Iowa Senate's Budget Puts Limits on Medicaid Managed Care

Iowa Governor Terry Branstad’s quest to transform his state’s $4.2 billion Medicaid program into a system of managed care hit a roadblock this week, as the Senate on Wednesday approved a budget that puts limits on how much management can occur.

Branstad, a Republican, questioned both decisions and savings estimates in the $1.9 billion budget for the Department of Human Services, which Democrats passed in a party-line vote. Among the changes Senate Democrats demanded:

· A cap on profits for managed care contractors, with limits on administrative costs.

· Creation of a commission to oversee the transition to managed care.

· A ban on finding savings by cutting provider rates.

· Reversal of a plan to close 2 state-run mental health institutes.

When he unveiled his Medicaid managed care plan earlier this year, Branstad said it would save an estimated $51 million, a figure he said was based on actual savings in other states. But Senate Democrats, have projected savings more than twice that—$120 million. Branstad criticized the larger figure as “not responsible,” while senators complained they have not seen details on Branstad’s estimates.

Iowa has already issued requests for proposals from contractors seeking to run all or portions of the state’s Medicaid services. The schedule calls for awards to be made in late summer, with the changeover taking place January 1, 2016. In announcing the proposal to move to managed care, Branstad and state Human Services officials said they sought not only budget savings and more predictability, but also better coordination of care, with improvements in quality and access.

Branstad’s proposal has met resistance from both lawmakers and advocacy groups who fear lower quality care or more bureaucracy, especially for the most fragile patients. “The concern is loss of services, especially waiver services,” Jane Hudson, executive director of Disability Rights Iowa, told the Quad-City Times in reference to Iowa’s Home and Community-Based Services waiver program, which provides long-term care.

Others have asked how appeals will work if a Medicaid beneficiary is denied care, and whether the state has adequate resources to handle an expected uptick in appeals.

The pushback has come despite Iowa’s implementation last year of managed care reforms within Medicaid mental health services, a transition that received praise for expanding access to care. In remarks to reporters, Branstad challenged the Senate’s effort to keep open mental health institutes targeted for closure. “These institutions are outdated and outmoded, and don’t really fit the needs of providing the best quality mental health,” he told reporters. “I think it would be a big mistake to just kick the can down the road and not make the important decisions that provide better services.”

Iowa’s budget talks move now to the House, which is dominated by Republicans. Published reports said the 2 sides are $100 million apart in health and humans services spending estimates.

Around the Web

Branstad questions Medicaid savings estimate

Branstad wants 2-year school aid bill; raps Senate Medicaid plan

Iowa Seeks Formal Bids for Medicaid Managed Care