Branstad: 'Significant' savings from Iowa's privately managed Medicaid

(File Photo) Gov. Terry Branstad speaks about water quality at the Fairbanks farm south of Anamosa on Wednesday, Aug. 3, 2016. Branstad visited the farm to discuss water quality, and viewed the farm’s manure storage facility and dairy operation. (Liz Martin/The Gazette)
(File Photo) Gov. Terry Branstad speaks about water quality at the Fairbanks farm south of Anamosa on Wednesday, Aug. 3, 2016. Branstad visited the farm to discuss water quality, and viewed the farm’s manure storage facility and dairy operation. (Liz Martin/The Gazette)

DES MOINES — Gov. Terry Branstad on Monday defended the state’s switch to privately managed care for Iowa’s Medicaid recipients, saying the new system is saving the state “significant” money by rooting out fraud and abuse that previously had gone undetected.

Meanwhile, two of the three insurance companies tasked with managing the Medicaid system saw losses in the tens of millions of dollars during the first six months of the year, according to financial statements filed with the Iowa Insurance Division.

AmeriHealth Caritas reported losses in Iowa of $42.6 million, while Amerigroup Iowa reported losses of $66.6 million, the filings reported.

UnitedHealthcare of the River Valley did not show its Iowa-specific figures, and reported a net income of $43.38 million companywide.

Department of Human Services Spokeswoman Amy McCoy said in a statement that Iowa Medicaid and the three managed care organizations (MCOs) are “committed to the long-term contract.”

AmeriHealth spokesman Joshua Brett said the losses, from Jan. 1 through June 30, include start-up costs, adding it’s common to “discover opportunities to enhance how the program works in practice.”

“We remain strongly committed to the health and well-being of Iowans,” he said.

“These insurance filings capture only a very short time period ... where MCOs are making long-term investments in the Medicaid program.” McCoy wrote in an email Monday.


Branstad, meanwhile, did not provide specific data documenting his claim of “significant” savings. He pointed to other states that have adopted similar models and noted state budget expectations that Iowa would save more than $100 million this fiscal year with MCOs overseeing Medicaid services for 560,000 Iowans.

The state handed over its $5 billion Medicaid program to the three out-of-state insurance companies on April 1.

“We’re getting good reports,” the governor told reporters at his weekly news conference. “The reports that we’re getting is that this new system of managed care, replacing the unmanaged care that we had before, is stopping significant fraud and abuse that had occurred previously in our state and across the country, and it is designed to try to improve health outcomes.”

Under the state-run approach, it was more difficult to detect unnecessary or redundant medical services being delivered by doctors, hospitals and other health care providers who treated Medicaid patients, Branstad said. The new system makes payments on a capitated basis rather than procedures performed since the April 1 switch was made, he added.

The governor downplayed reports of Iowa providers not getting paid in a timely manner or paid at all as well as some recipients being denied services, saying complaints have been resolved by MCOs and DHS overseers. He said many instances involved people not following the program rules or meeting the verification requirements.

Branstad did acknowledge an Associated Press story that said late-payment fines were waived for the three for-profit MCOs in April and May while Iowa’s system transitioned to the private management — a decision that has drawn some legislative criticism. He said the leeway was granted as part of a collaborative effort to transition to a new approach.

“We want to focus on things that are actually going to improve the health of Iowans, and we’re doing this in a collaborative way,” he said. “I know that there are those who would like to be involved in partisanship and confrontation. That is not our interest.”

Branstad said the processing time in the new system is about 8.5 days, while previously it took about eight days for claims to clear the process and payments reimbursed.


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“Before, when you had unmanaged care, you submitted the bill and you got paid. You didn’t know whether the service was ever provided,” he told reporters. “Now we are verifying to see that the service is provided, and obviously that may delay it a day or so.”

Iowa’s Senate Democrats have set up a call with the Centers for Medicare and Medicaid on Sept. 12 for the federal agency to hear from Medicaid beneficiaries and providers. Details still need to be ironed out, but that call tentatively is scheduled for 11:30 a.m. to 1 p.m.

Sen. Liz Mathis, D-Cedar Rapids, said despite Branstad’s claims that the transition has gone smoothly, some providers continue to run into payment problems.

“It’s time to get the feds involved and solve some of this,” she said Monday.

CMS also has requested the legislature to stream the Aug. 29 Medicaid oversight committee meeting online so officials can watch and hear testimony, she added.



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