Iowa Hospital Association proposes a move from managed care

Two years after switch, calls for change continue for Iowa's Medicaid system

The cover page of an application for health coverage, which includes Medicaid, photographed at Mercy Medical Center in Cedar Rapids on Thursday, Nov. 12, 2015. Generally the application is filled out electronically. (Liz Martin/The Gazette)
The cover page of an application for health coverage, which includes Medicaid, photographed at Mercy Medical Center in Cedar Rapids on Thursday, Nov. 12, 2015. Generally the application is filled out electronically. (Liz Martin/The Gazette)

Nearly two years after the system switched to private management — and despite top state officials asserting there’s no going back — many legislative leaders and health care executives continue to call for change in Iowa’s Medicaid program.

Democratic leaders and many Medicaid enrollees want a return to the previous state-run system. At the same time, a provider association wants to go forward with a third option for managed care it announced in January.

Iowa’s Medicaid system, which switched to managed care administered by three private insurance companies in April 2016, has faced broad criticisms from health care providers — who say they continue to see denied or late payments — and enrollees — who say they have been denied services necessary for their health.

All three managed-care organizations reported losses in excess of $100 million in the first year alone. AmeriHealth Caritas saw the greatest loss of nearly $300 million that first year.

AmeriHealth exited the market in December, leaving Amerigroup Iowa and UnitedHealthcare of the River Valley as the two insurers administering Medicaid.

Enrollees were further thrown for a loop when Amerigroup announced the same month it no longer would accept new members.

The state is undergoing a search for a third insurer to replace AmeriHealth beginning July 1, 2019. As of last week, two companies had announced their intents to bid: Iowa Total Care, a subsidiary of Centene, and the Trusted Health Plan of Washington.


“Our concern all along was that Iowa itself, with just 3 million people, is not a market in which this type of model works,” said Kirk Norris, president of the Iowa Hospital Association. “We tried to discuss that early on with the political leaders as this was coming about.”

In light of developments with the state system, the association, which represents Iowa’s hospitals, released a proposal this month that introduces a “third” option for managing Medicaid in the state.

The association’s proposal is a “member-driven” approach to managing medical and behavioral services through incentives for patient health improvements and a centralized organization that would handle administrative responsibilities.

It could work here

Other groups also have proposed changes to the system, including state Democrats who called on GOP Gov. Kim Reynolds and state Republicans in December to end privatized managed care and return to a state-run system.

Reynolds has stated she is committed to a privately managed Medicaid system, and Department of Human Services Director Jerry Foxhoven also has indicated the unlikeliness the state would break from managed-care organizations.

“We don’t believe the current model is sustainable in the near or long term."

- Kirk Norris

President, Iowa Hospital Association

“Frankly, that’s what these companies do for a living,” Foxhoven told The Gazette in an early January interview. “It’s not what the state of Iowa does for a living.”

Proponents of Iowa’s current system note that managed care works in other states — and therefore would work here.

Ohio, for example, has created a financially stable model by integrating delivery for services in medical, behavioral and long-term care, said the Kaiser Family Foundation.


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According to Ohio’s 2017 progress report, “there is an estimated monthly savings of approximately $2.4 million above what would have been achieved under the traditional Medicaid fee-for-service program.”

The hospital assocation’s Norris said states such as Ohio have larger populations than Iowa, which has about 600,000 enrollees in Medicaid, and implemented the system in a different way. An oversight board voted to use of $2.65 billion in federal funding to expand Medicaid for Ohioans, starting Jan. 1, 2014, the Columbus Dispatch reported.

Ohio has five managed-care organizations administering coverage for 3 million people.

“Long story short, if you look at Medicaid managed care, even though people say it’s in 30-some states, it’s really only in large population states where they’ve saved anywhere from 1 percent to 3 percent,” Norris said.

“It’s not in small markets,” he said. “In small markets, this model — the one that we’re currently using — generally costs states more and has resulted in diminishing services to the people that are insured and all kinds of management issues for providers that are involved.”

But Norris said as hospital association leaders began work on their proposal this past August, uncertainty in Iowa’s Medicaid system affirmed their belief managed care wasn’t the right path.

“We don’t believe the current model is sustainable in the near or long term,” Norris said.

The hospital association’s proposal would help Iowa’s system move forward, rather than start from square one, he said.

The proposal, which was created in partnership with health care consulting and law firm Manatt Health, is based on the “successes” of Connecticut and Colorado Medicaid systems, Norris said.


Connecticut is only one of three states that administers coverage to more than 771,000 Medicaid members entirely through fee-for-service systems.

Some 1.4 million Medicaid members in Colorado receive coverage through a state-administered program called Health First Colorado.

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