Iowa Medicaid insurers see financial losses for fourth consecutive quarter

Each of the three managed-care organizations lost hundreds of millions of dollars

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The three private insurers managing Iowa’s Medicaid program again saw millions of dollars in financial losses — ranging from nearly 12 percent to 19 percent — during the first quarter of 2017, according to a new report out Monday.

This is the fourth consecutive quarter in which the insurers reported a negative profit margin.

The 80-page report, put out by the Iowa Department of Human Services, looks at a number of performance measures during the months of January to March, from the number of health risk assessments completed to the average cost of each member per month.

All three insurers continued to pay out more in medical claims than they brought in through capitation payments — or the per-member fees they receive each month to deliver care.

Amerigroup Iowa paid more than $367 million in claims while bringing in $250 million; AmeriHealth Caritas Iowa paid nearly $500 million in claims while bringing in $457 million; and UnitedHealthcare Plan of Iowa paid $255 million in claims while bringing in $222 million.

On top of the money being spent on medical claims, each insurer spent between 6.6 percent and 11.8 percent of capitation payments on administrative expenses.

Those numbers reflect financial reports filed with the Iowa Insurance Division in mid-May that showed Amerigroup losing $4.5 million in the first quarter and AmeriHealth losing nearly $24 million. UnitedHealthcare has multiple lines of business in the state and does not file financials for its Medicaid business separately.

Their financial performances are important, as Iowa and the three managed-care organizations are negotiating capitation rates to begin July 1.

The MCOs believe the rates they are being paid are not actuarially justified, describing the Medicaid program as “drastically underfunded” in documents last year. The state maintains the rates — which were certified by the federal Centers for Medicare and Medicaid Services — are appropriate.

During their first year of operation in Iowa, all three insurers reported losses in excess of $100 million, with AmeriHealth suffering the greatest loss at nearly $300 million. Amerigroup reported a loss of $133 million, and UnitedHealthcare said it lost more than $100 million.

Also in the report:

l The average aggregate cost per adult member per month fell between quarters for two insurers — UnitedHealthcare spent about 6.5 percent less on members from January to March than it did the previous quarter (October to December), while AmeriHealth spent 8.4 percent less during those same time periods. Amerigroup, however, spent nearly 11 percent more than it did in the previous quarter.

l Average aggregate costs per child per month were more stable — Costs for health care and pharmacy services for children were more consistent between quarters, holding at $149 for UnitedHealthcare; rising $9 from $141 to $150 for AmeriHealth; and ticking up $8 from $102 to $110 for Amerigroup.

l Grievances and appeals have steadily risen for all three insurers — The number of grievances ranged from 115 to 223 during the quarter while the number of appeals ranged from 108 to 425. There were a wide number of reasons for appeals, including authorization for behavioral health services, authorization for certain medications and authorization for durable medical equipment such as wheelchairs.

A separate report filed by the Medicaid Managed Care Ombudsmen office reported 1,184 calls were made during that same time period, with the top three issues Medicaid beneficiaries experienced being reduction or termination of service, care planning participation and change in care setting.

 

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