Medicaid managed care is here: 5 things you should know

Here's what you should know as Iowa program shifts today to private management

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It’s three months past the initial target launch date of Jan. 1, but the Medicaid managed-care transition is finally here.

The state will hand over management of its $5 billion Medicaid program to three out-of-state private insurers — AmeriHealth Caritas Iowa, Amerigroup Iowa and UnitedHealthcare of the River Valley. These managed-care organizations now will be tasked with managing the Medicaid coverage of about 560,000 Iowa enrollees.

It’s been a long road, with several bumps along the way — including two delays from the federal Centers for Medicare and Medicaid Services.

Here are five things to know about managed care in Iowa.

Confused by how the new Medicaid system works?

We're here to help. Click the image above to check out an interactive explanation of Iowa's new Medicaid managed care system.


Medicaid managed care is hugely popular. More than 70 percent of all Medicaid recipients nationwide, or more than 51 million people, receive health benefits in a private Medicaid plan, according to a November PricewaterhouseCoopers report.

Between 2014 and 2015, private Medicaid plans added more than 7.8 million beneficiaries, while Medicaid members enrolled in traditional fee-for-service programs fell by 1.4 million people.

Experts said more states are turning to managed care to better manage state budget woes, especially as their Medicaid populations are growing through the Affordable Care Act’s Medicaid expansion. States pay private companies a predetermined fee for each Medicaid beneficiary enrolled in a plan on a monthly basis.

This makes it easier for states to anticipate Medicaid costs when compared with a fee-for-service system — where a state reimburses providers for each service given to a Medicaid patient.


Not many states have moved as many Medicaid recipients into managed care as Iowa is doing. Iowa has shifted about 92 percent of its Medicaid population — including those receiving long-term care services and the intellectually disabled — into managed-care plans.

So while 40 states have transitioned portions of their Medicaid population into these privately run plans, only a handful have moved as high a percentage of their Medicaid populations as Iowa.

According to the PWC report, Hawaii and Tennessee have moved 100 percent; Kansas has moved 95 percent; Texas and New Jersey have moved 94 percent. Kentucky, Delaware and New Hampshire have moved at least 90 percent in managed care.


Managing Medicaid is a billion-dollar industry. In 2014, private insurers brought in $115 billion in Medicaid revenue, according to data compiled by health analytics company Mark Farrah Associates and analyzed by Kaiser Health News.

In addition, a Gazette analysis of Securities and Exchange Commission filings of the insurers selected to manage Iowa’s Medicaid program shows:

• Amerigroup has seen a 290 percent revenue increase. Medicaid revenues have grown from $1.6 billion and 857,000 members in 2003 to $6.3 billion and 2 million members in 2011, the last year information was available. Amerigroup was purchased by Anthem in 2012.

• UnitedHealth Group has seen an 807 percent revenue increase. Medicaid revenues have grown from $2.6 billion and 1.1 million members in 2003 to $23.5 billion and 5 million members in 2014.

Information was not available for AmeriHealth Caritas, which is a private company and not required to file annual reports with the SEC.


Questions remain regarding the provider network. In December, CMS delayed the state’s request to transition its Medicaid program primarily due to concerns over the adequacy of the provider network.

According to the state’s Department of Human Services, 96 percent of Medicaid providers in Iowa have signed contracts with at least one managed-care organization, 75 percent have signed with two and 68 percent have signed with all three. Opponents of the plan, including Iowa Senate Democrats, have questioned the adequacy of the provider networks and asked the state to provide them with a complete list of every provider to sign a contract with an MCO.

According to the most recent DHS provider network summary (out March 24):

• AmeriHealth has signed contracts with 59 percent of adult primary care providers and 72 percent of pediatric primary care providers in the eastern third of the state.

• Amerigroup has signed contracts with 87 percent of adult primary care providers and 86 percent of pediatric primary care providers in the eastern third of the state.

• UnitedHealthcare has signed contracts with 80 percent of adult primary care providers and 81 percent of pediatric primary care providers in the eastern third of the state.


There’s still no conclusion in sight for the Medicaid oversight conversation. The Iowa Senate passed an expansive oversight bill in early March that included provisions to enhance the role and responsibilities of the Health Policy Oversight Committee, execute a comprehensive review of program integrity and create a special fund to finance system improvements and support for recipients.

But the bill failed to make it through a House committee by the so-called funnel deadline. However, late last week, leaders in the Republican-lead House said they planned to draft a bill that would provide additional oversight to the Medicaid transition.

“I don’t like that this is going to launch as we’re about to adjourn and we don’t have any oversight,” said Sen. David Johnson, R-Ocheyedan, during a Wednesday Senate Human Resources Committee meeting.

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