Iowa Medicaid insurers cautious to say if they’ll need another rate hike

DES MOINES - The three heads of the private insurance companies managing the state's nearly $5 billion Medicaid program were hesitant to answer questions Tuesday regarding additional future rate increases to the monthly fees they each receive from the state of Iowa.

'I am not able to answer that,” said Cynthia MacDonald, health plan president of Amerigroup Iowa, during Tuesday afternoon's legislative health policy oversight meeting in Des Moines. 'I'm not trying to be coy, but that's not something we can put on the table.”

The state of Iowa handed over its Medicaid program with nearly 600,000 enrollees to AmeriHealth Caritas Iowa, Amerigroup and UnitedHealthcare of the River Valley on April 1.

In early November - about seven months into the program - the state announced it would increase capitation rates, or the per-member per-month fees it pays the managed-care organizations for the first rate period, which ends June 30, 2017, by about $33 million.

Iowa officials pointed to rising prescription drug prices - up about 32 percent per member, per month since fiscal year 2014 - and unexpected costs of new Medicaid enrollees as the primary factors for the rate increase.

And with two of the tree MCOs reporting hundreds of millions of dollars in losses in early December, several state legislators on the committee wanted to know if the second shoe might drop.

On Dec. 2, financial reports filed with the Iowa Insurance Division show that Amerigroup saw losses of more than $147 million, while AmeriHealth had losses of more than $132 million.

UnitedHealthcare does not have to file financial reports with the state of Iowa, but did say in the second Department of Human Services quarterly report it had a loss of 25 percent.

'We will continue building a sustainable, long-term program,” AmeriHealth's Cheryl Harding said. 'The rate increase we got was from a process of looking at emerging trends. That's a continual process.

'But we can't comment further than that. We don't discuss those things in public settings.”

Amerigroup Iowa's MacDonald added that the companies invested heavily in the state - with Amerigroup putting in nearly $200 million - to set up infrastructure, build provider networks and get the program up and running.

'When you enter a market, you assume a level of loss,” she said. 'You also assume moving forward to break even and then eventually see a turnaround.”

Also an ongoing topic of conversation during the four-hour Medicaid oversight meeting was the projected savings put out by Gov. Terry Branstad's office and Iowa Medicaid Enterprise.

The state said the transition to managed care will save Iowa nearly $118 million, which Sen. Joe Bolkcom, D-Iowa City, called 'phantom numbers” and 'smoke and mirrors.”

Jean Slaybaugh, chief financial officer for DHS, said that figure comes from looking at average monthly expenditures for the program under fee-for-service or state-run Medicaid compared with the average monthly spending now.

'I sure hope at some point, if you continue to tell us this is saving money, you can tie it back to specific services that were bloated,” Bolkcom said. 'Because if you continue to talk about savings with these numbers - it's a bit of slippery slope.”

This was the second and final Medicaid managed care oversight meeting of the year. And with Republicans in control of the statehouse come January, several Democratic legislators put in their votes to keep the meetings going.

'We all want what's best for Iowans,” said Sen. Liz Mathis, D-Robins. 'We should want to iron out the difficulties and make sure we have the best system we can for vulnerable Iowans.”

l Comments: (319) 398-8331; chelsea.keenan@thegazette.com