Branstad decries Medicaid privatization ‘scare’ tactics of some health care providers

DES MOINES - Gov. Terry Branstad expressed worry Monday that some health care providers are using 'scare tactics” and what he called misinformation to undermine his administration's effort to begin the transition to a privately managed Medicaid service delivery system.

The privately managed system is scheduled to be launched Jan. 1.

Some providers in mental health, assisted living and other service areas that rely on Medicaid for treatment have said the state's plan to privatize Medicaid services includes a new payment system that could cut their reimbursements so much that smaller organizations would be forced to close.

On a conference call Monday afternoon with the Centers for Medicare and Medicaid Services, the federal agency that still must approve the plan, community-based Medicaid providers told CMS representatives about a key point of contention - reimbursement rates.

A number of providers said the rates being proposed are based on out-of-date, two-year-old costs instead of July 2015 rates, which Iowa's Department of Human Services in an Oct. 27 letter said managed care organizations would use.

During the call, which had about 340 participants, providers also expressed frustration and concern over incomplete contracts, out-of-date provider manuals and the need to obtain pre-authorization to provide certain services from the four managed care organizations.

However, Branstad told reporters Monday that is not the case because providers who sign new contracts under the managed care system will be reimbursed at present rates. However, he said the new fees might be based more on outcomes than procedures performed, which could mean lower profits for some providers.

The Iowa governor said the new system is based on systems in 26 other states that have switched to managed care. Those states use one or more of the four private companies with which Iowa has entered into contracts to begin managing care for about 560,000 Medicaid enrollees in Iowa.

'There's a lot of misinformation being put out by some people that are trying to scare people,” Branstad said. 'I don't like these scare tactics. I think we need to give people accurate information. I know there are some people that always fear change, and that you have some people that are fanning those fears.”

Branstad said state Department of Human Services (DHS) officials have used a thoughtful, deliberative process modeled after other states' experience in concert with federal guidelines to come up with a Medicaid system designed to deliver better outcomes for patients and while being more predictable for the state than the current 'antiquated” system.

Providers who sign contracts under the new approach will receive 100 percent reimbursement, he said, with mental-health services phased in over six months and long-term care over two years.

'I understand that some providers kind of like the present system because the more procedures you do, the more you get paid,” Branstad told reporters. 'I guess it bothers me that we have some people, because they think they may not make as much profit off the new system based on health outcomes than they will under the old system based upon procedures, would want to oppose this new system.”

Multiple snags accompanied the state's plan to transition its $4.2 billion Medicaid program that has about 560,000 enrollees into a privately managed care system.

CMS sent a letter to Iowa Medicaid Director Mikki Stier questioning the state's readiness and laying out a handful of concerns. Branstad said he met last week with CMS officials in Washington, D.C., and had a productive discussion.

CMS will complete its on-site readiness review the first week of December, officials said. Also, a group of providers have filed a petition for declaratory judgment and injunctive relief with the Polk County District Court, asking the court to delay the implementation of managed care until a legal conflict is addressed.

DHS officials have awarded contracts to four managed care companies - Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa. Three companies that were not awarded contracts have challenged the state's bidding process, saying there was improper contact between the state and a winning bidder, among other concerns.

Reporter Chelsea Keenan contributed to this story.