Another rate increase for Amerigroup?

Days after the state announced it would inject an additional $33 million into the three private insurers managing the $4.6 billion Medicaid program, one managed-care organization already is saying the increased rates are not enough and hinted it is asking for more.

'In terms of Iowa ...

we did get a retroactive rate increase,” John Gallina, chief financial officer of Anthem, the parent company of Amerigroup Iowa, said during the company's third-quarter earnings call on Wednesday. 'Unfortunately, we think it still is not actuarially justified. We really are not providing an exact number at this point as we continue to work with the state, and don't want to get out ahead of the state and negotiate this publicly.”

Gallina went on to tell analysts that the company needs 'to partner with states that want to be partners” and that Anthem will continue to negotiate higher 'actuarially justified rates.”

'We feel very good about that fact, but if we do not get it then we will have a decision to make in Iowa, as well,” he said during the call.

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

On Monday - about seven months into Iowa managed care - state officials announced it would increase capitation rates, or the per-member per-month fees it pays the MCOs for the first rate period, which ends on June 30, 2017. The increase on the state's end also came with an additional $94.5 million from the federal government.

Iowa officials pointed to rising prescription drug prices and unexpected costs of new Medicaid enrollees as the primary factors for the rate increase.

The move was criticized by many of the state's Senate Democrats who said Gov. Terry Branstad and Department of Human Services officials, which oversees the Medicaid program, transitioned to managed care too quickly.

It is not unprecedented for these private companies to lobby for higher capitation rates after the start of a contract and before a rate period ends.

In Florida, the companies managing the state's 3 million Medicaid recipients asked for a $400 million midyear increase in 2015 as well as a 12 percent rate increase, according to the Miami Herald. The companies said they were losing too much money, pointing to high prescription drug costs and higher-than-expected uses of medical services.

After arguments between the state and an MCO in Kentucky over higher-than-expected costs, the insurer, Kentucky Spirit Health Plan - a division of Centene Corp. - pulled out of the state in 2013 - a year before its contract was up, according to the Lexington Herald Leader. The move led to years-long legal battles between the common wealth of Kentucky and the insurer, which weren't settled until Friday. Under the terms of the settlement agreement, Kentucky Spirit will receive an immaterial cash payment from Kentucky's actuarial firm and each party will dismiss all claims.

Anthem would not provide additional comment to The Gazette outside of the earnings call transcript regarding how much of an additional rate it was seeking or what it would do if it did not come to an agreement with the state.

But Joe Swedish, Anthem's chairman, president and chief executive officer, told analysts Wednesday during that call the company experienced greater losses than forecast. The company filed a report with the Iowa Insurance Division at the end of June showing it lost more than $66.6 million during the first six months.

'We are in the process of having deep discussions with the state regarding the possibility of adjustments,” he said in the call. 'I commented in our discussions just a moment ago that we have realized some positive effect from that discussion, and quite frankly we're hoping for more. Unfortunately, the recent rate increase still is inadequate.”

Swedish said it was too early to discuss the company's legal position, but it was examining the contract.

'We are hopeful for a very positive outcome at the end of that review,” he said. 'We are concerned about the actuarial soundness of the rates. And that has been expressed by all the MCOs from the get-go.

'...

We will continue to be deeply concerned until we get a resolution to this, and then we will weigh our options with respect to the endpoint of those negotiations with the state.”

Anthem manages portions of the Medicaid programs in 18 states and has more than 6.4 million enrollees. The company purchased Amerigroup in 2012, which helped boost the insurer's numbers significantly.

Amerigroup operates in 11 states, including Iowa, where it has more than 184,000 enrollees.

The state also was tight-lipped on possible future rate increases.

'The state has reviewed emerging trends and updated the current 15-month capitation rate period,” said Amy McCoy, DHS spokeswoman. 'We are now focused on setting the next capitation rate period.”