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Iowa would add another private Medicaid company that has a history of fines
Addition of Molina Healthcare will restore number of privatized Iowa Medicaid MCOs to three

Aug. 31, 2022 1:09 pm, Updated: Dec. 19, 2022 10:30 am
Cynthia MacDonald Amerigroup Iowa
Iowa once again will have three for-profit insurance companies managing the state’s $7 billion privatized Medicaid program that provides health care for more than a quarter of the state's population.
The Iowa Department of Health and Human Services announced Wednesday its intent to award contracts to current Iowa Medicaid managed-care organization Amerigroup Iowa and to Molina Healthcare of Iowa, whose CEO, Jennifer Vermeer, spent nearly a decade as the Iowa Medicaid director.
Molina’s parent company, though, has faced fines in three states, including in the past couple months, for not paying providers on time and allegations of improperly submitting claims for reimbursement.
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Amerigroup and its subsidiary health plans also have been fined or paid a hefty settlement for denial of service and Medicaid fraud claims over the years.
A Molina representative did not immediately respond to a message seeking comment Wednesday.
The company, in a statement on its website, said its “mission is to improve the health and lives of our members by delivering high-quality health care, and we look forward to fulfilling that mission in Iowa.”
Medicaid health benefits in Iowa currently are administered by two managed-care organizations — Amerigroup Iowa, a subsidiary of Indiana-based Elevance Health, and Iowa Total Care, a subsidiary of St. Louis-based Centene.
Amerigroup’s contract will end in 2023, and Iowa Total Care’s contract is set to expire in 2025.
“This announcement continues the state’s work with Amerigroup, and this third MCO will enhance choice for members and incent innovation in the Iowa Medicaid program,” according to a statement from DHSS.
Medicaid is jointly funded by states and the federal government to provide health insurance primarily for lower-income individuals under the age of 65 and those with disabilities.
Iowa health care providers serving Medicaid patients have said they hope increased competition will improve health outcomes, patient choice and quality of care for poor and disabled Iowans.
But after an at times tumultuous six years of the privatized Iowa Medicaid program — which saw the exit of two for-profit insurers over heavy financial losses — providers and critics warn adding new insurers could cause disruption and patient confusion.
State officials said there would be no immediate changes for Iowa’s approximately 850,000 total Medicaid beneficiaries in the state.
Molina will begin providing services in July 2023.
“Between now and then, Iowa Medicaid will work with Molina on their readiness review and Amerigroup and Iowa Total Care continue to provide services,” according to a DHHS news release.
Iowa Medicaid Director Liz Matney said DHHS officials are working through logistics of how Medicaid members will be shared among the managed-care organizations. While the goal will be to distribute members equally across the three insurers, Matney said member choice and continuity of care will be “front of mind.”
“We’ll be mitigating that as much as possible,” she said of those members who will have to switch providers.
She said updated contract requirements specify Medicaid members who transition to a new managed-care plan are able to still see out-of-network providers for up 90 days, while the managed-care organization works to contract with that provider or move them to another provider.
Jennifer Vermeer, Molina Healthcare of Iowa
Five companies submitted proposals
The companies were selected from among five insurers that submitted proposals to join Iowa’s Medicaid and Children’s Health Insurance Program, or CHIP.
Other insurers who submitted proposals included private insurance company Aetna; not-for-profit managed-care organization CareSource Iowa; and Minneapolis-based not-for-profit insurer UCare.
According to DHHS, proposals were evaluated by “a multi-disciplinary team across the HHS agency" who work in a number of initiatives relevant to Iowa Medicaid.
A summary review of proposals provided by DHHS shows Molina received the highest score among the five vendors, followed second by Amerigroup.
Document: RFP# MED-23-005 - Iowa Health Link
Listed strengths included documented experience and past success with similar services and patient populations, and a well-documented early engagement with providers and stakeholders.
Molina, in its bid response, said that it organized meetings over the past nearly three years with IA Health Link providers, patients and their family members, advocates, state leaders and community organizations. As result, the company said it has “gained a deep understanding of the current needs, opportunities, and successes of the IA Health Link program,” and has “a deep commitment to serving the most complex Medicaid populations.”
The company, however, has faced million-dollar fines in three states.
Molina Healthcare was fined $1 million by the California Department of Managed Health Care in June for failure to timely resolve 29,124 provider disputes between September 2017 and September 2018.
The plan has paid the fine and implemented corrective actions, including the remediation of $80.3 million in payments to providers, with an additional $1.8 million in interest, according to the California state agency.
Last Month, Molina and its previously owned subsidiary, Pathways of Massachusetts, agreed to pay $4.6 million to resolve allegations that it violated the False Claims Act by submitting reimbursement claims while violating several regulations related to the licensure and supervision of staff in Massachusetts.
The Texas Department of Insurance fined the insurer $500,000 in 2019 over its inability to pay claims on time. That was on top of almost $8 million combined that the insurer paid in penalties and interest to the department and to affected physicians and other health care providers.
Matney said Molina was chosen based on its extensive experience providing health care plans to various state and federal health care programs. The Long Beach, Calif.-based Fortune 500 company serves more than 5 million members in 14 states under the Medicaid and Medicare programs and through the state insurance marketplaces. About 80 percent of whom are enrolled in Medicaid programs.
Molina as well, she said, has had “proven experience and demonstrated positive outcomes” in other states serving particularly vulnerable Medicaid beneficiaries who rely on long-term services and support.
She added the state’s managed-care contracts also have been updated to include new requirements on continuity of care, better communication with health care providers on payment, and new testing for claims submissions.
"We will be strenuously monitoring their claims payment once they do go live“ to make sure they’re meeting timeliness and accuracy standards, Matney said.
A troubled history
Iowa’s transition from a state-run system to a managed-care model in 2016 that put private insurance companies in charge of administering Medicaid benefits has been contentious.
The new Medicaid program, known as IA Health Link, was plagued by complaints that services were being illegally denied, payments were not being made to service providers and promised savings never materialized.
Liz Matney, then-Medicaid managed-care bureau chief, addresses the committee during an out-of-session Human Resources Committee meeting on the Medicaid transition at the Iowa State Capitol in Des Moines in 2016. (The Gazette)
Matney said the new contracts will help improve Iowa Medicaid infrastructure, in addition to other steps the department is taking to identify and address gaps in care.
“We’re listening to our members and providers, making sure we hear and respond to their feedback,” Matney said of town halls she hosted since becoming Medicaid director last year. “… This is reflected in the changes to the new contracts, which prioritize program improvements and better outcomes for those we serve.”
To facilitate a smooth transition for Medicaid members, Molina said in its proposal that it planned to waive all prior authorizations for the first 90 days, “ensuring no claims are denied.”
“We are also bringing a full provider network to ensure continuity of care,” according to the company’s proposal submitted to DHHS.
“We are really confident in our process to bring Molina into the Medicaid program and simultaneously improve the overall Medicaid program,” Matney said.
Democratic state Rep. Timi Brown-Powers of Waterloo said she’s “hopeful, but hesitant” things will improve with the addition of Molina, and argued the privatized system itself will continue to cause problems.
Brown-Powers serves on the Health and Human Services Appropriations Subcommittee and Human Resources Committee in the Iowa House.
“I do kind of worry that this is another company coming in and taking advantage of our persons with disabilities and senior citizens and not going to pay providers,” she said.
“You can’t make money off of people with disabilities, nor should you. That’s what happens with these for-profit companies coming in. Their goal is to make money. I get that. But when you’re doing it on the backs of people … who need services, then it becomes a problem.”
Comments: (319) 398-8499; tom.barton@thegazette.com
People stand at the back of the room during an out-of-session Human Resources Committee meeting on the Medicaid transition at the Iowa State Capitol in Des Moines in 2016. (The Gazette)
Then-Gov. Terry Branstad answers questions during a town hall meeting on Medicaid at the Historic Park Inn Hotel in Mason City in 2015. (Chris Zoeller/Mason City Globe Gazette)
An out-of-session Human Resources Committee meeting is held on the Medicaid transition at the Iowa State Capitol in Des Moines in 2016. (The Gazette)