Iowa DHS requests increase for Medicaid funding

DES MOINES - Iowa Medicaid Enterprises is requesting an increase of more than $76 million dollars from the previous year for its Medicaid program for state fiscal year 2020.

In addition, Iowa Medicaid Enterprises - a division of the Iowa Department of Human Services that oversees the state's privatized Medicaid program - also requested another $69 million for fiscal year 2021.

At a total of more than $145 million above approved 2019 state allocations, these requests for funding increases again raises questions from some at the meeting whether the move to a managed-care model is saving the state money.

The Council on Human Services met in Des Moines Tuesday afternoon for a two-day discussion on fiscal year 2020 and 2021 budgets. Those discussions, which will continue into Wednesday, included presentations on health care and behavioral and disability health services, two divisions within the Iowa Department of Human Services.

Director Michael Randol presented the budget for Iowa Medicaid Enterprises, which oversees the state's Medicaid program, Children's Health Insurance Program, or CHIP, and other related programs.

According to budget documents presented at the meeting, DHS is requesting $1.41 billion for 2020 and $1.48 for 2021 from the state for its Medicaid program.

The total request from the Department of Human Services for 2020 is $6.74 billion.

The total department budget for fiscal year 2018 was $4.8 billon, about $1.28 of which was from state general funding and another $685.91 million from other state funding.

During the meeting, concerns were raised by Council on Human Services members on the increasing cost of Medicaid, which they said indicates that the program may not be working.

In response, Randol pointed to several factors - including changes in federal match rates and what Randol described as data based on 'actual experience” of the members, meaning program officials now have a better understanding of costs based on previous years' data on member use.

Lawmakers appropriated $1.34 billion dollars from the state general fund for the upcoming 2019 fiscal year to Medicaid, a $54.8 million increase from the previous year.

The amount appropriated to the Department of Human Services for 2019 - about $2.16 billion - is short the newly determined capitation rates.

Capitation rates are what's paid to the managed-care organizations on a per-member, per-month fixed basis by the state for administering coverage.

Last month, officials announced the state agreed to an additional $102.9 million, or a 7.5 percent increase, in capitation rates to the managed-care organizations for 2019 in new contracts signed with the insurers.

Randol declined to clarify for news reporters following the meeting why capitation rates had increased, stating he needed to better understand the factors driving the costs before he answered the questions.

He did state the capitation rates are determined based on 'actuarial soundness” and specific federal requirements.

The budget also stated Medicaid 'achieved savings and cost avoidance” of $43.8 million state and federal dollars by identifying overpayments, coding errors, fraud and abuse in fee-for-service claims in 2017.

It also collected $135 million in revenue that year through cost avoidance and recovery when other insurance was present, the budget stated.

In terms of projections, the 2020-2021 budge overview noted that, though growth is slowing, Medicaid enrollment is projected to increase to nearly 767,000 Iowans in state fiscal year 2018, and to more than 772,000 members in 2019.

The factors laid out within the Medicaid program:

l Six percent of Medicaid members are enrolled in fee-for-service, the state-run system that existed before the program privatized.

l 58 percent of Medicaid enrollees in 2017 are children - in fact, the average Medicaid members is a healthy 9-year-old who uses few health care services.

l 19 percent of Medicaid members have disabilities, yet make up 49 percent of Medicaid costs.

l Individuals with chronic disease - which make up five percent of members - also drive 48 percent of acute-care costs.

l Approximately half of Medicaid expenditures are for long-term care costs, such as nursing facilities and home and community based supports.

The Department of Human Services also is requesting a $12 million increase in CHIP funding for 2020.

It's requesting no change in funding amounts for its behavioral and disability health facilities and services, including its institutes in the cities of Cherokee and Independence.

l Comments: (319) 368-8536; michaela.ramm@thegazette.com