Iowa Medicaid insurers pay more in claims than they get from the state

For the third consecutive quarter, the three private insurers managing the state's Medicaid program paid out more in claims than they were paid by the state, causing the insurers to see losses between 11 percent and 27 percent, according to Department of Human Services data out Wednesday morning.

The quarterly report — which details a number of metrics, including claims payments, prior authorizations and hospital admissions covering between Oct. 1 and Dec. 31, 2016 — helps shed additional light on the insurance companies' financial losses reported earlier in March in Iowa Insurance Division filings.

The state handed over its Medicaid program to the three managed care organizations nearly one year ago, and the insurers since have experienced financial troubles — with AmeriHealth Caritas Iowa losing nearly $300 million during its first year of operation while Amerigroup Iowa lost more than $133 million.

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UnitedHealthcare of the River Valley has multiple lines of business in the state and does not have to file a separate report for its Medicaid business. But during a February legislative committee meeting, the company told representatives it anticipated losing more than $100 million.

For two of three insurers, the losses were not as large as they saw in the previous quarter. According to the DHS report:

- Amerigroup Iowa reported the highest loss of 27.6 percent, up from a 17.78 percent loss during the past quarter. The state paid the insurer $237.5 million during the quarter.

The company reported a medical loss ratio — or the percentage of capitations payments used to pay medical expenses — of 116 percent; and an administrative loss ratio — or the percentage of payments used to pay administrative expenses — of 11.6 percent. It paid more than $237.6 million in claims.

- AmeriHealth Caritas Iowa reported a loss of 16.6 percent, down from the 20.7 percent loss it reported during the past quarter. The state paid the insurer $445 million during the quarter.

The company reported a medical loss ratio of 110 percent and an administrative loss ratio of 6.8 percent. It paid more than $489 million in claims.

- UnitedHealthcare of the River Valley reported a loss of 11.6 percent, down from the 25.24 percent loss it reported during the past quarter. The state paid the insurer $205.6 million during the quarter.

The company reported a medical loss ratio of 99.7 percent and an administrative loss ratio of 11.9 percent. It paid more than $253 million in claims.

The state still projects saving $118 million annually, noting that its savings are calculated without considering what the MCOs have paid in claims or the MCOs profit or loss. Instead, it is calculated through what the state has paid the MCOs versus estimated payments under the fee-for-service program.

The state and MCOs have disagreed on whether the rates the insurers are receiving are adequate. The state maintains the rates are actuarially sound and that some losses were anticipated start-up costs, while the MCOs believe the program is underfunded.

Next month, the state and MCOs will begin negotiating rates for the rate period that begins July 1.

In late October, the state announced it would boost rate payments to the insurers by $33 million to better cover rising prescription drug costs and the Medicaid expansion population.

And AmeriHealth has opted to make several changes in the past month to try to better control costs. Those include moving some case-management services in-house from external agencies as well as cut home and community based provider payments from negotiated rates to the state's Medicaid floor — the lowest amount the insurers will reimburse the providers.

AmeriHealth — which has the largest portion of the state's long-term services and supports population — paid nearly eight times more in home and community based services claims than the other two insurers combined, according to the quarterly report. AmeriHealth paid more than $159 million to those providers from October to December, while Amerigroup paid $12 million and UnitedHealthcare paid $8 million.

A Gazette review of Department of Human Services data spanning from April 1 to Dec. 31 shows all three MCOs have paid out nearly all or more in medical claims than they were paid through their contracts. The data supplied in the reports only shows provider reimbursements for provider types with the highest utilization and does not include all providers or all reimbursements for each MCO.

- Amerigroup has been paid more than $713 million during the first nine months of its contract while it paid providers at least $911 million.

- AmeriHealth has been paid $1.2 billion and has paid providers approximately at least the same amount, $1.2 billion.

- UnitedHealthcare was paid $644.2 million but paid out at least $642 million.

Gov. Terry Branstad said Wednesday that the private insurers have plenty of experience administering Medicaid programs in other states and anticipate start-up costs.

'But they're in it for the longer term, we're in it for the long term and we want to work together as partners to deliver the best care for our citizens,' he said.

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

Below is a snapshot of the data, which The Gazette will update as new reports are released. To view the full reports, click here.

Medicaid in Iowa in 9 Simple Charts