Managed Care Year One, Quarter Three: A 'rocky start' for one Iowa skilled-nursing facility

DUBUQUE — In so many ways, 2016 was just like any other year for Hills and Dales.

The Dubuque-based intermediate care facility provides 24-hour care to the nearly 50 medically fragile children and young adults who live there.

The kids finished another year of school. The facility held its annual Christmas events — a pageant as well as 911 Christmas, in which Santa Claus arrives on a firetruck along with local law enforcement and first responders to deliver gifts.

But there was one thing that was remarkably different about this past year.

All the residents at the facility rely on Medicaid — a program that has gone through considerable change in 2016. The state of Iowa handed over its Medicaid program with nearly 600,000 enrollees to three private insurers — AmeriHealth Caritas Iowa, Amerigroup and UnitedHealthcare of the River Valley — on April 1.

Hills and Dales also is where Colin Edberg lives, a 14-year-old boy who has physical and mental disabilities. The Gazette has been following Edberg for the past year to see how the move to Medicaid managed care impacts him and his family.

'It was a rocky start' for the facility, said Marilyn Althoff, executive director of Hills and Dales. 'We've continued to maintain a positive perspective and direction. That is not going to change.'

As with many providers across the state, Hills and Dales ran into reimbursement issues at first — most of which have been worked through, Althoff said.

But because of the facility's complex population — the children have intellectual disabilities, physical disabilities or autism — it ran into some unique challenges.

Hills and Dales ultimately decided to sign contracts with AmeriHealth and Amerigroup.

But the doctors group in Dubuque chose to sign only with AmeriHealth Caritas. That means Hills and Dales had to work with each of the 50 families to get the children switched over to AmeriHealth so they could receive in-network medical care.

The kids who live at Hills and Dales need wheelchairs and braces and rely on all sorts of medications. But durable medical equipment pre-authorizations and pharmaceutical pre-authorizations have been difficult to obtain at times, Althoff said, and there can be extra steps that weren't there under the state-run system.

'One of the challenges has been helping the MCOs understand the services we do,' she added.

In November, Althoff had to invite AmeriHealth officials to tour the facility after a child who met all admissions criteria was denied that level of care. The family appealed the decision and he later was admitted.

The problem, Althoff said, is that some of the field staff still are learning, and problems need to be resolved with higher ups in the company.

'The challenge is that, even though (the kids here) have health care issues, the people we support don't necessarily have medical challenges, they aren't sick or ill,' she said. 'We have to educate people in the community and the MCOs.'

But there have been some bright spots, too, she said. All the children were assigned a case worker, who comes by regularly — something the clients at Hills and Dales have never had before.

'We're into the implementation of this now, it's no longer the transition period,' Althoff said. 'I hope we can step back and evaluate things that have worked as well as the issues.'

The financial health of the insurers has dominated headlines for the past several months.

In early November — about seven months into the program — the state announced it would increase capitation rates, or the per-member per-month fees it pays the managed-care organizations, for the first rate period that ends June 30, 2017, by about $33 million.

Iowa officials pointed to rising prescription drug prices — up about 32 percent per member, per month since fiscal year 2014 — and unexpected costs of new Medicaid enrollees as the primary factors for the rate increase.

Senate Democrats — who have been opposed to the transition from the start — seized upon the information, saying the increase was another example of how the move to managed care was too rushed and not ready.

Then in early December, two of the tree MCOs reported hundreds of millions of dollars in losses — financial reports filed with the Iowa Insurance Division show that Amerigroup saw losses of more than $147 million, while AmeriHealth had losses of more than $132 million.

UnitedHealthcare does not have to file financial reports with the state of Iowa, but did say in the second Department of Human Services quarterly report it had a loss of 25 percent.

The three leaders of the MCOs were cautious to tell legislators during a Dec. 13 oversight meeting if they'd need additional rate increases.

'I am not able to answer that,' said Cynthia MacDonald, health plan president of Amerigroup Iowa. 'I'm not trying to be coy, but that's not something we can put on the table.'

Growth in Medicaid expenditures between State Fiscal Year 2004 and SFY2015

Chart by John McGlothlen / The Gazette

She said during the meeting that all three companies invested heavily in the state — with Amerigroup putting in nearly $200 million — to set up infrastructure, build provider networks and get the program up and running.

'When you enter a market, you assume a level of loss,' she said. 'You also assume moving forward to break even and then eventually see a turnaround.'

But correspondence between the MCO leaders and DHS officials reveal that the insurers have been lobbying for increased rates since the start of the transition. The documents, first reported by the Des Moines Register, show the MCOs believed the rates to be inadequate from the start.

Amerigroup's MacDonald said in early May that the company 'has some lingering important areas of concern regarding rate adequacy' due to the 'impact of delays in overall program implementation, transition of (fee for service) to managed care experience within the data pharmacy savings opportunities and other issues.'

And despite the $33 million extra in state funding, Kim Foltz, chief executive officer of UnitedHealthcare Community Plan of Iowa, said as recently as Nov. 19 that 'the program remains drastically underfunded.' She added that 'not only have medical claims exceeded premium rates, but deficits reported do not include administrative costs of managing the (Medicaid) program, which are above and beyond what was included in the rates.'

Data provided in the most recent quarterly report put together by DHS shows that all three MCOs paid out more in claims then they brought in payments from the state and federal government.

- Amerigroup paid at least $288 million in claims in the second quarter and was paid $238 million.

- AmeriHealth paid at least $500 million in claims in the second quarter and was paid $444 million.

- UnitedHealthcare paid at least $247 million in claims in the second quarter and was paid $209 million.

Margaret Murray, chief executive officer of the Washington, D.C.-based Association for Community Affiliated Plans, a trade association that represents safety net health plans, said claims paid can outpace money brought in during the span of one quarter. However, if that happens regularly over the course of a year, it could mean the rates are set too low, she said.

'Setting rates is really an art in addition to a science,' she said. 'It's not unusual for rates to be set incorrectly.'

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