CEDAR RAPIDS — The head of Iowa’s Department of Human Services said Thursday there has been progress in delivering services to Medicaid members through a privately managed system and he believes a soon-to-be-released audit will show the program in place since April 2016 has saved the state money.
“I’m confident it’s going to show there was a savings. I think the question is not does it save money, the question is how much,” Human Services Director Jerry Foxhoven told a discussion group at the Iowa Ideas Conference that focused on challenges facing Iowa’s privatized Medicaid program.
The assessment was met with skepticism by the other panel member — Kirk Norris, chief executive of the Iowa Hospital Association. He said his 118 member hospitals still are having issues getting reimbursed by the two managed care organizations that now contract with the state. A third company, a subsidiary of Centene, will begin administering coverage in July 2019.
Norris said association members tell him “they’re still dealing with first-day issues that they were dealing with two years ago” and they’re spending $3 instead of the $1 it previously cost them to process claims.
He said research shows the privatized Medicaid model does not work in mid-size states like Iowa.
“You don’t save money. In fact, it costs you more,” said Norris. “Our argument is what we’re doing now is not sustainable. If you look at the trend line relative to the expenditures, relative to these three companies, it’s off the charts. We’re not getting any value for the money we’re spending.”
Foxhoven countered that the focus is making sure that the 742,000 Medicaid members in Iowa get the quality services they need, not whether the hospitals are getting “more in their pockets.”
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Foxhoven appeared at the panel after Iowa Medicaid Director Michael Randol withdrew Wednesday as the department’s representative at the conference.
While acknowledging “bumps” in making the transition to managed care, Foxhoven said, “I would like to hope that most people think it’s better today than it was a year and a half ago.
“We still have a ways to go, but we think we have made progress and improvement,” he added. “I think most people would say that it’s getting better, that we’re moving in the right direction.”
Norris did not see it that way, however. Referencing Foxhoven’s “bumps” comment, he told conference participants “we would say that a more correct analogy would be, when you think of bumps in the road, you think of a vehicle hitting a bump and moving on or having a fender bender. From our perspective, the car has careened off the road,” he said.
The privatized Medicaid program, which offers care for poor and disabled Iowans, has received vocal criticism from members who assert their services were unfairly cut and from providers that say their insurance claims are not paid in a timely manner.
Last month, Human Services officials announced the state had agreed to a $102.9 million increase in Medicaid funding to two private insurance companies providing Medicaid coverage in fiscal year 2019. That is a 7.5 percent increase from last year.
Amerigroup of Iowa and UnitedHealthcare Plan of the River Valley have signed contracts to continue as managed-care organizations within the $5 billion Medicaid program. The contract states the insurance companies will receive a 8.4 percent overall increase in payments — which includes state and federal funding — from the past fiscal year, totaling up to $344.2 million. The state previously had agreed to a 3.3 percent increase for state fiscal year 2018.
He said the rates are lower than the average 8.5 percent increase Iowans are being charged for private health insurance premiums.
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State Sen. Pam Jochum, D-Dubuque, has asked State Auditor Mary Mosiman, a Republican, to conduct an audit of the privately managed Medicaid system to determine if the approach is saving the state money or costing taxpayers more. Foxhoven said he expected to see the adult results “any day now.”
Sen. Liz Mathis, D-Hiawatha, who attended Thursday’s discussion, said she was struck by the stark difference in opinion between Foxhoven and Norris. She said she was “disheartened” that lawmakers had to seek out an audit on the program because the department was not able to adequately answer those questions.