Health

Branstad forges ahead with Jan. 1 Medicaid privatization in Iowa

Judge's ruling on one insurer shouldn't slow process, governor says

Gov. Terry Branstad answers questions during a town hall meeting on Medicaid at the Historic Park Inn Hotel in Mason City. (Chris Zoeller/Mason City Globe Gazette)
Gov. Terry Branstad answers questions during a town hall meeting on Medicaid at the Historic Park Inn Hotel in Mason City. (Chris Zoeller/Mason City Globe Gazette)

DES MOINES — Gov. Terry Branstad said Monday that an adverse ruling regarding one of the companies chosen to privately manage Iowa’s projected $5 billion Medicaid program will not derail the state’s plan to implement the changeover set for Jan. 1.

“I have every confidence that we can do this,” Branstad told reporters at his weekly news conference.

Last week an administrative law judge recommended that WellCare of Iowa — one of four out-of-state organizations chosen by state officials to receive lucrative contracts for privately managing Iowa’s Medicaid program — should be bounced from the mix. But Judge Christie Scase said the other three companies could proceed.

Scase made her recommendation after hearing testimony in October about meddling by the insurance company to secure the work.

“In the end, although the improper communication by WellCare representatives present a sufficient independent basis for disqualification of the WellCare proposal, this misconduct does not sufficiently taint the entire process to necessitate reversal of the award of contracts to the remaining successful bidders,” Scase wrote.

Branstad appointed Janet Phipps, director of the state Department of Administrative Services, to review the administrative law judge’s finding and render a decision. But he did not believe the outcome would slow the transition of Iowa’s Medicaid program — which enrolls about 560,000 poor and disabled people — to a privately managed system.

On Monday, Phipps said she didn’t have a timeline for making her decision, noting that she is in the process of reviewing Scase’s findings. She also said any interested party in the case would have 10 calendar days in which to appeal or challenge the outcome of the administrative hearing.

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Branstad noted that officials with the state Department of Human Services initially planned to award contracts to two to four private bidders — so that target still would be met if the number of managed care organizations contracting with the state is reduced to three.

“I think it’s really important to improve the health outcomes for Iowans that are under the Medicaid program, to have better coordination so that we avoid duplication and end up with people going back to the hospital or the emergency rooms unnecessarily,” Branstad added.

Three rival companies that were not chosen for the work — said to be the largest procurement in state history — challenged the state decision to pass over their bids. Although the rivals took on winning bidders Amerigroup of Iowa, AmeriHealth Caritas and UnitedHealthcare Plan of the River Valley, they directed their biggest complaints against WellCare.

Among the company’s representatives during the bidding process were a former Iowa House speaker and a former state representative from Cedar Rapids, who both had contact with the now-chief-of-staff for the governor’s office during what was supposed to be a blackout period in the bidding process.

WellCare also did not initially disclose past legal troubles. The company has faced millions of dollars in fines in other states, and last year three former WellCare executives went to prison for fraud.

The matter still could be taken to civil court. Moreover, federal officials must give approval for the plan to advance.

DHS officials have projected switching to the governor’s Medicaid modernization approach could save $51 million within the first six months of implementation.

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