DES MOINES — Gov. Kim Reynolds said Tuesday it should not have been a surprise when the state notified a private company that manages Iowa’s Medicaid program that nearly $44 million in funding is being withheld until the managed-care organization complies with contract obligations.
“I think I made it very clear last year when we were going through the process that if providers aren’t paid on time, that our managed-care providers are going to be held accountable,” Reynolds told an Associated Press legislative forum at the Statehouse.
The governor was asked about a situation last week in which the Iowa Department of Human Services notified Iowa Total Care — which administers health coverage to thousands of Iowans under the state’s managed-care program — that the state would withhold nearly $44 million in funding due to issues related to incorrect payments to medical providers and the insurance company’s record keeping.
Reynolds said Iowa Total Care was put on notice by DHS’ Iowa Medicaid Enterprise it was not in compliance with contract terms, was provided recommendations to address the situation and was given a timeline to correct the situation.
“They didn’t get it done,” the governor said, “so if providers aren’t paid in a timely manner, they’re going to be held accountable just like we implemented in the contract negotiations. It shouldn’t be a surprise. It was part of the contract negotiations.
“We’re all partners in delivering services to Iowans and they need to hold up their part of the bargain.”
Iowa Total Care, a subsidiary of St. Louis-based Centene brought on this past July to manage Iowa’s Medicaid program, has a total capitation payment — set monthly for the services they provide — of more than $169 million. The $44 million penalty represents about 26 percent of Iowa Total Care’s monthly payment from DHS.
DHS officials announced the penalty Friday, stating the department was “exercising its authority” to hold the managed-care organization accountable — marking the first time the state agency has issued a withhold on a capitation payment to any managed-care organization. State officials said the withheld amount would be released once identified issues have been resolved.
“It’s not where it needs to be,” Reynolds told reporters Tuesday.
“They signed a contract. They are going to be held accountable. That’s what contracts are for,” she added.
Nearly 650,000 Iowans are enrolled in Iowa’s Medicaid program, which is managed by two private insurance companies — Iowa Total Care and Amerigroup Iowa.
According to state data, more than 239,000 adult Iowans were enrolled through Iowa Total Care in December 2019. That does not include the nearly 20,000 Hawk-i recipients enrolled with the managed-care organization.
The $44 million penalty was calculated by Iowa Medicaid Enterprises based on the number of unpaid claims directly related to outstanding issues over a five month period.
According to a letter sent to Iowa Total Care, there were about 106,000 unpaid claims directly related to the outstanding issues. Release of capitation payment — which will be determined at the end of February — will be based on whether the company resolves at least 75 percent of the unpaid claims, according to DHS officials.
Reynolds said she planned to speak with legislators once they return to the Statehouse for their 2020 session next week about proposed changes to “put some more teeth” into state oversight provisions and address nonpayment of funds. But she declined to elaborate on what ideas would be discussed.
Leaders from both political parties in the House and Senate said they would be open to such discussions.
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