State signs Medicaid contracts with private managed care providers

System effective Jan. 1

The Iowa State Capitol building in Des Moines, photographed on Tuesday, June 10, 2014. (Liz Martin/The Gazette-KCRG)
The Iowa State Capitol building in Des Moines, photographed on Tuesday, June 10, 2014. (Liz Martin/The Gazette-KCRG)

DES MOINES — State Department of Human Services officials announced Friday they have signed contracts with four winning bidders that will implement Gov. Terry Branstad’s plan to shift Iowa’s $4.2 billion Medicaid program to a privately run managed care system effective Jan. 1.

State contracts for the new, Medical Modernization care coordination effort have been signed with managed care organizations Amerigroup Iowa, Inc.; AmeriHealth Caritas Iowa, Inc.; UnitedHealthcare Plan of the River Valley, Inc.; and WellCare of Iowa, Inc., according to DHS officials.

“Together with these four partners, we are modernizing the Medicaid program in a way that focuses on patients’ individuals needs and on providing a higher quality of care,” Iowa Medicaid Director Mikki Stier said in a news release announcing the new contracts slated to begin Jan. 1.

According to Stier, the new approach establishing a statewide managed care delivery system for the majority of Iowa’s nearly 600,000 Medicaid enrollees is aimed at improving quality and access, promoting outcomes and accountability and creating a more predictable and sustainable Medicaid budget.

“With the help of these experienced partners, Medicaid members will receive better coordinated care so that they get the services they need to become healthier. An overall healthier Medicaid population will drive down program costs,” Stier said in a statement. “This is good for Medicaid members and for Iowa’s taxpayers who support this critical program.”

Branstad administration officials say they expect the managed care approach will provide quality services while saving a projected $51.3 million in the first six months — an estimate that has been called into question by critics. The privatization is needed to create a more predictable and sustainable Medicaid budget for a program that has grown 73 percent since 2003 to more than $4.2 billion in the last fiscal year, including $1.39 billion in state general fund taxpayer dollars, administration officials say.

Under the new IA Health Link program, DHS officials said Friday, savings come from improving Medicaid members’ health so there are fewer emergency room visits, hospitalizations and surgeries, and from eliminating unnecessary or duplicative services. Also, the managed care organizations will be able to offer preventive services above and beyond what the traditional Medicaid program has been able to offer, DHS officials said.


Three private companies — Aetna Better Health, Iowa Total Care and Meridian Health Care Plan of Iowa — have challenged the bidding process that led to the selection of the four managed care organizations that were awarded contracts on Friday. One of the companies unsuccessfully sought a district court injunction to bar the contract-signings from proceeding until questions about the bidding process are resolved.

The losing bidders have appealed their requests for reconsiderations that were turned down by the head of the state’s Department of Human Services last month, contending the DHS process was “fundamentally flawed” on a variety of grounds ranging from evaluator bias to scoring methodology deficiencies, process flaws and potential conflict of interests. In appeals filed with the agency.

Attorneys representing the three challengers want the department ordered to re-evaluate the bids using an independent, disinterested arbiter.

DHS officials defend their process, noting they have held nearly 90 public and stakeholder meetings since announcing the modernization initiative and have scheduled additional meetings to explain the transition that will take place by the Jan. 1 implementation date.

“We want Iowans to understand this care coordination effort and Medicaid members to know that they have a choice in which MCO manages their care,” said Stier. “This is how modern health plans work and how nearly 40 other states are managing all or part of their Medicaid programs. Iowa is moving beyond the status quo to a system that allows for more choice and accountability.”

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