UnitedHealthcare exiting Iowa's Medicaid program

Some 427,000 Iowans affected by the insurer's departure

#x201c;Ensuring that our members receive the best care, and that our program is sustainable for the long-term, is our hi
“Ensuring that our members receive the best care, and that our program is sustainable for the long-term, is our highest priority,” Department of Human Services Director Jerry Foxhoven says. (Rod Boshart/The Gazette)

UnitedHealthcare of the River Valley, the insurer that handles coverage for hundreds of thousands of Iowans on Medicaid, is withdrawing from the state’s privately managed program.

In a sudden announcement Friday, the managed-care organization — one of the two insurance companies that handles coverage for Iowa’s poor and disabled Medicaid enrollees — will exit Iowa’s program “in the next several months,” according to the Iowa Department of Human Services.

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Contract negotiations between UnitedHealthcare and the state stalled this week after insurers pushed back on financial penalties imposed on the managed-care organizations earlier this year, state officials said.

“That’s the issue here,” said Human Services Director Jerry Foxhoven in a Friday interview with The Gazette. “UnitedHealthcare did not want to be held to the performance standards the contract holds them to, and we’re just not willing to budge off that.”

The state had imposed certain performance measures in contracts with the Medicaid insurers earlier this year, such as paying health care providers on time and reducing use of emergency room services among members. If the organizations failed to meet the standards, the state would withhold payment from them.

“They were insisting, among other things, that in order to even enter in negotiations for the next year’s contracts that we would have to waive holding them to those performance standards and pay them all the money they would have if they met all the performance standards in this year’s contract,” Foxhoven said.

“We were very clear they signed a contract that required those performance standards to be met, they hadn’t met them, they’re not entitled to the money and we’re not willing to waive that,” he said.


UnitedHealthcare officials pushed back on the state’s reasoning, saying the departure was due to myriad problems.

“We manage Medicaid programs in more than 25 states which include performance-based metrics that we view as vital to successful programs — and Iowa is no different,” said Bror Hultgren, the former interim chief executive of the UnitedHealthcare Community Plan of Iowa. “Rather, it is the persistent funding and program design challenges that have made it impossible for us to continue our program participation.”

Insurance companies managing the state’s $5 billion program maintain they have faced financial troubles since joining IA Health Link. The companies reportedly lost $450 million in the first year, a trend that continued into the second year of operation in 2017.

UnitedHealthcare was paid $2 billion last fiscal year from the state and federal governments as a managed care organization.

Details of the company’s departure, including a timeline of the transition for UnitedHealthcare members to other managed-care organizations, still are unclear.

However, state officials and UnitedHealthcare both said the managed-care organization likely will stay in the program and continue providing coverage for Iowans until July 1.

At that time, a new insurer — Iowa Total Care, owned by St. Louis-based Centene — will join the state’s program.

Amerigroup Iowa continues as a managed-care organization in the Iowa Medicaid program.

Current enrollees will be sent notices on choosing a new insurer in the near future, Human Services said.


More than two-thirds of the 623,000 Iowans on Medicaid are members of Edina, Minn.-based UnitedHealthcare. The managed-care organization joined the IA Health Link program when the state first switched to a privatized program from a state-run system in April 2016, joining two other managed care organizations.

The insurer now handles coverage for nearly 427,000 Iowans, according to the latest Human Services data.

“We are honored to have served Iowans in the IA Health Link plan for the past three years, but persistent funding and program design challenges make it impossible for us to provide the quality care and service we believe people deserve,” UnitedHealthcare said in a statement Friday. “Therefore, we will no longer be able to participate in the program and will work to ensure a smooth and seamless transition for all of our IA Health Link members. We remain committed to serving our nation’s most vulnerable people and communities through the many sustainable, performance-based state Medicaid programs in which we currently participate.”

Foxhoven said it was clear by Friday morning that UnitedHealthcare would exit the program.

“Today I ended negotiations between the state of Iowa and UnitedHealthcare because of terms that I believed to be unreasonable and unsustainable,” Gov. Kim Reynolds said in statement Friday evening.

“ ... We have continued to work in good faith, along with the Legislature to make improvements to the managed care system, including a substantial increase to funding this past year. Unfortunately, UnitedHealthcare continued to make additional demands that I found to be unacceptable, including a provision that would remove pay for performance measures that would hold them accountable.”

This is not the first time an insurer opted to leave the state’s Medicaid program. In December 2017, the state moved nearly 215,000 Medicaid enrollees served by AmeriHealth Caritas Iowa to UnitedHealthcare after AmeriHealth said it would leave.

Iowa House Speaker Linda Upmeyer said in a statement she was “incredibly disappointed” by the move, which “which may cause confusion for the thousands of Iowans that they serve.”

“It is unfortunate that UnitedHealthcare wanted more money for less oversight and accountability, which is unacceptable,” she said.


Iowa Democrats — who long have criticized the state’s privatized Medicaid program — also expressed their disappointment.

Sen. Liz Mathis, D-Hiawatha, said she did not expect UnitedHealthcare “to just make this decision and leave.”

“This affects so many people in so many different ways,” she said in an interview. “It causes us to try to patch this up and patch it up quickly.

“All of this will cause so much confusion for those who are on Medicaid and those who provide care for them. It’s just going to be upside down for months because you have a number of members who have had maybe four or five different changes to their managed care organization,” she said.

Rep. Zach Wahls, D-Coralville, tweeted: “This news confirms what hundreds of thousands of Iowans already know: Medicaid privatization has been a disaster from day one. It’s time to end this failed experiment and put Medicaid back under state control.”

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