Some Linn County health providers say Medicaid payment changes not sustainable long term

Linn County case management services shut down due to new reimbursement model

A change in a Medicaid waiver reimbursement system for the state’s special-needs population has left some health providers without enough funding to sustain their services.

Changes to the home- and community-based services waiver — which affects approximately 5,000 Iowans who have traumatic brain injuries, developmental or intellectual disabilities — moved the payment model from a fee-for-service model to a tiered rate system, effective Dec. 1, 2017.

While Iowa Department of Human Services officials say this change will create more stability to the reimbursement system, it leaves some such as Jean Sturtz, who care for those covered by the waiver, concerned for their loved ones’ future.

Bringing you multiple perspectives:

In reporting this story, we talked with individuals on all sides of the issue. Here are their views:

Officials behind the change: “Previously these services were reimbursed using about 5,000 individual rates, exceptions to policy, and old county contract rates not necessarily tied to the individuals’ severity of disability. This was not an effective way to appropriately reimburse providers to meet individuals’ needs. It was very complex and unjustifiable.”

Providers impacted by the change: Say they are seeing a significant decrease in their Medicaid payments for services. One Johnson County provider, the Village Community, is expecting a projected 53 percent cut.

Members impacted by the change: Are worried their services might be cut by providers in light of these payment reductions.

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Sturtz, of Urbana, took over guardianship of her younger brother, Jake Simmons, after the death of their mother. Simmons, who is 55 and has an intellectual disability, receives residential and day habilitation services from local providers who are considering cuts to their services.

Sturtz added that losing his long-term case manager leaves her concerned that her brother might struggle to find long-term support in the years to come.

“What if Jake was kicked out, where would he go?” she said.

Instead of receiving a fee for services performed, Iowa’s managed-care organizations and the state now reimburse providers based on a tiered scale administered on a per-member basis.

Tier one is the lesser amount of reimbursement, and tier six the greatest.

Department of Human Services spokesman Matt Highland said in an email to The Gazette there are approximately 423 providers who serve that population.


Medicaid enrollees covered the waiver were placed in one of these tiers based on his or her level of need.

Highland said the goal of the tiered rates was to stabilize payments to providers by reimbursing more for services to individuals with more-severe disabilities and less to individuals with relatively less-severe disabilities.

“Previously these services were reimbursed using about 5,000 individual rates, exceptions to policy and old county contract rates not necessarily tied to the individuals’ severity of disability,” Highland said in an email to The Gazette. “This was not an effective way to appropriately reimburse providers to meet individuals’ needs.

“It was very complex and unjustifiable.”

Client shifts to managed-care organization case management has been a factor in the closure of Linn County Mental Health and Developmental Disability Services, which shuttered its doors on Thursday.

No Longer Sustainable

The shift of clients from independent providers to in-house services provided by managed-care organizations also has taken a toll on some case-management organizations.

UnitedHealthcare of the River Valley, one of the state’s managed-care organizations, initially contracted with Linn County for case management while the insurer took on 213,000 members affected by the Dec. 1 exit of AmeriHealth Caritas. AmeriHealth had had the largest concentration of special-needs enrollees.

UnitedHealthcare ended its agreement with Linn County — which was signed on an interim basis, said UnitedHealthcare spokesman Jesse Harris — on Feb. 1.

“Those agreements concluded as UnitedHealthcare added approximately 300 new employees to continue to meet the health care needs of our members,” Harris said in an email to The Gazette.

Iowa’s other managed-care insurer, Amerigroup of Iowa, operates with case managers on staff.


Linn County’s case management department averaged about 927 unduplicated clients served per year for fiscal 2013 through 2016.

That number dipped to 787 in fiscal 2017, and in January of this year — as the county’s contract with UnitedHealthcare neared its close — clients had dropped to about 350 people.

Staffing at the county case management department also reduced, from 37 full-time employees in fiscal 2015 to 25 in fiscal 2017. Earlier this year, the department was down to 15 case managers and its coordinator, Maggie Beavers.

With client numbers shrinking and the county’s case-management department struggling to pay the bills, Linn County supervisors were tasked with voting on whether they should retain a few staffers — at a financial loss — to manage the approximately 65 clients still with the department.

In late January, the board voted 4-1, with Supervisor Jim Houser opposed, to not retain any case-management services for Linn County Mental Health and Developmental Disability Services’s clients. The decision took effect March 1.

“I learned a long time ago in a different career that there are three management phases in a business,” Supervisor John Harris said before the vote. “There’s the birther, the maintainer and the undertaker. And I’m saddened and terribly concerned that actions that have taken place on the state level have made us proceed to the third phase.”

With that vote, the remaining clients with Linn County case management were shifted to new providers with DHS or Johnson County Mental Health and Disability Service.

Much of the department’s former staff members have found new county positions. Services Coordinator Maggie Beavers will retire this month.

The Consistent Person

The role of a case manager is to be an advocate for an individual’s needs.

Beavers said some case managers have been with the county as long as 30 years. Beavers herself has been a case manager for about 40 years.

“For a lot of individuals, the case managers have been a consistent person in their life,” Beavers said. “There are a lot of people we work with, a lot of the families that it is very difficult to be looking at making changes to having somebody new.

“It’s not that consistent person anymore.”

It was Jacqueline Hagen, Jake Simmons’s case manager, whom Jean Sturtz said helped her younger brother’s move to a supported living home go smoothly.

Hagen “is very knowledgeable in what she does,” Sturtz said. “I think the social workers that are assigned these (clients), it’s invaluable the knowledge that they have. I’m not saying it’s not valuable with privatized case management, but going forward, if someone comes into the middle of something like that, it could have fallen apart.”

No More Tiers?

Because of the waiver change, other providers are looking at their own budgets with apprehension.

Under the previous fee-for-service system, the Cedar Rapids-based Linn County Options received $102.32 a day per individual, totaling up to approximately $3,360,500 a year.

Nowadays, Linn County Options Director Jim Fox said his agency is projected to receive $750,000 less in payments this year — a nearly 22 percent decline.

“Just in the first month, we were down about $50,000 compared to December of last year,” Fox said. “We don’t have less clients, we don’t have less staff to pay.”

Other area providers have seen a similar shift in payments due to the new system, including Systems Unlimited in Iowa City, which is expecting a $3 million payment decline a year, and the Village Community, the West Branch-based provider that is experiencing a 53 percent cut in it’s payments.


“It’s been challenging,” said Casey Westhoff, executive director of Systems Unlimited. “We’re trying to minimize any of the impact on those changes, and make adjustments where we can.”

Although the possibility of switching to tiered rates had been introduced a year ago, Fox said providers only had 18 days’ notice before the switch took place in the middle of the fiscal year.

Officials at local providers, including Fox, also have raised concerns to the state and managed-care organizations at the accuracy of the assessment that placed individuals in respective tiers.

“In tier three alone, I have one individual who has a competitive job and is doing very well in that job and another individual who’s in a wheelchair that needs total assistance to get through the day. They are in the same tier,” Fox said.

However, Westhoff said cost-cutting initiatives ultimately may come down to more extreme measures.

“We serve people who need 24/7 support. How do we change that?” Westhoff said. “It may force us to consider who we can’t serve.”

No white horses

In January, before the Board of Supervisors ultimately voted to end Linn County case management services, Supervisor Houser requested the county wait on the vote until the legislative session closed, with hopes that proposed legislation would address the issue.

“I would like to see us at least give the Legislature a chance to do their process and figure out if something can happen at the state legislature that can reverse some of these travesties that are happening with the clients that we’re serving. Not only through managed care, but also through fee-for-service,” Houser said.

However, the remaining four supervisors had much less faith in state lawmakers.

“I don’t expect the legislature to come riding in on a white horse and save our fee-for-service dilemma that we have,” Supervisor Harris said.


Duplicate bills — House File 2451 and Senate Study Bill 3185 — aim to relocate some programs and services — including services such as long-term living and community support services for people with disabilities 18 years old or older — under the purview of the Iowa Department on Aging.

That would include case-management services.

While the Senate study bill failed to advance through the funnel, its House counterpart remains alive.

The proposed bill does not specifically address whether a tiered system would be maintained, or if the Department on Aging would shift back to a fee-for-service model, if the change was made. But the bill would direct the state Commission on Aging — the department’s policy-making board — to “adopt a ‘method’ rather than a ‘formula’” for distribution of funds available under the federal Older Americans Act.

Linda Miller, director of the Iowa Department on Aging, said the bills appear focused on finding where long-term service clients should reside.

“Most people in the disability or aging arena, they’re not going to get well, they’re not going to get cured.

“It’s a different perspective than the insurance model, which is what Medicaid is, it’s a health insurance model,” Miller said. “You need to figure out what that person needs to maintain their lifestyle.”

However, Miller said simply passing the services — and simultaneously the clients — to a new department needs to be handled delicately.

“You would be instituting another new change in the system. Some people would feel it’s a change for the better, but others would feel it’s for the worse,” she said. “It would be again another transition to another contract, to another company, to a different case manager.”


“The whole goal is to have the right service for the right patient at the right time ... at the right cost,” Miller added. “That’s not an easy thing to do in the long-term care situation.

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