Iowa: Managed Care and Privatization of Disability Services Create a Crisis

https://www.desmoinesregister.com/videos/news/2018/01/17/disabled-iowans-struggle-managed-care/109548320/

What's the matter with Iowa? Managed care and privatization of Medicaid for the State's poor and disabled have created a crisis in the delivery of Medicaid services. The Des Moines Register features over 60 articles from 2015 to the present reporting on the rocky road to the takeover of Medicaid by private health insurance companies.

Michigan should take note. We have a modified managed care system that so far preserves services provided by public Community Mental Health agencies and (at least theoretically) ensures that all medically necessary services will be provided to people with developmental and other disabilities. The move to privatize all services under private Medicaid Health Plans (MHP) is underway, however, with the implementation of three pilot projects and one demonstration program in the state.

Here is a sampling of articles from the Des Moines Register:

The Register’s Editorial: Medicaid plan is gift for private firms, 3/22/15

The Des Moines Register foresaw problems with the idea of privatized managed care for Iowa’s poor and disabled citizens. The editorial board encouraged the public to be skeptical, especially when the state throw’s out numbers, out of context, to show how expensive Medicaid is. It turns out that in 2015, Iowa was doing pretty well in serving people with disabilities and other low income citizens and keeping costs down in comparison to other states:

“In fiscal year 2013, a Medicaid recipient in this state cost an average of $5,491 — less than the per-person cost in 29 other states and much less than people insured by private coverage. For an adult who is not a senior or disabled, Iowa spent an average of $2,000 on health care, less than that spent in 47 other states, according to research from the Kaiser Family Foundation. Health insurance for a state lawmaker costs Iowa taxpayers about $9,000 per year.”

...“Administrative costs are low because the program is largely managed by the government, which is not beholden to stockholders or obligated to pay huge CEO salaries. The cost of operating the program is currently 4 to 8 percent, according to the Iowa Department of Human Services, which oversees Medicaid. When privatized, the cost could grow to as much as 15 percent. Those are dollars not spent on actual health care.”

...“In its comments to state officials, the Iowa Hospital Association noted that managed care companies reduce costs by denying coverage for services, including emergency room visits. The association is 'deeply concerned' that the private model could reduce access to care and reimbursement rates for providers.”

Branstad touts Medicaid contracts, but few hospitals signed

by Tony Leys, tleys@dmreg.com, 11/19/15

Signs of trouble. The takeover of Medicaid by private health plans was scheduled to go into effect January 1st, 2016 [the starting date was later moved to April 1, 2016], but by November 2015, most hospitals and physicians had not signed contracts to participate in the new system.

“Gov. Terry Branstad, who is pushing to shift management of the state’s Medicaid program to private companies on Jan. 1, said Thursday that the firms have signed more than 12,000 contracts with pharmacies, doctors and other health care providers.

“But most Iowa hospitals and physicians have not signed contracts to participate in the new system, according to the Department of Human Services. The issue is important, because the managed-care companies are supposed to show they have broad networks of health care providers willing to care for the new plans' members."

…"None of the four managed-care companies reported signing more than 17 of the 118 Iowa hospitals now participating in Medicaid. One of the companies, WellCare of Iowa, said it hadn’t signed up any hospitals. Another, AmeriHealth, said it had signed up just two.”

…”Branstad contends the shift to managed-care companies will save millions of dollars for the state and federal governments while offering flexibility and coordinated care to Medicaid recipients.

“Critics fear the change to for-profit management will lead to service cuts. They say Iowa’s 560,000 Medicaid recipients are being put in the impossible position of choosing a managed-care plan next month without knowing whether their doctors, hospitals and other health care providers will be participating in any of the networks.”

Iowa Medicaid payment shortages are 'catastrophic,' private managers tell state

by Tony Leys, tleys@dmreg.com 12/21/16

By December 2016:

“The for-profit companies running Iowa’s Medicaid program have been complaining to state administrators that the controversial project is 'drastically underfunded' and that the situation has been a 'catastrophic experience,' newly released documents show.

"One managed care executive wrote that Iowa’s recent offer to give the companies an extra $127.7 million in state and federal money this budget year 'is not acceptable.' He added that without major changes, the privately run Medicaid program could be unsustainable.”

…”Gov. Terry Branstad last year ordered the shift to private Medicaid management, which took effect April 1. Branstad, a Republican, predicted the private companies could allow the state to save tens of millions of dollars by helping the program’s 600,000 poor or disabled participants stay healthy. Critics are skeptical of the savings estimates, and they say the main effect of the switch has been to tangle Medicaid recipients and care providers in red tape.”

….”During a Statehouse hearing last week, a Democratic legislator asked executives of the three companies if they planned to ask for big raises in their payments for next fiscal year. They declined to answer.

“We really just don’t discuss those things in public settings,” Cheryl Harding, who is Iowa president for AmeriHealth Caritas, told Sen. Joe Bolkcom of Iowa City.”

Nevertheless, the health care plans complained that the plans were vastly underfunded and unsustainable. 

State should hold managed care accountable 

by Michael Bugeja, Iowa View contributor, 7/29/17 

This is the editorial viewpoint from a conservative Republican: The writer refers to a teenage “victim” of Medicaid who has a severe mental illness. Medicaid is pressuring treatment facilities to shorten the length of treatment regardless of the recommendation of the professionals involved. 

“As the former director of the Greenlee School at Iowa State University, I know Gov. Terry Branstad. I usually sat next to him at the Iowa Newspaper Association convention head table. I have the utmost respect for Gov. Branstad. His service to the state of Iowa is exemplary. But he made one colossal misjudgment in privatizing services for the mentally ill and others dependent on Medicaid services and managed care. 

"As a fiscal conservative Republican, I understand why he did it and why he believed that privatization saves the state millions of dollars. It may appear so on the surface, but savings in one area often results in expenses in others, and Iowa communities are paying the price.” 

AmeriHealth's exit should curtail disabled residents' suit against Iowa, state lawyers say

by Tony Leys, tleys@dmreg.com 11/6/17

A class action lawsuit was filed in June 2017 by Disability Rights Iowa on behalf of 6 disabled Iowans, “who argue that the state’s shift to private management of Medicaid led to illegal cuts to their in-home care services. The plaintiffs say without those services, they could be forced to move into nursing homes, violating their constitutional rights.” The class action is on behalf of about 15,000 Iowans with disabilities.

Meanwhile, Amerihealth Caritas, one of the Managed Care Companies announced that it is dropping out of the state’s Medicaid program, “because of a contract dispute. The state lawyers noted in a court filing last week that AmeriHealth oversees Medicaid benefits for all six initial plaintiffs in the Disability Rights Iowa lawsuit. None have had their benefits overseen by the remaining two managed-care companies, UnitedHealthcare and Amerigroup.”


By its very design, managed-care Medicaid discriminates against severely disabled Iowans

by Bill Dodds, Iowa View contributor, 1/26/18

"By its very design, managed-care Medicaid discriminates against disabled Iowans who require costly, long-term treatments simply to live in their communities. It’s the only way today’s managed-care organizations (MCOs) can deliver on their promise to slow the growth of Medicaid spending and generate profit for shareholders.

"Iowa, like many states, has sought to gain control over the increasing costs of its Medicaid program by doing away with a state-run system in favor of managed care. This has resulted in state contracts with multiple managed-care organizations in an attempt to incent these companies to compete in Iowa for Medicaid members by offering services that best meet their needs while simultaneously reducing costs.

"This might sound good in concept but is difficult to achieve in reality, especially for recipients who have severe mental illness and disabilities. At Optimae, we have seen this play out daily in the lives of the more than 5,300 Iowans we serve."

…"It is virtually impossible for an MCO [Managed Care Organization] to determine which of the millions of units of services provided each year is truly 'medically necessary,' given that more than 600,000 Iowans receive services under Medicaid. To compensate, the companies focus on managing the most expensive services, especially those that are long-term. This includes longer term inpatient and outpatient services, including home health and home- and community-based services for individuals with disabilities, and nursing and residential care facilities."

…”Additionally, the MCOs in Iowa and most other states are publicly traded, for-profit companies. Their management is under pressure to constantly produce better financial results for shareholders, meaning taxpayer dollars that previously paid for Medicaid services are now set aside for profits. This puts the most expensive services at even greater risk for reductions by the MCOs regardless of the outcome."

Iowa House passes Medicaid cleanup bill in effort to address managed care woes 

by Brianne Pfannenstiel, bpfannenst@dmreg.com, 3/8/18

“The Iowa House of Representatives approved legislation Thursday that lawmakers said would begin to fix some of the problems that have plagued the state's Medicaid system. "

...“The Iowa House of Representatives approved legislation Thursday that lawmakers said would begin to fix some of the problems that have plagued the state's Medicaid system. “