Late Wrangling, Lawsuit Puts Iowa Medicaid Managed Care in Limbo

For months, there have been plenty of protests about Governor Terry Branstad’s initiative to move 560,000 Medicaid beneficiaries into managed care, which his administration claims will save $51.3 million in the first 6 months of 2016. (Critics say there’s little documentation for this figure.)

Now, after yearlong process of town meetings, bids, and contracts, recent weeks have brought multiple snags. First, the state’s hospitals sued to block the transition, saying the change would illegally spend trust funds and break a promise to reward them for taking part in programs to make Medicaid more efficient.

Then, hundreds of healthcare providers took part in a conference call with CMS, which must ultimately sign off on the plan, and said they feared that reimbursement rates under the contracts with 4 managed care providers were based on outdated scheduled, not those announced in July. The difference, many said, would leave them shortchanged and, for some, unable to keep their doors open.

Branstad said Monday that the providers are using “scare tactics” to block his efforts, which he has said are designed to both rein in spending and bring value-based accountability to Medicaid in Iowa. He said that it’s true that new reimbursement plans that reward outcomes may mean that some will see lower profits, but he said this is where healthcare is going.

“I understand that some providers kind of like the present system because the more procedures you do, the more you get paid,” Branstad said Monday. “I guess it bothers me that we have some people, because they think they may not make as much profit off the new system based on health outcomes than they will under the old system based upon procedures, would want to oppose this new system.”

Branstad met personally with CMS officials in Washington, and Iowa will have a readiness review in early December. Besides the hospitals’ lawsuit, 3 vendors who were not awarded contracts have challenged the state’s selection process. Those awarded bids were Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa.