Medicaid privatization in Iowa hitting some bumps

Greenbeard · Dec 29, 2016

Back in April Iowa moved forward with privatizing its Medicaid program (something the vast majority of states have done).

After months of protests, multiple delays from the federal government and a legal battle or two, Medicaid managed care is finally here.

On Friday, the state handed over management of its $5 billion Medicaid program to three out-of-state private insurers — AmeriHealth Caritas Iowa, Amerigroup Iowa and UnitedHealthcare of the River Valley. . .

But the move has been a controversial one — the Iowa Hospital Association asked a judge to delay the move; about 100 Medicaid recipients rallied at the State Capitol; and Iowa Senate Democrats have come out in fierce opposition.

The transition has been bumpy to say the least. As this sharp Des Moines Register op-ed from last week demonstrates: Don't pay managed care firms a penny more

Iowa’s Medicaid program was operated by the state for decades. With modest administrative costs and among the lowest per-patient spending in the country, it worked well.

Then along came Gov. Terry Branstad and his unpopular idea of handing over the government health insurance program to three for-profit insurers. While providing no reliable evidence, he insisted privatization would save the state money and improve the health of more than 600,000 Iowans who rely on Medicaid. On April 1, three managed-care companies took over the program’s administration.

These insurers signed contracts with the state, agreeing to cover the health expenses of Iowans in exchange for fixed monthly payment rates based on actuarial projections reviewed by both parties. The companies, including giant UnitedHealthcare, didn’t just fall off the health insurance turnip truck. They knew exactly what they were doing.

And within months, they were begging for more public money. In October, Iowans unexpectedly discovered the state agreed the companies could milk an additional $127 million out of the state and federal government.

One insurance executive wrote that without changes — such as paying the companies more or allowing them to cut benefits and reimbursement rates — privatized Medicaid may not be sustainable.

Great. The program should not be sustained.

It has been a disaster. Since privatization began, numerous Iowans have complained about everything from catheters to surgeries not being covered. Health providers have not been reimbursed for services, forcing them to borrow money or close their doors.

The state should not pay the private insurers a single penny more than what was agreed upon in the contracts. If the companies don’t like it, they can jump ship, bail out of the contracts, and Iowa can return to the state-run Medicaid that was a trusted, reliable payer of health services.

Because what MCOs are doing in Iowa looks eerily like what they’ve done in other states: Secure a state contract with agreed-upon payment rates and come back later to demand more and more taxpayer dollars. They attempt to essentially hold the state hostage.

Not entirely dissimilar from what happened to Kentucky when they did the same thing five years ago; they had to start over last year.

Appearing to concede to many of the concerns of health care providers and patient advocates over the past few years, today the Kentucky Cabinet for Health and Family Services (CHFS) announced they would rebid all of their contracts for Medicaid Managed Care Organizations (MCOs) to improve oversight and administrative processes.

Facing a $1.3 billion shortfall in 2011, Kentucky changed its Medicaid system from a fee-for-service model to managed care, in which private insurers receive a set amount of money from the state per patient to be used to directly pay health care providers. The transition to the new system was rocky from its inception, as it was inundated with complaints from patients who were denied treatment or had difficulty finding providers, as well from doctors and hospitals who found long payment delays, if not outright denials, from MCOs.

CHFS issued a new RFP today for MCOs to manage the health care services of 1.1 million Kentuckians who are on traditional or expanded Medicaid, and the new contracts will take effect on July 1. The contracts with the current MCOs — Anthem, Aetna (Coventry Cares), Humana (CareSource), Passport and Wellcare — will expire at that date.

cpwill · Dec 29, 2016

1. This doesn't look like privatization, it looks like changing management.
2. Allow me a second to laugh hysterically at sudden claim from the left that the government setting itself up to pony up more money to private insurance companies, should a public program become unsustainable for them, is bad. I'm sure Marco Rubio will be very interested to hear about this new revelation

.

Greenbeard · Dec 29, 2016

cpwill said:
1. This doesn't look like privatization, it looks like changing management.

This is risk-based Medicaid managed care. The state no longer insures Medicaid beneficiaries, it pays private insurers a monthly premium to do it for them. Hence the financial dispute that's happening now. If putting these people in risk-bearing private insurance plans isn't privatization, I suppose there's no such thing as privatization.

2. Allow me a second to laugh hysterically at sudden claim from the left that the government setting itself up to pony up more money to private insurance companies, should a public program become unsustainable for them, is bad. I'm sure Marco Rubio will be very interested to hear about this new revelation .

I'm pretty sure the left hates giving private insurance companies public money in any circumstance. They're pretty vocal about it.

cpwill · Dec 29, 2016

Greenbeard said:
This is risk-based Medicaid managed care. The state no longer insures Medicaid beneficiaries, it pays private insurers a monthly premium to do it for them.

So, yeah. No market. Just handing over management of a public program.

If you would like to see what moving in the direction of "privatization" looks like, recommend you check out what Indiana has done.

I'm pretty sure the left hates giving private insurance companies public money in any circumstance. They're pretty vocal about it.

:lamo

You A Funny Man. :mrgreen:

Why, Liberals would never argue that injecting large sums of public cash into insurance companies is good policy.

Except, you know, when it's things like:

Obamacare Insurers Received More than $15 Billion in Taxpayer ‘Bailouts’

...Insurance Companies getting billions of dollars from the government, because liberals are all about tossing moral hazard out the window.

Captain Obvious · Dec 29, 2016

Managed Medicaid programs means the administration of these programs is done by private TPA's.

It's not privatization except to the extent of the management of the program. Instead of some bureaucrat administrating the program a private group does.

The upside is that claims are monitored more effectively in theory and claims aren't over-paid, under the current regs of Medicaid programs.

A lot of states are moving in this direction since starting now federal funding for expanded Medicaid programs starts to phase out and states are scrambling to balance budgets now.

It's the price for selling your state soul to the ACA.

Greenbeard · Dec 29, 2016

cpwill said:
If you would like to see what moving in the direction of "privatization" looks like, recommend you check out what Indiana has done.

Indiana did the exact same thing. The Healthy Indiana Plan is just a risk-bearing Medicaid managed care program.

The HIP program is operated within the risk-based managed care (RBMC) delivery system. In this delivery system, contracted managed care entities (MCEs) are paid a capitated monthly premium for each Indiana Health Coverage Programs (IHCP) member enrolled with the MCEs. The capitated premium covers the cost of services under the program incurred by IHCP members enrolled with the MCE. The MCE assumes financial risk for services rendered to its members.

MCEs are lawful entities authorized to operate a prepaid healthcare delivery plan. These entities arrange, administer, and pay for the delivery of healthcare services to members.

The following four MCEs are contracted with the state of Indiana to serve the HIP population:

Anthem
CareSource
Managed Health Services (MHS)
MDwise

Greenbeard · Dec 29, 2016

Captain Obvious said:
Managed Medicaid programs means the administration of these programs is done by private TPA's.

It's not privatization except to the extent of the management of the program. Instead of some bureaucrat administrating the program a private group does.

We're talking about comprehensive risk-based managed care. They're not acting as TPAs, they're acting as insurers. They don't get a flat fee to administer a program for which someone else bears risk, they bear the risk. That's why it's so contentious.

Nearly 50% of Medicaid beneficiaries nationwide are in such arrangements.

Captain Obvious · Dec 29, 2016

Greenbeard said:
We're talking about comprehensive risk-based managed care. They're not acting as TPAs, they're acting as insurers. They don't get a flat fee to administer a program for which someone else bears risk, they bear the risk. That's why it's so contentious.

Nearly 50% of Medicaid beneficiaries nationwide are in such arrangements.

ok - and agreed. In these arrangements the state pays a fixed amount for members and the private insurer bears the risk of over-utilization.

There is still a cost-based reimbursement aspect to these plans though but the state enjoys a cap of sorts on costs, which is why these plans are becoming more attractive at this juncture. I would expect that 50% figure to climb over the next few years.

The crux of the issue though, IMO is that the basis of these plans is to limit utilization - or reduce payments to providers. A combination most likely.

Are these sustainable plans? Limiting coverage or gouging the provider?

Greenbeard · Dec 30, 2016

Captain Obvious said:
Are these sustainable plans? Limiting coverage or gouging the provider?

That's the question Iowa needs to answer for itself. To date their privatization experiment has been a rocky ride for the state's care providers (and its beneficiaries as well); the question is whether they can turn it around.

Since the transition began, The Gazette has reported that providers across the state — from rehabilitation therapists and in-home care providers to Meals on Wheels and nursing homes — have seen slow or inaccurate payments that have forced them to dip into savings or extend their lines of credit.

According the survey, 90 percent of respondents have seen their administrative costs increase and nearly two-thirds have received lower reimbursement rates. Nearly eight in 10 providers who completed the survey said they are not getting paid on time and 28 percent of providers have been forced to take out loans to cover their expenses while waiting for payment.

“These survey results confirm what Iowans across the state have been saying to us for months: The Medicaid mess is a major burden for Iowa health care providers,” said Rep. Lisa Heddens, D-Ames, ranking member of the House Human Services Budget Committee, in a news release.

cpwill · Jan 1, 2017

Greenbeard said:
Indiana did the exact same thing. The Healthy Indiana Plan is just a risk-bearing Medicaid managed care program.

:lol: Indiana did quite a bit more than that - they started the shift from a single-payer model to one in which medicaid recipients were making spending decisions with money that would otherwise become theirs. They introduced actual market pressure.

As you know.

Greenbeard · Jan 1, 2017

cpwill said:
:lol: Indiana did quite a bit more than that - they started the shift from a single-payer model to one in which medicaid recipients were making spending decisions with money that would otherwise become theirs. They introduced actual market pressure. As you know.

The "shift from single-payer" is exactly what I'm talking about--the conversion of Medicaid for key populations in most states from a single public insurance payer into a private multi-payer design (privatization). Which is what Iowa just did.

The fact that Indiana is one of a handful of states that funds savings accounts for Medicaid beneficiaries is not what makes Indiana's program privatized. (The savings accounts are just intended to incentivize preventive care utilization and discourage utilization of other services.) Its program is privatized because the beneficiaries are insured by private payers.

Greenbeard · Mar 30, 2017

Medicaid privatization in Iowa continues to go not great.

DES MOINES, Iowa — Iowa’s decision to help Medicaid managed-care companies shoulder deep financial losses would only cost the state government about $10 million, but it could cost the federal government up to $225 million, state officials say.

The state’s recent agreements to help the three private management companies mop up their red ink were disclosed Friday in response to an open-records request from The Des Moines Register. The "risk-corridor" agreements would help the companies make up for an estimated $450 million in losses since they began running Iowa’s Medicaid program, which is jointly financed by the federal and state governments.

A related cost increase could come soon, as a result of negotiations between the three companies and state officials over the base rates that the companies are paid for covering Iowa Medicaid recipients. The companies are expected to seek large increases. If they succeed, the increased Medicaid spending could further pinch the state budget.

Medicaid privatization in Iowa hitting some bumps

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