Iowa Medicaid privatization plan halted for 2 months

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DES MOINES, Iowa (AP) — Federal officials imposed a two-month delay Thursday on a Medicaid privatization program Iowa planned to enact next month, explaining the state needed more time to fix several problems and boost the number of hospitals, clinics and doctors signing up.

In a letter to Iowa Medicaid Director Mikki Stier, the federal Centers for Medicare and Medicaid Services ordered a halt until March 1 on plans to hand over management of the $4.2 billion health care program for 560,000 poor and disabled residents to private insurance companies.

Iowa Gov. Terry Branstad had planned to make the switch beginning Jan. 1 and resisted requests from doctors, hospitals and others to delay the change.

The CMS said in the letter that approval is expected for the state to move forward but "we do not believe that Iowa is ready to make this transition on January 1."

The letter signed by CMS Director Vikki Wachino said Iowa has not met some key readiness requirements, including signing up enough hospitals, clinics and doctors.

"Adequate provider networks are a fundamental component of accessible, quality care for beneficiaries," she wrote.

The Iowa Department of Human Services, which oversees the Medicaid program said the four private insurance companies that will manage care have signed more than 62,000 contracts with medical providers, just over half of the 120,000 contracts that could be signed.

CMS determined after holding listening sessions with Iowans that there are still significant problems with communications about the transition. Some providers haven't heard from the managed care companies while others say they are reluctant to contract with the companies over concerns about rates and administrative uncertainties.

CMS said it learned that nearly half the calls to the state's Medicaid call center were dropped with 10,000 calls dropped in the first nine days of December.

Branstad surprised the medical community and lawmakers last January with the plan he says will save $47 million in the first six months. The plan was met with outspoken opposition at several public hearings and legislative meetings over the past several months.

In August the state awarded contracts to Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa to manage the program once CMS approves the plan.

Two Democratic senators opposing privatization said they'll continue to fight the plan.

Sens. Amanda Ragan and Liz Mathis called on the Legislature to pass a Medicaid bill giving the lawmakers some oversight of the Medicaid program in January. A bill passed in the Democrat-controlled Senate last spring died in the House, which has a Republican majority.

"Hundreds of thousands of Iowans and their health care providers are still struggling to make sense of Governor Branstad's chaotic approach to privatizing health care services for one out of six Iowans," they said in a joint statement. "Governor Branstad's Medicaid plan will be remembered as one of the worst decisions of his 21 years as governor."

Branstad said in a statement the CMS decision indicates privatization will be approved.

"From the very beginning, our focus has been on improving patients' health outcomes," he said.

Two legal challenges continue including one from the Iowa Hospital Association, a trade group for the state's hospitals. It sued the state claiming the privatization plan is illegal because it takes millions of dollars from a dedicated hospital trust fund and gives it to the four managed care companies. The case is pending in state court.

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