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Aetna, WellCare and DHS Spar Over Medicaid Implementation Progress


About 20 lawyers representing six healthcare companies and the state of Iowa crowded into a small Polk County courtroom Thursday.

All want Judge Robert Blink to issue or reject various stays, or orders, relating to the upcoming privatization of Iowa's $4.2 billion Medicaid system. All also argued a ruling in their favor prioritizes the healthcare of Iowa's 560,000 Medicaid recipients. 

Aetna is one of six Managed Care Organizations whose bid to manage Medicaid was rejected. The company, along with Meridian, is appealing the state's decision. The failed bidders want the selected MCOs to stop implementation preparations, such as hiring staff or signing contracts with providers and recipients. 

Aetna attorney Mark Weinhardt told the court the state's evaluation process was "fatally flawed," due in part to the state's rush to make a selection. He says the "irrationality of the scoring process" was an abuse of discretion by the selection committee. 

Weinhardt also says Aetna is arguing on the public's behalf, since the company's interests align with Medicaid recipients. He reasons Iowans would be harmed in having their healthcare managed by MCOs selected through a "cancerous" process. 

Assistant Attorney General Diane Stahle says Aetna, "Is in no position to speak on behalf of Medicaid members." 

Stahle also says Iowa's Department of Human Services should decide the ground rules for selecting MCOS, not bidders and it is "pretty naive and unrealistic" to assume the state can just pause privatization preparations, as this would result in "very real" harm to the public. 

WellCare also wants a stay, but instead of stopping the process it hopes to continue preparing for implementation. 

WellCare was one of four MCOs selected to manage Medicaid in Iowa. The contract was terminated after it came to light that the company not only communicated with the governor's chief healthcare advisor Michael Bousselot during a "blackout" period, but had also failed to disclose previous settlements. 

WellCare says it did nothing improper, and by tossing its contract the state fabricated a new standard. WellCare argues it's unfair both to the company and the public to bar it from moving forward, since the court may ultimately decide in WellCare’s favor.

Right now DHS is preparing to reassign the 134,000* Iowans who were automatically enrolled with WellCare to the remaining three MCOs. Though recipients are auto-enrolled, people can select another MCO for any reason.

DHS says allowing WellCare to continue creates confusion. The state argues financial harm is not a legal reason to allow WellCare to proceed with implementation, and due to Medicaid's complicated nature, the court should grant DHS discretion.

Decisions on Aetna and WellCare's requests may come within a week. Next month, Judge Robert Blink will rule on whether the state’s bid process was legal.

To further complicate matters, Iowa is also waiting for final approval from the Centers for Medicare and Medicaid Management to implement privatization in March. The state wanted to start Medicaid with MCOs on January 1, but CMS determined the companies weren't ready and enough information hadn't been provided to the public.

The state estimates a loss of $8 million for every month implementation is delayed.

*This is an updated number from DHS. (1/22/16)