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Iowa Officials Respond To Private Medicaid Management Company Leaving State

jerry foxhoven
Katarina Sostaric
Iowa DHS Director Jerry Foxhoven speaks with reporters Monday, April 1, 2019.

State officials responded Monday to the recently announced departure of one of the two private companies that manage the government-run health insurance program for poor and disabled Iowans.

Democrats in the Iowa Legislature said the departure of UnitedHealthcare, which manages the care of about 425,000 Iowans, shows privatized management of Medicaid does not work. It’s the second such company to leave the state since privatization began in 2016.

Sen. Amanda Ragan, D-Mason City, said this creates chaos for health care providers that are waiting for payment from UnitedHealthcare, and for patients who will have to switch insurance companies.

“They’re getting letters saying you’re going to a new company, and one of those companies now is not going to be available,” Ragan said. “So there’s a great deal of confusion.”

UnitedHealthcare said in a statement it is leaving because “persistent funding and program design challenges make it impossible for us to participate in the program.”

Republican Gov. Kim Reynolds and the state’s top human services official said they ended contract negotiations with the managed care organization because it was making “unreasonable and unsustainable” demands.

“I personally believe this shows our system is strong enough to do this,” said Jerry Foxhoven, director of the Iowa Department of Human Services. “There might be some Medicaid managed care systems in other states that aren’t in this position yet where they’re able to say to a company, ‘Look, if you don’t want to be held accountable, then you can leave.’”

Foxhoven provided a list of negotiation terms submitted by UnitedHealthcare. The company asked the state to pay back money the state withheld as a penalty for failing to meet performance requirements in the contract.

According to the Des Moines Register, a UnitedHealthcare executive said the company pulled out because of a lack of funding, not because it didn’t want to be held accountable. Foxhoven said that’s “dead wrong.”

Foxhoven said he does not think that the existing company, Amerigroup Iowa, and the new one that is scheduled to start July 1, Iowa Total Care, now have the upper hand in negotiations with the state.

“They’ve committed that they are willing to meet performance measures, that they’re willing to operate here under those terms,” Foxhoven said. “So we don’t see that there’s any problem at all with that."

But Ragan is concerned about that, and she wants to know if there are other reasons UnitedHealthcare is leaving.

“Is it because they have a higher population of people that need higher services? Is it because they can’t work to the outcomes they need? This is something we’d really like to know,” Ragan said.

She added she will continue to advocate for moving the highest-need population out of managed care, and for additional legislation she has sponsored with other Democrats.

Democrats in the House of Representatives also advocated for ending the privatization of Medicaid management. 

"Enough is enough," said Rep. Lisa Heddens, D-Ames. "With 425,000 Iowans facing another disruption in their health care, it's time for the Iowa Legislature to act now and end Medicaid privatization. The failed leadership of the Reynolds Administration is putting real lives at risk." 

It’s not clear when UnitedHealthcare will leave the state. Iowa Total Care is scheduled to start up July 1, to replace the other managed care organization that left in late 2017. Foxhoven said he believes Amerigroup and Iowa Total Care will be able to take on 425,000 new patients.

Foxhoven also said Monday the department will not yet invite proposals from other companies that might want to take the place of UnitedHealthcare.

Katarina Sostaric is IPR's State Government Reporter