Iowa Lawmakers Question Officials About Medicaid Performance, Funding Issues

Jan 28, 2020

Iowa lawmakers questioned Medicaid officials Tuesday about the finances and performance of the state’s health insurance system for low-income and disabled Iowans.

Medicaid issues have been controversial at the Iowa Capitol since the state hired private insurance companies in 2016 to manage the government-funded system.

In early January, the state announced it was withholding $44 million from one of those companies, Iowa Total Care, for failure to pay health care providers for 106,000 claims. ITC officially started operating in the state in July 2019.

Iowa Total Care CEO Mitch Wasden told state lawmakers Tuesday his company discovered the problem in October. He acknowledged it has been difficult for health care providers in the state, and said ITC is “committed to doing better.”

“It is absolutely true—this should’ve gone better, and this should not have had as many problems as we had,” Wasden said.

ITC’s deadline for resolving the payment issues is coming up at the end of February. That is when the state will decide whether to release the $44 million to ITC.

But Sen. Joe Bolkcom, D-Iowa City, said it was “astounding” to see ITC mess up its rollout, especially when it’s owned by an insurance company that manages Medicaid programs in several states.

“This seems like amateur activity here…Eventually they’re going to re-process all this stuff and say they’re sorry,” Bolkcom said. “Is there going to be a fine involved here? What cost do they have for coming in here and not having a system in place that works for us?”

Iowa Medicaid Director Mike Randol responded.

“I think that we as a Medicaid team could’ve done a better job. I could’ve done a better job,” Randol said. “We are evaluating how we could have done things differently.”

Randol added that Iowa Medicaid took many steps to help ITC start up in the state. And he said the state has the option to fine Iowa Total Care if it doesn’t meet performance standards.

“From my perspective I felt it was—at that moment—it was more appropriate to withhold an appropriate amount from their payments,” Randol said.

He said he believes temporarily withholding the $44 million got the state’s message across.

Lawmakers to put more money into Medicaid

Lawmakers will once again have to put millions more into the state’s Medicaid program in the current fiscal year, because the amount budgeted last year was not nearly enough to cover Medicaid costs.

Last year, they approved more than $100 million in additional funding late in the budget year. At the time, some Republican lawmakers said they did not think late-year budget additions of that size would be needed in the future.

This year, they are looking at adding $89 million, the amount recommended by Republican Gov. Kim Reynolds.

Much of this increase comes from the higher contract rates the state negotiated with the private companies that manage Medicaid.

Sen. Amanda Ragan, D- Mason City, said this is “a big chunk of change” to be adding later in the budget year.

“I thought this was the direction we were trying to get away from,” Ragan said. “In the next 100 days, is there some effort to be more realistic about this so we really know what we are really looking at?”

Director Randol said the state will never have finalized Medicaid contracts before the legislative session ends in the spring.

“I can’t say I’m real comfortable with having a big supplemental every year, because we don’t know that our income is always going to go up,” said Sen. Mark Costello, R-Imogene. “And then you have more trouble trying to find that money and make cuts and things like that, which is not good.”

Costello said he wants to work with Randol to get a better estimate of Medicaid costs for budgeting purposes. But he said Randol’s proposed solution of changing the Medicaid budget to a calendar year schedule instead of the current fiscal year won’t work.