It was almost three years ago that Iowa handed over its Medicaid program to private, out-of-state insurance companies. Has the move been a success? It depends on whom you ask.

The governor, for one, has said she’s tired of hearing from health care providers who say they still aren’t receiving payment on time.

According to Iowa Department of Human Services Director Jerry Foxhoven, managed care has matured beyond its issues of the past and is beginning to benefit the health of Iowans enrolled in the program.

“The goal is, at some point, for managed care to actually start improving the health of the citizens — that’s why we call it managed care,” Foxhoven said in an interview with The Gazette. “They actually start doing some things that reduce the cost of Medicaid by improving health outcomes for the people. We’re not moved to the level where we’re starting to be able to concentrate on that.”

But while things have been getting easier for some health care providers and the Medicaid enrollees they serve, challenges from the program’s start back in 2016 were enough to create lasting damage on any long-term success, one health care organization says.

“We don’t know the exact financial situation for every hospital, but it’s tougher out there than folks might assume,” said Scott McIntyre, spokesman for the Iowa Hospital Association.

The state’s privatized Medicaid program today oversees health care coverage for nearly 623,000 poor and disabled Iowans, according to a January report from Iowa Medicaid Enterprises, a unit of the Iowa Department of Human Services.

Foxhoven said that, in first privatizing managed care in 2016, details like getting claims paid on time and obtaining prior authorizations “needed to be ironed out.”

But now, the Human Services director says the program is beginning to reduce costs by improving the health of Iowans — meaning they regularly see a primary care physician and don’t need to make trips to the emergency room.

According to Human Services data, the number of escalated member issues has decreased by 50 percent and the number of escalated provider issues had dropped by 81 percent since fiscal 2017.

“What that’s telling us is we’re getting all those bugs worked out where we’re getting more satisfaction from our members, more satisfaction with our providers so that they feel all of those other issues are getting resolved and aren’t issues anymore,” Foxhoven said.

The two insurance companies that handle member coverage, Amerigroup Iowa and UnitedHealthcare of the River Valley, also saw a decline in grievances from the fourth quarter of fiscal 2018 to the first quarter of fiscal 2019.

Grievances refer to any complaint or dispute that expresses dissatisfaction with how a member’s care was handled.

Appeals — a formal request from a member to the managed-care organization to take action on its decision to limit or deny services — increased between the two quarters. That increase was driven by UnitedHealthcare, the managed-care organization that took the majority of members from AmeriHealth Caritas after the latter left the state’s program in late 2017.

AmeriHealth was not included in the count.

Gov. Kim Reynolds, during a Jan. 30 Gazette editorial board meeting, attributed recent success to two years’ worth of experience as well as a new actuary that can accurately measure costs.

“It’s not based on projections, it’s based on actual data,” she said.

During her campaign in this past year’s gubernatorial race, Reynolds vowed a hard stance on the requirements managed-care organizations must meet in annual contracts — or face penalties.

“I’m not going to continue to travel the state and hear from people that are providing the services that they’re not getting paid in a timely manner. I made it very, very clear,” she said.


Some providers around the state agree that after almost three years in the program, they have found a rhythm in working through the managed-care system.

The day-to-day process to bill for services and obtain prior authorization has become easier in the sense that they understand how to best deal with the insurers.

“But at same time, there continues to be struggle to some degree,” the Iowa Hospital Association’s McIntyre said.

“Hospitals are doing what they can to make things works with the managed-care organizations. Their financial stability depends on it, and their ability to provide care depends on it.”

Financial instability from some managed-care policies has affected rural hospitals hardest, where more organizations are opting to cut staff or close departments, McIntyre said.

“It does illustrate, kind of like a canary in the coal mine, that it’s difficult,” he said.

Since April 2016, when the managed-care program was debuted in Iowa, Medicaid has been top of mind for providers at the Village Community, a day habilitation facility in West Branch that cares for about 15 disabled individuals, all on Medicaid.

Nearly a year ago, its Medicaid reimbursement rate was cut in half by a new tiered rate system that gave members a fixed daily rate. But the provider at the time said the new rate was not reflective of the cost of the service it offers.

“We honestly have no idea what the long term looks like. After the bomb dropped last year, we were so blindsided, we can no longer predict what’s going to happen,” said Brenda Kurtz, one of the organization’s founders and member of its board of directors.

December, Kurtz said, was the first month in 33 months Village Community has been paid “on time and in full without any issues or back and forth” from the managed-care organization with which it is contracted.


For many critics of the managed-care program, it goes back to how the program was rolled out. Iowa Medicaid moved the majority of its enrollees into three managed-care organization all at the same time.

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This created what Foxhoven later would describe as “bumps in the road” that continued for months. Health care providers often complained they were being reimbursed for services incorrectly or receiving their payments later than expected. Patients said necessary services were unjustly limited or cut entirely.

“The reality is we knew and talked about the fact that rolling out managed care in the way that it was with such a large population, it invited bumps in the road,” McIntyre recalled. “It created confusion and problems for hospitals and all providers and recipients”

Reynolds echoed these sentiments went she met with The Gazette’s editorial board in January, and conceded managed care had been rolled out incorrectly.

“I said that from the beginning,” Reynolds said. “It was not rolled out right. I can control what I can control and there not a day that goes by where I am not just saying that.”


Then-Gov. Terry Branstad touted a key benefit of the program: saving money.

Republican Mary Mosiman, the previous state auditor, issued an report in November stating the state saved $126 million in 2018 with the switch.

Rob Sand, a Democrat who took office as auditor in January, said he intends to audit the program. again. He said Mosiman’s audit doesn’t answer questions about how much the managed-care companies owe providers for services.

On July 1, an insurer called Iowa Total Care — a subsidiary of Centene Corp., which became the country’s largest Medicaid health plans provider in 2015 — is slated to join the state’s program.

Human Services officials say they have been working with company officials to ensure they are ready to join.

Providers, however, are leery of the change.

“With the new managed-care organization, it’s difficult to know if there will be a few bumps in the road, but there probably will be,” McIntyre said.

Reynolds said her office and other officials will keep working to understand “how we can make this system better.”

“We’re going to continue to look for opportunity to streamline the process when I talk to providers,” Reynolds said. “ ... We’re going to continue to review the system, we’re going to continue to work with managed-care providers and the people that are providing the services and make sure they are getting paid on time, that we are working to make sure things are streamlined and easier.”

James Q. Lynch of The Gazette contributed to this report.

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