Iowa Raises Privatized Medicaid Capitation Rate By 8.6%

July 16, 2019 - Iowa’s Department of Human Services will be raising privatized Medicaid capitation rates by 8.6 percent and has signed contracts from Amerigroup Iowa and Iowa Total Care for fiscal year (FY) 2020, the department announced last week.

Of the 8.6 percent, or $386 million, the state will contribute 6.5 percent. That translates to about $115 million from the state.

The funds will go toward hepatitis C coverage, provider rebasing, and adjustments to long-term services and supports (LTSS) protections and to managed care organization (MCO) oversight. They will be further detailed in the House File 766 (HF766).

Among the most significant elements of HF766 is the rebased nursing facility reimbursement rates. The legislation also put funding toward the second year of the state’s adult mental health system and “lay the groundwork” for a pediatric mental health system.

Additionally, the bill allotted $1.5 million of state funding and $3.8 million overall to providing additional reimbursement to providers at critical access hospitals and $211,000 of state dollars to updating current procedural terminology codes (CPT). The state also gave $1 million of $2.6 million to intellectual disability waiver providers, for their tiered rates.

The law allocated funds to various groups including those with substance use disorders, children and families, chronically ill persons, community healthcare, and others.

The LTSS adjustments applied to the level of care and Supports Intensity Scale (SIS) assessments and sought to speed up the process. The changes included allowing members to request that others attend their assessment. Additionally, MCOs must improve their timeliness in notifying members of their assessment so that members have a copy in hand within three days.

Lastly, MCOs have 30 days to load provider rates and the organizations must finish provider credentialing and load accurate provider rosters and rates within the same time period.

Iowa’s Medicaid has been a point of controversy since the state privatized its program in April 2016.

The Department of Human Services released health outcome results the second quarter of state fiscal year (SFY) on April 17 for the state’s two MCOs, Amerigroup Iowa and UnitedHealthcare. Each company saw a slight overall decrease in inpatient admissions. Amerigroup saw a decrease from 11 percent readmissions within 30 days to nine percent. UnitedHealthcare’s readmissions dropped by only 0.9 percent.

However, the state did not publish Q2 adult non-emergent ED use, “due to a data issue.”

The state also analyzed the organizations for program integrity, which led to the revelation that Amerigroup had 27 open investigations that quarter and UnitedHeathcare had 19. The state also found that Amerigroup identified 24 overpayments, while UnitedHealthcare identified 19. Amerigroup had four cases referred to the Medicaid fraud control unit, UnitedHealthcare had two. Seven members’ concerns went to the Iowa Medical Enterprises (IME) in Amerigroup, whereas 10 complaints arose regarding UnitedHealthcare.

UHC is no longer available in the state as of June 30, according to Iowa Public Radio. Medicaid beneficiaries have been assigned to either Amerigroup or Iowa Total Care and have a certain period of time to switch their MCO.

The process has experienced various inefficiencies and political tensions. For the 420,000 Iowans on Medicaid, it may seem like the payers are adjusting too slowly to the loss of UHC and the new contracts. Iowa Total Care finalized contracts with new providers for its network a week away from the deadline for switching MCOs.

Additionally, the auditor noted that officials were not filing the required quarterly financial reports, leading to inaccurate reimbursements.

Then, last month, the Iowa Department of Health Services director, Jerry Foxhoven, suddenly resigned from his position. Republicans and Democrats alike expressed sadness at his departure from office.

While Reynolds searches for a new director of DHS, Gerd W. Clabaugh—director of Iowa Department of Public Health for the past five years—will step into the role temporarily.

Meanwhile, Iowans and the rest of the country will be watching to see what the third year of privatized Medicaid brings.