- Associated Press - Tuesday, August 18, 2015

IOWA CITY, Iowa (AP) - The Iowa Medicaid program plans to cut ties with the company that has managed mental health and substance abuse benefits for its members for two decades, a spokeswoman said Tuesday.

Magellan Health Inc. emerged as a major loser in Gov. Terry Branstad’s plan to turn over administration of the $4.2 billion Medicaid program to four national companies beginning Jan. 1. Magellan was one of six bidders passed over by the Iowa Department of Human Services for the work, a decision that surprised many Iowa providers and sent the company’s shares tumbling Monday afternoon.

The program will end Magellan’s contracts to provide behavioral health services, which were worth $461 million in the most recent fiscal year, on Dec. 31 and turn over those functions to the four companies who were selected.

Magellan CEO Sam Srivastava said the company had improved access to care and the health of members during its 20-year history in Iowa.

“While we are disappointed that we were not selected … we are proud that we have made positive and lasting impacts on Iowa’s healthcare delivery system, and on the health of Iowans,” he said in a statement.

Another loser in the bidding process was Meridian Health Plan, which will lose its state contract to manage care for some Medicaid beneficiaries that was worth $145 million last year. A third company that wasn’t selected, Aetna, said Tuesday in a statement it was “deeply disappointed” and exploring its options. Companies have five days to ask DHS to reconsider the awards.

Magellan has been a bedrock in Iowa’s Medicaid program for low-income and disabled individuals since 1995, serving hundreds of thousands of adults and children who needed mental health and substance abuse treatment. The company also recently worked with Medicaid and community providers to start Integrated Health Homes around the state, a concept meant to improve services for emotionally disturbed children and adults with serious mental illness.

“We were shocked that Magellan was not selected,” said Kelsey Clark, interim chief executive officer of the Iowa Behavioral Health Association, which represents mental health and substance abuse providers. “It’s going to be a culture shift. It’s going to be a big transition, and there’s going to be some bumps in the road.”

She said the association’s members worry about working with four companies that will have different billing structures and policies than Magellan and less experience with Iowa’s program. Clark said she also worried about the future of the Integrated Health Homes, which serve 24,400 people and will be turned over to the new vendors.

Iowa DHS spokeswoman Amy McCoy said Magellan has been a “valued partner” since the 1990s but that it scored lower on review criteria than the winners. State documents released Monday show Magellan finished seventh out of 10 bidders ranked by an evaluation team, which found several shortcomings in its proposal, including a lack of some details.

McCoy said the new program would “better connect a person’s physical, behavioral and long-term care.”

“This patient-centered approach will help Medicaid members get the right care at the right time and in the right setting, and it encourages health care professionals to work together across service types to address the needs of the whole person,” she said.

The winning bidders were ranked in this order: Amerigroup, United Healthcare, WellCare Health Plans and AmeriHealth Caritas, documents show. They are expected to take over management Jan. 1, pending successful contract negotiations. Finishing a few points behind was Centene Corp., a St Louis company that many observers had expected to win given its experience in other states, followed by Aetna.

Charles Bruner, executive director of the Child and Family Policy Center in Des Moines, said Magellan’s departure will cost the state its expertise serving foster children who need mental health services.

“We’ve got to have a special focus on how that knowledge is transmitted during the transition and we do well by those kids,” he said. “It’s going to call for additional, concerted attention to the specific population of children with behavioral health needs.”


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