- Associated Press - Tuesday, August 18, 2015

IOWA CITY, Iowa (AP) - In an Aug. 17 story about the companies selected to manage the Iowa Medicaid program, The Associated Press erroneously reported the number of members that WellCare Health Plans serves. It serves 3.8 million members, not 2.2 million.

A corrected version of the story is below:

Iowa picks 4 vendors to take over $4.2B Medicaid program

Iowa picks 4 companies to run $4.2B Medicaid program, in major shift sought by GOP governor


Associated Press

IOWA CITY, Iowa (AP) - Four national companies will take over management of Iowa’s $4.2 billion Medicaid program under an overhaul that will affect how nearly one in five Iowans receives health care, state officials announced Monday.

The Iowa Department of Human Services on Monday released the selection of Amerigroup Corp., AmeriHealth Caritas, UnitedHealthcare Plan of the River Valley and WellCare Health Plans. They are expected to administer services beginning Jan. 1 for the 560,000 children, low-income residents and disabled who are on Medicaid.

The companies, all national players in the health care field, beat out six others following a bidding process that began in February. One other company withdrew. The contracts are expected to be potentially lucrative, worth up to 15 percent or more than $600 million of the state’s Medicaid spending going toward administrative expenses and profits.

“These companies have demonstrated that they can manage Iowans’ care so they’ll be connected with the services they need to help them lead healthier lives,” said DHS Director Charles Palmer, whose agency is expected to negotiate contracts with each in coming weeks. He said the change is “good news for members and Iowa taxpayers who make this program possible.”

Amerigroup is based in Atlanta and serves 3.5 million members in 12 states. AmeriHealth Caritas is based in Philadelphia and counts 6.6 million members nationwide. UnitedHealthCare Plan of the River Valley is a subsidiary of Minnetonka, Minnesota-based UnitedHealth Group, the largest health carrier in the United States. WellCare is based in Tampa, providing Medicare and Medicaid managed plans for 3.8 million members.

The announcement marks a major step forward for Gov. Terry Branstad’s decision to shift administration of the program to private companies. Branstad argues that having the managed care organizations run Medicaid will hold down costs, which have risen 73 percent since 2003, while improving care. The state says patients will receive the same benefits but the new system should reduce duplicative services.

“We want to choose an approach that would be the most successful in terms of managing the care and increase the healthy outcomes for people that receive these programs,” Branstad told reporters Monday, saying his administration carefully reviewed the bidders’ proposals in recent weeks.

Branstad’s administration believes the change can save $51 million in the first six months alone while not affecting “medically necessary services.” The change is expected to go into effect Jan. 1, as long as the federal government doesn’t reject several waivers Iowa has proposed to operate the revamped program.

Many patients and their advocates are nervous that they will ultimately have services cut.

Medicaid beneficiaries will be automatically enrolled with one of the managed care organizations starting this fall, under a process meant to distribute the population evenly among the companies while keeping family members with the same organization. They will be given information on how to enroll with a different organization if they choose.

The four companies will manage care using statewide networks of health care providers. They will receive set monthly fees from the state per beneficiary, giving them an incentive to keep costs down. That will replace a system in which Medicaid was billed for each service provided.

State officials believe the companies can improve care for the most expensive patients while cutting costs. The top 5 percent of the “high-cost, high-risk members” account for 90 percent of hospital readmissions within 30 days, 75 percent of total inpatient costs, 50 percent of prescription drug costs and average having five doctors, program documents show. Better coordination should be able to improve some of those outcomes, they say.

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