- Associated Press - Thursday, December 22, 2016

DES MOINES, Iowa (AP) - The companies running Iowa’s newly privatized Medicaid system are complaining of drastic underfunding of the program in documents obtained by The Des Moines Register.

Gov. Terry Branstad ordered the shift to private Medicaid management last year, and it went into effect April 1.

Amerigroup, AmeriHealth Caritas and UnitedHealthcare told state officials their reimbursement rates were based on deeply flawed cost estimates provided to them before the program began, the Register (https://dmreg.co/2hgXQOa ) reported.

According to reports filed last month with regulators, the companies have lost hundreds of millions of dollars on the program.

Branstad announced in October that the state would pay the companies an additional $33.2 million this fiscal year for unexpected cost increases.

“We are extremely disappointed in the amended rate offer, as it does not address the significant rate issue identified and documented … The department’s rate offer is not actuarially sound and is not acceptable to us,” AmeriHealth Caritas Regional Vice President Russell Gianforcaro wrote to the state’s Department of Human Services.

Amerigroup and UnitedHealthcare also wrote letters to the state expressing frustration, and each gave some recommended solutions to the financial issue at hand.

UnitedHealthcare executive Kimberly Foltz wrote that experts from the actuarial firm hired by the state grossly underestimated how much it would cost to cover the tens of thousands of low-income residents that signed up for Medicaid under the Affordable Care Act. Foltz suggested the state allow managed care companies to negotiate with pharmacies on how much to pay for prescriptions.

Branstad said he remains confident the state will save over $110 million with private Medicaid management.

Department of Human Services spokeswoman Amy McCoy said the agency does not expect to raise the managed care rates beyond what was offered in October.

Democratic Sen. Joe Bolkcom said the recent financial issues further prove that privatizing Medicaid is flawed.

Gov. Branstad’s and Lt. Gov. (Kim) Reynolds’ hasty actions have put the state’s finances and every health care provider, patient and taxpayer at risk,” Bolkcom said.


Information from: The Des Moines Register, https://www.desmoinesregister.com

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