CEDAR RAPIDS — AmeriHealth Caritas Iowa, the Medicaid insurer with the largest concentration of the state’s special-needs population, will withdraw from the Medicaid program, which covers one in four Iowans, at the end of November, officials announced Tuesday.
The Department of Human Services already is searching for a replacement, DHS Director Jerry Foxhoven said during a news conference in Des Moines. A request-for-proposal is now online, and the new insurer will be available July 1, 2018.
“It isn’t a shock that we would lose one. Other states have lost (managed care organizations) as well,” Foxhoven said. “This has happened elsewhere. We’re not the first state to have MCOs decide they didn’t want to move forward with it and we won’t be the last, I’m sure.
“I don’t think we’ll have any problem finding another company to replace” AmeriHealth.
Foxhoven said the state is working with the insurers to achieve high-quality, cost-effective health care while ensuring sustainability to the program and state budget. To do that, the state has produced strong oversight expectations, he said.
“I think it’s indicative of we’re doing really continuous improvement,” Foxhoven said. “We’re trying to make this program as strong and robust as we can possibly make it. From time to time, that will mean a company may leave or enter. I don’t think that’s a challenge to the program.
“If anything, I think it’s a good thing because I think if you didn’t see any changes it would mean that we’re not holding anybody accountable or we’re not expecting any improvements.”
The more than 213,000 Iowans enrolled with AmeriHealth will be reassigned to the remaining two Medicaid insurers — Amerigroup Iowa and UnitedHealthcare of the River Valley — both of which resigned contracts with the state of Iowa.
The state has agreed to raise the managed-care organization’s capitation rates — the per-member per-month fees — by 3.3 percent. Foxhoven said the state agency will not need to ask the Legislature for additional appropriations, noting the current budget will cover the increase.
“This is a very small increase when compared to other national trends and insurance carriers who are seeking a 57 percent increase,” he said, referring to Minnesota-based Medica.
Medica is the only insurer selling individual plans statewide on the Affordable Care Act marketplace.
DHS has developed a comprehensive transition plan and will closely monitor patients as they transition from one insurer to another. AmeriHealth enrollees will start coverage with their new insurer on Dec. 1, however, families have until March 1 to change insurers.
DHS officials said this is to ensure there is no gap in coverage or access to care.
“Members can see a doctor as they normally would, and they should watch their mail and our website for more details as it becomes available,” said DHS Deputy Director and Acting Medicaid Director Mikki Stier in a news release.
But it may not be as simple as that for all AmeriHealth enrollees.
“We are at 99.5 percent of clients and business being with AmeriHealth,” said Marilyn Althoff, executive director of Hills and Dales, a Dubuque-based intermediate care facility. “We are really in a lurch on transitioning.”
Hills and Dales provides 24-hour care to nearly 50 medically fragile children and young adults who live there. The children have intellectual disabilities, physical disabilities or autism.
“It’s not as simple as changing a family doctor,” she said. “It’s very complex — they have complex pharmaceutical needs, therapy needs, durable medical equipment needs.”
And because the doctors group in Dubuque chose to sign only with AmeriHealth Caritas, Hills and Dales had to work with each of the 50 families to get the children switched over to that insurer.
AmeriHealth said it chose to withdraw from the state Medicaid program “after months of negotiations yielded no agreement on contract rates and terms,” adding it will now focus on working collaboratively with Iowa to provide a seamless transition.
All three private insurers saw large financial losses — more than $500 million collectively — during their first year of operation in Iowa, but AmeriHealth by far saw the largest. The company lost nearly $300 million, while Amerigroup reported a loss of $133 million and UnitedHealthcare said it lost more than $100 million.
AmeriHealth lost another $65 million as of June 2017, according to Iowa Insurance Division financial disclosures.
To help deal with the losses, AmeriHealth announced a series of changes in early 2017 to better control costs, including moving case management services in-house and cutting reimbursement rates to home and community based services providers.
AmeriHealth has the highest number of Medicaid enrollees, with more than 213,000 beneficiaries compared with Amerigroup Iowa’s 187,000 and UnitedHealthcare’s 167,000, according to the most recent DHS quarterly report.
The insurer also has the biggest share of the state’s special-needs population — with more than 23,300 beneficiaries receiving long-term services and supports, compared with Amerigroup’s 7,700 and UnitedHealthcare’s 6,500.
Long-term enrollees include elderly Medicaid beneficiaries as well as those with disabilities receiving waiver services.
Iowa Democrats said Tuesday’s announcement proves the decision to move to Medicaid managed care in 2016 was a mistake. A chorus of state senators, representatives and candidates for governor said the move has been a bad one for patients and providers, adding it’s time to reevaluate the system.
“For too long, Gov. (Kim) Reynolds and Republican legislators have been telling Iowans that the privatized Medicaid experiment was a huge success. That’s nonsense,” said Sen. Janet Petersen, D-Des Moines, and the Senate Democratic Leader. “The best advice for Gov. Reynolds and legislative Republicans is this: ‘You’ve dug yourself into a hole. You need to stop digging.’”