The state says it will withhold nearly $44 million in funding from a managed-care organization, brought on this past summer to manage Iowa’s Medicaid program, due to issues related to incorrect payments to medical providers and the insurance company’s record keeping.
Iowa Total Care, which administers health coverage to thousands of Iowans under the state’s managed-care program, was notified by the Iowa Department of Human Services Friday that the payments will be withheld from the insurer’s January capitation payment.
A capitation payment is a set rate paid monthly by the state to the managed-care organizations in Iowa’s Medicaid program for the services they provide.
Iowa Total Care’s total capitation payment is more than $169 million. The $44 million penalty represents 26 percent of Iowa Total Care’s monthly payment from DHS.
This is the first time the state agency, which oversees Iowa’s Medicaid program, has issued a withhold on a capitation payment to any managed-care organization.
“The Department has worked with Iowa Total Care in good faith to onboard your operations, and has provided ample opportunity for (Iowa Total Care) to correct claims payment issues and encounter data issues,” Iowa Medicaid Enterprises Director Michael Randol wrote in a letter to the company’s CEO that was provided to The Gazette.
DHS announced the penalty Friday, stating the department was “exercising its authority” to hold the managed-care organization accountable.
“Once Iowa Total Care resolves the issues identified, the withhold will be released,” DHS Spokesman Matt Highland said in a news release. “However, additional remedies may be sought.
“DHS will continue to hold managed-care organizations accountable to the Iowans they serve.”
Iowa Total Care did not respond to The Gazette’s request for comment in time for this article.
Nearly 650,000 Iowans are enrolled in Iowa’s Medicaid program, which is managed by two private insurance companies — Amerigroup Iowa and Iowa Total Care.
Iowa Total Care, a subsidiary of St. Louis-based Centene, joined the state’s program on July 1.
According to state data, more than 239,000 adult Iowans were enrolled through Iowa Total Care in December 2019. That does not include the nearly 20,000 Hawk-i recipients enrolled with the managed-care organization.
The $44 million penalty was calculated by Iowa Medicaid Enterprises based on the number of unpaid claims directly related to outstanding issues over a five-month period.
According to the letter sent to Iowa Total Care, there were about 106,000 unpaid claims directly related to the outstanding issues.
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Release of capitation payment — which will be determined at the end of February — will be based on whether the company resolves at least 75 percent of the unpaid claims, according to Randol’s letter.
Starting in early September, DHS sent formal notifications to Iowa Total Care for “compliance issues” under its contract as a managed-care organization with the state, according to documents provided by the department to The Gazette.
The first letter sent to the insurance company was dated Sept 4.
In that September letter, state officials notified the insurance company of “inaccurate system configurations” that lead to incorrect payments, particularly for Medicaid members who received services under the Long Term Services and Supports waiver and the Behavioral Health waiver.
Another letter was sent to Iowa Total Care on Sept. 10 for errors in its “encounter data,” or the records of health care services the company paid for and the amount that was paid for that service.
The letter, signed by Randol, said Iowa Total Care inaccurately submitted data related to a number of topics, including dates paid, client participations and prior authorization.
A final letter was sent to Iowa Total Care on Dec. 26, according to documents provided by DHS. In it, the managed-care organization again was notified of issues related to incorrect payments to providers and to inaccurate data related to the claim.
Corrective action plans were sent with the letters to Iowa Total Care. An October plan stated there were “numerous complaints from all provider types” who received either too little or too much payment for the services they provided to members.
In addition, the document stated, there were complaints of incorrect services listed to the provider or provider type.
DHS officials emphasized accountability within the state’s Medicaid program after UnitedHealthcare of the River Valley, a former managed-care organization, announced its intention to leave the program in March 2019.
At the time, then-DHS Director Jerry Foxhoven said the department would not hesitate to withhold payments for UnitedHealthcare not meeting meet certain performance standards laid out in its contract with the state.
“We were very clear they signed a contract that required those performance standards to be met, they hadn’t met them, they’re not entitled to the money and we’re not willing to waive that,” Foxhoven said to The Gazette in March.
UnitedHealthcare officials pushed back on the state’s reasoning, saying the departure was due to chronic underfunding and other issues related to program management.
AmeriHealth Caritas left Iowa Medicaid in 2017 for what it cited as the company’s loss of millions of dollars under the program.