Iowa's plan to transition its $4.2 billion Medicaid program that has about 560,000 enrollees into a privately managed care system hit multiple snags on Friday afternoon.
The Centers for Medicare and Medicaid Services — the federal agency that ultimately will approve the move — sent a letter to Iowa Medicaid director Mikki Stier questioning the state’s readiness and laying out a handful of concerns.
Meanwhile, a major group of providers filed a petition for declaratory judgment and injunctive relief with the Polk County District Court, asking the court to delay the implementation of managed care until a legal conflict is addressed. The Iowa Hospital Association, which represents the state’s hospitals, in addition to 11 hospitals, including Mercy Medical Center in Cedar Rapids, are plaintiffs in the petition.
The state announced its plan to transition Medicaid enrollees into a privately managed care system earlier this year. In August it awarded contracts to four managed care companies — Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa.
Since then, Iowa Senate Democrats have called the Jan. 1 timeline too aggressive and have asked to slow the transition. Meanwhile, the companies that were not awarded contracts also have challenged the state, saying there was improper contact between the state and a winning bidder.
Providers, including the Iowa Hospital Association and consumers also have voiced concerns.
“... CMS has significant concerns that the implementation time frames for the transition to managed care may place access, continuity of care and quality of care for beneficiaries at risk,” wrote Timothy Hill, deputy director for the Center for Medicaid and CHIP Services at CMS, in a letter dated Nov. 6. “We are also concerned about the extent to which managed care organizations, providers and Medicaid beneficiaries are prepared for the transition.”
CMS has asked Iowa to meet several “readiness benchmarks,” including establishing adequate provider networks and communicating the transition with beneficiaries. In its Nov. 6 letter to Stier, CMS laid out a list of concerns it has regarding the transition.
- The extent to which the managed care organizations have hired and trained staff as well as developed necessary IT infrastructure.
- The extent to which managed care organizations have developed an adequate networks of providers. For the state to receive an approval waiver, each managed care organization must have a meaningful percentage of providers under contract.
- The adequacy of the information, time and support for enrollees to make an informed managed care organization selection. This concern is particularly important for individuals receiving long-term care services.
- The overall readiness of the state and managed care organizations to address administrative issues associated with the transition. This is especially significant for issues related to beneficiaries’ continuity of care.
CMS also mentioned in the letter that it has been contacted by many individuals who expressed concerns about the transition, including its time frame.
Because of this, CMS will hold four so-called listening sessions in the coming weeks for providers and Medicaid beneficiaries. These listening sessions are meant to give interested stakeholders “an opportunity to share with CMS feedback regarding Iowa’s proposed move to a comprehensive managed care delivery system for their Medicaid program,” said Julie Brookhart, a CMS spokeswoman.
Sens. Amanda Ragan, D-Mason City, co-chair of the Health and Human Services budget subcommittee, and Liz Mathis, D-Robins, chairwoman of the Senate Human Resources Committee, said in a statement that “a key federal official (Friday) raised the same concerns that we have been hearing from Iowans for months: This proposal is too much, too fast and failing to protect vulnerable Iowans.”
Despite the letter, Gov. Terry Branstad’s office and the state’s Department of Human Services still are confident of its approach and timeline.
“We have received the letter, and we appreciate the confidence expressed by federal officials in our outreach so far,” the governor’s spokesman, Ben Hammes, said in an email.
Hammes pointed out that, for the first two years, Medicaid members who receive long-term care support and services will be able to keep services without any change.
“Iowa is confident that by taking a proactive, phased-in and patient-centered approach modernizing its Medicaid program through managed care beginning on Jan. 1, 2016, will lead to better outcomes for Medicaid patients and more stability for Iowa taxpayers,” he said.
The Iowa Hospital Association has opposed the state’s plan almost since its inception, citing concerns that the transition will restrict services, reduce reimbursements and hurt quality of care. Officials also are concerned with the proposed timeline, calling it “aggressive” and “unrealistic” with the “potential for unintended consequences.”
On Friday, it filed a petition in Polk County District Court raising questions over the legality of a transfer of fees to the managed care program from the Hospital Provider Assessment program.
The program, passed by the Iowa Legislature in 2010, serves as a tax to hospitals and works to draw down federal funding for Iowa’s Medicaid program and increase Medicaid rates paid to hospitals. Funds are collected from hospitals based on net patient revenue and put into a trust fund that are then used to help pay Medicaid reimbursements.
The Provider Assessment program collects about $34.6 million annually from Iowa’s hospitals, according to the filing. The funds are matched by federal dollars.
Because Iowa Code explicitly instructs Iowa’s Department of Human Services to use Provider Assessment funds to reimburse “participating hospitals” and not other entities, the Iowa Hospital Association questions if DHS will violate state law if the money no longer is directly paid to hospitals.
“On or about Sept. 15, 2015, DHS responded to questions from IHA about the implementation of (Medicaid modernization) and specifically informed IHA that fees assessed from hospitals, nursing facilities and intermediate care facilities will be provided to MCOs (managed care organizations),” according to the filing. “Payment of Provider Assessment funds to any party other than a ‘participating hospital’ is directly contrary to Iowa law. ... DHS has nonetheless entered into illegal contracts providing for the transfer of Provider Assessment trust fund moneys to the MCOs.”