Iowa Medicaid Privatization: Don’t Do It

I have to admit the rapid privatization of Iowa Medicaid caught me flat-footed because I’m a busy doctor and I’m trying to catch up with all the news–not all of it good. I think there are two resources that help me the most, so far, as I dig through this managed care controversy. One of them is Dr. E. Fuller Torrey’s recent report on the high level of fraud and waste of state mental health funds. He summarized it in the November 2015 issue of Psychiatric Times. One of his points is well taken, “Perhaps the largest amount of state-controlled mental health funds, however, is being lost through excess profits taken by for-profit managed care companies. Such companies have proliferated since the 1980s when most states assigned health care responsibilities for Medicaid recipients to them.” – Registration free; see more at:

In the article, Dr. Torrey warns us about one of the managed care companies, WellCare, involved in a scandal resulting in criminal charges:

“WellCare is an example of such a company. It began in 1985 with a contract for the managed care of Florida’s Medicaid patients. Under what is known as Florida’s 80/20 law, WellCare was required to spend 80% of the Medicaid premiums on mental health services but could keep the remaining 20% for administrative costs and profits. According to court documents, WellCare “allegedly set up a subsidiary to hide money from Florida regulators and falsified information on payments to doctors and mental health centers.”7,8 This criminal behavior came to light when a WellCare financial analyst became a whistleblower and began secretly recording conversations with WellCare executives. One company vice president was recorded claiming that WellCare was in fact keeping 50% of the Medicaid premiums. In 2007, the FBI raided WellCare’s headquarters in Tampa, and fraud charges were brought against the company’s top executives. In a 2013 trial, 3 were convicted and sentenced to prison. WellCare has also paid over $400 million in restitution and fines. Despite WellCare’s past criminal behavior, it has continued in business, with Medicaid contracts in 9 states, including Florida.” – See more at:

I was surprised to learn that WellCare is one of the private managed care organizations Iowans would need to deal with in the Medicaid Modernization (see one of the related links below). I’m not the only one worried about the implications. According to the Iowa Press Citizen article published on line November 26, 2015:

Judge recommends throwing out 1 of 4 Medicaid contracts by Jason Clayworth

“An administrative law judge has recommended that Iowa throw out one of the four contracts awarded to for-profit companies that are in line to manage Iowa’s Medicaid program.

The ruling calls for the state to reverse the contract awarded to WellCare, a company that has faced millions of dollars in fines for fraud or mismanagement in other states and last year saw three former executives sentenced to prison for fraud convictions.

The ruling was released after 4:30 p.m. Wednesday. It was not immediately clear how the ruling will affect a plan to launch the largest privatization effort in state history. The annual $4.2 billion Medicaid program provides health coverage to 560,000 poor and disabled Iowans.”

The other important resource I found is an Iowa Press Citizen article posted November 21, 2015, outlining concerns about this move led by Governor Terry Branstad:

Iowa’s Medicaid providers plead: Delay switch by Jason Clayworth

“Dozens of Iowa’s health care providers voiced warnings to federal officials in meetings last week about Gov. Terry Branstad’s plan to privatize Medicaid management, one calling it an upcoming “catastrophe of monumental proportions.”

“Trying to accomplish this in a two-month time frame and shoving this down the throats of providers is outrageous, unreasonable and shows no concern for the provider community or the patients we serve,” Mitch Harris of the Oncology Center of Iowa said, regarding the short turnaround for his agency to review the contracts and implement the new system. “It was poorly thought out, if thought out at all.”

The complaints and concerns were aired during a series of five public forums hosted this month by the Centers for Medicare and Medicaid Services. The feedback received is important because it could help determine whether the federal agency will allow the planned launch of Branstad’s effort to privatize management of the $4.2 billion program.”

Of course, Governor Branstad is focused on saving $51 million through innovative preventive care programs, even though nobody knows how his administration came up with those numbers.

And one hard-working doc in Ames, Dr. Jay Brown, who graduated from the University of Iowa College of Medicine in 1988, said this in a Des Moines Register opinion piece posted on line December 3, 2015:

Medicaid plan is a bad idea, governor by Jay Brown

“I am angry at Gov. Terry Branstad’s recent announcement to “privatize” Medicaid. This was an announcement, not a proposal, much like his closing of mental health hospitals. The privatization of Medicaid has significant repercussions for me as a doctor, and significant repercussions — negative ones — for my patients.”

“I deal with health insurance companies in the private sector on a daily basis.  Their efforts at cost containment vary, but in broad strokes, the two chief mechanisms for lowering costs are 1) to shift the costs onto patients and 2) to create time-consuming burdens on doctors and their staff by requiring us to get “prior authorizations.”  I recognize that some barriers are needed to prevent unnecessary care. But it is a clumsy system. My staff and I can spend 40 minutes on the phone trying to persuade some “reviewer” that I know what’s needed for my patient.”

I also found a succinct statement of the implications of Iowa Medicaid Privatization from an on line article written by Steven Muller, on the web site The Homestead: Innovative Solutions for Autism. He wrote this in April 2015 (where the heck was I when all this was happening? Probably running all over the hospital putting out fires as a psychiatric consultant).

Many other states have already moved to managed care or are in the process of moving to managed care. There is hope that by hiring an outside entity that there can be efficiencies in administration of the Medicaid program that are currently not available.  The governor is already forecasting a savings of $51.3 million in the first six months of the transition.

There are many questions surrounding this transition.  For example, where does the state see savings at this rate?  The managed care companies will have administrative costs and shareholders that expect profits.  Where is the funding to pay this overhead and retain the same access to services?  What existing costs will be eliminated from the system?  What oversight will be retained by the state and what will be the responsibility of the managed care organization?

Bottom line is the state is struggling to meet increasingly larger Medicaid costs.  These costs are tied to the enhanced Medicaid program that expanded under the Affordable Care Act, the formula that governs the state co-pay for Medicaid and other costs.  In fiscal year 2016 the state will need to balance a $200 million shortfall.  We have already seen a waiting list for adults wanting HCBS services – a new thing for Iowans with intellectual disabilities.

Yes, many other states have been faced with this challenge. A story just posted on line by the Iowa Press Citizen today outlines some of the concerns Iowans have and they sound dishearteningly familiar to me because they remind me of my recent troubles with the Clozapine REMS Program.

Iowa responds to key Medicaid complaints by Jason Clayworth (I’m going to quote only one because there are many and they are similar, for example, the Iowa Medicaid Enterprise number malfunctioning and disconnecting calls after long waits; the inability for Iowans to find out how many of their current providers have signed contracts among others).

“The Des Moines Register had contact with more than a dozen Iowans about the concerns or problems they are having with Iowa’s transition to privately managed Medicaid.  Here are some of their key concerns and response from Amy Lorentzen McCoy, a spokeswoman for the Iowa Department of Human Services.

QUESTION/CONCERN: Multiple readers tell us they have been placed on hold for more than 20 minutes at a time by both the MCOs and the Iowa Medicaid Enterprise (IME) number provided to them in their packets.
RESPONSE: DHS and our health plan partners are working to make the customer service experience better for Medicaid members. Enrollment packets were mailed in November, and there was an exceptionally high volume of calls this week, following the holiday. We worked with our phone vendor regarding the delays members experienced, and it was determined that some of the new phone lines we installed weren’t operating properly. This has been fixed and additional lines are being added. We’ve doubled call center staff since September and are adding dozens more next week. In addition, we are using staff from other DHS call centers.”

I hope those in charge of this project read Dr. Torrey’s report and take his recommendations seriously. One of them is the “prohibition on the use of for-profit managed care companies.” The University of Iowa Hospitals and Clinics is one of the three hospitals enrolled. Iowa is already up to the starting line for January 2016. I’m afraid that it might not be a Happy New Year.

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