Feds OK Medicaid privatization, with another delay

Tony Leys and Jason Clayworth
5:21 p.m. CST February 23, 2016
The Des Moines Register

Gov. Terry Branstad answers a question from publisher David Chivers Wednesday, Jan. 13, 2016 following Branstad's meeting with The Des Moines Register editorial board in downtown Des Moines. (Photo: Michael Zamora/The Register)Buy Photo

Gov. Terry Branstad gained federal approval Tuesday for his controversial plan to turn Medicaid over to private managers, but not until April 1.

Branstad originally planned to make the massive shift on Jan. 1. Federal administrators determined in December that Iowa was not ready to turn the 560,000 poor or disabled people who use the program over to three private management companies. They ordered the state to wait until at least March 1.

Patients and healthcare providers were unsure what would happen on March 1, which is next Tuesday. They finally learned Tuesday afternoon that the shift would happen, but not for another month. “Although we understand the state’s preference to move forward on March 1, the April 1 effective date provides additional time for Iowa to complete activities needed to ensure a smooth transition, such as completing contracting with providers and training case managers,” federal administrators wrote to Branstad officials.

Branstad hailed the decision. “We’re pleased that (the Obama administration) has approved Iowa’s plan to provide a better system for Medicaid patients on April 1,” the governor said in a press release.  “Iowa is ready for a new system that provides access through more doctors and will create a more sustainable Medicaid program for taxpayers.”

The governor contends that the new system, similar to many other states’, will offer more efficient, effective care. Critics fear it inevitably will lead to deep cuts in services, as the private companies try to make profits.

Democrats controlling the Iowa Senate released a statement with mixed reaction to the news of the federal approval. “We are thankful for another month of delay. Families living with severe medical challenges, the people affected most directly by Iowa Medicaid privatization, know it is far from ready,” Sen. Amanda Ragan of Mason City wrote. “Iowans still can’t get answers to basic questions. Iowans are being told trusted local doctors and service providers won’t be available.”

Senate Democrats continue to call for more legislative oversight of the shift. "Iowans will do a better job than out-of-state corporations when it comes to overseeing the health care safety net we all depend on," said Sen. Liz Mathis, D-Robins.

Marion resident and Medicaid beneficiary Rhonda Shouse has advocated against private management of the program. She considers Tuesday’s action a small victory, since the federal government again delayed the implementation.

“Yes, they approved it but at the same time it is a delay, which is confirmation of what we knew all along: The state is still not ready,” Shouse said. Shouse said she finds it ironic that the program will launch on April Fool’s Day and vowed that she and hundreds of people who have helped her protest will now shift their attention to oversight.

“We want to make sure Iowans are being taken care of,” Shouse said. “We don’t feel some of our legislators have our best interest at heart and I guarantee you we’re not going away.”

In ordering the initial delay, federal officials expressed concerns about a lack of doctors, hospitals and other health-care providers that had signed contracts with the three private management firms who are to run the joint state and federal health-care program. In the new letter, federal administrators say the state has made substantial progress on that issue and others. “(Our) primary focus is on protecting the quality of care delivered to beneficiaries, and we will continue to closely monitor the state’s progress,” they wrote.

House Speaker Linda Upmeyer, a Clear Lake Republican, praised the news. "I am optimistic that the move to managed care will bring more predictability to the Medicaid program, while also improving the health and well-being of the patients it serves," she wrote Tuesday afternoon. "House Republicans will continue efforts to assist those affected by the transition to ensure that Medicaid patients continue to receive high quality healthcare. It is clear that (federal officials) was able to see through the politics of this transition, and recognized that Iowa’s program is ready to move forward with providing the healthcare and services that Iowans expect.”

Amy McCoy, a spokeswoman for the Iowa Department of Human Services, said her agency would continue to manage the program through March before turning it over to the private companies. All participants should have been notified which company they’re assigned to, she said. They’ll now have until June 16 to change to another plan for any reason, she added.

Rep. Dave Heaton, a Mount Pleasant Republican who helps lead health-care discussions, predicted many health-care providers will now sign contracts with the private management firms. “A lot of them I think were holding off, uncertain of whether or not there would be a move toward managed care. Now since that date’s set, I think a lot of the providers that have held out will be signing contracts,” he said. “I’m really relieved to know now that we’re going to go forward. I expect some bumps in the road in the next year in its implementation. But I really feel that the people who are receiving service today will continue to receive their services.”

Heaton said he expected the Republican-led House and Democratic-led Senate to reach a compromise this spring on an oversight bill for the program.

— Register staff writer William Petroski and Brianne Pfannenstiel contributed to this report.