Iowa Gets Federal OK to Implement Medicaid Managed Care

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By Mark Wolski

Feb. 24 — The federal government Feb. 23 granted Iowa the waivers it needs to implement a managed care Medicaid system for its 560,000 enrollees.

The Centers for Medicare & Medicaid Services said the state could begin implementing the new system April 1, three months later than the state initially had proposed. A letter from Vikki Wachino, director of the CMS's Center for Medicaid and CHIP Services, said the delay would give the state additional time to complete a number of activities needed to ensure a smooth transition.

Governor: It'll Save Money

In a statement, Republican Gov. Terry Branstad said the new system should provide beneficiaries better health-care access through more doctors, while creating a more sustainable program for taxpayers. In proposing the move from fee-for-service last year, the governor said the state could see savings of $50 million in the first six months of moving to a Medicaid managed care system.

While critics of the plan repeatedly have questioned those estimates, Branstad has maintained steadfastly that the move will save Iowa money. Amy Lorentzen McCoy, spokeswoman for the Iowa Department of Human Services (DHS), said a joint forecasting group hopes to get a better idea of cost savings during the week of Feb. 29. She said savings for the first three months of managed care could approach $20 million.

Branstad proposed managed care Medicaid early last year, about two years after the state implemented the Iowa Health and Wellness Plan. While it's fee-for-service, that plan required hospitals and providers to set up accountable care organizations and integrated health homes. The governor said the change to managed care was necessary to help the state stave off increasing Medicaid costs. It currently spends about $4.2 billion on Medicaid.

Opposition From Hospitals

The DHS issued a request for proposals for managed care shortly after the governor proposed the plan. Three plans, AmeriGroup Iowa, AmeriHealth Caritas of Iowa and UnitedHealthcare Plan of the River Valley, were eventually chosen to manage the plan. McCoy said the system they operate should enable Medicaid enrollees to have more health care choices, while also offering better health management.

Despite state efforts to quickly prepare the managed care plan, it was dogged by controversy. Health plans not chosen by the state contested the selection process and the Iowa Hospital Association, which sought to keep the state's fee-for-service plan, challenged the plan as well. Enrollees also questioned the new plan's coverage and provider networks.

The CMS advised the state in December that it couldn't approve the Medicaid waiver plan the state was seeking until March at the earliest. It identified 16 items it believed the state had to address before the waivers would be granted. Branstad then announced that it would move the implementation date to March 1 .

Significant Progress Made

Wachino's letter to the state said the federal agency saw significant progress in the state's efforts to implement the new plan. It said provider networks had grown and that the state call center abandonment rate had dropped from 42 percent to less than 1.5 percent. Wachino said the state also improved its communications to enrollees, allowing them to get more detailed information on the new system.

In granting the section 1915(b) managed care waiver, the CMS laid out several terms and conditions for the state. They call for the state to monitor the managed care organizations' activities, including their staffing and resources, communications and grievances and appeals, as well as their call centers. The terms also require Iowa to monitor enrollee issues identified through an ombudsman office, monitor provider networks and their availability of services and monitor MCOs' contracting with case management agencies.

The CMS also identified continuity of care as a concern it had regarding the Medicaid change. To address it, the agency called on the state to ensure that Medicaid beneficiaries are allowed to keep their current case managers until at least Sept. 30. It also required the state to prohibit MCOs from reducing or modifying service plans without revised assessments and required MCOs to take into account enrollee prescriptions and ensure access to those prescriptions during the transition.

Oversight Bill

Rusty Martin, spokesman for the Iowa Senate Democratic Caucus, told Bloomberg BNA Feb. 24 that Senate Democrats had introduced legislation to forestall the move to managed care Medicaid. The bill passed the Democratic-controlled Senate, but didn't received a hearing in the House. Democrats' next step, he said, is to push to ensure that managed care Medicaid has substantial oversight to protect enrollees.

He said they will try to advance S.F. 2213, which calls for safeguards to ensure that enrollee interests are protected. The bill also would require the DHS to create a working group to review the laws and rules regarding managed care program integrity. It also would require the agency to improve consumer protections in the program.

The Iowa Senate Feb. 11 passed a bill (S.F. 2125) to scrap the state's transition to a managed care Medicaid system, but action in the Republican-controlled House is unlikely.

Officials with the Iowa Hospital Association were unavailable for comment.

To contact the reporter on this story: Mark Wolski in St. Paul, Minn., at

To contact the editor responsible for this story: Nancy Simmons at

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