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Iowa becomes latest Midwest state to move to managed care for Medicaid enrollees

by Deb Miller ~ April 2016 ~ Stateline Midwest »
After some bumps along the way, the Iowa Medicaid program — and some 560,000 Iowans — transitioned to a managed-care model of care in April. Iowa now joins the majority of U.S. states nationally, and within the Midwest, that depend on private entities called managed-care organizations — or MCOs — to deliver Medicaid services to most enrollees in their public insurance programs for low-income families and individuals (see map).
Under managed care, states do not pay health care providers on a fee-for-service basis. Instead, MCOs are paid an agreed-upon amount for each member’s health care expenses. Adjustments can be made to the per-member fee based on the health status of the member. Savings are shared between the states and the MCO, the latter of which assumes the risk of cost overruns.
Iowa began its journey to managed care by issuing a request for proposals early last year. The RFP indicated that the state was looking for $100 million in savings, but Gov. Terry Branstad received criticism for making the decision to privatize Medicaid without legislative input.
Iowa Sen. Liz Mathis, chair of the Human Resources Committee, says a bill was then passed last year calling for public meetings to review the transition. “We were shocked and appalled at how little communication had been absorbed by enrollees,” she adds.
The scope and speed of the move to managed care also concerned legislators; Mathis and two others traveled to Washington, D.C., last year and asked federal officials to slow the transition. Iowa’s transition was indeed delayed because it did not meet federal readiness metrics, its move to managed care, though, ultimately got the go-ahead from U.S. health officials and took effect April 1.
“Benefits do not change under managed care,” Gov. Branstad said in announcing the switch. He also highlighted 80 new “value-added benefits,” such as a 24-hour nurse hot line and new preventative services.
Mathis, though, remains concerned.
“First and foremost is the care of our citizens — 560,000 of our most vulnerable,” she says. “We have 57,000 on waivers for services for persons who are the most complex cases. We will need to ask, ‘Are you still providing services in a way that is satisfactory?’”
As an example, she points to some of those “most complex cases” — those 57,000 Iowans receiving Medicaid care via a federal waiver. Medicaid waivers allow states flexibility to design and test services for a particular population or to provide care in particular settings, such as community-based services for individuals with disabilities or the aging population.
“How can [the MCOs] show better outcomes? Can they show savings?” Mathis asks. Her committee proposed an oversight bill (SF 2213) with provisions to protect consumers, preserve provider networks and ensure accountability. The measure passed the Senate but stalled in the House. As of early April, other legislative oversight proposals were being considered.


Brief written by Deb Miller, CSG director of health policy.