Iowa’s largest Medicaid provider departure prompts Democrats to call for ending privatized system

Democrats push to bring Medicaid back under state control after UnitedHealth announced its departure from the system.


Katie Goodale

University of Iowa Hospitals and Clinics as seen on Sept 17, 2018.

Emily Wangen, Politics Reporter

Iowa Democrats are pushing to end the privatization of Medicaid in the state following the end of negations between the state and one of two private insurance organizations managing the program, which covers low-income and Iowans with disabilities.

House Democrats have used the departure of managed-care organization UnitedHealthcare of the River Valley to push amendments to end Medicaid privatization, attaching them to every bill eligible for debate on Monday and Tuesday.

“I’ve already heard from patients and providers deeply concerned about losing their health care and going through another difficult transition,”  House Minority Leader Todd Prichard, D-Charles City, said in a release by the Iowa House Democrats. “This latest health-care disruption for Iowans is unacceptable, and it proves we need to push the ‘reset’ button on managed care.”

One of the amendments aimed to move Iowans with long-term-assistance needs back to fee-for-service, a payment model in which providers are paid for each service provided, while the other would put a complete stop to privatization at the end of the fiscal year. Neither of the amendments passed, and no bills were debated in the Iowa House on Tuesday.

The reopened debate started March 29, when Iowa Gov. Kim Reynolds, a Republican, announced she ended negotiations with UnitedHealthcare, citing terms that she believed to be “unreasonable and unsustainable” in a press release.

“We have continued to work in good faith, along with the Legislature, to make improvements to the managed -care system, including a substantial increase to funding this past year,” Reynolds said in the press release. “Unfortunately, UnitedHealthcare continued to make additional demands that I found to be unacceptable, including a provision that would remove pay-for-performance measures that would hold them accountable.”

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In a statement, the company told a different story, citing financial losses as the reason for its departure and contending that it has incurred $250 million in losses to date.

“We are honored to have served Iowans in the IA Health Link plan for the past three years, but persistent funding and program-design challenges make it impossible for us to provide the quality care and service we believe people deserve,” UnitedHealthcare spokesperson Garrett Kasper said in an email statement.

Both parties have stated their commitment to working together during the transition period. More details about the transition are expected to be released in upcoming weeks, according to a press release from the Iowa Department of Human Services.

With the withdrawal of UnitedHealthcare, Amerigroup Iowa will be the sole managed-care firm in the state until July, when Iowa Total Care will begin providing services.

UnitedHealthcare is the second such group to withdraw from the health-link system since former Iowa Gov. Terry Branstad moved Medicaid under the management of private companies in 2015. In 2017, AmeriHealth Caritas withdrew from the system because of financial losses, causing UnitedHealth to assume care for its members.

As of July 2018, Iowa’s Medicaid covers 617,607 enrollees, 69.2 percent of which have UnitedHealthcare as their organization.

The effect of the departure of the managed-care organization on the University of Iowa Hospitals & Clinics, the largest hospital in the state, are unknown at this point, said UI spokesperson Tom Moore said in an email to The Daily Iowan, because the state has not released its transition plan yet.

“We will work closely with them to try to ensure as smooth a transition as possible for our patients,” Moore said in an email to the DI.