Iowa Negotiations With Private Medicaid Companies Continue Into New Fiscal Year

Jul 12, 2018

Several days after the new fiscal year started July 1, Iowa has yet to finalize contracts with the companies that run its privatized Medicaid program.

This also happened last year. Department of Human Services Director Jerry Foxhoven told lawmakers in January negotiations would be completed in time for their budget process.

But lawmakers approved budgets more than two months ago without knowing how much the Medicaid program would cost.

“I think it’s going to be done any time now,” Foxhoven said Wednesday. “Obviously we would’ve liked to have it done sooner. It’s not like baking a pie where you just look at a recipe. You have to look at all the issues.”

Foxhoven said part of the delay is the addition of oversight provisions to the contracts with the managed care organizations (MCOs). He said he doesn’t know if the state will pay the MCOs significantly more this year.

“We’re getting close to negotiations, but I’m not prepared to say what it’s going to be until we get there,” Foxhoven said.

He added he’s confident both current MCOs, Amerigroup and UnitedHealthcare, will stay in the Iowa program this year. In the last fiscal year that ended June 30, one MCO left the state and the two remaining companies were eventually given 3 percent raises.

If the state grants significant rate increases to the MCOs this year, it could affect the department’s controversial assessment of how much money privatized Medicaid is saving the state when compared with the former state-run program.

Sen. Pam Jochum, D-Dubuque, has been a prominent critic of privatized Medicaid in Iowa.

“Certainly if they’re trying to put more oversight into contracts, that’s a good thing,” she said.

But Jochum recalled the promise made by Foxhoven to lawmakers earlier this year. She said they will probably have to appropriate additional money when the legislature convenes in 2019.

“I think this whole privatization has proven to be a failed experiment,” Jochum said.