Private Healthcare Companies Fall Short on Contract Requirements, Financial Losses Continue

Dec 14, 2016

All three of the for-profit healthcare companies that have been managing Iowa’s Medicaid system are falling short of a contract requirement intended to protect segments of the Medicaid population from having to travel out-of-county for services. 

A quarterly report shows that none of the Managed Care Organizations have enough providers for the Home and Community Based Service waivers. These waivers provided services for various groups like  elderly people, Iowans with brain injuries, and those who are HIV/AIDs positive.

The state contract requires each MCO to have two providers in each county for each waiver. And while none of the companies are meeting this clause, the degree of failure ranges widely.

United Healthcare meets the waiver requirement in 90 percent of Iowa counties. AmeriHealth is at 42 percent, and Amerigroup has signed enough HCBS providers in only 21 percent of counties. The state notes those last two companies have yet to have exception requests approved, and therefore anticipates the success rates to increase.

The report also reveals that none of the companies have made a profit since taking charge of Medicaid. UnitedHealthcare has lost over 25 percent in profits, AmeriHealth is down by 21 percent, and Amerigroup by almost 18 percent.

State senators raised concerns that the companies would leave Iowa if they aren’t able to find financial success. Cynthia McDonald, plan president of Amerigroup Iowa, says it’s too early for her company to consider Medicaid privatization a failure.

"I think when we enter a market, we assume a level of loss," says McDonald. "And then we assume than as we move forward that we get a certain point at break even. And then you begin to see the turnaround based on the opportunities that we are able to put in place in terms of managed care."

None of the companies would comment on whether they will be asking for more money. Back in October the state agreed to pay the three companies an additional $33 million.

The governor says the poor estimates of growing pharmaceutical costs made the rate increase necessary.