Problems with Medicaid Privatization Called "Shocking"

Jul 26, 2016

Dozens of health care providers and others crowded a committee room at the statehouse today.  

Democrats in the Iowa Senate held a hearing on problems with Iowa’s new privately managed Medicaid program, which provides health care for the poor and disabled.

The issues include  delayed payments for providers, and claims denied for services.

Hospitals and others say they’re borrowing money to cover expenses while they wait for reimbursement.  

Others have laid off employees because of the shortfall.

I would not concede that we are not paying claims promptly

“As of yesterday we are owed over $3.3 million for April through June,” says Tim Roberts with ABCM Corporation, which owns 30 nursing homes in Iowa. “In order to make up this delay in payments we've had to increase our borrowings to $3.3 million to make sure we make payroll and make sure we pay our venders.”

Critics say some health care providers have laid off employees or even closed down services because of the delays.

Program officials disagree with some of the complaints.

“I would not concede that we are not paying claims promptly,” says Kim Foltz with United Health Care, one of three managed care companies running the program.  

“The claims are being paid on an average of eight and a half days,” says Liz Matney, Medicaid Managed Care Bureau Chief at the Iowa Department of Human Services.   

The amount of labor to deal with these companies is shocking

Providers also say it takes too long for the companies to authorize treatments.  

“The amount of additional labor to deal with these companies is shocking,” says Kent Jackson with Saint Luke’s Behavioral Health in Cedar Rapids. “Across our hospital we estimated four-and-a-half additional staff.”

“We see we have opportunities for improvement for prior authorization processing,” Matney says. “We set a high benchmark for ourselves.”

By one estimate, officials say as many as 25 percent of claims are being denied.

“Twenty-five percent appears high,” Matney says. “We want to get those tamped down certainly.”

Kim Foltz with United Health Care calls the denial rates inflated.

Medicaid officials agree there’s room for improvement in how patients are treated when they call for help.   The managed care companies concede there’s an inevitable transition time for such a big change.

“I wouldn’t say that the first three months of this initial transition has been perfect,” says Cheryl Harding of AmeriHealth Caritas. “But I would also say there are positive stories along with the negative stories.”

“This implementation is smoother than many,” she adds.

Senate Democrats will hold an additional hearing in August.

When will this transition be over?

“The Medicaid mess is getting worse, not better,” says Sen. Liz Mathis, a Democrat from Robins. “We will be vigilant about holding Governor Branstad accountable.”

Even some Republican lawmakers are impatient.

“When will the transition be over?” asks Rep. Julian Garrett, an Indianola Republican. “How long till we don't hear these complaints anymore?”

One company executive estimated the transition could last as long as 12 to 18 months.  But others on the committee say they’re hearing good things from patients and their advocates.

“My constituents got their questions answered within 24 hours,” says Sen. Jack Whitver, a Republican from Ankeny.

“We are taking this seriously,” says Medicaid Director Mikki Stier. “We’re here to help.”