An Iowa alert: Take note of Medicaid failures elsewhere
Medicaid managed by corporations has failed in two states, leaving advocates for the poor and disabled to warn Iowa: Don’t get hooked by flashy promises, unverifiable data and staunch ideologies.
Their advice surrounding Iowa’s new Medicaid management system is for public and state officials to aggressively monitor results, insist on transparency and don’t be afraid to fire the for-profit networks if standards aren’t met.
“Watch these companies like a hawk and hold them accountable,” said Ellen Andrews, executive director of the Connecticut Health Policy Project, a nonpartisan health care research group. “But also don’t be embarrassed after you’ve given it a good college try to say: ‘This was an experiment. It didn’t work.’”
Rep. Dave Heaton, R-Mount Pleasant, says he believes Iowa is on a path to take such advice.
The Legislature on April 29 passed House File 2460, a bill that Heaton says would put into place the most comprehensive oversight of those companies in the nation, and, if signed into law by Gov. Terry Branstad, would protect Iowans from an undesirable outcome, Heaton says.
Branstad has not indicated how he is leaning on the measure.
“We’ll have more data to look at than any other state,” said Heaton, chairman of a committee that allocates money to the Iowa Department of Human Services. “And it will be totally transparent.”
Heaton concluded: “It will be up to us as legislators to digest that data and not just set it aside. Those of us designated to be part of oversight, we owe it to take part and to take this very seriously.”
In 2012, Connecticut cut ties with the companies that managed its Medicaid program, known as “managed care organizations,” soon after a study showed that the state was overpaying by as much as $50 million a year for the service. Oklahoma terminated a similar arrangement for most of its Medicaid services in 2004, citing cost hikes and service failures.
“Connecticut has a 15-year history with managed-care organizations, and there has been a diminishing confidence in the value of what they are providing," Mark Schaefer, the state's Medicaid director, told USA Today in 2011 after the state decided to terminate the managed-care contracts.
Connecticut reports that the move cut the average cost for each Medicaid recipient by about $50 a month while simultaneously increasing the number of doctors who treat patients in the program. Oklahoma reported expanded quality and access to health care services, a reduction in emergency room services and higher overall satisfaction rates among members.
Andrews’ group focuses on improving health care for all residents in Connecticut, often billed as the “insurance capital of the world.” She said the results stand on their own, noting her state’s decline in average monthly per-member costs as compared with the national average, which has grown 5 to 15 percent in the past five years, according to a study by the Connecticut Department of Social Services.
“I’m not saying it won’t work for Iowa, but it didn’t work for us,” Andrews said. “It will take a lot of political will and staff resources to hold companies accountable to do the right thing. In Connecticut, we found it was just easier to do it ourselves.”
A national trend
Only Connecticut and Alaska do not use at least some form of managed care, according to information from the U.S. Department of Health and Human Services. Even Oklahoma still uses some managed care services, and state leaders have recently discussed expanding that role despite its rocky history.
David Blatt, director of the nonpartisan Oklahoma Policy Institute, says those numbers, as well as his state’s interest in reverting to the former system, speak to the powerful influence of insurance companies, many publicly traded, whose lobbyists often make big promises to state officials.
“We’ve been down this road before, and it turns out that it was a painful and costly dead end,” Blatt said.
Iowa has used private companies to manage pieces of its Medicaid program for decades, including some mental health services. On April 1, the state transitioned nearly all of the state’s management duties to three companies: UnitedHealthcare, Amerigroup and AmeriHealth. Those companies together will be paid up to $504 million in the first year to manage the $4.2 billion Medicaid program. (Iowa’s management cost under the old system cost the state less than $336 million.)
The privatization plan has created political backlash in Iowa — mostly among Democrats, who have resisted other efforts to privatize government services.
Branstad and his administration say the new system will save taxpayer money, improve health care services for the 560,000 poor or disabled Iowans in the program and stabilize budgets by setting a flat per-person payment to the corporations in return for program management.
Iowa’s response: We’ll be watching
Some Iowa Medicaid patients and health providers have expressed aggravation in the first few weeks of Iowa’s new management system. But advocates and critics say crucial services are being delivered.
The real test is longer term, said Sheldon Toubman, an attorney for the New Haven Legal Assistance Association in Connecticut.
Toubman said the lack of accountability in his state contributed to the downfall of the privately managed Medicaid agreements. Data were often inconsistently reported among companies, unverifiable or not available, and that made the company’s work impossible to compare, he said.
Toubman recommended that Iowa closely monitor denial rates; payments to medical providers as a way to make sure they are not being underpaid, which can encourage them to stop serving the program; and close accounting of how much money is spent on actual medical care. He also says a “secret shopper” policy is necessary to truly assess whether the services work as promised.
“They all say they are going to improve health care and reduce costs, so let’s see it,” Toubman said.
Much of the data are being collected, said Amy McCoy, a Human Services department spokeswoman. State officials have learned from the experiences in other states and believe they have a network of reporting requirements that can help the state fairly assess and monitor the work of the companies, she said.
“We have extensive reporting, and we put together a very thoughtful contract to be able to do that,” McCoy said.
Sen. Amanda Ragan, D-Mason City, called the oversight bill awaiting the governor's signature a "good first step." She noted that earlier oversight proposals she helped to write were more detailed. Those versions, for example, would have provided additional ombudsmen to advocate and investigate complaints on behalf of individual Medicaid recipients who believe they have been treated unfairly.
"There are good things in the oversight, but there are things that didn’t get in as well," Ragan said. "It’s very personal to the people who are utilizing the services. We all want to make sure these services continue."