Des Moines RegisterPublished 5:45 p.m. CT April 28, 2017 | Updated 6:27 p.m. CT April 28, 2017
Privatization hasn’t worked for anyone
Perhaps it wasn’t obvious before, but it should be now: If the hired guns paid to “manage” Iowa’s Medicaid program are saving taxpayers any money at all, they’re doing it by denying claims for payment and slow-walking the payment-approval process.
For more than a year now, Gov. Terry Branstad and his soon-to-be successor, Lt. Gov. Kim Reynolds, have argued that by privatizing the administration of Medicaid, which serves 600,000 Iowans, they’ve somehow saved taxpayers a fortune and made the system more efficient.
They’ve repeatedly ignored the complaints of patients who can’t get approval for treatments, as well as the concerns of care providers who say they’re not getting paid on time.
But now Iowa’s biggest hospital says that it must cut in half its operating-margin projections for 2017 due partly to a sharp increase in claim denials from Medicaid’s managed-care payers.
Jean Robillard, vice president for medical affairs at University of Iowa Health Care, told the Board of Regents last week that an increase in those denials has prompted the hospital to adjust its margin projections for the current budget year from 3.5 percent to just 1.6 percent, reflecting an anticipated decrease from $52.2 million to $23.9 million. By comparison, the hospital system’s operating margin in 2016 was $101.2 million, or 6.9 percent.
“We have to find a solution for this,” Robillard told the regents. “This is serious.”
As reported by the Cedar Rapids Gazette, hospital records show Medicaid’s managed-care payers rejected 700 claims in the last year, which was two or three times the number rejected by the insurer with the next-highest denial rate.
“It’s almost 10 times more than the other commercial payers,” Robillard says. “This is huge.”
Separately, Robillard says, the hospital still is seeking about $6.4 million in Medicaid reimbursements for old cases dating back 270 days or more.
It was almost a year ago that other Iowa hospitals and care providers began sounding the alarm with regard to denied claims for payment. Some agencies were forced to borrow money just to make payroll; others said they’d likely have to close their doors unless the system was improved.
The complaints were more than anecdotal. A Medicaid-provider survey released last summer by Iowa lawmakers gathered responses from more than 400 Iowa doctors, hospitals, clinics and nonprofits. More than 60 percent said privatization had reduced the quality of services they provided. Almost all reported an increase in administrative costs. Nearly 30 percent said they had been forced to take out loans to cover expenses while awaiting payment.
Still, the governor claimed his Medicaid privatization was a resounding success.
Then, late last year, it was revealed that the for-profit companies hired to run Medicaid had been complaining privately to state administrators that the program was “drastically underfunded” and the situation represented a “catastrophic experience.” In one email disclosed through the Iowa Open Records Law, a managed-care executive wrote that Iowa’s offer to quietly give the companies an extra $128 million in state and federal money was “not acceptable,” adding that without even greater changes, privatized Medicaid in Iowa was unsustainable.
When virtually everyone in the Medicaid system — the patients, the care providers, and the managed-care companies themselves — start tossing around words like “catastrophic,” you’d think the governor might step back and reassess the situation.
But, no, despite the fact that Medicaid is a literal lifeline to some of Iowa’s most vulnerable citizens, Branstad has insisted on staying the course.
Perhaps the predicament faced by the University of Iowa Hospitals — a 300-pound gorilla that cannot be ignored, and an entity of the state itself — will finally force him to acknowledge reality.
Unfortunately, “denial” isn’t just a river in Egypt, or the manner in which Iowa’s managed-care contractors deal with claims for payment. “Denial” also describes the state in which our governor has been ever since Medicaid was privatized.