DES MOINES, Iowa — More than 200,000 people enrolled in Iowa’s privatized Medicaid program have been formally switched to new coverage following the abrupt exit of an insurance company. UnitedHealthcare took over coverage Friday for affected patients, after AmeriHealth Caritas effectively withdrew Thursday from Iowa’s health care system for the poor and disabled. Here’s a look at what’s happened and what’s to come:
Iowa has had three private insurance companies — Amerigroup, AmeriHealth Caritas and UnitedHealthcare — providing Medicaid coverage since Iowa privatized the program in 2016. The roughly $4 billion program, paid through a combination of state and federal dollars, serves more than 600,000 people.
On Oct. 31, AmeriHealth Caritas announced it would drop coverage at the end of November because of failed contract negotiations with the state over money. While private negotiations between the state and the three companies appeared stalled, the expectation was all three companies would continue coverage.
The Iowa Department of Human Services, which oversees the companies’ coverage in the state, later pointed out insurance companies come and go during the first years of a new privatized Medicaid program.
Iowa signed new contracts with the remaining companies, Amerigroup and UnitedHealthcare, with the intention of still offering patient choice. On the same day AmeriHealth Caritas announced its exit, DHS said the company’s patients — about 215,000 — would be switched to UnitedHealthcare but with the option to pick Amerigroup.
On Nov. 21, the department confirmed plans had changed. Amerigroup told DHS it wouldn’t accept the patients because the company didn’t have the capacity to do so.
UnitedHealthcare is now taking all those patients, though the state is also providing separate coverage to about 10,000 of them under an old state-run system.
More than two-thirds of Iowa’s Medicaid patients will now be covered by UnitedHealthcare, and they won’t have the choice to switch. DHS said that will change, though they can’t provide a timeline.
Federal law requires Medicaid beneficiaries to have choice between private insurance companies that offer Medicaid plans. The department initially said it received approval from the federal government to temporarily allow the limited choice, before correcting itself and saying DHS didn’t get such approval because it didn’t need it. The department emphasized it was communicating with the federal government about the changes.
Two Democratic lawmakers penned a letter to GOP Gov. Kim Reynolds on Wednesday seeking more coverage options for the impacted patients. Brenna Smith, her spokeswoman, responded by defending the state’s Medicaid system.
The department said UnitedHealthcare will be paid about $3 million for taking on the influx of patients. For its part, the company is hiring about 400 employees, according to Kim Foltz, the chief executive officer in Iowa for the company. So far, about 200 people have been hired and another 100 have been offered a position. Training is underway.
Foltz said some of the new hires include workers laid off by AmeriHealth Caritas. That company announced after its planned departure it would let go of 400 workers.
Foltz said in a recent phone interview “there will be some challenges” in the transition, but she emphasized the company is positioned to ensure adequate health coverage. She pointed to UnitedHealthcare’s recent negotiations with health care providers around the state that weren’t covered under the company.
As the state deals with the flurry of activity, questions remain about the program’s future under a privatized system.
First, there’s the addition of another insurance company. DHS initially said it would hire another group in time for new coverage next July. The department later delayed those plans until 2019.
The future cost of the program is also unclear. The three companies in the program have argued they’ve lost millions of dollars since they took over coverage. The new contracts with the remaining two companies will cost the state an additional $60 million. The federal government will spend an additional $80 million.
The department has pointed out factors like cost savings within the department will allow for the state’s additional contributions. The agency will pay the insurance companies nearly $20 million directly for so-called capitation rates that are distributed on behalf of each Medicaid patient.
Separately, some health advocacy groups have expressed concern about new conditions under the updated state contracts with the insurance companies. A lawsuit by a disability rights group is also pending that claims reduced services under the privatized system for disabled patients. The department has not commented on the lawsuit.