DES MOINES, Iowa (AP) — An insurance company that helps run Iowa’s new privatized Medicaid program is withdrawing its participation after less than two years, state officials announced Tuesday, a move that highlights failed negotiations between the company and the state over future coverage expenses.
AmeriHealth Caritas will end its Medicaid coverage in Iowa at the end of November, the company confirmed in a press release. It offered no details on why a new contract with the state, through the Iowa Department of Human Services, could not be reached. DHS officials also declined specifics and focused attention to new contracts with the remaining companies, Amerigroup and UnitedHealthcare.
“From the very beginning I’ve said, ‘If we keep all three, terrific. If we can’t keep all three, that’s OK, we’ll find somebody else to fill in that gap,” said department director Jerry Foxhoven at a press conference. “That’s what we’re going to do.”
Still, the move will require a flurry of activity from the state. About 215,000 Medicaid enrollees had coverage through AmeriHealth Caritas, a company with corporate offices in Philadelphia. They must now be switched to the other companies. DHS then plans to hire another provider to offer coverage beginning next summer.
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DHS spokesman Matt Highland said the state is focused on “a smooth transition” for affected Iowans, noting they’ll get more information in the mail. He emphasized there will be no gap in coverage for them.
The agency confirmed it would spend more money as part of the new contracts. It was described as a 3.3 percent rate increase, but officials did not provide more specifics at the press conference. Foxhoven said the extra spending will be funded through existing agency dollars, though he did not break down how such a setup wouldn’t impact other services.
Separately, the agency has sought what it’s described as cost containment initiatives. The federal government recently approved a plan for the agency to reduce retroactive Medicaid benefits that help some new enrollees afford coverage after a sudden illness. Health care groups in Iowa have criticized the plan, arguing it will shift costs to patients and providers. The state expects to save more than $9 million.
Iowa privatized its Medicaid program in 2016 after DHS agreed to the switch without legislative approval. Democrats have since criticized its rollout, which has included reports of inadequate coverage and delayed payments for local health care providers. DHS and the three companies have repeatedly said such reports are not systemic. A disability rights group claims in a lawsuit filed this summer that the switch has violated the rights of disabled patients.
Amid that, changes could be coming. Foxhoven confirmed the new state contracts with the remaining companies include some updates over coverage. He called the contract changes “significant” but he declined to offer examples. He directed the press to review the documentation online.
Democrats in the Republican-controlled Legislature criticized Tuesday’s announcement. Des Moines Sen. Janet Petersen, the party’s new minority leader, said in a statement it’s “more proof that Medicaid privatization is a horrible disaster.”
GOP Gov. Kim Reynolds was lieutenant governor under former Gov. Terry Branstad when he oversaw the Medicaid shift. Reynolds has repeatedly defended the privatization since she became governor in May. Brenna Smith, a spokeswoman for Reynolds, didn’t acknowledge the criticism in an emailed statement.