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Iowa Seeks Formal Bids for Medicaid Managed Care

Mary K. Caffrey
Iowa's timetable calls for receiving bids by May 8, 2015, and signing a contract by August 28, 2015. Officials want the program up and running January 1, 2016, because they seek $51 million in savings in the first 6 months.
Iowa Governor Terry Branstad’s plan to wring $51 million in savings from the state’s Medicaid program in early 2016 took a key step forward Monday when the Department of Human Services (DHS) posted a Request for Proposals (RFP) on its website, inviting health plans to bid on managing pieces of the $4.2 billion program.

The RFP document, titled the “Iowa High Quality Health Care Initiative,” calls for bids from vendors willing to move toward “a risk-based managed care approach.” DHS announced the availability of the document in a press release, saying the program’s 3 objectives were “improving quality and access, promoting accountability in outcomes, and creating a more predictable and sustainable Medicaid budget.”

“Modernizing Medicaid will allow Iowa to create incentives to better health outcomes for members through comprehensive healthcare delivered within budget constraints,” DHS Director Charles M. Palmer said in a statement. “By better managing Medicaid, we will make sure Iowans are getting the right care at the right time and in the right setting.”

While the plan calls for better coordination of services for Medicaid clients, the need to find near-term savings concerns some advocates for the poor. “It is a big change for the state of Iowa and we need to be concerned about how it will impact vulnerable Iowans,” state Sen. Amanda Ragan, a Democrat and co-chair of a key healthcare committee, told the Des Moines Register.

In other states, transitions to Medicaid managed care that were driven primarily by the need for budget savings have been rocky, with service disruptions and complaints about bureaucracy. Last year in Ohio, for example, news accounts chronicled tales of home health aides who left long-term clients for other jobs, after working for weeks without pay. New Hampshire’s move to Medicaid managed care is not yet complete, but already some families say they lack access to longtime providers.

However, the Branstad Administration is correct when it notes that most states are moving to managed care to bring escalating Medicaid costs under control. A survey in late 2014 by the Kaiser Family Foundation found that 39 states incorporated some form of managed care into their Medicaid programs, and most planned to expand its use this year.

What makes Iowa’s transition noteworthy is that it comes after Governor Branstad’s well-publicized decision to expand Medicaid to residents between 100% and 138% of the federal poverty line. Iowa’s unique expansion required a waiver from CMS under the terms of the Affordable Care Act (ACA). Healthcare advocates have praised Iowa’s efforts to expand access to this population.

Less well-publicized was Iowa’s transition to managed care for its Medicaid clients seeking mental health services, a process that Palmer has said expanded access tremendously, despite some administrative challenges.

With experience in mental health services and another small program behind them, administrators said Monday that almost all 564,000 Iowans in Medicaid will be affected by the upcoming transition.

Iowa will follow an aggressive schedule to select its contractors, leaving almost 4 months to implement the change on January 1, 2016. According the RFP, bids are due May 8, 2015, with contractors scheduled to be selected July 31, 2015, and contracts signed August 28, 2015. Officials seek $51 million in budget savings by July 1, 2016.

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