National Names Among 4 Selected for Iowa Medicaid Managed Care

Winning bids reflect the trend of national insurers securing a large share of Medicaid managed care business as states seek savings and the Affordable Care Act allows for expansion.

Two of the top 5 national insurers—which could be 3 if planned mergers succeed—are among the victors in Iowa’s bidding to oversee Medicaid services, as the state becomes the 40th to use managed care in its healthcare program for the poor.

Anthem, UnitedHealthcare, AmeriHealth Caritas, and WellCare Health Plans received notices that Iowa’s Department of Human Services (DHS) intends to award them contracts, under a process that began back in February. The presence of large national insurers continues a trend seen in other states, due to both the expansion of managed care in Medicaid generally and especially since the inclusion of the group of beneficiaries making up to 138% of the federal poverty line. In most states that opted for Medicaid expansion, new enrollees were all required to go into managed care.

Governor Terry Branstad, a Republican who oversaw one of the earlier CMS waivers for Medicaid expansion under the Affordable Care Act, called for putting Iowa’s $4.2 billion program under private management at the start of this year, to take effect January 1, 2016. The change will affect 560,000 beneficiaries. Iowa hopes to save $51 million in the first 6 months of 2016 after seeing costs climb 73% since 2003.

There has been skepticism from Democrats in the legislature whether these amounts will be realized, as well as fears that fees paid to private vendors will cause Medicaid clients to be shortchanged, especially those with disabilities or long-term illnesses.

Initially, Democrats’ unhappiness caused a Senate committee to refuse to give DHS Secretary Charles Palmer a formal endorsement for his renomination, despite many years of service. He was later confirmed. Hospital groups also expressed concern about the plan. In response, Branstad’s administration held a series of meetings around the state on the proposal this spring.

The final 4 vendors emerged from an original group of 11 bidders, although 1 withdrew. Under a policy called the Iowa High Quality Health Care Initiative, the conversion seeks not only savings but also movement to value-based, patient-centered care that is better coordinated and more in step with principles outlined by CMS, which is moving away from fee-for-service payment models.

Consumers will see a program called the IA Health Link, which will be promoted through a communications campaign that targets both Medicaid beneficiaries and various stakeholders, including providers.