Iowa awards two health care companies contracts for state Medicaid program

By: - August 31, 2022 5:54 pm

Three companies will manage Iowa's privatized Medicaid program. (Photo by Getty Images Plus)

Iowa’s Medicaid benefits will be administered by three health insurance companies, the state Department of Health and Human Services announced Wednesday.

The state announced its intent to award managed care contracts with Amerigroup Iowa and Molina Healthcare of Iowa. These new contracts will go into effect while the state finishes out its current contract with Iowa Total Care, which is set to expire in 2025.

These companies will manage Iowa’s $7 billion program, which combines federal and state funding for health care support of more than 790,000 disabled and low-income Iowans.

Amerigroup and Iowa Total Care already have managed care contracts with the state, but the new agreement set a course for the future. While Iowa HHS announced the winning bids this week, the companies are still going through negotiations to finalize the agreements.

Iowa Medicaid Director Liz Matney said these new contracts will take steps to mitigate existing problems with the state system. The Legislature voted to privatize Medicaid in 2016, a move which both medical providers and recipients said created barriers to accessing health care.

Matney, who assumed her current role in 2021, said she spent the past year having discussions with people enrolled in the program and health care providers to learn about what issues existed. These new contracts will help improve Iowa Medicaid infrastructure, she said, in addition to other steps the department is taking.

“While this managed care announcement is very huge and a long time coming, it is only one piece of the enormous amount of strategy and investment that we’re making to improve the overall Medicaid program,” she said at a news conference Wednesday.

Changes from the contracts include new requirements on continuity of care, better communication with health care providers on payment, and new testing for claims submissions.

Privatized Medicaid has faced challenges for patients, providers

These new stipulations come following a rocky start to the state program’s privatization. Iowa started out with three companies holding managed care contracts, but AmeriHealth Caritas withdrew in 2017, and UnitedHealthcare in 2019. Both companies reported major financial losses because of their contracts with the state, at the same time as recipients reported cuts to medical services.

Amerigroup is the only company which has continually provided services since the state switched to a private system. Iowa Total Care stepped in after UnitedHealthcare’s exit. Matney said Molina was chosen to join these companies because it has experience providing managed care services in state insurance marketplaces, working with more than 5 million Medicaid and Medicare members nationwide.

“We really wanted to make sure we were choosing an entity that had proven experience and demonstrated positive outcomes,” Matney said.

Kelly Garcia, director of the Iowa Department of Health and Human Services, praised Molina’s coming role in Iowa’s Medicaid program and the work Matney has done to improve the system.

“Under Director Matney’s leadership, the Iowa Medicaid program is really addressing the needs heard from the Iowans who rely on us,” Garcia said in a statement. “Making sure those we serve and those who advocate on their behalf are embedded in the conversation is the right thing to do and the work we’re doing reflects that.”

But some critics argued that no matter which companies administered the program, the privatized system itself would continue to cause problems.

“Privatized Medicaid has failed to save tax dollars or make Iowans healthier,” state Sen. Sarah Trone Garriott, D-Waukee, said in a statement. “Year after year, the Reynolds’ administration has disrupted the lives of Iowans while refusing to provide real oversight or accountability. Iowans need new leadership.”

There are no immediate changes for Medicaid recipients. The newly announced four-year contracts with Amerigroup and Molina start July 1, 2023.

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Robin Opsahl
Robin Opsahl

Robin Opsahl is an Iowa Capital Dispatch reporter covering the state Legislature and politics. They have experience covering government, elections and more at media organizations including Roll Call, the Sacramento Bee and the Wausau Daily Herald.