An official on Friday terminated Iowa's contract with a private company that was scheduled to help manage the state's $4.2 billion Medicaid program, a decision that throws another hurdle at plans for privatization.
Iowa Department of Administrative Services Director Janet Phipps released a report that affirms an administrative law judge's recommendation in November that WellCare of Iowa be dropped over allegations it didn't properly disclose information about fraud or mismanagement during its bid for a contract.
Phipps was selected by Gov. Terry Branstad to review the recommendation and her decision is final, according to Ben Hammes, the governor's spokesman.
Phipps said in her report that WellCare "failed to disclose highly relevant information" during the bidding process. Lauralie Rubel, state president of WellCare of Iowa, said the company plans to seek an immediate injunction and appeal.
"This decision does not accurately reflect the facts, the integrity of Iowa's procurement process or Iowa law. WellCare intends to use every avenue available within the legal system to correct this erroneous outcome," she said in a written statement.
Branstad said in a statement that Phipps' decision shows she conducted a "thorough and methodical" investigation into the recommendation.
Phipps' report upholds the state's contracts with Amerigroup Iowa, AmeriHealth Caritas Iowa and UnitedHealthcare Plan of the River Valley. Hammes said Medicaid recipients assigned to WellCare could be served by the other three companies, though the administration was still reviewing the decision.
Amy Lorentzen McCoy, a spokeswoman for the Iowa Department of Human Services, also said the agency is reviewing the decision.
The report was released on a Friday night and comes one day after federal officials instructed Iowa to delay its move to private managed care until March 1. Branstad had planned to make the switch beginning Jan. 1 amid criticism from doctors, hospitals and others that the process was being rushed.
The CMS said in a letter Thursday that approval is expected for Iowa to move forward with privatization, but it didn't think the state was ready for the transition in two weeks.
The Medicaid program provides health care to poor children, families and disabled people, as well as some low-income adults. It is funded with state and federal dollars.
