Iowa can proceed with the privatization of its $4.2 billion Medicaid program but will need to wait until April 1 to make the formal switch, federal officials announced Tuesday.
In a letter to Iowa Medicaid Director Mikki Stier, the federal Centers for Medicare and Medicaid Services said the state had made significant improvements following a 60-day delay past its original Jan. 1 start date.
Iowa officials had been preparing for a potential March 1 switch. In its letter, CMS Director Vikki Wachino said the state may move ahead with the switch in April 1. She said the agency will continue to monitor the state's progress.
"Iowa has made significant progress since December to stand up their systems, call center and provide the information needed for beneficiaries to know what they need to do and where to get the care they need," CMS spokesman Aaron Albright said in a statement.
CMS in December postponed the state's original plan to begin managed care on Jan. 1, saying too many issues remained to safely transfer the care of 560,000 poor and disabled residents to three private for-profit insurance companies.
Iowa Gov. Terry Branstad in January 2015 announced a plan to shift the Medicaid program from state-run to a fully managed care program, saying it would save money and provide better care. It's a significant change in the care of about 18 percent of the state's population who use the Medicaid program for health care. The program is funded with state and federal dollars.
He released a statement Tuesday saying the approval gives certainty to patients and providers.
"Iowa is ready for a new system that provides access through more doctors and will create a more sustainable Medicaid program for taxpayers," he said.
Senate Democrats who have fought to delay or stop the transition to managed care said they're thankful for another month's delay but believe the state still isn't ready.
"Families living with severe medical challenges, the people affected most directly by Iowa Medicaid privatization, know it is far from ready," said Sen. Amanda Ragan. "Iowans still can't get answers to basic questions. Iowans are being told trusted local doctors and service providers won't be available. Iowans are losing independent case managers paid to put patients first."
A bill that would place the private management plan on indefinite hold passed the Democratic-controlled Senate on Feb. 11, but Republican leaders in the House say they will not move it forward because it is destined for a veto if it were to pass.
Senate Democrats also have introduced a bill that would establish state monitoring to ensure the transition is working. It's unclear if the measure will pass.
Now that it's approved the state's program will be run by three private for-profit insurance companies Amerigroup Corp., AmeriHealth Caritas and UnitedHealthcare Plan of the River Valley. The companies were selected by the Iowa Department of Human Services.
Stier told CMS in a letter dated Tuesday that more than 90 percent of active health care providers have signed contracts with at least one of the managed care companies and more than 70 percent are contracted with two of the companies. More than 60 percent have signed up to work with all three, she said.
"We're committed to improving quality and access, promoting accountability for outcomes, and creating a more predictable and sustainable Medicaid program," she said in a statement.
Legal challenges continue including one from the Iowa Hospital Association, a trade group for the state's hospitals. It sued the state claiming the privatization plan is illegal because it takes millions of dollars from a dedicated hospital trust fund and gives it to the managed care companies. The case is pending in state court.
