Iowa's privatized Medicaid program has asked the federal government to hand over up to $225 million in risk-corridor payments to make up for losses experienced by the health insurers that run the managed-care program.
The three insurers that operate the state Medicaid program—Anthem's Amerigroup, AmeriHealth Caritas and UnitedHealthcare—have lost an estimated $450 million since the program began in 2016.
The Iowa Department of Human Services has requested the CMS provide up to $225 million in funds to recoup those losses and the state department anticipates the CMS will approve the payments in the “coming weeks,” said Amy McCoy, a spokeswoman for the state agency. Risk corridors are commonly used for Medicaid managed-care programs, she said.
State taxpayers will also pay about $10 million after June 2018 to help the program.
Iowa outsourced its $4.2 billion Medicaid program to managed-care companies as a cost-saving tactic. It has saved the state an estimated $110 million in taxpayer dollars, McCoy said.
But the program has been controversial. The insurers have complained it is “drastically underfunded,” calling it a “catastrophic experience.” In late 2016, insurers voiced concern that the program isn't financially sustainable, and the reimbursement rates are flawed.
But Gov. Terry Branstad, a Republican, still defends the Medicaid program. In a news conference earlier this week the governor said the state would continue to work with managed-care companies to determine "what makes the most sense going forward.”
The Iowa Medicaid program serves about 500,000 residents.
More than two-thirds of states, including Iowa, contract out some or all of their Medicaid program to private companies, but the benefits of the practice and its impact on quality and cost of care have been unclear.