Iowa's privately run Medicaid program has been accused of cutting benefits that allow disabled beneficiaries to live independently in their communities.
Six Iowa Medicaid beneficiaries with serious disabilities sued Gov. Kim Reynolds and the head of the state Human Services Department in a proposed class-action lawsuit in federal court on Monday, alleging the state's contracted managed-care organizations cut their monthly cost allowances for home- and community-based care, even though there has been no change in their care needs.
Approximately 15,000 Iowa Medicaid beneficiaries with serious disabilities ranging from multiple sclerosis to intellectual disabilities and brain injuries may have been impacted by the cuts since Iowa shifted to private, for-profit managed care plans in April 2016.
Iowa's Medicaid program has several waivers available to fund care services for individuals who prefer to live independently rather than in institutional facilities. While some of these programs have monthly cost limits, the plaintiffs each had received variances to increase their care budgets to facilitate independent living.
The complaint alleged that Iowa's three managed-care organizations started cutting care services budgets this year, in violation of the Social Security Act and Americans with Disabilities Act.
"The plans claimed they had lost too much money on their Medicaid contracts, and began cutting these members' necessary home and community-based services without any significant changes to their health needs, giving them neither notice nor an opportunity to appeal," the complaint said. "The state has violated its legal obligations by failing to correct the illegal practices of its agents."
Although Iowa's managed-care organization contracts allow the companies to reject variance requests, they are not allowed to arbitrarily cut beneficiaries' staffing or services without clinical documentation. The contracts also encourage managed-care organizations to work with beneficiaries to keep their costs under budget, according to the complaint.
But managed-care organizations aren't following those directions, the plaintiffs said.
"The defendants have cut the budget of members, without regard to medical necessity, or the needs or preferences based on assessments, the recommendations of their interdisciplinary teams or their individualized service plans."
Also, the managed-care organizations only approve the beneficiaries' managed-care plans via short-term reauthorizations rather than annual evaluations, and one managed-care organization has informed care providers that it would reduce their contracted rates, the complaint said. This drops funding down to 2013 levels, which the plaintiffs said would not cover current care costs.
The plaintiffs have asked the federal court to grant the suit class-action status, prevent the state and managed-care organizations from cutting their benefits and award them attorneys' fees and costs for bringing the lawsuit.