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Neighbors Growing Together | Jun 22, 2018

Iowa Total Care selected as third Medicaid insurer in Iowa

Subsidiary of Centene to join program July 2019
By Michaela Ramm, The Gazette | May 22, 2018

Iowa Total Care has been named the new managed-care organization to administer coverage for the state’s Medicaid members, the state announced Monday.

The Department of Human Services named the carrier as the latest private company to help manage the $5 billion program, a move that will bring the total managed-care organizations on the program back up to three for the first time in more than a year.

Iowa Total Care will help begin administering coverage for the nearly 600,000 members on July 1, 2019.

The company joins two other private insurers − Amerigroup of Iowa and UnitedHealthcare of the River Valley.

“Over the course of the next year, DHS will be working closely with Iowa Total Care to get to operational readiness,” said Department of Human Services Spokesman Matt Highland in an email to The Gazette. “Iowa Total Care will have to undergo readiness review just like the initial start of the managed care program.

“We will ensure they have policies and procedures in place, have provider networks which meet network adequacy standards and are ready to authorize services and pay claims.”

Members will be notified by mail when they can select the new company as their insurer, Highland said.

More details on member choice and distribution among the managed-care organizations also will be available before Iowa Total Care begins accepting new beneficiaries.

“Members may continue to change their (managed-care organization) during their annual choice period and throughout the year for reasons of ‘good cause,’” Highland said in the email to The Gazette.

Iowa Total Care is a subsidiary of Centene Corp., a St. Louis, Mo.-based company that became the nation’s largest Medicaid health plans provider in 2015. It has Medicaid contracts with 21 states and has more than 12 million members nationwide, according to its website.

Centene did not immediately response to request for comment from The Gazette.

The insurer recently drew attention in California, after Kaiser Health News data showed that the company made a profit of $1.1 billion from the state’s Medicaid program between 2014 and 2016.

Centene had bid to join Iowa’s program in 2015, but was not one of the four companies selected.

It and two other companies argued Iowa’s bidding system had been “flawed” and “biased.” The contract for WellCare of Iowa, one of the four insurers selected before the managed-care program’s official start in April 2016, was later terminated.

Centene is considerably larger than the second company that bid to be an Iowa managed-care organization. Trusted Health Plan is based in Washington, D.C., and offers Medicaid coverage there and in Michigan.

Iowa Total Care will be replacing AmeriHealth Caritas, one of the initial insurers when Iowa Medicaid was privatized in April 2016. AmeriHealth left the program this past December, citing large financial losses as the driving force in the decision.

That left Amerigroup and UnitedHealthcare as the two insurers on the state program.

The situation was further complicated following AmeriHealth’s exit when Amerigroup announced it no longer had “capacity” to take on any new Medicaid members beginning in December 2017.

This left the bulk of former AmeriHealth members with UnitedHealthcare as their only choice in insurer — save for the roughly 10,000 Iowans who were put under the state fee-for-service system.

DHS worked with Amerigroup to expand its capacity, and the department announced in April the insurer once again would accept new members.

The Department of Human Services at the time touted the Amerigroup expansion as a success in an email to The Gazette, and in addition to selecting the new managed-care organization, the department said it had “restored choice” to Medicaid members.

But AmeriHealth was not the only managed-care organization seeing large financial losses. The companies collectively lost more than $500 million during the first year of operation in Iowa, but AmeriHealth was by far the largest.

It lost nearly $300 million — unsurprising, as that insurer covered the largest number of Iowa’s Medicaid enrollees, with more than 213,000 beneficiaries, according to DHS quarterly reports.

Early on in the program, then-Gov. Terry Branstad had touted Iowa’s managed-care program as a money-saving initiative. Branstad predicted that by fiscal year 2018 — the current budget year — the state would save $232 million for what it would have spent administering the program itself.

But in a Department of Human Services quarterly report for fiscal year 2018, released in December 2017, the annual savings from managed care was estimated at $47.1 million.

However, on Friday, the department released a new state savings estimate of $140.9 million as “projected annual range,” but did not clarify how the department came to these new estimates.

The information was sent Thursday in a one-page letter to Sen. Pam Jochum, D-Dubuque. DHS shared the letter with The Gazette.

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