Cedar Rapids-Iowa City Gazette “On Topic” column from March 13, 2016
Gov. Terry Branstad always and forever, it seems, has branded himself as pro-business.
Back in 2010 when he campaigned to retake Terrace Hill from then-Gov.
Chet Culver, Branstad won the endorsement of the Iowa Association of
Business and Industry’s political action committee. The organization at
the time represented 1,400 businesses in the state.
When he got that nod from the PAC, Branstad vowed to be a
“pro-business, pro-growth governor who will reduce taxes and not
increase debt.” He resolved, in a Gazette story reported by James Q.
Lynch at the time, to “make government more efficient and work day in
and day out to encourage job creation.”
So you have to wonder what thought Gov. Branstad gave, with that
pro-business mindset, to the many health care providers, large and
small, when he set in motion his lickety-split rush to managed care.
The difficulty, uncertainty, turmoil — use what word you like — that
was set loose by this hurried push is hard for an objective observer —
as well as the governor’s political adversaries — to deny.
The tsunami-like effect has been felt not only by Iowa’s large
hospitals and small clinics, case workers, nurses and other
professionals. Also affected are the three private, out-of-state
managed-care organizations that began to set up shop here last year —
all on the promise that Iowa would be ready for the transition by Jan.
1. Which it wasn’t.
They’ve lost time and they’ve lost money. In the meantime, they’ve disconcerted their client base — Iowa’s Medicaid recipients.
None of this makes for good business.
To recap: Iowa’s Medicaid price tag soared from $2.4 billion in
fiscal year 2004 to $4.9 billion in FY 2015, according to the state’s
Department of Human Services
In an understandable effort to want to get a grip on these mounting
costs, Gov. Branstad announced in February 2015 a shift from a program
in which providers are reimbursed by the state for services to a
managed-care system. (The DHS has claimed Iowa would save some $51
million in six months alone.) Start date: New Year’s Day 2016.
Three — well, four at first, but that’s a long story — managed-care
companies signed contracts to take over the approximately $5 billion
program that works with 560,000 enrollees. They began to take on nurses,
case workers and other professionals — some hired away from existing
agencies and hospitals in the state.
In early November, the Iowa Hospital Association and 11 hospitals called for a delay. Things were moving too fast, they said.
And in mid-December, after on-site reviews and expressing ongoing
concerns over 16 separate issues relating to the provider network, the
Centers for Medicare and Medicaid Services — aka, the feds — agreed, and
pressed the pause button. The start got pushed back to March 1.
During all this, some Medicaid beneficiaries continued to protest
that they’d yet to even get their hands on an information packet from
their state-selected managed-care organization, let alone try to figure
out what they wanted to do. They also worried — and still do — that
insurance coverage and services would be cut back under the private,
They repeatedly said they couldn’t get straight answers from the managed-care organizations or from the state.
Frustration reigned. As Jeff Edberg of Iowa City, father of two
Medicaid beneficiaries, told Gazette health care reporter Chelsea Keenan
last month, he’s spent roughly 10 hours a week on the phone with the
DHS and elected officials trying to obtain information.
“I’d love to be wrong, to come back in three, four, seven months and
say, ‘Gee, I was being an overprotective dad and the governor really had
my son’s best interests at heart,’” Edberg said.
The managed-care organizations, meanwhile, weren’t — and still aren’t
— making back any their financial outlay. Anthem, parent of Amerigroup,
one of the three companies picked for Iowa, offered an example of how
much money we’re talking about, during its 2015 fourth-quarter investors
conference call in late January, and as reported by TheStreet.com, the
Des Moines Register and others:
Anthem’s CFO, Wayne DeVeydt, said that the company anticipated a “few
hundred-million-dollar headwind” in various states’ managed-care
programs where the company was involved, and that about 25 percent of
that potential loss could be tied to the “delay of two months” in Iowa
in 2016. So if that “few” hundred million dollars is, let’s say, $200
million, at minimum, a quarter of that would be $50 million. (You can
listen to that conference call at http://smgs.us/3k7p.)
Not to be left out, Senate Democrats put together a bill to ensure
oversight and, they said, to better protect both the beneficiaries and
the health care providers. Culver reappeared on the public scene,
calling for accountability.
Branstad responded by suggesting Culver and the hospitals were
attempting to “scare” patients — that’s the word the governor used on
Iowa Public Television’s “Iowa Press.”
All along the governor said everything has been moving along quite
well, by golly, and the state was ready, providers were ready and he was
On Feb. 23, the CMS finally OK’d the managed-care handover — but again slid back its debut, to April 1.
More important, though, this has been more than partisan politics as
usual, as Branstad has suggested. This dash also seems to have given
little concern to the providers, companies and enrollees.
Which brings the big question: What’s the rush?
Sure, it’s true 39 other states have gone to managed care. But most
made their transition with bigger windows — some up to 18 months.
Remember, Iowa’s DHS didn’t sign contracts with the managed-care
organizations until October 2015 — just two months before the initially
planned start date.
Also, only about five states have moved as many Medicaid recipients
to managed care as Iowa wants to slide over. The significant majority of
states shifted much smaller amounts of their population to managed
State Sen. Liz Mathis, D-Robins, pointed out to The Gazette in
mid-October that Kansas moved toward managed care with a similarly short
time frame, and that was a “disaster.”
Indeed, according to the KHI News Service, part of the Kansas Health
Institute, the three companies that handled Medicaid for that state lost
$110 million in 2013, the first year of managed care there.
As Mathis said, Iowa’s unnecessary haste “is not good for patients, and it’s not good” for the managed-care organizations.
Time will tell how managed care unfolds in Iowa in the months and
years to come, assuming the transition does go through in a few weeks.
But surely a little more time to work things out wouldn’t have hurt. That’s just good business.