Iowa health officials are withholding $44 million from an insurance company that provides health coverage to Iowans under the state’s privatized Medicaid program, pointing to unresolved issues with payments to health providers.
Iowa Department of Human Services staff told Iowa Total Care representatives Friday that the state will withhold about a third of the amount it would have otherwise paid the company this month.
Michael Randol, Iowa’s Medicaid director, said in a letter released Friday that Iowa Total Care had not paid more than 100,000 claims that providers had submitted.
“Ample opportunity was given (to Iowa Total Care) to remedy the issues,” Randol’s letter said.
The state’s action Friday was the first time Iowa’s DHS has withheld payment to a Medicaid insurance provider. Medicaid is the $5 billion federal-state program that provides health coverage to poor and disabled Iowans. Nearly 650,000 Iowans, including children, are enrolled in Medicaid.
DHS oversees the Medicaid program, which became privatized in 2016. The Iowa system has long been controversial, with some accusing insurance companies of not paying providers on a timely basis.
During the 2018 gubernatorial campaign, Gov. Kim Reynolds said that she was willing to penalize insurance companies that were not paying providers “in a timely manner.” She also said she was willing to “up the penalties” if untimely payments continued.
“It’s unacceptable,” the governor said at the time.
Long-standing payment problems
The withholding, which amounts to just under $44 million, represents about 26% of Iowa Total Care’s monthly payment from DHS. Most months, Iowa Total Care receives a little more than $165 million from the state. The state pays private insurance companies to manage care for Medicaid recipients.
Although the state is holding back some of the insurance company’s expected payment, the withholding is not expected to affect the care that patients receive, DHS spokesman Matt Highland said. Instead, the state’s goal is to force the company to fix the problems that DHS outlined.
Randol wrote in the letter that Iowa officials will work with Iowa Total Care to resolve the issues. The company would be able to get the money the state held back later in January if its performance improves.
Randol’s letter said that 106,000 claims had not been paid. The withholding amount was calculated using that number multiplied by the number of months the state had been working with Iowa Total Care on the issues.
The Friday letter said that in November 2019, Randol “provided a verbal warning that failure to comply would result” in some of the money for Iowa Total Care being withheld. The verbal warning was not the first time the state tried to get Iowa Total Care to address the issues, the letter said.
DHS released several letters on Friday, all signed by Randol, that show the state has been raising compliance issues with Iowa Total Care since early September, prompting multiple corrective action plans. The letters are all addressed to Mitch Wasden, the CEO of Iowa Total Care.
Iowa Total Care is a subsidiary of Missouri-based Centene. A message left to Centene officials on Friday afternoon was not returned.
In the Friday letter, Randol told Iowa Total Care that the agency may withhold money again in February if the problems are not resolved.
Iowa Total Care joined the state’s Medicaid program in July. State data show the company provided coverage to 265,049 Iowans as of Nov. 1.
Today, Iowa Total Care and Amerigroup are the remaining insurance carriers providing Medicaid coverage in the state. Amerigroup provided coverage to 384,460 Iowans as of Nov. 1.
Iowa Total Care’s entrance last year into Iowa’s Medicaid program came as the state continued efforts to stabilize coverage offerings for recipients.
In late March 2019, UnitedHealthcare announced it was leaving Iowa’s Medicaid program over failed contract negotiations between the company and the state. Gov. Kim Reynolds at the time termed the demands by UnitedHealthcare officials as “unreasonable and unsustainable.”
AmeriHealth Caritas announced in 2017 that it would leave the program over a loss of hundreds of millions of dollars in providing care. That year, records show the state had assessed more than $1 million in penalties against the company. Amerigroup and UnitedHealthcare at the time had been fined $146,486 and $217,819, respectively.
Medicaid patients and health providers have reported reduced services under the privatized system over the years, including problems with the appeals process. Representatives for the carriers have defended the care, including to lawmakers during periodic meetings at the state Capitol.
Reynolds has also defended privatization and argued it’s more sustainable for long-term health care coverage in the state.
On Sunday afternoon, Iowa Total Care officials reached out to the Des Moines Register with the following statement:
“At Iowa Total Care, we are committed to providing access to high-quality, affordable healthcare to our members in Iowa. Since establishing operations in 2019, we have built strong local connections with members, providers and community partners.
Working with the state, we are making improvements to our processes involving provider claims. As part of that plan, the state is withholding a portion of our monthly capitation payment until remediations are met. We are committed to our members and providers and understand the importance of timely, accurate claims payments.”