Disabled Iowans could be exempted from private Medicaid management

Iowa might resume direct oversight of care for people with serious disabilities instead of having private Medicaid-management companies continue doing it, the state’s human-services director said Wednesday.

Many of the most serious complaints about Iowa’s privatized Medicaid system have come from disabled Iowans and their families. Numerous families have reported having their services cut and their hassles multiplied by the management companies. Their plight has sparked a federal lawsuit against the state.

“We are examining patients that may not be the right mix” for managed care-companies to oversee, Department of Human Services Director Jerry Foxhoven told an advisory council for his agency Wednesday.

Foxhoven, who recently became the department’s director, said the Medicaid management companies could succeed at saving money by helping many other Iowans improve their health, such as by encouraging them to quit smoking. “But somebody who’s a quadriplegic and is on a ventilator, there’s probably not much you’re going to do to improve their health or bring costs down,” Foxhoven told the Council on Human Services.

Iowa shifted last year to having three private companies manage its Medicaid program, which covers health care for nearly 600,000 poor or disabled Iowans. The change has been intensely controversial, especially in regards to how it has affected care for Iowans with serious disabilities.

Foxhoven raised the possibility of exempting some recipients from managed care during a discussion Wednesday of extended negotiations over new payment rates for the for-profit management companies. Those new rates were supposed to take effect July 1. The management companies have been demanding more money, saying they’ve lost hundreds of millions of dollars on the project.

Foxhoven said the negotiations have included whether some Iowa Medicaid recipients should be withdrawn from the private companies’ caseloads and put back under direct state oversight. “That’s part of what’s dragging this out,” he told the council. He said the management companies are open to the idea.

The director later told reporters that the change could take place soon, in future years, or not at all. But he characterized it as a serious proposal.

Although severely disabled Iowans make up a relatively small share of those on Medicaid, they account for a large share of the costs, because many need several hours of care each day. In June, the advocacy group Disability Rights Iowa sued state officials, including Foxhoven. The group contends Iowa is violating the rights of 15,000 disabled Iowans by denying them services they need to remain in their homes instead of moving to nursing homes or other facilities.

The lawsuit’s demands include that the state resume direct oversight of disabled Iowans’ Medicaid benefits. Foxhoven said Wednesday the suit did not spur his consideration of taking that step. “What’s driving it is the question of, ‘How do we best serve this population?’” he said in an interview.

Cyndy Miller, a lawyer for Disability Rights Iowa, said later Wednesday that her group would favor the change, if the state would resume approving the level of benefits that allow people with disabilities to live in their homes. "Otherwise individuals with serious needs will continue to have the same experiences of not having their needs met, even if DHS is administering their services," she said.

State Sen. Amanda Ragan, a Mason City Democrat and leading critic of privatizing Medicaid, said she agreed with the idea of resuming direct state oversight of disabled Iowans’ care. Ragan is a non-voting member of the human-services council. She said in an interview that many of the complaints she and others have received have been about the companies’ limits on services to disabled Medicaid recipients. She said she didn’t know what to make of Foxhoven’s statement at the meeting. “It’s something we agree with, but I don’t know if it’s real or not,” she said.

Wednesday's meeting included pointed questions from council members, who are frustrated that the department has yet to negotiate new payment rates with the management companies. The council members were being asked to approve a $1.8 billion budget proposal for fiscal year 2019, which starts next July 1, without knowing how much more public money the state will have to spend on Medicaid in the current fiscal year. Hundreds of millions of dollars hang in the balance, but department administrators have offered no estimates of how much higher the companies’ new rates will be.

“How are we budgeting if we don’t have those?” asked Kim Spading, a council member who is a University of Iowa pharmacist.

Foxhoven, who predicted in July that the negotiations would be resolved by Aug. 1, said they’re very close to conclusion. “We’ve been doing this night and day, trying to get there,” he said. “…We’re trying very hard to protect the taxpayer,” but the companies can’t be expected to lose money forever, he added.

Any large increase in state money to the management companies could further crimp a state budget that has already been cut repeatedly.

Foxhoven added that the negotiations aren’t just about payment rates. They also include rules changes that could give the companies more flexibility to manage care and save money.