Iowa Medicaid providers hit with $1.5 million in penalties

Iowa has assessed $1.5 million in penalties against the three companies that managed the state's Medicaid program for failing to meet performance standards, newly released records show.

More than $1 million of those penalties were assessed against AmeriHealth Caritas, which recently terminated its contract with the state because it said it was losing too much money.

In fact, AmeriHealth received the five largest penalties among more than 225 infractions the state has levied against the companies it hired in 2016 to manage Iowa's $6.4 billion Medicaid program, the records show.

Legislators from both parties and some Iowa medical providers say the penalties are more evidence of serious problems in a privatized system that provides healthcare to nearly 25 percent of Iowa's population.

A few believe the infractions are particularly noteworthy considering that Iowa Department of Human Services Director Jerry Foxhoven praised the companies for their work in a Nov. 28 presentation to Gov. Kim Reynolds.

"The way I look at it: It's a head-in-the-sand thing. They just act like everything is fine, even though we all know that's not the case," said Vince Wolrab, owner of JVA Mobility in Cedar Rapids.

In total, AmeriHealth — which was one of three private companies that managed the state’s Medicaid — has been assessed at least $1.2 million in penalties, the records show.

Amerigroup and UnitedHealthcare, the other two companies, have in the same 18-month period been fined $146,486 and $217,819, respectively.

The state has waived at least $815,501 of the $1,561,298 in total penalties it has assessed the three companies.

Two of the largest penalties — which together account for $450,000 — have been paid by AmeriHealth, the records show.

The penalties were made public as part of a records request by the Des Moines Register.

AmeriHealth spokesman Joshua Brett noted that about half the penalties against the company were waived after company officials challenged them.

The penalties — formally termed "liquidated damages" by the state — "are designed to promote achievement of contractual benchmarks." Brett said the company was improving and "no punitive intention is inherent."

"As the (management company) that had the most members, we are proud of the work we did in Iowa and the accomplishments of our associates in a short period of time," Brett said.

Wolrab, whose business provides equipment such as wheelchairs and beds that are customized to meet a patient's medical necessities, said he believes problems associated with private Medicaid management have progressed in recent months.

He said companies hired by the state are reimbursing businesses like his at artificially low rates that are well below the actual costs. His business has stopped providing service to some Iowa Medicaid clients because he said it can't sustain the losses.

"Every single person I've talked with — whether it's DHS or even the (management companies) — they all agree there are problems going on, but nobody wants to fix it or do anything," Wolrab said.

Penalties coincide with contract termination

The biggest penalties — including one for almost $250,000 — are largely associated with AmeriHealth's reporting requirements for Medicaid recipients who are chronically ill and receive long-term services, said Matt Highland, a spokesman for Human Services.

AmeriHealth terminated its contract with Iowa in an announcement made Oct. 31. Its contractual work ended Nov. 30.

The company's top executives had accused DHS of failing to provide data used to set the amount Iowa pays the companies for each Medicaid recipient they manage — commonly known as "capitation rates" — which it contends has led to artificially low payments for its work.

Months prior to its announced exit, AmeriHealth had asked for $75 million to back fill 2016 losses, a 15 percent "capitation rate" increase and an agreement to develop a fairer process for rates set in future years, records obtained by The Des Moines Register show.

Highland denied that the state penalties are connected with AmeriHealth's decision to pull out of Iowa.

The public records show AmeriHealth questioned the state's rate data as early as March and throughout the summer. Human Services withheld those records from Des Moines Register for almost six months.

The Register has alleged the delay is illegal and is pursuing a complaint against the agency before the Iowa Public Information Board.

Exit, infractions pain Iowans

AmeriHealth's exit from Iowa Medicaid management leaves hundreds of thousands of Iowans without a choice of providers, a federal requirement.

The federal rules are intended to protect against situations when poor and elderly populations are unable to find health services in their communities because doctors in their area do not contract with one of the Medicaid providers.

Human Services anticipates that the Centers for Medicare and Medicaid Services — the federal agency that oversees state Medicaid program — will issue a "corrective action plan" outlining steps for Iowa to fix the lack-of-choice issue.

The state hopes to find another company and offer Medicaid choice again in the spring, Human Services officials said this week.

Detail about the number of Medicaid recipients affected by the largest penalties was not apparent from the data.

But some of the first quarterly reports published by Human Services following the April 2016 transition to privatized Medicaid management show that AmeriHealth faced "compliance remedies" for failing to meet reporting standards associated with medical waivers for patients and credentials for medical providers.

Iowa halted publication of the details of its violations

Highland, the Human Services spokesman, said violation details stopped being reported because some infractions were ongoing, which means they "may change or naturally fall off."

Wolrab said AmeriHealth was the most responsive of the three companies hired to manage Iowa' Medicaid program.

But several Iowa medical officials told the Register they had problems with AmeriHealth before it halted its work with the state's Medicaid program.

Jon Novak, the CEO of Total Respiratory and Rehab — a Nebraska business that works in Iowa — said his company couldn't get employees of AmeriHealth to respond, ending in unpaid bills and questions for his Iowa Medicaid clients.

The result can have serious repercussions for patients, as illustrated in the case of Louis Facenda Jr., a quadriplegic from West Des Moines.

The 25-year-old spent as much as half of each day in a dirty diaper last summer because of what his caregivers and medical providers described as AmeriHealth's refusal to cover his care or respond to their appeals.

Kimberly Weber, an executive of Iowa Home Care whose employees are among those who assist Facenda Jr., said AmeriHealth has lost or misfiled dozens of appeals involving his company's patients and failed to respond to inquiries involving the care of hundreds of patients.

Weber estimates her company is owned more than $700,000 in Medicaid services it provided, mostly by AmeriHealth. Her company spends 67 minutes on average to obtain payment for a $78 bill, she said.

"People ask 'Why not forget the $78 bill?' But what they might not understand is there are hundreds and hundreds of these $78 and $150 claims," Weber said. "It's nickel-and-diming us to death."

Reconciling differing Medicaid messages

Gov. Kim Reynolds has said multiple times this year the privatized system has improved recipient access to medical care, given people more choice and brought accountability to the program.

And Foxhoven as recently as Nov. 28 praised the companies for their work, even as his agency handed out hundreds of thousands of dollars in penalties to the companies managing Medicaid.

Complaints have spiked and hundreds of people have attended forums or spoken before legislative committees alerting officials to what they believe are systematic problems with the privatized system.

The characterization of the program's success by top government officials versus the experience of hundreds of Medicaid recipients has caught the attention of legislators from both parties.

"I think based upon what's happened since he (Foxhoven) made his speech two weeks ago in the presentation to the governor to today, I think it's very obvious there are issues that need to be dealt with," said Rep. Rob Taylor, R-West Des Moines.

Sen. Pam Jochum, D-Dubuque who is the caregiver to a grown daughter with severe disabilities, wants to return Medicaid management to the state.

Both legislators predict Medicaid management will be a serious topic in the upcoming legislative session.

"It is collapsing under the weight of greed, arrogance and complicity," Jochum said. "Ending this failed experiment is overdue."