Iowa Medicaid lawsuit dismissed; critics say chronic problems persist

A lawsuit accusing Iowa’s privately run Medicaid program of illegally denying health assistance for thousands of Iowans with disabilities was dismissed Friday by a federal judge because the managed-care company in the suit ended its contract with the state.

The lawsuit against Iowa was filed last year by Disability Rights Iowa, a federally supported advocacy group that seeks to protect the rights of people with disabilities.

Disability Rights claimed in a June 2017 lawsuit that levels of care for people with serious disabilities are being terminated, reduced or denied without legal justification, often violating constitutionally protected due process, through engaging in “vague, subjective, arbitrary and secret criteria.”

The six plaintiffs in the case all were clients of AmeriHealth Caritas, one of three companies initially hired by Iowa in April 2016 to take over management of the Iowa program, which costs $4.8 billion annually to operate.

AmeriHealth subsequently terminated its contract with the state late last year following an unsuccessful effort to renegotiate its rates. That left Amerigroup and UnitedHealthcare to manage claims for the 600,000 Iowans in the program.

Federal District Judge Rebecca Goodgame Ebinger on Friday issued a ruling that concurred with the state’s argument that “there is no evidence in the record that the issues complained of by the plaintiffs relate to other managed care organizations.”

“Plaintiffs cannot plausibly allege ongoing violations of federal law where their allegations relate to an entity no longer in a position to violate federal law,” Goodgame Ebinger wrote.

Disability Rights Iowa officials on Friday said its group is evaluating its next steps.

“We strongly disagree with the judge’s decision,” said DRI Director Jane Hudson. “Regardless of which managed care company is in place, the director of the Iowa Department of Human Services is ultimately responsible for ensuring that Iowans have the Medicaid services they need and receive notice and an opportunity for a fair hearing when their services are denied or cut.”

Iowans have publicly expressed outrage over denied care at multiple public events since the companies took over, pointing blame at each of the three companies.

Earlier this month, the Register published an investigation showing hundreds of cases where Medicaid recipients have appealed what they say are illegal denials of care.

Despite the sharp criticism and concerns voiced publicly by lawmakers in both parties, DHS Director Jerry Foxhoven has given the agency and the private companies' overseeing Medicaid high marks.

Gov. Kim Reynolds said while mistakes have been made in implementing the new management systems, she doesn’t believe the state should resume management of the program.

AmeriHealth spokesman Joshua Brett said the focus of the lawsuit was the overall Iowa program and noted it had not named AmeriHealth as a party.

“We are proud of the work we did in Iowa and the accomplishments of our associates," Brett said.

Marty Matteson, a 39-year-old Webster City man with Down syndrome, was one of the six plaintiffs in the case. He has for years lived independently through a network of assistance that his mother, Marilyn Doocy, said has saved her son from being institutionalized.

Doocy also believes the in-home assistance provided to her son has saved taxpayer dollars, citing the overall and ongoing costs of long-term institutionalized care.

AmeriHealth last year reduced Matteson’s daily payments for care by 37 percent, from $274 to $173. He’s now managed by UnitedHealthcare.

Doocy on Friday said the cuts have continued under UnitedHealthcare.

“It doesn’t matter which company you’ve got, they’re all profit-motivated and acting the same,” Doocy said. “I’m going to keep fighting.”

Multiple bills have been introduced in this year’s legislative session to change some of the ways Medicaid is managed, some that call for the state to again manage the program.

Doocy says voters this fall should take careful note of their representative’s actions in the matter.

“The state, our lawmakers, know about these problems, but when is somebody going to do something about it?” Doocy asked.