How privatized Medicaid is systematically denying hundreds of disabled Iowans the medical equipment their doctors say they need

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VINTON, Ia. — Hundreds of disabled Iowans are being denied the medical devices they need, including wheelchairs, shower stools and even nutritional supplements, by private Medicaid providers that routinely refuse to pay for them, the Des Moines Register has found.

The casualties are patients like 4-year-old Tatum Woods of Vinton, Iowa, who for nearly six months was forced to crawl because a private Medicaid provider said it would pay less than a fifth of the cost of his $3,500 customized walker.

It’s an experience multiple officials and lawmakers contend is widespread in Iowa, and it's driving Medicaid patients and their families to new depths of frustration.

“These kids shouldn’t have to fight to get their equipment," said Kristie Woods, Tatum's mother. "They’ve already got enough struggles."

At issue is the reimbursement rate the private companies that manage Iowa’s $4.8 billion Medicaid program are paying to medical equipment providers for specialized equipment.

Medical device providers say Iowa's privatized Medicaid managers are willing to pay only pennies on the dollar — if anything at all — for the medical devices that doctors are authorizing for their disabled patients.

It's another example of what critics say is Iowa's flawed Medicaid system since then-Gov. Terry Branstad turned over management to for-profit companies in April 2016 in an attempt to save money and in his view improve care.

Earlier this year, the Register reported that disabled Medicaid patients who try to appeal their denied or reduced care are being stymied by an appeal process that presents a thicket of administrative and legal roadblocks.

Iowa’s Medicaid provides services to 680,000 poor or disabled residents, more than a fifth of the state’s population.

Care Denied:How Iowa's Medicaid maze is trapping patients in endless appeals

20 cents on the dollar

In Tatum Woods' case, Amerigroup, his Medicaid company, offered to pay $575 of the $3,500 manufacturer cost of the wheelchair-like device known as a gait trainer, which suspends him above the floor and allows him to "walk" by propelling himself on wheels.

Tatum had outgrown his old trainer in September.

Officials from Total Respiratory and Rehab in Hiawatha said Amerigroup classified Tatum’s equipment as a “miscellaneous” expense, capping the maximum reimbursement at less than 20 percent of its cost.

Total Respiratory said Tatum is one of dozens of clients it has been forced to deny equipment in the last year because Iowa's Medicaid system refused to pick up the cost.

The company — and four other medical equipment providers across the state — have outlined multiple billing problems associated with the Medicaid companies that they say has resulted in underpayment by tens of thousands of dollars and forced them into denying equipment to patients who need it.

Each of the medical equipment companies said they are experiencing problems from both of Iowa’s Medicaid management companies, Amerigroup and UnitedHealthcare.

UnitedHealthcare tends to limit claims or issue blanket denials, while Amerigroup incorrectly codes and underpays, they contend.

“They’re trying to reimburse us well below our cost,” said Jon Novak, CEO of Total Respiratory. “If we dispense the equipment at this cost, we would go broke.”

More: Iowa mom takes on Medicaid to fight for her dying son — and wins

Seeking to be independent

Durable medical equipment such as the walker sought for Tatum represents 1.2 percent to 2 percent of healthcare spending, according to information from the Centers for Medicare & Medicaid Services.

The equipment — including oxygen canisters, feeding tubes and wheelchairs — enables millions of disabled Americans to continue living independently or to avoid more costly and painful procedures.

Each $1 spent allows federal and state governments to avoid spending another $17, according to a 2014 study by Leitten Consulting, a Florida-based business.

Iowa since 2016 has paid the for-profit companies a per-person amount to manage the program. The state does not track or report how much those companies spend on medical equipment.

Iowa Ombudsman Kristie Hirschman, whose office recently issued a highly critical report of the state's Medicaid appeal process, said her office has taken several complaints about medical equipment.

Business officials in one case eventually accepted losses for medical compression socks it provided to a patient after one of the Medicaid companies continued to deny payment because of billing problems.

The company selling the compression garment told the ombudsman it had been reimbursed $1,200 for the equipment before private companies took over Iowa's Medicaid program in 2016.

In another case, a medical supply company complained that the Medicaid company's reimbursement rate was less than the company paid for the diabetic supplies it was providing to the Medicaid recipient. That recipient was forced to find another equipment company to sell the supplies as a result.

'It's a money game'

Kristie Woods said it took her family and her son’s medical providers months and dozens of hours of their time wrangling with Amerigroup, calls to the Iowa Department of Human Services and contacts with lawmakers and other state or federal offices before the billing issue was resolved and her son received the customized walker.

She said the issue was compounded by the inability or unwillingness of Human Services, which oversees Iowa's Medicaid system, to become involved. And because Amerigroup had approved the equipment, though at a fraction of the actual cost, she couldn't file an appeal with the state.

More: Iowa lawmakers stake out positions on state's privatized Medicaid woes

Without the ability to file an appeal, Woods couldn’t ask an Iowa administrative law judge — an independent party — to help resolve the matter.

Tatum Woods, who suffers from a genetic disorder known as Kabuki syndrome, ultimately received the gait trainer on Feb. 19 after Amerigroup agreed to pay Total Respiratory its cost.

Kristie Woods said she was never given an explanation from Amerigroup about reasons for the delay, which she believes has hampered her son’s physical development.

“It’s a money game,” Woods said. “Parents and special-needs people should not be put on the wayside.”

Amerigroup declined interview requests. The company issued a three-sentence statement saying it is committed to seeing its consumers have access to medical equipment and believes equipment providers “should be fairly compensated.”

“Depending on the circumstances, we recognize an enhanced level of reimbursement may be warranted when a consumer needs a high cost, medically necessary item,” Amerigroup spokesman Tony Felts said in the statement.

'This is about my son's life'

In a case involving UnitedHealthcare, Carol Dorsey said her 37-year-old son, Cody Trent, has been denied catheters, and she’s afraid it will result in his death.

Trent, who has Down syndrome, in 2004 had complications linked to another procedure that resulted in him needing to be catheterized regularly or risk infection.

UnitedHealthcare in December told the company it would pay for only one catheter a month, rather than the 12 Trent needs. A medical supply company this month told the family it could no longer afford to go unpaid for 11 catheters.

On March 19, Trent’s normal catheter treatment was bypassed for the first time. The Greenfield resident, who lives independently, faces an uncertain future, his mother said.

Dorsey, searching for online catheter sales companies, estimated the savings for denying payment of 11 catheters is less than $100 a month. Months of wrangling and hours on the phone by Dorsey and her son’s medical providers have been unsuccessful.

“This is not about publicity, this is about my son’s life,” Dorsey said. “If he were to insert a dirty catheter, he could be dead in weeks.”

Taking rulings to court

Even when appeals are possible, cases have been caught in a bureaucratic quagmire that has delayed equipment to some recipients for more than a year, according to Register research.

UnitedHealthcare on at least three occasions has challenged in district court the “final decisions” of Iowa Human Services directors who sided with administrative law judges and ordered the company to pay for specially designed equipment deemed medically necessary.

Those cases include:

A wheelchair for Spencer nursing home resident Ann Carrigan, a 70-year-old with advanced cerebral palsy who can’t walk or talk.

A home platform lift for Barbara Sumers , a 69-year-old Des Moines stroke survivor whose left leg and lower body are paralyzed.

A bariatric wheelchair for Des Moines nursing home resident Mildred Baker, whose multiple ailments have left her unable to walk without assistance.

In each case, UnitedHealthcare argued that Human Services’ reasoning that justified the specialized equipment was “illogical,” arguing that Iowa’s interpretation of “customized” equipment is flawed.

Carrigan's case has dragged on the longest: An appeal continues after 15 months. A June 29 hearing is set in Sumers' case, which was first denied in May 2017.

On March 14, Polk County District Court Judge Eliza Ovrom ruled against UnitedHealthcare in Baker’s case, noting that the chair specifications allow the 70-year-old to move independently in the nursing home and is a justified medical expense.

UnitedHealthcare declined to discuss the three cases but spoke broadly about the equipment issues. It attributed at least some of the problems the Register raised to administrative confusion or error.

In some cases, for example, medical equipment sellers submitted claims to UnitedHealthcare using incorrect codes that can result in payment issues, the company said.

In August 2016 and March 2017, the company published bulletins to give medical providers information and instructions about how to submit claims for medical equipment, said Jesse Harris, a company spokesman.

The company has met with Human Services and the Midwest Association for Medical Equipment Services & Supplies to discuss the process and to determine whether companies are giving the UnitedHealthcare the right "by report" code, Harris said.

“Please encourage any providers you are speaking with to contact us so that we can work together to resolve," Harris said in a statement.

‘Overwhelming evidence’

The four Iowa medical supply companies that supplied information to the Register are Total Respiratory, Hammer Medical Supply in Des Moines, Mobilis in Council Bluffs and JVA Mobility in Cedar Rapids.

The Midwest Association for Medical Equipment Services & Supplies — a group that represents about 40 companies in Iowa — conducted a survey in February and found widespread problems.

For some items, Medicaid companies have been unwilling or unable to justify how they determine the rates being offered to cover equipment, and reimbursements are routinely inconsistent, the survey found.

Rose Schafhauser, the equipment association’s director, said UnitedHealthcare and Amerigroup have met with the association's members, but that problems have remained “a vicious cycle since April 2016,” when Iowa shifted Medicaid management to private companies.

She said her members' experiences, the testimonials of Medicaid recipients and court records provide “overwhelming evidence” of a systemic problem. And she believes it's Human Services' responsibility to fix the problem.

'There's no accountability'

On March 15, Schafhauser and about 20 of her members met privately with Iowa Human Services Medicaid Director Mike Randol at the Iowa Capitol. She later said Randol appeared to take the issue seriously but made no sweeping promises as she had hoped.

“There’s no accountability back from DHS when these (managed-care) companies are not doing what they’re supposed to be doing,” Schafhauser said. “All our people are asking for is to give us the rules, keep the rules consistent and let us know what we’re going to get paid.”

Randol did not respond to a request for comment following the March 15 meeting.

If Medicaid recipients can’t obtain the equipment, that would be a good reason to switch to the other management company, Human Services spokesman Matt Highland said in written response to questions.

While rare, Medicaid company executives can be held criminally accountable for denying health care or failing to spend money on program recipients as obligated under their state contracts.

The Iowa contract of Wellcare, for example, was terminated in 2015 even before it began its work after state officials learned of fraud that in 2014 resulted in three of its former executives sentenced to prison in a case involving $30 million that was neither spent nor returned to the state of Florida.

“You see enough of these stories like this, and you have to start to review intent,” said Craig Douglas, vice president of VGM Group, a Waterloo-based company that helps medical equipment providers contract for and buy products.

"I don’t believe this is just a simple claims error. I believe it’s systematic, and it’s having a detrimental impact on Medicaid beneficiaries."

What lawmakers are doing

Lawmakers from both parties have indicated their discontent with at least parts of Iowa's Medicaid management system.

On March 8, the Iowa House passed House File 2462, which would make Medicaid companies pay medical providers within the timelines specified in their contract or at least provide reasons for their denials of claims.

The bill, which contains multiple other fixes, passed 97-0. The full Senate has yet to consider the bill.

A separate bill that also remains under consideration, House File 2483, would require Human Services to review all cases where private management companies cut the long-term care and support services of Medicaid recipients.

How to get help

Medicaid recipients who have been approved by their doctor for medical equipment but who are having problems finding companies that will sell it to them can't file a formal appeal.

However, they can seek assistance through the Iowa Ombudsman by calling (888) 426-6283 or email: ombudsman@legis.iowa.gov.