December 01, 2023

Iowa’s Medicaid woes affect level of services at local level

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Iowa lawmakers have committed to stabilizing the state’s privately run Medicaid system before the end of this legislative session, a system which has struggled to maintain consistency in the private insurers that manage the program.

Iowa Department of Human Services Director Jerry Foxhoven was the guest speaker at Iowa Senate’s Human Resources Committee meeting where he discussed the first two years of privatized Medicaid system.

Foxhoven said he’s seeing measurable improvements in the Medicaid system, and the privatized managed care system is here to stay.

“I believe we are down the manage care course at this point, and that’s where we’re going to stay,” Foxhoven said. “I’m going to do everything I can to make sure it’s successful for the people we serve and for the State of Iowa.”

Medicaid in Iowa is a $5 billion program, funded through a combination of federal and state funds, serving more than 600,000 people. The system was privatized in 2016 and put under the supervision of three private insurance companies.

Privatized Medicaid, pushed by then-Gov. Terry Branstad, has always been a political hot button issue and has been under added scrutiny since November when one of the three insurance companies dropped coverage. The managed care organization (MCO) AmeriHealth and the state failed to negotiate a new contract and the MCO pulled out of the Medicaid system, dropping more than 10,121 members from coverage. This forced the state to enroll the affected people in the old Medicaid system used before privatization began.

Clearview Recovery

The switch from privatized Medicaid management has also created problems for local medical service providers. Many nonprofit and for-profit agencies around Iowa have reported a reduction in payments for services from the MCOs.

For providers like Prairie City’s Clearview Recovery, the reduction in revenue from Medicaid results in a cut in services.

Clearview is an in-patient treatment facility for women recovering from substance abuse, most frequently drug and alcohol dependency. Licensed by the state in 2005, the facility also reunites children with their mothers. Clearview provides housing for children at the facility once their mother reaches a certain phase in their treatment.

Prior to the MCOs, Clearview was a nine-month program. The length of stay was reduced to six months when Medicaid transitioned to the managed care system and was shortened even further to a one to three-month program after the departure of AmeriHealth. The facility’s executive director, Scott Pritchard, worries the shortened treatment program increases the risk of relapse in patients.

Pritchard said Clearview’s six-month and one-year success rates were higher under Iowa’s Title 19 program managed by Magellan Healthcare of Iowa. Before the MCOs, Clearview was seeing returning referrals one to three years out of treatment, now, Pritchard said, he’s seeing returning referrals after three weeks to two months.

“We’ve had two referrals just this month from past clients,” Pritchard said. “With the shorter stays … the clients are not getting enough treatment. Not all of them will relapse, but it increases their chances. We’ll see more of the same person.”

Pritchard said in the fall of 2017, the MCOs amended their contracts with Clearview and will only authorize payment for three to five days of housing per week for Clearview patients instead of seven days, depending on their level of care. But Clearview continues to house its patients seven days per week despite the reduced payment authorizations, absorbing the cost.

According to Clearview Recovery Director of Operations DeDe Blom, the MCOs say their rationale for decreasing coverage in these situations is the services do not meet medical necessity.

“The quality of care at Clearview will never go down. Unfortunately, the quantity of that quality care has been taken away because of the MCOs,” Blom said.

From 2005 to 2014, Clearview Recovery had 12 to 15 children staying in the facility with their mothers at all times. Pritchard said in the two years since the MCOs have been in charge of Title 19 for the state of Iowa, Clearview has seen its child population decline because of the shorten stays the private insurers are authorizing.

Most cases at Clearview have involvement from DHS, so parent/child reunification is done gradually. After a woman becomes acclimated to treatment over the first 30 days, Clearview staff will begin short supervised visits with their child and then move to unsupervised visits. The goal is housing both the child and mother at Clearview in the final three months of treatment.

During this time, Clearview provides a licensed counselor for the child and mother and transportation to the Newton YMCA Child Care program during the day. Pritchard and Blom said the reduced stay makes it nearly impossible to reunify children with their moms while they’re in treatment.

“(Reunification) would possibly take six months, especially in the best interest of the child. Now, they’re only here for three months,” Blom said. “If the children aren’t here, they’re not getting the therapy with the parent to work through a lot of the different traumas that can happen during drug use.”

In a conversation with a MCO about the reduction in payments for services, Pritchard said one particular comment gave him the impression decisions on payments are more about the money than patient care.

“I was talking to one of the MCOs, and I made the comment that they’re creating a revolving door,” Pritchard said. “They said to me ‘Scott, it’s not going to hurt your revenue or your bottom dollar. You’re running a business now.’”

Despite the promises, Pritchard said Clearview has been taking in less money. He said the nonprofit has been pinching pennies in order to keep staff and has not yet made any cuts. Pritchard admits money was tight even before the MCOs. His agency has not seen a payment increase on Title 19 patients since 2008.

Mental Health

Mental health services in Iowa were also impacted after the switch to MCOs. Clearview contracts mental health counseling through Optimae Life Services in Newton. Optimae serves people in multiple clinics across southeastern and south central Iowa

Optimae President Bill Dodds said his organization saw a steep reduction in claim payments in the first 12 to 16 months of Medicaid under the MCOs. He said the privatized system was $1.5 million behind in payments to Optimae during this period.

This issue, Dodds said, has nearly stabilized and that numbers has been reduced to $300,000. But where the Optimae president says he still has concern is a reduction in payments to mental health patients with higher service needs.

He said to cut costs, MCOs are reducing payments for this population which usually have a higher cost for care.

“My fear is that we’re going to create a population of Medicaid patients that do not receive services,” he said.

Dodds and the Optimae leadership is lobbying lawmakers to make a specialty type of mass care system part of a Medicaid fix this session. It would cover patients with greater service needs.

Contact Mike Mendenhall at