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Iowa Medicaid privatization plans continue to draw scrutiny, hearing scheduled this week


DES MOINES, Iowa — Gov. Terry Branstad's effort to privatize Iowa's Medicaid program continues to move forward, though critics are raising questions about the projected cost savings, how contracts have been awarded and just how the change would impact patients.

On Tuesday a special legislative oversight committee will hold the first of two scheduled hearings to review the privatization plans. Branstad said the move to private management will mean more streamlined service at a lower cost, but many involved in the Medicaid system — including patients and health care providers — are less sure.

"My fear is services may go away or I may not be able to get as much of the services as I need," said Rhonda Shouse, 48, of Marion, who has been on Medicaid for about a year and receives in-home care for bipolar disorder and other conditions. "I've worked with my psychiatrist for ten years, that's not something I want to change. "

Asked about concerns with the process, Branstad said: "People need to give this an opportunity to work and see the benefits that come from it. We should not be afraid of change."

Branstad began the effort to move Medicaid to managed care organizations earlier this year, a shift that would impact most of the 560,000 Iowans enrolled in Medicaid. The program, which provides care to poor children, families and disabled people, as well as some low-income adults, is funded with $4.2 billion in state and federal dollars.

The plan is set to take effect Jan. 1, but Iowa is still awaiting federal approval. The four companies hired to help run the program are Amerigroup Corp., AmeriHealth Caritas, UnitedHealthcare Plan of the River Valley and WellCare Health Plans.

Some losing bidders are contesting those picks, arguing before an administrative law judge that the process was flawed. The administrative hearing has looked closely at the actions of former Republican state lawmaker Renee Schulte, who worked for WellCare during the bid process.

Schulte has been questioned about her communications with the state's Medicaid director and a top Branstad aide during a time period when bidders were to communicate only through a designated contact officer, according to reports in The Des Moines Register.

Branstad said he knew the losing bidders were disappointed but that the contracting was a "very fair process."

Projected cost savings associated with the shift have come under scrutiny, after The Des Moines Register reported there was no documentation available to show how the state reached a $51 million savings estimate. Department of Human Services spokeswoman Amy McCoy said the number was a midpoint of a range of savings estimates.

With about two months before the change is supposed to happen, the state is notifying Medicaid recipients about their options, holding community meetings and sending out information. Patients will be given a tentative enrollment in a managed care organization, though they can change it. People will be able to continue seeing their current providers for a transitional period.

Kirk Norris, president of the Iowa Hospital Association, which opposes the change, said hospitals have not been given enough information about reimbursement rates under managed care to negotiate contracts. He expressed fears that services will be restricted to save money and argued that the efforts were already underway to achieve savings and streamline care within the traditional Medicaid system.

"The research shows that managed care over the last 30 years hasn't saved money and it hasn't improved outcomes for people," Norris said.

McCoy said the state has set "baseline rates" and the hospitals can negotiate with the managed care organizations. She also said the new approach would save money by providing better preventative care and limiting duplicative services.

"This is not a new concept across the country or to Iowa," McCoy said. She noted the state will still determine Medicaid eligibility and oversee enrollment.

A total of 48 states have some form of managed care in place, with 39 jurisdictions, including the District of Columbia, contracting with comprehensive managed care organizations, according to the nonpartisan Kaiser Family Foundation.

Democratic lawmakers have criticized the move to privatization, calling for it to be halted or slowed, and questioning whether the children's insurance program, hawk-i, should be included.

"Privatizing these services has not been shown to be a good investment for taxpayers or the people's health," said Sen. Joe Bolkcom, D-Iowa City. "There are people that are going to die because of this big change."

But state Rep. Dave Heaton, R-Mt. Pleasant, said he believed the shift would help provide more in-home care for seniors and be a more efficient use of tax dollars. "We're on a path where we cannot sustain the annual increases," he said.

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