Branstad defends pledge to help Medicaid firms cover losses – DesMoinesRegister.com

Gov. Terry Branstad on Monday defended his administration’s decision to help private Medicaid managed care organizations shoulder huge financial losses, and he said it doesn’t mean the project is in trouble.

“We’re partners in this and we’re going to continue working with the MCOs with regard to what makes the most sense going forward,” Branstad told reporters at his weekly press conference.

The three companies have complained they’ve lost hundreds of millions of dollars in Iowa in the year since they began running the state’s $4 billion Medicaid program. The Des Moines Register reported Friday that the Department of Human Services has signed contract amendments under which the state agreed to help the companies cover some of those losses.

Human services officials estimated that the arrangement’s cost to the state for the current fiscal year would be roughly $10 million, which would not have to be paid until at least July 2018. Department of Human Services spokeswoman Amy McCoy said the federal government would be expected to pay the companies substantially more than $10 million under the arrangement. Although she didn’t have an estimate of that amount Monday, she noted the federal government matches Iowa contributions by more than 9-to-1 for many of the Iowa Medicaid participants covered by the contract amendments.

Several legislators involved in Medicaid oversight said they were unaware of the contract amendments before the Register learned of them via the state’s open-records law. “I don’t know where that money’s going to come from,” said state Sen. Pam Jochum, a Dubuque Democrat and vocal skeptic of Medicaid privatization.

The amended contracts include “risk-corridor” agreements the state reached with the three managed-care companies. Under such an agreement, the state and federal governments are to help cover the for-profit companies’ losses once they pass a certain point. In return, if the companies manage to turn large profits here, they would rebate some of that money to the government.

Lt. Gov. Kim Reynolds, who is slated to become governor later this spring when Branstad becomes ambassador to China, called the new arrangement “a good guardrail.” She said other states have used it successfully, and she suggested it probably would continue into future budget years.

The three companies are soon to begin negotiations with the state on base rates they’re paid to continue covering more than 500,000 poor or disabled Iowans. The companies are expected to seek substantially higher reimbursements, which could pinch a state budget that already is stretched.

Reynolds declined to speculate on how much more the state might have to pay the companies after those negotiations are done.

“I’m not going to guess on that. I’m not going to weigh in,” she said.

Branstad and Reynolds reiterated their contention that the privately managed Medicaid system will save the state more than $110 million this fiscal year over what Iowa would have spent if it continued to have state administrators run the system. They contend the companies do a better job of helping Medicaid recipients manage chronic health problems.

Critics say the shift to private management has caused red tape and hassles for Medicaid beneficiaries and delayed payments for service providers, some of which are in peril.

“Look at where we’re at in this picture. There’s chaos every day,” said state Sen. Amanda Ragan, a Mason City Democrat.

But House Speaker Linda Upmeyer said later Monday that she continues to agree with the governor’s contention that the new system is saving money.

“What we do know is this: If we had done nothing, we would be facing a really significant increase in the Medicaid budget, which would be very difficult to handle. So, from that perspective, we’re glad. But we want to make sure this is working, and from that perspective we need to pay attention to making sure it’s a viable system,” the Clear Lake Republican said in an interview.

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