DES MOINES, Iowa (AP) - Iowa officials have agreed to help private Medicaid management companies pay for huge losses suffered in covering more than 500,000 poor or disabled Iowa residents, documents released Friday show.
The three national companies have complained about losing about $450 million in Iowa’s shift to private Medicaid management, which started last April, the Des Moines Register reported (https://dmreg.co/2n4E4Ea ), and have pleaded with state officials to help them make up for the loss.
Documents obtained by the Register through an open-records request show that Department of Human Services leaders signed contract amendments in February, under which the government agreed to shoulder some of the losses.
Department of Human Services spokeswoman Amy McCoy said Friday the agreements are expected to cost the state roughly $10 million, which would be paid more than a year from now. She said the federal government would also contribute.
The state’s pledge to help cover the companies’ losses is contained in “risk-corridor agreements,” which were included in February amendments to the companies’ contracts with Iowa’s Medicaid program. Those agreements are complicated arrangements under which the government agency agrees to shoulder the management companies’ financial losses if they grow beyond a certain point. McCoy said federal officials, who pay more than half of Iowa’s Medicaid costs, have signed off on the contract amendments.
The state’s share of the risk-corridor payments would come out of the fiscal year 2019 budget, which takes effect on July 1, 2018, McCoy said, adding that the risk-corridor agreements do not include increases in rates paid to the management companies for the current budget year.
“We remain confident in our rates, and a risk corridor provides an extra level of protection for taxpayers,” she said.
Negotiations are to begin in April for rates to be paid to the Medicaid management companies for the budget year that begins July 1. The companies are expected to seek sharp increases, which could further pinch state coffers suffering from a deep budget crunch.
State Sen. Liz Mathis, a leading critic of Iowa’s privatization of Medicaid management, said she was shocked to learn the department had agreed to help shoulder the managed-care companies’ losses.
“Where are we going to get the money?” she asked.
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Information from: The Des Moines Register, https://www.desmoinesregister.com
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