Senators question moving ahead with Medicaid privatization

Two Democratic senators are questioning Republican Gov. Terry Branstad's plans to press forward with privatizing management of the state's Medicaid program after a judge's recommendation this week to throw out a contract awarded to one of four companies in line to manage the program.

“It’s obviously time to take a breath and see if this thing is running in the right direction,” said Sen. Amanda Ragan, D-Mason City and a co-chair of a committee that is charged with oversight of the plan. “I was quite surprised when I read his statement. Clearly, I have a different interpretation of the judge’s proposal than what he does.”

Iowa Administrative Law Judge Christie Scase on Wednesday recommended that Iowa throw out the contract awarded to WellCare, one of the for-profit companies hired to manage Iowa’s annual $4.2 billion Medicaid plan starting Jan. 1.

Scase made the recommendation after reviewing and hearing the objections of three companies that are challenging the Iowa Department of Human Service’s competitive bidding process to award the contracts. The companies mounting the challenge — Aetna, Meridian and Iowa Total Care — say the selection process was unfair.

They have cited accusations that include nepotism and improper communications involving Christopher Rants and Renee Schulte, two former Republican lawmakers hired to work for WellCare.

Scase dismissed the arguments involving Rants and Schulte, saying that, while troublesome, “the record lacks hard facts proving that WellCare had an organizational conflict of interest” and that the improper communications do not "sufficiently taint the entire process to necessitate reversal of the award of contracts to the remaining successful bidders.”

But Scase found that WellCare should have disclosed information about its “integrity agreement” with the federal government following convictions in 2014 of three former executives who had schemed to keep money for the company that should have been returned to the state of Florida.

Branstad spokesman Ben Hammes issued a statement Wednesday night following the release of Scase’s recommendation saying that her decision “allows Medicaid Modernization to move forward." The statement said the decision "emphasizes that the process was both ‘thorough and methodical.’”

The statement did not mention Scase’s recommendation to throw out WellCare's contract, an omission that Ragan and Sen. Janet Petersen on Friday described as misleading and confusing to Iowans. Like Ragan, Petersen is involved with legislative oversight of the Medicaid program.

MORE ON MEDICAID:

• Doctors signal more warnings about Iowa's Medicaid plan
• Iowa's Medicaid providers plead: Delay switch
• Iowa responds to key Medicaid issues

Branstad earlier this month announced that Janet Phipps, director of the Iowa Department of Administrative Services, would be the final decision-maker for the state in responding to the rival companies' legal challenge. Petersen said the governor’s statement Wednesday about moving forward is troublesome in relationship to Phipps' responsibilities.

“The governor’s statement sounds as if he just plans to have his appointee director Phipps overturn the judge’s recommendation,” said Petersen, D-Des Moines, a member of a state board that oversees a child health program covered by Medicaid. “That would be such an abuse of power.”

Hammes did not return a call Friday. DHS spokeswoman Amy Lorentzen McCoy said Friday that her department’s staffers continue to review Scase’s recommendation and how the agency will proceed is not yet known.

Under current plans to switch to private management, Iowans participating in Medicaid are to select one of the four companies as their Medicaid company by Dec. 17. It's unclear how the process would be affected if WellCare is taken out of the mix.

A time frame for Phipps’ decision about how Iowa should proceed also was not known Friday. She is expected to hear additional arguments before deciding whether the state will follow Scace’s recommendation to throw out the WellCare bid. Further legal challenges from any of the parties involved is possible.

The federal government has not yet given its approval to proceed with privatization. Federal officials are expected to review this week whether Iowa is ready to proceed with the Jan. 1 launch, including whether enough health care providers have signed up with the management companies to assure adequate care for the 560,000 Iowans covered by Medicaid.

“It’s a continuing story with a lot of uncertainties because of all the moving parts,” Mark McCormick, a former Iowa Supreme Court Justice and attorney for Iowa Total Care, said Friday.

Branstad's administration has projected that Iowa will save $51 million by privatizing management of the program and improve care by better coordinating services. Clients, their families and advocates have voiced fears that services eventually will be cut to achieve desired savings.