Medicaid shift: Agencies that help disabled Iowans face major cuts

Dozens of agencies that assist thousands of Iowans with disabilities learned this week that they face significant cuts in how much they’re paid by a private company managing the state’s Medicaid program.

Industry leaders said they fear some service agencies will go under because of the looming cuts from AmeriHealth Caritas.

"It’s not a matter of whether we can be patient — we can’t pay our bills. You can’t pay staff with a wish,” said Linda Dunshee, executive director of Link Associates, which serves central Iowans with intellectual disabilities.

AmeriHealth Caritas is one of three national insurance companies that took over management of Iowa’s Medicaid program last April. The program covers about 600,000 Iowans, including tens of thousands who have serious disabilities. AmeriHealth covers more than 23,000 Iowans with serious disabilities, about 9,400 more than the combined total of the other two managed-care companies, Amerigroup and UnitedHealthcare.

When the controversial shift to private Medicaid management began last year, AmeriHealth negotiated higher rates than the state required it to pay community agencies for services provided to many Iowans with disabilities. But its contracts with the agencies allows it to cut those rates at any time. Letters sent this week show the management company intends to cut the rates to the minimum, or floor.

An AmeriHealth spokesman released a statement explaining the company's decision. “We are taking action to achieve better alignment with the Medicaid rate structure.  In doing so, we can establish a more sustainable program that better serves our members," the statement said. "The state of Iowa set the Medicaid rate based on what providers were paid prior to the implementation of managed care. This change will not impact the care and services our members receive.”

But the agencies providing those services say the new rates do not equal what many of them were paid before.

Shelly Chandler, executive director of the Iowa Association of Community Providers, said the cuts would mainly affect agencies that serve people with intellectual disabilities or brain injuries. Many of those people live in apartments or small group homes, with staff members assisting them.

Chandler said her association includes about 150 agencies serving those clients. Some agencies would face losses in the hundreds of thousands of dollars if the AmeriHealth cuts take effect. “We are hearing some of them are going to stop doing services,” she said. In the past, she said, leaders of the state-run Medicaid program regularly made exceptions to the standard rates for services. They recognized those rates were not enough to pay for oversight for Iowans with disabilities that left them with complicated needs.

Chandler said she doesn’t blame the managed-care companies for being unwilling to pay what the social-service agencies need to care for Iowans with serious disabilities. Documents filed by the state indicate it is paying the managed-care companies about $2,170 per month to finance care for such clients, she said. The true cost is around $6,000, she said: “It’s just bad math."

Dunshee said her agency’s new payments from AmeriHealth would amount to $8.34 per hour for clients who need 24-hour assistance. That’s not sustainable, she said. Link Associates, which has been around for 61 years, is the Des Moines area’s largest agency serving adults with intellectual disabilities, such as Down syndrome or autism. It could go under because of the looming AmeriHealth cuts, which would amount to more than $300,000 per year, she said.

Dunshee said she has 350 employees, who haven’t received raises in three years. She has 27 open jobs she can’t fill, because she can’t pay a competitive wage.

Dunshee said her agency’s contract with AmeriHealth allows the company to cut its rates to the minimum allowed by the state. She can’t appeal the decision. “It’s a card game where we don’t have any cards in the deck,” she said.

Mikki Stier, Iowa’s Medicaid director, said Wednesday that her department will monitor the situation to ensure AmeriHealth maintains contracts with enough service providers to have an adequate network. However, Stier told a Department of Human Services advisory council that the department does not have authority to tell the managed-care companies if they should pay service providers more than the state-required minimum.

Stier said that under its contract, AmeriHealth had to give the service agencies 30 days' notice of the rate cuts. If the agencies decline to accept the new rates, there will be a 90-day transition period before the agencies are dropped from the contracts, she said.  Stier said she couldn't estimate how much the cuts would typically amount to, since the managed care company negotiated its rates independently.

A letter from AmeriHealth to one of the service agencies said the cut was to take effect April 1. The letter said the agency could object in writing to the managed care company.

The three national managed-care companies have been complaining that Iowa is not paying them nearly enough to oversee care for poor and disabled Iowans. Letters obtained by The Des Moines Register in December showed the companies have described the situation “catastrophic.” They have reported losing hundreds of millions of dollars on the project, mainly because estimates of how much care the Iowans would need were drastically low.

Gov. Terry Branstad, a Republican who spearheaded the controversial shift to managed care, has said the companies will not need substantially more money from the state to pay for services from care agencies. He says the state stands to save more than $110 million per year because the new system is more efficient and effective than a government-run Medicaid program. Critics contend the shift to private management has mainly led to red tape and frustration for Medicaid recipients and service providers.

Branstad's spokesman declined to comment Wednesday on what he described as "an individual AmeriHealth decision."

Besides the looming rate cut, AmeriHealth also recently announced that it would shift many Iowa Medicaid clients to case managers hired by the company. The other two managed-care companies already have done that, but AmeriHealth has been using independent case managers, many of whom had worked with clients for years. AmeriHealth claimed the shift was necessary because the independent case managers weren’t providing adequate oversight of care for the clients. Critics fear the internal case managers won’t have enough independence to demand the best services for clients, including those with serious disabilities.

AmeriHealth's statement Wednesday addressed the case management decision. “Members will be reassigned to our case managers on a case-by-case basis with consideration given to an assessment of their need," the company said. "These reassignments will result in greater integration of the social and medical needs of our members as well as create improved consistency in the case management process and recommended services. To ensure a seamless reassignment, members and their current providers will be notified 30 days in advance of a change. During that time, we will work to schedule an in-person meeting between the member and their new case managers."