Medicaid dispute could prevent 220,000 Iowans from using Mercy hospitals, clinics

More than 220,000 poor or disabled Iowans could lose access to one of the state’s largest hospital-and-clinic systems because of a payment dispute with a Medicaid management company.

The affected Iowans receive Medicaid via AmeriHealth Caritas, one of three companies the state hired last year to run the public health insurance program. AmeriHealth recently mailed letters warning that it has been unable to negotiate new contract terms with Mercy Health Network. If the two sides can’t reach a deal by July 1, the Mercy system system would no longer be included in AmeriHealth’s network of health-care providers, the letter says.

The Mercy Health Network includes Mercy Medical Center in Des Moines, hospitals in 12 other cities, plus about 200 clinics.

Iowa’s shift to private Medicaid management has been controversial, with critics predicting the for-profit companies would aggressively try to cut costs and limit services in order to turn a profit. Supporters of private Medicaid management, led by Gov. Terry Branstad, contend it can save the state money by providing more efficient and effective care.

AmeriHealth’s threat to cancel its Mercy contract comes less than a month after AmeriHealth disclosed it planned to cut payment rates to dozens of agencies that serve people with disabilities.

Mercy Health Network leaders said this week that the insurance company is trying to cut rates that the two sides previously agreed to.

“Our original agreement with AmeriHealth-Caritas was negotiated in good faith less than a year ago.  We have performed and continue to perform our duties under the contract,” Mercy Health Network Vice President Janell Pittman wrote in an email to the Register. “MHN is disappointed that AmeriHealth-Caritas has chosen to terminate the contract so quickly.  We are working collaboratively with AmeriHealth-Caritas with the hope that participants will continue to receive affordable care from MHN’s award winning providers in metro and rural communities across the state.”

Joshua Brett, a spokesman for AmeriHealth, said his company was seeking to “establish a sustainable Medicaid program” by negotiating different payment rates for services. He said his company sent a similar cancellation notice to UniNet Health Network, which is based in Omaha.

“AmeriHealth Caritas Iowa is taking this action now so that there is no impact on our members, as they can continue to see their providers while we work to agree on new contract terms,” Brett wrote in an email to the Register. He did not respond to follow-up questions about how many people might be affected or how far apart the two sides were in negotiations.

Charles Palmer, director of the Iowa Department of Human Services, said in an interview Wednesday that he was aware of the dispute between AmeriHealth and the Mercy Health Network.

“I hope they can work it out,” he said.

Palmer’s agency hired AmeriHealth and two other national companies, Amerigroup and UnitedHealthcare, to manage the state’s Medicaid system. He noted that under those contracts, the companies are required to maintain “adequate” networks of hospitals, clinics and other health-care providers to serve the 600,000 Iowans using the program.

Palmer said his department is monitoring the situation to ensure the management companies comply with the requirement. If AmeriHealth cancels its contract with the Mercy Health Network, it would have to show it has enough other care providers under contract throughout the state, he said.

All three Medicaid management companies have complained that they're spending much more on health care for poor or disabled Iowans than the companies have received in payments from the state. AmeriHealth recently reported losing $293 million in Iowa last year, according to documents filed with the Iowa Insurance Division. 

Many but not all Iowa hospitals with Mercy in their names are members of the Mercy Health Network. In addition to its hospitals in downtown Des Moines and West Des Moines, the Mercy Health Network includes Mercy hospitals in Centerville, Clinton, Dubuque, Dyersville, Mason City, New Hampton, Oelwein, Primghar and Sioux City, plus Covenant Medical Center in Waterloo, Sartori Memorial Hospital in Cedar Falls and Skiff Medical Center in Newton. The network also includes about 200 clinics.

AmeriHealth’s new letter to its members says that Mercy could continue providing services to those patients if it was willing to accept lower, out-of-network fees.

“If Mercy Health Network is not willing to see you as an AmeriHealth-Caritas Iowa member, our care teams will find another provider to meet your needs,” the letter says.

Medicaid recipients also could seek to switch to one of the other two managed-care companies, which both have contracts with Mercy Health Network.

- An earlier version of this story gave an incorrect date for when AmeriHealth Caritas plans to cancel its contract with Mercy Health Network. The correct date is July 1.