State to resume handling of 10,000 Iowa Medicaid members being dropped by AmeriHealth

State administrators will resume direct oversight of Medicaid benefits for some of the 215,000 Iowans who are being dropped this week by a private management company, the state Department of Human Services confirmed Monday.

The department posted a statement saying that Iowa Medicaid member who tried to switch from AmeriHealth Caritas to Amerigroup by Nov. 16 “will have coverage through Iowa Medicaid Fee-for-Service." Fee-for-service is the state-run Medicaid system that Iowa used before it made the controversial decision to hire three private companies to run the giant health care program last year. AmeriHealth is leaving the state due to a contract dispute. Amerigroup is one of the other two management companies serving Iowa's Medicaid program. 

A spokesman for the department said the change announced Monday would affect 10,121 members.

The news came as poor and disabled Iowans who use Medicaid scramble to figure out their options. State officials announced Oct. 31 that AmeriHealth, which has the largest share of Iowa Medicaid members, would withdraw from the program Nov. 30. At the time, state officials said AmeriHealth’s 215,000 members would automatically be enrolled with UnitedHealthcare, but could choose to go with Amerigroup instead. But state officials announced last week Amerigroup couldn’t handle any of AmeriHealth’s former members. That appeared to mean all 215,000 of them would go to UnitedHealthcare, even if UnitedHealthcare didn’t have contracts to pay for services from the members’ care providers.

Shelly Chandler, chief executive officer of the Iowa Association of Community Providers, said the Department of Human Services quietly posted Monday’s change on its website, without sending emails or other notices out to the public or agencies that will need to bill for their services. “Most providers are completely unaware,” said Chandler, whose group includes agencies that serve Iowans with disabilities.

Monday's announcement indicates the affected Medicaid members would have their benefits directly overseen by the state until Amerigroup builds up capacity to serve more Iowans than the 190,000 it already has. But the posting doesn’t say how long that might take. “Nobody knows what ‘temporary’ means – there’s not a time frame,” Chandler said.

Department spokesman Matt Highland said Monday that the arrangement would continue until "Amerigroup and the department are confident they have the capacity to take additional members." When that happens, the members would be assigned to Amerigroup, he said.

State Rep. Lisa Heddens, who is a leading legislative critic of Iowa’s Medicaid privatization, said she didn’t know what to make of Monday’s announcement that some members’ benefits would once again be directly overseen by the state. “It’s totally confusing,” said Heddens, an Ames Democrat. Heddens’ adult son, Paul, is disabled and had his Medicaid benefits administrated by AmeriHealth. Heddens said her son is now signed up with UnitedHealthcare, so he won’t be affected by the shift of some other members to the “fee-for-service” model.

Heddens noted that a key selling point of private Medicaid management was Iowans were supposed to have a choice of management companies, who would compete against each other to provide the best service. Now, all new Medicaid members will be shunted to UnitedHealthcare. “What is the deal?” she said. “These are people’s lives the state is dealing with.”

Medicaid is jointly financed by the federal and state governments. Under federal rules, states that use private Medicaid managers are supposed to ensure recipients can choose which management company to use. At one point last week, the Iowa Department of Human Services said it had federal permission to temporarily offer just one choice. But state and federal officials later said the state didn’t need such permission.