Storm Lake, Iowa
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Aug 21, 11:58 AM EDT

DHS waives sanctions at start of Iowa's new Medicaid system



DES MOINES, Iowa (AP) -- The state agency overseeing Iowa's transition to a privatized Medicaid program waived any possible sanctions against three insurance companies during the first two months of the new system, and it didn't inform health advocates or lawmakers about the plans.

The Iowa Department of Human Services issued no written warnings or corrective action plans in April and May to the insurance companies that now run the state's Medicaid program, according to information obtained by The Associated Press through a public records request. Fees for any purported violations were also waived.

Written warnings, corrective action plans and fees are among the compliance measures that DHS can take under state contracts signed with Amerigroup, AmeriHealth Caritas and UnitedHealthcare. The department had discretion to hold off on such sanctions, according to spokeswoman Amy Lorentzen McCoy, and doing so was ultimately the decision of DHS Director Chuck Palmer and Mikki Stier, the agency official who oversees Medicaid.

Processing Medicaid claims in a timely manner and resolving appeals and grievances are among several performance requirements that are subject to sanctions.

McCoy said DHS wanted to take a "collaborative approach" during the first two months.

"We wanted to really focus on the problems and on fixing them, not just being punitive," she said. "So taking the time to really examine what the issues are, allowing the opportunity to fix those before you go into that sanctioning process."

The decision to delay sanctions wasn't shared outside the agency, and the news was a surprise to some health advocates and lawmakers monitoring Medicaid, which provides health care to roughly 560,000 poor and disabled Iowa residents and switched to a privatized system on April 1. The program is under scrutiny over reports of late payments to health providers and delayed care to patients. DHS has said those issues are not systemic.

"Of course they should have told us and all those involved in the system what their plan was going to be," said Senate President Pam Jochum, D-Dubuque, a member of one of the legislative committees that review health issues. Her disabled adult daughter is a Medicaid patient.

No documentation exists to show the department planned to delay sanctions or to formally issue them beginning in June. McCoy said data on possible infractions recorded during June isn't yet available because it's tied to information submitted by the insurance companies on Aug. 1. That data is still being analyzed. Information on infractions collected for July is due on Sept. 1.

McCoy said the agency collected data from the three companies - also known as managed care organizations or MCOs - on possible problems recorded in the first two months, but that's also not available because they were addressed through daily communication with the insurance companies.

"We're finding that the MCOs are making the changes that they need to meet the compliance standards in Iowa," she said.

Still, McCoy said some data about early problems will be released in a quarterly report that will be made public for a legislative oversight committee on Aug. 29.

Sen. Liz Mathis, the chairwoman of the Senate Human Resources Committee, expressed disappointment that DHS wasn't more transparent about their plans during multiple legislative meetings on the transition.

"Is it solely their decision to make? And why wasn't that made publicly?" she asked.

Though most states have some form of privatized Medicaid, Iowa is among a handful of states that has switched the bulk of its program. The Centers for Medicare and Medicaid Services was unable to provide information on de-facto grace periods in other states. McCoy also said she could not comment on the process for sanctions in other states.

DHS did issue two corrective action plans in March before the formal transition. It involved AmeriHealth Caritas and UnitedHealthcare and addressed plans for case management training, according to documents. McCoy said those plans were submitted to federal officials to get final approval to launch privatization.

Rhonda Shouse, a Medicaid patient who has testified about the program changes at legislative hearings, said the actions of the insurance companies have immediate consequences on health care providers and patients through delayed payments and care.

"Why are the MCOs getting a free pass when nobody else is getting a free pass?" she asked. "This doesn't seem right."

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