Iowa will give $60M more to companies for Medicaid

A private insurance company that is exiting Iowa’s privatized Medicaid program and has employees around the state will lay off 400 workers, an agency confirmed to The Associated Press on Thursday.

Iowa Workforce Development said AmeriHealth Caritas informed the department recently about the layoffs, which are permanent. They will begin Dec. 31 and continue into 2018. Additional information about the workers, including whether they’re all based in Iowa, was not provided.

“Our number one priority is making sure the workers affected by this transition have the access to the information and resources they need to make informed decisions about the way forward,” said IWD director Beth Townsend in a statement.

Brenna Smith, Iowa Gov. Kim Reynolds’ press secretary, initially directed inquiries to the workforce department. She later said the governor’s office will work with officials to assist affected employees.

“We have one of the lowest unemployment rates in the country and Iowa employers would be fortunate to hire the hard working employees of AmeriHealth,” Smith said in a statement.

AmeriHealth Caritas wouldn’t confirm the 400 figure. It said the total number of employees impacted hasn’t been determined.

“We are committed to supporting our colleagues during this transition,” read an emailed statement. “All of us are extremely proud of our Iowa colleagues and all they do to make Iowa a healthier state.”

AmeriHealth Caritas said on Tuesday it plans to exit the state Medicaid program at the end of November. The company, along with Amerigroup and UnitedHealthcare, have run Iowa’s Medicaid program since it was privatized in 2016. The program, funded through federal and state dollars, costs about $4 billion.

For months, all three companies had been negotiating privately with the state over new contracts. Neither the state nor AmeriHealth Caritas provided more details about the company’s departure over the contract negotiations.

News of the layoffs came on the same day that an Iowa health official said the state will spend an additional $60 million this budget year for Amerigroup and UnitedHealthcare to keep running the state’s Medicaid program. The plan raises new questions about how Iowa will handle future health care spending.

Matt Highland, spokesman for the Iowa Department of Human Services, provided the $60 million figure to the AP to explain additional costs announced this week as part of new state contracts with the companies. The total will be $140.4 million, according to Highland. The state will pay $60.8 million of that; the federal government will pay about $80 million.

Additional data available online estimated different costs for the federal government and the state, but Highland said the $140 million amount is accurate.

The agency initially described the extra costs as a 3.3 percent rate increase. Officials did not break down a dollar amount at a Tuesday press conference.

Highland said Iowa will utilize a range of options to address the additional $60 million. The agency will pay the insurance companies nearly $20 million directly for so-called capitation rates that are distributed on behalf of each Medicaid patient. The remaining money will come by carving out some drug expenses and finding internal cost savings within the department. The federal government recently approved a plan for Iowa to reduce retroactive payments to some Medicaid patients. The reduction, which is particularly helpful when new eligible patients get suddenly ill, will save the state more than $9 million.

Highland said the breakdown is important context in understanding how Iowa will contribute extra money as part of new state contracts. He said some money may also go to AmeriHealth Caritas for work it’s done since July.

It’s unclear how the additional money will impact Iowa’s roughly $7.2 billion state budget, which went into effect last July and runs through next June. DHS director Jerry Foxhoven said it won’t require new money from the GOP-controlled state Legislature. He also added in a Tuesday press release about the increase: “This is a small increase when you compare it to national trends on healthcare spending.”

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