AmeriHealth Caritas Iowa cutting reimbursement rates to some Medicaid providers

Feb. 09--In an attempt to "establish a more sustainable program," one of the three private insurers managing the state's nearly $5 billion Medicaid program is lowering reimbursement rates for some of the state's long-term services and supports providers.

AmeriHealth Caritas Iowa sent letters this week to in-home care providers saying it no longer will reimburse them for services based on previously negotiated and contracted rates but instead will pay them the Medicaid rate floor -- or the lowest acceptable payment set by the Iowa Department of Human Services.

In the provider letter, a copy of which was obtained Wednesday by The Gazette, AmeriHealth said the rates will become effective April 1 and will "supersede all prior agreements and understanding between AmeriHealth Caritas Iowa" and the provider.

In-home caregivers help the elderly and disabled with daily tasks such as cooking, cleaning and taking medications.

The services allow individuals to live comfortably and safely in their homes, which is far less expensive than institutional care, such as residing in a nursing home.

"We are taking action to achieve better alignment with the Medicaid rate structure," the company said in a statement. "In doing so, we can establish a more sustainable program that better serves our members. 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 Sen. Liz Mathis, D-Cedar Rapids, and one of the sharpest critics of Gov. Terry Branstad's decision to move to Medicaid managed care, said the announcement is yet another example of a flawed plan.

"Now providers who negotiated a rate that would allow effective services will now be undercut and hurt people who need the most help," she said.

AmeriHealth along with Amerigroup Iowa have reported hundreds of millions of dollars in losses, according to financial reports filed with the Iowa Insurance Division in November. Amerigroup saw losses of more than $147 million and AmeriHealth had losses of more than $132 million.

UnitedHealthcare does not have to file financial reports with the state of Iowa, but did say in the second Department of Human Services quarterly report it had a loss of 25 percent.

This is the second announcement this week by the insurer regarding the long-term services and supports population -- or those on Medicaid with physical or intellectual disabilities, the elderly, those with brain injuries or children with mental health issues.

On Monday, The Gazette reported AmeriHealth would be shifting and reassigning some LTSS beneficiaries from external case management agencies to in-house case managers.

AmeriHealth has the highest number of Iowa Medicaid enrollees, with more than 212,000 beneficiaries, according to the most recent Department of Human Services quarterly report.

The insurer also has the biggest share of the state's special-needs population -- with more than 9,300 adults and 1,800 children with special needs compared with Amerigroup's 1,315 adults and 490 children and UnitedHealthcare's 857 adults and 408 children.

That puts the company's average cost per member per month significantly higher than its counterparts, with AmeriHealth spending about $4,779 per member in the second quarter compared with Amerigroup spending $2,932 per member and UnitedHealthcare spending $1,914.

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