Iowa’s Medicaid Insurers Each Post $1M In First-Year Losses

March 07--Two of three private insurers managing the state's nearly $5 billion Medicaid program lost hundreds of millions of dollars during their first year of operation in the state, according to reports filed with the Iowa Insurance Division.

AmeriHealth Caritas Iowa lost nearly $300 million, while Amerigroup Iowa lost more than $133 million. Those numbers were on target with what the insurers told legislators during a February committee meeting.

UnitedHealthcare of the River Valley has multiple lines of business in the state and does not have to file a separate report for its Medicaid business. But during the committee meeting, the company told representatives it anticipated losing more than $100 million.

All three companies told legislators in February that they are committed to staying in Iowa and building a sustainable program.

According to the financial reports, filed March 1:

--AmeriHealth was paid about $1.39 billion by the state of Iowa. It paid out $1.54 billion in medical claims and another $59 million in administrative costs. The company also has about $221 million in unpaid claims.

--Amerigroup was paid about $787 million by the state of Iowa. It paid out $914 million in medical claims and $38 million in administrative costs. The company also has about $143 million in unpaid claims.

In late October, the state announced it would boost rate payments to the insurers by $33 million to better cover rising prescription drug costs and the Medicaid expansion population.

Even still, correspondence between the MCO leaders and Department of Human Services officials revealed that the insurers have been lobbying for increased rates since the start of the transition last April. The documents, first reported by the Des Moines Register in December, show the MCOs believed the rates to be inadequate from the start.

AmeriHealth has opted to make several changes in the past month to try to better control costs, including moving some case-management services in-house from external agencies as well as cut home- and community-based provider payments from negotiated rates to the state's Medicaid floor -- the lowest amount the insurers will reimburse the providers.

"AmeriHealth Caritas continues to monitor the rates to ensure that they accurately reflect the level of service required," the company said in a statement. "We continue to work closely with Iowa DHS and other stakeholders to create a program that helps make Iowa an even healthier state."

Amy McCoy, Department of Human Services spokeswoman, said the state believes the rates are actuarially sound, adding some of these losses were anticipated start-up costs.

Starting in April, the state and insurers will begin negotiating capitation rates that will begin July 1.

Sen. Liz Mathis, D-Robins, said the state needs to drill down what the problem areas are.

"I think we need to know what is driving up the numbers for the managed care organizations," she said. "And then concentrate how to come to terms with that so we can keep quality services and control costs."

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