State Auditor accuses Iowa Medicaid companies of violating contracts

Jun. 26--DES MOINES -- State Auditor Rob Sand alleged Wednesday that both insurance companies that manage Medicaid in Iowa have breached their contracts with the state.

He announced in a news conference that he sent a letter to the Iowa Department of Human Services about the cases of two quadriplegic Iowans whose care services were reduced by Amerigroup Iowa and UnitedHealthcare, which could indicate "serious concerns" for the program as a whole.

In the letter, Sand asserts that the reduction of services for the two Medicaid members point to violations of contract clauses with the state as well as with federal regulations imposed on the companies through the state.

"There's a 267-page contract these (managed care organizations) signed with the state of Iowa," Sand said. "I don't care if a Democrat or Independent or a Republican, that contract is their obligation to the state, it's their obligation to the people of Iowa. If they can't do the bare minimum described in that contract, then they're going to have problems."

Sand, who described the review a "compliance audit," said his office will determine its next steps over the coming weeks.

Amerigroup and UnitedHealthcare did not immediately respond to requests for comment.

"We have received the Auditor's letter and will look into the issues he's raised," a Human Services spokesman said.

The Medicaid members -- whose names were redacted in the letter provided to the media -- received services at home from ComfortCare, an Eastern Iowa home health care provider.

Both members had received 30-day notice -- which is well past, Sand said -- that their services would be cut. Their respective managed care organizations encouraged them to move into nursing homes, he said.

According to Sand, these members' reductions of care violate clauses that include stipulations that managed care organizations should not reduce staffing "arbitrarily" or "without a supporting reduction in clinical need."

Sand also states the insurers violated rules that require them to facilitate access to member services and that managed care organizations "immediately respond" to service gaps.

"I wanted to talk about this now, I wanted to bring this up because these people deserve resolution," Sand said. "Any day now, they could throw their hands up and say, 'Fine, I'll move into a nursing home.' If they do that, that's going to be not just bad for them, but for taxpayers across Iowa because that's a more expensive alternative than keeping them in their home."

Sand said it would be more expensive because nursing home costs paid by the managed care organizations would translate later into capitation rates -- payments the state makes to the insurer each year to operate in the program.

Sand said he previously had looked into specific Medicaid member cases that were brought to him, but hadn't acted any further "because there wasn't anything that I thought appropriate to act on."

Sand also criticized UnitedHealthcare for not appointing a liaison to handle members' concerns as the company prepares to exit the state's Medicaid program. The company announced earlier this year it will leave on Sunday.

Sen. Claire Celsi, D-West Des Moines, who attended the news conference, said she heard that UnitedHealthcare members have not been able to contact their case managers.

"Apparently the case workers don't have their phones," Celsi said. "Technically, the person who is supposed to be helping them doesn't have a phone now."

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