Privately run Medicaid program is here to stay, DHS director tells legislators

Iowa won't turn back from its controversial shift to a privately run Medicaid program, the state’s top human services administrator told legislators Wednesday.

“I’m going to make it work. I believe we are down the managed-care course at this point, and that’s where we’re going to stay,” Department of Human Services Director Jerry Foxhoven told the Senate Human Resources Committee. “I’m going to do everything I can do to make sure it’s successful.”

Foxhoven acknowledged there have been problems in the transition to having national companies run the $5 billion health care system for more than 500,000 poor or disabled Iowans. He pointed specifically to delayed payments from the managed-care companies to agencies providing care to Medicaid members. But he said other states have seen similar problems during their Medicaid transitions, and he said the payment situation has improved since he took the reins in June.

He also acknowledged a Des Moines Register investigation into some members' repeated appeals of service denials. He said his agency is taking a serious look at those cases, but he said they represent a relatively small set of Medicaid recipients, and the number of such appeals has dropped since private companies began running the program. 

Critics continue to demand reverse Medicaid privatization. 

“You are very optimistic. I am not so optimistic,” Sen. Liz Mathis, a leading critic, told Foxhoven on Wednesday. The Hiawatha Democrat said she continues to hear complaint after complaint about the new system. “It keeps going around in circles. We keep talking about the same things,” she said.

Sen. Julian Garrett, R-Indianola, asked Foxhoven how much it would cost to go back to a state-run Medicaid program.

Foxhoven responded that his staff is working on an estimate of that cost, but he added the idea is impractical.

“Right now, we don’t have the infrastructure to do it anymore,” he said. The state would have to rebuild its Medicaid staff, he said, and a shift back would put members through another bumpy transition.

“It would be incredibly unfair to the patients to say, ‘Now we’re going to take that system and change it again,'” he said.

Supporters, including Foxhoven, contend privately-run Medicaid will provide more efficient services and will save money in the long run. A recent estimate from his department suggests the new system is only saving 20 percent as much money as predicted, but Foxhoven predicted Wednesday the change will make the Medicaid program “sustainable" for decades to come. 

Former Gov. Terry Branstad unilaterally ordered the shift in 2015, without needing any authority from the Legislature. After Wednesday’s meeting, Foxhoven told reporters that legislators won’t need to pass any major bills this session to improve the privately run Medicaid system. He said his department would propose “small changes” to legislators, but he declined to specify what they might be.

Mathis said in an interview later that Foxhoven might believe the Legislature doesn’t need to weigh in to the controversy, but she disagrees.

“We’re going to be filing bills no matter what Director Foxhoven thinks, because we’re the people who appropriate the money for his programs,” she said.

Mathis added that Republicans, who control both houses of the Legislature, have also been hearing complaints about the new Medicaid system, and some of them are open to considering changes. One bill already filed would exempt tens of thousands of disabled Iowans from the private system.