Iowa’s march toward Medicaid managed care moved several steps forward last week, with the Department of Human Services (DHS) presenting the four winning bidders that will be contracted to manage health insurance coverage for one-sixth of the state population. Some may view the announcement as just another check-off in a long process, but it was in fact a significant milestone, even if in the public view, the news was low priority.
While IHA continues to give the state’s process the close scrutiny it deserves, public outlets that provided coverage more or less ran the DHS press release word-for-word with no dissenting voice whatsoever. The Des Moines Register was more thorough, including quotes from Democratic legislators who have been questioning Iowa’s Republican governor since his administration fired up the managed care machine in February. Nonetheless, the Register relegated the story to the bottom of page 4A, while it was nowhere to be found on the paper’s home page.
Given that Medicaid affects more than 560,000 Iowans, the lack of drill-down given to this monumental change is, to say the least, disappointing. It’s also perplexing, like an elephant falling into a pool yet making no splash.
How could half a million people’s health and well-being – their very lives, in fact – be so roundly ignored? If this doesn’t raise a question about Iowans’ compassion, it at least says something about the lack of representation for our neighbors who are poor and disabled. And, of course, that gap in representation will grow further as management of Medicaid shifts from our duly elected government to private, profit-driven, out-of-state companies.
And speaking of drill-down, just where are the questions about the promises of Medicaid managed care with regard to cost, access and quality? As noted, DHS’ rose-colored claims for each of these were as unchallenged as they were unsubstantiated.
For those willing to investigate, it’s not hard to find doubt. A 2012 report from the Robert Wood Johnson Foundation, which examined and summarized current and relevant research on the subject, has plenty of it.
Have states saved money with Medicaid managed care? “Peer-reviewed literature finds little savings from Medicaid managed care on the national level, but some states have been more successful than others.” However, “managed care is unlikely to significantly lower cost” for a number of reasons, including already low fee-for-service rates, high state administrative costs (at least on the front end) and the fact that states were using prior authorization, utilization review and other similar tools even before moving to managed care.
What about access? “Medicaid managed care can and sometimes does provide beneficiaries with improved access, but the scope and extent of such improvements generally are state specific and variable.” And quality? “There is scant literature that carefully examines the effectiveness of disease and care management programs administered by Medicaid health plans.”
Not quite ringing endorsements, especially when taken in the context of decades of other states’ experience with Medicaid managed care. What the report does conclude is that the best approaches are likely to be site- and group-specific. In other words, Iowa needs an “Iowa solution” for Medicaid, something Iowa hospitals have been pursuing, with measurable progress and benefit to patients, for years.
But exactly how is an Iowa solution supposed to come about, or continue moving forward, when the people running Iowa Medicaid are in Minneapolis, Tampa, Philadelphia and Indianapolis?
As of July 30, Medicaid has for five decades provided health coverage that helps low-income seniors, children and people with disabilities get needed health care. It provides parents and other adults with economic security through health coverage that protects them (and their health care providers) from medical debt and allows them to stay healthy and work.
Medicaid is maligned by some as supposedly providing inferior access to care. However, current research indicates otherwise. The Commonwealth Fund Biennial Health Insurance Survey explores the experiences of adults with private insurance and Medicaid beneficiaries who had coverage for a full year as well as adults who were uninsured for some time during the year. The survey asked individuals about the quality of health care they received, access to preventive health services, cost-related experiences and responsiveness of health care providers. The survey found:
- Medicaid beneficiaries were as likely as those with private insurance – and significantly more likely than uninsured adults – to report having a regular source of care.
- Adults with Medicaid who were covered all year reported getting recommended preventive care services – like blood pressure and cholesterol checks, and seasonal flu shots — at higher rates than did adults who were uninsured part of the year.
- Medicaid beneficiaries rated the quality of their care as highly as privately insured adults and significantly better than uninsured adults.
- Adults with private insurance or Medicaid reported at higher rates than did those who were uninsured that their doctor always or often knows their medical history.
- Adults with Medicaid were significantly less likely than either privately insured or uninsured individuals to report difficulty paying medical bills, being contacted by a collection agency about unpaid bills, having to change their way of life to pay medical bills or paying off medical bills over time.
- Those with Medicaid were also significantly less likely to report skipping services because of the cost of care compared with adults who had spent time uninsured.
In Iowa, nearly 600,000 children, senior citizens and disabled citizens have access to care through Medicaid. In fact, more than 285,000 Iowa children – almost half the children in the state – are covered by the program, as are about 40 percent of Iowa births.
Iowa expanded Medicaid coverage in 2013, providing even more access to care and its benefits. With increased coverage has come decreased uncompensated care costs for hospitals in Iowa and across the nation. According to the U.S. Department of Health and Human Services, the nation’s hospitals provided more than $50 billion in uncompensated care in 2013; in 2014, there was a $7.4 billion reduction in uncompensated care costs, with 68 percent of the reduction coming from states that expanded Medicaid.
In those states, new diagnoses of diabetes increased 23 percent, while in states that have not expanded, the increase was just 0.4 percent. This means that when financial barriers to care were reduced, more people were encouraged to get tested and to take control of their disease, increasing the chances for an overall positive medical outcome. That likelihood is further enhanced because nearly all (97 percent) of Medicaid beneficiaries with diabetes said they had a usual source of care, as opposed to less than 80 percent of people with diabetes who were uninsured.
Medicaid is far from perfect, but the same could be said of any health insurance program, public or private. Medicaid has withstood the test of time because its fundamental mission – to provide vulnerable Americans with access to health care – aligns with fundamental American values.
Among those values: “(to) promote the general welfare and secure the blessings of liberty to ourselves and our posterity.”
His 20-year old son recently had been hospitalized twice with bipolar disorder and rescued from the brink of suicide, he said. Now, the insurer said he had improved and it was no longer medically necessary for the young man to see his psychiatrist two times a week. The company would pay for two visits per month.
“There was steam coming out of my ears,” Kamins recalled, his face reddening at the memory of that day in June 2012. “This is my kid’s life!“
His son again became suicidal and violent, causing him to be rehospitalized eight months later, said Kamins, a marketing professor at the State University of New York, Stony Brook. Kamins is suing the insurer, OptumHealth Behavioral Solutions, which disputes his version of events and denies that it left the young man without sufficient care.
Seven years after Congress passed a landmark law banning discrimination in the treatment of mentally ill people, many families and their advocates complain it stubbornly persists, largely because insurers are subverting the law in subtle ways and the government is not aggressively enforcing it.
The so-called parity law, which was intended to equalize coverage of mental and other medical conditions, has gone a long way toward eliminating obvious discrepancies in insurance coverage. Research shows, for instance, that most insurers have dropped annual limits on the therapy visits that they will cover. Higher copayments and separate mental health deductibles have become less of a problem.
But many insurers have continued to limit treatment through other strategies that are harder to track, according to researchers, attorneys and other critics. Among the more murky areas is “medical necessity” review – in which insurers decide whether a patient requires a certain treatment and at what frequency.
Kamins is among a small group of people around the country to file lawsuits alleging federal or state parity laws were violated when patients with mental illness were held to a stricter “medical necessity” standard than those with other medical conditions.
“’Medical necessity’ is the insurers’ last hurrah,” said Meiram Bendat, Kamins’ attorney, who filed the lawsuit in New York State court.
Bendat, who is seeking class-action status in the Kamins case and has filed other parity suits in New York, Illinois and California, said attorneys are acting because the government won’t.
Enforcement of parity laws is lax, he said, and companies are getting away with skirting their requirements.
In fact, only a handful of states have dug into whether insurers are complying with parity laws. And in the seven years since the federal law was passed, the U.S. government has not taken a single public enforcement action against an insurer or employer for violating the law.
Clare Krusing, a spokesperson for America’s Health Insurance Plans, the industry’s main trade group, said it is “a misperception” that enforcement has been weak. Insurers are working closely with federal and state governments, she said, and “have taken tremendous steps to implement these changes and requirements in a way that is affordable to patients.”
Ensuring that mental health and other medical treatments are exactly on par is challenging, she said.
“A treatment plan for diabetes or a chronic heart disease is very different from a treatment plan for a patient that’s seeking care for depression or another mental illness,” she said. “It’s not a math formula.”
But Henry Harbin, former CEO of Magellan Health, a managed behavioral health care company, said insurers are taking advantage of minimal oversight.
“They can micromanage care down to almost nothing,” said Harbin, who also served as Maryland’s mental health director before becoming a consultant. “The enforcement in this area is a joke.”
When it passed in 2008, the federal mental health parity law was seen as a major achievement for Americans with mental illnesses.
Though some states already had their own parity laws on the books, there were serious gaps in the protections they offered. This law was to force insurers across the country to provide the same access to treatment as they do for cancer, diabetes and other conditions.
At the time, Sen. Edward Kennedy called the law “historic,” and praised his colleagues for finally ending “the senseless discrimination in health insurance coverage that plagues persons living with mental illness.”
But enforcement was not assigned to any one agency. Instead, it fell to the departments of Labor, Health and Human Services and Treasury, as well as state insurance commissioners.
The Department of Labor, which is responsible for monitoring health insurance offered by large employers, set up a complaint line for consumers. Still, advocates say, most consumers don’t know they have new rights, and those that do often don’t know where to turn.
“It gets very complicated for the average person,” said Carol McDaid, who runs the Parity Implementation Coalition, an advocacy group created to make sure parity laws were properly enforced.
“They’re already in a [mental health] crisis, looking for help, and they don’t know if they should write and complain to their state insurance commissioner, the Department of Labor, the health department. It gets very difficult.”
Since 2010, just 867 of the 1.5 million total health insurance inquiries made to the Department of Labor had to do with the parity law, most of which were not complaints, a spokesman for the department said in May. A total of 140 cases of alleged parity law violations were found, and they were resolved through “voluntary compliance,” in which the employer agreed to pay for the patient’s services, the spokesman said. He said that the investigators also requested that the insurers change their broader policies, when appropriate.
Separately, HHS found 196 possible violations of parity law by insurers from September 2013 through September 2014, a spokeswoman said. In each case, she said, plans voluntarily made changes or told the agency they believed their plan was in compliance with the law.
No action by a federal agency, however, resulted in a lawsuit, fine or public announcement.
“Our problem is that these investigations are all kept secret,” McDaid said. That means the decisions have no effect on what other employers or insurers do, and consumers don’t learn what to look out for, she said.
Former congressman Patrick Kennedy, one of the authors of the parity law, said timing was partly to blame for the administration’s sparse enforcement record.
“Parity got kicked down the track until the Obama administration could get the Affordable Care Act on track,” he said. It took five years for the government to issue final rules explaining exactly what insurers had to do to comply.
Enforcing laws against insurance companies, he added, was also a delicate undertaking.
“Insurance companies were part of the coalition that helped bring the ACA to life, and the administration feels an enormous debt of gratitude,” he said. “It’s a challenge politically to then step on the toes of those that brought them to the dance.”
Meanwhile, research points to some continuing inequities in coverage.
Data compiled on health plans in 2010, the first year of the national parity law’s implementation, found that insurers frequently reviewed mental health treatment more strictly than other care. For instance, they more often required “preauthorization” for doctor visits or made patients “fail first” at one level of care before getting approval for another.
A study this year from the Johns Hopkins Bloomberg School of Public Health found that a quarter of the plans sold on two state Obamacare exchanges appeared to violate the federal parity law in various ways, including requiring higher cost-sharing for mental health. The states, one large and one small, were not named.
In a 2015 survey by the National Alliance on Mental Illness, an advocacy group for mentally ill people and their families, patients said they were denied payment because treatment was deemed “not medically necessary” twice as often for mental health as for other medical conditions.
Without strong government enforcement, patients and families say they are left to their own devices.
But demonstrating that an insurer has violated parity rules requires a detailed analysis of a plan’s mental health and medical benefits. And though the law requires that insurers disclose those documents, critics say they often are not complying.
The Parity Implementation Coalition in Washington D.C., has received hundreds of consumer complaints to its helpline, but McDaid said virtually none of the health plans have been willing to release the necessary documents to demonstrate that there has been a parity violation, she said.
Krusing of the insurers’ association insisted that documents are being made available to patients and providers. “Plans are committed to being transparent about their coverage decisions,” she said. Decisions to deny treatment, she said, are based on ensuring that patients receive care based on the best medical evidence.
“We are still at a point in the health system where patients face wide variation in the type of care they’re receiving,” she said. “Oftentimes we see tests and procedures done that are costly and unnecessary for the type of care that they’re seeking or even help or benefit their condition.”
The federal government is considering whether to tighten disclosure rules for insurers. In the meantime, some consumers, including the Kamins family, are turning to the courts.
Debating What’s ‘Medically Necessary’
Kamins’ son had always been a star, according to his father, who holds his power of attorney and asked that the young man’s first name be withheld for privacy reasons.
As a boy, he was a quiet but quick-witted jokester, who graduated fifth in his high school class in 2010, Kamins said.
A few months after heading to an Ivy League college, however, he was overcome by depression, his father said. His grades slipped. He began experimenting with drugs. Then, in the spring of 2011, he tried to kill himself, according to Kamins and the lawsuit.
His parents brought him home to Los Angeles, where the family lives while Kamins commutes back and forth to New York. The family has insurance through Kamins’ job.
But Kamins said OptumHealth Behavioral Solutions would not cover inpatient care before his son had tried an outpatient program that focused on drug addiction.
That marked the first of several violations of parity law, according to Kamins’ lawsuit, which seeks a change in Optum’s policy and reimbursement for benefits denied, plus attorneys’ fees. By requiring the young man to “fail first” at a lower level of care before paying for more expensive residential treatment, Optum, a subsidiary of UnitedHealth Group, had created an illegal obstacle to mental health treatment, the lawsuit alleges.
“Imagine someone going to a hospital and being told you can’t get open-heart surgery in the midst of a heart attack because you haven’t tried aspirin or nitroglycerin first. That’s the absurdity of it,” said Bendat, Kamins’ lawyer. “It’s just a way to discourage higher levels of care that we would never tolerate in the non-psychiatric context.”
After the addiction program, Optum paid for the young man to see a psychiatrist a few times a week. His father said he began showing signs of improvement and seemed on track to return to school back East.
But in June 2012 — four months after the young man was hospitalized during a manic episode — the insurer’s letter arrived saying it was no longer “medically necessary” for him to see his psychiatrist so frequently.
That fall, the suit alleges, Kamins’ son tried to return to his Ivy League school. He found a psychiatrist and began going twice a month as he had been authorized to do in the letter, Bendat said. Kamins said he tapped into his retirement fund to pay for extra visits, but his son spiraled downward.
In court documents, Optum alleges that Kamins’ son actually was entitled to more frequent visits with a new mental health provider, suggesting that the limitation on visits applied only to the psychiatrist he had been seeing in California. The insurer argues that his subsequent hospitalization in February had nothing to do with limitations put on visits in California.
In a written statement, Optum officials said they “take the mental health needs of each of our members very seriously, and we are committed to helping them get care that has shown to be most effective in helping people overcome and live better with mental and emotional challenges.”
Kamins said that was not his experience.
“The irony in all this is that Optum fights tooth and nail to dole out care for my son. But had they allowed him upfront to get the care he needed, he might not have ended up back in the hospital, which they had to pay for,” he said.
As for Kamins’ son, he returned to college in the fall of 2013. The next year, his father’s employer contracted with a new insurer, which Kamins said gave the young man greater access to care and helped him stabilize.
Now 23, he is scheduled to graduate next year.
Similar to “Iowa nice,” “quality of life” is one of those terms that is difficult to define but that everyone can identify because they know it when they see it. It’s the reason why many native Iowans who were attracted the natural beauty of Colorado or Oregon or the urban excitement of Chicago or Seattle come home. What was once predictable and boring suddenly becomes safe and welcoming.
Quality of life as a metric often boosts Iowa to the upper reaches in various state comparisons. Last month, CNBC released its list of top states for business, which placed Iowa a comfortable 10th. It’s familiar territory for Iowa, which usually hovers near the top 10 (12th last year, 11th in 2013), though in 2010 the state hit sixth. Similar results have been seen in lists from Forbes and CEO magazine, among others.
In the CNBC rating, which was led by Minnesota and dominated by the Upper Midwest (#6 North Dakota, #7 Nebraska, #11 South Dakota and #15 Wisconsin), Iowa ranked in the top 10 states for three metrics: cost of doing business (fifth), quality of life (ninth) and overall economy (10th).
At the other end of the scale was the quality and availability of Iowa’s workforce (44th), a measure that offered the greatest possible points in CNBC’s weighted methodology. Hurting Iowa the most in this area: the state’s ongoing struggle to hang on to college graduates who receive a good education (Iowa ranked 18th on that measure) but choose to start their careers elsewhere (recent surveys from the University of Iowa and Iowa State University show about 50 percent of graduates leave the state).
This is a situation that IHA works to address through the Iowa Hospital Education and Research Foundation (IHERF) Health Care Careers Scholarship program. In addition to providing support to students in high-need careers, the program also requires students to work one year in an Iowa hospital for each scholarship awarded (they can receive up to two of the $3,000 awards). In this way, IHERF scholarships help stabilize Iowa’s workforce and improve the state’s overall business climate.
Iowa hospitals also contribute to the state’s other strengths by lowering the cost of doing business (health care in Iowa is among the most affordable in the nation and, by extension, so is health insurance) and developing the overall economy (hospitals are a large, reliable and growing part of Iowa’s economy and help keep the state’s unemployment rate enviably low).
Among the top 10 states in the CNBC report, it’s interesting that Iowa is comparable in quality of life to Colorado and Washington and far better than Texas, Utah and North Carolina – locations that Iowa college grads find very appealing. It’s also notable that access to high-quality health care and overall population health are significant factors in the quality-of-life metric.
Clearly, Iowa is a great place to live and, by extension, a great place to do business. Hospitals contribute to both by providing high-value health care and employing a highly educated, highly professional workforce whose talents impact lives and communities in countless, often immeasurable ways.
As for those young people who take their college degrees and stream out of Iowa each year: a state can’t be all things to all demographics, as the CNBC results show. In most ways that affect quality of life for most people, Iowa has its priorities straight and is playing to its strengths, including an excellent health care system that, perhaps more than any other industry, ensures that Iowa will always be among the best places to live and work.
In Iowa, 560,000 people are covered by Medicaid, and that is a larger number than any other insurance coverage except by Wellmark.
For 2016, Gov. Terry Branstad and Iowa legislators have decided to make major changes to the Iowa Medicaid program, which has a $4.1 billion budget and over half the payment going to care for 168,000 severely disabled Iowans. The rest goes to care for the other 392,000 low income Iowans in Medicaid. Of that $4.1 billion, about 60 percent comes from the federal budget.
The plan for 2016 involves changing from the Iowa Department of Human Services (DHS) state-run program to contracting with two to four private “managed care” companies. There are 11 private companies who have been bidding for the 2016 contract and by August 3 we will hear which two to four companies have been chosen to run the Iowa Medicaid program.
Nationally, the trend to have Medicaid administered by private insurers has resulted in 70 percent of Medicaid beneficiaries receiving at least part of their services by private managed care companies. For example, in Iowa mental health services were taken over 20 years ago by private managed care.
Unfortunately there is more trouble with mental health care access now than ever before, with fewer hospitals offering inpatient services resulting in shortages of beds. There are fewer options too for outpatient care like community homes, which means many Iowans end up in jail or an emergency room instead of getting mental health care when they need it. Our police know how serious a problem access to mental health care is for any citizen.
There are many questions about private contracting for Medicaid, which Gov. Branstad expects to save the state up to $100 million per year. With the 15 percent administrative overhead that most private insurers have (which would be a $615 million cost for Iowa) it is going to be interesting to see how these two to four managed care companies will perform.
Managed care companies sound like Health Maintenance Organizations (HMOs), and it is not clear how they differ. These companies may have difficulty finding enough physicians to accept the currently low payments for Medicaid patients. It is one thing to accept lower payments from the government, but how many physicians will be willing to accept low payments from a for-profit insurer?
Most physicians are expecting more required pre-authorizations from these managed care insurers to allow them to do tests, procedures, and even give prescriptions. These pre-authorizations consume hours of time by physicians or their staff, instead of seeing and treating patients. Many physicians are so frustrated by these pre-authorizations and the time it takes for the managed care companies to respond they will refuse to see those patients covered by the managed care insurer.
Nationally, Medicaid rates for physician payment run about 34 percent less than Medicare, which is often half of what a commercial employer-based insurance pays.
Though currently most of Iowa’s physicians accept Medicaid patients, with these changes next year that access to care may drop. In New York only 57 percent accept Medicaid. In California and Florida it is only 54 percent and 56 percent respectively.
The providers of Medicaid services go far beyond just hospitals and doctors (such as nursing homes), and to think that some managed care insurers will take their 15 percent administrative cut of $615 million from $4.1 billion- and save another $100 million- does sound like the providers had better plan to get paid less. The current state-run Medicaid DHS does have some overhead, but most agree it is not 15 percent, so the $4.1 billion minus $715 million is potentially a big cut for providers.
Some managed care done by providers with cooperation, prevention, and coordinated care, e.g. Accountable Care Organizations (ACOs), has shown some promising reduction in costs of health care. It remains to be seen though whether these managed care companies will use ACOs. The change in Medicaid in Iowa will need to be monitored closely by our legislators, who so far have not resisted the privatization.
For 560,000 Iowans who depend on Medicaid and their providers, the change in 2016 brings an uncertain future.
Dr. Kitchell is a physician in Ames.