Counting costs. The state of Iowa transferring Medicaid management to private companies, saving money. Opponents fearing human costs. We're questioning state legislators Pam Jochum and David Heaton on this edition of Iowa Press.

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For decades Iowa Press has brought you politicians and newsmakers from across Iowa and beyond. Now celebrating more than 40 years of broadcast excellence on statewide Iowa Public Television, this is the Friday, February 12 edition of Iowa Press. Here is Dean Borg.

Borg: Medicaid pays bills for more than a half million Iowans, either because of low income or other reasons. So it's understandable why Governor Terry Branstad's plans for transferring Medicaid from state to private managers is raising fears. Those receiving Medicaid benefits have more confidence in the current system rather than something new. Life essential services are often involved. The taxpayer paid Iowa Medicaid program costs more than $4 billion a year. The question is whether professional health managers can save money without reducing services. Whether or not it's paranoia, or not, many Medicaid recipients and their political advocates aren't willing to take the chance. And it is playing out in the Iowa legislature where Dubuque democrat Pam Jochum is Senate President. The Senate this past week passing legislation repealing Governor Branstad's privatization plan. But that legislation now goes to the republican controlled House where Mount Pleasant republican Dave Heaton chairs the Health and Human Services Budget Committee. Welcome to Iowa Press.

Jochum: It's good to be here. Thank you.

Heaton: Thank you. Good to be here, Dean. Nice to see you.

Borg: Thank you. And you know the people across the table because you deal with them every day at the Statehouse.

Jochum: We do and we love them both.

Heaton: Absolutely.

Borg: James Lynch who writes for the Gazette published in Cedar Rapids and Radio Iowa's News Director Kay Henderson.

Henderson: Representative Heaton, let's start with where we are right now. The state is waiting for a waiver from a federal agency. Explain.

Heaton: Yes. Well, this was -- the privatization was supposed to start the 1st of January and CMS allowed for a couple more months to set a starting date of March 1st. There were some stipulations that we had to get fixed up, that they wanted to see us improve on. And I understand the department has been working with CMS in Washington, D.C., working through those and they feel they are ready. And so as of March 1st we're set to begin. However, I hope that we get an announcement maybe next week, which would put us a couple of weeks ahead of time so that people can get used to and condition and be ready to begin.

Borg: A couple of weeks ahead of time? You mean it's going to start earlier than March 1st?

Heaton: No. But I mean next week would be about two weeks before March 1st so the government, the feds would say you're all set to go and we can begin, rather than waiting to the very last minute and then we have a lot of confusion.

Henderson: Senator Jochum, you made a trip to Washington, D.C. in December to meet with the Center for Medicaid and Medicare Services. They came up with a checklist. Give us just a brief outline of what that checklist was.

Jochum: Actually the checklist that you're referring to now is the checklist that when the Center for Medicare and Medicaid Services were in Iowa in December they gave the state a list of 16 different metrics that they expected us to meet, the state to meet, prior to CMS giving its final approval to the Governor's plan. When we had Mikki Stier, she's the Director of IME, the Iowa Medicaid Enterprise, there was only one of those 16 measures, at least when she was in our Human Resources Committee, that they had actually satisfied at this point. Let me say this, a lot of people may not know that Medicaid is a state-federal shared program. So both the state and federal government help pay for that system. And because the federal government pays the majority of the cost they have to give its final approval to the Governor's proposal. The last time we talked to CMS, it was just a couple of weeks ago, we try to communicate with them, let them know what is happening on the ground and now that they said when they came here there seemed to be a mismatch between what they were told was happening and what they actually saw. So they kind of keep in touch with us. And what they thought at least two weeks ago, that the provider network was still very thin, for CMS the adequacy of the provider network is the most important issue. They want to make sure that we have enough providers throughout the entire state to be able to meet the health needs of some of Iowa's most vulnerable people.

Heaton: Now, in addition to what she just got through saying, we had Milliman, who is an actuarial company that did the work on our managed care project, come before our Health and Human Services Budget Subcommittee last week and IME issued a report exactly where we are as far as sign-ups with the providers creating the network.

Borg: Providers are hospitals and doctors?

Jochum: More than that.

Heaton: More than that.

Jochum: Far more than that.

Heaton: There are people involved in people taking care of disability people, there are just a -- you're talking 500,000, yeah, you're looking at a complete array of Medicaid providers. And when we look at that number, we look at Amerigroup said that they had 96.7% have signed contracts with all three, AmeriHealth had 99.2% and United, because of AARP and their connection with their Medicare supplemental policy, already has this established huge network in Iowa and they say they have 121% of providers signed with them.

Borg: So what you're really saying is that you're alleging, Representative Heaton, that there isn't a shortage then of providers signed up already for the new program?

Heaton: I think when you look at the state overall you can say that. However, we have pockets where certain doctors maybe have not yet signed. We have some hospitals that have not signed. But all of our major hospital networks have signed with all three.

Borg: Senator Jochum, you wanted to say something.

Jochum: You bet I do. So, I'm also the mom of a child with a disability and so I know firsthand what is going on because I'm going through the same kind of frustration that many other caregivers in the state are experiencing right now. And I can tell you that I have looked at the lineup in Dubuque and the only docs that have signed contracts with any of the managed care companies in my area are all at the community health center. None of my daughter's doctors have signed contracts yet in Dubuque. One provider that I know that provides Sarah some of her we call them waiver services, is still reviewing a contract.

Borg: So there's some dispute as to whether or not -- go ahead, Dave.

Heaton: Let me explain what the doctors are looking at. Medicare -- Congress in the past recognized the need for primary care providers and gave them, all Medicare doctors got an enhanced rate. And so when -- we're at the point now of where about four months ago Congress passes a bill that takes the enhanced rate back to the original rate. Iowa has elected as their base rate for primary care physicians to hold onto that enhanced rate and that is the base from which these docs are negotiating with these managed care companies.

Borg: Paying a premium above what is necessary.

Heaton: Paying a premium above other states, what other states are offering their doctors. Now, I want to go on and say this, that if these doctors don't agree really with what is being offered them as a base, I think that they are putting my Medicaid population at risk.

Borg: Jim?

Lynch: Representative Heaton, let's talk about that Medicaid population. As Dean said, there are more than half a million Iowans that are beneficiaries. Will they all be affected come March 1st? Or is this something that's going to come in little by little phased in? Or March 1st the world is going to change for all half million?

Heaton: The greatest number of them will be affected from the outset on March 1st, but the long-term care, people in the nursing home area of Medicaid is still a year and a half away.

Jochum: So let me just go back to the provider issue for just a minute. We have gone back through those lists of providers and I think the lists are rather misleading and if you try to go to the website it's pretty darn hard to really figure it out if you have tried to go to the website of any of the managed care organizations right now. What we have found is that you may have a doctor that signed a contract that has a clinic in Ames, but that doctor may also have five satellite clinics that he or she is also affiliated with. It's one doctor. But because that one doctor signed a contract they're counting that doctor for each of the satellite offices as well, but it's still just one person.

Borg: Let me ask you, past that now, let me ask you, Senator Jochum, isn't this really though a done deal, that it is going to be converted to private management? And shouldn't the more effective thing and efficient thing to work out these things that you're bringing up here now? Isn't it a done deal that it's going to be privatized?

Jochum: I'm not convinced it's a done deal yet. And I believe that if the network is really that thin and the state has not met all the metrics that CMS has requested of the state that they can delay it again. There is nothing saying that they have to give their approval for a green light to go ahead on March 1. Let me tell you, I did not come to the position I am very lightly or in a vacuum. I certainly did lots of research looking at studies that have been done and other states have managed care, I have talked to disability rights in Kansas and other states, and I can tell you that this system, a capitated managed care delivery system, has not worked well for the disabilities community or people on long-term care services, which would be nursing homes and facilities that work with children and adults with mental illness and other issues of that nature.

Borg: So you're not willing to concede that it's going to happen. Kay?

Jochum: I'm not willing to concede to it yet.

Henderson: Representative, you had something to add there.

Heaton: Well, the most important thing that we have to understand here is just exactly why the Governor proposed moving into privatization. You talk about the inevitability, I agree with you, I'm very confident that CMS is going to approve. But here's what it's going to do for us, we start with the Affordable Care Act, and what was the purpose of the Affordable Care Act? That was to get people covered and have them access to health care where before they were going through emergency rooms and everything else to get their health care. So Congress passed it. Iowa in the meantime looked at are we going to expand Medicaid or not? And we chose to expand it. And we took on a whole bunch of new people and they will have access to health care services. Now here comes why we go with insurance companies, nothing more, Obama wanted insurance to be able to provide Obamacare, we've done the same thing with Medicaid. What will happen? We will move a culture that has been locked in for fee for service and just curing people's ills to a whole culture of wellness. These managed care companies will not be successful unless they can move that culture to wellness. And because they have a capitated amount of money to work with they are taking a risk. But if they don't get them to wellness they will fail and they will lose a lot of money. In the meantime, look at what we do with chronic disease. IME has never worked with chronic disease before nor do they have the people to do that. The secret to lowering health care costs is to move people to wellness, take on chronic disease and then at the same time offer them the very best health care for these people that we possibly can.

Borg: Let me just throw in here, I heard former Governor Chet Culver this past week at a public forum, he made the statement this is not a partisan political issue, I'm doing this as a private citizen, it's not partisan political. I swallowed hard, held my tongue and thought, really? What do you think, Representative Heaton?

Heaton: I don't think it's a partisan issue.

Borg: Okay, what do you think?

Jochum: I do not either. I would not be here if I believed it was the right thing for very vulnerable Iowans. Let me go back to the Affordable Care Act. The Affordable Care Act also had new transformational measures built into it to try and change how we pay for health care and how it is delivered. And it was the establishment of what we call ACO's or accountable care organizations, and integrated health homes. That was a way to start reimbursing providers of services for getting people well and keeping them that way by pulling all the different providers together to work with individuals and that they would be paid for outcomes rather than volume. What we have proposed in the Senate is to stop the capitated managed care delivery system that the Governor has proposed. Our research has shown that it has not improved health outcomes in other states, has not expanded access to health care and certainly has not controlled costs. So what we are proposing is that rather than the Governor behind closed doors develop some kind of a plan and drop it on us, that we follow what some other states are currently doing, I might add Alabama just came out, of all states Alabama, their Governor started in 2012 putting together a commission to look at some recommendations on what can we do to change the Alabama Medicaid system to do all those things, shared goals that we all have. And the legislature was involved, stakeholders were involved and CMS just approved their plan yesterday. And it incorporates not the managed care mile the Governor is proposing but accountable care organization model and a regional care model.

Heaton: Let me finish off on the ACO's. The ACO's came about --

Borg: What ACO?

Heaton: Affordable care organizations. The ACO's came about because of Obamacare and wanting to address Medicare because the federal government wants to move Medicare into a managed care environment also. Right now --

Borg: We're talking about Medicare and the other one is Medicaid.

Heaton: I'm going to get there. Medicare is still involved in fee for service. What the feds want to do is move Medicare to a capitated approach through vertical integrated health systems called ACO's. And believe me when she says she doesn't agree with capitated, approaching it in a capitated way, Medicare will be here within a year and a half with the same plan.

Borg: Jim?

Lynch: Let me ask you quickly, you both talked about Obamacare and sort of comparing this to Obamacare. Is the Senate action to stop and start a do over on Medicaid the same as Congress voting to repeal Obamacare? Representative Heaton?

Heaton: I don't know what they have in mind with their legislation. I haven't read it yet.

Henderson: Let me ask you this, people listening to this who have private insurance maybe provided by their employer, they're in a managed care plan.

Heaton: Yes they are.

Henderson: Before, under the current system which is still in operation until you get this waiver, are there limits on the care you can receive, the doctors you can go to, under the current system, Senator Jochum?

Jochum: There are some in terms of which doctors even will take Medicaid to begin with. So yeah, to some extent there is. Look, if I really thought that this was the best approach for at least the disability community and the long-term services community I would be a cheerleader and say let's go for it. But everything that I have researched, everything I have learned from other states tells me that at least for certain populations within Medicaid this is not the best approach.

Heaton: And I disagree. I believe that the disabled population are going to end up with better services than they are currently receiving, as good or better. I didn't say they're not doing a good job now. I'm saying there will be improvements. I will see a deinstitutionalization of that population and there will be more community living offered to them with supports available because the difference between $1000 a day in an institution and $240 a day in a supported apartment per day with services and able to live in a community, but that will be voluntary, that's not going to be forced. But in order to have also my elderly be able to stay in their homes longer and have home health, adult day and all the supports there that they don't have to go to a nursing home, that is what's going to happen and that's where the rewards are.

Jochum: And that would be great and the budget bill last year had safeguards built in that the managed care companies could not reduce even the number of waiver slots and yet the Governor vetoed that. You're talking about services that are waivers to keep people in their own home rather than institutional care.

Borg: We've got far more questions. And one of them is, the savings that are projected by moving to managed care for Medicaid are already built into the state budget. So how can you go back?

Jochum: Well, that's if you want to agree that there was actually some real savings to begin with. I was one of those who never believed the savings would materialize at all. And other states that have done this, if there were savings at all it was in states that already had an above average fee for service reimbursement rate to begin with. I've got to tell you, Iowa's cost per enrollee for Medicaid has been pretty steady, stagnant for several years now, around $5,400 per enrollee for children and adults. And we're actually below, one of the lowest enrollee costs in the country.

Borg: Okay, I'm going to go to Kay.

Henderson: Representative Heaton, if I have a problem or a concern I would call someone called an ombudsman that is employed by the state. There has been some indication that dozens should be hired. There are currently, what are there, ten?

Jochum: Yes.

Heaton: Are there ten?

Jochum: There's eight and then we hired two more to try and deal with the Governor's proposal.

Henderson: So do you need to hire far more ombudsmen?

Heaton: I'm not quite sure how -- I know this thing with oversight has got to be decided before we go home this year and I know that I'm looking forward to visiting with the Senate and my members and trying to find some type of agreement on how we might provider oversight over these managed care companies.

Borg: Let me quickly ask you then to move to mental health. We have a mental health difficulty in the state. Is mental health, are mental health services covered in this Medicaid transfer?

Heaton: Yes. And absolutely when I talk about, when I talk about the elderly being able to stay in their homes longer, when I talk about the deinstitutionalization of people with disabilities, I want to talk about the 25% of my acute level care beds are occupied by people who have nowhere to go. There are counties who do not have the services for these people yet developed. These managed care companies will do everything they can to move these people back, chronically ill back into the community and provide support services so we don't get this revolving door --

Borg: Jim has a question. Jim? Let Jim ask his question.

Lynch: I was going to ask, moving from mental health to the mental health institutes, the state closed two of them in the past year. What is the next step here? Will the other two MHI's be closed or will they be repurposed to serve different populations? What's the future there?

Heaton: Well I hope that they won't, I really do.

Borg: That they won't what?

Heaton: Close. I think we need those beds. We need the level of bed that is a locked facility that will be able to take care of highly behavioral individuals.

Borg: Let me go to Senator Jochum on that question.

Jochum: Actually I do think we need to have the two remaining remain open. Whether we like it or not there is just a time and a place when people have a chronic illness, may get out of control, they need that kind of a service. But let me say this, we were engaged in mental health managed care for 20 years and part of what that Magellan, who was the private company we hired, one of the things they were supposed to do was create those community based services. So if we don't have them then you have to go back and say, so what is it that we achieved under mental health managed care for 20 years? Look, I know that Dave and I usually agree on all these issues, a deepest respect for the man, but this is one issue where we have parted ways and it isn't, has nothing to do with my political stripes, it has to do with the fact that I'm a mom, that I have seen how it is playing out in the state, I have done a lot of work, I have talked to disabilities communities and I can tell you that when we talked to the Kansas disability rights groups they said there are some things you absolutely have to make sure, if you're going to move to this you have to have a robust ombudsman program and the standard is one ombudsman for every 3,500 people. So the long-term care ombudsmen came in and made their proposal. The second thing they said is you need to make sure that you have conflict free case management. Case managers are the people that sit down with people with disabilities and their family members and they come up with goals for a year and how are we going to help this person achieve some additional skills over the next year. And then finally they said make sure you do not reduce the waiver slots because that is exactly what has happened in Kansas and it is a mess.

Borg: Kay?

Henderson: In regards to other issues within the Department of Human Services, over the past decade or so there have been concerns raised about child abuse investigations. Do you think you have a handle on that and have enough social workers to review the cases that are coming in, Representative Heaton?

Heaton: Well, we moved to a new type of approach that didn't, it separated the type of abuse so that some we followed up a lot more closely on than others and there's a kind of a determination process with that. Do I think we have enough people in the field? We haven't done a salary bill in five, six years, you guys know that and the pressure is continually on departments, I don't care if it's Economic Development or if it's the Justice Department, I don't care where it is, if we don't provide the money to continue to pay the people the raises that the unions and our Governor have negotiated, they get laid off. We have been shrinking, shrinking our workforce every year.

Borg: Let's let Senator Jochum --

Jochum: He's right though. You can only shrink a workforce, public or private sector, so much and at some point it no longer functions or is responsive to what you're trying to achieve. And no, Iowa has had a shortage of social workers for years, it's getting worse. We have a shortage of psychologists. That's only getting worse. So we have a lot of workforce issues we need to be dealing with as well. You only can shrink it so much, it doesn't work anymore.

Henderson: Shifting gears completely, this year you are the presiding officer in the Senate. There is a female new presiding officer in the House, House Speaker Linda Upmeyer, viewers met her a few weeks ago here on this program. Is it easier to recruit women when you have women in positions of leadership to encourage them to run for the legislature as someone who is out there doing the recruiting?

Borg: 30 seconds.

Jochum: Yes, the short answer is yes. And I can tell you even like on opening day of session when legislators bring their families in for the swearing in, some of the younger ones have young children and they will come up to me afterwards after I swore all the new Senators in and they said, my daughter sat there and said, dad look there's a woman up there in the chair with that gavel, that is so cool, I want to do that someday. So yes I think it makes a difference.

Borg: I don't know how we ever expected to solve this problem or explain it fully --

Jochum: No but we thank you.

Borg: -- but we're out of time and thank you so much for what you have done. Thank you.

Heaton: Thank you, Dean.

Jochum: Thank you.

Borg: And we'll be back next week with another edition of Iowa Press, 7:30 Friday night and then again noon on Sunday. I'm Dean Borg. Thanks for joining us today.

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Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. I'm a veteran. I am a builder. I'm a volunteer. I am a teacher. I'm a banker. I'm an Iowa banker. No matter who you are there is an Iowa banker who is ready to help you get where you want to go. Iowa Bankers, allowing you to discover the genuine difference of Iowa banks. Iowa Communications Network. ICN's Broadband Matters campaign advocates for access to high speed broadband in all corners of Iowa for education, public safety, health care, government and economic development. Information is available at broadbandmatters.com. Iowa Community Foundations, an initiative of the Iowa Council of Foundations, connecting donors to the causes and communities they care about for good, for Iowa, for ever. Details at iowacommunityfoundations.org. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. The Arlene McKeever Endowment Fund at the Iowa Public Television Foundation, a fund established to support local programming on Iowa Public Television.