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Davis Brown Health Law Blog  

Medicaid in Iowa: A Brief History - June 13, 2016

This blog series originally appeared as an article, “Are We There Yet?  We’ve “Modernized” Medicaid But Should We Expect Improvement?” in the June/July issue of the Iowa Lawyer magazine.


In the short span of two years, the Iowa Department of Human Services designed, implemented and recently completed a plan to transition the vast majority of the 560,000 members in the state’s $4.2 billion Medicaid program[1] to private managed care organizations (“MCOs”).  While sizeable challenges were overcome, the main challenge arguably lies ahead — demonstrating that the transition can deliver on its promises to improve health care quality and access while reducing costs.[2]

Medicaid is a state program that makes healthcare services available to individuals with inadequate financial resources, including children and elderly and disabled persons.  Historically, Medicaid programs made services available by contracting with providers on a “fee for service” basis, meaning that the programs contract directly with providers and pay the providers for each service performed (e.g. for each office visit). 


Over the past 20 years, many state Medicaid programs have transitioned to managed care delivery-and-payment models.[3]  With a comprehensive managed care model, the programs contract directly with managed care entities, including MCOs, to accept a set per-member-per-month payment (i.e. a capitated rate) in exchange for delivering services through a network of participating providers.  The widely-held view behind this trend is that a state may see improved care coordination and cost savings, or at the very least, some predictability on expenditures.


As of today, 48 states and the District of Columbia have implemented some form of Medicaid managed care.[4]  Approximately 80% of Medicaid members receive some service through managed care; 55% receive most of their services through managed care.[5]  Prior to April 1, 2016, Iowa operated a handful of managed care programs, which collectively covered a relatively narrow range of services and/or member groups.[6] 


In early 2014, Iowa DHS began to develop a plan for the transition of Iowa Medicaid to a comprehensive managed care model — then dubbed “Medicaid Modernization” —  and, on April 1, 2016, DHS transitioned the operation of the vast majority of the program to three MCOs.  This came after many challenges. 


The Centers for Medicare & Medicaid Services (“CMS”), for example, delayed its approval of the plan and the original transition date of January 1, 2016.[7]  The MCOs scrambled to develop the infrastructure to meet contractual and regulatory obligations and specifically appeared to fall short on developing their provider networks in time for the original transition date.[8]  Unsuccessful bidders to the RFP process challenged the contract procurement process in court.  Medicaid members and providers expressed frustration, confusion and fear about the transition.[9] 


While these past challenges are not entirely resolved, Iowa’s patients, providers and MCOs[10] —as well as the attorneys who represent them — will have to focus on addressing new challenges that arise with the ongoing operation of Iowa’s new managed care model.  Central to that effort should be the interest to evaluate whether the new model is delivering on its promises of improved quality and access at lower costs. 


In my next blog post about Medicaid modernization, we’ll cover what’s coming next for members, including if they’ll have better access to care, if they’ll receive better care and their potential to save money. 

[1]  While termed a “program,” Iowa maintains multiple Medicaid programs, each designed for a different patient population or service.  Iowa has transitioned Iowa Medicaid, Healthy and Well Kids in Iowa (hawk-i) and Iowa Health and Wellness Plan.  Iowa has not transitioned the HIPP Program, American Indians or Alaskan Natives, PACE, and Medicare Savings Program. 

[2]  See, e.g., Iowa Department of Human Services, “Medicaid Modernization Transition Fact Sheet,”

[3] For example, federal spending for Medicaid managed care increased from $27 billion in 2004 to $107 billion in 2014.  Government Accountability Office, Medicaid Managed Care: Trends in Federal Spending and State Oversight of Costs and Enrollment, Dec. 2015.

[4] Center of Medicare and Medicaid Services, “Managed Care State Profiles and State Data Collections,”    

[5] Center of Medicare and Medicaid Services, “Managed Care,”; Kaiser Family Foundation, “Medicaid Managed Care Market Tracker,”

[6] For example, MediPASS provided primary care case management services to children and low-income adults in select counties and the Iowa Plan for Behavioral Health Plan provided comprehensive behavioral health services to enrollees statewide. 

[7] Vikki Wachino, Director, Centers for Medicare & Medicaid Services, letter to Mikki Stier, Medicaid Director, State of Iowa, Department of Human Services, Dec. 17, 2015, found at

[8] Id. at 3.  For example, no MCO provider network contained more than 34% of the critical access hospitals that provide services in rural communities in the state. 

[9] Id. at 4.

[10] The three participating MCOs are Amerigroup Iowa, Inc., UnitedHealthcare Plan of the River Valley, Inc., and AmeriHealth Caritas Iowa, Inc.  The managed care program is now termed “IA Health Link.”