On Feb. 16, the Iowa Department of Human Services released a Request for Proposal (RFP) to modernize the Medicaid program. The purpose of the initiative is to improve the coordination and quality of care for Medicaid members while providing some predictability in the Medicaid budget for Iowa taxpayers.
According to the DHS press release, the main objectives of this Medicaid Modernization project are:
• Improving quality and access
• Promoting accountability for outcomes
• Creating a more predictable and sustainable Medicaid budget
The RFP includes the Iowa Medicaid, Iowa Health and Wellness Plan and Healthy and Healthy and Well Kids in Iowa (hawk-i) programs. Substance abuse is also covered in the RFP under the Iowa Department of Public Health, but it will be paid for by a Federal Block Grant. Eligibility and covered services will not change for members.
Iowa is making this change because the current Medicaid model is unsustainable. It operates multiple care management approaches, which contributes to a fragmented model of care.
In the current system, there is no financial incentive to prevent institutionalization. The new system with unite health care delivery under one system. The state will work with the federal government to obtain the authority to implement this new system.
The Iowa model assumes there will be $51 million in savings for the last six months of FY16 by utilizing managed care. It is important to note that this is an aggressive savings estimate. Anything higher than this $51 million estimate may be determined not actuarially sound. Estimating higher savings could jeopardize the future of the Iowa Medicaid program.
It could also put Medicaid members at risk of losing services. For example, in Kentucky the first year of managed care, the state chose to move forward with rates that were not actuarially sound. In the second year, they were forced to increase rates by 14 percent to sustain their program.
Thirty-nine states and Washington, D.C., use managed care.