For months, Governor Terry Branstad has dismissed warnings from patients, advocates, doctors, hospitals, editorial boards, and lawmakers that the state’s rush to privatize Medicaid would disrupt health care for some 560,000 Iowans. Today the governor finally got the message in a form he can’t ignore. Director Vikki Wachino of the federal government’s Centers for Medicare and Medicaid Services wrote to Iowa Medicaid Director Mikki Stier,

Based on our review last week of Iowa’s progress, as well as the information you have provided, CMS expects that we will ultimately be able to approve Iowa’s managed care waivers. However, we do not believe that Iowa is ready to make this transition Jan. 1. CMS previously outlined the requirements to provide high quality, accessible care to Medicaid beneficiaries, and Iowa has not yet met those requirements, meaning that a transition on January 1 would risk serious disruptions in care for Medicaid beneficiaries. While you have made progress in some areas of readiness, our review also identified significant gaps that need to be addressed before CMS can authorize your waiver requests. For that reason, CMS will work with you toward approval of your request effective March 1, 2016, provided that the state demonstrates progress toward readiness consistent with the actions in the attachment to this letter.

Click through to read the full four-page letter and four-page attachment from Wachino to Stier, which the Des Moines Register posted online. CMS officials found that “significant areas of the state did not have many provider types within a reasonable distance,” and that “Relying too heavily on out-of-network providers is likely to create confusion among beneficiaries and providers, result in access issues for beneficiaries, and disrupt continuity of care for beneficiaries.” Many of the points raised echo concerns three Democratic state senators expressed during meetings with CMS officials in Washington last month.

The CMS readiness review also showed that nearly half of Medicaid recipients who tried to call the state’s call centers earlier this month could not get through. Many Iowans who did reach a staffer on the phone were not able to find out whether any of their current doctors had signed contracts with the four managed care providers approved to run Medicaid. The CMS findings are consistent with what I’ve been hearing from acquaintances: the enrollment packets sent to Medicaid recipients did not include basic details they would need to make an informed choice of managed care provider (such as where their family’s current doctors will be in-network).

I enclose below reaction to today’s news from Branstad, who struck an upbeat tone, and key Democratic lawmakers, who vowed to keep fighting to improve legislative oversight of the Medicaid privatization. The Democratic-controlled Iowa Senate approved such a bill during the 2015 session, but the Republican-controlled Iowa House declined to take it up. Oversight is the very least state lawmakers could do to prevent the transition to managed care from becoming a pretext for denying services to vulnerable Iowans.

David Pitt noted in his report for the Associated Press,

Two legal challenges continue including one from the Iowa Hospital Association, a trade group for the state’s hospitals. It sued the state claiming the privatization plan is illegal because it takes millions of dollars from a dedicated hospital trust fund and gives it to the four managed care companies.

Any relevant comments are welcome in this thread. I am grateful that so many Iowans took the time to contact federal officials about Branstad’s disastrous policy. Bleeding Heartland reader Rhonda Shouse has been one of the superstar organizers in that fight.

UPDATE: Added below reaction from Representative Dave Loebsack (D, IA-02). I expect that during next year’s re-election campaign, Loebsack will highlight his efforts to shield constituents from the negative consequences of shifting Medicaid to managed care. His only declared Republican opponent is State Senator Mark Chelgren, who like his GOP colleagues in the upper chamber has done nothing to slow down the privatization or strengthen legislative oversight of the process.

SECOND UPDATE: Added more news and commentary related to this issue.

Statement from Governor Terry Branstad, December 17:

Centers for Medicare and Medicaid Services (CMS) puts wheels in motion for implementation of Iowa’s Medicaid Modernization plan

“The decision by CMS formally puts the wheels in motion to implement our Medicaid Modernization plan on March 1. The CMS letter effectively gives the green light to Iowa as long as steps are taken to build on the progress already made. Iowa’s Medicaid Modernization plan is similar to plans CMS has granted approval to in 39 other states. From the very beginning, our focus has been on improving patients’ health outcomes. Current Medicaid patients should continue working with their Managed Care Organizations for a March 1 kick-off.”

Iowa Senate press release, December 17:

Iowa State Senators applaud decision to delay Medicaid privatization

‘The decision…is a victory for Medicaid recipients and providers’

A joint statement by Senator Amanda Ragan of Mason City, Chair of the Health and Human Services Appropriations Subcommittee, and Senator Liz Mathis of Robins, Chair of the Senate Human Resources Committee

“The decision today by the federal Centers for Medicare and Medicaid Services to delay implementation of Medicaid privatization is a victory for Medicaid recipients and providers.

“The decision echoes many of the concerns that thousands of Iowans have been telling us for months: the privatization plan proposed by the Branstad/Reynolds Administration is too much, too fast and failing to protect vulnerable Iowans.

“The letter from CMS Director Vikki Wachino states:

‘CMS previously outlined the requirements to provide high quality, accessible care to Medicaid beneficiaries, and Iowa has not yet met those requirements, meaning that a transition on January 1 would risk serious disruptions in care for Iowa Medicaid beneficiaries.’

“Other concerns raised by the letter include:

The arbitrary and unrealistic implementation timeline
The failure to establish adequate provider networks in advance
Disruptions of longstanding patient-provider relationships
Diminished quality and access to health care services
Compromised patient care
Inadequate systems to communicate accurate information to patients and providers

“Despite this delay, we want to reiterate to Iowans that this fight is not over. Hundreds of thousands of Iowans and their health care providers are still struggling to make sense of Governor Branstad’s chaotic approach to privatizing health care services for one out of six Iowans. Governor Branstad’s Medicaid plan will be remembered as one of the worst decisions of his 21 years as governor.

“Democrats and Republicans in the Legislature must make correcting Governor Branstad’s mistake our top health care priority for the 2016 legislative session. We must find a way to minimize the harm being imposed on Iowa families and health care providers.

“One of the first actions of the 2016 session should be for the Iowa Legislature to pass comprehensive Medicaid oversight legislation. Last spring, the Iowa Senate approved an oversight bill (Senate File 452) that was never considered by the House.

“Unlike Governor Branstad’s plan that has benefitted only out-of-state corporations, this legislation will be developed in public meetings with the advice of Medicaid recipients and their advocates, Iowa’s health care providers, and national experts.

“We are hopeful that legislators from both parties will listen, debate, and then act to protect the Medicaid safety net that Iowa families count on.”

Iowa House Democrats press release, December 17:

STATEMENT FROM REP. LISA HEDDENS, D-AMES, RANKING MEMBER OF HEALTH & HUMAN SERVICES BUDGET ON CMS MEDICAID DELAY

“I’m glad that CMS stepped in today to hold Governor Branstad accountable and put the brakes on his Medicaid mess. His rush to privatization put hundreds of thousands of Iowans with disabilities and seniors at risk.

With Iowans facing a critical deadline today, the Governor should immediately give Iowans a 60 day extension for selecting one of the managed care groups. That will give Iowans more time to review the plans and provider networks that will best meet the needs of their family.

Governor Branstad needs to start listening to Iowans and work together with us when session starts in January to make sure no Iowan falls through the cracks in his privatization scheme.”

Iowa Democratic Party press release, December 17:

IDP Statement on CMS Medicaid Decision

DES MOINES – IDP Chair Dr. Andy McGuire issued the following statement in response to a decision from the Centers for Medicare and Medicaid Services today to delay implementation of the Branstad-Reynolds administration’s Medicaid privatization plan by sixty days:

“We commend the Centers for Medicare and Medicaid Services for its decision today to delay implementation of the Branstad-Reynolds administration’s misguided Medicaid privatization plan. This is a prudent decision that will ensure Iowans have more time to get the information they need, and allow providers, hospitals and doctors more time to prepare for Medicaid privatization.

“Clearly, the Centers for Medicare and Medicaid Services heard the people of Iowa, who for months now have been expressing their concerns with the Medicaid privatization plan and calling for implementation to be delayed. The Branstad-Reynolds administration has failed to answer Iowans’ questions and ensure that all stakeholders had proper and needed information. What’s worse is that the administration refused to slow down implementation even when it was crystal clear that Iowans had serious concerns about Medicaid privatization, namely the loss of vital services.

“It is a testament to Iowans’ dedication and determination, coupled with the incredible efforts by our Democratic legislators in the state house, that Medicaid privatization is now being delayed.

“It is now up to the Branstad administration to actually listen to the people of Iowa, and make sure that every voice is heard and implementation is done right. Iowa Democrats will continue to hold the Branstad-Reynolds administration accountable and stand up for the quality health care more than 500,000 Iowans depend on.”

Democratic presidential candidate Martin O’Malley also commented today:

O’Malley: CMS Rightly Delays Branstad Medicaid Privatization

Today the Centers for Medicare and Medicaid Services delayed Governor Branstad’s proposal to privatize Medicaid. Governor Martin O’Malley released this statement:

“Every state including Iowa has the right to make decisions to lower costs and improve quality—but Governor Branstad’s proposal to fully privatize Medicaid is dangerous. CMS should be in no rush to approve requests like Governor Branstad’s and the delay order today is the right decision for the health of the people of Iowa.
“To make healthcare more affordable we have to fundamentally change the way healthcare is paid for. Giving insurance companies the same incentives they’ve had for years, and passing those same incentives along to hospitals and physicians, isn’t going to get us where we need to be. As President, I would implement a plan that lets states keep half of the savings they can generate from actually improving health outcomes — that is the type of systemic incentive shift that we need and the type of new leadership that Americans and Iowans deserve.”

Representative Dave Loebsack press release, December 17:

Congressman Dave Loebsack released the following statement today after the Centers for Medicare and Medicaid Services (CMS) sent a letter to the state of Iowa indicating they must delay the proposed move to privatized management of Iowa’s Medicaid program for 60 days. The letter indicated that the state of Iowa has significant issues to address before more than 560,000 Iowans who rely on Medicaid services switch to the new program. Originally, Governor Branstad intended for the transition to go in to effect on January 1, 2016.

Loebsack has been leading the fight with leaders from the Iowa Senate to ensure those who rely on Medicaid are not negatively affected by the proposed changes.

“I am pleased that the Centers for Medicare and Medicaid Services have elected to slow down the state’s transition to a managed care system, as I urged them to do. I, along with many Iowans, expressed concerns that the transition was too fast to ensure the 560,000 Iowa beneficiaries that depend on Medicaid for quality care are not negatively affected. Going forward, I will continue to monitor the readiness of the state to implement the transition and to ensure care is not interrupted for our states most vulnerable populations.”

Loebsack press release, November 18:

Loebsack, Iowa Senate Leaders: “It’s Time to Pump the Brakes” on Iowa’s Medicaid Proposal

Congressman Dave Loebsack (IA-02), Iowa Senate President Pam Jochum, Senator Liz Mathis and Senator Amanda Ragan released the following statement today after the four met in Washington, D.C. to discuss Governor Branstad’s plan to implement a move to privatized management of Iowa’s Medicaid program, which is scheduled to go into effect on January 1, 2016. Loebsack and Senators Jochum, Mathis and Ragan have been leading the fight to ensure those who rely on Medicaid are not negatively affected by these changes. Approximately 560,000 Iowans rely on Medicaid, which often serves the state’s most vulnerable populations, including low-income families, children, seniors and individuals with disabilities.

“We remain concerned that Governor Branstad’s plan is moving too quickly and both those who provide Medicaid services and those who rely on Medicaid to receive medical care will face uncertainty. It is time to pump the brakes and slow down the process so Iowans have a chance to fully understand the possible changes. We cannot allow Iowa’s most vulnerable patients to fall through the cracks.”

Recently, Loebsack wrote to the head of the Centers for Medicare and Medicaid (CMS) expressing his concern with the plan and has called on him to protect the wellbeing of Iowans. He has also spoken directly with Sylvia Burwell, the Secretary of Health and Human Services, which oversees CMS, to express his concerns with her. Senators Jochum, Mathis and Ragan have also been fighting in Iowa and earlier today met with CMS officials in Washington to express their concerns.

SECOND UPDATE: The Des Moines Register’s lead editorial on December 19 hammered the governor’s resistance to facing reality on his Medicaid policy.

It has been suggested before that Gov. Terry Branstad’s administration occupies a fictional world of its own creation. […]

So it is with the governor’s hastily constructed plan to privatize Medicaid. […]

The federal agency refused to let the governor privatize Medicaid on Jan. 1, the date on which he has long insisted, and said approval would be granted no sooner than March 1.

Branstad’s hallucinatory response was a bit surreal, characterizing the decision as a ringing endorsement of his plan: “The decision by CMS formally puts the wheels in motion to implement our Medicaid Modernization plan on March 1. The CMS letter effectively gives the green light to Iowa as long as steps are taken to build on the progress already made.”

Only in the Branstad administration can one argue that the wheels are being put into motion by the act of slamming on the brakes.

Speaking of surreal, check out the governor’s reaction to Friday afternoon’s big Medicaid news.

Iowa Department of Administrative Services Director Janet Phipps sided with Administrative Law Judge Christie Scase’s recommendation last month that WellCare — one of four companies selected to manage the $4.2 billion annual program — should lose its state contract because of an unfair public bidding process. […]

Scase dismissed most of the allegations [raised by rival insurance companies] but found that WellCare should have disclosed information about its “integrity agreement” with the federal government following convictions for fraud in 2014 of three of the company’s former executives. […]

“In this case, the full record now before me shows that WellCare failed to disclose highly relevant information both in its initial response to the (public bid) and in its ‘clarifying’ answer,” Phipps wrote.

Phipps concluded: “In doing so, WellCare not only violated the terms of the (bid) but also deprived the agency decision makers — both the evaluation committee and the director Palmer — of the opportunity to fully exercise their discretion in determining which bid proposals would provide ‘the greatest benefit to the agency.’” […]

Branstad’s communications director, Ben Hammes, said in a statement that “the final decision this evening from Director Phipps confirms that the Department of Human Services conducted a ‘thorough and methodical’ procurement.”

How was it “thorough and methodical” when Iowa DHS officials failed to discover publicly available information about Medicaid fraud by one of the companies awarded a contract to manage care for Iowans?