Delayed Medicaid Payments Could Force Some Providers to End Patient Services

Published: Jan. 22, 2016 at 8:00 PM CST
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Governor Branstad’s plan to privatize Iowa’s Medicaid system will move forward after a Polk county judge ruled against two healthcare companies that sought to halt the state’s transition to managed care. Three managed care organizations are expected to take over Iowa’s Medicaid system on March 1.

Aetna Better Health and Meridian Health Plan claimed the bidding process was rigged and the state should do it over again. They were joined by WellCare, which initially won a contract but was disqualified in December for unfair bidding practices.

Judge Robert Blink’s ruling said the companies failed to show they'd suffer irreparable harm if the plan went forward and further delaying implementation would cause confusion and uncertainty for the 560,000 Medicaid members and their medical providers.

But the transition is already confusing for some eastern Iowa providers, specifically small businesses, who rely on timely Medicaid reimbursements to cover employee paychecks and day-today operating costs.

“We have not been paid anything since January first for any of the services we’ve provided,” said Patti Gilbaugh, founder of the Grace C. Mae Advocate Center, which provides mental health and substance abuse help to rural communities in the state.

A company called Magellan handled reimbursement for behavioral service providers like Gilbaugh until January 1. That’s when three managed care organizations were set to take over.

But in December, federal administrators ordered Iowa to wait at least 60 days before shifting to a privatized system, which forced Iowa Medicaid Enterprise (IME) to step in and fulfill reimbursements during that time frame.

According to Iowa Department of Human Services spokeswoman Amy Lorentzen McCoy, IME has up to six months to pay providers once a claim for service is filed.

McCoy said a clean payment, or one that includes all information required for processing should only take six and half days to process.

“The department is aware of providers whose behavioral health or substance abuse claims are suspending or denying due to billing errors,” McCoy said in an email. “Including Medicaid Management Information System (MMIS) programming holes where the billing provider’s provider type was not programmed for the specific procedure code being billed or the procedure code was not programmed into the MMIS.”

A delay could also be caused by providers not filling out claim forms correctly.

For Gilbaugh, who said she has worked with IME representatives over the phone to correct any delayed forms since January, it’s difficult to get a straight answer or solution.

“Finally, we got the response of, ‘We just weren’t ready for this,’ and I think that’s the truthful answer,” Gilbaugh said.

Gilbaugh said she’s currently relying on bank loans to cover employee paychecks and day-to-day operating costs, but expects that line of credit to run out soon. She said when that happens she may be forced to lay off employees or stop seeing Medicaid patients – which make up about 70 percent of the 300 families the advocate centers serve each week.

“We’re about two weeks from having to make that decision,” she said.

For a therapist who works at the center’s Marshalltown location, that option could be devastating to hundreds of rural Iowans.

“Some families struggle to find any support systems. We're all they have. If you take that away, they have absolutely nothing,” said therapist Jamie Johnson. “It’s hopeless.”