Iowa hospitals say Medicaid change will cost them millions

October 24, 2018 GMT

DES MOINES, Iowa (AP) — Iowa officials running the state’s Medicaid program have changed the way hospitals are paid for emergency room care which allows insurance companies to deny or reduce payment for hundreds of symptoms causing hospitals to absorb millions of dollars in unpaid bills.

Iowa hospitals have warned Gov. Kim Reynolds and the Iowa Department of Human Services administrator who oversees the Medicaid program that the changes will cost the state’s largest hospitals tens of millions of dollars in lost revenue a year and will lead to layoffs.

“The privatization of Medicaid has been a disaster for the health care industry in this state. We’re not getting paid for our work and our patients aren’t getting adequate coverage,” said Dr. Hans House, an emergency room doctor at University Hospitals in Iowa City and a professor of emergency medicine. He spoke on behalf of the Iowa chapter of the American College of Emergency Physicians, an organization challenging such cost-cutting moves by insurers.


Medicaid privatization has become a central issue in a tight race for Iowa governor. Reynolds says she’s fixing the system and stands behind privatization carried out by her predecessor Terry Branstad in 2016 to save the state money. Democratic challenger Fred Hubbell said it was a mistake and the state must regain control of the program that cares for 680,000 poor and disabled people.

The non-partisan Legislative Services Agency reported last month that per-patient costs have risen an average of 4.4 percent per year since privatization began and the state approved in August $344 million more in funding for the current fiscal year, an 8 percent increase.

Health department officials told Iowa hospitals in July that the two insurers managing Medicaid in Iowa, Amerigroup and UnitedHealthcare, would no longer fully reimburse for emergency room care if the primary symptoms the patient initially reported turned out not to be an emergency. The change went into effect in August.

In a letter to hospitals and other medical providers obtained by The Associated Press, DHS officials also said they were reclassifying more than 700 symptoms to non-emergency status including head contusions and generalized gastric pain. That means the costs for testing and diagnosis wouldn’t be fully reimbursed.


Similar changes in Georgia by Anthem’s Blue Cross Blue Shield of Georgia led to a federal lawsuit filed in July by health providers, alleging the policy violates federal law.

In court documents filed in September, Anthem said up to 24 percent of patients going to emergency rooms are treated for non-emergency conditions and its efforts are an attempt to discourage the unnecessary and costly use of emergency services.

Iowa medical professionals say the changes run the risk of discouraging patients from seeking emergency room care and people could die.

“A patient who has health insurance should not be expected to decide for themselves if their condition is an emergency or not, that’s not their job that’s my job,” House said.

One condition Iowa officials excluded is epigastric pain, which is pain just below the ribs in the upper abdomen and a common symptom of a type of heart attack that occurs in more than 1 million people a year.

Often the only way to exclude heart attack is by running tests including an EKG, House said. If the tests show no heart problem the Medicaid insurers will deny the charges saying the pain was not an emergency and the hospital won’t get paid.

Officials from Iowa’s largest hospitals including Mercy Medical Center, UnityPoint Health and Genesis Health System unsuccessfully appealed to state human services Director Mike Randol and Reynolds to reconsider the changes.

Reynolds’ spokeswoman did not immediately respond to a message.

Human services department spokesman Matt Highland said the changes were made with input from medical providers “to ensure the health care needs of Medicaid members are provided in the appropriate health care setting.”

University of Iowa Health Care declined to comment but its officials reported to the Iowa Board of Regents in April that it has cut about 487 jobs this year as payments from government sources, largely Medicaid, fell $6.5 million for the second half of the year. Its denial rate from the Medicaid insurers is 2 ½ times greater than other commercial hospital payers.

Genesis Health Systems, Mercy and UnityPoint officials did not immediately provide comment but they said in a letter to Randol in August that the new policy “will harm patients and severely harm providers.”


Ryan Foley contributed to this report from Iowa City.