By Chelsea Keenan

Federal officials told the state on Thursday it doesn't believe Iowa is ready to transition its $5 billion Medicaid program to managed care on Jan. 1 -- delaying the move until March 1.

The Centers for Medicare and Medicaid Services "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 that transition on Jan. 1," according to a letter addressed to Iowa Medicaid Director Mikki Stier.

Gov. Terry Branstad announced plans to transition Iowa's $5 billion Medicaid system to four out-of-state, private care companies earlier this year. In August, the state awarded contracts to Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare of Iowa.

Since then, many providers and Medicaid recipients have called the move rushed, with the Iowa Hospital Association even asking a Polk County district judge to delay the implementation of the managed-care plan until a legal conflict is addressed.

CMS Director Vikki Wachino told Stier in the Dec. 17 letter that while the state has made progress in some areas, it identified "significant gaps" when it was in Iowa last week conducting readiness reviews. She added that a "transition on Jan. 1 would risk serious disruptions in care for Iowa Medicaid beneficiaries."

The decision ultimately came down to provider networks, with CMS pointing out several gaps:

  • Managed care provider networks are not fully developed and "lack key providers"
  • "Significant areas" of the state did not have many provider types within a reasonable distance
  • Overreliance on out-of-network providers.

"The adequacy of the (managed-care organizations') provider networks will determine whether individuals have access to care, which in turn is paramount to their health, safety and well-being," CMS said.

Aaron Albright, a spokesman for CMS, said the federal agency will continue to work with Iowa toward approval of its waiver, "provided that the state and managed-care organizations continue progress on building sufficient provider networks, improving beneficiary communications and completing other important milestones."

The CMS decision elicited responses from Democrats across the state, who commended the decision -- even presidential candidate Hillary Clinton chimed in.

"The Centers for Medicare and Medicaid Services made the right call today," the former Secretary of State said in a statement. "Until Iowans' questions about quality of services and patient-provider relationships have been answered, I will not support an approval of this plan. Iowans depending on these services deserve no less."

Iowa Sen. Liz Mathis, D-Robins, told The Gazette that the delay will give Medicaid recipients time to make an informed choice, providers more time to iron out reimbursement rates and contracts, and Iowa Medicaid more time to strengthen its system.

In a joint statement, Mathis and Sen. Amanda Ragan, D-Mason City, called on state legislators to make correcting "Branstad's mistake" their top health care priority in the 2016 legislative session.

"One of the first actions of the 2016 session should be for the Iowa Legislature to pass comprehensive Medicaid oversight legislation," the statement said. "Unlike Governor Branstad's plan ... 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."

House Speaker-select Linda Upmeyer, R-Clear Lake, however, said she believes the delay will add to the confusion.

"All of our members and lots of people in the public have been working hard to make sure people understood how to go about getting signed up, what their opportunities were, what their abilities were and now we have another change," she said. "I just think that's kind of disappointing. We were on track, we were ready to go."

Upmeyer declined to comment further until she had a chance to read the CMS letter, which came while the 57-member House Republican caucus was holding a closed-door pre-session meeting at the Capitol building Thursday afternoon.

Despite the setback, Branstad said the decision "formally puts the wheels in motion" to implement managed care.

"The CMS letter effectively gives the green light to Iowa as long as steps are taken to build on the progress already made," he said in a statement.

Rod Boshart of The Gazette's Des Moines bureau contributed to this story.

(c)2015 The Gazette (Cedar Rapids, Iowa)