DHS Emergency Rules Cutting Medicaid Rates

medicaidAdministrative rules being proposed by the Department of Human Services threaten to usurp legislative authority over what Iowa pays its health care providers who serve Iowans on the Medicaid program.

As part of the Department’s plan to achieve the ten percent reduction in funding, DHS proposed that almost all Medicaid providers have their payment rates reduced. Provider groups like the hospitals, doctors, and nursing homes were among those who would have their rates reduced by 5 percent. Another group of providers including dentists, in-home providers of waiver services, and community mental health centers would have their payments cut by 2.5 percent. The changes would reduce General Fund spending on the program by $16,845,648.

The proposed reductions are scheduled to go into effect on December 1. In order to implement these changes, DHS is asking the Council on Human Services to adopt a package of emergency rules on November 10. Once those are approved, the Department will seek quick approval of the changes to Iowa’s Medicaid plan from the Centers for Medicare and Medicaid Services (CMS).

There is just one problem with the Department’s plan. Iowa law does not give DHS the authority to cut Medicaid rates.

Medicaid payment rates are statutorily set by the Legislature and signed by the Governor within the Health and Human Services Appropriations bill each year. The current Medicaid reimbursement rates were included in section 32 of House File 811. That section maintained the payment rates at the same level they were in 2009. That language was approved by the Legislature, and signed by Governor Culver on May 26.

In conversations with LSA staff, the Department has expressed the belief that the Governor’s executive order gives them the ability to override state laws enacted by the Legislation. This interpretation would appear to dramatically disrupt the balance of power that is the basic tenet of American government. If a Governor had the power to override laws passed by the Legislature and signed by the chief executive, what law would be safe?

DHS staff also claim that Iowa Code section 249A.4 gives the Director of DHS the ability to change the scope and duration of services under Medicaid, which the Department says is what they are doing. But a reading of section 249A.4 (1) shows that this power is granted to the Director within the limitation of available funds. And thanks to the federal stimulus bill, Iowa’s Medicaid program is flush with cash.

LSA projected before the Governor’s cut that there could be over $60 million left over at the end of FY 2010. DHS was so confident of excess funds, they built a FY 2010 Medicaid surplus of $57.5 million into their FY 2011 budget proposal.

Will DHS be allowed to usurp the Legislature’s power to set Medicaid rates? If they do, it won’t be without a fight from providers and legislators.

  • Patrick McDonald

    This HAS TO BE STOPPED! Culver is a crook…

  • As CEO of a non-profit company serving over 300 individuals with developmental disabilities (who receive their funding from Medicaid waiver services), I welcome our legislators fight to right this wrong imposed by the DHS Director and circumvent the legislative process. The 2.5% provider rate cuts create unneccessary strains on our ability to provide exemplary services to Iowa’s vulnerable population, and must be fought by our legislators and key stakeholders.