University of Iowa Health Care halves 2017 operating income estimates due to Medicaid denials

An increase in Medicaid managed care denials led Iowa City-based University of Iowa Health Care to lower its projected 2017 operating income from $52.2 million to $23.9 million, The Gazette reports.

Despite high patient volumes, the hospital's collection rate decreased from 33.9 percent in January to 31.3 percent in March due to the denials, Jean Robillard, vice president for medical affairs, told board members Wednesday. He said if the collection rate continues to dip to 31 percent and below, "it will change completely the way we will have to organize ourselves and do the budget," the report states.

Iowa handed over its Medicaid program to managed care organizations April 1, 2016. The state chose AmeriHealth Caritas Iowa, Amerigroup Iowa and UnitedHealthcare of the River Valley to manage coverage of the state's roughly 600,000 enrollees. Those companies have reported millions of dollars in losses since taking over the program, according to The Des Moines Register.

Mr. Robillard said the insurers have denied more than 700 of UIHC's cases in the last year. He said this is two or three times the rate of the next payer with the highest rejection rate, according to The Gazette. In total, UIHC seeks $6.4 million in reimbursement for cases dating back 270 days or more.

"We have to find a solution for this," Mr. Robillard said, according to the report. He said the hospital must talk with the managed care companies involved and "put pressure on them."

Mr. Robillard said UIHC's operating margin, which was 1.6 percent as of March, is on track to be under 3 percent until December. The hospital board unanimously approved a 6 percent rate increase, which is the maximum increase and the same percent the board approves each year, The Gazette reports.  

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