Gov. Reynolds, Outgoing DHS Director Palmer Being Sued Over Privatized Medicaid Fallout

DES MOINES, Iowa -- Governor Kim Reynolds and outgoing DHS director Chuck Palmer are at the center of a lawsuit filed on behalf of Iowans living with disabilities.

The lawsuit was filed by Disability Rights Iowa on behalf of six plaintiffs living with a variety of disabilities.  The lawsuit alleges that the state violated its legal obligation to stop privatized Medicaid providers from slashing funding for recipients.

It continues to allege “plans claimed they had lost too much money on their Medicaid contracts and began cutting these members home and community based services"

“There services have been slashed, in half, and they're not able to stay in the community anymore and they're very fearful about being put back in nursing homes or other institutions” said Jane Hudson, Executive Director of Disability Rights Iowa.

Prior to the privatization of the Medicaid system, Hudson says many of those with severe disabilities were granted waivers for increased funding.

The lawsuit uses 61 year-old Melinda Fisher as an example; claiming that before privatization Fisher, who suffers from debilitating multiple sclerosis, was granted a waiver to fund eight hours of in-home care a day.

Now in order to meet her Medicaid provider's spending cap, she'd have her care reduced to less than two hours per day.

“The state was doing a good job before. The managed care companies are not doing a good job with these folks and are trying to cut their services” said Hudson.

According to industry leaders, privatization has also hurt the groups who provide those services; saying they're seeing millions of dollars less than before the switch, and are being bogged down with clerical work as they report to three managed care companies plus DHS.

“All of the positive work the community providers were doing prior to April 1 of 2016, helping people get jobs, live more independently has felt like it’s come full stop almost as providers are reeling with trying to understand now four different systems. The focus has really been on management and administration more-so than outcomes for the service delivery” said Shelly Chandler, Executive Director for the Association of Community Providers.

The Governor’s Office says they will not comment on pending litigation but said in a statement they have “always been committed to ensuring the most vulnerable Iowans get the right care, at the right time and in the right time”.