Rep. Axne Seeks Answers as Insurance Group Reduces Medicaid Payments in Iowa

January 23, 2020
Press Release
In letter to Iowa Medicaid director, Rep. Axne says an insurance company’s bottom line shouldn’t limit Iowans’ access to critical medical supplies without serious and transparent justification

Today, Rep. Cindy Axne (IA-03) sent a letter to the Director of Medicaid for Iowa demanding further investigation after learning that AmeriGroup, a health insurance and managed health care provider in Iowa, has begun decreasing reimbursement rates to businesses who provide vital medical supplies to Iowans on Medicaid.

Rep. Axne’s letter calls on Iowa Medicaid Director Michael Randol to stay the payment decreases, which went into effect on January 15th, 2020, and conduct an investigation in order to determine that AmeriGroup has appropriate justification for changing its prices.

“I’m concerned about what AmeriGroup’s justification is for squeezing the small medical equipment businesses of Iowa and potentially threatening lifesaving health care for vulnerable Iowans on Medicaid,” said Rep. Axne.  “We haven’t seen an 80% decrease in payments to AmeriGroup, and we aren’t seeing medical supplies get more expensive; I’m asking our state’s Medicaid officials to examine why this company is taking steps that could reduce access to these crucial medical tools.”

Multiple small business owners contacted Rep. Axne after they received a letter in mid-December stating that AmeriGroup will decrease payments to their medical equipment businesses by as much as 80% for medical supplies like nebulizers, CPAP machines, home oxygen, diabetic supplies, and more.

“While businesses’ reimbursement rates might at first seem technical and inconsequential, these changes could be devastating to Iowa families and seniors who depend on access to medical equipment every single day,” said Rep. Axne. “Critical supplies like oxygen or wheelchairs must not be inaccessible because of an insurance company’s bottom line without serious and transparent justification – and I hope Director Randol will help provide Iowa with some answers.”

The letter also requests more time for business owners to make a determination on whether to continue working with AmeriGroup. Businesses were given only 30 days to evaluate their options, with owners forced to choose between accepting these rate changes or dropping out of using AmeriGroup entirely.

“As a small business owner, I can tell you that 30 days is not enough time to fully assess the costs of this kind of change, determine how it will impact your business, and make a responsible choice on the future of a partnership like this,” said Rep. Axne. “To make matters worse, this letter arrived just before the Christmas and New Years holidays, meaning the reality of thoroughly assessing the impacts of these rate changes was limited to less than half of the month that AmeriGroup provided.”

The full letter to Director Randol can be found below and here. The table of expected changes included in the letter can be found here.


Michael Randol

Iowa Medicaid Director

Iowa Department of Human Services

1305 E Walnut St, Des Moines IA 50319


Director Randol,

I am writing to express my concern over AmeriGroup’s fee schedule changes to durable medical equipment (DME) and home medical equipment (HME) that went into effect January 15th, 2020. I am worried that the announcement of these changes was insufficient, that the proposed fee changes are going to harm Iowans on Medicaid, and that Amerigroup will significantly profit off these changes – at the expense of Iowa.

I am calling on the you as the Iowa Medicaid Director to review these fee changes in order to determine if they are an accurate reflection of the market changes. Until that decision is made, I request a delay in the implementation of these proposed fee changes. Additionally, AmeriGroup and the Iowa Department of Human Services should provide a longer timeframe to give medical equipment suppliers and businesses sufficient time to determine if they will remain with AmeriGroup. 

I am concerned that Medicaid beneficiaries in Iowa have not been properly informed that fee changes for vital, lifesaving home medical equipment supplies would occur by January 15th, 2020. By decreasing fee rates, AmeriGroup will reimburse our medical equipment suppliers significantly less. As Iowa’s 3rd Congressional District Representative, I have heard directly from these business owners who are deeply troubled by what these changes will mean for their businesses and customers. I know our medical equipment suppliers will do everything they can to continue to supply DME and HME, but these reimbursement decreases can be as much as 80%. It appears inevitable that Iowans on Medicaid will experience reduced access to necessary medical equipment and supplies.

I have learned the following medical equipment supplies will be impacted:

  • Nebulizers will be reimbursed up to 80% less
  • CPAP machines will be reimbursed up to 63% less
  • Home Oxygen will be reimbursed up to 62% less
  • Incontinence Supplies will be reimbursed up to 59% less
  • Enteral Nutrition Feeding Pumps will be reimbursed up to 47% less

I have included in this letter the expected fee decreases, 28 pages of price changes that medical suppliers received late last year. I request that your office review these changes to evaluate any undue burden these place on businesses and ensure that Iowans will still receive essential care. 

My second concern is the lack of information and the short timeframe under which our medical equipment providers have to operate. On or about December 14th, 2019, Amerigroup sent a letter giving a 30-day notice of these fee schedule changes. Given that 30-day notice timeline overlapped with a two-week holiday period, many providers have had less than 14 days to make an informed business decision. Additionally, I have heard from providers who did not receive their letter or discovered it was mailed to an incorrect address.

Within that letter, AmeriGroup required providers to agree to these new fee schedules or to disagree and opt out of AmeriGroup entirely. If they don’t reply within 30 days, AmeriGroup will assume their answer is a yes – opting them in to these changes. As a business owner myself, I can assure you that two weeks is not nearly enough time for a small business to make a well-informed decision of this magnitude. I can also tell you that this default opt-in strategy is deeply flawed and will opt-in many providers whose letters were incorrectly mailed.

Finally, I am concerned about who stands to gain in this process. The cost of the medical supplies has not decreased as much as 80%, nor is the State of Iowa changing their Medicaid payment rates that reflect these changes. AmeriGroup will receive the same Medicaid payment to cover the same medical supplies but will incur significantly less in procurement costs.

AmeriGroup has stated their changes reflect a “pricing analysis of a number of markets for appropriateness.” If you have not already done so, I hope you will request from AmeriGroup this research that demonstrates reductions up to 80% of cost are market appropriate. Given that Iowa Medicaid receives 60% of its funding from the federal level, I am working to determine if additional oversight on AmeriGroup is necessary.

I respectfully request that you look into these concerns and determine if these proposed fee changes accurately reflect changes in the marketplace. In the meantime, I hope you will work to protect Iowans on Medicaid, our small business owners, and Iowa taxpayers.


Cindy Axne

Member of Congress


CC: Gerd Clabaugh, Iowa Department of Public Health

CC: Rob Sand, Iowa Auditor of State

CC: Kim Reynolds, Governor