Audit: Iowa Medicaid savings barely half what was projected

November 26, 2018 GMT

DES MOINES, Iowa (AP) — Iowa saved $126 million this year from privatizing its Medicaid system, barely half what former Gov. Terry Branstad projected when he forced the change in 2016, according to an audit released Monday.

The report by Auditor Mary Mosiman also found officials and lawmakers have failed to file quarterly financial reports as required by state law.

She said they “should have worked together to establish a method to estimate the program cost savings” when moving from state-managed Medicaid to a system managed by for-profit health care companies.


When Branstad’s administration changed the system for overseeing health care for more than 600,000 poor and disabled Iowans, he projected it would produce $232 million in savings.

His successor, Gov. Kim Reynolds, and the Department of Human Services provided a wide range of new savings estimates last year, spanning from $47 million to $234 million.

Mosiman found both of those were inaccurate. A $141 million estimate released this past May was the most accurate measure, the audit said, and recommended that method of calculation be used going forward. She updated that figure to $126 million on Nov. 7.

Democratic Sen. Pam Jochum, who called for the audit, says Mosiman’s report is incomplete and doesn’t include millions of dollars the managed care organizations running the program owe doctors, hospitals and mental health care providers.

“The partial review of the Medicaid privatization disaster by the departing state auditor is a big pile of excuses with no good answers for Iowa taxpayers who are being ripped off,” Jochum said in a statement.

Mosiman, a Republican lost her bid for re-election to Rob Sand, a Democrat and a former Iowa assistant attorney general who promised a full investigation into the Medicaid finances.

“I was elected to provide truth, integrity, and accountability to Iowans, and they deserve more answers,” Sand said. “I will continue to dig into this issue when I assume office in January, as I promised voters.”

Democratic critics and some health care providers have questioned whether the Medicaid change really is producing any savings. DHS has poured more money into Medicaid because insurance providers claimed they were sustaining losses.

Iowa officials said in August they were giving Amerigroup and UnitedHealthcare, the two companies that manage the program, an additional $103 million over last year’s funding.


Jochum and others have complained Medicaid recipient care has deteriorated under the privatized system. Hospitals, doctors and mental health care providers have said they’re not paid in a timely manner and must often fight to get paid.

Jochum called on Reynolds to return Iowa to a publicly managed system.

Reynolds’ Democratic opponent, Fred Hubbell, said he’d return the program to state management, but he was defeated by Reynolds in this month’s general election.

Reynolds’ spokeswoman, Brenna Smith, said Iowa like 39 other states adopted privatized managed care because Medicaid was growing at an unsustainable rate.

“Our state is now on a path to sustainability, and the governor is working to ensure Iowa has a program that better helps improve patient health,” she said. “The governor has already made positive changes to the program since taking office and will continue to do so.”

DHS Director Jerry Foxhoven said in a statement he hopes the audit can put to rest the question of whether privatization generates savings.

“We will continue to focus on providing the needed services to Iowa’s Medicaid members and ensuring the long-term sustainability of Iowa’s Medicaid program,” he said.


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