Iowa Medicaid Director Estimates Privatization Savings, Questions Remain

Jun 13, 2018

Iowa’s Medicaid director Wednesday told the Council on Human Services the state’s privatized Medicaid program is saving money for taxpayers, but his explanation left questions unanswered.

Medicaid Director Mike Randol said the state is projected to save $140.9 million in the fiscal year that ends June 30, compared to what the state would have spent before its health care program for low income and disabled people was turned over to for-profit companies.

“I think it’s important to understand that regardless of the methodology, there are savings,” Randol said.

He did not explain why the state’s savings estimate for this year tripled after Gov. Kim Reynolds hired him to run the Medicaid program late last year. Randol also did not offer a cumulative number showing savings since the privatized Medicaid program started in April 2016.

“When you say you have $141 million in savings, that’s kind of hard to say too,” said Sen. Amanda Ragan, D-Mason City. “Because it is complex, and it is tough to think about who’s getting services or who’s not, or who’s not getting reimbursement.”

Randol said those factors and health outcomes were not considered in the cost savings estimate.

Ragan asked how the managed care organizations are saving money.

Randol said “effective care coordination and case management” help reduce hospitalizations, thereby reducing costs.

“What I heard was rhetoric,” Ragan said after the meeting. “I did not hear detailed examples of how that savings has occurred.”

Council members were not given any documents showing or explaining the cost savings.

“This is such a big investment for our state,” said council member Kim Spading after pressing Randol for more numbers. “I think everyone deserves to have all that information out front.”

“I think I’ve been very open about transparency,” Randol said.

Randol walked quickly out of the meeting without taking questions from reporters. Gov. Reynolds recently told reporters Randol “would be happy to sit down with the media and walk through the process” of calculating savings from privatized Medicaid.

After the meeting, Sen. Pam Jochum, D-Dubuque, said Randol’s presentation was incomplete.

“He looked back at pre-managed care and then compared it to a projection of 2018, rather than comparing it to some actual real numbers from 2017,” Jochum said.

State Auditor Mary Mosiman, a Republican, recently agreed to conduct a review of Medicaid cost savings after Sen. Jochum made that request. Jochum said the review should consider any impacts on health outcomes for patients and new expenses for care providers resulting from the implementation of managed care in Iowa.