Report: For-Profit Companies Make Fewer Mistakes Managing Medicaid

Aug 25, 2016

A federal report released last year shows in 2014, for-profit companies managing part of Iowa’s three billion dollar Medicaid program made far fewer faulty payments than the state-run portion of the program.  

Governor Branstad says that shows fraud and abuse will go down, now that for-profit companies are in charge of most of Iowa’s Medicaid patients.      

Managed care is an effective tool to manage improper payments

The report issued last November by the Centers for Medicare and Medicaid services covered 2014 when about 10 percent of Iowa’s Medicaid program was run by for-profit companies.

The report says their error rate was less than one per-cent.    

That compares to nearly 10 percent for the traditional fee for service program.   

Legislators, lobbyists, and health care providers at a Statehouse hearing on Medicaid privatization
Credit Joyce Russell/IPR

Governor Branstad predicts similar results now that the bulk of Iowa’s program is privatized.    

“Managed care is an effective tool to combat improper payments,” the governor says in a statement.

The report shows most improper payments involved billing for non-covered services or insufficient documentation.     

In 2014, that cost more than 300 million dollars.    

Officials could not immediately say how much of that the state recovered.

“We work to recoup those losses,” says DHS spokeswoman Amy McCoy.

A leading critic of privatized Medicaid was not impressed with the report. 

We try to recoup those losses.

Senator Joe Bolkcom (D-Iowa City) says Medicaid privatization has been underway in Iowa now for nearly five months.

“We have received very little data on how things are going,” Bolkcom says.  “We have heard dozens of stories of problems.”

Bolkcom calls the report an attempt to divert attention from problems under the new managed care system.

On Monday afternoon state lawmakers will review data from the first three months of privatized Medicaid.

Earlier in the day they will take three minute statements from Medicaid patients and providers on their experiences with managed care.