Auditor: Iowans are illegally denied care due to Medicaid privatization

By: - October 20, 2021 11:18 am

Iowa Auditor of State Rob Sand speaks during a news conference. (Photo courtesy of Iowa Auditor of State’s office)

Iowa’s state auditor issued a report Wednesday that indicates the privatization of Medicaid in Iowa has resulted in an 891% increase in members being “illegally denied services or care.”

The report calls into question the 2015 decision by former Gov. Terry Branstad, a Republican, to privatize Medicaid. It comes from office of Auditor of State Rob Sand, a Democrat who is considered to be a potential candidate for governor.

Iowa transitioned its Medicaid members in April 2016 from a fee-for-service system administered by the Iowa Department of Human Services to a managed care system called IA Health Link. The program has been managed by private managed care organizations in exchange for a fee.

Medicaid rules have established a minimum standard for administering services to Medicaid members and ensuring that disputes are resolved in a fair and appropriate manner. Medicaid recipients can appeal a reduction in benefits or services and the process calls for an independent judge to consider the matter.

To determine whether Iowa’s compliance with Medicaid administration rules had changed under privatization, the auditor’s office analyzed six years’ worth of results from the so-called “State Fair Hearings” at which appeals are heard. Three years of decisions predated privatization, and three years of decisions were rendered after privatization.

Auditors compared appeal results before and after privatization

According to the auditors, a comparison of appeals filed before and after privatization shows the percentage of appeals in which the judge agreed with the reduction or denial of services dropped by 72%. The percentage of cases where the courts overturned a reduction or denial of services – ruling it illegal and then reinstating the services – had increased 891%.

“Seeing a denial overturned is always a bad result,” the report states, “because it means a legally incorrect decision was made, which also negatively impacted the health care a member received. Unfortunately, denial overturnings increased by 891%, showing privatization has substantially increased the number of illegal denials of care in Iowa.”

The auditor’s office says even if the privatized Medicaid figures provided upon review of the auditor’s findings are factored into the equation, the increase is 588%.

“Privatized Medicaid in Iowa is substantially less likely to follow the laws and regulations regarding providing care to members,” the report concluded.

State says more information is needed to determine cause of higher reversed denials

In responding to the auditor’s findings, DHS has said it believes “much more information would be needed to substantiate that a higher number of ‘reversed’ administrative law judge State Fair Hearing dispositions was caused by managed care.”

Sand’s office says the suggestion that so many reversed appeals may not be caused by privatization “neglects an important point: an 891% increase is too large to suggest the switch to privatization is merely a coincidence.”

According to Sand, one of Iowa’s Medicaid MCOs, Iowa Total Care, violated numerous provisions of its contract with the state, and another MCO, Amerigroup, violated one provision of its contract.

In one example cited by auditors, MCO officials repeatedly claimed an inability to comply with the contract clause requiring the providers of home- and community-based services to continue providing services to a Medicaid recipient until the individual has been transitioned to a new provider. As a result, Sand said, Iowans have gone without needed services such as bathing and wound care, and the MCO has violated its contract with the state as well as state and federal law, even while collecting payment for its work.

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.