State Auditor’s report finds surge in denied Medicaid claims

DES MOINES — A report from the state auditor’s office has found that after private “managed care organizations” took over the state’s Medicaid system, the number of Iowans improperly denied medical care and services dramatically increased. State Auditor Rob Sand says this is the fourth Medicaid-related audit his office has released.

“What we’re trying to do is figure out whether or not Iowa taxpayers are getting what we’re paying for with the MCOs,” Sand says. “The answer, pretty clearly, is that we’re not.”

The state turned over management of Medicaid patients’ care to private companies in 2016. Auditors reviewed Medicaid files from 2013 through 2019. “Comparing privatized Medicaid to non-privatized Medicaid, we have seen a 891% increase in judges overturning care denials,” Sand says, “meaning that care denial, for one reason or another, was illegal.”

State officials in charge of the Medicaid program say Sand’s report is flawed because it fails to account for changes made in the appeals process once private companies were in charge of approving or denying care. Governor Kim Reynolds says administrators of the program tell her the auditor has “a fundamental misunderstanding” of how the appeals process works.

“They have spent a lot of time with his office walking through how it actually works,” Reynolds says. “He made the decision to disregard the information that they provided him and so I stand by Medicaid and believe that we’re still doing the right thing.”

More than 780,000 Iowans are currently getting medical care or other services through Medicaid. Sand’s report found the two private companies managing the program violated contract provisions, for example, failing to pay for in-home services like wound care and help bathing if the Medicaid recipient was switching from managed care organization to the other.