DES MOINES, Iowa – State Auditor Rob Sand released a report on Wednesday claiming a 500 to 890 percent increase in Medicaid recipients illegally denied services or care since the privatization of Medicaid.
Iowa Department of Human Services said Sand is making an “apples to oranges” comparison.
The state transitioned Medicaid in 2016 from a fee-for-service system administered by the Iowa Department of Human Services (DHS) to a managed care system called IA Health Link, managed by Managed Care Organizations (MCOs) for a fee.
Medicaid recipients can appeal reductions or denials in service, and Sand’s office compared appeals three years before privatization and three years after. They found that appeals, since privatization, saw administrative law judges ruling reductions or denial of service legal drop by 72 percent. In comparison, the percentage of cases where the judge overturned the reduction or denial of service increased 890 percent.
The report also states that two MCOs, Amerigroup and Iowa Total Care (ITC), violated provisions of the contract established with DHS. One example is non-compliance with the contract clause requiring Home and Community-Based Services (HCBS) providers that resulted in Medicaid recipients going without services, such as bathing and wound care, violating the contract, as well as state and federal law.
Iowa Department of Human Services said the report demonstrates Sand’s “lack of understanding about the appeals process,” calling the report “incorrect and flawed.”
“The Auditor of State report attempts to compare the appeals processes between the old fee-for-service, and the managed care models. We worked with the Auditor of State’s team to explain why this was an apples to oranges comparison. The process is not the same, so making a comparison without factoring in the improvements we built into the MCO appeals process prior to ever seeing an administrative law judge (ALJ) is just wrong,” Iowa Medicaid Director Elizabeth Matney said. “Under managed care, most appeals can be resolved without an ALJ, allowing them to focus on more complex cases.”
DHS also said that Medicaid’s clinical staff takes the time to review each ALJ case, no matter how it turns out, and resolves any issues as they are identified.
“Over the past couple of years, my team and I have made many good faith efforts to demonstrate transparency and integrity with the Auditor of State, which is why this is so disappointing. I’m proud of the work Iowa’s Medicaid team is doing and I am excited for the positive changes as Director Matney builds out Iowa’s Medicaid team to ensure strong managed care oversight, as well as innovative improvements to the program,” DHS Director Kelly Garcia said in a released statement.
Gov. Kim Reynolds’ office told The Iowa Torch that the Governor supports Garcia and Matney’s leadership and the changes made to Medicaid.
“The Governor stands behind the Medicaid program, Director Matney and Director Garcia and the work they have done and are doing on the program,” Alex Murphy, Reynolds’ spokesperson, said in an email.
Sand said vulnerable Iowans had been harmed since the change.
“Independent judges are seeing a massive increase in illegal denials of care under privatized Medicaid, which means that our most vulnerable are being hurt and that taxpayers aren’t getting what we are paying for,” he told The Iowa Torch.
This is not the first time that Sand, a Democrat, has issued a report critical of Reynolds, a Republican, or her administration.
In June, Sand, a Democrat, issued a report claiming that Reynolds, a Republican, broke the law with a COVID-19 PSA campaign. However, the Iowa Ethics and Campaign Disclosure Board voted unanimously at their August 12 meeting that Reynolds did not violate state law with the campaign.
In October 2020, Sand also said the Governor’s office misused $21 million in CARES Act funding to pay for Workday, the state’s new accounting and human resources system, and said the $448,449 staff expenses is questionable and may have to be repaid. Sand said the U.S. Treasury Department’s Inspector General agreed with his findings. The state returned the money, causing the Iowa Legislature to appropriate it during the 2021 session.
Read his report below:DHS Medicaid ALJ Report