Amid backlash, Iowa governor claims Medicaid privatization prevents fraud

Medicaid on paper and a stethoscope

Battle lines are being drawn in Iowa over the governor’s decision to privatize the state’s Medicaid program in an effort to cut down on fraud and abuse, even as patients and providers have complained about insufficient payments and access to services.

After transitioning Iowa’s Medicaid program to three private insurance carriers in April, Gov. Terry Branstad told the Des Moines Register that the new system was “stopping significant fraud and abuse that had occurred previously in our state and across the country.” Branstad added that the insurance carriers were taking additional steps to ensure services were provided before remitting payment, but did not offer specific savings generated from fraud prevention activities.

An editorial published in The Hawk Eye argued that privatizing the Medicaid program had done more harm than good, and noted that any fraud and abuse that occurred before the transition happened under the governor’s watch.

All three insurers—UnitedHealthcare, AmeriHealth Caritas, and Amerigroup—have reported losses through the first quarter of the program, according to the Des Moines Register. Meanwhile, providers that were already displeased with the transition have complained about late payments or insufficient reimbursement, and patients have said they are experiencing delays in care.

A report released earlier this week indicated the state had saved more than $22 million since switching to the managed care organizations. The three insurers have initiated 27 fraud investigations and referred five cases to the state Medicaid Fraud Control Unit, but the report offered no specific dollar figure on fraud savings.

Experts have previously said that privatizing Medicaid complicates fraud detection tactics since investigators face additional barriers and fewer referrals.