Auditor: Iowa's privatized Medicaid illegally denies care

DES MOINES, Iowa (AP) — Iowa's privatized Medicaid system has illegally denied services or care to program recipients, and both private insurance companies managing the system have violated terms of their contracts with the state, according to a state audit released Wednesday.

Auditor Rob Sand released a report from his investigation that examined cases from 2013 through 2019. He said his investigators found a massive increase in illegal denials of care by managed care organizations, or MCOs, under privatized Medicaid.

“What this means is that privatized Medicaid is less likely to treat Iowans in accordance with the law. It means that the Medicaid MCO's that we have contracted with are not upholding their end of the bargain,” Sand said.

The head of Iowa's Medicaid program responded within minutes of the audit's release, rejecting its conclusions and arguing Sand was making an “apples to oranges comparison" that mischaracterized the current program.

Former Republican Gov. Terry Branstad in 2016 abruptly shifted Iowa's Medicaid program from management by the Iowa Department of Human Services to private insurers. His successor, current GOP Gov. Kim Reynolds, has continued to support privatization amid complaints that service has suffered, payments to service providers are sometimes delayed, and promised savings never materialized.

Privatization became a popular idea among GOP politicians, who argued private companies would more efficiently manage Medicaid than a state government agency. Private Medicaid managers provide health care for more than 781,000 poor and disabled Iowans.

Sand said after privatization, there was an 891% increase in the number of cases in which a judge restored services to a Medicaid participant, concluding services were unlawfully denied by the...