Senator demands state auditor investigate whether Medicaid privatization is saving money

Iowa’s state auditor should investigate how much the controversial shift to private Medicaid management is saving taxpayers, a legislator said this week.

Sen. Pam Jochum, D-Dubuque, asked Auditor Mary Mosiman for the investigation Tuesday, after the Department of Human Services abruptly tripled its estimate of the savings last week without explanation.

The controversy involves hundreds of millions of dollars being spent on private companies now running Iowa's $5 billion Medicaid program.

“It is time for you and your office to open a special investigation so Iowans can be assured their taxpayer funds are being used effectively and efficiently,” Jochum wrote Mosiman.

Potential savings to taxpayers were a major selling point when former Gov. Terry Branstad ordered the shift to private Medicaid management in 2015. Branstad predicted Iowa taxpayers would be saving $232 million per year by now.

Last December, the Department of Human Services estimated the shift was saving just $47 million per year — 80 percent less than Branstad had predicted. Then, last week, the department told Jochum it now believes the shift is saving $140.9 million annually. However, the department offered no explanation of its math, and the agency's spokesman gave varying descriptions of whether the $140.9 million number described the state's savings for one year or two.

Mosiman’s chief of staff, Bernardo Granwehr, said Tuesday afternoon that Jochum’s request for a special investigation is “under review.” He did not say when a decision might be made.

Gov. Kim Reynolds told reporters Wednesday that she considered Jochum's request for an audit "political." She said Randol would be glad to sit down with Jochum and with reporters to explain how his office came up with the savings estimate.

The dispute comes amid a continuing controversy over the use of private, for-profit companies to manage Iowa’s $5 billion Medicaid program. Supporters say the shift is making the system more effective and efficient for the 600,000 poor or disabled Iowans whose health care it covers. But critics say it has led to deep cuts in services to members and stacks of unpaid bills to agencies providing their care. Critics, including Jochum, doubt the shift is saving nearly as much taxpayer money as Branstad promised it would.

Mosiman, a Republican, is facing a challenger in November’s election in Democrat Rob Sand, a former assistant attorney general. After the Register published a story Friday about the changing Medicaid privatization savings estimates, Sands tweeted a call for Mosiman to use her subpoena powers to investigate how state administrators are coming up with the numbers.

Iowa's new Medicaid director, Mike Randol, said in January that the department's estimate of $47 million in annual savings didn't include all costs that Iowa taxpayers were avoiding by having private managers oversee the program. Randol vowed to come up with a more accurate way of estimating those savings. The $140.9 million estimate released last week reportedly reflects the new method of figuring the state's savings, but Randol declined to explain on the record how the new estimate was calculated.

Randol is a top administrator for the Department of Human Services. When asked Tuesday for response to Jochum's request for an audit, department spokesman Matt Highland replied in an email to the Register:

"The department is committed to being transparent and would be happy to sit down with Sen. Jochum to explain how the department calculated the difference in cost between managed care and the old system," he wrote.