DES MOINES -- Privatized Medicaid is saving the state of Iowa $140.9 million for fiscal year 2018, the program director said in a public meeting Wednesday. But no one yet has clarified how the state saved those dollars.
Iowa Medicaid Enterprises Director Michael Randol gave his presentation on cost savings estimates as well as the calculations that led to those conclusions during the Council on Human Services meeting in Des Moines. About 20 state officials, lawmakers, stakeholders, members of the media and the public attended the presentation.
Randol discussed the methodology for determining that $140.9 million estimate, which compared the overall cost of the Medicaid program with and without the managed-care organizations — or the private companies that administer coverage in Iowa.
The nearly $141 million estimate was calculated by comparing actual Medicaid costs for state fiscal year 2015 — which was the last full year under the previous system — and the projected basic expenditures for state fiscal year 2018, which was determined based on what the state spent in December 2017.
It was not explained during the presentation why officials did not use actual costs from state fiscal year 2017 for this estimate.
Randol said the methodology he used created a more accurate estimate by changing the comparison. Managed-care costs previously were compared to the state’s fee-for-service model — Iowa switched most enrollees to managed care in April 2016 — but Randol said he “wanted to make sure we had apples to apples.”
“I think they were comparing to fee-for-service, but I felt it would be more appropriate to look at the Medicaid program as a whole prior to implementation and whole program after implementation (of managed care),” Randol said. “It’s not appropriate to compare fee-for-service to managed care. We compared Medicaid to Medicaid.”
But regardless of methodology, “there are savings,” Randol said. He added that the department has to ensure the program is sustainable long-term for the thousands of poor and disabled Iowans who rely on Medicaid for their health care.
“We have to have that sustainable program, and to do that, you have to manage the care and manage the appropriate costs within the program,” Randol told Council members. “And with the managed-care delivery program, I believe that’s what we’re seeing.”
Randol’s presentation comes in response to calls for transparency after the new $140.9 million cost savings estimates released this past month by the Department of Human Services did not match figures released in a quarterly report published in December 2017. According to that DHS report, the cost savings estimates for fiscal year 2018 were $47.1 million.
Randol did not clarify in the meeting why these two estimates were different from one another, and did not take questions from reporters seeking explanation following his presentation.
Randol’s office has not directly responded to earlier requests for a separate meeting with Gazette reporters to discuss the estimates.
Two Democratic lawmakers at Wednesday’s meeting said Randol’s presentation was vague and did not answer some lingering questions on the impact of these costs savings.
Sen. Amanda Ragan, D-Mason City, and a member of the Council on Human Services, pressed Randol during the meeting, asking if the savings included unpaid provider reimbursements or if the data has shown any improvement in members’ health.
“I don’t think (anyone) in the room felt there was a clear answer where the savings were,” Ragan told reporters after the meeting.
Sen. Pam Jochum, D-Dubuque, called Randol’s presentation “incomplete” and questioned the accuracy of the numbers he provided.
“Certainly he provided some total numbers,” Jochum said. “However, I believe we were not comparing apples to apples because if you look at pre-managed care and compare it to a projection of 2018 rather than comparing it to some actual real numbers from 2017 ...” a lot of unknowns remain.
She called on Randol to sit down with members of the media and provide more detail on the cost savings estimates of the Medicaid program.
Democratic lawmakers are looking to an incoming Iowa State Auditor’s review, which was formally requested by Jochum following the release of the $140.9 million cost savings estimate from the department.
In her letter to the State Auditor Mary Mosiman, which was sent to The Gazette, Jochum requested Mosiman’s office “determine if Iowans are really saving money by paying out-of-state, for-profit insurance companies to care for our most vulnerable.”
“I am hoping that (Mosiman) is going to be able to go into the Medicaid system, collect the health data as well as the financial data to determine whether or not there are real cost savings, where it’s coming from, whether or not we’re actually engaged in care coordination and practicing preventive care that can reduce our health care costs,” Jochum told reporters Wednesday.
DHS Director Jerry Foxhoven welcomed the review during Wednesday’s meeting, saying that DHS has been in contact with the auditor’s office to begin setting up those meetings.
“I think it’s a huge plus,” Foxhoven said. “If everyone is concerned whether or not we’re getting real numbers, here’s our way to find out.”