Budget Document Shows Rise In Per-Member Cost Of Medicaid After Privatization

Sep 12, 2018

Iowa’s Medicaid director said Tuesday he doesn’t know what is driving a recent increase in what the state is paying per Medicaid member.

Kim Spading, a member of the council that oversees the Iowa Department of Human Services, asked during a budget presentation why the per-member cost shot up in the past two years.

“This is the opposite of what we would’ve hoped for,” Spading said.

Medicaid Director Mike Randol replied the state’s privatization of the health care program for poor and disabled people is part of it, but said he needs to look into other factors.

According to a graph included in the department’s draft budget for the next two years, the per-member cost was decreasing from state fiscal year 2015 to 2017. Then, it increased by 6.6 percent last fiscal year and another 11 percent in the current fiscal year 2019.

“I didn’t create that chart, so I need to go back and understand the background, understand the numbers behind the chart and understand the factors that could potentially be driving the increase,” Randol told reporters after the meeting.

The budget document states the per-member cost increases come from higher rates being paid to the private companies that manage Iowa’s Medicaid program. This year, the companies were granted a 7.5 percent rate increase, which Randol attributed to a more accurate analysis of how much is being spent on Iowans’ care.

The state’s privatization of its Medicaid program remains controversial as reports continue to surface of care reductions and denials to disabled Iowans, delay of payment to health care providers, and questions about cost savings.

Randol maintains the switch to private companies is saving the state money compared to the previous state-run system. IPR asked him how that is possible when the per-member cost has spiked in the past two years and program enrollment keeps increasing.

Randol said it needs to be looked at in context.

“You can’t just look at that in aggregate and determine whether there was cost avoidance or not in the program,” Randol said.

He also told the Human Services Council Tuesday next year’s budget will require an extra $64.3 million to cover the rate increase for Medicaid management companies.