The state will withhold $44 million from Iowa Total Care, one of the two managed care organizations contracted to run the state's Medicaid program.
According to a letter from state Medicaid Director Mike Randol to Iowa Total Care CEO Mitch Wasden, the state will withhold the payment until the company has corrected "claims payment issues and encounter data issues."
The state claims Iowa Total Care has failed to pay 106,000 claims. The money withheld amounts to just over a quarter of the company's monthly payment.
The letter states the company was issued multiple verbal and written warning about the issue. The state said will make the decision to release the money at the end of February.
Since the state's Medicaid system was privatized in 2016, it has experienced significant turbulance and turnover.
Iowa Total Care joined the state in July of last year, just months after United Healthcare announced it was leaving the state in March. The state's other current MCO is Amerigroup.
Iowa Total Care replaced AmeriHealth Caritas, which left the state in 2017 after claiming large losses under the program.
Last July, the state agreed to increase Iowa Total Care and Amerigroup's payments by 8.6 percent, amounting to an additional $386 million in state and federal dollars.
The state's Medicaid program serves more than 600,000 Iowans.