Branstad argues managed care reduces fraud; figures show Iowa Medicaid fraud already rare

Facing criticism for the implementation of the new system, Branstad said the transition is saving 'significant' money

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Gov. Terry Branstad this week again defended the state’s decision to move its $5 billion Medicaid program over to a managed-care system handled by three private insurers, saying the transition is saving Iowa “significant” money by rooting out fraud that previously went undetected.

But while the number of Medicaid investigations in Iowa has risen in recent years, those in fiscal year 2015 accounted for only about 1.8 percent of total investigations — and some 3 percent of both indictments and convictions — nationwide, figures from the U.S. Department of Health and Human Service’s Office of the Inspector General show.

According to a fact sheet the governor’s office put out Tuesday, Iowa’s managed-care system, launched in April 1, is able to save money by “reviewing and verifying claims upfront” and providing “payments through a modern computer.” Under the old fee-for-services system, the state “paid claims first and asked questions later” as well as “used a paper system and a 1970s computer,” the sheet stated.

Department of Human Services spokeswoman Amy McCoy didn’t know the exact age of the agency’s computer system but said it is pretty old. She explained the state has had to build onto it over the years and it would have been in need of significant upgrades had they continued to use it.

The managed-care organizations (MCOs) meanwhile have sophisticated systems designed to catch errors and overpayments upfront, she said, which will cut down on waste, fraud and abuse.

McCoy said most of the time it is less a matter of providers filling out claims incorrectly to be paid more, and more a case of they’re not getting paid quickly enough and then submitting claims more than once, or improperly filling out forms.

But how prevalent is fraud among Iowa’s 29,000 Medicaid providers?

According to annual Medicaid fraud reports put out by the U.S. Department of Health and Human Service, there were 270 fraud investigations in Iowa in fiscal year 2015. Those investigations resulted in 37 indictments and 33 convictions.

Nationwide, there were 14,441 investigations, 1,387 indictments and 1,097 convictions for Medicaid fraud.

Those numbers have risen over the years, in Iowa and nationally. Previous fraud reports for Iowa show:

• In 2014 — 249 fraud investigations, 33 indictments and 28 convictions

• In 2013 — 205 investigations, 31 indictments and 18 convictions

• In 2012 — 146 investigations, 11 indictments and 9 convictions.

The state and federal government work together to clamp down on Medicaid fraud, according to Centers for Medicare and Medicaid spokeswoman Julie Brookhart. States have their own Medical Assistance offices that house integrity units in addition to Medicaid Recovery Audit contractors.

CMS also has Medicaid Integrity contractors that support state efforts, Brookhart said. CMS auditors conduct post-payment analyses to identify overpayments as well as help review, audit and provide education.

What’s more, according to a DHS report, in fiscal year 2015, Medicaid achieved savings and cost avoidance of $46.8 million — both state and federal — through the identification of overpayments, coding errors, and fraud and abuse. “Historically actual Medicaid fraud is very rare in Iowa,” said Scott McIntyre, spokesman for the Iowa Hospital Association, which represents the state’s 118 hospitals. Fraud “is not something that happens in the background.

“It’s a crime and is dealt with in a public and visible way. ... So if this was occurring, we’d be curious to see the data.”

McIntyre added that the association — which has been a vocal opponent to the Medicaid managed-care move — does not have any indication that managed care prevents fraud or discovers fraud better than other Medicaid systems.

“We’re not saying this in an adversarial role,” he said. “Everyone wants to prevent fraud from happening. Let’s work on this together to fix the problem.”

How does Iowa compare with other Midwestern states?

• Illinois — 248 investigations, 41 indictments and 42 convictions

• Indiana — 1,216 investigations, 47 indictments and 38 convictions

• Kansas — 104 investigations, 6 indictments and 15 convictions

• Minnesota — 417investigations, 22 indictments and 17 convictions

• Nebraska — 97 investigations, 8 indictments and 6 convictions

• Wisconsin — 468 investigations, 11 indictments and 5 convictions

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