Fact Checker: Branstad on Medicaid errors

Governor's claim is accurate, but misleading

Iowa Gov. Terry Branstad delivers the Condition of the State speech at the State Capitol in Des Moines, Iowa, on Tuesday, Jan. 12, 2016. (Jim Slosiarek/The Gazette)
Iowa Gov. Terry Branstad delivers the Condition of the State speech at the State Capitol in Des Moines, Iowa, on Tuesday, Jan. 12, 2016. (Jim Slosiarek/The Gazette)


“In the old system, under the pay-for-services system, we had an error rate of more than 9 percent, close to 10 percent. The error rate under the new system is very close to zero.”

Source of claim: Gov. Terry Branstad speaking about Medicaid managed care during an Aug. 29 news conference.


Branstad has been arguably the biggest champion of Iowa’s transition from a state-run, fee-for-service Medicaid program to the new managed care system, which took place April 1.

Branstad’s communications director Ben Hammes pointed to an Iowa Payment Error Rate Measurement — or PERM — program report for fiscal year 2014 as source material for the governor’s statement.

The report, created by the Centers for Medicare & Medicaid Services, measures payment errors for Iowa’s fee-for-service and managed-care Medicaid systems. PERM reviews a sample of claims payments for billing errors and provider compliance, among other factors. It then uses those sample errors to project payment errors and target areas for improvement.

According to that report, fee-for-service Medicaid in the state had an estimated error rate of 9.9 percent. Meanwhile, the report states managed care “does not have any sampled errors.”

So Branstad’s comment lines up with the figures in the PERM report, but we’ll take a closer look for additional context.


PERM reports lump states into three-year rotational cycles, so Iowa’s next report does not take place until fiscal year 2017.

The specific report Branstad cites is the most recent available for Iowa. It looks at payment errors in state Medicaid from July 2013 through June 2014.

That time frame is significant when checking Branstad’s claim.

Iowa handed over management of its $5 billion Medicaid program to three private insurers — also called managed-care organizations, or MCOs — in April. The MCOs include Amerigroup Iowa, AmeriHealth Caritas Iowa and UnitedHealthcare of the River Valley.

In the transition, the state moved about 560,000 Medicaid enrollees, or more than 90 percent of the total Medicaid population, into the new managed-care plans.

But in fiscal year 2014, when the PERM survey was conducted, only about 12 percent of Iowa’s roughly 548,000 Medicaid enrollees were on managed-care plans.

In that fiscal year, only Iowans receiving behavioral health services enrolled with Magellan of Iowa, and those in select counties enrolled with Meridian Health Plan of Iowa — or less than 67,000 people between the two MCOs, according to Department of Human Resource data provided by the governor’s office — were on a managed-care plan.

Both of those MCOs left the state of Iowa in December 2015.

It’s worth noting Centers for Medicare & Medicaid Services data shows that nationally, managed-care Medicaid traditionally has a lower payment error rate than fee-for-service Medicaid.

For example, in 2015, fee-for-service Medicaid had an error rate of 10.6 percent, while managed care was at only 0.1 percent, according to the report.

But again, that’s a snapshot for the entire country.


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The truth is, a measurement of errors for Iowa Medicaid that accounts for the state since it transitioned to a managed-care system does not exist and the report Branstad refers to measured error rates for MCOs no longer operating in the state.

The next PERM report for Iowa Medicaid won’t be completed until 2017.


Comments made by Branstad in August on the number of errors among fee-for-service Medicaid programs was accurate — two years ago.

The problem is the governor used that data to paint a picture of Iowa’s current Medicaid system.

That system has changed drastically since the April transition and we simply don’t know how many payment errors have occurred among the more than 500,000 people now on managed-care Medicaid.

For that, we have to give Branstad a grade of C.


The Fact Checker team checks statements made by an Iowa political candidate/office holder or a national candidate/office holder about Iowa, or in advertisements that appear in our market. Claims must be independently verifiable. We give statements grades from A to F based on accuracy and context.

If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

• This Fact Checker was researched and written by Mitchell Schmidt.



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