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Program saves Iowa Medicaid nearly $30 million


An aggressive program to catch claims errors and identify fraud has saved Iowa’s Medicaid program nearly $30 million in its second year of operation, the Iowa Department of Human Services announced this morning.

The savings were achieved through a three-year, $14 million program integrity contract with Optum, a health services business based in Eden Prairie, Minn.

“Combined with first-year savings of more than $23 million, we have now saved or recovered more than $50 million without trimming essential healthcare services for 400,000 Iowans or reducing provider rates,” Iowa Medicaid Director Jennifer Vermeer said in a press release.

Annually, Medicaid reimburses Iowa hospitals and providers approximately $4 billion for health-care costs incurred; approximately two-thirds of those dollars are funded by the federal government and one-third by the state.

Those reimbursements fall far short, however, of covering actual costs to health-care providers. In its annual community report issued recently, the Iowa Hospital Association said hospitals in the state lost more than $274 million from the combined shortfalls in Medicare and Medicaid reimbursements. Hospitals in Iowa rely on the two government programs for more than 60 percent of their revenues. The association could not be immediately reached for comment regarding the Optum contract results.

Vermeer said the savings – which exceeded the contracted goal by about $7.5 million for the first two years – resulted from analyses of claims submitted by major Medicaid providers, with most savings or recoveries due to claims errors.

For example, one strategy screens claims for inadvertent errors that would make Medicaid pay for a more expensive procedure than the one actually performed.

Another strategy makes sure that Medicaid is reimbursed when a non-government insurer eventually pays for the same hospital visit or procedure.

Additionally, “hundreds of thousands of dollars” have also been saved or recovered when analysts discovered fraudulent claims, Vermeer said in the release.

Roger Munns, a department spokesman, said the report did not break out a specific dollar amount, but said fraud cases were “a relatively small part” of the total two-year savings, probably $1 million or less.

Medicaid has referred dozens of providers to the fraud investigation unit of the Iowa Department of Inspections and Appeals.

“We do ask for money back in those cases, even if it isn’t fraud,” Munns said.

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