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Medicaid Director Defends $386 Million Increase in Spending

DES MOINES, Iowa  --  The head of Iowa's Medicaid program says the sharp increase in the cost of the program is the price of improving benefits for members, not price gouging.

"It is not a(n)..  increase for the MCOs.  The majority of that funding will go out to the providers who are providing a service and delivering those services to our members," Medicaid Director Mike Randol says about the $386 million increase in the price of Medicaid in Iowa for FY2020.  The new price tag, an 8.6% increase from last year, was announced on Wednesday by DHS.  Most of that money will come from federal dollars.  The state will see an increase of $115 million in taxpayer spending.

Randol says the big increase is because of big changes to coverage for Medicaid members.  He says those changes came at the request of Medicaid users as well as new requirements for coverage passed by the Iowa legislature.  "The critical access hospital increase, the nursing facility increase, tiered rate increase, the $12 million that were put in for complex needs for mental health; all that has to be put in those cap rates so that’s part of that 8.6% ," says Randol.

Randol says the new contract is based on data collected from the last three years of privatized Medicaid in the state and all figures are actuarially sound.  This is the second consecutive year of sharp increases in the cost of Medicaid.  Randol says he can't predict if more such increases will follow in the coming years.  But he does say there is one constant about medical costs.

"Medical costs are going to go up.  That’s true in Medicaid.  That’s true in Medicare.  That’s true in commercial.  I’m not aware in a commercial environment where costs have gone down," says Randol.

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