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Medicaid Program Integrity Initiative Saves $86 Million Over 3 Years

Gov. Terry E. Branstad announced today that an Iowa Medicaid initiative saved taxpayers $41 million in fiscal year 2013. That brings the total three-year savings of the program integrity effort to more than $86 million.

“The savings are six times greater than the overall cost of the program integrity contract, and $18.5 million above the savings target. That’s very good news for taxpayers,” said Branstad. “These savings help us provide better care for 400,000 Iowans in need, without reducing provider rates or trimming services.”

The savings were achieved through a three-year, $14 million program integrity contract awarded to Optum of Eden Prairie, Minn. Optum, which manages most of the program integrity work for Iowa Medicaid Enterprise, will continue its program integrity efforts for FY 2014 in the first of two performance-based option years under the contract.

Iowa Medicaid Enterprise Director Jennifer Vermeer said savings under the program integrity contract include both “cost avoidance,” which is money not spent because claims errors or fraudulent activities are caught in advance, and “recoveries,” which refers to funds inappropriately billed to Medicaid that providers must repay.

A strong emphasis on avoidance is especially beneficial to Medicaid programs, since it is less costly than “chasing” inappropriately paid claims in an effort to recover funds. Optum discovered inappropriate behavior by both providers and beneficiaries.

“We are pleased with the innovative approaches Optum has instituted,” Vermeer said. “We’ve put those who deliberately seek to defraud the system on notice that we’re using some very sophisticated techniques to thwart their efforts. For those who make mistakes or are misinformed, there’s an educational component to the program that our Medicaid providers have found helpful.”

The majority of the approximately 20,000 Medicaid providers bill appropriately and understand how the program works. But, Vermeer said the few who are fraudulent can cost taxpayers millions.

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