FILE - Iowa hospital

University of Iowa Hospitals clinical building

Iowa will increase its share of Medicaid funding in the new fiscal year by 6.5 percent as a result of the state Department of Human Services (DHS) signing new health care contracts this week.

The Fiscal Year 2020 contracts signed with insurers Amerigroup Iowa and Iowa Total Care reflect a $386 million increase over FY 2019 funding levels, which includes a federal share of Medicaid funding. That’s a year-over-year 8.6 percent increase in total spending, according to DHS.

State taxpayers' share of that Medicaid spending increase is $115 million, reflecting a 6.5 percent hike. Some of the increase reflects bills passed in the last legislative session, which increased nursing home reimbursement rates and provided additional mental health funding, DHS reported.

In addition, the new contracts will provide Iowans with more access to Hepatitis C treatment through Medicaid, according to the agency.

“Medicaid members and providers can be assured that both Amerigroup and Iowa Total Care are here to serve Iowans for the long term,” Iowa Medicaid Director Michael Randol said in a prepared statement. “These new contracts demonstrate a commitment to those we serve, including greater access to Hepatitis C treatment and additional funding for the adult mental health and children’s mental health systems.”

The cost increases in the new health care contracts are actuarially stable and reflect public policy changes and adjustments for care reimbursements, according to DHS.

Iowa Gov. Kim Reynolds said the increase in contract costs, which follows an 8.4 percent increase in the previous fiscal year, are justified to ensure quality care.

“With additional funding for nursing homes, mental health services and health care providers, this agreement provides Iowans compassionate, integrated and coordinated health care options,” Reynolds said in a prepared statement. “The negotiated contract ensures greater health care access for those who need it and demands more accountability from the managed-care organizations involved in the program.”

Previously run by state officials, the health care program was turned over to private managed-care organizations under the previous governor, Terry Brandstad, three years ago. The idea was to create a system that provided better health care services at lower costs, but Democratic lawmakers have said the privatized system hasn’t delivered on its promises.

Iowa’s Medicaid program covers beneficiaries at higher incomes than many other states do. The state expanded Medicaid under the Affordable Care Act in 2015.