Gov. Stitt’s plan to privatize Medicaid lacks required legislative authorization, Oklahoma Supreme Court says

MM Curator summary


A court ruling means the state will now expand Medicaid but under a fee for service model, making this the first example of this combination.


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OKLAHOMA CITY (KFOR) – The Oklahoma Supreme Court delivered a blow to Gov. Kevin Stitt’s plan to privatize the state’s Medicaid program, ruling in favor of medical associations that challenged the constitutionality of his plan.

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The Oklahoma State Medical Association, Oklahoma Dental Association, the Oklahoma Osteopathic Association, the Oklahoma Society of Anesthesiologists, Inc., and Oklahoma Chapter of American Academy of Pediatrics, Inc., challenged the Oklahoma Health Care Authority (OHCA) and the State of Oklahoma’s effort to outsource management of the state’s Medicaid program to for-profit companies, awarding those companies $2.2 billion in contracts.

The Supreme Court ruled in a 6-3 decision that the State and OHCA went beyond their authority by implementing an entirely new capitated managed care program, SoonerSelect, following the passage of State Question 802.

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“In effect, the OHCA moved ahead without the required legislative authorization,” the Supreme Court’s conclusion states.


Oklahoma Supreme Court

The website describes SQ 802 as “an initiative petition that gave Oklahoma voters the chance to expand Medicaid to cover low-income adults in Oklahoma beginning no later than July 1, 2021.” SQ 802 was passed on June 30, 2020.

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The court determined that SQ 802 does not allow the governor and the OHCA to outsource Oklahoma’s Medicaid program to private insurance companies.

The Supreme Court’s full conclusion is as follows:

“The provisions of SQ 802 in no way authorize this course of action. The OHCA, through an RFP [Request for Proposal] process and competitive bidding, awarded contracts to MCOs [Managed Care Organizations] without legislative authorization or required rules in place. In effect, the OHCA moved ahead without the required legislative authorization. This Court assumes original jurisdiction and grants declaratory relief to the Petitioners. We find the actions of the OHCA are invalid under Oklahoma law. Having determined the Respondents did not have legislative authority to implement the SoonerSelect program, there is no need to issue a writ of Mandamus for OHCA to promulgate any rules. A writ of prohibition is also not appropriate in this matter. In addition, having determined declaratory judgement in favor of the Petitioners, we need not address whether the provisions proposed in the RFPs and model contracts are unconstitutional in and of themselves.”


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Gov. Kevin Stitt

Stitt announced SoonerSelect, his plan to revamp the state’s Medicaid program, on Jan. 29.

Selected Managed Care Organizations include Blue Cross Blue Shield of Oklahoma, Oklahoma Complete Health, Humana Health Horizons and UnitedHealthcare – each established in the state and serving Oklahomans. Stitt’s office estimates 1,500 new jobs will be created.

Stitt said the new program will improve health care outcomes for Oklahomans.

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Physicians across the state and several lawmakers, both Democratic and Republican, opposed privatizing Medicaid, wanting to keep the Medicaid expansion brought on by SQ 802 in the hands of the state.

“The Supreme Court today agreed that the Managed Care contracts were awarded without legislative input and contrary to the plan approved by the voters through State Question 802,” said Lynn Means, executive director, Oklahoma Dental Association. “Medicaid expansion will provide coverage for more than 200,000 of Oklahoma’s most vulnerable citizens. The managed care plan would’ve jeopardized health care for all Oklahomans by driving out providers of general health care, as well as dentists and specialists across the state. This lawsuit was one part of a physician-led effort to ward off privatization to insurance companies and keep Oklahomans in charge of health care in Oklahoma.”

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Stitt was on the cusp of succeeding in privatizing Medicaid, as legislators who opposed the privatization effort instead began focusing last month on putting guardrails on privatization to prevent problems experienced by 42 other states that enacted some form of managed care.

Sen. Greg McCortney, R-Ada, spoke with KFOR on May 19 about rewriting Senate Bill 131 to insert guardrails that would ensure Managed Care Organizations keep up their end of the deal.

Supreme Court Managed Care Decision by KFOR on Scribd

Gov. Stitt released the following statement:

“The Supreme Court’s ruling will unnecessarily delay Oklahoma’s efforts to improve health outcomes through managed care, which the Legislature confirmed is the right path forward for our state through Senate Bill 131. I will continue to work with the Oklahoma Health Care Authority to determine the next steps in the process.”

The Oklahoma Health Care Authority released the following statement:

“Improving health outcomes in Oklahoma will continue to be a top priority for the Oklahoma Health Care Authority. While we are disappointed in the Supreme Court ruling, we respect their decision and continue to focus on providing quality care to the more than one million Oklahomans we serve through SoonerCare. We are excited to welcome our newest population of Oklahomans now eligible for benefits through Medicaid expansion. This will allow us to serve an estimated 200,000 more people who deserve health care benefits.”


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