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[MM Curator Summary]: The provider-led entity plan begins July 1.
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Oklahoma adopts new system for Medicaid management
Between July 1, 2021, when Oklahoma’ Medicaid expansion went into effect, and May 2022, more than 291,000 people were added to the program’s enrollment. Currently, more than 1.2 million people are enrolled in Medicaid in Oklahoma. (Photo by Online Marketing on Unsplash)
OKLAHOMA CITY – After years of battle in the courts and at the state Capitol over how best to manage the state’s $7 billion Medicaid program, Oklahoma lawmakers and Gov. Kevin Stitt are agreed on a new structure scheduled to go into effect on July 1.
Instead of contracting with large, out-of-state insurance companies to manage the state’s Medicaid program, as Stitt had previously attempted to accomplish, the new plan ensures that Oklahoma-based companies play a role in managing care for Medicaid enrollees. However, several of those locally owned entities will still likely have to partner with large, out-of-state companies in order to provide services to Oklahoma’s newly expanded Medicaid population.
The new system is better than the original plan, health care providers say, though some remain wary of how the program ultimately will be administered.
Voters set the stage for the state to expand Medicaid eligibility to an additional 190,000 Oklahomans when they approved State Question 802 in 2020. State leaders scrambled to find a way to manage the $162 million increase the expansion was projected to cost.
Stitt responded by directing the Oklahoma Health Care Authority to award $2 billion in contracts to four private companies to manage the Medicaid program. Several medical groups, including the Oklahoma State Medical Association, filed a lawsuit. The Oklahoma Supreme Court struck down the contracts in 2021, finding Stitt did not have the authority to implement such a plan without involving the Oklahoma Legislature in the process.
Health care provider groups had objected to Stitt’s managed care plan, claiming the managed care approach did not work well when the state last attempted it in the 1990s. Lawmakers eventually switched back to a state-run system after the number of participating health are providers dwindled to a point that challenged the state’s ability to provide adequate Medicaid services.
Providers had dropped out of the Medicaid plan because they claimed the for-profit management companies, seeking to increase profits, had slashed reimbursement rates and erected other barriers to reimbursement that made participation untenable. Returning to a managed care system would likely result in the same outcome, provider groups argued.
Stitt signed Senate Bill 1337 and SB 1396 into law on May 26, hailing the new plan as one that achieves the goals he had in mind when pushing for managed care.
“I have pushed since 2020 to find a solution that improves health outcomes for Oklahomans and also protects the taxpayers from rising costs,” Stitt said.
The new plan encourages provider-led entities, such as Integris, to expand their accountable care organizations statewide, said state Rep. Marcus McEntire, R-Duncan.
“This plan puts an Oklahoma provider-led entity in the middle of that,” McEntire said when he presented the measures before the House. “The money will stop there, in state.” The new system allows Oklahoma lawmakers to more easily step in and tweak the process as needed, he said.
The Oklahoma-based companies likely will partner with larger, national companies in order to secure the financial backing needed to take on the risk of overshooting the state’s cap on expenditures, McEntire said.
Companies contracted to provide Medicaid services will be expected to achieve measurable goals and develop strategies to address health disparities, said State Medicaid Director Traylor Rains.
“While SB 1337 implements managed care, it is vastly different from where we were last January, when the health care authority offered contracts to insurance companies without legislative oversight or guardrails to protect Oklahoma’s tax dollars or our Medicaid recipients,” said OSMA President David Holden, M.D.
The latest version of the bill is the result of a more collaborative process that allowed hospitals and physicians to have some input, Holden said.
“While we still have concerns about how this program will be implemented and administered, we are grateful for the thought that has gone into this effort,” Holden said. “Looking forward, the Oklahoma State Medical Association will continue to oppose any increases in administrative fees as, ultimately, that takes tax dollars away from patient care.”
SB 1396, the Supplemental Hospital Offset Payment Program, provides $130 million annually for the Medicaid program and benchmarks hospital inpatient and outpatient services at 90% of the average commercial rate.
Between July 1, 2021, when Oklahoma’ Medicaid expansion went into effect, and May 2022, more than 291,000 people were added to the program’s enrollment. Currently, more than 1.2 million people are enrolled in Medicaid in Oklahoma.