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Stitt Administration's Partially Privatized Medicaid Plan Finds Unexpected Opponents: Oklahoma House Republicans

 Oklahoma Gov. Kevin Stitt at his 2021 State of the State address.
Legislative Service Bureau Photography
Oklahoma Gov. Kevin Stitt at his 2021 State of the State address.

From Day 1 of this year’s legislative session, the state’s executive branch has been hammering its dedication to usher in SoonerSelect.

Under that plan, instead of having Oklahoma’s Medicaid agency pay providers directly for their care, the state would shift about $2 billion in health spending to four private insurance companies, giving them a set amount for every client. Those companies would then coordinate care for nearly a million low-income Oklahomans, who are covered by SoonerCare, the state’s Medicaid program.

Here’s the idea: Insurance companies make more money when their clients are healthier and need less medical care. So they’re incentivized to improve health outcomes. They also have more flexibility in how they can spend on health, because state Medicaid agencies have stricter rules. Supporters often offer this example. A member with a heart condition has their air conditioner go out, and they can’t replace it. The resulting heat poses a serious health risk. A managed care company has the flexibility to buy a new air conditioner with Medicaid funding. The state wouldn’t be allowed to.

In his State of the State address, which governors deliver before the Legislature on the first day of session, Stitt reiterated the office’s position: Oklahoma’s health outcomes, which rank 46th in the nation, are unacceptable. Health policy needs to change, and now is the time to do it.

“With Medicaid expansion now in our Constitution, this is the perfect opportunity to reimagine health care delivery in Oklahoma,” he said. “It is time to focus on outcomes, and not just paying invoices. Forty states have found managed care is the best way forward.”

All along, that plan — which nearly every medical trade group in Oklahoma has denounced — has seen opponents in the Legislature. In December, more than a dozen members wrote a letter calling for the idea to be abandoned. Health committee chairmen in both chambers have held hearings on the program’s risks.

For months, that opposition has seemed informal, for the most part. That is, until last week. The House of Representatives overwhelmingly passed a bill that would block the program and create a similar one, only with no private insurance companies. Senate Bill 131 creates the Oklahomans Caring for Oklahomans Act. It would create a more coordinated care model under the Oklahoma Health Care Authority.

It creates three priority areas: prevention, chronic care management and payment reform.

It would require Medicaid members to enroll in the program and renew their enrollment at annual wellness visits. The idea is that it would require them to attend the check ups needed to promote preventative care. The chronic care management policy has many components, such as creating a long-term care plan for each member and investing in patient health education. The last would nudge the agency away from the fee-for-service model and toward the more incentive-based payments that the Stitt Administration has supported.

The measure passed 73-13, with bipartisan support and opposition.

 Rep. Marcus McEntire (R-Duncan)
Oklahoma House of Representatives
Rep. Marcus McEntire (R-Duncan)

Rep. Marcus McEntire, a Duncan Republican who chairs the Appropriations and Budget Health Subcommittee, authored the bill. He said he wasn’t surprised by its far-reaching support, despite the chamber’s issues with Medicaid — and specifically expanded Medicaid — in the past.

When voters approved State Question 802 last summer, they expanded Medicaid and opened coverage up to about 200,000 working adults. That policy, made available to states under the Affordable Care Act, raised the income cutoff for the health program. The Legislature opposed expansion for a decade before voters used the state question to place it in the constitution.

One of the executive branch’s arguments for SoonerSelect is that the state needs help from insurance companies to coordinate care for the expansion population. It’s new, and officials aren’t sure what health demands it will create, or how much treating those demands could cost.

McEntire said that although House Republicans widely opposed Medicaid expansion, that state question placed the policy in the constitution. If they’re going to have to fund it, he said, they want to do it right.

“There are many Republicans who just really don’t know what to do about this because they are against expansion, and I think they feel like they’re in some kind of a twilight zone — that they’re having to vote on this stuff that they’re against,” he said. “They know it’s here and they know it’s constitutional. I think that’s where everyone’s pivoted to. It’s here. So let’s make the best of it and let’s do this in the best way that we possibly can.”

Oklahoma’s Legislature has a long history of cutting Medicaid funding and attempting to curtail its enrollment. During tough budget years, the Legislature tends to cut reimbursement rates — the standardized fees Medicaid pays doctors, hospitals and other providers for their care. Lawmakers have made several attempts to create new eligibility requirements on the program, which opponents said created unnecessary barriers to entry. For example, under the Fallin Administration, Oklahoma leaders pursued mandates that would require all able-bodied adult members to report a certain number of hours worked weekly. A similar program in Arkansas led to 17,000 losing their health coverage.

But during debate last week, a spate of Republicans debated to keep Medicaid under state control, against bringing in private-sector organizations, and pledged to protect the program’s funding. Arguments varied.

One oft-repeated criticism focused on administrative costs. The Oklahoma Health Care Authority is capped at 5 percent of total costs. The contractors are capped at 15 percent. Several members echoed the concern — first raised by the state’s medical trade groups and the campaign Stop the Health Care Holdup — that this could total hundreds of millions of dollars going to the insurance companies for their administrative costs instead of patient care.

Rep. Kevin West, R-Moore, revisited Oklahoma’s past cuts to reimbursement rates and their effect on providers while calling for the program to remain under state control.

“If we keep it in-state, could we not use at least some of that 10 percent to improve our provider reimbursement rates, which would also improve health care outcomes?” he said.

Rep. Anthony Moore, R-Clinton, noted that several of the four companies Oklahoma has already contracted for the program are facing lawsuits in other states. One specifically is facing multiple lawsuits from state attorneys general regarding Medicaid. The Ohio Attorney General is suing Centene, alleging that the managed care organization is defrauding that state’s Medicaid program. Mississippi’s state government is investigating Centene for similar allegations.

Moore said problems like that would be expensive themselves, but resulting lawsuits would also be costly.

“Tell me the fiscal impact of lawsuits against an MCO and what that’s going to look like,” he said.

Rep. Kyle Hilbert, R-Bristow, raised concerns about one of SoonerSelect’s selling points: that it could save the state money on Medicaid in the long run. He said that cutting spending from current levels could only mean one thing: worse service.

“If we’re saving money, in my mind, it’s because we’re either reducing services or we’re paying providers less or delaying (care),” he said.

McEntire offered another reason behind the bill’s success: hospitals are popular, and the hospitals have been fighting against SoonerSelect.

“My hospital in my hometown is the largest employer in my district,” he said. “And a lot of reps are that way. And so, in these smaller towns, you can’t get a school bond passed. But I guarantee if they put a bond up for their hospital, it’ll pass at 90 percent because people are really concerned about their health systems in their communities.”

It’s still unclear whether the Senate will hear this version of the bill, which has changed significantly from the one heard in the chamber originally, but McEntire said he’s hopeful.


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Catherine Sweeney was StateImpact Oklahoma's health reporter from 2020 to 2023.
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