NewsOK: Oklahoma City News, Sports, Weather & Entertainment

Point of View: On Medicaid, lessons unlearned in Oklahoma

David Blatt
David Blatt

The board of the Oklahoma Health Care Authority, the state’s Medicaid agency that provides health insurance coverage for nearly 1 million low-income residents, voted last week to allow commercial managed care organizations to assume operation of the Medicaid program as early as this fall.

According to Gov. Kevin Stitt, “engaging providers through a managed care organization will help us achieve our goal of ensuring Oklahomans receive improved access and quality care.” Supporters contend that contracting with managed care organizations will provide cost certainty for the Medicaid program, and ultimately save the state money.

If managed care is of such great benefit, we might ask why it hasn’t been tried before. The answer is, it has — and it failed.

In the 1990s, the newly created OHCA created a pair of Medicaid managed care programs for low-income parents and children. In the state’s three urban areas — Oklahoma City, Tulsa, and Lawton — the state contracted with HMOs that received monthly capitation payments for every covered patient, the same model being developed today. Outside the metropolitan areas, OHCA developed a lighter form of managed care centered on primary care providers.

The HMO program struggled from the start. Although based in urban areas, surrounding rural counties were included, and it was difficult to contract for certain services in those rural areas. Many physicians disliked the HMO model and were reluctant to sign up to participate at the rates the HMOs were able to offer. Squeezed between provider demands for higher reimbursement and the Legislature’s reluctance to raise capitation payments, several HMOs quickly dropped out of Medicaid managed care.

In 2003, with the state struggling with budget shortfalls, the three remaining Medicaid HMOs demanded an 18% rate increase. OHCA determined that it could operate its primary care program statewide at a fraction of the administrative cost and staff and voted to terminate the HMO program.

Since 2004, most Medicaid patients have been served through a medical home model that uses primary care providers to coordinate patient care while maintaining traditional fee-for-service for most other services. This system has been stable, effective and innovative. The program has expanded its network of primary care providers and specialists in urban and rural areas and receives consistently high satisfaction ratings from its members.

The fundamental flaw of a weak HMO market that doomed the state’s earlier managed care experiment still holds. Fewer than one in 10 Oklahomans are insured through HMOs, among the lowest rates in the nation. It is no surprise that rural providers are especially wary of moving to an HMO-based system.

Pushed by the governor, OHCA seems ready to end a cost-efficient model of health care delivery that fits Oklahoma well and return us to an HMO model that failed once already. Legislators should step in to make sure that the mistakes of the past aren’t repeated.

Blatt is the George Kaiser Family Foundation Professor of Practice at the University of Oklahoma and former director of Oklahoma Policy Institute.