Legislature must act to avoid Medicaid provider rate cuts

Posted on: 10/11/17

SoonerCare payment rates for hospitals and most other providers will be cut 9 percent effective Dec. 1, 2017 unless the Legislature acts quickly to resolve the state’s revenue crisis. All state agencies are required to keep balanced budgets, and the Oklahoma Health Care Authority will not be receiving $70 million because the smoking cessation fee was ruled unconstitutional. On Monday Oct. 9, Finance Secretary Preston Doerflinger told the Oklahoma Health Care Authority, the Department of Human Services and the Department of Mental Health and Substance Abuse Services to make the $215 million in cuts so the state remains within the legal requirements of a balanced budget.

Gov. Mary Fallin called lawmakers into special session on Sept. 25. The action came after the Oklahoma Supreme Court in August ruled that lawmakers violated the law in passing Senate Bill 845. The bill added a $1.50 fee to cigarettes. It was expected to generate $215 million in state dollars. Coupled with a loss in federal dollars, the budget hole is closer to $500 million.

OHCA leadership briefed provider groups and associations on the proposed cuts in an Oct. 9 conference call. OHCA proposes to cut nursing home payments by reducing rates 4 percent, eliminating payment for therapeutic leave days, and ending payment of Medicare coinsurance and deductibles for dual eligible nursing home patients. However, for hospitals, physicians, and most OHCA providers other than nursing homes, the cuts would be 9 percent beginning Dec. 1.  The OHA, the Oklahoma Association of Health Care Providers (OAHCP) and other coalition members are working on educating legislators about what a 9 percent reduction would mean to our members. On Nov. 2, the OHCA State Plan Amendment Rate Committee (SPARC) will hold a public hearing on the rate reductions and make recommendations to the OHCA Board. On Nov. 9, the OHCA Board will review recommendations and make a decision on the balanced budget proposal. We at OHA are hopeful that the $1.50 cigarette tax or another form of revenue will be passed by the Legislature before the Nov. 2 SPARC hearing and before the implementation of cuts on Dec. 1.    

Saving $33.6 million from provider rate cuts will cost the state about $47.4 million in federal matching funds. Total payment reductions over six months would exceed $81 million, and no source has been identified for restoring these cuts in future state fiscal years.

OHCA plans to absorb about $36.6 million of the lost $70 million through one-time savings, such as the carryover of unspent funds from 2017. The agency is also moving forward with four program changes saving $3.2 million in state funds.

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