Press Release

March 23, 2017

OHCA Contacts: Jo Stainsby - (405) 522-7474, Cate Jeffries - (405) 522-5616

OHCA board hears budget scenarios

The Oklahoma Health Care Authority (OHCA) board was presented various appropriations scenarios for state fiscal year 2018 during their board meeting March 23.    

At the request of state leadership, agency staff put together scenarios ranging from a 5 percent to a 15 percent reduction in state appropriations. Following the March 2017 revenue failure, OHCA’s revised base appropriation is $986.4 million for state fiscal year (SFY) 2017.     

Chief Financial Officer Carrie Evans told the board that even a flat appropriation to the agency for SFY18 would result in reductions to the program due to shrinking federal funds and growth and utilization increases. To meet a flat appropriation, the agency will have to make an across-the-board provider rate reduction of 8 percent. Evans noted that for every 1 percent in provider rate reductions, there are state savings of $8.6 million. Should the agency’s appropriation be reduced by 15 percent, the provider rate reduction will increase to 25 percent.    

Evans noted that these budget and rate reduction calculations are based on the assumption that Congress extends the Affordable Care Act (ACA) Children’s Health Insurance Program (CHIP) enhanced federal matching funds through federal fiscal year 2019. If the CHIP funds aren’t extended, the OHCA will need an additional $49 million for SFY18. Provider rate reductions could increase to as much as 14 percent for a flat appropriation up to 31 percent for a 15 percent appropriation reduction. 

The scenarios are based on 12 months of savings. The agency needs at least 30 days for public notice requirements in order to implement a provider rate reduction. These reductions will affect all provider types including hospitals, physicians, pharmacy, durable medical equipment suppliers and nursing facilities. The OHCA currently contracts with 45,013 providers.     

OHCA has filed a budget request that includes an increase of $118 million to operate the program in SFY18. The increase would fund growth and utilization, replace one-time carryover and funding, and cover decreases in federal funds.     

“Following the request from state leadership, we felt compelled to share this information with our board in order to prepare them for the possibility of having to vote on a provider rate reduction in the near future,” said OHCA CEO Becky Pasternik-Ikard. “We must consider whether we will have viable access to the SoonerCare program if we have to continue to reduce payments to our providers. There is no good way to measure the impact of these potential reductions on providers. We do not know the tipping point, but we can reasonably speculate that with continued rate reductions we would lose providers, both urban and rural, across all provider types. When a state changes provider reimbursement rates, the agency must also revise its Access Monitoring Review Plan, which provides our federal partner, the Centers for Medicare & Medicaid Services (CMS), information on adequate access to care for SoonerCare members. Those changes must be approved by CMS.”   

Since SFY2010, more than $400 million in state and federal funds has been cut out of OHCA’s budget. In 2010, the agency made targeted program reductions, administrative cuts, and implemented a 3.25 percent provider rate reduction in order to balance the budget.     

In 2015 when state revenue dipped, the agency made strategic changes to the program and implemented a 7.75 percent provider rate reduction. In 2016, when agency leaders recognized that revenues were continuing to fall, the agency reduced provider rates yet another 3 percent.    

OHCA’s portion of the 2017 revenue failure was small enough ($4.7 million) that the agency was able to absorb the cut, through current year budget savings, without making further rate reductions. Physicians are currently reimbursed at 86.57 percent of the Medicare fee schedule.    

To view the complete board agenda and appropriations scenarios, visit http://www.okhca.org/board-meetings.

 

The Oklahoma Health Care Authority (OHCA) administers two health programs for the state. The first is SoonerCare, Oklahoma’s Medicaid program. SoonerCare works to improve the health of qualified Oklahomans by ensuring that medically necessary benefits and services are available. Qualifying Oklahomans include certain low-income children, seniors, the disabled, those being treated for breast or cervical cancer and those seeking family planning services. The second program OHCA operates is Insure Oklahoma, which assists qualifying adults and small business employees in obtaining health care coverage for themselves and their families. Currently, there are 819,410 Oklahomans enrolled in OHCA’s programs. The agency contracts with a state-wide network of 45,013 providers. For more information, visit www.okhca.org or www.insureoklahoma.org.