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
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
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.