Oklahoma House OKs Medicaid Reform Bill

Published May 1, 2006

The Oklahoma House on March 13 approved a sweeping new reform bill that would fundamentally change how Medicaid delivers health care in the Sooner State.

Oklahoma House Bill 2842, “The Medicaid Reform Act of 2006,” authorizes the Oklahoma Health Care Authority–the state agency charged with administering the program–to petition the federal government for a waiver allowing Medicaid beneficiaries to own a “personal health account” to pay for medical expenses, among other reforms. At press time, the Oklahoma Senate was considering the bill.

Adding Consumer Control

The legislation is the result of 14 recommendations offered by the Oklahoma House Medicaid Reform Task Force, which spent six months last year on a “fact-finding” tour talking to Medicaid recipients, policy experts, and other health care stakeholders about their recommendations for reform.

“The Medicaid Reform Act of 2006 recognizes the fact that Oklahoma has a broken, outdated system,” said bill sponsor Rep. Kris Steele (R-Shawnee), who also chaired the state’s House Medicaid Reform Task Force, a group specially convened to investigate reform options. “In talking with Oklahomans, we’ve found that the Medicaid program is plagued with a lack of access to care, a lack of health literacy, and no incentives for Medicaid consumers to use the program wisely.”

One of the bill’s provisions would allow insurance companies to compete in a “Medicaid marketplace” and offer varying benefit packages, all of which would include the federal minimum package of mandatory services. Medicaid recipients would be able to use a risk-adjusted amount in their personal health accounts to pay for a benefit plan, or they could opt out of Medicaid altogether and purchase health insurance through their employers.

Eliminating Multiple Systems

Supporters say this would help eliminate the current two-tiered medical system and would confer the benefits of high-quality, private health insurance to those on public assistance.

“Individuals, not the government, are best-suited for making decisions about their own health care,” said state Sen. Brian Crain (R-Tulsa), a supporter of the legislation and the bill’s original Senate sponsor. “By introducing competition into the system, we can allow individuals the flexibility to customize a health care plan to meet their needs.”

Steele said the task force had incorporated into the legislation “best practices” of other states’ market-based proposals, including Florida’s consumer-directed Medicaid plan, which is set to debut in June. Both the Oklahoma and Florida plans include provisions that encourage preventive care and offer financial incentives for healthy lifestyles.

Targeting Medicaid Fraud

“I am encouraged that the Oklahoma legislature is joining Florida in providing consumer choice and better care for Medicaid beneficiaries,” said Florida state Rep. Gayle Harrell (R-Port St. Lucie), a key legislative player in her state’s Medicaid reform effort. “Patient empowerment, marketplace competition, access to quality care, and cost stability are worthy goals that Florida, Oklahoma, and every state should strive for in reforming Medicaid.”

Oklahoma’s plan provides for the establishment of an electronic prescription system and a provider database that tracks utilization of Medicaid services.

“Using this new technology will help weed out fraudulent Medicaid claims and curb often-fatal medical errors,” Crain said. “If we save one life, the system will have proven its value.”

The bill also appropriates $93 million to fully reimburse doctors and hospitals for the costs of serving Medicaid patients. According to the Oklahoma Hospital Association, hospitals in the state currently get only 62 cents for every dollar of treatment provided to state Medicaid patients. Bill advocates say paying providers at market value helps reduce overutilization, as low reimbursement rates may cause providers to perform unnecessary medical tests in order to stay profitable.

“Fully reimbursing Medicaid providers is essential in ensuring quality health care,” Crain explained, “and it gives providers a market incentive to see more patients, which broadens access to care.”

Causing Controversy

The bill’s most controversial provision would eliminate some costly state-mandated benefits–such as dental anesthesia and bone-density testing–from the Medicaid program. However, it would ensure that many of those services are included in at least one of the new Medicaid benefit packages available for selection.

Oklahoma’s current Medicaid program is already exempt from insurance mandates, Steele noted. The bill would keep federally mandated benefits intact while allowing beneficiaries to choose the optional Medicaid services that suit them.

“For example, women and children comprise two-thirds of Medicaid recipients, so they wouldn’t need coverage for prostate screening,” said Steele. “They could instead choose a plan that includes mammography screening or audiological services for children.”

Reaching Compromises

Crain said the Oklahoma Senate will maintain the integrity of the House’s mandated benefits language, while working to make opponents “more comfortable” with what they perceive as draconian service cuts.

“Interest groups are always fearful of changes that affect them,” Crain said, “and the Senate will work to make them partners in change.”

Steele said he was pleased the bill has crossed over into the Senate, and that he was “cautiously optimistic” his language would survive a House-Senate conference committee and Gov. Brad Henry’s (D) veto pen, given its bipartisan support.

Crain agreed.

“The governor should recognize the need for reforming Medicaid, whether or not he chooses to do so,” Crain said. “Oklahoma’s Medicaid budget has doubled in seven years, and if we don’t enact fundamental reforms, Medicaid won’t be around to protect our state’s most vulnerable citizens.”

Christie Raniszewski Herrera ([email protected]) is director of the Health and Human Services Task Force at the American Legislative Exchange Council in Washington, D.C.