Last week, the House passed HB 1552 by Rep. Mark McCullough, R-Sapulpa. Inspired by Florida’s Medicaid managed care program, the bill would move the entire statewide Medicaid population, including seniors and persons with disabilities who are receiving long-term care, into managed care plans. If implemented, Oklahoma would be among a small handful of states attempting to serve its entire population through managed care plans.
The result of this bill would be a complete overhaul of SoonerCare. Yet we already tried this idea in Oklahoma on a much smaller scale, and it didn’t work. Before we dramatically change the health care system for the one in four Oklahomans enrolled in SoonerCare, it may be helpful to review the state’s earlier experiment with managed care plans.
In the early 1990s, many states were turning to managed care through Health Maintenance Organizations (HMOs) as a way to control health care costs and provide better coordinated care in their Medicaid programs. Under Governor David Walters, the newly-created Oklahoma Health Care Authority (OHCA) created a pair of Medicaid managed care programs for low-income parents and children. From the very beginning, Medicaid managed care was hamstrung by the weakness of Oklahoma’s HMO market, as noted in a comprehensive 2009 evaluation of SoonerCare by Mathematica Policy Research:
While many in the legislature hoped Oklahoma would establish a fully capitated statewide Medicaid managed care program, OHCA ultimately determined that full capitation would not be feasible outside of the state’s three urban areas (Oklahoma City, Tulsa, and Lawton). There was little experience with managed care in rural areas, and few MCOs seemed willing and able to serve the Medicaid population in those areas. OHCA therefore developed a fully capitated MCO model called SoonerCare Plus to operate just in the three urban areas, and contracted with five MCOs, each of which served one or more of the areas. This model was implemented in July 1995. For rural areas, OHCA developed a partially capitated PCCM program called SoonerCare Choice that was launched in October 1996.
The SoonerCare Plus program struggled from the start. Although based in urban areas, rural counties surrounding Tulsa, Oklahoma City and Lawton were included in the plans’ catchment areas, and it was difficult to contract for certain services in those rural counties. 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 dropped out of Medicaid managed care within the first few years.
In 2003, with the state struggling with budget shortfalls, the three remaining Medicaid HMOs demanded an 18 percent rate increase. According to Mathematica, OHCA “developed an analysis that indicated that [it] could operate the Choice program in the urban areas at one-quarter of the administrative cost of the Plus program and with one-quarter of the staff.” OHCA’s Board then voted to terminate the fully capitated SoonerCare Plus program effective January 1, 2004.
For the past decade, 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 medical services. This system has been stable, effective, and innovative. The program has expanded its network of primary care providers and specialists in both urban and rural areas and receives consistently high satisfaction ratings from its members. Mathematica concluded that OHCA “construct(ed) a Medicaid managed care program that fits Oklahoma well”, and argued that the lesson for other states is that “with sufficient resources and leadership commitment, state Medicaid agencies can manage care at lower costs than MCOs and with similar outcomes.”
If Oklahoma was unable to launch a fully capitated statewide Medicaid managed care program in 1996 or maintain the participation of managed care organizations just in urban areas in the early 2000s, is there reason to expect greater success in 2013? The fundamental flaw of a weak HMO market that doomed the state’s earlier effort still holds. Currently, just 6.7 percent of Oklahomans are insured through HMOs, less than one-third the national HMO penetration rate and the 11th lowest rate in the nation. HB 1552 would move the entire “dual eligible” population of seniors and individuals with disabilities who are covered by both Medicare and Medicaid to managed care; currently, only 16 percent of Oklahoma Medicare recipients are enrolled in Medicare Advantage plans, compared to 27 percent of Medicare recipients nationally. Oklahoma’s rate of HMO penetration and Medicare Advantage coverage are less than half Florida’s, the state blazing the trail that supporters of HB 1552 aim to follow.
In its current form, HB 1552 would put an end to a cost-efficient model of Medicaid managed care that fits Oklahoma well and return us to an HMO model that failed once already. As the bill continues its way through the legislative process, let us at least hope that policymakers who were not around back then take the time to listen to and learn from those who were.