New GAO report details problems with managed care (Capitol Update)

Recently Sen. Rob Standridge, R-Norman, issued a press release expressing his continued opposition to the Medicaid managed care proposal of Gov. Stitt. The Oklahoma Health Care Authority (OHCA) issued a Request for Proposal for insurance companies to bid on becoming a managed care organization (MCO), and contracts for three to five MCOs are expected to be awarded shortly before the legislature goes into session. However, legislation may be needed to fully implement the plan. 

Privately operated MCOs are paid a per capita fee for each covered Medicaid beneficiary, and for the fee they agree to provide all necessary health care services. The advantage of managed care is said to be that MCOs have flexibility to provide more creative preventive health care, while OHCA pays a “fee-for-service” for treatment. Proponents of managed care claim that more robust preventive care will improve the overall health of Oklahomans and save the state money. Opponents fear that private insurance companies will either cut services to beneficiaries, cut pay for providers, or lobby the state for increased funding in order to maintain profits. 

The key to success for managed care will be determining and measuring success. Fee for service is fairly easy to monitor. When treatment for illness, or preventive care such as immunizations and screenings are necessary, the provider is entitled to be paid after each service is provided. But where an MCO is paid a per capita fee up front for future services to be provided, it’s trickier to measure the value and success of the services.

The occasion for Sen. Standridge’s comments is a U.S. Government Accounting Office (GAO) report released on Dec. 16 finding access and quality problems in managed care. The GAO report found that in 5 of the 6 selected states, one or more MCOs had problems with authorizing services or notifying beneficiaries of changes to their services. In Virginia, 3 of 6 MCOs inappropriately reduced services in 33 percent to 53 percent of the cases reviewed. Moreover, 5 of the 6 selected states had one or more MCOs that did not adequately coordinate or monitor quality of care for beneficiaries.

It is unfortunate, but not surprising, that providing health care is so politically difficult. Health care is a universally needed service involving billions of public dollars that has been a divisive issue for decades. In Oklahoma, it took an initiative petition to expand Medicaid, which will bring a huge infusion of new Medicaid dollars to the state. Managed care, having failed before in Oklahoma, has returned to the legislative agenda for the past several sessions but could not garner enough support to pass. Having opposed Medicaid expansion, the Governor now proposes to privatize management of Medicaid dollars with managed care. Sen. Standridge is a strong voice in opposition, but there are strong voices on both sides.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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