Push to privatize Medicaid could disrupt care for seniors and Oklahomans with disabilities

Photo by Ben Smith / CC BY-SA 2.0
Photo by Ben Smith / CC BY-SA 2.0

As directed by a law created last year, the Oklahoma Health Care Authority (OHCA) spent much of the fall exploring options to move the roughly 180,000 SoonerCare patients who are aged, blind, or have one or more disabilities (ABD) into privatized, managed care.  In November, OHCA reported that they would develop a request for proposals from private companies to offer this care statewide under a “fully capitated” model. That means private health insurance companies contracted by the state would receive a set per-member, per-month payment and would be responsible for providing the full range of health care services to those who sign up or are assigned to their plan.

Some long-standing providers of services to frail seniors and those with disabilities might be left out of the new managed care networks. Many organizations serving or representing Oklahomans who are aged, blind, or have a disability, as well as their family, friends, and caretakers, have been up in arms over the proposed changes. Their concerns have merit. In states that have turned care management for similar populations over to private organizations, the process has been rocky at best.

Care disruptions

A central issue across states when transitioning Medicaid patients with complex medical needs to managed care organizations is large disruptions in the care those members receive. Here’s a non-comprehensive list of what’s happened in other states:

  • In Kansas, Iowa, and Kentucky, some members with severe chronic illnesses and disability reported that their care and coverage were significantly cut when they were assessed by the private organizations, despite no change in their conditions.
  • In Kentucky, an evaluation of the first year of privatized care by the Urban Institute reported, among other issues, “difficulty maintaining continuity of needed prescription medications for chronic conditions,” “claims denials resulting in higher levels of appeals,” and “behavioral health service gaps…reportedly exacerbated.” Providers reported significant payment disputes that left their offices unpaid for months, and Kentucky advocates reported that rural community mental health centers limited or cancelled plans because the managed care companies weren’t authorizing enough treatment to allow the providers to break even.
  • Lengthy enrollment and renewal glitches have left an estimated 10,000 Kansans in limbo, including members with chronic diseases who can’t wait to access care until their membership is untangled but also can’t afford to pay thousands of dollars out of pocket. Kansas care providers have been left on the hook for unreimbursed costs, and hospitals with these “Medicaid-pending” patients who need to transfer to long-term care can’t locate facilities that will agree to take the patients because they don’t know how long it will take for the care to be reimbursed.
  • Despite lawsuits, Florida families still encounter devastating gaps in pediatric coverage, leaving parents struggling to locate providers for even very ill children.

Questionable savings

States have privatized their Medicaid programs in hopes of incentivizing savings, but it’s hard to find clear evidence of that savings. In 2012, the Robert Wood Johnson Foundation reviewed state savings, increased access to care, and improvements in care for Medicaid managed care; its results were inconclusive. That same year, the Kaiser Family Foundation reported:

While managed care may be able to generate savings over time by improving access to preventive and primary care and more effective management of chronic conditions, savings from improved utilization patterns are unlikely in the short-term, and budget-driven efforts to achieve savings from managed care could have adverse consequences for beneficiaries’ access to needed care.

It’s not clear what level of savings could be generated in Oklahoma. In the 22 responses to OHCA’s request for information in 2015, savings projections varied widely, although most respondents assumed some reduction in health care utilization. Another concern is that Oklahoma tried privatized Medicaid before but terminated the program when costs went through the roof. Today, Oklahoma’s Medicaid payments per enrollee are well below all but one state with a high percentage of Medicaid patients in managed care.

It’s also unusual for states to try to generate savings out of the most medically-frail patients. In most states with Medicaid managed care, enrollment for aged and disabled populations underpaces that of the general population. When crafting expansions of their Medicaid programs, both Arkansas and Montana built in exceptions for medically frail patients, keeping them enrolled in traditional Medicaid rather than moving them into private coverage. Yet Oklahoma is moving in the opposite direction by creating a new Medicaid managed care system only for Oklahomans who are aged, blind, or disabled.

The bottom line

Although it’s possible that moving Oklahoma’s aged, blind, and disabled population into privatized care could generate some savings, evidence suggests that those savings would be realized slowly if at all. In the meantime, the transition would likely disrupt health care for Oklahomans with complex care needs and put health care providers at risk. Some legislators are taking these concerns seriously. Sen. Rob Standridge (R-Norman) has filed legislation designed to put the brakes on implementation of Medicaid managed care (SB 1500, SJR 56), while Rep. Johnny Tadlock (D-Idabel) has proposed delaying implementation for some groups (HB 2308). Hopefully lawmakers will take heed of the warnings and reconsider this risky experiment with the most vulnerable Oklahomans.

Learn More // Do More


Carly Putnam joined OK Policy in 2013. As Policy Director, she supervises policy research and strategy. She previously worked as an OK Policy intern, and she was OK Policy's health care policy analyst through July 2020. She graduated from the University of Tulsa in 2013. As a student, she was a participant in the National Education for Women (N.E.W.) Leadership Institute and interned with Planned Parenthood. Carly is a graduate of the Oklahoma Center for Nonprofits Nonprofit Management Certification; the Oklahoma Developmental Disabilities Council’s Partners in Policymaking; The Mine, a social entrepreneurship fellowship in Tulsa; and Leadership Tulsa Class 62. She currently serves on the boards of Restore Hope Ministries and The Arc of Oklahoma. In her free time, she enjoys reading, cooking, and doing battle with her hundred year-old house.

5 thoughts on “Push to privatize Medicaid could disrupt care for seniors and Oklahomans with disabilities

  1. Propaganda. There are plenty of facts out there that refute this story. Google the Texas Association of Health Plans and see plenty of data for 17 plus years that shows savings and quality of care. OK is near the bottom in many metrics—you won’t get better doing the same thing. Google the Kaiser Foundation or HMA and read their reports concerning bringing managed care into Medicaid. Plenty of good news.

  2. Great article on the challenges on managed care on the most vulnerable population of Oklahoma. The additional challenges not mentioned is the burden on the providers as well in dealing with multiple managed care companies and each of their individual payment requirements versus one entity as it is now. In addition there also comes CMS’s future grandfathering in of dual eligible beneficiaries which will require providers to adhere to Medicare regulations and adds additional administrative paperwork and labor not to mention risk of audits or reimbursement rejections. With the transformation of CMS (Medicare) transitioning to value-based care, connecting the states Mediciad program will ensure that benefits will decline if managed by the insurance industry that only knows how to manage patient populations like CMS. I would hope Oklahoma would want to find another solution for our most vulnerable population so we can continue to provide at least the same care we currently are versus less care to more people.

  3. Reference the last comment. The state can set a common standard or reference for payment requirements for both payers and providers to get the on the same page. Right now on commercial insurance contracts providers deal with multiple payers just fine. CMS is following the lead of the private sector in paying for quality and value based contracting. Most of the MCOS are doing this quite well on commercial contracts. In fact, in a dozen other states where MCOS are providing services for the ABD population, quality has been raised, waiting lists have been shortened or eliminated and costs contained without sacrificing care to the most vulnerable. 30+ states are operating Medicaid in a MCO environment and have moved up the ladder in health rankings.

  4. It is unfortunate that this kind of propaganda gets thrown out when the State is trying to come up with a meaningful solution for Care Coordination for these Medicaid and Medicare members. The current system is fragmented and wasteful. Go talk to an Advantage Waiver provider and they will tell you that there are huge unmet behavioral and physical health needs for this population. The managed care organizations that served Oklahoma Medicaid members in the late 90s and early 2000s were contracted to deliver all medically necessary services for their patients. The current program is filled with benefit limitations that keep members from receiving the services they need to keep them out of the hospital. In addition, CMS has dramatically changed the manner that health plans are evaluated and reimbursed. The Medicare Star program tiers health plans based upon their success fulfilling member needs. Reimbursement for their services is directly tied to their success ensuring that members receive the services they need to maintain their health.

    I appreciate the work that the Oklahoma Policy Institute has done for Oklahoma over the last several years, but you are on the wrong side of this issue.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.