What comes next after Supreme Court strikes down managed care plan? (Capitol Update)

The Oklahoma Supreme Court ruled last week that the actions of the Oklahoma Health Care Authority (OHCA) implementing a capitated managed care plan — at the direction of Gov. Stitt — violated state law and was therefore void. The Court said OHCA acted without legislative authorization and without first adopting necessary administrative rules for the bidding process.

OHCA tried to bootstrap legislative authority to start a new managed care system from an old statute that created a previous managed care model in the 1990s. That model had been implemented and abandoned. The rules pertaining to it had been repealed later by OHCA. The court, in a detailed opinion, said the previous statute did not authorize a new managed care system.   

The ruling was correctly reported as a 6 to 3 decision, but it doesn’t appear the case was that close in reality. The three dissenting opinions said nothing indicating the dissenters approved of the OHCA actions. They spoke to the effect of Senate Bill 131 that was passed in the last days of the session and allowed to go into law without the governor’s signature. One of the dissenters felt SB 131 belatedly authorized a managed care model, and the other two said they would like a show cause hearing on the legal effect of SB 131. The majority decided to make their ruling without wading into the effect of SB 131.

SB 131 was passed as a “guardrail” bill to put in place protective requirements and limitations on any Medicaid managed care program to be implemented by OHCA. The idea was to protect Medicaid providers and recipients from potential abuses by managed care organizations. According to the Senate author of SB 131, Sen. Greg McCortney, R-Ada, the bill “was written in a world where it was assumed, because of the governor’s actions that the governor had that authority, and so we were trying to reclaim the authority. Now if you read 131 in a world where the governor didn’t have the authority, I do think that some attorneys could read it as us giving the authority but that was never, ever the intent of the legislature.” The legislative intent of the bill was “never to give the governor a new authority to do managed care,” according to McCortney. The Court will, of course, discern the legislative intent from the language of the bill itself.

With the ruling of the Supreme Court and the confusion over the extent to which SB 131 gives any new authority to the governor or OHCA to implement a managed care plan, it would be wise to hold up and see if the governor, the legislature, and the medical community that filed the lawsuit can find a way to implement a Medicaid plan that works for everyone. After all, it is the doctors, hospitals and other clinicians who do the work of providing the services paid for by Medicaid. 

One would hope the governor, once burned by the Court, would not try to plow ahead with his own interpretation of SB 131 against stated legislative intent and attempt to implement a managed care plan. Rep. Marcus McEntire, R-Duncan, had the best idea saying, “It is time to bring in all the stakeholders to negotiate a deal in good faith that ensures our Medicaid members receive quality care and our health providers are supported.” 


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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