Nico Gomez, CEO of the Oklahoma Health Care Authority. Credit: Warren Vieth / Oklahoma Watch

State health care officials say they might be forced to proceed with a June 1 pay cut to Medicaid providers even if the Legislature enacts Gov. Mary Fallin’s proposals to ease the budget crisis.

The Oklahoma Health Care Authority already has started a 60-day clock ticking for a proposed 25 percent reduction in the money it pays for treating poor people enrolled in SoonerCare, the state’s version of Medicaid.

Fallin issued a revised 2017 budget plan this week that would provide more funding for the Health Care Authority, essentially restoring the amount originally budgeted for this year. That amount was later reduced because of unexpected revenue shortfalls.

But even if state lawmakers accepted Fallin’s ideas in their final rounds of budget negotiations, the restored funding would not be quite enough to eliminate the need for a provider rate cut, according to Health Care Authority CEO Nico Gomez.

Gomez was traveling Friday and could not be reached for an interview. But he issued a statement in response to questions posed by Oklahoma Watch:

“While we recognize there are a lot of moving parts to consider, the OHCA has to operate under the information we currently have, which means we must proceed with the proposed provider rate cuts,” Gomez said.

“Once there is an approved budget agreement, those proposed cuts may require adjustment. Should we receive an additional $63.8 million as requested by the governor’s budget, the OHCA would still be short about $35 million. Being short by this amount would reduce the proposed provider rate cuts to an estimated 4 percent across-the-board rate cut.”

The authority is holding hearings across the state to hear comments from SoonerCare providers and other people affected by the proposed rate cuts, scheduled to take effect June 1.

SoonerCare provides services to nearly 800,000 low-income Oklahomans, including about 523,000 children. Its programs are financed by a combination of federal and state funds. Over the past two years, budget cuts have reduced total funding by $868 million, the authority said.

The rate cuts would affect 46,129 providers who contract with the authority to treat poor children and working adults. SoonerCare pays doctors about 87 percent of what Medicare pays them to treat people 65 or older. The 25 percent rate cut under consideration would reduce the reimbursement to 65 percent of Medicare.

The prospect of big cuts has sparked opposition among medical groups, who predict some rural practitioners might quit treating Medicaid patients or relocate to other areas, and some nursing homes might close. (Medicaid funds are used to help pay for long-term nursing home care for the elderly.)

The impact is expected to be severe in rural parts of the state, where poverty rates are higher and fewer doctors receive “enhanced” Medicaid payments in exchange for mentoring student physicians.

Dr. Dwight Sublett, a Stillwater pediatrician, said his medical group could probably survive a rate cut, at least for a few years, because it receives enhanced reimbursements as a result of its affiliation with Stillwater Medical Center.

“Our concern is with the doctors in the smaller communities,” Sublett said “It’s very hard for people like that to survive (big rate cuts). That could be very hard on rural Oklahoma.”

Pediatricians are among the harder-hit specialties because so many SoonerCare recipients are children. Sublett said about half his caseload consists of Medicaid enrollees, and he knows doctors with 70 percent to 80 percent caseloads.

One wild card that might avert a June 1 provider rate cut is a proposed $1.50 per pack increase in the state cigarette tax. If the Legislature were to approve that increase quickly and if collections could begin soon enough, it might generate enough funding to make the rate cut unnecessary.

Gomez recently outlined a proposed four-year Medicaid “rebalancing” plan that included the cigarette tax increase. The Oklahoma Hospital Association urged lawmakers this week to approve the tax hike.

But the odds of that happening soon enough to avert the rate cuts appear slim. The cigarette tax hike was not among the new ideas proposed by Fallin this week. Its approval would require a three-fourths “supermajority” in both houses of the Legislature. It would need to win speedy approval in the next few weeks, and it already has encountered significant political opposition.

“The threat is still there,” said Carly Putnam, health care analyst at the Oklahoma Policy Institute, a non-government research and advocacy group in Tulsa. “It could be less than 25 percent, but I think that 25 percent is a definite possibility.”

Health Care Authority spokeswoman Jo Kilgore said the agency believed it should move ahead with the 25 percent cut because it remains unclear what and how soon the Legislature might do anything to mitigate the need for the reductions.

“That’s what we’re doing, telling providers now that this is where we’re headed. We wanted to make sure everybody knew,” Kilgore said.

“When it gets to the point where we finally have a budget, it would be easier to come down than go up.”

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