Practice Management Insight

May 2010

A report on events affecting Oklahoma providers

The following is from the Oklahoma Health Care Authority SFY2011 Budget Perspective:

“In state fiscal year 2010, the Oklahoma Health Care Authority trimmed more than $38 million in state funds from the SoonerCare program including $4.3 million from its administrative costs. The last $5 million of the budget reduction came in the form of a 3.25 percent overall provider rate cut effective April 1. These cuts ultimately resulted in a total program reduction of more than $110 million because of the corresponding reduction in federal Medicaid matching funds not including the loss of an additional $38 million in federal economic stimulus money.

“Looking ahead to state fiscal year 2011, the Oklahoma Health Care Authority estimates it will need $1.098 billion in state funds to run the program as statutorily directed to cover the increasing growth in the number of people and the increased utilization of health care services. The agency expects to serve more than 894,000 Oklahomans in the upcoming fiscal year, 200,000 more people than served in state fiscal year 2005.

“We have been asked to assume and appropriation of $937 million, less 10 percent (or $94 million) for a revised appropriation of $843 million as the state funding level for July 1. With this assumption, the agency estimates it will need $255 million in program cuts to achieve a balanced budget.

“ … This does not include the additional loss of more than $100 million from federal economic stimulus money for the six-month period of July through December 2010.

“… At a 10 percent reduction level, a $29.5 million reduction in optional services (which does not result in real savings) leaves $162 million left to be cut primarily from what the agency pays for services to adults and children. This would result in an overall provider rate reduction of 19 percent. In state fiscal year 2011, the agency estimates an annual savings of $8.7 million state dollars for each percentage point cut in overall provider rates.

“To file a balanced budget at the 10 percent reduction level, the agency must reduce the program by $255 million state dollars which requires a total program reduction of more than $1 billion dollars due to the loss of federal Medicaid matching dollars. A 10 percent cut in appropriation below current year base is actually a 30 percent cut due to the need to fund the unavoidable increase in qualified people and increase in people accessing services. It also slashes the total OHCA SoonerCare (Medicaid) program by almost one-third ($3.5 billion - $1 billion = $2.5 billion).

“This would impact more than 10,000 contracted physicians and another 3.500 physician groups in clinics. The agency contracts with more than 1,100 pharmacies, 900 dentists, 350 nursing facilities, 1,000 behavioral health providers and 700 hospitals. Anecdotally, we know that there are nursing homes, pharmacies and behavioral health providers whose Medicaid revenue comprises more than 80 percent of their total revenue.

“According to a recent Oklahoma State Medical Association survery, more than two-thirds of physicians will stop seeing SoonerCare members if rates are cut 10 percent. ….”

Behavioral Health Provider rates may be cut another 10 percent

What can you do?

To take action, please email your state legislatures to let them know the importance of mental health and the impact that it will have in our communities and with our clients.

Mike Jackson           [email-masked]

Patrick Anderson     [email-masked]

See also OCARTA’s action plan.

Also click to read “More Budget Cuts Could Decimate State’s Mental Health, Addiction Treatment Services, odmhsas Tells Lawmakers”