Group sues Oklahoma Medicaid agency over privatized managed care plans

OKLAHOMA CITY — A group of local health care providers is suing the state's Medicaid agency over its request for proposals seeking entities to implement privatized managed care.

A newly formed company made up of eight Medicaid providers requested the Oklahoma Supreme Court compel the Oklahoma Health Care Authority to alter and reissue its request for proposals to award multibillion-dollar contracts for companies to oversee care for many of the state's Medicaid recipients.

The state agency and its CEO Kevin Corbett are named in the lawsuit filed Monday.

Equity Group Advancing Access and Services alleges OHCA's public bidding process for the managed care contracts does not, as was intended under state law, give preferential treatment to local providers already serving Medicaid patients.

"The OHCA released an RFP (request for proposals) that is flawed and circumvents state law," Variety Care president and CEO Lou Carmichael said in a news release. A member of the equity group's board of directors, Carmichael helped form the group in March.

"As written, the RFP makes it impossible for any Oklahoma-based PLE (provider-led entity) established under state statute to submit a competitive bid as the requirements in the RFP are written in such a way that no newly formed entity could ever win a contract."

Under a managed care or privatized Medicaid model, the OHCA will contract with outside companies to oversee the delivery of services for a majority of the more than 1 million Oklahomans receiving Medicaid benefits through SoonerCare.

The lawsuit argues the language in the RFP is nearly identical to a managed care RFP the agency issued prior to legislation passed last year that aimed to give Oklahoma medical providers a leg up in the bidding process that will undoubtedly include bids from national insurance companies.

The state Supreme Court struck down the OHCA's previous attempt to implement privatized managed care, saying the agency didn't have the authority to act without approval from the Oklahoma Legislature. That led lawmakers last year to pass Senate Bill 1337, which authorizes managed care and details how the OHCA should give preferential treatment in the bidding process to local provider-led entities.

The equity group argues it was disenfranchised in the bidding process because the RFP sought historical documentation that no newly formed entity could possibly provide. After expressing concerns to OHCA, the agency updated the RFP, but the lawsuit argues the changes were minor and did not undo the inherent bias against newly formed provider-led entities.

The lawsuit calls for the RFP to be declared null, void and unenforceable.

The lawsuit also alleges OHCA's plans violate state law because of the delayed timeframe to implement managed care. SB 1337 requires the Medicaid changes to take effect by Oct. 1. The state pushed back implementation of managed care until April 2024, according to the lawsuit.

OHCA issued its RFP in November. The agency is required by law to choose at least three entities, including one provider-led group, to offer health care coverage statewide. Its unclear when OHCA will announce the selected companies.

Former Democratic state Rep. Collin Walke, now an attorney at Hall Estill in Oklahoma City, is representing the group that brought the lawsuit.

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