Oklahoma legislators on Friday approved plans to revamp the state's Medicaid program into a value-based health care model that incentivizes providers to improve patient health.
The plan includes some elements of the Medicaid managed care plan the Stitt administration tried to implement last year, but lawmakers were directly involved in crafting the details this time.
The Oklahoma Supreme Court last year ruled the Oklahoma Health Care Authority, which oversees the state's Medicaid program, exceeded its authority in trying to implement managed care.
The House on Friday gave final passage to legislation that would give the agency the authority to pursue managed care and lays out a framework for the agency to do so.
The bill that now goes to Stitt's desk would let the Health Care Authority enter into "capitated contracts" for companies to oversee care for some Medicaid recipients. In other words, the state would pay companies a flat fee for every person covered under the contracts.
The complex measure passed the House with no questions and no debate.
"We've set up a system under the belief that value-based care is a better way for us to improve the health outcomes of the people of Oklahoma than what we have been doing," said Senate Floor Leader Greg McCortney, the bill's author.
The state's Medicaid program currently operates under a fee-for-service model in which health care providers are paid for each service performed.
Managed care proponents say the bill will provide budget certainty for one of the state's most expensive programs, where costs continue to rise. But some Republicans and several Democrats voted against the measure.
Senate Bill 1337 would make a key change to the public bidding process for awarding managed care contracts. Local provider-led entities would be given preferential treatment for bids, which McCortney, R-Ada, said would give such entities a leg up over the insurance giants that operate managed care organizations.
When pursuing managed care last year, the Health Care Authority awarded contracts to four major insurance companies. Provider-led entities are groups or organizations that are more directly involved in providing patient care.
"Personally, I'm not a huge fan of managed care, but it can work if we manage it right," said Rep. Marcus McEntire, who co-authored the legislation. "With having Oklahoma companies, Oklahomans taking care of Oklahomans, that changes the outlook on it for me."
Under the legislation, the Health Care Authority could award contracts to at least three entities to provide health care coverage statewide.
SB 1337, which has evolved throughout the legislative session, is the result of months of discussions involving lawmakers, officials from the Health Care Authority and various stakeholders. Legislative leaders last year formed a working group on the issue.
"Hopefully, it'll be transformational for the way we think about health," McEntire said. "Only time will tell."
A companion bill that also goes to the governor's desk would alter the Supplemental Hospital Offset Payment Program, a fee paid by some Oklahoma hospitals that allows the state to draw down federal matching funds. The change is expected to significantly increase funding for rural hospitals.