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Stanley Hupfeld: Managed care can work for Medicaid in Oklahoma

Stanley Hupfeld: Managed care can work for Medicaid in Oklahoma


In a recent History Channel special the hundred greatest innovations in the past century were discussed. Surprisingly, the invention of dice was named as a major innovation. We are all familiar with the expression, “roll the dice.” It simply means leaving our future to blind luck.

Every year in our state Medicaid program we leave our result to just that, blind luck. The vagaries of the health status of our state’s most vulnerable population are left to the whims of chance. Any number of circumstances (including a pandemic and a vote on expansion) can significantly alter the state’s fiscal responsibility for the care of its Medicaid population.

The governor has suggested that it is time for Oklahoma to take a more measured approach to how we administer and pay for the care of our Medicaid population. Traditionally, since the advent of Medicaid in Oklahoma, the state has paid Medicaid providers a payment for their services. This process is called fee-for-service. The state is paying for the volume of service, not necessarily the quality or efficacy of those services.

Parenthetically, I will add that the Oklahoma Health Care Authority is the best and quickest payer for health services in Oklahoma. The employees and leadership of OHCA are some of the smartest and most dedicated health workers it has been my pleasure to know. However, the reality is the state of Oklahoma is in dire need of a health transformation. Ranked 46th in health outcomes is not acceptable. Changes must be made.

The governor’s plan is to move from fee-for-service to a managed care environment. At its core, managed care is an effort to shift the risk for the cost of care for Medicaid recipients from the state’s taxpayers to an insurance company. Basically, the state will contract with one or more insurance companies (perhaps partnering with a local hospital or system) to take the financial risk for the total care of a defined part of the Medicaid population. These entities will accept a negotiated fixed premium at the beginning of the care cycle.

In exchange, they will deliver all the care the recipient requires. If they can do this and keep the population healthy, they will profit. If they cannot, they will suffer a loss. The concept is to focus on being proactive in indemnifying that recipients stay healthy and reduce the requirement to use the most expensive parts of the health care system.

Let me give you a small example of how this works. Recently, I was contacted by an organization that acquires and stores mothers’ breast milk from donors to be used for babies whose natural mother cannot produce her own milk. We are all familiar with the nutritional and therapeutic values to an infant receiving breast milk. Here’s the rub. Medicaid now cannot pay for this service because the milk is now considered food and thus not a covered service.

But in a managed care environment, the premium is global, and the contractor is free to do those things such as paying for breast milk which keep people healthy thus reducing the cost of future care.

The concern now expressed by many providers is that we have been here before and that it was a disaster. Indeed, this is very true. A decade ago, health care authority experimented with a managed care program. It did not go well. Many doctors and hospitals in Oklahoma were disadvantaged by slow, delayed, and inadequate payments.

The justifiable outrage was intense. The state eventually eliminated the program. Memories are long. Much of the current reaction on display is a result of these unfortunate memories.

So, what is the difference now? In my opinion OHCA has gone to extraordinary lengths to ensure that the past is not repeated. There are a plethora of protections and safeguards built into the Request for Proposal language that ensure the state’s providers will not be disadvantaged. For instance, the contractor will be held to a tight rein on how much they will be allowed for profit and overhead.

So, too, the quality, patient and provider reactions will be closely monitored. As chair of OHCA I am confident the mistakes of the past will not be repeated.

The truth is, for the fiscal integrity of the state and for the opportunity to improve the health of its clients OHCA needs to change course. Simply relying on a roll of the dice is no longer prudent.

Stanley Hupfeld is chairman of the Oklahoma Health Care Authority.

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Stanley Hupfeld is chairman of the Oklahoma Health Care Authority.

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A capitol is always a noun, specifically a building where a legislative body meets, the column says. It is routinely capitalized, as in the U.S. Capitol or the Oklahoma Capitol. It can be lowercase when used as I did at the beginning of this paragraph in writing about a nonspecific capitol. Capital can mean a lot of things.

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