Highlight on Oklahoma: Budget cuts are leaving providers weak

An Oklahoma budget deficit is leading to actual and proposed rate cuts that could have a dramatic impact on patients and providers.  This month, the State Medicaid agency proposed to cut Medicaid (SoonerCare) provider rates by 25 percent, and the State Health Department eliminated state funding for community health centers. Mental health care providers are also hurting under the strained budget with the Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) taking on $13 million in new budget cuts.


The Oklahoma Health Care Authority (OHCA) announced that the 25 percent rate cut could begin impacting providers on June 1, 2016. The rate cuts would impact reimbursement for all 46,000 SoonerCare providers, including hospitals, physicians, durable medical equipment suppliers, nursing facilities and pharmacies. The cuts could have a substantial impact on the 800,000 Oklahomans that are beneficiaries of the program, 524,000 of which are children. Some Medicaid providers in the state have already said the cuts will be so devastating that they will either have to reduce salaries or stop treating SoonerCare patients altogether. Nico Gomez, CEO of the OHCA, said that in addition to the impact of providers that stop accepting SoonerCare, many rural providers might move their businesses to larger communities in order to remain financially stable. Because the program receives federal matching funds, the $64 million rate cut will reduce SoonerCare funding by $164 million in combined state and federal funds.


Oklahoma is currently operating with a physician shortage. Now, with lowered Medicaid reimbursement rates, there are concerns that the state will have an even harder time retaining and recruiting doctors. The cuts also hit community Health Centers. By cutting all state funding for federally qualified health centers (FQHCs), facilities that 175,000 Oklahomans use for primary, dental and mental health care services, the state took away an important source of care for individuals that do not have health insurance. Funding for the community health centers was provided through the uncompensated care fund, but because that fund has been steadily shrinking, the state department of health was forced to pull the funding, which will save the health department about $700,000 for the remainder of the year. Some community health centers, like Variety Care are being forced to reduce hours and the services they offer to stay open. Variety Care CEO, Lou Carmichael, said that the result of the cuts is that individuals without insurance will go to hospitals for primary care.

Mental Health

The $13 million in cuts to mental health is being tacked on to $22.8 million in cuts made since January. Because the state relies on federal matching for many mental health services, the total impact of the cuts will be even higher, almost $40 million. The new cuts are feared to be more impactful than the first round because they more directly impact front-end treatments to help those suffering from mental illness and substance abuse. The cuts include a $7 million reduction in the payments to private mental health and substance abuse facilities, which come a year after those facilities provided $12 million in services that ODMHSAS was unable to pay for. The cuts are also forcing reductions in the number of therapy sessions available to children and adults with mental illnesses and substance abuse disorders. How much strain providers can endure remains to be seen, however, as the cuts keep coming, lawmakers are falling under growing pressure to provide greater funding to the state’s health care programs.