"The problems with Medicaid are creating a perfect storm for the Health Care Authority, because at a time they have to operate on less money, they're having to serve more and more people," said Rep. Doug Cox, a Republican and emergency room physician from Grove who chairs the House committee that oversees Medicaid spending.
The Health Care Authority already was requesting $144 million in new funding from the Legislature this year, a large portion of which is to cover an increase in the number of Medicaid-eligible Oklahomans who are now applying for coverage because of the new health insurance mandate. The federal government also is requiring Oklahoma to increase its portion of Medicaid matching funds because of recent improvements in the state's economy.
But with the state currently projected to have about $170 million less revenue available to spend on next year's budget, increased funding for the program is unlikely, and a spokesman for Fallin defended the cuts she is recommending.
"Medicaid costs continue to rise every year," said spokesman Alex Weintz. "Governor Fallin's budget sends a signal that taxpayers are not going to keep cutting a larger and larger check for an entitlement program that is in serious need of reform."
The Health Care Authority has limited options when it comes to cutting its budget because the federal government dictates the benefits that must be provided, with only a few exceptions. That leaves provider rates as one of the few areas the agency can cut to realize savings.
"What we do know is that for a 1% across-the-board rate reduction to all providers, that reduces the budget by $10 million," said Health Care Authority spokeswoman Jo Kilgore. "That kind of gives you an idea of what we're looking at. You can do that math."
Cox is proposing a bill that would slash provider rates by 1.75%, which would save the agency about $17.5 million. He also intends to reduce the number of covered prescriptions and require prior authorization for all brand-name prescriptions and most narcotics, which is projected to save an additional $20 million. Other changes in the bill would decrease the number of allowable emergency room visits to six per year and require competitive bidding for durable medical equipment and diabetic supplies.
"I've spread the pain of the cuts," Cox said about his bill, dubbed the Medicaid Sustainability and Cost Containment Act. "Some to patients, some to providers, some to hospitals ... some to suppliers, some to the pharmaceutical industry.
"Without this bill, it will be entirely up to the Medicaid agency as to how they balance their budget ... and the easiest thing is to put it on the backs of providers," he added.
Sen. Kim David, who chairs the Senate committee that oversees funding for Medicaid, said even though Fallin proposed a 5% across-the-board cut to the Health Care Authority in her executive budget, it's too early to tell what the final revenue picture will look like.
"We're going to look at each agency individually to see where we can cut and if we can cut," said David, R-Porter. "Some of the agencies may be held harmless. We don't just want to take a hatchet to their budget."