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Mourning Our Medicaid Malaise: Lawmakers Reject Free-Market Reforms

July 2, 2014 - 9:41am CDT

Dr. Doug Cox is no Dr. Tom Coburn. And the Oklahoma Hospital Association is no supporter of Medicaid reform.

In 2014 Oklahoma hospitals, through their powerful lobbying arm, blocked Medicaid reforms, thanks in large measure to the work of Cox, a medical doctor and a Republican state representative from Grove.

Cox is a top advisor to Oklahoma’s Speaker of the House Jeff Hickman, R-Fairview, and an emergency room physician at Grove’s Integris Hospital. He is among the lawmakers pressing hard for Medicaid expansion, per the Affordable Care Act, in the blended Arkansas model that is bringing significant enrollment increases and cost overruns. In other words, the Arkansas Plan, not a whole lot different than the Obamacare plan—which is to say, straight-up Medicaid expansion.

In 2013 it was Sen. Brian Crain, R-Tulsa, who guided maneuvering to thwart wholesome Medicaid reforms.

The analysis that follows is not a personal assault on either Crain or Cox, but an assessment of how and why some good things didn’t happen at 23rd and Lincoln these past couple of years.

Let’s be clear about why this is important: Government health care spending, driven by Medicaid, is the fastest growing chunk of the Oklahoma state budget.

Although I am largely a fan of House Speaker Jeff Hickman, his close alliance with Dr. Cox likely contributed to the death of broad Medicaid reforms in the 2014 legislative session.

Medicaid Reform Thwarted

The reforms were contained in Senate Bill 1495, introduced by Sen. Kim David, R-Porter. She proposed to begin implementation of Medicaid reforms enacted (and operating in cooperation with federal administrators) in Florida, Kansas, and Louisiana, and partially in other states.

The culprits in the demise of SB 1495 included administrators at the Oklahoma Health Care Authority, former director Mike Fogarty, the Oklahoma Pharmacists Association, and, yes, the Oklahoma Hospital Association.

Hospitals make big bucks from Medicaid, as my old pal Peter Rudy reported a couple of years back on his OK CapitolSource website. Unfortunately, they are comfortable with expansion as envisioned in the Affordable Care Act, and uncomfortable with market reforms on the model of, say, the Surgery Center of Oklahoma.

The Oklahoma Pharmacists Association helped impede reforms in these measures that would have allowed multiple options for delivery of prescription drugs to patients, including mail order, the option pharmacists most despise. In this case, you can’t fault “Big Pharma” for the death of reform.

In the end, as Sen. David noted, opponents of reform preferred the single-payer system, with less accountability (however imperfect) than the private insurance that still provides coverage for most taxpayers. They left in place the promise (to providers) of comparatively high reimbursement levels for doctors with the often-illusory promise of quick turnarounds on submitted claims. No private company can allow such an arrangement (again, often illusory in any case) because it does not allow time for proactive review of utilization and appropriate care, or for documentation that procedures were actually performed.

As the clock ticks on rising costs for government-financed health care, lack of forward movement for these varied measures is damn near despair-inducing. However, faithful readers of my Perspective essays for lo, these many years, know I remain a short-term pessimist and a long-term optimist.

So, some small consolation comes from the Legislature’s passage of, and the governor’s signature on, House Bill 2906. This measure instructs the Oklahoma Health Care Authority (OHCA) to study “diversion models” for Medicaid patients. The law requires study of cost containment and delivery alternatives.

By the end of this year, the OHCA is to present a study to the Legislature that includes, in the words of a House summary, these elements: “an assessment of the propensity of Medicaid recipients to use emergency medical facilities; opportunities to ‘leverage and partner’ with community-based resources to reduce emergency-room utilization; analysis of existing state and national initiatives ‘with the aim of more cost-effective, coordinated care’ for persons who overuse emergency medical facilities; [and] development of recommendations, accompanied by projected expenditures and potential cost savings.”

All well and good, I guess. Here’s what we know for sure. As of March, state Medicaid enrollment totaled 830,850. That includes 539,996 children and 290,854 adults. As I reported earlier this year, SoonerCare (i.e., Medicaid) enrollees made 548,136 emergency room visits in Fiscal Year 2013.

The Health Care Authority’s own data showed that cost us $178 million in the last year.

There’s gotta be a better way. In fact, there is a better way and the state does not need to spend the next six months reinventing the wheel.

Sen. David’s SB 1495 would have created a pilot program—not a “study”—to  put counselors in ERs to direct Medicaid recipients to more appropriate and much less expensive general care.

Her bill was based on market-oriented models in Florida, Louisiana, and Kansas. Florida has had success in easing costs and improving patient satisfaction among diabetes and high blood pressure patients.

David’s bill is the best place to start improving Medicaid outcomes without the “expansion” envisioned in the Affordable Care Act. Her proposal’s demise in the latter days of the legislative session must be scored as one of the most deeply disappointing results of the session. Ironically, the anti-reform matrix actually preferred to see implementation of a provider cut rather than countenance the start of systemic reforms.

Other Missed Opportunities

Alas, that’s not the only disappointment from the 2014 session. Oklahoma’s Legislature nixed two other health care reforms that would move us toward better (and more personalized) health care for Oklahomans.

House Bill 2400 by Rep. Arthur Hulbert, R-Fort Gibson, steadily gained support this spring, and I hoped it would pass. It would have required hospitals accepting Medicaid dollars from the state program to post prices transparently, on the Web.

This would have enhanced the ability of both the public and Medicaid recipients to see the price of procedures before they were performed. Alas, after the proposal gained credible momentum it did not get a hearing by the full House—because the Oklahoma Hospital Association was opposed.

Another promising reform was contained in House Bill 2828, sponsored by state Rep. Jason Murphey, R-Guthrie. Heaven knows I have been critical of Gov. Mary Fallin and her team on certain issues. But in this instance the Fallin team—including Secretary of Finance and Revenue Preston Doerflinger—supported Murphey’s proposal to allow Oklahoma’s self-insured plan to incentivize the use of providers who produce positive outcomes at a low, affordable price.

Yes, we’re talking about providers such as the Surgery Center of Oklahoma, a multispecialty facility that posts its prices online, which is performing common procedures at one-sixth to one-tenth of the cost at Big Box Hospitals.

As I discussed in these pages in April, the model is proving itself shockingly effective. In March, Oklahoma County entered into an agreement with the Surgery Center of Oklahoma—an agreement which is benefiting County employees and taxpayers alike. Jon Wilkerson, director of HR, benefits, and payroll for Oklahoma County Clerk Carolynn Caudill, told me on June 17 that he estimates the cost savings to date for Oklahoma County is $400,000. That kind of money can fill a lot of potholes.

Jonathan Small, OCPA’s vice president for policy, reflected on this year’s disappointments in the Oklahoma Legislature. In an interview, he told me, “In Oklahoma, the instances of good reforms being thwarted by crony capitalists in the health care system is growing. What’s bad is that lawmakers often aren’t even aware of the problem. What’s worse is that some lawmakers are actively ‘working on the inside’ and are involved in helping the crony capitalists succeed in hurting patients and taxpayers.”

Informed citizens should press their legislators to assure that the study authorized in HB 2906 is prelude to enactment of Sen. David’s SB 1495. And, that’s just for starters.

Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com. He is the editor of seven books on legal policy, and the author or co-author of three books, including Ninth Justice: The Fight for Bork. Last year the Washington Post political blog, “The Fix,” designated McGuigan one of the three best political reporters in Oklahoma.