Oklahoma Health Care Authority outlines budget stress as managed-care rollout stabilizes

The director of the Oklahoma Health Care Authority told the Senate appropriations committee that the agency’s FY25 operating picture totals about $11.2 billion, funded largely by the federal Centers for Medicare & Medicaid Services and state appropriations of roughly $1.31 billion.

The presentation outlined progress since Sooner Select launched last April and why the agency requests additional state support for FY26: growth in utilization and acuity after Medicaid expansion, lingering effects from the pandemic unwind, and weekly cash‑flow needs to pay providers and managed‑care capitation rates.

Sooner Select and scope: The authority said Sooner Select serves a little over 600,000 members through three medical plans, two dental plans and a children’s specialty plan that serves juvenile‑justice‑involved children and children in foster care. “Sooner Select plans to date have paid more than 5,600,000 claims, totaling about $1,200,000,000,” the director said. The agency reported that approximately 97% of those claims were paid within 14 days.

Why the budget request: The agency described several upward pressures on its state share: managed‑care capitation driven by utilization and acuity after expansion; pharmacy costs; supplemental payments to providers transitioned under a hospital provider tax; and declines in tobacco‑tax revenue. The director told senators the agency’s FY26 request includes a growth component based on Oklahoma data and projections; the expansion population is projected at 9.9% growth while non‑expansion populations are projected at about 3.7%.

Cash‑flow and reserves: The agency said it operates like an insurer and needs sizable cash on hand to make weekly and monthly payments—an average of about $200 million weekly inclusive of fee‑for‑service and capitation payments. The presentation noted existing cash in a 340 Fund dedicated to provider payments, and a “rate preservation” fund that had about $600 million near the end of the fiscal year. The director warned there is cash‑flow risk in the last quarter of the fiscal year and listed contingency levers: aggressive federal rebate draws, timing changes to payment cycles, transfers from the rate preservation fund, and—if directed—provider rate adjustments.

Program and policy highlights: The authority highlighted quality and technology projects including the Medicaid enterprise system (a decennial reprocurement), an AI call‑center pilot to improve call answer speeds, efforts to increase primary‑care spending to an 11% target under the agency’s statutory direction (the agency said current primary‑care spend is about 4.2%), expansion of school‑based services supported by a three‑year Department of Education grant, and program‑integrity work such as a Treasury death match and audit processes to reduce improper payments. The agency noted strong PERM (payment error rate measurement) performance: Oklahoma’s 2022 eligibility error rate was reported at 1.95% versus a national average of 15.62%.

Funding and tradeoffs: The director discussed one‑time and recurring funding choices, including the composition of the FY25 appropriated base ($1.31 billion in state appropriations plus revolving funds and federal match) and replacement requests for expiring supplemental revenues. A senator asked about using the FMAP stabilization (rate preservation) fund to smooth shortfalls; the director said that could be an option but emphasized the fund was sized to protect against multi‑year FMAP swings. The authority said it will try to maximize federal drug rebates and other revenue before requesting more state dollars.

What it means for providers and members: Senators pressed how growth might normalize. Authority staff said part of the national double‑digit per‑enrollee increase is a temporary unwinding effect and a “woodwork” effect as expansion members seek care previously deferred. The authority also said drivers include pharmacy, inpatient and behavioral‑health spending and that they are monitoring trends closely.

Where the request stands: The agency said it is seeking additional state appropriations (the presentation referenced roughly $126 million in one place and outlined a larger growth request linked to utilization projections elsewhere). No formal vote was recorded during the hearing; staff asked legislators to consider options including drawing on the rate preservation fund, early appropriations, or other timing solutions to manage cash flow.

Ending: The director closed by thanking staff and highlighting the agency’s goal to align spending to value and to preserve provider payments while protecting program integrity and member access.