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State could lose $115 million in Medicaid funds for teaching hospitals

Darla Shelden Story by on December 17, 2017 . Click on author name to view all articles by this author. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
Paul Monies, Oklahoma Watch
Updated to reflect the governor’s executive order for a special session

Oklahoma’s two largest safety-net hospitals could lose $115 million a year because the state spent Medicaid dollars on training doctors for well over a decade apparently without approval, Oklahoma Watch has learned.

The University of Oklahoma and Oklahoma State University’s medical schools and associated teaching hospitals also could need an emergency injection of about $30 million from the Legislature this fiscal year because of the dispute with the federal government over a Medicaid waiver. The money would get them through June 30. The schools would need $115 million for the next fiscal year, according to a letter from the Centers for Medicare and Medicaid Services that was obtained by Oklahoma Watch.

The dispute started in 2015 when the federal agency, which oversees the Medicare program for seniors and states’ Medicaid programs for the poor, found Oklahoma’s waiver to get federal matching funds for medical training at the University of Oklahoma Health Sciences Center and Oklahoma State University Center for Health Sciences hadn’t been renewed since 2001. Despite that, the federal government continued making Medicaid matching payments through the program. It’s unclear why the payments continued for so many years.

Michael McNutt, a spokesman for Gov. Mary Fallin, said his office was working to forestall a funding cut.

We are working with our congressional delegation and the Trump administration to resolve the issue. Maintaining our medical schools for training future doctors is a high priority of Gov. Fallin,” he said.

Early Friday evening, Gov. Mary Fallin issued an executive order for a special session starting Monday to address a shortfall for Medicaid and to avoid provider rate cuts.

In joint statement to Oklahoma Watch, OU and OSU medical school leaders said they were disappointed with the decision by the federal government.

The loss of the federal funds would severely curtail services to Oklahoma’s Medicaid population throughout the entire state,” said the statement from OSU’s Dr. Kayse Shrum and OU’s Dr. Jason Sanders. “At a time when Oklahoma struggles with a physician shortage, the loss of the federal funds would also result in a reduction or elimination of training programs and fewer doctors for Oklahomans, worsening access to quality medical care, particularly in underserved rural Oklahoma. In spite of this news, we will continue working diligently with federal and state officials to find a solution.”

The Oklahoma Health Care Authority said it continues to communicate with CMS “to explore alternative paths to support workforce development.” The authority receives about $3 billion annually in federal participation funds for its Medicaid program.

This is an issue between the state and the federal government around a long-standing supplemental payment program for medical schools in recognition of the higher cost of the service delivery associated with their teaching mission,” health care authority CEO Becky Pasternik-Ikard said in a statement. “These funds are used for physician workforce development to strengthen and sustain access to care for our SoonerCare members.

Under the waiver, the state appropriates money to the two medical schools, which direct the money to the Oklahoma Health Care Authority in order to get federal Medicaid matching funds. The Health Care Authority then sends the larger pool of money back to OU and OSU medical schools. The two hospitals serve a large percentage of poor and uninsured patients, and they train the bulk of the state’s future physicians through their residency programs.

Sen. Ervin Yen, an anesthesiologist, questioned the timing of the federal denial and wondered if it was connected to other issues with federal money at the Oklahoma State Department of Health. He said it complicates an already challenging budget situation at the Capitol.

It will have a terrible impact, especially when we have a shortage of rural physicians in the state,” said Yen, R-Oklahoma City. “We need more physician graduates in this state, not less.”

 In August, the state asked if it could amend the broader SoonerCare program to include spending Medicaid matching funds on the medical schools and their associated hospitals,seeking to continue what it had been doing since 2001.

But the Centers for Medicare and Medicaid Services this week rejected the state’s proposal, saying it would not match the medical school payments in the previous quarter. That makes the state responsible for $31 million in funding this fiscal year.

From the time CMS first identified and raised this concern to Oklahoma, we have continually asked the state to provide additional information to justify the state’s authority to make these payments,” the federal agency said in a Dec. 11 letter to the health care authority. “However, we have not received such information.”

The letter said Centers for Medicare and Medicaid Services supports the state’s goal of expanding the health-care workforce and recognizes “a particularly challenging budget situation.”

However, at this time, CMS does not see a path to approval for the state’s proposal to receive federal Medicaid match for payments made to the above described universities,” the letter said. “Medicaid payments must be linked to the delivery of services to Medicaid beneficiaries and, if authorized under the state plan, must be in compliance with all other applicable limits.”

The state has 60 days to appeal the determination.

NOTE: Paul Monies has been a reporter for 15 years and was most recently an energy reporter for The Oklahoman newspaper in Oklahoma City. He now covers state government and social policy issues or Oklahoma Watch.

Oklahoma Watch is a nonprofit, nonpartisan media organization that produces in-depth and investigative journalism on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to This report is reposted with permission of Oklahoma Watch.

Senator Ervin Yen

Senator Ervin Yen

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