Agency says hospitals will not lose overall Medicaid funding despite federal filing showing reduction in one payment program
OKLAHOMA CITY — A federal Medicaid filing that appeared to show a $218 million reduction in payments to Oklahoma hospitals prompted concern among lawmakers and hospital leaders this week, even as state health officials insisted hospitals are not expected to lose funding overall.
The confusion centers on the Supplemental Hospital Offset Payment Program, or SHOPP, which helps hospitals offset financial losses associated with treating Medicaid patients.
Just days after Oklahoma Health Care Authority CEO Clay Bullard assured the agency’s governing board that the fiscal year 2027 budget included no cuts to hospitals, providers or Medicaid services, the agency submitted documents to the Centers for Medicare & Medicaid Services proposing a roughly $218 million reduction in SHOPP payments.
The filing surprised the Oklahoma Hospital Association, which asked the agency to delay the proposal while hospitals reviewed the assumptions behind the calculations. Association President Rich Rasmussen said hospitals believed provider reductions previously discussed during budget negotiations had been resolved after legislative leaders reached agreement on the agency’s budget.
The issue also caught the attention of legislative budget leaders.
Rep. Trey Caldwell, R-Faxon, chairman of the House Appropriations and Budget Committee, said lawmakers believed they had reached an agreement with the agency that avoided provider cuts after identifying additional cash available to help balance the budget. After learning of the federal filing, legislators sought an explanation from Health Care Authority officials.
The Health Care Authority had requested nearly $495 million in additional appropriations for fiscal year 2027 but ultimately received $250 million from lawmakers, matching Gov. Kevin Stitt’s executive budget recommendation. Agency officials have said the budget also relies on carryover funds from the previous fiscal year and access to the state’s Rate Preservation Fund if additional cash is needed.
After meeting with agency officials, Sen. Paul Rosino, R-Moore, said hospitals are not expected to lose overall Medicaid funding. Instead, he said Oklahoma’s transition to Medicaid managed care has changed how some hospital payments are made, with reimbursements shifting from the SHOPP directed-payment program to traditional Medicaid fee-for-service payments.
According to The Lawton Constitution, a person who attended the meeting said Bullard acknowledged the agency had “done a terrible job of communicating” with the Oklahoma Hospital Association. The source said agency officials maintained that reductions shown in the SHOPP filing would be offset by increased fee-for-service reimbursements but agreed to provide lawmakers and hospitals with detailed financial information supporting those calculations.
Whether hospitals ultimately receive the same overall level of reimbursement remains the central question.
Hospital leaders have asked the agency to provide documentation showing that reductions in one payment program will be fully offset elsewhere in Oklahoma’s Medicaid financing system.
For now, lawmakers say they are trying to determine whether the federal filing reflects an actual reduction in hospital funding or simply a change in how Medicaid payments are distributed following Oklahoma’s transition to managed care.
Read the original reporting from Oklahoma Watch and The Lawton Constitution.
