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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
ENGROSSED SENATE
BILL NO. 875 By: Rosino of the Senate
and
Stinson of the House
An Act relating to the state Medicaid program;
amending Section 4, Chapter 395, O.S.L. 2022, as
amended by Section 3, Chapter 448, O.S.L. 2024 (56
O.S. Supp. 2024, Section 4002.3b), which relates to
capitated contracts; establishing certain penalties;
amending 56 O.S. 2021, Section 4002.12, as last
amended by Section 7, Chapter 448, O.S.L. 2024 (56
O.S. Supp. 2024, Section 4002.12), which relates to
minimum rates of reimbursement; defining terms;
establishing certain penalties; specifying allowed
use of certain proceeds; amending 56 O.S. 2021,
Section 4002.13, as am ended by Section 18, Chapter
395, O.S.L. 2022 (56 O.S. Supp. 2024, Section
4002.13), which relates to the Medicaid Delivery
System Quality Advisory Committee; modifying powers
and duties of the Committee; providing an effective
date; and declaring an emerg ency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Section 4, Chapter 395, O.S.L.
2022, as amended by Section 3, Chapter 448, O.S.L. 2024 (56 O.S.
Supp. 2024, Section 4002.3b), is amended to rea d as follows:
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Section 4002.3b. A. All capitated contracts shall be the
result of requests for proposals issued by the Oklahoma Health Care
Authority and submission of competitive bids by contracted entities
pursuant to the Oklahoma Central Purchasing Act .
B. Statewide capitated contracts may be awarded to any
contracted entity including, but not limited to , any provider-led
entity or provider-owned entity, or both.
C. The Authority shall award no less than three statewide
capitated contracts to provide comprehensive integrated health
services including, but not limited to, medical, behavioral health,
and pharmacy services and no less than two statewide capitated
contracts to provide dental coverage to Medicaid members as
specified in Section 4002.3a of t his title.
D. 1. Except as specified in paragraph 3 of this subsection,
at least one capitated contract to provide statewide coverage to
Medicaid members shall be awarded to a provider -led entity, as long
as the provider-led entity submits a responsive r eply to the
Authority’s request for proposals demonstrating ability to fulfill
the contract requirements.
2. Effective with the next procurement cycle, and except as
specified in paragraph 3 of this subsection, at least one capitated
contract to provide s tatewide coverage to Medicaid members shall be
awarded to a provider -owned entity, as long as the provide r-owned
entity submits a responsive reply to the Authority ’s request for
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proposals demonstrating ability to fulfill the contract
requirements.
3. If no provider-led entity or provider -owned entity submits a
responsive reply to the Authority ’s request for proposals
demonstrating ability to fulfill the contract requirements, the
Authority shall not be required to contract for statewide coverage
with a provider-led entity or provider -owned entity.
4. The Authority shall develop a scoring methodology for the
request for proposals that affords preferential scoring to provider -
led entities and provider -owned entities, as long as the provider -
led entity and provider-owned entity otherwise demonstrate an
ability to fulfill the contract requirements. The preferential
scoring methodology shall include opportunities to award additional
points to provider-led entities and provider -owned entities based on
certain factors including, but not limited to:
a. broad provider participation in ownership and
governance structure,
b. demonstrated experience in care coordination and care
management for Medicaid members across a variety of
service types including, but not limite d to, primary
care and behavioral health,
c. demonstrated experience in Medicare or Medicaid
accountable care organizations or other Medicare or
Medicaid alternative payment models, Medicare or
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Medicaid value-based payment arrangements, or Medicare
or Medicaid risk-sharing arrangements including, but
not limited to, innovation models of the Center for
Medicare and Medicaid Innovation of the Centers for
Medicare and Medicaid Services, or value -based payment
arrangements or risk -sharing arrangements in the
commercial health care market, and
d. other relevant factors identified by the Authority.
E. The Authority may select at least one provider -led entity or
one provider-owned entity for the urban region if:
1. The provider-led entity or provider -owned entity submits a
responsive reply to the Authority ’s request for proposals
demonstrating ability to fulfill the contract requirements; and
2. The provider-led entity or provider -owned entity
demonstrates the ability, and agrees continually, to expand its
coverage area throughout the contract term and to develop statewide
operational readiness within a time frame set by the Authority but
not mandated before five (5) years.
F. At the discretion of the Authority, capitated contracts may
be extended to ensure there are no gaps in coverage that may result
from termination of a capitated contract; provided, the total
contracting period for a capitated contract shall not exceed seven
(7) years.
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G. At the end of the contracting period, the Authority shall
solicit and award new contracts as provided by this section and
Section 4002.3a of this title.
H. At the discretion of the Authority, subject to appropriate
notice to the Legislature and the Centers for Medicare and Medicaid
Services, the Authority may approve a delay in the implementation of
one or more capitated contracts to ensure financial and operational
readiness.
I. 1. A contracted entity that currently holds a capitated
contract with the Authority under the Ensuring Access to Medicaid
Act and fails to meet the eleven percent (11%) minimum primary care
services expense requirement stipulated in subsection O of Section
4002.12 of this title by the deadline specified therein shall be
subject to a scoring penalty , which shall be determined by the
Authority, on the request for proposals for the subsequent
procurement cycle.
2. If the contracted entity fails to a llocate at least eight
percent (8%) of its total health care expenses to primary care
services by the deadline specified in subsection O of Section
4002.12 of this title, the contracted entity shall be ineligible for
a capitated contract award for the subsequent procurement cycle.
SECTION 2. AMENDATORY 56 O.S. 2021, Section 4002.12, as
last amended by Section 7, Chapter 448, O.S.L. 2 024 (56 O.S. Supp.
2024, Section 4002.12), is amended to read as follows:
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Section 4002.12. A. Until Jul y 1, 2027, the Oklahoma Health
Care Authority shall establish minimum rates of reimbursement from
contracted entities to providers who elect not to ent er into value-
based payment arrangements under subsection B of this section or
other alternative payment agreements for health care items and
services furnished by such providers to enrollees of the state
Medicaid program. Except as provided by subsection I of this
section, until July 1, 2027, such reimbursement rates shall be equal
to or greater than:
1. For an item or service provided by a participating provider
who is in the network of the contracted entity, one hundred percent
(100%) of the reimbursem ent rate for the applicable service in the
applicable fee schedule of the Authority; or
2. For an item or service provided by a non -participating
provider or a provider who is not in the network of the contracted
entity, ninety percent (90%) of the reimbu rsement rate for the
applicable service in the applicable fee schedule of the Authority
as of January 1, 2021.
B. A contracted entity shall offer value -based payment
arrangements to all providers in its network capable of entering
into value-based payment arrangements. Such arrangements shall be
optional for the provider but shall be tied to reimbursement
incentives when quality metrics are met. The quality measures used
by a contracted entity to determine reimbursement amounts to
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providers in value-based payment arrangements shall align with the
quality measures of the Authority for contracted entities.
C. Notwithstanding any other provision of this section, the
Authority shall comply with payment methodologies required by
federal law or regulation for specific types of providers including,
but not limited to, Federally Qualified Health Centers, rural health
clinics, pharmacies, Indian Health Care Providers and emergency
services.
D. A contracted entity shall offer all rural health clinics
(RHCs) contracts that reimburse RHCs using the methodology in place
for each specific RHC prior to January 1, 2023, in cluding any and
all annual rate updates. The contracted entity shall comply with
all federal program rules and requirements, and the transformed
Medicaid delivery system shall not interfere with the program as
designed.
E. The Oklahoma Health Care Authority shall establish minimum
rates of reimbursement from contracted entities to Certified
Community Behavioral Health Clinic (CCBHC) providers who elect
alternative payment arrangements equal to the prospective payment
system rate under the Medicaid State P lan.
F. The Authority shall establish an incentive payment under the
Supplemental Hospital Offset Payment Program that is determined by
value-based outcomes for providers other than hospitals.
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G. Psychologist reimbursement shall reflect outcomes.
Reimbursement shall not be limited to therapy and shall include but
not be limited to testing and assessment.
H. Coverage for Medicaid ground transportation services by
licensed Oklahoma emergency medical services shall be reimbursed at
no less than the publish ed Medicaid rates as set by the Authority.
All currently published Medicaid Healthcare Common Procedure Coding
System (HCPCS) codes paid by the Author ity shall continue to be paid
by the contracted entity. The contracted entity shall comply with
all reimbursement policies established by the Authority for the
ambulance providers. Contracted entities shall accept the modifiers
established by the Centers for Medicare and Medicaid Services
currently in use by Medicare at the time of the transport of a
member that is dually eligible for Medicare and Medicaid.
I. 1. The rate paid to participating pharmacy providers is
independent of subsection A of this se ction and shall be the same as
the fee-for-service rate employed by the Authority for the Medicaid
program as stated in the payment methodology in OAC 317:30 -5-78,
unless the participating pharmacy provider elects to enter into
other alternative payment ag reements.
2. A pharmacy or pharmacist shall receive direct payment or
reimbursement from the Authority o r contracted entity when providing
a health care service to the Medicaid member at a rate no less than
that of other health care providers for providin g the same service.
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J. Notwithstanding any other provision of this section,
anesthesia shall continue to be reimbursed equal to or greater than
the anesthesia fee schedule established by the Authority as of
January 1, 2021. Anesthesia providers may also enter into value-
based payment arrangements under this section or alternative payment
arrangements for services furnished to Medicaid members.
K. The Authority shall specify in the requests for proposals a
reasonable time frame in which a contracted entit y shall have
entered into a certain percentage, as determined by the Authority,
of value-based contracts with providers.
L. Capitation rates established by the Oklahoma Health Care
Authority and paid to contracted entities under capitated contracts
shall be updated annually and in accordance with 42 C.F.R., Section
438.3. Capitation rates shall be approved as actuarially sound as
determined by the Centers for Medicare and Medicaid Services in
accordance with 42 C.F.R., Section 438.4 and the following:
1. Actuarial calculations must include utilization and
expenditure assumptions consistent with industry and local
standards; and
2. Capitation rates shall be risk -adjusted and shall include a
portion that is at risk for achievement of quality and outcomes
measures.
M. The Authority may establish a symmetric risk corridor for
contracted entities.
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N. The Authority shall establish a process for annual recovery
of funds from, or assessment of penalties on, contracted entities
that do not meet the medical loss ratio standards stipulated in
Section 4002.5 of this title.
O. 1. For the purposes of this subsection only:
a. “contracted entity” does not include dental benefit
managers, and
b. “primary care services ” has the same meaning as
provided by rules promulga ted by the Oklahoma Health
Care Authority Board for the implementation of this
subsection.
2. The Authority shall, through the financial reporting
required under subsection G of Section 4002.12b of this title,
determine the percentage of health care expen ses by each contracted
entity on primary care services.
2. 3. Not later than the end of the fourth year of the initial
contracting period, each contracted entity shall be currently
spending not less than eleven percent (11%) of its total health care
expenses on primary care services.
3. 4. The Authority shall monitor the primary care spending of
each contracted entity and require each contracted entity to
maintain the level of spending on primary care services stipulated
in paragraph 2 3 of this subsection.
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5. If a contracted entity fails to meet the minimum primary
care services expense requirement stipulated in paragraph 3 of this
subsection by the deadline specified therein , the contracted entity
shall:
a. pay liquidated damages to the Authority in an amount
equal to the difference between eleven percent (11%)
of the contracted entity ’s total health care expenses
and the actual percentage of its total health care
expenses being allocated to primary care services as
of the deadline specified in paragraph 3 of this
subsection. All proceeds from liquidated damages
received by the Authority under this subparagraph
shall be spent on primary care services through a
methodology approved by the Administrator of the
Oklahoma Health Care Authority based on
recommendations from the Medicaid Delivery System
Quality Advisory Committee as provided by Section
4002.13 of this title, and
b. be subject to a scoring penalty on the request for
proposals for the subsequent procurement cycle as
provided by subsection I of Section 4002.3b of this
title.
6. If a contracted entity fails to allocate at least eight
percent (8%) of its total health care expenses to primary care
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services by the deadline specified in paragraph 3 of this
subsection, the contracted entity shall be ineligible for a
capitated contract award for the subsequent procurement cycle as
provided by subsection I of Section 4002.3b of this title.
SECTION 3. AMENDATORY 56 O.S. 2021, Section 4002.13, as
amended by Section 18, Chapter 395, O .S.L. 2022 (56 O.S. Supp. 2024,
Section 4002.13), is amended to read as follows:
Section 4002.13. A. The Oklahoma Health Care Authority shall
establish a Medicaid Delivery System Quality Advisory Committee for
the purpose of performing the duties specifi ed in subsection B of
this section.
B. The Committee shall have the power and duty to make:
1. Make recommendations to the Administrator of the Oklahoma
Health Care Authority and the Oklahoma Health Care Authority Board
on quality measures used by contra cted entities in the capitated
care delivery model of the state Medicaid program ; and
2. Develop and recommend to the Administrator a methodology for
the use of proceeds from liquidated damages received by the
Authority from contracted entities for failur e to meet the eleven
percent (11%) minimum primary care services expense requirement
stipulated in subsec tion O of Section 4002.12 of this title;
provided, that such methodology shall ensure that proceeds are spent
exclusively on primary care services .
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C. 1. The Committee shall be comprised of members appointed by
the Administrator of the Oklahoma Health Care Authority. Members
shall serve at the pleasure of the Administrator.
2. A majority of the members shall be providers participating
in the capitated care delivery model of the state Medicaid program,
and such providers may include members of the Adviso ry Committee on
Medical Care for Public Assistance Recipients. Other members shall
include, but not be limited to, representatives of hospitals and
integrated health systems, other members of the health care
community, and members of the academic community having subject -
matter expertise in the field of health care or subfields of health
care, or other applicable fields including, but not limited to,
statistics, economics, or public policy.
3. The Committee shall select from among its membership a chair
and vice chair.
D. 1. The Committee may meet as often as may be required in
order to perform the duties imposed on it.
2. A quorum of the Committee s hall be required to approve any
final recommendations of the Committee. A majority of the members
of the Committee shall constitute a quorum.
3. Meetings of the Committee shall be subject to the Oklahoma
Open Meeting Act.
E. Members of the Committee sha ll receive no compensation or
travel reimbursement.
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F. The Oklahoma Health Care Authority shall provide staff
support to the Committee. To the extent allowed under federal or
state law, rules, or regulations, the Authority, the State
Department of Health , the Department of Mental Health and Substance
Abuse Services, and the Department of Human Services shall as
requested provide technical expertise, statistical information, and
any other information deemed necessary by the chair of the Committee
to perform the duties imposed on it.
SECTION 4. This act shall become effective July 1, 2025.
SECTION 5. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON HEALTH AND HUMAN SERVICES, dated
04/15/2025 – DO PASS.