Oklahoma Medicaid Managed Care: SoonerSelect, SB 131, and Hospital Cuts

Oklahoma’s Medicaid managed care program, called SoonerSelect, pays private insurance companies fixed monthly rates to coordinate and cover care for SoonerCare enrollees. It went live in 2024 after a legislative fight and a state Supreme Court ruling, and it is Oklahoma’s second attempt at this model — the first, SoonerCare Plus, ran from 1995 until the state shut it down in 2003. The current program is operating, but its finances are tight and its long-term footing is unsettled.

What SoonerSelect Is Today

Under SoonerSelect, the Oklahoma Health Care Authority pays private managed care entities a set monthly capitation rate per enrollee. Those companies, rather than the state, then coordinate services and pay providers. It replaces the fee-for-service arrangement Oklahoma had used for the previous two decades, in which the OHCA paid providers directly for each service delivered.

The program rolled out in phases. Dental coverage went live on February 1, 2024. The medical plans and the children’s specialty plans followed on April 1, 2024.¹

One provision in state law directly protects providers during the transition. Contracted managed care entities must reimburse providers at 100% or more of the OHCA fee schedule through July 1, 2026.² The floor keeps the managed care companies from pushing payments below what providers had been getting under the older fee-for-service system, at least through the initial contract period.

The 1990s Attempt That Failed

Oklahoma’s first try at Medicaid managed care began in July 1995. That program, SoonerCare Plus, was a fully capitated model in which private managed care organizations received fixed monthly payments per enrollee and had to coordinate and cover their care. It ran in the three urban areas — Oklahoma City, Tulsa, and Lawton. Rural Oklahoma used a different arrangement called SoonerCare Choice, in which the state paid providers directly and assigned each patient a primary care physician to coordinate services.³

The insurers left. Federal rules required at least two MCOs so enrollees would have a choice, but three of the original five participating MCOs withdrew between 1996 and 2000. Enrolling the aged, blind, and disabled population starting in 1999 made things worse, because the MCOs said the capitation payments didn’t cover the higher-cost patients.³

By 2003, only two or three MCOs were still operating across the three urban areas. When one demanded an 18% rate increase for the following year and threatened to walk, the OHCA ran the numbers and concluded it could operate the SoonerCare Choice model in urban areas at about a quarter of the administrative cost of the MCO program.⁴ The OHCA Board voted in November 2003 to end SoonerCare Plus. Enrollees moved to SoonerCare Choice by April 2004.³

The 2021 Supreme Court Ruling and SB 131

Managed care came back on the table in 2020, when Governor Kevin Stitt pushed to shift part of the state’s Medicaid program to private insurers under the SoonerSelect brand. The OHCA developed draft capitation rates and solicited bids from private companies.⁵

On June 1, 2021, the Oklahoma Supreme Court struck the plan down 6-3. Justice Douglas Combs, writing for the majority, found the OHCA lacked “express or implied legislative authority” to implement a new managed care program, said the program was not “specifically authorized by law,” and held that the state had failed to properly promulgate rules for the bidding process. The contracts already awarded to private companies were invalid.⁶

The Legislature had already been working on a fix. Senate Bill 131, the Ensuring Access to Medicaid Act, became law without Governor Stitt’s signature on May 27, 2021, and set up a legislative framework with guardrails for managed care.⁷ Three dissenting justices argued the bill had already answered the legal question the majority faulted the executive branch on. Governor Stitt said the bill’s requirements would limit his original plan, but it gave the OHCA the statutory authorization the court said was missing.⁸ With that authorization in place, the OHCA restarted the procurement that eventually produced the 2024 launch.

The Money Problem

Switching payment systems produced a one-time cost the agency called a “claims bubble” — $368 million in state fiscal year 2024. To absorb it, the OHCA drew down $777 million in cash reserves across fiscal years 2024 and 2025. Those reserves had built up from enhanced federal funding during the COVID-19 public health emergency, and they were fully spent.⁹

That left the agency going into fiscal year 2027 with what it described as “razor-thin” cash flow margins on a roughly $12 billion annual budget. In January 2026, the OHCA asked for an additional $495 million in state funding. Legislators pushed back on the agency’s actuarial estimates of how much care members would use, in part because this was the first year those estimates rested on managed care data rather than fee-for-service data.¹⁰

The Legislature approved $250 million in additional funding, matching the figure in Governor Stitt’s February 2026 executive budget rather than the higher amount the agency requested. The OHCA covered the remaining gap with $66 million in carryover from the prior year and got authorization from legislative leaders to draw on a Rate Preservation Fund if cash ran short. The agency also cut vendor contracts and employee bonuses.¹¹

Proposed Hospital Payment Cuts

OHCA CEO Clay Bullard told the board at a June 2026 meeting that provider reimbursements would not be reduced. The agency then proposed $218 million in cuts to the Supplemental Hospital Offset Payment Program, known as SHOPP, which directs additional dollars to hospitals beyond standard Medicaid reimbursement rates. The reduction amounted to about 20% of the program’s funding.¹¹

The OHCA attributed the cuts partly to lower-than-expected hospital use by some Medicaid patients and partly to changing federal requirements. The federal government was evaluating state-directed payment programs under stricter new Medicaid rules, and the Oklahoma Hospital Association flagged that review as a concern because directed-payment programs are a significant funding stream for hospitals serving Medicaid patients.¹⁰

Oversight and What’s Ahead

As of early 2026, the OHCA was implementing a Managed Care Monitoring and Oversight Solution to analyze the hundreds of reports it receives from contracted managed care entities and enforce contractual and regulatory requirements.⁹ Handing coordination to private companies moves the state’s administrative work from paying claims to policing insurers.

Several pressures shape what comes next. State Question 802, approved by voters in 2020, wrote Medicaid expansion into the state constitution, so enrollment can’t easily be pulled down. Post-pandemic patient acuity is rising as deferred care catches up. And the federal reserves that cushioned the SoonerSelect launch are gone, so the program now depends on annual appropriations and on whatever savings managed care delivers over time.⁹ Whether SoonerSelect proves more durable than SoonerCare Plus did is still an open question.

1
Centers for Medicare & Medicaid Services. Oklahoma SoonerCare Annual Report, January–December 2023
2
Oklahoma Health Care Authority. SoonerSelect Dental Capitation Rate Briefing
3
Oklahoma Health Care Authority. SoonerCare Plus Program History
4
Mathematica. SoonerCare Program Evaluation
5
Oklahoma Health Care Authority. SoonerSelect Medical Capitation Rate Briefing
6
NonDoc. Supreme Court Strikes Down Stitt’s Privatized Managed Care Medicaid Plan
7
Oklahoma State Legislature. SB 131 Bill Information
8
KGOU. Capitol Insider: Supreme Court Shoots Down Managed Care Plan
9
Oklahoma State Senate. OHCA Presentation to Legislature
10
Oklahoma Watch. In Reversal, Oklahoma Medicaid Agency Plans $218 Million in Provider Cuts
11
The Oklahoman. Oklahoma Health Care Authority Proposes $218M in Medicaid Payment Cuts