The medical schools and teaching hospitals at the University of Oklahoma and Oklahoma State University could require an immediate injection of funds after CMS denied a request by the state to use federal Medicaid funds to pay those schools to recruit, train and retain physicians.

That authority had previously been approved by CMS in a Medicaid Section 1115 waiver called “SoonerCare,” which had run from 1996 through 2001. In 2015, however, CMS discovered Oklahoma had continued to claim those payments for its federal matching funds in Medicaid despite the authority having lapsed nearly 14 years earlier.

CMS had frozen those federal payments going to the medical schools. In a waiver request made in Aug. 2017, Oklahoma asked for it to be reinstated. This would allow the state to use federal Medicaid funds to pay the two universities for programs which encouraged medical school students to complete their residencies in Oklahoma “in order to support the development of the healthcare workforce in the state.”

CMS denied the request, saying while it understands the state’s issues on retaining a physician workforce, particularly one that serves Medicaid beneficiaries, this solution may not meet federal requirements.

“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. 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 agency wrote in its denial letter.

The state would need to provide additional information showing how payments to universities support Medicaid services, CMS said. The agency added that some portion of the expenditures could be including in the state’s Medicaid fee-for-service methodology.

CMS said this could cause the two schools to lose $115 million for the next fiscal year, while $30 million could get the schools through the current fiscal year which ends on June 30, 2018.

“The loss of the federal funds would severely curtail services to Oklahoma’s Medicaid population throughout the entire state,” the universities said in a joint statement to Oklahoma Watch. “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.”