Doctors leery about Tennessee plan to overhaul Medicaid

Washington -- Some good and a lot of bad. That's how physicians are rating the proposed overhaul of TennCare, Tennessee's Medicaid program, which provides care for some 1.3 million poor, disabled and uninsured state residents.

While physicians applaud the plan's commitment to improving the quality of care and reducing prescription drug spending, they worry about new limits on services.

"As a taxpayer, I understand the need to curb costs," said David McKee, MD, a Nashville reconstructive surgeon who treats TennCare recipients. "But after patients use up their hospital days and office visits, they might need more care. It's ultimately the providers who will end up paying."

If the overhaul is approved by federal Medicaid officials, roughly 270,000 beneficiaries will see limits on outpatient hospital visits (eight per year), hospital stays (45 days per year), office visits (10 per year) and prescriptions (six per month). The plan, unveiled in August, also introduces co-payments for certain services and for prescription drugs on a sliding scale from $1 to $250. Over-the-counter drugs will be eliminated from coverage, as will prescription antihistamines and gastric-acid reducers.

Tennessee Gov. Phil Bredesen says the limits are needed to prevent the $7.6 billion program from bankrupting the state. The state pays about one-third of the costs; the federal government pays the balance. TennCare accounts for one of every four state dollars, a proportion projected to increase over the next four years. The governor's office says that without the overhaul, TennCare will consume 80% of all new state tax revenue between now and 2008.

In an open letter inviting comments on the proposal, Bredesen notes that 15% of enrollees account for 75% of TennCare's costs.

"I think it is far more sensible to have the bronze plan for more eligible Tennesseans than the platinum plan for a few," he writes.

Yet it is the sickest patients who could suffer, said Subhi Ali, MD, past president of the Tennessee Medical Assn. "Any limitations and restrictions are going to fall heavily on patients who are the most vulnerable."

Some patients exempt from limits

The governor's office notes that the plan exempts patients with disabilities, children and pregnant women from care limitations and co-payments. The state also would set aside funds for select nonprofit hospitals that would provide care for those unable to pay. Regional committees, which would include doctors, would review any requests for special dispensation for patients facing "extraordinary" circumstances.

Funding figures for this "safety net" plan were not released.

Physicians worry that these extra hoops will only add to TennCare's already high "hassle factor." The Tennessee Medical Assn. even organized a "TennCare Hassles Task Force" to review the plan and solicit comments from members.

"Without question, patients have benefited [from TennCare]," McKee says of the 10-year-old program. "But if there are limitations that seem unreasonable, you're going to drive doctors out of the system.

"If you don't have doctors to treat the patients, all of these other issues are going to be moot."

One big issue is the definition of "medically necessary." In the past, TennCare paid for virtually any service and product ordered by physicians. Legislation passed in February limits reimbursement to only the least costly alternative "required to diagnose or treat an enrollee's medical condition."

The overhaul plan would spell out what is "medically necessary" with disease-management guidelines. Until those guidelines appear, though, physicians face uncertainty when deciding how to treat. And when they do appear, physicians will face a double whammy, they say.

"You have a situation where if you treat patients with your best medical judgment, but outside of the disease- management guidelines, you won't get paid," said TMA general counsel Yarnell Beatty. "And if you give your patient only the treatment specified by the guidelines, you could face liability charges."

The TennCare proposal is open for comment though Sept. 17. It will then be reviewed by federal Medicaid officials. If approved, the changes would take effect in 2005.