Government

Tennessee Medicaid may be headed for a fall

TennCare offers a striking example of the struggle states are facing in containing growing health care spending.

By Joel B. Finkelstein — Posted Dec. 13, 2004

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Washington -- After 10 years, Tennessee's expanded Medicaid, which serves one in four residents, is teetering on the brink of extinction -- a victim of the financial pressures that are forcing many states to reconsider who is covered by the program.

TennCare is one of the most generous Medicaid offerings in the country. It is also the most expensive, consuming 26% of Tennessee's annual revenue. It has periodically been beset by financial troubles. But the latest problems threaten to force changes that would make it one of the smallest and most restrictive Medicaid programs. This would drop hundreds of thousands of dollars of uncompensated care in the laps of Tennessee's hospitals and physicians.

The state no longer can afford TennCare in its current form, according to a January report commissioned by Gov. Phil Bredesen but funded privately. Based on those findings, he proposed a plan designed to cap spending at the current level. But once the plan was submitted to the Centers for Medicare & Medicaid Services, it faced legal challenges from the Tennessee Justice Center, which represents a TennCare watchdog group that has proposed its own reform agenda for the program.

The Justice Center has since relented and placed a self-imposed two-year moratorium on pending lawsuits. But, according to the governor's office, his reform plan cannot go forward under the threat of new lawsuits.

Bredesen has said he still hopes that negotiations will reveal a third way to make TennCare work.

"We need to step back from the brink, and I need to try again," he said in a statement. "This thing is over-lawyered, it is too personal, it is rushing too fast to a conclusion."

But he has set the wheels in motion to end TennCare, a process that will take six months if it is not stopped. The basic and expanded Medicaid program currently serves about 1.3 million people. The shutdown would leave an estimated 430,000 of those residents without coverage.

"These patients would have continued to receive health care under the governor's reform plans, and now they are faced with starting over without health insurance," said John J. Ingram III, MD, president of the Tennessee Medical Assn. "We would like to assure these recipients that the dedicated physicians throughout Tennessee will continue to provide for their care."

Spending is a growing problem

Medicaid is not an entitlement program, and states are not required to offer it to their residents, but every state does. It is generally considered good public and fiscal policy: Federal matching funds bring hundreds of millions of dollars into the states every year.

Tennessee currently gets $2 from the federal government for every $1 of state funding devoted to the program. Any reduction in the state's share of the funding means twice the drop in federal aid.

Medicaid recipients fall into two groups -- a mandatory population meeting federal eligibility criteria and an optional one decided by each state. As long as a state offers Medicaid, the mandatory population will be eligible for benefits.

So far, no state is considering dropping Medicaid altogether, but coverage for these optional groups, usually working poor residents, is in trouble in some places.

Forced by diminishing reserves, states have been cutting Medicaid spending in recent years. They have reduced or frozen payment rates to physicians and others, scaled back covered benefits or even trimmed at the edges of eligibility.

"The low-bearing fruit is gone," said Nancy Atkins, chair of the National Assn. of State Medicaid Directors. "We are now making the deep cuts that hurt people."

Texas was the first state to make sweeping changes to expanded Medicaid coverage, reducing its rolls by nearly 190,000 beneficiaries.

And in Tennessee, the plan would impose some significant restrictions on the services provided to TennCare's population.

The Tennessee Medical Assn. supports Bredesen's proposed changes, if for no other reason than the alternative of completely dropping a huge number of recipients is so much worse.

"We want to see these reforms implemented. While the reforms may be far from perfect, it's the best chance we've got," Dr. Ingram said.

The loss of TennCare would mean potentially tens if not hundreds of thousands of patients suddenly seeking uncompensated care. This would put additional strain on already thin resources in both hospitals and physicians' offices, said TMA spokesman Russ Miller.

An analysis by the Center on Budget and Policy Priorities estimates that reverting to basic Medicaid would save the state $650 million but also would mean a loss of $1.2 billion in federal funding for the program. Uncompensated care would rise by somewhere between $230 million and $450 million.

The state would prefer not to cut the optional Medicaid recipients, but it doesn't have the financial wherewithal to provide that full $650 million in state funds necessary to maintain their current level of services, said TennCare spokeswoman, Marilyn Elam.

If there were no changes to TennCare, the state would stand to lose $132 million in federal funding next year anyway. That's because the federal matching rate is adjusted to state per capita income, which rose in Tennessee this year.

Back to top


ADDITIONAL INFORMATION

Remaking TennCare

Tennessee Gov. Phil Bredesen has proposed a reform plan designed to keep Medicaid spending to 26% of the state's budget. The changes would affect recipients whom Medicaid requires states to cover and those whom Tennessee has opted to cover voluntarily.

Optional and mandatory populations would be subject to:

  • A more restrictive definition of medical necessity.
  • A tiered pharmacy formulary.
  • Potential benefit limits, increased premiums and cost sharing if necessary to meet the spending target.

Optional populations would be subject to:

  • The loss of Early and Periodic Screening, Diagnosis and Treatment services.
  • Some restrictions on benefits, such as the number of prescriptions, physician visits, etc.
  • Premium increases and cost sharing.
  • Denial of services for outstanding co-payments.
  • Limits on the right to appeal.

Back to top


ADVERTISEMENT

ADVERTISE HERE


Featured
Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story


Read story

Goodbye

American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story


Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story


Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story


Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story


Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story


Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story


Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn