TennCare, Tennessee's unique managed-care plan covering the poor, uninsured and uninsurable, has won another year to implement reforms its director says are necessary for its survival.
The Tennessee Legislature on May 24 approved a state budget that included a $200 million boost in funding for TennCare. The additional funds would increase payments to the 11 managed-care organizations serving TennCare enrollees. Most of that money would go directly to healthcare providers, including physicians.
TennCare's 1999-2000 budget, two-thirds of which is paid for by the federal government, is now $4.3 billion. TennCare covers about 1.3 million people: 800,000 Medicaid-eligible recipients and 500,000 uninsured and uninsurable. That represents one of four Tennesseans, although it doesn't cover all those without insurance.
The state established TennCare in 1994 to replace its traditional Medicaid program. By using risk-taking HMOs, the state hoped to save money and add uninsured residents to its plan.
1999 has been TennCare's most tumultuous year yet. Developments included the installation of the plan's fourth director in five years and the state takeover of a TennCare managed-care contractor that had run into financial trouble.
The extra funding, says TennCare Director Brian Lapps Sr., will allow the agency to set up closer monitoring of managed-care organizations. The third-largest TennCare plan, Nashville-based Xanthus HealthPlan, was taken over by the state in April after falling behind on payments to physicians.
The agency also plans to increase its 220-person staff by 43%, adding 95 managed-care-savvy employees; push for more investigation of fraud and abuse; and require additional eligibility documentation.
A Supreme Court ruling in May thwarted plans to require a six-month residency to receive TennCare.
"I've got 21/2 to three years (to revamp the program); that's what I told the governor (Don Sundquist)," Lapps says. "I told him (that during that time) I would anger so many people someone would have to start the car for me."
Lapps' plan, delivered before legislators May 10, was criticized by citizens groups, who said the reforms don't sound like anything new.
The major problem is money, says Russ Miller, senior vice president of the Tennessee Medical Association. TennCare pays $88 per enrollee per month, well below the break-even point of $120 per enrollee per month. TennCare is proposing $121 per enrollee per month, but a percentage of that will be taken off the top by managed-care insurers, Miller says.
When TennCare was proposed, he says, the state expected that through managed care it would increase the number of people enrolled and still save 40% on the cost of Medicaid. That's not happening, he says, despite the assertion of Tennessee Finance Commissioner John Ferguson that the state's Medicaid budget would be $900 million higher without TennCare.
"If you continue to put more people into it, you've got to put more money into it," Miller says.
Miller says the TMA will begin distributing a survey this month to find out how many doctors have dropped out of TennCare. Doctors are not legally bound to participate in the plan.