More Troubles for TennCare

Published April 1, 2002

The federal government’s unwillingness to meet Tennessee’s request for $13 billion over three years for TennCare could mean the end of the state’s Medicaid managed care program and force the state to return to traditional Medicaid, a state official told the Memphis Commercial Appeal. Health Care News has been following the troubled state government-run health care experiment since March of last year.

Reports indicate the Center for Medicare and Medicaid (CMS) is offering only $12 billion for the three-year waiver the state is seeking for TennCare, which now covers 1.4 million people.

“If we don’t get close to $13 billion over the next three years [beginning in 2003], we will have no choice but to significantly reduce the program,” Deputy Finance Commissioner John Tighe said. He explained the additional $330 million per year is needed to fund Gov. Don Sundquist’s (R) proposal to split the program into three parts and reduce benefits to beneficiaries with higher incomes. Because negotiations with CMS are going “so badly,” Tighe said the state is “crunching the numbers” on dropping the managed care aspect of TennCare and returning to fee-for-service Medicaid.

The dismantling of TennCare would leave 400,000 people, ineligible for standard Medicaid, without health coverage.

No More Favored Status

Speaking before the State Senate Commerce Committee, Tighe told lawmakers Tennessee would have a better chance of obtaining more federal funding if Sundquist’s proposal, which attempts to address some concerns federal officials have raised about TennCare, was approved by the legislature.

What the federal government is looking for is coverage to an expanded population of low-income people using the resources and capabilities of the private-sector insurance market. The federal government also seeks to have Tennessee reform TennCare so companies are not allowed to dump their high-medical-risk employees into the program.

Tighe told the Commercial Appeal that even if the state returned to traditional Medicaid, the savings might be minimal because of administrative costs related to the switch to fee-for-service and the loss of funding for several treatments—including mental health services—the federal government currently helps subsidize.

While state officials are still negotiating with CMS, State Senator Jerry Cooper (D) said the days of Tennessee receiving preferred treatment from the federal government are over.

In the past, favored treatment may have been due to the influence of the current CMS administrator, long-term Republican health care advisor Tom Scully. At the February meeting of the National Health Insurance Underwriters, Scully claimed he has “always been a fan of TennCare.”

But Cooper thinks Tennessee is not likely to get any more funding than other states, unless Sundquist and Sen. Bill Frist (R-Tennessee) make a personal plea to President George W. Bush for the additional $1 billion.

For more information …

on the troubled history of TennCare, see the following articles in past issues of Health Care News:

  • “Tennessee Taxpayers Revolt” and “Tennessee Tax Protest: A Report from the Frontlines,” August 2001;

  • “High-Risk HIP Will Return to Tennessee,” October 2001;

  • “Tennessee Employers May Face ‘Play or Pay,'” November 2001;

  • “More Trouble Ahead for TennCare,” December 2001; and

  • “TennCare Reform Moves Ahead,” January 2002.