Not yet singing the Blues — TennCare officials say plan’s departure won’t kill the program
Not yet singing the Blues — TennCare officials say plan’s departure won’t kill the program
When the nation’s largest single Medicaid contractor wants to bail from the nation’s most ambitious program to enfranchise the uninsured, one of the first questions has to be whether it’s the idea or the execution that went south.
"I don’t think it’s the idea," says Gordon Bonnyman, director of the Tennessee Justice Center and nationally recognized consumer advocate. He and the rest of the nation are watching how state officials deal with the December announcement that BlueCross BlueShield of Tennessee will leave the TennCare program effective June 30. The Blues cover 645,000 TennCare members, about half of the program’s total enrollment.
As State Health Watch was going to press, TennCare officials insist the program still is viable and add they are courting managed care organizations to replace the Blues, but have no engagement to announce. The Blues’ position is that they are continuing to talk with state policy-makers, to help with either an orderly transition to another managed care organization or creation of an administrative services only (ASO) role for the company.
The Blues have been TennCare providers since the program’s inception in January 1994, and the relationship has been profitable. Through October 1999, the Medicaid business has given the company a cumulative after-tax gain of $33.1 million, of which $6.9 million is from underwriting gain and $26.2 million is investment interest income.
The decision to flee is driven by relatively poor performance in 1999 and the specter of losing money in 2000. After posting net gains of $10.6 million, $11.7 million, and $24.7 million during 1996-98, the company’s TennCare business posted a $350,000 net gain through October of last year. Anticipated losses for 2000, which would be its first red ink since 1995, are estimated at $51 million to $96 million.
"We are very willing to do whatever we can to help the program survive, but we just couldn’t sustain the losses that our actuaries are predicting," says Blues spokeswoman Frances Haman-Prewitt.
TennCare provided its managed care contractors a $16 per-member-per-month increase last year, of which at least $12.40 had to be passed on to providers. The rate increase kept physicians at least happy enough to forestall significant defections, but not enough to keep enough hospitals in the program and meet other anticipated costs, says Ms. Haman-Prewitt.
For hospitals, whose officials point out that indigent and uninsured patients will show up "no matter what," the looming departure of the Blues is disappointing.
"They didn’t pay much, but they did pay us and they paid quickly," says Craig Becker, president of Tennessee’s hospital association. He doesn’t fault poor utilization management for the Blues’ reversal of fortune in TennCare. "This has nothing to do with utilization. Utilization has been pretty much staying the same — it has everything to do with the fact that they’ve been chronically underfunded. If the Blues can’t do it, nobody can do it," he says. "It’s symptomatic that this program is on its last legs."
Tennessee Gov. Don Sundquist in late November announced a 12-step plan to rehab TennCare. (See "Tennessee governor proposes downsizing TennCare," State Health Watch, January 2000, p. 11.) The plan calls for dramatic changes in TennCare: closing enrollment temporarily to all but uninsured children and the Medicaid-eligible, limiting TennCare benefits, and increasing premiums for many of the program’s participants. Most of the proposed changes would require the Health Care Financing Administration to approve a change in the program’s Section 1115 Medicaid waiver.
"It seems to me that there will have to be a massive restructuring of the program to keep it afloat and likely sizable reductions in enrollment," says Robert Hurley, an associate professor of health administration at Virginia Commonwealth University in Richmond, and an observer of Medicaid programs around the country. "Since the major accomplishment of the program has been expanded enrollment, it’s hard to see what is gained if that is the price of saving it."
Operational disputes also poisoned the air between TennCare and the Blues. Late last year, TennCare inflicted on its managed care organizations the nation’s "most unworkable and most far-reaching" appeals process, says a statement from the Blues, in order to resolve a protracted dispute with consumer advocates. Implementing a 40-page federal court order addressing notification of denials of service and the delivery of care while the decision is being appealed will cost the Blues an estimated $86 million annually, says the company. At the same time, the order "leaves many questions unanswered" and its full impact can’t be determined, the company adds.
"What’s so onerous about this just boggles my mind," says Michelle Johnson, a staff attorney with the plaintiffs’ counsel, the Tennessee Justice Center. "A lot of this stuff we assumed, and I think the state would say they assumed, the MCOs were doing already."
The Blues also are worried about absorbing poor underwriting risks from the state’s second- and third-largest TennCare contractors, Access MedPLUS and Xantus. Access MedPLUS is out of compliance with statutory reserve requirements and Xantus has been in receivership since March 1999. A Davidson County (Nashville) chancellor was scheduled in mid-January to review the state’s latest plan to rehabilitate Xantus.
Contact Mr. Bonnyman at (615) 255-0331, Ms. Haman-Prewitt at (432) 755-5815, Mr. Becker at (615) 256-8240, the Bureau of TennCare (615) 741-0213, and Mr. Hurley at (804) 828-1891.
The court order was filed in the Nashville division of U.S. District Court for the Middle District of Tennessee (Civil Action No. 79-3107).
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