New TennCare director faces many challenges, a troubling history
New TennCare director faces many challenges, a troubling history
New TennCare director Mark Reynolds, the eighth person to hold that job in the troubled program’s six-year operating history, faces a multitude of challenges in trying to salvage a program that started with great promise but has not been able to deliver.
Mr. Reynolds left his position as acting commissioner of the Massachusetts Division of Medical Assistance, managing $4.3 billion in health programs and serving 940,000 people, to take on a program serving 1.3 million Tennessee residents from a $4.3 billion budget. He said he decided to make the change because "TennCare is on the cutting edge of public health policy. What made the position more desirable is the incredible support from the governor’s office, the legislative leadership, and the federal oversight agency."
According to several studies, he’s going to need all that support and more to turn around a program that has fallen victim to poor and inconsistent management, inadequate funding, poor state oversight of managed care organizations, and an outdated computer system.
TennCare was born 90 days after then-Gov. Ned McWherter told legislators it would take $764 million in new money or drastic cuts to keep the Medicaid program alive. He challenged them to take the bold step to withdraw from Medicaid and establish a new program to deliver health care. "If we are brave enough to abandon a Medicaid system that we all know has run its course, I offer a future for Tennessee without limits," Mr. McWherter proclaimed.
Under TennCare, the state planned to cover not only Medicaid recipients, but also the uninsured and the uninsurable. Key to the ability to expand coverage was a move from paying health care providers the actual costs of services to a managed care system in which managed care organizations receive a capitated payment per enrollee per month. The managed care organizations contracted with the state for their payment and then contracted with doctors, hospitals, and other providers to deliver care.
The goal was to save enough money through the efficiencies of managed care and by converting federal and state payments made directly to hospitals for indigent care to payment for insurance coverage. But those prospective savings never materialized and, in March 1999, PricewaterhouseCoopers issued an actuarial statement indicating that TennCare was underfunded by 10%, or about $200 million annually. The state has had to take over operation of Xantus, the third-largest TennCare MCO, because the plan was faced with massive losses and was behind in payments to providers. And BlueCross BlueShield of Tennessee has said it intends to pull out as of July 1. The Blues cover about 50% of total TennCare enrollment.
What the think tanks think
A Commonwealth Fund and Kaiser Family Foundation study of the Tennessee situation conducted by Mathematica Policy Research’s Marsha Gold states success of the program depended on sufficiently developed systems to avoid major issues with network adequacy or quality. But the developers had little managed care infrastructure on which to build in ways to recruit sufficient plans and control provider capacity. In 1993, Ms. Gold reports, 11 small HMOs enrolled 216,000 people and BlueCross BlueShield enrolled another 1 million in loosely structured PPOs. The only Medicaid managed care plan was a small, partly capitated HMO with 35,000 enrollees.
A Washington, DC-based Urban Institute report says the current TennCare crisis is due to the fact that there never was enough money to finance a roughly 50% increase in coverage. Because the program has been underfunded, the report says, capitation rates to managed care plans have been very low. And because capitation rates are low, provider payments likewise are low.
Tennessee’s hospitals say they lost more than $450 million in 1998, and physicians say the rates they are paid are very low and the plans are slow in processing claims. A major challenge for Reynolds will be to rebuild relations with providers.
The Urban Institute does say that the crisis mentality makes it hard to remember the good TennCare has accomplished. Their review indicates that the program has increased coverage of many who would otherwise be uninsured, has improved access to care, has reduced emergency room visits, and has increased utilization of many preventive services.
On March 2, Gov. Don Sundquist — a Republican who was elected in 1994 on an anti-tax platform but who said a year ago he would support an income tax to address the state’s fiscal crisis — held the Summit on the Future of TennCare to "find solutions. The best way to do that is to get doctors, hospitals, and others in the health care industry together to share their ideas, talk about what’s working in other states, and work together to make TennCare a success," he said.
At that meeting, the Tennessee Medical Association presented a list of policy questions to be considered by those developing a solution and expressed the belief that the best solution will flow from the answers to those questions.
The doctors said the state needs to decide:
• Do the people of Tennessee want to provide health insurance coverage to every citizen who is uninsurable? What should the state provide for those who are uninsured? Is there an upper limit of income beyond which an individual should be expected to self-insure?
• If the state does provide uninsured and uninsurable coverage, what conditions, medicines, and treatment modalities should be covered? Who decides what should and should not be covered?
• In providing such coverage, how does the state create market conditions that deter the dumping of patients into the state system?
• How will the program ensure that physicians and other providers remain solvent so that citizens can continue to receive needed health care services?
• What responsibility should the state bear for ensuring that hospitals, physicians, and other providers get adequate and timely reimbursement for their services? Does adequate reimbursement cover the cost of providing care, or should the state anticipate or plan to ensure some reasonable profit?
• What role, if any, should private managed care companies play in the next form of TennCare? How many companies are necessary?
TennCare spokeswoman Lola Potter tells State Health Watch that in anticipation of Mr. Reynolds’ arrival, state officials are feverishly working to complete waiver amendments for the Health Care Financing Administration. Although the federal agency has not set a timetable for review and approval, TennCare deputy commissioner of finance and administration John Tighe has said that to meet a goal of having more managed care organizations in place by Jan. 1, 2001, it is necessary to have the program details squared away by July 1. In addition to working with HCFA, Tighe is working with the state legislature on a funding package for the overhauled version of TennCare.
In an interview with Tennessee news media, Mr. Reynolds said he accepted the position because "TennCare is known nationwide for what they attempted to do to cover as many people as possible and to relieve the pressure on the uninsured. Although it’s had a lot of trouble and a lot of relationships have been hurt along the way, I believe I can contribute to bringing TennCare out of that situation."
Acknowledging that he is the highest-paid executive in Tennessee state government (making $95,000 per year more than Gov. Don Sundquist’s $85,000), Mr. Reynolds said he had not given Sundquist a formal commitment on how long he planned to be in the state, but, "I’m interested in trying to make sure this program works and sticking it out. What we talked about is that we want to set up a situation where there isn’t a ninth TennCare director a year from now. What I need to do is build the organization, and that’s something that doesn’t happen in 12 months. That’s something that really takes an investment of a few years."
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.