Independent Study Supports Sundquist’s Proposal to Spend Additional $160M on TennCare

A PriceWaterhouseCoopers report released May 1 found that Tennessee Gov. Don Sundquist's (D) FY 2001-2002 budget, which would funnel an additional $160 million into TennCare -- the state's Medicaid managed care program -- would "keep the program actuarially funded," but several state lawmakers "remained skeptical" that the funds would "mak[e] their way" to doctors, hospitals and other providers. According to the Nashville Tennessean, Sundquist's budget would raise reimbursement rates for private managed care and mental health organizations that participate in TennCare and cover an additional 80,000 residents expected to enroll in the program next fiscal year. The PriceWaterhouseCoopers report recommends a 4.1% increase in reimbursements for managed care groups, an 8% boost for mental health groups and a 17% increase for pharmacy costs (de la Cruz, Nashville Tennessean, 5/2). According to the report, the overall funding increase, about 6.6% more than last year, would "account for medical inflation." State Deputy Finance Commissioner John Tighe said, "The medical side of the program is funded, and the increased funding for next year is more inflationary." Tennessee boosted TennCare funding by 13% in 1999 and an additional 26% in 2000. State officials said that the report did not "surprise" them. "This tells us the funding levels of the program last year appear to have been right," state Comptroller John Morgan said, adding, "At least for the next year we're dealing with medical inflation and that is really ideally where we should be" (Commins, Chattanooga Times & Free Press, 5/2).

Negative Numbers?
Still, state Sen. Jim Kyle (D) "didn't like how those numbers sounded," pointing out that increased funding for TennCare could hurt other initiatives. In addition, state House Finance Committee Chair Matt Kisber (D) said, "The challenge is, how do we get the money to providers who need it?" adding, "There is still a problem with the way managed care organizations set their reimbursement rates," often leading to a "wide disparity in payments for nearly identical services." Craig Becker, president of the Tennessee Hospital Association, agreed, saying, "Hospitals in Tennessee are receiving only 60% of what it costs them to provide care to TennCare patients" (Nashville Tennessean, 5/2). "We need to fix TennCare so those dollars reach the providers," he added (Chattanooga Times & Free Press, 5/2). Becker also "disliked" the report's finding that "so-called essential access payments" -- which tallied about $91 million last year -- to hospitals to "help offset TennCare and charity care losses are unnecessary." He said, "We believe the state needs to continue paying supplemental payments to keep our safety net and rural hospitals whole" (Nashville Tennessean, 5/2).

Patients' Rights Trio
Meanwhile, the state House Judiciary Committee on May 2 will begin discussions on three patients' rights bills, which would allow Tennessee residents to sue their HMOs for denials of "necessary medical care," the Tennessean reports. Two of the bills have received backing from consumer advocacy groups -- including the Tennessee Trial Lawyers Association and the Tennessee Medical Association -- while the third, "considered more friendly to the insurance industry," would cap damages for "pain and suffering" at $300,000, limit attorneys fees and prohibit suing for punitive damages. One of the two "patient-friendly" bills (HB 1466), sponsored by state Rep. Kim McMillan (D), would require patients to exhaust internal and external appeals before filing a lawsuit, while the second bill (HB 116), sponsored by state Rep. Gary Odom (D), permits an "immediate" lawsuit. Both bills allow patients to sue for punitive damages and unlimited pain and suffering damages. "There are lots of differences between the bills, but there may be some room for compromise, short of accepting the caps," McMillan said. According to state Sen. Jim Kyle (D), sponsor of the state Senate version McMillan's bill, the legislation faces opposition from Sundquist and "powerful senators." In addition, the bill's "perceived costs" have "made some lawmakers uneasy," he said. Sundquist and other opponents of the legislation also maintain that the state should "wait to see what the federal government decides" on the issue.

Charity Care Conundrum
In other Tennessee health care news, Erlanger Hospital's effort to "force" Memorial Hospital and other not-for-profit hospitals to provide additional charity care or pay more taxes has received a "less than charitable reception," the Times & Free Press reports. A state House panel last week for the third time delayed addressing the "Good Samaritan" bill (HB 1792), which would require community and religious hospitals to "prove" that they provide "as much charity care as what they receive in tax exemptions." State Rep. Bobby Wood (R), a sponsor of the bill in the state House, said that the measure "may end up being directed to a study committee this summer." Erlanger officials "claim" that they have a "competitive disadvantage" because Erlanger "bears more than four times as much of the TennCare losses" as "chief rival" Memorial Hospital (Commins/Flessner, Chattanooga Times & Free Press, 4/25).