With Medicaid Waiver Set to Expire, Tennessee Considers Host of Potential TennCare Reforms

With Tennessee's federal waiver for TennCare, the state's Medicaid managed care program, set to expire at the end of the year and renewal "neither automatic nor guaranteed," the state will likely establish a "new and improved" three-tiered TennCare system, the Memphis Business Journal reports. The plan, based on recommendations from the Commission on the Future of TennCare, would separate TennCare into three "distinct" plans -- TennCare II for traditional Medicaid beneficiaries, TennCare Assist to help state residents purchase employer-sponsored coverage and TennCare Standard for residents who are not offered health coverage through their employer or who have pre-existing conditions that preclude them from obtaining health insurance. According to David Garriott, president of the Tennessee Medical Association, TennCare Assist and TennCare Standard would separate the 500,000 non-Medicaid beneficiaries currently covered by the program and reduce the program's "perverse incentive" for employers to shift less healthy employees from private coverage to TennCare. In addition, the TennCare commission recommended that the state should limit prescriptions under TennCare to "perhaps seven per month" to prevent "profligate abuse" and control costs. Tennessee may also hire a representative from the private health insurance industry to manage the TennCare and "stay on top" of MCOs participating in the program. "We want the program to be much more accountable than in the past," Garriott said, adding, "For the program to work the state has to accept responsibility for oversight, and to financially stand behind the MCOs." The TennCare commission, which included 18 individuals from the health care industry, issued a final report to Gov. Don Sundquist (R) in November. During the discussions, members issued a "16-point list of key concerns" such as "making TennCare actuarially sound" and imposing "firm oversight" on MCOs in the program (Shepard, Memphis Business Journal, 6/11).

'Pay or Play' Policy
In addition, Tennessee may impose "pay or play" rules -- which would force businesses to offer health insurance to employees or pay TennCare to help cover the cost -- as part of a TennCare reform plan, state Rep. Gene Caldwell (D), chair of the state Joint TennCare Oversight Committee, said. "We have anecdotal evidence that a lot of small companies have dropped insurance so their employees can get on TennCare. We don't think that's right," Caldwell said, adding, "The pay or play plan is the way the state might push business into participating. Whether it will pass or not, I don't know," he said. Last year, a "pay or play" bill "died quietly" in a legislative committee. TennCare Commissioner John Tighe said that the state program "should be the last resort, not the first," for most Tennessee residents. "If you're a businessman who offers health insurance to your employees, you're contributing," Tighe said, adding, "If you don't and you are benefiting because TennCare is covering your workers, you ought to be contributing." However, state and local business leaders called the argument "wrong." Dave Goetz, president of the Tennessee Association of Business, said, "The problem is, businesses are not (failing to offer) health care because they're bad people. They're not offering health care because they can't afford it," adding, "The idea that somehow all you have to do is pass a law and you will force companies to do something is really nonsensical. What you will force them to do is leave Tennessee." Although the "impact" the legislation would have on businesses remains unclear, state Sen. David Fowler (R) said that the bill could "stifle entrepreneurship" and introduce "bankrupting costs" (Walton, Chattanooga Times & Free Press, 6/12).