Judge Orders State to Transfer 550,000 TennCare Child Enrollees Into Separate Program; Ruling Could Mean End of TennCare

A December court decision ordering Tennessee to shift more than half a million children enrolled in TennCare into a separate program threatens the future of the state's seven-year-old Medicaid managed care program, the Nashville Tennessean reports. Calling TennCare a "failed experiment," U.S. District Judge John Nixon ordered state officials to move 550,000 children under 21 years old, who compose 40% of all TennCare enrollees, into another program because the state has "failed to provide adequate" medical services to them. According to TennCare Director Mark Reynolds, the ruling could lead to the end of the program "if it means that managed care no longer can be used to provide services to children." Without managed care, the state would have to reinstate traditional fee-for-service Medicaid. About 500,000 people currently enrolled in TennCare, however, might not be eligible for regular Medicaid. Under TennCare's waiver, the state can extend coverage to non-Medicaid eligible populations only if managed care is used to save money for the state and the federal government, which pays two-third's of the program's costs, according to Reynolds. "If you can't save money, or if someone believes you shouldn't use managed care, we're not allowed to cover more people," he said.

Scope of Ruling Uncertain
The court order stems from a lawsuit filed in 1998 by the Tennessee Justice Center alleging that TennCare did not provide early periodic screening, diagnosis and treatment to children as required by federal Medicaid law. Although the state agreed to "improve services," the center asked Nixon last year to find the state in contempt for not enacting reforms. After hearing testimony from 20 parents who said their children were unable to access care, Nixon wrote in his ruling that TennCare has "indeed broken down" and the program, "as it relates to the under-21 population, has proven to be unworkable." Nixon also ordered the appointment of a "special master" to oversee the creation of a new health plan for children. Reynolds said it was unclear whether Nixon intended to eliminate managed care for children in his Dec. 18 ruling, adding that TennCare officials were considering seeking a "clarification or reconsideration" from the judge. Reynolds also disagreed with Nixon's contention that managed care under TennCare had failed child enrollees. "More preventive care happens in Tennessee due to managed care. Overall it's provided for improved care," he said (Snyder, Nashville Tennessean, 1/10).