Proposal by Tennessee Governor Would Shift Risk of Insuring TennCare Beneficiaries to State

Tennessee officials last week unveiled to the federal government and state managed care organization officials a plan to "radical[ly]" restructure TennCare, the state's Medicaid managed care program, by shifting the medical risk from participating MCOs to the state, the Memphis Commercial Appeal reports. Currently, TennCare MCOs are paid a per-patient monthly fee to cover administrative and health care costs and are responsible for any costs that exceed the payments they receive from the state. But under a plan by Gov. Don Sundquist (R), MCOs' role in the program would change to an "administrative services only" arrangement, meaning they would maintain management responsibilities, but the state would self-insure TennCare beneficiaries. The plan calls for the state to pay MCOs a 7% management fee and another 2% if they meet performance standards. MCOs also would receive a 25% share of estimated medical cost savings. The health plans "would still maintain the provider and specialty care networks [and] be responsible for transportation [and] finding out-of-network providers when necessary," TennCare spokesperson Lola Potter said, adding, "The only difference is that the state would have all the medical risk." Potter said, "There is a lot of instability in the MCOs right now. ... We floated the idea to them as a way to help stabilize things, just to ask them, 'What do you think?' It was just a preliminary conversation." Al King, president of TLC Health Plan of Memphis, called the plan "a good idea," saying, "Our medical loss ratios are going up. ... I think this is designed to alleviate a lot of the concerns of the MCOs about where [TennCare] is going" (Wade, Memphis Commercial Appeal, 4/20).

Protesting Sundquist's Budget
In other TennCare news, a coalition of community and advocacy groups campaigned in Memphis on April 19 urging voters to press lawmakers to "fully fund" the program. Under Sundquist's current budget proposal, children in families earning more than 200% of the federal poverty level and other individuals earning more than 100% of poverty would not qualify for coverage; about 60,000 people would lose TennCare benefits under the plan. The coalition, made up of about 20 groups, including the AARP and the National Alliance for the Mentally Ill, is hoping to keep TennCare benefits available to those with annual incomes up to 250% of poverty. Similar events are planned for nine other cities around the state (Powers, Memphis Commercial Appeal, 4/20).