Prescription Drugs Drive Up TennCare Costs; Governor’s Budget Plan Might Not Be Enough, Study Finds

Prescription drug costs are pushing up per-patient costs under TennCare, Tennessee's Medicaid managed care program, the Memphis Commercial Appeal reports. According to a PriceWaterhouseCoopers study conducted to help the state plan its TennCare budget, the cost of providing prescription drugs to beneficiaries has increased 15%. The Commercial Appeal does not report the time period the study examined (Wade, Memphis Commercial Appeal, 5/15). The study says that to adjust for the drug cost increases, the state will need to spend an additional 9.9%, or $17.07, per beneficiary, for a total of $188.88 per beneficiary, during the fiscal year that starts July 1 (Park, Chattanooga Times & Free Press, 5/15). The study also found that TennCare reimbursements for hospitals, which average $825 daily for inpatient care, are higher than many other states, suggesting that hospitals could afford a $100 million payment reduction. The savings could be used to create a fund for financially struggling hospitals, the study says (Lewis, Nashville Tennessean, 5/15).

Lessons For Lawmakers
The study's findings have some lawmakers "worried" that Gov. Don Sundquist's (R) proposed 3.8%, or $114 million, funding increase for TennCare would be insufficient to cover the program's costs (Memphis Commercial Appeal, 5/15). But Deputy State Finance Commissioner John Tighe, who oversees TennCare, said the state is aware of the rising drug costs and could control spending by requiring copayments, limiting fraud and abuse and requiring physicians to use "best practices" when prescribing medications (Chattanooga Times & Free Press, 5/15). State Rep. Gene Caldwell (D) criticized the study for not taking into account a recent court ruling (Nashville Tennessean, 3/6). In December, U.S. District Court Judge John Nixon, ruling in a lawsuit filed by the Tennessee Justice Center, said that Tennessee must move all TennCare beneficiaries under age 21, who make up 40% of total enrollment, into a separate program because the state has failed to provide adequate early periodic screening diagnosis and treatment, or EPSDT, services to them (Kaiser Daily Health Policy Report, 3/6). "We've got a court order saying we have to do these things, but we're not going to put in anything to pay for it," Caldwell said (Memphis Commercial Appeal, 5/15). The Times & Free Press reports, however, that state officials are confident that Sundquist's proposed budget will provide "adequate funding" for TennCare (Chattanooga Times & Free Press, 5/15).