Tennessee House Approves Bill That Would Overhaul TennCare

The Tennessee House on May 29 unanimously passed a bill that would reform TennCare, the state's Medicaid managed care program, by amending state law to reflect changes proposed by Gov. Don Sundquist (R) in his application to the federal government to renew the program's waiver, the Memphis Commercial Appeal reports (Wade, Memphis Commercial Appeal, 5/30). CMS in January extended the program for one more year, but held off on approving Sundquist's changes, which call for stricter eligibility limits and scaled-back benefits (Kaiser Daily Health Policy Report, 1/8). Even though the Sundquist administration manages the program, lawmakers said they felt it necessary to approve the bill because they often are "blamed" for the program's problems (Memphis Commercial Appeal, 5/30). The bill is an attempt to "clear up" these problems and address constituent complaints, lawmakers said (Cheek, Nashville Tennessean, 5/30). The bill would enact the following reforms:

• The state would be required to reverify beneficiaries' eligibility on an annual basis. Although this has been a requirement since TennCare replaced the state's original, fee-for-service Medicaid program, eligibility verification had not been comprehensive until last December.
• The state would seek payments from beneficiaries who fraudulently receive benefits.
• State policy would stipulate that TennCare coverage for non-Medicaid-eligible beneficiaries is not an entitlement. The state Legislature will set coverage levels during the annual budgeting process (Memphis Commercial Appeal, 5/30).
• Coverage for non-Medicaid-eligible beneficiaries would be limited to those who have lived in the state for at least one year.
• Individuals who qualify for group insurance, such as through an employer, would be prohibited from receiving TennCare coverage.
• Coverage decisions for those uninsurable in the private market would be based on a review of medical records. (Nashville Tennessean, 5/30).

Stabilization Concerns
The House bill also would require the Sundquist administration to receive approval from the TennCare Oversight Committee before implementing its "stabilization" plan, the Commercial Appeal reports (Memphis Commercial Appeal, 5/30). Sundquist has proposed changing the role of TennCare managed care organizations to an "administrative services only" arrangement, meaning they would maintain management responsibilities, but the state would insure TennCare beneficiaries, effectively shifting the medical risk from participating MCOs to the state. 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 (Kaiser Daily Health Policy Report, 4/22). Lawmakers are concerned the stabilization plan could result in "fiscal disaster" for the state. State Rep. Frank Buck (D), chair of the House Judiciary Committee, said he is "scared to death" that the plan would eliminate capitated payments to MCOs. "[T]here'll be absolutely no incentive whatsoever for them to control costs," he added (Memphis Commercial Appeal, 5/30).