Tennessee Governor Announces TennCare Will End Coverage for About 300,000, Change Benefits for Another 400,000

Tennessee Gov. Phil Bredesen (D) on Monday announced he will eliminate coverage for 323,000 adults enrolled in TennCare, the state's Medicaid managed care program, to reduce costs by about $1.7 billion annually, the AP/Raleigh News & Observer reports. Adults expected to lose coverage generally have annual incomes that are too high to qualify for traditional Medicaid (Gouras, AP/Raleigh News & Observer, 1/11). In addition, Bredesen called for restrictions on coverage for about 396,000 adult beneficiaries who would remain in the program. However, none of the 612,000 children in TennCare would lose coverage or be subject to coverage changes, the Tennessean reports (Wadhwani, Tennessean, 1/11). TennCare, which was launched in 1994 to expand traditional Medicaid benefits, provides health care coverage to 1.3 million low-income, uninsured and disabled Tennessee residents -- about 22% of the state's population. In November, Bredesen announced that he would dissolve TennCare and return it to a traditional Medicaid program, unless talks between the state and advocates for TennCare beneficiaries resulted in an agreement about program reforms (Kaiser Daily Health Policy Report, 11/11/04). Bredesen said he had been working with lawyers representing those who face reduced benefits or elimination from the program, but he said they were "living in a fairyland" and were not open to realistic solutions (AP/Raleigh News & Observer, 1/11).

Reform Details
According to the Memphis Commercial Appeal, adults set to lose TennCare coverage include 121,000 who would otherwise be uninsured and considered "mostly healthy"; 67,000 who have pre-existing medical conditions that prevent them from obtaining private health coverage; 97,000 "medically needy adults" who have incomes too high for traditional Medicaid but cannot afford their medical bills; and 3,000 "dual eligibles" who qualify for both Medicaid and Medicare (Memphis Commercial Appeal, 1/11). Bredesen's plan would create a new, "basic TennCare" program, which he said would be similar to Medicaid programs in other states, the Tennessean reports. The proposal calls for most adults remaining in TennCare to have limited benefits, including coverage for four prescriptions monthly, 12 physician visits annually and 20 days of hospital care annually. According to the Tennessean, Bredesen said that his plan does not include a way for beneficiaries to appeal for additional coverage (Wadhwani, Tennessean, 1/11).

Next Steps
The plan must be submitted to the joint Legislature TennCare Oversight Committee and a copy of the plan also must go to the Tennessee Justice Center, which under a court order has the right to view any written plans, the Tennessean reports. According to the Tennessean, CMS will review the plan next month, and if the agency gives its approval, Tennessee would send out letters in April to inform some beneficiaries that their coverage will end in 30 days. The state in May would impose the cap on prescription drug benefits and by fall would inform more beneficiaries that they will lose benefits in 30 days. According to the Tennessean, coverage for 97,000 beneficiaries who are considered "medically needy" would be phased out as their one-year eligibility expires. Officials said all changes would be implemented by early 2006 (Tennessean [1], 1/11).

Court Action
Although Bredesen's proposed changes do not require court action, lawyers for the governor on Monday filed papers in federal court to inform the court of the changes, the Tennessean reports. According to the Tennessean, the move also is part of the state's future plans to modify rules governing beneficiaries' appeals of medical and pharmacy benefits and to create a new definition of "medical necessity" (Tennessean [2], 1/11).

Reaction
Bredesen said, "I say to you with a clear heart that I've tried everything. There is no big lump of federal money that will make the problem go away. It is just not there" (AP/Raleigh News & Observer, 1/11). He added, "When this is all done and over, we should still end up with one of the broadest, most generous programs in the country," noting that TennCare would remain one of the top ten programs in the country (Wadhwani, Tennessean, 1/11). Gordon Bonnyman, a lawyer with the Tennessee Justice Center and an advocate for TennCare beneficiaries, called the governor's plan "a natural disaster." He said, "This is simply unacceptable. This is going to hit the weakest people in the program." Bonnyman added that reducing enrollment and benefits in the program would result in more health care spending for the state because former beneficiaries would seek care in emergency departments. Matt Leber, director of the Nashville Peace and Justice Center, said, "It's going to have people suffering. It means that Bredesen hasn't managed TennCare, he has dismantled it" (Hamburg, Tennessean, 1/11).

Broadcast Coverage
NPR's "Morning Edition" on Tuesday reported on the impact of TennCare's coverage changes. The segment includes comments from Bredesen and a TennCare beneficiary (Fellows, "Morning Edition," NPR, 1/11).

The complete segment is available online in RealPlayer.