Dr. Wendy Long

The TennCare Bureau has completed the transition to a new managed care setup intended to provide more “holistic” and cost-effective care to enrollees.

The 1.2 million people enrolled in the state’s managed Medicaid program now have their mental and physical health care administered by a single managed care organization.

In East and West Tennessee, enrollees will use either Volunteer State Health Plan, a wholly owned subsidiary of BlueCross BlueShield of Tennessee that administers TennCare benefits, or AmeriChoice, a division of United Healthcare.

A “holistic” approach to enrollees’ health, focused on preventive medicine and coordination of care among doctors, will result in higher quality care, said Dr. Paul Banick, medical director for AmeriChoice in East Tennessee.

“And the cost savings will follow,” he said.

The change in East Tennessee, which went into effect Thursday, completes TennCare’s transition to a “full risk” managed Medicaid program, meaning the managed care organizations receive a predetermined payment for each enrollee, as opposed to payment based on the amount of care an enrollee receives.

The payment system encourages the conscientious use of health care services, TennCare officials said.

The new arrangement gives incentives that prompt managed care organizations “to want to provide preventive health care, to want to deal with health problems early, before they turn into larger problems that cost more,” said Dr. Wendy Long, chief medical officer at TennCare.

Advocates for the mentally ill say the change should result in more-thoughtful care for enrollees with those diseases or disorders.

Those patients will benefit from collaboration between their mental and physical health doctors who, when prescribing medicines, must stay within TennCare’s limit of five prescriptions, said Sita Diehl, executive director of the National Alliance on Mental Illness in Tennessee.

The five-prescription limit can be hard for TennCare enrollees with multiple doctors to manage, she said.

“In the past, (their doctors) have kind of duked it out and the consumer loses in the middle,” Ms. Diehl said, noting that the limits on prescriptions allow for some exceptions.

An integrated managed care and behavioral health company will review all of those recommended medications and coordinate what combinations work best for the patient, she said.

ECONOMIC SQUEEZE

The transition comes as TennCare officials are looking for ways to comply with a request from Tennessee Gov. Phil Bredesen to cut about $400 million in state money from the program.

TennCare officials currently are working with the Tennessee Department of Finance and Administration to figure out where to cut, said Lola Potter, deaprtment spokeswoman.

A federal economic stimulus package is expected to give millions more in federal Medicaid payments to the state, meaning fewer state-level cuts should be necessary now, said Tony Garr, executive director of the Tennessee Health Care Campaign. The Nashville-based group advocates for people on TennCare.

Over the past year, the bureau has embarked on a number of efforts to control costs, including limiting the hours of the home health and private-duty nursing care that enrollees can receive. The limits went into effect in September, but a recent court decision staved off the benefit cuts for 20 plaintiffs with serious nursing needs.

This year’s budget also gave less funding than expected for the expansion of a program to help people who make too much money to qualify for Medicaid but whose medical bills are high enough that they face poverty.

A maximum of 100,000 people were expected to be covered under the “medically needy” eligibility category, but the new budget provided coverage only for 20,000 people.

Despite the squeeze on the program, TennCare’s reserve fund is bigger than ever at more than $650 million, according to a November TennCare budget presentation.

Gordon Bonnyman, director of the Tennessee Justice Center, which also advocates for TennCare enrollees, said that by sitting on those funds instead of spending, the state is missing out on a 2-to-1 federal match that would come with the use of state dollars, he said.

“We have those huge reserves, and we’re not drawing down the federal money. No other state would consider that to be good stewardship” of Medicaid funds, Mr. Bonnyman said.

Dr. Long said that, considering the tight economic situation, TennCare likely will tap those reserve funds this fiscal year.