Tennessee's health care program for the poor proved to be less financially healthy for the state's biggest health insurer last year.
But the chief financial officer for TennCare said he expects most of the plans in the program should do better over time as they continue to shift back into an at-risk, managed-care environment.
Scott Pierce, chief financial officer for TennCare, also said those insurers operating plans in TennCare are well capitalized and services are not threatened as they were with some smaller TennCare plans in the 1990s.
"When we wrote the bid proposals (in 2007), we really built in requirements that attracted players that had a lot of market share and were well capitalized with other books of business," Mr. Pierce said. "We wanted to make sure we had plans that could withstand some losses as they transform the marketplace."
Last year was the first full year since 2002 in which all of the managed care organizations that insure TennCare participants were put at financial risk. For the previous seven years, the state agreed to pay the insurers on a type of fee-for-service plan that TennCare was originally created in 1992 to replace.
BlueCross BlueShield of Tennessee, which insures the most TennCare participants through one of its subsidiaries' BlueCare program, lost $95.6 million before taxes, or $64.4 million after taxes, in 2009, according to filngs with the Tennessee Department of Commerce and Insurance.
The other two major TennCare plans - Americhoice and Amerigroup - were both profitable in 2009, earning $26.3 million and $22.5 million, respectively.
In an interview earlier this month, BlueCross President Vicky Gregg said BlueCare and other BlueCross plans are working to encourage more wellness programs and more cost-effective treatments of those needing care.
TennCare contractor balance sheets* Americhoice in Tennessee, a subsidiary of UnitedHealth Group, reported net income of $26.3 million on premium income of nearly $1.5 billion* Amerigroup of Tennessee, a subsidiary of Amerigroup based in Virgnia Beach, Va., reported net income of $22.5 million on premium income* BlueCare, operated by the BlueCross BlueShield of Tennessee subsidiary Volunteer State Health Plan, reported a pre-tax loss of $95.6 million on premium income of more than $1.6 billion.Source: Company filings with the Tennessee Department of Commerce and Insurance
Mr. Pierce said he expects such changes will help limit expenses and improve the results for TennCare plans over the life of their three- to five-year contracts with the state.
"In any situation like this where you are moving from an unmanaged environment to one with managed care, you don't change behaviors and patterns overnight or in one year's time," he said.
Gov. Phil Bredesen has revamped TennCare to limit coverage and costs over the past five years. From its $8.5 billion peak in 2005 when more than 1.3 million Tennessans were on TennCare, the program was cut in the current fiscal year to $7.6 billion, including federal stimulus funds, with nearly 1.2 million subscribers. A majority of the TennCare participants today are children, who are usually less expensive to cover than low-income adults.
With federal stimulus dollars running out, Gov. Bredesen has proposed a TennCare budget next year of about $6.7 million with cutbacks in payments to health care providers.