Hospitals agree to bail out TennCare

Hospitals agree to bail out TennCare

February 4th, 2011 by Andy Sher in News

NASHVILLE - The Tennessee Hospital Association has agreed to once again provide a transfusion of funds to help the state's beleaguered TennCare program avoid massive cuts, the group's president said Thursday.

THA President Craig Becker said the group's board agreed to ask Gov. Bill Haslam and the Legislature to extend a hospital "assessment" fee, enacted last year, for an additional 12 months.

In addition, hospitals have agreed to raise the fee, now at 3.52 percent of hospitals' net patient revenues, to 4 percent or a little more, Becker said.

It currently raises about $290 million annually, and the increase would push that to $400 million or $430 million per year, Becker said. The money would be used by the state to draw federal matching funds - providing a total of about $1.2 billion for the estimated $8 billion program.

Nothing is final yet, Becker said.

"We're still working with the administration," Becker said, noting the proposal would have to be accepted by the Legislature and the federal Centers for Medicaid and Medicare Services.

He warned that hospitals are near the end of what they can legally do to help TennCare, the state's version of Medicaid, and cannot afford to permanently fund forever the program that helps 1.2 million Tennesseans. Most recipients are lower-income children and pregnant women.

The TennCare Bureau earlier in the day made a budget presentation to Haslam, emphasizing problems that would be created if the hospital assessment disappeared.

Haslam and other officials said discussions were continuing with hospitals but didn't mention the THA board's action, which occurred last week.

"We obviously have to see how the hospital fee situation progresses with the hospitals and the Legislature, but we'll make the assumption that the rest of that one-time money is gone, and we'll have to take those cuts," Haslam told reporters earlier Thursday.

The TennCare Bureau is also recommending additional cuts of 1 to 2 percent as the state continues to recover from the worst economic downturn since the 1930s.

Later Thursday, TennCare spokeswoman Kelly Gunderson was guarded in her comments about hospitals' willingness to extend and increase the fee.

It "isn't a certainty because it has to go through the legislative process," she said. "There's still a lot of steps before it's official."

Earlier in the day during Haslam's final round of public budget hearings, TennCare Director Darin Gordon and other officials pointed out that the current hospital fee raises $210 million for TennCare and about $507 million in federal matching funds with another $80 million going to fund a pool payment to hospitals.

It would all go away July 1, blowing a combined $717.1 million hole in TennCare.

But the picture is complicated even further because Tennessee is losing another $121.5 million in one-time federal stimulus funds. If not replaced, those dollars and the resulting loss of federal matching funds that come with the stimulus money would tear another $442.7 million hole in the program.

These funds are largely being used to prevent cuts in provider reimbursements.

Becker said that, as part of the THA agreement, hospitals are willing to cover the entire amount of the state's share of the 7 percent rate reduction in provider payments, which comes to about $116 million.

But TennCare announced Thursday that it would seek an additional 1.5 percent in cuts to providers, costing hospitals, doctors and other providers another $77.29 million. That "would be enough to put the membership over the edge," Becker warned.

Counseling cuts

Meanwhile, TennCare officials laid out another proposed cut -- eliminating emotional, social and spiritual counseling services for dying patients in TennCare.

The agency's chief medical director, Dr. Wendy Long, told Haslam that, if the agency must cut 3 percent, optional hospice benefits would be cut, saving $14.5 million in state funds and also eliminating about $28.5 million in federal matching funds.

"It's important to point out that elimination of this benefit will not mean terminally ill individuals will go without needed medical care," Long emphasized. "Medical care, including pain medication, will continue to be provided in the same way that it's provided. ... It just won't be provided through hospice agencies."