Change in federal guidelines could lessen TennCare cuts

Change in federal guidelines could lessen TennCare cuts

February 23rd, 2010 by Andy Sher in Politics

NASHVILLE -- TennCare's chief said Monday he is advising Gov. Phil Bredesen that the state use an unexpected change in federal Medicaid rules to offset about a quarter of the $500 million in new TennCare cuts the administration plans to make in its latest round of reductions.

"I've already shot off a recommendation to the governor about what I would recommend," TennCare Director Darin Gordon told the legislature's TennCare Oversight Committee.

Tennessee is coming into the estimated $120 million in one-time funds as a result of a policy change agreed to on Friday by the federal Centers for Medicare and Medicaid Services.

Mr. Gordon confirmed the change as lawmakers and doctors continued to wring their hands over the latest round of cuts as the state wrestles with the worst economic downturn since the Great Depression.

The TennCare director said he hopes to use the additional funds to "mitigate or postpone" recently recommended caps limiting services to adult, nonpregnant enrollees on TennCare, the state's version of Medicaid.

Those proposals include limiting in-patient hospital stays for adults to no more than $10,000 a year and capping lab and X-ray procedures to eight a year. The proposals would respectively cut state and federal funding to TennCare by $149.7 million and $60.2 million.

"As we go each year further into this (revenue woes), the more severe and difficult the cuts become," Mr. Gordon later told reporters. "Obviously, I would look at the most recent cuts first and foremost. Obviously there's not enough money to address all of them because if you total them all together (latest round of proposed cuts), you're looking somewhere in the neighborhood of $450 million plus."

Cuts made last year and those proposed for 2010-11 total $1.22 billion in state and federal funds for TennCare, which serves low-income pregnant women and children as well as categories of adults including some who are disabled.

TennCare's budget would stand at $6.79 billion if the latest round of cuts go through.

The CMS decision involves a "clawback" provision. It requires states to reimburse the federal government for some spending on prescription drug benefits for people who are jointly eligible for coverage by both the Medicare program, which covers seniors, and Medicaid, the state program that covers many poor people.

States are having to pay less than expected under the CMS decision, Mr. Gordon said. The state was lobbying for the change but was not expecting it to happen, he said.

Mr. Gordon also noted that if Congress approves an extension of federal Medicaid matching rates for states including Tennessee, the state could reap an additional $260 million. But Mr. Gordon said the budget does not count on that happening.

During Monday's hearing, frustrated lawmakers lashed out at cuts. Sen. Doug Jackson, D-Dickson, laid out a bleak future in which the state doesn't fully recover from the recession and escalating TennCare costs force additional costs, sharply limiting services.

"I worry about the next year and the year after that and the year after that in just how far do we go?" Sen. Jackson said.

The Tennessee Medical Association's director of government affairs, Gary Zelizer, said physicians remain unhappy over 7 percent cuts in reimbursements approved by lawmakers last year. They take effect July 1 and Mr. Zelizer said could prove disruptive to the networks of providers that give care to the estimated 1.2 million TennCare enrollees.

He also criticized Chattanooga-based BlueCross BlueShield of Tennessee's recent move to slash reimbursements to specialists in the insurer's network by 14 percent.

The Tennessee Medical Association's president-elect, Chattanooga oncologist B.W. Ruffner, asked lawmakers to exercise caution in requiring additional co-pays from TennCare recipients.

"I agree that co-pays will change the behavior of patients," Dr. Ruffner said. "But you've got to be careful, that sometimes it changes their behavior in the wrong way."