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Faced with deepening cuts, leaders of five Tennessee children's hospitals met with state officials in Nashville this week, appealing for a voice in budget discussions that impact their doctors and patients.

Meanwhile, pediatricians in the state say they are concerned about their patients and their practices' finances after seeing the impact of state-issued changes to CoverKids - the program that provides free health coverage for children and pregnant women who do not have insurance but make too much to qualify for TennCare.

The changes to CoverKids are among a series of recent cost-saving measures made by TennCare and other insurers over the past two years that have hit children's hospitals' bottom lines to an unprecedented degree, said Dr. Alan Kohrt, CEO of T.C. Thompson Children's Hospital at Erlanger. Kohrt is also chairman of the Children's Hospital Alliance of Tennessee, which met with state leaders this week.

Children's at Erlanger for example, has lost more than $3 million from a string of recent cuts.

"We're seeing increasing cuts to the children's hospitals that threaten the level of care that we provide," Kohrt said. "We have not had to cut any services - yet. But we continue to face financial pressure."

One of the key changes that has worried both hospitals and pediatricians was a switch in how the state administers CoverKids, which covers 60,000 Tennessee children.

The Oct. 1, 2013, change - a cost-saving measure - meant the program that managed CoverKids was switched from the commercial BlueCross Network S to TennCare Select, a narrower network traditionally used for foster children and children with disabilities.

State officials have said there is an 85 percent overlap between the providers in the old network and new one, and that 696 pediatricians are in the TennCare Select network.

But leaders with the Children's Hospital Alliance said the change has meant many families in the state have had to switch doctors.

Dr. Suzanne Berman, managing partner of Plateau Pediatrics in Crossville, Tenn., said surrounding specialists who do take TennCare Select are stretched thin, so wait times to try to find someone who will see a baby with a new onset of seizures, for example, are even longer than they used to be.

And for all doctors, the change means markedly lower reimbursements.

At Berman's practice, fees for office visits dropped about 16 percent. Other fees dropped 30 percent or so. The worst, Berman said, were reimbursements for vaccinations, which plummeted from over $20 to $10.25.

For Children's Hospital, the network switch translated to a $1 million loss this past fiscal year, said Kohrt.

Some pediatricians have opted to stop taking CoverKids altogether.

KidsChoice Pediatrics in Seymour, Tenn., near Knoxville, tried to stay in the new CoverKids network for several months, but "the vast majority" of local pediatricians in nearby counties did not - meaning KidsChoice became flooded with calls from families trying to find a new doctor.

In a letter the KidsCount doctors drafted to patients in July, they wrote that it was impossible as a small practice to accept such a large number of patients and deal with such lower reimbursement rates - so they stopped taking CoverKids altogether.

"We truly regret having to make this change," the letter said. "We have developed many close relationships with our CoverKids families."

TennCare spokesman John Goetz said Thursday that the change was part of the budget reduction process, and that it "prevented other reductions that could have occurred."

Goetz added that staying on the BlueCross network was problematic because of how commercial negotiations between BlueCross and hospital systems could mean certain hospitals were unintentionally left out of CoverKids.

"The state could prevent similar situations in the future because we have more control over the Select network," Goetz said.


Children's hospitals are facing more pressures besides the CoverKids switch.

Changes to how BlueCross reimburses for labs and changes to the TennCare's "rate corridor" - calculated payment rates hospitals - have also translated to over $2 million in losses for Erlanger, Kohrt says.

Such decisions have had an "extremely adverse effect" on children's hospitals ability to give "the safest and highest quality care to all children in our state," said a letter from the Children's Hospital Alliance, which is also made up of hospitals in Knoxville, Johnson City, Nashville and Memphis.

Children's hospitals need to be treated completely differently than community hospitals, members of the group explained during their meeting Monday with Commissioner OVERSET FOLLOWS:of Finance and Administration Larry Martin and TennCare Director Darin Gordon.

The intensity of the services are usually significantly greater. More caregivers are always required. Overall expenses are greater. And children's hospitals are heavily dependent on Medicaid.

Between 55 and 65 percent of all patients treated at Erlanger are on Medicaid, said Kohrt.

"What seems like a small cut can be disastrous for children's hospitals. The cuts are much deeper now," he said, adding that whatever TennCare cuts also is trimmed from the federal match as well.

And the children's hospital leaders are worried cuts will only continue.

Kohrt said state leaders were "very receptive" to the hospitals' concerns, and agreed to begin meeting regularly with the group.

"We have historically stayed in contact with the Children's Hospital Alliance on issues that are important to them and TennCare and the CoverKids program will continue to do so," Goetz said.

The group did not discuss the recent controversy surrounding a lawsuit filed against TennCare, which argues that thousands in the state - including children - have faced inordinately long delays in obtaining coverage.

But Kohrt said the discussion did touch on the issue of Medicaid expansion.

If the state is facing a shortfall and the federal government is offering to put money toward expansion, Kohrt asked "why would we go forward with cutting services to kids?"

The most important thing right now, he said, is keeping the channels of communication open.

"We have to continue this dialog, and stress that the shortfall shouldn't be borne on the backs of these kids."

Contact staff writer Kate Harrison Belz at or 423-757-6673.