TennCare's current structure not 'financially viable,' consultant says (shillarycare bankrupting TN)

The Tennessean ^ | 12/11/03 | Tom Sharp

[GailA]

Tennessee cannot afford to keep the TennCare program as it now exists, according to an independent assessment released today by Gov. Phil Bredesen.

''This has been a sobering day for me. The news is certainly not good,'' Bredesen said. ''It's very clear that TennCare is not viable in its current configuration.''

[GailA]

http://www.tennessean.com/government/archives/03/12/43939558.shtml

Gov. Bredesen says TennCare can't be kept afloat without changes By BILL LEWIS and DURAN CHEEK Staff Writers

Consultants who conducted a financial checkup on TennCare have made their diagnosis, and the news is not good, Gov. Phil Bredesen said today.

TennCare is too expensive to keep operating in its current form, consultants with the global consulting company McKinsey & Company concluded in a report released to members of the legislature and to the public yesterday.

If its spending is not controlled, the managed-care program will absorb almost every dollar in new revenue the state collects between now and 2008, the period included in the study. The most likely scenario is that the program would take up 91% of all new state revenue, the report says.

TennCare would then become the state's biggest single expenditure, passing K-12 education and public safety, even though those services affect more Tennesseans than TennCare's 1.3 million enrollees.

''Are they daunting? Absolutely,'' Bredesen said of a chart showing the figures. ''This is the

worst picture I would have imagined. What it means is absent major changes, there is no money for employee raises, there is no money for education. There is no money for corrections. There is no money for other social services. That is obviously unacceptable.''

Bredesen called the report a ''sobering thing.'' It is also the first step in what are sure to be sweeping changes to the way TennCare operates that the governor and his staff will announce in January.

The governor promised to reveal his solution to the health-care bleeding next month, after McKinsey unveils the second part of its report, which will focus on options for the future shape of TennCare. Today's report focused only on the program's finances.

Bredesen said he is not giving up on TennCare but its future depends on how it is changed.

''Unless people are willing to make substantial changes – that means beneficiaries, the advocates, providers and others – TennCare cannot be kept afloat,'' he said.

He did not say whether that would mean reductions in particular benefits or changes in eligibility requirements, although the report points out that TennCare is generous compared with other states' Medicaid programs.

TennCare's total cost today is $6.9 billion. The state's share of that is $2.1 billion. The federal government pays the rest. By 2008, the program's total cost could rise to around $12.2 billion or more. The state's share would be around $3.9 billion, the report says. If that happens, TennCare would grow from 25% of the state budget to between 34% and 40% of the budget in 2008.

Those costs will be driven by the expense of filling prescriptions at pharmacies, professional services that include physician appointments, lab work and transportation services, as well as the cost of outpatient services and growth in enrollment.

TennCare replaced Medicaid in Tennessee in 1994 and provides managed-care services to the uninsured, disabled and the poor. About 260,000 of TennCare's 1.3 million enrollees would not be eligible for a traditional Medicaid program.

McKinsey's report notes TennCare is ''relatively generous'' with few limits on benefits. It does not limit the number of hospital visits or prescriptions an enrollee can have, for example. The program's managers also lack an adequate computer system. A new one is being installed but deadlines have been missed.

Bredesen said changes will be necessary, but he offered reassurances to enrollees who might be worried about cuts in benefits.

''I don't want anyone on TennCare to be sitting around thinking, 'I'm about to be on the receiving end of a sharp knife,''' he said.

[bjcintennessee]

Tennessee cannot afford to keep the TennCare program as it now exists, ...

Hmph! Wonder how much we paid to have this research done. If they'd just asked me, I could have told them for free.

[GailA]

McKinsey report PDF FILE http://www.state.tn.us/governor/mckinsey/mckinsey.report.pdf

[Blood of Tyrants]

it is what we have been saying for about 5 years now.

[ccmay]

Hey Tennessee!

You want to see some improvement in health care costs? Why don't you pass some meaningful tort reform that cuts the balls off the plaintiff's bar? You'll see results overnight.

-ccm

[TomServo]

A). They'll gut it. -or-
B). More tax protests...

Which I'm sorry to say I'll miss. :-(

I've moved...

[Ingtar]

This is another excuse he'll use to say that the IT is necessary.

[MainFrame65]

I am retired from IBM and have prescription coverage from there. The plan has no deductible, but it provides different copayments and limits for generic and proprietary drugs. Also, it only allows an initial order and two refills, each for no more than 30 days, to be obtained locally from a participating pharmacy.

What about longer term use? These must be ordered from a central mailorder facility. They expect an initial 90 day order, with three refills, and the charge is twice the charge for the locally obtained 30 day supply. If a 30 day order is mistakenly sent to mailorder, they charge for the smaller number of doses but the cap on the copayment is at the 90 day level. NOTE THAT I CAN OBTAIN ALL OF MY PRESCRIPTIONS FOR MAINTENANCE DRUGS ONCE A YEAR, AND ORDER THEM ONLY FOUR TIMES A YEAR.

Currently, the copayment is 20%, with a 30 day cap of $10 or $20 and a 90 day cap of $25 or $50, for generic or proprietary, respectively. There is no deductible.

Next year, when medicare becomes primary, I will have to change to another plan that will require a 30% copayment, and correspondingly higher caps.

I know someone on Tenncare who needs several drugs. This person is required to obtain a new prescription for each drug every 30 days, no refills. This means that in a year this person must see the doctor 11 extra times, and obtain drugs 8 extra times. And if multiple drugs are required - I use seven, he uses three - the number of prescription drug orders (with associated costs) rises accordingly.

Tenncare is using a bad economic model for drugs, and ought to change to the mailorder model with more doses and refills. The savings would be huge, and the loss would be limited to just the few recipients who lose eligibility within two months after a refill.

[TomServo]

This is another excuse he'll use to say that the IT is necessary.

Then start circling the wagons around legislative plaza.

And honk!

[The Raven]

So now what?

[Ron in Acreage]

There's an easy fix. Just raise taxes till everyone moves out of the state. That will bring down the cost. There will be no one left on the plan. Or pay people to NOT use the plan.

[FormerACLUmember]

Hey Tennessee! You want to see some improvement in health care costs? Why don't you pass some meaningful tort reform that cuts the balls off the plaintiff's bar? You'll see results overnight.

Absolutely correct! First thing I thought of. The report directly says this also:

"The report concludes TennCare, which now takes 25 percent of state spending, cannot be sustained because of its design, medical inflation and unique problems that include litigation, court settlements ..."

[GailA]

Fleming had Sen Mark Norris on yesterday and he said tenncare is doa. I truly hope so, it is being abused and we can not continue with this expweriment and survive as a free state!