Bredesen announces major cuts to save TennCare
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Bredesen outlined the plan, perhaps the most significant proposal of his tenure, before a joint session of the Legislature on Tuesday night.
“I call on each of you tonight — lay aside your hardened positions, open your minds to what we have to do,” Bredesen said. “Tonight is TennCare’s last chance.”
He then laid out a range of proposed changes to TennCare, the state’s expanded Medicaid program for 1.3 million poor, disabled and otherwise uninsured citizens.
The governor has said the state cannot afford to keep TennCare as it currently exists because within a few years it would starve all other state programs.
“Let me put this in perspective,” Bredesen said. “The total cost of the pharmacy benefit alone in TennCare has become greater than the total cost of Tennessee’s higher education system.
“Just two drugs in TennCare — Zyprexa and Zocor — cost our state more than we appropriate to run the University of Tennessee medical school.
“That’s a fire bell in the night. Something is wrong.”
Bredesen’s proposal does not call for any enrollment reductions, and it protects 65 percent of TennCare’s enrollees — 859,000 pregnant women, children, and the disabled — from almost all the benefits reductions.
For the remaining 35 percent, the proposal would implement an insurance package more in line with commercial insurance and other states’ Medicaid plans.
The proposal does not cut the program from its current size, but tries to limit its growth. TennCare takes up 26 percent of next year’s budget, about $2.3 billion in state funding out of an overall cost of $7.8 billion. Bredesen proposes to keep the program at about that percentage of state spending through 2008.
Slowing the growth to that extent would mean TennCare would cost the state $1 billion per year less in 2008 than it would had no changes been made; the total savings through that period would be $2.5 billion.
“We need to face the basic facts: too many people with too many benefits for the money we have. Something has to give,” Bredesen said. “When we abandon our responsibility to manage costs — when we pay for anything and everything — we encourage an inefficient and unfair system.”
The bulk of the proposed savings come by reducing benefits in two categories.
The first is pharmacy, where Bredesen proposes the state pay for only the lowest cost prescription drug in any category — with a limit of six prescriptions per month — at an estimated savings in 2008 of up to $340 million.
He also proposes the state quit covering two categories of drugs all together — antihistamines and gastric-acid reducers — instead requiring these to be purchased over the counter.
Those two categories of drugs — which are, broadly speaking, allergy medicines and remedies for heartburn or acid reflux disease — cost TennCare $280 million a year.
“There is a lot of money at stake here for the corporations that sell these drugs,” Bredesen said, asking lawmakers to resist pressure from drug companies. “You can expect advertisements, you can expect a whole herd of lobbyists inviting you to backroom meetings.”
The second large category of benefit reductions would be limits on hospital and doctor visits.
Bredesen proposes paying for 45 inpatient and eight outpatient hospital visits per year; 10 visits to the doctor’s office; and 10 laboratory or X-ray procedures a year. Those are now unlimited.
The plan also would increase co-payments for 35 percent of the TennCare population. There are three subgroups within that population who would pay from $1 to $40 per visit, depending on their status and the type of medical attention they receive.
There would be appeals available for people whose lives might be adversely affected by the benefit cuts. The plan would create regional panels of health experts to hear those appeals. Each panel would have a set amount of money to allocate per year for, say, more hospital visits or more prescriptions drugs.
Speaking directly to the enrollees, Bredesen said, “I am not your enemy in this.”
“There has been a lot of positioning these last few weeks against changes in TennCare, and I am very respectful of the power you have to slow things in the courts, to engage TennCare beneficiaries politically, and to speak against what we have to do,” the governor said. “But I also want you to know that I am completely committed to balancing this program with Tennessee’s other needs.”
Gordon Bonnyman of the Tennessee Justice Center, who has frequently sued TennCare over its treatment of enrollees, said there are many details yet to be discussed but that he is prepared to work with the governor to keep the program alive.
“The structural problems he described are not the fault of people who are sick and using the services,” Bonnyman said. “They are the product of years of mistaken policies and poor management. We’re quite willing, and welcome the opportunity, to work to reverse some of those mistakes and get the program back on sound footing.”
Bredesen’s plan also would designate certain hospitals to treat enrollees who cannot afford the co-payments. There would be additional funding for those hospitals.
Bredesen’s proposal also would focus more attention on managing the care for chronic diseases such as diabetes and heart disease.
Some changes would require amendments to the state’s waiver with the federal Centers for Medicare and Medicaid Services; others can be done administratively; and others will require action by the Legislature. Few changes are expected to go into place before next year.
Bredesen also proposes to increase the pursuit of fraud within the program. He would combine separate fraud units now administered under TennCare, the Tennessee Bureau of Investigation and the Department of Human Services and make it an independent unit reporting directly to the governor.
Overview of Bredesen’s plans to overhaul TennCare
An overview of Gov. Phil Bredesen’s proposed overhaul of TennCare, the state’s $7.8 billion expanded Medicaid program for 1.3 million poor, disabled and otherwise uninsured citizens.
Bredesen, who presented his plan to a joint session of the Legislature on Tuesday, calls his effort the state’s “last chance” to salvage the financially troubled program.
General
— Requires no cuts to the program’s rolls, though one-third of enrollees would see cuts in services.
— Cuts and changes would save $2.5 billion over the next four years.
— By completion of the overhaul in 2008, the program would spend between $865 million and $1.08 billion less than it would under the current structure.
— Most reforms implemented by Jan. 1, 2005.
Benefits
— All children, pregnant women and those who qualify as disabled under Social Security standards would be exempt from new co-pays and limits on physician visits and prescriptions. They account for approximately 65 percent of all enrollees (859,000 people).
— For everyone else, unlimited prescriptions would be replaced with a maximum of six prescriptions per month.
— Implements medical service limits, including a maximum 10 physician visits and 10 lab or X-rays per year. Enrollees also would receive a maximum of 45 inpatient days and eight outpatient visits per year.
— Institutes tiered co-pay system for doctor’s visits, ranging from $1-$5 for mandatory Medicaid patients to $5-$40 for those who qualify for benefits through the waiver with the federal government.
— Allows those who cannot afford co-pays to receive services from a “safety net” hospital without charge.
— Establishes a committee to review enrollee requests for non-included services in “extraordinary cases.”
— Mandates all enrollees, including children, pregnant women and the disabled, use the lowest-cost prescription drugs available.
— Requires all enrollees to purchase antihistamines and gastric-acid reducers over the counter, instead of by prescription. The two drugs account for $280 million, or 12 percent, of TennCare’s total pharmaceutical costs this year.
Management
— Proposes a new, independent state law enforcement unit to cut down on fraud and abuse.
— Establishes an “expert commission” of providers, advocates and health care managers to conduct an annual review of the program’s benefits, cost and performance, and recommend continued improvement.
— Implements disease management plan with focus on chronic conditions like diabetes and heart disease.
— Encourages the use of “best practices” based on comprehensive research among providers.
Savings
(Estimated savings in 2008 as compared to projected costs if nothing is changed:)
— Using lowest cost prescription drugs: $300 million to $350 million.
— Adjusting benefit limits, establishing tiered co-pays, adjusting premiums for expansion population: $295 million to $355 million.
— Establishing evidence-based medicine initiative: $110 million to $170 million.
— Eliminating coverage of two drug categories with over-the-counter alternatives: $100 million to $130 million.
— Creating disease management initiative: $45 million to $65 million.
— Creating disease management program for disabled enrollees and those with multiple conditions: $45 million to $65 million.
— Setting up a review panel and creating “safety net” hospitals. Additional cost: $30 million to $50 million.
Source: Governor’s Communications Office.
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On the Net:
TennCare Bureau: http://www.state.tn.us/tenncare
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