Failed prescription cap put TennCare in deeper in hole

TennCare Director J. D. Hickey said it is hard to speculate on how many people might have been spared cuts if the state had gotten the savings it budgeted. But he acknowledged that the failure to save the money hurt.

“The hole definitely wouldn’t have been as deep,” he said.

Hickey and other officials said the failed plan was just one of several factors contributing to TennCare’s budget gap, however.

“It may have helped, but it wouldn’t have alleviated the problem,” said Darin Gordon, TennCare’s chief financial officer. “We would need less money. Would it have solved the problem? We’d still have a tough time.”

The Bredesen administration is seeking to eliminate health care coverage for 323,000 adults on TennCare and limit benefits for another 396,000.

A federal court hearing on the cuts is under way this week.

Last spring, the administration budgeted about $48 million less for drugs this year than it actually spent last fiscal year, when TennCare drug spending went up 26.2 percent.

The key to the plan was limiting the 1.3 million TennCare recipients to four prescriptions a month, according to documents obtained by The Tennessean newspaper under the state’s Public Records Law.

But after the Legislature passed the budget and the projected savings became law, the state decided not to implement the plan. State officials never sought permission from federal overseers to impose the four-prescription-a-month plan.

Instead, they decided to pursue an alternate savings plan, which depended on TennCare reforms’ starting by a particular date. But that fell through, too.

As a result TennCare will use reserve funds to pay for drugs in order to finish this fiscal year with a balanced budget, and it is looking at an unprecedented surge in its drug budget next year.

Several legislators said they didn’t remember any discussions of a four-prescription limit as a way to cut costs in 2004-05.

“If somebody talked to me, I don’t recall it,” said Sen. Doug Jackson, D-Dickson, a member of the TennCare Oversight Committee.

Former TennCare Director Manny Martins, who came up with the idea of the prescription cap as a way to achieve a 5 percent budget reduction, said he talked about the limit in Bredesen’s November 2003 TennCare budget hearing and at a subsequent oversight committee hearing.

Hickey said the idea wasn’t appealing as health policy, and officials decided to “find more innovative, less impactful reforms.” But they went ahead and “booked” the savings the prescription limit would have produced, assuming TennCare reform plans would kick in by Jan. 1, yielding the same savings over the final six months of the fiscal year.

Instead, the changes did not happen on that timetable — and TennCare found itself unable to achieve the savings it had budgeted.

“I think what happened was (Finance) Commissioner (Dave) Goetz, hoping to avoid such hard and fast cuts … basically decided not to implement the four-script limit in hopes that there would be reform along the way.”

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Information from: The Tennessean, http://www.tennessean.com