TennCare putting MCOs back at risk
The change — taking effect next week — comes about three years after the state had to bail the managed care organizations out of contracts that forced them to take full risk for rising costs. Since then, the companies have not had any “skin in the game,” said TennCare director J. D. Hickey.
The new MCO contracts will reduce administrative fees by 15 percent. Another 10 percent of those fees will be placed “at-risk,” meaning the MCO could lose it if it doesn’t reach certain performance measures.
“The goal here is not to necessarily drive a profit margin out of the MCO network,” Hickey said. “The goal is to get them to care about their expenses and control their relationships … so they manage customer care.”
Hickey, a health care expert brought in last year by Gov. Phil Bredesen to revamp the $8.7 billion expanded Medicaid program, said the new contracts are an important step in reining in the program.
“When I came in, I made no bones about it that our MCO network was not where it should have been,” Hickey said. “That wasn’t something I couldn’t change overnight. But with 10 to 11 months of effort, we are making a substantial step forward.”
A legislative fiscal review committee will review the new contracts Wednesday. They will go into place July 1.
The state is also looking to come out on top in federal court next week in a case that Hickey says will be an important step toward reforming TennCare, a program budgeted at $8.7 billion next year. He said he expects federal regulators will approve the new contracts.
The MCOs will have financial incentives to meet certain cost-control benchmarks, such as getting doctors to use cheaper medications or reduce the emergency room visits of their patients.
If every MCO meets all performance benchmarks, TennCare will have a net savings of $100 million next year, said TennCare finance chief Darin Gordon.
“It provides us some real running room to get this network where we think it should be,” said Hickey.
TennCare advocates, angry over cost-cutting plans to remove up to 323,000 people from the plan that covers 1.3 million Tennesseans, said the move is overdue.
“We’re happy to hear the state is looking at that option,” said Matt Leber of the Nashville Peace and Justice Center. “We hope, and we call on the governor, that any savings that are made will be directed toward keeping more people on the TennCare rolls.”
Hickey said MCOs were first lukewarm to the idea of sharing some risk, after enjoying three years of a guaranteed income stream. He says they now recognize it is needed.
Blue Cross-Blue Shield of Tennessee, the biggest TennCare managed care organization with about 700,000 enrollees, has said it will endorse the new performance standards.
Right now, TennCare pays the MCOs about $210 million in administrative fees to handle billions in payments for TennCare services.
The new contracts also contain tough new ethics rules, aimed squarely at the behavior of TennCare contractors caught with financial ties to former state Sen. John Ford.
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On the Net:
http://www.state.tn.us/tenncare/