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Federal agreement over TennCare leaves state $270M short

Federal agreement over TennCare leaves state $270M short
By ERIK SCHELZIG
Associated Press Writer
NASHVILLE (AP) — The federal government has approved a three-year TennCare waiver extension that will leave the state with about $270 million less than needed to cover growing hospital costs, state officials announced Monday.
But the agreement with Centers for Medicare and Medicaid Services is an improvement over an original proposal that would have left Tennessee with more than $385 million less than projected.
Gov. Phil Bredesen, a Democrat, cited the help of Tennessee’s Republican Sens. Bob Corker and Lamar Alexander in breaking an impasse with the Bush administration over the TennCare negotiations.
Corker, a former state finance commissioner, had threatened to hold up all of President Bush’s nonmilitary nominations until the TennCare waiver issues were resolved.
“We had some difficulty, no question, just getting them to focus,” Corker said. “At some point, after a multitude of phone calls and meetings, we just felt that we needed to go ahead and take a step that would bring everybody into focus.”
The agreement sets an annual $540 million cap on how much the state can draw from federal sources to help reimburse hospitals for treating Medicaid and uninsured patients.
“We were able to secure an agreement that allows TennCare to pay $115 million more to hospitals over the next three years to help offset uncompensated care,” state Finance Commissioner Dave Goetz said in a release.
Over the last three years, TennCare has paid hospitals more than $1.7 billion to help cover the cost of charity care and Medicaid losses. The new cap will force the state to carefully account for the annual growth in hospital care costs, he said.
“The program will have to be managed with careful vigilance,” Goetz said. “The fact that the majority of the cap’s impact occurs at the end of the three-year period does give the state time to incorporate this financing change into its budget.”
Now that the agreement has been signed, the state has the authority to open a new category of TennCare coverage for certain adults whose medical bills threaten them with poverty. The “standard spend down” category would be similar to a current program available only to pregnant women and children.
Goetz acknowledged that the new cap makes opening the TennCare rolls more difficult, but that the state still intends to launch the new category.
Bredesen in 2005 cut 170,000 adults from TennCare to bring costs under control. TennCare now provides coverage to about 1.2 million Tennesseans.
TennCare is Tennessee’s expanded Medicaid program, providing health insurance coverage to 1.2 million Tennesseans, including 640,000 children.
The program was created in 1993 by a waiver that must be periodically renewed.
TennCare’s most recent agreement with CMS expired on June 30, but the program was granted six short-term extensions while the two sides negotiated the new terms.
Tony Garr, executive director of the Tennessee Health Care Campaign, a health care advocacy group, said opening the new TennCare category would come as welcome news to people like grandparents caring for children who don’t have health insurance and disabled people waiting to get on Medicare.
Garr sad there are 60,000 disabled Tennesseans within the two-year waiting period for Medicare.
As far as the reimbursement agreement is concerned, Garr said he expects that hospitals will be able to find their revenue elsewhere.
“As uncompensated care goes up, the hospitals recoup some of that by charging a higher amount to people who are insured,” he said.
Published in The Messenger on 10.09.07

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