MEDICAID MANAGED CARE: In Tennessee, Sickest Patients Flock to AMC-Sponsored Plans
Academic medical centers participating in TennCare, Tennessee's Medicaid managed care system, are targets of a pattern of adverse selection by the state's sickest Medicaid recipients, according to a report published yesterday in the Journal of the American Medical Association. Patients with one of nine state-designated, high-cost chronic conditions -- AIDS, coagulation defects, cystic fibrosis, pregnancy, prematurity, and heart, kidney, liver and bone marrow transplants -- chose either to enroll in participating AMC-owned managed care organizations or to seek treatment from an AMC that provided services for independent MCOs at a disproportionately higher average when compared with statewide MCOS. Based on Medicaid claims data from 1994 and the first eight months of 1995 submitted by all 12 capitated MCOs in Tennessee, researchers discovered that "[a]lthough academic MCOs enrolled only 4.5% of the TennCare population, they cared for 38% of the patients with AIDS, 31% with coagulation defects, 10% with cystic fibrosis, 14% with pregnancy and 26% with transplantations." A similar trend appeared when studying other high-cost conditions, such as sickle cell disease (28.4% treated) and profound mental retardation (27.7% treated).
'Serious Financial Risks'
Tennessee's three academic MCOs have all responded differently to the financial crisis caused by the rush of high-cost patients. Memphis Managed Care (University of Tennessee, Memphis) expanded its regional coverage and increased enrollment by 39%, while VHP (Vanderbilt University) saw enrollment decrease by 23% after a consolidation that focused "participation within a community-based practice staffed by nurse practitioners." Total Health Plus (University of Tennessee, Knoxville) was rendered financially insolvent in 1995 and taken over by a Blue Cross/Blue Shield MCO. "The historic role of AMCs in providing a safety net for highly complex care is currently threatened by their very success in attracting and serving the sickest patients," the authors note, urging policymakers to realize that AMCs are "dependent on both clinical revenues and government support." The government must investigate potential solutions to the problem, they note, concluding, "The public has ... [an] interest in developing public and private health care systems that do not discourage plans from enrolling and providing services to the sickest patients (JAMA, 9/15).
In related news today, the Nashville Tennessean reports that the state may have to repay up to $540 million dollars in federal matching funds to TennCare. The state improperly levied a $2,600 per bed nursing home tax and drew matching funds which it then distributed to low-income, non-Medicaid nursing home residents. The end result of this "Granny Grants" program, wrote Center for Medicaid and State Operations Director Sally Richardson in a letter to TennCare Director Brian Lapps, "is that taxpayers in other states ultimately pay more than their share of Tennessee's Medicaid expenditures." State Comptroller John Morgan contends, however, that although federal officials did not specifically approve the tax, they were aware the situation. "There was some correspondence back as early as 1994 where they said this is kind of fishy, but then it went a way for a while," he said. Morgan added that if Tennessee does owe the money, it would "probably be repaid through a reduction in future federal matching funds" (de la Cruz, 9/16).