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VOL. 125 | NO. 22 | Wednesday, February 3, 2010

TennCare Cuts Under Way Now

By Tom Wilemon

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Call it coincidence or bad timing, but many physicians in Tennessee began taking a 14 percent cut for seeing TennCare patients on the same day Gov. Phil Bredesen announced deep cuts in health care spending.

BlueCross BlueShield of Tennessee, which operates one of two managed health care companies that contract with the state on the TennCare program, sent out a Dec. 31 letter notifying specialists of the rate cut that went into effect Feb. 1. Hospitals also received notices their payer rate would be cut.

The cut is not a direct consequence of the state budget proposed by the governor, but is a harbinger of the difficulties facing the state’s Medicaid managed care program. The state’s budget cuts could cause more physicians to stop accepting TennCare patients.

“As far as I’m aware these rate reductions are because we’ve been experiencing losses throughout 2009,” said Mary Thompson, manager of media relations for BlueCross BlueShield of Tennessee. “They are separate from actions the state deems necessary to control program costs.”

She said Volunteer State Health Plan, the division of the insurance company that contracts with TennCare, was operating at a loss.

“Volunteer State Health Plan anticipated some losses originally due to the startup costs associated with the new contract costs for the east and west grand regions (of Tennessee),” Thompson said. “However, we are projecting very heavy losses. We’ve been able to operate at a loss for a short period of time over the past year, throughout 2009, and been able to handle those losses due to our financial strength. We just can’t sustain those ongoing losses and operate the program.”

Thompson said the rate cuts vary for hospitals, but the reductions to specialists average 14 percent.

About 12,000 specialists statewide are affected by the cuts.

“Primary care physicians will not be affected,” Thompson said.

Brenda H. Jeter, chief financial officer for UT Medical Group Inc., which has more than 400 doctors on its staff, said the practice had not made a decision yet on a course of action.

“We are analyzing the financial impact as well as the effect that it would have on patients,” Jeter said. “We are working with our physicians. At this point, we’re just going through the due diligence process based on this proposal. We’ve also been in contact with our hospital partners.”

BlueCross BlueShield is one of two insurance companies that contract with the state to provide benefits for TennCare recipients.

Jeff Smith, a spokesman for AmeriChoice, the other insurance company, said it was not seeking to amend its contracts with physicians.

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