February 7, 2003

VUMC, state officials meet to fix TennCare

Featured Image

Dr. John Sergent

VUMC, state officials meet to fix TennCare

The newly formed administration of Phil Bredesen is asking for help in fashioning a more effective, sustainable program for protecting the health of poor and uninsured Tennesseans.

In a recent meeting with TennCare Director Manny Martins, Vanderbilt University Medical Center leaders offered their suggestions to help rescue the faltering TennCare program.

TennCare payments are in many cases inadequate to cover the cost of care and providers sometimes receive no payment at all. Distrust and financial loss have caused doctors to flee the program, increasing the strain on the remaining doctors and hospitals.

Even without this thinning of the network, TennCare puts an unsustainable burden on children’s hospitals and on programs franchised by the state, such as level one trauma and burn care.

The state’s academic health care centers are reeling, as are physicians and hospitals who operate in rural areas of the state. Various compromises have been tried, but they’ve lacked full participation. No previous administration has organized an effective effort to bring together providers, legislators and citizen advocacy groups to find solutions to the problems of TennCare.

“In the long run TennCare threatens the state’s health care infrastructure,” said VUMC Chief Medical Officer Dr. John Sergent. “It’s making us look seriously at how to continue in the face of these huge losses.”

To help lower the expense of the program, Vanderbilt leaders urge use of disease management as a proven means to reduce utilization of expensive hospital resources through more intensive evaluation and outpatient management of chronic disease groups.

VUMC leaders also stressed the need to rebuild the tattered network of TennCare providers. Lasting solutions will require consensus, and for this reason Vanderbilt leaders urged the administration to invite providers, state legislators and advocacy groups to work together on answers.

Sergent said the battles over TennCare have tended to distract people from the underlying issues.

“The problem is how to provide medical care for people who can’t care for themselves. Regardless of how questions like the current reenrollment issue are ultimately decided, there will still be a population that needs care. Until we deal with it that way, they’ll be no solutions. Band-Aids won’t fix the program.”

TennCare was supposed to function as a managed care program, with commercial insurers competing for enrollees and accepting all of the financial risk in exchange for a monthly premium from Tennessee taxpayers. The managed care model isn’t working, and to stabilize things the state has temporarily had to take back all the risk and limit MCOs to an administrative fee.

“TennCare is under-funded and there is no mechanism embedded in the program that’s working to manage costs,” said Norman B. Urmy, executive vice president for Clinical Affairs and CEO of Vanderbilt University Hospital.

“I’m not sure the best managed care organization in the country could succeed with TennCare,” Sergent said. “Managed care may be found to work for a population that is generally healthy, but chronically ill populations need disease management; and doctors do disease management, not insurance companies.”

Chronic disease is considerably more prevalent among the TennCare population, in part because it covers people shut out of private insurance because of chronic illness.

Regardless of whether MCOs stay in the picture or the state instead contracts directly with doctors and hospitals, the VUMC message to the Bredesen administration was that disease management, encompassing broad preventive services as well as specialized programs for prenatal care and for chronic diseases such as asthma, diabetes, heart failure and mental illness, is the best strategy for protecting health and conserving resources. Vanderbilt also urged that TennCare give more focus to its current program of preventive care for kids.

“We told Martins that disease management is the easiest and quickest way to get savings,” Urmy said.

“The dollars are huge,” Sergent said, citing a recent credible estimate of 40 percent savings out of every health care dollar from disease management and preventive care. While screening such as cholesterol testing, mammography and colonoscopy may take a while to yield savings, standardized management of known conditions such as diabetes and heart failure can produce substantial savings very quickly, Sergent said.

Hospitals subsidize TennCare. Nearly 30 percent of VUH admissions are TennCare, and the major hospitals in other cities face a similar crushing burden. The network may crumble further unless a way is found to get doctors back in the program and spread the burden more evenly. The state must first win back the trust of doctors.

“The first issue is that doctors don’t trust the system because they often don’t get paid,” Urmy said. “We told them what’s needed is to pay people when they’ve done the work. It won’t be possible to coax people back in unless this basic requirement is met.”

Pediatrics is a special case, Urmy said. It would be folly to replicate pediatric subspecialty services in every community, and children’s hospitals like VCH arose from the realization that the best way to care for kids is to concentrate these services. TennCare should acknowledge the benefit of children’s hospitals and create a mechanism to support these especially burdened institutions. Better mechanisms are also needed to support state designated services such as level one trauma and burn care.

The availability of TennCare has caused some employers to drop health care benefits for employees. Vanderbilt leaders urged the state to examine ways of shifting employed people back to commercial insurance.

Vanderbilt urged that the state establish a single TennCare drug formulary, rather than leave it up to every MCO to create its own.

Consumer advocates have managed to put up some legal barriers to the effective use of formularies, but Sergent said a state-sponsored formulary might have a chance of overcoming these barriers.

An enforceable formulary would substantially reduce and control costs, and doctors would have an easier time of keeping track of what medications are covered.