Radical Medicaid Changes Approved for Tennessee

The Clinton Administration gave Tennessee a green light Thursday to make radical changes in its Medicaid program in an effort to hold down costs and expand care for the uninsured.

The five-year demonstration project will steer Tennessee’s 1 million Medicaid recipients into managed care programs such as health maintenance organizations, along with up to 500,000 of the uninsured.

Those with incomes above the poverty line will have to pay premiums, deductibles and co-payments on a sliding scale.

But federal officials set conditions on the Medicaid waivers, including an agreement limiting how much Washington will have to kick in for the $2.8-billion TennCare program.

Bruce C. Vladeck, head of the Health Care Financing Administration, said, “To help protect the right of recipients to choose their own health care providers, Tennessee will initiate a new enrollment process for the uninsured and a re-enrollment process for Medicaid recipients.”

The decision was delayed for two months, partly out of concern that the state’s budget for TennCare “may not be high enough,” Vladeck said in an interview.

Washington insisted on the right to approve each new managed care plan before Tennessee enrolls anyone in them. That is to make sure each plan has an adequate network of providers, Vladeck said.

Health and Human Services Secretary Donna Shalala said the TennCare experiment was “consistent with the Administration’s policy of encouraging states to develop alternative programs to serve the health care needs of their people.”

Washington now pays about two-thirds of the cost of Tennessee’s Medicaid program. Vladeck said the state had agreed that the federal payments will rise no more than 8.3% a year over the 1993 level.

The state estimates that Washington will pay $11.6 billion over five years toward TennCare. Without its reforms, Tennessee estimates that Washington’s share of its Medicaid bill would be $14.8 billion.