Early reactions mixed after Haslam Medicaid announcement


By Jeff Keeling


Tennessee Gov. Bill Haslam is hoping for a happy ending to his Medicaid waiver proposal.

The ink may be barely dry on Gov. Bill Haslam’s “Tennessee Plan” to provide health insurance to an estimated 160,000 or more uninsured state residents, but initial opinions on the effort were not in short supply Monday. Those speaking with News and Neighbor an enthusiastic hospital system CEO, a generally supportive physician practice administrator, and a highly skeptical state legislator. The Tennessee Medical Association also weighed in, with a combination of support and early critique.

Haslam outlined the “Insure Tennessee” plan to cover residents who qualify for the “Medicaid expansion” under the Affordable Care Act – an expansion Tennessee’s legislature has refused to accept – at a morning news conference in Nashville. An administration news release said the federal Department of Health and Human Services has given its verbal blessing to the two-year pilot program, which allows fairly wide latitude for Tennessee.

For instance, it includes measures that integrate aspects of commercial insurance into the publicly funded insurance for people with incomes up to 138 percent of the federal poverty level (around $16,000 for individuals, and $27,000 for a family of three). It also provides incentives for participants who “take more personal responsibility in their health,” and shifts payment and delivery models on the provider end from fee-for-service to outcomes based.

“This is an alternative approach that forges a different path and is a unique Tennessee solution,” Haslam said. “This plan leverages federal dollars to provide health care coverage to more Tennesseans, to give people a choice in their coverage, and to address the cost of health care, better health outcomes and personal responsibility.”

Despite the state legislature’s opposition to Medicaid expansion, which lawmakers have said is rooted in fears that it will be a budget-buster once the feds quit subsidizing 100 percent of it (after two years), Tennessee’s hospital leaders have continued to push for a solution. Hospitals have borne the brunt of the financial pain due to lack of expansion, and Mountain States Health Alliance CEO Alan Levine was highly pleased after his initial review of the plan. State Rep. Jon Lundberg (R-Bristol), conversely, was skeptical. Lundberg and his colleagues, along with the state senate, will have to approve the plan for it to go into effect, after having passed a bill last session giving the legislature veto power over any expansion of Medicaid.

Non-hospital providers expressed cautious optimism. ETSU Rusty Lewis, executive director of the Faculty Practice Plan for ETSU Physicians and Associates, didn’t expect the financial boost the hospitals do, but still said he believes the overall impact should be positive.

“I think most everyone in the health care industry feels like this is the right thing to do,” said Lewis, who estimated about 12 to 15 percent of women in the area – potential ob-gyn patients – will fall under the plan. But that doesn’t mean a financial windfall for physicians groups, Lewis said.

Medicaid has been required to pay the equivalent of Medicare for the past couple of years to soften the impact of other payment cuts and difficulty associated with the ACA, but Lewis said that is scheduled to change Jan. 1. That could mean a 25 percent reduction in Medicaid reimbursement levels.

“Medicaid is becoming difficult now for us to balance the books with,” Lewis said. “This is not going to be a cash windfall for the practices, but it is going to enable us to care for patients we haven’t been able to care for in the past.”

Mountain States CEO Alan Levine discusses the Medicaid waiver proposal.

Mountain States CEO Alan Levine discusses the Medicaid waiver proposal Monday.

Hospitals, on the other hand, already have been caring for uninsured patients, and usually receiving little or nothing in return.

“Most of these people are working poor,” Levine said. “These are people that go to work every day, but they just don’t have the resources to buy coverage.”

Subsidies to help purchase insurance are available for people with incomes higher than 138 percent of poverty, so the Medicaid expansion was designed to fill the gap for those below that income level but not eligible for traditional Medicaid.

Levine said about 7 percent of Mountain States patients are charity care, and his rough estimate was that a Tennessee Medicaid expansion waiver could increase the system’s revenue by $13 to $15 million.

That is one reason Levine is less concerned about the prospect of the federal government tapering its support after a couple of years than is Lundberg. He said Tennessee’s hospitals already have offered to make up the difference when that day comes through a so-called “hospital assessment tax.”

“If we’re able to get 13 to 15 million new dollars, then some element of that might have to be contributed back,” Levine said. “It’s still a net gain.”

For his part, Lundberg said he supports Haslam’s desire to craft a plan that includes more personal responsibility and a path toward commercial insurance for recipients. Fiscally, he said, he just isn’t convinced such a move would be sustainable.

State Rep. Jon Lundberg wants more details about the plan. (Photo by Adam Campbell)

State Rep. Jon Lundberg wants more details about the plan. (Photo by Adam Campbell)

“At some point the state is going to be forced, if it wants to continue participating, to come up with dollars,” Lundberg said. He said he understands the hospitals’ position – “I would want to get some kind of compensation for those patients, and they (hospitals) are taking the hit right now” – but sees the “hospital assessment tax” as a bit of a shell game.

Lundberg said he is open-minded and looking forward to learning more in advance of a special session after the legislature convenes in January, during which Haslam will attempt to gain legislative passage.

“I have really serious concerns,” Lundberg added. He’s got a pretty significant sales job he’s going to have to undertake for the next couple of months.”

Even the TMA, whose president is a Kingsport gastroenterologist Douglas Springer, voiced serious concerns. Those centered around a belief that, one, hospitals wouldn’t be the only entities footing part of the bill when the federal government tapers its support.

“These costs will be passed down through all providers, including physicians,” Springer said in a news release.

The TMA also said it fears further reimbursement cuts, such as those in the proposed TennCare budget. Adding a couple hundred thousand people to a new TennCare plan while cutting payment for providers, “won’t increase access to care,” Springer said. “It will decrease it.”

TMA said it generally supports an expansion of insurance in Tennessee, and likes the idea of incentives to promote personal responsibility that can, “encourage healthier choices and help contain costs.” Springer questioned, though, how exactly a “value-based reimbursement model” will work.

The governor’s release describes a payment reform initiative that “creates financial incentives for providers to provide high quality care in an efficient and appropriate manner so as to reduce costs and improve health outcomes.”

The TMA release said the group has, “concerns about the value-based reimbursement model currently being developed and will keep working with state officials to get it right.”



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