Tennessee doctors failed to convince the legislature that the way TennCare is starting to pay them isn’t working. Physicians called it their top priority for the legislative session. Lawmakers have agreed to study the program but not pump the brakes.
The state's Medicaid program represents nearly a third of all state spending. And that share is growing. But to reign in costs, TennCare has started putting the onus on doctors.
The insurer does this by creating so-called "episodes of care." For instance, TennCare pays for half the births in the state. And giving birth is an episode. An OB-GYN is judged on whether she or he can keep the total expense for all the services involved under a certain amount. If they're way below the target, they get a bonus. If way over, their reimbursement gets docked.
The problem is, physicians say they're sometimes judged on costs they can't control, especially in rural areas — in the birthing case, there may not be an option on which hospital to use for the delivery. But TennCare director Wendy Long pushed back on that claim, telling lawmakers in a committee hearing that's rarely the case.
"The situations where we have high-cost facilities, it is almost always in an urban area where there are other hospital choices," she said. "We really do believe that it's in Tennessee's best interest to be driving utilization to hospitals that are a better value for the state."
TennCare says it saved more than $14 million in one year, even with just eight episodes in place and paying more in bonuses to doctors than it got back in penalties.
The Tennessee Medical Association acknowledges the savings but has asked whether patients might be hurt in the process. The physician lobbying group had asked lawmakers to force the agency to stop rolling out new episodes, with 20 in place and a goal of 75 by next year.
"The problem we have in Tennessee is that our Medicaid program refuses to listen to input from the people who are actually delivering the care," TMA president-elect Matthew Mancini wrote in an editorial for the Knoxville News Sentinel on April 5. "Our concerns and suggestions for improvements have been repeatedly ignored, and doctors have grown increasingly frustrated by a lack of transparency, and inaccuracies and inconsistencies in how the state measures health care providers’ performance."
TennCare has established expert panels to give feedback, and officials point to 33 changes that have been made as a result. One involves births. Part of the total cost used to judge performance of OB-GYNs included whether a patient took an ambulance to the hospital. The physicians said they couldn't help it if a patient had no transportation. So TennCare stopped including the cost of an ambulance ride in the calculation.
"We usually take those recommendations," says Brooks Daverman, director of strategic planning for TennCare. "We do want to move from just paying for volume to paying for value. We're open to recommendations on how we do that...but it's very easy for someone to say that we're not listening."
The broader health insurance industry is headed in the direction of so-called "value-based" payments, where physicians are discouraged from simply doing procedures and held accountable for the patient's health. So TMA is concerned that it's only a matter of time before commercial insurers in the state start using the episodes of care.
But rather than pausing the episodes of care program, the Tennessee legislature approved an amended bill (HB 1729 / SB 2639) that requires TennCare to study how to fairly treat doctors when a health care facility is the only one within a 30-minute drive or when specialists are the only providers in town.
"We'll do the study," Daverman said.