THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, November 25, 1995 TAG: 9511230039
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 56 lines
The GOP hopes to reduce the federal deficit by turning Medicaid over to the states. States are expected to hold down costs by mandating managed care for Medicaid recipients.
Virginia will soon test the managed-care approach in Hampton Roads. But Tennessee has already give the approach a try. Results have been underwhelming according to a report by the L.A. Times.
The so-called TennCare program was installed in 1993. It has succeeded admirably in slowing health-care cost increases. The state was spending almost $3 billion a year on a program that was growing at 20 percent a year - double the national average.
TennCare authorized 12 managed-care organizations to contract with doctors and hospitals to serve patients at fixed rates. In the first year, 1.2 million people were served, but costs increased less than 1 percent, much lower than the 10 percent national average.
The savings weren't without human and other costs, however. The saga of TennCare is a cautionary tale that suggests reform can be painful.
One managed-care provider is accused of abusing the system by signing up phantom patients, a variation of familiar welfare scams.
Almost a third of physicians refuse to accept TennCare patients because they claim they can't make money. Hospitals raise the same objections, and several may pull out of the managed-care network if losses continue.
Of the 12 managed-care companies that took over administration of the program, five lost money in the first year. The biggest of them, Blue Cross/Blue Shield, serves about half of all TennCare patients and is losing millions. It, too, threatens to abandon the business unless rates are increased 10 percent.
Surveys by the University of Tennessee reveal widespread patient dissatisfaction. In one, 45 percent said TennCare provided worse care than the old Medicaid system. In a more recent poll, 33 percent felt that way.
Obviously, this is not yet a success story. The accountants and taxpayers may be happy, but their joy will be shortlived if patients, doctors, insurers and hospitals all reject the arrangement.
For reforms like TennCare to survive, they've got to perform better. Too many people are involved for Draconian cost-cutting to be an option. Medicaid provides medical care for 20 percent of the nation's children, a third of all babies born in the United States and 68 percent of all nursing-home residents.
Virginia officials say they aren't making the same mistakes as TennCare has, but Virginia has already found it necessary to rewrite rules that govern managed-care organizations in order to prevent abuse. The TennCare experiment is a warning that reforming Medicaid isn't going to be as cheap, easy or painless as some claim. by CNB