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GOVERNMENT

Tennessee Medicaid may be headed for a fall

TennCare offers a striking example of the struggle states are facing in containing growing health care spending.

By Joel B. Finkelstein, amednews staff. Dec. 13, 2004.

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Washington -- After 10 years, Tennessee's expanded Medicaid, which serves one in four residents, is teetering on the brink of extinction -- a victim of the financial pressures that are forcing many states to reconsider who is covered by the program.

TennCare is one of the most generous Medicaid offerings in the country. It is also the most expensive, consuming 26% of Tennessee's annual revenue. It has periodically been beset by financial troubles. But the latest problems threaten to force changes that would make it one of the smallest and most restrictive Medicaid programs. This would drop hundreds of thousands of dollars of uncompensated care in the laps of Tennessee's hospitals and physicians.

The state no longer can afford TennCare in its current form, according to a January report commissioned by Gov. Phil Bredesen but funded privately. Based on those findings, he proposed a plan designed to cap spending at the current level. But once the plan was submitted to the Centers for Medicare & Medicaid Services, it faced legal challenges from the Tennessee Justice Center, which represents a TennCare watchdog group that has proposed its own reform agenda for the program.

The Justice Center has since relented and placed a self-imposed two-year moratorium on pending lawsuits. But, according to the governor's office, his reform plan cannot go forward under the threat of new lawsuits.

Bredesen has said he still hopes that negotiations will reveal a third way to make TennCare work.

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