TennCare Changes Could Cut Ranks of Medicaid Providers

KNOXVILLE, Tenn. — Tennessee home medical equipment
providers have a message for the newest company to administer the
state’s Medicaid benefits: “It ain’t going to work.”

Providers in the state who work with BlueCross BlueShield got a
firsthand look at the proposed fee schedule under CareCentrix, the
Connecticut-based company taking over the administration of
TennCare benefits for the Blues’ subsidiary and current
administrator, Volunteer State Health Plan.

“The first thing you look at is the fee schedule. It ain’t going
to work,” said one longtime provider who asked not to be named.

“There are some payments that are half what competitive bidding
rates are, let’s put it that way,” confirmed Randy Wolfe of
Lambert’s Health Care in Knoxville, referring to 32 percent lower
Medicare rates resulting from the Round 1 rebid. “I think they are
going to have a hard time finding providers.”

Providers were notified three months ago that BlueCross
BlueShield, in an effort to staunch a hemorrhage of red ink in
Tennessee, was looking to cut costs by contracting with CareCentrix
to handle HME benefits for TennCare beneficiaries. TennCare is the
state’s expanded Medicaid program, covering 1.2 million Tennesseans
through three managed-care organizations.

Under the contract, CareCentrix must establish a network of
providers across the state. But that could be hard to do,
stakeholders said. While BCBS reported average reimbursement cuts
of 15 percent, providers said some cuts are quite a bit higher
depending on product lines.

Eddie Jenkins, durable equipment manager for Access Family
Pharmacy, a full-line respiratory and HME company in Chattanooga,
said his company would see some significant cuts. “The majority are
15 to 25 percent cuts, which makes doing business almost undoable,”
he said.

Contracts, if they are accepted, must be returned to CareCentrix
by Sept. 17; the new fee schedule will be implemented Nov. 1.
Jenkins said he is losing sleep about whether or not to accept.

“Today, I would say we are not going to participate,” he said
Wednesday. “But you’ve got a lot of things to weigh out.”

Wolfe said he has diversified
greatly in recent years and would not be too affected by the
cuts, but he has heard many other providers say they will reject
the proposed contracts. Providers, he said, no longer have the
luxury of taking on lowball insurers.

“I think the problem is that for many years, suppliers have been
able to roll the dice and take some of the low-pay agreements in
exchange for market share,” Wolfe said. “These types of programs
existed five or six years ago and there was an environment for them
to work.

“Other plans with better margins subsidized the low margins,” he
said.

But times have changed, Wolfe pointed out. Companies are dealing
with more pressures, more documentation, slimmer margins. “What is
happening today is that everybody wants a discount … so there
is no longer the opportunity to subsidize an aggressively priced
plan.”

In a recent study by the Center of Business and Economic
Research at the University of Tennessee, 94 percent of TennCare
recipients said they were satisfied with the program, a 2 percent
increase over last year. It’s a strong endorsement, but it may not
hold up if providers’ predictions prove out.

“Under the new fee schedule, Jenkins said, “you’re going to have
a bunch of mass-produced, sub-prime equipment. You can forget any
kind of deliveries or [respiratory therapists] to the home —
you just can’t do it.”

Wolfe agreed. By carving sizeable chunks out of reimbursement,
state and federal agencies are chipping away at the pool of
providers. And that will have a severe impact on the accessibility
and quality of HME, he said.

“I think it’s going to be a bloodbath in the industry for
awhile. I think insurance companies will continue to go for the
bottom. And providers, as they fall to the bottom, look like they
are alive until they are dead.

“When you take away competitors,” Wolfe continued, “you lose the
ability to negotiate prices as easily. As long as there are a lot
of us in the market, it should help insurers, it should help
Medicare and Medicaid.”

That is not the way the industry is going, however, he said.
“The service goes down, the prices go up, the delivery slows down.
That’s the way we are headed,” Wolfe said. “Once we start to lose
providers across the board, everybody loses.”

And in the end, said Jenkins, it’s the beneficiaries who lose
the most. “People aren’t on Medicaid by choice, and they are going
to be the ones who suffer,” he said. He dreads having to tell a
customer who comes in with a prescription for albuterol and a
nebulizer that he can supply the albuterol, but not the nebulizer,
Jenkins said, “because your insurance pays less than it costs
me.”

To keep that from happening, the providers said they are hoping
to negotiate more reasonable rates.

“They’ve got some top people,” Wolfe said about CareCentrix’s
executive force. “They’re smart enough to understand.”

Concluded another, “If they don’t, well, peace be with them.
Because it just isn’t going to work.”