TENNCARE OVERVIEW

Medicaid is a joint federal and state financed health care financing program, providing medical assistance to the poor. Although Federal funding is involved in the form of matching payments, Medicaid is a State administered program. Traditionally, Medicaid has been established as a fee for service health program whereby beneficiaries can go to any State certified participating provider of their choice for covered medical services.

The State of Tennessee joined the Medicaid program in 1969. Initial expenditures were projected to be approximately $32,865,000. By FY 1992-93, the program was consuming about 26.3% of the total state budget. As in other States across the nation, the tremendous growth of the traditional fee for services Medicaid program and the State’s ability to fund it became a paramount concern to State leaders. The State addressed this issue by performing a great deal of research into the managed care concept of health care delivery, and explored the possibilities of developing a Statewide managed care program for its Medicaid beneficiaries, and other uninsured citizens not eligible for Medicaid. This resulted in the State’s submission and approval of a Section 1115 waiver request from the Health Care Financing Administration to implement a new Medicaid managed care program, to be known as “TennCare.” The program began on January 1, 1994 and is now entering its fifth year.

TennCare serves 1.2 million beneficiaries, of which approximately 350,000 were uninsured. Budgetary constraints in the Medicaid program necessitate that the maximum enrollment in TennCare is capped at 1.4 million beneficiaries. All medical care provided by TennCare is furnished through ten capitated managed care organizations (MCOs). Four of the MCOs are statewide, the remainder operate regionally. Due to budgetary constraints, enrollment for the uninsured was closed January 1, 1995 with the exception of individuals coming off Medicaid eligibility. For those who are uninsurable due to an existing medical condition, enrollment is still open. In January, 1997, Governor Sundquist announced open enrollment for children, beginning on April 1, 1997. A comprehensive outreach program was put in place to notify all eligibles. It is estimated that 68,000 children who lack health insurance will be eligible for TennCare.

Since the inception of the TennCare Program, the State, as required by its 1115 waiver, has, through a contract with the University of Tennessee, performed customer satisfaction surveys with TennCare users. The results of these surveys demonstrate that Tennessee Medicaid beneficiaries are more satisfied receiving health care through TennCare than with the former fee for service Medicaid program, and the satisfaction index has increased over three successive surveys. The State has been successful both in terms of meeting the health care needs of the eligible citizens, and in controlling the runaway costs experienced in the traditional Medicaid program. (See Attachment - Health Care and TennCare: a Survey of Tennesseans - for a more in-depth discussion of the TennCare program).