TennCare cuts could hit hospitals

Gov. Phil Bredesen's proposed cuts to the state's expanded Medicaid program would cost state hospitals hundreds of millions of dollars and may force some of them to shut down, health care officials say.

TennCare is the name for Tennessee's program using federal Medicaid dollars.

Dan Buckner, CEO of Heritage Medical Center in Shelbyville, said he is concerned about the discussion but is waiting to see a formal bill in writing.

"I'm very anxious to see what comes out of the final legislation," said Buckner.

But the discussion, based on Bredesen's State Of The State address, is already giving pause to some in the health care field.

Tennessee Hospital Association president Craig Becker estimates the loss to hospitals statewide will be about $540 million.

"There'll be hospitals that will close over this," he said. "We'll lose some of our safety nets if these cuts are allowed to go through."

"It's worrisome, of course, to have any kind of Medicaid monies cut," said Buckner.

He said there are already many providers who won't take Medicaid patients, and cutting funding for the program would lead to lower provider reimbursement and cause even more providers to refuse to participate.

Bredesen has said he needs to slash $201 million from TennCare to balance a $28.41 billion state budget. The TennCare reduction is part of $394 million in cuts to recurring spending plans.

But House Minority Leader Gary Odom, a frequent critic of the administration on health care issues, agrees that "a number of hospitals ... will just not be able to survive." The Nashville Democrat has asked state officials to provide him with an analysis of how they arrived at the cap and the percentage of admissions that would be covered under it.

"We're talking about the health care infrastructure of our state," Odom said. "That's why I want the administration to give a detailed explanation of what they think is going to happen if this is put in place."

The local debate, of course, ties in with a national debate about health care issues.

"We need to change health care," said Buckner. He said the public clearly did not like the most recent national health care proposal, as evidenced by recent election results.

"It looks like the sentiment of the public right now is, they don't like the bill that's before them," said Buckner, but he said some other option needs to be explored.

"We don't need to just stop and let it rest."

One main change being proposed to TennCare is a $10,000 annual cap on inpatient care for adults, which state officials say will save $51 million.

TennCare spokeswoman Kelly Gunderson estimates about 5,600 enrollees may exceed the $10,000 cap annually, which she said represents less than 1 percent of TennCare's 1.2 million enrollees.

Gunderson said the cuts are among "difficult decisions in order to live within our means" and that other states are experiencing similar budget difficulties because of the poor economy.

"Based on pre-recession data, 17 states have inpatient hospital limits ... and will likely have to make changes to their Medicaid programs as well," she said. "This may increase the total number of states that have these types of limits and may in fact impose stricter limits for those with them already in place."

Nevertheless, Jason E. Boyd, interim CEO of Nashville General Hospital at Meharry, said the proposed cuts would result in a $10.5 million deficit at the hospital.

"Nashville General cannot absorb a $10.5 million cut, but is hopeful the state working in concert with the hospital advocacy groups can find a solution to fund hospitals that provide a high portion of TennCare, charity and unfunded care to the citizens of Tennessee," Boyd said.

Becker said the administration should use more of the state's cash reserves to soften the cuts. Between the rainy day fund and TennCare reserves, there's currently about $900 million available, and Bredesen has said he plans to dip into that to spare some state jobs and key services.

Becker and other health care officials believe there's nothing more key than providing the best service for TennCare's enrollees.

"It just doesn't quite seem fair to us that they wouldn't use those (reserves) to keep us afloat," he said. "That's what they're there for, they're rainy day funds, and it's definitely a rainy day."

Tennessee hospital officials on Monday approved a one-year fee assessment they hope will raise about $200 million and help mitigate severe cuts to the state's expanded Medicaid program.

The board of the Tennessee Hospital Association unanimously agreed for an "enhanced coverage fee" to be placed on hospitals in order to draw down federal funds.

Becker said the fee would begin on July 1 and be reviewed after a year. He wasn't sure about the exact amount of the fee, but said it could be between "1 and 2 percent".

Whatever it is, he said patients won't be affected.

"There will be enough dollars that will come back that these fees will not be reflected on a patient's bill," Becker said.

Buckner advised against any too-hasty solutions.

"We don't need to go through anything that's a knee-jerk," he said.

House Speaker Kent Williams said he could see giving the hospitals enough reserve money to float them until they receive the federal funding.

"I think we need to concentrate on finding a long-term solution," the Elizabethton Republican said.

In 2005, Bredesen cut 170,000 people from TennCare to save the state money. He has said the latest TennCare changes will apply more to institutions than those enrolled in the program.

Tennessee Health Care Campaign director Tony Garr disagrees.

"When those kinds of cuts come down, the patient ultimately is hurt, as well," said Garr, adding that the state should consider new forms of revenue in addition to dipping into reserves, like closing "corporate loopholes."

The Associated Press contributed to this report.