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Could this be the time TennCare gets it right? Key players in the first phase of an overhaul say the answer is yes.

On April 1, two managed care organizations began accepting new enrollees in Middle Tennessee and assumed full financial risk to participate. The TennCare Bureau awarded the two contracts last July after a first-time competitive bid process, and each will deliver both physical and behavioral healthcare to about 170,000 Tennesseans. The MCOs — AmeriChoice TennCare health plan and AMERIGROUP® Community Care in Tennessee — will be paid set monthly rates, or capitated payments. While the two names are similar, they are competitors in the market.
Marilyn Wilson, TennCare communications director, said the fact that plans were willing to bid and take full risk "was a real testament to the fact that the program had really turned a corner."

AMERIGROUP is headquartered in Virginia Beach, Va. and runs managed healthcare for the public sector in 10 states. AmeriChoice is an organization of UnitedHealthcare, which is headquartered in Minnesota and manages Medicaid patients in 13 states. United last year acquired John Deere Health Care, a TennCare MCO in East Tennessee.

TennCare once took all MCO comers with an any-willing-provider policy that generated what Wilson called "home-grown plans" without the experience necessary to carefully manage the challenging TennCare population. While there were a few strong plans, several failed. She said TennCare enjoyed "a field of strong bidders" last year because of intricate negotiations that resulted in federal relief from a judicial consent decree. The relief allows for "a true managed-care process," she said. Plans were also lured by the state's methodical efforts to stymie the program's growth. In fiscal year 2003-04, TennCare's growth percentage was more than 20 percent; in fiscal year 2004-05, 13 percent; in fiscal year 2005-06, 3 percent; and for the current fiscal year, the projection is 1 percent.

"We certainly knew who Gov. Bredesen is and what his background is. He has certainly surrounded himself with people who understand this business in his administration, and we thought from the beginning that the redesign of TennCare was being done thoughtfully and intelligently by experienced people. We betted early on that it would be successful," said Richard Zoretic, executive vice president of health plan operations for AMERIGROUP. "It looks to us like the moves Tennessee has made to put the program back on firm footing have all been the right moves."

Steven Matthews, AmeriChoice vice president of public affairs, echoed that sentiment: "We thought that the governor and the legislature had made a very strong commitment to the program, that it was well designed and that it offered a good possibility for success. One of the things that we look for is whether the program has the support of the political leadership and the community. When it comes to Medicaid, those two have to be closely aligned if you are to have a successful program. We felt the new TennCare program met those qualifications quite well."

Both Zoretic and Matthews said their companies would be interested in furthering their relationship with the state by offering services in East and West Tennessee. TennCare's Wilson said the state intends to competitively bid the rest of the state, once the Middle Tennessee initiative is running smoothly and offers a blueprint to follow.

Both programs also plan to place high emphasis on helping members manage their health and their treatment, especially if those members suffer chronic disease. Zoretic acknowledged that the general perception of managed care is that "it saves money by denying or restricting access to care. In point of fact, we can't really save money by denying access to care. That's a very, very hard thing to be able to do. What works much better, particularly with the Medicaid population, is reaching out and engaging individuals as well as their physicians, whom we hope they have a relationship with. If they don't have a relationship with a physician, then we try to create one and get them into care early and often, so that small problems don't become big problems."

AMERIGROUP and AmeriChoice promise the heavy use of case managers to help patients navigate the healthcare system and coordinate the care of multiple providers. "There are things we do that aren't directly laying the hands of a doctor on a patient, but fall into the category of providing support services and care-coordination services. Doing that is good medicine. It provides for better health for that member, and it also happens to save money," Zoretic said.

AmeriChoice will deploy its Personal Care Model™ with case managers who "seek to establish a personal relationship and assume a significant burden of coordinating not only a patient's medical care, but working with their personal support system," Matthews explained. The case managers identify family members, friends, neighbors, ministers and other individuals who offer the necessary backup to ensure a patient sticks with the program. They also help patients access other community social services such as food stamps, for which they're eligible.

"Our approach is you cannot treat a person medically without consideration of the social environment in which they live," Matthews said. "We try to determine what barriers exist that may prevent an individual from getting the optimal care and then break those barriers down."

One requirement of a TennCare contract was the provision of both physical and behavioral healthcare, and both MCOs seem to like that arrangement. In fact, both have behavioral health organizations under their corporate umbrellas. "The advantage of that is that it's totally coordinated in terms of case management, and there's an absolutely seamless merging of the medical and the mental health or substance abuse side," said Matthews.

Zoretic said, "There are a whole lot of related comorbidities that go along with behavioral health, and our view is that having one set of records versus two, one system versus two, one set of people versus two, provide for greater coordination of care for those members."

Both organizations have Middle Tennessee offices and marketing professionals working to build their provider networks.


April 2007

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