Medicaid Managed Care - U.S. Senate Special Committee on Aging

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care physician and be referred. This has got to be addressed for not
just these two disease states, but many of the others.
Does that answer your question?
QUESTION. Yes. I was particularly interested in Tenn<strong>Care</strong> and
what the improvement has been.
Mr. MINOR. The improvement has been because many of the
major HMOs that are involved, which are 12 in Tenn<strong>Care</strong>, are now
starting to realize that they are having problems dealing with catastrophic
disease, that the capitation rate is not enough to take care
of these disease states, and it has already bankrupted three of
those HMOs on catastrophic diseases. So they are coming back to
the Tenn<strong>Care</strong> roundtable and saying, We need to re-talk this.
So the recommendation is to leave catastrophic disease out of a
new demonstration project until you have all the bugs worked out,
and then roll in your catastrophic disease to where you have the
right skills and the right training to manage it.
Ms. McGINLEY. May I add something, too? We have 1,200 State
and local chapters, and they try in their States to play a role when
States are working on these managed care waivers or plans. One
of the major concerns in a lot of States-and I can give specific
States if people are interested-is the fact that even though advocates
are at the table, and they are part of the working group that
is supposedly developing the plan, often, when the plan is ready to
go to HCFA or whomever for approval, the concerns of the consumers
have not really been reflected or included in the plan, and neither
has the expertise of the consumers been included in the plan.
That is a major problem.
Mr. GUIDA. I should say in follow-up-and I agree with Mr.
Minor-the net improvement of Tenn<strong>Care</strong> is that there are now
200,000 or 300,000 low-income Tennesseans who did not have access
to health insurance before Tenn<strong>Care</strong> who do now. The savings
produced by Tenn<strong>Care</strong>, these reductions in managed care into the
<strong>Medicaid</strong> program, were sufficient to expand health coverage to a
significant number of Tennesseans who did not have access to
health insurance prior to the program. That's the net-that's the
most significant improvement produced by the program.
The effects of the program on specific disability groups have been
variable, and I don't mean to editorialize. The mental health managed
care program in Tennessee is a disaster.
Mr. MINOR. Amen.
Mr. GUIDA. It is chaotic. The State attempted to carve outmeaning
establish a special managed care program-for adults
with severe mental illness and children with serious emotional disturbances.
The capitation rate, the amount of money that the State
agreed to pay to the HMOs that ran that carve-out program and
then in turn the subcapitation rate, or the amount of money that
the HMOs paid to the community providers, is so low that the community
mental health centers-there are only six community mental
health centers in the entire State of Tennessee-one of them is
in bankruptcy in Memphis, and another is close to bankruptcy.
There is a confidential HCFA site visit report which indicates that
part of the problem is that the HMOs that run the mental health
carve-out own private psychiatric facilities in the State of Tennessee
and are shuttling consumers to those inpatient hospitals