Tag Archives: inequities

TennCare Payment Inequities Threaten ‘Enhanced Coverage Fee’

Some Tennessee hospitals are questioning why they should continue paying a self-imposed tax to prop up the state’s Medicaid program, reports The Tennessean. It seems hospitals raising the questions are losing money treating TennCare patients while some others are being paid much higher reimbursements.
Hospital executives were shocked to learn that insurance contractors for TennCare, the state health-care program for the poor, were paying more than four times as much to some hospitals as to others for outpatient procedures. In some cases, the disparities amounted to millions of dollars — enough to make or break a hospital’s budget.
The tension threatens to fracture a carefully negotiated alliance that keeps the state from losing hundreds of millions of dollars in federal matching money.
One of the state’s largest hospitals, Methodist Le Bonheur Healthcare in Memphis, has left the Tennessee Hospital Association, the organization that came up with the idea for the “enhanced coverage fee,” a 3.5 percent assessment on patient revenue.
Craig Becker, THA president, said a solution is in the works. His organization has asked TennCare to set new guidelines to narrow the disparities in reimbursements. The state agency has agreed to a more equitable payment scale, and a bill is moving through the legislature to do that.
…Hospitals can receive different reimbursements for a variety of reasons. One with a trauma center or a neonatal intensive care unit would provide more expensive treatment.
But the biggest variable is the fact that TennCare contracts with three managed-care organizations that negotiate with individual hospitals to set reimbursement rates.
Those rates are considered proprietary business information, so hospitals did not realize how much disparity there was until TennCare proposed a new rule as a cost-saving measure. The rule said no hospital should receive more than what Medicare — the federal insurance program for the elderly and disabled — would pay for a procedure.
That proposal raised eyebrows, because TennCare typically pays less than Medicare.
After hospitals complained about disparities, the THA hired Aon Consulting, the same firm that serves as TennCare’s actuary, to analyze reimbursements.
Aon found that for outpatient services, some hospitals got just 60 percent of what Medicare would pay, while others got more than four times the Medicare rate.
For routine hospital stays, some hospitals received reimbursements higher than Medicare’s, while others got as little as one-fifth of what Medicare would pay.