Post image for State May Push TennCare Cuts Off, Again

State May Push TennCare Cuts Off, Again

by Andrea Zelinski on April 20, 2010

State officials think they may have hit upon a scheme to dodge hundreds of millions of dollars in cuts to the government’s health care program for the poor — for now.

But those same officials warn that cuts avoided this year will become necessary again next year if federal funds dry up.

By combining some one-time federal money with a yet-to-be-approved new fee for hospitals, TennCare’s funding hole could shrink to $106 million from $430 million, TennCare chief financial officer Scott Pierce told a legislative oversight committee on Capitol Hill Monday.

“It’s good news for the short term. We still need sort of a long-term plan,” he said. “They aren’t permanent solutions.”

Tennessee is in line to get $121 million from the federal government through one-time federal funds owed the state for overpaying on its share of prescription benefits for Medicare Part D enrollees who have both Medicare and Medicaid.

The Legislature is considering SB3528 — a measure that imposes a fee that hospitals would pay based on their net patient revenues. If passed, the legislation would create a federal matching program and result in the state collecting $203 million in additional one-time funds.

After both the additional one-time funds, TennCare has $106 million worth of unfunded items, which could lead to shaving down reimbursements for certain non-hospital and non-physician health providers by 1 percent, cutting grants and other reductions.

Pierce said he expects the administration to come back and try to find a way to fund at least some of those potential cuts, but he hasn’t seen that proposal. “We’ll be back here next year talking about these same issues,” he said. “The underlying issues haven’t gone away.”

Bredesen proposed cuts within the TennCare program last year, but those reductions were averted through the application of federal stimulus funds.

He proposed another round of cuts this year. Between the original cuts for the 2011 fiscal year, that kicks of July 1, and a sluggish economy resulting in lower-than-predicted state revenues, those cuts grew to $430 million.

“We kind of continue to get an extension on when we thought that the other shoe is going to drop,” said Rep. Joe Armstrong, D-Knoxville, who sits on the TennCare Oversight Committee.

History is repeating itself, Pierce said, and the legislature will eventually need to fully make those cuts or find permanent revenue to help fund TennCare.

“There is a day of reckoning. It might be in Fiscal Year 12. It might be in Fiscal Year 13,” he said.

Andrea Zelinski can be reached at

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