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A soft landing after benefit cuts

April 1, 2006
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A Tennessee provider aims to ease the transition for beneficiaries with severe and persistent mental illness

In 1994, Tennessee tried a bold experiment. With special waivers from the federal government, the state expanded its Medicaid program, and any Tennessean who lacked healthcare coverage could buy into the program—renamed TennCare. At one point TennCare provided coverage for 23% of the state's population—more than any other state. But as the economy soured, the state's budget tightened, and Tennessee—which has no income tax and is obligated to balance its budget—had to make painful decisions about the popular program.

David C. Guth, Jr. “It was clear that the growth rate of TennCare could not be sustained by the tax structure in Tennessee,” says David C. Guth, Jr., CEO of Centerstone, Tennessee's largest behavioral healthcare provider and one of the largest in the nation. “The governor, as well as the legislature, was under tremendous pressure to bring the growth of TennCare under control.”

As in other states, the cost of pharmaceuticals was a rapidly growing line-item for TennCare. Guth points out that TennCare's costs for pharmaceuticals for behavioral health conditions grew from $100 million to $600 million between 1994 and 2005; in contrast, the costs of behavioral health services provided through TennCare grew from $320 million in 1994 to $400 million in 2005. Although many of the newer—and more expensive—antipsychotics debuted during this time, Guth doesn't believe the rise in pharmaceutical costs can be tied to one factor.

The state's reaction to overall growing costs in TennCare was the usual approach: place limits on eligibility and reduce benefits. But policymakers knew they just couldn't cut off people with severe and persistent mental illnesses from vital services, so they created the Mental Health Care Safety Net, an ongoing program (subject to funding review) providing a limited formulary and services to people who no longer qualify for full TennCare benefits, Guth explains. These benefits are available only to beneficiaries who were receiving TennCare benefits before the recent eligibility changes.

For many beneficiaries, however, this could have been a jarring change from the type of care they were used to receiving. “Centerstone was very concerned about the possible impact on folks moving from the TennCare program to the safety net,” says Guth. So Centerstone identified $800,000 in one-time funds it could use to create a “soft landing,” to ease the transition between traditional TennCare services and those provided under the safety net.

In its soft landing program, Centerstone assists clients with transitioning from the TennCare formulary to the more limited one offered through the safety net. Centerstone funded case management services that would not be available through the safety net so patients could complete their treatment goals (Fortunately, the state later restored case management services to the safety net program).

Most behavioral health providers don't have hundreds of thousands of dollars available to help patients when payers change benefit structures. But Centerstone had been preparing for changes in TennCare from the beginning. Says Guth: “We knew that when TennCare was first introduced, that was not the first and last major change we would see.” Subsequently, Centerstone's board and management have been continuously setting aside resources.

As pressures on the state budget have eased, so have pressures on TennCare to limit eligibility and benefits. Guth notes that the state is expanding eligibility for safety net services, and advocates are hoping the cost savings generated through the cuts eventually will lead to expanded benefits. And despite TennCare's ups and downs, Guth is not pessimistic about the program: “It was a good plan. TennCare has had its problems, but it was the right thing to do, and still is the right thing to do.”


Sara Evans to Perform at Centerstone's Benefit Concert

It's certainly not everyday that a major music star performs at a concert to celebrate a community mental health provider. But that's exactly what country music star Sara Evans is doing on May 17 in celebration of Centerstone's 50th anniversary. Evans’ hits include “Born to Fly,” “Suds in the Bucket,” and “No Place That Far.” Opening for Evans will be Nashville guitarist/songwriter/singer Pat Flynn. More information is available at www.centerstone.org.