TennCare is renegotiating its managed care contracts for middle Tennessee, and is trying to encourage health insurance companies to take on more risk.
By assuming the risk, insurers could pocket any profits, but would also assume any losses if they couldn’t hold down health care costs. Currently, TennCare managed care companies are only eligible to lose their management fees if costs aren’t kept in line with state targets.
Full-risk entails being paid a set fee per person in the program, and the insurance companies make money by spending as little as possible of this amount.
Governor Phil Bredesen says getting the MCOs to take on full risk won’t be easy.
“Given the fact that they’ve been on a either no-risk or very limited risk for a while, I don’t believe any of them will come back with a full transfer, immediately to full risk, what we wanted to do is to encourage them to go as deeply into that as we could. I think the quality, because they were not at risk, the quality of information they have about the claims that have been paid is not as good as if they’d really had their real money on the line.”
The M-C-Os were reduced to administrative middle men when the Sundquist administration relieved them of all risk, after two of them went bankrupt. This arrangement has long been cited as part of the reason why costs spiraled out of control in the program.
The bids are due back July 26th, and TennCare will select two M-C-Os for middle Tennessee by early August.
**Correction: the bids are due back June 30th, and TennCare will select the winner by July 26th.**
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