A TALE OF TWO STATES

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TennCare, however, is not the product of a long, thoughtful, democratic process. Stealth attack is more like it. In 1993 then Governor Ned McWherter, alarmed that Medicaid had ballooned from 13.4% of the state's budget in 1987 to more than 26%, presented lawmakers with a managed-care program contained in an innocent-looking 1 1/2-page bill. Before the powerful lobbyists for doctors, insurance companies and the elderly knew what had hit them, the bill passed, with virtually no debate.

From the moment TennCare was law, its opponents had much to grouse about. The speed of the transition from a fee-for-service Medicaid plan to the new system, in which the state takes $2.9 billion in federal and state funds and contracts with 12 privately run managed-care organizations, wreaked havoc on doctors and patients alike. The chaos that even a small private business often undergoes when switching medical plans was multiplied a thousand-fold. Many patients did not know which managed-care group they had been assigned to, and in the early days it could take hours to get through to TennCare's phone lines. The managed-care groups were sometimes four or five months late reimbursing doctors and other providers, who were unhappy with TennCare's lower fee schedule. In the race to sign up new patients--the more patients, the more government dollars--one managed-care group even sent sales representatives into a county jail, whose occupants already had medical coverage.

As with Arizona's program, one of TennCare's greatest successes has been in mainstreaming Medicaid patients, who no longer see doctors at so-called Medicaid mills. This too was accomplished cunningly. The architects of TennCare created a controversial rule called the "cram down." A doctor who opts out of TennCare is not permitted to participate in BlueCross and BlueShield's commercial network, thereby losing a huge amount of potential business from approximately 1.2 million non-Medicaid people, including state and municipal employees and teachers. Initially, almost one-third of the doctors in the BlueCross and BlueShield network refused to join TennCare, but most have since signed up.

To many patients, TennCare has been like a balm. Those people who never had health coverage are "happy just because they have a TennCare card in their pocket," says Gordon Bonnyman, a Tennessee legal-services lawyer. And many Medicaid recipients like the shift to managed care, since it provides an opportunity to build a relationship with a primary-care physician.

Administrative snafus and tight dollars all around, however, have hurt the quality of care in Tennessee. TennCare critics say the program is often about managing costs, not care. The worse a patient's medical problems, critics claim, the worse the system works. That is, they contend, because the profits for managed-care groups lie in attracting healthy members who require little or no treatment in a given year. "The experience of people with severe disabilities is that they get poor care because, frankly, the provider hopes they will choose another provider," says Carol Westlake, executive director of the Coalition for Tennesseeans with Disabilities. "What's missing is accountability." Frequently, she says, medical decisions made by doctors are second-guessed, even vetoed, by administrators.