Carole R' Myers, PhD, RNAssistant Professor

1
TennCare A Critical Case Study
Carole R. Myers, PhD, RN-Assistant Professor The
University of Tennessee (Knoxville)-College of
Nursing

• Study background In the span of only 15 years,
  the introduction of managed care and other
  market-based strategies from the private sector
  precipitated a transformation of the delivery of
  Medicaid services in the United States. These
  monumental changes remain poorly understood. The
  implementation of managed care in Tennessees
  Medicaid program is an excellent public policy
  exemplar because of the far-reaching scope of the
  program and the ongoing development of the
  program.
• Study purpose The purpose of this study was to
  evaluate the fidelity of Tennessees Medicaid
  managed care program (TennCare) to selected
  strategic aims.
• Fidelity implies a strict and continuing
  faithfulness to an obligation, trust or duty
  (Merriam-Webster, 2000).
• Program fidelity is a broad measurement of how
  true the implemented program is to the intended
  program (Heflinger Northrup, 2000).
• Methods A single case study design was used.
  The retrospective recollections of 26 informants,
  captured in recorded interviews were triangulated
  with time-stable documents to reveal an intricate
  web of people and circumstances that have shaped
  the program.
• The study examined the complex contextual factors
  that influenced the TennCare program, by
  providing a multi-perspective view and
  examination of expected and unanticipated program
  results.
• Key informants included
• Governor Ned Ray McWherter-Democratic Governor of
  Tennessee from 1987-1995 creator of TennCare
• Gordon Bonnyman-A prominent advocate, co-founder
  of the Tennessee Justice Center and key figure in
  the development of TennCare
• David Manning-Commissioner for Finance and
  Administration during the entire McWherter
  administration
• Manny Martins-McWherters Director of the
  Medicaid Bureau and then TennCare Director under
  three Tennessee governors (McWherter, Sundquist
  and Bredesen)
• Governor Don Sundquist-Republican Governor of
  Tennessee 1995-2003
• Dr. Bruce Vladeck-Administrator for the Health
  Care Financing Administration from 1993-1997

• Governor Ned Ray McWherter made a deliberate
  decision about who would be included in the
  development of TennCare he made the unorthodox
  decision to include the advocates, such as Gordon
  Bonnyman and Tony Garr, and exclude the
  providers.
• David Manning came to the point where he said,
  I cant beat Gordon Bonnyman , and so Ive got
  to figure out a way to work with Gordon. (T.
  Garr) .
• It was apparent that the providers were
  opposed to managed careIt seemed to us that we
  had to implement this thing rapidly There
  would have a long drawn out debate process and it
  would never have gotten us to the point we got
  to (M. Martins).
• The implementation of TennCare was influenced by
  several key factors
• The capstone of a political career-Governor
  McWherter served two terms as Governor from
  1987-1995. It was during the waning days of his
  administration that he turned his attention to
  access to health care for the states most needy.
• An imminent state budget disaster-Medicaid
  expenditures nearly tripled between FY 1987 and
  FY 1993. A strategy used by Tennessee and other
  states to finance hospital payments for indigent
  care was curtailed by the federal government. In
  turn, the state levied a 6.75 gross receipts tax
  on hospital and professional services. Legal
  action was threatened by the Tennessee Hospital
  Association and others, essentially closing of
  this funding avenue.
• The triumvirate-Governor McWherter had an
  excellent team, most prominent were David Manning
  and Manny Martins. All three shared a similar
  social and political philosophy and commitment,
  as well as a complementary skill set.
• The failure of national health reform-Bill
  Clinton came to office in 1993. In November
  1993, he proposed the Health Security Act of
  1993. TennCare then was created during the same
  time that a national health reform plan was being
  created. McWherter saw his efforts as compatible
  (but better!) than what was being developed at
  the national level. TennCare was implemented
  January 1,1994 and by October of 1994 the Health
  Security Act was dead.
• Presidential perspective, power and
  persuasion-President Clinton came to us as a
  former governor who had been very frustrated
  about Medicaid and very frustrated with what he
  perceived as bureaucratic rigidity at HCFA. We
  had very clear marching orders to make
  encouragement of state flexibility and state
  waivers a priority and to be as responsive and
  supportive to the states as we could (B.
  Vladeck).
• TennCare was approved and implemented in less
  than one year.
• Governor McWherters personal and political
  collateral and prowess were key factors in the
  creation of TennCare
• Governor McWherter established a strong executive
  authority to create and implement TennCare

• Management
• Management is key to envisioning and
  operationalizing program components. Management
  conveys the judicious use of means to accomplish
  an end.
• The management of the creation and implementation
  of TennCare was purposeful and proactive.
  Management of the operational phase of TennCare
  has largely been reactionary and politicized and,
  in many instances, inappropriately abdicated or
  conferred upon the wrong or unprepared people or
  entities.
• The management of the delivery of health care
  services is complex and specialized. The state
  employed managed care organizations (MCOs) and
  behavioral health organizations (BHOs) to manage
  the utilization, costs and quality of services.
  It was incumbent upon the state to hold these
  vendors accountable for performance.
• The MCOs that the state contracted with had
  little managed care experience or
  capabilities-The MCOs and BHOs have generally
  been a weak link. When TennCare launched, 12
  MCOs under contract most created after April 1,
  1993. Only one had prior Medicaid experience and
  this was on limited scale.
• One of our failures was that some managed care
  organizations did come in that were homegrown.
  And those managed care organizations were not
  good managed care organizations. That hurt us,
  and it hurt TennCare, I think (M. Martins)
• The MCOs and BHOs were not selected through a
  competitive bid process.
• There really was not a round of bids.There was
  an offer to consider proposals (D. Manning).
• I think there were a lot of political decisions
  made as to who the MCOs were. They were not
  always good business decisions, but they were
  political decisions as to who would operate the
  MCOs geographically, racially, and in other
  ways. (D. Sundquist)
• After a bid process, the state signed risk
  contracts in March of 1996 with five for-profit
  BHOs, four of which were based out-of-state. Two
  months later, at the states urging, the five
  consolidated into two for the TennCare Partners
  business. Eventually these two BHOs became arms
  of a single entity.