Friday, June 17, 2005

A TennCare story

RangelMD wrote this excellent commentary on the history of TennCare and a frightening prediction of the future.

It prompted me to share this TennCare story.

When TennCare first started, there was only one pediatrician in this small town in east Tennessee. He was willing to participate and was assigned 5,000 (that's right) TennCare kids. He was paid a monthly fee for each kid that varied depending on which HMO carried them, but let's say about $10/month. So he was getting about $50,000/month from TennCare.

Now most of us in primary care struggle to carry 2000-2500 on our panels and provide reasonable access. As an old school MD, he worked long hours and on weekends and provided a lot of call in care. Naturally, a significant number of his patients ended up in the ER, despite his best effort.

When he retired, a young pediatrician had been recruited to take over his practice. This doc was of a new generation, and less inclined to devote as much time to his panel. So he set up his clinic this way: mornings were walk-in only. The first 20 patients to sign in would be seen. Everyone after the first 20 were turned away and told to come back another day or go to the ER. In the afternoon, he had appointments. Most of these, coincidentally, went to privately insured patients.

Now, you have to understand how TennCare paid for the ER visits. Each participating provider signed a contract for a certain monthly capitation, say $12/patient/month. From this, there was a withhold, let's say $2/patient/month. These monies were used to establish a risk pool. From this risk pool were paid any specialty referrals, ER visits and other benefits for which the providers accepted the risk.

The plan was that, at the end of the year, the monies left in the risk pool would be distributed to all of the participating providers based on the number of bodies enrolled and the providers level of "utilization." If you were a high utilizer of the ER or specialists, you got less of a year-end bonus. Makes great sense, huh?

The problem was that there was never any money left in the risk pool at the end of the year. So, if you struggled to see everyone and almost never let any of your patients got to the ER or see a specialist, you got squat. If you simply sent everyone to the ER or to a specialist, you got squat. So where's the incentive?

So this young MD figured this out. Early on, hospitals were required to contact the PCP to get "authorization" to see the patient in the ER. So you would get called at night and asked if you would authorize the visit. ER's would actually turn the patient away if the doctor said no. This young MD just told the ER staff that he would authorize any visit, so don't call me. The practice in which I worked required us to speak with each patient and try to treat them over the phone or ask them to come in the next day. Of course, this put us at a great deal of risk. We realized that we weren't getting anything back from the risk pool, so we quit taking the risk and just said, "Sure, see 'em."

With EMTALA, ER's just quit calling, anyway.

Anyone who reads Thomas Sowell knows that if you institute cost controls, all you do is restrict access to the commodity.

Access to a TennCare provider has become so difficult in my current community that we end up seeing a lot of patients in the ER whose providers are 30-40 miles away. These are people who can't afford the gas to drive there, or don't have access to reliable transportation. They have providers to whom they have been assigned for years and have never seen.

This, of course, is great for the providers, because they are getting paid for some number of patients that never come in.