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Overview of the TennCare FY 2012 Budget

Like the two previous years before it, the FY 2012 final approved budget postpones some of the more difficult reductions. Most of the reductions are postponed with one-time funding such as the Hospital Assessment Fee, unused state funds from the 2011 state fiscal year, and a potential credit from the federal government known as SDW. A few other reductions were funded with recurring funds due to improved state revenue estimates. While TennCare is able to once again postpone the majority of the reductions, some cuts will have to be made at the start of the fiscal year, July 1, 2011. These reductions include:

  • The elimination of a grant to the Tennessee Chapter of the American Academy of Pediatrics (TNAAP)
  • A reduction in the amount of sleeping pills adults can fill per month
  • A reduction on the amount of Suboxone adults can fill per month
  • The elimination of acne products for adults
  • A limit of $4 on the amount TennCare will pay for widely accessible $4 generic drugs
  • Better purchasing agreements related to factor for Hemophilia
  • Births will be paid for at a new blended rate - calculated at current vaginal rates plus 17 percent. This will properly incentivize the appropriate use of C-sections
  • A change in the way ER physicians are reimbursed - they will only be paid a triage fee for treatment of non-emergent cases
  • A reduction in a grant paid to Meharry - from $13 million to $12.5 million
  • A reduction in grants paid to the MED, Metro and Jellico hospitals - from $10 million to $5 million
  • A rate reduction of 4.25 percent for certain providers:
    • Nursing homes, MCO admin. rates, transportation providers, lab and x-ray services, dental, PACE program, and home health providers
    • This rate reduction will be put into place starting July 1, 2011 and will stay in place until December 31, 2011
    • Starting January 1, 2012, that rate reduction will increase to a reduction of 8.5 percent for those providers
    • However, there is a possibility that the federal government will credit states for an error made by the Social Security Administration known as SDW. If that SDW money is credited to Tennessee by January 1, 2012, the rate reduction for those providers will remain at 4.25 percent for the rest of the fiscal year (until June 30, 2012)
    • If SDW funds are not received by January 1, 2012, TennCare will also implement a $2 co-pay for adult non-emergency transportation services

The 2012 budget also adds smoking cessation products to the TennCare benefit package for adult enrollees.