Alexander, Corker: Postponing Changes to Medicaid until August Will Prevent a Loss of $232 Million for Tennessee and Protect Care for Thousands of TennCare Recipients

Bredesen Says Change Would Have a Significant Impact on Tennessee, Appreciates the Help of Alexander and Corker

Posted on May 21, 2008

U.S. Senators Lamar Alexander (R-TN) and Bob Corker (R-TN) said today that the Administration’s decision to postpone implementation of two proposed rules governing Medicaid until August 1, 2008 will temporarily prevent Tennessee from losing an estimated $232 million per year in federal funding – a loss that would have resulted in significant cuts in services to TennCare beneficiaries and eliminated vital federal support for Tennessee medical students. Alexander and Corker have been working since March 2007 to address these proposed cuts to the TennCare program. “Senator Corker and I have both worked with Governor Bredesen to make sure that our efforts to control spending in Washington don’t unfairly hurt Tennesseans,” Alexander said. “Senator Corker has worked especially hard on this. While today’s announcement to delay implementation of two proposed rules helps protect Medicaid funding for our state, I still have serious concerns about a third proposal that, among other things, will affect foster care services. That is why I cosponsored a bill to prevent this rule from taking effect and hurting our state’s foster children. We will continue to work together to ensure that TennCare receives the federal dollars necessary to care for all Tennesseans in need.” “While our ultimate goal should be true health care reform in this country, in the interim we need to do everything possible to keep the health care infrastructure in Tennessee strong and able to serve the citizens of our state,” said Corker. “Senator Alexander and I have been working with Governor Bredesen and federal officials for over a year on these issues, and I am pleased that the Administration has suspended any cuts until August. I hope this signals a commitment to work with states to achieve a thoughtful reform of the program that is fiscally responsible, while maintaining health care access to Medicaid recipients. While our health care system must be reformed, the changes that result should be made in coordination with states and in a way that ensures a smooth transition.” “This change would have a significant impact on Tennessee, so I appreciate the help provided by Senators Alexander and Corker,” said Governor Phil Bredesen. “Delaying the effective date of this rule is a step in the right direction, and I'm hopeful we'll resolve this issue in the coming months.” The first rule would have restricted the definition of a “public” hospital eligible to use Certified Public Expenditures (CPEs), which help states fund their Medicaid programs. This would have a significant impact on 19 Tennessee hospitals, including safety net hospitals such as The Med in Memphis and Erlanger Hospital in Chattanooga. Under the proposed rule, the definition of “public provider” would effectively restrict the pool of public providers in Tennessee to one, Metro General Hospital in Nashville. The Med and Erlanger would no longer be eligible for federal funding. Based on analysis from the TennCare Bureau, which administers Tennessee's Medicaid program, the proposed rule would cause Tennessee to lose an estimated $200 million in federal funding per year and force significant cuts in services to Tennesseans. The second rule would have eliminated federal reimbursement for Graduate Medical Education (GME) programs, which are meant to support the academic work of medical students across the country. This would have effectively eliminated federal support for the state’s medical schools, including East Tennessee State University, Meharry Medical College, UT Memphis, and Vanderbilt Hospital, and caused Tennessee to lose an estimated $32 million per year in federal funding. U.S. Health and Human Services Secretary Michael Leavitt released a statement today saying, “I reiterate the Administration’s willingness to work with Congress and Governors to discuss their concerns before the rules go into effect. We will voluntarily refrain from making these rules effective until August 1, 2008, more than 60 days after the moratorium expires. I invite interested parties to sit down with me and my staff in the coming weeks to ensure that we meet our mutual commitments to protect health care for low-income individuals.”