NASHVILLE - The state is reviewing an order from a federal judge who called TennCare a "failed experiment" and directed 550,000 TennCare children into a separate program.
U.S. District Judge John T. Nixon ruled in a 4-year-old case that the state has not provided adequate screening, diagnosis and treatment services to them. They represent nearly 40 percent of all TennCare enrollees.
The ruling could spell the end of the 7-year-old TennCare program if it means that managed care no longer can be used to provide services to children, TennCare Director Mark Reynolds said Wednesday.
If that happens, Tennessee would have to go back to the old Medicaid program, Reynolds said. About 500,000 Tennesseans who are included in TennCare might not be eligible for Medicaid.
"We're reviewing whether or not we should go back to this judge and either seek clarification or reconsideration," Reynolds said.
In his 50-page ruling Dec. 18, Nixon called TennCare a "failed experiment" and a system that "has indeed broken down."
"TennCare, as it relates to the under-21 population, has proven to be unworkable," he wrote.
The federal government, which pays two-thirds of TennCare's $5.6 billion budget, allows Tennessee to extend coverage to the uninsured and uninsurables as long as the program utilizes managed care to save the state and the federal government money, Reynolds said.
"If you can't save money, or if somebody believes you shouldn't use managed care, we're not allowed to cover more people," Reynolds said.
The judge also ordered the appointment of a special master to oversee the development of a new children's program.
Both the state and attorneys for the Tennessee Justice Center, a public interest law firm in Nashville that sued the state in 1998 on behalf of TennCare children, have recommended former TennCare Director Manny Martins to be special master. Nixon has not ruled on that recommendation.
During three weeks of testimony last summer, Nixon heard from 20 parents who testified that their children were unable to get needed services, said Michelle Johnson, lead attorney for the plaintiffs.
Johnson said managed care has "lots of potential" to provide preventive services to children.
"It's not that managed care hasn't worked. It's the lack of oversight. The state is ultimately responsible to make sure that kids get what is entitled to them," she said.
Reynolds disagreed. "More preventive care happens in Tennessee due to managed care," he said. "Overall it's provided for improved care."
Gov. Don Sundquist has proposed a major overhaul of the program. It would be split into three parts, with different benefits and payment structures for the different populations.