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Lawmakers press TennCare on MCO oversight, contracts and network adequacy
Summary
Members raised concerns about managed-care organization (MCO) contracting delays, provider disruptions and network adequacy. TennCare officials said the state contracts the MCOs but does not dictate individual provider contract terms; oversight is exercised through network adequacy standards, profit margin limits and medical loss-ratio provisions.
Several lawmakers told TennCare officials about constituent and provider problems stemming from delayed or incomplete contract negotiations between providers and managed-care organizations (MCOs). Representative Brock Martin and others described cases where providers had not received new contracts months after the start of a new year, forcing providers and patients to scramble.
TennCare Director Steven Smith acknowledged the concerns but said the state—ontracts with MCOs and relies on them to build networks and negotiate provider agreements. "We don't tell our MCOs what to pay or what to negotiate," Smith said, explaining that stepping into individual negotiations would run counter to the managed-care model and would require growing state capacity. He added TennCare does hold MCOs accountable through network adequacy oversight, the medical-loss-ratio and the ability to claw back dollars when appropriate.
CFO Zane Sills and other officials provided fiscal context: the MCO line item is roughly $12.3 billion and administrative costs run at roughly 10% of total MCO funds (about $800–$900 million annually across three MCOs). Members asked staff to invite MCO representatives to a future hearing to increase transparency about contracting practices, profitability and performance metrics.
