Erlanger sues state Medicaid program
Erlanger Health System is suing the state’s Medicaid program, TennCare, saying it’s purposefully siphoning money from hospitals that treat the neediest patients in order to favor insurance companies that often employ former TennCare employees.
The suit, which was filed Friday, is the latest in a decadelong saga in which Erlanger says state officials are ignoring the law in terms of how some hospitals are reimbursed for emergency services they’re required to provide.
In 2007, the Tennessee General Assembly enacted a statute requiring for-profit managed care organizations contracted by TennCare to pay the average in-network contract rate to out-ofnetwork hospitals that provide emergency services to Medicaid enrollees. Instead, the suit claims, managed care organizations are paying the lowest rates for in-network hospitals.
Erlanger’s lawsuit says TennCare executives have “acted to enrich insurance companies at the expense of Tennessee medical providers,” creating a “windfall for profit-driven MCOs on the backs of out-of-network hospitals like Erlanger that have no choice but to provide emergency care to Tennessee’s neediest citizens.”
TennCare spokeswoman Sarah Tanksley said TennCare cannot comment on ongoing litigation.
TennCare operates through agreements with managed care organizations that receive a capitation payment for each enrollee,
and then the organization assumes the risk of paying for their covered health care expenses, the lawsuit explains. If a managed care organization pays less for enrollees’ health care than the amount it receives in capitation payments, the organization stands to earn a profit, and TennCare’s managed care organizations have earned billions of dollars in profits, the lawsuit adds.
The suit mentions that many former TennCare employees “now work for the very insurers they once regulated.”
For instance, J.D. Hickey, chief executive of BlueCross BlueShield of Tennessee, was director of TennCare Select from 2004 to 2006 before joining BlueCross, the state’s biggest health insurer.
Erlanger previously sued to recover rates from a managed care organization in 2009, then the state Supreme Court in 2015 ruled the hospital system had to go through the administrative challenge system. In that process, which began in April 2017, TennCare determined it lacks jurisdiction to issue an order invalidating the rates, the lawsuit says.
Erlanger officials deferred comment to representatives from Riley Warnock & Jacobson, the Nashville-based law firm handling the suit, who said Erlanger’s argument is outlined in the complaint and a petition that was also filed Friday.
Staff writer Elizabeth Fite contributed to this story.