House Speaker Cameron Sexton, R-Crossville, opposes extension of TennCare’s primary contracts as part of a continued effort to award a separate health-care company a contract after it lost a bid. (Photo: John Partipilo)
Tennessee’s House speaker is opposing extension of TennCare’s primary contracts as part of a continued effort to award a separate health-care company suing the state after it lost a contract bid two years ago.
The Tennessee Legislature’s Fiscal Review Committee delayed a vote on extending TennCare’s primary contracts as House Republican leaders sought more time for “due diligence” to review the matter and possibly bring Rhythm Health into the realm.
Postponement comes amid a lawsuit filed by Rhythm Health against the state in Davidson County Chancery Court after the company failed to win one of the TennCare managed care contracts two years ago.
It then lost two appeals and a legislative effort to hand it a contract. House Speaker Cameron Sexton sponsored the bill to give Rhythm, a subsidiary of Centene Corp., a fourth state contract with TennCare even though it lost out in the bidding.
The move to delay is considered an effort to muddy the process and push Tennessee to the point it settles the Rhythm lawsuit and gives the company a share of TennCare’s business. The contracts have a total liability of $25 billion over several years, though they’ve cost only about $6 billion the last two years to serve 1.5 million to 2 million of the state’s poorest residents.
Asked if the delay is an effort to end the litigation and help Rhythm, state Sen. Paul Bailey, a member of the Fiscal Review, said, “There could be some intent there.”
Bailey, a Sparta Republican, noted the contracts will be extended for a year, which the Legislature has approved as part of the state’s $52.6 billion budget. But Fiscal Review Committee approval is part of the process to ensure the contracts go forward, he noted.
Rep. Patsy Hazlewood, chair of the House finance committee, and Rep. Dan Howell, chair of the House Transportation Committee, called for the delay last week even though a TennCare official said the Attorney General’s Office recommended extending contracts with three providers while it defends the state in the Rhythm Health lawsuit.
Asked if he told Hazlewood and Howell to delay the vote in an effort to reach a settlement, Speaker Sexton said in a statement, “TennCare has informed me they could extend the current contracts or proceed with the new contracts. There has not been a single discussion between me and the bureau on the premise that the attorney general has advised them not to initiate the new contracts. I would be surprised if that were the case, and they failed to express that to me.
“I believe the time has come for TennCare to settle its lawsuit or initiate the new contracts. I agree with the action taken by Fiscal Review to dive deeper into this issue. This new norm by the bureau of using excessive continuing extension requests goes against the entire purpose of the competitive bids, which were awarded two years ago.”
Hazlewood, a Signal Mountain Republican, told the committee she has several questions about the contracting process and needs more time “to dig a little bit deeper.” She noted the contracts with BlueCare Tennessee, UnitedHealthcare and Wellpoint, formerly Amerigroup, are the state’s largest.
Amid questions about the timing of contract approval and whether TennCare would be able to keep services flowing, Howell, R-Cleveland, pointed out the state could shift to a fee-for-service program.
However, TennCare Chief Financial Officer Zane Seals told the committee the state would need two to three years to switch from its managed care organization program and hire hundreds of personnel to run a new type of insurance organization. TennCare is the state’s Medicaid program for its neediest residents, including pregnant women and children.
The committee will take up the matter again in mid-November after Seals warned lawmakers that waiting much longer could disrupt the program and cause chaos.
But Seals acknowledged he would be bringing the same request for a 12-month extension in mid-November.
Centene and another subsidiary, Wellcare, are one of 193 organizations to spend at least $1 million trying to influence Tennessee politics over the last 15 years, according to a database created by the Lookout.
Centene focuses its spending power on lobbying, spending between $300,000 and $480,000 since 2022 to increase its lobbyist presence to seven. Alexandria Honeycutt Gambrell serves as Centene’s lead lobbyist, but in September 2023, the company hired McMahan Winstead Richardson, one of the state’s largest lobbying firms with more than 40 clients.
During the Fiscal Review meeting last week, Sen. Bo Watson questioned what information Howell was “trying to glean” from TennCare about the contracts. Watson, chairman of the Senate finance committee, noted the state won’t have a TennCare program in 2024 if the panel doesn’t approve the contracts.
One official, however, said TennCare could move forward with the contracts if the Legislature fails to approve them in 40 days.
The Fiscal Review Committee has been dealing with the TennCare contracts for more than a year. In September 2024, it put off action on the managed care organization contracts at the request of Sexton, R-Crossville.
Sexton said at the time he was seeking “transparency and accountability” within the program because of the profitability of the contracts.
Centene has run into trouble already in Tennessee, causing the state to rebid a $123 million contraction in 2021 after allegations of bid-rigging within the Department of Correction.
Nationally, it has hit numerous snags.
In Mid-2021, Centene announced it would spend $1.25 billion to settle disputes with 22 state Medicaid systems, though the company admitted no wrongdoing, according to an Ohio Capital Journal report.
That included $55 million in a settlement with Mississippi for failing to give contractually guaranteed discounts on Medicaid drugs.
An $88.3 million settlement with the state of Ohio centered on accusations by the attorney general that Buckeye Health, a Centene subsidiary, set up a chain of businesses that double-charged the state for services.
EDITOR’S NOTE: Tennessee Lookout reporter Adam Friedman contributed to this story.
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