Federal Court Grants State Relief from Long-Standing Court Order

Thursday, January 08, 2009 | 10:42am

State Will Be Able to Mitigate Budget Cuts

NASHVILLE – The State of Tennessee today received relief from U.S. District Court, resolving a long-standing court order that will help minimize planned budget cuts in TennCare’s effort to meet its budget reductions for next year.  The court granted the state permission to check the eligibility of 150,000 TennCare members, some of whom may no longer be eligible for the program.  They are all members of a class of enrollees subject to a 21-year old court order known as Daniels. 

“We appreciate that the court ruled quickly and fairly, allowing us to move forward in determining which of these individuals are still eligible for TennCare,” TennCare Director Darin J. Gordon said. “By allowing TennCare to remove those individuals who are no longer eligible, the court’s ruling will enable the state to reduce or avoid some of the budget reductions we otherwise would have had to make in the state’s effort to balance its budget during this difficult economic period.”

All Daniels class members were once eligible for Supplemental Security Income (SSI), a package of federal benefits that includes Medicaid.  Due to the Daniels court order, the state was barred from re-determining their eligibility, effectively allowing non-eligible individuals to remain on the program. Although some of Daniels class members will remain eligible for TennCare, some will not for a variety of reasons.  Those who no longer live in Tennessee, make too much money or are not now disabled. For example, an individual who was injured in a car accident but who through rehabilitation is able to return to work may not now be considered disabled by the Federal government’s standards and would no longer qualify.

TennCare estimates that the state spends about $1.2 billion annually to provide healthcare insurance for the 150,000 Daniels class members. Though the Bureau will not know how many of these individuals will still qualify until their eligibility is verified, if only 10 percent are found not to be eligible, the state could save as much as $120 million ($42 million of which is state funded) annually.

The state will begin identifying Daniels class members in TennCare and start a review process. For those who are no longer eligible for SSI, and have not filed an SSI appeal, the state will move to determine whether they meet other qualifications to be eligible for Medicaid.

Daniels class members will keep their benefits with no lapse in coverage during the determination process.   The process is similar to one the court approved in 2005 for other TennCare members, which meets full approval of the federal Centers for Medicare and Medicaid Services (CMS), TennCare’s federal partner.

“This gives us hope that we may be able to realize savings that will help minimize cuts we will have to make,” Gordon said. “It’s simply a matter of fairness that we are allowed to take people off the program who no longer qualify to minimize the budget reductions we will have to make that will impact TennCare’s truly eligible members.”