MYTH #2:
“TennCare is riddled with fraud and abuse that are soaking the taxpayer and making the program unaffordable.”

REALITY

McKinsey & Co. found in its December 2003 report that fraud and abuse were not major factors driving program costs, which have been fueled primarily by payments for pharmaceuticals, professional services and outpatient services.1  During the 2004 legislative session, the General Assembly enacted the nation’s toughest Medicaid fraud and abuse laws and created a new investigative agency.  In sum, fraud and abuse were not the major factors that some people believe them to be, and important steps were taken to address the issue. 

There was one important area, however, that the state neglected for years. McKinsey found that better use could be made of information technology to identify potential abuse. That echoes an earlier Comptroller finding that TennCare was not using existing technology and claims data to curb inappropriate prescribing and use of prescription drugs. That process, known as retrospective drug use review (DUR), has been mandated by Federal law since 1993, but Tennessee failed to implement an effective DUR program.2 DUR is important for detecting outright abuse in the pharmacy program, but it may be even more valuable in improving the overall quality of prescribing practices in the state. Utilization of drugs remains among the highest in the nation, for TennCare and non-TennCare patients alike. This reflects prescribing practices that have been entrenched for years and that have serious adverse effects not just on TennCare drug costs, but on public health.3 Overprescribing has led to the development of drug-resistant infections and drug dependency among some patients.

In 2003, the Tennessee Justice Center obtained a promise from the Bredesen Administration to implement DUR immediately. Two years later, court documents disclosed that the state had yet to establish effective DUR.4 The state’s failure to conduct DUR is a striking example of the gap between political rhetoric (about getting tough on fraud and managing the program better) and administrative reality.

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