TennCare aims to "demonstrate that the state can use managed care principles to serve Medicaid enrollees, as well as some individuals who are not Medicaid-eligible, without compromising quality of care and without spending more than the State would have spent had it continued its fee-for-service program" (Bureau of TennCare 2012b, 5). In 1996, behavioral health services for TennCare members were carved out and BHOs contracted directly with the Bureau of TennCare to manage these services. A primary aim of the carve-out was to provide services for a priority population that included adults with SMI.
By 2007, Tennessee decided that the carve-out model was not working. State officials saw a range of problems in this arrangement: the classification system was not serving members well, services for members were not coordinated, the Bureau of TennCare had to mediate disputes between the BHOs and MCOs about which organization was responsible for what services, and providers were not satisfied. Separating physical and behavioral health services, the Bureau concluded, interfered with providing comprehensive and cost-effective care for its enrollees. Tennessee therefore ceased providing behavioral health services through the BHOs and instead required its existing MCOs to provide these services.
An integrated managed care model meant that TennCare members would be able to access behavioral health services based on medical necessity. Integration also simplified contract agreements, since the state no longer had to contract with both a BHO and MCO, and it alleviated "turf wars" over which conditions were covered as physical or behavioral health. Finally, it ensured that TennCare members received comprehensive, coordinated care through a fully integrated service delivery system (James 2011).
In 2007, the Bureau of TennCare awarded regional contracts to three MCOs and began integrating behavioral health services into its MCO contracts. The MCOs accepted full-risk for all services, and the new contracts established an integrated medical and behavioral health care system for members. United and Amerigroup began serving the Middle Tennessee region in 2007, and United and BlueCare (Volunteer State Health Plan of Tennessee) began serving the West Tennessee region in 2008 and the East Tennessee region in 2009. In late 2009, behavioral health services for TennCare Select enrollees (a group including foster children and children receiving SSI benefits) were transferred from the BHO to Volunteer State Health Plan, which began operating statewide. The state had created a fully integrated delivery system for medical and behavioral health services.
Before the integration, the mental health benefit carve-out was managed by the Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS). The Department maintained oversight for the first year of integration and transitioned oversight to the Bureau of TennCare in 2008. Today, the Bureau and TDMHSAS collaborate in community and state work groups to discuss various projects related to reviewing services and needs in the community.
Continuing its quest to promote improved coordination of care for the whole person, Tennessee launched the CHOICES program in 2010. CHOICES integrated long-term care services into the MCO contracts. The MCOs began to offer new community-based alternatives to eligible individuals who would otherwise require Medicaid-reimbursed care in a nursing facility. With the implementation of CHOICES, the MCOs in Tennessee became responsible for the coordination of all medical, behavioral, and long-term care services provided to their members. The only remaining carved-out services are dental and pharmacy.