BusinessTN

Here's a look at three bills recently signed into law.

Small Group Health Cooperatives:
Allowing small businesses to form cooperatives to negotiate group health insurance rates.

Companies with two to 50 employees are eligible to participate, and cooperatives must have at least 1,000 eligible employees or 10 participating employers. As National Federation of Independent Business state director Jim Brown explains, the legislation's primary driver is to provide better rate predictability.

"This is addressing those thousands of small business owners lying awake at night knowing that they are one catastrophic employee illness away from getting out of health insurance," Brown says. "This way, they are sharing the risk through a pool to inoculate themselves from those situations."

Brown emphasizes that such cooperatives will not necessarily lower insurance premiums. "The goal is to have predictability so that these businesses don't have a 70% increase next year," he says.

Brown says that it's too early to offer specifics about what kinds of plans insurance companies will offer but that the marketplace for the product looks fairly strong. "We've had strong interest from associations and chambers," he says. "We've gotten through the legislative phase, and now we'll work on the implementation phase, but we hope that by Jan. 1, [when the law goes into effect,] one or more insurers will be offering the product."

Medical Liability Reform: Reducing the number of frivolous malpractice lawsuits.

A compromise between tort reform advocates, such as the Tennessee Medical Association (TMA), and trial lawyers, represented by the Tennessee Association for Justice (TAJ), this legislation requires a certificate of good faith from a medical expert indicating that a medical malpractice complaint has merit. It also sanctions attorneys who pursue merit-less cases.

"We're satisfied with the outcome because the legislature has agreed with us that there needs to be reform, but this is a small step in total reform," says Don Alexander, CEO of the TMA.

For the TMA, "total reform" would include a cap on non-economic damages—awards for unquantifiable damages, such as loss of enjoyment of life and pain and suffering. The group argues that a cap would lower medical costs and improve the climate for practicing medicine in Tennessee.

"Right now, juries are unlimited [in how much money they can award for non-economic damages], but if you cap those damages, you can better forecast future insurance rates," Alexander says.
The TAJ, however, disagrees that such damages should be limited. "Caps end up harming people who have already been harmed the most," says TAJ president Daniel Clayton. "We trust a Tennessee jury to make decisions as to fair compensation for those injuries."

The group is satisfied with the recent legislation because, Clayton says, "it should help reduce the filing of cases which should never have been filed in the first place."

Lela Hollabaugh, a partner at law firm Waller Lansden, who co-manages the firm's Trial and Appellate Litigation practice and is not a member of the TAJ, says that while she believes the law, which goes into effect Oct. 1, will ultimately reduce the number of medical malpractice lawsuits, it may also have unintended consequences.

"I think we'll see the development of a cottage industry of doctors willing to give these preliminary assessments at a high cost to the plaintiff," she says. "It will be expensive to get a quality opinion from a doctor because doctors capable of giving them don't generally like doing that type of work."

She also believes the state will see litigation regarding the interpretation of the statute. As for the cap issue, the state hasn't seen the last of the TMA's push to make caps a reality. "I don't know if it will be next year or the next or the next, but the reason for filing comprehensive legislation still exists," Alexander says. "If we can't get the whole package, we'll get it piece by piece."

Long-Term Care Community Choices Act:
Rebalancing the state's long-term care system.

Gov. Phil Bredesen made this one of his top priorities, announcing in January that he would fulfill his promise to expand alternatives to nursing homes for elderly and physically disabled residents.

The new law allows $1.2 billion in TennCare funds to be more evenly divided between home and community-based service providers and nursing homes—which previously received 98% of the state's long-term care funds. "We will see long-term care handled by managed care organizations, and there will be more of an incentive for care to be given in home- and community-based settings," says Patrick Willard, director of advocacy for the AARP in Tennessee.

Ron Taylor, executive director of The Tennessee Health Care Association, which represents nursing homes in the state, says the group initially was concerned the legislation would adversely impact the nursing home industry. Bredesen, however, urged them to recognize it as an opportunity to expand its long-term care services, and after working closely with the administration to address industry concerns, the group, Taylor says, is satisfied with the new law.

"This bill is probably the most comprehensive reform in long-term care in over two decades," Taylor says. "It provides opportunities and incentives for nursing homes to diversify services."
Both Taylor and Willard note that change will be gradual.

"Rules and implementation will take place over the next year," Willard says. "Contracts will take effect July 1, 2009. This is a gradual process but one that will ultimately restructure the system."