Ties that Bind: Monopsony Tying and the Tenncare Cram-Down

Abstract

The TennCare cram-down provides an important case study of how a state with low managed care penetration implemented, on short notice, a mandatory managed care program not only for all its Medicaid beneficiaries but also for several hundred thousand uninsured or uninsurable state residents not otherwise eligible for medical services support under Medicaid. The TennCare cram-down provides a vehicle for analyzing how the antitrust law applies to a health insurance setting in which an insurance company requires that the providers in its mainstream private plans (and its contracted-for plan for public employees) participate in its public benefits network for public beneficiaries - albeit under different financial terms. The article concludes that, for antitrust purposes, the cram-down must be analyzed and justified under conventional antitrust doctrinal (pro-competitive) norms. The case study is important in its own right and is of even broader potential significance since states seeking the fiscal benefits of managed care in Medicaid are now authorized to adopt mandatory managed care as a universal requirement without the need of securing a federal waiver.

Keywords: antitrust, Blue Cross, competition, health insurance, Medicaid, medical care, monopsony, TennCare, tying, worthy purpose