Knox County and TennCare disagree over MCO contracts; staff and TennCare say pilot and contract edits may resolve disputes

Gary Dupler, deputy law director for Knox County, told TACIR on May 30 that Knox County Schools has repeatedly pushed back against a standard managed‑care organization (MCO) contract offered by BlueCare because the template reads like a medical provider agreement and includes obligations the district says are inappropriate for a public school system.

"We are not a medical provider," Dupler said. He cited examples in the contract that asked schools to provide services outside their scope — listing schools in provider directories, care for pregnant women and prescription management — and said Knox sought a disclaimer in the agreement clarifying that schools provide limited services to enable education rather than full medical care.

Why it matters: Medicaid reimbursement can provide recurring funding for school health services. Dupler estimated Knox County could have been reimbursed roughly $250,000 a year under some arrangements, but he said his district declined to sign a contract that misstates the district's role.

TennCare and DOE perspective: Lori Paisley of the Tennessee Department of Education described the coordinated school health model and technical assistance the department provides; she said 14 districts reported billing for nursing services in the 2022–23 school year and that some districts are developing in‑house billing capabilities. Drew Staniewski, deputy director at TennCare, told the commission that TennCare now contracts with three statewide MCOs, that 63 school districts have at least one MCO contract and that TennCare has increased spending on school‑based services from about $15.6 million in 2020 to nearly $40 million in calendar year 2023.

Staniewski said TennCare has an "any‑willing LEA" expectation — the state requires MCOs to attempt to contract with local education agencies and to use a standard fee schedule for LEAs. TennCare also has taken several steps to ease school participation: removing the need for annual parental consent for IEP‑based services, expanding timely‑filing rules for LEAs to one year, creating a TennCare billing manual and issuing school nursing guidelines.

Statutory and administrative fixes: Staniewski and Paisley highlighted Public Chapter 695, a state law change referenced by TennCare staff, that clarified ordering authority for school‑based providers so occupational, speech and physical therapists employed by districts can order IEP services within their scope — reducing the need to find outside physicians to sign orders.

Next steps and negotiation: TennCare staff said they met with Knox County and reviewed a PCG‑submitted list of contract concerns, returned the document with comments, and remain open to negotiating common contract changes that meet federal and state requirements. Dupler told the commission that a clear disclaimer describing schools as public school systems rather than medical providers would make the contract acceptable to Knox and likely to other districts with similar concerns.

The commission did not vote on legislation or require immediate contractual changes at the May 30 meeting; staff said the study will help identify common problems and potential statewide contract language that could be flowed down to MCO templates.