Tennessee Leads the Way by Being the First State to Propose Receiving Federal Medicaid Funding Through a Block Grant

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Tennessee became the first state in the nation Tuesday to propose that $7.9 billion in federal funding for the state’s Medicaid program, known as TennCare, would be provided through a block grant.

The release of the 34-page proposal, TennCare II Demonstration Amendment 42, begins a 30-day public comment period, which will end on October 18, 2019.

TennCare is the state’s $12 billion program that provides services to 1.4 million Tennesseans with limited income in need of medical care.

Playing on the state’s nickname, the press release stated about the proposal, “Tennessee is volunteering to be the leader in reforming the financial incentives in Medicaid to show that it’s not only possible but desirable to ensure that states are relentlessly driving quality in care, efficiency in program administration, innovation in serving enrollees, and sustainability in how the state serves some of its most vulnerable citizens.”

“The proposal represents a natural progression of the state’s history of nationally recognized innovation and financial management,” the press release also said.

The proposal emphasizes the state’s accountability for effective program management, while incentivizing performance and ensuring that financial responsibility for TennCare continues to be equitably shared between the state and federal government, according to the executive summary on the amendment to the demonstration waiver.

The executive summary explains that the traditional model of Medicaid financing is outdated with misaligned incentives such that states that spend more money receive additional federal funding.

Meanwhile, states that control costs and reduce spending receive reductions in federal funding.

A key provision in Tennessee’s proposal is that the federal money saved by the state through effective management of the program, determined through a series of stated calculations, would be shared equally between the state and federal government. The concept is called “Shared Savings.”

Information provided with the proposal makes it clear that, to achieve savings, there will be no reductions in who is eligible or the benefits that are currently provided.

The proposal for the block grant waiver, developed by Governor Bill Lee’s administration, came at the direction of the legislature during the first year of the 111th Tennessee General Assembly.

At the time the bill was introduced, House sponsor Representative Timothy Hill (R-Blountville) told The Tennessee Star that block grants are the conservative way to expand TennCare coverage.

On the final day of the 2019 legislative session, the measure passed which directed the Governor, through the Commissioner of Finance and Administration, to submit a waiver amendment to the Centers for Medicare and Medicaid Services to provide TennCare II funding by means of a block grant.

HB 1280 and companion SB 1428 also required that the proposal for the block grant be indexed for inflation and population growth.

Additionally, the bill mandated that the administration’s proposal provide maximum flexibility with regard to existing federal mandates and regulations, implementing cost controls, pharmacy benefits, diabetic testing supplies, over-the-counter medications and serving other needy populations.

The final version of the bill came about through a Conference Committee of three House members and five Senate members that resolved the differences between the two chambers.

The law, which became Public Chapter No. 481, was still extremely partisan and garnered zero votes from Democrats in either house.

The administration’s resulting proposal introduced Tuesday calls for the block grant amount to be adjusted on a per capita basis to compensate the state for TennCare enrollment growth beyond its average growth during the reference years of 2016 to 2018.

The per capita adjustment will ensure medical assistance will continue to be provided to all eligible individuals, regardless of changes in the economy.

Annual inflation adjustments to the block grant, based on Congressional Budget Office growth projections, will account for year-over-year inflationary increases.

The state envisions that the flexibility afforded in the block grant could expand services either not covered under TennCare or otherwise ineligible for federal match, if they are determined to be beneficial to health of members or will likely result in improved health outcomes.

Such services could include, for illustrative purposes only, nutritional assistance, housing support, transition services for those preparing to exit correctional settings who are likely to be eligible for TennCare, home health strategies to coordinate care for members with intellectual other developmental disabilities, or members in institutions for mental diseases.

The proposal also calls for “delivering the right care to the right members,” addressing Medicaid’s requirement for “comparability” by instead allowing variability in benefit packages for different members based on medical factors, such as pregnancy versus disability.

Further flexibility is requested in the way of penalizing member fraud, only upon determination of guilt of TennCare fraud by way of a judgment of conviction in court, which would permit suspension or termination of the member or just a particular benefit to the offending member.

A public input process is required prior to the state’s submission of Amendment 42 to the Center for Medicare and Medicaid Services and is open from September 17 through October 18, 2019.

Comments may be emailed to public.notice.tenncare@tn.gov or mailed to Gabe Roberts, Director, Division of TennCare, 310 Great Circle Road, Nashville, TN 37243.

Those preferring to make their comments in person may attend public hearings to be held the first week of October in each of the state’s three grand divisions:

Tuesday, October 1 at 2 p.m. Central Time
Family and Children’s Service, Honey Alexander Center, Training Room B, 2400 Clifton Avenue, Nashville

Wednesday, October 2 at 2:30 p.m. Eastern Time
Burlington Branch of the Knox County Library, Community Meeting Room, 4614 Asheville Highway, Knoxville

Thursday, October 3 at 2:30 p.m. Central Time
Jackson-Madison County Library, Program Center, 433 East Lafayette Street, Jackson

Various documents regarding the TennCare Block Grant can be viewed on the TennCare Public Notices web page.

Laura Baigert is a senior reporter at The Tennessee Star.
Photo “Healthcare Signing” by the Tennessee Department of Commerce and Insurance. 








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4 Thoughts to “Tennessee Leads the Way by Being the First State to Propose Receiving Federal Medicaid Funding Through a Block Grant”

  1. CCW

    This is nuts! This is a holdover from Obama-nation. What happened to Billy Lee’s promise to his conservative constituents not to needlessly take on indebtedness to the Federal Government through these freebees, with all sorts of federal strings attached. He will not get my vote again. Has he ignored the lessons of Tenn-Care and Tenn-Care fraud? This is a $12Bn dose of Federal opioids dished out to the TN politicians, and the TN Medical community, with addiction guaranteed.

  2. 83ragtop50

    $12 billion!!!!! Unbelievable.
    Whatever happened to personal responsibility?

    1. Nopersonalresponsibility

      Who needs personal responsibility when you can get stuff you didn’t pay for by stealing from your neighbors through the force of government.