The waiver expired at the end of June, but it was extended multiple times while TennCare officials negotiated with CMS. A sticking point during the negotiations was the federal funding that subsidizes Tennessee hospitals’ uncompensated care costs.
Under the new agreement, the federal government will continue subsidizing hospitals’ uncompensated care costs at current levels through June 30, 2017. During a one-year transition period that begins July 1, 2017, the federal government will increase payments made to the hospitals. After that, Tennessee will have to create a new system for dispersing funding to hospitals that limits the federal subsidies.
The new methodology will require additional state funding, which will be covered, in part, by an assessment on hospitals, according to the report.
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