Tennessee's plan for Medicaid would overhaul program funding

Tennessee Gov. Bill Lee released a draft proposal Sept. 17 for funding the state's Medicaid program through a block grant, according to The Tennessean.

Tennessee lawmakers approved in May a bill requiring the state to submit a plan to President Donald Trump's administration for a Medicaid block grant, and the state has been preparing this plan.

States historically have not had big restrictions on the amount of federal Medicaid money they receive. But the federal government announced in January that it was working on a plan to allow states to receive fixed block grants for Medicaid spending in exchange for giving states more flexibility in implementing the program.

Mr. Lee's plan would revamp funding for TennCare, a Medicaid managed care program operated by the state, which provides healthcare for about 1.4 million Tennesseans, primarily low-income pregnant women, children, elderly and disabled individuals.

The federal government establishes rules for coverage and provides TennCare with about $7.5 billion to $8 billion each year, The Tennessean reported, adding that funding is adjusted based on the size of the state Medicaid program.

However, the governor's plan for a "modified block grant" would give Tennessee greater authority in running TennCare, and the state would receive federal Medicaid funding as a lump sum or a set amount per program enrollee, according to the newspaper. Block grant funding generally can't increase once the initial money is gone, The Tennessean reported, but the state is asking the Trump administration to pledge to increase funding if it is needed in circumstances like a recession.

Under Tennessee's plan, the state and federal government would split leftover money if TennCare spends less than the funding provided by the federal government in a given year, according to the Nashville Business Journal.  The governor told the Journal this would financially benefit the state — potentially through about $1 billion in additional annual funding for TennCare — based on that Tennessee spent approximately $2 billion less on the program than projected in 2018.

"We think we have crafted a waiver that is going to really mitigate the risk that Tennesseans have and actually give us an opportunity to benefit from the efficiencies and the way that we run our program," the governor added. "That benefit will give us an opportunity to provide enhanced services to our TennCare population … and eventually, for the same money, provide additional services to more people."The

But the Journal and Tennessean reports state that critics of a Medicaid block grant system are concerned about how the state's rural hospitals could be affected, and that such a system could hurt TennCare coverage.

Tennessee's Medicaid program is now holding a 30-day public comment period before a final proposal is submitted to the federal government for consideration Nov. 20.

Read the full Tennessean report here.


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