How TennCare Could Change Under Nation’s First Block Grant Proposal

Tennessee’s Medicaid program stands to bring in as much as an additional $1 billion a year in federal money if its block grant proposal, released Tuesday, is approved without changes. And TennCare would have more flexibility in how to spend that money, like transforming rural hospitals or funding healthy food and housing.

“We know there’s a possibility for a meaningful amount of increase in revenues to our state through the federal funding,” Gov. Bill Lee said in a briefing with reporters Monday.

Lee said there will be no reduction in benefits under a block grant, and no one currently being served by the program will lose eligibility.

But state officials are trying not to focus on how much money they might have to spend because they expect some negotiating with the Centers for Medicare and Medicaid Services.

“We can only tell you that we think there are other things we think we ought to look at like … programs that address some of those social determinants, which really means investing in health of a population and not just investing in health care,” Lee said.

Where Would Additional Funding Go?

In the draft proposal, TennCare lays out examples of how they’d like to target the savings they generate, like dental care for pregnant women and new mothers. Currently, it’s difficult for TennCare to provide additional benefits for a limited population, even though — as the proposal notes — ”the actual medical needs of a pregnant woman and a disabled SSI recipient” are quite different.

The state is also seeking flexibility to use federal money for “items and services with a demonstrable connection to TennCare member health.” Those could include nutritional assistance, housing supports and transition services as people leave the correctional system.

Rural communities could benefit from the additional money, with the state requesting broad latitude to fund telemedicine or help transform struggling rural hospitals into “more sustainable, community-appropriate models.”

Where Do The Savings Come From?

Primarily, the additional money comes from a plan to split savings TennCare already generates with the federal government. Under its current waiver, Tennessee’s Medicaid program costs the federal government billions of dollars less than if it were just the open-ended federal benefit. Tennessee now wants to share those savings 50/50, which is expected to be a key sticking point in negotations.

The block grant also envisions saving money by cutting red tape, like the periodic reapprovals of Tennessee’s waiver. Even when very few changes are made, the process takes nearly a year. Tennessee is asking for its new block grant proposal to be considered permanent.

TennCare wants to change a few rules that would ensure it’s the “payer of last resort,” particularly in cases where a patient also qualifies for Medicare.

There is one group of beneficiaries who would lose benefits under the proposal. Those accused of fraud would be banned from the program for up to 12 months. “The flexibility to impose meaningful consequences for members who have abused a public benefit is both reasonable and will improve the integrity of the TennCare program,” the draft plan says.

What Next?

Publishing a draft of the block grant proposal triggers a 30-day window for gathering feedback. Three public comment meetings have been scheduled. The first is at 2400 Clifton Ave. in Nashville at 2 p.m. Oct. 1. The details and documents are posted
here.

Once submitted to CMS, TennCare anticipates a lengthy negotiation process because no state has ever asked for a block grant to pay for Medicaid. And what Tennessee is requesting is much more complex than a lump sum. In fact, it would almost certainly result in the federal government spending more money on Medicaid in Tennessee rather than less.

But Gov. Lee says he’s hopeful the Trump administration is willing to make an example of Tennessee that could ultimately help other states do the same and result in lower Medicaid costs.

“It would cost the federal government more than what they were paying for Tennessee currently,” Lee said. “But it would demonstrate their willingness to invest in programs that are efficient.”