Tennessee’s Medicaid block grant waiver approved by federal government


Tennessee became the first state in the country to receive federal approval for a Medicaid block grant waiver Friday, but it's possible the approval could be reversed by President-elect Joe Biden's incoming administration.

The waiver, approved by the federal Centers for Medicare & Medicaid Services (CMS), significantly could change the funding mechanism for Tennessee's Medicaid program, TennCare, and give the state more autonomy in administering the TennCare program.

“We have sought to fundamentally change an outdated and ineffective Medicaid financing system that incentivizes states to spend more taxpayer dollars rather than rewarding states for value, quality and efficiency,” Gov. Bill Lee said in a statement.

TennCare provides health care to mostly low-income pregnant women, parents and caretakers of minor children, and elderly and disabled adults. About 1.5 million Tennesseans – around 1-in-5 – are covered by TennCare.

Laura Berlind, the executive director of the Sycamore Institute, a nonpartisan public policy research center for Tennessee, said the agreement would give Tennessee authority to alter or expand the Medicaid program without federal approval, providing unprecedented control over new populations and benefits and limits on prescription drug coverage.

“This broad power shift from federal to state policymakers will have significant effects on TennCare spending, enrollees, and providers. The ultimate impact could be positive, negative, or mixed depending on what changes state officials decide to make,” Berlind said in a statement.

Lee said in a video statement Friday that with new flexibility and savings under the block grant model, the state can work toward improving maternal health coverage, clearing the waiting list for intellectual and developmental disability services and reaching more needy populations with targeted interventions.

“We've shown that partnership is a better model than dependence when it comes to running a Medicaid program in our state while providing high-quality services at the same time,” Lee said.

Block grant approval was adopted by the General Assembly in 2019, and federal approval comes after more than a year of negotiations.

The Tennessee Legislature must approve the authorization before implementation can begin. Opponents of the block grant in the Legislature are appealing to the incoming Biden administration

“I anticipate the incoming Biden administration will reverse this promptly,” Senate Minority Leader Jeff Yarbro tweeted. “It’s irresponsible in the final weeks of the outgoing Administration to play games with Medicaid funding in the middle of a pandemic.”

“The legislature should reject any last ditch effort by the lame-duck Trump administration to endanger the health coverage of millions of Tennesseans,” Senate Minority Caucus Chairperson Raumesh Akbari said. “Instead lawmakers of both parties should be focused on working with President-elect Joe Biden to extend health coverage to every working Tennessean in the state.”

However, opposition to passage of approving legislation by Tennessee's Republican supermajority is unlikely. Without intervention from the Biden administration, implementation of the block grant waiver seems imminent.

“While it is not everything we asked for, the waiver grants our state more autonomy and flexibility in the administration of TennCare. This will allow us to save taxpayer dollars and improve the quality of care,” Lt. Gov. Randy McNally, R-Oak Ridge said in a statement Friday. “I look forward studying the proposal in depth and working with my legislative colleagues in the House and the Senate to approve the waiver as is required by law.”

McNally and House Speaker Cameron Sexton, R-Crossville, said Friday they look forward to the General Assembly approving authorizing legislation.

“Now that an agreement has been reached, we look forward to the authorizing legislation making its way through our committee system in the House,” Sexton said. “I believe this is a good deal for Tennessee, for Tennesseans and the federal government; this conservative solution will increase access to quality care without government mandates.”

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