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Tennessee to Seek Block Grant for Medicaid

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Michael Petruzzelli

, National Council for Behavioral Health

Tennessee to Seek Block Grant for Medicaid

May 9, 2019 | Medicaid | Waivers/SPAs | Comments
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Last week, the Tennessee legislature passed a bill that would make it the first state in the nation to transform its Medicaid program into a single lump sum block grant. The legislation was passed after continued promises from the Trump Administration to provide states greater flexibility in running their state Medicaid programs. The bill now heads to Governor Bill Lee’s desks for his review and approval.

Despite the promises for flexibility from CMS and overwhelming support for the measure in Tennessee, it remains unclear as to whether or not the Trump administration will approve the request. Administration officials have been studying whether or not it is legal to grant states such authority and any decision will likely face legal challenges from both political and advocacy groups in opposition.

Plans to block grant Medicaid may be familiar to advocates, as they took center stage during the early days of the 115th Congress in 2017. The National Council was and remains opposed to implementing block grants for state Medicaid plans. Medicaid currently is financed through an open-ended federal-state matching formula. However, under a block grant model, the federal government would pay its share of a state’s Medicaid costs only up to a total set amount. States would bear 100% of any medical costs that exceed the block grant.

To date, there are 1.3 million people enrolled in Tennessee’s Medicaid program, known as TennCare, with the federal government covering about two-thirds of the program’s costs. Should TennCare costs exceed the annual block grant amount provided by the federal government, there could be devastating effects on states, providers and beneficiaries. With less federal funding to work with, states will likely consider the following options:

  1. Reducing Medicaid eligibility (including limiting or eliminating Medicaid population expansion)
  2. Restricting benefits and services offered to Medicaid beneficiaries
  3. Imposing work requirements and/or cost-sharing for Medicaid beneficiaries
  4. Cutting payments made to health care providers
  5. Reallocating more state general revenue funds to Medicaid

The National Council will continue to monitor this legislation and subsequent waiver application and update its members with the latest news.

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