Tennessee Unveils First-Of-Its-Kind Block Grant Proposal for Medicaid

State officials say TennCare could collect as much as $1 billion in savings under the proposal.

Tennessee this week made public its $7.9 billion block grant proposal for its Medicaid program, which would be the first of its kind if it passes muster with federal regulators.

The proposal, four months in the making, is expected to be submitted to the Centers for Medicare & Medicaid Services in November.

Republicans have since the 1980s attempted to transition state Medicaid funding into block grants, which they say would allow for more flexibility and cost savings. Those attempts have been rebuffed at the federal level.

Earlier this year, however, the Trump administration signaled that it is open to the idea.

The federal government pays for about $7.9 billion of TennCare's $12.1 billion overall budget, which is roughly 65% of the cost.

Tennessee officials say TennCare, the state's Medicaid plan for 1.4 million Tennesseans, could collect as much as $1 billion in savings under the proposal, even as Medicaid services are expanded. The state based that estimate on claims that the program's spending has come in under CMS projections in recent years, saving the federal government billions of dollars.

Tennessee Gov. Bill Lee told reporters that the state deserves to be rewarded for its good stewardship of federal dollars. 

"Over the last 10 years, we've saved the federal government a significant amount of money because of the efficiencies that we've operated our plan under, which is why they're looking to us as potentially being the first state," Tennessee Gov. Bill Lee told reporters this week, according to The Tennessean.

TennCare Director Gabe Roberts told the Associated Press that the plan was a "hybrid" approach to block grants because the state has designed its proposal to allow Tennessee to keep 50% of any unspent block grant funds.

State officials have also stressed that the proposal will undergo what is expected to be vigorous negitions with CMS in the coming months.

Reaction to the proposal was mixed.

Craig Becker, president and CEO of the Tennessee Hospital Association, said he was "encouraged that the Medicaid block grant proposal for the TennCare program will not reduce benefits, remove individuals from the rolls and has the potential for shared savings."

"THA is working now to understand the potential impact of the proposal on TennCare members, hospitals and the state," he said. "Ensuring adequate funding for the program in the future is critical to continuing to care for some of Tennessee’s most vulnerable residents and is a strength of the proposal."

"The potential for shared savings in recognition of TennCare's historic fiscal responsibility also presents a great new opportunity for enhanced coverage for TennCare enrollees, Becker said, adding that THA will review the proposal and submit formal comments in the coming weeks.

Michele Johnson, executive director of the Tennessee Justice Center, an advocacy group for TennCare enrollees, said the state wants to make children in the program "guinea pigs in a risky experiment that no other state has been reckless enough to try."

"Half of Tennessee children, including those who are most vulnerable, rely on TennCare for essential healthcare.  We were just in the news for cutting off over 200,000 kids, and the state still doesn’t know whether they were eligible or not," Johnson said.  

"What is most distressing is that this proposal is all about the state using kids' healthcare as a piggy bank. State officials should listen to the many respected national patient advocacy groups that warn that such proposals put patients' health and safety at risk," she said.