Tenncare block grant given 11th-hour approval
Biden may reverse plan before it has any effect
In the waning days of the Trump administration, federal officials approved a plan to convert Tenncare funding to a block grant, potentially overhauling the Medicaid program providing health coverage to about one in five Tennesseans.
But a Tenncare block grant does not align with the health care proposal of President-elect Joe Biden, who instead campaigned on plans to improve and expand Obamacare. Biden may reverse the Tennessee block grant decision before it has any effect.
For now, Tennessee is the first and only state approved to transform Medicaid in this way. Federal officials said the proposal could be a “model” for other states. Gov. Bill Lee touted the approval as a “legacy accomplishment” and a “historic day for Tennessee.”
“I have said from the beginning we would only accept a deal that was good for Tennessee and Tennesseans,” Lee said Friday. “And I believe that we have done just that.”
The approval drew immediate criticism from Tennessee Sen. Raumesh Akbari, D-memphis, who called it a “last-ditch effort by the lame duck Trump administration” to undermine Biden. She encouraged Tennessee lawmakers to reject the proposal and instead work with Biden to “extend health coverage to every working Tennessean.”
The block grant approval, negotiated over about a year with the Centers for Medicare and Medicaid Services, still must get final approval from state lawmakers before it can be implemented. Lee now intends to present a joint resolution on the plan for the General Assembly’s “immediate consideration,” according to a news release.
But the transformation still might be undone before it truly begins.
Two Nashville experts, John Graves, a professor with the Vanderbilt Department of Health Policy, and Michele Johnson, executive director of the Tennessee Justice Center, said in December that if the Trump administration gave the block grant a last-minute approval, the Biden administration would likely reverse the decision.
During a news conference on the block grant approval, Lee said it “would be a mistake” for the Biden administration to reverse the decision, and he did not expect it to happen. CMS Administrator Seema Verma confirmed it would be within the authority of Biden’s incoming cabinet members to reverse the approval, but said the administrative process should allow Tennessee leaders the opportunity to object.
A third Nashville expert, Vanderbilt health economist Melinda Buntin, said Friday the odds were “very very low” that the Biden administration would let the block grant program stand “in exactly this form. Biden’s goal will be to convince Tennessee to finally expand Medicaid coverage, which lawmakers refuse to allow.
“(Biden) will have an interest in constructing carrots, if you will, for states like Tennessee that have not expanded coverage to do so,” Buntin said. “And so I would expect they would go into negotiations about this waiver with that in mind.”
Buntin, a health economist, said she had not expected a last-minute approval of the block grant because this funding model was dependent on health care costs remaining relatively stable, but the coronavirus pandemic had thrown those costs into chaos.
In December, Buntin said she would be surprised if the block grant was approved. And then it was.
“And it still surprises me,” Buntin said, “but I guess we’ve all learned to not to be surprised by surprising things in 2020, or now, 2021.”
Block grant untested alternative to Medicaid expansion
The block grant plan fundamentally transforms how Tennessee’s Medicaid program, called Tenncare, is both funded and managed. Tenncare provides health insurance to pregnant mothers, low-income families and many people with disabilities. It currently covers about one-fifth of all Tennessee residents.
Under the current Tenncare system, the federal government pays Tennessee for about two-thirds of the cost of Tenncare. This money is not capped, so as Tenncare costs rise or fall, the federal funding adjusts to match.
The block grant caps funding for Tenncare, with exceptions, and gives state officials more authority over how to spend that money. If money is saved as a result of state control, the state keeps half to reinvest in government programs but not necessarily in Tenncare.
According to documents provided by the governor’s office, priorities for spending this money include enhancing maternal health coverage, clearing a wait list of people with disabilities awaiting services, expanding coverage to include “additional needy populations” and “addressing state-specific health crises.”
“For the first time, Tennessee will have the opportunity to be rewarded for its efficient and sound management of its Medicaid program through shared savings and additional federal dollars …” said Tenncare Director Stephen Smith. “This is about more, not less.”
The block grant is often seen as an untested, Republican-backed alternative to expanding Medicaid, which was allowed under the Affordable Care Act, better known as Obamacare. Expansion raises the financial threshold to receive Medicaid coverage, allowing more people to join, and provides federal funding to support their enrollment.
Tennessee is one of the few states to decline Medicaid expansion, turning down billions in federal funding in the process. Conservative lawmakers who control the General Assembly have rejected all attempts to expand Tenncare and instead passed a law last year requiring the governor to apply for a Tenncare block grant.
When the governor unveiled his proposal last fall, it was not well received. Public hearings held across the state were almost entirely negative. The state collected about 1,800 written comments on the block grant plan, but only 11 were in support.
Is the block grant actually a block grant? Not really.
Much of the criticism of the block grant stemmed from concerns it would not provide enough funding in an emergency that caused a surge of Tenncare enrollment, like a pandemic or an economic recession – two scenarios that have since become reality.
The state government tried to account for this scenarios by proposing a sliding scale that capped Tenncare funding under most circumstances but still provided more federal money if enrollment spiked.
As a result, Tennessee’s proposal is not actually a traditional block grant, and federal officials did not call it one when announcing the approval. In a separate news release announcing the approval, the Centers for Medicare and Medicaid Services never uses the words “block grant.”
Instead, CMS calls it an “aggregate cap,” folded into a 10-year agreement now known as “Tenncare III.”
“The Tenncare III demonstration builds on all the good ideas that have been out there around a new financing model for Medicaid, but addresses many of the most prominent concerns,” said Verma, the CMS administrator, in the news release.
“This groundbreaking waiver puts guardrails in place to ensure appropriate oversight and protections for beneficiaries, while also creating incentives for states to manage costs while holding them accountable for improving access, quality and health outcomes. It’s no exaggeration to say that this carefully crafted demonstration could be a national model moving forward.”
Brett Kelman is the health care reporter for The Tennessean. He can be reached at 615-259-8287 or at brett.kelman@tennessean.com. Follow him on Twitter at @brettkelman.