Biden admin will allow TennCare’s controversial block grant, with some caveats


MM Curator summary

[MM Curator Summary]: The state will no longer have a cap on spending, and CMS will tell it how it can spend the savings, and the closed formulary is out. But let’s still call it a block grant.


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The Biden administration is making TennCare’s new block grant, approved under President Trump, more tenable to Democrats who fought it from the start. And TennCare officials say they’re open to alterations, though they have yet to submit a formal response.

TennCare is Tennessee’s Medicaid program that provides health insurance for 1.4 million people — mostly women, children and those with disabilities. It’s mostly funded by the federal government, and conservatives have pushed for years to get the money as a block grant with much more flexibility for states. Tennessee was the first — and only — to get such a proposal approved. But TennCare director Stephen Smith says it was never just a block of money with no strings attached.

“I don’t place a lot of importance on what this is called,” he tells WPLN News.

And now, the federal agency over Medicaid is making the state’s latest funding formula even less like a block grant.

Under the changes, outlined in a letter dated June 30, the funding model would revert to being based on how many people have TennCare coverage instead of a dollar cap. There were always caveats with the cap allowing for years with big enrollment growth, so Smith says the change is not a big deal. Also, the feds want more say-so over how the state spends the money that it saves. Smith says there’s nothing to hide.

“We reinvest back into the program to enhance benefits, enhance services and add people to the program,” Smith says, pointing out TennCare has already expanded benefits like taking thousands off a wait list for home-based care.

The new administration is totally rejecting limits on which medications patients can get, known as a closed formulary. But TennCare knew that was a possibility, which is why Smith says the drug limits still haven’t been implemented a year and a half into the new funding model.

It also behooves the state to go along with the demands because the “block grant” — if it can still be called that — is already generating savings, Smith says. But that money can’t be spent on newly approved initiatives like dental coverage-for-all until the sticking points are settled.

“This is a 10-year waiver,” Smith says. “So, it’s to our benefit to solidify this, so we can have certainty for the next eight years.”


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