Important TennCare III Update

Folder with text that reads "Medicaid"

On June 30th, the Centers for Medicare and Medicaid Services (CMS) sent a letter to TennCare asking the state to make several changes to the TennCare III waiver. 

The proposed TennCare III waiver, commonly known as a “block grant”, significantly altered how Tennessee funded its Medicaid waiver programs. These changes had the potential to negatively impact Tennesseans with disabilities who received services and benefits from the state. 

CMS approved the TennCare III waiver application in early January 2021, and the waiver has been in effect since then. However, after a robust effort from the disability advocacy community, a second comment period was held to solicit additional input on the waiver. The issues raised by disability advocates during this comment period led CMS to request that TennCare amend their waiver. You can see Tennessee Disability Coalition’s written public comment from last summer outlining our primary concerns with TennCare III linked below. 

In their response letter, which can also be found linked below, CMS has asked TennCare to make several changes to their TennCare III and to submit a new amendment with these changes by August 30, 2022: 

  • Eliminate the use of a closed formulary. Closed formularies are systems that limit access to certain prescription drugs and therapies, often based upon price. This system is common in private health insurance plans and serves to take medical decisions out of the hands of doctors and their patients in the name of “savings”.  
  • Eliminate the "block grant" financing model. Instead of the traditional CMS waiver model, which uses a per-member capitation rate, TennCare III uses a “block” of money to provide services and then “repurposes” any remaining funds. This would have the effect of incentivizing TennCare to save money, which many feared could negatively impact the types of services, medications and care available to Tennesseans. 
  • Explicitly state that TennCare WILL NOT limit the availability of benefits to participants without requesting an amendment to the waiver from CMS, which would also include a public comment period. 
  • Specifically describe what benefits and services it proposes to add with any programmatic savings. This helps to ensure that any savings are indeed “repurposed” to expand access to care for Tennesseans. 

This is a huge win for the disability advocacy community. The changes that CMS is requesting address some of the most prominent issues with TennCare III for Tennesseans with disabilities. This happened because so many of you spoke up, submitted public comment and organized. That said, it’s incredibly important that the disability community continue to advocate and to push for fair, accessible and high-quality health care in Tennessee. 

Next steps:

  • TennCare will submit the amended waiver by August 30, 2022
  • There will be a public comment period of at least 30 days to solicit feedback regarding the amended TennCare III waiver
  • CMS will approve, deny or request changes to the amended waiver based on feedback from the public comment period

TDC will continue to share updates on the pending amended TennCare III waiver as they occur.