TennCare III Comment Period

This year Tennessee received approval from the Centers for Medicare and Medicaid (CMS) for a waiver to shift the funding mechanism for Medicaid (TennCare) from the traditional state-federal matching model to the nation’s first Medicaid block grant. Since then, the General Assembly has passed legislation that permits TennCare to implement the block grant. Since the possibility of a block grant was proposed, we have been concerned about how the use of this funding mechanism will impact Tennesseans with disabilities. 

The waiver, titled “TennCare III”, makes fundamental changes to the way Medicaid is funded:

  • Medicaid is traditionally funded through a state and federal matching agreement
    • Typically, each state is assigned an FMAP, or federal matching rate. In Tennessee, the matching rate for 2021 is 73%, which means that for every dollar spent on Medicaid services, the federal government pays 73 cents and Tennessee pays 27 cents. 
  • TennCare III instead provides a “block” of money from CMS that the state can use to pay for Medicaid services. This includes a cap on the amount of money the federal government will provide to Tennessee. 
    • If the state does not spend all of the money in the block, it can keep some of the remaining money as savings or to spend elsewhere. 

TennCare previously held an abbreviated public comment period on the waiver. They have since announced an additional public comment period that runs through July 9th. TennCare has also announced that they will hold a public forum on July 6th. Given our concerns about how TennCare III would negatively impact Tennesseans with disabilities, we believe that it is vitally important that these issues be heard clearly and urgently. 

These are some of our primary concerns: 

  • The option to keep and repurpose unspent Medicaid funds may incentivize TennCare to cut costs in order to increase the amount of savings available for capture. It is possible that this leads to cuts in the amount, scope and duration of services available to Tennesseans with disabilities.
  • The incentive to cut costs and maximize savings makes it unlikely that TennCare would expand available services in the future or draw down waiting lists for existing programs.
  • The TennCare III waiver excludes the state’s new Katie Beckett program from block grant funding, instead choosing to use traditional Medicaid funding mechanisms to pay for the program while the state evaluates ongoing costs over three years. This may incentivize TennCare to slow down or limit enrollment in the Katie Beckett program in order to establish a lower ongoing funding level. It is then possible that the Katie Beckett program will not have adequate ongoing funds to fully pay for the program, potentially resulting in waiting lists, for the program.
  • The TennCare III waiver proposes to establish a closed formulary system, which establishes a more limited list of drugs than usually allowed by Medicaid. This could limit drugs and treatments available to TennCare beneficiaries, particularly those with disabilities that require uncommon or expensive drugs.
  • TennCare III is requesting a highly unusual ten-year waiver approval period. Typically, waivers are approved for 3-5 years, after which CMS requests that states resubmit the waiver and open a public comment period for people to voice their opinions. This limits the opportunity for Tennesseans to comment on TennCare III until 2031.
  • The waiver for TennCare III comes at a time when TennCare is also attempting to integrate DIDD programs into the state’s managed care system. In doing so, TennCare is changing the way Tennesseans with intellectual disabilities receive their services. The TennCare III waiver is currently vague on details about this integration, leaving questions about MCO compensation, provider networks and changes to services.
  • Ultimately, TennCare is putting the most vulnerable Tennesseans – those with developmental and intellectual disabilities, children with complex medical needs and older adults – on the front lines of an untried and unproven mechanism for delivering indispensable services and protections. It is important that TennCare take this responsibility very seriously. 

The approved waiver to implement the block grant is currently subject of a pending lawsuit and seeking an injunction to its implementation. And, as the first comment period demonstrated, comments made to CMS were and are overwhelmingly in opposition to implementation of the waiver. With the opportunity for the coming public forum and additional comment period, it is important that we continue to voice our concerns about TennCare III and DIDD integration to CMS. Please take advantage of this opportunity and consider providing comment to CMS articulating these concerns about TennCare III.

Comments may be sent by email to public.notice.tenncare@tn.gov

Comments may be mailed to Aaron Butler, Director of Policy, Division of TennCare,
310 Great Circle Road, Nashville, Tennessee 37243.