In National First, Tennessee Proposes Medicaid Block Grant

(CN) – Calling the way Medicaid dollars are allocated to states “outdated,” Tennessee on Tuesday proposed that the Centers for Medicare and Medicaid Services give the state a $7.9 billion block grant to fund its health care services for low-income and disabled residents. 

The State of Tennessee released a 34-page draft waiver amendment, kicking off a 30-day comment period on this proposed alternative method of funding health care. Tennessee is the first state in the nation to propose such a financing method.

“In the current framework, states that spend more money receive additional federal dollars, while states that strive to control costs and reduce spending receive reductions in federal funding,” the proposal’s executive summary states. “New models of Medicaid financing are needed that reward states for promoting value and health, not merely spending more money.”

Under the proposal, the modified block grant would not lead to a reduction of health care services or the number of Tennesseans enrolled, according to a fact sheet included with the public notice. 

The grant would also be indexed to rise with population growth and inflation.

“Under the block grant, the state would also have flexibility from excessive or unnecessary federal intervention in its Medicaid program. These flexibilities will allow the state to administer its program more effectively to promote the health of TennCare members,” the draft proposal states.

The Beacon Center of Tennessee, a nonpartisan think tank that focuses on “free market solutions,” did not immediately return a request for comment Tuesday, but in March, the center’s executive vice president, Stephanie Whitt, wrote in support of the policy, saying that the state spent almost a third of its budget on TennCare and the Trump administration had floated out the idea of approving Medicaid block grants in the past.

Near the end of May, Republican Governor Bill Lee signed the bill that directed him to seek a Medicaid block grant. 

Michele Johnson, executive director of the Tennessee Justice Center, said funding TennCare through a block grant would end a 50-year partnership with the federal government and the accountability that includes.

Johnson likened the proposal to saving money by not changing the oil in a car. She said many health care costs would be passed on to hospitals and charitable clinics.

Vast segments of Tennesseans rely on Medicaid funding, Johnson said, including two-thirds of seniors in long-term care.

“The issue here is that about half of the children in our state rely on Medicaid and the governor’s proposal turns his back on those children,” Johnson said.

The state expects it will take the Centers for Medicare and Medicaid Services several months to make a decision about the proposal.

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