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Gov. Lee signs Tennessee's Medicaid block grant

Gov. Bill Lee signs Medicaid block grant on 1/15/21 (Gov. Bill Lee){p}{/p}
Gov. Bill Lee signs Medicaid block grant on 1/15/21 (Gov. Bill Lee)

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Tennessee’s GOP-dominant Legislature on Friday approved a contentious decision that would drastically overhaul the state’s Medicaid program, casting quick votes this week in hopes of making it difficult for incoming President-elect Joe Biden’s administration from overturning the deal.

The House vote Friday sets in motion a plan that proponents, including Republicans, argue will produce flexibility and savings that can fuel additional health coverage offerings, with a promise that there won’t be eligibility or benefit cuts. Opponents, including many Democrats, are wary of that promise since the plan banks on big savings. They also point out that there’s no guarantee more patients will be eligible under the block grant, unlike their preferred action of expanding Medicaid under the Affordable Care Act.

It’s still not a given that Tennessee will actually become the first state to receive funding in a lump sum for its Medicaid program through a block grant. While Tennessee received approval under President Donald Trump’s administration just last week, Biden has opposed block-grant efforts and can rescind the change.

That tension fueled Republican lawmakers’ determination to prioritize their approval in the first week of the legislative session. The votes are required under the state law the General Assembly initially passed in 2019. Senators approved the plan Thursday.

“We are in a unique circumstance. Sometimes, when there’s a transition from one administration to another there are issues that come up that are time sensitive,” House Majority Leader William Lamberth, a Republican, said this week while explaining the need for the quick votes.

The rush to finalize approval infuriated the Legislature’s minority Democratic caucus.

“If this is as a good of a proposal and as good of an idea and is good policy as has been suggested, I don’t understand why we would pass it in four days at a time we don’t usually even consider legislation,” said Sen. Jeff Yarbro, a Nashville Democrat.

One reason for the push before Biden takes office is because the Trump administration took steps that could lengthen the process to rescind the deal by extending the waiver period and sending out new guidance on terminating a Medicaid waiver.

But already critics are reaching out to the Biden administration asking for the deal to be rescinded, with Democratic U.S. Rep. Jim Cooper describing the deal as “radical” that would treat Tennesseans as “guinea pigs.”

The Centers for Medicare and Medicaid “had eighteen months to approve the waiver but is now cramming it in at the last minute in an ideological and illegal effort to handcuff your administration and to further damage the health of Tennesseans,” Cooper wrote in a Thursday letter to Biden.

“At the very least, CMS should deny the worst parts of the waiver request and force Tennessee to go back to the drawing board. You were elected to be President of the United States, not of the other 49 states,” Cooper added.

TennCare, Tennessee’s Medicaid program, insures approximately 1.5 million low-income Tennesseans, including pregnant women, children, caretaker relatives of dependent children and older adults, and disabled adults.

Currently, the federal government pays a percentage of each state’s Medicaid costs, regardless of cost increases in any given year. For Tennessee, that means receiving approximately $7.5 billion in federal money for its $12.1 billion Medicaid program, or 65%.

Republicans argue the current system gives states little incentive to control expenses because no state pays more than half the total cost.

“That flexibility is going to allow us to put TennCare dollars, federal dollars, where they need to be in this state, not where the federal government thinks they need to be,” said Rep. Patsy Hazlewood, a Signal Mountain Republican.

The block grant idea has been floated by Republicans for decades but never implemented, due to possible legal challenges and concerns that doing so would result in large spending cuts to the states’ most vulnerable populations.

In 2017, Trump’s budget proposal called for block grant funding and Medicaid cuts. The legislation failed to pass Congress, but some states renewed efforts to pursue the option by petitioning the federal government — including Tennessee.

Since 1994, Tennessee has operated its Medicaid program under a waiver known as TennCare. It allows Tennessee to deviate from the standard federal rules by enrolling recipients in managed care programs rather than fee-for-service arrangements.

Yet Tennessee still hasn’t received federal decisions on a pair of older applications for contentious changes to TennCare.

One would require able-bodied, low-income adults to work, volunteer or take classes in order to stay on TennCare, a plan the state submitted in December 2018.

The other, submitted in August 2018, would ban TennCare payments to abortion providers, including Planned Parenthood, for nonabortion services.

Reaction from across the state:

The American Cancer Society Cancer Action Network

"For months, ACS CAN and other patient advocacy groups have voiced their concerns and objections to the approval of Tennessee's Medicaid 1115 Research and Demonstration waiver. This waiver will add additional barriers to health insurance coverage and lifesaving therapies critical to individuals and their families with lower incomes, including those with cancer, cancer survivors and those who will be diagnosed with the disease.

"The TennCare III waiver will cap the amount of federal funds available to the state to run Tennessee's TennCare program. Implementation of this policy will reduce TennCare enrollees' access to lifesaving care, including cancer treatments.

"Even as we face this global pandemic, 41,980 Tennesseans will hear the words "you have cancer" this year. Research has proven that individuals without health insurance are more likely than those with insurance to be diagnosed with cancer at a later stage when it is more costly to treat, and individuals are less likely to survive.

"As an organization dedicated to saving lives and improving access to care, ACS CAN finds this action taken by state lawmakers and Gov. Lee unconscionable."

Michele Johnson, Executive Director of the Tennessee Justice Center

"It is tragic that, in the middle of a deadly pandemic, our legislators have rushed to adopt this crass political gimmick. It distracts from their continued refusal to let 300,000 working Tennesseans receive the federally funded health coverage that former Governor Haslam’s plan would provide. Not a single other states has sought a block grant, and the nation’s most respected patient advocacy organizations all oppose it. The block grant puts at risk the health of the 1.4 million Tennesseans, including half of our children and two-thirds of our nursing home residents, who rely on TennCare. This is a dark moment for our state."

Tennesseans for Better Healthcare Choices

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“Tennesseans for Better Healthcare Choices applauds Governor Bill Lee, his administration, and the leaders in the Tennessee General Assembly on their efforts to pass Medicaid Block Grant reform. This meaningful health care reform will increase funding and lead to new, better care options through TennCare. It is clear that states know best how to serve their population, and this is a great move in the direction of more state control.” - Chris Walker, Advisor to Tennesseans for Better Healthcare Choices

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