TennCare has responded to requests from the federal government to make changes to its policies and budgeting strategy.

On June 30, the Centers for Medicare and Medicaid Services sent a letter to Stephen Smith, the director of TennCare, requesting that the organization abandon its proposed closed formulary (which would limit the drugs the state insurance would cover), submit a new financing model based on monthly numbers of Tennesseans enrolled and seek CMS approval and a public comment period for any cuts in coverage or benefits. 

In response to the letter, TennCare, the state’s insurance for those with low incomes or disabilities, on Tuesday proposed amendments to its current iteration. Amendment 4 complies  with the federal requests, giving more oversight to the federal government after Tennessee was the only state to receive a block grant in 2021.    

Gordon Bonnyman, staff attorney for Tennessee Justice Center, said a closed formulary would have dangerously limited drug access. 

“That would have sharply curtailed what drugs TennCare enrollees could receive, and it would have the worst impact on people with rare diseases or really complex disorders,” Bonnyman said. “Keep in mind we already have among the most restrictive Medicaid benefits in the country in terms of prescription drugs.”

In addition, at CMS’ request, TennCare will begin to submit a new budget model including the number of enrollees. This is in part because enrollment has grown throughout the pandemic, according to TennCare spokesperson Amy Lawrence. 

TennCare, the state’s Medicaid program, covers about one-fifth of all Tennessee residents. Tennessee was the first and only state to switch to a block grant model, which started with the implementation of TennCare III in 2021. The proposal faced mostly opposition in the federal comment period preceding its passing.

“Block grant means different things to different people, but the short version of it is, it is more of a limit on how much the federal government will pay,” Bonnyman said. “The federal government now matches the dollars for everybody that qualifies and for all the services that are covered. The block grant says we're capping this and anything that goes above that is the state responsibility.” 

Bonnyman said for the first five years, the cap is high, so the state will likely get a windfall, but that may change after a required renegotiation five years on. 

“The Trump administration said, ‘we're going to offer this sweet deal that through the waiver authority states can seek a block grant on their own,’” Bonnyman said. “We were the only state to seek that. I think that tells you something, that most states looked at it and said, ‘this is a bad deal.’” 

The amendment process includes a public comment period that is currently open and lasts until Aug. 19. 

Since TennCare III was implemented, Gov. Bill Lee and the Tennessee General Assembly have made nearly $500 million in new TennCare investments, according to a press release. 

Those investments include adding a dental benefit for pregnant women, extending postpartum coverage from 60 days to one year, shortening wait lists and enrolling 1,750 additional Tennesseans with disabilities to its home health care program. 

“For a year and a half, the TennCare III waiver has successfully provided the structure to enhance benefits and serve additional Tennesseans in need,” Smith said in the release. “We are encouraged by CMS’ continued support for the core priorities of the program, and this amendment process is an important step in solidifying the delivery of high-quality, cost-effective care to our members.”