block grant deliberations

The State of Tennessee has intervened on a lawsuit filed by the Tennessee Justice Center attempting to block the state’s new TennCare waiver. 

The lawsuit against the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services was brought by the advocacy firm and 13 other individuals with disabilities who rely on TennCare coverage. It alleges the state insurance program already provides inadequate care and contends the waiver will grant Tennessee increased power to further deny health services to people who need them. 

“Tennessee, and its contracting managed care plans, have repeatedly failed to provide the thirteen Plaintiff Medicaid beneficiaries with access to medically necessary services,” the complaint says. “By continuing the managed care program, introducing the aggregate cap and shared savings financing scheme, and permitting the State to impose additional limits on prescription drug coverage, the TennCare III approval will only intensify the harm that these beneficiaries have suffered.”

Attorney General Herbert Slatery announced last week the state would intervene on the lawsuit, saying: “The corporate plaintiffs behind this lawsuit, who consistently sue the State, are trying to stop a significant and beneficial policy reform for our state with a federal lawsuit filed in D.C. Our office is intervening to make sure Tennessee’s unique healthcare infrastructure is appropriately defended.”

The first-in-the-nation per-capita TennCare financing structure passed the Tennessee General Assembly in a vote in January as the Republican-led legislature rushed to get the plan in place before President Joe Biden took office. The block-grant style funding gives Tennessee broad authority over the state’s Medicaid program, unlike any other in the nation, which Gov. Bill Lee said would result in lower health care spending that could be reinvested in health-related initiatives.

Through the model, TennCare will receive a lump sum of money based on per-capita projections and the following year’s expected spending. If the state spends less than that amount, the savings will be split with the federal government. 

Tennessee state officials also plan to implement a commercial-style closed drug formulary as a cost-cutting measure, which will allow the safety-net insurance program to not cover all FDA-approved prescription medicines.  

The Biden Administration has since sweetened the deal on Medicaid expansion that has enticed several non-expanded states into negotiations. Tennessee leaders, however, continue to support their novel block grant approach. 

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