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 Tennessee Asks Feds for Permission to Block Grant its Medicaid Funding

In a move that has been anticipated for some months, Tennessee this week formally asked the Trump administration to allow the state to turn its TennCare Medicaid program into a block grant funding model, a possibly significant and controversial development that could affect how long term and post-acute care providers are reimbursed and affect the number of individuals in the program.

At its core, the Tennessee Gov. Bill Lee’s (R) plan is asking the federal government to convert the state’s Medicaid funding into a block grant. The state sees this as a way to give maximum flexibility in how it distributes Medicaid dollars. Critics fear a block grant model would cause states to disenroll Medicaid recipients or partake in major service cutbacks.

Tennessee Medicaid officials said in media reports that the block grant proposal is modified from a previous version and would not cause cutbacks or fewer people covered. Tennessee’s block grant proposal would be tied to existing Medicaid spending and see funding increase each year based on federal estimates of health care costs.

Today, Medicaid is modeled on a shared state-federal partnership tied to costs and enrollment variations fluctuating as needed.

Long a Republican goal when it comes to Medicaid funding, block grants have not been able to gain legislative favor over the years, most recently when the issue was included in failed attempts by Republicans in Congress to repeal and replace the Affordable Care Act after President Trump took office.

Even as Tennessee submitted its plans for review, stakeholders are not certain the administration has the legal authority to allow such a drastic makeover of a state’s Medicaid funding mechanism. One source said the issue will be in the courts for some time, even if the Tennessee model is approved.

When the block grant plan was under discussion at public hearing’s last month, the state’s long term and post-acute care advocates urged caution and close examination of how the plan would affect Medicaid recipients and providers.

The block grant would cover core medical services for the roughly 1.2 million children, adults, elderly, and people who are blind or have disabilities in the state. The federal government would raise Tennessee’s block grant funding if enrollment grows beyond what was originally calculated, advocates for the plan said.

The Tennessee Health Care Association and the Tennessee Center for Assisted Living has said the organization’s position is any alternative Medicaid proposal must provide and ensure sustainability for the state’s most vulnerable elderly population while preserving that population’s choice to have nursing facility services or assisted living services when they are needed and appropriate.

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