block grants

Feds approve Medicaid block grant, but for how long?

Tennessee’s Medicaid block grant has been approved in the waning days of President Donald Trump’s administration. The questions will be whether the program will proceed once Democrat Joe Biden takes over on Jan. 20.

Here’s the release from Gov. Bill Lee’s office:

NASHVILLE, Tenn. – After more than a year of discussions and negotiations with the federal government, Tennessee’s Medicaid “Block Grant” waiver amendment received approval today by the Centers for Medicare and Medicaid Services (CMS).  Tennessee is the first state in the nation to be granted approval for this type of block grant arrangement, which will result in an innovative, alternative financing arrangement for its Medicaid program and provide additional flexibilities relative to its administration.

TennCare submitted Amendment 42 to CMS in November 2019 in accordance with legislation adopted by the Tennessee General Assembly during the 2019 legislative session.  The legislation directed the governor to submit the waiver for federal approval. 

The negotiated agreement includes the major components and principles outlined in TennCare’ s original proposal to CMS, building upon Tennessee’s history of effective management of its Medicaid program and providing opportunities for additional federal funding for the purpose of improving the health of TennCare members and communities throughout the state.

“Today’s agreement represents a continuation of Tennessee’s commitment to innovate, lead and improve,” said Governor Bill Lee. “We have sought to fundamentally change an outdated and ineffective Medicaid financing system that incentivizes states to spend more taxpayer dollars rather than rewarding states for value, quality and efficiency. Our approved plan will create an unprecedented opportunity for Tennessee to be rewarded for its successful administration of TennCare and further improve the health of TennCare members and Tennessee communities with that reward.”

“We approached our negotiations with CMS and the ultimate agreement with one overriding question and directive from Governor Lee – Will this plan benefit Tennessee, our TennCare program and the people we serve,” said Stephen Smith, TennCare Director. “We are convinced the answer is yes.  This gives Tennessee the real opportunity to enhance the services we provide to Tennesseans.”

Pursuant to Public Chapter 481, from 2019, implementation of the waiver agreement must be authorized by the Tennessee General Assembly. 

The approved waiver amendment is available on the Division of TennCare’s website at https://www.tn.gov/tenncare/policy-guidelines/tenncare-1115-demonstration.html

Lee says block grant critics are ‘misinformed’

Gov. Bill Lee speaks at the state Capitol on Sept. 16, 2019. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee says the largely critical response to his Medicaid block grant proposal in public hearings around the state is coming from people who have either been misinformed or haven’t taken the time to understand the proposal, the AP’s Kimberlee Kruesi reports.

From the AP report:

“I do think that a lot of the folks who are concerned about this have been either misinformed or have not taken the time to really understand it. And there’s legitimate concern about that. We want people to understand this,” Lee, a Republican, told reporters.

The public comment period is required under federal rules for seeking Medicaid waivers. Public hearings were scheduled for Nashville, Knoxville, and Jackson this week. Lee has said he will add stops in Chattanooga and Memphis.

Lee’s Medicaid block grant proposal deemed ‘illegal’ by House chairman

Gov. Bill Lee speaks at the state Capitol on Sept. 16, 2019. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee’s application for a Medicaid block grant is drawing fire from a power chairman in the U.S. House, the Chattanooga Times Free Press reports.

“This is illegal and the Trump Administration does not have the authority to do this,” House Energy and Commerce Chairman Frank Pallone (D-N.J.) wrote on Twitter.

“I wrote to [Health Secretary Alex] Azar this summer reminding him HHS does not have legal authority to implement a block grant or per capita cap on the Medicaid program,” Pallone said. “While Secretary Azar has yet to respond to me, ignoring oversight letters from Congress doesn’t change the fact that block granting Medicaid is illegal.”

The Tennessee proposal has drawn praise from Republican Tennessee Sens. Lamar Alexander and Marsha Blackburn.

The details of Lee’s block grant application were unveiled this week, launching a 30-comment period before it is submitted to the federal government. Supporters say it can be approved without congressional oversight.

“Gov. Lee has reiterated that point throughout this process and it will be up to [the Centers for Medicare & Medicaid Services] to communicate what they are willing to accept during the negotiations,” said Laine Arnold, a spokeswoman for the governor.

Lee’s block grant proposal: What they’re saying

Gov. Bill Lee’s administration on Tuesday unveiled its Medicaid block grant proposal, kicking off a 30-day public comment period. Here’s a sample of how Tennessee news outlets are covering the news.

Tennessean:

Currently, the federal government provides about $7.5 billion to $8 billion annually to pay for TennCare. This funding increases or decrease as the need grows or shrinks, and the money is theoretically limitless if the state continues to operate TennCare in accordance with federal guidelines.

As proposed, Gov. Bill Lee’s administration’s plan would convert that funding into a “modified block grant,” giving the state government more authority over how this money is spent. Block grants are generally finite, raising concerns this money might run out, but the governor’s proposal asks the federal government to commit to providing more money if it is needed by the state in the future.

Chattanooga Times Free Press:

Lee’s proposals have already come under fire even before he made full details public.

“I think the issue is that when they say that they’ve created all these ‘savings’ for the federal government, that includes like the 220,000 children that were cut off even though tens of thousands of them were eligible,” said Michele Johnson, executive director of the Tennessee Justice Center, in an early September interview.

“Here’s the bottom line,” Johnson said. “The Trump administration has said they’re going to cut over a trillion dollars out of the [national] Medicaid program through block grants. The Lee administration says we’re going to be able to get all this money, an expansion of health care? The math doesn’t work out.”

_ The Daily Memphian:

Initially, the governor avoided answering how much the state could net through the block grant proposal. But after TennCare Director Gabe Roberts acknowledged the state’s “budget neutrality” figure is $2 billion, the governor conceded Tennessee could land $1 billion if the feds agree to the state’s entire proposal.

Lee couched that comment by noting the amount will depend on whether the feds place new service requirements on TennCare, which typically receives about $8 billion from CMS and about $4 billion from the state.

_ WPLN-FM:

Primarily, the additional money comes from a plan to split savings TennCare already generates with the federal government. Under its current waiver, Tennessee’s Medicaid program costs the federal government billions of dollars less than if it were just the open-ended federal benefit. Tennessee now wants to share those savings 50/50, which is expected to be a key sticking point in negotiations.

The block grant also envisions saving money by cutting red tape, like the periodic reapprovals of Tennessee’s waiver. Even when very few changes are made, the process takes nearly a year. Tennessee is asking for its new block grant proposal to be considered permanent.

TennCare wants to change a few rules that would ensure it’s the “payer of last resort,” particularly in cases where a patient also qualifies for Medicare.

_ The Associated Press:

The plan’s likelihood of ever being implemented, however, remains largely unknown. To date, no state has been given permission to rely solely on block grants to cover Medicaid expenses. The 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.

Yet Lee remains hopeful, noting that support is growing under President Donald Trump’s administration and asserting that no services to the state’s indigent population will be cut. Tennessee’s GOP U.S. Sens. Lamar Alexander and Marsha Blackburn have also expressed interest in the plan, an endorsement that some say could help push the idea further along.

The Nashville Business Journal:

The 50/50 split Lee is pitching, as well as other aspects of the proposal, are subject to changes and negotiation once Tennessee submits a formal proposal to the federal Centers for Medicare and Medicaid Services.

“We think we have crafted a waiver that is going to really mitigate the risk that Tennesseans have and actually give us an opportunity to benefit from the efficiencies and the way that we run our program,” Lee said. “That benefit will give us an opportunity to provide enhanced services to our TennCare population … and eventually, for the same money, provide additional services to more people.”

While health systems have yet to comment publicly on Lee’s plan, Republicans in Congress had pitched a similar proposal in 2017 as their effort to repeal and replace the federal Affordable Care Act. At the time, more than 20 organizations, including the American Hospital Organization and the American Medical Association, came out against the proposal, which ultimately failed.

_ The Washington Post:

Tennessee is setting up the nation’s first test case of how far the Trump administration is willing to go to allow a state the “flexibility” that has become a watchword of the administration’s health-care policies.

If TennCare, as that state calls its Medicaid program, wins federal approval for its plan, it could embolden other Republican-led states to follow suit. It also almost certainly would ignite litigation over the legality of such a profound change to the country’s largest public insurance program without approval by Congress.

The Wall Street Journal:

If block grants catch on, the Trump administration could be successful in achieving the Medicaid changes congressional Republicans were unable to in their failed 2017 repeal of the ACA, also known as Obamacare. Tennessee’s proposal released Tuesday would be submitted to the Trump administration in November following a public comment period.

Under Tennessee’s draft proposal, the state would get a lump sum based on projected Medicaid costs. The grant would be adjusted each year for inflation. The federal government would increase its funding on a per capita basis when Medicaid enrollment eclipses the number used to calculate the state’s initial grant amount.

What’s happening with the Medicaid block grants? Lee still ‘exploring’

Gov. Bill Lee speaks to reporters on March 19, 2019, about his proposal to introduce an education savings account program in Tennessee. (Erik Schelzig, Tennessee Journal)

Gov. Bill Lee is assembling a Health Care Modernization Task Force, but appears not to have decided whether to pursue a Medicaid block grant from the federal government, the Daily Memphian reports.

Lee told the publication that his office is putting together the task force made up of health care industry members, providers, and patients to come up with ways to cut costs and “increase access and affordability for everybody.”

The governor is still “exploring the idea” of block grants, he said at a recent event in Shelbyville.

“If we pursue [a block grant], we’ll be the first state in the country to do it,” Lee said. “And that is to take federal funding for our TennCare-Medicaid population and spend it in a way that allows us to do it more effectively in Tennessee than the way the federal government tells us we have to.”

 

House Minority Leader Karen Camper, who served on former Speaker Beth Harwell’s 3-Star Healthy Task Force, questioned the point of another group to study the issue.

“Now we are in a different General Assembly, with new leaders and a new governor. Not only have the players changed, but we are also working in the shadows of the Medicaid block grant waiver, which was passed by our General Assembly. We do not yet know the consequences of this legislation and how the federal government will respond to this waiver request,” she told the Daily Memphian.