Why it Matters: Tennessee’s Medicaid Block Grant Waiver Proposal
Issue Brief
“Medicaid Waiver Tracker: Approved and Pending Section 1115 Waivers by State,” KFF, https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/tn/tn-tenncare-ii-pa10.pdf.
The state seeks relief from the federal requirements at 42 CFR Part 438.
The Kaiser Family Foundation State Health Facts. Data Source: Medicaid and CHIP Eligibility, Enrollment, Renewal, and Cost Sharing Policies as of January 2019: Findings from a 50-State Survey, Kaiser Family Foundation, March 2019, “Medicaid Income Eligibility Limits for Parents, 2002-2019, https://www.kff.org/medicaid/state-indicator/medicaid-income-eligibility-limits-for-parents/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
TN has a separate waiver amendment pending with CMS that would cover a limited number of additional children with special health care needs. If approved, TN proposes that this new coverage group initially be excluded from the block grant proposal.
Tennessee House Bill 1280, https://legiscan.com/TN/text/HB1280/2019.
Office of Information and Regulatory Affairs, Office of Management and Budget, State Medicaid Director Letter: Medicaid Value and Accountability Demonstration Opportunity, Withdrawn on 11/15/2019, https://www.reginfo.gov/public/do/eoDetails?rrid=129184.
The “without waiver” projected costs are part of long-standing federal policy that requires Section 1115 waivers to be budget neutral to the federal government. This means that the federal government cannot spend more under the waiver than it would have been expected to spend without the waiver. To determine “with” and “without” waiver costs, CMS establishes a per member per month (PMPM) spending amount. Tennessee’s waiver has PMPMs for four populations that it proposes to include in the block grant.
In August 2018, CMS issued guidance related to Section 1115 budget neutrality indicating methodology adjustments related to calculating “without waiver” expenditures that would be fully phased in for waiver extensions beginning January 1, 2021. Notably, these methodology changes restrict the ability of states with long-running demonstrations to roll over “unspent” budget neutrality savings and to extend baseline spending assumptions for years without adjustment. SMD # 18-009, Budget Neutrality Policies for Section 1115 (a) Demonstration Projects, https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD18009.pdf.
CBO average annual growth per enrollee estimates over the next decade (2019-2029) are 3% aged, 5% blind and disabled, 5.7% children and 5.3% adults. Medicaid—CBO’s May 2019 Baseline, https://www.cbo.gov/system/files/2019-05/51301-2019-05-medicaid.pdf.
The Tennessee proposal is not like other capped waiver programs approved in the past. In the past, capped waiver programs have been approved in Rhode Island, Vermont, and Virginia (for a limited population). However, despite the calculation of a federal cap on funds that would be available to the state, in each case the states still had to expend state dollars to be able to draw down the federal funds.
Tennessee Medicaid Block Grant Proposal Frequently Asked Questions, https://www.tn.gov/content/dam/tn/tenncare/documents2/TennCareAmendment42FAQs.pdf.
Tennessee also indicates in its waiver application that itis open to discussing with CMS how the shared savings could be accomplished within the more traditional federal-match funding model.
Such as opioids, maternal and infant mortality, access to care in rural and underserved areas, and tobacco cessation.
All Medicaid spending for duals, including long-term services and supports, would be excluded from the block grant.
TN is unlike other states in that it does not have a Katie Beckett state plan option or comparable waiver to expand financial eligibility for children with significant disabilities. Instead, TN’s waiver has a demonstration group for children that meet medical criteria with income at or above 211% FPL – enrollment in this group is capped and closed. This group would be excluded from the block grant.
If approved and implemented, these provisions could potentially impact people with disabilities and others who need access to and could benefit from breakthrough drugs that offer cure, new treatment etc.
In its rejection of Massachusetts’ proposal, CMS said it would be willing to consider a closed formulary proposal under which the state agrees to negotiate directly with manufacturers and forgo all manufacturer rebates available under the federal Medicaid Drug Rebate Program, https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ma/ma-masshealth-ca.pdf
42 CFR § 455.15 (b).
Elizabeth Hinton, MaryBeth Musumeci, Robin Rudowitz, Larisa Antonisse, and Cornelia Hall, Section 1115 Medicaid Demonstration Waivers: The Current Landscape of Approved and Pending Waivers (Washington, DC, Kaiser Family Foundation, February 2019), https://www.kff.org/medicaid/issue-brief/section-1115-medicaid-demonstration-waivers-the-current-landscape-of-approved-and-pending-waivers/.
The Affordable Care Act (ACA) made Section 1115 waivers subject to new rules about transparency, public input, and evaluation. In February 2012, HHS issued new regulations that require public notice and comment periods at the state and federal levels before new Section 1115 waivers and extensions of existing waivers are approved by CMS. Although the final regulations involving public notice do not require a state-level public comment period for amendments to existing/ongoing demonstrations, CMS has historically applied these regulations to amendments.
National Health Law Program Letter to CMS Concerning TennCare II Demonstration, November 26, 2019, https://healthlaw.org/resource/letter-to-cms-concerning-tenncare-ii-demonstration/.