Health Care News

Tennessee releases Medicaid block grant proposal

NACHC Deputy Director of State Affairs Susan Sumrell contributed to this blog post.

States are continuing to test the limits of Medicaid waiver flexibility made available to them under the Trump administration. While Alaska, Texas and Georgia are reportedly exploring ways to reform their Medicaid programs, including through the use of block grants, others, like Utah and Tennessee, have pursued waivers that seek to impose spending or enrollment caps, features that are akin to the workings of a block grant. 

Tennessee has released a draft proposal (Amendment 42) to amend its Medicaid waiver demonstration program, TennCare II, to implement a block grant.  Earlier this month, Tennessee Gov. Bill Lee indicated that the state would be releasing the block grant proposal well ahead of the legislative mandate to submit to Centers for Medicare and Medicaid Services (CMS) by November 2019.  According to the proposal, the state is moving toward financing model that converts “the bulk of TennCare’s federal funding to a block grant,” i.e., a lump sum payment. Current federal Medicaid law provides for a federal-state partnership in which the government pays an unlimited match on state spending under the rules. (Read more about the legal concerns pertaining to block grants here.) 

The state has excluded certain services from the block grant proposal, e.g., all expenditures that are outside the scope of regular medical assistance, pharmacy-related expenses, Medicare enrollee expenditures, and payments made to disproportionate share, critical access and essential access hospitals. The state indicates that it does not seek to reduce enrollment or services, as the proposal: 1) does not rely on reductions to eligibility or benefits to achieve savings, and 2) does not request any significant changes in those areas.  However, if approved as written, the block grant would allow Tennessee more authority over how it runs TennCare and how the money is spent.  In fact, one of the proposals for utilizing such new authority is that TennCare would no longer need approval from the federal government to change the limits of its health care insurance.  The state would be able to change “amount, duration and scope” of coverage without approval from CMS.  The state would also gain the authority to add or cut optional benefits without federal approval.

The state is currently accepting comments from the public on the block grant proposal through October 18, 2019. Proposals to implement other amendments to TennCare II, such as a community engagement (work-reporting) requirement, are also still pending at CMS.  NACHC and our partners at the Tennessee Primary Care Association are carefully reviewing Tennessee’s block grant proposal and will be monitoring the upcoming state level hearings for further developments.  Please send questions about the proposal to

Related links:

Tennessee unveils TennCare block grant proposal, pushes savings split with federal government (Nashville Tennessean)

Tennessee becomes first state with a plan to turn Medicaid into a block grant (Washington Post)

Tennessee Primary Care Association Statement