Health care advocates: Disabled Tennesseans could have 'target on their backs' if Medicaid block grant approved

Tennessee State Capitol
Tennessee State Capitol

NASHVILLE - Health care advocates for the poor are fretting over the potential effect of Gov. Bill Lee's proposed Medicaid block grant waiver on 150,000 or more disabled Tennesseans should it win approval from the Trump administration.

"Our concern really is that in a block grant scenario, people with disabilities are feeling like they have a large target on their backs," said Carol Westlake, executive director of the Tennessee Disability Coalition, during a conference call with reporters last week.

Westlake said the worry is that "as things tighten up, which they are likely to do under a block-grant scenario, that benefits, services and eligibility of folks that we care about are the first things that are going to get cut."

When unveiling his proposed $7.9 billion waiver request for TennCare, the state's $12.1 billion version of the jointly state and federal Medicaid health care program, the governor emphasized to reporters that "what's important to know is that there'll be no reduction in benefits under this program."

"No one that is currently being served is not going to be served as a result of eligibility under this new plan," emphasized Lee, who has stated repeatedly he won't go through with the waiver if Tennessee can't strike a good deal with the U.S. Department of Health and Human Services and its ancillary Centers for Medicare and Medicaid Services.

TennCare, created in 1994, contracts with insurance companies which operate managed health care plans that strike agreements with providers such as hospitals and physicians to provide health services to low-income children, pregnant women, the children's care takers, seniors and the disabled. TennCare currently covers 1.4 million Tennesseans.

Last Tuesday, Tennessee became the first state in the nation to formally begin the process of seeking a federal Medicaid block grant waiver. The Trump administration and Republicans at the federal level are pushing block grants as a means of cutting federal costs. Lee, a Republican, was directed to do so by the GOP-controlled General Assembly.

Because Medicaid is a federal entitlement program, the federal government currently provides matching dollars for whatever states spend within designated categories based on the average per capita income for each state relative to the national average. For about every $1 Tennessee spends, Uncle Sam kicks in $2. Federal money currently accounts for about 65% of TennCare's funding.

As an entitlement program, defenders of the status quo say, TennCare can pay for enrollment surges stemming from economic downturns or health crises.

Lee's proposal calls for much but not all federal funding to come to Tennessee as a single lump sum. It also would free the state of many federal Medicaid requirements, granting much more flexibility to run the program. The proposal also includes an annual inflation adjustment. And because of anticipated savings, the governor's waiver would commit the federal government to a 50/50 cost-savings sharing plan based on what the federal government would have been spending on a traditional Medicaid fee-for-service program.

Basing estimates on TennCare's past performance, the Lee administration estimates that's about $2 billion in cost savings currently so the waiver could generate upwards of $1 billion annually for Tennessee depending on whether Lee is able to negotiate.

Under state lawmakers' directive, the waiver must be submitted to CMS by Nov. 20. The 30-day comment period ends Oct. 18.

During advocates' conference call with reporters last week, critics raised a variety of objections beyond the concerns about disabled Tennesseans, a group that includes low-income residents physically and/or intellectually disabled.

Gordon Bonnyman, a staff attorney and co-founder of the Tennessee Justice Center, called the governor's proposal "dangerous."

While the state says "it has no intention of cutting, changing who's currently eligible or what services it covers," Bonnyman said, "where they're going to get these savings is by cutting benefit levels. They're not going to eliminate services, but they're going cut benefit levels."

Andy Schneider, a research professor at Georgetown University's Center for Children and Families and Medicaid expert, said Tennessee already has a "very efficient program," perhaps among the nation's top five.

"So if you're operating so efficiently now, where are the savings going to come from?" Schneider asked. "And you know, in theory, savings could come from cutting enrollment, reducing benefits or cutting payment rates, to managed care plans or providers - or both."

With the Lee administration making it clear the state doesn't intend to cut enrollment or benefits, Schneider said that theoretically puts in play the state's payment rates to TennCare's insurer-owned managed care plans and the rates paid to health providers for services as targets for reductions.

Schneider said current federal requirements say the state has to pay rates that are sufficient so that the managed care plans can deliver the services that they're contracted to provide to all the beneficiaries enrolled in the plans.

Noting the state also wants to waive federal regulations over how it deals with managed care plans used by TennCare, Schneider said "one way to save money would be to reduce those rates to the managed care plans and forcing the plans to take action to live within those new lower rates."

If that were to happen, Schneider said that could mean reducing rates to the providers in their networks and/or lead to "reducing services."

While President Donald Trump's administration is pushing the block grant Medicaid waiver for states, U.S. House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., blasted the entire concept last week after Tennessee announced it has started the lengthy process of seeking approval.

"This is illegal and the Trump Administration does not have the authority to do this," charged Pallone in a tweet.

But Lee's effort was welcomed by U.S. Sen. Lamar Alexander, R-Tenn., who is chairman of the Senate Health, Education, Labor and Pensions Committee which, like Mallone's House panel, deals with health policy and has oversight over the federal Health and Human Services Department and CMS.

Alexander said he has always supported block grants.

"Last Congress, I supported legislation in the United States Senate that would have taken Affordable Care Act money and turned it into block grants that states, including Tennessee, could decide how best to spend," noted Alexander.

Contact Andy Sher at or 615-255-0550.

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