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Bill Haslam

NASHVILLE - Republican Gov. Bill Haslam has gotten some of the "clarity" he wants from the Obama administration on his plan to use federal Medicaid dollars to provide insurance for an estimated 181,000 low-income Tennesseans.

He probably won't like some of what they're telling him.

That's because the guidance, issued Friday, says no to several provisions Haslam included in the "Tennessee Plan" he unveiled Wednesday to state lawmakers.

Haslam told lawmakers he'd decided not to pursue an expansion of the state's Medicaid program, called TennCare, this year because U.S. Health and Human Services' officials couldn't provide clear answers on key aspects of his plan.

Under the federal Affordable Care Act, Haslam could have gotten 100 percent funding for three years to expand TennCare.

But he instead was working on an idea, first floated by Arkansas, to use the Medicaid expansion money to pay for insurance for the poor through exchanges created under health care reform. In the exchanges, private insurers will compete to provide health coverage to individuals or families with incomes of between 100 percent to 400 percent of the federal poverty level.

Tennessee would get about $1 billion a year for the first three years to cover those earning up to 138 percent of the federal poverty level -- about $33,000 for a family of four.

State offices were closed for Good Friday. Reached by phone, TennCare spokeswoman Kelly Gunderson said no one could comment on the guidance issued by the federal Centers for Medicare and Medicaid Services.

Under those guidelines, Tennessee could indeed do just what Haslam wants: Use new Medicaid dollars to enroll people earning up to 138 percent of the federal poverty level in insurance exchanges.

But that's only if states make the program optional for the Medicaid-eligible population. Beneficiaries "must be able to choose an alternative to private insurance to receive Medicaid benefits," CMS says.

To get the flexibility wants and put new beneficiaries into the exchange, Haslam would have to obtain a federal waiver of Medicaid requirements. That can take considerable time.

Haslam also wants new beneficiaries to have the same benefits and co-payments as other enrollees in the exchange's private insurance plans.

But CMS says states would have to make "arrangements" with the exchange's insurers for "wrap around benefits," that is, extra benefits required under traditional Medicaid rules.

That includes things like providing transport to and from a doctor's office, experts said.

Traditional Medicaid co-payments also appear to be required. TennCare Director Darin Gordon said for Medicaid enrollees in the exchange to pay the same co-payments as others, the cost would be 6 percent of the premium.

Gordon Bonnyman, an attorney and Medicaid expert with the Tennessee Justice Center, said it's "always been pretty clear that some of things on their list would not be legally permissible."

But, he added, "The good news is that the core of the plan can go forward which is using Medicaid matching money" to pay for premiums in the exchange.

Nothing in the guidelines prevents Haslam from moving ahead with a major component of his plan, reforming payments to health providers.

Tennessee hospitals are clamoring for the expansion, which they will offset planned cuts to their special Medicare payments for indigent care. Many chambers of commerce across the state, including Chattanooga's, want the expansion as well.

The Affordable Care Act calls for the federal government to pay 100 percent of the Medicaid expansion for its first three years and 90 percent thereafter. But Haslam and Republicans in the legislature say federal funds are uncertain given the federal debt. Many Republicans are entirely opposed to what they call Obamacare.

Nashville television station WKRN on Saturday quoted former Gov. Phil Bredesen, a Democrat who while in office criticized the Affordable Care Act.

Bredesen said he respects Haslam's decision.

"I wouldn't second-guess what he's doing, but in the end, I hope he and the Legislature, if they can't work out this third way with the federal government, would come back and maybe add people into the Medicaid rolls. It's just a lot of free money for the state."

Contact staff writer Andy Sher at or 61-255-0550.