Gov. Bill Lee has stood by an experimental health care block grant approved by the Trump Administration. (Photo: John Partipilo)

Thirteen recipients of Medicaid represented by the Tennessee Justice Center and two other groups filed suit Thursday in U.S. District Court, challenging federal approval of a TennCare block grant through 2030.

The state says the block grant will give officials more flexibility to better serve recipients of TennCare, the Tennessee version of Medicaid, which provides health coverage to low-income Tennesseans, mostly women, children and people with disabilities. Critics contend a block grant will result in less coverage and limit future TennCare funding.

"The hardships experienced by the plaintiffs who brought this case show the harm caused by the state's decision to radically restructure TennCare. Tennessee has a long history of mismanagement and bad Medicaid policy," said Michele Johnson, executive director of the Tennessee Justice Center, in a statement. "Tennessee is the last state that should have an experimental waiver that puts vulnerable populations at risk. We stand with our clients and all Tennesseans against the further restriction of life-saving healthcare services and prescription drugs."

In response to the lawsuit, TennCare spokesperson Connor Tapp said, "TennCare III will benefit Tennessee, our TennCare program and the people TennCare serves. In particular, TennCare III benefits our state by giving Tennessee the opportunity to be rewarded with a share of the savings that we have been generating for the federal government for many years to reinvest in the health of Tennesseans. Seeking to vacate TennCare III's approval only harms the very Tennesseans the organizations behind this lawsuit purport to advocate for."

The modified block grant program caps the amount of federal funding for Medicaid services and allows the state to restrict coverage of prescription drugs, according to the statement released by the plaintiffs — Tennessee Justice Center, National Health Law Program and King & Spalding LLP, which filed the complaint in the District of Columbia.

The plaintiffs' legal counsel said the program permits Tennessee to keep "troublesome" parts of TennCare such as the elimination of three months of retroactive coverage as well as the requirement that beneficiaries enroll in managed care plans, which they said the state has been "testing" on low-income people since 1994.

Filed on behalf of TennCare recipients with chronic, disabling conditions, a rural pediatrician and the Tennessee Justice Center, the lawsuit claims the Trump administration failed to give enough time for public comment, hurting people's ability to object. The plaintiffs also claim the Department of Health and Human Services exceeded its authority in an "arbitrary and capricious manner" by authorizing the project as an "experimental waiver" affecting more than 1.5 million Tennesseans.

Jane Perkins, legal director at the National Health Law Program, said the Trump administration "overstepped its authority" when it approved TennCare III less than two weeks before the Biden administration took office. Tennessee had been negotiating with the feds for almost a year when the plan was approved just as Donald Trump left the presidency.

Perkins said the decision by the Department of Health and Human Services allows Tennessee to "ignore" funding and coverage provisions set by Congress in the Medicaid Act.

"In a rush to approve the project in its waning days, that administration also stepped out of bounds by shutting the public out and approving TennCare III without giving public notice and opportunity to comment as federal law requires," Perkins said.

Republican state leaders have said they want to stick with the modified block grant. They say "shared savings" through the federal government will provide the state with extra funds based on efficient operation of TennCare to provide more services to needy women, children and disabled residents.

"Shared savings is a great plan for all Tennesseans. There's no need to negotiate on that," House Speaker Cameron Sexton, R-Crossville, said.

Gov. Bill Lee has also stood by the modified block grant program.

During his State of the State, Lee said, "Let me be clear: if partisan attacks that call for this block grant to be rescinded prevail, the state will not get these shared savings dollars that we plan to use to improve healthcare for vulnerable Tennesseans."

Tennessee is the first state in the nation to receive approval for a block grant program, which Republicans say is innovative and Democrats say amounts to gambling on the health of the state's poorest and sickest residents.