CMS Approves First Block Grant Waiver for Tennessee

Earlier this month, the Centers for Medicare and Medicaid Services approved the waiver for Tennessee to utilize a Medicaid block grant program, making them the first state to do so. In addition to utilizing a fixed spending target by means of an aggregate cap, this change will provide the state some flexibility with the program, such as being able to negotiate with prescription drug manufacturers, increase benefits and coverage without prior approval from CMS, and respond more aggressively to Medicaid fraud, among others.


If spending falls below the aggregate cap, Tennessee may be given up to 55% of the savings. Those funds can then be used on state health programs. CMS approved the block grant program for 10 years, allowing the state to fully evaluate the new approach.


Giving states more control over their Medicaid programs may result in more efficient and innovative plans at lower costs. The responsibility of making benefit changes also moves from the federal policymakers to the state. Some worry that putting a cap on federal Medicaid funds will cause certain groups to lose access to healthcare. Plus, the program’s fate could be affected by the new presidential administration.


When CMS originally gave states the ability to pursue block grant programs a year ago, the response was generally negative. Many feared the new system would exacerbate access to care and overall health outcomes, increase health disparities, and raise costs.


Depending on the effectiveness of the TennCare III block grant program, we may see more state Medicaid programs adopt this model in the future.


Read the full article from Healthcare Finance.

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