As part of its late-term rulemaking and waiver-approving blitz, the Trump administration on Jan. 8 cleared the way for Tennessee to become the first state to accept a fixed amount of federal funds in exchange for a range of flexibilities in its Medicaid program. Although CMS’s approval of Tennessee’s demo is likely to be revisited by President Joe Biden, who was sworn in as the 46th U.S. president on Jan. 20, experts suggest if implemented it would have a downstream effect on the managed care organizations that serve 1.5 million TennCare beneficiaries.
The Tennessee demo was approved for 10 years, similar to other recently approved section 1115 waiver requests made by nonexpansion states such as Florida and Texas. Through an “aggregate cap” approach, Tennessee will receive federal Medicaid funds based on a fixed budget target that is determined by CMS and the state using “well-established, historical enrollment and Medicaid cost data,” according to a Jan. 8 press release. If it spends less than its target cap while meeting quality goals, Tennessee can earn up to 55% of annual savings to reinvest back into other state health programs, such as those that address the social determinants of health or behavioral health, explained CMS in its approval letter.