With New Comment Period, CMS Will Reassess TennCare Cap

As the Biden administration continues to dash states’ dreams of implementing Medicaid work requirements — most recently revoking waiver approvals granted to Ohio, South Carolina and Utah by the Trump administration — CMS this month took a critical step in revisiting Tennessee’s plans to use a fixed funding mechanism. With the opening of a new 30-day federal public comment period regarding the approval of TennCare III, experts anticipate a great amount of negative input that will lead the program to a fate similar to that of work requirements.

The Trump administration on Jan. 8 approved Tennessee’s request to use an “aggregate cap” approach to Medicaid funding that many industry observers have likened to a block grant. The outgoing administration approved the state’s section 1115 waiver demonstration for 10 years. Through the unprecedented approach, Tennessee will receive federal Medicaid funds based on a fixed budget target that is determined by CMS and the state using historical enrollment and cost data. If the state spends less than its target cap while meeting yet-to-be determined quality goals, it can earn up to 55% of annual savings to reinvest back into other state health programs. That waiver also allows the state to implement a commercial-style closed drug formulary.

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