With New Comment Period, CMS Will Reassess TennCare Cap

by Lauren Flynn Kelly

As the Biden administration continues to dash states' dreams of implementing Medicaid work requirements, 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.

Background:

• 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. 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.

Demo faces pushback:

• The approval was met with strong opposition from beneficiary advocates, including 13 Medicaid beneficiaries who filed a complaint challenging the agency’s approval of the 10-year demonstration.

What industry experts say:

• "What concerns me is if you follow the money, there's shared savings, depending on quality measures which have yet to be named, and so where the expenses [are highest is] in the disability category and in the duals. So that's where the money is and there's a strong incentive to save money with this program," asserts Jerry Vitti, founder and CEO of Healthcare Financial, Inc. "While the modified version is innovative, you still have this overriding financial model that could have negative implications" for high-cost populations.
• Vitti says he expects CMS will hear from multiple advocacy organizations, and their comments could inform any modifications requested by the Biden administration, although that's "the mildest case scenario."
• "Block grants, even Tennessee's modified aggregate cap plan, will drive a greater divide in health equity — socio-economically and racially," argues Gary Rosenfield, senior vice president at ConsejoSano. "Block grants may promote efficiencies in some areas, but in reality the upshot is that it will narrow already sparse networks even further, creating less access to care, minimal benefits, and ultimately worse outcomes."

From RADAR on Medicare Advantage