The Tennessee General Assembly is roaring ahead with a modified Medicaid block grant program for the state’s poorest residents despite the possibility the Biden Administration could rescind it.

Two Senate panels — the Senate Health and Welfare Committee and the Senate Commerce and Labor Committee — approved the federal agreement Wednesday, with dissent coming only from Democrats on those groups in the last-minute moves. The bill moves next to the Senate Finance, Ways and Means Committee.

TennCare Director Stephen Smith told the committees that no reductions in spending, recipients and services are planned as part of the proposal for TennCare, which serves 1.5 million people, mainly pregnant women and children and the state’s neediest elderly and disabled residents.

Stephen Smith, director of TennCare (Photo: Tennessee.gov)
Stephen Smith, director of TennCare (Photo: Tennessee.gov)

Almost simultaneously, the House voted 71-22 Wednesday to suspend its rules so the measure could be considered in committees in advance of a floor vote this week, possibly Thursday evening or Friday.

House leaders disagreed, with Minority Leader Karen Camper of Memphis calling for a vote against suspending the rules. 

State Rep. John Ray Clemmons backed her up, contending a resolution to suspend the rules was more than a two-page document, and he pointed out the House would have only 24 hours to review the agreement, without giving the public adequate time to read the document and comment on it.

“This is a very heavy, weighty piece of legislation that will impact the lives of thousands of Tennesseans,” Clemmons, a Nashville Democrat, said.

Some 90% of those who testified about the modified block grant opposed it during public hearings in 2019.

State Rep. Antonio Parkinson, a Memphis Democrat, contended the House shouldn’t ram the deal through the Legislature, and he pointed out the incoming Biden Administration will have the ultimate decision and could reject it.

House Majority Leader William Lamberth said he followed public procedure, filing the resolution Tuesday.

“I’m really trying not to get irritated at some of the comments,” Lamberth, a Portland Republican, said Wednesday, arguing the TennCare reimbursement rates don’t allow enrollees to receive the quality healthcare legislators get.

The federal Centers for Medicare and Medicaid Services and TennCare announced the agreement Jan. 8. Based on the state’s request made in 2019, it would affect $7.85 billion of the Tennessee’s Medicaid money, and the state could receive a 50/50 split of about $2 billion in annual savings, the amount the state usually spends below federal projections.

The first week of the General Assembly session is normally an organizational period, but the House also could approve the modified block grant by Thursday evening or Friday, House Republican leaders said.

The block grant also could be adjusted annually for inflation and increase per capita when people are added to the rolls, according to Smith.

Smith told lawmakers Wednesday he has not spoken to the Biden Administration. Under the agreement with the Trump Administration, the state would use “shared savings” to make improvements to TennCare services, with a focus planned for maternal health coverage, serving additional needy populations, the developmentally disabled and crisis areas such as rural healthcare.

“There won’t actually be a reduction in funding,” Smith said, describing the 10-year agreement.

Some $6 billion will be available over that decade if the state exceeds its spending limit, according to Smith. But if the state exceeds that cap, it won’t have those “shared savings,” Smith said.

Tennessee’s Medicaid waiver is set to run out anyway June 30, and Smith said the state would have to negotiate a new agreement.

Democrats and critics of the modified block grant have criticized the proposal, saying this first-time agreement is illegal and could wind up leading to cuts in spending. Instead, they say the state should ask the federal government for permission to expand enrollment in its Medicaid program to provide coverage for some 300,000 uninsured and underinsured working Tennesseans.

Smith told lawmakers the new deal modernizes a “flawed and outdated” financing model, one that is built on spending more money. The new method will reward Tennessee, which has “consistently controlled spending,” he added.

Some officials, including Democratic Congressman Jim Cooper of Nashville, accused the federal government of approving the modified block grant waiver just days before President Donald Trump is to leave office.

Senate Minority Leader Jeff Yarbro, a Nashville Democrat, pointed out the proposal is a “massive change” in the laws governing TennCare, which makes up about 33% of the state’s $40 billion budget.

Sen. Jeff Yarbro during 2020 legislative session. (Photo: submitted)
Sen. Jeff Yarbro during 2020 legislative session. (Photo: submitted)

If the program is as good an idea as suggested, he questioned why the Senate committee would approve it in five days at a time it usually doesn’t consider legislation. 

The first week of the General Assembly session is normally an organizational period, but the House also could approve the modified block grant by Thursday evening or Friday, House Republican leaders said. Yarbro noted the Senate Health and Welfare Committee wasn’t even scheduled to meet on Wednesday.

“I just think there’s a significant amount of risk here that we don’t fully understand now,” Yarbro said.

Smith acknowledged to the House Republican Caucus earlier in the day that the incoming Biden Administration could rescind the agreement. He said he looks forward to explaining its benefits to the next CMS director.

State Rep. Rusty Grills, a West Tennessee Republican from Newbern, sarcastically said he didn’t see how Democrats would want to cut services to the needy by opposing the agreement. He made the comments in a House Republican Caucus meeting.

If the next president’s administration refuses to follow through with the deal, the state would fall back on its current Medicaid waiver.

“We would have to negotiate a new waiver with the new administration, and we would be back to square one,” Smith said.

Senate Minority Chairman Raumesh Akbari asked questions Wednesday about a pending change in the TennCare drug formulary. 

Under the state’s plan, TennCare would reduce the number of drugs it would cover. But Smith said if a physician and patient show a certain drug is needed, even if it is not covered, TennCare will pay for it. 

Akbari, a Memphis Democrat, raised questions about whether thousands of TennCare recipients would be put on hold for certain prescriptions or would have to pay for them out of pocket while they’re waiting for approval.

Smith responded that TennCare has not worked out the process yet. But he promised he will report back to lawmakers with updates.

Sen. Rusty Crowe, chairman of the Health and Welfare Committee, asked Smith whether uninsured and underinsured people could be served, since they were left out when the Legislature refused to approve former Gov. Bill Haslam’s Insure Tennessee proposal.

“For those who are apprehensive and want Obamacare, would it be an opportunity to help those people?” Crowe asked?

Smith responded that it “certainly creates an opportunity,” but he cautioned the state would have to be careful because the funds would be non-recurring.