CMS Extends TennCare Waiver One Year, Approves 8% Funding Increase

Tennessee officials announced on Jan. 7 that the state will receive an 8% increase in federal funding in 2002 for TennCare -- 4% less than the state had sought, the Nashville Tennessean reports (Snyder/Lewis, Nashville Tennessean, 1/8). The state had requested a 12% increase in funding and a three-year extension of its existing waiver for TennCare, the state's Medicaid managed care program. CMS, however, only agreed to extend the waiver for one year and to increase the "trend rate" for reimbursement inflation -- used to determine whether a waiver program is saving the federal government money -- from 5% to 8%. With the one-year waiver extension, TennCare will continue to receive federal support for services outside of traditional Medicaid, such as long-term care, community-based care and mental health services. "The reality is we didn't get what we asked for, and it's unclear what will happen a year from now. It's certainly clear the federal government wants us to make savings in the program," TennCare Director Mark Reynolds said (Chattanooga Times & Free Press, 1/8). Without the larger funding increase, the program will deplete the savings it accumulated when the program first started "more quickly," the Tennessean reports. As a result, the state may need to increase its share of funding, or cut enrollments or benefits. Gov. Don Sundquist (R), however, in a letter to state lawmakers, said that Tennessee could receive additional federal funding by reforming the program. Sundquist has proposed "stiffening eligibility" and cutting benefits for the uninsurable and non-Medicaid eligible beneficiaries, but there is "no guarantee" his plan will pass the Legislature. Sundquist met with HHS Secretary Tommy Thompson last week to discuss TennCare's future. He said, "We have achieved an understanding that approved changes in TennCare could mean more federal support in the following years. We will work with [CMS] for the next few months to determine what those changes might be" (Nashville Tennessean, 1/8).