Funding Dispute Between CMS and Tennessee Could Force State to Return to Traditional Medicaid

The federal government's unwillingness to meet Tennessee's request of $13 billion over three years for TennCare could mean the end of the state's Medicaid managed care program and force the state to return to traditional Medicaid, a state official said on Jan. 22. The Memphis Commercial Appeal reports that CMS is only offering $12 billion for the new three-year waiver the state is seeking for TennCare, which now covers 1.4 million people. "If we don't get close to $13 billion over the next three years [beginning in 2003], we will have no choice but to significantly reduce the program," Deputy Finance Commissioner John Tighe said. He explained that the additional $330 million per year is needed to fund changes proposed by Gov. Don Sundquist (R) to split the program into three parts and reduce benefits to beneficiaries with higher incomes. Because negotiations with CMS are going "so badly," Tighe said the state is "crunching the numbers" on dropping the managed care aspect of TennCare and returning to fee-for-service Medicaid. The dismantling of TennCare would result in about 400,000 Medicaid-ineligible beneficiaries losing their health coverage.

More Uninsured With No Savings?
Speaking before the state Senate Commerce Committee on Jan. 22, Tighe told lawmakers that Tennessee would have a "better chance" of obtaining more federal funding if Sundquist's proposal, which attempts to address some concerns federal officials have raised about TennCare, was approved. "What the federal government is looking for is coverage to an expanded population of low-income people, but one that doesn't mess with the private (insurance) market and that doesn't allow companies to dump people onto the program." He added that even if the state returned to traditional Medicaid, the savings might be minimal because of administrative costs related to the switch to fee-for-service and the loss of federal funding for several treatments that the federal government currently helps subsidize, such as mental health services (Wade, Memphis Commercial Appeal, 1/23). While state officials are still negotiating with CMS, state Sen. Jerry Cooper (D) said the days of Tennessee receiving "preferential treatment" from the federal government are over. He added, "The bottom line ... is that Tennessee is not going to get any more funding than other states are going to get." Cooper believes that the only chance Tennessee has to obtain the funding level it desires is for Sundquist and Sen. Bill Frist (R-Tenn.) to "make a personal plea" to President Bush for the additional $1 billion (Cheek, Nashville Tennessean, 1/23).