CMS Approves Tennessee’s Waiver Application To Alter Medicaid Program

As expected, the federal government on May 31 approved Tennessee's waiver application to alter TennCare, the state's Medicaid managed care program, the Memphis Commercial Appeal reports (Wade, Memphis Commercial Appeal, 6/1). The new waiver takes effect July 1 and will restructure eligibility and benefits offered under the program (HHS release, 5/31). The original TennCare model aimed to lower the state's Medicaid costs by instituting managed care and using the savings to expand coverage to individuals normally ineligible for benefits. CMS Administrator Tom Scully, speaking May 31 in Tennessee, said the approved waiver will allow the state "more flexibility" to respond to funding problems in the current program (Sharp, Associated Press, 5/31). TennCare Deputy Commissioner John Tighe said that the waiver allows the state to fully fund Medicaid and the flexibility to cover non-Medicaid-eligible individuals according to available funding (Memphis Commercial Appeal, 6/1). The waiver allows the state to create TennCare Medicaid for Medicaid-eligible individuals and TennCare Standard for adults with no access to group insurance and annual incomes below the poverty level, or $8,860 for an individual; children in families with annual incomes below 200% of the poverty level, $36,200 for a family of four, and no access to group insurance; and medically eligible people with illnesses that make them uninsurable (Kaiser Daily Health Policy Report, 5/31). TennCare Medicaid will give beneficiaries coverage similar to what is currently offered through TennCare, while TennCare Standard will offer scaled-back benefits similar to those available through commercial managed care programs (Memphis Commercial Appeal, 6/1). The waiver also allows for the creation of TennCare Assist, which would provide low-income workers assistance in purchasing private health insurance (Kaiser Daily Health Policy Report, 5/31).

Other Changes
Other changes include:

• Classification as "uninsurable" will be based on a review of medical records rather than a letter of denial from an insurer.
• Non-Medicaid-eligible individuals will be required to re-enroll annually, and enrollment will be open once per year.
• All beneficiaries will pay copayments for prescription drugs.
• A more substantial review of income, residency and insurance status will determine proof of eligibility (Memphis Commercial Appeal, 6/1).
• The state can provide drug benefits to Medicaid-ineligible, low-income Medicare beneficiaries who had enrolled in TennCare by the end of 2001 (HHS release, 5/31).
• Tennessee can enact a "stabilization" plan, under which the state will assume the medical risk of insuring beneficiaries, rather than the program's managed care organizations, for an 18-month period.

Size and Shape
State officials will begin reverifying eligibility for all TennCare beneficiaries July 1 to determine whether they are Medicaid-eligible. Individuals who do not qualify for Medicaid will receive an application for TennCare Standard (Memphis Commercial Appeal, 6/1). Some advocates have expressed concern about the waiver, specifically that it would make some current beneficiaries ineligible for coverage. For instance, while the waiver would permit TennCare Standard coverage for individuals with annual incomes up to 200% of the poverty level, Gov. Don Sundquist's (R) fiscal year 2003 budget proposal would provide $114 million to cover individuals with incomes up to the poverty level. To cover individuals with incomes up to 200% of the poverty level, lawmakers would need to appropriate an additional $100 million. Without the extra funding, up to 420,000 currently enrolled people would lose their coverage starting Jan. 1, 2003. Tony Garr, executive director of the Tennessee Health Care Campaign, said the waiver design is "pretty bad," because "hundreds of thousands ... could lose health benefits, depending on what the Legislature does" (Lewis, Nashville Tennessean, 6/1).

Medicaid Benefits Expanded
In related news, the federal government also on May 31 approved a separate waiver application that will allow Tennessee to provide Medicaid coverage to uninsured women diagnosed with breast or cervical cancer through a free CDC screening program (HHS release, 5/31). Under the Breast and Cervical Cancer Prevention and Treatment Act, signed into law in October 2000, states can expand their Medicaid programs to include uninsured women under age 65 who have breast or cervical cancer. To qualify for treatment, women must be under age 65, otherwise ineligible for Medicaid and without health insurance. Patients will receive Medicaid benefits for the duration of their treatment (Kaiser Daily Health Policy Report, 12/7/01). Tennessee is the 41st state to expand Medicaid benefits under the act (HHS release, 5/31).