CMS to let Tennessee use modified Medicaid block grants

CMS approved Tennessee's request to use a modified block grant to finance its Medicaid program, the agency said Jan. 8.

Five things to know:

1. Tennessee's approved section 1115 waiver calls for the use of an "aggregate cap" to fund its Medicaid program. The state's Medicaid program provides coverage to about 1.5 million low-income and disabled residents, according to The Wall Street Journal

2. The modified block grant would give Tennessee a lump sum of federal funding. That funding would increase or decrease with enrollment. Additionally, Tennessee could keep federal funds it saves, as long as certain improvement measures are met, according to WSJ.

3. CMS Administrator Seema Verma said the "groundbreaking" waiver "puts guardrails in place to ensure appropriate oversight and protections for beneficiaries, while also creating incentives for states to manage costs while holding them accountable for improving access, quality and health outcomes." She added that the demonstration could be a model for other states.

4. While Republicans have argued funding caps give states more flexibility around their Medicaid programs and greater control over costs, Democrats have argued block grant-like funding mechanisms will lead to fewer health benefits for poor Americans. 

5. The incoming Biden administration may rescind the approval. President-elect Joe Biden has called for increased Medicaid eligibility and has opposed block-grant funding, according to WSJ

To review CMS' approval, click here.

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