CMS approves Tennessee's Medicaid block grant 1115 demonstration

On Jan. 8, the Centers for Medicare and Medicaid Services (CMS) approved the first 1115 demonstration that would permit Tennessee to transition its Medicaid program to a “block grant” model with a new aggregate cap approach, the Health Center Advocacy Network reported Jan. 19. Instead of receiving a set percentage of federal funding for enrollees' care, the state would receive fixed payments that increase with a rise in program enrollment and inflation. Tennessee will be eligible to qualify for shared savings on an annual basis when it underspends the “without waiver” aggregate cap and meets quality targets. This flexibility allows the state to receive federal matching funds based on savings rather than expenditures for medical assistance provision. Additionally, the 1115 demonstration includes a closed formulary that enables the state to decline specific prescription drug coverage if regulators say it is too expensive.