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Feds Received More Than 6,100 Public Comments on TN's Block Grant Proposal, Only 14 Were in Support

Office of the Governor

When the federal government asked the public to weigh in on Tennessee’s proposal to receive its Medicaid dollars as a modified block grant, it received more than 6,100 comments. Just 14 of them supported the plan.

Despite the overwhelmingly negative feedback, the Centers for Medicare and Medicaid Services (CMS) approved a modified version of the state’s proposal earlier this month, making Tennessee the first state in the nation eligible to receive part of its federal Medicaid dollars in a lump sum.

But the vast majority of the messages from the public were from people like Jean Smith, a 73-year-old mother of two in Knoxville, urging the CMS to reject the proposal.

“I only have two fingers that I can use on my left hand, it's a struggle for me to type this,” Smith wrote in her letter to the federal government. “I have to do this because it really frightens me to think that Tennessee might go to a block grant.”

Smith has a form of muscular dystrophy and needs an expensive medication and in-home care. She and her adult daughter Carol, who has cerebral palsy, both rely on Tennessee’s modified Medicaid program, TennCare. Her letter to CMS echoed the sentiments of thousands of comments opposing a Medicaid block grant for Tennessee. 

“I’m on a medication that’s helping me breathe better,” Smith said during an interview last year. “If I can’t get that medicine then I will die. A block grant would cut services to the most expensive cases.” 

An investigation by WUOT News found that 5,914 comments were expressly opposed, 244 comments were neutral or offered other commentary, and just 14 comments expressed support for Tennessee’s modified block grant proposal during a federal public comment period at the end of 2019.

Like federal Medicaid administrators, both Tennessee’s General Assembly and Governor Bill Lee rejected the widespread public opposition and approved the modified block grant proposal last week. Gov. Lee has previously called block grant opponents misinformed. The federal response to the opposing comments was similar. After listing many of the concerns commenters raised, the approved waiver reads, "CMS believes that these commenter concerns are misplaced in light of the guarantees under this demonstration concerning the state’s maintenance of effort in providing coverage."

Opponents say the new 228-page plan is undoubtedly complicated, but that doesn’t mean they don’t understand what’s happening. 

“This is a really tough time in our community, not a time to be playing fast and loose,” said Dr. Valerie Arnold, president of Tennessee’s Psychiatric Association, during an interview after a modified version of the proposal was approved.

Like dozens of other national non-profits representing more than 38,000 physicians, 9,000 pediatric nurse practitioners and 700 people with Cystic Fibrosis, the American Psychiatric Association urged CMS to reject Tennessee’s proposal entirely in its public comment.   

One of the APA’s largest concerns about Tennessee’s now-approved waiver is the possibility that the state could alter TennCare’s drug formulary. A drug formulary is the list of medications a health insurance plan covers. Under the approved plan, Tennessee is only required to cover one drug within each drug class, and can exclude some new medications. 

Dr. Valerie Arnold says the change could have disastrous effects on patients with mental illness, who often need multiple medications and for whom new drugs may be more effective.  

“When your choice is the one that’s been around for 30 years cause it’s cheap and there’s other ones that work a lot better, but you can’t access those or you can’t afford those, that’s dangerous,” Arnold said. 

Though it’s a common practice in Medicare and private insurance plans to have limited drug formularies, Tennessee would be the first state in the country to use a restricted drug formulary for Medicaid. No other state has been authorized to exclude drugs from Medicaid coverage and keep its federal rebates.

TennCare officials say just because they've been granted the new authorization doesn’t mean they will use it.

“We haven’t made any decisions about the drug formulary; this is a tool that we asked for,” Stephen Smith, TennCare’s director, said. “We will ensure, just as we do now, that if the member needs that particular drug we will have a process in place that will allow them to get that and get it quickly.”

But state health care advocates say added administrative steps and appeals processes to get the right medication are exactly where patients could lose the care they need. 

“Our eligibility on paper isn’t horrible, it’s just they put so many bureaucrats and red tape between you and the coverage that you have a very low number of people who can actually run the gauntlet,” the director of Tennessee Justice Center, Michele Johnson, said. “I think that’s what this [plan] sets up here.”

Public commenters share stories of relying on TennCare and fearing cuts

Of the more than 5,900 federal public comments opposing the proposed funding scheme, most were from individual Tennessee residents. Dozens of letters were from TennCare recipients themselves who shared their fears of being denied care under the program’s new funding plan.   

Jean Smith wrote about an ongoing battle to receive reliable in-home care for her daughter in a letter to CMS. She also described her own difficulty receiving needed services under TennCare.

“I had trouble finding a foot doctor. When I found a doctor they wouldn’t cover my treatments,” Smith said in an interview. “My doctor’s office found a nonprofit from another state to cover my treatment.”

Credit Claire Heddles
Jean Smith in her Knoxville home in January 2020. A modified version of the proposal she spoke out against passed one year later.

TennCare officials and Gov. Bill Lee have touted both the potential savings and the pilot health programs that could be funded by a block grant-style Medicaid structure, but Smith says these officials don’t understand the reality of being on TennCare.

“I would say put yourself in my shoes, try using TennCare and see how frustrating things can be,” she said.

While TennCare touts a 94 percent customer satisfaction rate, Smith’s fears about TennCare changing its services reverberate throughout letters Tennesseans submitted to the federal government.   

A Claiborne County mother of two wrote, “We have already experienced problems with our TennCare coverage, we are concerned that TennCare will operate even worse if it is block granted.” One Davidson County father wrote “Please reject the block grant!” in a letter outlining his difficulty accessing care for his young daughter with autism. 

Critics say the block grant incentivizes the state to drive down spending

Federal Medicaid administrator Seema Verma acknowledged the wave of opposition to a block grant during the federal public comment period in her approval letter. She wrote, “a small number of comments supported the proposed demonstration.” WUOT News found less than a quarter of one percent of the comments supported the proposal. 

Of the letters opposing a block grant, more than half mention concerns that a block grant model will incentivize Tennessee to further cut spending in TennCare. Georgetown University Health Policy Institute’s Center for Children and Families outlined this concern in its letter to federal administrators. They say the new funding model will disproportionately harm Tennessee’s children. TennCare covers about half of the state’s births and half of Tennessee children, according to state data.

“Medicaid is a hugely important program from the standpoint of insuring uninsured kids in Tennessee. Slapping a cap in federal matching dollars on the program is worrisome,” Georgetown’s Andy Schneider said. “The state has created with this, for the first time that any state has done this, an incentive to drive spending down.”

TennCare’s Stephen Smith says the approved plan has metrics in place to keep the state from cutting any services. He says the way Tennessee will keep its costs low enough to receive the federal dollars is through better care coordination.

“The success of this plan is actually dependent upon us doing what we have always done and that is control the cost of healthcare and control our spending growth,” Smith said. “If we can grow our spending less than the projected growth rate for Medicaid programs, then that’s what generates the savings.”

Health advocates and TennCare recipients remain skeptical of officials’ promises. The Tennessee Psychiatric Association’s Dr. Valerie Arnold said TennCare is tightly managed already. “I don’t see any way of cutting that fish any leaner cause it’s already very, very lean,” Arnold said.  

Tennessee’s per capita Medicaid spending is about a thousand dollars lower than the national average, but the state also had the 13th highest rate of uninsured residents in the country in 2019, according to the Census Bureau.   

Tennessee is one of 12 states that has not expanded Medicaid to cover all low-income households. More than 120 comments sent to the federal government called for expanding Medicaid instead of implementing a block grant funding structure. 

The approved block grant proposal is shrouded by legal questions

Under Section 1115 of the Social Security Act, states can request waivers from certain Medicaid requirements, Tennessee has been under Medicaid waivers since 1994, which has allowed Tennessee to run its Medicaid program entirely as a managed care organization in recent years (meaning the state negotiates contracts with providers for services at reduced costs). 

Tennessee’s current waiver, TennCare II, was set to expire on June 30  of this year. The newly-approved plan, called TennCare III, allows TennCare to continue as a managed care organization but drastically changes the state’s federal funding model.

Typically, Medicaid dollars are paid out to states as a percentage of their spending (usually about two-thirds of the state’s costs to run the program). The new plan, which Governor Lee is calling a “block grant” and CMS is calling an “aggregate cap,” sets a limit on federal Medicaid spending in Tennessee. If Tennessee is under that limit, it will receive some of the federal dollars back in a lump sum. 

According to a report from the Sycamore Institute, the state spent 21 percent of its budget on TennCare in 2019. Any additional dollars the state could get back from the federal government under the new financial model would bring down this cost, and free up money in the rest of the state budget. There are few limitations on how the state could spend those extra dollars.  

Some policy experts assert that a financial plan that gives a state a lump sum of Medicaid dollars isn’t one of the things Section 1115 allows for. Andy Schneider, the policy expert at Georgetown University who wrote a letter to CMS, said only Congress has the legal authority to grant Tennessee a block grant. He was one of the vast majority of letter writers who oppose the block grant. 

“It’s not the way that Medicaid works. Somehow because the state is underspending the national average, the state should get more? It’s not the program.” Schneider said. “The Department of Health and Human Services doesn’t have the authority to do that.”

The approved plan could face lawsuits based on this argument. It could also be overturned by the Biden administration, but CMS officials have been implementing policy changes that will make that outcome more difficult. In a January 4 letter to states, CMS administrator Seema Verma asserts that Medicaid demonstrations, like TennCare III, must continue for nine months before the Biden administration can withdraw approval. Some experts say CMS could also face legal challenges for passing a version of a proposal so widely disapproved of during the public comment period. 

Tennessee Justice Center’s Michele Johnson sees the approved plan as a political move by CMS administrator Seema Verma and Governor Bill Lee. She says they are carrying out former Trump administration goals to shrink federal Medicaid expenses, while ignoring the more than 5,900 public comments detailing Tennessean’s opposition to the new funding model.

“They both have an ideological goal,” Johnson said. “It doesn’t have anything to do with regular Tennesseans who are hardworking and who just really dream that their children can have a bright future.”

WUOT News intern Rachel Birdsong contributed to this report. 

WUOT News read and categorized 6,172 public comments submitted to CMS regarding the block grant proposal. They were noted as 'Oppose' if they explicitly urged CMS to reject the proposal, or if they used mostly negative terms like 'harmful' or 'concerning' in their feedback. Comments were marked as 'Support' if they urged CMS to approve the proposal, or if they included mostly positive language about the proposal. Comments were categorized as 'Other' if they offered general commentary about TennCare, used phrases like 'expand Medicaid' without mentioning the block grant proposal, or were unreadable. 

At the time of publishing, there were 6,172 publicly available comments. A January 8 letter from CMS administrator Seema Verma said she considered 6,186 comments. A CMS spokesperson said in a statement, “CMS’s technical team is still assessing this discrepancy.” 

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