Medicaid matching coming to an end in Tennessee

Published 6:03 pm Tuesday, December 27, 2022

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Throughout the federal COVID-19 emergency, Tennessee’s Medicaid service TennCare and programs like it across the country have been barred from removing those who initially qualified for services.

Starting on April 1, however, the emergency will end and so will the federal matching dollars that went into the program. TennCare served 1.4 million residents in early 2020 and, after hitting a projected peak of 1.7 million members this spring, expects TennCare enrollment to go back down to 1.4 million by April 2025.

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The problem for TennCare will be the additional costs related to what is called redetermination as it goes through its rolls to determine who is still eligible for the program. During that process, it will continue to serve additional members without the federal matching funds to pay for the added expense.

“We don’t just snap our fingers and go back to normal,” TennCare Director Stephen Smith said about the process in his Nov. 18 budget hearing. “That means that the cost of serving these individuals won’t just shut off in June.

“Unfortunately, as we’ve discussed many times, Congress acted and appropriated additional federal matching dollars to states, so we’re drawing down more federal dollars to assist with the increased cost tied to the enrollment growth.”

Smith said that TennCare was well-positioned to afford the one-time costs with an additional surplus in its budget, without saying the total. The department asked for $689.5 million in budget increases for next fiscal year, with $403 million in federal funding increases and $286.5 million in state funding.

“It’s important to stress that, while our reserve might appear abnormally high, many of those dollars are obligated and necessary to meet the ongoing costs once the emergency ends and those enhanced federal dollars stop coming into the state,” Smith said.

Tennessee’s 2023-24 budget request included $63 million for the Tennessee Eligibility Determination System, including $57 million in federal requests and $6 million from the state.

TennCare III operates differently than other states as the first to receive a Medicaid block grant, where Tennessee receives federal money for the state Medicaid program all at once instead of periodically.

This year, TennCare is adding an adult dental benefit for 600,000 adults as well as ending its waiting list for individuals with intellectual and developmental disabilities who are seeking services.

Smith noted that, during the upcoming redetermination process for benefits, it is essential that TennCare recipients update their contact information to make sure they receive the required forms. When possible, the department will use Internal Revenue Service data to auto-renew participants, who can visit or call 855-259-0701 to renew coverage.

Smith noted that TennCare must keep costs under control as the program makes up about one-third of the state’s budget and Tennessee’s Medicaid spending has been well below the national average by cumulatively $5.2 billion since 2012 with a $1.2 billion for next fiscal year, allowing the state to increase spending for other departments such as education.

“We’ve come a long way in our TennCare program but it really wasn’t that long ago when double digit growth trends and runaway costs threatened the very existence of TennCare,” Smith said. “In fact, in the early 2000s, projections showed that the TennCare budget was literally going to eat every available new revenue dollar in just a few years.

“No one wants to be in that position again.”