Tennessee drops Medicaid drug change over federal concerns

July 22, 2022 GMT

NASHVILLE, Tenn. (AP) — Tennessee is abandoning plans for a major change to its Medicaid program’s pharmacy benefits after federal health officials raised concerns.

TennCare, Tennessee’s Medicaid program, said it will abandon a proposal to impose limits on some prescription drugs following pressure from the federal government. The state last year received approval from former President Donald Trump’s administration for a TennCare overhaul that included the change. Officials argued the overhaul could produce flexibility and savings that would then fuel additional health coverage offerings, including prescription drug limits aimed at rising costs.

But advocacy groups expressed concerns the change would limit low-income patients to one drug per therapeutic class and thereby hamper access to some medications.

Advocacy groups also argued the prescription drug limitations, known as a closed formulary, would have violated an agreement under a Medicaid rebate law. Last month, the Biden administration asked the state to drop the idea and further change TennCare’s block grant plan.


The block grant plan has drawn concerns from various medical and patient groups about how it could impact care for the state’s most vulnerable patients. The backlash over the block grant sparked questions about whether President Joe Biden would outright spike the program, which received federal approval just before former Trump left office.

TennCare said it also plans to implement federal agency recommendations including clarifications to show nothing in the plan “authorizes the state to reduce coverage or benefits” and to show the state will use savings to expand coverage.

Stephen Smith, TennCare’s director, said in a statement that the agency was “encouraged” by the federal Centers for Medicare and Medicaid Services continued support and that the process of refining the policy “is an important step in solidifying the delivery of high-quality, cost-effective care to our members.”

The process is open to public comment until Aug. 19.

The changes drew positive reviews from some advocacy groups.

Jeff Strand, coordinator of government and external affairs with the Tennessee Disability Coalition, said it was “encouraging” to see TennCare respond to the concerns from federal officials and the public.

Gordon Bonnyman, staff attorney at the Tennessee Justice Center, called the changes a “step in the right direction” but said concerns remain, including the lack of retroactive coverage for many Tennesseans who may become eligible because of an accident or illness. Under TennCare’s waiver, Bonnyman said retroactive coverage has become available for pregnant women and people under 21 years old. He said it should be extended to all TennCare adults.

Tennessee lawmakers passed a resolution in 2019 calling for the submission of a block grant plan for federal consideration. They argued the existing system gave states little incentive to control expenses because no state pays more than half the total cost.


Democrats and health advocates have expressed concern that spending caps might cause states to purge their rolls or reduce services, which Republican Gov. Bill Lee’s administration officials have said they won’t do. Democrats and advocates instead want to expand Medicaid eligibility, which Tennessee’s Republican leaders have declined to do under former President Barack Obama’s health care law. TennCare officials have dangled the possibility of expanded eligibility under the block grant, but haven’t guaranteed they’ll pursue it.

Lee declared in January 2021 that Tennessee had become the first state in the nation federally approved to receive funding in a lump sum for its Medicaid program through a block grant program.

The Tennessee Justice Center sued in federal court, seeking a halt to the block grant push.

Biden has so far declined to halt the initiative, instead opening it it back up for additional public comments last summer. The move resulted in a pause in the lawsuit. The federal agency then sent the state its list of concerns about the block grant specifics last month. The agency said it is “evaluating a range of actions” while asking the state to make changes.

TennCare has noted hundreds of millions of dollars in new recent coverages, from extending post-partum coverage from 60 days to a year, to a new adult dental coverage.