Home » Tennessee opts out of ACA Medicaid expansion – with a caveat

Tennessee opts out of ACA Medicaid expansion – with a caveat

By Jerry W. Taylor
Stites & Harbison

Tennessee Gov. Bill Haslam last week addressed a joint session of the Tennessee General Assembly to announce that Tennessee will not participate in the Medicaid expansion option under the Affordable Care Act (ACA). Instead, the administration is proposing to the federal government an alternative “Tennessee Plan” intended to provide health care coverage to the expanded population while also protecting Tennessee taxpayers from perceived future risks.

While details were not disclosed, the proposal is a hybrid plan by which the same federal dollars which would have covered the expanded Medicaid population in Tennessee would instead be used to purchase private health insurance for the expanded population. With the goal of making the federal dollars work “smarter” for Tennessee, payment for the care for this expanded population would be “pay for performance” – payment to care providers would be tied to medical outcomes rather than a traditional fee-for-service payment methodology. Seeking to pre-empt future federal mandates and funding cuts or other negative funding decisions, Tennessee’s participation in the arrangement would be subject to continued approval annually by the Tennessee General Assembly.

It was not made clear in the governor’s address the extent to which this proposal had been discussed with the Centers for Medicare and Medicaid Services (CMS) of the federal Department of Health and Human Services, but Haslam did say approval of CMS had not been received. The administration will continue to negotiate with CMS in an attempt to receive its approval for the Tennessee Plan.

Future health care coverage for hundreds of thousands of Tennesseans, and the economic health of Tennessee hospitals and other health care providers, hang in the balance.

Jerry W. Taylor of Stites & Harbison concentrates his practice in the areas of health care law, administrative law and commercial lending.