Trump Administration Approves Tennessee Medicaid Block Grant Proposal

On Jan. 8, the Centers for Medicare & Medicaid Services (CMS) approved a proposal from Tennessee that if implemented, would make Tennessee the first state to receive its Medicaid funding through a block grant. The plan, which was originally submitted in November 2019, would shift Medicaid funding in Tennessee from an open-ended arrangement under which the federal government pays a percentage of the state’s Medicaid costs based on per-capita income, to an arrangement where the federal government provides a fixed amount of funding annually. The approved proposal differs slightly from a traditional block grant program to allow for increased contributions from the federal government during times of growth in the state’s Medicaid population.

The current shared-funding arrangement requires states to adhere to conditions established by the federal government, but under a block grant system, there would be fewer conditions to which states must adhere. Proponents of block grants argue that with fewer strings attached to funding, states could use Medicaid more efficiently. But opponents have voiced concerns that the fixed amount of funding could result in reductions in or denial of Medicaid coverage for recipients.

Although the plan was approved by CMS, the approval was granted by outgoing Trump administration officials. The incoming Biden administration is likely to take action to reverse the decision, and even if it does not, the decision is likely to face legal challenges as it is unclear if CMS has authority to make such a decision without congressional approval.