Governor Bill Lee wants to run TennCare without interference from Medicaid officials in Washington.. He says he can save $2 billion a year out of a $12 billion budget.

NASHVILLE, TN­ – Governor Lee is moving quickly to finalize his plan to fundamentally change TennCare, Tennessee’s version of Medicaid. He wants to put the program under state control to save money. Healthcare advocates say it’s a giant con to drain funds out of the system that provides care to 1.4 million Tennesseans.

They are urging people to make public comments to oppose the Governor’s proposal. The deadline is October 17. (See details below.)

“It would be very important for the country to see an opportunity to lower the cost of Medicaid services without changing the quality or level of those services to the Medicaid population,” Lee said. “For Tennessee to be an example of how we can deliver that would be a very big deal.” Lee told the Washington Post.

Lee says his block grant will save $2 billion out of TennCare’s $12 billion budget. But he is not saying where he is going to get those savings or what he is going to do with them.

“He’s being very cagey about that, “ said Michele Johnson, Executive Director of the Tennessee Justice Center (TJC).

“He’s being cagey about that,” said Michele Johnson, Executive Director of the Tennessee Justice Center.

“He has to be cagey because the math doesn’t add up. Trump can’t take $1 trillion dollars out of Medicaid and Governor Lee take out $2 billion from TennCare. With that math even an English major knows that children are going to be harmed,” she said, adding, “It’s not only immoral but it’s illegal.” TJC sued the state six times in TennCare cases and has never lost one.

Lee’s block grant proposal claims any savings will be invested in some health-related programs around the state. “This is a draft and currently under the 30 day public comment window. The proposal is not finalized and sent to CMS until Nov. 20,” said Lee’s Press Secretary Laine Arnold in an email.

TJC Staff Attorney Gordon Bonnyman said 10% of TennCare patients, many chronically ill or with disabilities, account for more than half of TennCare spending.

“The only way to get those savings is going to be to cut the services that are being provided to the state’s most vulnerable patients,” Bonnyman said.

The Governor said he has no intention of cutting people off or eliminating services but he will have to reduce them, like putting limits on hospital stays, or bargain for better drug prices, or put other restrictions on services that Medicaid currently pays for.

TennCare has been around since 1994 and serves mostly low-income pregnant women, children, and people who are elderly or have a disability. For every $35 the state spends on healthcare to the needy, the Federal government reimburses the state $65. That longstanding formula is what Lee wants to change.

“The traditional model of Medicaid financing is an outdated model of fundamentally misaligned incentives. In the current framework, states that spend more money receive additional federal dollars, while states that strive to control costs and reduce spending receive reductions in federal funding. New models of Medicaid financing are needed that reward states for promoting value and health, not merely spending more money,” states the Executive Summary of Lee’s block grant proposal.

Lee wants the feds to pay a lump sum up front then split any savings at the end of the year with Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicaid in all 50 states.

The Governor’s proposal is essentially a kickback scheme: Lee is asking the feds to give him about $8 billion for services the state has not yet rendered, and may not provide to CMS’s liking, and the Governor promises to return half of the scheme’s profits. He may be aiming a little too high.

Medicaid officials have never allowed the states to do that before. Medicaid is an entitlement program for the country’s neediest citizens. President Lyndon Johnson signed the Medicare and Medicaid programs into law in July, 1965.

This is how it has worked for more than 50 years: CMS pays patient premiums to managed care contractors (MCOs) every month in advance. The MCOs operate networks of providers that care for patients and they all have to meet certain standards of care as well as prompt payment to providers. CMS has oversight to make sure the federal government is getting what it pays for. Health advocates say Lee’s plan says a lot of nice things but lacks the accountability of Medicaid.

Political conservatives like Bill Lee dislike entitlement programs in general but in this case, Lee is proposing to hold the purse strings himself. He wants CMS to give Tennessee a free hand to run TennCare with little or no interference from Washington. It’s a bit like Republican proposals to replace the Affordable Care Act, which went nowhere because they failed to protect people with pre-existing conditions.

“It’s a gimmick,” said Gordon Bonnyman, Staff Attorney for the Tennessee Justice Center.

“Medicaid is not commercial insurance. It covers desperately ill, chronically ill people that insurers generally do not cover. So what works in a commercial plan for a generally healthy population does not work in a Medicaid context, which was designed by Congress to serve a population that commercial carriers avoid,” Bonnyman said.

It is not clear what, if anything, Lee plans to change about the MCOs that provide networks of healthcare providers to TennCare patients. If he cuts their margins too much, some of them will probably go out of business. If he restricts covered services too much, patients will leave.

Disability advocates say Lee’s plan puts a target on their backs. The Gov’s plan gives few specifics and is short on details and that’s what worries them. They say the block grant will give the state a free hand to cut health services they need and they want the feds to nix the whole idea.

Carol Westlake is Executive Director of the Tennessee Disability Coalition.

“While our constituents are very appreciative of TennCare, rely on it as a lifeline, we think they also have very good reason to worry about doing away with the kind of federal safeguards that make Medicaid a safety net for vulnerable folks who need it the most.  And simply giving the state a blank check and then telling them that they don’t have to necessarily follow the rules we think puts people with disabilities at great risk,“ said Carol Westlake, Executive Director of the Tennessee Disability Coalition.

“It’s really a $2 billion cut,” said Bonnyman. ”It’s a transfer of money out of the system that would have gone to patients but will instead flow to government,” he said.

Bonnyman said TennCare expenditures per patient are among the lowest 5 of all 50 states. “It’s not like there is a lot of surplus there to be trimmed,” he said.

If the Governor wants to make changes to TennCare, under the block grant it will not need CMS approval. And that worries Bonnyman who said accountability and standards “will go away” if it is approved. He likened it to having traffic cops but eliminating speed limits.

There is a 30-day comment period that ends October 17. Lee’s plan is vague on important details like hospital stays and new drugs that cure Hepatitis C but they are expensive.

What You Can Do:

Advocates want TennCare patients to voice their disapproval of the block grant proposal by telling Lee about themselves if they are a patient, or telling him about their patients if they are providers. Bonnyman said people should cite statistics, reports, and research in their comments if they can.

You can comment in person. There is a public meeting at Family and Children’s Service Center, 2400 Clifton Avenue, Tuesday, October 1 at 2pm.

You can write Mr. Gabe Roberts, Director, Division of TennCare at 310 Great Circle Road, Nashville, TN 37243

You can send an email to:

Here’s a link to make a comment:

Here’s another link with talking points from the TJC: