NASHVILLE — Through a historic Medicaid waiver agreement granting Tennessee more flexibility managing TennCare, the state will be able to recognize over $300 million in shared savings for the first year of the program, known as TennCare III. At no additional cost to taxpayers, the state will use these shared savings which are additional federal funds to extend TennCare benefits to Tennesseans in need. The innovative, alternative financing arrangement is the only federally-approved waiver of its kind. Governor Lee announced these significant savings in his fifth State of the State address on Monday.

“This is a prime example of how government can and should work for all Tennesseans,” said Senate Commerce and Labor Committee Chairman Paul Bailey (R-Sparta). “The savings from this waiver prove that our excellent conservative fiscal management in Tennessee yields big returns for taxpayers and enables us to provide better care to more citizens in need. I am excited for the future of this program and grateful to Governor Lee for his support and the amazing folks at TennCare who worked hard to secure this waiver and improve efficiencies.”

In 2019, Sen. Bailey sponsored the legislation that directed TennCare to negotiate with the Centers for Medicare and Medicaid Services (CMS) to reach an agreement that would provide the state with more flexibility managing TennCare administration. Following over one year of discussions and negotiations, in 2021 CMS approved Tennessee’s Medicaid Block Grant waiver amendment.

Tennessee has now been operating under TennCare III for two years. Since that time, the state has made notable and unprecedented investments into TennCare, including:
Providing a comprehensive dental benefit for adults for the first time in Tennessee history;
Serving thousands of additional people with intellectual and developmental disabilities;
Providing 12 months of postpartum coverage to mothers through a pilot program;
Workforce investments in behavioral health, home and community-based care, and dental services; and
Additional investments in public hospitals.

“Our waiver actually rewards a state for efficient, responsible management of taxpayer resources by awarding additional federal funds – known as shared savings – to serve the most vulnerable,” said Governor Lee during Monday night’s address.

Lee is proposing to use the shared savings to enhance benefits and serve 25,000 additional Tennesseans with a focus on babies, children, pregnant women and parents. These efforts include:
Making our post-partum coverage extension for women on TennCare permanent;
Expanding eligibility for pregnant women and providing lactation services and supports to new mothers
Expanding eligibility for parents and caretakers of children; and
Providing one year of continuous enrollment for children.

In the coming weeks and months, the General Assembly will review Governor Lee’s budget proposal and make its own budget recommendations, which will include ways to reinvest the shared savings from the Medicaid waiver.