TennCare III Demonstration: Overview and Implications
On January 8, the Centers for Medicare and Medicaid Services approved a ten-year Medicaid demonstration project in Tennessee that imposes an aggregate cap on federal funding (subject to certain adjustments). The waiver has received much attention because it has been described as a “block grant” and allows Tennessee to access “shared savings,” but also because it allows the state to operate a closed formulary without foregoing rebates, sets a 10-year term for the waiver, and continues a sizable uncompensated care pool. While certain features may generate interest from some states, the waiver is unlikely to establish significant new precedent that will be observed by the Biden administration. This expert perspective provides an overview of the waiver and discusses implications for states.