(The Center Square) — Tennessee’s Division of TennCare is asking for $689.5 million in budget increases for next fiscal year, with $403 million in federal funding increases and $286.5 million in state funding increases.
Stephen Smith, the Tennessee Director of TennCare, said at Friday’s budget hearing with Gov. Bill Lee and the budget team that Tennessee’s Medicaid spending has been well below the national average by cumulatively $5.2 billion since 2012 with a $1.2 billion for next fiscal year.
“We don’t have the benefits of being average,” Smith said. “We have to bend the cost curve.”
Smith noted that he believes the lower budget hasn’t prevented TennCare from improving programming and adding care, citing a statistic that Tennessee neonatal abstinence syndrome deaths from babies exposed to certain drugs, including opioids, in the womb have dropped by 31% from 2016 to 2020 and the state is the only one reporting a continued decline in NAS deaths by Medicaid members.
TennCare has also ended its waiting list for individuals with intellectual and developmental disabilities who are seeking services.
“Eligible individuals who are seeking services have a spot in the program,” Smith noted.
TennCare enrollment projections show that enrollment is expected to peak in mid-2023 and continue to drop through mid-2025 to pre-pandemic levels. Smith noted that the federal healthcare state of emergency has prevented participants from being dropped and added a federal supplement.
When that state of emergency ultimately ends, the federal supplement will end and enrollment will progressive drop afterward with the state funding the higher enrollment numbers. TennCare will be reaching out to enrollees during that process, so Smith said it’s essential that enrollees keep their contact information updated with the program.
“We want eligible members to remain eligible,” Smith said.
The largest increase will be for inflation and utilization, estimated to be a total $192.1 million with $125.8 million coming from federal funds. Increased pharmacy costs are expected to be $138.4 million with $90.6 million in federal funds.
A non-recurring $139.3 million increase is being requested for a Medicaid Management Information System, with $125.3 million coming from federal funds.
Additionally, $66.1 million will be adjusted from federal to state funds based on how much the federal government will match of TennCare funds because the state is outpacing the rest of the country in personal income, a major factor in the calculation.