Tennessee’s Block Grant Is Approved by H.H.S.
“Restoring Medicaid,” What happens when states switch to Block Grants? I came across a NYT article citing Seema Verma’s approval of the Tennessee’s Block Grant recently. The Tennessee Block Grant is mentioned in section ” Revoke The Block Grant Initiative” of my post Restoring Medicaid.
What Are Block Grants?
Government funded normal Medicaid has established rules for coverage and benefits. In an exchange for greater freedom offered to states and an open-ended payment commitment, states pay a share of Medicaid. Using the Block Grant initiative and capped federal funding , states can decide what services to provide.
If the Block Grant spending is less, Tennessee can keep 55% of any savings. Savings can be used for anything related to healthcare and not just Medicaid. If the spending increases beyond the Cap, Tennessee makes up the difference. Program limitations can change to allow the spending cap to grow if enrollment increases such as what is happening during the Pandemic.
Medicaid pays for a wide variety of pharmaceuticals and pays the lowest price “today” of any pharmaceutical purchase in the United States. Under a Block Grant, Tennessee negotiates the drug pricing. One danger is if a drug is too expensive, Tennessee can reject covering it in its formulary.
Why Can Block Grants Be Bad?
Savings can be used for anything healthcare and also end up not being used to treat Medicaid patients.
Tennessee negotiating pharmaceutical pricing is similar to a corner store attempting to negotiating prices for product. It is one store or state. We have seen during the pandemic how states have struggled to lock in healthcare supplies and pricing Lone states do not have the same leverage as Medicaid negotiating prices for all of the states. Medicaid “today” secures the best pricing regardless of value.
HHS has extended the term of Block Grants to 10 years. A state can cancel it after giving a nine month notice. Such a delay in cancellation is an attempt by the present administration to lock states into the contract blocking the Biden Administration.
Puerto Rico’s experience with Block Cap funding ended up shifting significant costs to itself resulting in cuts to eligibility, benefits, and provider payments. Promised additional Medicaid funding increases to cover funding short fell over the past decade resulted in modest improvements and access.
Using a Block Grant system, the state could impose personal spending caps. It could exempt itself from following Medicaid policy such as standardized eligibility requirements for the needy ensuring coverage and reimbursement rates reflecting the actual cost of care.
One of a dozen states, Tennessee hopes to abandon the normal Medicaid structure with its wavier. The Block Grant is in lieu of the Medicaid expansion and also the normal Medicaid structure still leaving a gap of uninsured from 101% to 138% FPL.
$ Left on the Table?
Tennessee wants the block grant to result in “significant federal funding” which it will control. The state will use the money gained to provide additional services, such as nutritional assistance, housing support, and dental care.
In 2016, the federal government paid 100% of the cost of covering expansion-eligible Medicaid enrollees from 2014 through 2016. In 2016, the amount paid by the federal government gradually decreased to 90% by 2020. The state’s cost share for expanded Medicaid will never exceed 10%. By leaving 380,000 people uninsured in old Medicaid, Tennessee left a windfall ~$26 billion in federal funding (over a decade) on the table.
The state wants the billions of dollars of federal funding, no oversight, and all the critical access and health care protections stripped away.
https://www.healthinsurance.org/virginia-medicaid/
Virginia implemented Medicaid expansion in 2019, and more than 494,000 Virginians have gained coverage as a result…
Ron:
The same in Michigan because it was mostly funded by the federal gov.
[With all the news clamor about the state budget impact of the Medicaid Expansion, then I did not realize that the state share would only be 10% going forwards. I was always for it anyway and we finally got in VA, but it looks like liberals do not own enough media corporations. The linked article below says the next state budget impact is less than the sticker price due to offsetting expenses.]
https://www.commonwealthfund.org/publications/issue-briefs/2020/may/impact-medicaid-expansion-states-budgets
The Impact of Medicaid Expansion on States’ Budgets
May 5, 2020
Bryce Ward
…In this brief, we focus on a common barrier to Medicaid expansion: concerns about its impact on state budgets. Expansion opponents often argue that its fiscal cost is too high. For the first three years, the federal government paid the full cost of expansion. States began covering a portion of expansion’s cost in 2017 and, starting in 2020, are responsible for 10 percent of its cost. Given recent spending levels, expansion states will collectively pay more than $7 billion in 2020. For the median expansion state, expansion will cost more than $100 million.2
These costs represent the “sticker price” of expansion. However, its actual fiscal impact differs from the sticker price for three reasons. First, expanding eligibility allows states to cut spending in other parts of their Medicaid programs. Second, it allows states to cut spending outside of Medicaid — particularly on state-funded health services for the uninsured. Finally, expansion may increase state revenues due to taxes related to Medicaid expansion or taxes on the increased economic activity it triggers.
To date, dozens of studies have documented the fiscal effects in expansion states. While the studies do not account for every possible impact, all find that the net cost of Medicaid expansion is well below the sticker price. In many cases, researchers have found that Medicaid expansion generates enough savings and/or new revenue to more than offset a state’s share of the cost. Building from these studies, researchers in at least eight nonexpansion states project similar savings and revenue, should their states expand Medicaid.3…
The impact of Covid-19 on state budgets does not help.
Ron:
TN is wanting the money without strings and having to cover the people between reg. Medicaid and expansion Medicaid who will still be left out. If anything state budgets are impacted by people not working and a shrunken economy.
Run,
Understood. Well, TN is sort of like Tennessee :<)
T FOR TEXAS by WAYLON JENNINGS
“Give me a T for Texas, give me a T for TennesseeGive me a T for Texas, give me a T for TennesseeGive me a T for Thelma, woman made a fool out of me…”
https://www.ncsl.org/ncsl-in-dc/standing-committees/budgets-and-revenue/mandate-monitor-overview.aspx
The Unfunded Mandates Reform Act of 1995 (UMRA) was adopted in an effort “…to curb the practice of imposing unfunded Federal mandates on States and local governments.” According to the Congressional Budget Office (CBO), UMRA defines a mandate as any provision in legislation, statute, or regulation that would impose an enforceable duty on state, local, or tribal governments or the private sector, or that would reduce or eliminate the amount of funding authorized to cover the costs of existing mandates. Since 1995, CBO has identified eleven laws that contain intergovernmental mandates which exceed the UMRA threshold ($50 million in 1996 dollars; adjusted annually for inflation, $69 million in 2009).
Intergovernmental Mandates under UMRA that Exceed the Threshold (listed by date of enactment)
an increase in the minimum wage (P.L. 104-188, 1996)
a reduction in the federal funding to administer the Food Stamps program (P.L. 105-185, 1998);
***********************************************
[Fear and loathing on the state budget trail.]
Ron:
Do you have a point to this?
Lots more at the link in the above comment but I forgot to close the excerpt with….
Herman Cain should have been a tell.
Run,
Prior to UMRA the federal government had a reputation of unfunded mandates including starting programs under federal funding or mostly federal funding which the federal government pared back over time leaving states holding the bag. That reputation may have been larger than life, but it was definitely large.
I worked in VA state government from 1980 until being transferred under Northrop Grumman management in 2006, where I was still on the state payroll, but no longer involved in state budget discussions. During the 26 years where I was part of the state budget process, then unfunded federal mandates came up more often than I can count. The applicable programs were UI including WIA and Child Support Enforcement, which were both hosted on the IBM large systems that were under my planning.
That in no way makes you incorrect, but it is an important feature of the landscape which is the backdrop to Medicaid expansion. Hence fear and loathing on the state budget trail.
BTW, I was wrong about Herman Cain. Although he was born in Memphis, he was raised in Atlanta.
Run,
[I was wrong about Herman Cain, but correct about the nature of influence. The nexus is much closer to home for HHS. See link below.]
https://healthcarecouncil.com/hhs-secretary-alex-azar-nashville-is-a-health-care-innovation-hub/
HHS Secretary Alex Azar: Nashville is a health care innovation hub
U.S. Department of Health and Human Services Secretary Alex M. Azar II speaks at Nashville Health Care Council event hosted at Lipscomb University
U.S. Department of Health and Human Services Secretary Alex M. Azar II encounters Nashville Health Care Council members all over the world, he said in a speech delivered Thursday at Lipscomb University.
“There is a reason that Nashville health care leaders have kept popping up throughout my career,” he said. “It’s because Nashville has become a thriving hub for health care innovation.”
Before his speech, Azar met with Governor Bill Haslam and a group of local health care leaders for an open discussion about health care policy priorities and issues that are top-of-mind for the health care industry. Topics addressed included the industry’s transition to value-based care and the opioid epidemic. The problem of “surprise” hospital bills – meaning fees that patients later discover are out-of-network or unexpectedly high – was brought up as a tough issue that needs to be solved. Azar asked for leaders in Nashville to share ideas that could help the administration work toward a solution…
Ron:
You threw Herman Caine out there and I thought what ?
Screw value-based pricing, while a drug may have a broader use thereby proving it has additional value besides what it had in the past, does this mean additional pricing. For cost, Humira is #1 and Rituxan is #2 at $93/molecule. My infusion of the #2 drug came to just shy of $30,000 a piece for 4 infusions. The two IVIG infusions out of three soda bottle containers was ~$28,000/infusion. Neither of the ones I had were new drugs. The costs of manufacture have been recouped, So if either is found to be useful for another disorder, the manufacture fixed costs have been recovered since 1997. Here is some reading for you:
A Look at Drug Pricing 2020, Costs, and Why – “Redux”
The ICER found the price increases for both Rituxan and Humira could not be justified based upon the information supplied. A complaint by Colorado farmer Michael Costanzo who also uses Rituxan is legitimate. People are being priced out of the market and some are dying. I am too hard to kill and my body keeps trying to off me.
Run,
I picked Herman because he was on a list of famous Tennessee politicians not knowing that he was only on the list because he was born in Memphis. In any case to understand why the Tennessee Medicaid block grant was approved then one must backtrack the influence peddling. That turned out to be easier than I would have thought after I found the Azar link on his meeting with Nashville Health Care Council.
When things seem wrong then just look for the political influence behind those things. Whether one agrees with underlying reasons or not, there still should be no denying that political influence is how things get done, especially things that would on their face seem wrong.
Ron:
My Vulcan mind-meld does not work well while reading comments. It is limited as to distance and comprehension of the writers thoughts. Then too, this is not Jeopardy where I pose the question. You have to be clear or I may assume something else positive or negative.
Decisively this Block Grant is wrong as its passage is not to encourage healthcare for those who lack it, it is to limit or block healthcare. I would assume the new director will revoke the Block Grant. To wit, Azar used the same value added model to promote the price increases in Insulin pricing. With regard to Value Based pricing? Briefly, here is one example of how it worked with a sought after and life saving drug:
I have not even touched upon the value based pricing a PBM might also impose upon this drug in distribution, all of which is not transparent to the end customer.
Even the ICER (if you read my prior post) might not disagree with the increased pricing of this drug which equates to an ~ 700%. In the layman’s article I posted, the ICER did agree with the price increases all seven drugs to which each increase could not be justified by the proclaimed increased value of the manufacturer. Rituxan (#2) on the list has been out since 1997. The formulation has not changed and neither has the manufacture of it to my knowledge. The R&D costs and manufacture setup have probably been written off multiple time over. Does a $29,000 – $30,000 per litre of it in a solution make sense? In the ICER findings, whole sale price increased by 17% and retail was up 25% all based upon value added to which the ICER rejected.
Ultimately the question comes to mind, can we the citizens have faith in the pharma business to price drugs fairly? Azar did not give a damn and price the drug I described well above what was necessary to reap a good profit. And that is but one drug.
If God is omnipresent and omniscient then cynicism is next to godliness.
Run,
“… can we the citizens have faith in the pharma business to price drugs fairly?…”
[No. Not much else is as certain as that though. With 50/50 and Senate rules then deal making will bear strange bedfellows.]
https://www.reuters.com/article/us-usa-congress/senates-top-democrat-republican-seek-path-to-guide-50-50-chamber-idUSKBN29O2PA
anuary 19, 20215:38 PMUpdated 2 days ago
Senate’s top Democrat, Republican seek path to guide 50-50 chamber
By Susan Cornwell
WASHINGTON (Reuters) – Facing a 50-50 partisan split in the U.S. Senate, the chamber’s top Democrat and Republican discussed adopting a power-sharing deal similar to one struck two decades ago in similar circumstances, a Democratic spokesman said on Tuesday…
…
Recognizing that the vice president could not be a constant presence in the chamber, the 2001 agreement split committee memberships evenly and mandated that both leaders seek to attain an equal balance of the two parties’ interests when scheduling and debating legislative and executive business.
When one party has clear control of the Senate, it holds committee chairmanships along with a majority of committee seats and dictates the chamber’s agenda.
McConnell said last year that if the Senate did split 50-50 along party lines, he assumed the chamber would embrace a similar arrangement to that of 2001.
But in the talks with Schumer on Tuesday, McConnell also sought to keep the Senate’s legislative filibuster, according to his office. Some Democrats favor changing the rules so that legislation could pass on a simple majority vote. But McConnell wants to keep the rules requiring a super-majority of 60 votes to overcome a filibuster and advance legislation…
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwigydnqua3uAhV1SjABHe2WCe4QFjAAegQIAhAC&url=https%3A%2F%2Ffas.org%2Fsgp%2Fcrs%2Fmisc%2FR40486.pdf&usg=AOvVaw2gYRedGtb_Ihd69VsTv2yc
Block Grants – Federation of American Scientists