Subcommittee advances bill to seek temporary TennCare waiver aimed at helping rural hospitals

Representative Baum presented House Bill 18 and told the TennCare Subcommittee that the measure would ask the Lee administration and TennCare to seek a federal waiver to create a conservative, temporary TennCare expansion. "If we were to flip patients from uncompensated care to compensated care, then it would help, all of our hospitals, including our rural hospitals, stay in business," Baum said.

The measure would create a new eligibility group for low-income Tennesseans who earn just above current TennCare income limits. Under the bill as described in committee, beneficiaries in the expanded group would be eligible for benefits for no more than one year during any two-year period and no more than five years over the course of their lives. The bill contemplates a 90 percent federal and 10 percent state funding match for the expansion and would ask that the waiver be structured to preserve that match.

Why it matters: proponents argued the change would convert uncompensated hospital care (services with no insurance payment) into Medicaid-covered care, improving hospitals' revenue and helping rural facilities remain open. Baum said the time limits mirror limits used in 1996 federal welfare reform (TANF) and would prevent the expansion from becoming an open-ended entitlement.

Committee discussion focused on funding, scope and feasibility. Representative Sabiki asked whether people who lose TennCare after a pay increase could qualify for the temporary benefits; Baum said current TennCare recipients would not be subject to the time limits while actively enrolled under existing rules, but individuals who later fall into the coverage gap could use the temporary program, though the limits might start "the clock" on their lifetime eligibility.

Committee members raised questions about hospital finances and reimbursement. Baum said 20 hospitals in Tennessee have closed since about 2010, most in rural areas, and argued that shifting people from uncompensated care to Medicaid — even at Medicaid reimbursement rates below private insurance — would improve facility revenue. Other members cautioned that closures stem from multiple factors and that Medicaid reimbursement does not fully cover costs.

Fiscal and program details discussed in committee included a fiscal note reported in the transcript: a state cost estimate of $234,000,000 and an expectation (as stated by a committee member) of more than $2,000,000,000 in federal spending for the program. Baum said he would encourage the Lee administration and TennCare to seek to include the new population in the state's block grant approach so savings could return to the state; he also said the waiver should include the stated 90/10 federal match as a condition the state would accept.

Formal action: the committee called the previous question and voted on House Bill 18. The clerk announced the result as seven ayes and zero noes. The bill was advanced to the full Insurance Committee.

Next steps and limits: Baum and members repeatedly said the waiver outcome would depend on federal approval and negotiation; the committee did not direct staff to implement the program absent federal agreement. The transcript records no additional amendments or implementation dates. The meeting closed with adjournment after the single bill vote.