Tennessee's TennCare shared savings plan is unique

(The Center Square) - Tennessee Gov. Bill Lee is tapping into TennCare's shared savings account to fund $100 million in emergency loans for counties affected by Hurricane Helene.

It's not the first time the state has pulled money from the account, which is the only waiver like it in the country, according to Lee.

The state applied for it during the Trump administration and it was approved after President Joe Biden took office, Lee said.

According to an explanation on the state's website, "Tennessee administers its Medicaid program (TennCare) under a specified spending cap (referred to as a budget neutrality cap), which considers historical state spending, inflation and future enrollment changes. If the state can operate successfully at a lower cost than the budget neutrality cap and maintain or improve quality, the state then shares in the savings that traditionally have gone to the federal government to enhance the TennCare program and improve the health of TennCare members and Tennessee communities."

Lee said the shared savings is designed for "the health and welfare of Tennesseans," so using the funds for disaster relief while the state waits for federal funding made sense. The communities are required to pay back the loans, which will replenish the fund, according to the governor.

"These dollars are ours. They're here. They're available," Lee said in announcing the program.

The state's fiscal year 2025 budget draws on more than $600 million of shared savings revenue to fund programs, according to a budget analysis from the Sycamore Institute.

The bulk of the shared savings plan, $31 million in FY 2025 and a $234 million total through FY 2031 will cover "some of the state’s share of Medicaid eligibility expansions for low-income mothers and children," according to the analysis.

The state is using $81 million in FY 2025 and $197 million through FY 2029 for its rural health initiative approved by the Tennessee General Assembly earlier this year. Another $11 million and $82 million total between FYs 2024-2031 will pay for a program that gives 100 diapers a month to Tennessee children under the age of 2 who are enrolled in the state's Medicaid program, according to the analysis.