AG: Tennessee has right to cancel Medicaid expansion

Friday, January 23, 2015, Vol. 39, No. 4

NASHVILLE (AP) — Federal Medicaid officials and the state's attorney general on Tuesday confirmed that Tennessee could end Gov. Bill Haslam's proposal to cover 200,000 low-income people without penalty.

Attorney General Herbert Slatery, who was Haslam's chief legal adviser before being named attorney general last year, said in a legal opinion that the state "would retain the ability to suspend or terminate the demonstration program" as long as it provides proper notice and phase-out procedures.

But Slatery said his office lacks "sufficiently specific information" to determine how long it would take to process 200,000 people off the state's health care rolls.

The opinion came as the Senate Judiciary Committee held a hearing later Tuesday to evaluate what Chairman Brian Kelsey has described as legal issues surrounding the governor's proposal.

During his opening statements, Kelsey voiced his opposition to the proposal and was criticized shortly afterward by committee member Doug Overbey, who accused Kelsey of promoting his position on the plan, and questioned the need for the hearing.

"You mentioned that you intended for this meeting only to address legal issues, but I've heard many comments unrelated to legal issues; and a lot of opinion, and a lot of conjecture," said Overbey, R-Maryville. "So, I guess, I'm wondering why are we here?"

Haslam has called a special legislative session next week to take up his Insure Tennessee proposal that would be paid for mostly with federal Medicaid dollars, with state hospitals making up any extra costs. Slatery said the state could use an existing voluntary hospital assessment fee to make up the difference when the federal match rate drops from 100 percent to 95 percent in 2017.

The governor has stressed the plan would come at no extra cost to the taxpayers, and that the state could drop the program if the finances don't work out as planned.

But some fellow Republicans in the Legislature — including members of Tuesday's committee — have raised questions about whether the federal government would go along with the state extracting itself from the program funded through President Barack Obama's health care law.

Haslam's office on Tuesday released a letter from Health and Human Services Secretary Sylvia Burwell assuring the state that it could drop out of the program down the road with no financial penalty and no reduction in federal matching rates.

In his opinion, Slatery cited language on the Centers for Medicare and Medicaid Services website that says: "A state may choose whether and when to expand, and, if a state covers the expansion group, it may decide later to drop the coverage."

Slatery cited the 2005 cuts of 170,000 TennCare enrollees as a precedent for removing people from the expanded Medicaid program as long as the state conducts reviews about whether individuals would be eligible for coverage under other available categories. Those procedures were upheld in a 2005 federal appeals court ruling, he said.

Thomas A. Scully, a former administrator of the Centers for Medicare and Medicaid Services who gave TennCare its first federal waiver, spoke to reporters before Tuesday's hearing. Scully said Kelsey invited him to testify, but seemed to change his tune when he found out Scully supports Haslam's plan.

"Considering I'm a Republican, I think he expected me to come out and say I didn't like the waiver," Scully said. "I think you'd be nuts in Tennessee not to do this. I don't like provider taxes, but the fact is, it's set up in a way that there's zero risk to Tennessee."

Kelsey said after the hearing that he followed up with a message on Scully's cellphone Tuesday morning inviting him to testify.