Medicaid Coalition Letter to CMS Regarding TennCare 1115 Waiver Proposal

March 30, 2005

Dear Dr. McClellan,

The undersigned organizations write to express our grave concerns about the Section 1115 TennCare Waiver Amendment submitted on September 24, 2004 and revised on February 18, 2005. While many of us have a range of specific concerns about different provisions of the waiver, this letter highlights three crosscutting issues that would remove basic protections for Medicaid beneficiaries in Tennessee. If approved, this waiver would establish an extremely troubling precedent for Medicaid beneficiaries nationwide. These cross-cutting concerns include the request for "pre-approval" authority to make significant unspecified changes in the program to manage spending within a spending target; the proposed new definition of medical necessity; and far-reaching changes to the pharmacy benefit.

First, the waiver seeks "pre-approval" for a wide range of changes that the state could make at any point in the future without seeking specific authority from the Centers for Medicare and Medicaid Services (CMS). The waiver document lists possible future changes -- such as reducing mandatory or optional services to the lowest level approved in any southern state; expanding eligibility; and raising and/or imposing premiums or copayments on populations such as optional children - but the waiver does not limit the changes to these strategies. The Governor could make these or variations of these changes whenever he (or any future governor) at his sole discretion. As such, the "pre-approval" provision amounts to a request for virtually unfettered and unprecedented discretion to remove or modify federal standards and beneficiary safeguards.

If this "pre-approval" provision is approved, harmful changes affecting most beneficiaries and services in the program could be implemented -- whether or not the changes comport with the intent of federal Medicaid law or the purposes underlying the Medicaid program. This type of "blank check" waiver request was denied to Washington state, and we urge you to similarly reject Tennessee's request.

Secondly, we believe that the state should not be permitted to operate its program under the state's revised definition of medical necessity. As written, this definition undermines all beneficiaries' ability to obtain appropriate health care services, including the guarantee provided to children by the Early Periodic Screening Diagnosis and Treatment (EPSDT) benefit. We urge you to reject this definition for all Medicaid beneficiaries.

Specifically, the definition's requirement that the "least costly alternative" that is "adequate for the medical condition of the enrollee" be used represents a sharp departure from standard definitions of medical necessity in both public and private insurance programs. In addition, its failure to consider prevailing practices in the community, particularly where clinical tests relating to certain procedures are not available, opens the door for denials of care that treating physicians have determined, with sound basis, are necessary for their patients. Together, these features of the definition would allow for an arbitrary and essentially standardless system for approving or denying coverage.

We strongly believe that CMS should make it clear to Tennessee and to other states that this definition of medical necessity - which would serve as the gateway to all services for all Medicaid beneficiaries-- is not compatible the statutory provisions and objectives of the Medicaid program. Implicit or explicit approval would set a dangerous precedent for the nation.

The third issue of significant concern to our organizations is the potential for very stringent limitations on prescription drugs included in the waiver proposal. Many of us have a number of concerns about the changes that the state is proposing in this area, but we are particularly troubled by the state's request to eliminate coverage for two broad classes of medications - gastric acid reducers and antihistamines, and its request for authority to implement a drug formulary that would put certain unspecified drugs or classes of drugs on an excluded list, available only in extremely rare circumstances . The state has not proposed any clear criteria for determining which drugs or classes of drugs would fall within the excluded category. If approved, these changes would result in considerable suffering for Medicaid beneficiaries, and possibly higher Medicaid costs over the long term. Although over the counter alternatives are available for gastric acid reducers and antihistamines, many Medicaid beneficiaries would be unable to afford these costs, particularly because these drugs are often prescribed to treat chronic conditions. Both the two-drug exclusion and the formulary proposal would break new ground by authorizing a state to exclude entire classes of medications and by undermining federal drug rebate agreements.

At your confirmation hearing you expressed your belief that the waiver process should not be used to erode basic protections critical to the integrity of the Medicaid program. We hope that you will agree that Tennessee's proposal requires fundamental changes before it can receive federal approval. Thank you for your attention to our concerns.


African American Health Alliance
Alliance for Children and Families
Alzheimer's Association
American Association of People with Disabilities
American Association on Mental Retardation
American Congress of Community Supports and Employment Services
Association of Academic Physiatrists
Association of University Centers on Disabilities
Bazelon Center for Mental Health Law
Center for Medicare Advocacy, Inc.
Children's Defense Fund
Disability Service Providers of America
Families USA
Family Services of the Mid-South
Family Voices
Gay Men's Health Crisis
Generations United
HIV Medicine Association
Institute for Reproductive Health Access
Mental Health Association of Middle Tennessee
National Academy of Elder Law Attorneys
National Association for the Advancement of Orthotics and Prosthetics
National Association of Councils on Developmental Disabilities
National Association of Protection and Advocacy Systems
National Association of School Psychologists
National Association of Social Workers
National Citizens' Coalition for Nursing Home Reform
National Committee to Preserve Social Security and Medicare
National Council on Independent Living
National Family Planning and Reproductive Health Association
National Health Law Program
National Latino Council on Alcohol & Tobacco Prevention (LCAT)
National Medical Association
National Mental Health Association
National Multiple Sclerosis Society
National Senior Citizens Law Center
National Women's Law Center
National Family Planning and Reproductive Health Association
Out of Many One
Planned Parenthood Federation of America
Project Inform
Racial and Ethnic Health Disparities Coalition
Service Employees International Union
The Arc
Title II Community AIDS National Network (TIICANN)
United Cerebral Palsy
United Spinal Association
Voice of the Retarded
Volunteers of America