Tennessee moves to defend Medicaid waiver from legal challenge

4 minute read

A COVID-19 patient connected to a ventilator tube in the Intensive Care Unit (ICU) at the Centre Cardiologique du Nord private hospital in Saint-Denis, near Paris, amid the coronavirus disease pandemic in France, May 4, 2021. REUTERS/Benoit Tessier

Register now for FREE unlimited access to Reuters.com
  • Lawsuit aims to undo Trump-era waiver that allows for Rx restrictions
  • Plaintiffs trying to stop "beneficial policy reform" says Tenn. AG

(Reuters) - Tennessee is seeking to intervene in a lawsuit that aims to undo the Trump administration's approval of a waiver allowing the state's Medicaid program to restrict prescription drug coverage and capping its expenditures.

In a motion filed Thursday in Washington, D.C., federal court, Tennessee, represented by Scott Keller of Lehotsky Keller, said it had a "unique sovereign interest in defending its state Medicaid program," called TennCare, which it said promoted cost savings and efficiency.

The lawsuit was filed against the U.S. Department of Health and Human Services in April on behalf of TennCare enrollees by lawyers at Tennessee Justice Center and the National Health Law Program, along with Joel McElvain and others at King & Spalding.

Register now for FREE unlimited access to Reuters.com

Tennessee Justice Center Executive Director Michele Johnson said she was not surprised by Tennessee's intervention.

"They had an ideological perspective that they share with the Trump administration, and they are pursuing that ideological perspective even though it would harm Tennesseeans," she said.

Tennessee said in its motion that the plaintiffs did not oppose its intervention, and that it had not had a chance to confer with HHS. The agency did not immediately respond to a request for comment.

"The corporate plaintiffs behind this lawsuit, who consistently sue the state, are trying to stop a significant and beneficial policy reform for our state with a federal lawsuit filed in D.C.," Tennessee Attorney General Herbert Slatery said in a statement. "Our office is intervening to make sure Tennessee's unique healthcare infrastructure is appropriately defended."

Medicaid, which covers low-income and disabled people, is run jointly by HHS and state governments. The Medicaid law allows HHS to grant states waivers from the program's usual requirements for "experimental, pilot or demonstration projects" that it finds likely to promote the objectives of the Medicaid program.

TennCare has been operating under a waiver since the mid-1990s, allowing it to require beneficiaries to enroll in managed care plans and to forego the usual three months of retroactive coverage.

In January 2021, shortly before President Donald Trump left office, HHS approved a new 10-year waiver for TennCare. This new waiver includes a cap on funding tied to enrollment, and allows the state to use up to 55% of any unspent federal funds below that cap for other state health programs.

It also allows TennCare to place new limits on coverage of prescription drugs.

In their lawsuit, the plaintiffs said that the Trump administration had approved the waiver without a public notice and comment period, violating the Administrative Procedure Act. They also said that the waiver went beyond the authority granted by the Medicaid statute.

The plaintiffs further alleged that the waiver of three months' retroactive coverage, which has been in place since 1994, no longer qualifies as an experimental program.

The lawsuit is one of several pending legal battles over Medicaid waivers granted to states in the last days of the Trump administration.

The case is McCutchen et al v. Becerra et al, U.S. District Court, District of Columbia, No. 21-cv-01112.

For plaintiffs: Gordon Bonnyman of Tennessee Justice Center, Joel McElvain of King & Spalding, Jane Perkins of National Health Law Program and others

For HHS: Not immediately available

For Tennessee: Scott Keller of Lehotsky Keller

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.