Tennessee's Medicaid System and the Impact of the One Big Beautiful Bill Act

As the gubernatorial election in Tennessee approaches, candidates are concentrating on various critical issues. Among these, the state's preparedness for the One Big Beautiful Bill Act (OBBBA) and its Medicaid requirements remains under-discussed. This oversight could have significant implications for both regulatory compliance and fiscal management.

The OBBBA, enacted by the previous administration, mandates states to verify Medicaid enrollee addresses, prevent duplicate enrollments across states, and comply with error rate standards to avoid fiscal penalties. It also introduces work or volunteer requirements for certain Medicaid recipients, highlighting the need for robust administrative systems.

Proper implementation of these requirements is crucial. A recent report by the Centers for Medicare & Medicaid Services (CMS) found that improper Medicaid payments amounted to $31.1 billion nationally in 2024. These errors predominantly resulted from incomplete documentation and administrative oversights, not intentional fraud, pointing to systemic inefficiencies exacerbated by outdated infrastructure and fragmented data systems.

Systemic Challenges in Tennessee’s Medicaid System

Tennessee faces notable challenges in this area. A federal court identified systemic errors within the state's Medicaid Eligibility Determination System, which led to mistaken coverage terminations for thousands. Furthermore, an earlier investigation revealed that Tennessee incurred approximately $15.6 million in payments for individuals with multiple Medicaid ID numbers due to these systemic issues.

The OBBBA’s verification and anti-duplication mandates aim to rectify these errors, emphasizing the necessity for reliable and interconnected systems. Historically, the federal government shouldered most implementation costs with minimal penalties for non-compliance, discouraging investment in essential technology. Now, with financial repercussions for non-compliance, Tennessee must urgently modernize its systems.

Medicaid Compliance and Strategic Investments

The administrative workload tied to these changes is substantial. Despite Tennessee's decision not to expand Medicaid under the Affordable Care Act, the impact of the OBBBA provisions remains significant. Non-compliance could lead to reduced federal funding for Medicaid services, adversely affecting low-income residents.

Learning from neighboring states could offer valuable insights. For instance, Georgia's experience with Medicaid work requirements highlighted the risks of heavy outsourcing and system inefficiencies. In contrast, North Carolina skillfully managed Medicaid expansion by balancing contractor expertise with robust governmental oversight.

Stan Soloway, Chairman of the Center for Accountability, Modernization, and Innovation, emphasizes the critical need for these reforms based on his extensive experience in policy and program management. By addressing these issues directly, Tennessee can set a precedent for Medicaid system improvements nationwide, securing efficient administration, protecting patient coverage, and maintaining accurate billing.