The federal government will soon be issuing guidance for states considering Medicaid block grants and per capita cap programs — a move that could pave the way for more states to consider Medicaid block grant systems. 

CMS Administrator Seema Verma announced the plans while speaking Tuesday in Washington D.C., where she applauded states that have “expressed a willingness to be held accountable for improving outcomes in exchange for greater flexibility and budget certainty.”

“Block grant and per capita cap proposals are two such alternative financing approaches,” Verma said. “We are encouraged by this interest. You will soon see guidance from us that lays out initial opportunities to test new approaches to delivering and financing care for certain optional adult populations.” 

States would receive a fixed amount of Medicaid funding under a block grant system, which could ultimately limit funding for providers, who have rallied hard against block grant efforts in the past.

Providers could also face more scrutiny under the under guidance based on Verma’s comments. She added that that the Medicaid Value and Accountability Demonstration won’t compromise important beneficiary protections, but instead “will inject rigorous accountability for outcomes, provide significant and unprecedented flexibilities for program operation, and offer opportunities for shared savings that can be reinvested back into Medicaid.”

In September, Tennessee officials released a first-of-its-kind proposal to convert its Medicaid program into a block grant system, which have previously been opposed by providers.

A final draft is expected to be submitted to the federal government this month. The estimated block grant amount for Tennessee is $7.9 billion. If finalized, it would make Tennessee the first state in the nation to receive its Medicaid funding this way.