Senators Hear SB401 to Prevent Children's Medicaid Losses; Amendment Delays Effective Date to July 1, 2027

Senator Lara Lamar introduced Senate Bill 401 to the Tennessee Senate Health and Welfare Committee, saying the measure would prevent eligible children from being disenrolled from TennCare because of minor paperwork mistakes.

"What we do know out of all the Medicaid disenrollment, about nearly 70 percent have been for paperwork reasons," Lamar said during her presentation, arguing the bill would close coverage gaps that particularly harm children with chronic health issues. The committee received the bill, and an amendment (No. 12068) that changes the effective date to July 1, 2027, was moved, seconded and passed by voice vote.

Why it matters: lawnmakers and sponsors described the bill as a procedural fix intended to maintain continuity of care for children who remain eligible but are at risk of administrative disenrollment. Committee members pressed sponsors for the fiscal and programmatic effects of extending continuous eligibility or suspending reverification for affected children.

TennCare and fiscal concerns: TennCare legislative liaison TC Becker told the committee that a July letter from the Centers for Medicare & Medicaid Services (CMS) signaled the agency will not approve new or extended section 1115 demonstration authority to allow expanded continuous eligibility beyond what state Medicaid and CHIP plans already provide. "As a result of this change in policy, we have to assume that the state of Tennessee would bear the full cost of this proposed program," Becker said. Committee members noted the fiscal note in the packet was last year's estimate (federal $9,950,000; state $5,500,000). Sponsor Lamar and TennCare staff said that estimate is outdated and that the current state exposure would be approximately $15,000,000 because the federal match would not be available for expanded continuous eligibility.

Questions and follow-up: Senators asked TennCare for data on how many children who remain eligible are nonetheless being disenrolled during reverification; TennCare staff said they did not have that data on hand and would provide it to the committee. Senator Watson and others requested a revised fiscal note and clarification of the CMS determination before further action. Chairman Crowe and members agreed to roll the bill for two weeks to allow TennCare and fiscal staff to provide the updated information and analysis.

Next steps: The committee approved the amendment to SB401, recorded that the bill will go to the Finance committee, and agreed to revisit the bill after receipt of revised fiscal materials and enrollment data.