TennCare director touts waiver savings and proposes Pathway to Independence pilot to bridge beneficiaries into private coverage

TennCare Director Steven Smith told the Senate Commerce and Labor Committee that the Medicaid program has achieved unprecedented savings under a 10‑year waiver and proposed a new four‑year pilot, "Pathway to Independence," to help families transition from TennCare to private insurance.

"We will provide 12 months of insurance up to $2,000 total limited to those who do not exceed 250% of the federal poverty level," Smith said, describing a capped premium‑assistance model that also requires participants to pay $15 per month (or the actual premium if less than $15).

Smith framed the proposal as part of a broader shared‑savings strategy the state negotiated with federal partners. He told the committee that, in the first four years of the waiver, TennCare has secured more than $1,300,000,000 in savings and directed more than $5,000,000,000 in additional combined state, federal and assessment funding to providers.

Why it matters: Smith said the pilot aims to reduce churn — the pattern in which people who lose Medicaid temporarily re‑enroll shortly afterward — by helping them secure private coverage and become accustomed to the private insurance market. He described the program as experimental and emphasized it is untested nationally: "We don't know if this is going to work," Smith said, adding, "If this pilot is successful, if it works, it will be transformational."

Committee members pressed for details about program mechanics and fiscal risk. Senator Reeves asked about the impact of pending assessment changes on hospitals; Smith replied that certain directed payments that exceed 110% of Medicare (including hospital and some ambulance payments) will need to be reduced beginning in 2028, with annual reductions until payments reach 110% of Medicare. Dr. Victor Wu, TennCare's chief medical officer, described related pilots such as HealthStarts, which focuses on social determinants of health and a closed‑loop referral platform (Tennessee Community Compass) intended to help local partners sustain services after grant funding ends.

Smith and his team also addressed provider rates, behavioral‑health utilization (including ABA therapy), and the program's use of shared‑savings dollars for both recurring and nonrecurring investments. Katie Evans, who leads TennCare's long‑term services programs, told senators that Employment & Community First (ECF) choices has a wait list of about 1,900 people and that the Katie Beckett program now serves nearly 5,000 children, up from the initial projection of about 3,000.

What happens next: The committee voted to forward the Division of TennCare FY27 budget to the Health Committee. The motion was made by the chair and seconded by Chairman Yeager; the chair announced the budget moved forward.