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TennCare outlines MMIS modernization pivot and new timeline, says strategy change will reduce long‑term costs
Summary
TennCare told the committee it has shifted its Medicaid Management Information System strategy following federal flexibilities and expects lower out‑year spending, but said IT remains a significant and ongoing budget item requiring continuing maintenance and federal matching.
Members pressed TennCare about its Medicaid Management Information System (MMIS) investment, including cost, matching rates and schedule. TennCare acknowledged the project is a major state IT effort and said the agency recently pivoted its approach after federal guidance allowed additional flexibilities.
"We pivoted from a modular strategy to just a wholesale replacement strategy," CFO Zane Sills told the committee, adding the change should reduce out‑year spending compared with the previous plan. Sills said the MMIS program accounted for a peak in IS spending but that the agency is projecting the IS budget will come down and level off. He placed TennCare's IT spend at roughly 3.3% of the agency's total budget and about 1.7% of state‑dollar spending after enhanced federal matches.
Committee members asked who pays for ongoing maintenance. Sills explained federal matches vary: many state administrative Medicaid costs are matched at 50/50; IT maintenance is matched at approximately 75.25% (state pays 25%), while new implementation work has historically had higher federal participation (about 90.10% federal in implementation phases). "If it's maintenance, it's matched at 75.25. So the state pays 0.25, the feds pay 75¢," Sills said.
TennCare emphasized the program will require continuing modular additions once the core system is in place, because federal policy, statutory changes and program adjustments create ongoing requirements for eligibility and benefits systems. The agency did not commit to the previously cited January 2027 finish date, saying the timeline has shifted with the new strategy and further details would be provided to the Fiscal Review Committee and the Ways and Means Committee.
Members asked for regular updates; the agency agreed to follow up with the committee on revised timelines, total obligations, and the split between federal and state costs as the modernization work continues.
