Performance Audit of Selected Programs and Activities of the Division of TennCare
Learn how the AI-generated research projects were createdOverall Conclusion
The Division of TennCare has made progress in implementing TennCare III initiatives, unwinding renewals, and maintaining cybersecurity controls, but faces ongoing risks in behavioral health provider network adequacy, HCBS transition data issues, and MMIS modernization complexity; continued management attention, transparency, and CMS collaboration are essential to sustain program integrity and compliance.
Source Document
Audit Scope
We have audited the Division of TennCare (the division) for the period July 1, 2021, through May 31, 2024. Our audit scope included assessments of program effectiveness, efficiency, internal control, compliance, prospective analyses, and compliance with provisions of laws, regulations, policies, procedures, contracts, and grant agreements in the following areas: the division’s process for shared savings from the TennCare III waiver; the division’s assessment of the behavioral health provider network; the division’s transition process to a new Fiscal Employer Agent for home- and community-based services; the division’s compliance with federal requirements for the unwinding renewal process; the division’s process for cybersecurity over information systems; and the division’s plan to replace the Medicaid Management Information System. Additionally, our audit scope included follow-up on a prior audit finding in the division’s episodes of care strategy for payment reform. For our sample design, we used nonstatistical audit sampling; we conducted the audit in accordance with GAO [GAGAS]. The Division of TennCare’s management is responsible for internal controls and compliance with laws and contracts.
Key Findings Summary
Observation 1: Division management should continue educating stakeholders on TennCare III shared savings initiatives and related programs; the division has drawn down over $630 million in shared savings in the first two years of the TennCare III waiver (approximately $331 million in year 1 and $303 million in year 2). The diaper program for TennCare children…
Observation 3: The division’s information systems cybersecurity controls were reviewed with no findings; however, risks and planning remain for the MMIS modernization project, including Project Iris planning costs (~$105 million by March 15, 2024) and a target go-live of January 2027; ongoing risk management and CMS collaboration are required to ensure compl…
Observation 4: Repeat finding from Single Audit 2023-023 – CoverKids eligibility process deficiencies resulted in $31,499 in federal and state questioned costs; corrective action plans are required and will be monitored by the federal awarding agency; prior audit finding related to episodes of care strategy for payment reform was resolved.
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AI-Assisted
AI Scope Summary
Evaluate TennCare’s management of TennCare III shared savings, assess behavioral health network adequacy, oversee the HCBS transition to a new Fiscal Employer Agent, ensure unwinding renewal compliance and CMS reporting, monitor the MMIS modernization, and review resolution of prior audit findings.
AI-Generated Insight
This audit underscores how innovative Medicaid waiver programs, like TennCare III, create opportunities for enhanced services and shared savings but require robust governance to balance flexibility with accountability. Key risk areas include behavioral health network adequacy, timely renewals during unwinding, and the complexity of replacing an aging MMIS. Tennessee’s proactive transparency and investments in BH providers reflect a strong commitment to improving access and outcomes, but sustained monitoring, action on inactive providers, and rigorous data governance will be critical as the program scales over the next several years.
Audit Objectives
Assess the Division of TennCare’s process for shared savings from the TennCare III waiver and the allocation of those savings to initiatives, including transparency and accountability.
Assess the division’s assessment and management of the behavioral health provider network to ensure adequate access and alignment with federal requirements.
Evaluate the division’s transition to a new Fiscal Employer Agent for home- and community-based services and its impact on member access and service delivery.
Assess compliance with federal requirements related to the unwinding renewal process for Medicaid eligibility and the accuracy of CMS reporting.
Assess information systems cybersecurity controls and governance, and the progress of the Medicaid Management Information System (MMIS) modernization project to ensure compliance with federal requirements and user needs.
Follow up on the prior audit finding related to the division’s episodes of care strategy for payment reform.
Audit Findings (5)
Observation 1: Division management should continue educating stakeholders on TennCare III shared savings initiatives and related programs; the division has drawn down over $630 million in shared savings in the first two years of the TennCare III waiver (approximately $331 million in year 1 and $303 million in year 2). The diaper program for TennCare children under age two is described as a pilot without a recurring budget allocation.
Observation 3: The division’s information systems cybersecurity controls were reviewed with no findings; however, risks and planning remain for the MMIS modernization project, including Project Iris planning costs (~$105 million by March 15, 2024) and a target go-live of January 2027; ongoing risk management and CMS collaboration are required to ensure compliance and user needs.
Observation 4: Repeat finding from Single Audit 2023-023 – CoverKids eligibility process deficiencies resulted in $31,499 in federal and state questioned costs; corrective action plans are required and will be monitored by the federal awarding agency; prior audit finding related to episodes of care strategy for payment reform was resolved.
Observation 2: The division and the TennCare Connect call center worked together to implement the comprehensive 12-month unwinding renewal process to ensure timely member renewals, maintain health care coverage, and prevent unnecessary terminations; renewals were initiated for about 1.5 million of 1.7 million members; call center staffing and volume increased during the unwinding; delays affected about 2% of HCBS members during the transition, with reimbursements issued and contract changes implemented to mitigate future risks.
Emerging Issue: Behavioral health provider network adequacy amid rising demand, with national and state data showing gaps in active provider capacity and several counties with low provider ratios; the division has invested heavily in behavioral health providers but faces ongoing challenges in maintaining an adequate, accessible network and addressing inactive providers.
Recommendations (6)
Continue to provide transparency and accountability to the General Assembly and the public regarding shared savings and future TennCare III initiatives.
Monitor and document the unwinding renewal process; provide the overall unwinding results to stakeholders, including the public and the General Assembly, and continuously improve call center wait times and outreach materials.
Continue identifying risks and monitoring the MMIS modernization project to ensure the new system meets user needs and complies with CMS requirements; maintain collaboration with CMS and vendors during design, development, and implementation phases with go-live targeted for January 2027.
Assess and strengthen the behavioral health provider network to address growing needs; monitor network accessibility standards, reduce inactive providers, and proactively expand the network across rural and urban counties.
Mitigate transition risks in HCBS by ensuring data sharing between FEAs, maintaining records for 10 years, monitoring the Electronic Visit Verification system, and providing data dashboards to stakeholders; address delays experienced during the 2023 FEA transition and apply contractual changes to prevent recurrence.
Develop corrective action plans for CoverKids eligibility deficiencies identified in the 2023 Single Audit (finding 2023-023) and submit to the federal awarding agency; implement corrective actions and provide updates to CMS; ensure full corrective action is achieved.