Welcome to Tuesday's Overnight Health Care.

Disagreements derailed a planned vote on a House panel's surprise medical billing legislation, Tennessee wants to block grant its Medicaid program, and the Sacklers are facing another lawsuit.

We'll start with news from Tennessee...

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Tennessee seeks to become first state to turn Medicaid into a block grant

Tennessee on Tuesday unveiled a proposal to convert its Medicaid program into a limited, block grant–type model, a controversial plan that, if approved, could be the first in the nation.

The proposal needs to be submitted to the Centers for Medicare and Medicaid Services for approval, after a 30-day state comment period. Imposing block grants in Medicaid has long been a major conservative goal and has been encouraged by the Trump administration.

Administration officials have drafted a guidance that would make it easier for states to apply for a capped payment or block grants. That document has been under review by the White House Office of Management and Budget for months, but it could be released at any time, especially now that Tennessee has a proposal that could be touted as a model for others.

Prognosis: The administration has been quietly trying to sell states on the merits of imposing block grants without congressional approval, so this could be a good sign for Tennessee. No states have been granted permission to date, but if Tennessee's plan is approved, it would likely embolden other Republican-led states. The proposal will also mobilize opposition from patient advocacy groups, who have already been protesting since the state passed a bill.

Details: It's not a "true" block grant, but it's close enough to put activists on alert. It also could be what the future looks like if the administration hopes to find the strongest model that will survive legal challenges.

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Like a traditional block grant, instead of the federal government matching state dollars, the state is asking for a lump sum payment-- in this case, nearly $7.9 billion. The amount would be adjusted for inflation, but unlike a traditional block grant, it could increase in the future based on enrollment. If enrollment drops, the block grant amount would not decrease.

Read more on the plan here.

House panel delays vote on surprise medical bills legislation

Stopping surprise medical bills is a priority for both parties. But that doesn't mean it's going to be easy.

The latest evidence: The House Education and Labor Committee called off plans to vote on legislation this week on surprise medical bills because of divisions among lawmakers on the panel, according to House aides and lobbyists.

The holdup: The panel was planning to vote on a bill similar to the measure passed out of the House Energy and Commerce Committee, but some lawmakers are objecting to that measure, and pushing for an approach favored by doctors and hospitals.

Lobbying: There are lots of ads on this if you turn on the TV. The bipartisan Energy and Commerce legislation essentially sets the payment rate that an insurer would pay the doctor. Doctors and hospitals are lobbying hard against that approach, including by spending millions of dollars in ads, warning it would lead to damaging cuts to doctors' pay.

Read more here.

EXCLUSIVE: Swing-state voters oppose 'surprise' medical bill legislation, Trump pollster warns

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A polling memo obtained by The Hill could put President Trump Donald John TrumpFederal prosecutor speaks out, says Barr 'has brought shame' on Justice Dept. Former Pence aide: White House staffers discussed Trump refusing to leave office Progressive group buys domain name of Trump's No. 1 Supreme Court pick MORE in a difficult position on surprise medical bills.

Trump's campaign pollster is warning that swing-state voters oppose a bipartisan bill meant to protect patients from "surprise" medical bills they receive when going out-of-network for emergency care.

The polling data comes as Trump is considering whether to support a bipartisan measure that would put a federally mandated rate cap on the amount that insurers have to pay doctors for out-of-network emergency care.

"Swing state voters see Surprise Medical Billing as a major problem and siding with Insurers who look to sidestep paying these bills is crossways with overwhelming voter sentiment," Tony Fabrizio wrote in the polling memo.

Insurers vs. doctors: Bipartisan legislation to fix surprise medical bills has already passed the House Energy and Commerce Committee, but a massive lobbying push by hospitals and doctors' groups has complicated progress. Insurers are backing the legislation, which gives the opposition an easy boogeyman. But there are special interests on both sides, and the most vocal opposition comes from a "dark money" group funded by private-equity owned doctors-- the ones who don't belong to any insurance networks and profit the most from sending surprise bills.

"An overwhelming majority of voters in each state agree emergency care should be covered by health insurance companies regardless of network," Fabrizio wrote. "Any policy to address this issue that appears to side with the insurance companies could backfire because they are seen as the problem."

Read more on the memo here.

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North Carolina sues Sackler family over opioid epidemic

North Carolina's attorney general has filed a new lawsuit accusing members of the Sackler family of deliberately ignoring the harms of OxyContin in order to boost the prescription painkiller's sales as well as profits for themselves.

In the lawsuit filed Tuesday, North Carolina Attorney General Josh Stein (D) accused eight members of the Sackler family of being the driving forces behind Purdue Pharma and its work to deceptively market and sell OxyContin.

Purdue manufactures OxyContin, the drug widely blamed for helping drive the country's opioid crisis. The company, which is owned by the Sacklers, is facing lawsuits from virtually every state in the country, as well as thousands of cities, counties, Native American tribes and others seeking restitution for the opioid epidemic.

The company filed for bankruptcy protection Sunday night as part of a proposed settlement agreement, but North Carolina is one of 24 states, plus the District of Columbia, that has refused to settle.

The Sacklers are hoping that Purdue's bankruptcy will shield them from lawsuits like the one filed by Stein, but it's not clear if the bankruptcy judge will allow it.

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The states believe the settlement is not nearly hard enough on the Sacklers and Purdue, especially since neither the family nor the company would be required to admit any wrongdoing. They want to pursue the Sacklers for a full accounting.

Read more here.

Health officials in California issue warning after new vaping death

A California county is warning residents not to use e-cigarette products after connecting a local death to the devices.

Tulare County's Health and Human Services Agency issued the warning on Twitter late Monday after confirming an individual died from complications related to vaping.

Dr. Karen Haught, Tulare County public health officer, told the Los Angeles Times the resident's death is "suspected to be related to severe pulmonary injury associated with vaping."

"The Tulare County Public Health Branch would like to warn all residents that any use of e-cigarettes poses a possible risk to the health of the lungs and can potentially cause severe lung injury that may even lead to death," Haught said in a statement to local news outlets. "Long-term effects of vaping on health are unknown. Anyone considering vaping should be aware of the serious potential risk associated with vaping."

Read more on the warning here.

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What we're reading

With ominous TV spots and a senior 'strike force,' AARP launches an all-out attack on pharma (Stat News)

'Blood money'? Purdue settlement would rely on opioid sales (Associated Press)

Health insurance that doesn't cover the bills has flooded the market under Trump (Bloomberg)

Air ambulances woo rural consumers with memberships that may leave them hanging (Kaiser Health News)

State by state

Opioid-related deaths decline in Maryland for second straight quarter (The Washington Post)

Ohio's pharmacy benefit managers back in spotlight of Medicaid-oversight panel (Columbus Dispatch)

A bobble on vaccines tarnished Gavin Newsom Gavin NewsomOVERNIGHT ENERGY: California seeks to sell only electric cars by 2035 | EPA threatens to close New York City office after Trump threats to 'anarchist' cities | House energy package sparks criticism from left and right California seeks to sell only electric cars by 2035 EPA head questions connection of climate change to natural disasters MORE's first legislative year, Capitol experts say (Sacramento Bee)

From The Hill's opinion page:

Fixing America's heath-care system is going to require radical reform: price caps

Business, ballots and battling opioids: Why the Universal Postal Union benefits the US

Market model for vaping and pot is creating a public health crisis