TennCare

HOUSE BILL 372
By Hulsey

SENATE BILL 334
By Crowe

SB0334
001726
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AN ACT to amend Tennessee Code Annotated, Title 63;
Title 68 and Title 71, relative to TennCare.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 71, Chapter 5, Part 1, is amended by
adding the following as a new section:
71-5-177.
(a) This section is known and may be cited as the "Tennessee Medicaid
Modernization and Access Act of 2025."
(b) The general assembly finds that:
(1) The CMS 2024 final rule provides updated guidance on medicaid
reimbursements and specifically addresses the need for competitive
reimbursement rates for key services;
(2) TennCare's current medicaid fee schedule does not consistently align
with the medicare fee schedule or average commercial rates, which leads to
limited access for medicaid beneficiaries and inadequate compensation for
healthcare providers; and
(3) Modernizing TennCare reimbursements for key services in alignment
with the medicare fee schedule and the CMS 2024 final rule will improve
healthcare access and outcomes, particularly in rural and underserved areas,
support equitable healthcare provider compensation, expand patient access, and
improve quality outcomes for medicaid beneficiaries in this state.
(c) As used in this section:

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(1) "Average commercial rate" means the average commercial
reimbursement rate in this state as benchmarked against the state insurance
plan;
(2) "CMS" means the federal centers for medicare and medicaid
services;
(3) "CMS 2024 final rule" means the May 2024 guidelines set by CMS
updating medicaid reimbursement standards for key services;
(4) "Key services" means obstetrics-gynecology (OB/GYN), primary care,
outpatient mental health, and substance use disorder (SUD) services;
(5) "Medicare fee schedule" means the federal payment schedule for
services provided to medicare beneficiaries, as set by CMS; and
(6) "State insurance plan" means the group health insurance plan for
state employees created under title 8, chapter 27.
(d)
(1) TennCare reimbursements for key services in calendar year 2025
and subsequent years must be updated to match the medicare fee schedule or
the average commercial rate, whichever is higher. This subdivision (d)(1) may
be implemented through phasing in for specific key services, if necessary.
(2) The department of health, in consultation with the bureau of
TennCare, shall conduct an annual review to ensure TennCare reimbursement
rates align with changes in the medicare fee schedule and average commercial
rates and with the CMS 2024 final rule.
(3) A healthcare provider of key services that is entitled to receive
TennCare reimbursement who alleges a delay in payment or receives an
erroneous level of reimbursement pursuant to this subsection (d), may, in

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accordance with rules promulgated by the commissioner of health, submit a
written request for an administrative hearing, and the decision made after the
hearing is final.
(e)
(1) Healthcare providers receiving increases under this section may
receive additional incentive payments based on metrics for quality of care and
improved patient access, particularly in rural and underserved areas.
(2) The department of health shall consult the bureau of TennCare to
establish and enforce these quality and access metrics.
(f) The bureau of TennCare shall submit a request to CMS to modify the state
medicaid plan, as necessary, to implement this section.
(g)
(1) The department of health and bureau of TennCare shall actively seek
and apply for federal, private, or other available funds, and actively direct
available state funds, to support reimbursement adjustments under this section,
with particular attention to key services.
(2) It is the legislative intent that funds be annually appropriated in the
general appropriations act to cover administrative costs to implement this
section, including the costs of benchmarking, updating annual fees pursuant to
subsection (d), and overseeing the incentive program pursuant to subsection (e).
(h) Beginning February 1, 2026, and no later than February 1 of each
subsequent year, the department of health and the bureau of TennCare shall submit an
annual joint report to the health and welfare committee of the senate and the committee
of the house of representatives having jurisdiction over insurance, that details fiscal

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impacts, provider participation rates, access improvements, and outcome metrics for key
services impacted by this section.
(i) The bureau of TennCare and the department of health are authorized, as
necessary, to promulgate rules to effectuate this section. Rules must be promulgated in
accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter
5.
SECTION 2. This act is not an appropriation of funds, and funds must not be obligated
or expended pursuant to this act unless the funds are specifically appropriated by the general
appropriations act.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it,
and unless otherwise prohibited by the United States Constitution or the Tennessee
Constitution, this act applies to all TennCare reimbursements for key services occurring on or
after January 1, 2025.