Insurance, Health, Accident

Plain English Breakdown

The bill does not specify the exact date when it will take effect.

Stabilizing Healthcare Access with Reimbursement Protections (SHARP) Act

This bill requires health insurance companies to increase payment rates and benefit limits based on inflation for certain policies, while allowing exceptions and providing oversight by the commissioner of commerce and insurance.

What This Bill Does

• Requires health insurance companies to raise in-network reimbursement rates each year by at least the amount of inflation, but no more than 4% unless approved by the commissioner.
• Health insurance companies must also increase annual benefit maximums for individual and group policies based on inflation, with a cap of 4% unless approved by the commissioner.
• Requires health insurance companies to file documentation showing they are following these rules each year.
• Allows health insurance companies to ask for an exemption if following the rules would cause financial problems or threaten their stability.
• Encourages health insurance companies to make catch-up adjustments for rates and benefits that haven't changed in five years, with a cap of 20%.

Who It Names or Affects

• Health insurance companies
• People who have health insurance policies covered by this bill

Terms To Know

Annual benefit maximum

The most a policy will pay for healthcare services in one year.

Inflation index

A measure of how much prices have gone up over the past year, based on the consumer price index (CPI-U).

Limits and Unknowns

• The bill does not apply to policies covering fewer than 100 people or self-insured plans.
• Health insurance companies can ask for a waiver if following the rules would cause financial hardship.

Official Summary Text

Beginning January 1, 2027, and
on
January 1 of each year thereafter,
this bill generally requires
each health insurance entity
, excluding plans
governed exclusively by the federal Employee Retirement Income Security Act of 1974 (ERISA
), to do all of the following with regard to
all applicable policies issued, amended, or renewed on or after January 1, 2027
:



Adjust all in-network reimbursement rates upward by no less than the annual percentage increase in the inflation index for the preceding calendar year, which may be applied by provider type or specialty or service category
.



Adjust annual benefit maximums under individual and group policies upward by no less than the annual percentage increase in the inflation index for the preceding calendar year, which may be applied by provider type or specialty or service category
.



Cap each annual increase at 4%, even if the inflation index exceeds 4%, unless otherwise approved by the commissioner of commerce and insurance.

However, the provisions above do not apply to
(
i
)
p
olicies covering fewer than 100 enrollees
,
(
ii
)
s
elf-insured plans governed exclusively by ERISA
,
(
iii
)
m
edicare advantage or TennCare managed care plans operating under federal waiver authority
,
(
iv
)
o
ut-of-network provider reimbursement rates
,
or

(
v
)
a
plan granted a temporary exemption by the commissioner.

This bill requires adjustments to
be included in provider contracts, reimbursement schedules, or benefit documents provided to the commissioner
of commerce and insurance ("commissioner")
as part of rate or form filings.

ANNUAL REPORT

This bill requires the commissioner to
develop a public annual report identifying health insurance entities in compliance with
this bill.
Health insurance entities
must
file with the commissioner, no later than April 1 of each year, documentation of compliance with the inflation adjustment requirement.

The commissioner
must
monitor and review rate filings submitted by health insurance entities to ensure that adjustments in premiums are proportionate and justified in relation to the inflation index-based r
eimbursement updates.

WAIVER

This bill authorizes a
health insurance entity
to
request a waiver from the requirements of this
bill
by submitting to the commissioner an actuarial certification demonstrating that compliance would cause material financial hardship or jeopardize solvency.

The commissioner may grant a full or partial exemption for no more than one calendar year per filing.

CATCH-UP ADJUSTMENT

This bill authorizes a
health insurance entity
to
voluntarily implement a one-time catch-up adjustment to any in-network reimbursement rates or annual benefit maximums that have remained unchanged for at least five consecutive calendar years prior to the effective date of this
bill
. The catch-up adjustment may equal the cumulative CPI-U change over that five-year period, subject to a cap of

20%. Voluntary adjustments must be filed with the commissioner within 60 days of implementation. A health insurance entity may prioritize adjustments for rural and
small practices.

QUALIFYING CATCH-UP ADJUSTMENT

This bill authorizes a
health insurance entity
to
voluntarily implement a qualifying catch-up adjustment
as described above
on or before December 31, 2029.
However, b
eginning January 1, 2030, a health insurance entity
must
implement a catch-up adjustment to any in-network reimbursement rates or annual benefit maximums that
(i) h
ave remained unchanged for five consecutive calendar years prior to the effective date of this
bill
and

(
ii
)
f
all within a line of coverage subject to regulation
by this state
.

Th
e mandatory catch-up adjustment
occurring on or after January 1, 2030
must equal the cumulative CPI-U increase for the frozen period, subject to a cap of

20%.

COMPLIANCE MONITORING

This bill requires the commissioner to
establish procedures to monitor compliance, review filings, and enforce catch-up adjustments
as described above
. A health

insurance entity that maintains a full provider network and makes good-faith efforts to comply with this
bill
is eligible for safe harbor protections, subject to review by the attorney general or designated legal counsel.

This bill authorizes t
he commissioner
to
prioritize review and enforcement of this
bill
in counties identified as provider shortage areas or health professional shortage areas. The commissioner
must
ensure that small or rural providers receive equitable consideration in inflationary adjustments.

This bill prohibits a
health insurance entity
from
reduc
ing
the size of in-network provider panels in a discriminatory manner as a response to inflationary adjustments. The commissioner
must
review provider network adequacy as part of rate oversight under this
bill
.

This bill authorizes t
he department of commerce and insurance to allocate appropriations, hire additional staff, and procure technology necessary to support CPI tracking, compliance review, and public transparency.

The commissioner
must
issue a transition timeline and guidance no later than 90 days after the effective date of this act, including grace periods for systems integration.

The commissioner
must
encourage insurers to conduct and submit multi-year rate reviews in conjunction with inflation index
-based adjustments.

RULEMAKING

This bill authorizes the
commissioner to promulgate rules to implement this
bill.

Current Bill Text

<BillNo> <Sponsor>

SENATE BILL 2036
By Harshbarger
SB2036
011551
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 8 and
Title 56, relative to health insurance.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. This act is known and may be cited as the "Stabilizing Healthcare Access
with Reimbursement Protections (SHARP) Act."
SECTION 2. Tennessee Code Annotated, Title 56, Chapter 7, Part 10, is amended by
adding the following as a new section:
(a) As used in this section:
(1) "Annual benefit maximum" means the dollar cap on total covered
services paid per insured individual, per policy year, where applicable;
(2) "Health insurance entity":
(A) Means an insurance company, managed care organization,
health maintenance organization (HMO), or third-party administrator
offering or administering health coverage and subject to regulation by the
commissioner; and
(B) Does not include a plan governed exclusively by the federal
Employee Retirement Income Security Act of 1974 (ERISA)(29 U.S.C. §
1001, et seq.);
(3) "Inflation index" means the annual percentage increase in the
consumer price index for all urban consumers (CPI-U), as published by the
United States bureau of labor statistics; and

- 2 - 011551

(4) "Reimbursement rate" means the maximum allowable amount
payable by a health insurance entity for covered healthcare services rendered by
in-network providers.
(b) Beginning January 1, 2027, and January 1 of each year thereafter, each
health insurance entity shall:
(1) Adjust all in-network reimbursement rates upward by no less than the
annual percentage increase in the inflation index for the preceding calendar year,
which may be applied by provider type or specialty or service category;
(2) Adjust annual benefit maximums under individual and group policies
upward by no less than the annual percentage increase in the inflation index for
the preceding calendar year, which may be applied by provider type or specialty
or service category; and
(3) Cap each annual increase at four percent (4%), even if the inflation
index exceeds four percent (4%), unless otherwise approved by the
commissioner of commerce and insurance.
(c) This section does not apply to:
(1) Policies covering fewer than one hundred (100) enrollees;
(2) Self-insured plans governed exclusively by the federal Employee
Retirement Income Security Act of 1974 (ERISA)(29 U.S.C. § 1001, et seq.);
(3) Medicare advantage or TennCare managed care plans operating
under federal waiver authority;
(4) Out-of-network provider reimbursement rates; or
(5) A plan granted a temporary exemption by the commissioner under
subsection (f).
(d)

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(1) This section applies prospectively to all applicable policies issued,
amended, or renewed on or after January 1, 2027.
(2) Adjustments must be included in provider contracts, reimbursement
schedules, or benefit documents provided to the commissioner as part of rate or
form filings.
(e)
(1) The commissioner shall develop a public annual report identifying
health insurance entities in compliance with this section.
(2) Health insurance entities shall file with the commissioner, no later
than April 1 of each year, documentation of compliance with the inflation
adjustment requirement.
(3) The commissioner shall monitor and review rate filings submitted by
health insurance entities to ensure that adjustments in premiums are
proportionate and justified in relation to the inflation index-based reimbursement
updates.
(f)
(1) A health insurance entity may request a waiver from the requirements
of this section by submitting to the commissioner an actuarial certification
demonstrating that compliance would cause material financial hardship or
jeopardize solvency.
(2) The commissioner may grant a full or partial exemption for no more
than one (1) calendar year per filing.
(g) A health insurance entity may voluntarily implement a one-time catch-up
adjustment to any in-network reimbursement rates or annual benefit maximums that
have remained unchanged for at least five (5) consecutive calendar years prior to the

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effective date of this section. The catch-up adjustment may equal the cumulative CPI-U
change over that five-year period, subject to a cap of twenty percent (20%). Voluntary
adjustments must be filed with the commissioner within sixty (60) days of
implementation. A health insurance entity may prioritize adjustments for rural and small
practices.
(h)
(1) A health insurance entity may voluntarily implement a qualifying
catch-up adjustment under subsection (g) on or before December 31, 2029.
(2) Beginning January 1, 2030, a health insurance entity shall implement
a catch-up adjustment to any in-network reimbursement rates or annual benefit
maximums that:
(A) Have remained unchanged for five (5) consecutive calendar
years prior to the effective date of this section; and
(B) Fall within a line of coverage subject to regulation under this
chapter.
(3) The mandatory catch-up adjustment under subdivision (h)(2) must
equal the cumulative CPI-U increase for the frozen period, subject to a cap of
twenty percent (20%).
(4) The commissioner shall establish procedures to monitor compliance,
review filings, and enforce catch-up adjustments pursuant to this subsection (h).
A healthinsurance entity that maintains a full provider network and makes good-
faith efforts to comply with this section is eligible for safe harbor protections,
subject to review by the attorney general and reporter or designated legal
counsel.
(i)

- 5 - 011551

(1) The commissioner may prioritize review and enforcement of this
section in counties identified as provider shortage areas or health professional
shortage areas.
(2) The commissioner shall ensure that small or rural providers receive
equitable consideration in inflationary adjustments.
(j) A health insurance entity shall not reduce the size of in-network provider
panels in a discriminatory manner as a response to inflationary adjustments. The
commissioner shall review provider network adequacy as part of rate oversight under
this section.
(k)
(1) The department of commerce and insurance is authorized to allocate
appropriations, hire additional staff, and procure technology necessary to support
CPI tracking, compliance review, and public transparency.
(2) The commissioner shall issue a transition timeline and guidance no
later than ninety (90) days after the effective date of this act, including grace
periods for systems integration.
(l) The commissioner shall encourage insurers to conduct and submit multi-year
rate reviews in conjunction with inflation index-based adjustments.
(m) The commissioner of commerce and insurance is authorized to promulgate
rules to implement this section The rules must be promulgated in accordance with the
Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it.