Tennessee Senate Bill SB0185

Tennessee 2025-2026 Regular Session

• Introduced: 1/15/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 63; Title 68 and Title 71, Chapter 5, relative to hospital reimbursement.

Summary

SB0185 amends Tennessee’s TennCare hospital reimbursement rules to create a special payment framework for rural hospitals. It defines a “rural area” as a non-urbanized area under federal census definitions and a “rural hospital” as a hospital with no more than 49 licensed beds located in such an area. For routine, nonspecialized inpatient services provided to TennCare enrollees, the bill sets a reimbursement floor and ceiling tied to each rural hospital’s current federal fiscal year Medicare reimbursement: at least 100% and no more than 120%. The bill also authorizes the TennCare director to seek any federal waiver or other approval needed to implement the new reimbursement structure, and it expressly states that such implementation does not require Medicaid expansion. In addition, it requires TennCare to publish on its website the MS-DRGs included in each service category and to update that list annually, while also sending updated lists directly to participating rural hospitals.

Impact

The bill would amend Tennessee Code Annotated § 71-5-161 to add a new rural-hospital reimbursement subsection and to revise the publication requirements for MS-DRG service categories. Its practical effect is to change how TennCare calculates aggregate reimbursement rates for qualifying rural hospitals, likely increasing or stabilizing payments for small hospitals in rural communities that treat TennCare patients. It also imposes an administrative transparency requirement on TennCare to maintain and distribute updated MS-DRG lists to affected hospitals.

Sentiment

The available voting history shows strong bipartisan committee support, with unanimous or near-unanimous recommendations for passage in both the Senate Commerce and Labor Committee and the Senate Health and Welfare Committee. That pattern suggests the bill was viewed favorably as a targeted rural health care measure, especially for hospitals facing reimbursement pressure. No committee transcript objections are provided, and the recorded votes indicate broad agreement on the need to support rural providers.

Contention

The main policy issue is the reimbursement formula itself: the bill ties TennCare payments for rural hospitals to Medicare reimbursement percentages and sets a 100% to 120% range, which could raise state spending or alter provider payment dynamics. Another possible point of concern is the bill’s reliance on federal waiver or authorization, since implementation depends on federal approval. While no recorded debate is included, the likely stakeholders are rural hospitals seeking higher, more predictable reimbursement and state budget or TennCare administrators who must manage fiscal and federal compliance implications.