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SB 881

Insurance, Health, Accident - As enacted, removes the aggregate penalty limits for violations of law concerning pharmacy benefits managers; provides that a pharmacy benefits manager regulated under law relative to pharmacy benefits managers is subject to the insurance laws relative to timely reimbursement of health insurance claims and its requirements for timing of payments to pharmacists; provides that a violation of the prompt pay standards is governed by the penalties set out in insurance laws relative to timely reimbursement of health insurance claims. - Amends TCA Title 56.

114th Regular Session (2025-2026)

Tennessee removes penalty caps on pharmacy benefits managers violating insurance prompt-pay laws, requiring faster reimbursement to pharmacists with uncapped financial penalties for non-compliance.

Pub. Ch. 446
#accident #health #insurance
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Bill Summary · SB 881

Legislative bill overview

SB 881 removes aggregate penalty caps for pharmacy benefits managers (PBMs) that violate Tennessee insurance law and subjects PBMs to the same prompt-pay requirements and penalties that apply to health insurers. This means PBMs must now reimburse pharmacists on the same timeline as insurers and face uncapped financial penalties for violations.

Why is this important

Pharmacy benefits managers act as intermediaries between insurers and pharmacies, often creating payment delays that strain small pharmacy operations. By extending insurance prompt-pay laws to PBMs and removing penalty limits, this bill aims to accelerate reimbursement to pharmacists and provide stronger enforcement mechanisms when PBMs delay payments without justification.

Potential points of contention

  • Competitive impact: PBMs may argue that uncapped penalties create disproportionate liability compared to other regulated entities and could increase healthcare costs passed to consumers
  • Implementation complexity: PBMs operate across multiple state jurisdictions with different rules; applying Tennessee-specific prompt-pay timelines may create compliance burdens
  • Regulatory scope: Questions remain about whether PBM reimbursement timelines can match insurer timelines given their role as payment intermediaries rather than primary payers

Compiled from official sources — confirm details with the bill’s official record.

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