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SB 264

Taxes - As introduced, requires TennCare to certify an eligible healthcare provider's unreimbursed costs in a calendar year as charitable contributions made exclusively for public purposes to TennCare; requires eligible healthcare providers to pay TennCare $25 annually to receive such certification. - Amends TCA Title 67, Chapter 4.

114th Regular Session (2025-2026) Introduced by Joey Hensley

TennCare would certify providers’ unreimbursed costs as charitable contributions for tax purposes, in exchange for a $25 annual fee.

Action deferred in Senate Health & Welfare Committee to first calendar of 2026
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Bill Summary · SB 264

Summary of Bill SB 264 (Session 114) – Tennessee

Overview

  • Purpose: Introduce a program whereby TennCare certifies certain unreimbursed costs incurred by eligible healthcare providers as charitable contributions, for public purposes, under 26 U.S.C. § 170. In exchange, providers pay a $25 annual fee to TennCare to obtain certification.
  • Jurisdiction: Tennessee
  • Topic: Tax relief / charitable contributions reporting for TennCare providers
  • Key: Applies to costs calculated as unreimbursed differences between 125% of the average federal Medicaid reimbursement rate and the TennCare reimbursement rate.

Main Purpose and Intent

  • Create a framework for eligible healthcare providers (and group practices) to have unreimbursed costs treated as charitable contributions to TennCare, potentially enabling federal tax benefits for providers.
  • Establish a nominal annual certification fee to access these certifications.
  • Require administrative rules and data collection to implement and verify the program.

Key Provisions

New Part 67-4-1301 (Definitions)

  • Division: Tennessee Division of TennCare.
  • Eligible healthcare provider:
    • A TennCare (or successor Medicaid) provider, or
    • A group practice under contract with TennCare or a participating managed care organization (MCO) in TennCare.
  • Group practice: Two or more providers operating together (includes certain corporate forms) but excludes facilities such as hospitals, nursing homes, home care, etc.
  • Healthcare provider: Licensed, certified, or authorized to practice health care in Tennessee.
  • TennCare recipient: Eligible and enrolled in TennCare or successor program.
  • Unreimbursed costs: The difference between 125% of the average federal Medicaid reimbursement rate and the TennCare reimbursement rate paid to the provider for services to a TennCare recipient.

Certification and Fee Mechanics (67-4-1302)

  • Certification: TennCare must certify a provider’s unreimbursed costs for a calendar year as charitable contributions to TennCare under 26 U.S.C. § 170, upon payment of a $25 annual fee.
  • Fee payment:
    • Individual providers: $25 per year, due by January 15.
    • Group practice: $25 per provider within the group, due by January 15, to obtain the certification.
  • Certification timeline: TennCare must provide a year-end statement (total charitable contributions) by January 31 of the following year.
  • Rulemaking: Division may promulgate rules to implement the part, under the Uniform Administrative Procedures Act.

Effective Dates

  • Immediate effect for rulemaking purposes (as soon as law takes effect).
  • For the substantive program: Applies to charitable contributions made on or after July 1, 2025.

Who Is Affected

  • Eligible healthcare providers and group practices that participate in TennCare or a successor Medicaid program.
  • TennCare Division, which would administer the certification, collect fees, and compile data.
  • Potential indirect beneficiaries include TennCare enrollees and providers who may realize tax-related benefits from treating unreimbursed costs as charitable contributions.

Procedural and Timeline Aspects

  • Current Action: Pending through Senate Health & Welfare; action history shows introductions and committee referrals, with deferments and scheduling in 2025 and 2026.
  • Certification cycle: Annual (calendar year-based) with provider data due for certification after the year ends.
  • Fee due date: January 15 each year.
  • Certification statement provided: By January 31 of the following year.
  • Effective date: Law takes effect upon becoming law for purposes of “public welfare” and July 1, 2025 for other purposes.

Fiscal and Administrative Impact (Overview)

  • Revenue/Expenditure (State General Fund):
    • Potential annual revenue up to $1,750,000 (if about 70,000 eligible providers participate at $25 each).
    • Estimated program start-up and ongoing annual cost: around $10.8 million in state expenditures and $10.8 million in federal expenditures ( split 50/50 for administrative funds), beginning FY25-26. Staffing needs: Approximately 12 full-time positions (9 Statistical Research Specialists, 3 Fiscal Directors) starting FY25-26, with related salaries and benefits.
  • Administrative: Requires a contract or system for cost-report collection, data analysis, and annual charitable care certifications.
  • Other: Potential increase in business revenue for a technology vendor implementing the reporting system; possible reductions in providers’ federal tax liability, depending on individual circumstances.

Practical Considerations

  • The program relies on accurate reporting of unreimbursed costs and sound data management to produce valid charitable contributions for tax purposes.
  • The fiscal impact is contingent on participation rates and the cost of implementing and maintaining the reporting system.

If you’d like, I can provide a concise one-page briefing or a side-by-side comparison with current TennCare reporting requirements.

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

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