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SB 2080

TennCare - As introduced, directs the first $150 million of tax revenue generated by the health maintenance organization tax on or after July 1, 2026, to be utilized to draw down federal funds to reimburse a physician, advanced practice registered nurse, or physician assistant who is entitled to receive TennCare reimbursement for a CPT code for evaluation and management, obstetrics and gynecology, or anesthesia. - Amends TCA Title 56; Title 63; Title 68 and Title 71.

114th Regular Session (2025-2026) Introduced by Bo Watson

The bill redirects the first $150 million of the HMO tax to draw federal funds to reimburse TennCare providers (physicians, APRNs, PAs) for E/M, OB/GYN, and anesthesia services up

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
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Bill Summary · SB 2080

Summary of Bill SB 2080 / HB 2046 (Tennessee) – TennCare Funding Using HMO Tax Revenue

Overview

  • Jurisdiction: Tennessee
  • Session: 114
  • Primary purpose: Redirect the first $150 million of HMO tax revenue to fund enhanced TennCare reimbursements for certain providers, drawing additional federal funds, with reimbursement up to 110% of Medicare rates for specific CPT codes (evaluation and management, OB/GYN, or anesthesia).

Key Provisions

  1. New use of HMO tax revenue (starting July 1, 2026):

    • The first $150,000,000 of tax revenue collected under the HMO tax (as defined in Tenn. Code § 56-32-124) must be used to draw down federal funds to reimburse TennCare providers.
    • Eligible providers for reimbursement include:
      • Physicians
      • Advanced Practice Registered Nurses (APRNs)
      • Physician Assistants (PAs)
    • Eligible CPT codes for reimbursement:
      • Evaluation and Management (E/M)
      • Obstetrics and Gynecology (OB/GYN)
      • Anesthesia
    • Reimbursement shall be provided to those entitled to TennCare reimbursement for the respective CPT codes under TennCare.

  2. Reimbursement rate (subsection (c) of 71-5-175):

    • Reimbursement under the new section may be allocated up to 110% of the current Medicare rate for the same CPT code.

  3. Rulemaking authority:

    • The Bureau of TennCare and the Department of Commerce and Insurance (DCI) may promulgate rules to implement the provisions.
    • Rulemaking must follow the Uniform Administrative Procedures Act (UAPA).

  4. Effective dates:

    • The act takes effect upon becoming law (for promulgation purposes, the public welfare requiring it).
    • For substantive implementation, the provisions apply to TennCare reimbursements for services provided on or after July 1, 2026.

Affected Entities

  • TennCare program participants and providers:
    • Physicians, APRNs, and PAs who bill TennCare for E/M, OB/GYN, or anesthesia services.
  • State agencies:
    • TennCare Division
    • Department of Commerce and Insurance (DCI)
  • Federal funds dynamic:
    • The policy leverages federal matching funds to support increased provider reimbursements.

Fiscal and Economic Impact

  • State government:
    • Revenue/Tax Collections: The HMO tax revenue designated for this program is $150,000,000 in FY26-27 and in subsequent years.
    • Expenditures: The Division of TennCare would incur $150,000,000 in expenditures (offset by $150M in straight state funds redirected to directed payments and offset by federal matching).
  • Federal government:
    • Estimated additional federal expenditures of about $261,466,191 in FY26-27 and subsequent years, resulting from the 63.545% federal match on the state-funded portion.
    • Overall program impact combines to about $411,466,200 in combined state + federal support for the targeted services in the first year and beyond.
  • Industry impact:
    • Providers serving TennCare patients may experience increased revenue for the specified services due to higher reimbursement rates (up to 110% of Medicare).
    • Net effect on employment is expected to be not significant, while overall provider revenue increases are anticipated.

Procedural/Timeline Highlights

  • Legislative action timeline:
    • Introduced and moved through committees in early 2026, with final committee recommendations in April 2026.
    • Placement on Senate Finance, Ways, and Means Committee calendar for consideration in April 2026.
  • Rulemaking timeline:
    • To be developed under UAPA by TennCare and DCI to implement the policy.
  • Effective date:
    • Applies to services provided on or after July 1, 2026.

Summary in Plain Language

SB 2080 proposes using the first $150 million of the HMO tax revenue starting July 1, 2026 to draw federal funds and reimburse certain TennCare providers (physicians, APRNs, PAs) for specific services (E/M, OB/GYN, anesthesia). Reimbursement could be as high as 110% of the Medicare rate for those CPT codes. The change requires rulemaking by TennCare and DCI and would affect provider reimbursements beginning in mid-2026. The policy aims to increase provider reimbursement levels to TennCare patients, supported by a combination of state funds redirected from the HMO tax and federal matching funds.

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

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