<BillNo> <Sponsor>
HOUSE BILL 19
By Baum
HB0019
000492
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AN ACT to amend Tennessee Code Annotated, Title 8,
Chapter 27 and Title 56, Chapter 7, Part 6, relative
to covered persons insured under state healthcare
plans.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. This act is known and may be cited as the "Tennessee State Healthcare
Cost Savings Incentive Program."
SECTION 2. Tennessee Code Annotated, Title 56, Chapter 7, Part 6, is amended by
adding the following as a new section:
56-7-611.
(a) As used in this section:
(1) "Committees" has the same meaning as defined in § 8-27-101;
(2) "Enrollee" means an individual who is insured under a state
healthcare plan;
(3) "Healthcare services and providers" includes services and providers
within and outside of this state;
(4) "State healthcare plan" or "plan" means the group insurance plans
offered under title 8, chapter 27; and
(5) "Third-party vendor":
(A) Means a business entity with:
(i) A minimum of four (4) years of experience delivering
transparency and shared savings programs to a state employee or
healthcare plan with at least one hundred fifty thousand (150,000)
subscribers;
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(ii) A demonstrated positive return on investment for state
clients with at least one hundred fifty thousand (150,000)
subscribers;
(iii) The ability to deliver shared savings programs for
healthcare services and providers and medical and prescription
drug benefits;
(iv) At least fifteen (15) years of experience delivering cost
and quality shopping tools; and
(v) The ability to aggregate and provide cost and quality
ratings for applicable shoppable services to enrollees; and
(B) Does not include a third-party administrator of the plan.
(b)
(1) The committees shall establish an incentive program in accordance
with this section no later than January 1, 2026, to be administered by a third-
party vendor selected under subdivision (c)(1). In establishing the incentive
program, such committees shall work with the third-party vendor with which the
department of finance and administration has entered into a contract to provide
incentives through the incentive program.
(2) The committees shall require the third-party vendor to provide each
enrollee with online information on the cost and quality of healthcare services
and providers, allow an enrollee to shop for healthcare services and providers,
and reward the enrollee by sharing savings generated by the enrollee's choice of
healthcare services or providers. Each contract with such third-party vendor
must require the vendor to:
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(A) Establish an internet-based, consumer-friendly platform that
educates and informs enrollees about the price and quality of healthcare
services and providers, including the average amount paid in each county
for healthcare services and providers. The average amounts paid for
such services and providers must, where appropriate, be expressed for
service bundles, which include all products and services associated with
a particular treatment or episode of care, or for separate and distinct
products and services;
(B) Allow enrollees to shop for healthcare services and providers
using the price and quality information provided on the internet-based
platform;
(C) Permit an agent of the third-party vendor to provide
educational materials and counseling to enrollees regarding the internet-
based platform and the costs of healthcare services and providers; and
(D) Identify the cost savings realized to the enrollee and this state
if the enrollee chooses high-quality, lower-cost healthcare services or
providers, and facilitate a shared cost savings payment to the enrollee.
The amount of shared cost savings must be determined by a
methodology established by the third-party vendor and the department of
finance and administration, in collaboration with the committees, that
must maximize value-based purchasing by enrollees based on historical
claims data. At the discretion of the enrollee, the amount payable to the
enrollee may be:
(i) Credited to a qualified flexible or health benefits or
savings account offered to an enrollee under a healthcare plan; or
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(ii) Paid as a cash reimbursement by direct deposit, check,
or other similar payment method.
(3) The costs to the third-party vendor for administering the incentive
program must be paid to the third-party vendor out of the cost savings realized
under the incentive program.
(c) The department of finance and administration shall:
(1) Contract with a third-party vendor for the incentive program
established under this section in accordance with applicable state procurement
requirements; and
(2) Provide notice to each enrollee, not less than quarterly each year, of
the incentive program established under this section, including a brief description
of the program, and the contact information of the third-party vendor for purposes
of obtaining counseling and pricing in accordance with subdivision (b)(2)(C).
(d) Enrollees are eligible to receive an incentive under the incentive program for
in-network or out-of-network healthcare services and providers if such services and
providers meet the cost-effective criteria established under the incentive program.
(e) The committees, in collaboration with the third-party vendor of the incentive
program, shall submit an annual report to the speakers of the senate and the house of
representatives, the chair of the state and local government committee of the senate, the
chair of the committee of the house of representatives with subject matter jurisdiction
over state government, the chair of the commerce and labor committee of the senate,
and the chair of the committee of the house of representatives with subject matter
jurisdiction over insurance. The report must identify the number of enrollees
participating in the incentive program and the cost savings to the state healthcare plan
as a result of the implementation of the incentive program. The report must be
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submitted no later than March 15, 2027, and no later than March 15 of each year
thereafter.
(f) The third-party vendor of the incentive program shall:
(1) Administer the incentive program created under this section;
(2) Compile a list from which an enrollee may choose high-quality, lower-
cost healthcare services and providers. In compiling the list, the third-party
vendor shall:
(A) Consider the availability and necessity of such services and
providers, and the variance in cost of such services and providers, in a
manner to maximize cost savings under the incentive program; and
(B) Maintain and routinely update such list on its internet website;
and
(3) Make one (1) or more agents available to counsel enrollees on the
incentive program and available healthcare services and providers for purposes
of maximizing cost savings.
(g) Consistent with the intent of this act, and to encourage competition in the
healthcare industry to achieve cost savings for this state and for enrollees in the state
healthcare plan, the department of finance and administration shall promulgate rules
reasonably necessary to carry out this section in accordance with the Uniform
Administrative Procedures Act, compiled in title 4, chapter 5.
SECTION 3. Tennessee Code Annotated, Section 56-7-603(a)(1), is amended by
deleting "Beginning upon approval of the next health insurance rate filing on or after January 1,
2021" and substituting "In addition to the incentives provided under § 56-7-611, beginning upon
approval of the next health insurance rate filing on or after January 1, 2021"; and is amended by
deleting the language "§ 56-7-610" and substituting "§§ 56-7-610 and 56-7-611".
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SECTION 4. Tennessee Code Annotated, Section 56-7-603(a)(2), is amended by
deleting the language "§ 56-7-610" and substituting "§§ 56-7-610 and 56-7-611".
SECTION 5. Tennessee Code Annotated, Section 56-7-609(a), is amended by deleting
"in any year" and substituting "in a year; provided, that this limitation does not apply to the
incentive program required under § 56-7-611".
SECTION 6. For purposes of promulgating rules and carrying out administrative duties
necessary to effectuate this act, this act takes effect upon becoming a law, the public welfare
requiring it. For all other purposes, this act takes effect on January 1, 2026, the public welfare
requiring it, and applies to state healthcare plans issued, delivered, entered into, amended, or
renewed on or after that date.