SB 264 - HB 385
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 8, 2025
Fiscal Analyst: Chris Higgins | Email: chris.higgins@capitol.tn.gov | Phone: 615-741-2564
SB 264 - HB 385
SUMMARY OF BILL: Requires the Division of TennCare (Division), upon payment of a
$25 annual fee paid by a healthcare provider, to certify the eligible healthcare provider's
unreimbursed costs in a calendar year as charitable contributions made exclusively for public
purposes to TennCare. Requires the fee for healthcare providers to be paid by January 15 of each
year. Requires the Division to provide the eligible healthcare provider with a statement of the total
amount of such charitable contributions provided by the eligible healthcare provider in a calendar
year by January 31 of the following year.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years Up to $1,750,000
EXPENDITURES General Fund
FY25-26 & Subsequent Years $10,842,000
Total Positions Required: 12
FEDERAL GOVERNMENT
EXPENDITURES
FY25-26 & Subsequent Years $10,842,000
Assumptions:
• The Division does not have access to data relating to uncompensated care, as defined in the
legislation as "an amount equal to the difference between 125 percent of the average federal
Medicaid reimbursement rate and the TennCare reimbursement rate paid to an eligible
healthcare provider."
• According to the Division, there are approximately 70,000 providers who would be eligible
to participate in the charitable care reporting program.
• If all eligible providers participate in the program, there will be a recurring increase in state
revenue of up to $1,750,000 ($25 x 70,000).
• The Division will need to collect cost reports from each provider who requests to receive
an annual certification of charitable care and then verify and compile the data into a format
required by the legislation.
• According to the Division, there are approximately 1,000 providers who have cost reports.
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• The Division will need to procure a contract to create a reporting mechanism for the
remaining 69,000 providers, compile and analyze provider data, and generate the annual
charitable care certifications.
• Based on existing contracts relating to cost reports for hospitals and nursing facilities, it is
estimated that the cost of the contract to implement the proposed legislation will be
$20,000,000 per year.
• The contract expenditures will receive matching federal funds at the administrative rate of
50 percent federal to 50 percent states funds.
• There will be an increase in state expenditures of $10,000,000 ($20,000,000 x 50%) and a
corresponding increase in federal expenditures of $10,000,000 in FY25-26 and subsequent
years.
• In order to oversee the new program and manage inquiries from healthcare providers, the
Division will require 12 additional positions (9 Statistical Research Specialist positions, 3
Fiscal Director positions) beginning in FY25-26.
• The total recurring increase in state expenditures is as follows:
Title Salary Benefits # Positions Total
Statistical Research Specialist $100,440 $24,691 9 $1,126,179
Fiscal Director $152,616 $33,347 3 $557,889
Total: $1,684,068
• These positions will also be funded at the rate of 50 percent federal to 50 percent state,
resulting in a recurring increase in both state and federal expenditures of $842,034
($1,684,068 x 50%).
• The total increase in state expenditures will be $10,842,034 ($10,000,000 + $842,034), and
the total increase in federal expenditures will be $10,842,034 ($10,000,000 + $842,034) in
FY25-26 and subsequent years.
• The Division can promulgate rules to implement the legislation utilizing existing resources,
without an additional increase in expenditures.
• There is not expected to be a significant increase in healthcare services provided to
TennCare enrollees as a result of the proposed legislation.
IMPACT TO COMMERCE:
BUSINESS IMPACT
FISCAL YEAR REVENUE EXPENSES
FY25-26 & Subsequent Years $20,000,000 < $20,000,000
Total Jobs Created: > 1
OTHER COMMERCE IMPACT
Allowing healthcare providers to claim unreimbursed costs as charitable contributions could
reduce the amount of federal income tax paid by each provider. The impacts of such deductions
are dependent on the circumstances of each individual provider an cannot be estimated with
reasonable certainty.
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Assumptions:
• A technology vendor will experience an increase in business revenue of $20,000,000 in
FY25-26 and subsequent years subsequent years for implementing a system for annual
certification of charitable care.
• In order for the business to remain solvent, any increase in expenditures is expected to be
less than the amount of revenue collected.
• It is assumed that the vendor will require at least one additional employee to accomplish the
required responsibilities.
• Allowing healthcare providers to claim unreimbursed costs as charitable contributions could
reduce the amount of federal income tax paid by each provider. The impacts of such
deductions are dependent on the circumstances of each individual provider an cannot be
estimated with reasonable certainty.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director