Who Approves a Rate Before You See It in Tennessee

Two different reviewers look at a Tennessee small-group rate before an employer ever sees it, and they look at different things in a fixed order. First, the issuer files the rate with the Tennessee Department of Commerce and Insurance, Insurance Division, and the Division approves that filing or does not — a state act, repeated per issuer and repeated every time rates change. Second, and separately, the Affordable Care Act’s reasonableness review of a qualifying rate increase is carried out by the federal Centers for Medicare & Medicaid Services (CMS) rather than by Tennessee, because Tennessee does not operate an Effective Rate Review Program.

Both of those are true at the same time. Collapsing them into “Tennessee has no rate review” produces a sentence that is simply false, and it is the version an employer is most likely to have heard.

The Tennessee rule that puts every rate in front of a reviewer

The requirement is written down, and it is written down in a document anyone can open. Tenn. Comp. R. & Regs. 0780-01-93-.03(1), headed General Filing Requirements, provides:

All initial premium rates and forms for new policies and revised premium rates on any previously approved policies must be filed for approval for all health insurance coverage as specified in T.C.A. §56-26-102(a).

The chapter that rule sits in is titled, in full, “Rules Related to Form and Rate Filings for Health Insurance Coverage Subject to the Authority of the Patient Protection and Affordable Care Act of 2010,” and it is issued by the Tennessee Department of Commerce and Insurance, Insurance Division. Its scope provision, 0780-01-93-.02(1), reads: “The provisions of this Chapter shall apply to health insurance coverage issued to any individual or small employer.”

That last phrase is the one that matters to a small employer in Nashville or Jackson or Johnson City. The chapter is not general insurance housekeeping that happens to touch health coverage; small-employer coverage is named inside its own scope. A parallel chapter, 0780-01-92, covers health coverage that is not subject to the Affordable Care Act, which is how you can tell the two apart when you go looking.

The administrative history is short and worth knowing, because it explains the vintage of everything else on this page: an emergency rule was filed August 29, 2011, the original rule was filed November 22, 2011, and the chapter became effective February 20, 2012.

What an issuer has to hand over with the number

A rate does not arrive at the Division as a number on its own. Rule 0780-01-93-.04 requires the arithmetic behind it and a named person willing to sign for that arithmetic:

Each rate submission shall include an actuarial memorandum describing the basis on which rates were determined… Each rate submission must also include a certification by a qualified actuary that to the best of the actuary’s knowledge and judgment the rate filing is in compliance with the applicable laws and regulations of this state and that the benefits are reasonable in relation to premiums.

And the filing is electronic. Rule 0780-01-93-.06 provides that “Beginning January 1, 2012, all filings submitted pursuant to this Chapter shall be filed electronically. All electronic filings shall be made via the System for Electronic Rate and Form Filing (SERFF).” The Department’s current Plan Year 2027 filing guideline says the same thing in its own words — “All filings to the State should be made via SERFF. Individual and small group filings may not be combined.”

For an employer, the practical content of those two rules is this: the number on your renewal was built by an actuary, described in a memorandum, certified as compliant, and submitted through a filing system, before anyone tried to sell it to you.

Who inside the department actually reads it

Tennessee does not have a standalone department of insurance. Insurance is a division inside the Department of Commerce and Insurance, and the reviewing work sits in a named section of that division.

The Department describes its Policy Analysis Section this way: “The primary function of this section is to review form, rate, and rule filings for compliance with Tennessee insurance statutes, rules, regulations, and bulletins.” Within that section, health filings go to the Life and Health Unit, which “reviews filings regarding, life, annuity, accident and health…” among other product lines.

So the reviewer of a Tennessee small-group rate filing is a compliance reviewer inside a state division, measuring a filing against Tennessee statutes, rules, regulations and bulletins. That is a different job from asking whether a rate increase is reasonable in the Affordable Care Act’s sense, which is the second layer.

Tennessee’s own list of what a rate increase has to explain

This is the part of Tennessee’s rules that an employer almost never sees and would find most useful. When an issuer files revised rates, 0780-01-93-.05(5) requires it to supply data and documentation “with an explanation as to how each item has or has not impacted the premium rate” on a specific, enumerated list — running from medical trend and utilization through reserve needs, administrative costs, taxes and fees, medical loss ratio and the issuer’s own capital and surplus, and closing with anything else the Commissioner determines is necessary. The full thirteen items, item by item, are set out in Why did our group health renewal go up in Tennessee, which is the post that question belongs to.

Subsections (1) through (4) of the same rule add a statement of the scope and reason for the filing, whether it applies to new or in-force business, a history of experience under the existing rates, and “the date and magnitude of each previous rate change.”

Read that list as an employer and it stops being regulatory furniture. It is Tennessee’s own answer to the question every renewal conversation turns into: what moved, and why. The issuer already had to separate trend from utilization from benefit changes from risk profile from administrative cost, item by item, for the reviewer. Asking your broker which of those items the issuer said moved is a better question than asking whether the increase can be argued down.

The second review is federal, and Tennessee says so itself

The Affordable Care Act’s reasonableness review of rate increases is performed by a state where the state operates an Effective Rate Review Program. Tennessee does not, and two primary sources say so independently.

CMS, in its own description of state Effective Rate Review Programs: “As of April 23, 2024, most states and the District of Columbia have an Effective Rate Review Program for the individual and small group markets. CMS reviews rates for both of those markets in Oklahoma, Tennessee and Wyoming until those states can meet Effective Rate Review criteria.”

And the Tennessee Department of Commerce and Insurance, in its Plan Year 2027 Affordable Care Act filing guideline: “Tennessee is a Federally Facilitated Marketplace (FFM) without an Effective Rate Review Program; carriers must follow the timeline set out by CMS.”

Those two sentences come from opposite ends of the relationship — the federal agency describing what it does, and the state agency describing what it does not do — and they agree. That agreement is why the layered answer is safe to rely on and the collapsed one is not.

Why the threshold printed in the Tennessee rule is not the one that bites

There is a trap in reading the Tennessee rules directly, and it is worth naming because it catches careful readers rather than careless ones.

Rule 0780-01-93-.05(6) describes a rate increase at or above a stated percentage as the trigger for the additional filing requirements. That figure was accurate when the chapter took effect on February 20, 2012, because it matched the federal threshold of the day. The federal threshold has since moved. The Tennessee rule survives the change only because of its own escape clause, which reaches an increase at or above the State-specific threshold “as defined by the Secretary” — that is, the federal definition, whatever it currently is, rather than the number frozen in the 2012 text.

An employer reading the Tennessee rule on its own would come away with a percentage that looks like current Tennessee law and is not. That is why this page describes the mechanism and prints no threshold figure at all: the operative number lives in federal regulation, the state rule defers to it, and quoting the state rule’s own digits would be quoting a number that has been superseded in place.

Two different things are called approval here

Tennessee also holds a CMS authorization for a state-specific composite premium method — a way of expressing a group’s premium when an issuer offers composite billing. That authorization is frequently described with the same word used above, and the two are not the same event.

The Division approving a filed rate is a state act. It is recurring, it happens per issuer, and it happens again whenever rates are revised. CMS authorizing Tennessee’s composite premium method is a federal act, it happened once, and it concerns a methodology rather than any particular number. An employer told that “Tennessee approved it” has been given a sentence that could mean either, and the two have different consequences.

The composite method is its own subject with its own mechanics, and it is covered separately in what Tennessee requires instead of the federal default rather than summarized here. What belongs on this page is only the boundary: this post is about who reviews the number, and in what order.

What you can read yourself, and what is behind a paywall

Every Tennessee rule quoted above was read from the Tennessee Secretary of State’s Official Compilation of Rules and Regulations, where chapter PDFs download cleanly and carry real text. Tennessee’s administrative rules are open.

Tennessee’s codified statutes are not, at least not to an ordinary reader. The Department’s own “Laws” link redirects to a subscription legal-research container, and what comes back is a 3,702-byte page containing a browser check and a redirect instruction, with no statutory text in it at any point. That is why this post cites rule 0780-01-93-.03(1) rather than the code section that rule names as its authority: the rule is a primary source we could read, and the statute is one we could not.

We also did not substitute a third-party summary in place of the unreadable code. Compilations of state insurance law carry their own vintage, and at least one is demonstrably behind Tennessee’s own recent enactments. A disclosed gap is more useful to an employer than a confident sentence sourced to a document nobody checked.

What this means when a renewal lands on your desk

Three things follow, and none of them require reading a rule.

The number was reviewed before it reached you. It was built by an actuary, certified by that actuary as compliant with Tennessee law, filed with the Insurance Division for approval, and submitted through SERFF. Treating the rate as an opening offer misunderstands what it is.

If the increase is large enough to meet the federal threshold, the reasonableness review of it is being done by CMS, not by Nashville. Directing that question to the state is directing it to the wrong layer, and the Department says as much in its own filing guideline.

And the issuer already itemized what moved. Tennessee’s own rule made it separate trend, utilization, cost-sharing, benefit changes, risk profile, reserves, administrative cost, taxes and fees, medical loss ratio, and capital and surplus, each with an explanation of how it did or did not affect the premium rate. That list is the shape of the conversation worth having at renewal — not whether the rate can be talked down, but which of those items the issuer said moved, and whether your own plan design and enrolling population are the reason.