Because something moved in the carrier’s rate filing — and Tennessee is one of the states where you can find out, in advance, what the carrier was made to account for. When an issuer files a revised premium rate for small group health coverage here, a Tennessee rule requires it to hand over data and documentation on a fixed list of items, each one carried with an explanation of how that item has or has not moved the rate. That list lives at Tenn. Comp. R. & Regs. 0780-01-93-.05(5), it runs from (a) through (m), and it contains no figures whatsoever. It is the closest thing Tennessee publishes to an official answer to the question in the title, and most employers have never seen it.
The list Tennessee makes a carrier account for
The rule’s own phrasing is the useful part. A carrier filing revised rates must supply the data and documentation “with an explanation as to how each item has or has not impacted the premium rate.” Note what that wording does: an item that did not move the rate still has to be addressed. The enumeration covers medical trend changes by major service categories; utilization changes by major service categories; cost-sharing changes by major service categories; benefit changes; changes in enrollee risk profile; any overestimate or underestimate of medical trend for prior year periods related to the rate increase; changes in reserve needs; changes in administrative costs related to programs that improve health care quality; changes in other administrative costs; changes in applicable taxes, licensing, or regulatory fees; medical loss ratio; the issuer’s capital and surplus; and other information the Commissioner determines is necessary.
Read that as a checklist rather than as a paragraph. Almost every renewal conversation an employer has collapses the whole thing into one word — “claims” — and the rule is telling you that Tennessee does not let the carrier collapse it.
Trend, utilization and cost-sharing are three different items
The first three entries on the list look similar and are not. Medical trend by major service category is about what care costs. Utilization by major service category is about how much care was used. Cost-sharing changes by major service category is about how the plan design splits that cost at the point of service. A rate can move because of any one of them while the other two sit still, and the rule keeps them apart precisely so that a filing cannot blur them together.
There is a fourth entry that belongs with this group and is easy to miss: any overestimate or underestimate of medical trend for prior year periods related to the rate increase. That is the carrier correcting its own earlier forecast. Part of what an employer experiences as “this year’s increase” can be last year’s projection being trued up, and Tennessee makes the carrier say so as a distinct item.
Two items are about your group, not about the market
Benefit changes and changes in enrollee risk profile are the two entries closest to home. A plan whose benefits changed at renewal is not the same product it was, and a group whose covered population changed is not the same risk it was. If your census moved — people added, people dropped, a different mix enrolling — that is the item the rule calls the enrollee risk profile.
This is also the point where the limits of the rule matter. A rate filing is made for a product, across the small group business a carrier writes in Tennessee. It is not a letter about your renewal. The filing tells you what the carrier told the state about the rate; it does not tell you how your own group’s enrollment interacted with that rate. Those are separate questions and they are worth asking separately.
Several items have nothing to do with medical care
Further down the enumeration the subject changes entirely. Changes in reserve needs. Changes in administrative costs related to programs that improve health care quality, which the rule carries as its own separate item. Changes in other administrative costs. Changes in applicable taxes, licensing, or regulatory fees. Medical loss ratio. The issuer’s capital and surplus. And a catch-all for anything else the Commissioner determines is necessary.
An employer who only ever asks “how were our claims?” is asking about a fraction of the list. Taxes and regulatory fees move without anyone in your building visiting a doctor. So does the capital position of the company writing the coverage. Tennessee decided these were disclosable, which is a reasonable signal that they can matter.
The rule also asks for the history of every previous change
Before the itemized explanation, subsections (1) through (4) of the same rule require the filing to carry a statement of the scope and reason for the filing, whether it applies to new business or in-force business, a history of experience under the existing rates, and — the sentence worth remembering — “the date and magnitude of each previous rate change.”
That last requirement is the one that reframes a renewal. A single year’s increase, looked at alone, is a number with no context. The state requires the filing to place it in a sequence. An employer can do the same thing with its own renewal history before deciding whether this year is an outlier or a continuation, and that is a conversation about a pattern rather than about one letter.
Two layers of review stand behind a Tennessee rate, and they are not the same layer
The first layer is Tennessee’s. Tenn. Comp. R. & Regs. 0780-01-93-.03(1) reads: “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).”
Those filings go in electronically through the System for Electronic Rate and Form Filing, and under -.04 each rate submission must include an actuarial memorandum describing the basis on which rates were determined, plus a certification by a qualified actuary that the filing complies with this state’s applicable laws and regulations and that the benefits are reasonable in relation to premiums. The chapter itself is scoped by -.02(1) to health insurance coverage issued to any individual or small employer, and it was issued by the Tennessee Department of Commerce and Insurance, Insurance Division.
The second layer is federal, and it is unusual. Tennessee does not operate an Effective Rate Review Program, so the Affordable Care Act reasonableness review of a qualifying rate increase is conducted by the Centers for Medicare & Medicaid Services instead of by Tennessee. CMS states it plainly: “CMS reviews rates for both of those markets in Oklahoma, Tennessee and Wyoming until those states can meet Effective Rate Review criteria.” Tennessee’s own plan-year 2027 Affordable Care Act filing guideline says the same thing from the other side: “Tennessee is a Federally Facilitated Marketplace (FFM) without an Effective Rate Review Program; carriers must follow the timeline set out by CMS.”
Both layers are real and they do different jobs. “Nobody reviews rates in Tennessee” is simply false — every initial and revised rate is filed with the Insurance Division for approval. What is true is that the federal reasonableness review of a large increase is performed federally.
Do not quote the rule’s own percentage back at anyone
Subsection (6) of the same filing rule attaches a threshold, expressed as a percentage, to a rate increase. Resist the urge to repeat that figure. The rule took effect on 20 February 2012, and the number printed in it was the federal threshold as it stood on that day. The federal threshold lives at 45 CFR part 154, in § 154.200(a)(1), and has been revised since. What keeps the Tennessee rule working is its own alternative wording — “or above the State-specific threshold as defined by the Secretary” — which points at the federal figure rather than freezing the old one.
So the mechanism, not the number, is what an employer should carry: Tennessee’s rule defers to the federal threshold in force, and a percentage read out of a 2012-vintage state rule will look like current law while being out of date. This is a good general habit with state insurance rules. Read the escape clause before you quote the figure.
What to do when the letter arrives
Three questions, asked separately, get further than one.
First, ask the carrier which of the filing items it attributes the movement to, and use the rule’s own vocabulary — medical trend by major service category, utilization, cost-sharing changes, benefit changes, enrollee risk profile. A question phrased in the state’s own terms is harder to answer with a generality.
Second, ask what changed inside your own plan. Benefits and cost-sharing are named items on that list for a reason, and a renewal that quietly re-shapes a deductible or a network is not the same purchase as last year’s.
Third, ask what changed in your census since the plan was last rated, and confirm how your group is billed. Whether your per-employee line is built member by member or expressed as an averaged tier rate changes what the bill looks like even when the group total is built the same way underneath, and Tennessee has its own rule about that shape — it is a separate subject with its own post.
None of this requires an argument with the carrier. It requires asking about the right item.
The bottom line
Tennessee publishes the list of things a carrier has to account for when it files a revised rate, and that list is the honest answer to a renewal increase — trend, utilization, cost-sharing, benefits, risk profile, reserves, administration, taxes and licensing fees, medical loss ratio, capital and surplus. Ask which of those items moved, and ask it in those words.
Frequently asked questions
Does Tennessee publish a reason for my group’s renewal increase?
Not for your group specifically. What Tennessee publishes is the list of items a carrier must address when it files a revised rate for small group health coverage. Tenn. Comp. R. & Regs. 0780-01-93-.05(5) requires the carrier to supply data and documentation on each item on that list, “with an explanation as to how each item has or has not impacted the premium rate.” A rate filing covers a product, not one employer’s renewal letter. But it tells you the vocabulary the increase was actually built in, and it lets you ask your carrier a specific question instead of a general one.
Who approves a health insurance rate in Tennessee?
There are two layers and they are not the same thing. Under Tenn. Comp. R. & Regs. 0780-01-93-.03(1), initial premium rates and forms for new policies and revised premium rates on previously approved policies must be filed for approval, and the filing must carry an actuarial memorandum and an actuary’s certification under -.04. Separately, the Affordable Care Act reasonableness review of a rate increase at or above the federal threshold is run by the Centers for Medicare & Medicaid Services rather than by Tennessee, because Tennessee does not have an Effective Rate Review Program. Both statements are true at once, and neither one cancels the other.
Is it true that nobody reviews rates in Tennessee?
No, and it is the most common mistake made about this state. Tennessee requires every initial and revised rate to be filed with the Tennessee Department of Commerce and Insurance, Insurance Division for approval, through the System for Electronic Rate and Form Filing. What Tennessee does not run is an Effective Rate Review Program, which is the federal designation for a state that conducts the Affordable Care Act reasonableness review itself. CMS states that it reviews rates for the individual and small group markets in Oklahoma, Tennessee and Wyoming until those states can meet Effective Rate Review criteria, and Tennessee’s own plan-year 2027 filing guideline says the same thing in its own words.
Can the increase be about something other than medical costs?
Yes, and Tennessee’s own list says so. Alongside medical trend and utilization, the rule names changes in reserve needs, changes in administrative costs related to programs that improve health care quality, changes in other administrative costs, changes in applicable taxes, licensing or regulatory fees, medical loss ratio, and the issuer’s capital and surplus. Those are separate items with separate explanations. A renewal conversation that only asks about claims is asking about part of the list.
What should I actually ask the carrier?
Ask which of the filing items the movement is attributed to, using the rule’s own words: medical trend by major service category, utilization, cost-sharing changes, benefit changes, or a change in the enrollee risk profile. Then ask separately whether your plan’s benefits or cost-sharing changed at renewal, and whether your census changed since the plan was last rated. Those are three different questions, and they are often answered by three different people.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. He reads Tennessee’s rate-filing rule alongside a client’s renewal letter so the conversation with the carrier is about named filing items rather than about a single number. Start with the Wexford Health Insurance quote form.