Tennessee

Cluster 4: Non-Expansion High-Burden States

Tennessee enters the Rural Health Transformation Program with conditions that expose a question the state has avoided for seven years: what happens when a healthcare monopoly fails its accountability requirements and the state responds by lowering the requirements? Ballad Health operates 20 hospitals across a 29-county region spanning the Tennessee-Virginia border, serving 1.1 million residents with no competing hospital system. The Certificate of Public Advantage that waived antitrust protections in 2018 was granted in exchange for quality commitments, charity care obligations, and community benefit investments. Ballad has failed most of these commitments. The state has not enforced consequences.

Now RHTP directs federal transformation resources to a state where the largest rural healthcare provider is a documented accountability failure, where the lead agency cannot direct the Medicaid infrastructure, where the coverage gap leaves an estimated 95,000 to 300,000 adults without healthcare access, and where $86 per rural resident annually must somehow transform conditions that five priorities are too thin to address. Tennessee has institutional strengths that most non-expansion high-burden states lack. Whether those strengths can overcome the structural constraints and governance failures is the implementation question this profile examines.

State Context

#

Tennessee has 2.4 million rural residents spread across 95 counties, with rurality concentrated in three distinct geographic bands that carry different health profiles, different provider landscapes, and different economic foundations. East Tennessee’s Appalachian counties running from the Smoky Mountains to the Virginia border carry coal and manufacturing legacies that mirror central Appalachian patterns documented in Series 10A. West Tennessee’s agricultural flatlands extending to the Mississippi River share demographic composition and health burden characteristics with the Mississippi Delta. The Upper Cumberland plateau sits between these extremes with neither the Appalachian institutional infrastructure nor the Delta’s severity of persistent poverty.

Governor Bill Lee enters RHTP implementation without a 2026 election cycle, providing political continuity through at least Year 3 of the program. This is the advantage Tennessee holds over states like Nebraska facing gubernatorial transitions during the critical mid-program evaluation window. Tennessee has not expanded Medicaid, maintaining TennCare eligibility for parents at just 105% of the federal poverty level and providing no pathway for childless adults. The legislature has rejected expansion proposals repeatedly, including the Insure Tennessee initiative that failed in committee without a floor vote in 2015. An estimated 95,000 to 300,000 Tennesseans fall into the coverage gap, earning too much for TennCare but too little for marketplace subsidies. This structural absence shapes every RHTP implementation decision and defines the sustainability problem Tennessee shares with all non-expansion states.

The provider landscape includes approximately 28 Critical Access Hospitals, 31 Federally Qualified Health Centers, and a rural hospital system where 44% of facilities face financial vulnerability according to Chartis. Tennessee leads the nation in rural hospital closures per capita over the past decade. The state eliminated Certificate of Need requirements through 2024 legislation effective in 2025, a deregulation experiment that may reshape the provider landscape during the RHTP implementation period. Unlike most non-expansion high-burden states, Tennessee has created conditions where new market entrants could theoretically compete with incumbent providers. Whether any entrants materialize in rural markets remains speculative.

The defining feature of Tennessee’s provider environment is Ballad Health, a 20-hospital system created in 2018 through a Certificate of Public Advantage (COPA) that waived antitrust protections across a 29-county region. This regulatory experiment created the largest hospital monopoly ever authorized in the United States. The COPA’s implications for RHTP implementation, examined below, represent the most consequential governance question in any non-expansion high-burden state profile.

RHTP Application and Award

#

Tennessee received $206.9 million for FY2026 ($1.03 billion over five years), translating to $86 per rural resident annually. This places Tennessee in the lower tier of non-expansion state per-capita allocations, below South Carolina ($141) and comparable to Alabama ($97). Unlike Kansas, which combines similar allocation levels with boundary-case institutional capacity that positions it between non-expansion and expansion state categories, Tennessee operates with resource constraints that match its classification without the mitigating factors that could shift the assessment.

The Tennessee Department of Health (TDH) leads the application, a standard DOH designation with moderate-to-high institutional separation. TDH manages population health programs but does not administer TennCare, which operates as a separate managed care Medicaid program under the Division of TennCare within the Department of Finance and Administration. This split creates the coordination challenge that distinguishes Tennessee from states where the lead agency controls both RHTP investment and Medicaid payment pathways. TDH cannot directly align RHTP investments with billing infrastructure because the billing authority sits in a different organizational chain. TennCare is listed as a subawardee, creating a coordination dependency where the lead agency must negotiate with rather than direct the payment system.

The application identifies five priority areas: rural healthcare transformation, maternal and child health, prevention and community health, workforce development, and technology modernization. MAHA alignment features include proposed SNAP waiver authority for sugar-sweetened beverage restrictions, nutrition-focused CME requirements for healthcare providers, and scope of practice expansion through legislative action. The legislative scope expansion aligns with regulatory transformation frameworks enabling alternative architecture, though Tennessee’s current NP practice authority remains restricted, requiring collaborative agreements that limit independent practice in rural settings where physicians are unavailable.

Subawardees span a broad network reflecting Tennessee’s institutional assets. TennCare’s participation addresses the institutional separation through formal partnership rather than organizational integration. Local health departments (89 county and 6 metropolitan in a hybrid structure) provide implementation reach. The Tennessee Initiative for Perinatal Quality Care (TIPQC) brings demonstrated maternal health capacity. Three academic partners provide complementary geographic coverage: the University of Tennessee Health Science Center anchors West Tennessee, Meharry Medical College provides Nashville-adjacent capacity with particular strength in health equity research, and East Tennessee State University covers the Appalachian region. Five Area Health Education Centers provide moderate workforce pipeline capacity. The Tennessee Community Health Worker Association (TNCHWA) is listed but represents still-developing professionalization infrastructure that lacks the billing pathways required for sustainable CHW employment models essential to alternative workforce architecture.

Ballad Health appears as a subawardee despite documented performance failures examined below.

CMS assigned Tennessee to Enhanced Monitoring rather than Intensive Technical Assistance, reflecting either confidence in TDH’s institutional capacity or recognition that Tennessee’s 6.5:1 ratio places it at the favorable end of non-expansion state fiscal conditions.

The Medicaid Math

#

Tennessee’s 6.5:1 RHTP-to-Medicaid-cut ratio is the most favorable among non-expansion high-burden states, reflecting a projected $6.8 billion ten-year Medicaid cut (7% of baseline) against $1.03 billion in five-year RHTP investment. The ratio appears favorable because Tennessee’s non-expansion status means the state carries lower federal Medicaid spending per capita than expansion states. This is not an advantage. It means less federal health spending exists to cut, which keeps the ratio moderate while leaving the underlying coverage gap untouched. Tennessee’s ratio would be substantially worse if it had expanded Medicaid and provided coverage to the population RHTP-funded transformation now serves without sustainable payment pathways.

The primary cut mechanism is all-states rather than work-requirement-driven, because Tennessee has no expansion population to subject to work requirements. Provider tax phase-downs and enhanced FMAP reductions apply to TennCare’s existing program, squeezing managed care payments that already rank among the lowest nationally. Unlike Florida, which faces similar all-states cut mechanisms but brings AHCA’s dual control of RHTP and Medicaid payment to potentially align transformation with reimbursement reform, Tennessee’s institutional separation means TDH-led transformation and TennCare-administered payment operate through coordination rather than integration.

KFF projects approximately 250,000 Tennesseans will lose coverage from OBBBA provisions layered on top of the existing 635,000 uninsured (11% of the state population). The combined effect creates a coverage environment where RHTP-funded transformation serves populations who increasingly cannot pay for the services being transformed. SNAP cuts affecting an estimated 57,000 Tennessee families with children compound coverage erosion through nutritional pathways, directly undermining the prevention and community health goals the RHTP application emphasizes.

The COPA Experiment

#

Ballad Health’s Certificate of Public Advantage represents the most significant regulatory experiment in any state’s rural healthcare landscape. In 2018, Tennessee and Virginia granted antitrust waivers allowing Wellmont Health System and Mountain States Health Alliance to merge into a single entity controlling 20 hospitals across 29 counties. The merger was approved on the explicit condition that Ballad meet quality benchmarks, invest in community benefit, and maintain charity care obligations. The COPA created a regulatory laboratory for monopoly oversight that would demonstrate whether antitrust protection could be exchanged for enforceable community benefit.

The experiment has failed by its own metrics. Over four years of COPA oversight, Ballad failed 74% of quality benchmarks established as conditions for its antitrust waiver. The state responded in May 2025 not by enforcing consequences but by lowering the passing threshold from 85/100 to 70/100 in a renegotiated COPA agreement. Ballad missed $194 million in charity care obligations over five years with no penalties imposed. Patients in the 29-county monopoly region report driving 100 miles or more to avoid Ballad facilities. Service line closures have reduced access to specialties including labor and delivery, creating maternal health deserts in a region that already faced above-average maternal mortality.

The COPA expires in 2028, during the RHTP implementation period. Three scenarios carry distinct RHTP implications. If the COPA is renewed without meaningful enforcement, Ballad continues operating as a monopoly partner with documented accountability failures and RHTP funds flow through an organization the state has demonstrated it cannot hold to standards. If the COPA expires and Ballad restructures, the 29-county region faces provider landscape disruption during the RHTP window. If the COPA expires without restructuring, the antitrust waiver ends but Ballad’s market position is functionally unchanged.

TDH’s capacity to manage Ballad as a subawardee is the implementation question no other non-expansion high-burden state faces. The state’s own regulatory apparatus has proven unable to enforce COPA quality conditions against Ballad. Whether CMS cooperative agreement oversight provides leverage that state COPA oversight could not is an open question with no favorable precedent.

Implementation Assessment

#

Approach plausibility. Tennessee’s five-priority structure spreads $86 per rural resident across healthcare transformation, maternal health, prevention, workforce, and technology. The breadth is ambitious for the per-capita allocation. States with comparable funding levels that concentrated on fewer priorities face fewer coordination challenges. Alabama focused on workforce and maternal health. Kansas concentrates on accountable care network development. Tennessee’s application reads as comprehensive strategy rather than strategic prioritization.

The maternal and child health priority is the strongest match between approach and institutional capacity. TIPQC has demonstrated perinatal quality improvement outcomes through existing infrastructure that predates RHTP. TennCare’s Health Starts program provides an existing platform for maternal health integration. Meharry Medical College’s health equity focus adds research capacity that most non-expansion high-burden states lack. Unlike Alabama, which brings workforce and maternal health priorities to an implementation environment without comparable academic infrastructure, Tennessee has both the workforce pipeline and the research capacity to produce measurable maternal health results within the RHTP window.

Workforce development benefits from three academic medical centers with complementary geographic coverage and five AHEC centers, a stronger pipeline infrastructure than Mississippi, Alabama, or South Carolina can deploy. But pipeline programs produce graduates on timelines that extend beyond RHTP’s five-year window, and Tennessee’s fundamental workforce challenge is retention in rural communities rather than training volume. Local workforce models address this directly: creating CHW career pathways and digital infrastructure employment that does not require professional credentialing or relocation for advancement. Tennessee’s workforce plan emphasizes pipeline approaches that may extract talent from rural communities rather than building local careers that stay.

Technology modernization depends on broadband infrastructure that remains uneven across rural Tennessee. TennCare’s developing HIE creates a potential integration pathway, but “developing” means the platform is not operational at the scale RHTP implementation requires. The application’s technology ambitions assume infrastructure maturation on a timeline the state does not fully control. AI-as-infrastructure frameworks require connectivity and device access that rural Tennessee does not universally have.

Architecture trajectory assessment. Tennessee’s RHTP approach reinforces conventional healthcare delivery models rather than building toward alternative architecture. The investment flows through existing hospital systems, including a monopoly provider with demonstrated performance failures. The workforce strategy emphasizes professional training pipelines over local career development. The technology strategy focuses on EHR connectivity rather than service delivery transformation.

The Certificate of Need elimination represents regulatory transformation aligned with enabling alternative architecture, creating conditions where new entrants could deploy service center models without regulatory barriers to market entry. But CON elimination without corresponding investment in alternative models means deregulation enables competition without ensuring transformation. The COPA’s 2028 expiration could create restructuring opportunities in the 29-county monopoly region, but Tennessee has not used RHTP planning to position alternative delivery models for that transition.

Tennessee’s AHEC system and CHW association represent nascent infrastructure for local workforce models, but TNCHWA’s developing professionalization status means Tennessee lacks the Medicaid CHW billing pathways that states like Minnesota and Oregon use to sustain community health worker employment. RHTP investment in CHW programs without billing pathway development creates grant-funded positions that disappear when federal funding ends.

Sustainability design. Tennessee’s non-expansion status creates the structural sustainability problem shared across non-expansion high-burden states: RHTP-funded services that cannot bill Medicaid for the populations most likely to use them. The coverage gap population receives RHTP-funded transformation services during the grant period but has no payer pathway after federal funding ends. Unlike Kansas, where the 100% accountable care target creates sustainability infrastructure that could persist through state investment if expansion eventually passes, Tennessee’s RHTP plan does not build payment architecture that outlasts the grant period. This is not a design flaw unique to Tennessee’s application. It is a structural constraint every non-expansion state faces and that no RHTP application can resolve without Medicaid expansion.

Risk Assessment

#

Primary risk: Subawardee accountability failure. Tennessee faces a unique institutional risk: an RHTP subawardee with demonstrated inability to meet regulatory accountability requirements. Ballad Health failed 74% of COPA quality benchmarks over four years. The state response was to lower standards rather than enforce consequences. Whether CMS cooperative agreement monitoring can achieve what state COPA oversight could not is unknown. RHTP performance metrics and reporting requirements may or may not provide leverage the state’s own regulatory framework failed to generate.

Secondary risk: Sustainability fiction. Tennessee shares the defining failure mode of non-expansion high-burden states. Every non-expansion state faces the question of what sustains transformation investments after RHTP ends without Medicaid billing pathways for the coverage gap population. Tennessee’s 6.5:1 ratio moderates the Medicaid Math dimension, but the sustainability problem is binary rather than scalar: either the coverage gap closes through expansion or RHTP-funded services lose their payer base in Year 6.

Tertiary risk: Authority gap coordination failure. The TDH-TennCare split creates implementation risk when transformation investments must align with payment reform. Value-based care initiatives in the RHTP plan require TennCare cooperation that TDH cannot direct. Unlike Florida, where AHCA controls both RHTP and Medicaid payment, Tennessee must negotiate alignment between agencies that answer to different organizational hierarchies.

Political continuity advantage. No 2026 gubernatorial election. Governor Lee’s administration submitted the application and will oversee at least three years of implementation. Legislative alignment on deregulation (CON elimination, proposed scope of practice expansion) supports rather than obstructs transformation approaches. This stability distinguishes Tennessee from states where mid-program transitions threaten implementation continuity.

Compound disadvantage pattern is moderate. Tennessee’s institutional infrastructure is stronger than Mississippi’s or Alabama’s. Three academic medical centers, 31 FQHCs, functional AHEC networks, and a politically stable governor create conditions where RHTP implementation can achieve measurable interim results. The disadvantage compounds not through institutional absence but through the structural coverage gap, the institutional separation, and the COPA accountability failure that together limit every transformation investment’s long-term viability.

Honest Assessment

#

Tennessee brings the strongest institutional environment among non-expansion high-burden states to implementation within the same structural constraint that limits every non-expansion state. The combination of three academic medical centers, a hybrid local health department network, demonstrated perinatal quality improvement infrastructure, and political stability creates conditions where well-targeted RHTP investments can produce measurable health improvements during the program period. Maternal and child health will likely show the clearest results. Workforce pipeline investments will generate enrollment and early graduates but not the retention outcomes rural communities need within five years.

What Tennessee does well. The application leverages genuine institutional strengths that peer states lack. TIPQC, the academic medical center network, and the AHEC system represent capacity that Mississippi faces without, Alabama accesses through a single institution, and South Carolina distributes across fewer partners. TDH’s standard DOH designation avoids the non-HHS agency complications Alabama faces with ADECA leading healthcare transformation through an economic development lens. The absence of a 2026 election removes Year 1 political disruption risk. Tennessee’s intermediary landscape, including a strong Primary Care Association with 31 FQHCs, provides community-level implementation capacity. The Certificate of Need elimination creates regulatory conditions for alternative delivery models that most states actively prevent.

Where the plan meets reality. Five priorities at $86 per rural resident is thin coverage by any measure. The TDH-TennCare authority gap means payment model innovation requires cross-agency negotiation rather than internal direction. Ballad Health’s documented performance failures create subawardee risk in the 29-county COPA region that no other Cluster 4 profile contains. The state’s demonstrated unwillingness to enforce COPA accountability requirements suggests CMS monitoring may face similar enforcement limitations. The coverage gap remains the structural constraint no transformation investment addresses: an estimated 95,000 to 300,000 adults cannot access TennCare, cannot afford marketplace coverage, and will use RHTP-funded services without a sustainable payer pathway. RHTP cannot solve this problem because the statute prohibits backfilling Medicaid revenue losses and cannot create coverage where state policy refuses to provide it.

What would change the assessment. Medicaid expansion remains the structural intervention that would shift Tennessee from managed improvement to genuine transformation. Short of that, three developments would elevate the assessment. First, concentrating RHTP resources on the two or three priorities with the strongest institutional backing rather than distributing across five would improve implementation depth. Maternal health and workforce development have the infrastructure. Prevention and technology do not. Second, establishing CMS-enforceable performance benchmarks for Ballad Health as a condition of subaward funding would provide accountability leverage the COPA process has not delivered. TDH cannot enforce what the state refused to enforce, but CMS might. Third, treating the 2028 COPA expiration as a provider landscape planning event rather than waiting for it to arrive would position the 29-county region for whatever restructuring follows. The service center model offers an alternative to the hospital monopoly that has failed its community benefit commitments. Tennessee has not incorporated alternative architecture planning into RHTP strategy.

Tennessee has conditions for incremental improvement. The conditions for transformation require policy changes this program cannot deliver.