The Tennessee Legislature’s 2026 session begins on January 13. This year’s session unfolds against the backdrop of a major election year. Tennessee will elect a new governor in 2026, with Governor Bill Lee reaching the end of his two terms in office. Additionally, all 99 members of the House of Representatives and 17 members of the State Senate will be up for reelection in November. Legislative leaders have signaled interest in keeping the session short to accommodate campaigning.
Under the leadership of Lt. Governor and Speaker of the Senate Randy McNally (R) and Speaker of the House Cameron Sexton (R), and in conjunction with Governor Lee (R), this session will address a range of issues, including the state budget, the Rural Health Transformation Program, Certificate of Need repeal, healthcare workforce scope of practice legislation, and education funding.
HCA Healthcare is providing this legislative preview to keep colleagues updated on key developments that may affect care and access in the communities we serve. This is an overview of key policy proposals that lawmakers are likely to consider during the 2026 session.
Budget
Governor Lee will release his proposed budget in early February. Preliminary estimates reveal that the state will be in the range of $500M for maintenance of effort for the upcoming fiscal year. While Tennessee has enjoyed strong state revenue growth in recent years, that growth has started to slow. We anticipate the state will address these downturns when they begin to consider the 2027 budget in Q1.
Rural Health Transformation Program
The Rural Health Transformation Program (RHTP), a new program created under the One Big Beautiful Bill Act (OBBBA), will award $50 billion in state grants between 2026 and 2030. The program is designed to support rural healthcare access, workforce capacity, technology modernization, and infrastructure investment.
In November 2025, Tennessee submitted the state’s application, and in late December, CMS awarded Tennessee approximately $206.8 million for calendar year 2026. Funding distribution is expected to begin in early 2026.
Tennessee’s proposed RHTP initiatives focus on strengthening rural health systems through several key efforts:
- Rural Healthcare Transformation: Strengthen rural health systems by modernizing facilities and expanding value-based care.
- Maternal and Child Health: Support strong starts for rural families through generational health investments.
- Prevention & Community Health: Increase early detection, expand access to preventive services, and improve local nutrition and wellness.
- Health Technology & Infrastructure: Invest in digital tools that improve care coordination, reduce administrative burden, and support innovative service delivery.
- Workforce Development: Build and retain a skilled rural healthcare workforce through education and training pathways.
Certificate of Need Repeal
Tennessee’s RHTP application states plans to introduce and pass legislation in 2026 that would fully eliminate Certificate of Need (CON) laws, with implementation by January 1, 2027. The repeal effort is designed to reduce barriers to entry, help improve access and quality, and lower costs.
In addition, two CON-related bills from the 2025 session remain active:
- SB 1369/HB 819, Removing Acute Care Hospitals from CON Requirements
- SB 853/HB 970, Full Repeal CON Requirements, which would apply to all hospital-based services
Healthcare Workforce Scope of Practice
The RHTP application also included plans to introduce scope of practice legislation in 2026 that would allow mid-level providers, including physician assistants, nurse practitioners, pharmacists, and dental hygienists, to perform more advanced care procedures, with implementation by January 1, 2027. Governor Lee has not shared specific language, but we anticipate the legislation will seek to alleviate critical workforce shortages and enable more timely, accessible care for rural residents.
Education Funding
After the legislature created the Education Freedom Scholarship Program in 2025, education funding will continue to be a key topic during the 2026 legislative session.
- Funding Formula: The legislature must review a public school funding formula that passed in 2023 and make changes if deemed necessary. Education advocates have already called for changes in how the state identifies economically disadvantaged students to ensure those from lower-income backgrounds receive enough resources.
- Education Freedom Scholarship Program: The state received more than 40,000 applications for the scholarship program that is funded to serve 20,000 students. There is likely to be a legislative push in 2026 to expand the scholarship program.
