Disputed $15.5 billion R.I. Medicaid contract canceled amid new federal requirements
Rhode Island officials have scrapped a tentatively awarded, $15.5 billion contract to manage the state's Medicaid program. Blue Cross Blue Shield of Rhode Island, pictured, was one of four vendors that competed for a piece of the contract. (Photo by Alexander Castro/Rhode Island Current)
Rhode Island officials have scrapped a tentative, $15.5 billion, five-year contract to manage the state Medicaid program amid new federal rules, Kerri White, a spokesperson for the Rhode Island Executive Office of Health and Human Services (EOHHS), confirmed via email on Tuesday.
Instead, the state will extend its existing Medicaid contract to June 30, 2026 — a year later than it was scheduled to end. The massive contract, equal to 25% of the state's annual budget, determines which vendors run the state's medical assistance program for nearly 320,000 Rhode Islanders.
White cited updated federal regulations and timeline requirements under the Centers for Medicare and Medicaid Services (CMS) as the reason why the state decided to cancel the award.
'The model contract must be redrafted to align with these changes and any additional federal changes the new administration enacts,' White said.
President Donald Trump has issued a string of executive orders since taking office that could reshape state Medicaid programs, though details remain fuzzy. His attempt to freeze federal funding — blocked temporarily by federal judges in Rhode Island and D.C. — could also have sweeping consequences for Medicaid recipients if implemented.
A tentative award announced by state officials July 16 would have split the new, five-year contract between two companies — Neighborhood Health Plan of Rhode Island and UnitedHealthcare of New England.
Two other bids, submitted by Blue Cross Blue Shield of Rhode Island and Tufts Public Health Plans, Inc., were initially disqualified because they did not meet a minimum score set by a review committee.
The losing companies filed separate appeals of the state's decision, pointing to flaws in the scoring criteria and the makeup of the review committee, which Blue Cross alleged unfairly included a former employee of UnitedHealthcare. Based on their claims, state administrators agreed in October to restart its review of all four proposals.
Chief Purchasing Officer Jonathan Womer, who also heads the Rhode Island Department of Administration, acknowledged in an Oct. 15 letter that the state was too vague in explaining the scores awarded by the original, five-person review committee. Womer called for a new review committee to reevaluate all four proposals, bringing in a non-government subject matter expert to suggest potential changes to scoring criteria.
The appeals 'had no bearing' on the decision to cancel the existing award, White said.
EOHHS will work with the state purchasing division to determine next steps in issuing a new solicitation, White said.
United and Neighborhood, along with Tufts, have been managing Medicaid services under the existing state contract, awarded in 2016.
In fiscal 2022, the most recent data available, Neighborhood was responsible for more than half of the state's Medicaid patients, while UnitedHealthcare had 30% and Tufts had 5%. The remaining 6% was paid directly to providers through a fee-for-service model, rather than through the managed care organizations.
Peter Marino, president and CEO of Neighborhood, said the company is still committed to serving Rhode Island residents.
'Neighborhood is confident in our expertise and capabilities as a nation-leading health plan, and we remain a dedicated partner to EOHHS in serving Rhode Islanders,' Marino said in an emailed statement Tuesday. 'We are steadfast in our commitment to ensuring access to healthcare and social services for the 220,000 members Neighborhood serves, as the largest Medicaid and Exchange based health plan and the only Medicare-Medicaid plan in Rhode Island.'
Kathleen Makela, a spokesperson for Tufts' parent company, Point32Health, said the company was pleased with the state's decision to cancel the award.
'We remain strongly committed to Rhode Island and to meeting the unique and diverse health needs of all Rhode Islanders,' Makela said in an email on Tuesday. 'We believe that it's important that our 15,000 RI Together members continue to have access to Tufts Health Plan's high-quality health care services.'
Blue Cross acknowledged, but did not immediately respond to, requests for comment Tuesday.
UnitedHealthcare did not immediately respond to inquiries for comment.
The contract cancellation does not require any actions by or effects on Rhode Island Medicaid recipients, White said.
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And most of them — around 92% — are working, caregiving, attending school or disabled. Earlier estimates of the budget bill from the Congressional Budget Office found that about 5 million people stand to lose coverage. A KFF tracking poll conducted in May found that the enrollees come from across the political spectrum. About one-fourth are Republicans; roughly one-third are Democrats. The poll found that about 7 in 10 adults are worried that federal spending reductions on Medicaid will lead to more uninsured people and would strain health care providers in their area. About half said they were worried reductions would hurt the ability of them or their family to get and pay for health care. Amaya Diana, an analyst at KFF, points to work requirements launched in Arkansas and Georgia as keeping people off Medicaid without increasing employment. Amber Bellazaire, a policy analyst at the Michigan League for Public Policy, said the process to verify that Medicaid enrollees meet the work requirements could be a key reason people would be denied or lose eligibility. 'Massive coverage losses just due to an administrative burden rather than ineligibility is a significant concern,' she said. One KFF poll respondent, Virginia Bell, a retiree in Starkville, Mississippi, said she's seen sick family members struggle to get onto Medicaid, including one who died recently without coverage. She said she doesn't mind a work requirement for those who are able — but worries about how that would be sorted out. 'It's kind of hard to determine who needs it and who doesn't need it,' she said. Some people don't if they might lose coverage with a work requirement Lexy Mealing, 54 of Westbury, New York, who was first diagnosed with breast cancer in 2021 and underwent a double mastectomy and reconstruction surgeries, said she fears she may lose the medical benefits she has come to rely on, though people with 'serious or complex' medical conditions could be granted exceptions. She now works about 15 hours a week in 'gig' jobs but isn't sure she can work more as she deals with the physical and mental toll of the cancer. Mealing, who used to work as a medical receptionist in a pediatric neurosurgeon's office before her diagnosis and now volunteers for the American Cancer Society, went on Medicaid after going on short-term disability. 'I can't even imagine going through treatments right now and surgeries and the uncertainty of just not being able to work and not have health insurance,' she said. Felix White, who has Type I diabetes, first qualified for Medicaid after losing his job as a computer programmer several years ago. The Oreland, Pennsylvania, man has been looking for a job, but finds that at 61, it's hard to land one. Medicaid, meanwhile, pays for a continuous glucose monitor and insulin and funded foot surgeries last year, including one that kept him in the hospital for 12 days. 'There's no way I could have afforded that,' he said. 'I would have lost my foot and probably died.' ___ Associated Press writer Susan Haigh in Hartford, Connecticut contributed to this article.
