STATE HOUSE – Taxpayers pay almost $2 billion each year to three private health insurance companies, also known as Managed Care Organizations (MCOs), to administer benefits for about 90% of Rhode Island Medicaid enrollees. Sen. Linda Ujifusa, a member of the Senate Health and Human Services Committee, has proposed legislation to audit these companies to ensure those taxpayer dollars are being properly spent.

“With skyrocketing health care costs, hospitals closing or being sold to out-of-state, for-profit entities, primary care providers leaving in droves and virtually no replacements even applying to fill empty jobs, we all see our health care system is in crisis,” said Senator Ujifusa. “Past efforts to ‘reinvent Medicaid’ by putting private middlemen MCOs in charge have clearly failed.”

Three MCOs, Neighborhood Health Plan of Rhode Island, Tufts Health Plan and United Healthcare Community Plan, currently administer health benefits for about 316,000 Rhode Islanders. For many years, the Rhode Island Auditor General has noted the state lacks effective auditing and monitoring of MCO activity, likely leading to inaccurate reimbursements.

Senator Ujifusa’s bill (2023-S 0109) would instruct the Auditor General to hire an independent consultant to compare costs and patient outcomes of the MCO program to those that could be achieved under a fee-for-service, state-managed program. If the audit determines the state could save money by switching, the legislation instructs the state to come up with a plan to transition away from MCOs. Rep. Joseph  J. Solomon Jr. (D-Dist. 22, Warwick) has introduced companion legislation (2023-H 5474) in the House.

In 2009, Connecticut conducted a similar MCO audit which found the state was overpaying its three MCOs (United Healthcare, Aetna, and Community Health Network of Connecticut) nearly $50 million per year. In 2012, Connecticut implemented a state-run, fee-for-service Medicaid program and saved hundreds of millions of dollars and achieved the lowest Medicaid cost increases in the country, while improving access to care.

“We should follow Connecticut’s lead,” said Senator Ujifusa. “Everyone recognizes that Medicaid reimbursements to providers have been too low, but what we’ve missed is that the best way to increase Medicaid reimbursements without increasing taxes is to focus on middlemen MCOs and their pharmacy benefit managers (PBMs),” Senator Ujifusa said.

The multi-year contracts with all three MCOs are set to be renewed this fall.

“It is imperative we finally do an in-depth audit of MCOs now, before those contracts are renewed,” said Senator Ujifusa. “State efforts to study skyrocketing health care costs have focused almost exclusively on patients and providers as cost-drivers. But patients and providers are struggling. The only ones doing well financially are the middlemen MCOs and PBMs, so it’s time we stop ignoring the elephants in the room.”