2023 -- H 5402

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LC001115

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

     

     Introduced By: Representatives Casimiro, Noret, Bennett, Potter, Morales, McGaw,
Cotter, and Stewart

     Date Introduced: February 03, 2023

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Legislative findings.

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     The general assembly finds and declares the following:

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     (1) Medicaid covers approximately one in four (4) Rhode Islanders, including: one in five

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(5) adults, three (3) in eight (8) children, three (3) in five (5) nursing home residents, four (4) in

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nine (9) individuals with disabilities, and one in five (5) Medicare beneficiaries.

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     (2) Prior to 1994, Rhode Island managed its own Medicaid programs; directly reimbursing

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healthcare providers by paying fee-for-service ("FFS").

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     (3) Currently, the state pays about $1.7 billion to three (3) private health insurance

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companies, Neighborhood Health Plan of Rhode Island, Tufts Health Plan and United Healthcare

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Community Plan (Managed Care Organizations - "MCOs"), to “manage” Medicaid benefits for

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about ninety percent (90%) of all Rhode Island Medicaid recipients (approximately three hundred

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thousand (300,000)); the other ten percent (10%) remains FFS.

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     (4) MCOs are not actual health care providers - they are middlemen who take set per-

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person per-month fees from the state, pass some of that money to actual health care providers, and

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keep the rest as MCO profit.

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     (5) MCOs increase their profits by limiting health care goods and services for Medicaid

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patients.

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     (6) Theoretically, MCOs are supposed to help states control Medicaid costs and improve

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access and health care outcomes; however, there is no significant evidence of these objectives.

 

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     (7) Peer-reviewed research, including two (2) separate literature reviews done in 2012 and

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2020, concluded: "While there are incidences of success, research evaluating managed-care

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programs show that these initial hopes [for improved costs, access and outcomes] were largely

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unfounded.”

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     (8) Since 2009, every annual Single Audit Report by the Rhode Island Office of the Auditor

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General has found that the state lacks adequate oversight of MCOs.

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     (9) In 2009, Connecticut conducted an audit which found it was overpaying its three (3)

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MCOs (United Healthcare Group, Aetna, and Community Health Network of Connecticut) nearly

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fifty million dollars ($50,000,000) per year.

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     (10) In 2012, Connecticut returned to a state-run fee-for-service Medicaid program and

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subsequently saved hundreds of millions of dollars and achieved the lowest Medicaid cost increases

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in the country and improved access to care.

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     (11) In 2015, the Rhode Island Auditor General found that Rhode Island overpaid MCOs

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more than two hundred million dollars ($200,000,000) and could not recoup overpayments until

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2017.

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     (12) In 2015, Governor Raimondo began efforts to “Reinvent Medicaid” that led to

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increased Medicaid privatization, including the UHIP/RI Bridges project and MCO five (5) year

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contracts.

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     (13) In the FY 2017, FY 2018, and FY 2019 Single Audit Reports, the Rhode Island

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Auditor General bluntly concluded, "The State lacks effective auditing and monitoring of MCO

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financial activity.”

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     (14) In its latest FY 2020 Single Audit Report, the Auditor General notes that EOHHS

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failures to collect adequate information from MCOs has had the “effect” of, “Inaccurate

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reimbursements to MCOs for contract services provided to Medicaid enrollees.”

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     (15) The federal Center for Medicaid and CHIP Services (CMCS) determined that in 2019,

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Rhode Island spent the second highest amount per capita for Medicaid patients out of all states and

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had a, “High overall level of data quality concern.”

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     (16) The Rhode Island executive office of health and human services (EOHHS) has not

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taken sufficient actions to address problems with MCO oversight, for example:

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     (i) Until 2021, EOHHS made Rhode Island one of only six (6) states with MCO contracts

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that had not required MCOs to spend at least eighty-five percent (85%) of their Medicaid revenues

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on covered services and quality improvement (i.e., have a Medical Loss Ratio, MLR, of 85%);

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     (ii) Unlike thirty (30) other states, EOHHS failed to require MCOs to remit to the state

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Medicaid program excess capitation revenues not adequately applied to the costs of medical

 

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services;

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     (iii) EOHHS failed to file annual Medicaid reports; publishing FY 2019 data in a report

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dated May 2021; and

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     (iv) EOHHS failed to ensure that FY2021 MCO quarterly reports were made in a

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“Financial Data Reporting System,” as set forth in a response to criticisms raised by the Rhode

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Island Auditor General.

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     (17) Other states that more recently adopted Medicaid MCO managed care, such as Iowa

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and Kansas, have suffered cuts in health care, far less than expected savings, and sacrificed

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oversight and transparency.

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     (18) During the COVID-19 pandemic, Rhode Island Medicaid enrollments increased about

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twelve percent (12%) as people lost their jobs and health insurance.

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     (19) During the pandemic, MCO private insurance companies earned record profits while

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health care providers such as hospitals suffered severe financial losses from deferred elective

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medical procedures.

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     (20) Rhode Island EOHHS wants to continue to help private MCO insurance companies

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by giving a set per person per month fee to health care providers in order that health care providers

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assume “full risk capitation.”

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     (21) Rhode Island is the only state in the country that has an “Office of Health Insurance

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Commissioner” whose top listed priority is to, “Guard the solvency of health insurers.”

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     (22) Private health insurance companies have more government funding and support than

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any other type of business in Rhode Island.

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     (23) The Centers for Medicare and Medicaid Services (CMS) has issued guidance intended

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to help states monitor and audit Medicaid and Children’s Health Insurance Program (CHIP)

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managed care plans to address spread pricing and appropriately incorporate administrative costs of

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the Pharmacy Benefit Managers (PBMs) when calculating their medical loss ratio (MLR).

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     (24) States that chose to establish minimum MCO MLRs with requirements to return

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monies may recoup millions of Medicaid dollars from plans that failed to meet the State-set

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minimum MLR thresholds.

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     (25) Given the $1.7 billion taxpayer dollars given to MCOs and the current lack of adequate

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monitoring and oversight, the costs of audits set forth by this legislation are justified and necessary.

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     (26) The executive office proposes to begin Medicaid billing for inpatient substance use

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disorder recovery facilities, pursuant to the previously issued waiver of the Institute of Mental

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Disease exclusion rule, facilitating the raising of rates in a budget-neutral manner.

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     SECTION 2. Chapter 40-8 of the General Laws entitled "Medical Assistance" is hereby

 

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amended by adding thereto the following section:

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     40-8-33. Medicaid programs audit, assessment and improvement.

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     (a) The auditor general, in consultation with the executive office of health and human

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services, shall hire and supervise an outside contractor or contractors to audit the state's managed

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care entities in order to determine whether managed care entities are providing savings, access and

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outcomes that are better than what could be obtained under a fee-for-service program managed by

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the state.

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     (b) Managed care entities shall provide information necessary to conduct this audit, as well

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as all legally required audits, in a timely manner as requested by the outside contractors.

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     (c) Failure of a managed care entity to provide such information in a timely manner shall

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permit the state to seek penalties and terminate the managed care entity’s Medicaid contract.

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     (d) Staff and outside contractors working on the audit shall not have relevant financial

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connections to managed care entities or the outcome of the audit.

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     (e) The auditor general shall present the results of the audit to the public and general

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assembly within six (6) months after the effective date of this section.

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     (f) If the audit concludes that a fee-for-service state-run Medicaid program could provide

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better savings, access and outcomes than the current managed care system, the office of health and

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human services and the auditor general shall develop a plan for the state to transition to a state-run

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fee-for-service program within two (2) years from the effective date of this section.

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     (g) Contracts with managed care entities shall include terms that:

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     (1) Allow the state to transition to a fee-for-service state-run Medicaid program within two

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(2) years from the effective date of this section;

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     (2) Require managed care entities to meet a medical loss ratio (MLR) of greater than ninety

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percent (90%), net of pharmacy benefit manager costs related to spread pricing;

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     (3) Require managed care entities to remit to the state Medicaid program excess capitation

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revenues that fail to meet the ninety percent (90%) MLR; and

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     (4) Set forth penalties for failure to meet contract terms.

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     (h) The attorney general shall have authority to pursue civil and criminal actions against

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managed care entities to enforce state contractual obligations and other legal requirements.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

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     This act would require the auditor general to oversee an audit of Medicaid programs

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administered by managed care organizations. The auditor general would report findings to the

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general assembly and the director of the executive office of health and human services (EOHHS)

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within six (6) months of the passage of this act. The director of EOHHS would provide the general

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assembly with a plan within two (2) years of the passage of this act to end privatized managed care

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and transition to a fee-for-service state-run program if the audit demonstrates the plan would result

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in savings and better access and healthcare outcomes.

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     This act would take effect upon passage.

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