Neighborhood, UnitedHealthcare to share $3B state Medicaid contract

Neighborhood Health Plan of Rhode Island and UnitedHealthcare of New England Inc. both scored highly in a technical review of the bids submitted by managed care organizations to oversee Medicaid services in Rhode Island. (athima tongloom/Getty image)

Neighborhood Health Plan of Rhode Island and UnitedHealthcare of New England Inc. will share a coveted contract to run Rhode Island’s more than $3 billion Medicaid program for the next five years, the Rhode Island Executive Office of Health and Human Services announced on Tuesday.

The two private health insurers were among the four vendors competing for part of the massive contract, which serves one-third of state residents and comprises 25% of the state’s annual budget. The Centers for Medicare & Medicaid Services lets states decide how to structure their contracts with private health insurers, or managed care organizations, who oversee Medicaid services.

Two other companies submitted proposals in response to the state’s December solicitation : Tufts Health Public Plans Inc. and Blue Cross Blue Shield of Rhode Island. Both were disqualified because they did not meet the minimum score required on the technical portion of the proposal, according to a July 11 memo from David Francis, the interdepartmental project manager for the Rhode Island Department of Administration.

Four vendors want in on managing Rhode Island’s Medicaid program

Bidders were required to score 85 points out of a possible 100 on their technical proposals; Blue Cross scored 63.22 points and Tufts scored 54.38 points, according to Francis’ memo.

“Blue Cross & Blue Shield of Rhode Island is reviewing the just-released results of the state’s Medicaid Managed Care procurement process,” Rich Salit, a company spokesperson, said in an email on Tuesday. “While we work to better understand the state’s assessment, we remain committed to collaborating with the Executive Office of Health and Human Services and to building healthier lives and communities in Rhode Island.”

Kathleen Makela, a spokesperson for Tufts, said the company was disappointed in the decision.

“We strongly believe that Tufts Health Plan continues to be the plan best suited to meet the unique health needs and address the diverse challenges of the Medicaid beneficiaries across Rhode Island,” Makela said in an email Tuesday night. “For the past seven years, Tufts Health Plan has developed a strong understanding of our Tufts Health RITogether members’ health needs. By providing innovative, high-quality health care coverage, our members experience exceptional primary and behavioral health care, with tailored, member-centered care management to support their evolving health and wellness needs.”

Makela also said the company remains committed to providing “high quality health care coverage” to Medicaid coverage until the new contract begins.

Neighborhood and United both exceeded the required technical score minimum, with final scores of 90.53 and 88.71 respectively.

Francis in his memo pointed to Neighborhood’s longstanding history providing Medicaid managed care services and “highly member-centric approach” as strengths for the company, while its weaknesses included a poor approach to pharmacy services and resistance to collaboration with the state if it opts to move to a single pharmacy benefit manager for Medicaid recipients. UnitedHealthcare earned praise for “highly organized and comprehensive responses to questions” and demonstrated support for the state’s goal of moving to a single pharmacy benefit manager, among other strengths. Its sole weakness was missing responses to certain questions, the memo stated.

The new contract, which begins July 1 2025, authorizes both awarded insurers to oversee services to nearly 320,000 residents a year who qualify for the medical assistance program for low-income and disabled children, adults and families. 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.

How the new contract will be divided between United and Neighborhood, including the amount of money awarded, will depend on monthly, per-person payment and enrollment standards set by federal law, Kerri White, a spokesperson for EOHHS, said in an email. The total contract is valued at $3.1 billion in fiscal year 2026, and $3.4 billion in fiscal 2027, White said.

The new agreement includes more stringent reporting and oversight of Medicaid vendors in an effort to reduce fraud, waste and abuse while ensuring stability in rates paid to providers. Lack of adequate compensation to Medicaid providers, most of whom are paid through managed care organizations like United and Neighborhood, has been a source of growing concern among lawmakers and administrators, who cite uncompetitive rates compared with neighboring states as a reason for Rhode Island’s provider shortage.

A March report by the the Office of the Auditor General also raised alarm bells over Medicaid spending, finding that the state paid $38.4 million from 2019 to 2021 to Medicaid managed care organizations to cover services for patients who don’t live in Rhode Island, and therefore should not be covered under the state’s medical assistance program.

“Many of the improvements made to this contract will positively impact our members’ care, bring greater parity between medical and behavioral healthcare, incorporate Long-Term Services and Supports (LTSS) as an in-plan benefit, reduce unnecessary prior authorizations, and focus on health equity,” Rhode Island Health and Human Services Secretary Richard Charest said in a statement.

The new contract runs through June 30, 2030, with the option for a five-year renewal. Existing Medicaid members who are enrolled in a Tufts Health plan will be contacted by the state to select a new plan for care.

Updated to include a response from Tufts Health Public Plans Inc.

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