PROVIDENCE, R.I. (WPRI) — A state contract for Medicaid services worth more than Rhode Island’s entire annual budget has been awarded to two health insurers, Neighborhood Health Plan of Rhode Island and UnitedHealthcare of New England.

The so-called Medicaid Managed Care Organizations contract, valued at upward of $15.5 billion over five years, designates outside insurance companies to provide Medicaid coverage to Rhode Island residents enrolled in the program.

The federal and state-funded health plan for low-income families and people with disabilities currently covers nearly 321,000 Rhode Islanders, approaching a third of the state’s population. The managed-care contract pays for coverage and services to about 90% of all Medicaid members, according to state estimates.

The lucrative state contract, which is slated to begin next July, is one of the most expensive for taxpayers. To put the $15.5 billion figure into perspective, this year’s state budget totaled $14 billion. The insurers earn a profit as part of their administrative fee.

“The new managed care contract will provide better services for Rhode Islanders who rely on Medicaid for their health care and stronger transparency and oversight of its vendors,” Gov. Dan McKee said in a statement announcing the new contract.

The contract is as much a financial boon for Neighborhood Health and UnitedHealthcare as it is a blow to Blue Cross Blue Shield of Rhode Island and Tufts Health Plan, two other insurance companies that had sought to win the multibillion-dollar contract.

State officials said Neighborhood Health scored the highest in its technical proposal for the contract followed by UnitedHealthcare. Blue Cross Blue Shield and Tufts “did not meet the technical proposal score required for the solicitation,” according to the state.

“Blue Cross Blue Shield of Rhode Island is reviewing the just-released results of the state’s Medicaid Managed Care procurement process,” Blue Cross spokesperson Richard Salit said in a statement.

“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,” he added.

R.I. Secretary of Health and Human Services Richard Charest thanked all the companies that expressed interest, saying the state solicited information from those companies before putting out a request for proposals and the input helped strengthen the contract requirements.

State Medicaid Director Kristin Sousa echoed the sentiment, calling the feedback “invaluable.”

“We are committed to improving services for the Rhode Islanders who rely on Medicaid to manage their healthcare needs,” Sousa said in a statement.

Awarding the contract caps off a yearslong — and at times bumpy — procurement effort. An initial bidding process led to a series of unforced errors by Blue Cross and Tufts. The state eventually scrapped the first effort, saying it was necessary because the federal government had tweaked its rules, and relaunched the bidding process in December.

State officials did not immediately provide a definitive price tag for the total value of the contract, saying it fluctuates annually based on a myriad of factors, such as enrollment and rates.

But they estimate the first year will cost $3.1 billion, mostly coming from federal funds, meaning if annual expenses stayed consistent it would be about $15.5 billion over five years.

And it’s likely the annual cost could go even higher, as the state is already estimating the second year of the contract will cost $3.4 billion. Estimates for the following three years were not immediately available.

State officials said current Medicaid recipients don’t need to take any immediate action. Recipients enrolled in Tufts, which currently holds part of the existing managed-care contract, “will be contacted about their options” to select a new insurer, according to the state.

The contract will run through June 2030 with an option to extend for up to five years.

Eli Sherman ( esherman@wpri.com ) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook .

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