McKee administration touts $15 billion Medicaid contract. Why 2 companies are protesting

PROVIDENCE – Two major players in the Rhode Island health insurance arena are protesting the award of a five-year Medicaid contract – worth upwards of $15 billion – to provide managed-care services to roughly a third of the state's population.

On July 16, the McKee administration announced the award of the massive contract to two of the three companies that hold the current contract: Neighborhood Health Plan of Rhode Island (NHPRI) and UnitedHealthcare of New England (UHC).

“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 on the day of the announcement.

But Blue Cross & Blue Shield called the solicitation-and-award process "fatally flawed" on multiple grounds. Tufts – which is one of three healthcare plans with a current state contract – also objected, as first reported by WPRI . ("The protests are currently under review by the Department of Administration. When completed, we will issue a written determination,'' an agency spokeswoman told The Journal.)

"Given the magnitude of the State's Medicaid Program – serving a third of the State's total population and resulting in the expenditure of billions of dollars of public funds – it is essential that the State get this procurement right,'' but it did not, wrote BCBS's lawyers at Pierce Atwood.

Conflict of interest raised

Among the many alleged "defects," BCBS alleged that United and Neighborhood Health omitted required information from their responses, "which should have disqualified them from receiving an award," including past sanctions and corrective actions required of them or their affiliates.

The July 29 BCBS protest letter also alleged potential conflicts of interest in that every member of the bid review team is a member of the "same managed care team" within the Executive Office of Health & Human Services; in other words, people who "currently work with UHC and NHP on a day-to-day basis and have ongoing relationships with employees at both of those plans, creating at least the perception of bias."

BCBS alleged one unnamed person on the review committee "worked for one of the winning bidders within the past two years, opening the door to conflicts of interest, bias, and favoritism."

As a result of these and other alleged defects, "the intended contract determination unfairly and arbitrarily limits options for the [states] low-income families, adults, children with special needs, and those that are aged, blind, and disabled that depend on the State for their health needs," BCBS alleged.

BCBS also asked for more time to respond to the disputed award, based on the fact the state has not responded to the "Access To Public Records Act (APRA)" request it made for documents related to the bid solicitation on July 17.

Among the issues Tufts Health raised in its protest letter: "If the award is not overturned, [TUFTS] will be forced to exit the Medicaid managed care program in the state as of July 2025, and its thousands of members will be required to find a new health plan for their coverage."

Tufts also questioned the methodology for scoring the bids and, in the end, both asked the state to rescind the awards and go out to bid again.

Benefits of new Medicaid contracts

Among the touted benefits of the two new Medicaid contracts, scheduled to start on July 1, 2025, according to the McKee administration.

• Reducing unnecessary prior authorizations (PAs), particularly for behavioral health services.
• Requiring more "executive level compensation transparency," to ensure the appropriate use of Medicaid funds;
• Increasing oversight and accountability for the use of Pharmacy Benefit Managers (PBM), including the prohibition on "the practice of charging more for a product or service than the cost to obtain it."
• Increasing financial sanctions and publication of corrective actions.
• The designation of "a children’s health coordinator to ensure all enrolled children receive "appropriate care, required vaccinations and lead testing."

Karen Greco, the new spokeswoman for the Department of Administration, told The Journal: "We don’t have a total estimated cost of the whole 5-year contract,'' but it is expected to cost an estimated $3.1 billion in the year beginning on July 1, 2025, and $3.4 billion the following year,

The new contract, which will begin on July 1, 2025, and run through June 30, 2030, contains an option to extend for up to 5 additional years.

This article originally appeared on The Providence Journal: McKee administration touts $15 billion Medicaid contract. Why 2 companies are protesting