H 8561Medical Services

State Affairs and Government - Medicaid Program Funding and Reallocation of Enrollment Savings

This bill requires that state savings from reduced Medicaid enrollment be exclusively used to increase healthcare provider reimbursement rates.

Introduced

Population
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Introduced May 15, 2026Committee House Finance

Plain-English Summary

This bill dictates that any money the state saves from having fewer people enrolled in Medicaid must be kept within the healthcare system. Instead of using these savings for other state budget needs or deficit reduction, the funds will be used to increase the reimbursement rates paid to healthcare providers, such as hospitals, doctors, and community health centers. The state health office is required to adjust these payment rates, ensure most of the money goes directly to providers rather than insurance companies, and submit an annual report detailing the savings and rate adjustments.

For younger readers

Medicaid is a government program that helps pay for doctor visits for people who don't have a lot of money. Sometimes, fewer people use this program, which saves the government money. This bill says that any money saved must stay in the healthcare system. The state cannot use it for other things. Instead, the saved money will be used to pay hospitals and doctors a little more when they treat patients who still use the program. The state also has to write a report every year to show exactly how this saved money was spent.

Who & Where It Applies

Impacted groups

Healthcare providersHospitalsCommunity health centersMedicaid patientsManaged care organizations

Impacted communities

All

Constitutional & Fiscal Check

None Likely. The bill simply directs state budget appropriations and Medicaid reimbursement rates, which falls squarely within the legislature's authority to manage state funds and programs. It does not implicate free speech, due process, or search and seizure rights.

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Directs critical funding to community health centers and hospitals that serve vulnerable, low-income populations, ensuring these essential facilities remain financially stable.
Prevents the state from diverting healthcare savings into unrelated budget areas, protecting the overall pool of resources dedicated to the public healthcare safety net.
Mandates strict oversight and a 90% pass-through rate for managed care organizations, ensuring corporate insurers do not hoard the savings and that the money reaches frontline providers.
Fails to establish a state-level safety net for the thousands of Rhode Islanders expected to lose Medicaid coverage, seemingly accepting the coverage loss as a given.
Focuses strictly on paying healthcare businesses and providers for uncompensated care rather than protecting the uninsured individuals from receiving financially devastating medical bills.
Mandates that savings go only toward increasing provider rates, missing an opportunity to use those funds to expand Medicaid eligibility or add covered services like dental and vision care.

For Conservatives

Offsets the financial burden on private healthcare businesses by ensuring they receive higher reimbursements for the uncompensated care they are often legally required to provide.
Reflects a reduction in overall Medicaid enrollment, aligning with conservative goals to decrease dependency on government-funded welfare programs.
Introduces stringent reporting and compliance requirements for the state health office, increasing transparency and accountability regarding how taxpayer funds are distributed.
Prohibits the state from using Medicaid savings for deficit reduction or taxpayer relief, mandating that the government spend the funds instead of saving them.
Imposes strict government price controls on private managed care contracts by mandating a 90% pass-through rate, limiting corporate freedom and operational flexibility for insurers.
Artificially inflates Medicaid reimbursement rates based on temporary enrollment savings, which could create unsustainable ongoing funding expectations for providers once those savings stabilize.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 40 additions

Section 1. Legislative findings. The general assembly finds and declares that:

(1) The General Assembly recognizes the importance of maintaining access to healthcare services for Rhode Islanders and supporting a stable, functioning healthcare delivery system;

(2) Recent and anticipated federal policy changes are expected to reduce Medicaid enrollment, resulting in a loss of coverage for thousands of Rhode Islanders;

(3) The loss of insurance coverage does not eliminate the need for healthcare services, but shifts the cost of delivery of care to providers serving all patients regardless of ability to pay;

(4) Hospitals, community health centers, and other providers will continue to deliver necessary care, resulting in increased uncompensated care and financial pressure on the healthcare system;

(5) Reductions in Medicaid enrollment are expected to generate savings within the Medicaid program;

(6) Aligning those savings with the continued demand for care supports provider stability and access to services across the state; and

(7) Accordingly, any Medicaid program savings associated with enrollment reductions shall be retained within the healthcare system and reinvested in providers through targeted increases in reimbursement.

SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND GOVERNMENT" is hereby amended by adding thereto the following chapter: 42-169-1. Definitions. As used in this chapter, “enrollment-driven savings” means the reduction in Medicaid expenditures in the fiscal year ending June 30, 2028, attributable to decreases in enrollment, as reflected in the estimates adopted at the May meeting of the Rhode Island caseload estimating conference. 42-169-2. Reallocation of savings. Notwithstanding any general or special law to the contrary:

(1) All enrollment-driven savings shall be retained within the Medicaid program and shall not be used for deficit reduction or other purposes;

(2) Such savings shall be reallocated exclusively to increase Medicaid provider reimbursement rates, including:

(i) Hospital inpatient services;

(ii) Hospital outpatient services;

(iii) Physician services; and

(iv) Federally qualified health center services; and

(3) Funds provided pursuant to this section shall be additive to existing Medicaid reimbursement levels and shall not be used to supplant, replace, or offset existing appropriations, rate structures, or payment methodologies in effect as of June 30, 2026. 42-169-3. Implementation. The executive office of health and human services shall:

(1) Adjust Medicaid fee-for-service reimbursement rates as necessary;

(2) Amend managed care contracts and/or implement state directed payments to ensure that rate increases are reflected in payments to providers, with a minimum provider pass-through rate of not less than ninety percent (90%) of each rate increase, implemented within one hundred eighty

(180) days of the effective date of each rate adjustment; and

(3) Submit any required state plan amendments, waivers, or federal approvals to the Centers for Medicare & Medicaid Services. 42-169-4. Reporting and compliance. The executive office of health and human services shall submit an annual report to the general assembly no later than October 31 of each year, covering the following:

(1) The calculation of enrollment-driven savings, including the methodology and actuarial assumptions used;

(2) Provider rate adjustments implemented pursuant to this chapter, itemized by provider type and care setting;

(3) The total amount of federal financial participation generated by rate investments made under this chapter;

(4) The status of any required state plan amendments, waivers, or federal approvals, including any approvals pending or denied by the Centers for Medicare & Medicaid Services; and

(5) Compliance by managed care organizations with the provider pass-through payment requirements established under § 42-169-3(2).

SECTION 3. This act shall take effect on July 1, 2026.