S 3330Medical Services

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

The bill redirects money saved from fewer people using Medicaid to increase payment rates for healthcare providers.

In committee

Population
Affected

Introduced May 27, 2026Committee Senate Finance

Plain-English Summary

This bill requires the state to keep any money saved from reductions in Medicaid enrollment within the Medicaid program. Instead of using these savings for other state expenses or deficit reduction, the funds must be used to increase payment rates for healthcare providers, such as hospitals, doctors, and community health centers. It requires the state's health agency to adjust these payment rates, ensure managed care organizations pass at least 90% of the increases to providers, and submit an annual report to the legislature detailing the savings and how the money was distributed.

For younger readers

Sometimes, fewer people use the government's free health insurance program, called Medicaid. When this happens, the government saves money. This bill makes a rule that any money saved this way must stay in the healthcare system. The state cannot spend these savings on other things. Instead, the saved money must be used to pay more to the doctors, hospitals, and health centers that help sick people. The state also has to write a report every year to show exactly how much money was saved and which doctors or hospitals received the extra money.

Who & Where It Applies

Impacted groups

Healthcare providersHospitalsCommunity health centersManaged care organizationsMedicaid patients

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

Amount unknown

Bill Analysis

Both viewpoints

For Progressives

Ensures that healthcare funding remains dedicated to public health services rather than being diverted to other state budgets or used for deficit reduction, protecting the social safety net.
Increases funding for community health centers and hospitals that serve low-income and disadvantaged populations, helping to offset the costs of uncompensated care.
Mandates strict reporting and a 90% minimum pass-through rate for managed care organizations, preventing corporate insurance companies from pocketing the savings and ensuring the money actually reaches frontline healthcare workers.
Accepts the premise of thousands of vulnerable Rhode Islanders losing Medicaid coverage without introducing mechanisms to keep them insured or expand state-level coverage.
Directs funds exclusively toward provider reimbursement rates rather than directly assisting individuals who can no longer afford healthcare or expanding other social safety net programs for the uninsured.
Still allows managed care organizations (private insurance companies) to keep up to 10% of the rate increases, rather than ensuring 100% of public funds go directly to patient care and providers.

For Conservatives

Acknowledges and adapts to federal policy changes that reduce Medicaid enrollment, effectively shrinking the size of government dependency and limiting government assistance.
Provides financial support to private medical providers, hospitals, and physicians by increasing their reimbursement rates, supporting free-market healthcare businesses.
Prevents the state government from using healthcare savings as a slush fund for other government programs, enforcing fiscal discipline within the specific program.
Explicitly prevents the state from using Medicaid savings to reduce the state deficit or lower taxes, mandating that the money still be spent by the government.
Imposes strict regulatory mandates on managed care contracts, forcing them to pass through 90% of rate increases, which infringes on corporate freedom and private contract negotiations.
Artificially inflates Medicaid reimbursement rates using temporary enrollment savings, which could create unsustainable financial expectations for providers if enrollment rises again in the future.

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.