AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- OFFICE OF HEALTH AND HUMAN SERVICES (Sets controls on Medicaid prescription drug costs by imposing transparency and accountability requirements on managed care organizations (MCOs) and their pharmacy benefit managers (PBMs).)

H7692

2026 -- H 7692
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LC004550
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- OFFICE OF HEALTH AND
HUMAN SERVICES

Introduced By:
Representatives Stewart, Potter, Giraldo, Tanzi, Boylan, Donovan,
Speakman, Cotter, Morales, and Kislak

Date Introduced:
February 11, 2026

Referred To:
House Finance
It is enacted by the General Assembly as follows:
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SECTION 1. The intent of this legislation is to protect Rhode Islanders and the state
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Medicaid program from high prescription drug costs by requiring greater pharmacy benefit
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manager (PBM) transparency and accountability.
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SECTION 2. Section 42-7.2-5 of the General Laws in Chapter 42-7.2 entitled "Office of
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Health and Human Services" is hereby amended to read as follows:
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42-7.2-5. Duties of the secretary.
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The secretary shall be subject to the direction and supervision of the governor for the
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oversight, coordination, and cohesive direction of state-administered health and human services
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and in ensuring the laws are faithfully executed, notwithstanding any law to the contrary. In this
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capacity, the secretary of the executive office of health and human services (EOHHS) shall be
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authorized to:
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(1) Coordinate the administration and financing of healthcare benefits, human services, and
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programs including those authorized by the state’s Medicaid section 1115 demonstration waiver
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and, as applicable, the Medicaid state plan under Title XIX of the U.S. Social Security Act.
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However, nothing in this section shall be construed as transferring to the secretary the powers,
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duties, or functions conferred upon the departments by Rhode Island public and general laws for
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the administration of federal/state programs financed in whole or in part with Medicaid funds or
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the administrative responsibility for the preparation and submission of any state plans, state plan

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amendments, or authorized federal waiver applications, once approved by the secretary.
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(2) Serve as the governor’s chief advisor and liaison to federal policymakers on Medicaid
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reform issues as well as the principal point of contact in the state on any such related matters.
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(3)(i) Review and ensure the coordination of the state’s Medicaid section 1115
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demonstration waiver requests and renewals as well as any initiatives and proposals requiring
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amendments to the Medicaid state plan or formal amendment changes, as described in the special
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terms and conditions of the state’s Medicaid section 1115 demonstration waiver with the potential
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to affect the scope, amount, or duration of publicly funded healthcare services, provider payments
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or reimbursements, or access to or the availability of benefits and services as provided by Rhode
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Island general and public laws. The secretary shall consider whether any such changes are legally
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and fiscally sound and consistent with the state’s policy and budget priorities. The secretary shall
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also assess whether a proposed change is capable of obtaining the necessary approvals from federal
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officials and achieving the expected positive consumer outcomes. Department directors shall,
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within the timelines specified, provide any information and resources the secretary deems necessary
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in order to perform the reviews authorized in this section.
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(ii) Direct the development and implementation of any Medicaid policies, procedures, or
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systems that may be required to assure successful operation of the state’s health and human services
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integrated eligibility system and coordination with HealthSource RI, the state’s health insurance
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marketplace.
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(iii) Beginning in 2015, conduct on a biennial basis a comprehensive review of the
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Medicaid eligibility criteria for one or more of the populations covered under the state plan or a
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waiver to ensure consistency with federal and state laws and policies, coordinate and align systems,
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and identify areas for improving quality assurance, fair and equitable access to services, and
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opportunities for additional financial participation.
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(iv) Implement service organization and delivery reforms that facilitate service integration,
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increase value, and improve quality and health outcomes.
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(4) Beginning in 2020, prepare and submit to the governor, the chairpersons of the house
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and senate finance committees, the caseload estimating conference, and to the joint legislative
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committee for health-care oversight, by no later than September 15 of each year, a comprehensive
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overview of all Medicaid expenditures outcomes, administrative costs, and utilization rates. The
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overview shall include, but not be limited to, the following information:
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(i) Expenditures under Titles XIX and XXI of the Social Security Act, as amended;
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(ii) Expenditures, outcomes, and utilization rates by population and sub-population served
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(e.g., families with children, persons with disabilities, children in foster care, children receiving

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adoption assistance, adults ages nineteen (19) to sixty-four (64), and elders);
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(iii) Expenditures, outcomes, and utilization rates by each state department or other
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municipal or public entity receiving federal reimbursement under Titles XIX and XXI of the Social
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Security Act, as amended;
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(iv) Expenditures, outcomes, and utilization rates by type of service and/or service
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provider;
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(v) Expenditures by mandatory population receiving mandatory services and, reported
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separately, optional services, as well as optional populations receiving mandatory services and,
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reported separately, optional services for each state agency receiving Title XIX and XXI funds; and
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(vi) Information submitted to the Centers for Medicare & Medicaid Services for the
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mandatory annual state reporting of the Core Set of Children’s Health Care Quality Measures for
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Medicaid and Children’s Health Insurance Program, behavioral health measures on the Core Set of
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Adult Health Care Quality Measures for Medicaid and the Core Sets of Health Home Quality
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Measures for Medicaid to ensure compliance with the Bipartisan Budget Act of 2018, Pub. L. No.
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115-123.
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The directors of the departments, as well as local governments and school departments,
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shall assist and cooperate with the secretary in fulfilling this responsibility by providing whatever
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resources, information, and support shall be necessary.
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(5) Resolve administrative, jurisdictional, operational, program, or policy conflicts among
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departments and their executive staffs and make necessary recommendations to the governor.
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(6) Ensure continued progress toward improving the quality, the economy, the
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accountability, and the efficiency of state-administered health and human services. In this capacity,
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the secretary shall:
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(i) Direct implementation of reforms in the human resources practices of the executive
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office and the departments that streamline and upgrade services, achieve greater economies of scale
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and establish the coordinated system of the staff education, cross-training, and career development
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services necessary to recruit and retain a highly-skilled, responsive, and engaged health and human
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services workforce;
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(ii) Encourage EOHHS-wide consumer-centered approaches to service design and delivery
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that expand their capacity to respond efficiently and responsibly to the diverse and changing needs
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of the people and communities they serve;
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(iii) Develop all opportunities to maximize resources by leveraging the state’s purchasing
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power, centralizing fiscal service functions related to budget, finance, and procurement,
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centralizing communication, policy analysis and planning, and information systems and data

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management, pursuing alternative funding sources through grants, awards, and partnerships and
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securing all available federal financial participation for programs and services provided EOHHS-
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wide;
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(iv) Improve the coordination and efficiency of health and human services legal functions
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by centralizing adjudicative and legal services and overseeing their timely and judicious
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administration;
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(v) Facilitate the rebalancing of the long-term system by creating an assessment and
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coordination organization or unit for the expressed purpose of developing and implementing
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procedures EOHHS-wide that ensure that the appropriate publicly funded health services are
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provided at the right time and in the most appropriate and least restrictive setting;
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(vi) Strengthen health and human services program integrity, quality control and
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collections, and recovery activities by consolidating functions within the office in a single unit that
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ensures all affected parties pay their fair share of the cost of services and are aware of alternative
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financing;
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(vii) Assure protective services are available to vulnerable elders and adults with
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developmental and other disabilities by reorganizing existing services, establishing new services
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where gaps exist, and centralizing administrative responsibility for oversight of all related
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initiatives and programs.
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(7) Prepare and integrate comprehensive budgets for the health and human services
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departments and any other functions and duties assigned to the office. The budgets shall be
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submitted to the state budget office by the secretary, for consideration by the governor, on behalf
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of the state’s health and human services agencies in accordance with the provisions set forth in §
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35-3-4.
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(8) Utilize objective data to evaluate health and human services policy goals, resource use
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and outcome evaluation and to perform short and long-term policy planning and development.
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(9) Establish an integrated approach to interdepartmental information and data
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management that complements and furthers the goals of the unified health infrastructure project
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initiative and that will facilitate the transition to a consumer-centered integrated system of state-
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administered health and human services.
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(10) At the direction of the governor or the general assembly, conduct independent reviews
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of state-administered health and human services programs, policies, and related agency actions and
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activities and assist the department directors in identifying strategies to address any issues or areas
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of concern that may emerge thereof. The department directors shall provide any information and
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assistance deemed necessary by the secretary when undertaking such independent reviews.

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(11) Provide regular and timely reports to the governor and make recommendations with
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respect to the state’s health and human services agenda.
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(12) Employ such personnel and contract for such consulting services as may be required
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to perform the powers and duties lawfully conferred upon the secretary.
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(13) Assume responsibility for complying with the provisions of any general or public law
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or regulation related to the disclosure, confidentiality, and privacy of any information or records,
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in the possession or under the control of the executive office or the departments assigned to the
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executive office, that may be developed or acquired or transferred at the direction of the governor
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or the secretary for purposes directly connected with the secretary’s duties set forth herein.
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(14) Hold the director of each health and human services department accountable for their
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administrative, fiscal, and program actions in the conduct of the respective powers and duties of
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their agencies.
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(15) Identify opportunities for inclusion with the EOHHS’ October 1, 2023, budget
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submission, to remove fixed eligibility thresholds for programs under its purview by establishing
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sliding scale decreases in benefits commensurate with income increases up to four hundred fifty
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percent (450%) of the federal poverty level. These shall include but not be limited to, medical
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assistance, childcare assistance, and food assistance.
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(16) Ensure managed care organizations (“MCOs”) and pharmacy benefit managers
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(“PBMs”) working for the Rhode Island Medicaid program are transparent, do not increase
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unnecessary costs for the Rhode Island Medicaid program and patients, and demonstrate that they
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improve patient health outcomes, by:
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(i) Requiring contracts with MCOs ensure PBMs:
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(A) Cease activities that result in spread pricing, a payment model where the PBM charges
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a health plan more than it reimburses the pharmacy for a prescription drug and retains the
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difference;
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(B) Use pass-through pricing, a payment model where the PBM charges the health plan or
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insurer the same amount it reimburses the pharmacy, with no additional profit margin, and retains
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only a pre-determined administrative fee;
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(C) Prohibit discriminatory treatment of non-affiliated pharmacies and pharmacists;
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(D) Cease utilization management processes, including prior authorizations, step therapy
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and non-medical drug switching, that delay, reduce or prevent medically necessary care;
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(E) Ensure enrollee benefits result from discounts, price reductions, or other financial
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incentives provided to PBMs by drug manufacturers including, but not limited to, rebates for
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formulary placements; and

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(F) Provide information and documents that permit enforcement of this subsection to
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EOHHS.
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(ii) Analyzing and making recommendations to the governor and the general assembly by
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January 1, 2027 about:
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(A) Creating a single Medicaid PBM;
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(B) Carving out pharmacy benefits from the managed care program;
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(C) Adopting a Medicaid uniform preferred prescription drug list (PDL); and
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(D) Removing MCOs and moving to a Connecticut-style Medicaid program.
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(iii) Promulgating rules and regulations, and employing staff and independent contractors
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familiar with pharmacy benefit managers’ operations and finances to implement and enforce this
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section; and imposing civil fines up to ten thousand dollars ($10,000) per violation and taking any
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other enforcement action not prohibited by law. This subsection does not limit the attorney general
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from taking any actions against PBMs. EOHHS may consult with OHIC, the commissioner of
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insurance, DBR and other state authorities to ensure effective MCO and PBM oversight.
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(17)
Ensure that insurers minimize administrative burdens on providers that may delay
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medically necessary care, including requiring that insurers do not impose a prior authorization
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requirement for any admission, item, service, treatment, or procedure ordered by an in-network
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primary care provider. Provided, the prohibition shall not be construed to prohibit prior
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authorization requirements for prescription drugs. Provided further, that as used in this subsection
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(16) of this section, the terms “insurer,” “primary care provider,” and “prior authorization” means
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the same as those terms are defined in § 27-18.9-2.
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(17)
(18)
The secretary shall convene, in consultation with the governor, an advisory
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working group to assist in the review and analysis of potential impacts of any adopted federal
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actions related to Medicaid programs. The working group shall develop options for administrative
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action or general assembly consideration that may be needed to address any federal funding
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changes that impact Rhode Island’s Medicaid programs.
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(i) The advisory working group may include, but not be limited to, the secretary of health
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and human services, director of management and budget, and designees from the following: state
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agencies, businesses, healthcare, public sector unions, and advocates.
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(ii) As soon as practicable after the enactment federal budget for fiscal year 2026, but no
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later than October 31, 2025, the advisory working group shall forward a report to the governor,
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speaker of the house, and president of the senate containing the findings, recommendations and
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options for consideration to become compliant with federal changes prior to the governor’s budget
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submission pursuant to § 35-3-7.

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SECTION 3. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- OFFICE OF HEALTH AND
HUMAN SERVICES
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This act would set controls on Medicaid prescription drug costs by imposing transparency
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and accountability requirements on managed care organizations (MCOs) and their pharmacy
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benefit managers (PBMs).
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This act would take effect upon passage.
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