Attorney General Neronha announces series of actions to address health care crisis

“Rhode Island’s health care system, and primary care in particular, is in a state of crisis and facing spectacular failure if we do not act, and act now,” said Attorney General Neronha.

Rhode Island Attorney General Peter Neronha today announced a series of health care-related initiatives aimed at providing immediate relief and long-term solutions for Rhode Island’s failing health care system.

These initiatives include:

• Filing suit against the three largest Pharmacy Benefit Managers (PBMs) in the country to protect Rhode Island consumers from unfair and deceptive conduct that has caused drug prices to skyrocket;

• Introducing legislation to immediately raise Medicaid reimbursement rates to 100% of Medicare rates for primary care providers;

• Introducing legislation to immediately eliminate nearly 100% of prior authorization requirements for primary care providers;

• Introducing legislation authorizing the Attorney General to petition the Superior Court to place a hospital into receivership if the facility becomes financially unstable;

• Issuing proposed regulations to require pre-merger notification of certain material corporate transactions involving medical practice groups, including transactions involving private equity firms;

• Issuing an advanced notice of proposed rulemaking regarding market oversight of artificial intelligence (AI);

• A collaboration between the Attorney General and the Brown University School of Public Health Center for Advancing Health Policy Through Research (CAHPR) to examine potential policy options for state-based health system reform; and

• Planning for a new state health care agency to obtain and analyze healthcare data, and inform innovative and effective governmental health care decision-making.

Here’s the video:

“Rhode Island’s health care system, and primary care in particular, is in a state of crisis and facing spectacular failure if we do not act, and act now,” said Attorney General Neronha. “With these health care-related actions, my Office is continuing to pull the levers available to us to contribute to the solution. Because there is money to be made in healthcare, there are bad actors who will exploit the system to the detriment of Rhode Islanders, as we’ve seen with pharmacy benefit managers and private equity firms. At the same time, our healthcare system’s overall revenue has suffered in part because Medicaid reimbursement rates are far too low, and we need to simply bite the bullet and raise them now. Rhode Island primary care providers are retiring or closing their practices, and newly trained doctors are choosing not to come to Rhode Island at all, in part because of the low Medicaid, Medicare, and commercial insurance reimbursement rates relative to those in our neighboring states. Our health care providers are also facing unnecessary and wasteful prior authorization burdens imposed unilaterally by health insurance companies. And the fallout is clear: many Rhode Islanders simply can’t find a primary care doctor.

“These actions and proposals will stabilize the system in the short term, but there is much more work ahead, including work to determine if a more comprehensive overhaul is necessary. That’s why we are partnering with researchers from the Brown School of Public Health to re-examine how healthcare is funded in Rhode Island. In the coming months, our Office will outline concrete steps to create a new state agency that will be able to provide governmental decision-makers with the data and analysis they need, something that today is sorely lacking.

“Rhode Islanders deserve quality, accessible health care, and that is more than reason enough to fix what is broken,” concluded Attorney General Neronha. “But don’t think for a second that a health care collapse in our state wouldn’t be destructive in other ways. People would think twice about moving here, and current residents would relocate. Our economy would suffer - businesses, small and large, would shutter or move away. It’s not too late to right this ship, but we are nearing the point of no return. We must act now, collaboratively, and courageously, so we don’t look back at this moment and wish we had.”

Pharmacy Benefit Managers lawsuit

Attorney General Neronha filed a lawsuit in Providence County Superior Court against the country’s largest Pharmacy Benefit Managers (CVS Caremark, Express Scripts, and Optum) and their affiliated Group Purchasing Organizations (Zinc, Ascent Health Services, Emisar Pharma Services) for their role in unfairly and deceptively increasing the costs of prescription drugs, limiting care choices for Rhode Islanders, and harming local businesses.

The complaint alleges that the defendant Pharmacy Benefit Managers (PBMs) and Group Purchasing Organizations (GPOs) deceive consumers by branding themselves as a source of cost savings when, in fact, they profit directly from cost increases. These defendants act as intermediaries between health plans and other entities in the drug distribution chain, such as prescription drug manufacturers and pharmacies. Often secretive and unknown to consumers, pharmacy benefit managers (PBMs) and group purchasing organizations (GPOs) exploit the complex pricing and payment scheme for prescription drugs, taking a cut of ever-increasing drug prices at every step of the way. They may also make decisions about formularies – the lists of drugs that are available to plan enrollees – that unfairly restrict access to safe and effective medications.

“Pharmacy benefit managers are the middleman of the drug industry,” said Deputy Chief of the Public Protection Bureau Sarah Rice. “You have a manufacturer, the pharmacy benefit manager, your health plan on one side, and the consumer and the doctor on the other. The pharmacy benefit manager enters into contracts with manufacturers and health plans, and through these contracts claims to be able to save the plan and its consumers money while ensuring the clinically appropriate use of drugs.

“Our suit details how the defendant PBMs and GPOs don’t live up to those representations of cost savings and clinical effectiveness. We took this action because Rhode Islanders are skimping on their clinical care because they can’t afford it. Costs are so high that people who are already paying a large percentage of their salary in health insurance premiums can’t afford that high deductible when they go to the pharmacy to fill a prescription.

“The other source of complaints has been the independent pharmacies in Rhode Island. To their credit, many independent pharmacies have come forward to let us know they are having a hard time staying in business. Many independent pharmacies are community-based. They offer services for individuals with disabilities and the elderly. They have vaccination services and other special community-based programs.

“We filed suit under the Deceptive Trade Practices Act here in Rhode Island because this behavior is harmful to consumers. It has a direct pocketbook effect on any consumer who has a deductible or co-insurance when they go to the pharmacy, which is most of us. We’ve brought three counts of violation of the Deceptive Trade Practices Act to seek a remedy for these violations,” concluded Attorney Rice. “We’re seeking injunctive and monetary relief. We are hopeful that as we continue to pursue it, we will be successful in driving down drug prices in Rhode Island.”

Report on Health Care Reform Options

The Office’s collaboration with researchers from CAHPR examines potential policy options for state-based universal health system reform. CAHPR’s report sets forth four state-based reform options to promote a sustainable health care system that is affordable and accessible to Rhode Islanders:

1. A state-based single-payer plan;

2. A comprehensive public option;

3. Reforms to achieve pricing parity across payer segments by increasing Medicaid reimbursements with the option of controlling commercial prices; and,

4. A state prescription drug purchasing pool.

The report focuses specifically on reform actions that Rhode Island may take unilaterally. While federally legislated reform to address our nation’s healthcare system should continue to be a priority, the Trump Administration and Republican leadership in Congress have shown no appetite or ability to undertake the necessary reforms. Therefore, the Attorney General urges Rhode Island policymakers to consider state-based structural reforms that could be established, including those in collaboration with and in partnership with other New England states.

“Each of these options would move the state toward universal coverage while balancing varying degrees of complexity, costs, and policy trade-offs, because solving healthcare is a hard problem and it requires careful thought,” said Attorney General Harvey.

Medicaid Primary Care Rate Increase Legislation

The Attorney General has introduced legislation that would immediately increase Medicaid payment rates to primary care physicians (PCPs) so that these rates are 100% in line with rates for Medicare. For many of the services that primary care providers offer to patients, Medicaid reimbursement rates have remained unchanged for years. They are insufficient to cover providers’ costs and ensure that Medicaid enrollees can access primary care. By promoting consistent reimbursement for primary care services across Medicaid and Medicare, this legislation would help address barriers to primary care, thereby improving health equity in the State. This bill is sponsored by Senator Pamela Lauria and Representative Megan Cotter.

“According to a 2023 survey by the Kaiser Family Foundation, nearly 12% of adults in Rhode Island reported that they do not have a personal healthcare provider,” said Attorney Lee Staley. “When you examine the census data for the state, that translates to roughly a hundred thousand adults. In recent months, we have seen increasingly dire signs that Rhode Island’s primary care system is in jeopardy (such as) the closure of Anchor Medical and the challenges faced by our community health centers. These are symptoms of a lack of investment in primary care.

“Our office stays closely engaged with the primary care community, and when we speak with PCPs, one of the consistent messages we hear is that Rhode Island Medicaid reimbursements are too low to ensure that Medicaid enrollees have access to care.”

Medicaid reimburses healthcare providers at 37% of the rate that Medicare does, and private insurers reimburse healthcare providers at 200% of the Medicare rate.

“The stark disparity in payment rates impedes access to care for the more than 317,000… Rhode Islanders who rely on the Medicaid system are exacerbating their health risks. This is a downward spiral that can lead to avoidable hospitalizations and lost productivity. Low Medicaid reimbursement also undercuts our primary care providers by undercompensating them for their services. It makes it harder for Rhode Island to retain primary care physicians,” said Attorney Staley. “All Rhode Islanders bear the cost of failing to invest in primary care. In contrast, investing in Medicaid primary care providers benefits our system as a whole. That’s why we are announcing legislation that would immediately increase Medicaid reimbursement rates for primary care providers in Rhode Island.”

Prior Authorization Legislation

The Rhode Island Prior Authorization Reform Act of 2025 (H6317), sponsored by Representative Mia Ackerman, would make it unlawful for insurers to impose prior authorization requirements on any procedure, test, treatment, study or prescription drug ordered by a primary care provider, with exceptions for controlled substances and individual providers with identified cases of fraud, waste or abuse. This legislation would also require any insurer issuing any lawful prior authorization to use a single, standardized prior authorization form.

“Prior authorization creates an unnecessary burden on our healthcare providers, stands in the way of patient care, and replaces clinical judgment with profit goals,” said Special Assistant Attorney General Jordan Broadbent. “It also contributes to our state’s diminishing healthcare provider workforce and contributes to burnout. In 2024, the American Medical Association conducted a survey of providers nationwide about the impact of prior authorization on both their patient care and work lives. It found that, on average, physicians and their staff report spending 13 hours a week on prior authorization. That’s time spent away from patient care and on paperwork.

“In addition to negatively impacting the time and resource commitment of providers, it also leads to unnecessary spending and significant costs for our healthcare system. The same survey found that 73% of providers reported that the prior authorization process resulted in additional office visits. 47% reported that immediate or emergency room care visits resulted from prior authorization, and 33% reported hospitalization. That type of utilization places a burden on our healthcare system and increases costs. It also delays a patient’s access to the care that they’re provider deemed necessary. We believe that it should be a provider’s decision on how their patients get treated, which is why we submitted to the House the Rhode Island Prior Authorization Reform Act.”

The Senate recently passed similar legislation (S0068A), sponsored by Senator Melissa Murray, which incorporated recommendations by this Office as proposed in H6317 above.

Hospital Receivership Legislation

This legislation would amend Rhode Island’s Health Care Advocate statute to include new authority for the Health Care Advocate to petition the Rhode Island Superior Court to place a hospital into receivership. This receivership authority would enable the Attorney General to protect a hospital and its patients when the hospital is in financial distress or is otherwise being operated in a manner that is detrimental to patients. This bill is sponsored by Representative Susan Donovan.

“This legislation is about protecting patients and healthcare institutions and about being able to respond in the event of a crisis,” said Special Assistant Attorney General Julia Harvey. “When a hospital is placed in receivership, it allows the court and a court-appointed receiver to step in to protect the assets of the facility to the best of their ability and to ensure that the facility is being managed in a way that is protective of patients.”

Pre-Merger Notification Proposed Regulation

The increasing consolidation and increasing role of private equity in the health services industry necessitate strengthened reporting requirements to ensure that the Attorney General’s Office, Rhode Island’s primary antitrust regulator, is notified of potentially harmful transactions. To help combat the ever-increasing market concentration and rising costs in health care, the Attorney General has released a public notice of a proposed rule to require Rhode Island-based medical-practice groups to notify the Rhode Island Attorney General’s Office of any merger, consolidation, or acquisition that would result in:

1. Ownership or control by a private equity investor;

2. A group of eight or more physicians, physician assistants, and/or nurse practitioners; or,

3. The establishment of a management services organization or similar contracting entity responsible for administering a medical group’s contracts with health insurance carriers or third-party administrators. A public hearing for this regulation is scheduled for July 8, 2025.

“Our office issued a proposed rule that would require healthcare transacting parties and a healthcare transaction to notify our office if there’s a material change to their organization or they’re being acquired, including by a private equity investor,” said Stephen Provazza, Unit Chief, Consumer and Economic Justice Unit at Rhode Island Office of the Attorney General. “The rule would require the transacting parties to provide our office with notice of the transaction, including the type of transaction and basic information about it, so that our office can determine whether further investigation is necessary or whether we need to intervene to prevent the transaction from proceeding. This proposed rule is now live on the Secretary of State's website. We encourage members of the public and the healthcare community to submit comments on the proposed rule.”

Public Protection Authorities Bill

“This bill stems from our lived experience as attorneys working with Rhode Islanders every day to address unlawful practices by businesses and government throughout the state,” said Assistant Attorney General Sarah Rice. “The legislation would enable us to undertake more pre-suit investigations and resolve problems that are cropping up for everyday Rhode Islanders quickly and effectively. It’s relevant to healthcare because it would give us the power to intervene when a business or a government entity is engaged in a pattern of repeated illegal acts. This would enable us to enforce healthcare laws that fall outside the jurisdiction of other authorities.

“There are two main applications of this in the healthcare realm that we could use this authority for. The first is private equity in nursing homes. We have seen, time and again, private equity firms come into Rhode Island to acquire nursing home licenses. In the course of doing so, a responsible private equity firm would disclose its related transactions and those of different companies, allowing regulators to evaluate whether that would be the best deal for Rhode Islanders. However, we have seen that this is not always the case, and private equity firms are not always compliant with the law. When that occurs, we would like to be able to take action to address it. For example, we are aware of an investigation into a private equity-owned nursing home in another state, which also has facilities here. However, we can’t investigate without the proper legal authority, which this bill would provide.

“The second area is where the federal government has passed laws that help our healthcare system, allow consumers access to healthcare, but is no longer enforcing those laws because of changes in the federal government. You have seen our office’s work to restore federal funding to our healthcare system. What do we do when those federal agencies are no longer enforcing the laws that they were entrusted with? This bill would give us the authority to enforce those federal laws. One example is the No Surprises Act. This was a significant piece of federal legislation that directly impacts healthcare pricing and a consumer’s right to transparency and information about the costs they pay for healthcare. With the passage of this bill, our office would be able to enforce the law and get the benefits of the laws that are already on the books.

“It doesn’t give us unrestrained authority,” said Attorney General Rice. “It just says someone’s watching the store; the laws that Congress has passed can now be enforced.”

AI Regulation

Systems that utilize computer algorithms and other methods, including large language models and AI, have a profound impact on the lives of Rhode Islanders. Given the pace of AI’s development and commercialization, particularly in fields such as healthcare, the Attorney General has released an advanced notice of proposed rulemaking to evaluate whether additional regulation in this area is necessary or beneficial. A public hearing is scheduled for July 9, 2025.

“Artificial intelligence is changing our economy, and the services being provided for Rhode Islanders,” said Assistant Attorney General Keith Hoffman. “It can be a good thing and a very dangerous thing, especially in healthcare, where patients’ lives are on the line. Let’s talk about the good things that AI could do. It could make providers’ lives easier by helping with medical notes. It can help to create health systems that are efficient and intentionally designed to be free of bias, but it can also be very dangerous. People design these tools, and mistakes can occur.

“People can be biased. People can have motives that run counter to the interests of our patients, providers, and healthcare system. For example, AI could be a powerful new tool for insurers to deny claims or otherwise exclude individuals or groups from access to healthcare. Some companies may overstate the effectiveness of their AI tools, which can create specific risks to healthcare providers and patients who rely on these tools to provide and receive healthcare.

“Through the Deceptive Trade Practices Act, our office has the authority to regulate in this area if necessary and valuable for Rhode Islanders. We have opened an advanced notice of proposed rulemaking. It’s not a formal rule that has been established,” concluded Attorney General Hoffman. “It is an opportunity for Rhode Islanders to provide input and tell us whether and, if so, how we ought to regulate AI in healthcare and other areas, including housing and employment.”

Health Care Agency

Looking forward, the Office of the Attorney General proposes the establishment of a new state agency dedicated to enhancing the state’s data collection, policy development, and implementation capabilities. This agency would provide independent and centralized statewide health system oversight, a strong data infrastructure, and long-term planning, with a focus on statewide access to care and the essential building blocks of health. The Attorney General expects to share a more fulsome proposal later this year, in advance of the 2026 legislative session.

Health care capacity report

The Attorney General’s office commissioned Health Management Associates (HMA) to evaluate the capacity of hospitals, long-term care facilities, and nursing homes, and the sufficiency of primary care providers across the state. The report included dozens of interviews with key community stakeholders, leaders, and healthcare partners across the state, as well as an analysis of the best available data at the time.

“The takeaways we want to emphasize here are threefold,” said Special Assistant Attorney General in the Healthcare Unit Dorothea Lindquist. “Number one, Rhode Island is an outlier in key aspects of our healthcare delivery system. Two is that the negative trends we are seeing are not going to reverse themselves. And number three is that what we need in our state is a comprehensive, dedicated focus on healthcare reform that is supported by accurate, appropriate data.”

AG Lindquist cited four key findings in the report:

1. There is a substantial mismatch between hospital capacity and need, driven in part by workforce challenges experienced throughout our healthcare system. “Hospital leaders who were interviewed in the course of this project underscored the impact that ongoing workforce shortages have had and continue to have on their ability to hire and retain nurses and other skilled professional staff,” said AG Lindquist. “If hospitals are not able to recruit and retain a robust workforce, their ability to put people at the bedside to staff these beds and to serve the patients will continue to be limited… Rhode Island’s hospitals are in economic distress, with many complex drivers that need to be better understood to accomplish the course correction that is undeniably needed.”

2. Emergency departments are overburdened, which directly impacts patient care at every level across the healthcare delivery system. “Our emergency departments in Rhode Island are overburdened, and this directly impacts access to patient care,” said Lindquist. “Rhode Islanders are seeking more emergency department care than nationally. First, we are seeing 441 visits per 1,000 people, compared to 411 visits per 1,000 people nationally. Second, Rhode Islanders are leaving the emergency department without being seen at double the national average. Third, Rhode Islanders are spending more time in the emergency department than the national average.”

3. Our long-term care facilities, specifically nursing homes, are in big trouble. There has been a decrease in long-term care access due to the closure of many nursing homes and workforce challenges. “87% of Rhode Island’s nursing homes are for-profit entities, which is higher than the national average,” said Attorney General Lindquist. “And reimbursement rates to long-term care facilities remain unsustainably low. Over the past decade, nine nursing homes in Rhode Island have closed, accounting for approximately 11% of the state’s total facilities… Nursing homes in Rhode Island are experiencing a persistent workforce shortage... This is a contributing factor to low occupancy, which in turn has significant implications for the financial sustainability of these facilities.”

4. We have a primary care workforce shortage, and available data at the time of this report about primary care is not aligned with the lived experience of people in this state. “National data and our licensure data here in Rhode Island compare favorably to national statistics for primary care providers,” noted Attorney General Lindquist. “The Centers for Medicare and Medicaid Services (CMS), as cited in the HNA report, estimates that Rhode Island has over 3000 primary care physicians (PCPs). We know this is a clear disconnect… Researchers led by Dr. Caroline Richardson and the Brown Medical School examined the data. They estimated that the number of practicing primary care physicians in Rhode Island is significantly lower than 3,000. They’ve estimated approximately 660 primary care physicians in Rhode Island. These data discrepancies underscore the need for better data reporting and analysis in our state.”

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More information about the Office’s initiatives and more can be found on the Attorney General’s new dedicated website.

Today’s announcement follows last week’s $11 million settlement with Barletta Heavy Construction, the proceeds from which will be used to benefit health and dental care services for hundreds of children in Rhode Island.