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

Published on Wednesday, May 28, 2025

Attorney General Peter F. 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. 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 Rhode Island children.

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.

“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’s money to be made in health care, there are bad actors who will exploit the system to the detriment of Rhode Islanders, as we’ve seen with PBMs and private equity firms. At the same time, our health care system’s overall revenue has suffered in part because of Medicaid reimbursement rates that are far, 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 these low Medicaid, Medicare and commercial insurance reimbursement rates relative to 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 we pay for healthcare in Rhode Island, and 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 obviously broken. 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.”

In-depth information about the Office’s initiatives, and more, can be found on our new dedicated website.

PBM 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, PBMs and GPOs exploit the complex scheme of pricing and payment for prescription drugs, and they take 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.

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 health care 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 in collaboration and partnership with other New England states.

Medicaid Primary Care Rate Increase Legislation

The Attorney General has introduced legislation that would immediately increase Medicaid payment rates to PCPs so that these rates are 100% on par with rates for Medicare. For many of the services that primary care providers offer to patients, Medicaid reimbursement rates have not increased for years and are simply too low to cover providers’ costs and ensure 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.

Prior Authorization Legislation

The Rhode Island Prior Authorization Reform Act of 2025 (HB 6317) introduced by the Attorney General’s Office on May 9, 2025 and 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 unnecessary burdens on our health care providers, stands in the way of patient care, replaces clinical judgment with profit goals, and is contributing greatly to our country’s diminishing workforce of dedicated physicians.

The Senate recently passed similar legislation (SB 168-A), sponsored by Senator Melissa Murray, which incorporated recommendations by this Office as proposed in HB 6317.

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.

Pre-Merger Notification Proposed Regulation

The increasing consolidation and increasing role of private equity in the health services industry necessitates 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 Office 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.

AI Regulation

Systems that use computer algorithms and other methods, including large language models or AI, fundamentally impact the lives of Rhode Islanders. Given the pace of AI’s development and commercialization, including its use in fields such as health care, 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.

Health Care Agency

Looking forward, the Office of the Attorney General is proposing the establishment of a new state agency, dedicated to improving the State’s data collection and policy development and implementation capabilities. This agency would provide independent and centralized statewide health system oversight, strong data infrastructure, and long-term planning, with a focus on statewide access to care and 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.

For more information on these and other initiatives, please visit our website.

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