Fiscal Year 2027 Medicaid Budget Initiatives
The Rhode Island Executive Office of Health and Human Services (EOHHS) and Rhode Island Medicaid are in the process of implementing changes to the Medicaid program passed in the FY2027 Budget as Enacted.
The FY2027 initiatives are outlined below.
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When the State revises its rate methodologies or establishes new services, the Medicaid Program coordinates necessary updates to relevant systems, contracts, and policies with its managed-care organizations (MCOs), federal partners, and providers.
State Plan Amendments or Waiver Rate Approvals
State plan amendments (SPAs) first must go through a 30-calendar-day public comment period before they can be submitted to CMS for review and approval. EOHHS must complete a submission package for CMS which includes public and tribal notices, revised state plan pages, a fiscal impact summary, and funding questions. Once submitted, CMS has 90 calendar days to review the amendments or request additional information (RAI). If CMS issues RAI, the 90-day clock is stopped, and the state works with CMS to answer any questions. The approval from CMS is retroactive to the effective date submitted with the SPA.
If a rate change occurs for a service covered under the state’s 1115 Waiver, Medicaid must also first seek federal approval for the changes. This process often takes longer than six months to complete.
Finance Updates
Medicaid staff must prepare an updated fee schedule for every code and modifier combination affected by changes in the Budget. This includes error-checking, identifying codes necessary for a managed care minimum fee schedule, cross-referencing fee-for-service billing codes with MCO billing codes, and preparing the rate sheet so that it contains all the information necessary to update the Medicaid Management Information System (MMIS), which is the system that processes payments for any Medicaid claims submitted according to the updated fee schedule.
MCO Management and Oversight Updates
The managed care oversight team must amend contracts to reflect updated rates and direct MCOs to update their provider agreements with the changes. MCOs have 45 calendar days to review proposed contract changes and submit questions and concerns to EOHHS. Once the amended contract is fully executed, ,the MCOs have 90 calendar days to implement all changes. Implementation may include renegotiating changes to provider contracts, updating computer and billing systems and ensuring that providers are paid correctly under their new agreements. MCO subcontractors must also be compliant with the changes.
The SFY 2027 enacted budget authorizes EOHHS to continue and expand the Acute Hospital Care at Home Program in Medicaid, allowing eligible hospitals to provide inpatient-level care in a patient’s home. CMS has extended the federal Medicare Acute Hospital Care at Home initiative through September 30, 2030, at which point the current federal authorization is scheduled to end. EOHHS and Medicaid will provide guidance to managed care organizations and hospitals after completing a review of the initial program that began in SFY 2025.
In the biennial rate review, OHIC recommended increases to a number of reimbursement rates in behavioral health, Intellectual/Developmental Disability (I/DD), children’s, and home- and community-based services. The FY 2027 Enacted budget includes these rate increases, effective as of October 1, 2026, as recommended by OHIC except in cases where the recommendation exceeds Medicare reimbursement rates; in these cases, the Medicare rate is used.
The rate increase requires a great deal of coordination between the State, federal partners, managed care organizations, and providers to successfully implement.
Increasing rates across these categories require State plan amendments and waiver rate approvals. The State Plan amendments are being finalized for public notice and submission, while the waiver rate approvals are being finalized for submission. The FY 2027 Enacted Budget establishes an effective date of October 1, 2026, completion of the federal approval, contracting, fee schedule, systems, and operational activities necessary for implementation is anticipated to extend beyond that date. Medicaid staff are finalizing the State Plan Amendments and Waiver rate change documents necessary for federal approval. The State Plan Amendments require a 30-day public comment period prior to submission (the expected posting date is the end of August). The draft rate list remains subject to change based on CMS’s review of the State’s rate increase requests. Please note, in the case of an implementation delay, the rates will be retroactively applied back to the October 1, 2026, effective date.
The 10/1/2026 fee schedule is not yet posted. Medicaid will provide an update here as soon as it is finalized.
Assisted living rates, Tiers A, B, and C, will increase effective October 1 through the state’s regular rate review process. The budget included an additional 13% increase for Tier C payments effective January 1, 2027. Implementation requires a waiver rate approval and coordination with managed care organizations regarding the new rates.
Effective January 1, 2027, Rhode Island will increase the Medicaid asset limit for several eligibility groups from $4,000 to $8,000 for an individual and from $6,000 to $12,000 for a couple. This includes elders and adults with disabilities seeking Community Medicaid, most individuals seeking long-term services and supports (LTSS), and individuals that qualify for Medicaid due to high medical expenses (medically needy).
The change will not impact groups with federally required asset limits, groups that already have higher limits, or groups that do not have an asset test. Implementation requires coordination with DHS eligibility staff, federal approval of changes to the Medicaid State Plan, updates to state regulations, and eligibility system changes. The State is targeting fall 2026 for submission of the required federal approval request.
The SFY 2027 enacted budget authorizes EOHHS to update the behavioral health per-diem add-on program for particularly complex nursing facility patients beginning April 1, 2027. This is not a change to the add-on rate. The updates are intended to enhance nursing facility participation in the program. A State Plan Amendment and changes to the provider certification requirements are required before implementation work can begin. The SPA is being prepared for drafting, and the applicable department teams are working on updated rules, regulations, and procedures.
As directed by the FY2027 Enacted budget, beginning October 1, 2026, Rhode Island Medicaid will no longer cover certain GLP-1 receptor agonists when they are prescribed solely for weight loss. Members receiving these medications for weight loss may be affected by this coverage change and may no longer be able to obtain them through Medicaid beginning October 1, 2026. Medicaid is working closely with the MCOs to implement this coverage change. There is no federal authority required to implement this change.