Ohio bill targeting Medicaid managed care raises stakes for Dayton insurer CareSource

A state lawmaker proposed a bill that would scrap the Ohio Department of Medicaid’s managed care program, opting instead to return to a fee-for-service model with administrative services organizations to process claims and other administrative tasks.

With the Dayton-based health insurer CareSource administering one of Ohio’s largest managed care plans, a change that large could have repercussions for local jobs and the region’s economy.

“This (administrative services organizations) model will integrate Medicaid care management for medical, behavioral health, and nursing care — creating a single line of Medicaid administration which will allow for streamlined management, significantly reduced administrative costs, and better access to health care for Ohioans,” State Rep. Karen Brownlee, D-Symmes Twp., said in her testimony when she introduced the bill in the Ohio House Medicaid Committee.

House Bill 780, called the “Medicaid Savings Act” in the bill, would require the Ohio Department of Medicaid to terminate the care management system within the Medicaid program and transition Medicaid recipients enrolled in a Medicaid managed care organization plan to the fee-for-service component of the Medicaid program or a newly established managed fee-for-service component.

HB 780 would then require Ohio Medicaid to contract with one or more administrative services organizations as a replacement for the care management system.

DeWine imposing Medicaid changes to address possible fraud, waste

Dayton-based insurer administers large managed care plan

CareSource, one of Dayton’s largest employers and an anchor for downtown Dayton’s offices, would see a significant loss if it could no longer operate in Ohio as it administers one of the state’s largest Medicaid managed care plans.

“CareSource’s mission is to improve the health and well-being of Ohioans through access to high-quality, affordable healthcare,” says a statement from CareSource. “Serving close to half of Ohio’s nearly three million Medicaid members, we are focused on finding ways to make Medicaid work for the people who rely on it and for the taxpayers who fund it.”

For the month of March 2026, the most recent month of data, the Ohio Department of Medicaid paid CareSource about $767.8 million for all of the managed care aid groups CareSource serves, according to the state’s payment dashboard.

Nationally, CareSource offers health insurance — including Medicaid, Health Insurance Marketplace and Medicare products — to more than two million members across 12 states.

Across the CareSource brands, the company saw more than $13 billion in revenue in 2024, according to nonprofit tax filings, with earnings exceeding $386 million. About $8.6 billion in revenue comes from CareSource’s Ohio brand, according to tax filings.

“Moving Ohio Medicaid to a fee-for-service model limits critical provider and service oversight, hinders state budget predictability, creates fragmentation and disrupts care for members,” says CareSource’s statement.

“CareSource remains committed to working with state leaders to support a strong, sustainable Medicaid Managed Care program centered on consistent, coordinated care for our members, efficiency and accountability.”

As of January, CareSource has more than 7,000 employees in 46 states, including about 4,000 employees in Ohio.

Comparing to Connecticut’s administrative services, fee-for-service program

Brownlee uses Connecticut as an example, which eliminated managed care organizations in 2011.

“The Medicaid Savings Act will provide relief to Ohio’s state budget. Although this bill feels like a monumental change, it is not a blind leap,” Brownlee said.

Connecticut Medicaid has 14% lower per-enrollee spending compared to the other average of other Northeastern states, according to a report from the Connecticut Department of Social Services in December 2024, which also found Connecticut Medicaid administrative spending was 3.8% of its budget compared to 9.4% for the managed care state average.

Quality of care with the program is less clear with some indicators showed favorably of Connecticut’s program while others showed dissatisfaction.

Access to care for Connecticut Medicaid enrollees was in line with national benchmarks and Connecticut Medicaid performed above the median for about 70% of national adult and child quality measures, according to that report.

The report also found Connecticut Medicaid performed below the median on about half the measures for acute and chronic conditions for adults and children, with declining performance on select behavioral health measures. Connecticut Medicaid beneficiaries also rated their overall and specialty care less positively than national benchmarks and scores had declined over time.

“Ohio’s managed care model provides increased consumer choice, improved health outcomes and more cost-savings,” said Kelly O’Reilly, president and CEO, Ohio Association of Health Plans.

Health insurers under the managed care model, which is used by most states, absorb any loss from unexpected spikes in health costs, O’Reilly said, such as in the event of a flu outbreak or rising drug prices.

“The Connecticut model also struggles with care management for individuals with disabilities and older adults, costing the state more money for those populations than peer states,” O’Reilly said.

As of March 2026, Ohio Medicaid has about 2.9 million members, of which about 2.4 million are under a managed care program, according to Ohio Medicaid.

In its most recent fiscal year, Ohio Medicaid spent about $43.2 billion on Medicaid, including both state and federal dollars, according to the department’s budget reports.

Proposed legislation targets Medicaid managed care in Ohio.

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