Ohio SB 386 Proposes Replacing MCOs with ASO

April 17, 2026

Client Alert: Ohio Lawmakers Propose Ending Medicaid Managed Care in Favor of Administrative Services Organization Model

Daphne Kackloudis Shumaker, Loop & Kendrick, LLP + Follow Contact LinkedIn Facebook X ;) Embed

A bipartisan duo of Ohio legislators introduced Senate Bill 386, titled the "Medicaid Savings Act." The bill, introduced by Senators Louis Blessing (R-Cincinnati) and Beth Liston (D-Dublin), proposes a fundamental shift in how Ohio administers its Medicaid program, moving away from the current Managed Care Organization (MCO) model to an Administrative Services Organization (ASO) framework. Representative Karen Brownlee (D-Cincinnati) introduced a companion bill, HB780, in the House.

The Proposed Shift: MCO vs. ASO

Currently, Ohio utilizes seven different MCOs to manage Medicaid benefits. Under this “risk-bearing” model, the state pays the MCOs a capitated (per-member per-month) rate to manage the care of Medicaid beneficiaries and assume financial risk.

SB 386 seeks to replace these MCOs with ASO vendors that would be paid a flat fee to administer the program without bearing risk. The bill sponsors argue that this change would reduce overhead and save money; they point to the state's recent Single Pharmacy Benefit Manager (PBM) reform, which reportedly saved hundreds of millions of dollars.

**** Key Objectives of SB 386

According to the bill sponsors, moving to the ASO model will have significant benefits to the State of Ohio and Ohio Medicaid beneficiaries.

• Cost Reduction: By removing the “middleman,” profit margins and overhead associated with multiple insurance plans will go down. The bill sponsors cite Connecticut's successful transition to an ASO model as a precedent.
• Reduced Administrative Burden: Currently, providers must contract and navigate relationships with seven different systems. A unified ASO model would standardize these processes.
• Enhanced Transparency: Lawmakers expressed frustration with the lack of insight into how MCOs currently spend state funds. The ASO model is intended to provide a clearer view of where tax dollars are allocated.
• Response to Federal Pressures: The proposal is framed as a necessary reaction to federal legislation (HR1 or the One Big Beautiful Bill Act), which is expected to result in significant cuts to the Medicaid program, necessitating new ways to find state budget savings. Impact on Health Care Providers and Stakeholders

I f passed, SB 386 would represent the most significant overhaul of Ohio's Medicaid infrastructure in over a decade. While the bill promises “easier” processes for health care providers, it would also mean:

1. Contractual Transitions: Providers would eventually move away from individual MCO contracts to a centralized state-directed administrative system.
2. Increased Reimbursement Potential: Sponsors suggest that savings found in overhead could be redirected toward increasing provider reimbursement rates.
3. Simplified Compliance: A single set of rules governing the relationship between providers and the Medicaid program would replace the current system. Next Steps

SB 386 is currently undergoing sponsor testimony in the Senate Medicaid Committee. Medicaid providers should monitor this legislation closely, as it challenges the long-standing role of private insurance companies in Ohio’s public health landscape.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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