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Special Report
Contracting for Public Mental Health
Services Opinions of Managed
Behavioral Health Care Organizations

Recommendations of Focus Group Participants

Recommendations on Program Design

• RFPs should specify contractor requirements and ask offerors to describe how they will operationalize these requirements. Avoid requiring descriptions of organizational structures, internal processes and procedures, and job positions unless a specific requirement is critical to the success of the program.
• During the planning stages of a new program and before the procurement "blackout" period, public agencies should engage MBHO representatives in discussions on program requirements and design components to understand operational and financial constraints, and barriers to successful implementation as perceived by the MBHO.
• If the issuing agency intends to use requirements from an existing program in another State, the agency should contact the other State’s program director to uncover any lessons learned or insights into the impact of the requirements.

A. Benefit Package

• Include a specific, clearly defined core benefit package in the contract; tie provision of services to medical and psychosocial necessity criteria. Also, adopt level-of-care standards with protocols that permit the MBHO to provide wraparound services on an as needed basis.
• Include services for chemical dependency in the program and combine funding sources, but ensure that any requirements to coordinate services across agencies are fully supported by the affected agencies and by sufficient funding for the contractor.

B. Performance Measures

• Develop performance measures that relate clearly to the program’s objectives.
• Keep it simple—limit the number of measures and the complexity of data gathering and methodology. Avoid measures that MBHOs cannot track, for example, number of times a student has been seen by the school counselor, days in jail.
• First-year measures should reflect program essentials and focus on access to services and utilization, provider payment, and responsiveness to enrollees.
• For each performance indicator, outline the source of the data, the frequency of data collection, and the parties responsible for data collection.
• Recognize that performance measures may require a significant investment in information systems, training, and personnel.
• Apply uniform accreditation standards and performance measures across all contractors. For example, do not apply more rigorous behavioral health standards to the MBHOs, but do permit HMOs to provide the same services to the same population under less rigorous managed care standards.

C. Grievance and Appeals Process

• Permit MBHOs to establish informal processes to receive and respond to enrollee feedback and complaints rather than require all such communications to flow through a formal grievance and appeals process.

D. Consumer Participation in Program Administration

• Require consumer involvement in advisory committees focusing on service delivery issues (e.g., care coordination, quality improvement, provider network composition) and member services. Do not require consumer representation on the governing board, which should be limited to those with fiduciary responsibility for the organization.

E. Requirements for Local Presence

• If the public agency prefers that certain administrative functions be performed locally, permit offerors to negotiate with the agency on the specific areas of activity that must be performed locally.

F. Protection of Existing Infrastructure

• Before moving to the managed care model, while still under the traditional funding model, consider developing and implementing provider profiling tools to evaluate the relative productivity of safety net providers.
• Develop a conceptual model of the desired delivery system before drafting the RFP requirements; design mechanisms for the managed care program that promote this model, while recognizing the flexibility and authority needed by the MBHO to manage services.

__Phase out provider protection under the contract over a 3-to-5-year period. Permit the MBHO to screen safety net providers based on specific measures. Gradually increase these screening measures to the levels applied to other network providers.

__Require safety net providers to comply with the MBHO’s utilization management rules and to cooperate with discharge planning activities.

• Clearly delineate in the RFP the State hospital’s role in the managed care program and the financial effects on the MBHO.

G. County versus State Programs

• Evaluate the need to protect county providers and the relative size of the enrolled population when designing a program to ensure the adequacy of the financial arrangements and the MBHO’s authority to use and manage providers appropriately.

Focus Group Recommendations on Financial Requirements and Reimbursement

• Ensure that both reimbursement rates are developed based on both the specific benefit package and the population to be enrolled in the program. Communicate the methodology used to establish reimbursement rates to the offerors, along with any actuarial assumptions incorporated into that methodology.
• Ensure that financial prerequisites are sufficient to limit bids to responsible organizations but not too high to disqualify or dissuade otherwise desirable organizations from bidding.
• Make the level of financial risk commensurate with the degree of control permitted the MBHO to manage the program. Do not expect MBHOs to assume full financial risk while expecting them to accept severe restrictions on their ability to impose utilization management techniques, enforce provider performance requirements, negotiate provider payment and risk sharing terms, and impose provider selection criteria.
• Impose financial incentives based on quality indicators such as patient outcomes and consumer satisfaction rather than on profit limits. Requiring minimum levels of service spending extends the ill-advised incentives inherent in traditional fee-for-service and grant-funded systems.
• Fund the start-up phase separately under the contract. Develop a "bridge contract" or alternative mechanism to permit reimbursement for start-up activities in the event of a delay in the execution of the main contract (without a corresponding delay in the required start date).
• Incorporate contract terms of 3 to 5 years (contingent upon future funding under State budgets). Consider the length of time needed to recover start-up costs (if start-up is not separately funded) in establishing the contract term.
• Avoid duplicative conditions relating to financial viability. Allow different approaches to demonstrate similar levels of fiscal soundness.
• If the political environment requires reinvestment requirements to be imposed to limit profit taking, analyze the economic and social return on the particular reinvestment target before making (or requiring the MBHO to make) the investment. Avoid funding programs simply for the sake of demonstrating a maintenance-of-funding level; instead, ensure adequate "returns" on the investment.

Focus Group Recommendations on the Procurement Process

• Before the procurement "blackout" period, invite industry representatives to meet individually with agency staff to discuss design issues and to give input. Finalize program design decisions, including reimbursement approach, before RFP release.
• Allot at least 8 to 12 weeks between RFP release and the proposal due date to ensure adequate time for bidders’ questions and responses and proposal preparation. All responses to bidders’ questions should be released no later than 4 weeks before the deadline for proposals.
• Provide data pertinent to the assessment of reimbursement rates, financial risk, and cost/benefit analyses with the release of the RFP (or set the proposal deadline based on the latest release date for procurement materials). Data should be specific to the services and population relevant to the program.⁹ Explain the source of the data, any assumptions used in its derivation, and any issues regarding its representation of the covered population and the articulated benefit package.
• Provide sufficient training to members of the evaluation team. Hire experienced consultants as needed. Use attorneys and Procurement Office staff before and during all phases of the procurement to ensure that procurement integrity standards are met. Include on the evaluation team an individual with expertise in behavioral health information systems.
• Require at least some of the evaluators to review proposals by reading them in their entirety, rather than assigning specific portions of proposals to the evaluators. In some cases, it may be essential to be familiar with one part of the proposal to evaluate another.
• Place less emphasis in the evaluation on the proposal submission itself, and more emphasis on evaluating the organization’s capabilities through site visits and reference checks and on understanding each organization’s proposed approach. The RFP should establish strict page limits for each section of the proposal, and should limit the number and size of attachments as well. Offerors who submit proposals that meet minimum standards should be required to deliver oral presentations, and the evaluation team should visit the sites. Before site visits, the evaluation team should submit questions to offerors based on the desk review of the proposal. The evaluation team should plan for follow-up questions after receipt of the first round of responses.
• Permit negotiation in the procurement process. The best-and-final-offer process can represent the negotiation as long as the payer clearly identifies the types of changes it is seeking to the original proposal.
• Foster evaluation teams that are free of political pressure and ensure permission to make fair and open decisions based on the team’s review. In some situations, State evaluators have little expertise in the area of managed behavioral health care and receive no training to perform the evaluation.