Developing an RFP and managing a competitive procurement demanded experience and skills not previously required for mental health and substance abuse authorities. In the past few years, a number of public managed care contracts have expired, requiring renewals and new contracts. MCOs have noticed that these contracts are becoming more complex as States seek to ensure quality and breadth of services. In an attempt to hold MCOs to a higher standard, some States have expanded their contracts by replicating requirements included in other States RFPs. Unfortunately, some of these requirements have proven to be unduly costly, complicated, ineffective, and duplicative.
Lawsuits facing States and MCOs make the market seem risky.
States, providers, and consumers have sued MCOs for what they allege to be unfair or dangerous practices. In turn, MCOs have sued States for unfair bidding processes and have withdrawn from programs they believe to be inadequately funded. Rapid changes in the managed behavioral health care industry have further complicated contracting relationships. In recent years, the industry has experienced a flurry of merger and acquisition activity, reducing the number of MBHOs and increasing the size of those that remain. Consequently, in the past 2 years the number of national MBHOs active in public sector procurements has fallen from eight to three.