By Zach Gorchow
Gongwer News Service
The Department of Health and Human Services has legal authority to competitively bid the Medicaid mental health managed care services provided by pre-paid inpatient health plans and to reduce the number of PIHPs as it is seeking to do through an RFP, a Court of Claims judge ruled Tuesday.
Ruling in Region 10 PIHP v. State of Michigan (COC Case No. 25-000143), Judge Christopher Yates dismissed most of the lawsuit brought by PIHPs and community mental health agencies – but not all of it. He also said he would rule later on the request for a preliminary injunction to stop the RFP from going forward.
DHHS is in the middle of a request for proposals to reduce the number of PIHPs from 10 to three. The PIHPs have sued, contending the change violates the mental health code and unlawfully blocks them from bidding because none can meet the requirements of the RFP.
Yates ruled DHHS has the authority to competitively bid the services and reduce the number of PIHPs.
“The court concludes that a competitive procurement system is not only compatible with state law but also regarded as the preferred nationwide model. The federal preference for competitive procurement is so strong that, for years, the MDHHS has had to obtain federal authorization in the form of a waiver of governing provisions in the Social Security Act,” he wrote. “The MDHHS is simply taking proactive steps to bring Michigan into compliance with the federal mandate of competitive procurement.”
Yates acknowledged that Michigan law requires community mental health service plans and allows for pre-paid inpatient health plans but said the RFP meets Michigan law by maintaining both entities, “albeit in a modified configuration that provides for three PIHPs, but no more than that.”
Yates noted that in 2013, DHHS reduced the number of regions from 18 to 10 “without creating significant concerns.” The reduction of regions does not violate state law, he said.
He did call the idea of upending the system “unwise” given the history of the existing PIHPs and their connections with mental health agencies and providers.
“But assessing the wisdom of such changes is a matter of policy reserved for the MDHHS, not the courts,” he said. “However unwise the changes may seem, nothing in Michigan law precludes the MDHHS from making them.”
Yates said, however, that the specifics of the RFP in one regard requires greater inquiry and declined to dismiss that aspect of the case.
Michigan law does not empower DHHS to change the Mental Health Code by permitting a PIHP to directly provide or contract out services that a mental health agency is legally required to provide, Yates wrote. The RFP states PIHPs are expected to provide managed care functions to beneficiaries and those functions cannot be delegated.
Yates wrote that declaring functions non-delegable appears to conflict with the Mental Health Code, which assigns those functions to the mental health agencies, not the PIHPs. Further the RFP does not require a PIHP to provide Medicaid funds to a mental health agency.
“Without question, the MDHHS has discretion to select a PIHP … but the MDHHS cannot exercise that discretion in a manner that renders CMHSPs unable to carry out their statutory obligations,” he wrote.
Yates did not indicate what might occur next to resolve the remaining claim.
Gongwer News Service
The Department of Health and Human Services has legal authority to competitively bid the Medicaid mental health managed care services provided by pre-paid inpatient health plans and to reduce the number of PIHPs as it is seeking to do through an RFP, a Court of Claims judge ruled Tuesday.
Ruling in Region 10 PIHP v. State of Michigan (COC Case No. 25-000143), Judge Christopher Yates dismissed most of the lawsuit brought by PIHPs and community mental health agencies – but not all of it. He also said he would rule later on the request for a preliminary injunction to stop the RFP from going forward.
DHHS is in the middle of a request for proposals to reduce the number of PIHPs from 10 to three. The PIHPs have sued, contending the change violates the mental health code and unlawfully blocks them from bidding because none can meet the requirements of the RFP.
Yates ruled DHHS has the authority to competitively bid the services and reduce the number of PIHPs.
“The court concludes that a competitive procurement system is not only compatible with state law but also regarded as the preferred nationwide model. The federal preference for competitive procurement is so strong that, for years, the MDHHS has had to obtain federal authorization in the form of a waiver of governing provisions in the Social Security Act,” he wrote. “The MDHHS is simply taking proactive steps to bring Michigan into compliance with the federal mandate of competitive procurement.”
Yates acknowledged that Michigan law requires community mental health service plans and allows for pre-paid inpatient health plans but said the RFP meets Michigan law by maintaining both entities, “albeit in a modified configuration that provides for three PIHPs, but no more than that.”
Yates noted that in 2013, DHHS reduced the number of regions from 18 to 10 “without creating significant concerns.” The reduction of regions does not violate state law, he said.
He did call the idea of upending the system “unwise” given the history of the existing PIHPs and their connections with mental health agencies and providers.
“But assessing the wisdom of such changes is a matter of policy reserved for the MDHHS, not the courts,” he said. “However unwise the changes may seem, nothing in Michigan law precludes the MDHHS from making them.”
Yates said, however, that the specifics of the RFP in one regard requires greater inquiry and declined to dismiss that aspect of the case.
Michigan law does not empower DHHS to change the Mental Health Code by permitting a PIHP to directly provide or contract out services that a mental health agency is legally required to provide, Yates wrote. The RFP states PIHPs are expected to provide managed care functions to beneficiaries and those functions cannot be delegated.
Yates wrote that declaring functions non-delegable appears to conflict with the Mental Health Code, which assigns those functions to the mental health agencies, not the PIHPs. Further the RFP does not require a PIHP to provide Medicaid funds to a mental health agency.
“Without question, the MDHHS has discretion to select a PIHP … but the MDHHS cannot exercise that discretion in a manner that renders CMHSPs unable to carry out their statutory obligations,” he wrote.
Yates did not indicate what might occur next to resolve the remaining claim.
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