CHAPTER IV--Contracting for Network Services

• Subcontracting with providers;
  
• Establishing qualification standards for provider staff; and
  
• Monitoring providers' performance.

A.Specifying the Capacity and Composition of the MCO's Provider Network

1. Provider Network Capacity

An effective contract will ensure that the MCO's provider network has the capacity to provide enrollees with access to the full range of contracted services. In Medicaid managed care initiatives, this feature is mandatory for compliance with Federal Medicaid law. The concept of "sufficient capacity" of a network is difficult to define, however, and will certainly evolve over time. Generally, sufficient capacity can best be understood by examining the strengths and weaknesses of the current provider system, identifying gaps in services and/or in management capability, and soliciting input from consumers and their families, providers, advocates, related agencies, and other stakeholders. This approach will provide the information necessary to build an infrastructure that can support the goals of the initiative in many areas (e.g., data systems; management, clinical, and financial controls).

There are several means by which the issue of sufficient capacity can be addressed. Under Federal Medicaid law, it is the State's duty to ensure adequate access and capacity regardless of the type of arrangement the MCO has with the network. Most purchasers address one or more dimensions of capacity and access in their contracts (Rosenbaum et al., 1997). Purchasers can use the request for proposal (RFP) to give bidders comprehensive information related to capacity needs; this approach is likely to lead to proposals that are relatively consistent with the purchaser's expectations and lay the foundation for capacity-related provisions in the contract. Alternatively, the purchaser may require the MCO to submit a capacity-development plan for purchaser approval.

The benefit package provides the foundation upon which capacity requirements can be determined and should guide the MCO's decisions about the composition of the provider network. Other factors to be considered include current capacity of service programs and existing systems; population-specific utilization patterns, if known; areas of insufficient capacity; anticipated changes in utilization upon implementation of managed care; environmental, geographic, and cultural/ethnic variables that may affect service access; and plans for equalizing service resources and enrollee access across regions. The RFP and the contract should specify the purchaser's desires for geographic access, access to timely appointments, and access to a full range of appropriate providers and should describe the mechanisms that will be used to monitor access. (Capacity standards may have to be adapted for rural and frontier areas, as geographic access is more difficult to achieve.)

Provider Network Capacity. Purchasers may wish to address the following in RFPs and contracts:

Establish access standards that can be quantified and monitored, and require the MCO to demonstrate the capacity to provide and monitor access as defined by the purchaser.

Require the MCO to have full capacity available on the contract start date, or stipulate that specified services may be phased-in on an approved timetable and/or on a regional basis.

Specify the MCO's responsibilities for addressing unexpected capacity demands, such as unforeseen gaps in services, disasters, and newly emerging needs.

Establish allowable variations in minimum capacity due to regional factors (such as urban versus rural capabilities), available modalities of care, and/or other purchaser-specified factors.

Establish conditions under which enrollees are permitted to use out-of-network providers.

2. Composition and Structure of the Provider Network

Purchasers can also use the RFP and the contract to shape the overall composition, structure, and characteristics of the provider network. Requirements may vary substantially based on the goals of the managed care initiative and unique characteristics of the enrollee population to be served. For example, a purchaser with a large percentage of enrollees from one or more ethnic groups may wish to require the development or expansion of culturally specific services and/or the active utilization of traditional community-based organizations with experience serving those groups. Similarly, a purchaser with a significant percentage of enrollees in rural areas may want to be explicit in the RFP and the contract in terms of rural network needs (see box above).

Adults with severe and persistent mental illness (SPMI) and children with serious emotional disorders (SED) are two other subpopulations who have very specific network needs. These include providers with specialized training and experience, coordination with accessible providers of clinically important wraparound support services. Effective mechanisms for referral to such nonreimbursable but necessary services consistently improve treatment outcomes, and network developers may wish to create a more seamless system of care by establishing cost-sharing arrangements with key agencies to help enrollees obtain these services.

Network Composition. Purchasers may wish to address the following in RFPs and contracts:

Describe the required clinical and administrative capacity of the network, including providers' capabilities and their capacity to accept new referrals, as well as licensure, credentialing, board certification, and accreditation requirements.

Establish minimum guidelines for providers' competence and experience in serving the covered enrollee population.

Establish the means by which consumers will most successfully obtain needed wraparound services.

Establish whether providers must meet Medicaid or other regulatory requirements regarding certification, licensure, accreditation, and/or eligibility for reimbursement.

Establish the network strategy for meeting the cultural- and gender-specific needs of consumers.

Ensure that emergency service teams have expertise in assessing adults with substance use disorders, children, and other purchaser-specified populations.

Ensure that Medicaid management services include child experts, and that mechanisms are in place for reporting child abuse, institutional abuse, and domestic violence.

Ensure that there is an adequate safety net so that children and families have a choice of providers in a given region.

Specify the desired processes and relationships between the MCO and services provided by State or county employees (e.g., State psychiatric hospitals).

Establish minimum thresholds regarding desired credentialing standards.

Permit (as is done in Colorado) or prohibit (as is done in Massachusetts) the MCO from directly delivering care using its own staff or programs.

Establish measurable expectations regarding the degree of coordination of substance abuse and mental health treatment services with primary health care services.

Establish any necessary antitrust controls, both prior to and after contracts are developed with providers.

Establish minimum requirements regarding strong functional linkages to housing and rehabilitation providers when serving adults with SPMI.

Establish an ongoing mechanism for measurement and monitoring of the adequacy of network composition and capacity.

B. Selecting Providers for the Network

1. Selection of Providers

The selection of providers for an MCO's network will largely determine the accessibility, range, and quality of services the MCO provides. The provider selection process can vary substantially depending on a number of factors:

Whether a competitive procurement process is being established;

Whether an MCO bidding on the contract is allowed directly to provide services with its staff and programs (e.g., staff model health maintenance organizations [HMOs]);

Whether an MCO develops a business and/or legal partnership with a local provider organization(s);

Purchaser philosophies, experience, and perspectives;

Availability, willingness, and capacity of providers to serve the target population in a defined area; and

Clinical philosophy and approach of the MCO.

If the purchaser wishes to establish minimum requirements for the process of selection and deselection, it must do so in the contract. Federal Medicaid standards do not create any substantive requirements in this area, other than a general prohibition against arbitrary discrimination against certain classes of providers (see discussion below), although Federal Medicaid law extensively protects the MCO's selection and deselection process itself. In a number of States, courts have enjoined MCOs from arbitrarily denying admission to networks or deselecting network members (see cases cited in Chapter 2 of Rosenblatt, Law, & Rosenbaum, 1997).

MCOs are increasingly developing partnerships with local provider organizations to bid on public sector contracts. These partnerships are often formed long before the RFP is released. When development of such partnerships is likely, the purchaser may want specifically to require the providers to comply with applicable specifications in the RFP and contract regarding selection of individual providers. In addition, the MCO must be able to show the purchaser that it has demonstrated due diligence in considering a range of area providers in its selection process.

In many situations, however, network providers are selected in a highly visible competitive procurement process that is likely to be closely monitored by stakeholders. Competitive selection processes must effectively incorporate several, often conflicting, factors, including estimates of capacity needs, desired characteristics of the network providers, clinical needs of the enrollees, regional considerations, stakeholder input, and usually a host of political, legal, and/or business factors.

Competing in the network provider selection process may be the first time that providers from the public and private sectors compete openly with one another. The purchaser should ensure in the contract that the MCO's process for selecting providers is conducted in an open and objective manner that can withstand public, clinical, and legal scrutiny and is in the best interests of the enrollee population. Since the MCO is effectively undertaking a procurement of publicly financed services on the purchaser's behalf, certain aspects of the State's procurement laws apply. Purchasers should generally consult with legal counsel if they allow the MCO to select provider networks through a competitive procurement.

The purchaser must often balance the desire to protect current service providers and to have a broad network with the goals of obtaining favorable financial and clinical arrangements with providers. In general, the greater the number of providers actively participating in a network, the more difficult it is for the MCO to monitor practice patterns, to carry out credentialing activities, and to negotiate substantial discounts that rely on patient referral volume.

One of the most important factors in the MCO's selection of providers is whether the MCO uses a competitive process, a noncompetitive process, or a combination of both to procure some or all network services. Although MCOs generally use competitive processes to lower costs, to limit the network of providers, and to increase accountability, some MCOs choose a noncompetitive procurement when services are not widely available. These may include specialty services, services for which there is no excess capacity, services that require widespread local availability (e.g., outpatient services), and other situations in which there is little likelihood of achieving savings, increasing efficiency, and/or improving quality via a competitive process.

Another factor that promotes noncompetitive procurement is "any willing provider" legislation that has been enacted in several States in order to support participation of local and private providers and practitioners. Such legislation stipulates that MCOs must contract with any provider who is "willing to meet the terms and conditions of the payment contract." Purchasers should be aware that MCOs can minimize the impact of such legislation by creating "tiered" networks in which "preferred" providers are sent the bulk of cases and mandated provider applicants are technically included in the network but receive few, if any, referrals. While such practices may support purchaser and MCO goals of clinical and financial control, efficiency, or geographic access, they may violate the law's intention to maintain open networks with broad access. If a purchaser is particularly concerned about access for certain types of providers, it should specify inclusion of those providers in the contract and include standards, measures, and sanctions for nonperformance.

Selection of Providers. Purchasers may wish to address the following in RFPs and contracts:

Specify whether the MCO should use a competitive, noncompetitive, or mixed process to procure services, either for all services, or by levels and/or types of care.

Establish implementation plans with timelines for procuring network services systemwide, by region, and/or by level of care.

Require the MCO to solicit input from consumers and their families and other stakeholders on provider selection procedures and criteria.

Ensure that MCO solicitation practices are consistent with applicable State and/or Federal laws.

Require the development of comprehensive performance expectations for all procured services.

Ensure that selected network providers meet overall and regional capacity needs for all covered services and special populations.

Establish formal, objective, and documentable procedures and criteria for MCO review of providers' proposals for network membership.

Establish a formal review and appeals process so that providers can address perceived inequities in the solicitation process.

Require provider grievance and appeals procedures, with appeal to the purchaser if unresolved, concerning financial arrangements, referrals, use of utilization management (UM) or utilization review (UR), and advocacy for consumer services.

Require that the MCO contract only with specified classes of providers, such as those that are fully licensed and board certified; State-approved vendors, practitioners, and facilities; federally qualified health maintenance organizations (HMOs); and community mental health centers.

Require that a specified percentage of enrollees be referred to community-based organizations for a defined period of time.

Address whether the MCO can transfer legal liability to the provider for any actions that result from MCO decisions, and vice versa.

Because "gag" clauses are now banned, prohibit any contract provisions between the MCO and the provider that prevents the health care provider from disclosing to enrollees any information that the provider believes to be appropriate about possible courses of treatment and/or provision of tests.

2. Types of Providers

The RFP and the contract can prohibit or encourage the selection and utilization of certain types of providers in the network. A wide range of providers deliver substance abuse and mental health services and can be viable candidates for inclusion in an MCO's provider network. These may include traditional nonprofit and other community-based organizations, public health care institutions, for-profit health care organizations, provider-sponsored networks, State- or county-funded agencies, institutions that provide direct services, hospital-based systems, primary health care providers, school-based clinics, group practices, individual practitioners, and consumer-run organizations. Three types of providers are increasingly involved in managed care initiatives and/or addressed in managed care contracts: community-based organizations (CBOs), public institutions, and provider-sponsored networks.

a. Community-Based Organizations (CBOs)

Given the complex needs of many enrollees in public sector managed care initiatives, purchasers may wish to promote the active involvement of CBOs to provide substance abuse and mental health services. These organizations have historically been the linchpin of public sector services and usually have substantial experience providing services to some of the most challenging public sector consumers. At least 26 States that maintain full-service managed care Medicaid agreements address to some degree the issue of the safety net and of inclusion of traditional providers in their contracts with MCOs.⁽¹⁾

In recent years, managed behavioral health care organizations (MBHOs) have increasingly made efforts to develop partnerships with CBOs when bidding on contracts and have recruited administrators with strong public sector experience into their organizations. However, some MCOs are more inclined to establish or maintain contracts with network provider systems that are designed for commercially insured populations (Rosenbaum et al., 1997) or that have administrative and/or clinical staff with little or no public sector experience. This sometimes raises concerns that an MCO will not include a sufficient number of CBOs in the network and that this may negatively impact the consumers' level of functioning.

Purchasers can use the RFP and contract to promote or require the inclusion of CBOs that have historically served clients whose care was supported by public funds. As with the selection of any provider, the purchaser's desire to include community providers needs to be balanced with an equal concern for the quality of services the provider is capable of delivering. Purchasers should appreciate that many CBOs provided a safety net for the public sector before it was profitable to do so. They may therefore have insufficient funds to invest in improving buildings, developing more sophisticated management information systems (MIS), hiring high-salaried staff, and so forth. CBOs can be highly vulnerable in the transition to a competitive marketplace. Given this situation, purchasers and MCOs sometimes face challenging dilemmas about the adequacy of some CBOs to function in a new managed care initiative. Purchasers should be sensitive to the fact that mandated inclusion of providers who are ill-prepared to function in a specific initiative may result in substandard service, and appropriate safeguards should be established. To help address this issue, the Federal Center for Substance Abuse Treatment (CSAT) has recently established a contract to provide technical assistance and training to CBOs across the country regarding improving business practices and successfully adjusting to a more competitive business environment.

Purchasers who want to ensure that CBOs are included in the MCO's initial provider network and receive adequate referrals can require that certain providers or categories of providers be included in the network as "essential community providers" (ECPs), usually for a defined period of time. The basic principles underlying this inclusive approach are that many CBOs with extensive experience treating the enrollee population should be given the opportunity to adapt to the managed care environment and that consumers of substance abuse and mental health services should not be expected to make abrupt transitions to new providers.

b. Public Institutions

Many purchasers may wish to include State or other public institutions, such as State hospitals, in the MCO's provider network and to "re-engineer" their public system to ensure that government-operated services are one component of the new managed care system. It may be the goal of other purchasers to restructure the service delivery system or to reduce reliance on certain providers or modalities (e.g., State hospitals, long-term residential placements for children). The purchaser may use the contract to construct provider networks consistent with these goals. State laws vary on whether public institutions can provide services as part of a managed care network. Purchasers should exercise due diligence, investigate and protect themselves from liability at unaccredited State facilities.

Nearly half the States surveyed by the Bazelon Center for Mental Health Law (1997) indicated that they include, or plan to include, public institutions in their managed care initiatives. There are many ways to include these institutions, including fee-for-service arrangements. Almost all State hospitals are accredited as a requirement for receiving Medicaid reimbursement. Nonetheless, there may be pitfalls depending on State laws, and purchasers should address several questions before requiring inclusion of public institutions in an MCO's network.

c. Provider-Sponsored Networks (PSNs)

A PSN is a group of providers who have affiliated to pool administrative, financial, and/or clinical resources to improve efficiencies and strategically enhance their position in the health care marketplace. Providers that wish to establish PSNs must be careful about antitrust and restraint of trade issues and should engage the services of legal counsel early in their deliberations. Purchasers can use the RFP and the contract to prohibit, encourage, or mandate the involvement of PSNs in the management or provision of treatment services. PSNs often seek a legal partnership with an MCO, hospital, or other health care organization to strengthen their financial position. Because State laws vary concerning the regulation and legal framework under which PSNs may be formed and operated, purchasers should ensure that the RFP and contract reflect a full understanding of these issues.

Types of Providers. Purchasers may wish to address the following in RFPs and contracts:

Establish requirements for the MCO to use certain types of providers (e.g., State hospitals, federally qualified HMOs, State or nationally certified substance abuse counselors or prevention service providers, or nonprofit community-based organizations).

Establish requirements for the MCO to establish procedural linkages to certain types of providers for specific services (e.g., acceptance of screening evaluations from specific categories of community-based prevention service providers; referral and transfer to a State- or community-provided list of service providers for aftercare).

Establish capitalization requirements that do not functionally prohibit community-based, nonprofit organizations from submitting bids.

Establish clinical, administrative, and/or financial requirements that support active involvement of community-based organizations (CBOs).

Clarify the capacity to establish, as needed, different financial arrangements for similar types of State- or county-operated programs.

Confirm that the purchaser is able to assume legal liability for clinical decisions made by the public institution, possibly requiring special indemnification arrangements and/or reinsurance.

Designate specific provider organization(s) to be included and used in the provider network, including consumer-run and peer-support programs, if desired.

Address any issues related to labor unions and/or exclusions regarding outsourcing.

Create the operational definition, and define the privileges and expectations of an essential community provider (ECP).

Define the types of agencies and/or the criteria that can qualify as an ECP.

Establish mechanisms to monitor referral and utilization of the services of ECPs.

Establish a minimum amount or percentage of referrals or overall service utilization to occur in ECPs.

Establish timeframes for ECP status to terminate.

Establish any special means by which ECP performance will be measured.

Require the MCO to provide training and/or technical assistance to CBOs, as needed and approved by the purchaser.

Define the referral relationship between the MCO and the public institution.

C. Ensuring Enrollees' Access to Network Services

One of the most important responsibilities of a public purchaser of managed care is to ensure that enrollees in managed care systems have prompt and easy access to network services. Such access is a hallmark of a high-quality health care system. The Health Care Financing Administration (HCFA) requires a demonstration of access for Medicaid managed care systems operated under Medicaid waivers.

Ensuring access to services for individuals who rely on public sector service systems can be very challenging. Individuals served by public sector systems often lack the resources to obtain services from complex and bureaucratic health care systems, and their mental and/or addictive disorders often exacerbate access problems. Many of them also lack transportation and/or child care. For reasons such as these, individuals in the population served by public sector systems often require specialized support to gain access to health care and ancillary services they need. A well-designed managed care system can coordinate services and facilitate the movement of enrollees through the clinical care system, creating an opportunity for purchasers to significantly increase access for their vulnerable populations by identifying the components of access that are most likely to be meaningful to consumers.

Determining what constitutes good access and developing reliable measures of access is also very challenging. Performance measures are usually based on quantifiable data, so evaluations are often limited by what is easily quantifiable, limiting their range and meaningfulness.

The fundamental components of access that are most likely to be relevant to enrollees are summarized below, along with points to consider when developing RFPs and contracts.

1. Components of Access

a. Information/Education Needs

Enrollees, providers, and MCO employees require comprehensive and up-to-date information about the services that are available and how to use them. It may be necessary to make this information available in several languages and to ensure that it is written at a basic reading level. The methods by which this information is conveyed to enrollees varies. Consumer handbooks, brochures, pamphlets, and posters are often used, although educational strategies for those who can't read should also be developed.

Information/Education Needs. Purchasers may wish to address the following in RFPs and contracts:

Specify the degree to which the purchaser, the MCO, or both, are responsible for ensuring the availability of information to all enrollees, network providers, and other interested parties.

Require a handbook that provides guidance to clinicians and provider organizations on difficult or unfamiliar situations.

Specify the type of information to be provided at enrollment and re-enrollment, such as services covered (including services for specialized populations), exclusions, limitations on coverage, explanation of a 24-hour toll-free line, grievance procedures, disenrollment criteria, procedures for determining the appropriate treatment level, access to representation, and other enrollee rights and privileges.

Require that information (including consumer handbooks) is free of technical jargon, formatted in an easy-to-read style, and available in the primary languages of the enrollee population.

Specify the reading level at which the information should be written.

Require the MCO to develop and maintain an up-to-date list of all organizations, clinicians, and other service providers in the network, including names, addresses, telephone numbers, specialties, license numbers, and other relevant information.

Clarify how enrollees are to access and use primary health care services and medications, how these services will be coordinated with behavioral health services, and how access and utilization of these services will be monitored and tracked by the MCO.

Require an easily accessed enrollee services unit to provide enrollees with information, answer questions, give recommendations, and resolve complaints.

Require that essential materials be adapted to meet the needs of those with disabilities (e.g., audiotapes upon request, large-print versions of consumer materials).

b. Ease of Initial Access

The ease with which an enrollee can initially access services is a fundamental component of access. Rosenbaum et al., (1997) found that some enrollees in managed care systems sometimes have to negotiate with as many as three different entities to obtain initial services (e.g., outpatient assessment, detoxification). Increasingly, MCOs are allowing direct access/self-referral for certain types of initial services.

A number of States maintain strict specifications with respect to initial access in order to ensure that MCOs begin serving enrollees promptly. Ensuring that MCOs serve enrollees promptly is particularly important given the relatively brief periods of enrollment that many beneficiaries may face because of interrupted Medicaid eligibility, a problem that has grown since the enactment of the 1996 welfare reform legislation.

Particularly crucial may be the establishment of minimum performance standards for the selection of a primary care provider, including access to lists of participating providers that are kept up to date and that contain addresses and telephone numbers; assistance in selection; timelines for selection; requirements to honor patients' choice of providers; and permissible procedures for situations in which patients fail to select providers. In the absence of specifications, an MCO may devise its own procedures, including large-scale assignment of nonselecting patients to providers with whom the MCO has negotiated additional discounts. This practice of auto-assigning patients to certain providers may result in the disruption of care in the case of persons who have chosen an MCO because their provider is a member.

Most States do not require that MCOs honor patients' choice of a primary care provider. Instead, they permit the MCO some discretion in deciding whether or not to assign the patient to his or her provider of choice. The Massachusetts contract establishes particularly stringent specifications for the assignment of patients (Rosenbaum et al., 1997):

In the event that the Contractor is unable to elicit a PCP [primary care provider] selection from an enrollee, the Contractor shall assign a PCP to such enrollee within two business days of obtaining enrollment information . . . Such PCP assignment shall meet the following criteria:

a. The PCP shall be within a 15-mile radius and/or 30 minutes' traveling time from the enrollee's home address. Within urban locations this shall take into account walking and public transportation.

b. The contractor shall determine whether the assigned enrollee had previously received services under the Contractor's plan, within the last two years, under either Medicaid or a commercial membership, where the recipient had a minimum of two claims with a PCP during that two-year period.

-If the enrollee received a minimum of two services from a PCP in the Contractor's plan, the HMO shall automatically assign the enrollee to the PCP.

-If the enrollee did not have a pre-existing relationship with a PCP who participates in the contractor's plan, the Contractor shall determine an alternate methodology to automatically assign enrollees to a PCP.

Ease of Initial Access. Purchasers may wish to address the following in RFPs and contracts:

Specify the model(s) of initial access to services to be used by the MCO.

Specify whether behavioral health care services can be accessed directly without going through a primary care provider.

Require the MCO to have a 24-hour, toll-free service line available 7 days a week that provides information, assessment, crisis intervention, and referral services and that has sufficient capacity to meet the needs of non-English-speaking enrollees.

Establish how enrollees are to access emergency services.

Establish how initial access systems will be measured, monitored, and evaluated.

Specify how access systems will accommodate enrollees with disabilities (e.g., visually or hearing impaired) or who have low levels of literacy.

Specify the types of authorization (e.g., pre-authorization, postauthorization, no authorization) that are required, allowed, or forbidden.

c. Geographic Proximity

Many publicly insured individuals do not have reliable access to transportation, and the travel time or distance to service locations may be prohibitive. While most States specify geographic access standards for primary care, far fewer do so for specialty care.⁽²⁾ Purchasers can develop contract provisions defining the maximum times and/or distances considered acceptable, possibly establishing different standards for some types of services, and can address the availability of or responsibility for transportation services. Ideally, these provisions should be consensus-derived and/or part of negotiations. State Medicaid plans must assure that beneficiaries have transportation to medically necessary care, although how this transportation service is implemented varies widely from State to State. Some States do include at least some level of transportation in their contracts as a required service, particularly in cases in which MCOs are operated by community programs that customarily offer transportation services.

A Florida Medicaid contract sets the following access standards for mental health providers (Rosenbaum et al., 1997):

The Contractor shall make available and accessible facilities, service locations, and service sites and personnel sufficient to provide the covered services (specifically, nonhospital, outpatient, emergency, and assessment services) throughout the geographic area within thirty minutes typical travel time by public or private transportation of all enrolled recipients. (The typical travel time standard does not apply to waiting time for public transportation; it applies only to actual time in transit.)

Geographic Proximity. Purchasers may wish to address the following in RFPs and contracts:

Specify the maximum allowable travel times and distances (or number of bus transfers) enrollees may be required to travel to specified levels of care and services.

Require the MCO to develop strategies for ensuring transportation services by providing these services directly, assigning transportation responsibility to network providers in specified circumstances, or subcontracting this service to a transportation firm (possibly including a maximum cap on the MCO's financial responsibility in this area).

Establish special access standards for services that are highly specialized and/or for which there is a limited choice of providers.

Establish access requirements for rural or frontier areas based on mileage, time restrictions, or other relevant variables depending on the environment.

Require use of software packages designed to assist in the actual measurement of and monitoring of geographic access.

d. Timeliness of Access

Enrollees' motivation to address their behavioral health problems is often fleeting, and a delay in access can result in a missed opportunity to initiate treatment. The purchaser can establish standards for promptness of service delivery in a variety of areas. For instance, the purchaser may wish to establish maximum waiting times for routine, urgent, and crisis/emergency care; specify the response time for the toll-free consumer service line (e.g., customer service line answered within four rings or 30 seconds); stipulate that customer service line staff be familiar with the plan, benefits, and network providers to facilitate assessment; and mandate that trained staff be available around the clock for crisis intervention and assessment. Nearly all States establish timelines for emergency services; fewer do so for other forms of care. Twelve States establish time standards for mental health services.⁽³⁾ Typical service timeframes used by States are same day/immediate service for emergencies with 24-hour-per-day, 7 day-per-week availability by the contractors, 24 to 48 hours for urgent care, preventive (non-symptomatic) services within 45 days of request, and non-urgent symptomatic office visits within 2-7 days of request. Massachusetts establishes certain timeframes for selected services for addiction disorders (Rosenbaum et al., 1997):

With regard to acupuncture detoxification, the Contractor shall provide, where Medically Necessary, up to six (6) treatments per week for the first two (2) weeks of treatment and up to three (3) treatments per week after the first two (2) weeks.

With regard to methadone maintenance therapy, the Contractor shall provide, where Medically Necessary, one (1) dose per day and up to four (4) methadone counseling sessions per week.

Washington State's contract requires contractors to be able to furnish outpatient crisis mental health service to enrollees "24 hours a day, seven days a week." The contract specifies that "all other services shall be available during regular business hours and without undue delay." Vermont requires plans to make initial mental health services available within 5 working days for treatment of a non-emergency, non-mental-health problem (Rosenbaum et al., 1997).

New York's RFP contains relatively extensive service timelines for mental health services (Rosenbaum et al., 1997):

The plan will have 24-hour availability of crisis care . . . [and] availability of psychiatric consultation coverage 24 hours each day to do triage and provide consultations on medication reactions, etc. . . . [The plan will have] seven days, 24-hour access to support and counseling by trained peers and/or other staff, provided in the enrollee's home with the goal of reducing distress while allowing the person to stay in familiar surroundings.

Timeliness of Access. Purchasers may wish to address the following in RFPs and contracts:

Specify the required degree of promptness of telephone services, such as the number of rings or seconds allowable before a call is answered by a person, the maximum amount of time callers may spend on hold, and call abandonment rates.

Require the MCO to have urgent and emergency/crisis services available within specified periods of time.

Establish maximum times between initial telephone (or other contact) and first face-to-face contact for routine, urgent, and crisis/emergency care.

Specify the supervision requirements and level of training and capabilities required of staff who answer consumer service lines.

Establish whether the MCO may use an automated attendant answering system.

Establish maximum allowable times for MCO authorizations and reauthorizations, or allow a certain level of service before authorization must be obtained (e.g., eight outpatient visits).

Establish policies concerning waiting lists for clinical services, including whether such lists are acceptable and for how long.

Clarify access requirements for designated services (e.g., detoxification).

e. Cultural and Linguistic Competence

The relationship between culture, language, and health care is complex and inextricably linked to health outcomes. Most States address this issue to at least some degree. In States or counties where enrollee populations include significant cultural, ethnic, and/or linguistic diversity, it is imperative that the MCO establish systems designed to facilitate access to services for diverse groups.

For instance, the Florida mental health contract requires staffing patterns that reflect the racial and ethnic composition of the community in which the plan is located and requires that services be provided in the language spoken by the enrollees. The contract specifies that the contractor must supply the State with a list of all Spanish-speaking and Spanish-literate staff (Rosenbaum et al., 1997).

Wisconsin has one of the most extensive sets of provisions regarding the language and cultural appropriateness of care, as shown below (Rosenbaum et al., 1997):

Provide interpreter services for enrollees as necessary to ensure availability of effective communication regarding treatment, medical history or health education. Furthermore, the HMO must provide 24 hour a day, 7 day a week access to interpreters conversant in languages spoken in the HMO's service area, including at least Spanish and Hong. Also, upon a recipient or provider request for interpreter services in a specific situation where care is needed, the HMO shall make all reasonable efforts to provide an interpreter in time to assist adequately with all necessary care, including urgent and emergency care. The HMO must routinely document all such efforts.

This documentation must be available to the Department at the Department's request. Professional interpreters shall be used when needed where technical, medical or treatment information is to be discussed or where use of a family member or friend as interpreter is inappropriate. Family members, especially children, should not be used as interpreters in assessments, therapy, and other situations where impartiality is critical. The HMO will maintain a current list of interpreters who are on "on call" status to provide interpreter services.

HMO shall address the special health needs of enrollees who are poor and/or members of a minority population group. HMO shall incorporate in its policies, administration, and service practice the values of (1) honoring members' beliefs, (2) being sensitive to cultural diversity, (3) fostering in staff/providers attitudes and interpersonal communications types which respect enrollees' backgrounds. HMO shall have specific policy statements on these topics and communicate them to subcontractors . . .HMO shall encourage and foster cultural competency among providers. HMO shall permit enrollees to choose providers from among the HMO's network based on cultural preference. HMO shall permit enrollees to change primary providers based on cultural preference. Enrollees may submit grievances to the HMO and/or the Department related to inability to obtain culturally appropriate care, and the Department may pursuant to such grievance permit an enrollee to disenroll and enroll into another HMO . . . .

Culturally appropriate care is care by a provider who can relate to the enrollee and provide care with sensitivity, understanding and respect for the enrollee's culture.

Cultural and Linguistic Competence. Purchasers may wish to address the following in RFPs and contracts:

Establish standards for cultural and linguistic competence required by the MCO and its provider network, including degreed and nondegreed professionals who reflect the cultural and linguistic makeup of the enrollee population.

Establish standards for translation and interpreter services for customer service telephone and direct service providers.

Require the MCO and/or provider to develop cultural competence plans.

Specify cross-cultural training requirements.

Provide guidelines or specific requirements for minority providers.

Require the MCO to monitor compliance with any legal or contractual requirements for cultural competency, and establish standards, measures, and means for enforcing compliance.

Require the MCO to develop and implement standards to systematically evaluate providers' cultural competency.

Require the MCO to provide enrollees with written information about access and services in specified languages.

Require specialized outreach to certain populations.

Require the MCO to develop strategies to accommodate the specific cultural/ethnic-related needs of consumers with disabilities.

Require the MCO to develop strategies to accommodate consumers who are deaf or hearing impaired.

Ensure the availability of linguistic capabilities upon consumers' request.

f. "Gatekeeper" Competence

Managed care systems by definition incorporate some version of a "gatekeeping" function to ensure that services are provided in the most appropriate and efficient manner and to protect against unnecessary utilization of expensive services. How this function is implemented varies substantially. It may involve primary care providers' screening and referring before services are deemed appropriate and reimbursable, phone-based utilization reviewers, MCO- or provider-based utilization management teams, care managers, and so forth. Regardless of the setting or model used, the competence of individuals performing the gatekeeping function is crucial because they must be capable of accurately assessing needs and triaging consumers to the most appropriate set of services. The gatekeepers must be well trained in and sensitive to the complex biopsychosocial aspects of mental illness and addiction.

Gatekeeper Competence. Purchasers may wish to address the following in RFPs and contracts:

Specify how primary care physicians are to conduct screening and assessment for mental and addictive disorders or for risk factors associated with these disorders.

Specify the gatekeeper's responsibilities to inform the primary care physician of the patient's treatment plan, in accord with confidentiality requirements.

Specify minimum qualifications, training, and experience in substance abuse and mental health assessment and treatment for those who perform a gatekeeper function.

Establish guidelines for screening and assessment tools to be used in gatekeeping functions.

Establish separate standards for those performing gatekeeping functions for different specializations, such as mental disorders, substance use disorders, children and so forth.

Establish restrictions on or limitations for financial incentives of gatekeepers that may unduly affect decisionmaking.

Specify availability, consultation, or determination of utilization management decisions by a physician or by a psychiatrist.

g. Outreach Capabilities

Improving access for hard-to-reach populations may often require outreach services. These services may be directed to addicted pregnant women, homeless individuals with mental and/or addictive problems, injection drug users, severely mentally ill individuals, or others who are unlikely to seek out treatment on their own and whose untreated illnesses entail high social and other costs. Some purchasers prefer to contract with agencies other than MCOs to do outreach for hard-to-reach populations. If the MCO is to conduct outreach, the contract should be very specific as to what is required and also ensure that the MCO is held accountable for outreach work at the rate anticipated.

Outreach Capabilities. Purchasers may wish to address the following in RFPs and contracts:

Identify target population groups for outreach.

Specify requirements for the MCO to conduct outreach, particularly outreach to vulnerable populations (such as people who are homeless) or difficult-to-reach groups (e.g., rural, specific ethnic/cultural populations).

Require the MCO to develop outreach staff guidelines and standards.

To clarify both what is expected and what is not, establish requirements for outreach in specific terms (e.g., how many staff should be devoted to outreach, in what locations and to which populations, and how outreach should be conducted).

Establish measures for performance of outreach functions.

Stipulate appropriate incentives to encourage the MCO's outreach efforts.

Establish acceptable penetration rates (i.e., access to services).

Clarify how outreach efforts will be monitored.

2. Measuring Access

Several organizations have developed and continue to refine standards that measure different aspects of access. These standards are likely to form the base upon which access within the field will be built. The accompanying box outlines the standards established by these organizations. Purchasers are strongly encouraged to be specific in the RFP and contract about their expectations concerning performance of the contractor. These expectations should have measures attached to them, standards to which the contractor will be held accountable, incentives and sanctions for reaching or failing to reach the standards set, and provisions that the contractor use new measures and standards at periodic intervals (e.g., annually or at contract renewal). There should be expectations in the RFP/contract about rates of use by population and a means for tracking utilization and access rates in fairly real time (e.g., monthly reports at least) and means for auditing use rates to assure that expectations are being met and that the data reported are accurate.

D. Subcontracting With Providers

One of the MCO's fundamental responsibilities is to execute and administer service contracts with providers. Like the prime contract between the purchaser and the MCO, the MCO's subcontract with providers establishes specific clinical, financial, and operational responsibilities. The purchaser may wish to include substantive contractual requirements about the content and/or structure of such subcontracts, require their approval by the purchaser, require the MCO to show evidence of due diligence in soliciting providers, and mandate that the fundamental content of subcontracts between the MCO and providers be made public in the same manner as the prime contract is made public.

1. Devolution of Responsibilities in the Prime Contract to the MCO's Subcontracts With Providers

The importance of extending the relevant terms of the prime contract to the MCO's subcontracts with providers to ensure the legal devolution (delegation) of many service and performance duties from the MCO to providers cannot be overemphasized. The providers in the MCO's network are not parties to the prime contract between the purchaser and the MCO and are therefore not bound by it unless the MCO-provider contract so states. For example, many prime contracts require the MCO to develop practice guidelines regarding quality of care; however, these same contracts may neglect to require the MCO-provider contract to address this issue. As a consequence, the MCO may not distribute the agreed-upon guidelines to providers, and the providers are under no contractual obligation to follow them. To ensure that network providers are contractually obligated to provide services in a manner consistent with the prime contract, the purchaser may require the MCO to bind providers by the relevant terms of the prime contract.

In addition, at a minimum, to guard against the potential for underservice, the contract should specify that the MCO must provide evidence that it has communicated to its subcontractors the classes of benefits that will be covered, the standards and procedures for making coverage determinations under the agreement, and a full explanation of the benefits that can be secured for enrollees both through the contract and outside of the contract. One of the great challenges for a managed care purchaser is ensuring that all subcontractors are aware of its agreement with the contractor. This is especially true in the case of Medicaid managed care agreements, in which the terms of the master contract may depart significantly from those found in service agreements in the private sector.

Devolution of Responsibilities. Purchasers may wish to address the following in RFPs and contracts:

Require the MCO to have signed subcontracts with providers in place before the plan is implemented.

Establish guidelines regarding the use of provisional contracts or some other transitional arrangement if necessary (with appropriate malpractice coverage and indemnification provisions) to facilitate contracting, credentialing, and clinically appropriate transitions for enrollees during the implementation of the managed care plan.

Ensure the delegation of all relevant service and performance duties from the prime contract to the subcontract.

Require purchaser approval of all MCO-provider contract language related to the devolution of prime contract terms to the provider.

Require the MCO to monitor prime contract terms and ensure compliance of prime contract requirements by the subcontractors.

Require the MCO to train providers to ensure clear understanding of the purchaser's contract with the MCO and consequent provider obligations.

Require purchaser approval of a standard subcontract base language that clearly reflects the delegation of responsibilities (e.g., performance standards, recommendations for network membership, medical necessity criteria, quality assurance, consumer protections, and grievance and appeals procedures).

Require that all subcontracts, provider performance standards, and practice guidelines be publicly available.

Require compliance with 42 C.F.R. 434.70 and 434.67, whereby the MCO may operate a physician incentive plan only if it is consistent with the act's provisions.

Establish any requirements regarding timelines and processes for the recontracting and reprocurement of providers.

Ensure that provider contracts are available to the public and that information on financial incentives that might influence care is also publicly available.

Establish mechanisms for the purchaser to audit compliance of the MCO with its practice guidelines and utilization review criteria.

2. Provider Payment Requirements

Another essential component of the contract is the MCO's payment terms and conditions with regard to network providers. Purchasers may wish to support the ongoing financial viability of network providers by contractually establishing fair, efficient, and monitorable compensation methods.

Provider Payment Requirements. Purchasers may wish to address the following in RFPs and contracts:

Require the MCO to have signed subcontracts with providers in place prior to the start date of the MCO contract.

Require the MCO to specify clear payment terms and conditions in the MCO-provider subcontract (e.g., rates, timeframes for payment, assumption of risk, copayments, deductibles, and service definitions).

Establish timelines for payment of providers (especially important during the startup period when providers may not have adequate cash reserves)-- e.g., 90 percent of invoices be paid within 45 days.

Establish fees and schedules of services for fee-for-service arrangements.

Require the MCO to report any revenue paid to the providers from copayments or charges for noncovered services, or other sources.

Require the MCO to seek purchaser approval regarding subcapitation to providers, rate-setting policies, or other purchaser-specified reimbursement-related issues.

Require the MCO to pay claims for dates of service beginning on the date of contract implementation.

Require reporting on all third-party payment activities, or alternatively, encourage the MCO to collect third-party liability payments by designating a percentage to be retained by the MCO for its efforts (e.g., 25 percent).

Require MCOs to develop fair payment terms and efficient and monitorable processes in the MCO-provider subcontract.

Determine all financial responsibilities for consumers already in treatment when the contract starts.

3. Grievance and Appeals Procedures for Providers

Rosenbaum and her colleagues' analysis of State Medicaid managed care contracts found that most contracts, through omission or insufficiently precise language, created a situation in which MCOs held considerable power over providers, giving the providers no recourse to address what they may have considered unfair practices (Rosenbaum et al., 1997). To ensure that network providers have viable options for addressing issues with the MCO, a purchaser of managed care services may require the MCO to include dispute resolution, grievance, and appeals procedures for providers in the MCO-provider subcontract. Such provisions should clearly describe procedures, identify who bears the cost of the procedures, and protect the rights of providers who challenge MCO practices. Policy and legal issues abound, and purchasers should ensure that the arbitration-grievance procedures comply with all relevant county, State, and Federal laws and regulations.

Grievance and Appeals Procedures for Providers. Purchasers may wish to address the following in RFPs and contracts:

Require the MCO to develop provider grievance and appeals procedures with levels of appeal available within the MCO and, ultimately, an appeal to the purchaser or its designee (e.g., the State mental health or substance abuse authority).

Require the MCO to generate written documentation supporting a decision to eliminate or suspend a provider from the network, to be available to the purchaser and provider upon request, ensuring confidentiality when necessary.

Ensure that providers have access to grievance and appeals procedures, both with the MCO and with the purchaser.

E. Establishing Qualification Standards for Provider Staff

Another MCO responsibility is to establish, monitor, and enforce standards for training, experience, qualifications, and continuing competency of staff who provide services within their networks. A purchaser can use the prime contract to establish qualification standards for network provider staff for implementation by the MCO, or the purchaser can require the MCO to propose a set of standards for the purchaser's review and approval.

1. General Staffing Guidelines

Staffing guidelines, such as those specified by the National Committee for Quality Assurance (NCQA) in its behavioral health accreditation standards, can be used to establish minimum requirements in such areas as education, training, experience with the defined population, cultural competence, and licensing and certification. Although these standards are very helpful, it has been argued that they are too oriented to private sector systems and must be supplemented to be useful in public sector systems (Bazelon Center for Mental Health Law, 1997). Requiring accreditation of the MCO is also a way in which minimal credentialing standards for staff can be assured. All licensing and certification standards must be consistent with all applicable local, county, State, and/or Federal requirements.

In determining staff qualifications, purchasers may want to be careful not to be overly restrictive in order to allow for staffing patterns that make optimal use of licensed professional, certified, and "experientially trained" staff. A significant percentage of direct service staff in the substance abuse field, for example, are people in recovery who have not pursued academic degrees but are nonetheless highly effective in certain clinical settings (e.g., detoxification, outreach). Overly restrictive standards might prohibit the use of such staff in publicly funded substance abuse services. Similarly, staff qualification requirements should not restrict valuable opportunities to include students, volunteers, and consumers, as long as they are adequately supervised by licensed professionals. (The 1997 NCQA manual includes new language to allow credentialing of programs that have unlicensed staff with licensed supervisors.) These staff can be used well in staffing patterns that achieve treatment goals in ways that are innovative, clinically sound, and cost effective. Use of such staff requires clear policies on appropriate functions, malpractice protection, and appropriate fee structures.

General Staffing Guidelines. Purchasers may wish to address the following in RFPs and contracts:

Specify that the purchaser retains the right to approve all staff standards and any exceptions to those standards before implementation.

Require the MCO to be appropriately accredited, or to use the credentialing standards of NCQA accreditation as a base and then set additional standards to reflect public sector realities.

Establish the staffing requirements for managing and/or providing substance abuse treatment and prevention, both for those experientially trained and for those with academic training and/or licensure.

2. Credentialing and Credential Verification

Establishing credentialing standards for providers allows the purchaser to ensure the qualifications of professional, licensed, and certified staff within the network. Credentialing is a review process based on specific criteria, standards, and prerequisites to approve a provider or professional who applies to provide care in a number of health care settings, including hospital, clinic, medical group, health plan, or in private practice. Credentialing activities generally include review of original documents submitted by the provider, including contacting references, verifying licensure, and reviewing and verifying insurance and malpractice history. These activities may be carried out by the MCO or contracted out to an organization that specializes in such tasks. Due to the liability risk of credentialing in a manner not consistent with industry standards, which are set mainly by NCQA and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), purchasers should exercise caution in the degree to which they vary from these established standards.

Credentialing. Purchasers may wish to address the following in RFPs and contracts:

Direct the MCO to develop, implement, and/or oversee credentialing policies and capabilities of network providers and MCO staff.

Require purchaser approval of the credentialing policies and process.

Identify which categories of providers are to be credentialed and methods by which this will take place, and set timeframes for the credentialing process.

Establish the credentialing standards to be used, such as those drafted by NCQA, JCAHO, CARF, CAO, or other accrediting organization.

Ensure that the standards used are consistent with any State, county, or local requirements.

Require the MCO to utilize State counselor certification or credentialing as a staffing standard.

Require the MCO to oversee and closely monitor any credentialing work that is contracted out.

Establish requirements for credentialing group providers, as contrasted to standards for credentialing individual providers.

Require the MCO to provide primary source verification of documentation regarding MCO staff experience and training, as well as network providers.

Direct the MCO to include providers with specialized training and experience in specialty areas (e.g., substance abuse, children, eating disorders).

Establish whether the MCO and its providers must accept referrals of enrollees involved with the courts or the criminal justice system or referrals that present conditions outside their licensure or competency to treat.

Establish a volume or amount of funds that must be provided through essential community providers (e.g., Oregon substance abuse services).

Require that substance abuse and mental health service providers establish and maintain formal relationships with each other and with primary health care providers and with social services and supportive services organizations.

3. Clinical Specialties

The purchaser may wish to require that a sufficient number of staff throughout the network have training, board certification, and/or experience in various specialties. For instance, the purchaser may want the MCO to have expertise in-house and within its network to manage the treatment of children with severe emotional disturbances who require the services of board-certified child psychiatrists and child psychologists.

The degree to which purchasers choose to address clinical specialty issues will vary depending on the needs of the enrollee population, the availability of specialists, utilization of specialists in the current system of care, and the purchaser's attitudes about the importance of using specialists. Purchasers may wish to require the MCO to submit a specialty services plan for purchaser approval, specifying standards for certain specialties and/or identifying the types of programs that should have specialists on staff or readily available.

Clinical Specialties. Purchasers may wish to address the following in RFPs and contracts:

Require the MCO to submit a specialty services plan for purchaser approval.

Specify which clinical specialties are required within the network, including waivers or adjustments for rural and frontier areas when appropriate.

Establish the settings, situations, and/or programs that should have such specialties.

Specify which board certifications are required for physicians, psychologists, and others, both in the MCO and in designated settings and situations.

Establish and provide means to monitor access to specialists.

Require the MCO to systematically upgrade and improve specialist capabilities throughout the system, taking into account the potential limitations of specialist availability in rural and frontier areas.

4. Consumer Employment

Employment of consumers of mental health services and their families and individuals in recovery from addiction can be an important element in an effective staffing system. Consequently, the purchaser may wish to develop standards that promote the training, hiring, employment, and supervision of those with mental disorders, those in recovery from addictive illnesses, and family members of children with emotional disorders, both in the provider network and within the MCO. The purchaser may also wish to promote contracts for services with consumer-sponsored organizations.

Consumer Employment. Purchasers may wish to address the following in RFPs and contracts:

Establish guidelines for the use of consumer-based provider systems (e.g., consumer support groups or drop-in centers).

Establish consumer and family employment goals for internal MCO and/or provider operations.

Direct the MCO to systematically promote, monitor, and improve the recruitment, training, and hiring of former or current consumers and family members by network providers.

Establish minimum standards for length of sobriety required for clinical staff and for systems to respond to relapse or psychological deterioration among staff.

Require compliance with all applicable State or county laws regarding health status including substance use/sobriety by recovering employees.

F. Monitoring Providers' Performance

Monitoring, evaluation, and improvement of network providers' performance by the MCO is a crucial and ongoing task of network management. Effective monitoring and management of providers' performance by the MCO can give the purchaser much critical information. The purchaser may therefore wish to include guidelines and specifications in the contract regarding how this monitoring process should occur and the standards by which the MCO's monitoring strategies will be evaluated. Chapter VI includes an analysis of important issues related to performance monitoring and quality assurance, and these topics are only briefly discussed here in relation to network monitoring.

MCOs use a wide variety of strategies to monitor and manage performance of the providers in their networks, which may include placing MCO staff at treatment sites, making intensive site visits, conducting consumer satisfaction surveys and focus groups, and requiring internal reporting by utilization management staff. Increasingly, however, provider monitoring relies on data-based provider profiling, in which systematic profiles of providers are created using a series of specific measures. In claims-based fee-for-service arrangements, a substantial amount of useful information can be developed from which provider profiles can be generated. The profiles can be used to compare the performance of providers of similar services. They can also be used to design quality improvement programs, distribute incentives or enact sanctions, establish corrective action plans, and/or provide the basis for continued measurement in the network.

Monitoring Providers' Performance. Purchasers may wish to address the following in RFPs and contracts:

Require the MCO to submit a formal network monitoring, development, and management plan for purchaser approval, including procedures for corrective action plans and systematic follow-ups.

Establish clear specifications to support purchaser monitoring and evaluation of specified MCO network management functions (e.g., a report card).

Describe any MCO requirements regarding training of network providers (e.g., utilization management, best practices, or management information service development).

Implement a tracking system to measure providers' progress.

Describe the role of consumers and family members in monitoring provider performance.

Describe required provider profile measures and evaluation criteria.

Describe software capabilities that would best meet desired provider-profiling needs.

Require that profiling measures and procedures be available to providers and the public.

Specify any provider reporting requirements (e.g., State client data systems, outcome reporting systems, or data on placement patterns).

Ensure that providers are given feedback on quality and performance data.

Require documentation of actions taken to resolve quality concerns.

^1. For a detailed analysis of this issue, see table 3.1 with State Medicaid managed contract provisions addressing this issue in Rosenbaum et al. (1997).

^2. For a detailed analysis of this issue, see table 3.8 with State Medicaid managed contract provisions addressing this issue in Rosenbaum et al., (1997).

^3. For a detailed analysis of this issue, see table 3.7 with State Medicaid managed contract provisions addressing this issue in Rosenbaum et al., (1997).

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