Request for Proposal for the Children's Specialty and Children's Comprehensive Health Care Plan

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General

EXECUTIVE DIGEST #3963798
Request for Proposal for the Children's Specialty and Children's Comprehensive Health Care Plan

INTRODUCTION
This report, issued in September 1998, contains the results of our performance audit of the Request for Proposal (RFP) for the Children's Specialty and Children's Comprehensive Health Care Plan developed by the Department of Community Health (DCH) and the Department of Management and Budget (DMB).

AUDIT PURPOSE
This performance audit was conducted in response to a legislative request and as part of the constitutional responsibility of the Office of the Auditor General. Performance audits are typically conducted on a priority basis related to the potential for improving effectiveness and efficiency.

BACKGROUND
The RFP was developed by DCH and the DMB Office of Purchasing. The purpose of this RFP was to solicit proposals from qualified health plans seeking contracts with the State to provide or arrange for a comprehensive and specialty-focused set of organized health care services for children on a Statewide basis.

Proposals submitted pursuant to the RFP were evaluated by a 10-member joint evaluation committee (Committee), which used a three-step process to evaluate proposals received from three health plans. Upon the completion of its evaluation process, the Committee recommended that the Office of Purchasing award contracts to all three health plans.

AUDIT OBJECTIVES, CONCLUSIONS, AND NOTEWORTHY ACCOMPLISHMENTS
Audit Objective: To assess DCH's and DMB's effectiveness in the RFP development, health plan selection, and contract awards recommendation processes.

Conclusion: We concluded that DCH and DMB were generally effective in the RFP development, health plan selection, and contract awards recommendation processes; however, we a noted reportable condition related to documentation of evaluations (Finding 1).

Noteworthy Accomplishments: The Children's Specialty and Children's Comprehensive Health Care Plan RFP represents several years of collaborative work among the Children's Special Health Care Services Plan Division, consumer and professional stakeholders, health care providers, and other public and private agencies. Michigan has developed a national model for managed care for the children with special health care needs.

Audit Objective: To assess DCH's and DMB's compliance with State and federal laws and regulations in the RFP development, health plan selection, and contract awards recommendation processes.

Conclusion: We concluded that DCH and DMB were generally in compliance with State and federal laws and regulations in the RFP development, health plan selection, and contract awards recommendation processes.

Audit Objective: To assess the adequacy of financial requirement provisions of the RFP.

Conclusion: We concluded that financial requirement provisions of the RFP were generally adequate.

AUDIT SCOPE AND METHODOLOGY
Our audit scope was to assess the development of the request for proposal and the related health plan selection and contract awards recommendation processes for the Children's Specialty and Children's Comprehensive Health Care Plan. Our audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.

Our objectives were designed primarily to answer the following eight legislative questions:

1.     What qualification standards were used to evaluate
         the health plans?

2.     What outcome measurements were included in the
         RFP?

3.      How do the terms of the RFP compare with similar
         provisions of RFPs issued by other states which have
         preceded Michigan in managed care initiatives?

4.      Did the terms of the RFP comply with requirements of
         the Health Care Financing Administration, U.S.
         Department of Health and Human Services?

5.      What level of services was required?

6.      What involvement was there from the DMB Office of
         Purchasing?

7.      Were the health plans required to submit audited
         financial statements and, if so, who evaluated them?

8.      Do the terms of the RFP allow State and federal
         agencies to audit contractors' financial and
         performance practices?

Specific answers to these questions are included in this report as supplemental information.

Our audit methodology included examinations of the Children's Specialty and Children's Comprehensive Health Care Plan records and activities for the period May 1, 1997 through March 31, 1998. To accomplish our objectives, we reviewed methods and standards used to evaluate health plans and to measure outcomes and interviewed DCH and DMB staff. We evaluated various features of the RFP for compliance with State and federal laws and regulations, State procurement rules, and contracting laws and regulations. We also evaluated the RFP provisions related to health plans' financial practices and the criteria used in assessing health plans' financial data.

AGENCY RESPONSES
Our audit report includes 1 finding and 1 corresponding recommendation directed to DMB. DMB will take the recommendation under advisement. There were no findings or recommendations directed to DCH.

Full Audit Report - #3963798 - Request for Proposal for the Children's Specialty and Children's Comprehensive Health Care Plan

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This page was created on 10/01/98.


INTRODUCTION This report, issued in September 1998, contains the results of our performance audit of the Request for Proposal (RFP) for the Children's Specialty and Children's Comprehensive Health Care Plan developed by the Department of Community Health (DCH) and the Department of Management and Budget (DMB).

AUDIT PURPOSE This performance audit was conducted in response to a legislative request and as part of the constitutional responsibility of the Office of the Auditor General. Performance audits are typically conducted on a priority basis related to the potential for improving effectiveness and efficiency.

BACKGROUND The RFP was developed by DCH and the DMB Office of Purchasing. The purpose of this RFP was to solicit proposals from qualified health plans seeking contracts with the State to provide or arrange for a comprehensive and specialty-focused set of organized health care services for children on a Statewide basis. Proposals submitted pursuant to the RFP were evaluated by a 10-member joint evaluation committee (Committee), which used a three-step process to evaluate proposals received from three health plans. Upon the completion of its evaluation process, the Committee recommended that the Office of Purchasing award contracts to all three health plans.

AUDIT OBJECTIVES, CONCLUSIONS, AND NOTEWORTHY ACCOMPLISHMENTS Audit Objective: To assess DCH's and DMB's effectiveness in the RFP development, health plan selection, and contract awards recommendation processes. Conclusion: We concluded that DCH and DMB were generally effective in the RFP development, health plan selection, and contract awards recommendation processes; however, we a noted reportable condition related to documentation of evaluations (Finding 1). Noteworthy Accomplishments: The Children's Specialty and Children's Comprehensive Health Care Plan RFP represents several years of collaborative work among the Children's Special Health Care Services Plan Division, consumer and professional stakeholders, health care providers, and other public and private agencies. Michigan has developed a national model for managed care for the children with special health care needs. Audit Objective: To assess DCH's and DMB's compliance with State and federal laws and regulations in the RFP development, health plan selection, and contract awards recommendation processes. Conclusion: We concluded that DCH and DMB were generally in compliance with State and federal laws and regulations in the RFP development, health plan selection, and contract awards recommendation processes. Audit Objective: To assess the adequacy of financial requirement provisions of the RFP. Conclusion: We concluded that financial requirement provisions of the RFP were generally adequate.

AUDIT SCOPE AND METHODOLOGY Our audit scope was to assess the development of the request for proposal and the related health plan selection and contract awards recommendation processes for the Children's Specialty and Children's Comprehensive Health Care Plan. Our audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances. Our objectives were designed primarily to answer the following eight legislative questions: 1. What qualification standards were used to evaluate the health plans? 2. What outcome measurements were included in the RFP? 3. How do the terms of the RFP compare with similar provisions of RFPs issued by other states which have preceded Michigan in managed care initiatives? 4. Did the terms of the RFP comply with requirements of the Health Care Financing Administration, U.S. Department of Health and Human Services? 5. What level of services was required? 6. What involvement was there from the DMB Office of Purchasing? 7. Were the health plans required to submit audited financial statements and, if so, who evaluated them? 8. Do the terms of the RFP allow State and federal agencies to audit contractors' financial and performance practices? Specific answers to these questions are included in this report as supplemental information. Our audit methodology included examinations of the Children's Specialty and Children's Comprehensive Health Care Plan records and activities for the period May 1, 1997 through March 31, 1998. To accomplish our objectives, we reviewed methods and standards used to evaluate health plans and to measure outcomes and interviewed DCH and DMB staff. We evaluated various features of the RFP for compliance with State and federal laws and regulations, State procurement rules, and contracting laws and regulations. We also evaluated the RFP provisions related to health plans' financial practices and the criteria used in assessing health plans' financial data.

AGENCY RESPONSES Our audit report includes 1 finding and 1 corresponding recommendation directed to DMB. DMB will take the recommendation under advisement. There were no findings or recommendations directed to DCH.