Michigan has canceled its request for proposal to restructure the state’s Medicaid-funded behavioral health system, halting a planned overhaul that would have shifted management of $4.9 billion in services, Bridge Michigan reported Jan. 30.
The cancellation, posted Jan. 29 on the state’s procurement website, ends an effort by Michigan’s HHS to introduce “consumer choice” reforms and revise the state’s regional behavioral health structure.
The proposal would have reduced the number of regional agencies, including prepaid inpatient health plans, from 10 to three and introduced public-private partnerships into a system currently overseen by local governments. The change would have affected behavioral health services for approximately 300,000 residents, according to the report.
Several prepaid inpatient health plans sued the state last August after MDHHS released details of the bid process. A Michigan Court of Claims judge ruled Jan. 8 the request for proposals violated state law by undercutting funding for community mental health service programs and would need to be amended to proceed.
The department said it rescinded the request for proposal “to evaluate next steps and available options” while ensuring compliance with state and federal requirements. MDHHS cited “significant changes in healthcare delivery, financing, integration expectations and federal oversight” as reasons for reassessing the system.
An MDHHS spokesperson said the department remains focused on improving access to care, strengthening consumer choice and reducing duplicative administrative costs.
The state had planned to launch the new contracts in October, according to the report.
Robert Sheehan, CEO of the Community Mental Health Association of Michigan, said the move does not rule out future restructuring efforts and called for a more collaborative approach.
The MI Care Council, which supported the redesign, said cancelling the request for proposal does not address ongoing challenges in the state’s behavioral health system, including fragmentation, delayed payments and workforce strain.
