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Concerns Emerge Over Gaps and Structural Risks in MDHHS PIHP RFP

The Michigan Department of Health and Human Services (MDHHS) has released Request for Proposals No. 250000002670 to award new Prepaid Inpatient Health Plan (PIHP) contracts as part of the state’s 1115 Behavioral Health Demonstration. The procurement will determine which entities manage Medicaid behavioral health benefits for more than 300,000 residents.

Under the RFP, the state will consolidate oversight into three regions: Northern, which includes the Upper Peninsula and northern Lower Peninsula; Central, covering mid and west Michigan; and Metro, which provides for southeast Michigan. The contracts will operate under a payor-only model, meaning the selected entities will serve solely as administrative payors and will not provide direct services. Each PIHP will be required to contract with all Community Mental Health Service Programs in its region. Applicants must demonstrate that they can meet strict network adequacy standards and outline their strategies for recruiting and retaining providers.

Payment will be based on actuarially sound capitation rates established by MDHHS. The contracts will also include risk corridors, capital reserve requirements, and a revised Payment Responsibility Grid clarifying obligations for both PIHPs and Medicaid Health Plans. The department will place a strong emphasis on parity, person-centered planning, data transparency, and ongoing performance monitoring. Applicants are expected to show how they will address health disparities, provide culturally competent care, and engage stakeholders.

Under the RFP, the structure of CMHSPs remains unchanged, which could allow existing regional fragmentation to continue. While the RFP references the need for standardized assessments, it does not require a single statewide tool, which may allow inconsistent eligibility decisions to persist. No dedicated funding is outlined for implementation or transition. The role of Medicaid Health Plans in providing mild or moderate behavioral health care is also not clearly defined.

The addendum clarifies that all CMHSPs must be included in each regional network. CMHSPs cannot serve as both a PIHP and a direct service provider, which means that entities currently fulfilling both roles will have to separate those functions. Although PIHPs hold ultimate accountability, they may subcontract operational duties such as provider credentialing, utilization review, claims processing, and quality oversight. CMHSPs may still provide direct services and remain part of the provider network, meaning they could continue to compete with community providers for clients and contracts.

Under the RFP, depending on the PIHP’s design, providers may contract directly with the PIHP or through a CMHSP if network management responsibilities are delegated. Even without formal authority over rate-setting, CMHSPs could still influence rates, referral pathways, and utilization decisions if they are assigned gatekeeping functions. The RFP does not require PIHPs to contract with all qualified providers outside the CMHSP network, which could allow for selective contracting and limit access for some community providers.

MDHHS has not announced any changes to the procurement schedule. Applications must be submitted by region, and eligible entities must be organized as 501(c) nonprofit organizations.

Questions to ask on PIHP RFP Requirements and Safeguards

Questions on the MDHHS RFP are due by August 20. Questions could focus on how the department will address potential conflicts of interest, ensure fair competition, and protect providers from retaliation as the new system is implemented.

One area of inquiry is how MDHHS will prevent PIHPs from pressuring providers to submit letters of support or participate in applications, and whether the department will prohibit tying future contracts, rates, or referrals to provider support for proposals. Questions about what protections will be in place for those who choose not to participate in writing a letter of support can also be asked.

Another concern is the definition and enforcement of a “conflict-free” structure. For example, will MDHHS consider internal firewalls between PIHP and Community Mental Health Service Program (CMHSP) functions sufficient, or will complete legal and operational separation be required? If so,  what qualifies as a firewall versus what requires complete structural separation, as well as how MDHHS will evaluate conflict-mitigation measures in cases where a single legal entity applies to serve as both PIHP and CMHSP.

Questions could also address eligibility and restructuring timelines. For example, do current PIHPs that also operate as CMHSPs have to divest their service provision functions before applying, or would a transition plan after award be acceptable? Clarification is also needed on whether a newly created nonprofit spun off from a CMHSP could still contract with its former PIHP.

Oversight and compliance are recurring themes. Information should be shared on whether MDHHS will require independent attestations of conflict-free status, how the department will audit operational independence between spun-off or affiliated entities, and what penalties or corrective actions will apply if post-award reviews find that conflict-free commitments are not being met.

Governance and contracting fairness are also on the list. How will MDHHS ensure that contracts between PIHPs and spun-off CMHSPs do not favor one entity over others? Will all providers in a region have equal opportunity to contract under the new structure? Additional questions address how reserves are monitored and whether there are safeguards against using public funds to expand direct service capacity in ways that could disadvantage the broader provider network.

Other topics include the protection of provider and patient data, transparency of the scoring and evaluation process, and the role of Certified Community Behavioral Health Clinics (CCBHCs) in the redesigned system. How will MDHHS ensure that the redesigned PIHP structure simplifies access, standardizes expectations, and reduces administrative burden compared to the current system?

MDHHS has set an August 20 deadline for submission of questions on the RFP. Providers say they will continue to coordinate inquiries to ensure that issues of governance, competition, and accountability are addressed before the procurement moves forward.

CMHAM Develops Alternative System Design Concepts Amid PIHP Procurement

In an August 14, 2025, email to its members, the Community Mental Health Association of Michigan (CMHAM) released a set of "core concepts" intended to guide alternatives to the MDHHS's current proposal to bid contracts for the state's PIHPs.

Last week, MDHHS issued its Request for Proposals (RFP) to replace the existing 10 public PIHP contracts. Under Michigan's procurement law, an RFP is a formal solicitation for competitive bids, open only to entities that meet the eligibility requirements and submit a proposal meeting all specified criteria. The process is not structured for negotiation over core requirements once the RFP is issued.

CMHAM has stated that it remains opposed to the procurement process. However, the association has also developed system redesign concepts that it says could be applied either if the RFP is halted or, if it proceeds, as elements in proposals submitted in response. It is unlikely the RFP will be halted or amended to meet the concepts shared by the CMHAM.

The "core concepts" document, distributed to CMHAM members and allied organizations, outlines the following recommendations:

According to CMHAM, these concepts reflect a "center of gravity" among a range of stakeholders, including individuals served, advocacy groups, CMHSPs, PIHPs, private providers, legislators, and MDHHS. But did not say specifically by whom.

MDHHS has not announced any changes to the procurement timeline. Under state law, once the RFP is issued, interested and eligible entities must submit proposals by the stated deadline to be considered for award, and only changes can be made by the agency that issued the RFP.

Read more,

Legislative Action Expected in Behavioral Health System Redesign

With Michigan’s new Prepaid Inpatient Health Plan procurement underway, legislative changes are expected to ensure the redesigned behavioral health system delivers conflict-free, high-quality, and timely care.

One anticipated change is an amendment to the Michigan Mental Health Code to prohibit a single entity from serving as both a Community Mental Health Services Program and a PIHP unless there is full legal and operational separation, including distinct governance, finances, and leadership. This would align state statute with structural requirements outlined in the state’s redesign framework.

Lawmakers are also expected to consider codifying conflict-free provisions in state law. While the new PIHP model establishes these standards in policy, they are not currently backed by statute. Codification could define conflict-free care, bar PIHPs from providing direct services, and limit their influence over CMHSP decision-making.

Additional proposals would establish legal safeguards against retaliation, requiring fair and transparent contracting and creating an independent review mechanism for complaints. Uniform statewide rate-setting is also under discussion, with options to enact a statutory or administrative rule-based methodology to address inconsistencies and improve transparency.

Another area of focus is establishing a legislative foundation for the Certified Community Behavioral Health Clinic model. This would define eligibility, create a cost-based reimbursement system, and ensure access for all qualified nonprofit organizations.

Beyond statutory changes, the redesign effort is expected to include participation in administrative rulemaking, advocacy for transparency in contract oversight, and recommendations for legislative hearings or state reporting on compliance with the new system’s standards.

Key themes in the policy discussions include modernizing the management of public behavioral health funds, ensuring accountability and transparency, and creating clear statutory requirements to match structural changes in contracting and oversight. No legislation has been introduced and no legislator has yet been identified as championing these issues.

CCBHC

SUD

Overdose Deaths Down 35% in Michigan

According to MIRS, Michigan is among the top states in the nation seeing sharp declines in overdose deaths. From February 2024 to February 2025, the state recorded a 35% drop—outpacing the national decline of 25.9%, based on new CDC data shared at the National Conference of State Legislatures. CDC injury prevention director Allison Arwady called the nationwide decrease “an incredible improvement,” noting that progress is also being seen in non-fatal overdoses and youth drug use. Forty-six states saw reductions; only Nevada, Hawaii, Arizona, and Utah reported increases. Policy leaders credited the gains to a mix of prevention, harm reduction, and treatment access. Examples included expanded K-12 drug education, rapid response teams, drug courts, easier expungement for non-violent offenses, and wider distribution of fentanyl test strips and naloxone. Speakers emphasized treating addiction as a medical condition, expanding harm reduction sites, and maintaining funding as key to sustaining momentum. Arwady cautioned against pulling back resources, warning that despite the progress, fentanyl remains a major threat—often appearing in counterfeit pills and increasingly smoked rather than injected. “An overdose death is a tragedy,” she said. “A non-fatal overdose is an opportunity.” Source MIRS

Politics

The Wolverine State is almost the mirror image of Georgia. Republicans lined up behind former Rep. Mike Rogers, who narrowly lost to Sen. Elissa Slotkin (D-Mich.) in 2024. Meanwhile, Democrats have a messy primary to replace retiring Sen. Gary Peters (D-Mich.) with no clear favorite. Rep. Haley Stevens (D-Mich.) hasn’t cleared the field like Slotkin did last cycle. Stevens is battling against state Sen. Mallory McMorrow and progressive darling Abdul El-Sayed in a primary that won’t be settled until August 2026. Republicans haven’t won a Senate seat in Michigan since 1994, but Trump carried the state in 2024. Source: Punchbowl News. Rogers leaves ritzy Republican dinner early without speaking, leaving Leonard and others to shine, Michigan Advance (Leonard says GOP should focus more on mental health care)

ICYMI

Forum: How to improve mental health care in northern Michigan, Traverse City Record Eagle

When Grief is Not Normal, The News Herald (By Carol Zuniga)