Following a January court ruling, the Michigan Department of Health and Human Services (MDHHS) withdrew its request for proposals (RFP) to rebid the Prepaid Inpatient Health Plan (PIHP) system, halting the planned restructuring of Medicaid behavioral health services.
The proposed rebid would have restructured approximately $4.9 billion in Medicaid behavioral health funding, reduced PIHP regions from 10 to three, and significantly changed how care is managed for roughly 300,000 Michigan residents with serious mental illness, intellectual and developmental disabilities, and substance use disorders.
Opponents of the rebid—including mental health agencies, counties, and advocacy organizations—expressed concerns about potential service disruption, increased administrative costs, workforce shortages, and whether the proposal addressed long-standing funding challenges. Supporters contended that restructuring could improve care coordination, enhance accountability, expand consumer choice, and reduce system fragmentation.
Several mental health agencies challenged the RFP, arguing it conflicted with the Michigan Mental Health Code. The court identified significant legal conflicts, including provisions that limited Community Mental Health Services Programs’ ability to carry out statutorily required functions and enter financial contracts necessary to fulfill managed care responsibilities. Although the court did not issue an injunction requiring withdrawal, it made clear that key elements of the RFP were inconsistent with state law. MDHHS subsequently chose to rescind the RFP rather than revise or reissue it.
As a result, the current PIHP and Community Mental Health structure will remain in place. It remains unclear whether MDHHS will pursue a revised procurement strategy, incremental reforms, or broader policy changes moving forward.
If you have questions regarding this matter, please contact Dara J. Barrera, MSMS Director of Quality, Equity and Technology, at djbarrera@msms.org.
