LANSING - Although the federal Health Care Financing Administration (HCFA) has issued rules requiring "free and open" competition among public and private mental health care providers for Medicaid-funded contracts, the plan submitted Oct. 1 to the HCFA by the state of Michigan backs off from that requirement.

Caving in to pressure from public mental health providers, the state modified its original plan, which called for all-out competition, and instead proposed that it would give "initial consideration" for contracts to "qualified Community Mental Health services (CMH) programs" that serve at least 20,000 Medicaid clients. To save on administrative costs, counties with CMH services serving smaller communities would have to combine with their neighbors in order to receive state funding.

The new proposal also requires CMH programs to meet an extensive list of qualification requirements before being selected for Medicaid funding. These include administrative efficiency, establishing a network of service providers, and offering "consumer choices." If an existing CMH program can't meet these requirements, both public and private companies will be allowed to bid on services for that area.

It remains to be seen whether this plan will be approved by the HCFA. Meanwhile, the state has applied for a waiver from all competition requirements, on the grounds that it's impractical.