04/22/16: MSP Contract Procurement

MSP Contract Procurement

On April 13th, I participated in a presentation at the OASBO conference regarding the Medicaid School Program (MSP) and the Agreed Upon Procedures (AUP) review. I had the pleasure of presenting with Ken Richards of Kennedy Cottrell Richards (KCR) and Zac Morris with Rea and Associates. We had a lot of information to cover in just one hour of time. As we discussed, the costliest area of exposure in the AUP review relates to “Contract Procurement”. Below is a summary of the Related Service Procurement Requirements for the upcoming 2016/17 school year. Please note these requirements as you are entering into 2016/17 service contracts for MSP therapy services (OT, PT, Speech, Psychology, Social Work, and Nursing).

Contracts over $150,000

  • Must be awarded through full and open competition.
  • Contract file must state rationale for vendor selection. (Cost/Price Analysis)
  • If competition is limited, document your efforts and rationale. (Sole Source Vendor)

Contracts under $150,000, but over the district’s procurement threshold.

  • Documentation must exist that show at least 2 price comparisons, which can be obtained through written, verbal, catalog pricing, internet or from other sources. (Cost/Price Analysis)

Competitive Bidding or Price Analysis are not required for contracts less than the micro purchase limit ($3,000).

Sole Source Vendor

  • Competitive Bidding and/or Price Comparisons are not required if you can justify and you document that there is only one vendor in your area that can meet your service needs. You must document your efforts in determining that the services are “available only from a single source”.

Contracts with ESC’s

  • MSP service contracts with ESC’s can also be designated as a Sole Source Vendor and/or a Shared Services Contract. 45 CFR 92.36 (b)(5) encourages “State and Local intergovernmental agreements for the procurement or use of common goods and services”.

Note, when you contract with two separate vendors for the same service, it is hard to justify that either vendor is a Sole Source Vendor.

Therapy contracts must include the following three statements:

  1. Vendor to comply with the requirements of 45 CFR 164.504(e) (1) for safeguarding and limiting access to information concerning beneficiaries.
  2. The representative of the U.S. Department of Human Services, ODM, ODE or their respective designee will have access to the subcontractor’s books, documents and records.
  3. Vendor acknowledges that they or their principles are not suspended or debarred.

All vendor invoices are required to provide a listing of students served. (It is extremely important that your therapy vendor provide this information for every invoice)


Contracts over $150,000 require Competitive Bidding, unless the contract is with an ESC, or you can justify Sole Source Vendor designation.

Contracts under $150,000 require Price Comparisons, unless ESC contract, Sole Source Vendor, under district’s procurement threshold, or under the Micro Purchase limit.

Include the three statements on therapy contracts.

Require all vendors to provide “Students Served” listing with each invoice.

See Attachment “Medicaid School Program – Contract Procurement Checklist

Healthcare Billing Services, Inc.