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Pay for Performance Program Oversight Committee

Notice of Pay for Performance Committee Meeting

MMB would like to announce the next meeting of the Pay for Performance Oversight Committee on Tuesday, March 18th from 9:00 - 11:00 am. The meeting will be held in the Blazing Star conference room, located on the ground level of the Centennial Office Building located at 658 Cedar Street, Saint Paul, MN 55155. Metered parking is available.

Please note that responses to both RFPs must be received by 4:00 pm CT on December 21, 2012. A different time was inadvertently noted in the State Register notice.

RFPs (see QAs below)
Request for Proposals (RFP) for Third Party Management Services for the Pay for Performance Pilot Program—Supportive Housing Services
Request for Proposals (RFP) for Third Party Management Services for the Pay for Performance Pilot Program—Workforce Development Services
Additional Information
2011 First Special Session Laws
Meeting Information
Presentations
Organizing Documents
Resources
Requests for Information and Information Session Registration

 

RFP QAs

Question: Can the organization that provides the Third Party Management Services also serve as a service provider? Or are those roles mutually exclusive?

Answer: Under the Collaboration section of the RFP (Section V, C-2 on page 17 of each RFP) we do state that the third party contractor must have a clearly defined role that cannot include service provision or evaluation.

General Questions

Question: When will the Evaluation RFP be issued?

Answer: The date of issuance for the evaluator RFP has not been determined. We will first contract with a third party contractor and work with that entity to determine the timing of an evaluator RFP.

Question: Can the organization that provides the Third Party Management Services also serve as a service provider? Or are those roles mutually exclusive?

Answer: Under the Collaboration section of the RFP (Section V, C-2 on page 17 of each RFP) we do state that the third party contractor must have a clearly defined role that cannot include service provision or evaluation.

Question: If performance outcomes are met, will the third party contractor be reimbursed from the state for only administrative costs or will the third party contractor also be eligible for additional payments based on the return on investment percentage?

Answer: The RFP requires that the third party contractor provide the financing/funding for their services (see Part IV, Section D). This requirement was based on our assumption that financing the third party contractor out of bond proceeds (with the subsequent requirement that the ROI cover the debt service on the bonds) would result in an ROI that may not be achievable. If a responder would like to propose otherwise, please identify the strategy and the impact on the ROI and payments in responses for Part V, Section A:1, and Part V, Section B.

Question: Can a third party contractor that funds the third-party service provider (in terms of administrative and operational costs) also invest in the working capital and get a return on their working capital investment?

Answer: Based on the terms outlined in the RFP (Part V, Section A:3), nothing precludes a third party contractor from investing in a working capital fund. Terms on the investment, including rates of return, should be provided in the RFP response.

Question: In MMB’s award decision, to what degree does the proposed rate of return from the third party contractor factor into the selection criteria?

Answer: We do not have a predetermined ROI requirement. Please see Part II, Section G for scoring criteria.

Question: Does MMB have any concerns regarding the possibility of a private enterprise acting as the third party contractor and earning a profit should target outcomes be met?

Answer: Proposals will be evaluated based on the criteria outlined in Part II, Section G.

Appropriation Bonds/Proceeds

Question: It is our understanding that the Minnesota Supreme Court approved the use of appropriation bonds in a manner consistent with the purpose of the Pay for Performance Pilot Program. Please clarify the information on Page 5, Part 1: Introduction A. Overview that states “The applicability of this decision to the pay for performance appropriations bonds requests legal review and analysis. Depending on the outcomes of this analysis, the issuance of appropriation bonds and the implementation of phases of the pay for performance pilot program, including performance-based contracts with services providers, may be delayed or prevented.” Our understanding is that the Minnesota Supreme Court approved the use of appropriation bonds for purposes consistent with the Pay for Performance Pilot Program.

Answer: The Minnesota Supreme Court ruled that refunding general fund appropriation bonds to refinance the tobacco settlement refunding bonds would not be “public debt”. We are working with our legal advisors to determine if we can interpret this ruling to apply to appropriation bonds for the Pay for Performance pilot. We do not anticipate an answer to this question prior to the RFP due date of December 21st.

Question: What is the expected interest rate for the bonds to be sold? What is the expected debt service needed to repay the bonds?

Answer: Interest rates will depend on market conditions at the time of sale; we cannot project today what they will be. For planning purposes only, we can provide two conservative estimates for a $10 million taxable bond issue structured over 10 years. The taxable market is more sensitive than the tax exempt market. a. Assuming an average coupon/interest rate of 2.50%, the annual debt service is $1,143,000. This is about 75 basis points above current market conditions. b. Assuming an average coupon/interest rate of 1.95% (just under 2%), the annual debt service is $1,112,000. This is about 25 basis points above current market conditions.

Question: The current statute stipulates that bonds should be sold by June 30th, 2013. What is the anticipated timeline for launch of the pilot?

Answer: The launch date for the pilot will be coordinated with the third party contractor (see Part IV, Section A:8).

Question: What is the expected success payment schedule from the States’ perspective?

Answer: Performance payments will be made based on the performance criteria established by the third party contractor, in collaboration with the state.

Question: On page 14, Part IV, D, the RFP states “Because the Pay for Performance Act of 2011 does not designate funding for the third party contractor, the contractor must provide funding for the third party services to be provided under this solicitation.” However, based on our reading of the legislation, the Pay for Performance Pilot Program statute language [16A.94] does not specifically preclude the bonding proceeds from being used for third party services. Would the State reconsider the eligible uses of the bond proceeds to include third party services necessary to implement the Pilot Program?

Answer: The RFP requires that the third party contractor provide the financing/funding for their services (see Part IV, Section D). This requirement was based on our assumption that financing the third party contractor out of bond proceeds (with the subsequent requirement that the ROI cover the debt service on the bonds) would result in an ROI that may not be achievable. If a responder would like to propose otherwise, please identify the strategy and the impact on the ROI and payments in responses for Part V, Section A:1, and Part V, Section B.

Working Capital/Funding

Question: On Page 6, it says “the contractor must also demonstrate that they have access to non-state funding to provide the third party services...” How will the State interpret “demonstrated access”? What level of commitment is sufficient to meet the State’s expectations at this point?

Answer: For the third party contractor, see Part V, Section B:2. For the working capital fund, see Part V, Section A:3 (iii). For evaluation criteria, see Part II, Section G.

Data

Question: Page 13, Part IV. B. Service Provider Evaluation states that the third party contractor will “Arrange data access with entities possessing data.” What is the State’s level of commitment to assisting with the making state owned data accessible for the purposes of the Pilot Program? More specifically, how will the State work to ensure that the necessary data from the various state agencies is available to the third party and evaluator?

Answer: The state is committed to making data available for this pilot. At the same time, we recognize the complexity of this task. Part V, Section A:4 outlines the competencies we are looking for in a third party contractor to facilitate this process.

Question: What is the State’s capacity and commitment to integrate and cross reference data across systems, in particular data between Department of Human Services and Department of Corrections?

Answer: The state’s capacity for this pilot is to make the data available. Any integration or cross referencing that is not embedded in the data will be the responsibility of the third party contractor and/or evaluator.

Evaluation

Question: What type of evaluation design does the State consider to be the standard for the Pilot Program?

Answer: We anticipate defining the evaluation design with the third party contractor at a later date. At this time, we are expecting a quasi-experimental research design with the ability to control for variables.

Question: Will direct collection of data from participants be required or will administrative data analysis be sufficient where data can be made available?

Answer: This will be dependent on the final ROI and evaluation methodology selected. However, our goal would be to use existing data first.

Question: Are the goals of evaluation focused on understanding the State’s economic return on investment, or does the State anticipate a broader evaluation that will include a process/implementation analysis, clarification of program elements, or additional outcomes such as health and quality of life?

Answer: The primary goal of the evaluation is to focus on the state’s economic return on investment.

Evaluator

Question: What role does the third party play in the selection of the evaluator and how much involvement will the third party have in the selection of the evaluator? What is the selection process and timeline for the evaluator?

Answer: The state will issue and select a third party evaluator under a separate RFP. The third party contractor will assist the state in developing the evaluator RFP, but the state will make the selection of the evaluator.

Question: At what point in the program development and contract negotiations will the evaluator be an active partner?

Answer: The evaluator will be an active partner once they have been selected. The selection timeline has not been determined, but will be set in collaboration with the third party contractor.

Clarification of Roles

Question: Page 6, Part I, B says, “The Act also requires MMB, after consulting with the oversight committee, to establish a methodology for calculation the state’s return on investment.” However, below that in Section C, it states that the third party contractor is expected to do the following nine items including “8. Design and develop the return on investment goal, methodology and calculation.” Please provide additional information and clarification on the role of the state and the role of the third party around establishing, designing and developing the return on investment goal, methodology and calculation.

Answer: Any ROI goal, methodology or calculation design needs to be approved by the state.

Question: What is the line between evaluator and third party management? What are the expected role distinctions of the intermediary versus the evaluator specific to matters such as data collection agreements, and design of data collection protocols?

Answer: The RFP does not clearly articulate the role of the evaluator; it will depend on the third party contractor and will be clarified with the evaluator RFP (see the responses to questions 18 and 19). We anticipate the evaluator’s role will focus on data analysis.

 

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