THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO PROCUREMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 103F, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:
"§103F- Fair and reasonable pricing policy; cost or pricing data. (a) For each contracting action under this chapter, including any change orders or contract modifications that increase the original contract amount, the purchasing agency shall make a written determination that the amount of the contracting action is fair and reasonable.
(b) In determining whether the amount of the contracting action is fair and reasonable, the purchasing agency shall obtain the data necessary to perform a cost or price analysis to determine that the amount of the contracting action is a fair and reasonable price."
SECTION 2. Section 103D-201, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The policy board shall consist of [
six members. Notwithstanding the
limitations of section 78-4, the members of the board shall include:
(1) The comptroller;
(2) A county employee with significant high-level procurement experience; and
persons who shall not otherwise be full-time employees of the State or any
county; provided that at least one member shall be a [ certified]
professional in the field of procurement, at least one member shall have
significant high-level, federal procurement experience, and at least [ two
members] one member shall have significant experience in the field
of health and human services.
Each appointed member shall have demonstrated sufficient
business or professional experience to discharge the functions of the policy
board. The initial and subsequent
members of the policy board, other than the comptroller, shall be appointed by
the governor from a list of [
three] two individuals for each vacant
position, submitted by a nominating committee composed of [ four] three
individuals chosen as follows: [ two
persons] one person appointed by the governor; one person appointed
by the president of the senate; and one person appointed by the speaker of the
house. Except as provided in this
section, the selection and terms of the policy board members shall be subject
to the requirements of section 26-34. No
member of the policy board shall act concurrently as a chief procurement
officer. The members of the policy board
shall devote such time to their duties as may be necessary for the proper
SECTION 3. Section 103F-404, Hawaii Revised Statutes, is amended to read as follows:
Treatment purchase of services. (a) Treatment services may be purchased in
accordance with this section if [ either or both of] the following
circumstances are applicable:
(1) Such services
may become necessary from time to time, but cannot be anticipated accurately on
an annual or biennial basis; and (2) When deferring
treatment until solicitation, provider selection, and contract formation can be
completed, the problem needing treatment would be rendered worse than at the
time of diagnosis or assessment. Contracts for treatment services shall be awarded
on the basis of demonstrated competence and qualification for the type of
service required, and at fair and reasonable prices.]
(1) The need for treatment services is unanticipated and arises from time to time;
(2) The required services are for a one-time purchase for not more than $100,000 and no longer than one year;
(3) The services are industry standard services generally accepted by the industry or profession; and
(4) The award of a contract is based on demonstrated competence and qualification for the type of service required and at fair and reasonable prices.
At a minimum, before the beginning of each fiscal year, the
administrator shall publish a notice describing the types of treatment services
that may be needed throughout the year on a periodic basis and inviting
providers engaged in providing these treatment services to submit current
statements of qualification and expressions of interest to the office. The chief procurement officer may specify a
uniform format for statements of qualifications.] The head of the
purchasing agency, or a designee, shall publish a notice describing the types
of treatment services that may be needed throughout the fiscal year on an
as-needed basis and inviting providers engaged in providing these treatment
services to submit current statements of qualification and expressions of
interest to the purchasing agency. Providers may amend these statements by filing
an amended or new statement prior to the date designated for submission.
administrator] head of the purchasing agency shall
form an initial review committee for each profession, consisting of a
minimum of three employees from a state agency or agencies with sufficient
education, training, and licenses or credentials to evaluate the statements of
qualifications which the [ administrator] head of the purchasing agency
receives in response to the notice published pursuant to subsection (b). The committee shall review and evaluate the
submissions and other pertinent information, including references and reports,
and prepare a list of qualified providers to provide treatment services during
the fiscal year. Providers included on
the list of qualified treatment providers may amend their statements of
qualifications as necessary or appropriate.
Providers shall immediately inform the [ administrator] head of
the purchasing agency of any changes in information furnished [ which]
that would disqualify the provider from being considered for a contract
(d) When the need to purchase treatment arises, the head of a purchasing agency shall select the provider most qualified to provide the needed treatment from the list of qualified providers.
The head of the purchasing agency, or a designee, shall negotiate a
contract, including a rate of compensation [
which] that is fair
and reasonable, established in writing, and based upon the estimated value,
scope, nature, and complexity of the treatment services to be rendered, or use
the rate established by the [ administrator,] head of the purchasing agency,
if any. If negotiations fail, upon
written notice of an impasse to the provider selected under subsection (d), the
head of the purchasing agency shall choose another provider from the list of
qualified providers, and conduct further negotiations. Negotiations shall be conducted
Contracts for treatment services in excess of $100,000 or that
last for more than one year shall [
be procured using section 103F-402,
competitive purchase of services, unless a waiver of this subsection is
approved by the chief procurement officer.] utilize an applicable method
SECTION 4. Section 103F-405, Hawaii Revised Statutes, is amended to read as follows:
§103F-405[ ]] Small
purchases. Purchases of health and
human services of less than [ $25,000] $100,000 are small
purchases, and shall be made in accordance with [ section 103D‑305
and] rules adopted by the policy board to implement [ that] this
SECTION 5. Section 103F-202, Hawaii Revised Statutes, is repealed.
Community council. (a) There
is established a community council on purchase of health and human services. The community council shall be comprised of no
more than nine voting members, and one non-voting, ex-officio member of the interagency
committee on purchase of health or human services designated by the majority of
the members of the committee. There shall
be a member from each county, except the county of Kalawao, and up to five members
interested in health, human services, employment, or the provision of services to
children and youth. (b) Voting members shall
be appointed by the governor and serve for four years. Each voting member shall serve until the member's
successor is appointed. Section 26-34 shall
apply insofar as it relates to the number of terms and consecutive number of years
a member may serve on the council. (c) Members shall serve
without compensation, but shall be reimbursed for actual expenses, including travel
expenses, necessary for the performance of their duties. (d) The community council
shall advise the administrator about or assist the administrator in: (1) Market or business
conditions facing providers; (2) Securing input
from providers to facilitate agency decision-making to assess needs, plan, budget,
and purchase health and human services; (3) Facilitating
provider participation in the process used by state agencies to plan for and purchase
health and human services; (4) Establishing
schedules for planning and purchasing health and human services in relation to the
annual and biennial budget cycles; (5) Developing criteria
to evaluate proposals to provide health and human services, and for restrictive
purchases under section 103F-403; and (6) The needs
of purchasing agencies and providers for education and training to improve planning
for or purchasing of health and human services."]
SECTION 6. The legislature finds that long-standing and growing community problems, such as homelessness, can be addressed more effectively through greater integration, lower fragmentation of payment models, and standard performance metrics. The siloed approach in which state-funded services currently are financed and purchased leads to:
(1) Increased administrative burden on service providers and any relevant state funding agencies;
(2) Disparate and inequitable reimbursement rates paid for similar services;
(3) Dissimilar contract terms regarding payment, evaluation processes, and quality assurance metrics; and
(4) Duplication and waste of resources.
The inconsistencies in procuring social services, especially those for behavioral health care payers and homelessness services, often result in patients receiving uncoordinated care across a variety of services from public providers, contracted providers, and other private providers. This irregularity also perpetuates the disparity in monitoring outcomes and results of services purchased by the State.
The legislature further finds that the consumers and patients of state behavioral health services should have an improved quality of behavioral health care. Act 90, Session Laws of Hawaii 2019, established the involuntary hospitalization task force to evaluate current behavioral health care and related systems, including existing resources, systems gaps, and identification of action steps. Act 263, Session Laws of Hawaii 2019, established a working group within the department of health to evaluate current behavioral health care and related systems and identify steps that may be taken to promote effective integration to more effectively respond to and coordinate care for persons experiencing substance abuse, behavioral health conditions, and homelessness.
Both the involuntary hospitalization task force and working group submitted reports to the legislature prior to the convening of the regular session of 2020. Since then, the behavioral health services administration within the department of health has made strides in implementing the recommendations and closing service gaps, as proved by the expansion of the Hawaii coordinated access resource entry system and the recent implementation of stabilization beds for sub-acute care. However, there is still much work to be done for the State to realize the goal of a comprehensive, coordinated care system for behavioral health and homelessness services.
The legislature recognizes that it can promote greater coordination and enhance recent advancements by enacting legislation that formalizes the multi-sectoral coordination of purchasing services for behavioral health, substance abuse, and homelessness services at optimal value and impact. Given the current economic situation facing the State, it is in the State's best interest to do so.
Accordingly, the purpose of this part is to:
(1) Establish a state payor committee to establish and adopt a unified baseline framework for performance metrics, evaluation standards, and coordinated reimbursement rates relating to behavioral health, substance abuse, and homelessness services; and
(2) Require nongovernmental entities that contract for services relating to behavioral health, substance abuse, and homelessness services to disclose, at the request of any state funding agency, the source of other federal, state, or county level funding received for the purposes of performing any of these services.
SECTION 7. (a) There is established a state payor committee within the behavioral health services administration of the department of health that shall consist of the following members or their designees:
(1) The director of health;
(2) The director of human services;
(3) The chief procurement officer; and
(4) Representatives from all executive programs that award procurement contracts for services relating to behavioral health, substance abuse, or homelessness services; provided that these representatives be designated by the heads of their respective programs.
(b) The committee shall establish and adopt a uniform baseline framework for performance metrics, evaluation standards, and coordinated reimbursement rates for all state procurement contracts for services relating to behavioral health, substance abuse, and homelessness services.
SECTION 8. All community or private entities that contract for services relating to behavioral health, substance abuse, or homelessness services shall disclose, at the request of any state funding agency, the source of other federal, state, or county level funding received for the purposes of performing any of these services.
SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 10. This Act shall take effect on July 1, 2050.
Procurement; Purchase of Health and Human Services; Procurement Policy Board; Community Council; Behavioral Health Services; State Payor Committee
Requires purchasing agencies to make a written determination that the amount of a contracting action for purchases of health and human services is fair and reasonable. Amends the selection process and composition of the procurement policy board. Amends the circumstances for when treatment services may be purchased and the procedure to purchase such services. Increases the small purchase threshold. Repeals the establishment of the community council on purchase of health and human services. Establishes the state payor committee within the department of health to implement a unified framework for tracking, coordinating, and guiding the purchase of behavioral health, substance abuse, and homelessness services. Requires nongovernmental entities that contract for services relating to behavioral health, substance abuse, or homelessness services to disclose any sources of funding to perform such services. Effective 7/1/2050. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.