Sec 36-3412. Contracts; regional behavioral health authorities; financial security

A. In order to be considered eligible for a contract award, an offeror seeking to become a regional behavioral health authority must meet minimum capitalization requirements which shall be established by the director based upon the director's determination of the amount of funds that a regional behavioral health authority should initially have available to facilitate successful contract performance. Minimum capitalization requirements shall be specified in the request for proposal released by the department to solicit offers from entities willing to serve as a regional behavioral health authority. An irrevocable letter of credit may be used to meet part, but no more than fifty per cent of the minimum capitalization requirement established by the director. The director shall only accept an irrevocable letter of credit issued by one of the following:

1. A bank doing business in this state and insured by the federal deposit insurance corporation.

2. A savings and loan association doing business in this state and insured by the federal savings and loan insurance corporation.

3. A credit union doing business in this state and insured by the national credit union administration.

B. The department's contracts with regional behavioral health authorities shall include terms necessary to ensure a regional behavioral health authority's financial stability and adequate performance. Contract provisions related to financial stability and adequate performance shall include the maintenance of deposits, performance bonds, financial reserves or other financial security. In place of a requirement to post a bond or security, the director may accept evidence that a regional behavioral health authority has posted other security, equal to or greater than that required by the department, with a state agency for the performance of health service contracts if the funds from the security would be available to the department upon default or nonperformance by the regional behavioral health authority.

C. The director may also adopt rules that provide for the withholding or forfeiture of payments to be made to a regional behavioral health authority by the department due to a regional behavioral health authority's failure to comply with a provision of the regional behavioral health authority's contract with the department or with the provisions of adopted rules.

D. The department's contracts with regional behavioral health authorities shall include terms authorizing the department to operate a regional behavioral health authority directly. These contract terms shall stipulate the circumstances under which the department could step in for direct operation. The department shall, after delivering notice to the regional behavioral health authority in question, operate the regional behavioral health authority for only as long as it is necessary to assure delivery of uninterrupted care to clients and accomplish the orderly transition of those members to a new regional behavioral health authority, to other existing regional behavioral health authorities, or until the regional behavioral health authority in question reorganizes or otherwise corrects the contract performance failure.

E. Upon a declaration by the governor, through an executive order, that an emergency situation exists in the area of behavioral health services delivery in which the health, safety or welfare of the public will be threatened without intervention by government agencies, the department may operate as the regional behavioral health authority or undertake actions to negotiate and award, with or without a bid, a contract to an entity to serve as the regional behavioral health authority. Contracts awarded pursuant to this subsection are exempt from the requirements of title 41, chapter 23. The department shall immediately notify the administrators of the regional behavioral health authority or authorities in question of the department's intentions.

(L94, Ch. 229, sec. 6. Eff. until 7/1/16)