How are procurement decisions on solutions for state Medicaid agencies made?

Our clients are often challenged by understanding state information technology or other solution procurements: How they work, the timing of the opportunities, who the incumbents are in the space and what relationships and strategies matter in developing opportunities to win state Medicaid business.

Reading Time: 5 minutes

Intended Audience: Information Technology or Solution Business Development or Governmental Affairs Team Members in HHS solution vendors companies

Key Topics: Pre-proposal work, RFIs and RFQs, RFPs, Sole Source Procurements

 Pre-Proposal Work

This is the most often ignored or least understood aspect of Medicaid and Health and Human Services procurements at the state level. Opportunities to engage the potential customer before an active procurement are critical in understanding the pain points, opportunities and key decision maker needs within a state agency.

Making contact with the agency you expect to procure needs to be done strategically and in a manner that positions the vendor well for future competitive opportunities. Having an opportunity for the potential customer to see what your solutions can do for them before drafting a procurement can also assist in a favorable outcome.

Leveraging partners who have existing contracts in the state can assist in this effort. Also, providing thought leadership in topics related to your solutions can establish your brand in the minds of potential customers.

Work that can be accomplished before a procurement officially becomes available but is often left until after the fact includes: developing a win strategy, assessing potential competitors for strengths and weaknesses and identifying a price to win strategy.

Requests for Information or Requests for Qualifications

If a Request for Information or Requests for Qualifications is released as part of the procurement process, vendors should also take full advantage of that opportunity to craft the future procurement to benefit their solutions. Requests for Information or Requests for Qualification are often issued by state Medicaid or Health and Human Services agencies to answer particular questions about the solutions that are in the marketplace and to help them identify landmines that could cripple a potential procurement by eliminating or scaring off potential vendors.

Vendors should always respond to RFI and RFQ opportunities that impact procurements in which they are interested. This is yet another opportunity to get your vendor name in front of the potential decision makers, orient them to your solution, potentially impact a future request for proposal or begin convincing a state that your solution is unique and should receive sole source consideration.

Requests for Proposal

Responding to a request for proposal is a significant effort. Most procurements from state agencies now involve weeks of staff time in responding to functional requirements as well as statements of experience, references and pricing. Recently, we are also seeing acknowledgement from state agencies that change management is a crucial component of any potential change in solution, particularly technology solutions. We are also seeing pricing structure mattering almost as much or more than the actual cost of a solution. It is essential for vendors to understand that how their pricing is structured could be a disqualifying factor for a Medicaid or Health and Human Services agency. Knowing how state budgets work, the cycles, funding sources and variability of state funding structures is often underestimated as a concern. Some customers will see an advantage in a per member per month structure while others will prefer an annual fee.

Sole Source Procurements

There are certain states and types of procurements that are favored to be procured under “sole source” language, which can eliminate any competition. Getting into a relationship that convinces a state Medicaid or Health and Human Services agency that you are the only vendor able to meet their needs is certainly advantageous to the vendor, but is not always the best situation for taxpayers and ultimately, even for the state Medicaid or health and human service agency users.

How You Can Capture Opportunities With State Medicaid and Health and Human Service Agency Procurements?

Besides your own research into this topic, there are a few key tactics that can help you overcome some common challenges related to Medicaid and HHS procurements. We provide this type of assistance to our vendor clients, and are happy to have a conversation anytime. If our services and expertise are a fit for your needs as you develop or execute your strategy, engaging with us is a simple process. If we are not the right fit, we are happy to make a referral to another firm who may be.

  1. Develop a competitor analysis and win themes that differentiate you in the space- Who are your competitors? What do their solutions offer that yours do not? What do you offer that your competitors do not? What makes your company unique in this space? What do your competitors emphasize in their marketing materials? Which features make your solution unique?
  2. Strengthen your business development process to begin well before a procurement hits the street –  The pre-proposal release window is the most important part of the process to invest in. There are key best practices you can add to your capture process that are customized to this space. 
  3. Develop pricing models that fit the needs of states and still allow your solution to be profitable – The way you present pricing can often make the difference in a win or a loss. If possible, start by identifying competitor pricing and the typical pricing models for a given state Medicaid and Health and Human Services agency.