Busting Myths on Multi-State Cooperative Purchasing

As more states are planning for and progressing on their Medicaid Enterprise System (MES) modernization journeys, some State Medicaid Agencies (SMAs) are reimagining alternatives to traditional procurements for acquiring modular solutions. Multi-state cooperative purchasing has recently become a hot topic. Organizations like the purchasing arm of the National Association of State Procurement Officers (NASPO) ValuePoint are facilitating public procurements and competitive contracting by harnessing resources from multiple participating states.

With cooperative group procurements, states can reduce the time and cost traditionally needed for procurement with less demand on state staff, all while:

  • Spurring new and innovative ideas for requirements from a collective of states versus developing these in silos.
  • Introducing the flexibility to negotiate both functionality and price with multiple qualified vendors versus a single “best and final” vendor, ultimately reducing the risk of protest (assuming the state chief procurement officer agrees with the approach). 
  • Shortening the time to benefit through prebuilt contracts with Service Level Agreements (SLAs), and flexible pricing models that further reduce the time to award and onboard a vendor. Once master agreements (MAs) with qualified vendors are finalized by NASPO, any state can use them. The state simply needs to submit a participating addendum (PA) to Centers for Medicaid and Medicare Services (CMS) for their selected vendor after completing the negotiation process, including any state-specific requirements.

Growing Momentum

Group purchasing is a tried-and-true concept for the private sector, yet it is new to the MES market. In an effort led by Montana, CMS approved six MAs for Provider Services in 2018, the first module to be procured via a multi-state cooperative procurement. Building on that momentum, Montana led another initiative for Claims Processing and Financial Management via NASPO ValuePoint in which CMS approved five Master Agreements in December 2020. Currently, Georgia is leading the procurement of Third Party Liability Services using NASPO ValuePoint with Missouri, Montana, and Louisiana serving as participating states.

Busting Myths on Multi-State Cooperative Purchasing
 States across the country are sourcing MMIS modules via collaborative procurements.

As it’s probable that we will see more multi-state collaborative purchasing on the horizon, states and vendors alike may be wondering whether participating is right for them. Participation and growing interest from states with large Medicaid populations are dispelling the myth that collaborative purchasing is just for small Western states. With the first two modules being Provider Management and Claims Processing, it is clear multi-state purchasing can be successfully applied to complex solutions and services. From a vendor's perspective, the prospect of responding only one time to a cooperative purchasing solicitation’s core requirement set, then proceeding directly to negotiations (versus responding to multiple single state RFPs), has strong appeal.

Getting Started

Proper planning is key to determining whether to use multi-state procurements and contracts. Developing a comprehensive strategy and utilizing a roadmap tool for your state’s MES transformation can help determine whether leading or participating in a group procurement, versus leveraging an existing competitively sourced contract, is more appropriate for specific modules.

North Highland is currently providing planning and procurement support services to multiple states as they evaluate and navigate the cooperative purchasing process for the Provider Management, Claims Processing and Financial Management, and Third Party Liability modules. From our experience, we’ve learned the states that succeed are those that closely manage their involvement to ensure they’re realizing the benefits of the group purchasing process, including speed to value and enhanced flexibility.

As states adopt modularity, traditional procurement processes must also evolve to be as efficient and seamless as the modular MES is designed to be. Breaking free of state procurement “business as usual” requires states to look at innovative approaches, such as cooperative purchasing, that make purchasing agility, innovation, and value realization a reality.