The state of Minnesota has posted a request for information (RFI) on pay-for-performance programs. It is seeking information from service providers and third party contractors. Responses are due July 20, 2012.
According to the RFI:
The Minnesota Pay for Performance Pilot Program was authorized by the state legislature in 2011 under the Minnesota Pay-for-Performance Act of 2011 (Minnesota Statutes 16A.93-16A.96). The program uses up to $10 million in bond proceeds to pay service providers for certain financial outcomes that will result in decreased costs or increased revenues to the state. Providers will only be paid upon demonstrating that they have met the agreed upon outcomes, which must result in savings (or increased revenues) greater than the debt service needed to repay the bonds. In other words, their “return on investment” must be at least 100% of the costs of bonding. When they achieve the outcomes, the state pays the service providers and uses the ongoing savings or revenue increases from those programs to repay the debt service on the bonds.
As a pilot program, the state will test the following:
- whether state investments in specific programs create future state savings or increased revenues, and the extent to which those savings are sufficient to pay for the programs themselves;
- whether performance-based contracts are a feasible way to share risk between the state and service providers and improve the performance outcomes of state investments; and,
- whether performance-based service delivery using data measurement and analysis can be done in a cost-effective and efficient way to improve the outcomes of state investments.
The Minnesota program is currently focused on workforce development and supportive housing, although the state is welcoming input related to other service areas.
The information being requested is similar for both sets of stakeholders (the following is for third party contractors):
- To better understand what stakeholders believe is the most desirable program structure.
- To better understand the most appropriate areas of service delivery for this type of contracting.
- To better understand the universe of roles that could be used to implement the pilot program.
- To better understand available sources of financing for service providers’ working capital.
- To better understand available options for the data collection and analysis structure used to determine that outcomes are achieved and payment may be made.
The state is holding two related meetings in the next few weeks, one of which is a webinar that will be held June 28 from 1-3 PM local time. To register go here.