Attorney General: The Honorable Mary Ann Handley and The Honorable Peter F. Villano Co-Chairs, Human Serices Committee, 2004-020 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

November 24, 2004

The Honorable Mary Ann Handley
The Honorable Peter F. Villano
Co-Chairs, Human Services Committee
Legislative Office Building
Hartford, CT 06106-1591

RE: Contract Award For SAGA Services to Medicaid Recipients

Dear Senator Handley and Representative Villano:

You have asked for my opinion whether the contract entered into by the Department of Social Services (DSS) with the Community Health Network of Connecticut, Inc.(CHN) to provide medical services to eligible clients under the State-Administered General Assistance program (SAGA) is a personal service agreement which must comply with the competitive bidding or competitive negotiations provisions of Conn. Gen. Stat. § 4-212 et seq. My conclusion is that the DSS does not need to submit the CHN contract to an RFP or bid process because the legislature specifically directed DSS to contract with the federally qualified health centers that comprise CHN.

Specifically, contracts for the provision of human services to specific members of the population are subject to the provisions of Conn. Gen. Stat. § 4-212 et seq. However, Conn. Gen. Stat. § 17b-257 as amended by P.A. 03-03, June 30 Special Session 2003, specifically directed the Department to contract for SAGA medical services with federally qualified health centers, which do not compete with each other, thereby exempting the contract from the requirements of Conn. Gen. Stat. § 4-212 et seq.

A. Contracts between a state agency and a private entity for the provision of medical or social services to the public are generally subject to the competitive bidding requirements of Conn. Gen. Stat. § 4-212, et seq.

Conn. Gen. Stat. § 4-212 et seq. establishes the process for obtaining personal services by state agencies. It defines a personal service agreement as a "written agreement defining services or end product to be delivered by a personal service contractor to a state agency…". A personal service contractor is an entity hired by the state to provide such services to the agency. There are certain exclusions contained in the statute. They include, inter alia, contracts for professional services and certain types of specific services, such as maintenance services as defined in 4b-55. None of the exemptions apply to contracts for the provision of medical services to the public.

Questions have been raised as to whether Conn. Gen. Stat. § 4-212 applies to contracts for services to the public, or only to contracts for services provided directly to state agencies. An examination of the relevant statutes and their legislative history indicates that Conn. Gen. Stat. § 4-212 applies in both instances.

The legislative history of Conn. Gen. Stat. § 4-212 et seq. indicates that the process for contracting for personal services includes human services contracts, e.g., contracts between a state agency and a private entity (typically a non-profit organization) to provide medical services or social services such as battered women shelters directly to a certain segment of the population, rather than to the state.

In bringing out House Bill 6822, the legislation later codified as Conn. Gen. Stat. § 4-212 et. seq., Representative Pelto stated that the intent of the legislation was "to ensure that the administration and the legislative branch of government gets a handle on all of the expenditures that are made through various consultants and personal service agreements and contracts with various individuals, agencies, firms and so forth". (emphasis added). Trans. H. Proc. (6/1/93).

House Bill 6822 was based on a study and recommendation by the Legislative Program Review and Investigations Committee. The report issued by the committee provided that the personal service agreement (PSA) is the "primary mechanism used by the state to contract for services". Personal Service Agreements, Program Review and Investigations Committee, December, 1992, p.1. In the report, the committee listed the types of services then provided through PSA's. This list included routine health services to clients of the state, routine educational services to clients of the state and housing, human and social services. Id., p.11. Finally, the report listed the amount of agency expenditures through PSA's. In Fiscal Year 1992, the Department of Human Resources spent $16,181,369. Id. p.B-1. Clearly this amount included services provided directly to the people of Connecticut, not merely services provided directly to state agencies.

Further, there are two direct references to human service provider contracts in the legislative history of Conn. Gen. Stat. § 4-212 et seq. that clearly demonstrate the legislature's intention to include human service provider contracts under the personal service agreement statutes. First, the Program Review and Investigations Committee report contained several recommendations for making the PSA contracting process more accountable and uniform. However, the recommendations for a Department of Administrative Services pilot program for regional purchase of services specifically excluded human service provider contacts. The report stated that "The human service area is excluded from this recommendation because OPM and a task force created by Public Act 92-123 are working to establish policies and procedures for purchasing human services from private providers. The same act requires the attorney general to develop standards for human service agencies to enter into multi-year contracts with private providers of human services." Id. p.25. This specific exclusion was necessary because the committee intended to include such contracts in its other recommendations including establishing a uniform process for contracting.

Second, it is clear that state agencies were aware that the committee's PSA recommendations included human services contracts because a staff person from the Department of Aging testified at the public hearing on this report, requesting that the committee eliminate the use of PSA's as a mechanism for funding service providers such as elderly nutrition projects, adult day care providers, and other social service providers. Trans, Program Review and Investigations Committee hearing, 9/16/92. The committee, however, did not create such an exception.

The provisions of subsection (c) of Conn. Gen. Stat. § 4-70b also do not exempt human service contracts from the requirements set forth in Conn. Gen. Stat. § 4-212 et seq.

Conn. Gen. Stat. § 4-70b(c) is the codification of Public Act 92-123 and directs the Secretary of OPM to establish uniform policies and procedures for "managing and evaluating the quality and cost effectiveness of human services purchased from private providers". The legislative history of Public Act 92-123 indicates that the focus of the legislature was on measuring the performance and improving the quality of the services provided primarily by the non-profit community. Conn. Gen. Stat. § 4-70b(c) does not concern the bidding and selection process for human service provider contracts.

B. The legislature exempted the SAGA medical contract from the competitive bidding requirements of Conn. Gen. Stat. § 4-212 et seq.

Although human services contracts are generally subject to the bidding process under Conn. Gen. Stat. § 4-212 et seq., the legislature specifically exempted the contract for SAGA medical services from the provisions of Conn. Gen. Stat. § 4-212 et seq. by specifically directing the DSS to contract with federally qualified health centers, which do not compete with each other. Conn. Gen. Stat. § 17b-257 as amended by section 43 of PA 03-03 (June Sp. Sess.). This statute provides in pertinent part (emphasis added):

"(a) The Commissioner of Social Services shall implement a state medical assistance component of the State Administered General Assistance program for persons ineligible for Medicaid. Not later than October 1, 2003, each person eligible for State Administered General Assistance shall be entitled to receive medical care through a federally qualified health center or other primary care provider as determined by the commissioner. The Commissioner of Social Services shall determine appropriate service areas and shall, in the commissioner's discretion, contract with community health centers, other similar clinics, and other primary care providers,…” and

"(e) The Commissioner of Social Services shall contract with federally qualified health centers or other primary care providers as necessary to provide medical services to eligible State Administered General Assistance recipients pursuant to this section. The commissioner shall, within available appropriations, make payments to such centers based on their pro rata share of the cost of services provided or the number of clients served, or both. The Commissioner of Social Services shall, within available appropriations, make payments to other providers based on a methodology determined by the commissioner. The Commissioner of Social Services may reimburse for extraordinary medical services, provided such services are documented to the satisfaction of the commissioner. For purposes of this section, the commissioner may contract with a managed care organization or other entity to perform administrative functions."

Federally qualified health centers do not compete with each other. Each health center establishes its own "catchment area" and its federal grants are contingent on its maintenance of "collaborative relationships with other health care providers in the catchment area of the center". 42 USC 254b(j)(3). See also, 42 CFR Part 5lc. In enacting PA 03-03, therefore, the legislature specifically excluded the selection of contractors for SAGA medical services from the competitive bidding requirements of Conn. Gen. Stat. § 4-212, et seq. Instead, Public Act 03-03 directed the Commissioner of Social Services to select federally qualified health centers, such as the Community Health Network of Connecticut, Inc., as contractors to provide medical services to eligible State Administered General Assistance (SAGA) recipients.

I hope this letter addresses your questions. If you need further information, please contact me.

Very truly yours,


RICHARD BLUMENTHAL
ATTORNEY GENERAL


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