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Performance Accelerator Knowledge Center

Module Three: Beyond Compliance—Contracting as a Tool to Drive Performance

Exploring Outcomes-Based Contracting (OBC)

This module introduces outcomes-based contracting (OBC) as a practical tool for moving beyond compliance and driving performance in behavioral health systems. It explains how OBC can help counties spend resources more strategically, improve outcomes, and strengthen accountability, while outlining core OBC concepts, design options, and implementation considerations. County Behavioral Health Directors and BHSA Coordinators will gain an understanding of common risks and mitigation strategies, along with the foundational building blocks needed to develop and apply effective OBC approaches in a county behavioral health context.

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Module Three Objectives

Understand OBC for behavioral health

Explore opportunities for piloting OBC approaches

Identify key principles for effective OBC

Learn how to develop your own OBC

What you'll learn

PART 1
PART 2
PART 3
PART 4
Outcomes-Based Contracting (OBC) 101
Learn the five key principles of outcomes-based contracting and how OBC is different from traditional compliance
OBC Building Blocks
The process of developing and implementing OBC mechanisms in CA behavioral healthcare
OBC Models & Design Choices
Identify the four OBC models available and evaluate the pros and cons for each
Common Risks & Mitigation Strategies
Four things to consider when developing an outcomes-based contract

Not sure where to start?

This 60-minute overview of Module Guide Three introduces what outcomes based contracting looks like in practice: how to structure contracts that align provider incentives with individual outcomes, assess your county’s readiness, and take meaningful first steps toward a contracting approach that rewards results.

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Module Three Resources

Resources to help you execute on the concepts in Module Guide Three

Resource 3A

OBC Readiness Checklist and Sample Workplan
Overview of key components needed to support a successful transition from activity-based contracting model to an outcomes-focused approach
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Resource 3B

Funding Guide for Outcome-Based Payments
Learn the different funding options to support implementation of outcome-based payments through county behavioral health departments in California
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Resource 3C

Scope of Work Template for New BHSA Programs
Example Scope of Work components and source ideas to improve the contracting of new programs required under the BHSA
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Get hands-on support to put these resources into practice

New tools and requirements can be complex to navigate. Our goal is to make this work easier and more effective for your county. To support that, we offer one-on-one introductory sessions designed to help you understand how the Knowledge Center tools can be applied in your local context. In this session, counties will:

  • See how the Knowledge Center tools can fit your county’s priorities and capacity 

  • Learn how counties are effectively applying these tools 

  • Identify which resources are most relevant to your county’s BHSA priorities 

  • Get connected to upcoming hands‑on support: workshops, webinars, office hours, and more
Request an intro session

“The Performance Management Dashboard is really going to help our department make data-driven decisions and be able to show our story through data...I cannot wait to have our data analyst create reports for us.”

Outcomes-Based Contracting Readiness Checklist

This checklist can be used as a practical self-assessment and discussion tool for counties when developing OBC workplans

Consider the status of the following:
 
  1. County leadership (executive team, BH director, board of supervisors) has endorsed exploring OBC
  2. The program area selected is a strategic priority identified in the county’s BHSA Integrated Plan
  3. Contracting/procurement staff understand the shift from cost- or activity-based contract models to outcomes-based models
  4. Providers and community stakeholders have been consulted on the concept of outcomes-based contracting
  5. A pool of funding exists to cover the maximum potential outcomes payout (see section 4 for more details)

Consider the status of the following:

  1. Leadership, clinical specialists and quality assurance leads agree on priority outcomes that are specific, measurable, and achievable within the contract timeframe
  2. Outcomes are defined as either binary (yes/no) or continuous (levels of improvement), with clarity on thresholds
  3. There is a plan for collecting demographic information to monitor the equity-related effects of the piloted contracts
  4. Data sources are identified (e.g., Medi-Cal claims, county EHR system, provider reporting)
  5. Data quality (timeliness, completeness, accuracy) has been assessed and is sufficient for outcome tracking
  6. Verification methods are defined, such as administrative data checks, third-party validation, or independent evaluation where deemed necessary
  7. Data-sharing agreements are feasible or already in place with providers and state partners
  8. A plan is in place to address other outcomes-related risks (e.g. cream-skimming, misaligned incentives, financial risks, etc.)

Consider the status of the following:

  1. Engaged providers have the financial capacity to manage delayed or performance-based payments and/or a plan is in place to address working provider working capital constraints
  2. Engaged providers have data systems in place to track and report outcome data accurately, where necessary for the identified outcomes
  3. Where necessary, smaller or community-based providers can access capacity-building supports (e.g., TA, consortium approaches)
  4. Engaged providers understand and accept the risk/reward trade-offs of OBC models

Consider the status of the following:

  1. County procurement rules permit outcome-linked payments, or necessary flexibilities/waivers have been identified
  2. Standard RFP and contract templates can be adapted to include outcome metrics, payment triggers, and risk-sharing provisions
  3. The proportion of fixed vs. outcome-based payments can be defined with an understanding of provider financial capacity (e.g., 70/30, 50/50)
  4. Payment triggers can be clearly identified (milestones, final outcomes, tiered achievements)
  5. OBC pilot timelines can be aligned with fiscal year planning and other implementation constraints
  6. Risk-sharing mechanisms are understood and can be specified in collaboration with service providers (e.g., payment floors, ceilings, partial payments for partial achievement)
  7. Necessary oversight and governance structures are planned (e.g., contract monitoring team, steering committee)
  8. Plans for dispute resolution and rebaselining processes have been considered

Consider the status of the following:

  1. Medicaid/Medi-Cal claiming requirements for the program area are understood
  2. Outcome-based payments can be reconciled with federal/state/other required reporting obligations
  3. Audit processes can verify compliance with both traditional billing and outcome-linked payments
  4. Any statutory, regulatory, or labor-related barriers to OBC have been reviewed
  5. Contract language complies with county/state procurement law while incorporating OBC elements
Access OBC Readiness Checklist Resource

Get started with Module Three

Access guide

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Operationalizing Performance Management

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Facilitating Governance and Accountability

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