The Arizona Health Care Cost Containment System (AHCCCS) does not get sentimental at contract time. For the next round of five-year contracts, it tossed two MCOs with long track records while bringing in a new participant with a long track record in California.

Phoenix Health Plan, owned by for-profit Vanguard Health Systems, lost its Maricopa County contract and did not win bids in any other counties. Its 182,000 members will be reassigned. Centene's Bridgeway Health Solutions also bid on multiple regions and lost its only existing contract. Through its partnership with Banner MediSun, Blue Cross and Blue Shield of Arizona failed to secure a winning Maricopa bid. All losing MCOs can still protest the decision.

While Health Net's contract only covers one county, Maricopa is no ordinary county ? it is the state's largest and the nation's fourth largest. A contract in Maricopa virtually guarantees a strong AHCCCS start for a new MCO. Enrollment for the six existing MCOs in the county ranges between 46,000 (Care 1st) and 240,000 members (Mercy Care Plan). An MCO can quickly go from no business to big business.

The impact of the contracts won?t be measured by AHCCCS alone. Health reform creates further implications. The new contracts begin in October, just as the federal government will begin selling policies in Arizona's health exchange (or so the feds hope). Because of the overlap in population (some people will move between Medicaid and exchange eligibility), many Medicaid plans are expected to sell plans through exchanges.

Barring blowback from Arizona's broad exchange benchmark, a state employee EPO that has generous benefits, both state and national AHCCCS players could reap thousands of new members. Several AHCCCS MCOs are tied to hospitals and could offer narrow network plans in Phoenix or Tucson.

UnitedHealthcare of Arizona, the state's largest carrier and second-largest Medicaid MCO, now has AHCCCS contracts for all but one region and a statewide contract for Children's Rehabilitative Services. Health Net's new Medicaid footprint and its strong commercial standing in the individual and small-group markets should benefit the plan should it choose to join the exchange.

Any of the existing AHCCCS contractors could do the same ? the program launched with managed care 30 years ago, and these plans have brand recognition among lower-income Arizonans. The new contracts might not be kind to some MCOs, but should give plans with new contracts a leg up for exchange members.

Follow Bill Melville on Twitter @BillMelvilleHLI

 

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