While the agency will hold an open enrollment period for Phoenix Health Plan members (PDF) next year, it also agreed to lift the cap if certain conditions occur, including the termination of another contractor or if “legislative action creates an unforeseen increase in the overall (Medicaid) population.”
Analysts pointed out that Arizona awarded a capped contract to Mercy Care in 2008, and while the plan lost some members to attrition, the cap was ultimately lifted, allowing it to enroll new beneficiaries.
Vanguard's troubles started March 22 when Phoenix received a letter that it was not awarded an acute-care contract for the program year beginning Oct. 1. The system said in a news release that Phoenix represented 80% of the revenue and “substantially all” of the income from continuing operations from its health plan segment during the second half of 2012. Health plan premium revenues represented 12.4% (or $370 million) of the $2.98 billion in revenue Vanguard generated in the second half of last year, its most recent reporting period, according to its quarterly earnings report.
It also noted that it planned to file a request for a capped contract in Maricopa and Pima counties, where it has the bulk of its members.
Phoenix currently covers 186,200 members across nine counties, with about 98,300 in Maricopa County, which includes the Phoenix metro area. Another 17,900 live in Pima County, which includes the Tucson metro area, where it did not receive a capped contract.
While Vanguard lost its bid, Arizona did award a managed-care contract to another investor-owned chain, Iasis Healthcare, Franklin, Tenn., which operates the Health Choice Arizona plan.
The three-year contract, with two one-year renewal options, will cover eight counties.
Iasis also said in a news release that it is preparing to launch a Health Choice plan on Arizona's federally-facilitated health insurance exchange.