The Arizona Department of Health Services has awarded two behavioral health contracts as part of a move to integrate physical and behavioral healthcare services for Medicaid beneficiaries.
The contracts divide the state into three geographic service areas: a northern region covering six counties and portions of a seventh; a southern region covering eight counties; and the populous Maricopa County, which includes the greater Phoenix area.
The Maricopa contract was not part of the request for proposals that was issued last July.
In the northern region, the state awarded the contract to a joint venture between Iasis Healthcare's Health Choice managed-care division and the Northern Arizona Regional Behavioral Health Authority. The joint venture, known as Health Choice Integrated Care, will cover 6,000 Medicaid beneficiaries with serious mental illness and 225,000 with general behavioral health needs over the contract term. It will generate $300 million in annual revenue starting in 2016.
Northern Arizona Regional Behavioral Health Authority previously provided behavioral health services on its own. But when the state decided to integrate physical and mental health services, “it made sense to contract with the strongest players available,” said Shawn Nau, the authority's chief operating officer.
In the southern region, Cenpatico of Arizona, a behavioral health company that's part of Centene Corp., will continue to provide behavioral health services, but will do so in partnership with the University of Arizona Health Plan. Their newly formed partnership is called Cenpatico Integrated Care.
The award will provide $350 million in additional revenue to Centene, Citi Research analyst Carl McDonald wrote in a note to clients.
Magellan Health Services and UnitedHealthcare Integrated Services also had submitted bids (PDF) in each region.
In Maricopa County, Mercy Maricopa—a partnership between Mercy Care Plan and Maricopa Integrated Health System—already provides behavioral health services. Mercy Care Plan is sponsored by San Francisco-based Dignity Health and Tucson, Ariz.-based Carondelet Health Network, part of Ascension Health.
The new three-year contracts go into effect Oct. 1, 2015, and have two renewal options.
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