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Mental health contract put on hold, potentially delaying new approach to patient care

A multibillion-dollar contract for mental health services in Maricopa County is on hold while the Arizona Department of Administration sorts through a protest by the losing bidder.

ADOA issued a stay on a contract awarded by the Arizona Department of Health Services to Mercy Maricopa Integrated Care. That could delay its implementation beyond the Oct. 1 start date, with services continuing on a month-to-month basis.  Still, a mental health advocate said the delay could lead to “dreadful consequences’’ for patients.

The three-year contract, worth $2 billion to $3 billion, depending on whether Gov. Jan Brewer’s Medicaid expansion plan is implemented, would provide mental and physical health services to about 12,000 seriously mentally ill patients in Maricopa County.

The stay was issued after Magellan Health Services, which has provided behavioral health services for the county since 2007, appealed. Magellan alleged that Mercy Maricopa Integrated Care, a partnership between the county hospital system and Mercy Care Plan, unfairly received the contract after violating confidentiality agreements, using Magellan’s trade secrets and other improprieties that the company said effectively rigged the bidding process.

But all parties involved say the stay has nothing to do with the substance of Magellan’s arguments. Jeff Grant, deputy director to ADOA Director Brian McNeil, wrote in the agency’s decision that a stay is appropriate because of the size of the contract, the scope of the services and the impact of the transition between the two providers. Grant also said it is unknown whether a lawsuit filed by Magellan against Maricopa Integrated Health System, the county hospital system, will affect the appeal of the contract.

In a blog post on the ADHS website, Director Will Humble wrote that stays of protested contracts are common, and emphasized that it wasn’t based on the merits of Magellan’s appeal. Humble described it as a procedural decision to give ADOA enough time to review the materials submitted by the agency, Magellan and Mercy Maricopa Integrated Care.

Cory Nelson, ADHS deputy director for behavioral health services, said the stay “wasn’t unexpected.” But it could potentially delay the scheduled Oct. 1 beginning of Mercy Maricopa Integrated Care’s contract. If the stay pushes the official transition back, Nelson said ADHS would continue its contract with Magellan on a month-to-month basis.

“No matter what, at the end of the day our members are going to receive services,” Nelson said.

Magellan of Arizona CEO Richard Clarke and spokeswoman Mary Ehlert also said the stay was simply a procedural matter. Ehlert said the stay isn’t indicative of how ADOA will rule on Magellan’s appeal.

“It’s not really a ruling on our appeal at all. It’s really just about the stay. It’s not really an indicator one way or the other,” Ehlert said.

Some mental health advocates, however, are concerned about the impact that a delay in the new contract might have. Charles “Chick” Arnold, an attorney who won the landmark Arnold v. Sarn ruling on mental health services in Maricopa County, emphasized that the new contract will provide services that the old one didn’t.

While Magellan’s current contract is for behavioral health services only, the new contract is for integrated services that provide both mental and physical health treatment. On average, people with serious mental illnesses die 32 years earlier than other people, Arnold said, and most of the time the cause of death is physical issues that go untreated such as asthma or diabetes.

Arnold said he fears “dreadful consequences” if such treatment is delayed.

“People were excited about the notion of an integrated system and to suggest that it might be delayed is going to have a negative impact on the collective mindset of our mental health community,” Arnold said. “The current delivery system isn’t responsive. It’s not accessible and needs to move toward an integrated system. And the state has recognized that in the way the RFP was drafted.”

In the meantime, ADHS is asking the Department of Administration to reconsider the stay.

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