The Arizona Department of Health Services has awarded a $1.5 billion dollar contract to oversee mental health care in Maricopa County for the next three years to Magellan Health Services.
The job of managing care for the county’s mentally ill has been held by ValueOptions since 1998. The transfer to Magellan creates an obligation to ensure there is no disruption in patient services, said ADHS Division of Behavioral Health Services Deputy Director Eddy Broadway.
“We will be working overtime to ensure people with mental illness in Maricopa County continue to receive services without interruption,” he said.
The contract start date is Sept. 1, 2007, and extends until June 30, 2010, with the option of two one-year extensions.
Magellan provides mental health and substance abuse services to approximately 2 million adults, adolescents and children in Iowa, Tennessee, Pennsylvania and Nebraska. The company also specializes in radiology and pharmaceutical management.
3 firms competed for contract
Cenpatico Behavioral Health of Arizona, ValueOptions and Magellan submitted bids in hopes of receiving the largest mental health contract in the state’s history.
ValueOptions received mixed reviews in a 2006 report by the state’s auditor general. The report found lax oversight and contract stipulations that allowed the company to divert funds for the seriously mentally ill to cover losses in other areas or to boost profits.
The audit also found that legal requirements from Arnold v. Sarn, a 1981 lawsuit filed against the state and county on behalf of the mentally ill, and several other court orders have had the effect of prioritizing the process of delivering service above patient recovery.
In the case, the Arizona Supreme Court ruled individuals with serious mental illness have a legal right to treatment and that the state and county were not providing adequate services.
The new request for proposals included improvements to prevent the transferring of funds based on the findings of the 2006 audit, Broadway told the Arizona Capitol Times in March.
A fact sheet distributed by the Division of Behavioral Health Services cites three core differences between the new and old Maricopa County mental health contract.
Magellan is forbidden from directly providing behavioral health services to avoid conflict of interest that could stem from “having to monitor itself as a provider.” Consumers will also be given a choice of providers from network organizations, and the contract includes upgraded performance incentives and penalties based on patient outcomes to comply with the Sarn requirements.
According to the ADHS, approximately 70,000 adults and children in the county receive mental health services.
The funding for the programs comes from a variety of federal, state and county sources, including Medicaid, KidsCare, the Arizona Health Care Cost Containment System, the state’s general fund, and other legislative appropriations.