Arizona Health Care Cost Containment System - Medical Services Contracting

This report focuses on AHCCCS’ contracting and procurement practices for its acute and long-term care medical services contracts. In fiscal year 2002, AHCCCS spent nearly $2.9 billion in federal and state funds on these services. Even though exempt from state procurement statutes, AHCCCS has adopted an appropriate process for procuring medical services. In fact, this process closely mirrors state requirements and incorporates various options allowed under state guidelines. However, AHCCCS could improve its medical services procurement process by establishing general policies and procedures to guide the various steps of the process. AHCCCS should also fully document its evaluation of current contractors’ performance when it reviews these contractors’ acute care contract proposals and include an evaluation of current contractor performance in its procurement process for long-term care. Finally, the report presents information about managed care contracts both in Arizona and nationwide, noting that Arizona has been successful in generating competition for its contracts and employs a reasonable method for determining the number of contracts to issue in each service area.