Arizona on Tuesday awarded a three-year, $1.5 billion contract to Magellan Health Services to oversee Maricopa County’s public mental-health services.
The company will replace ValueOptions, which has held the contract since 1998, as the provider of mental-health services for Maricopa County’s 70,000 poor and mentally ill residents.
The new deal, the largest of its kind in the country, takes affect in September. State health officials said they are working the make the transition as seamless as possible.
“We’ll be meeting with them (Magellan) on a daily basis for an indefinite period of time during the transition,” said Eddy Broadway, the Department of Health Services Deputy Director.
The new contract runs through 2010 and can be renewed for another two years. Magellan Health Services beat out ValueOptions and Cenpatico Behavioral Health for the contract.
Scrutiny on ValueOptions has increased in recent years after numerous lawsuits and state fines. Recent audits have found declines in the level of treatment, budget cuts and money transfers that beef up some services at the expense of others.
Broadway said his department hired an outside firm to set up the criterion for what the state wanted and based their decision on that rather than “any emotional responses.”
ValueOptions has been sued by its clients and fined $200,000 by the state in connection with two suicides. Its administrative costs in 2004-05 included more than $4 million in medical malpractice and legal fees. Penalties that year totaled $678,000, according to the state Auditor General’s Office.
“I’m very happy ValueOptions didn’t get it, because I don’t think they did a good job,” said Rep. Jonathan Paton, R-Tucson, who pushed for state audits of the health care company in 2005. “I think this sends a message to anyone who has this contract that the government will hold you accountable.”
Magellan is a public company from Connecticut that manages health services for government agencies, corporations and insurance companies. Its public-sector behavioral-health segment has contracts with Iowa and Nebraska, five counties in Pennsylvania and parts of Florida and Tennessee.