Magellan Health Services Awarded $1.5 billion Contract in Arizona

Magellan Health Services, Inc. (Nasdaq: MGLN) has been awarded a contract to manage behavioral health care for Medicaid recipients and other beneficiaries of the Maricopa County Regional Behavioral Health Authority. The contract will begin September 1, 2007 and has an initial term through June 30, 2010 with options for the Arizona Department of Health Services to extend for two additional one-year periods.

Magellan was awarded the contract, which is considered the largest public sector behavioral health contract in the nation, over two other bidders in a competitive bidding process that culminated with the State of Arizona’s announcement of the result Wednesday.
 
Various media reports indicated that Magellan won the contract by beating out Cenpatico Behavioral Health, a subsidiary of government healthcare BPO giant Centene Corp. (NYSE: CNC), as well as ValueOptions Inc., a subsidiary of FHC Health Systems Inc.  According to Magellan’s press release, under Arizona law, the bidders who were not awarded the contract have the right to file a protest seeking to overturn the award. The mere filing of a protest may delay the implementation of the contract.

The Maricopa County Regional Behavioral Health Authority covers approximately 500,000 individuals who reside in the county, which includes the city of Phoenix, with approximately 70,000 adults and children receiving services.

Magellan manages public sector behavioral health care programs covering nearly two million individuals through direct contracts with government agencies in Florida, Iowa, Nebraska, Pennsylvania, and Tennessee. It also manages behavioral health care as a subcontractor to leading health plans serving Medicaid programs in Indiana, Nevada, Ohio, and Texas.