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In Part 1, we walked through why Arizona built AHCCCS using managed care from the beginning. In Part 2, we covered how the state gets permission from the federal government to design and update the program using waivers and State Plan Amendments.

AHCCCS 101 (Part 1 of 4): AHCCCS’ Origin Story – Why Arizona Built Medicaid Different – AZ Public Health Association

AHCCCS 101 (Part 2 of 4): Waivers, State Plan Amendments and Who Decides – AZ Public Health Association

Now we get to what AHCCCS actually does every day.

At its core, AHCCCS’ main job is contract management.

Before we get into that, it’s worth stepping back and remembering how many people depend on this system. AHCCCS provides health insurance to well over 2 million Arizonans in a typical year.

That includes kids, people with disabilities, seniors needing long-term care, and adults (and some kids) with serious mental illness.

So how does AHCCCS make sure those people actually get care?

It goes back to the model we talked about in Part 1. AHCCCS doesn’t pay most providers directly. Instead, it contracts with health plans called AHCCCS Complete Care contractors and pays them a fixed amount per member per month.

Those contractors are responsible for building provider networks, paying claims, and making sure members get the services they’re entitled to.

That means AHCCCS is paying these plans with taxpayer dollars and trusting them to deliver care. So the agency’s job is to make sure the plans do what they said they would do in the contracts they signed.

Note: The American Indian Health Program is an administrative exception to the AHCCCS as contract manager rule -as the agency directly runs that fee-for-service program. In my opinion the horrible multi-billion-dollar fraud and human trafficking that occurred during the Ducey Administration probably wouldn’t have happened if a contractor were running AIHP & AHCCCS was regulating the contract.

One of the main tools AHCCCS uses is something called ACOMs, which stands for AHCCCS Medical Policy Manuals. These are detailed policy documents that spell out what services must be covered, how decisions should be made, and what standards plans are expected to meet.

In simple terms, ACOMs are the contractual rulebook that health plans have to follow.

But writing rules for required services isn’t enough. AHCCCS also needs to check whether plans are actually following them. Contract management. Compliance and enforcement.

AHCCCS conducts regular audits of its contracted health plans. These reviews look at things like whether claims are being paid correctly, whether services are being approved appropriately, and whether plans are meeting their contractual obligations.

Another key area is network adequacy. This is about whether a plan has enough doctors, specialists, and providers so members can actually get care when they need it. A benefit on paper doesn’t mean much if there’s no provider available to deliver it or if people have to wait forever for an appointment or drive a super long way for care.

Quality is another focus. AHCCCS uses national performance measures like HEDIS (Healthcare Effectiveness Data and Information Set) to track how well plans are doing. These measures look at things like preventive care, chronic disease management, and follow-up after hospital visits.

If plans don’t meet expectations, AHCCCS can require corrective action and in some cases impose financial penalties.

Members themselves are also part of the accountability system. If someone is denied a service or has trouble getting care, they can file a grievance or an appeal. Those complaints are tracked and reviewed, and they can highlight patterns of problems within a health plan.

All of this ties back to the core idea from Part 1.

AHCCCS pays health plans a fixed amount per member per month. A plan can save money by postponing care, denying services, or offering a poor network.  That creates a real risk. That’s what AHCCCS is supposed to prevent.

That’s why contract management is so important.

AHCCCS has to make sure that the care it’s paying for is actually being delivered. Not just on paper via the contract but in real life.

In Part 4, we’ll take a closer look at the real-life part of AHCCCS…  how people enroll, who qualifies, – basically what real live people experience in the real world.