Discover how changes in Arizona's Medicaid enrollment from 2019 to today impact revenue for managed care organizations and providers
From 2019 to 2025, Arizona's Medicaid enrollment has seen significant fluctuations; first swelling by 27.54% from 2019 to the peak in 2022. This rapid growth was primarily driven by the public health emergency (PHE) declared in response to the COVID-19 pandemic. During the PHE, federal mandates temporarily halted eligibility redeterminations, resulting in a substantial increase in Medicaid membership. This policy aimed to provide continuous coverage during the crisis, leading to ballooning Medicaid rolls under the Arizona Health Care Cost Containment System (AHCCCS).
In 2023, as the PHE unwound and eligibility redeterminations resumed, AHCCCS began reassessing member eligibility. This shift has led to a marked reduction in Medicaid enrollment by 17.28% from the 2022 peak to today; reflecting a historic market contraction; impacting AHCCCS, managed care organizations and Providers statewide. Adding to the mix, Arizona's historic sober living fraud, which inflated Medicaid enrollment and expenses. Today's political and social contexts, including changes in policies and public sentiment, have contributed to Arizonans being less likely to renew their eligibility, further exacerbating the decline in enrollment numbers. Figure 1.0 below shows the changes in Arizona Medicaid enrollment from 2019 to today.
Figure 1.0 Changes in Arizona Medicaid Enrollment 2019 - 2025
The contraction in Medicaid enrollment has presented significant challenges for healthcare providers in Arizona. Managed care organizations (MCOs) operating under the AHCCCS are paid on a per member per month (PMPM) basis. Consequently, the reduction in Medicaid membership directly translates to reduced revenue streams for MCOs. With fewer resources, MCOs have fewer Members for Providers to serve; forcing Providers to adjust their budgets and operational strategies accordingly. Between September 2024 to 2025 alone there was a 10.91% reduction in AHCCCS enrollment; resulting in a sizable cut to enrollment and revenue.
Providers are now facing the dual challenge of maintaining quality care and managing operational costs with fewer resources and greater administrative requirements following historic Medicaid fraud. This requires innovative approaches to optimize efficiency and ensure the sustainability of services amidst the shrinking revenue base. The need to balance financial viability with patient care quality becomes paramount in this contracting market; that is concurrently facing material disruption due to federal policy changes (e.g. HR 1, the "Big Beautiful Bill").
Despite the challenges posed by the shrinking Medicaid market, there are notable business opportunities for those Providers willing to adapt creatively. Market contractions necessitate innovative thinking and strategic consolidation, which can lead to exponential growth for those who leverage these conditions effectively.
Healthcare providers and MCOs can use this period to analyze their revenue and cost centers by program, service line, facility, and staff type. Collaboration and strategic partnerships will be paramount as we navigate the incoming headwinds. Use of fractional staff and shifting duties to vendors and contractors can retain quality while right sizing resource needs. Identifying low market disruptions and exploring 'blue oceans'—untapped market spaces—can reveal new opportunities for growth. By consolidating operations and focusing on high-value services, organizations can achieve multiplicative growth even in a contracting market.