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Pima Health System has lost its state contract to provide health care to local Medicaid patients.

"This is devastating to us," said Mona Berkowitz, chief deputy director.

The system, a non-profit arm of Pima County, has been a Medicaid contractor since 1982. Its clients include 25,000 people in Pima County and 5,000 in Santa Cruz County.

Arizona's Medicaid program, called the Arizona Health Care Cost Containment System, awarded the latest round of five-year acute-care-service contracts this week. Those who use the services include low-income families with children, pregnant women, children and disabled people.

Pima County has 171,291 acute-care AHCCCS members and 154,884 of these AHCCCS members in Pima County are enrolled with a health plan, AHCCCS spokeswoman Rainey Holloway said.

Although Pima Health System has 25 percent of the market share for those clients, it didn't make the cut in the highly competitive process because its monthly rate per member was higher than the chosen bidders' rates, Berkowitz said.

Contracts were awarded to Health Choice, Arizona Physicians IPA, University Family Care and Phoenix Health Plan.

Pima Health System already has entered an appeal process, which allows it to request an enrollment cap to continue operating, said Virginia Rountree, system deputy director.

With the cap, the system wouldn't be able to accept new AHCCCS patients and it would lose enrollment over time because of attrition.

System administrators should know by the end of next week whether they receive the cap provision.

Without the cap, the system's 30,000 patients will have to choose a different AHCCCS contractor plan during an open enrollment period.

Affected members would be notified by AHCCCS if they need to make a plan change, Holloway said.

Patients don't need to make any changes now, Berkowitz said; long-term-care patients are not affected because they are part of a separate contract.

The system operated with a capped enrollment once before, Rountree said. When Prop. 204 expanded AHCCCS eligibility in 2001, there was an influx of new members and the state lifted the cap, she said.