Arizona showed us what MCO termination looks like.

The Arizona sequence is worth studying step by step. Mercy Care announced a 15% rate cut effective July 1, 2025. Three months later, a second 25% cut effective October 1, 2025. Combined, a 37% reduction in 90 days. By March 5, 2026, Mercy Care terminated its contract with Centria entirely. Arizona Complete Health and UnitedHealthcare Community Plan followed within weeks.

Centria filed suit against Mercy Care, AHCCCS, and the Arizona Department of Developmental Disabilities in December 2025, alleging the rate cuts and termination violated state and federal Medicaid rules. The case is pending. A separate class action filed by families displaced from Centria and Action Behavior Centers is also pending.

The playbook the MCOs used

Three moves, in sequence:

• Stack the rate cuts. Two cuts in 90 days, totaling more than 30%, give the provider no time to renegotiate, restructure, or find an alternative payer. The economics force a response.
• Wait for the response to be inadequate. Most providers cannot absorb a 30%+ cut without changing service model. The MCO then cites quality concerns, network adequacy issues, or rate-disagreement as cause to terminate.
• Terminate without a transition plan. Arizona families had limited notice. The state DDD scrambled to identify replacement providers. The narrative becomes the MCO solving a provider problem rather than the MCO creating a family problem.

Why this is operationally a national story

Most ABA chains have meaningful payer concentration without realizing it. We routinely audit chains where 40 to 60 percent of revenue is concentrated in a single MCO. The chain CEO sometimes does not see this until quarterly board prep. The MCO knows it.

The Arizona playbook only works when the provider has high revenue concentration with one or two payers, when the underlying contracts have weak termination protection, and when the state Medicaid agency is not motivated to push back. All three conditions are present in many MCO-heavy states. Florida, Arizona, Texas, Ohio, Georgia, Michigan, and Indiana each have at least one MCO with enough enrollment share to repeat the move.

The contract language that matters

Pull your top five MCO contracts. Find the unilateral rate-change clause. Find the notice-of-termination clause. The combinations to worry about:

• Unilateral rate change with less than 60 days notice. The MCO can cut without negotiation.
• For-cause termination with broad definitions of cause. The MCO can cite quality or network adequacy as cause without specific data.
• No mandatory transition period for displaced clients. The MCO walks away without obligation to your families.

If your contracts have any two of those three features, you have Arizona risk on your books.

What to watch next

Two pieces of the Arizona story will move the national playbook. First, the outcome of the Centria lawsuit against Mercy Care, AHCCCS, and DDD. If the court finds the stacked rate cuts violated CMS rate-setting rules, other MCOs will slow down. Second, AHCCCS's broader policy webinars in April 2026 signal new licensure and fingerprint-clearance reforms across all Arizona Medicaid providers. Those reforms become the legitimacy cover for tighter network management going forward.