VANGUARD HEALTH SYSTEMS INC
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>exhibit10_7.txt
<TEXT>
								   EXHIBIT 10.7

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM ADMINISTRATION
DIVISION OF BUSINESS AND FINANCE
CONTRACT AMENDMENT

1. AMENDMENT NUMBER: 12
2. CONTRACT NO.: YH04-0001-06
3. EFFECTIVE DATE OF AMENDMENT: January 1, 2006
4. PROGRAM: DHCM
5. CONTRACTOR'S NAME AND ADDRESS:
   Phoenix Health Plan/Community Connection
   7878 N. 16th Street
   Phoenix, Arizona  85020
6. PURPOSE:
   To incorporate the changes below and to amend capitation rates.

7. The above referenced contract is hereby amended as follows:

   A.	SECTION B, CAPITATION RATES - SEE ATTACHED RATE SHEET

   B.	SECTION C, DEFINITIONS: MEDICARE PART D EXCLUDED DRUGS

	Medicare Part D is the Prescription Drug Coverage option available to
	Medicare beneficiaries, including those also eligible for Medicaid.
	Medications that are available under this benefit will not be covered
	by AHCCCS post January 1, 2006. There are certain drugs that are
	excluded from coverage by Medicare, and will continue to be covered
	by AHCCCS. Those medications are barbiturates, benzodiazepines, and
	over the counter medication as defined in the AMPM. Prescription
	medications that are covered under Medicare, but are not on Part D
	Health Plan's formulary are not considered excluded drugs, and will
	not be covered by AHCCCS.

   C.	SECTION D, PROGRAM REQUIREMENTS, Paragraph 29, Network Management:

	Insert the following language at the end of the Network Management
	paragraph:

	Homeless Clinics:
	Contractors in Maricopa and Pima County must contract with homeless
	clinics at the AHCCCS Fee-for-Service rate for Primary Care services
	on or before April 1, 2006. Contracts must stipulate that:

	1. Only those members that request a homeless clinic as a PCP may be
	   assigned to them; and
	2. Members assigned to a homeless clinic may be referred out-of-network
	   for needed specialty services

	The Contractor must make resources available to assist homeless clinics
	with administrative issues such as obtaining Prior Authorization, and
	resolving claims issues.

	AHCCCSA will convene meetings, as necessary, with the Contractors and
	the homeless clinics to resolve administrative issues and perceived
	barriers to the homeless members receiving care. Representatives from
	the Contractor must attend these meetings.

   D.	SECTION D, PROGRAM REQUIREMENTS, Paragraph 57, Reinsurance

	Insert the following language under Reinsurance Audits

	For CYE 2002, CYE 2003, CYE 2004, and CYE 2005, the Reinsurance Audit
	Process as described in contract is discontinued. No audit related
	recoupments will be made on reinsurance payments made for services
	delivered in the above listed contract years.

	Delete the Pre-Audit paragraph and replace it with the following
	language:

	Pre-Audit: Beginning in CYE 2006 medical audits on prospective and prior
	period coverage reinsurance cases will be conducted on a statistically
	significant random sample selected based on utilization trends. The
	Division of Health Care Management will select reinsurance cases based
	on encounter data received during the contract year to assure timeliness
	of the audit process. The Contractor will be notified of the
	documentation required for the medical audit. For closed contracts,
	a 100% audit may be conducted.

   E.	SECTION D, PROGRAM REQUIREMENTS, Paragraph 60, Medicare Services and
	Cost Sharing

	Insert the following language after the first paragraph:

	When a person with Medicare who is also eligible for Medicaid
	(dual eligible) is in a medical institution that is funded by Medicaid
	for a full calendar month, the dual eligible person is not required
	to pay co-payments for their Medicare covered prescription medications
	for the remainder of the calendar year. To ensure appropriate
	information is communicated for these members to the Center for
	Medicare and Medicaid Services (CMS), effective January 1,2006
	the Contractor must, using the approved form, notify the AHCCCS Member
	File Integrity Section (MFIS), via fax at (602) 253-4807 as soon as
	it determines that a dual eligible person is expected to be in a medical
	institution that is funded by Medicaid for a full calendar month,
	regardless of the status of the dual eligible person's Medicare
	lifetime or annual benefits. This includes:
	a. Members who have Medicare part "B" only;
	b. Members who have used their Medicare part "A" life time
	   inpatient benefit;
	c. Members who are in a continuous placement in a single medical
	   institution or any combination of continuous placements in a medical
	   institution.

	For purposes of the medical institution notification, medical
	institutions are defined as acute hospitals, psychiatric hospital -
	Non IMD, psychiatric hospital - IMD, residential treatment center -
	Non IMD, residential treatment center - IMD, skilled nursing
	facilities, and Intermediate Care Facilities for the Mentally Retarded.

   F.	SECTION D, PROGRAM REQUIREMENTS, Paragraph 78, Medicare Modernization
	Act (MMA)

	Delete Paragraph 78, Medicare Modernization Act language and insert
	the following:

	The Medicare Modernization Act of 2003 created a prescription drug
	benefit called Medicare Part D for individuals who are eligible for
	Medicare Part A and/or enrolled in Medicare Part B. Beginning
	January 1,2006, AHCCCS will no longer cover prescription drugs that
	are covered under Part D for dual eligible members. AHCCCS will not
	cover prescription drugs for this population whether or not they are
	enrolled in Medicare Part D. Capitation rates will be adjusted
	accordingly to account for this change.

	Drugs Excluded from Medicare Part D: AHCCCS will continue to cover those
	drugs ordered by a PCP, attending physician, dentist or other authorized
	prescriber and dispensed under the direction of a licensed pharmacist
	subject to limitations related to prescription supply amounts,
	contractor formularies and prior authorization requirements if they are
	excluded from Medicare Part D coverage. Medications that are covered
	by Part D, but are not on a specific Part D Health Plan's formulary are
	not considered excluded drugs and will not be covered by AHCCCS.

	As the Medicare Modernization Act is fully implemented, there may be
	required changes to business practices of AHCCCS and contractors or the
	contract. AHCCCS will identify potential impacts and work with
	contractors to implement necessary program changes.

   G.	PURSUANT TO SECTION E, CONTRACT CLAUSES, PARAGRAPH 46 and SECTION F,
	ATTACHMENT A, MINIMUM SUBCONTRACT PROVISIONS, PARAGRAPH 27

	Please insert the following FEDERAL IMMIGRATION AND NATIONALITY ACT
	language in Paragraph 46 and 27 of the Sections listed above.

	All subcontracts must contain the following provision by October 1,2006

	The Contractor shall comply with all federal, state and local
	immigration laws and regulations relating to the immigration status of
	their employees during the term of the contract. Further, the Contractor
	shall flow down this requirement to all subcontractors utilized during
	the term of the contract. The State shall retain the right to perform
	random audits of contractor and subcontractor records or to inspect
	papers of any employee thereof to ensure compliance. Should the State
	determine that the contractor and/or any subcontractors be found
	noncompliant, the State may pursue all remedies allowed by law,
	including, but not limited to; suspension of work, termination of the
	contract for default and suspension and/or debarment of the Contractor.

NOTE:	Please sign and date both and return one original to:
	Gary L. Callahan, Contract Management Supervisor
	AHCCCS Contracts and Purchasing
      	701 E. Jefferson, MD 5700
	Phoenix AZ 85034

8.	EXCEPT AS PROVIDED FOR HEREIN, ALL TERMS AND CONDITIONS OF THE ORIGINAL
	CONTRACT NOT HERETOFORE CHANGED AND/OR AMENDED REMAIN UNCHANGED AND IN
	FULL EFFECT.

	IN WITNESS WHEREOF THE PARTIES HERETO SIGN THEIR NAMES IN AGREEMENT.

9.	NAME OF CONTRACTOR:
	PHOENIX HEALTH PLAN

	SIGNATURE OF AUTHORIZED INDIVIDUAL:
	/s/NANCY NOVICK
	TITLE: CHIEF EXECUTIVE OFFICER
	DATE: 12/21/05

10.	ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
	/s/MICHAEL VIET
	MICHAEL VEIT
	TITLE: CONTRACTS & PURCHASING ADMINISTRATOR
	DATE: December 14, 2005

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
CAPITATION RATE SUMMARY - ACUTE RATES
Phoenix Health Plan/Community Connection
1/1/06-9/30/06

Title XIX and KidsCare Rates:
TANF <1, M/F
8  Gila/Pinal	$443.79
12 Maricopa	$429.35

TANF 1-13, M/F
8  Gila/Pinal	$107.10
12 Maricopa	$102.56

TANF 14-44, F
8  Gila/Pinal	$185.63
12 Maricopa	$182.34

TANF 14-44, M
8  Gila/Pinal	$127.74
12 Maricopa	$123.61

TANF 45+, M/F
8  Gila/Pinal	$355.04
12 Maricopa	$366.70

SSI w/Med
8  Gila/Pinal	$182.81
12 Maricopa	$171.07

SSI w/o Med
8  Gila/Pinal	$576.64
12 Maricopa	$564.50

SFP
8  Gila/Pinal	$16.85
12 Maricopa	$18.08

Maternity Delivery Supplement
8  Gila/Pinal	$6,102.18
12 Maricopa	$6,074.03

Non-MED
8  Gila/Pinal	$425.54
12 Maricopa	$428.84

MED
8  Gila/Pinal	$820.62
12 Maricopa	$825.41

MED Hospital Supplement
8  Gila/Pinal	$10,021.35
12 Maricopa	$9,902.59

PPC Rates:
TANF <1, M/F
8  Gila/Pinal	$762.80
12 Maricopa	$1,236.65

TANF 1-13, M/F
8  Gila/Pinal	$41.29
12 Maricopa	$41.29

TANF 14-44, F
8  Gila/Pinal	$150.39
12 Maricopa	$156.42

TANF 14-44, M
8  Gila/Pinal	$122.52
12 Maricopa	$127.43

TANF 45+, M/F
8  Gila/Pinal	$283.36
12 Maricopa	$294.68

SSI w/Med
8  Gila/Pinal	$40.89
12 Maricopa	$32.08

SSI w/o Med
8  Gila/Pinal	$90.61
12 Maricopa	$85.48

Non-MED
8  Gila/Pinal	$590.91
12 Maricopa	$573.80

MED
8  Gila/Pinal	$1,558.69
12 Maricopa	$1,546.92

Other Rates:
HIFA 14-44, F
8  Gila/Pinal	$209.97
12 Maricopa	$206.52

HIFA 14-44, M
8  Gila/Pinal	$139.32
12 Maricopa	$134.86

HIFA 45+, M/F
8  Gila/Pinal	$392.94
12 Maricopa	$406.12

HIV/AIDS Supplement
8  Gila/Pinal	$755.46
12 Maricopa	$755.46



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