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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
Senate: HHS DP 9-1-0-0 | 3rd Read 18-12-0-0
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SB 1741: 2025-2026; health care
Sponsor: Senator Kavanagh (with permission of committee on Rules), LD 3
Signed by the Governor
Overview
Contains provisions relating to health care needed to implement the FY 2026 budget.
History
The Arizona Legislature adopts a budget for each fiscal year (FY) that contains general appropriations. Article IV, Section 20, Part 2, Constitution of Arizona, requires the General Appropriations Act (feed bill) to contain only appropriations for the different state departments, state institutions, public schools and interest on public debt. Statutory changes necessary to reconcile the appropriations made in the feed bill and other changes are drafted into separate budget bills. These bills are prepared according to subject area.
Provisions
Arizona Department of Administration (ADOA)
1. Requires ADOA to award a one-time $3,000,000 grant in FY 2026 to a health care facility operator to construct an outpatient treatment center for dialysis services. (Sec. 9)
2. Requires an eligible health care facility to:
a) operate under Public Law 93-638 (Indian Self-Determination and Education Assistance Act);
b) operate as a critical access hospital;
c) be located on unincorporated land within or on tribal land in a county with a population of no more than 70,000 persons;
d) benefit tribal members in need of dialysis treatment;
e) serve a patient population of at least 10,000 persons; and
f) be located at least 30 miles from the nearest outpatient treatment center that is licensed to provide dialysis treatment. (Sec. 10)
Health Care Interoperability Grant Program
3. Continues, for FYs 2026 through 2028, the requirement that ADOA administer a competitive grant program that provides a single company that licenses an interoperability software technology solution to support acute care for rural hospitals, health care providers and trauma centers with resources to further treatment and care coordination with a focus on reducing public and private health care costs and unnecessary transportation costs. (Sec. 11)
4. Prohibits the grant recipient from using a third-party vendor to comply with any of the grant program requirements. (Sec. 11)
5. Requires ADOA to award the grant by September 30, 2025. (Sec. 11)
6. Requires AHCCCS to work with ADOA to supplement the grant monies by identifying and applying to receive federal matching monies. (Sec. 11)
7. Requires the grant program to enable the implementation of a single licensed interoperability software technology solution that is shared by hospitals and health care providers to benefit patients, before and after discharge from the provider's care, and that is accessible to current and future providers via a mobile, native smartphone application. (Sec. 11)
8. Requires the software to be made available to rural hospitals, health care providers and trauma centers that wish to participate by enabling a hospital's electronic medical records system to interface with interoperability technology and other electronic medical records systems and providers to promote mobile connectivity between hospital systems and facilitate increased communication between hospital staff and providers that use different or distinctive online and mobile platforms and information systems when treating acute patients. (Sec. 11)
9. Tasks ADOA to award one grant for an interoperability software technology solution that, at a minimum:
a) complies with the federal Health Insurance Portability and Accountability Act (HIPAA) privacy standards;
b) captures and forwards clinical data, including laboratory results and images, and provides synchronous patient clinical data to health care providers regardless of geographic location;
c) provides a synchronous data exchange, that is not batched or delayed, at the point the clinical data is captured and available in the hospital's electronic record system;
d) is capable of providing proactive alerts to health care providers on their smartphones or a smart device;
e) allows synchronous and asynchronous communication via a native smartphone application;
f) is mobile technology, can be used on multiple electronic devices and includes the industry standard built-in application for the two most popular operating systems and a built-in application available to all users;
g) has patient-centric communication and is tracked with date and time stamping; is connected to the appropriate physician resources; and
h) provides data to update cost reports to enhance emergency triage and to treat and transport patients. (Sec. 11)
10. Requires the grant recipient to demonstrate:
a) that its interoperability software technology solution meets all requirements at least 30 days before applying for the grant; and
b) proof of veteran employment. (Sec. 11)
11. Requires, for FYs 2026, 2027 and 2028, the grant recipient to provide ADOA a report that provides metrics and quantifies cost and time savings for using an interoperable software solution in health care that complies with HIPAA privacy standards. (Sec. 11)
12. Requires ADOA, by June 30 of each year, in coordination with AHCCCS, to provide a report on the allocation of grant funding and a compiled analysis of the reports provided by the grant recipient to the specified offices. (Sec. 11)
13. Specifies that monies appropriated for the grant program in the FY 2026 General Appropriations Act do not affect monies appropriated in FY 2024 for interoperability software technology solutions or any grant awarded to or contract with a grant recipient. (Sec. 11)
14. Repeals the grant program on January 1, 2029. (Sec. 11)
Arizona Health Care Cost Containment System (AHCCCS)
15. Adds, subject to available funding and approval by the Centers for Medicare and Medicaid Services (CMS), traditional healing services in the list of health and medical services covered by AHCCCS and Arizona Long-Term Care System (ALTCS) program contractors if the:
a) member qualifies for services through the Indian Health Service or a tribal facility; and
b) traditional healing services are delivered by or through the Indian Health Service or a tribal facility. (4-6)
16. Removes speech therapy and cochlear implants from the list of health and medical services that are limited or excluded from AHCCCS coverage for persons at least 21 years old. (Sec. 4)
17. Prohibits Hospital Assessment Fund monies from being used to provide speech therapy and cochlear implants to eligible persons who are at least 21 years old. (Sec. 4)
18. Requires the Director of AHCCCS, subject to approval by CMS and available funding, to implement limited benefit coverage prerelease services to eligible incarcerated individuals and committed youth for up to 90 days immediately preceding the individual's expected date of release from a prison, jail, secure care facility or tribal correctional facility. (Sec. 4, 7)
19. Requires AHCCCS to prepare a report to the Governor, Legislature, Director of the Joint Legislative Budget Committee and Director of the Office of Strategic Planning and Budgeting that includes information about the costs and aggregate spending on and aggregate utilization of mental health medications during contract year FY 2023-2024. (Sec. 17)
20. Outlines factors for the mental health medication utilization report and requires the report to be prepared no later than January 31, 2026. (Sec. 17)
21. Requires the Director of AHCCCS, by December 1, 2025, to offer one-year AHCCCS complete care contract extensions to all managed care entities with then-current AHCCCS complete care contracts beginning with the contract number YH19-0001, including those with regional behavioral health agreements. (Sec. 22)
22. Prohibits a contract extension from being offered to any entity that will cause AHCCCS to lose any federal monies it is otherwise entitled to. (Sec. 22)
23. Allows the Director of AHCCCS to offer additional contract extensions on determination by ADOA that the extensions are in the best interest of the state. (Sec. 22)
24. Requires the contract extensions, if accepted, to be both:
a) effective between October 1, 2027, and September 30, 2028; and
b) offered as provided by law. (Sec. 22)
County Session Law Provisions
25. Sets the annual county ALTCS contributions for FY 2026 at $409,537,600 and:
a) outlines each county's contribution;
b) requires the State Treasurer to recover the cost of any funding that was not provided; and
c) requires the State Treasurer to deposit monies received into the ALTCS fund. (Sec. 12)
26. Requires the counties' share of the state's contribution to comply with federal maintenance of effort requirements. (Sec. 12)
27. Requires, by December 31, 2026, for FY 2026, AHCCCS to transfer to the counties any portion necessary to comply with the Patient Protection and Affordable Care Act regarding the counties' proportional share of this state's contribution. (Sec. 14)
28. Sets the FY 2026 county acute care contributions at $42,814,200 and:
a) outlines each county's contribution;
b) outlines payment processes and requirements;
c) requires the State Treasurer to recover the cost of any funding that was not provided by a county from other funds owed to that county, excluding the Highway User Revenue Fund; and
d) states that the Legislature intends that the Maricopa County contribution be reduced in each subsequent year according to changes in the GDP price deflator. (Sec. 15)
Department of Health Services (DHS)
29. Requires the DHS to add Duchenne muscular dystrophy to the state's newborn screening panel on the earlier of:
a) October 1, 2027; or
b) two years from the date Duchenne muscular dystrophy is added to the Recommended Uniform Screening Panel adopted by the U.S. Department of Health and Human Services. (Sec. 2, 26)
30. Delays the repeal of the Arizona Nurse Education Investment Pilot Program from January 1, 2027, to July 1, 2027, and excludes the Arizona Board of Regents from the FY 2026 distributions. (Sec. 3, 8, 21)
31. Extends, retroactive to June 30, 2025, the repeal of the Collaborative Care Uptake Fund from July 1, 2025, to July 1, 2027. (Sec. 9, 25)
Disproportionate Share Hospital (DSH) Payment Session Law Provisions
32. Sets the annual DSH payment allotment to the Arizona State Hospital (ASH) at $28,474,900 for FY 2026 and:
a) requires ASH to provide a certified public expense form for qualifying DSH expenditures made to AHCCCS by March 31, 2026;
b) directs AHCCCS to:
i. assist ASH in determining the amount of qualifying DSH expenditures; and
ii. deposit the entire amount of federal financial participation in the state GF;
c) states that if the certification is less than $28,474,900, AHCCCS must:
i. notify the Governor and the Legislature; and
ii. deposit the entire amount of federal financial participation in the state GF; and
d) requires the certified public expense form to contain the total amount of qualifying DSH expenditures and the amount limited by the Social Security Act. (Sec. 13)
33. Establishes the annual DSH payment allotment for private qualifying DSH hospitals at $884,800 for FY 2026, consistent with the appropriation and the terms of the State plan and limits payments to hospitals that either:
a) meet the mandatory definition of DSH qualifying hospital under Section 1923 of the Social Security Act; or
b) are located in Yuma County and contain at least 300 beds. (Sec. 13)
34. Outlines the order of priority for DSH payment allotments for private qualifying hospitals once the preceding DSH distributions are made. (Sec. 13)
Arizona State Board of Nursing
35. Establishes the Registered Nurse Anesthetist Clinical Rotation Program (Program) within the AZBN for FY 2026 to expand the capacity of preceptor training programs at health care institutions for registered nurse anesthetist students. (Sec. 16)
36. Requires the AZBN to develop a grant program to distribute appropriated Program monies for FY 2026 to licensed health care institutions to pay for the direct and indirect costs to expand or develop clinical training placements for nurse anesthetist students, with preference given to expanding or developing clinical rotations in obstetrics, pediatrics, cardiovascular, thoracic and neurological care. (Sec. 16)
37. States the grant program monies are intended to supplement and not supplant existing training program expenses covered by the health care institution grantee. (Sec. 16)
38. Permits grant monies to be used to fund a clinical training placement through:
a) an anesthesia provider group who is contracted with a health care institution;
b) an authorized preceptor; or
c) a health care institution directly. (Sec. 16)
39. Prohibits more than 20% of a grant award from being spent on the indirect costs of expanding or developing clinical training placements. (Sec. 16)
40. Requires grant monies be distributed to grantees before the expenses for expanding or developing clinical rotations are incurred. (Sec. 16)
41. Directs grantees to return all monies to the AZBN that are not spent on the direct and indirect costs related to expanding or developing clinical rotations. (Sec. 16)
42. Requires the AZBN to establish an application process for Program grants and to consider the following factors when determining grant awards:
a) the geographic and population distribution;
b) the number of nurse anesthetist students expected to be trained and retained; and
c) the cost of the proposal for the number of nurse anesthetist students expected to participate and be retained, compared to other proposals. (Sec. 16)
43. Defines terms. (Sec. 16)
Miscellaneous
44. Removes the requirement that DHS annually apply for grant monies from the U.S. Department of Health and Human Services to provide family planning services. (Sec. 1)
45. Revises the definition of tribal facility to include a facility that is operated by a tribal organization, rather than only an Indian tribe. (Sec. 5)
46. Continues to exclude Proposition 204 administration costs from county expenditure limitations. (Sec. 18)
47. Continues to exempt county expenditures on Restoration to Competency treatment at ASH from county expenditure limitations. (Sec. 19)
48. Allows, for the contract year beginning October 1, 2025, and ending September 30, 2026, AHCCCS to continue the risk contingency rate settings for all managed care organizations (MCO) and funding for all MCO administrative funding levels that were imposed for the contract year beginning October 1, 2010, and ending September 30, 2011. (Sec. 20)
49. Contains a legislative findings clause. (Sec. 23)
50. Continues to state that it is the intent of the Legislature for FY 2026 that AHCCCS implement a program within its available appropriation. (Sec. 24)
51. Makes technical and conforming changes. (Sec. 1-5)
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55. SB 1741
56. Initials AG Page 0 Signed by the Governor
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