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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
House: APPROP DP 15-1-2-0
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HB 4160: health care; 2026-2027
Sponsor: Representative Livingston, LD 28
House Engrossed
Overview
Contains provisions relating to health care needed to implement the FY 2027 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, in consultation with the Health Insurance Trust Fund Oversight Board (Oversight Board), to seek a variety of plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations. (Sec. 3)
2. Allows ADOA, following approval by the Oversight Board, to directly contract with preferred provider organizations, physician and hospital networks, indemnity health insurers, hospital and medical service plans, dental plans and health maintenance organizations if ADOA self-insures. (Sec. 3)
3. Requires ADOA, by rule, and following approval by the Oversight Board, to designate and adopt performance standards, including cost competitiveness, utilization review issues, network development and access, conversion and implementation, report timeliness, quality outcomes and customer satisfaction for qualifying plans. (Sec. 3)
4. Requires any indemnity health insurance plan or hospital and medical service plan designated by ADOA and approved by the Oversight Board to be open for enrollment to all permanent full-time state employees, except that any plan established before June 6, 1977, may continue as a separate plan. (Sec. 3)
5. Requires any closed-panel medical or dental plan or health maintenance organization designated as the qualifying plan by ADOA and approved by the Oversight Board to be open for enrollment to all permanent full-time state employees residing within the plan's service area. (Sec. 3)
6. Allows ADOA, following approval by the Oversight Board, to designate the Arizona Health Care Cost Containment System (AHCCCS) as a qualifying plan for the provision of health and accident coverage to full-time state officers and employees and their dependents. (Sec. 3)
7. Requires ADOA, in consultation with the Oversight Board, to consider certain factors to ensure that an officer or employee does not suffer a financial penalty or receive a financial benefit based on their age, gender or health status. (Sec. 3)
8. Adds the Oversight Board to the list of recipients required to receive the ADOA report that details the information provided to ADOA by the insurance providers and includes any recommendations for possible legislative action. (Sec. 3)
Health Insurance Trust Fund Oversight Board
9. Establishes the Oversight Board consisting of the following members:
a. the Assistant Director of the ADOA Benefits Division, who serves as the chairperson;
b. the ADOA Director or their designee;
c. the Director of the Department of Insurance and Financial Institutions or their designee;
d. one member who is appointed by the President of the Senate; and
e. one member who is appointed by the Speaker of the House of Representatives. (Sec. 5)
10. Specifies that the members appointed by the President of the Senate and Speaker of the House of Representatives must:
a. serve a term of two years or at the pleasure of their appointing authority, and is eligible for reappointment; and
b. have at least three years of experience in the health care industry and cannot be a registered lobbyist. (Sec. 5)
11. Stipulates that a person is not eligible to serve as an Oversight board member during the term for which the person has been elected or appointed to fill an otherwise elected position. (Sec. 5)
12. Subjects Oversight board members to laws and regulations relating to conflicts of interest. (Sec. 5)
13. Requires the Oversight Board to meet at least two times annually and allows meetings to be held at the call of the chairperson or a majority of the board members. (Sec. 5)
14. Requires three members to constitute a quorum to conduct business. (Sec. 5)
15. Allows Oversight Board meetings to be conducted virtually. (Sec. 5)
16. Stipulates that Oversight Board members are not eligible to receive compensation for board service nor eligible to receive reimbursement for expenses. (Sec. 5)
17. Directs the Oversight Board to:
a. approve all health insurance benefit programs offered to state officers and employees;
b. approve premium rates, copayments, deductibles and coinsurance percentages and maximums for the plan;
c. for plan year 2028 and each subsequent plan year, approve any requests for proposal contract of more than $3,000,000 that are entered into by ADOA for the health insurance benefit plan;
d. consult with ADOA and at ADOA's request; and
e. develop and maintain a strategic plan for the state health plan. (Sec. 5)
18. Requires the Oversight Board to review ADOA contracts within 10 days after the request. (Sec. 5)
19. Requires the Oversight Board to design policies that seek to, by plan year 2035 and for each subsequent plan year, achieve:
a. a premium cost sharing of 85% to be paid by the employer and 15% to be paid by the employee for medical premiums;
b. a consistent reserve in the Special Employee Health Insurance Trust Fund that is twice the total amount of incurred, but not reported, claims payable from health benefit programs funded by the trust fund; and
c. optimal cross subsidization of retirees. (Sec. 5)
20. Requires, by July 1, 2027, and annually thereafter, the Oversight Board to approve and ADOA to submit an annual report to the Governor, President of the Senate, Speaker of the House of Representatives and the chairpersons of the Senate and House of Representatives Appropriations Committee and the Joint Legislative Budget Committee (JLBC) staff. (Sec. 5)
21. Directs ADOA to make the annual report available to officers and employees who have paid premiums under any of the insurance plans from which monies were received for deposit in the special employee health insurance trust fund since the inception of the state health and accident insurance plan or since ADOA submitted the most recent annual report, whichever is later. (Sec. 5)
22. Requires the annual report to include:
a. its strategic plan for the state health plan;
b. the annual activities of the Oversight Board;
c. the actuarial assumptions and a description of the methodology used to set premiums and reserve balance targets for the health insurance benefit plan for the current plan year;
d. an analysis of the actuarial soundness of the health insurance benefit plan for the current plan year, based on both year-to-date experience and total expected experience;
e. a preliminary estimate of the premiums and reserve balance targets for the next plan year, including the actuarial assumptions and a description of the methodology used; and
f. the required an actual performance standard for the prior plan year for the contracted health plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations. (Sec. 5)
23. Requires the Oversight Board, subject to applicable state and federal laws, to develop requirements for the sharing of anonymized and aggregated claim and trend data with employers that participate in health benefit programs funded by the Special Employee Health Insurance Trust Fund. (Sec. 3)
24. Allows monies in the Health Insurance Trust Fund to be used, with approval from the Oversight Board, for administering federal and state health insurance laws and for designing, implementing and administering improvements to the state employee health insurance and benefits program, subject to a limit of $1.50 per employee per month. (Sec. 4)
25. Removes the requirement that ADOA submit an annual report on the financial status of the Special Employee Insurance Trust Fund to the specified recipients by July 1. (Sec. 4)
26. Requires ADOA to submit a report to the JLBC detailing any changes approved by the Oversight Board to the type of benefits offered under the plan and associated costs at least 45 days before making the change. (Sec. 5)
27. Exempts the Oversight Board from the Sunset Review Process. (Sec. 5)
Dementia Services Program Session Law Provisions
28. Establishes the Department of Health Services (DHS) as the lead agency in Arizona to address Alzheimer's disease and related forms of dementia. (Sec. 8)
29. Requires the DHS Director to establish a Dementia Services Program within the agency that does all of the following:
a. facilitates the coordination of programs that relate to Alzheimer's disease and related forms of dementia in all state agencies;
b. facilitates the coordination, review, publication and implementation of and updates to the Alzheimer's Disease State Plan (State Plan);
c. applies for public health funding and grants related to Alzheimer's disease and related forms of dementia; and
d. incorporates evidence-based brain health strategies into relevant DHS-led public health programs. (Sec. 8)
30. Requires DHS to develop a State Plan that assesses the current and future impact of Alzheimer's disease and related forms of dementia on the State of Arizona. (Sec. 8)
31. Requires the State Plan to assess and identify relevant gaps in:
a. existing state services and resources that address the needs of persons living with Alzheimer's disease or a related form of dementia and their caregivers;
b. the needs of persons who have Alzheimer's disease or a related form of dementia and how their lives are affected throughout the progression of the disease;
c. the state's public and private health systems, workforce and clinical capacity and capability to provide effective detection, diagnosis and treatment of Alzheimer's disease or a related form of dementia; and
d. the state's public and private nonmedical care and support services for persons living with Alzheimer's disease or a related form of dementia and their caregivers. (Sec. 8)
32. Requires the State Plan to provide strategic recommendations with measurable goals for state action to do all the following for persons living with Alzheimer's disease or a related form of dementia:
a. improve access to care, support, diagnostics and treatment;
b. improve the quality of dementia care, including crisis response, health care systems, long-term care and in-home care;
c. advance risk reduction and early detection awareness and brain health;
d. improve caregiver support, care planning and care coordination; and
e. improve the collection, availability and use of dementia-related data by state agencies. (Sec. 8)
33. Directs DHS to convene or designate an advisory council or working group to assist in planning, conducting and evaluating stakeholder engagement and State Plan implementation, review and updates. (Sec. 8)
34. Specifies that the membership of the advisory council or working group must reflect a diversity of stakeholders related to Alzheimer's disease or a related form of dementia, as outlined. (Sec. 8)
35. Requires DHS to conduct stakeholder engagement sessions at least once each calendar year to solicit input on the State Plan. (Sec. 8)
36. Requires DHS to seek feedback from and collaborate with persons who have Alzheimer's disease, or a related form of dementia, direct caregivers and public, private and nonprofit organizations focused on Alzheimer's care services, research, advocacy, health services and caregiver support. (Sec. 8)
37. Requires DHS to provide public notice of the stakeholder engagement session at least 30 days before each session, including the date, time, location or virtual access information, a summary agenda and instructions for submitting written comments. (Sec. 8)
38. Directs DHS to ensure meaningful participation by stakeholders statewide, including rural and underserved communities, and provide reasonable accommodations and language access. (Sec. 8)
39. Requires DHS to accept written comments for at least 14 days following each engagement session. (Sec. 8)
40. Requires DHS, by September 30, 2027, and at least every three years thereafter, to update and submit the State Plan to the Governor, the President of the Senate and the Speaker of the House of Representatives, provide a copy to the Secretary of State and publish the plan on DHS's public website. (Sec. 8)
Arizona Rural Health Transformation Fund
41. Establishes the Arizona Rural Health Transformation Fund (Fund) to consist of monies received by the state through Rural Health Transformation Program. (Sec. 2)
42. Requires AHCCCS to administer the Fund and states these monies are continuously appropriated. (Sec. 2)
43. Requires AHCCCS, before the executive branch spends any money, to hold three public meetings in each of the largest metropolitan areas in northern, central and southern Arizona to receive input and feedback regarding how the monies should be spent. (Sec. 2)
44. Directs AHCCCS, after holding the public meetings, to submit a report detailing its expenditure plan for the RHTP funds to JLBC. (Sec. 2)
AHCCCS Member Eligibility Review Session Law Provisions
45. Requires AHCCCS to review information provided by the Arizona Lottery Commission and the Department of Gaming to identify members of households who have won substantial lottery or gambling winnings as defined by federal law, including online gambling winnings and incorporate the information into eligibility determinations. (Sec. 6)
46. Requires AHCCCS to:
a. receive and review death record information from DHS concerning its members and to adjust system eligibility accordingly;
b. receive and review information from the Department of Economic Security concerning members that indicates a change in circumstances that may affect eligibility, including changes to unemployment benefits, employment status or wages; and
c. review information concerning members indicating a change in circumstances that may affect eligibility, including changes in residency as identified by out-of-state enrollment in a state's Medicaid program, TANF program, SNAP or an out-of-state death record. (Sec. 6)
47. Requires AHCCCS, for all medical assistance eligibility redeterminations under the state plan, scheduled on or after the first day of the first quarter beginning after December 31, 2026, to comply with applicable federal laws and regulations, unless otherwise approved through a waiver by the Centers for Medicare & Medicaid Services (CMS). (Sec. 6)
48. Prohibits AHCCCS, to the extent allowed by federal law, from accepting self-attestation of residency without independent verification before enrollment. (Sec. 6)
49. Prohibits AHCCCS from accepting eligibility determinations for the system from a federally-facilitated exchange established in accordance with federal law. (Sec. 6)
50. Allows AHCCCS to accept assessments from a federally-facilitated exchange established in accordance with federal law. (Sec. 6)
51. Requires AHCCCS to independently verify eligibility and make eligibility determinations from the assessments accepted from a federally-facilitated exchange. (Sec. 6)
52. Requires AHCCCS to review a member’s eligibility if it receives information concerning that member indicating a change in circumstances that may affect eligibility. (Sec. 6)
53. Allows AHCCCS to execute a memorandum of understanding with any other department of this state to obtain the required information. (Sec. 6)
54. Authorizes AHCCCS to contract with one or more independent vendors to provide additional data or information that may indicate a change in an individual's circumstances and eligibility. (Sec. 6)
55. Requires AHCCCS to submit any waiver requests necessary to implement this act's requirements to CMS on or before April 1, 2027. (Sec. 6)
56. Repeals the review of AHCCCS member eligibility information requirements on July 1, 2027. (Sec. 6)
Presumptive Eligibility Determinations Session Law Provisions
57. Requires AHCCCS to request approval from CMS for a section 1115 waiver to allow the agency to eliminate mandatory hospital presumptive eligibility and restrict presumptive eligibility determinations to only children and pregnant women eligibility groups. (Sec. 7)
58. Declares that if the section 1115 waiver request for restricting presumptive eligibility is denied by CMS, AHCCCS is required to resubmit a subsequent request within 12 months of each denial. (Sec. 7)
59. Prohibits AHCCCS, unless required by federal law, from designating itself as a qualified health entity for the purpose of making presumptive eligibility determinations or for any other purpose not expressly authorized by statute. (Sec. 7)
60. Requires a qualified hospital making presumptive eligibility determinations to:
a. notify AHCCCS of each presumptive eligibility determination within five working after the date of the determination is made;
b. assist individuals determined to be presumptively eligible under the system with completing and submitting a full application for AHCCCS eligibility;
c. notify each applicant in writing and on all relevant forms that if the applicant does not file a full application before the last day of the following month, presumptive eligibility coverage will end on the last day of the following month; and
d. notify each applicant that if they file a full application for AHCCCS eligibility before the last day of the following month coverage will continue until an eligibility determination is made on the filed application. (Sec. 7)
61. Outlines standards AHCCCS must establish and apply to ensure that accurate presumptive eligibility determinations are made by each qualified hospital. (Sec. 7)
62. Requires AHCCCS to notify a qualified hospital that fails to meet the established standards for any presumptive eligibility determinations within five days after the determination:
a. for the first violation:
i. a description of the standard that was not met and an explanation of why it was not met; and
ii. confirmation that a second finding will require all applicable hospital staff to participate in mandatory training by AHCCCS on hospital presumptive eligibility rules.
b. for the second violation;
i. a description of the standard that was not met and an explanation of why it was not met;
ii. confirmation that all applicable hospital staff are required to participate in mandatory training by AHCCCS on hospital presumptive eligibility rules and the date, time and location of the training as determined by AHCCCS;
iii. a description of available appellate procedures by which a qualified hospital may dispute the finding and remove it from the hospital's record by providing clear and convincing evidence that the standards were met; and
iv. confirmation that if the qualified hospital subsequently fails to meet any of the standards for presumptive eligibility the hospital will no longer be qualified to make presumptive eligibility determinations under AHCCCS.
c. for the third violation:
i. a description of the standard that was not met and an explanation of why it was not met; and
ii. a description of available appellate procedures by which a qualified hospital may dispute the finding and remove it from the hospital's record by providing clear and convincing evidence the standards were met; and
iii. confirmation that, effective immediate, the hospital is no longer qualified to make presumptive eligibility determinations under AHCCCS. (Sec. 7)
63. Repeals the hospital presumptive eligibility requirements on July 1, 2027. (Sec. 7)
AHCCCS Traditional Healing Services Session Law Provisions
64. Requires AHCCCS and its contractors, subject to CMS approval of a Section 1115 waiver, to provide pilot coverage for traditional healing services during FYs 2027 through 2029 for eligible members who qualify for services through the Indian Health Service or a tribal facility and receive the services through an urban Indian organization. (Sec. 9)
65. Permits the AHCCCS Director to take any other administrative action necessary to implement the traditional healing services. (Sec. 9)
66. Repeals the traditional healing services on January 1, 2030. (Sec. 9)
AHCCCS Mental Health Medication Utilization Report
67. Requires AHCCCS to report by January 31, 2027, on aggregate spending and aggregate utilization of mental health medications, including antipsychotics and antidepressants, during the contract year 2024-2025. (Sec. 14)
68. Requires the AHCCCS report on the costs and utilization of mental health medications to include the:
a. aggregate gross amount spent for each mental health medication class;
b. annual aggregate net amount spent for each mental health medication class after rebates, without disclosing any information about manufacturer-negotiated supplemental rebate agreements for any specific drug; and
c. average annual cost by class for generic and nongeneric mental health medications. (Sec. 14)
69. Requires AHCCCS to submit the mental health medication utilization report to the:
a. Governor;
b. chairpersons of the Health and Human Services Committees of the Senate and House of Representatives, or their successor committees;
c. Director of Joint Legislative Budget Committee;
d. Director of the Office of Strategic Planning & Budgeting; and
e. Secretary of State. (Sec. 14)
70. Requires the AHCCCS report on the costs and utilization of mental health medications, for antipsychotic and antidepressant medications, without disclosing any information about manufacturer-negotiated supplemental rebate agreements that could compromise the competitive or proprietary nature of the agreements, to include the:
a. total number of prior authorizations submitted for nonpreferred antipsychotic and antidepressant medications;
b. percentage of prior authorization approvals and denials;
c. generic antipsychotic and antidepressant medication utilization percentages; and
d. total amount of antipsychotic and antidepressant medication claims. (Sec. 14)
County Session Law Provisions
71. Sets the annual county Arizona Long Term Care System (ALTCS) contributions for FY 2027 at $445,813,900 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. 10)
72. Requires the counties' share of the state's contribution to comply with federal maintenance of effort requirements. (Sec. 10)
73. Sets the FY 2027 county acute care contributions at $42,447,600 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. 13)
74. Continues to exclude Proposition 204 administration costs from county expenditure limitations. (Sec. 15)
75. Continues to exempt county expenditures on Restoration to Competency treatment at ASH from county expenditure limitations. (Sec. 16)
Disproportionate Share Hospital (DSH) Payment Session Law Provisions
76. 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. 11)
77. 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. 11)
78. Outlines the order of priority for DSH payment allotments for private qualifying hospitals once the preceding DSH distributions are made. (Sec. 11)
79. Requires, by December 31, 2027, for FY 2027, 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 the state's contribution. (Sec. 12)
Opioid Settlement Funds Agreement
80. Prohibits a city, town or county from using opioid settlement monies to provide or grant monies to a nongovernmental organization to provide safer smoking equipment. (Sec. 1)
81. Defines safer smoking equipment as sterile, durable and specialized tools intended to reduce the health risks associated with inhaling drugs, such as cocaine base, methamphetamine or opioids. (Sec. 1)
82. Applies the opioid settlement prohibition to contracts entered or renewed by December 31, 2026. (Sec. 22)
83. Provides that, notwithstanding any uniform expenditure reporting requirements, for FY 2027, if a county, city or town exceeds its expenditure limitation due to spending monies received from the Opioid Settlement Funds Agreement, the penalty must be reduced by the amount of agreement monies spent and may not be less than $0. (Sec. 17)
Miscellaneous
84. Allows, for the contract year beginning October 1, 2026, and ending September 30, 2027, 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. 18)
85. Exempts AHCCCS for FY 2027, from rulemaking requirements for the purposes of adopting policies and rules related to service frequency or hour limitations for covered services, except that AHCCCS must provide notice and a minimum 30-day public comment period before implementing such policies or rules. (Sec. 19)
86. Exempts, in FY 2027, AHCCCS from rulemaking requirements for the purposes of implementing the hospital assessment, which applies retroactively from July 1, 2026. (Sec. 20)
87. Continues to state that it is the intent of the Legislature for FY 2027 that AHCCCS implement a program within its available appropriation. (Sec. 21)
88. Defines terms. (Sec. 1, 2, 7-9, 14)
89. Makes technical and conforming changes. (Sec. 4, 5)
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93. Initials AG HB 4160
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