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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
prepaid capitated contractors; cost reports
Purpose
Requires, by December 1 of each year, the Arizona Health Care Cost Containment System (AHCCCS) to report the percentage of monies all nongovernment entities that have a prepaid capitated contract with AHCCCS spent in the previous contract year on direct payments to providers for services and administrative costs, by category, to specified officials.
Background
AHCCCS administers the state’s Medicaid program and delivers services to eligible members primarily through contracts with managed care organizations and other prepaid capitated contractors. AHCCCS pays contractors a fixed per-member, per-month payment to provide covered services. Contractors are then responsible for managing the delivery and cost of care within those payments. Through these contracts, AHCCCS provides coverage for specified health care services and supplies, including but not limited to inpatient and outpatient hospital services, laboratory and X-ray services, prescription medications and medical supplies, health screenings, diagnostic services and medical transportation (A.R.S. §§ 36-2901; 36-2904 and 36-2907).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires,
by December 1 of each year, AHCCCS to submit an annual report, aggregated for
all nongovernment entities that have a prepaid capitated contract with AHCCCS, detailing
the percentage of monies spent in the previous contract year on direct payments to providers for services and on
administrative costs, by category, to:
a) the Joint Legislative Budget Committee;
b) the Governor;
c) the President of the Senate;
d) the Speaker of the House of Representatives; and
e) the members of the Senate and House of Representatives Health and Human Services Committees, or their successor committees.
2. Requires the report to include the percentage of monies spent on administrative costs for each of the following:
a) health care quality improvement activities;
b) program integrity, including fraud, waste and abuse prevention;
c) taxes, licenses and regulatory fees;
d) community reinvestment; and
e) all other administrative activities.
3. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Requires AHCCCS, rather than each prepaid capitated contractor, to submit an annual expenditure report aggregated for all nongovernment entities with a prepaid capitated contract.
2. Requires the report to include amounts spent on direct payments to providers for services, rather than direct patient care.
3. Outlines required administrative costs by category to be included in the report.
Senate Action
HHS 2/19/26 DP 6-1-0
Prepared by Senate Research
March 3, 2026
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