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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
home; community-based services; mental illness
Purpose
Establishes the Home and Community-Based Services (HCBS) for Adults who are Seriously Mentally Ill (SMI) Program (HCBS for SMI Program) in the Arizona Health Care Cost Containment System (AHCCCS) to provide, with federal approval, a dedicated HCBS benefit for adults who are determined to be SMI. Outlines HCBS for SMI Program coverage, eligibility, capacity and reporting requirements.
Background
AHCCCS serves as Arizona's Medicaid agency, which offers qualifying Arizona residents access to healthcare programs. AHCCCS contracts with health professionals to provide medically necessary health and medical services to eligible members. Additionally, AHCCCS must contract for a coordinated system of behavioral health services for persons who are SMI, including screening and intake, case management, treatment planning family involvement and a continuum of care. (A.R.S. §§ 36-2901 and 36-3407).
The Arizona Long Term Care System (ALTCS) is the management and delivery
system of hospitalization, medical care, institutional services and home and
community-based services to members through AHCCCS program contractors and
providers, together with federal participation under Title XIX of the Social
Security Act. As an ALTCS program contractor, the Department of Economic
Security must provide additional services, if appropriate, to members who have
a developmental disability and are determined to need institutional services.
These services include HCBS that may be provided in a member's home, at an
alternative residential setting or at other licensed behavioral health
alternative residential facilities approved by the Director of AHCCCS. HCBS may
include in-home health and support services, therapies, personal and homemaker
services, respite care, transportation and other approved community-based
services. (A.R.S.
§ 36-2939).
Seriously mentally ill means persons who, as a result of a mental disorder, exhibit emotional or behavioral functioning that is so impaired as to interfere substantially with their capacity to remain in the community without supportive treatment or services of a long-term or indefinite duration. In these persons mental disability is severe and persistent, resulting in a long-term limitation of their functional capacities for primary activities of daily living such as interpersonal relationships, homemaking, self-care, employment and recreation (A.R.S. § 36-550)
The Joint Legislative Budget Committee (JLBC) estimates that S.B. 1630 would increase AHCCCS state General Fund (state GF) costs by $2,100,000 annually once the HCBS for SMI Program is fully implemented, if enrollment remains capped at 250 members. If the enrollment cap is expanded to the maximum 1,000 members, state GF costs may increase, as specified (JLBC fiscal note).
Provisions
Program Establishment
1. Establishes the HCBS for SMI Program in AHCCCS and directs AHCCCS to develop and request authority from the Centers for U.S. Medicare and Medicaid Services (CMS) to implement a dedicated HCBS benefit for adults determined to be SMI.
2. Requires AHCCCS, through the submission of the first annual report, to convene a stakeholder workgroup that includes representatives from behavioral health providers, counties, tribal nations, community organizations and family members, caregivers and guardians of SMI individuals to advise on HCBS for SMI Program design and implementation.
3. Requires stakeholder input to specifically address the needs of individuals who require complex medication management, enhanced monitoring and structured community-based supports, including assisted living-type models, to promote medication continuity and safety.
4. Requires AHCCCS to request approval from CMS for the HCBS for SMI Program by July 1, 2027.
5. Requires AHCCCS to begin implementing the HCBS for SMI Program within one year after approval.
6. Requires AHCCCS, until the HCBS for SMI Program is implemented, to provide semiannual implementation updates to the President of the Senate, the Speaker of the House of Representatives and the Chairpersons of the Health and Human Services Committees, or their successor committees.
Covered Services
7. Requires AHCCCS, subject to the approval of CMS, to provide HCBS that are comparable to those authorized for ALTCS, with appropriate modifications for behavioral health needs.
8. Requires the HCBS to include:
a) attendant care and personal care;
b) habilitation with behavior management;
c) adult day health care with a behavioral health care focus;
d) supervised community living services, including assisted living-type supports;
e) respite care;
f) home-delivered meals;
g) nursing, home health and medication administration services; and
h) nonemergency transportation.
9. Requires AHCCCS to establish service descriptions and scope and staffing standards through rule or policy.
10. Allows HCBS to be delivered in any residential setting authorized under state law when an individual is subject to a valid court order, guardianship or involuntary treatment if:
a) Medicaid reimbursement is limited to covered HCBS and does not include room, board, supervision for custody or enforcement of court orders; and
b) the individual is afforded periodic review and planning for transition to a less restrictive setting when clinically appropriate.
11. Allows AHCCCS to add, modify or combine services consistent with federal approval and legislative intent.
Eligibility
12. Requires an individual, to be eligible for the HCBS for SMI Program, to:
a) have been determined to be SMI;
b) meet the SMI long-term level of care adopted by AHCCCS;
c) require HCBS to avoid placement in a behavioral health residential facility (BHRF) or psychiatric institution; and
d) meet the outlined financial eligibility requirements.
13. Deems an individual who meets the AHCCCS SMI long-term level of care financially eligible for the HCBS for SMI Program if the individual's income does not exceed 300 percent of the federal supplemental security income benefit rate.
14. Allows an individual whose income exceeds the outlined standard to establish a qualified income trust to achieve eligibility.
15. Specifies that resource and spousal impoverishment standards are the same as required for enrollees of the ALTCS HCBS Program.
16. Requires AHCCCS to adopt an SMI long-term level of care specific to individuals who are SMI that is based on behavioral, functional and safety criteria, which may include:
a) current or recent court-ordered treatment;
b) legal guardianship due to psychiatric incapacity;
c) recent discharge from a jail or prison, the Arizona State Hospital (ASH) or a BHRF;
d) impaired judgement, disorganization or inability to perform activities of daily living due to psychiatric symptoms;
e) documented safety risks, including elopement, fire or water misuse, aggression, delusional behavior or exploitation risk;
f) homelessness or imminent risk of homelessness;
g) high-intensity or complex psychotropic medication regimens requiring enhanced monitoring to ensure adherence and to identify potential adverse effects; and
h) clinical needs that necessitate structured community-based supports, including assisted living-type supports, to maintain continuity of medication therapy, such as those at elevated risk of relapse, decompensation or hospitalization related to medication nonadherence.
17. Prohibits the adopted SMI long-term level of care from requiring a nursing facility level of care, physical disability or impairment criteria or using a preadmission screening tool.
18. Allows AHCCCS to refine the assessment criteria and processes through rule or policy, consistent with legislative intent, including adjustment to assessment tools, thresholds or processes.
Program Capacity
19. Limits enrollment in the HCBS for SMI Program to 250 members statewide, including temporary emergency placements, subject to CMS approval.
20. Allows AHCCCS to increase enrollment above 250 members if data reported in the annual report demonstrates reduced utilization of high-cost services or cost avoidance in state-funded systems, subject to review JLBC review.
21. Prohibits enrollment in the HCBS for SMI Program from exceeding 1,000 members unless authorized by the Legislature.
22. Requires AHCCCS, when capacity is limited, to assign available slots based on the following:
a) individuals under court-ordered treatment;
b) individuals with legal guardianship due to psychiatric incapacity;
c) individuals discharged from a jail or prison, ASH or a BHRF;
d) individuals who are homeless or at imminent risk of homelessness;
e) individuals with repeated crisis episodes, psychiatric hospitalizations or public safety involvement;
f) individuals presenting significant safety risks due to psychiatric symptoms; and
g) individuals with high-intensity or complex psychotropic medication regimens requiring enhanced monitoring to ensure adherence and identify potential adverse effects.
23. Allows a court to recommend participation in the HCBS for SMI Program.
24. Prohibits a court from compelling AHCCCS to exceed the HCBS for SMI Program enrollment cap.
25. Allows AHCCCS to reserve a portion of available capacity for emergency or priority placements.
Provider Requirements
26. Requires providers to document behavioral interventions, crisis supports and staffing adjustments before initiating discharge.
27. Requires a provider that receives reimbursement under the HCBS for SMI Program to implement eviction-prevention protocols and obtain regional behavioral health authority approval before issuing nonemergency notices to vacate.
28. Allows AHCCCS to adopt enhanced reimbursement rates for high-acuity SMI individuals who are receiving HCBS.
29. Specifies that the provider requirements do not:
a) limit AHCCCS's authority to ensure the health and safety of participants; or
b) require a provider to continue services when immediate and documented risks to health or safety cannot be mitigated through reasonable clinical interventions.
Miscellaneous
30. Requires AHCCCS, beginning one year after implementation of the HCBS for SMI Program and each year thereafter, to submit a report to the Governor, the President of the Seante and the Speaker of the House of Representatives that includes:
a) the number of enrolled members and the number of individuals who are on the waitlist;
b) the percentage of members who are under court-ordered treatment, guardianship or criminal justice supervision;
c) housing stability outcomes for members;
d) hospitalization, emergency department, evaluation agency and screening agency utilization of members;
e) provider denials and discharges and the reasons for the denials and discharges of members; and
f) the fiscal impact of and estimated cost avoidance related to the HCBS for SMI Program.
31. Requires AHCCCS to seek and maintain any necessary federal approvals to operate the HCBS for SMI Program through approved Medicaid state plan authorities, waivers or demonstration authorities.
32. Requires AHCCCS, if CMS denies or does not approve a request necessary to implement the HCBS for SMI Program, to continue to pursue approval to the extent allowed by federal law through modifications, resubmissions or alternative federal authority.
33. Requires AHCCCS to report the status of approval efforts in the semiannual implementation updates.
34. Allows AHCCCS to adopt rules to implement the HCBS for SMI Program.
35. Specifies that statutory authorization for the HCBS for SMI Program does not expand or modify standards for involuntary treatment.
36. Defines home and community-based services to:
a) mean services authorized under one or more Medicaid state plan authorities, waivers or demonstration authorities that support individuals in the community as an alternative to institutionalization; and
b) include services that provide assistance with activities of daily living, medication administration, supervision and structured supports comparable to assisted living models.
37. Defines terms.
38. Becomes effective on the general effective date.
Amendments Adopted by the Health and Human Services Committee
1. Requires the stakeholder workgroup to be convened through the submission of the first annual report.
2. Narrows eligibility for the HCBS for SMI Program to individuals requiring an SMI long-term level of care, rather than any SMI level of care.
3. Requires implementation updates to be made semiannually, rather than quarterly.
4. Reduces the enrollment limit of the HCBS for SMI Program from 500 to 250 members but allows the limit to increase to up to 1,000 members if outlined conditions apply.
5. Removes the requirement that AHCCCS assign available slots in an order of priority when availability in the HCBS for SMI Program is limited.
6. Modifies the annual report to require reporting on member utilization of emergency departments, evaluation agencies and screening agencies, rather than crisis services and jail.
7. Requires AHCCCS to continue pursuing approval if CMS denies or does not approve implementation of the HCBS for SMI Program and report the status of the efforts in the semiannual implementation updates.
8. Allows, rather than requires, AHCCCS to adopt rules to implement the HCBS for SMI Program.
9. Makes conforming changes.
Senate Action
HHS 2/11/26 DPA 7-0-0
ATT (awaiting committee hearing)
Prepared by Senate Research
February 20, 2026
MM/SDR/hk