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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
VETOED
FACT SHEET FOR H.B. 4145/S.B. 1838
2026-2027; health care.
Purpose
Makes statutory and session law changes relating to health care necessary to implement the FY 2027 state budget.
Background
The Arizona Constitution prohibits substantive law from being included in the general appropriations, capital outlay appropriations and supplemental appropriations bills. However, it is often necessary to make statutory and session law changes to effectuate the budget. Thus, separate bills called budget reconciliation bills (BRBs) are introduced to enact these provisions. Because BRBs contain substantive law changes, the Arizona Constitution provides that they become effective on the general effective date, unless an emergency clause is enacted.
H.B. 4145 contains the budget reconciliation provisions for changes relating to health care.
Provisions
Arizona Health Care Cost Containment System (AHCCCS) – Eligibility and Enrollment
(Effective January 1, 2027)
1. Requires AHCCCS to enter into a data matching agreement with the Arizona Department of Revenue (ADOR) to identify members who have lottery or gambling winnings of $3,000 or more.
2. Requires AHCCCS to review the information on lottery or gambling winnings on at least a monthly basis.
3. Requires AHCCCS, if a member fails to disclose winnings of $3,000 or more and is identified through the database match, to consider the member’s failure to disclose the information a violation of AHCCCS's terms of eligibility.
4. Requires AHCCCS, at least monthly, to:
a) receive and review death record information from the Department of Health Services concerning members and adjust system eligibility accordingly; and
b) review information concerning members that indicates a change in circumstances that may affect eligibility, including potential changes in residency as identified by out-of-state electronic benefit transfer card transactions.
5. Requires AHCCCS, at least quarterly, to redetermine eligibility of able-bodied adults who are not American Indians or Alaska Natives and to receive and review information indicating changes in circumstances that may affect eligibility from:
a) the Department of Economic Security, including changes to unemployment benefits, employment status and wages; and
b) ADOR, including potential changes in income, wages or residency as identified by tax records.
6. Prohibits AHCCCS from:
a) accepting self-attestation of income, residency, age, household composition, caretaker or relative status or receipt of other health insurance coverage without independent verification before enrollment, unless required by federal law;
b) requesting authority to waive or decline to periodically check any available income-related data sources to verify eligibility; or
c) accept eligibility determinations of the system from a federally-facilitated exchange established in accordance with federal law.
7. Allows AHCCCS to accept assessments from a federally-facilitated exchange established in accordance with federal law.
8. Requires AHCCCS to independently verify eligibility and make eligibility determinations from the assessments accepted from a federally-facilitated exchange.
9. Requires AHCCCS to review a member’s eligibility if it receives information concerning that member indicating a change in circumstances that may affect eligibility.
10. Allows AHCCCS to:
a) execute a memorandum of understanding with any other state department in Arizona for information required to be shared in accordance with the eligibility verification requirements; and
b) contract with one or more independent vendors to provide additional data or information that may indicate a change in circumstances and affect an individual’s eligibility.
11. Requires AHCCCS, by April 1, 2027, to submit to the federal Centers for Medicare and Medicaid Services (CMS), any waiver requests necessary to implement eligibility verification requirements.
12. Requires AHCCCS to request approval from CMS for a section 1115 waiver to allow AHCCCS to eliminate mandatory hospital presumptive eligibility and restrict presumptive eligibility determinations to children and pregnant women eligibility groups.
13. Requires AHCCCS, if approval for the section 1115 waiver is denied, to resubmit a subsequent request for approval within 12 months after each denial.
14. 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 purpose not expressly authorized by state law.
15. Requires a qualified hospital, when making presumptive eligibility determinations, to do all of the following:
a) notify AHCCCS of each presumptive eligibility determination within five working days after the date the determination is made;
b) assist individuals who are determined presumptively eligible for AHCCCS coverage with completing and submitting a full application for AHCCCS eligibility;
c) notify each applicant in writing and on all relevant forms with plain language and large print that if the applicant does not file a full application for coverage eligibility with AHCCCS before the last day of the following month, presumptive eligibility coverage will end of the last day of the following month; and
d) notify each applicant that if the applicant files a full application for coverage eligibility with AHCCCS before the last day of the following month, presumptive eligibility coverage will continue until an eligibility determination is made on the application that is filed.
16. Requires AHCCCS to apply the following standards to establish and ensure the accurate presumptive eligibility determinations are made by each qualified hospital:
a) whether the qualified hospital submitted to AHCCCS the presumptive eligibility card within five working days after the determination date;
b) whether a full application for system eligibility was received by AHCCCS before the expiration of the presumptive eligibility period; and
c) whether the individual was found to be eligible under the system if a full application was received by AHCCCS.
17. Requires AHCCCS to notify a qualified hospital in writing within five working days after AHCCCS determines that the hospital fails to meet the established standards for any presumptive eligibility determination made by the hospital.
18. Requires the determination notice to include:
a) for a 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 that all applicable hospital staff participate in mandatory training by AHCCCS on hospital presumptive eligibility rules;
b) for a second violation:
i. a description of the standard that was not met and an explanation of why it was not met; and
ii. confirmation that all appliable hospital staff will be required to participate in a mandatory training by AHCCCS on hospital presumptive eligibility rules, including the date, time and location of the training as determined by AHCCCS;
iii. a description of available appeals procedures by which a qualified hospital may dispute the findings and remove the finding from the qualified hospital’s record by providing clear and convincing evidence that the standard was met; and
iv. confirmation that if the qualified hospital subsequently fails to meet any of the standards for presumptive eligibility for any determination, the qualified hospital will no longer by qualified to make presumptive eligibility determinations under the system;
c) for a third violation:
i. a description of the standard that was not met and an explanation of why it was not met;
ii. a description of available appeals procedures by which a qualified hospital may dispute the finding and remove the finding from the hospital’s record by providing clear and convincing evidence that the standard was met; and
iii. confirmation that, effective immediately, the hospital is no longer qualified to make presumptive eligibility determinations under the system.
AHCCCS – Miscellaneous
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 JLBC;
d) Director of the Governor's Office of Strategic Planning and Budgeting; and
e) Secretary of State.
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.
21. 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.
22. Continues to require AHCCCS to transfer to the counties any excess monies necessary to comply with the federal Patient Protection and Affordable Care Act, regarding the counties' proportional share of the state's contribution.
23. Continues to allow AHCCCS, for the contract year beginning October 1, 2026, and ending on September 30, 2027, to extend risk contingency rate settings for all managed care organizations (MCOs) and funding for all MCO administrative funding levels imposed for the contract year beginning October 1, 2010, and ending September 30, 2011.
24. Declares the Legislature's intent that AHCCCS implement a Medicaid program within the available appropriation for FY 2027.
State Employee Health Plan
25. Directs the Arizona Department of Administration (ADOA) to increase health insurance premium contributions by 10 percent in plan year 2027 for state officers and employees, including former state employees who enrolled in or continued health benefits upon retirement.
26. Declares the Legislature's intent that ADOA further increase health insurance premium contributions by 5 percent in each of plan years 2028 and 2029.
Arizona Long Term Care System (ALTCS)
27. Outlines the following FY 2027 county contributions for ALTCS:
|
County |
Contribution Amount |
|
Apache |
$792,400 |
|
Cochise |
$8,055,900 |
|
Coconino |
$2,378,900 |
|
Gila |
$3,365,400 |
|
Graham |
$2,320,400 |
|
Greenlee |
$138,200 |
|
La Paz |
$756,100 |
|
Maricopa |
$298,895,000 |
|
Mohave |
$12,022,500 |
|
Navajo |
$3,279,800 |
|
Pima |
$68,282,000 |
|
Pinal |
$19,662,800 |
|
Santa Cruz |
$3,204,100 |
|
Yavapai |
$8,793,400 |
|
Yuma |
$13,867,000 |
28. Directs the State Treasurer to collect from the counties the difference between the total contribution and the counties' share of the state's actual contribution, if the overall cost for ALTCS exceeds the amount specified in the FY 2027 General Appropriations Act.
29. Requires the counties' share of the state's contribution to comply with any federal maintenance of effort requirements.
30. Requires the Director of AHCCCS to notify the State Treasurer of the counties' share of the state's contribution and report the amount to the Director of the Joint Legislative Budget Committee.
31. Directs the State Treasurer to:
a) withhold from any other monies payable to a county from any available state funding source, excluding the Highway User Revenue Fund (HURF), an amount necessary to fulfill that county's contribution requirement; and
b) deposit the withheld amounts and amounts paid by counties into the ALTCS Fund.
Disproportionate Share Hospital (DSH) Payments
32. Establishes the FY 2027 DSH payments as follows:
a) $28,474,900 for the Arizona State Hospital (ASH), of which the federal portion is deposited in the state General Fund (GF); and
b) $884,800 for private qualifying DSHs, which are hospitals that meet the mandatory definition of qualifying DSHs as defined by the federal Social Security Act (SSA), or DSHs that are located in Yuma County and contain at least 300 beds.
33. Outlines the following requirements once AHCCCS files a claim with the federal government and receives federal financial participation based on the amount certified by ASH:
a) if the certification is for an amount less than $28,474,900, AHCCCS must notify the Governor, the President of the Senate and the Speaker of the House and must deposit the entire amount of federal financial participation in the state GF; and
b) requires the certified public expense (CPE) form to contain both the total amount of qualifying DSH expenditures and the amount limited by the SSA.
34. Stipulates that, after DSH payment distributions are made, the allocation of DSH payments designated to political subdivisions, tribal governments and universities must be provided in the following order of priority to qualifying private hospitals located in a county with a population of:
a) fewer than 400,000 persons;
b) at least 400,000 but fewer than 900,000 persons; and
c) 900,000 persons or more.
35. Requires ASH, by March 31, 2027, to provide a CPE form for qualifying DSH expenditures to AHCCCS.
36. Continues to require AHCCCS to assist ASH in determining the amount of qualifying DSH expenditures.
County Acute Care
37. Outlines the following FY 2027 county acute care contributions:
|
County |
Contribution Amount |
|
Apache |
$268,800 |
|
Cochise |
$2,214,800 |
|
Coconino |
$742,900 |
|
Gila |
$1,413,200 |
|
Graham |
$536,200 |
|
Greenlee |
$190,700 |
|
La Paz |
$212,100 |
|
Maricopa |
$14,417,300 |
|
Mohave |
$1,237,700 |
|
Navajo |
$310,800 |
|
Pima |
$14,951,800 |
|
Pinal |
$2,715,600 |
|
Santa Cruz |
$482,800 |
|
Yavapai |
$1,427,800 |
|
Yuma |
$1,325,100 |
38. Requires the State Treasurer, if a county does not provide funding as specified, to:
a) subtract the amount owed by the county from any payments required to be made by the State Treasurer to the county plus interest on that amount, retroactive to the first day the funding was due; and
b) if the amount withheld is insufficient to meet that county’s funding requirement, withhold from any other monies payable to that county from any available state funding source, excluding HURF, an amount necessary to fulfill that county’s requirement.
39. Requires payments equal to one twelfth of the total amount for county acute care contributions to be made to the State Treasurer by the fifth day of each month and requires the State Treasurer, on request from the Director of AHCCCS, to require that up to three months' payment be made in advance, if necessary.
40. Requires the State Treasurer to deposit the amounts paid and withheld into the AHCCCS Fund and the ALTCS Fund.
41. Allows the Director of AHCCCS, if payments made exceed the amount required to meet the costs incurred by AHCCCS for the hospitalization and medical care of eligible persons, to instruct the State Treasurer to:
a) reduce the remaining payments to be paid by a specified amount; or
b) provide to the counties specified amounts from the AHCCCS Fund and the ALTCS Fund.
42. Declares the Legislature's intent that Maricopa County acute care contributions be reduced in each subsequent year according to the changes in the Gross Domestic Product price deflator.
Miscellaneous
43. Continues to exclude county contributions for Proposition 204 administrative costs from county expenditure limitations.
44. Continues to exclude county contributions related to the costs of inpatient, in-custody competency restoration treatment from county expenditure limitations.
45. Becomes effective on the general effective date, with a delayed effective date, as noted.
The Governor indicates in her veto message that H.B. 4145, and this version of the FY 2027 state budget as a whole, would cause Arizona to default on its debt obligations, endanger vulnerable children, cut public safety funding and provide tax breaks for billionaires, data centers and special interests. The Governor outlines her specific concerns, including cuts to funding for specified agencies and programs, and invites the Legislature to return to the negotiating table.
House Action Senate Action
APPROP 4/28/26 DP 11-7-0-0 ATT 4/28/26 DP 6-4-0
3rd Read 4/29/26 33-20-7 3rd Read 5/4/26 16-12-2
(H.B. 4145 was substituted for S.B. 1838 on 3rd Read)
Vetoed by the Governor on 5/5/26
Prepared by Senate Research
May 7, 2026
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