 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
health care; 2026-2027.
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.
S.B. 1853 contains the budget reconciliation provisions for changes relating to health care.
Provisions
Opioid Settlement Funds
1. Prohibits a city, town or county from using monies received through the final One Arizona Distribution of Opioid Settlement Funds Agreement to provide, or grant monies to a nongovernmental organization to provide, safer smoking equipment.
2. Stipulates that, if a city, town or county exceeds its expenditure limit due to spending monies received from the final One Arizona Distribution of Opioid Settlement Funds Agreement, any penalty must be reduced by the amount of settlement funds spent but may not be less than $0.
3. Applies the restrictions on use of opioid settlement funds to contracts entered into or renewed on or after December 31, 2026.
4. Defines safer smoking equipment as sterile, durable and specialized tools intended to reduce the risks associated with inhaling drugs, such as cocaine base, methamphetamine or opioids.
Arizona Rural Health Transformation Fund (RHT Fund)
5. Establishes the RHT Fund, consisting of monies received through the Rural Health Transformation Program.
6. Requires the Arizona Health Care Cost Containment System (AHCCCS) to administer the Fund.
7. Specifies that monies in the RHT Fund are continuously appropriated.
8. Requires AHCCCS, before the Executive Branch may spend any monies in the RHT Fund, to:
a) 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; and
b) submit a report to the Joint Legislative Budget Committee (JLBC) detailing its expenditure plan for monies in the RHT Fund.
Health Insurance Trust Fund Oversight Board (Board)
9. Establishes the Board, consisting of the following members:
a) the Assistant Director of the Arizona Department of Administration (ADOA) Benefit Services Division, to serve as Chairperson;
b) the Director of ADOA or the Director's designee;
c) the Director of the Department of Insurance and Financial Institutions or the Director's designee;
d) one member appointed by the Senate President and one member appointed by the House Speaker, each of whom must:
i. serve a two-year term or at the pleasure of the appointing authority;
ii. have at least three years of experience in the health care industry in Arizona; and
iii. not be a registered lobbyist.
10. Requires the Board to:
a) approve all health insurance benefit programs offered to state officers and employees;
b) develop and maintain a strategic plan for the state health plan;
c) approve premium rates, copayments, deductibles and coinsurance percentages and maximums for the plan;
d) beginning in plan year 2028, approve any requests for proposal contract of more than $3,000,000 that are entered into by ADOA for the state health plan;
e) consult with ADOA as required by law and at the request of ADOA; and
f) design policies that seek to, by plan year 2035, achieve:
i. a premium cost sharing of 85 percent to be paid by the employer and 15 percent to be paid by the employee for medical premiums;
ii. a consistent reserve in the Special Employee Health Insurance Trust Fund (HITF) totaling twice the amount of incurred, but not reported, claims payable from funded health benefit programs; and
iii. optimal cross subsidization of retirees.
11. Requires, by July 1, 2027, and each subsequent year, the Board to approve and ADOA to submit an annual report to the Governor, Senate President, House Speaker, Chairpersons of the Appropriations Committees of the Senate and House of Representatives and JLBC Staff, that includes:
a) the Board's strategic plan for the state health plan;
b) the annual activities of the Board;
c) the actuarial assumptions and description of the methodology used to set benefit premiums and reserve balance targets for the current plan year;
d) an analysis of the actuarial soundness of the health insurance benefit plan for the previous and current plan years, as prescribed;
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 and actual performance standards 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.
12. Requires ADOA to make the report available to officers and employees who have paid premiums under any insurance plan from which monies were received for deposit in the HITF since the inception of the state health and accident insurance plan or since ADOA submitted the most recent annual report, whichever is greater.
13. Specifies that appointed Board members are eligible for reappointment.
14. Prohibits any person from serving on the Board while also holding an elected office position.
15. Subjects members of the Board to state laws governing conflicts of interest.
16. Requires the Board to meet at least twice annually.
17. Allows meetings to be held at the call of the Chairperson or a majority of the Board.
18. Specifies that three members of the Board constitute a quorum for purposes of conducting business.
19. Allows Board meetings to be held virtually.
20. Specifies that Board members are ineligible to receive compensation or reimbursement of expenses.
21. Requires the Board to develop requirements for sharing anonymized and aggregated claim and trend data with employers that participate in health benefit programs funded by the HITF.
22. Adds the Board to the list of entities required to receive insurance provider claims data and recommendations for legislative action from the Director of ADOA.
23. Repeals ADOA reporting requirements relating to HITF.
24. Exempts the Board from statutory termination and continuation requirements.
AHCCCS – Eligibility and Enrollment
25. Requires AHCCCS to review information provided by the Arizona Lottery Commission and the Arizona Department of Gaming to identify members of households who have won substantial lottery or gambling winnings, including online gambling winnings, and incorporate the information into eligibility determinations.
26. Requires AHCCCS to:
a) receive and review death records information from DHS concerning members and to adjust system eligibility accordingly; and
b) review information indicating a change in a member's circumstances that may affect eligibility, including potential changes in residency identified through out-of-state enrollment in another state's Medicaid program, Temporary Assistance for Needy Families program, or Supplemental Nutrition Assistance Program or through an out-of-state death record.
27. Requires AHCCCS, beginning January 1, 2027, to comply with applicable federal laws and regulations for all eligibility redeterminations under a state plan or waiver.
28. Requires AHCCCS to receive and review information from the Department of Economic Security indicating a change in circumstances that may affect eligibility, including changes to unemployment benefits, employment status or wages.
29. Prohibits AHCCCS from:
a) accepting self-attestation of residency without independent verification before enrollment, to the extent allowed by federal law; and
b) accepting eligibility determinations from a federal exchange.
30. Specifies that AHCCCS may accept assessments from a federal exchange but must independently verify eligibility and make eligibility determinations.
31. Requires AHCCCS to review a member’s eligibility if it receives reliable information indicating a change in circumstances that may affect eligibility.
32. 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.
33. Requires AHCCCS, by April 1, 2027, to submit to the U.S. Centers for Medicare and Medicaid Services (CMS), any waiver requests necessary to implement eligibility verification requirements.
34. 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.
35. Requires AHCCCS, if approval for the Section 1115 waiver is denied, to resubmit a subsequent request for approval within 12 months after each denial.
36. 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.
37. 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 on 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.
38. 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.
39. 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.
40. 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;
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; and
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.
41. Repeals the revised AHCCCS eligibility determination and enrollment requirements on July 1, 2027.
AHCCCS – Miscellaneous
a) the member qualifies for services through the Indian Health Service or a tribal facility; and
b) the services are delivered by or through an urban Indian organization.
43. Allows the Director of AHCCCS to take any administrative action necessary to implement coverage of traditional healing services.
44. Repeals AHCCCS coverage of traditional healing services through urban Indian organizations on January 1, 2029.
45. Continues to require AHCCCS to prepare an annual report regarding the costs, aggregate spending on and aggregate utilization of mental health medications, including antipsychotics, antidepressants, anxiolytics, stimulants and sedative hypnotics, and submit it 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 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.
47. 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.
48. 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.
49. 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.
51. Exempts AHCCCS from rulemaking requirements in FY 2027, retroactive to July 1, 2026, for purposes implementing the hospital assessment.
52. Requires AHCCCS to provide notice and at least 30 days for public comment before implementing policies and rules related to service frequency or hour limitations.
53. Declares the Legislature's intent that AHCCCS implement a Medicaid program within the available appropriation for FY 2027.
Alzheimer's Disease State Plan
54. Designates the Department of Health Services (DHS) as the lead state agency to address Alzheimer's disease and related forms of dementia.
55. Requires the Director of DHS to establish a dementia services program within DHS that:
a) facilitates the coordination of programs relating 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 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.
56. Requires DHS to develop a plan that assesses the current and future impact of Alzheimer's disease and related forms of dementia on the state.
57. Requires the 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 the persons' caretakers;
b) the needs of persons who have Alzheimer's disease or a related form of dementia and the persons' caregivers;
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 the persons' caregivers.
58. Requires the plan to provide strategic recommendations with measurable goals for state action to do all of 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.
59. Requires DHS to conduct stakeholder engagement sessions at least once each calendar year to solicit input on the plan.
60. Requires DHS, regarding the stakeholder engagement sessions, to:
a) 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;
b) at least 30 days before each engagement session, provide public notice of the session, including the date, time, location or virtual access information, a summary agenda and instructions for submitting written comments;
c) ensure meaningful participation by stakeholders statewide, including rural and underserved communities, and provide reasonable accommodations and language access; and
d) accept written comments for at least 14 days following each engagement session.
61. Requires DHS to convene or designate an advisory council or working group to assist in planning, conducting and evaluating stakeholder engagement and plan implementation, review and updates.
62. Specifies that membership of the advisory council or working group must reflect the diversity of the outlined stakeholders.
63. Requires DHS, by October 1, 2027, and at least every three years thereafter, to update and submit the plan to the Governor, the President of the Senate (Senate President) and the Speaker of the House of Representatives (House Speaker) and provide a copy to the Secretary of State.
64. Requires DHS to publish the plan on its public website.
65. Repeals DHS dementia and Alzheimer's disease program requirements on July 1, 2027.
Arizona Long Term Care System (ALTCS)
66. 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 |
67. 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.
68. Requires the counties' share of the state's contribution to comply with any federal maintenance of effort requirements.
69. 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 JLBC.
70. 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
71. 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 (state 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.
72. 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 Senate President and the House Speaker 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.
73. 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.
74. Requires ASH, by March 31, 2027, to provide a CPE form for qualifying DSH expenditures to AHCCCS.
75. Continues to require AHCCCS to assist ASH in determining the amount of qualifying DSH expenditures.
County Acute Care
76. 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 |
77. 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.
78. 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.
79. Requires the State Treasurer to deposit the amounts paid and withheld into the AHCCCS Fund and the ALTCS Fund.
80. 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.
81. 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
82. Continues to exclude county contributions for Proposition 204 administrative costs from county expenditure limitations.
83. Continues to exclude county contributions related to the costs of inpatient, in-custody competency restoration treatment from county expenditure limitations.
84. Defines terms.
85. Makes technical and conforming changes.
86. Becomes effective on the general effective date, with a retroactive provision as noted.
Prepared by Senate Research
June 9, 2026
MM/ci