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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AHCCCS; comprehensive claims audit
Purpose
Subject to voter approval, requires the Director of the Joint Legislative Budget Committee (JLBC) to contract with a qualified audit vendor to coordinate with the U.S. Centers for Medicare and Medicaid Services (CMS) to conduct a comprehensive claim-level audit of Arizona's Medicaid program administered by the Arizona Health Care Cost Containment System (AHCCCS).
Background
AHCCCS serves as Arizona's Medicaid agency, which offers qualifying low-income or disabled Arizona residents access to healthcare programs. AHCCCS contracts with health professionals to provide medically necessary health and medical services to members who meet outlined income criteria and is authorized to take actions necessary to maintain the integrity of the program, including establishing fraud prevention systems, eligibility determination and enrollment oversight. AHCCCS's duties include: 1) developing and implementing a county-by-county system that includes access to hospitalization and medical services for members; 2) coordinating member benefits; 3) contracting, overseeing, reviewing and providing technical assistance to contractors; 4) assisting in the formation of medical care consortiums to provide covered medical services for a county; and 5) developing and maintaining outlined programs and systems (A.R.S. § 36-2903).
JLBC is a committee composed of members from the Senate and House of Representatives which ascertains facts and makes recommendations to the Legislature relating to the state budget, revenues and expenditures. JLBC's duties include: 1) implementing a system to produce fiscal notes on introduced legislation or rules that have a fiscal impact; 2) analyzing the state tax structure; 3) implementing a system of fiscal analysis that applies to any legislation changing tax laws. JLBC's authority includes any powers conferred upon it by law (A.R.S. § 41-1272; JLBC).
After payment of audit costs, H.C.R. 2058 directs any remaining monies recovered from misappropriated claims to the state General Fund (state GF). If the audit recovers sufficient monies to cover audit costs and deposit additional monies into the state GF, there may be an impact to the state GF.
Provisions
1. Requires the Director of the JLBC, within 180 days after the effective date of the proposition, to issue a request for proposals from qualified audit vendors for a comprehensive claim-level audit of Arizona's Medicaid program administered by AHCCCS.
2. Specifies that the audit must look at each payment that AHCCCS or its contractors made under Arizona's Medicaid program in the prior three years.
3. Requires the audit to be coordinated with CMS.
4. Requires the audit report to categorize misappropriations by provider type and managed care organization.
5. Directs the auditor to redact any personal identifying information and confidential commercial information from any public report.
6. Requires the Director of the JLBC and AHCCCS to jointly negotiate settlements for all misappropriated claims within 90 days after the audit report is issued and refer any matter that is not settled to the Attorney General (AG).
7. Directs the AG to file suit within 60 days after receiving a referral of misappropriated claims.
8. Requires the costs of the audit to be paid through monies recovered from misappropriated claims.
9. Requires any remaining share of monies recovered from misappropriated claims to be deposited in the state GF.
10. Requires the Director of the JLBC, within nine months after the audit report is issued, to report the total amount of recovered misappropriated claims and monies to the Governor, the Speaker of the House of Representatives and the President of the Senate and provide a copy of the report to the Secretary of State.
11. Defines comprehensive claim-level audit as a 100 percent verification of each payment, including a review of unbundling, upcoding and services that were not medically necessary.
12. Defines misappropriated claim as an improper payment, including a duplicate payment, incorrect coding and payment for ineligible services.
13. Defines qualified audit vendor as an entity with Medicaid audit experience and proprietary technology platforms.
14. Repeals the audit requirements on January 1, 2031.
15. Requires the Secretary of State to submit the proposition to the voters at the next general election.
16. Becomes effective if approved by the voters and on proclamation of the Governor.
House Action
HHS 2/12/26 W/D
GOV 2/18/26 DP 4-3-0-0
3rd Read 3/3/26 32-24-3-0-1
Prepared by Senate Research
March 16, 2026
MM/SDR/hk