Arizona Health Care Cost Containment System

Revision Date: 
Saturday, September 9, 2023

AGENCY CONTACT INFORMATION

Arizona Health Care Cost Containment System

Authority

Laws 1981, Fourth Special Session, Chapter 1, effective February 8, 1982, established the Arizona Health Care Cost Containment System. Statutory authority is found at A.R.S. §§36-2901 through 36-2999.73. Administrative rules are found in the multiple Chapters of Title 9 of the Arizona Administrative Code.

Function

Medicaid is a federal healthcare program for low-income individuals and families.

AHCCCS administers Arizona’s Medicaid program, which provides health insurance for low-income Arizonans based on eligibility criteria outlined in statute. AHCCCS is governed by federal and state requirements and is jointly funded by federal, state, and county government monies. The federal Medicaid program allows each state to administer its own program.

AHCCCS operates according to a federal waiver and contracts with health plans to provide primary, acute, and long-term care services to eligible recipients. AHCCCS oversees programs for acute care, long-term care, behavioral health, and children’s care, and is responsible for determining eligibility and enrollment; monitoring quality of care; executing contracts with health plans and providers; and procuring services.

History

Background

Title XIX of the Social Security Act of 1965 created the federal Medicaid program to provide health care for low-income individuals and families who meet certain eligibility requirements.

The program is jointly funded by the federal and state governments.

Arizona did not initially participate in the federal program and county governments were responsible for the costs of health care for the poor. AHCCCS, established in 1982 as an alternative to Medicaid, provides medical services to eligible persons through a managed care system. AHCCCS was the first statewide Medicaid-managed care system in the U.S.

AHCCCS contracts with a number of public and private entities to provide services. The providers receive a fixed monthly amount, or capitation payment, for each enrolled member.

Initially, AHCCCS covered only acute care, however, additional programs have been implemented since 1982. The Arizona Long-Term Care System (ALTCS) was put in place in 1987 to provide long-term care for the elderly, physically disabled, and developmentally disabled.

In 1990, AHCCCS phased in mental health services and behavioral health coverage in response to federal requirements. Children under age 19 receive medical services under Arizona’s Children’s Health Insurance Program, adopted in 1998. Legislation has also been enacted to address comprehensive care for the elderly and nursing facility provider assessments. The number of recipients has varied over time, impacted by available funding and modifications to eligibility requirements.

Governor Ducey declared a state of emergency in June 2017 regarding the opioid overdose epidemic and in January 2018 called for a special session of the Arizona Legislature. Laws 2018, First Special Session, Chapter 1 established requirements relating to prescribing, administering and dispensing opioids and outlined responsibilities for several agencies, including AHCCCS.

Additional detail is provided in Session Laws, which follows.

 

Session Laws

Laws 1981, Fourth Special Session, Chapter 1 established AHCCCS as a division within the Arizona Department of Health Services (ADHS). It provided for hospitalization and medical care of the indigent sick; provided funding for the system; authorized the director to apply for federal funding; outlined responsibilities of counties, the Arizona Department of Economic Security (ADES) and the ADHS; prescribed requirements for eligibility, services, coverage and contracts; and executed prepaid capitated health service contracts. Coverage was required to begin October 1, 1982.

Laws 1983, Chapter 304 modified AHCCCS legislation to clarify state and county responsibilities related to indigent health care coverage. The measure specifically addressed ADHS authority, eligibility, coverage, reimbursable services, and costs to counties. The Arizona Auditor General was required to determine if changes in county responsibilities related to indigent health care had resulted in a shift of costs to or from any county. The report was due by April 1, 1984, to the Governor, Legislature, and the Joint Legislative Budget Committee.

Laws 1984, Chapter 372 established AHCCCS as a stand-alone agency and transferred responsibilities, personnel, equipment, and funds from ADHS to the newly created agency.

Laws 1986, Chapter 380 was an omnibus measure addressing eligibility, coverage, county contributions, and penalties. The measure also expanded coverage to eligible children younger than six years of age and included a supplemental appropriation of $3.8 million for fiscal year 1986-1987 to cover operating and medical service expenditures.

Laws 1987, Chapter 332 established the Arizona Long Term Care System (ALTCS) in order to provide long-term care for the elderly, physically disabled, and developmentally disabled.

Laws 1989, Chapter 5 prescribed eligibility determinations, enrollment, and coverage for qualified Medicare beneficiaries in accordance with the federal amendments to Title XIX of the Social Security Act and Title III of the Medicare Catastrophic Coverage Act of 1988.

Laws 1990, Chapter 334 phased in mental health services and behavioral health coverage in response to federal requirements. The measure provided for mental health services for children younger than age 18, including screening, diagnostic and treatment services. AHCCCS was required to phase in implementation as of October 1, 1990, and to deliver services to all eligible persons by April 1, 1991. A report on implementation of mental health services, including recommendations on the delivery system, was due to the Governor, the Legislature, AHCCCS, ADHS, ADES, the Arizona Department of Corrections, the Arizona Department of Education, and the Arizona Supreme Court by December 31, 1991.

Laws 1998, Fourth Special Session, Chapter 4 established the Children’s Health Insurance Program (CHIP), which is a federal program administered by the states to provide health insurance to children from low-income families. Arizona’s CHIP program covers children up to age 19. The Federal government reimbursement of state spending ranges between 65 and 81 percent. Tobacco tax monies were dedicated to providing the state matching monies. A cap could be imposed on enrollment if the program exceeded the available funding. In the event federal monies were unavailable, the program would be repealed, and services would be terminated. Note: the CHIP program was repealed in 2010 as part of the state budget, but was reinstated that same year by Laws 2010, Chapter 232.

In 2000, Arizona voters approved Proposition 204, a measure that expanded AHCCCS coverage to individuals with income at or below 100 percent of the federal poverty level. The ballot measure dedicated settlement monies received as a result of a lawsuit filed against manufacturers of tobacco products as the source of funding to cover the costs of expansion. Arizona’s share of the settlement monies was estimated at $3.2 billion over a 25-year period. Prior to passage of Proposition 204, AHCCCS recipient’s net income could not exceed 34 percent of the federal poverty level.

Laws 2006, Chapter 307 established a program for comprehensive care for the elderly as an alternate model for ALTCS members who meet specified requirements.

Laws 2011, Chapter 31 made a number of changes to AHCCCS regarding eligibility, cost sharing, provider rates, and hospital reimbursement, county contributions, prescription drugs, fraudulent payments, and transplant services. The measure also transferred responsibility for the children’s rehabilitative services program from ADHS to AHCCCS.

Federal law allows states to impose an assessment on specified providers for healthcare items and services in order to receive federal matching funds. Laws 2012, Chapter 213 established an assessment on health care items and services provided in nursing care facilities in order to draw down federal monies to supplement Medicaid payments.

Laws 2013, First Special Session, Chapter 10 made a number of changes to AHCCCS regarding Medicaid expansion, hospital assessments, ambulance services, payments to hospitals, county contributions, and Medicare waivers.

Laws 2015, Chapter 195 transferred the administration of behavioral health services from ADHS to AHCCCS.

Laws 2017, Chapter 207 required the AHCCCS Director to establish an internal Clinical Oversight Review Committee to review data specific to agency initiatives and populations, including behavioral health services. The measure outlined committee membership and duties and required an annual report.

In 2017, Governor Ducey declared a state of emergency regarding the opioid overdose epidemic. The Governor authorized the Department of Emergency and Military Affairs to coordinate state assets and required ADHS to: coordinate a public health emergency response; take specific steps to address the issue; and produce a report of findings and recommendations by September 5, 2017. A legislative special session, called in January 2018, established requirements for prescribing, administering and dispensing opioids and outlined responsibilities for several agencies, including AHCCCS. Executive Order 2017-05.

Laws 2018, First Special Session, Chapter 1 established the Substance Use Disorder Services Fund, administered by AHCCCS, authorized the AHCCCS Director to contract for substance use disorder services, and appropriated $10,000,000 from the state General Fund to the new fund in FY 2018. The measure also appropriated $400,600 to ADHS for an opioid abuse prevention campaign and $400,600 to the Attorney General to award grants for opioid education and prevention efforts.

In 2019, the Legislature prescribed AHCCCS reimbursement requirements for opioid treatment programs based on facility compliance with plans related to security, neighborhood issues, patient care, community relations, diversion control, and reporting requirements. The measure also established the Opioid Use Disorder Review Council and outlined the Council’s duties and reporting requirements. The Council consists of 14 members: two legislators, the directors of AHCCCS and ADHS, and ten members appointed by the Governor. The Council is required to report annually and terminates on January 1, 2024. See Laws 2019, Chapter 224.

Laws 2019, Chapter 199 established suicide prevention and awareness training requirements for school personnel who work with students in grades six through twelve. Not later than July 1, 2020, AHCCCS is required to make suicide prevention training available and post training information on its website, including a list of materials that schools may use to provide training for school guidance counselors, teachers, principals, and other school personnel.

Laws 2020, Chapter 4, the mental health omnibus bill, also known as Jake’s Law, outlined AHCCCS responsibilities related to behavioral health services and authorized AHCCCS to enter agreements with contractors to provide services for children.  The measure created the Children’s Behavioral Health Services Fund administered by AHCCCS, specified use of monies in the fund, outlined conditions for contracts, and appropriated $8 million to the Fund. The measure also required AHCCCS to conduct a survey of public schools regarding referral of behavioral health services to students and to deliver a report of survey results to the Governor, Legislature, and Secretary of State by December 2022.  Related information is also required to be included in AHCCCS annual reports.

A second measure enacted in 2020 requires AHCCCS to seek federal authorization to reimburse the Indian Health Services and tribal facilities for the cost of adult dental services.  Laws 2020, Chapter 17 outlines conditions and limitations.

A third measure enacted in 2020 requires AHCCCS to establish and collect an assessment on hospital revenues, discharges and bed days to fund the nonfederal share of specific costs outlined in the measure.  It also created the Health Care Investment Fund, administered by the AHCCCS Director, consisting of assessment monies, legislative appropriations and interest; established reporting requirements; and exempted AHCCCS from rulemaking requirements for one year after the general effective date of the measure.  See Laws 2020, Chapter 46.

A fourth measure enacted in 2020 allows AHCCCS to authorize payments to providers in order to maintain specific services during the federal declaration of the public health emergency associated with COVID-19.  Specified services include: behavioral health services; services for individuals with intellectual and developmental disabilities; and services for individuals with physical disabilities and the elderly. See Laws 2020, Chapter 53.

Several measures were enacted in 2021 relating to AHCCCS.  Laws 2021, Chapter 81 requires AHCCCS to establish a program to reimburse direct and indirect costs incurred by community health centers and rural health clinics that have established a primary care graduate medical education program. The measure also outlines provisions relating to distribution of monies, administrative rulemaking, matching funds, and reporting.

Laws 2021, Chapter 86 establishes requirements for a person to be certified as a licensed health aide, and outlines the application process and qualifications, administered by the Arizona State Board of Nursing.  The measure adds licensed health aide services to the category of home and community-based services which may be provided by AHCCCS programs.

Laws 2021, Chapter 122 requires the Department of Child Services to partner with AHCCCS, instead of the Arizona Department of Health Services, to serve as joint administrators of community substance abuse prevention and treatment programs. 

Laws 2021, Chapter 320 requires health insurers to cover telehealth procedures and outlines related responsibilities for several agencies: AHCCCS, ADHS and DIFI.  Establishes the Telehealth Advisory Committee on Telehealth Best Practices, staffed by AHCCCS to develop guidelines and recommendations regarding those services that can be appropriately provided through an audio-only telehealth format as a substitute or an in-person or audio-visual telehealth encounter.  Reports are due to the Governor and Legislature by December 1, 2020, and June 30, 2022 (Section 18).

Laws 2022, Chapter 330, establishes grant programs to address the state’s healthcare workforce shortage. The Student Nurse Clinical Rotation and Licensed or Certified Nurse Training Program is established within AHCCCS to expand preceptor training programs at healthcare institutions.  The measure also provides, subject to funding, authority for AHCCCS to establish a Transition to Practice Pilot Program to help nurses transition from the classroom to practice.  Finally, the Behavioral Health Workforce Training Pilot Program is established to provide funds to develop curriculum in partnership with the Maricopa County Community College District and the Navajo County Community College District. Subject to availability of funds, grants may be used to expand curriculum, increase the number of faculty members, and to pay for tuition, fees, and educational expenses of eligible students. Annual reports are required each December until the programs expire January 1, 2027.

A second measure enacted in 2022 requires AHCCCS and the Department of Health Services to enter into a data-sharing agreement for vital records information necessary to compile an annual report relating to individuals living with serious mental illness.  See Laws 2022, Chapter 305.

In response to federal legislation passed in December 2022, AHCCCS is required to reinstate the process to determine eligibility of its members each year, which was suspended during the COVID-19 pandemic.  AHCCCS must provide monthly reports to the Governor, Legislative leadership, and the Secretary of State regarding member renewal information.  Monthly reports are due beginning May 15, 2023, through May 15, 2024.  See Laws 2023, Chapter 17.

Sources

  • Arizona Revised Statutes §§36-2901 through 36-2999
  • Arizona Administrative Code (A.A.C.) Title 9
  • Session Laws
    • Laws 1981, Fourth Special Session, Chapter 1
    • Laws 1983, Chapter 304
    • Laws 1984, Chapter 372
    • Laws 1986, Chapter 380
    • Laws 1987, Chapter 332
    • Laws 1989, Chapter 5
    • Laws 1990, Chapter 334
    • Laws 1998, Fourth Special Session, Chapter 4
    • Laws 2006, Chapter 307
    • Laws 2010, Chapter 232
    • Laws 2011, Chapter 31
    • Laws 2012, Chapter 213
    • Laws 2013, First Special Session, Chapter 10
    • Laws 2015, Chapter 195
    • Laws 2017, Chapter 207
    • Laws 2018, First Special Session, Chapter 1
    • Laws 2019, Chapter 199 and Chapter 224
    • Laws 2020, Chapter 4, Chapter 17, Chapter 46 and Chapter 53
    • Laws 2021, Chapter 81, Chapter 86, Chapter 122, and Chapter 320
    • Laws 2022, Chapter 305 and Chapter 330
    • Laws 2023, Chapter 17

     

    Arizona Health Care Cost Containment System website

    Arizona Memory Project Arizona Health Care Cost Containment System (AHCCCS) agency collection

    Arizona Health Care Cost Containment System sunset factors : Sunset review, 2012

    Performance audit and sunset review, Arizona Health Care Cost Containment System, 2022

    Performance audit, Arizona Health Care Cost Containment System, Review of Selected Behavioral Health Services, 2022

    Performance audit, Arizona Health Care Cost Containment System, Member Disenrollment Processes, 2022

    Health Care Under AHCCCS: an examination of Arizona’s alternative to Medicaid by Howard E. Freeman and Bradford Kirkman-Liff

    Master List of State Government Programs, Office of the Arizona Governor

    Proposition 204, Ballot measure approved November 4, 2000 (PDF page 157).

    Governor Doug Ducey Executive Order: EO 2017-05

    Arizona Department of Health Services website

    Opioid Action Plan: Opioid Overdose Epidemic Response Report, September 2017.