Every 10 years AZ state agencies come up for what’s called a Sunset Review. It’s a process by which the legislature reviews agency performance and their mission. The legislature generally reauthorizes the agency for a 10 year period after the review. We’re currently in the fiscal year in which the ADHS is up for review.

There are several pieces to the process including some agency Auditor General reports, a review of that report by a selected legislative committee, and finally a bill that will re-authorize the agency (usually but not always for 10 years).   

ADHS Auditor General Reports

The sunset review starts with a report written by the Arizona Auditor General.  They pick a few areas of the agency to examine and put forward their findings. The Arizona Auditor General is in the legislative branch is supposed to serve as an “independent source of impartial information concerning state and local governmental entities and provides specific recommendations to improve [their] operations”.

A few weeks ago, the Auditor General published some findings on the ADHS as part of the sunset review.  The reports are published on the Auditor General’s website which include their findings and also recommendations for improvements in areas that are found deficiencies.

They published 2 reports about the agency last month.  One of the reports found that the ADHS licensing division “failed to investigate or timely investigate some long-term care facility complaints, didn’t  comply with some conflict-of-interest requirements, and has some gaps in IT security.” 

A 2nd report focused on the Arizona State Hospital (which is part of ADHS) and found that they hadn’t fully “evaluated assault-reduction strategies but has established processes for patient admission, ensuring patients receive prescribed treatment, and reporting incidents.”

The Auditor General’s website posts the reports and the agency responses to the report.  Those responses state whether the agency leadership agrees with the findings or not and whether and how they intend to change practices to improve on the report findings. 

ADHS leadership disputed many of the findings about the nursing home complaints- but nevertheless agreed to partially implement some of the auditor recommendations. Their leadership also stated that additional funding will be needed to timely follow up on nursing home complaints.

On page 6 of their response, ADHS leadership states that will need an additional 44 staff and $3.3M to do timely follow on the 2,500 nursing home complaints that they get each year. 

Legislative Review of the Auditor General Report

Once the Auditor General Reports are completed, a committee of the state legislature meets (before the legislative session starts) and has a hearing about the findings and votes whether to recommend to the full legislature that the agency be re-authorized for another 10 years.

The Senate Health & Human Services Committee met last week to talk about the findings and vote on the recommendation to reauthorize the agency. 

You can read more about what happened in this article from Stephanie Innes at the Arizona Republic …  but basically 3 of the Senators on the committee voted “no” on the motion to recommend reauthorizing the ADHS for another 10 years because they wanted to learn more about how the agency intends to change their processes and timely follow up on nursing home complaints.  The vote was still 4-3 to reauthorize…  but it’s kind unusual to have “no” votes like that.

There still needs to be a successful bill next legislative session in order to reauthorize the agency. 

Licensing Division Funding

Before the recession, the ADHS received state general fund appropriations to perform their licensing functions (hospitals, skilled nursing, assisted living, childcare, residential behavioral health facilities, outpatient treatment clinics etc.). 

As part of the budget cuts in 2009, all of the general fund dollars were discontinued and the agency was given rulemaking authority to charge a fee to licensed facilities to satisfy their regulatory responsibilities.  The licensing fees were authorized to go into a new ADHS Licensing Fund.  

We estimated the resources that we’d need to do our work and published the final fee structure in 2009. However, we forgot to add in overhead (called Indirect in state government speak) to the fees, and the final fees that we ended up charging (and therefore our revenue) was about 20% lower than they should have been – and we basically had to live with that.  My bad.  And remember- those fees were set in 2009 – and no adjustment for inflation is in the fee structure.

I don’t know is how much money is in the Licensing Fund right now… but there are a couple of possibilities when it comes to getting the additional $3.3M that the agency says they need to timely follow up on nursing home complaints. 

If there’s enough money in the Licensing Fund, they could ask the legislature to appropriate that money to hire the staff they need to adequately follow up on nursing home complaints (and other functions).  If the funds aren’t available in the Licensing Fund, then they could ask permission to raise the licensing fees and raise the needed revenue that way.

I suspect that when the Executive Budget is released in January it’ll propose an appropriation from the Licensing Fund to cover the need (although this was not included in the agency’s budget request). 

If the funds aren’t available in the Licensing Fund, then I suspect there may be a proposal to raise licensing fees. It’s just hard for me to believe that if it’s really true that $3.3M more is needed to do the job right that the money won’t be found.

After all, inspecting and following up on complaints in nursing homes is a core government function that’s necessary to ensure the health and safety of some of the most vulnerable folks in Arizona.