AZ State Agency Budget Request Summary

Each Fall state agencies turn in requests for changes in their funding to the Governor’s Office for consideration in his or her proposed budget.  These requests are then evaluated by the executive branch and synthesized into a final budget proposal from the Governor, which is usually released in mid-January.

Here’s an abbreviated snapshot of what ADHS, AHCCCS and ADES turned in this year:


  • AHCCCS is estimating an average Capitation Rate increase of 3.1% across all lines of business.  They turned in cap rate increases for special populations of 12% for Children’s Rehabilitative Services, 9.6% for behavioral health and a 3.5% decrease for the Comprehensive Medical and Dental Program (a state program for providing quality care for kids in the foster care system); 
  • This request would add $72M from the state General Fund to cover costs for enrollment growth, capitation rate increases and state-federal match rate changes;
  • Maintaining current state funds dedicated to the state’s behavioral health Crisis System ($14M) non-Title XIX services for persons with a serious mental illness ($78.8M) & $5.3M for Supported Housing; and
  • They’re asking that behavioral health costs be blended into the acute care and ALTCS (long term care) line items.

Arizona Department of Health Services

  • ADHS is requesting $500K to continue funding for response to public health emergencies;
  • Seeking $750K to maintain minimum standards for health care licensure staff and responses to growing demand for services because of the growth and workload in licensing; and
  • Requesting funds to respond to new responsibilities to oversee the AZ Radiation Regulatory Agency with a 1-time request for $500K for proper handling and disposal of radioactive materials.

Arizona Department of Economic Security

  • Seeking $3.9M to respond to ongoing Adult Protective Services caseload growth;
  • Adding $10M to accommodate a 2% capitation increase & accommodate a caseload increase of 4.9% for persons with Developmental Disabilities in the Arizona Long Term Care System (ALTCS);
  • Addressing DDD structural shortfall by adding $6.4M to cover Long Term Care services for non-XIX services of room & board;
  • Requesting $3.3M for targeted case management services for the state-only DDD clients; and
  • Responding to mandates imposed by Prop 206 on the minimum wage by adding for DDD $11.6M to assure network sufficiency.

Family Planning Services Lose Traction

Contraception and family planning are among the most significant public health interventions of all time- and among the top of the list when it comes to return on investment.

Family planning and contraception are key to reducing teen pregnancies and inter-generational poverty.  It’s no secret that poverty is a key driver for a host of poor health outcomes.  Family planning is also a high return on investment intervention for improving preconception health because it allows women to make more deliberate decisions about the spacing of babies- which improves the health status of mom and baby.  Family planning is also good for businesses, because it allows employees to plan their families in a way that improves their work-life balance, improving attendance and retention.

The Affordable Care Act initially required that health insurance plans cover no-cost contraception services, a big win for public health. A couple of years ago the US Supreme Court ruled that family owned and other closely held companies can opt out of these ACA’s provisions.  The owners of the Hobby Lobby had objected on the grounds of religious freedom.

This week things slipped further, when Attorney General Sessions expanded the religious exemption for employers who object to providing insurance coverage for birth control because of their religious or moral beliefs.  His “religious liberty directive” instructs federal agencies to do as much as possible to accommodate those who claim their religious freedoms are being violated, effectively lifting a burden from religious objectors to prove that their beliefs about marriage or other topics that affect various actions are sincerely held.

Here’s the Attorney General’s guidance and his implementing memo

Prevention & Public Health Fund Back on Chopping Block

Just when we thought the Prevention and Public Health Fund (PPHF) was going to be OK because of the downfall of the ACA repeal efforts, along comes the “Champions Act” which would cut this important public health fund by 57%.

The “Community Health & Medical Professionals Improve Our Nation Act” of 2017, or CHAMPION Act, would do some good things like support “330” grant funding for Community Health Centers, continue to fund the National Health Service Corps and Teaching Health Center Graduate Medical Education. 

But, the legislation pays for the extension by cutting the Prevention & Public Health Fund by 57% (a cut of $6.35B over the next 10 years). 

The ACA established the Fund to establish a framework for prevention, wellness, and public health initiatives to reduce long-term health costs. It focuses on preventing expensive chronic medical conditions by providing expanded and sustained national investment in public health programs that improve health and restrain the rate of growth in health care costs.

This investment in public health infrastructure is evidence-based. Research suggests that funding for community-based public health has a 5.6 to 1 return on investment. In other words, every dollar invested in evidence-based prevention programs results in a $5.6 in savings in overall health care costs.

Arizona state and county public health programs have received more than $52.6M via the Fund since 2010. This $9.3 million annual investment is at work in Arizona, providing critical resources that support evidence-based, community prevention activities tailored to meet community health needs and preferences. Evidence-based investments in Arizona include:

  • Building immunization services to prevent serious infectious disease outbreaks;

  • Prescription painkiller (opioid) and heroin use prevention;

  • Health security funds for bioterrorism, disease outbreaks, and disasters;

  • Promoting better detection and response to disease threats;

  • Lead poisoning prevention;

  • Reducing tobacco use; and

  • Reducing diabetes, heart disease, and obesity.

Here’s a report we wrote with the Vitalyst Health Foundation that details the public health programming that’s at risk again.

We’ll continue to track this bill and issue an Action Alert when the time is right.

KidsCare in Limbo

Funding for KidsCare (CHIP) expired last week.  This program (run by AHCCCS) currently covers about 23,000 kids with a pretty good set of benefits and reasonable premiums.  It’s only available for kids in families that don’t qualify for regular Medicaid and who live in a family that makes under 200% of poverty.

Even though the program hasn’t been reauthorized by the October 1 deadline, most states have reserved enough funding for the next three months. AHCCCS apparently has funding to continue the for a few weeks past the October 1 expiration date.

There is light on the horizon. The Senate Finance Committee introduced a CHIP funding proposal (Hatch/ Wyden) that would extend funding to states through FY 2022 but gradually reduce federal contributions. 

Enough matching funds would remain for Arizona to keep the program as-is through FY 2019 but after that our KidsCare program could be at risk because the federal contribution will be less than what’s currently wired into state law for funding AZ’s share of the program. 

But, that’s something that could be changed in either the 2018 or 2019 AZ Legislative Sessions.


State Supremes to Hear Challenge to Medicaid Expansion October 26

When Arizona expanded our Medicaid program (AHCCCS) to cover people up to 138% of poverty we used a provision in the ACA that allows states to expand coverage with the federal government absorbing all the cost at first.

But that meant we had to first cover all “childless adults” below the federal poverty level- a group that lost AHCCCS coverage during the recession.  We paid for covering the childless adults with an assessment (fee) on hospitals (right now it’s about $264M).

AHCCCS set the assessments using a formula that made sure each hospital chain would be OK with the assessment because their fee would be lower than what they stood to gain by the reduction in uncompensated care.

The bill that authorized the assessment and Medicaid expansion barely passed with just over 50% of the House and Senate.  Many of the lawmakers that voted “no” believe that the bill should have required a supermajority because of a voter approved initiative that requires tax increases to pass by 2/3 of each chamber.

The Executive Branch believes that the assessment is not a tax, but a fee set by an agency director.  That’s the crux of the Biggs v. Betlach suit that challenges our Medicaid expansion.

The Goldwater Institute filed new documents this week with the Arizona Supreme Court, who will ultimately decide if the assessment is a fee or a tax. 

If the Court ultimately agrees with the Plaintiffs, AHCCCS wouldn’t be able to collect $264M hospitals pay and there won’t be enough money to fund the childless adults or the expanded coverage.  Unless the legislature were to vote by a 2/3 majority to fund the program, the only path to keeping the coverage would be via a voter initiative- which just got a lot harder to do with the passage of HB 2404 (preventing signature gatherers from getting paid by the signature) and HB2244 (changing the citizen’s initiative compliance standard from “substantial compliance” to “strict compliance”).

There will be Oral Arguments on the Biggs v. Betlach case on Thursday, October 26 starting at 9 am at the Arizona Supreme Court (Case CV-17-0130-PR).

ADHS EMS Bureau Scores Opioid Intervention Grant

ADHS’ Bureau ofEmergency Medical Services and Trauma System has been awarded $3.1 million by the Substance Abuseand Mental Health Services Administration for development of a comprehensive first responder opioid/naloxone program in partnership with the University of Arizona and the Arizona Peace Officer Standards and Trainingboard. Naloxone is a medication that can counteract an opioid overdose.

This joint initiative will implement a statewide naloxone delivery system to provideaccess to naloxone for first responders, an acute opioid overdose recognitionand naloxone administration training program for first responders, and addressa targeted first responder opioid screening, brief intervention, and referralto treatment curriculum to instruct first responders how to recognize actual orpotential opioid-related substance abuse and to provide appropriateinterventions and referrals to care.

Adult AHCCCS Members now have Access to Emergency Dental Services!

The budget approved by the Legislature last session provided the funding for AHCCCS to cover emergency dental services for all adult members (over 21) up to $1,000 per year beginning October 1. AHCCCS turned in a plan to the Centers for Medicare and Medicaid fortheir approval a few weeks ago.

The next public health question is “what is the definition of Emergency Dental Services” so folks can know what’s covered. 

AHCCCS posted proposed language that defines what will be covered awhile back (the comment period ended September 21).  In it, they proposed covering dental servicesfor: “…an acute disorder of oral healthresulting in severe pain and or infection as a result of pathology or trauma.”

The proposed language is posted at 310-D1 – Dental Services for Members21 Years of Age and Older and also clarifies what kinds of procedures meet the criteriafor treating an “acute disorder of oral health resulting in severe pain and orinfection as a result of pathology or trauma”. 

I couldn’t tell whether this is going to be the final definition and list ofprocedures or not that will shortly become covered.  I’ll keep my eye out for that.

Children up to age 21 enrolled in AHCCCS have had (and continue to have) access to comprehensive and even preventative oral health coverage under the program.

KidsCare Still in Flux

Last week Senators Hatch and Wyden introduced bipartisan legislation to reauthorizethe Children’s Health Insurance Program (CHIP)- which is the parent ofArizona’s KidsCare program.

The Bill (called S.1827) proposes a 5-year reauthorization of the program and maintaining the current 23% increase in the federal matching funds rate through FY 2019, but reducing thematching rate in FY 2020… and returning to the standard state-federalmatching rate in FY 2021-2022.

While it looks like this reauthorization bill won’t be voted in this week, it’s not dead.  It can still be approved in thecoming weeks.  The lack of a reauthorization introduces some uncertainty to states (all 50 states have a CHIP program) butas long as it gets voted on in the near future most states will probably holdfast and keep the program going for the time-being.

The issue in the long-run is that the Hatch/Wyden bill drops the federal matching rate in FY 2020 below the threshold that’s wired into state law for fundingAZ’s share of the program.  But, that’s something that could be changed in either the 2018 or 2019 AZ Legislative Sessions.


ADHS Earns Accreditation

Congratulations to the ADHS and all the Stakeholders that helped the team achieve national accreditation through the Public Health Accreditation Board (PHAB). The national accreditation program improves public health system performance by transforming the quality and performance of the nation’s state, local, tribal, and territorial public health departments.

PHAB Accreditation is a multi-year process that ADHS began in 2010 with the development of an agency strategic plan in 2011 and the first ever State Health Assessment in 2014.  Next was building the Arizona Health Improvement Plan.  Along the way, Accreditation includes developing, reviewing, and submitting documentation that supports the accreditation standards evaluate processes and services, outcomes, and progress toward specific goals and objectives.

The entire public health system including numerous Stakeholders need to be involved to achieve this recognition.  Congratulations to AZ’s public health system for this remarkable achievement.

The state health department joins Maricopa, Mohave, Pima, and Yavapai counties as national accredited public health agencies in Arizona.

Crunch Time for KidsCare Too

The Children’s Health Insurance Program (CHIP) is a program that provides health insurance coverage for uninsured children in families with incomes that are modest but too high to qualify for Medicaid (AHCCCS). To continue operating, the CHIP program needs to be reauthorized by Congress by September 30.

In our state, CHIP is called KidsCare. AHCCCS offers health insurance through KidsCare for kids (under age 19) who aren’t eligible for other AHCCCS health insurance. There are several eligibility criteria- but the basic income criteria is a family income less than 200% of the federal poverty level.  Right now, about 23,000 kids are insured through Kids Care.  AZ also gets CHIP matching funds that covers an additional 73,000 kids via AHCCCS.

Arizona law requires AHCCCS to freeze enrollment if the federal match goes below its current level, meaning that there would be an enrollment freeze if Congress lowers the federal match below 100% as part of a funding reauthorization.

Last week there was an agreement struck in the Senate Finance Committee between Senators Hatch and Wyden on extending CHIP funding for 5 years but with a scaling down of the federal match.  So far, my understanding is that starting in FFY 2020, the federal matching rate would be reduced bump will be reduced and beginning in 2021 the federal match will go back to the regular CHIP match (for Arizona that’s 79% federal and 21% state match). 

Bottom line is that if this amendment goes through with the reauthorization bill, it would probably mean that KidsCare would continue as is through September 30, 2019.  After that, the program would freeze enrollment unless a state law is changed allowing for an alternative federal matching rate.  If the reauthorization doesn’t go through at all I’m not sure what would happen.

Please urge Senators McCain and Flake to reauthorize full funding of the Children’s Health Insurance Program (KidsCare in Arizona) and to keep the federal match rate at 100%.

Contact Senator John McCain and Senator Jeff Flake:

     Sen. John McCain: (202) 224-2235 or (602) 952-2410

     Sen. Jeff Flake: (202) 224-4521 or (602) 840-1891

Senator McCain indicated that he looks to the Governor for guidance. Please contact the governor’s office to urge the governor to support reauthorization of CHIP funding at 100% match.

     Gov. Ducey: (602) 542-4331 or (520) 628-6580

Last Ditch Effort to Repeal the ACA Underway Next Week

A last-ditch effort is underway in the US Senate to repeal the Affordable Care Act and replace it with an alternative plan.  It’s called the Graham-Cassidy bill. Before October 1 the Bill could pass the Senate with only 51 votes.  After that, it would take 60 votes, meaning that changes to the ACA would need to be bipartisan.

The Congressional Budget Office (CBO) – which evaluates the impact of health bills in terms of cost and impact on private insurance coverage and Medicaid- will need several weeks for it to evaluate the Bill’s impact, so it’s unknown how many fewer people could be insured under it or what the impact on premiums may be.

Even though the bill won’t have a CBO evaluation & its impact on commercial and group insurance and Medicaid as well as the fiscal impact have no objective estimates, the US Senate is poised vote on the bill in the coming days. 

What would Graham – Cassidy do?  In a nutshell, it would:

·       End Medicaid expansion funding, turning the federal funding for Medicaid expansion into a block grant. States would be given a lump sum of money and decide what to do with it (e.g. help enrollees pay their premiums, set up a high-risk or reinsurance pools);

·       Send states a fixed amount of money per Medicaid enrollee (a per-capita cap) starting in 2020.  States could also opt to receive Medicaid funding as a block grant – a fixed amount of federal funding each year- regardless of how many participants are in the program (states couldn’t take a block grant for persons with disabilities);

·       Repeal the ACA individual and employer mandates;

·       Repeal ACA cost-sharing subsidies that lower marketplace premiums by 2020, and roll the funds into a block grant to states;

·       Loosen the ACA’s requirements that plans cover pre-existing conditions;

·       Allow everyone in the individual market to buy catastrophic plans;

·       Repeal ACA taxes on over-the-counter medicine, health savings accounts and medical devices;

·       End federal funding for Planned Parenthood for 1 year; and

·       Double maximum contributions to health savings accounts.

We’re encouraging our members to use APHA’s action alert to let Senator McCain know what you think of the bill itself (especially the profound changes to Medicaid) and the process that’s being used to debate and approve this Bill.  Here’s the text of the short letter that AzPHA sent to Senator McCain yesterday.

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