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A.R.S. 36-2901.08 authorizes the Administration to establish, administer and collect an assessment on hospital revenues,
discharges or bed days for funding a portion of the nonfederal share of the costs incurred beginning January 1, 2014, associated
with eligible persons added to the program by A.R.S. 36-2901.01 and 36-2901.07. It is the agencys objective to assess only so
much as is necessary to meet the estimated costs associated with the projected populations referenced in the statute. As such, it
is necessary for the Administration to adjust the assessment from time to time as the Administration obtains new information to
update estimations of the number of eligible persons and projections of the costs anticipated to provide coverage for those persons.
The Administration is proposing a new rule to update the figures to be used as of July 1, 2015 for collecting the assessment on hospitals.
Hospital providers have expressed interest in identifying AHCCCS payments for hospital services
for populations funded by the recently-implemented assessment. Populations covered by the assessment
include the Proposition 204 (Childless Adults) Restoration population from 0-100% of the Federal
Poverty Level (FPL), as well as the Newly Eligible Adult Expansion population from 100-133% FPL.
These members are displayed by a yellow bar in the
Hospital Assessment Funding by Medicaid Eligibility Category Chart
(NOTE: For ease of display and understanding, for the purposes of this chart, the Newly Eligible Adult
Expansion Population from 100-133% FPL is shown as associated with the existing eligibility
groups, e.g., persons with disabilities who are under age 65 who do not qualify for Medicare,
parents and childless adults. In the AHCCCS enrollment reporting for this category, those groups
will all be displayed together as part of the Newly Eligible Adult Expansion.) Additionally, the
hospital assessment will fund a portion of coverage for parents from 22-100% FPL, displayed by the
red bar in the chart.
The Rate Code Table
[PDF] | [RTF] lists specific codes that
define the majority of the population covered by the assessment (those populations displayed in the
yellow bars), referred to as rate codes. Hospitals have access to these rate codes by utilizing the
AHCCCS Online Provider Website: Member Eligibility and Enrollment Verifications, or via Electronic Data
Interchange (EDI): 270/271 Batch Eligibility Request and Response. Rate code information can be used to
track revenue from AHCCCS and its Contractors. It will not be possible to identify revenue associated
with members represented by the red bar.
Providers may also be interested in AHCCCS Acute Care Program enrollment activity since the implementation
of the assessment. A month-by-month statewide tracking of estimated populations compared to actual
populations is available in the Population Tracking Sheet
[PDF] | [RTF].
For State Fiscal Year (SFY) 2015, AHCCCS levied a $233 million hospital assessment to cover the state costs
(not covered by other funds) associated with restoring coverage required by Proposition 204. Due to consistent increases in the
Proposition 204 adult restoration group, AHCCCS proposed in December to raise the total amount collected in SFY 2015 to $270 million,
with the increase being phased in during the 3rd and 4th quarters. In January, we communicated that we would postpone making the
increase until the 4th quarter payment (May 15, 2015) and that we would continue to monitor the Proposition 204 population.
We further communicated that the overall dollar amount of the assessment would likely be similar to what was discussed in December 2014,
but that our approach would allow us to gather more data points before finalizing a decision.
After collecting additional data points, AHCCCS has determined that $270 million assessment is still the best estimate for SFY 2015,
and the assessment will be increased during the 4th quarter in order to collect the sufficient amount. Since the increase is being
collected entirely in the 4th quarter, the 4th quarter payment will be significantly larger than prior quarter payments.
It will also be significantly larger than what we will be collecting for the 1st quarter of SFY 2016. AHCCCS is still working with our
consultants to determine the amount needed to cover the state costs in SFY 2016, and the amounts levied in SFY 2016 will be adjusted
accordingly after a decision is made.
As we have stated previously, AHCCCS is working to make supplemental payments as early as possible to help with cash flow issues. Below is the schedule for the timing of payments:
AHCCCS will be posting the proposed rule change. Please contact Amy Upston if you have any questions.
While AHCCCS has been reluctant to increase the hospital assessment mid-year, an increase for the period of January 1– June 30, 2015 to
cover $270 million in state costs for the full year had previously been discussed. However, AHCCCS has decided to continue to monitor
the growth in the Proposition 204 population and therefore wait to make any changes to the assessment amount until the State Fiscal
Year (SFY) 2015 4th quarter payment, due May 15, 2015. AHCCCS is working to accelerate supplemental payments to hospitals for cash
flow purposes, as follows:
We will continue to monitor this and share information on a regular basis. Please contact Amy Upston if you have any questions.
On December 3, 2014, AHCCCS provided an update to the Workgroup and provided
models showing how increasing the SFY
2015 Hospital Assessment from $233 million to $250 million or $270 million would impact the hospitals.
On October 29, 2014, AHCCCS provided an update to the Workgroup.
Effective July 1, 2014, AHCCCS filed the Updated Final Rule for the Hospital Assessment with
the Arizona Secretary of State.
SFY 2015 Hospital Assessment Final Rule [PDF] | [RTF]
We would like to thank the hospitals and hospitals systems which took the time to submit feedback
regarding the 3 models presented at the February 27, 2014 Hospital Assessment Workgroup. After
listening to hospital feedback and carefully considering other relevant factors, AHCCCS has
decided to continue with the same structure as the SFY 2014 assessment, or
[PDF] | [RTF].
AHCCCS will continue to monitor the impact of the expansion and restoration of Medicaid
benefits on hospitals as well as the impact of the assessment, and will continue to post
relevant data on this website. We remain committed to an open and transparent process and
will reconvene the workgroup should the FY 15 analysis demonstrate changes to the model are
needed, and for the development of the FY 16 rate.
At the February 27, 2014 Hospital Assessment Workgroup meeting, AHCCCS presented 3 models for
consideration. All models continue to assess hospitals based on patient discharges from the
2011 Medicare Cost Reports. Model 1
[PDF] | [RTF]
contains the same structure as the SFY 2014 assessment based on the original principles developed
by AHCCCS. Model 2
[PDF] | [RTF]
is based on
formal comments received from Banner [PDF] | [RTF] during the rule-making process, and excludes
hospitals with a 50% or higher Medicare volume which have at least 5,000 Medicare discharges.
[PDF] | [RTF] excludes all Medicare discharges
from the assessment and makes other necessary adjustments to pass CMS-required tests. All models
continue the same exclusions included in SFY 2014 and update the assessed amounts to account for a
full year of collections and the phase-in of restoring Childless Adults. Feedback on the models are below:
As a reminder, a statewide hospital assessment will be in place beginning in January 2014 to
cover the state costs (not covered by other funds) associated with restoring coverage required
by Proposition 204 (General Election 2000), in which voters increased AHCCCS eligibility for all
persons up to 100% of the federal poverty level. Laws 2013, 1st Special Session, Chapter 10
(adding new section 36-2901.08, Arizona Revised Statutes) also increased eligibility for
Medicaid up to 133% of the federal poverty level. The cost for this new population is, initially,
funded entirely with federal funds; future state costs will be funded by the assessment. For the
first six months of State Fiscal Year 2014, the assessment is expected to generate $75.4 million.
AHCCCS is currently awaiting CMS approval of the assessment proposal, and expects to have this
approval in time to begin in January 2014 as planned.
AHCCCS will be sending email notifications to all Arizona hospitals subject to the assessment
on or before January 15, 2014 and April 15, 2014, that the assessment invoice is available on a
secure website. No invoices will be produced on paper or mailed to a physical address. As such,
it is imperative that AHCCCS have a dedicated group email address for every facility. We will
not send emails to individual people as staffing changes occur often and we must ensure that
invoices are not lost or missed due to individual staff schedules or termination. This email
address should be accessed by multiple staff to ensure proper delivery.
Please submit any group email changes to
The Administration is proposing a new rule to describe the process for establishing, administering
and collecting the assessment on hospitals. A.R.S. § 41-1005 (A)(32) exempts the Administration
from Title 41, Chapter 6 of the Arizona Revised Statutes (the Arizona Administrative Procedure Act)
for purposes of implementing and establishing the hospital assessment; however, that provision
requires the Administration to provide public notice and an opportunity for public comment at least
thirty days before doing so.
Hospital Assessment Notice of Proposed Rulemaking
On September 20, 2013, AHCCCS submitted the statewide hospital assessment proposal to CMS. Below are
links with the narrative request and assessment model. After carefully reviewing comments, AHCCCS
made the following changes from the model distributed to hospitals on August 22, 2013:
AHCCCS will post to this website CMS action on this request, and the proposed state rule will be
posted for public comment on or about November 15, 2013.
As has been discussed in each workgroup meeting, AHCCCS considers the development of the hospital assessment
to be an iterative process. This proposed rate is for the first six months of calendar year 2014 only, and
further workgroup meetings and modeling will be completed for the State Fiscal Year 2015
(July 1, 2014-June 30, 2015) rate period.
CMS Approval Letter 1/14/14
Revised CMS Request
Revised 2014 Assessment Model
(including 2015 data)
CMS Request 9/20/13
Initial Proposed Assessment Model (see Updates below)
Subsequent to the submission of this assessment model to CMS, a minor change was made to the
model to account for a separately licensed hospital that falls into one of the exemption
categories that is located within a larger hospital which is subject to the assessment. A very
small number of discharges associated with the separately licensed facility were reduced from the
hospital’s total number of discharges. Because the number of discharges was so small, this change
does not impact the overall 2014 rate, and it does not result in changes to the assessment amounts
for any other hospital.
As noted above, the proposed assessment rate is limited to the first six months of calendar year 2014.
AHCCCS anticipates that a new analysis will be completed in order to determine the assessment rate for
the period of July 1, 2014 through June 30, 2015 (State Fiscal Year 2015). Modeled results for the
State Fiscal Year 2015 period are provided for informational purposes only and the actual SFY 2015
rates will be updated based on further analysis, Workgroup discussions and updated data.
Projected Coverage Payments
As discussed in Workgroup meetings, the projected coverage payments displayed in the model represent
payments associated only with those populations funded by the hospital assessment. See the
Assessment Population Chart at the top of this page for a summary of populations funded by the
assessment. The projected coverage payments do not represent the full impact to hospitals of the
various changes in coverage expected beginning January 1, 2014, including the expansion of coverage
for children and the woodwork effect on traditional Medicaid populations. Hospitals should not use
the projected coverage payments to estimate the total increase in hospital revenue associated with
the coverage changes beginning January 1, 2014.
Below please find the AHCCCS Draft Proposed Hospital Assessment Rule and the associated model. These
documents will be discussed at the Hospital Workgroup meeting on August 22 and are available for your written
comments until September 4, 2013. Please send your written comments to
FFSRates@azahcccs.gov. AHCCCS expects to post a proposed rule in
November, with a 30 day formal public comment period, for expected implementation of the final rule on
January 1, 2014.
At the request of Workgroup members, below please find an updated proposed model which includes the
SFY 15 impacts by hospitals. The SFY 15 impacts are for illustration purposes only and will change as
AHCCCS updates its budget projections for SFY 15, and based on possible changes to peer group assessment
rates as revenues and expenses are monitored on an ongoing basis. Other than the addition of SFY 15 data,
this model is identical to the August 22, 2013 version except for the reclassification of one urban hospital
which was incorrectly included in the rural hospital peer group.
Proposed Model Including SFY 15 impacts
Hospital Assessment Workgroup Presentation May 8, 2013
On April 4, 2013, AHCCCS hosted a meeting with hospital providers to discuss the Governor’s
proposal to expand Medicaid coverage through hospital assessment funding. In this meeting,
AHCCCS presented some of the principles and next steps in moving forward with this plan.
AHCCCS will form workgroups of hospital representatives to work through the methodology and issues
related to the assessment. If you are interested in participating, please contact AHCCCS at
AHCCCS Hospital Assessment Workgroup
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