First Special Session - 49th Legislature

On March 12, 2009, the Legislature enacted a number of changes to the FY 2009 Budget that will have an impact on AHCCCS. See HB 2051 for more information. As a result, AHCCCS will be implementing a series of changes in accordance with the $39.9 million General Fund reduction delineated in the attached spreadsheet. The Total Fund impact of these changes, which includes foregone federal funds, is expected to be approximately $95 million.


AHCCCS will be taking a series of actions in response to budget reductions mandated by the Legislature for FY 2009, as found in Laws 2009, First Special Session Chapter 1 [PDF] (SB1001) and Chapter 4 [PDF] (SB1004).

  1. AHCCCS Copayments
    As a result of changes in Federal and State laws and regulations, AHCCCS will expand member copayment requirements effective October 1, 2010. The expanded copayment requirements, which are described in AHCCCS Final Rule A.A.C. R9-22-711, include mandatory copayments for certain populations, higher optional copayment amounts for certain populations, and clarification of the services and populations which are exempt from both mandatory and optional copayments. More information can be found on the AHCCCS Copayments page.
  2. 5% Fee-for-Service (FFS) Rate Reduction
    Effective February 1, 2009, AHCCCS implemented a 5% rate reduction for payment of services provided to members enrolled in the AHCCCS FFS program, the Medicaid School Based Claiming (MSBC) program and the Comprehensive Medical and Dental Program (CMDP). A separate "FFS Program Capped Fee Schedule" was established. Rates contained in this schedule include the Physician Fee Schedule (also including DME, radiology, and drugs administered in a physician's office), Dialysis (free-standing), Transportation, and Behavioral Health services (including counseling, crisis, rehabilitation/supportive services, residential treatment and services in psychiatric facilities not paid for by ADHS/BHS or their subcontractors).
  3. Disproportionate Share Hospital (DSH) Funding - REVISED
    HB 2051 restores DSH funding providing for $4,202,300 to the Maricopa Integrated Health System and $8,922,200 in General Fund for the DSH private hospital pool for a total fund amount of $26,147,700.
    • AHCCCS DSH Presentation [PDF] before the Senate Healthcare and Medical Liability Reform Committee from February 10, 2009.
    • AHCCCS DSH Worksheet [PDF]shows Arizona's estimated DSH allocations as a result of the ARRA 2.5% increase in federal allotments.
  4. KidsCare Premiums Increase
    Pursuant to Laws 2009, First Special Session Chapter 1 [PDF] and Chapter 4 [PDF], AHCCCS is seeking to increase KidsCare premiums for children and households/parents. KidsCare children are part of the AHCCCS SCHIP State Plan and parents on KidsCare, known as HIFA parents, are part of the 1115 waiver. Accordingly, AHCCCS has submitted a request to CMS to amend its SCHIP State Plan [PDF] and 1115 waiver [PDF] to increase premiums for KidsCare members. On April 13, 2009, AHCCCS received CMS approval [PDF].

    Members will receive notice prior to implementation of the changes as follows:
    • Premiums for children in households with incomes between 150-175% FPL will increase: (a) for one child, from $20 to $40; (b) for more than one child, from $30 to $60.
    • Premiums for children in households with incomes between 176-200% FPL will increase: (a) for one child, from $25 to $50; (b) for more than one child, from $35 to $70.
    • Premiums for parents between 150-175% FPL will increase from 4% of household income to 5% of household income.
    It is expected that an estimated 25,089 children will be impacted by the increased premiums. This number includes children in households who were also billed for Family premiums when the parents are also covered under KidsCare. Of this number, 21,484 were billed in households where only children are covered. It is expected that 3,218 parents in households between 151-175% FPL will be impacted by the premium increase. There is an estimated 3,605 children in households where parents are also covered under KidsCare and billed for premiums.

    View more detailed information about the estimated number of children [PDF] and families impacted by the proposed changes to KidsCare premiums.

    View a copy of the SCHIP Reauthorization and KidsCare Fact Sheet [PDF] provided to the Senate Healthcare and Medical Liability Reform Committee on February 18, 2009.

    View the notices [PDF] that will be published in Arizona's Administrative Register for the upcoming public hearing on March 31, 2009.
  5. Elimination of Part D Co-Payments
    The Medicare Modernization Act of 2003 created a prescription drug benefit called Medicare Part D for individuals on Medicaid who are eligible for Medicare Part A and/or enrolled in Medicare Part B. As part of this benefit, dual members are required to pay copayments for prescription drugs. As of January 1, 2006, AHCCCS no longer reimbursed for prescription drugs covered under Part D for dual eligible members, and during the 2006 Legislative Session, the Arizona Legislature authorized AHCCCS to pay for these copayments on behalf of dual eligible members with State-only dollars. The State's Part D co-payment was a state-only benefit, not a Medicaid benefit.

    As of February 28, 2009, the Medicare Part D co-payments for AHCCCS Dual Eligible Members will be discontinued. There is insufficient funding to continue this state-only program. Members have received notice of the termination of this benefit.

    It is expected that about 93,000 members who are dually eligible for Medicare and Medicaid will be impacted. The pharmacy may require payment of Medicare Part D co-payments prior to a member receiving prescriptions that are covered under the Medicare Part D benefit.
    The co-payments for prescription coverage for dual eligible members are federal requirements. The State attempted to address this federal issue by creating a state program covering the co-payment for dual-eligibles. In light of the significant budget shortfall at the State level, the State can no longer carry this burden. Please note, the elimination of the Part D co-payments does not affect the Extra Help people may receive for their prescription costs. Those who qualify for Medicare's "Extra Help" will continue to receive help from Medicare paying for their Part D premiums, deductibles and co-payments. (AHCCCS members and people who receive help with Medicare costs under QMB, SLMB or QI-1 automatically qualify for Extra Help.) The amount of help varies due to a number of factors. Members should contact 1-800 MEDICARE (1800-633-4227) for more information about Extra Help and their Medicare Part D costs.

    AHCCCS members will continue:
    • To receive a subsidy towards the cost of their Part D premium,
    • Will not have to pay a deductible, and
    • Will not be affected by the Catastrophic Coverage gap.
    Medicare will continue to pay up to $16.22 toward the cost of the Part D premium and will also continue to pay for prescription costs above the $1.10 to $6.00 Part D co-payments.

    AHCCCS will also continue to pay the Medicare Part A premium for certain individuals and the Medicare Part B premium for people approved for certain AHCCCS programs.
  6. Rollback of Graduate Medical (GME) Education Payments - REVISED
    HB 2051 restores GME funding providing for $5,559,200 in General Fund for a total fund amount of $20,449,900. View the GME Presentation [PDF] provided to the Senate Healthcare and Medical Liability Reform Committee on February 25, 2009.
  7. Benchmark Benefit Plan (Updated. Please see 2009 Third Legislative Special Session.)
    The FY 2009 budget mandates that AHCCCS develop a benchmark benefit package for childless adults with income below 100% of the federal poverty level and families with children receiving transitional medical assistance.

    Benchmark Benefit Fact Sheet [PDF]

    The AHCCCS Administration is working on the design of the benchmark and will provide additional details as they become available. This will require CMS approval through an Amendment to Arizona's Waiver and State Plan, which will be posted once it is available.

    Due to restrictions and significant complications in implementing a benchmark package, AHCCCS is reviewing the acute care benefit package for all adults.
  8. Acute Care Capitation Reductions
    Effective May 1, 2009, AHCCCS will implement a rate reduction to its capitation payments for Acute Care contracted health plans. The physician and ancillary component of the capitation rates will be reduced by 5% for contracts that are based on the AHCCCS Fee For Service Rates.

    Health plans will determine how the reductions will be implemented and could result in reduced fees for providers as necessary to meet the Health Plans' reduced revenues. Please see the included memo [PDF] for more information.

    Effective May 1, 2009, dental sealants on primary second molars will no longer be an AHCCCS covered dental benefit. Sealants will continue to be a benefit on permanent first and second molars. All contracted health plans have been notified of this change in the attached Dental Sealant Announcement [PDF].
  9. HealthCare Group Fund Balance Adjustment
    As part of the FY 2009 Budget reductions, HCG reverted $2.2 M to the General Fund. Of this amount, $1M (from a total of $5M) was initially appropriated by the Legislature to reduce the reconciliation liability to Health Plans that contract with HCG (HCG had already spent $4M). $1.2M is from HCG profits realized in the year, for a total of $2.2M that went back to the General Fund. The reversion will not have a direct impact on members of HCG.

    HCG Overview [PDF] before the Senate Healthcare and Medical Liability Reform Committee on February 18, 2009.
  10. Rural Hospital Funding - REVISED
    HB 2051 restores Rural Hospital funding providing for $2,500,800 in General Fund for a total fund amount of $12,158,100.

    The Rural Hospital Inpatient Fund (also known as the SAVE program) was established by the Legislature to provide supplemental payments to rural hospitals with 100 or fewer beds.


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