FFY 2021 Establishment of HCIF Assessment and HEALTHII Payments
In March 2020, the Arizona Legislature passed and Governor Ducey signed into law HB 2668 (Laws 2020, Chapter 46) which establishes a second assessment effective October 1, 2020. Monies from this assessment are to be deposited into the Health Care Investment Fund (HCIF) to 1) make directed payments to hospitals pursuant to 42 CFR § 438.6(c) to persons eligible for Title XIX services, 2) increase base reimbursement for services reimbursed under the dental fee schedule and physician fee schedule, and 3) to pay for the non-federal share of the costs for AHCCCS expenses to administer this program, not to exceed one percent of the total assessment monies collected.
The HCIF assessment uses the methodology already established for the original Hospital Assessment Fund (HAF) assessment, assessing hospitals based on inpatient discharges and outpatient net patient revenues. This methodology was developed with the help of consultants and through the AHCCCS stakeholder engagement process to allow providers to offer feedback on proposed changes to the model.
The HCIF assessment revenue, when matched with federal funds, will result in hospitals receiving approximately $1.275 billion in quarterly directed payments, which after accounting for the HCIF collection amount, reflects a net increase of approximately $900 million. AHCCCS has named the quarterly directed payments the Hospital Enhanced Access Leading to Health Improvements Initiative (HEALTHII) payments.
Beginning with FFY 2021, the model combines both the HAF and HCIF assessments. Moving forward, AHCCCS intends to update the both the HAF and the HCIF assessments at the beginning of every Federal Fiscal Year (10/1-9/30) instead of the beginning of each State Fiscal Year (7/1-6/30).
FFY 2021 Final Rule
- FFY 2021 Hospital Assessment Final Rule
- AZ Assessment Model - FFY 2021 with enhanced FMAP
- AZ Assessment Model - FFY 2021 without enhanced FMAP
States receive an enhanced FMAP during the COVID-19 emergency period. This allows AHCCCS to collect a lower assessment amount. Since it is unknown whether the emergency period will be extended, annualized models have been provided for both with and without the enhanced FMAP. Once the emergency period ends, AHCCCS will update the rule to reflect the higher assessment amount.
Hospital Assessment Materials June 26, 2020
Hospital Assessment Materials June 12, 2020
Hospital Assessment Materials May 15, 2020
SFY 2021 Hospital Assessment Inpatient Rebase and Establishment of Outpatient Assessment
During SFY 2020, AHCCCS worked with Milliman, Arizona hospitals, and Arizona hospital associations to conduct a rebase of the hospital inpatient assessment and establish an outpatient component of the hospital assessment in order to continue to comply with CMS’ hold harmless provision.
SFY 2021 Final Rule
Hospital Assessment Materials April 23, 2020
Hospital Assessment Materials March 20, 2020
Hospital Assessment Materials January 8, 2020
SFY 2020 Final Rule
Effective July 10, 2019, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.
SFY 2019 Final Rule
Effective July 10, 2018, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.
SFY 2019 Hospital Assessment Rebase
During SFY 2018, AHCCCS will work with Navigant Consulting, Arizona hospitals, and Arizona hospital associations to conduct a rebase of the hospital assessment, which will include updating the model to use discharges from the 2016 Medicare Cost Reports and a review of exemptions and other model components. The rebase will have an implementation date of July 1, 2018. The assessment will need to continue to comply with federal requirements for provider assessments, and an analysis to confirm continued compliance (along with any necessary model adjustments) will be part of the rebase. Feedback may be provided at workgroup meetings or by submitting comments to HospitalAssessmentProject@azahcccs.gov.
Update – February 2, 2018
The SFY 2019 Executive Budget includes a proposal to allocate 28% of Proposition 204 Protection Fund and the Tobacco Litigation Settlement Fund monies for Proposition 204 behavioral health services. The Executive Budget recommendation results in a SFY 2019 hospital assessment projection of $325.6 million. A model of this along with the other rebase changes presented at the November 7, 2017 workgroup can be found here.
Hospital Assessment Materials November 7, 2017
- Feedback, Assessing New Hospitals, and Rebase Period
- Assessment Model Changes Overview
- Updated SFY 2019 Hospital Assessment Rebase Model
Hospital Assessment Materials September 15, 2017
- Enrollment Update, Hospital Assessment Overview & Timeline
- SFY 2019 Hospital Assessment Rebase Model
- SFY 2019 Hospital Assessment Rebase Model Presentation
SFY 2018 Final Rule
Effective July 1, 2017, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.
SFY 2017 Final Rule
Effective July 14, 2016, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.
Payments Associated with the Hospital Assessment
SFY 2016 Final Rule
Effective July 16, 2015, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.
Hospital Assessment Workgroup Materials May 11, 2015
- Projected vs. Actual Caseload Graph
- Assessment Total Coverage Payments for January 2014-September 2014
- SFY 2016 Proposed Model
Tracking Revenue Associated with the Hospital Assessment
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 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.
March 13, 2015 Update
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:
- 2015 CAH Payments: the first payment was made on December 12th 2014, and the second payment will be made in the beginning of May 2015
- 2015 Proposition 202 Trauma and Emergency Funds: AHCCCS resumed making two payments, the first of which was made in late February (AHCCCS must receive the revenues from the Department of Gaming before the payments can be made, and these revenues are typically received in early-to-mid-February and early-to-mid August). The next payment will be made in late August
- 2015 Rural Hospital Inpatient Fund (SAVE) funds: payments will be made the beginning of May 2015
- 2015 GME: AHCCCS is exploring options to determine if payments may be made earlier than usual
- EHR Incentive Payments: completed and valid attestations will have an expedited review process with a projected turn-around time of eight weeks from time of submission (to ensure timely payment, all necessary documentation should be submitted in its entirety and in the requested format)should be submitted in its entirety and in the requested format)
4th Quarter Payment by Hospital
January 16, 2015 Update
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:
- 2015 CAH Payments: the first payment was made in December 2014 and the second payment will be made in the beginning of May 2015
- 2015 Proposition 202 Trauma and Emergency Funds: AHCCCS will resume making two payments, the first of which will be made in late February (AHCCCS must receive the revenues from the Department of Gaming before the payments can be made, and these revenues are typically received in early-to-mid-February)
- 2015 Rural Hospital Inpatient Fund (SAVE) funds: payments will be made by the beginning of May 2015
- 2015 GME: AHCCCS is exploring options to determine if payments may be made earlier than usual
- EHR Incentive Payments: completed and valid attestations will have an expedited review process with a projected turn-around time of eight weeks from time of submission (to ensure timely payment, all necessary documentation should be submitted in its entirety and in the requested format)
We will continue to monitor this and share information on a regular basis. Please contact Amy Upston if you have any questions.
December 3, 2014 Update
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.
FY 2015 Hospital Assessment
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 Model 1 | Rich Text Version.
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.
Feedback from February 27, 2014 Workgroup
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 contains the same structure as the SFY 2014 assessment based on the original principles developed by AHCCCS. Model 2 is based on formal comments received from Banner during the rule-making process, and excludes hospitals with a 50% or higher Medicare volume which have at least 5,000 Medicare discharges. Model 3 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:
- Dignity Health
- Abrazo Healthcare and Tenet Healthcare
- Tucson Medical Center
- Scottsdale Lincoln Health Network
- Banner Health
- Maricopa Integrated Health System
- Aurora Behavioral Health System
- The University of Arizona Health Network
- Arizona Hospital and Healthcare Association
- Northwest Medical Center
- Oro Valley Hospital
- Western Arizona Regional Medical Center
- IASIS Healthcare
- Payson Regional Medical Center
Hospital Assessment Workgroup Materials February 27, 2014
- Agenda | Rich Text Version
- Enrollment and Expenditure Update
- Model 1 | Rich Text Version
- Model 2 | Rich Text Version
- Model 3 | Rich Text Version
- Summary of Models | Rich Text Version
- Hospital Charge Master Transparency Slideshow
- Hospital Charge Master Transparency Report Summary and Recommendations | Rich Text Version
Email Addresses for Hospital Assessment Invoices
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 HospitalAssessmentProject@azahcccs.gov.
Notice of Proposed Rulemaking December 13,2013
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.
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:
- Exempted rehabilitation subprovider discharges (as reported on the 2011 Medicare Cost Report) of Acute Care hospitals from the model, consistent with the exemption of Freestanding Rehabilitation Hospitals.
- Restructured the Pediatric Intensive Acute Care Hospitals group by:
- Calculating pediatric, PICU and NICU beds as a percent of total licensed beds.
- Creating two distinct rates:
- Pediatric Intensive Acute Care Hospital (Pediatric, PICU and NICU beds are 20% or more of total licensed beds): 80% of General Acute Hospital Rate
- Medium Pediatric Intensive Acute Care Hospital (Pediatric, PICU and NICU beds are 10% or more but less than 20% of total licensed beds): 90% of General Acute Hospital Rate.
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)
Model Update 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.
SFY 15 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.
Hospital Assessment Workgroup Materials August 22, 2013
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.
Supplemental Workgroup Materials – Follow-Up from August 22, 2013 Meeting
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.
Hospital Assessment Workgroup Materials July 18, 2013
Hospital Assessment Workgroup Materials June 26, 2013
- Workgroup Scope
- Budget and Enrollment Projections
- Benefit Analysis
- Draft Discharge Model
- Hospital Assessment Timeline
Hospital Assessment Workgroup Materials April 4, 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.
- Hospital Assessment Meeting
- Provider Assessment Programs 101
- Assessment Principles
- Revenues Data
- Assessment Population Chart
- AHCCCS Assessment Program Work Steps Timeline
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 HospitalAssessmentProject@azahcccs.gov.