Arizona Section 1115 Demonstration Waiver

The 1115 Waiver refers to section 1115 of the Social Security Act (SSA). States must comply with Title XIX (Medicaid) and Title XXI (Children's Health Insurance Program) of the SSA. Since Arizona began providing Medicaid on October 1, 1982, AHCCCS has been exempt from specific provisions of the SSA, pursuant to an 1115 Research and Demonstration Waiver.

Arizona's 1115 Waiver includes the following:

  • Provisions in the SSA and corresponding regulations AHCCCS is exempt from
  • Special Terms and Conditions (STCs) that AHCCCS must fulfill
  • Approved federal budget amounts

Waiver Approved

On 9/30/2016, CMS approved Arizona’s request to modernize its Medicaid program and continue many of the existing authorities that allows AHCCCS to maintain its unique and successful managed care model, use home and community based services for members with long term care needs and other innovations that make AHCCCS one of the most cost effective Medicaid programs in the nation. More information can be found below.

2017 Waiver Amendments

  1. On January 18, 2017, CMS has approved Arizona’s 1115 Waiver amendment request to implement the Targeted Investment Program. As part of this larger integration effort, the Program will make almost $300 million available over five years to Arizona providers.

2016 Waiver Amendments

  1. 1115 Waiver Renewal

    On September 30, 2016, CMS approved Arizona’s request to modernize its Medicaid program and continue many of the existing authorities that allows AHCCCS to maintain its unique and successful managed care model, use home and community based services for members with long term care needs and other innovations that make AHCCCS one of the most cost effective Medicaid programs in the nation. More information including the approved package can be found below.

2015 Waiver Amendments

  1. DSH Substantive Amendment

    On September 30, 2015, CMS approved Arizona’s 1115 Waiver amendment to the DSH payment methodology to modify payment pool qualification and priority for DSH program year ending 2015. More information is provided in the links below.


  2. DSH Technical Update

    On June 18, 2015, CMS approved Arizona’s 1115 Waiver technical amendment to update the DSH methodology to reflect the 2015 DSH amounts. More information is provided in the links below.

2014 Waiver Amendments

  1. On December 15, 2014, CMS approved Arizona’s 1115 Waiver amendment request that will:

    • Expand integration of physical and behavioral health services for adults with serious mental illness throughout the State;
    • Extend the Safety Net Care Pool for the Phoenix Children’s Hospital;
    • Extend uncompensated care payments to Indian Health Services and 638 Tribal facilities; and
    • Cover all Medicaid services for pregnant women during their hospital presumptive eligibility period.

    More information, including the provisions of all of Arizona's Waiver and Expenditure Authorities and accompanying Special Terms and Conditions can be found in the links below.

    Additional background regarding the waiver amendments can be found below.



  2. Tuba City Regional Health Care Corporation

    One of the largest 638 facilities, Tuba City Regional Health Care Corporation located on Navajo Nation, has recently had to absorb the cost of care for the population incarcerated within the Navajo Detention Facility at Tuba City, even though these patients are federal trustees for whom the facility would otherwise be receiving reimbursement from Medicaid. Lack of availability of Medicaid funding for the care provided to these inmates is proving unsustainable for the Tuba City Regional Health Care Corporation, one of the most critical providers of care to the American Indian Medicaid enrolled population in Arizona. AHCCCS is proposing to preserve access to care for a critical Medicaid population that is largely American Indian living in rural and frontier areas; and collect data to establish a line item within the Indian Health Services budget as more of these facilities are built on reservation. AHCCCS is accepting public comments on this DRAFT proposal through June 27, 2014. See the Public Comment section below for instructions on how to send comments on this proposal.



  3. Cost Sharing

    At the direction of the Arizona State Legislature and upon CMS approval, AHCCCS is proposing to impose mandatory cost sharing on the Expansion Population of:

    1. A premium of not more than two percent of the person's household income.
    2. A copayment of two hundred dollars for nonemergency use of an emergency room if the person is not admitted to the hospital.
    3. A copayment of two hundred dollars for nonemergency use of an emergency room if there is a community health center, rural health center or urgent care center within twenty miles of the hospital.


  4. DSH Technical Update

    On June 27, 2014, CMS approved Arizona’s 1115 Waiver technical amendment to update the DSH methodology to reflect the 2014 DSH amounts. More information is provided in the links below.



2013 Waiver Amendments

  1. Phoenix Children’s Hospital SNCP Extension and Uncompensated Care Payments to I.H.S. and 638s Extension
    December 30, 2013
    On December 27, 2013, CMS approved Arizona’s 1115 Waiver amendment request that will allow AHCCCS to use SNCP funding for Phoenix Children’s Hospital and continue uncompensated care payments to I.H.S. and 638 facilities, through December 31, 2014.
    CMS Approval Letter 12/26/13 
    Waiver Authorities 4/16/2013  
    Expenditure Authorities 12/26/13  
    Special Terms and Conditions 12/26/2013  
    Budget Neutrality 2012-2016 4/16/2013  
    I.H.S. and 638 Extension Request 11/7/13  
    PCH Extension Request 8/30/13 

  2. City of Phoenix SNCP Addition
    November 27, 2013
    CMS has approved the amendment to expand the current authority to provide Medicaid and CHIP coverage to additional groups under the City of Phoenix Safety Net Care Pool Demonstration. 
    CMS Approval Letter 11/27/13
    Waiver Authorities 4/16/2013  
    Expenditure Authorities 11/27/13
    Special Terms and Conditions 11/27/2013  
    Budget Neutrality 2012-2016 4/16/2013  

    November 7, 2013
    On November 7, 2013, AHCCCS requested an amendment to expand its current authority to provide Medicaid and CHIP coverage to additional groups under the City of Phoenix Safety Net Care Pool (SNCP) Demonstration..
    SNCP Addition Request 11/7/13  
  3. City Assessments
    November 27, 2013
    CMS has denied the proposal to build upon the City of Phoenix Access to Care Ordinance. .
    CMS Denial Letter 11/27/13 

    November 1, 2013
    The cities of Mesa, Tucson, Casa Grande and Globe are proposing to build upon the successful City of Phoenix Access to Care Ordinance provider-assessment funded SNCP model.
    City Assessments
  4. Childless Adults Continuation
    December 9, 2013
    Since submitting the Childless Adults DRAFT Waiver request to CMS, Governor Brewer’s Medicaid Restoration Plan was signed into law, which will cover adults up to 133% of the FPL beginning January 1, 2014. Accordingly, AHCCCS has withdrawn this Waiver amendment request.
    Withdrawal Letter 

    November 9 , 2012
    On November 9, 2012, AHCCCS submitted the waiver amendment to CMS requesting continued authority to cover Childless Adults with enhanced federal matching funds.
    Childless Adults DRAFT Waiver
  5. Transition Plan
    October 21, 2013
    CMS has approved Arizona’s 1115 Demonstration Transition Plan to map the coverage of populations currently served by Arizona's demonstration.

    Arizona Transition Plan 

  6. City of Phoenix Access to Care Assessment

    April 17 2013
    On April 17, 2013, CMS approved Arizona’s 1115 Waiver amendment request that will allow AHCCCS to match provider assessment monies collected by the City of Phoenix. These funds will be used to support:

    1. Additional KidsCare II coverage
    2. Maintain coverage for parents who would otherwise have lost eligibility for lack of a dependent child; and
    3. Supplemental payments to 9 additional hospitals under the Safety Net Care Pool (SNCP).

    More information, including the provisions of all of Arizona's Waiver and Expenditure Authorities and accompanying Special Terms and Conditions can be found in the links below. Additional background regarding this amendment is available on the "Waiver History" tab at the top of this page.

    CMS City of Phoenix Tax Approval Letter 4/16/13
    CMS SNCP Expansion Approval Letter 4/16/13
    Waiver and Expenditure Authorities 4/16/2013
    Special Terms and Conditions 4/16/2013  
    Budget Neutrality 2012-2016 4/16/2013

    January 29, 2013
    On January 29, 2013, AHCCCS submitted the City of Phoenix Tax Assessment Waiver proposal to CMS following the close of the public comment period.

    December 20, 2012
    On December 11, 2012, the City of Phoenix adopted an assessment on designated acute care hospitals so that AHCCCS can draw down additional federal matching funds, subject to CMS approval. AHCCCS will be submitting the DRAFT Waiver proposal for CMS review and approval after a 30 day comment period. More info on this DRAFT waiver proposal, including how to submit public comments, can be found on the link below:

    City of Phoenix Assessment
  7. Waiver Approved

    January 31, 2013
    On January 31, 2013, CMS approved Arizona’s requests to:

    1. Integrate physical and behavioral health services provided to children enrolled in the Children’s Rehabilitative Services program
    2. Integrate physical and behavioral services provided to adults residing in Maricopa County who are diagnosed with a serious mental illness
    3. Clarify language to the KidsCare II program wait list procedures
    4. Update 2013 DSH amounts
    5. Revise the SNCP protocols to include three new hospitals and mid-level practitioner costs

    More information, including the provisions of all of Arizona's Waiver and Expenditure Authorities and accompanying Special Terms and Conditions can be found in the links below. Additional background regarding these amendments is available on the "Waiver History" tab at the top of this page.

    CMS Approval Letter 4/8/13
    CMS Approval Letter 01/31/13
    Waiver and Expenditure Authorities 01/31/13
    Special Terms and Conditions 01/31/13
    AHCCCS 2012-2016 Budget Neutrality 01/31/13
    Fact Sheet New Maricopa County RBHA
  8. Children’s Rehabilitative Services Integration

    January 31, 2013
    AHCCCS received federal approval to integrate physical and behavioral health services provided to children enrolled in the CRS program. The links below have additional information:
    CMS approval letter 1/31/13
    CRS Proposal to CMS 4-18-12

  9. Behavioral Health Integration

    January 31, 2013
    AHCCCS received federal approval to integrate physical and behavioral health services provided to adults residing in Maricopa County who are diagnosed with a serious mental illness. The links below have additional information:

    CMS approval letter 1/31/13
    ADHS/DBHS Website
    2013 RFP Timeline(Tentative)
    Proposal to CMS
    Fact Sheet New Maricopa County RBHA

2012 Waiver Amendments

  1. Nursing Facility Provider Proposal

    November 2, 2012
    As part of its most recent legislative session, the Arizona legislature passed HB2526, establishing a tax on the nursing facilities within the State beginning October 1, 2012. The assessment would neither be uniform nor broad-based; therefore the State is seeking a waiver of the broad-based and uniformity requirements. Below are links to the waiver proposal to and approval from CMS.

    Proposal to CMS
    CMS Approval Letter

  2. Proposition 202 Funding

    August 8, 2012
    In late August, AHCCCS will be making $35 million in payments to hospitals for Emergency Department and Trauma facilities. AHCCCS was able to secure flexibility from CMS to draw in additional funding for hospitals statewide. Trauma centers will receive $23.2 million, Emergency Departments will receive $6.2 million and rural hospitals will receive an additional $5.5 million.


  3. Disproportionate Share Funding

    July 30, 2012
    On July 30, 2012, CMS approved updates to Arizona’s Disproportionate Share Funding as Exhibit 3 to Attachment D of Arizona's 1115 Waiver.

    DSH Approval Letter
    Special Terms and Conditions

  4. Safety Net Care Pool

    June 21, 2012
    On June 21, 2012, CMS approved the Safety Net Care Pool (SNCP) Protocol as Attachment I of Arizona's 1115 Waiver. The protocol provides for the computation of the uncompensated care cost limit for each provider type that is authorized to receive uncompensated care payments under the SNCP program.

    SNCP Approval Letter

    April 6, 2012
    On April 6, 2012, CMS approved the Safety Net Care Pool program to provide hospitals with funding to cover their costs of providing uncompensated care.

    SNCP Fact Sheet
    CMS Approval Letter 04/06/12
    Waiver and Expenditure Authorities
    Special Terms and Conditions

    November 28, 2011
    Governor Brewer and area hospitals propose to use local dollars to fund uncompensated care and hospital improvements. The proposal is pending before CMS.

    SNCP Revised Proposal 11/14/11
    SNCP Original Proposal 7/29/11
    Status Update [1.09MB] (See item #15)

  5. KidsCare II Program

    April 6, 2012
    Along with the approval of the SNCP program, CMS approved a portion of the SNCP funding to provide coverage to a limited number of children.  More information about the KidsCare II program is available on the link below:

    KidsCare II Program

  6. Avoiding Cost Shift to Indian Health Services and 638 Tribal Facilities

    April 6, 2012
    On April 6, 2012, CMS granted AHCCCS with authority to make supplemental payments to IHS and tribal 638 facilities to address the fiscal burden of uncompensated care for services provided by such facilities.

    SNCP Fact Sheet
    CMS Approval Letter 04/06/12
    Waiver and Expenditure Authorities
    Special Terms and Conditions

    October 25, 2010
    AHCCCS has been working with CMS to obtain federal approval to exempt services received at Indian Health Services (IHS) and 638 facilities paid at 100% federal match from recent benefit and eligibility reductions.

    CMS Letter update 2/17/12
    CMS Letter – 12/16/10
    AHCCCS Letter – 10/25/10
    Benefits Page

1115 New Waiver Demonstration Application Process

  1. Hospital Funding (Copper Queen Community Hospital Proposal)
    • Thur Feb 15, 2012
      CMS denied the Copper Queen Community Hospital (CQCH) proposal to use donated funds from private hospitals to draw federal matching dollars for uncompensated care programs at such hospitals.  However, AHCCCS continues to work with CMS on other hospital funding proposals such as the Safety Net Care Pool (SNCP), which includes using state gaming monies associated with Proposition 202 to draw federal matching dollars.  More information about the CQCH and SNCP proposals is provided in the links below.

      Provider Donation Proposal 8/19/11
      CMS Denial Letter 2/10/12

  2. Medicare Part B Premiums
    • Fri Oct 21, 2011
      CMS approved Arizona's request for flexibilities under the 1115 Waiver, to provide coverage for the cost of Part B premiums after October 1, 2011.

    • Thur Jul 7, 2011
      Effective October 1, 2011, AHCCCS will no longer cover Medicare Part B Premiums for approximately 10,000 ALTCS members.

      As a result of an OIG audit and CMS decision, payment of the Medicare Part B premium for approximately 10,000 ALTCS members whose income exceeds 120% of the Federal Poverty Level (FPL) will be terminated by AHCCCS and will become the member’s responsibility effective October 1, 2011.


  3. 1115 New Waiver Request
    • Fri December 09, 2011
      As part of Arizona’s Medicaid Reform Plan and in an effort to increase member accountability and provider satisfaction during a period of decreased funding in Arizona’s Medicaid program, effective January 1, 2012, healthcare providers will be able to impose a fee to Adults Eligible for AHCCCS for Families with Children under Section 1931 of the Social Security Act and individuals eligible for AHCCCS Care (childless adults) who reside outside of Maricopa and Pima counties for missed appointments if certain conditions are met. This authority expires December 31, 2012.

    • Fri Oct 21, 2011
      On October 21, 2011, CMS approved Arizona’s Section 1115 Research and Demonstration Waiver for a period to begin October 22, 2011 through September 30, 2016. More information, including the provisions of the Waiver and accompanying Special Terms and Conditions are provided below:

      Waiver Approval Fact Sheet
      CMS Approval Letter
      Waiver Approval Package

    • Thurs Oct 13, 2011
      Arizona's current 1115 Waiver authority was previously extended until October 14, 2011. The Waiver will be further extended to provide CMS with additional time to finalize the approval process. All current authorities and terms of the existing 1115 Waiver will be in place until the new 1115 Waiver is approved by CMS. AHCCCS will continue to work with CMS to transition to the new 1115 Waiver Demonstration.

      Waiver Extension #2 

    • Fri Oct 7, 2011  
      On October 7, 2011, CMS sent AHCCCS a letter summarizing the status of the Waiver negotiations and outlining the various proposals in the Governor's Medicaid Reform Plan. This letter should only serve as an update on CMS's review of the authorities requested and should not be interpreted as a formal approval or disapproval of the final Waiver agreement.

      CMS Letter 

    • Fri Sept 30, 2011
      Arizona's current 1115 Waiver authority will be extended until October 14, 2011.  All current authorities and terms of the existing 1115 Waiver will be in place until the new 1115 Waiver is approved by CMS.  AHCCCS will continue to work with CMS to transition to the new 1115 Waiver Demonstration.

      Waiver Extension 

  4. Childless Adult Phase Out Plan

    Pursuant to the flexibilities outlined in Secretary Sebelius’ letter, Governor Brewer’s Medicaid Reform Package includes a freeze on the childless adult population. A Phase Out Plan was submitted to CMS on April 11, 2011 and the final plan was approved by CMS on July 1, 2011. AHCCCS eligibility systems will stop screening for the Childless Adult eligibility category beginning July 8, 2011. 

    Phase Out Plans to CMS

    Other Related Information:

    Prop. 204 Litigation


  5. Revised Waiver Proposal

    On March 31, 2011, AHCCCS submitted a revised Waiver Demonstration proposal to CMS incorporating provisions of the Governor's Medicaid Reform Plan.  Waivers from various federal requirements are needed for flexibilities that will allow the State to manage its Medicaid program within budgetary constraints. AHCCCS is seeking public comment on the Revised Waiver Proposal. More information is provided below, including a link to submit comments


  6. Medical Expense Deduction (MED) Phase Out
  7.  

    Pursuant to the flexibilities outlined in Secretary Sebelius’ letter, Governor Brewer’s Medicaid Reform Package includes the phase out of the MED program.  A phase out plan was submitted to CMS on March 16, 2011.  This MED phase out plan must be approved by CMS prior to implementation. AHCCCS is seeking public comment on the MED Phase Out Plan. More information is provided below, including a link to submit comments.


  8. MOE Waiver Request

    The New Waiver Request will alsoinclude a request from the Maintenance of Effort (MOE) requirements of the Affordable Care Act.  The AHCCCS MOE waiver was submitted to the Secretary on January 25, 2011. More information will be posted to the web as it becomes available. Continue to visit this page for updates on its progress.


  9. Original New Waiver Submission

    Arizona's current waiver is scheduled to expire on September 30, 2011. Information about how the Waiver allows Arizona to run its efficient and innovative program as well as next steps is provided below.

    Note: Information provided in PDF files.

  10. Options re Medicaid Enrollment
    • Expansion Population Data
      Tues Mar 15, 2011
      In response to a number of requests, AHCCCS is providing details related to the medical utilization and costs of the expansion groups- including Waiver and Proposition 204 populations.

      Summary
      Data Narrative and Detail

    • Enrollment Freeze Scenarios
      Wed Mar 9, 2011
      See the attached statement for an explanation of potential enrollment freeze scenarios related to the February 15, 2011 letter from Secretary Sebelius.

      Enrollment Freeze Scenarios

    • HHS Letter to AZ re Expansion Population
      Wed Feb 16, 2011
      Secretary Sebelius outlines steps Arizona may take to manage its Medicaid program and balance its budget, without violating MOE requirements.  One of these steps includes not renewing coverage for childless adults and the MED population, which would have the effect of eliminating those waiver groups from the AHCCCS program beginning October 1, 2011.

      Secretary Sebelius’ Letter to Governor Brewer 2/15/11


Previous Waiver Documents

Arizona's previous versions of its Section 1115 Waiver are available below:

Fri Oct 21, 2011
On October 21, 2011, CMS approved Arizona’s Section 1115 Research and Demonstration Waiver proposal for a period to begin October 22, 2011 through September 30, 2016. More information, including the provisions of the Waiver and accompanying Special Terms and Conditions are provided below:

Waiver Approval Fact Sheet
CMS Approval Letter
Waiver Approval Package
AHCCCS 2012-2016 Budget Neutrality 10/2011

2006-2011 Waiver Arizona Medicaid Section 1115 Demonstration Project Waiver