House of Representatives

HB 2630

AHCCCS; proposition 204; implementation

Sponsors: Representatives Flake, Loredo, Cannell, Weiers, et. al.

X	Committee on Appropriations
	Caucus and COW	This bill as introduced contains an Appropriation clause.
	As Passed the House

History

On November 7, 2000 Proposition 204, an initiative measure, was passed by the people of Arizona. The measure expands the definition of an eligible person for the Arizona Health Care Cost Containment System [AHCCCS], requires that specific existing programs be funded, establishes the tobacco litigation settlement fund and directs the use of monies deposited into the fund.

Proposition 204 expands the definition of an eligible person to include any person that has an income level up to 100 per cent of the federal poverty guidelines [FPL] [$8,590 for a single person, $17,650 for a family of four] and when applicable, meets the prescribed resource limits and other federal eligibility requirements. The initiative establishes the tobacco litigation settlement fund consisting of all monies received pursuant to the Tobacco Litigation Master Settlement Agreement entered into on November 23, 1998. The initiative further requires the fund monies to be used to ensure that sufficient monies are available to provide benefits to all eligible persons and to pay for the six prescribed programs. The fund may be supplemented by other available sources including legislative appropriations and federal monies.

In order to fund the Proposition, the State pursued a waiver from the federal government. In January 2001, Arizona received approval from the Health Care Financing Administration, a division of the U.S. Department of Health and Human Services, for the waiver [section 1115 waiver]. The federal government will now pick up 65 per cent of the cost of implementing the expanded program; the state will pay a 35 per cent match. The federal monies will supplement the tobacco settlement monies used for the programs and services established by the expanded definition of an eligible person.

In addition to fully funding the programs and services required as a result of the increased membership of AHCCCS, the initiative requires the director of AHCCCS to annually withdraw from the tobacco settlement fund the amount necessary to fully fund six previously established health-related programs. However, the programs are funded only if there are monies remaining in the settlement fund. These six programs were part of an initiative measure that was passed into law on the November 1996 ballot. The programs were to be funded annually by monies from the state lottery fund; however, state lottery revenues have historically been insufficient to fund the programs. The six programs include: 1) the health families program within the Department of Economic Security [DES]; 2) the Arizona area health education system within the Arizona board of regents; 3) the teenage pregnancy prevention program within the Department of Health Services [DHS]; 4) the health start program within DHS; 5) the disease control research fund; and 6) the federal woman, infants and children food programs [WIC] within DHS.

Current law stipulates that if a person enters a hospital emergency room and cannot pay for services, the county is responsible for determining if that person is eligible for AHCCCS. Once a person is deemed eligible, AHCCCS covers retroactively 48 hours. HB 2630 transfers the responsibility for determining eligibility from the counties to DES. Additionally, HB 2630 stipulates that once a person is found eligible, AHCCCS will cover expenses retroactively to the first day of the month the person applied for eligibility. Also in current law, counties are responsible for being the payors of last resort, often referred to as residuality or residual responsibility. HB 2630 eliminates the counties’ responsibility for residuality.

HB 2630 implements Proposition 204. In so doing, the bill transfers the counties’ eligibility determination responsibilities to DES, streamlines eligibility, establishes a funding mechanism to pay for the expansion of AHCCCS, provides for the six prescribed programs to be funded upon availability of monies, conforms statutes to reflect changes, and establishes a legislative study committee to report findings and recommendations on the implementation of this act.

Provisions:

COUNTIES

· Allows a county board of supervisors that maintains a hospital or health care facility, or a county board of health to do the following:

1) enter into agreements with prescribed entities for services or facilities to provide health care services; [15]

2) acquire, maintain, lease, encumber and dispose of real and personal property, including trust properties, and interest in this property; [15]

3) adopt administrative rules, including an employee merit system and procurement process; [15]

4) establish or acquire foundations or charitable organizations to solicit donations for use solely to perform the duties in furtherance of health care services; [15-16]

5) delegate to the hospital chief executive officer the authority to compromise claims or debts, up to $25,000; [16]

6) prohibits supervisors from disclosing any specified records. [16]

· Eliminates the mandate for county board of supervisors to have the sole and exclusive authority to provide for the medical needs of the indigent sick in the county, and makes the authority permissive. [16-18]

· Stipulates that if the tobacco settlement fund payments are less than 66 per cent of the original part owed in any fiscal year and the state has used previous settlement payments for indigent health care, counties shall contribute an amount equaling 33 per cent of the difference in the following fiscal year. [29]

· Requires the state to use these county contributions for indigent health care services and specifies that if all settlement payments are not used for indigent health care costs, the counties are not required to contribute the 33 per cent. [29]

· Requires JLBC to calculate the total county contribution as well as each county’s contribution based on current population. [29-30]

· Requires the state treasurer to deposit the monies in the budget neutrality compliance fund. [30]

· Maintains current residual claims and obligations against counties until November 15, 2004. [220-223 and 227]

· Requires a county that maintains, operates or has a contract for hospital operation to maintain the hospital until July 1, 2006. [226]

· Stipulates that if a county plans to close a hospital, it must give AHCCCS at least a 12-month notice. [226]

· Repeals the section relating to the county hospital maintenance of effort on July 1, 2003 unless legislation meeting prescribed guidelines is enacted before that date. [226]

HOSPITALS

· Requires AHCCCS to continue to make disproportionate share payments to private hospitals and state-operated institutions for mental disease [ASH-Arizona State Hospital] and eliminates references to public hospitals. [125]

· Requires AHCCCS in cooperation with at least two urban hospitals and one rural hospital and a nonprofit trade association representing hospitals to evaluate the inpatient hospital reimbursement system, outlines what the evaluations shall include, and stipulates a written report of the evaluation be submitted to the joint legislative committee by November 15, 2002. [225]

BUDGET NEUTRALITY COMPLIANCE FUND

· Establishes the budget neutrality compliance fund [fund] consisting of third party liability recoveries, county contributions and appropriations to be administered by AHCCCS. [177-178]

· Stipulates the monies in the fund are continuously appropriated and do not revert to the general fund. [178]

· Requires the state treasurer to invest and divest the monies in the fund and credit the earned investment money to the tobacco litigation settlement fund. [178]

· Requires AHCCCS to use fund monies to pay expenditures made pursuant to the expanded definition of eligible person and for prescribed programs if sufficient funds are not available in the tobacco settlement fund. [178]

· Requires AHCCCS to transfer from the tobacco settlement fund the amount needed to reimburse the budget neutrality compliance fund for its expenditures made to cover costs associated with the new definition of an eligible person by June 30 of each year. [178]

· Specifies that in FY 2001-2002, AHCCCS shall use $53.7 million for the maintenance of effort for the state match of persons covered by the state before November 7, 2000. Each year thereafter, AHCCCS shall adjust the amount for inflation based on the GDP price deflator. [178]

SERIOUSLY MENTALLY ILL

· Requires a county with a population of less than 600,000 to provide behavioral health services for persons who are seriously mentally ill [SMI] as required by law as of January 1, 2001. [29]

· Stipulates that a county with a population of more than two million and that has an intergovernmental agreement [IGA] with DHS by January 1, 2001 for SMI services must annually renew the agreement and maintain the same terms and funding with agreed upon annual adjustments. [29]

· Stipulates that a county with a population between 600,000 and two million and that has an IGA with DHS by January 1, 2001 for SMI services must annually renew the agreement and maintain the same funding amount, except for court ordered evaluations pursuant to statute. [29]

ELIGIBILITY

· Requires the AHCCCS administration [administration], in accordance with the section 1115 waiver, to adopt rules for a streamlined eligibility determination process for individuals eligible for AHCCCS. [106-107]

· Specifies that once a person is determined eligible, the date of eligibility is the first day of the month of application and requires the administration to determine continued eligibility on an annual basis. [107]

· Conforms the definition of eligible person to reflect the expanded definition contained in Proposition 204. [104-106]

· Requires the administration, in accordance to the section 1115 waiver, to adopt rules for a streamlined medical expense deduction eligibility process [spend down] for persons who apply to be an eligible person for AHCCCS. [107]

· States that for a person to be eligible for the spend down the person must meet the following: 1) have a family income less than 40 per cent FPL [$3,436 for a single person] after deducting allowable medical expenses; and 2) have family resources not exceeding $100,000 in net worth [excluding one vehicle], including $5,000 in liquid assets. [107]

· Permits an applicant to use allowable family unit medical expenses to reduce income to meet required income levels. [107]

· Requires the administration to calculate income by using medical expenses incurred in a three-month period not covered by first or third party payors. [107]

· Specifies the three-month period shall include the month before the month of application, the month of application, and the following month. [107]

· Requires the administration to determine when spend down is met by deducting incurred medical expenses sequentially beginning with the month before application from the family income. [107]

· Stipulates that eligibility begins the date the spend down is met or the first day of application, whichever is later.[107]

· Requires the administration to grant eligibility for five continuous months plus any remaining days starting with the first day of eligibility but not exceeding six months. [107]

· Requires a written and signed application by the applicant or authorized representative, unless the applicant is incompetent or incapacitated. If the latter occurs, a family member or person acting responsibly for the applicant may obtain the signature or a reasonable facsimile and file the application as prescribed by the administration. [115]

· Aligns U.S. citizenship and qualified alien requirements with those of federal law. [127]

· Requires the DES director to enroll the member with an available contractor located in the geographical area of the member’s residence. [130]

· Specifies that if a person becomes ineligible while waiting for a transplant, that person may extend eligibility for 12 months based on a prescribed spend down. [150]

AHCCCS

· Requires AHCCCS to enter into an IGA with DES to establish a streamlined eligibility process for persons up to 100 per cent FPL. [115]

· States the IGA between DES and AHCCCS shall:

1) establish an expedited eligibility and enrollment process for persons

hospitalized at the time of application; [115]

2) establish performance measures and incentives for DES; [115]

3) establish a process for management evaluation reviews in order for AHCCCS to evaluate the eligibility determination functions of DES; [115]

4) establish eligibility quality control reviews by AHCCCS; [116]

5) develop rules consistent with AHCCCS rules for a hearing process for applicants or members to use for eligibility determination appeals; [116]

6) establish DES responsibility to place sufficient eligibility workers at federally qualified health centers and hospitals to ensure persons seeking services are screened for eligibility; [116]

7) withhold payments based on the allowable sanctions for eligibility determination errors or failure to meet performance measures required by the IGA. [116]

· Permits the AHCCCS director to offset all or part of the sanction if DES submits a corrective action plan and a strategy to remedy the errors. [115-116]

· Requires the AHCCCS administration to adopt rules for nominal copayments by members to contractors except for emergency services. [129]

· Stipulates that AHCCCS shall provide reimbursement only to entities that have a provider agreement and that have agreed to the contractual requirements, except as provided by prescribed law. [130]

DES

· Stipulates the rules for DES shall include a grievance and hearing process to use for eligibility determinations, redeterminations, or discontinuances based on federal law. [116]

· Requires the DES director and a county board of supervisors to enter into an IGA for the transfer of duties of a county department that determines eligibility to DES and outlines the agreement provisions. [224]

· Requires the Department of Administration to transfer county employees who agree to be transferred to state employment and outlines a probationary period for employees who have not completed six months’ related experience. [224]

· Transfers a county’s fixed assets and equipment individually valued at $5,000 or less to DES and designates the items as a contribution for implementation. [224]

· Relieves DES and the state from the obligation to pay for these transfers. [224]

· Allows DES and a county to enter into an IGA until July 1, 2002 that would allow the county to perform eligibility for AHCCCS and outlines the provisions the agreement must specify. [225]

JOINT LEGISLATIVE COMMITTEE

· Establishes a 12 member joint legislative committee for the implementation of Proposition 204 consisting of six members from each house of the Legislature with equal party representation. [223]

· Outlines committee duties and requires a report of findings be submitted to the Governor, the President of the Senate and the Speaker of the House of Representatives by August 15, 2002 and 2003 and outlines what the report shall include. [223-224]

· Repeals the legislative committee on November 15, 2003. [227]

MONEY

Annual County Contribution to AHCCCS

· Requires the counties to contribute for the administration costs associated with implementing the expansion of AHCCCS eligibility. The counties will contribute $3.75 million in 2001-2002 and $5 million every year thereafter.[26,27,219]

· Requires that the monies be deposited in the budget neutrality compliance fund. [26-27]

· Prescribes the percentage for each county’s contribution. [27-28]

County Contribution for Uncompensated Care

· Requires the state treasurer to withhold prescribed amounts from each county for uncompensated care within hospitals in FY 2001-2002 and 2002-2003. [218]

· The bill appropriates $10,000,000 from prescribed sources [$6,498,000 from AHCCCS and $3,502,000 from the counties] in FY 2001-2002 to AHCCCS for the disproportionate share distributions to hospitals as outlined in this act and exempts the monies from lapsing. [228]

· The bill appropriates $6,500,000 from the counties and $3,500,000 from the general fund in FY 2002-2003 to AHCCCS for uncompensated care payments to hospitals as prescribed by this act and exempts the monies from lapsing. [228-229]

· Requires AHCCCS to distribute the monies collected for uncompensated care to each private hospital based on the relative share of the total amount paid for prescribed emergency care based on the current information available. [219]

Appropriations

· Appropriates $5,532,500 from the state general fund in FY 2001-2002 and $4,825,600 in FY 2002-2003 to AHCCCS for distribution to prescribed counties to offset a net loss in revenue due to Proposition 204 and exempts the monies from lapsing. [227-228]

· Requires any savings realized by a county as a result of the implementation of Proposition 204 to be used for indigent health care costs. [228]

· Appropriates $118,569,500 from the state general fund in FY 2001-2002 and $124,397,000 in FY 2002-2003 to AHCCCS for deposit into the budget neutrality compliance fund and exempts the monies from lapsing. [228]

REPEALS

· Repeals section 11-290, which defines claims and error-free claims within county statutes. [16]

· Repeals section 11-291.01 regarding eligibility standards for indigent health services within a county. [18]

· Repeals 11-297, 11-297.01, 11-297.02, 11-297.03, 11-297.04, 11-297.05, 11-297.06, 11-298, and 11-300 relating to county involvement with providing health care services to indigent persons. [28]

· Repeals 36-2905, 36-2905.01, 36-2905.02, 36-2905.03, 36-2905.05 pertaining to medically needy qualifications, county reimbursement for erroneous payments, child eligibility, citizen status, state emergency services and prenatal care. [135]

· Repeals 36-2997 relating to direct services for eligible children [Kids Care]. [198]

GENERAL PROVISIONS

· Removes the option that allows families to apply through DHS or health centers for the children’s health insurance program [CHIP]. [146]

· Allows the AHCCCS director to examine persons under oath, issue subpoenas, and provide records for investigations and audits. [172]

· Permits AHCCCS to extend health care contracts in effect before the effective date of this act until October 1, 2004. [226]

· Exempts AHCCCS and DES from prescribed rule making requirements for two years to implement this act and requires AHCCCS to hold two pubic meetings and present proposed rules to the joint legislative committee. [226]

· Exempts DES from prescribed procurement code requirements to implement the eligibility determination process prescribed by this act. [227]

· Requires the legislative council staff to prepare proposed legislation conforming statute to the provisions of this act in the forty-fifth second regular session. [227]

· Contains a conditional enactment date, which requires each county to relinquish all rights, titles, and interest to monies in the tobacco litigation master settlement agreement by September 30, 2001. [229]

· Makes numerous technical and conforming changes throughout the bill.

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· 45th Legislature

· First Regular Session 7 April 17, 2001

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