How Congress is beginning to draft budget reconciliation package.
Legislative progress in the hospital and healthcare sector
The AzHHA policy and advocacy team is beginning to see meaningful progress on several priority bills impacting our members and Arizona's healthcare delivery system.
But first, here’s where things stand at the Legislature as of Wednesday afternoon:
Session days: 93
Bills introduced: 1,679
Bills passed: 73
Bills vetoed: 19
Bills signed: 54
So…is the break canceled?
While the Senate took Monday off, the House continued to work diligently throughout the week.
Both chambers are grappling with increasingly lengthy third reading calendars, which indicates that the Legislature is building momentum as it approaches budget negotiations.
Tuesday proved to be particularly challenging for the members of the appropriations committees, who listened to heartfelt testimonies from advocates and family members who are deeply concerned about the Legislature's efforts to limit the Parents and Paid Care Givers Program through mirror bills HB2945 and SB1734.
These proposed bills also seek to assert legislative control over capitation rate setting and waiver renewals within the state’s Medicaid program, raising additional concerns for many.
As a result, organizations like AzHHA and others have expressed their strong opposition to HB2945 and SB1734, emphasizing the potential impact on the healthcare system and on families who rely on these critical programs.
Both bills passed out of their respective committees, albeit mostly along party lines.
Tensions ran high in the House Appropriations Committee after the chair added three Republican members just before the hearing, tipping the vote in favor of the bill at 11–10.
A few Republican members voted "no" after expressing concern that an amendment from Majority Whip Julie Willoughby (R-Dist. 13), supported by AzHHA, was not considered. The amendment sought to address AzHHA’s issues in the bill.
We want to extend our heartfelt thanks to Majority Whip Willoughby for her ongoing leadership and advocacy. She has sponsored several critical bills this session and is a tireless advocate for Arizona’s hospitals, working across the aisle to find balanced, patient-centered solutions.
Streamlining provider credentialing: SB1291 (health insurers; provider credentialing; claims), sponsored by Senator Hildy Angius (R-Dist. 30), is nearing completion.
After passing both chambers, it awaits a final vote in the Senate before moving to the Governor’s desk.
The bill reduces the provider credentialing timeline from 100 to 60 days and permits retroactive reimbursement from the date a complete application is submitted until the provider is officially credentialed.
We will continue to monitor its progress closely.
Raising the bar for the Arizona Department of Health Services (ADHS) licensing accountability: SB1219 (behavioral health facilities; accreditation) passed its final Senate vote on Tuesday and is awaiting the Governor’s signature.
You may recall that the bill’s second portion originally resided in HB2176, which failed a third reading in the House.
We worked quickly to preserve its most important provisions—particularly, the requirement that ADHS surveyors and managers receive mandatory annual training.
Hospitals are held to high standards regarding continuing education, and surveyors should also be.
As the healthcare system evolves, those responsible for oversight must stay current.
We’re hopeful we will share the news of the final passage soon.
Protecting patients from AI-based denials: This session, AzHHA partnered with the Arizona Medical Association to champion HB2175 (prior authorization; claims), which limits insurers' use of Artificial Intelligence to deny claims or prior authorizations based on medical necessity.
After months of negotiation and stakeholder input, a final agreement will be reflected during Thursday’s Committee of the Whole in the Senate. This bill has been hard-fought, and we’re optimistic about its chances.
Stay in the know: Although our Friday legislative calls are on pause, your questions and feedback are always welcome.
For any updates or insights, please reach out to Damien Johnson, director of government relations, directly at djohnson@azhha.org.
Last week CMS released an abundance of proposed Medicare payment rules.
The FY 2026 proposed hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) proposed rule would:
Increase inpatient PPS payments by a net 2.4%, including a 0.8 percentage point productivity cut, relative to FY 2025.
Make several modifications to the Transforming Episode Accountability Model (TEAM) which would provide bundled payments for certain surgical procedures effective Jan. 1, 2026.
Discontinue the low-wage index hospital policy.
Increase LTCH payments by 2.5% relative to FY 2025, including both standard payments and site neutral payments. This includes increasing the high-cost outlier cases from $77,048 in FY 2025 to $91,247 for FY 2026.
Increase the IPF PPS payments by a net 2.4%, including a productivity cut of 0.8 percentage points and maintain the outlier payments at 2% of the total.
What’s next: AzHHA members should be on the lookout for a more detailed analysis of the proposed rule in the coming days, including facility-specific estimated impacts.
Hospitals may report feedback on the proposed rules to AzHHA’s Director of Financial Policy and Reimbursement Amy Upston.
CMS is accepting comments on the rules until Tuesday, June 10, 2025.
Congress begins drafting budget reconciliation package to enact President’s policy priorities
Last week, the House passed a revised budget resolution bill identical to the bill previously passed by the Senate.
Why it matters: This unlocks the next step in the budget reconciliation process: drafting the large and complex bill that will contain the details of President Trump’s policy priorities including tax cuts, border security and cost-cutting policies.
Utilizing the budget reconciliation process will facilitate passage of the bill by allowing Republicans to sidestep the Senate filibuster and pass a final bill along party lines.
What’s next: Congressional committees are using this two-week recess to begin drafting the budget reconciliation package in line with instructions in the budget resolution.
The budget resolution requires the Energy and Commerce Committee, which oversees programs including Medicaid, to identify $880 billion in spending cuts.
House Republicans have proposed various policies to cut Medicaid spending including per-capita caps, block grants, work requirements, reducing the FMAP rate and eliminating provider taxes.
Senate Republicans have tended to focus on eliminating waste, fraud and abuse, and implementing more modest Medicaid reforms.
The big picture: The GOP’s goal is for the committees to finalize their sections of the reconciliation package by Friday, May 9, 2025, and for Congress to vote on a final reconciliation package and send it to President for his signature by Memorial Day.
Newly-released Executive Order calls for comprehensive prescription drug reform
President Trump issued an Executive Order on Tuesday titled "Lowering Drug Prices by Once Again Putting Americans First" that directs the U.S. Department of Health and Human Services (HHS) to lower prescription drug prices by calling for a number of investigations and reforms.
Why it matters: Most relevant to hospitals, the Executive Order seeks to align Medicare Part D payments more closely with hospitals’ drug acquisition costs and calls for intensified site neutral policies.
What’s next: AzHHA and the American Hospital Association are closely reviewing the Executive Order to evaluate all potential impacts.
🏆Your name here ________
The Third Annual AzHHA Quality Awards are open for submissions from outstanding applicants from member hospitals and healthcare facilities wanting to highlight a recent project, within the last 12 months, in:
Clinical Excellence
Outstanding Patient/Community Impact
A Top Overall Excellence Award will also be presented.
Why it matters: These awards celebrate and recognize Arizona’s leaders committed to advancing healthcare with exceptional quality performance, community engagement and a culture of continuous improvement.
The big picture: Apply by 5 p.m. on Friday, May 30, 2025.
Support Arizona hospitals by contributing to the AzHHA PAC
The AzHHA Political Action Committee (PAC) is a critical resource for strengthening relationships with Arizona legislators who shape healthcare policy. Every contribution helps us advocate for legislation supporting hospitals and their communities.
Did you know your support…
✅Helps elect healthcare champions who prioritize hospitals and patient needs.
📃Amplifies our voice at the Capitol as we advocate for innovative, patient-centered policies.
🏥Ensures we can support lawmakers who stand with Arizona hospitals - rural, urban and everywhere in between.
The bottom line: Every dollar makes a difference, whether it’s a one-time gift or recurring contribution.
HHS workforce cuts causing disruptions across agency
The U.S. Department of Health and Human Services (HHS) Secretary Kennedy has purged the agency of tens of thousands of workers with the goal of ultimately reducing HHS’s workforce by approximately 20,000 positions.
The rapid implementation of these “reductions in force” has led to disruptions across various HHS agencies.
Why it matters: The workforce reductions at the Centers for Disease Control and Prevention (CDC) are affecting critical functions in disease surveillance and data collection.
The CDC has halted agency data collection on innumerable health metrics such as cancer rates among various populations, HIV transmission rates, levels of lead in children’s blood and alcohol-related deaths.
Staff eliminated from the CDC have reported that they were not given an opportunity to hand over their work and fear that all of their work “has essentially been eliminated overnight.”
Former Surgeon General Jerome Adams, who served in the first Trump administration, stated: “Without robust data and surveillance systems, we cannot accurately assess whether we are truly making America healthier.”
Secretary Kennedy has also disbanded the specialized team responsible for calculating the federal poverty levels (FPLs), which are critical for determining eligibility for programs like Medicaid, the Supplemental Nutrition Assistance Program and the Special Supplemental Nutrition Program for Women, Infants and Children.
Former staff members have expressed alarm, noting that there is now "literally no one in the government who knows how to calculate the [FPL] guidelines," and that they are unable to train replacements due to being locked out of their systems.
There is concern that if FPLs and eligibility thresholds are calculated by staff without the requisite expertise, millions of Americans could be at risk of losing access to essential services.
Meanwhile, the Administration is attempting to rehire many essential workers at the Food and Drug Administration (FDA).
The terminations included all members of an FDA office that fined stores with civil penalties that repeatedly violated a ban on selling tobacco to customers under 21 years of age.
The big picture: All of these “reductions in force” have raised concerns among public health experts and former officials about the potential impact on the nation's ability to maintain essential services and to respond to health crises.
Human Resources Roundtable: In-person meeting on Thursday, April 24, 2025
Join your human resources colleagues for an in-person learning and networking event.
Chief human resources officers and human resources directors of AzHHA member hospitals are invited to an HR Roundtable from 10 a.m. to 2:30 p.m. on Thursday, April 24, 2025, at AzHHA’s office in downtown Phoenix.
Why it matters: The agenda includes:
Roundtable discussions of pertinent topics, such as recruitment, benefits and staff burnout.
A presentation and group brainstorming on innovation in staff resource sharing.
Ogletree Deakins attorney, Tracy Miller, will present on current topics in employment law. Matt McElrath, CHRO at Onvida Health, will facilitate the discussion.
What’s next: Advance registration is requested for space accommodations and meal preparation.
Tuesday, April 29 - Hospital Capacity Management Consortium This free virtual event is the opportunity to connect with other healthcare capacity management professionals to innovate, find out what works and drive the field to create safer, more efficient hospitals. Register today.
May 4-6 - American Hospital Association Annual Membership Meeting This event will feature insightful conversations with policymakers, legislators and thought leaders on our most pressing issues. You’ll connect with decision makers who create, shape and implement healthcare policy and influence the political landscape. Register now.
Wednesday, May 13 - AHA Workshop: Community health and the environment The workshop will be held in Scottsdale, Ariz. and will bring together frontline hospital leaders in community health strategy, population health and emergency planning to better understand opportunities and challenges related to addressing community health and the environment. Interested in attending? Contact Sean Thorton or Andrew Jager.
Friday, May 16 - Emerging Technology and Tools - What are the Risks? Join the Association for Healthcare Quality of Arizona for this virtual event to explore the latest advancements in digital health, human factors, compliance and emerging technologies. This event features speakers, interactive discussions and practical insights to help you navigate the evolving landscape of healthcare innovation.Learn more and register.
Wednesday, May 28 - Introduction to POLST Join physician orders for life-sustaining treatment (POLST) paradigm for their one-hour virtual workshops equipping healthcare professionals with knowledge and resources to begin using POLST in Arizona. Register here.
May 28-30- Az HFMA "Rev Up Your Rev Cycle" 2025 Spring Conference Join other healthcare financial experts for an exciting conference in Scottsdale, Ariz. Hear from CFOs, revenue cycle experts, state and federal policy experts, AHCCCS and more. Register today.
