HHS withdrawing 340B rebate program after court injunction and pursuing revised approach.
Deadline approaching at the Arizona Legislature
The legislature is gearing up for next week’s deadline for bills to be heard in their originating chamber committee.
We expect long committee days ahead as our team works to keep our priorities moving forward.
Before looking ahead, here’s a snapshot of where things stand and what took place during the first half of this week.
By the numbers:
Days of session: 32
Bills posted: 1,966
Bills vetoed: 1
Bills signed: 1
The House Health and Human Services Committee met Monday afternoon and heard bills late into the evening because of lengthy testimony on HB2435, the international physicians bill.
HB2176 would require the Arizona Department of Health Services to notify a licensee of the general nature of a complaint at the start of an investigation and to limit investigations of alleged violations to a 12-month lookback period. The bill now heads to the Rules Committee before consideration on the House floor.
At the time of writing, the Senate Health and Human Services Committee had not yet met.
The committee has a packed agenda, with 12 bills scheduled for hearing, several of which are on our watch list as they continue to develop.
You can view the agenda and access the committee recording here.
Looking ahead to next week: The House Health and Human Services Committee agenda has been released and spans three pages of bills.
The committee plans to meet at 9 a.m. on Monday and reconvene at 2 p.m., following the floor session, to work through the full agenda.
AHCCCS proposes DAP changes for CYE 2027
On Wednesday, Feb. 4, 2026, the Arizona Health Care Cost Containment System (AHCCCS) released its preliminary proposal for the Contract Year Ending (CYE) 2027 Differential Adjusted Payment (DAP) program (Oct. 1, 2026–Sept. 30, 2027), outlining significant changes by hospital type.
Why it matters: For CYE 2027, AHCCCS will phase out the Health Information Exchange (HIE) DAP for most hospitals and tie DAP increases to participation in select quality programs, affecting all AHCCCS payments.
What’s changing:
General acute care, critical access and behavioral health hospitals could earn a 2% increase on all AHCCCS payments by electing to participate in either the Maternal Syphilis Program or the Medications for Opioid Use Disorder (MOUD) Program.
Rehabilitation hospitals and LTACHs will see a familiar approach, as AHCCCS proposes reinstating Pressure Ulcer Performance Measures used in prior years.
Indian Health Service and 638 tribally owned or operated facilities may qualify for up to a 3% increase on all AHCCCS payments through participation in select programs, including HIE, the SDOH Closed Loop Referral System, the Maternal Syphilis Program and the MOUD Enhancement Program.
What’s next:
AzHHA is developing a comment letter in response to the proposal.
The final proposal is expected to be released in March.
Action item: Submit feedback to Amy Upston by Tuesday, Feb. 24, 2026, for inclusion in the AzHHA comment letter.
HHS withdraws 340B rebate program after court injunction and pursues revised approach
In a Thursday, Feb. 5, 2026 court filing, the U.S. Department of Health and Human Services (HHS) announced it is rescinding its proposed 340B Rebate Model Pilot Program after courts blocked the program from taking effect on Jan. 1, 2026.
The courts reasoned that the pilot program likely violated the Administrative Procedure Act by making a major shift from up-front 340B discounts to a rebate system without adequately explaining the change or showing that it considered significant reliance interests and burdens on hospitals.
Although committing to abandon the program at issue in the litigation, HHS indicated in the filing on Thursday, Feb. 5, 2026, that it may restart the administrative process for a similar program.
The next day, HHS submitted a “prerule” to the Office of Management and Budget (OMB) for regulatory review entitled “340B Drug Pricing Program Manufacturer Rebate Models.”
The contents of the revised program have not been published, and it is unclear how long OMB’s review process will take or when a comment period may begin.
However, HHS has agreed that the effective date for a new rebate program will be no earlier than 90 days following the public announcement of any drug manufacturer application approval in order to avoid another expedited round of litigation.
The 340B Rebate Model Pilot Program blocked by the courts would have allowed nine participating drug manufacturers to provide 340B discounts through retrospective rebates rather than upfront discounts for 15 specified drugs.
While the details of the new proposal are unknown at this time, the American Hospital Association is urging hospitals to gather information and begin preparing their comments with a focus on the inevitable financial and administrative burdens that any rebate model would impose.
OB emergency simulation training available to emergency departments across the state
AzHHA’s Workforce and Clinical Excellence team has secured additional funding to continue supporting the delivery of OB emergency simulation training for emergency departments across Arizona.
Why it matters: Obstetrical emergencies can have devastating consequences for the mother and baby, making early recognition and response essential.
The big picture: The OB emergency simulation covers preeclampsia, postpartum hemorrhage and maternal code scenarios.
Each session is two hours.
Four to five learners can participate in each session.
A facility can have up to four sessions in a day.
The bottom line: This training is available for free to members and nonmembers for emergency departments at OB and non-OB hospitals as well as standalone emergency departments.
A standardized approach to strengthen nurse leadership
Through the Nurse Leadership Program, AzHHA is proud to offer a Certificate in Nurse Leadership, a 12-week, online program developed in partnership with leading health systems and grounded in real-world practice.
Why it matters: There is a sustained need for high-quality, standardized leadership training for nurse leaders across the state.
This structured learning experience provides a shared framework for leadership development, mentorship and professional growth at every level of nursing leadership.
What makes this program different?
Purpose-built for nurses: Designed specifically for clinical nurses stepping into — or already in — leadership roles.
Structured, yet flexible: Involves approximately a three-to-five-hour weekly time commitment.
Centralized leadership model: Supports consistent decision-making and communication across the organization.
Competency-based curriculum: Covers emotional intelligence, conflict resolution, communication strategies, financial acumen and operational decision-making.
Real-world application: Includes interactive case studies, guided reflection and opportunities to apply learnings directly to participants’ roles.
Scalable and collaborative: Fosters a consistent and adaptable leadership style that drives collaboration, accountability and workforce engagement.
The big picture: The program is made possible by funding and support provided by the Arizona Health Care Cost Containment System (AHCCCS). We’re grateful for their backing so that we can tackle this important work.
What’s next: Visit our program page to learn more about this program and its benefits.
AzHHA is hiring for our next teammate: maternal health program manager.
Why it matters: In this grant-supported role, you’ll help lead Arizona’s maternal health initiatives, support hospitals with AIM implementation, provide clinical education and drive quality improvement efforts statewide.
This position works closely with healthcare partners and supports key data reporting and program management activities.
The Arizona Department of Health Services Bureau of EMS & Trauma System is hosting the third annual Trauma Awards.
Why it matters: Eight individuals who have demonstrated dedication, leadership and excellence within their role in the Arizona trauma system will be recognized.
Save the Date: 2026 Arizona Hospital Leadership Conference Mark your calendar for the AzHHA Foundation’s 2026 Arizona Hospital Leadership Conference, taking place Oct. 21–23 at the El Conquistador Tucson, a Hilton Resort. This annual gathering brings together hospital and healthcare leaders from across the state for engaging discussions, networking and forward‑focused learning. Additional details, registration information and sponsorship opportunities will be shared in the coming months. Questions may be directed to communications@azhha.org.
