Another week passing at the Arizona Legislature with some notable progress.
AzHHA submitting comments on FFY 2027 hospital assessments and HEALTHII.
CMS releasing FY 2027 proposed payment rules for IRFs and IPFs.
Another week passes with some notable progress
The Arizona Legislature took an extended Easter break and resumed sessions on Tuesday morning. The Senate quickly resumed its work, with several notable actions on the first day:
Passed the Senate with a final vote of 27–2. Due to Senate amendments, the bill now returns to the House for concurrence. It has already been scheduled for a Wednesday morning House Caucus, so progress is expected to continue rapidly.
Other bills supported by AzHHA remain active and are moving through the final stages of the legislative process. We anticipate progress on several of these in the upcoming weeks.
Any updates on the budget? There is no concrete news yet.
While there’s widespread speculation, no formal agreement has been reached.
Based on previous patterns, we expect a possible break later this month as budget discussions continue behind the scenes.
AzHHA submits comments on FFY 2027 hospital assessments and HEALTHII
Last week, AzHHA submitted comments to the Arizona Health Care Cost Containment System (AHCCCS) on the proposed FFY 2027 hospital assessment and HEALTHII payments model.
Why it matters: FFY 2027 is a key transition year as hospitals prepare for significant federal Medicaid financing changes in FFY 2028, including reimbursement reductions under P.L. 119‑21 (H.R. 1) and requirements under the 2024 Managed Care Rule.
AzHHA’s message: Maximizing HEALTHII payments in FFY 2027 will help hospitals enter this transition in the strongest possible financial position and protect access to care for AHCCCS members.
Key themes in the letter:
Concerns about proposed changes related to uniform percentage increases and potential cash‑flow impacts
The need for continued hospital‑focused workgroups before federal changes take effect
Avoiding unintended payment reductions, including for specialty hospitals
Updating enrollment assumptions to reflect recent declines in AHCCCS enrollment
The bottom line: HEALTHII must continue to function as intended — supporting hospital reimbursement and access to care.
CMS releases FY 2027 proposed payment rules for IRFs and IPFs
Increase IRF payments by a net 2.8%, reflecting a 3.2% market basket update reduced by a 0.8 percentage point productivity cut and a 0.4% increase related to outlier payments. The standard IRF conversion factor would increase from $19,371 to $19,881.
Lower the outlier threshold to $8,689, increasing aggregate IRF payments.
Tighten coverage and operational requirements by requiring all therapies to begin within 36 hours of admission, preadmission screenings to document current functional status and initial interdisciplinary team meetings to occur within four days of admission.
Seek stakeholder input on future IRF payment reform, including potential shifts to clinical categories and comorbidity tiers similar to the SNF PPS.
The FY 2027 proposed IPF PPS rule would:
Increase IPF payments by a net 2.3%, reflecting a 3.1% market basket update reduced by a 0.8 percentage point productivity cut. The federal per diem base rate would increase from $892.87 to $912.58.
Limit outlier payments at the facility level, capping total outlier payments at 20% of annual IPF PPS payments. Facilities exceeding the cap would forfeit outlier payments.
Continue use of the IPPS wage index for FY 2027, while requesting comments on whether CMS should develop an IPF‑specific wage index in the future.
Reduce certain reporting burdens while introducing a new standardized assessment, removing two quality measures and implementing a required admission and discharge assessment (IPF‑PAI) for adult patients, with payment penalties for non‑reporting.
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 Monday, June 1, 2026.
President Trump’s proposed 2027 budget would reshape HHS and cut discretionary spending
The Trump administration’s proposed fiscal 2027 budget would cut discretionary funding for the Department of Health and Human Services (HHS) to $111.1 billion, a $15.8 billion reduction from enacted fiscal 2026 levels, while also reviving a broader effort to reorganize the department.
The administration calls for moving the 340B Drug Pricing Program from the Health Resources and Services Administration (HRSA) to the Centers for Medicare and Medicaid Services (CMS) and creating a new agency called “Administration for a Healthy America.”
The new entity would consolidate a wide range of programs across multiple agencies, including those related to rural health, workforce, maternal and child health, mental health and HIV/AIDS.
The budget also proposes major cuts to the National Institutes of Health while seeking targeted increases for certain telehealth initiatives.
Some elements could potentially be pursued administratively, but many would require congressional approval.
Congress declined to fund the proposed Administration for a Healthy America in the prior budget cycle and did not enact all of the proposed cuts to HHS.
Even so, the proposal signals the Trump administration’s continued interest in restructuring federal health programs, reducing health spending and changing 340B oversight.
Apply now: 2026 AzHHA Quality Awards
Applications for the 2026 AzHHA Quality Awards are now open!
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 outstanding achievements will be honored at the AzHHA Quality Awards Luncheon on Wednesday, Oct. 21, 2026, during the 2026 Arizona Hospital Leadership Conference.
The big picture: Applicants must be able to highlight a recent project, within the last 12 months, in:
Outstanding Patient/Community Impact
Workforce Engagement
A Top Overall Excellence Award will also be presented.
The deadline for submissions is 5 p.m. on Friday, May 29, 2026.
Fourth Circuit blocks West Virginia 340B contract pharmacy law
On Tuesday, March 31, 2026, drug manufacturers achieved a significant appellate win against a state 340B contract pharmacy law in the U.S. Court of Appeals for the Fourth Circuit.
The court upheld a preliminary injunction blocking West Virginia from enforcing S.B. 325, which was designed to stop drug manufacturers from limiting 340B pricing when covered entities use contract pharmacies.
The law required manufacturers to honor 340B discounts for drugs dispensed through contract pharmacy arrangements and barred manufacturers from imposing certain conditions, including claims-data submission requirements.
Yes, but: The Fourth Circuit’s decision does not resolve the national dispute regarding contract pharmacy access to 340B pricing.
Appellate courts have reached differing conclusions on similar state laws, with the Fifth and Eighth Circuits allowing state contract pharmacy protections to stand in Louisiana and Arkansas, respectively.
The split among the circuit courts creates more uncertainty for states considering similar legislation and increases the possibility of eventual Supreme Court review.
UnitedHealth’s $3B AI push could reshape payer–provider dynamics
A recent STAT News special report notes that UnitedHealth Group is investing at least $3 billion to expand the use of artificial intelligence across claims processing, prior authorization, billing and coverage decisions that affect millions of patients and providers nationwide.
What’s changing: UnitedHealth and Optum are using AI more broadly across administrative functions such as claims adjudication, prior authorization, fraud detection, clinical documentation and billing code selection, while also introducing AI‑enabled tools intended to help patients navigate benefits, respond to coverage questions and schedule care.
Many of these tools are offered to other payers and providers as well, extending their use beyond UnitedHealth plans.
Potential impacts on hospitals and providers:
Greater use of automation in coverage, coding and utilization decisions
Risk of denials, audits or payment delays when AI‑supported processes do not function as intended
Ongoing uncertainty about how and when AI is used to inform decisions
Opportunities for faster approvals and fewer manual steps in some cases
The bottom line: While UnitedHealth has described AI as a way to reduce administrative burden and improve efficiency, providers are raising concerns about transparency, oversight and the ability to understand or challenge AI‑supported decisions.
Hospitals may see faster workflows in some areas, but should also be prepared for greater automation and continued questions around visibility in coverage and payment decisions.
ACA premium subsidy reconciliation may cause surprise tax bills
Marketplace patients who received advance Affordable Care Act (ACA) premium tax credits may face unexpected tax bills if their actual annual income ends up higher than the income they projected when they enrolled.
The tax credit must be reconciled on the federal return using Form 8962 and Marketplace Form 1095-A, and patients who do not promptly report income or household changes to the Marketplace can wind up owing back part of the subsidy at tax time.
This risk is especially acute for patients with variable income, including those working multiple jobs, self-employed individuals and others whose hours or earnings fluctuate during the year.
This issue may become more significant going forward.
For tax year 2025, there is a cap on the repayment amount for many enrollees.
For tax years after 2025, IRS guidance indicates that the repayment caps no longer apply, meaning patients who receive more advance premium tax credits than they ultimately qualify for may have to repay the full excess amount to the IRS.
The biggest repayment risk may be for enrollees whose income rises above 400% of the federal poverty level during the year, which could require them to repay all subsidy amounts received in 2026.
As a practical matter, hospitals may want to encourage patients who are Marketplace enrollees to update projected income and household information during the year and to watch for Form 1095-A during tax season, since these repayment surprises can create financial stress and potentially affect patients’ ability to pay medical bills.
This year’s AzCHER Healthcare Emergency Preparedness Conference will be held June 9-10 at the Desert Willow Conference Center in Phoenix, Ariz.
The theme is “Many voices, one mission: Advancing healthcare preparedness together.”
Why it matters: This year’s one-and-a-half-day conference features sessions shaped by member feedback and brings together experts across healthcare, public health and emergency management.
Topics include workplace violence, behavioral threat assessment, regulatory updates, lessons learned and coordinated response.
Day two offers in-depth workplace violence and active-shooter preparedness training, including targeted instruction and hands-on exercise development to strengthen prevention, response and recovery in healthcare settings.
Wednesday, April 15, 2026 and Thursday, April 16, 2026 - Listening Sessions on ALTCS EPD Program The Arizona Health Care Cost Containment System (AHCCCS) is inviting members, family members, advocates and providers to participate in upcoming listening sessions focused on the Arizona Long Term Care Services (ALTCS) Elderly and/or Physically Disabled (EPD) Program. These sessions are designed to provide an opportunity for participants to share feedback and suggestions that AHCCCS will consider as part of new ALTCS EPD health plan contracts, which are scheduled to begin Oct. 1, 2027. Register for the Wednesday, April 15, 2026 session or the Thursday, April 16, 2026 session.
Monday, April 27, 2026, Wednesday, April 29, 2026 and Thursday, April 30, 2026 - Getting started with AHCCCS Solution Center webinar The Arizona Health Care Cost Containment System (AHCCCS) is launching a AHCCCS Solutions Center, a new, centralized platform designed to make it easier to connect with AHCCCS and submit requests on behalf of providers. This webinar will introduce this new platform and walk participants through the initial setup process. Register for one session: Monday, April 27; Wednesday, April 29 or Thursday, April 30.
Thursday, April 30, 2026 - AzAHQ 2026 Spring Virtual Conference: Quality’s Role in Organizational Culture Join the Association for Healthcare Quality of Arizona (AzAHQ) to explore the role of quality leadership in fostering a culture of safety and quality within organizations from the boardroom to frontline employees. This conference will explore the critical interrelationship between quality and financial outcomes, distinguish between traditional, siloed quality models and a true enterprise-wide culture of quality, understand quality’s role in healthcare violence prevention and staff safety, and action plan development. Register now.
Friday, May 1, 2026 - From Crisis to Care: Improving Outcomes in Arizona’s Behavioral Health System The Arizona Public Health Association’s 98th Annual Conference will focus on strengthening Arizona’s behavioral health system and improving outcomes for people with mental and behavioral health needs. This year’s conference will highlight innovative strategies, evidence-based practices and policy approaches that move the system beyond crisis response and toward sustainable, person-centered care. Learn more and register.
Friday, May 15, 2026 - West CMS QIN-QIO Region 7 Emergency Preparedness Webinar In 2023 and 2025, the Maui, Palisades and Eaton fires forced urgent evacuations that tested emergency preparedness plans across the healthcare system and challenged hospitals, nursing homes, public health agencies and emergency responders. The Health Services Advisory Group is hosting a webinar to bring together firsthand insights on what worked, where challenges emerged and how lessons learned can strengthen emergency preparedness across all provider types. Register today.
June 9-10, 2026 - 2026 AzCHER Healthcare Emergency Preparedness Conference This year’s theme is “Many voices, one mission: Advancing healthcare preparedness together.” The one-and-a-half-day conference features sessions shaped by member feedback and brings together experts across healthcare, public health and emergency management. Register now.
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 and registration information will be shared in the coming months. Questions may be directed to communications@azhha.org.
