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Connection newsletter 1-18-24

Read about an update from week two at the Legislature, the state budget and current trends for hospital operating margins.



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Connection Newsletter

By AzHHA Communications ● Jan. 18, 2024

Smart Brevity® count: 5 mins...1376 words

This week, read about:

  • An update from week two at the Legislature.
  • The state budget.
  • Current trends for hospital operating margins.

Week two: Legislative update

Arizona State Capitol

The Legislature had a short week due to Martin Luther King Jr. Day taking place on Monday.

  • Due to the holiday, the House Health Committee did not meet this week. The Senate Health Committee considered four bills in their meeting Tuesday, all of which the AzHHA Policy Team is monitoring.
  • As of Wednesday morning, we have seen 802 bills introduced with still a few weeks left until the introduction deadline.

The big picture: As mentioned last week, our two priority bills for this session include:

  1. Health plan accountability, HB2035 sponsored by Rep. David Cook (R-7).
  2. Interfacility transportation, HB2290 sponsored by Rep. Alexander Kolodin (R-3).

Stay tuned as we help move these bills through the legislative process on behalf of AzHHA members!


State budget update

PBMs are becoming the easy target on drug pricing

Last Friday, Governor Katie Hobbs released her budget with a $16 billion spending plan.

  • The plan attempts to offset Arizona’s projected budget shortfall of $1.7 billion.

What’s new: The budget is broken into seven different spending categories that include, of interest, long-term care reform and prescription drug affordability.

Healthcare licensing reform: Protecting Arizona’s most vulnerable

  • Arizona is enhancing accountability in healthcare settings, including sober living and long-term care facilities, through a $24.8 million investment in healthcare licensing reform.
  • This initiative will improve inspections, enforce standards and enhance licensing procedures.

Healthcare access: Prescription drug affordability

  • To combat the financial burden of high prescription drug costs in Arizona, Governor Hobbs' Executive Budget proposes the establishment of the Prescription Drug Affordability Division at the Department of Insurance and Financial Institutions (DIFI).
  • This initiative aims to foster affordability and savings in healthcare by regulating pharmacy benefit managers (PBMs).
  • PBMs will need approval for increasing drug prices beyond inflation and must report on rebates and incentives, promoting transparency. The plan also includes setting maximum prices for common medications and prohibiting "spread pricing" to reduce taxpayer impact.

What’s next: The legislature is not likely to enact much of the Governor’s plan—they have called it “an unserious mess.”

  • If you have any questions regarding the proposed budget, please reach out directly to AzHHA’s Director of Government Relations Damien Johnson.

Hospital operating margins still low and stable

Animated GIF of two hospitals merging, with a dollar sign appearing in between them

In KaufmanHall’s November 2023 financial report, which shows data from more than 1,300 hospitals nationwide, hospital operating margins continue to remain low, nudging up to 2% in November. This marks the sixth continuous month where the margins range from 1-2%.

  • While hospital margins improved slightly from the prior month, the disparity between higher and lower performing hospitals remains wide.
  • This continues to remain a concern since most experts agree that hospitals need to have operating margins of approximately 4-6% to be able reinvest in their facilities and equipment.
  • Average length of stay, which is correlated with acuity, has been higher since the pandemic, but declined in November from prior months.

The bottom line: KaufmanHall recommends hospitals evaluate the following:

  1. Is our market large enough?
  2. Is our hospital essential in our market?
  3. How can our competitive position be strengthened?

AHCCCS renewals update

What’s new: As of the beginning of January, AHCCCS has disenrolled 457,753 from AHCCCS, 18% of those whose eligibility is being determined.

  • Another 1,439,472 (57%) have had their renewals approved, 366,100 (14%) are in the process of being renewed, and 282,129 (11%) are planned to be renewed through March 2024.

Why it matters: From April 2023 through March 2024, AHCCCS will re-determine every member’s eligibility. Those members who are determined to be ineligible, either because their incomes are too high or a lack of response to requests to update information, will be disenrolled.

👉Anyone who has been notified that they were disenrolled for procedural reasons has 90 days to submit a renewal form that can restore their coverage without filling out a new application.


New toolkit to mitigate risk associated with online tracking technologies

🆕AzHHA is offering a new toolkit for members to help you mitigate the increased risk in utilizing online tracking technologies which has become standard practice for hospitals.

Go deeper: The increased legal exposure of the use of online tracking technologies is a growing risk for hospitals.

  • Sharing individually identifiable user data with third-party tracking vendors without proper agreements in place or consent from the individual now presents significant risk for any organization working in the healthcare space.
  • Hospitals should be evaluating their current use of online tracking technologies, mitigating any potential harm, reducing regulatory and litigation risk, and creating appropriate policies and procedures for managing online tracking technologies moving forward.

The toolkit is available on AzHHA’s Box platform. Email [email protected] to receive the password to a downloadable version of the toolkit.


Informational webinar: Implications of the Trusted Exchange Framework and Common Agreement (TEFCA)

In support of nationwide data exchange requirements, the Arizona Society for Healthcare Attorneys (AzSHA) is hosting a webinar titled “TEFCA is Here! What it Means for Health Care in Arizona” from noon to 1 p.m. MST on Tuesday, Jan. 23.

Why it matters: In this presentation:

  • Zoe Barber, policy director for the Sequoia Project, will explain what TEFCA is, Sequoia Project’s role as recognized coordinating entity (RCE) and what to expect in 2024.
  • Jay Nakashima, executive director of eHealth Exchange, will provide insight into the rigorous application, vetting and testing process for qualified health information networks (QHINs) and how eHealth Exchange will be implementing TEFCA participation for potential participants and sub-participants.
  • Melissa Soliz, data privacy and interoperability attorney with Coppersmith Brockelman, will provide the legal background for TEFCA, and what legal and compliance representatives of organizations interested in TEFCA participation should consider.

Register now for this virtual webinar. Program costs are $20 for AzSHA members and $40 for non-members.


Support available through the Inflation Reduction Act

What’s new: The Department of Health and Human Services (HHS) will host a series of upcoming briefings to help health facilities learn about opportunities available through the Inflation Reduction Act.

Why it matters: The sessions are designed to help healthcare providers and safety net organizations take advantage of tax credits, grants and other supports made available by the Inflation Reduction Act.

👉Breakout sessions begin on Thursday, Feb. 1 for the following groups:


🤰Maternal Health Awareness Day

Tuesday, Jan. 23 is Maternal Health Awareness Day.

  • This year’s theme is Access in Crisis to illustrate how access to maternal healthcare has increasingly become unobtainable for many patients in the U.S.
  • Why it matters: Ongoing financial, staffing and policy challenges have forced hospital administrators in both rural and urban areas to shutter their labor and delivery units, causing patients to travel longer distances or go without needed care.

Go deeper: The American College of Obstetricians and Gynecologists (ACOG) will host a live webinar at noon (MST) on Tuesday, Jan. 23.

  • The webinar will feature people who are navigating and working to mitigate the maternal health and reproductive healthcare access crisis in the U.S.
Learn more and register.


Tuesday, Jan. 30 - Crisis Standards of Care tabletop exercise
AzCHER will conduct a virtual tabletop exercise that will address Crisis Standards of Care in Arizona. Registration closes on Monday, Jan. 29. Learn more and register.

Tuesday, Feb. 6 - Arizona Rural and Public Health Policy Forum 2024
Each year, this forum focuses on issues of the day that are affecting the health of rural Arizonans. The event will be held at the Virginia G. Piper Auditorium located at 600 E. Van Buren Street in Phoenix. Register now.

Wednesday, Feb. 21 - Introduction to POLST 
Join physician orders for life-sustaining treatment paradigm (POLST) for their one-hour virtual workshops equipping healthcare professionals with knowledge and resources to begin using POLST in Arizona. Register here.




Share your thoughts! Email [email protected].