SB1838 • 2026

2026-2027; health care

SB1838 - 2026-2027; health care

Budget Healthcare Labor Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: David C. Farnsworth, John Kavanagh
Last action: 2026-05-04
Official status: Senate committee of the whole
Effective date: Not listed

Plain English Breakdown

Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.

2026-2027; health care

SB1838 - 572R - Senate Fact Sheet Assigned to ATT�� AS VETOED ARIZONA STATE SENATE Fifty-Seventh Legislature, Second Regular Session VETOED FACT SHEET FOR H.B.

What This Bill Does

SB1838 - 572R - Senate Fact Sheet Assigned to ATT�� AS VETOED ARIZONA STATE SENATE Fifty-Seventh Legislature, Second Regular Session VETOED FACT SHEET FOR H.B.
4145/S.B.
1838 2026-2027; health care.
Purpose Makes statutory and session law changes relating to health care necessary to implement the FY 2027 state budget.

Limits and Unknowns

This entry is temporarily using official source text because the generated explanation could not be confirmed against the official bill text during the last sync.

Bill History

2026-05-04 Senate
Senate committee of the whole
2026-05-04 Senate
Senate majority caucus
2026-05-04 Senate
Senate minority caucus
2026-04-28 Senate
Senate second read
2026-04-27 Senate
Senate Rules: PFC
2026-04-27 Senate
Senate Appropriations, Transportation and Technology: DP
2026-04-27 Senate
Senate first read

Official Summary Text

SB1838 - 572R - Senate Fact Sheet

Assigned to
ATT������������������������������������������������������������������������������������������������������������������������������ AS
VETOED

ARIZONA STATE SENATE

Fifty-Seventh
Legislature, Second Regular Session

VETOED

FACT SHEET FOR
H.B. 4145/S.B. 1838

2026-2027; health care.

Purpose

Makes statutory and session law changes relating to health care necessary
to implement the FY 2027 state budget.

Background

The Arizona Constitution prohibits substantive law from being included in
the general appropriations, capital outlay appropriations and supplemental
appropriations bills. However, it is often necessary to make statutory and
session law changes to effectuate the budget. Thus, separate bills called
budget reconciliation bills (BRBs) are introduced to enact these provisions.
Because BRBs contain substantive law changes, the Arizona Constitution provides
that they become effective on the general effective date, unless an emergency
clause is enacted.

������������������ H.B. 4145 contains the budget reconciliation
provisions for changes relating to health care.

Provisions

Arizona Health Care Cost Containment System (AHCCCS)
�
Eligibility and Enrollment

(Effective
January 1, 2027)

Requires AHCCCS to enter into
a data matching agreement with the Arizona Department of Revenue (ADOR) to
identify members who have lottery or gambling winnings of $3,000 or more.

Requires
AHCCCS to review the information on lottery or gambling winnings on at least a
monthly basis.

Requires
AHCCCS, if a member fails to disclose winnings of $3,000 or more and is
identified through the database match, to consider the member�s failure to
disclose the information a violation of AHCCCS's terms of eligibility.

Requires
AHCCCS, at least monthly, to:

receive and review death record information from the Department of
Health Services concerning members and adjust system eligibility accordingly;
and

review information concerning members that indicates a change in
circumstances that may affect eligibility, including potential changes in
residency as identified by out-of-state electronic benefit transfer card
transactions.

Requires
AHCCCS, at least quarterly, to redetermine eligibility of able-bodied adults
who are not American Indians or Alaska Natives and to receive and review
information indicating changes in circumstances that may affect eligibility
from:

the Department of Economic Security, including changes to unemployment
benefits, employment status and wages; and

ADOR,
including potential changes in income, wages or residency as identified by tax
records.

Prohibits
AHCCCS from:

accepting self-attestation of income, residency, age, household
composition, caretaker or relative status or receipt of other health insurance
coverage without independent verification before enrollment, unless required by
federal law;

requesting authority to waive or decline to periodically check any
available income-related data sources to verify eligibility; or

accept
eligibility determinations of the system from a federally-facilitated exchange
established in accordance with federal law.

Allows AHCCCS to accept assessments from a federally-facilitated
exchange established in accordance with federal law.

Requires AHCCCS to independently verify eligibility and make eligibility
determinations from the assessments accepted from a federally-facilitated
exchange.

Requires AHCCCS to review a member�s eligibility if it receives
information concerning that member indicating a change in circumstances that
may affect eligibility.

10.

Allows AHCCCS to:

execute a memorandum of understanding with any other state department in
Arizona for information required to be shared in accordance with the
eligibility verification requirements; and

contract
with one or more independent vendors to provide additional data or information
that may indicate a change in circumstances and affect an individual�s
eligibility.

11.

Requires
AHCCCS, by April 1, 2027, to submit to the federal Centers for Medicare and
Medicaid Services (CMS), any waiver requests necessary to implement eligibility
verification requirements.

12.

Requires
AHCCCS to request approval from CMS for a section 1115 waiver to allow AHCCCS
to eliminate mandatory hospital presumptive eligibility and restrict
presumptive eligibility determinations to children and pregnant women
eligibility groups.

13.

Requires
AHCCCS, if approval for the section 1115 waiver is denied, to resubmit a
subsequent request for approval within 12 months after each denial.

14.

Prohibits
AHCCCS, unless required by federal law, from designating itself as a qualified
health entity for the purpose of making presumptive eligibility determinations
or for any purpose not expressly authorized by state law.

15.

Requires a qualified
hospital, when making presumptive eligibility determinations, to do all of the
following:

notify AHCCCS of each presumptive eligibility determination within five
working days after the date the determination is made;

assist individuals who are determined presumptively eligible for AHCCCS
coverage with completing and submitting a full application for AHCCCS
eligibility;

notify each applicant in writing and on all relevant forms with plain
language and large print that if the applicant does not file a full application
for coverage eligibility with AHCCCS before the last day of the following
month, presumptive eligibility coverage will end of the last day of the
following month; and

notify each applicant that if the applicant files a full application for
coverage eligibility with AHCCCS before the last day of the following month,
presumptive eligibility coverage will continue until an eligibility
determination is made on the application that is filed.

16.

Requires AHCCCS to apply the
following standards to establish and ensure the accurate presumptive
eligibility determinations are made by each qualified hospital:

whether the qualified hospital submitted to AHCCCS the presumptive
eligibility card within five working days after the determination date;

whether a full application for system eligibility was received by AHCCCS
before the expiration of the presumptive eligibility period; and

whether the individual was found to be eligible under the system if a
full application was received by AHCCCS.

17.

Requires AHCCCS to notify a
qualified hospital in writing within five working days after AHCCCS determines
that the hospital fails to meet the established standards for any presumptive
eligibility determination made by the hospital.

18.

Requires the determination
notice to include:

for a first violation:

a description of the standard that was not met and an explanation of why
it was not met; and

ii.

confirmation
that a second finding will require that all applicable hospital staff
participate in mandatory training by AHCCCS on hospital presumptive eligibility
rules;

for a second violation:

a description of the standard that was not met and an explanation of why
it was not met; and

ii.

confirmation
that all appliable hospital staff will be required to participate in a
mandatory training by AHCCCS on hospital presumptive eligibility rules,
including the date, time and location of the training as determined by AHCCCS;

iii.

a description of
available appeals procedures by which a qualified hospital may dispute the
findings and remove the finding from the qualified hospital�s record by
providing clear and convincing evidence that the standard was met; and

iv.

confirmation
that if the qualified hospital subsequently fails to meet any of the standards
for presumptive eligibility for any determination, the qualified hospital will
no longer by qualified to make presumptive eligibility determinations under the
system;

for a third violation:

a description of the standard that was not met and an explanation of why
it was not met;

ii.

a
description of available appeals procedures by which a qualified hospital may
dispute the finding and remove the finding from the hospital�s record by
providing clear and convincing evidence that the standard was met; and

iii.

confirmation
that, effective immediately, the hospital is no longer qualified to make
presumptive eligibility determinations under the system.

AHCCCS �
Miscellaneous

19.

Continues
to require AHCCCS to prepare an annual report regarding the costs, aggregate
spending on and aggregate utilization of mental health medications, including
antipsychotics, antidepressants, anxiolytics, stimulants and sedative hypnotics
,
and submit it to the:

Governor;

chairpersons of the Health and Human Services Committees of the Senate
and House of Representatives, or their successor committees;

Director of JLBC;

Director of the Governor's Office of Strategic Planning and Budgeting;
and

Secretary
of State.

20.

Requires
the AHCCCS report on the costs and utilization of mental health medications to
include the:

aggregate gross amount spent for each mental health medication class;

annual aggregate net amount spent for each mental health medication
class after rebates, without disclosing any information about
manufacturer-negotiated supplemental rebate agreements for any specific drug;
and

average
annual cost by class for generic and nongeneric mental health medications.

21.

Requires the AHCCCS report
on the costs and utilization of mental health medications, for antipsychotic
and antidepressant medications, without disclosing any information about
manufacturer-negotiated supplemental rebate agreements that could compromise the
competitive or proprietary nature of the agreements, to include the:

total number of prior authorizations submitted for nonpreferred
antipsychotic and antidepressant medications;

percentage of prior authorization approvals and denials;

generic antipsychotic and antidepressant medication utilization
percentages; and

total
amount of antipsychotic and antidepressant medication claims.

22.

Continues
to require AHCCCS to transfer to the counties any excess monies necessary to
comply with the federal Patient Protection and Affordable Care Act, regarding
the counties' proportional share of the state's contribution.

23.

Continues
to allow AHCCCS, for the contract year beginning October 1, 2026, and ending on
September 30, 2027, to extend risk contingency rate settings for all managed
care organizations (MCOs) and funding for all MCO administrative funding levels
imposed for the contract year beginning October 1, 2010, and ending September
30, 2011.

24.

Declares
the Legislature's intent that AHCCCS implement a Medicaid program within the
available appropriation for FY 2027.

State Employee
Health Plan

25.

Directs the
Arizona Department of Administration (ADOA) to increase health insurance
premium contributions by 10 percent in plan year 2027 for state officers and
employees, including former state employees who enrolled in or continued health
benefits upon retirement.

26.

Declares
the Legislature's intent that ADOA further increase health insurance premium
contributions by 5 percent in each of plan years 2028 and 2029.

Arizona
Long Term Care System (ALTCS)

27.

Outlines the following FY
2027 county contributions for ALTCS:

County

Contribution Amount

Apache

$792,400

Cochise

$8,055,900

Coconino

$2,378,900

Gila

$3,365,400

Graham

$2,320,400

Greenlee

$138,200

La
Paz

$756,100

Maricopa

$298,895,000

Mohave

$12,022,500

Navajo

$3,279,800

Pima

$68,282,000

Pinal

$19,662,800

Santa
Cruz

$3,204,100

Yavapai

$8,793,400

Yuma

$13,867,000

28.

Directs the State Treasurer
to collect from the counties the difference between the total contribution and
the counties' share of the state's actual contribution, if the overall cost for
ALTCS exceeds the amount specified in the FY 2027 General Appropriations Act.

29.

Requires the counties' share
of the state's contribution to comply with any federal maintenance of effort
requirements.

30.

Requires the Director of
AHCCCS to notify the State Treasurer of the counties' share of the state's
contribution and report the amount to the Director of the Joint Legislative
Budget Committee.

31.

Directs the State Treasurer
to:

withhold
from any other monies payable to a county from any available state funding
source, excluding the Highway User Revenue Fund (HURF), an amount necessary to
fulfill that county's contribution requirement; and

deposit
the withheld amounts and amounts paid by counties into the ALTCS Fund.

Disproportionate
Share Hospital (DSH) Payments

32.

Establishes the FY 2027 DSH
payments as follows:

$28,474,900
for the Arizona State Hospital (ASH), of which the federal portion is deposited
in the state General Fund (GF); and

$884,800
for private qualifying DSHs, which are hospitals that meet the mandatory
definition of
qualifying DSHs
as defined by the federal Social Security
Act (SSA), or DSHs that are located in Yuma County and contain at least 300
beds.

33.

Outlines the following
requirements once AHCCCS files a claim with the federal government and receives
federal financial participation based on the amount certified by ASH:

if
the certification is for an amount less than $28,474,900, AHCCCS must notify
the Governor, the President of the Senate and the Speaker of the House and must
deposit the entire amount of federal financial participation in the state GF;
and

requires
the certified public expense (CPE) form to contain both the total amount of
qualifying DSH expenditures and the amount limited by the SSA.

34.

Stipulates that, after DSH
payment distributions are made, the allocation of DSH payments designated to
political subdivisions, tribal governments and universities must be provided in
the following order of priority to qualifying private hospitals located in a
county with a population of:

fewer
than 400,000 persons;

at
least 400,000 but fewer than 900,000 persons; and

900,000
persons or more.

35.

Requires
ASH, by March 31, 2027, to provide a CPE form for qualifying DSH expenditures
to AHCCCS.

36.

Continues
to require AHCCCS to assist ASH in determining the amount of qualifying DSH
expenditures.

County
Acute Care

37.

Outlines the following FY
2027 county acute care contributions:

County

Contribution Amount

Apache

$268,800

Cochise

$2,214,800

Coconino

$742,900

Gila

$1,413,200

Graham

$536,200

Greenlee

$190,700

La
Paz

$212,100

Maricopa

$14,417,300

Mohave

$1,237,700

Navajo

$310,800

Pima

$14,951,800

Pinal

$2,715,600

Santa
Cruz

$482,800

Yavapai

$1,427,800

Yuma

$1,325,100

38.

Requires the State
Treasurer, if a county does not provide funding as specified, to:

subtract
the amount owed by the county from any payments required to be made by the
State Treasurer to the county plus interest on that amount, retroactive to the
first day the funding was due; and

if
the amount withheld is insufficient to meet that county�s funding requirement,
withhold from any other monies payable to that county from any available state
funding source, excluding HURF, an amount necessary to fulfill that county�s
requirement.

39.

Requires payments equal to
one twelfth of the total amount for county acute care contributions to be made
to the State Treasurer by the fifth day of each month and requires the State
Treasurer, on request from the Director of AHCCCS, to require that up to three
months' payment be made in advance, if necessary.

40.

Requires the State Treasurer
to deposit the amounts paid and withheld into the AHCCCS Fund and the ALTCS
Fund.

41.

Allows the Director of
AHCCCS, if payments made exceed the amount required to meet the costs incurred
by AHCCCS for the hospitalization and medical care of eligible persons, to
instruct the State Treasurer to:

reduce
the remaining payments to be paid by a specified amount; or

provide
to the counties specified amounts from the AHCCCS Fund and the ALTCS Fund.

42.

Declares the Legislature's
intent that Maricopa County acute care contributions be reduced in each
subsequent year according to the changes in the Gross Domestic Product price
deflator.

Miscellaneous

43.

Continues to exclude county
contributions for Proposition 204 administrative costs from county expenditure
limitations.

44.

Continues to exclude county
contributions related to the costs of inpatient, in-custody competency
restoration treatment from county expenditure limitations.

45.

Becomes effective on the
general effective date, with a delayed effective date, as noted.

Governor's Veto Message

The Governor indicates in her
veto message
that
H.B. 4145, and this version of the FY 2027 state budget as a whole, would cause
Arizona to default on its debt obligations, endanger vulnerable children, cut
public safety funding and provide tax breaks for billionaires, data centers and
special interests. The Governor outlines her specific concerns, including cuts
to funding for specified agencies and programs, and invites the Legislature to
return to the negotiating table.

House Action
����������������������������������������������������������
Senate
Action

APPROP�������� 4/28/26����� DP������ 11-7-0-0������������ ATT���������������� 4/28/26����� DP��������� 6-4-0

3
rd

Read��������� 4/29/26����������������� 33-20-7�������������� 3
rd

Read��������� 5/4/26���������������������� 16-12-2

(H.B. 4145 was substituted for S.B. 1838
on 3rd Read)

Vetoed by the Governor on 5/5/26

Prepared by Senate Research

May 7, 2026

MM/hk

Current Bill Text

Read the full stored bill text

SB1838 - 572R - S Ver

Senate Engrossed

2026-2027; health
care

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SENATE BILL 1838

AN
ACT

Amending title 36, chapter 29, article 1,
Arizona Revised Statutes, by adding sections 36-2903.18 and 36-2903.19;
appropriating monies; relating to health care.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section 1. Title 36, chapter 29, article 1,
Arizona Revised Statutes, is amended by adding sections 36-2903.18 and 36-2903.19,
to read:

START_STATUTE
36-2903.18.

Data matching agreements; review of member eligibility
information; quarterly eligibility redetermination; waiver requests

A. The administration shall enter
into a data matching agreement with the department of
revenue
to identify members who have lottery or gambling winnings of $3,000 or
more. the administration shall review this information On at least a
monthly basis. If a member fails to disclose winnings of $3,000 or
more and is identified through the database match, the administration shall
consider the member's failure to disclose the information a violation of the
system's terms of eligibility.

B. On at least a monthly basis, the
administration shall
:

1. Receive and review death records
information from the department of health services concerning members and shall
adjust system eligibility accordingly.

2. Review information concerning
members that indicates a change in circumstances that may affect eligibility,
including potential changes in residency as identified by out-of-state
electronic benefit transfer card transactions.

C. On a quarterly basis, the
administration shall
redetermine the eligibility of able-bodied
adults who are eligible pursuant to section 36-2901, 36-2901.01 or
36-2901.07 and who are not american indians or alaskan
natives. For the purposes of the redetermination process, the
administration shall receive and review information from
both:

1. the department of revenue
concerning members that indicates a change in circumstances that may affect
eligibility for the system, including potential changes in income, wages or
residency as identified by tax records.

2. the department of economic
security concerning members that indicates a change in circumstances that may
affect eligibility, including changes to unemployment benefits, employment
status or wages.

D. Unless required by federal law,
the administration may not accept self-attestation of income, residency,
age, household composition, caretaker or relative status or receipt of other
health insurance coverage without independent verification before
enrollment. The administration may not request authority to waive or
decline to periodically check any available income-related data sources
to verify eligibility.

E. The administration may not accept
eligibility determinations for the system from an exchange established pursuant
to 42 United States code section 18041(
c
). The
administration may accept assessments from an exchange established pursuant to
42 United States code section 18041(
c
) but shall
independently verify eligibility and make eligibility determinations.

F. If the administration receives
information concerning a member that indicates a change in the member's
circumstances that may affect eligibility, the administration shall review the
member's eligibility.

G. The administration may execute a
memorandum of understanding with any other department of this state for
information required to be shared pursuant to this section. The
administration may contract with one or more independent vendors to provide
additional data or information that may indicate a change in circumstances and
affect an individual's eligibility.

H. On or before April 1, 2027, the
administration shall submit to the centers for medicare and medicaid services
any waiver requests necessary to implement this section.
END_STATUTE

START_STATUTE
36-2903.19.

Presumptive eligibility; limits; standards; notification;
training

A. The administration shall request
approval from the centers for medicare and medicaid services for a section 1115
waiver to allow the administration to eliminate mandatory hospital presumptive
eligibility and restrict presumptive eligibility determinations to children and
pregnant women eligibility groups. If approval for the section 1115
waiver is denied, the administration shall resubmit a subsequent request for
approval within twelve months after each denial.

B. Unless required by federal law,
the administration may not designate itself as a qualified health entity for
the purpose of making presumptive eligibility determinations or for any purpose
not expressly authorized by state law.

C. When making presumptive
eligibility determinations, a qualified hospital shall do all of the following:

1. Notify the administration of each
presumptive eligibility determination within five working days after the date
the determination is made.

2. Assist individuals who are
determined presumptively eligible under the system with completing and
submitting a full application for system eligibility.

3. Notify each applicant in writing
and on all relevant forms with plain language and large print that if the
applicant does not file a full application for system eligibility with the
administration before the last day of the following month, presumptive
eligibility coverage will end on the last day of the following month.

4. Notify each applicant that if the
applicant files a full application for system eligibility with the
administration before the last day of the following month, presumptive
eligibility coverage will continue until an eligibility determination is made
on the application that is filed.

D. The administration shall apply the
following standards to establish and ensure that accurate presumptive
eligibility determinations are made by each qualified hospital:

1. Whether the qualified hospital
submitted to the administration the presumptive eligibility card within five
working days after the determination date.

2. Whether a full application for
system eligibility was received by the administration before the expiration of
the presumptive eligibility period.

3. If a full application was received
by the administration, whether the individual was found to be eligible under
the system.

E. If the administration determines
that a qualified hospital fails to meet any of the standards established under
subsection D of this section for any presumptive eligibility determination that
the qualified hospital made, the administration shall notify the qualified
hospital in writing within five days after the determination. The
notice must include:

1. For the first violation, both of
the following:

(
a
) A
description of the standard that was not met and an explanation of why it was
not met.

(
b
) Confirmation
that a second finding will require that all applicable hospital staff
participate in mandatory training by the administration on hospital presumptive
eligibility rules.

2. For the second violation, all of
the following:

(
a
) A
description of the standard that was not met and an explanation of why it was
not met.

(
b
) Confirmation
that all applicable hospital staff will be required to participate in mandatory
training by the administration on hospital presumptive eligibility rules,
including the date, time and location of the training as determined by the
administration.

(
c
) A
description of available appeals procedures by which a qualified hospital may
dispute the finding and remove the finding from the qualified hospital's record
by providing clear and convincing evidence that the standard was met.

(
d
) Confirmation
that if the qualified hospital subsequently fails to meet any standard for
presumptive eligibility for any determination, the qualified hospital will no
longer be qualified to make presumptive eligibility determinations under the
system.

3. For the third violation, all of
the following:

(
a
) A
description of the standard that was not met and an explanation of why it was
not met.

(
b
) A
description of available appeals procedures by which a qualified hospital may
dispute the finding and remove the finding from the qualified hospital's record
by providing clear and convincing evidence that the standard was met.

(
c
) Confirmation
that, effective immediately, the qualified hospital is no longer qualified to
make presumptive eligibility determinations under the system.

END_STATUTE

Sec. 2.
ALTCS; county
contributions; fiscal year 2026-2027

A. Notwithstanding section
11-292, Arizona Revised Statutes, county contributions for the Arizona
long-term care system for fiscal year 2026-2027 are as follows:

1. Apache���������������������������������� $ 792,400

2. Cochise��������������������������������� $ 8,055,900

3. Coconino�������������������������������� $ 2,378,900

4. Gila������������������������������������ $ 3,365,400

5. Graham���������������������������������� $ 2,320,400

6. Greenlee�������������������������������� $ 138,200

7. La Paz���������������������������������� $ 756,100

8. Maricopa�������������������������������� $298,895,000

9. Mohave���������������������������������� $ 12,022,500

10. Navajo��������������������������������� $ 3,279,800

11. Pima����������������������������������� $ 68,282,000

12. Pinal���������������������������������� $ 19,662,800

13. Santa Cruz����������������������������� $ 3,204,100

14. Yavapai�������������������������������� $ 8,793,400

15. Yuma����������������������������������� $ 13,867,000

B. If the overall cost for
the Arizona long-term care system exceeds the amount specified in the general
appropriations act for fiscal year 2026-2027, the state treasurer shall
collect from the counties the difference between the amount specified in
subsection A of this section and the counties' share of the state's actual
contribution. The counties' share of the state's contribution must
comply with any federal maintenance of effort requirements. The
director of the Arizona health care cost containment system administration
shall notify the state treasurer of the counties' share of the state's
contribution and report the amount to the director of the joint legislative
budget committee. The state treasurer shall withhold from any other
monies payable to a county from whatever state funding source is available an
amount necessary to fulfill that county's requirement specified in this
subsection. The state treasurer may not withhold distributions from
the Arizona highway user revenue fund pursuant to title 28, chapter 18, article
2, Arizona Revised Statutes.� The state treasurer shall deposit the amounts
withheld pursuant to this subsection and amounts paid pursuant to subsection A
of this section in the long-term care system fund established by section 36-2913,
Arizona Revised Statutes.

Sec. 3.
AHCCCS; disproportionate share payments; fiscal year
2026-2027

A. Disproportionate
share payments for fiscal year 2026-2027 made pursuant to section
36-2903.01, subsection O, Arizona Revised Statutes, include:

1. $28,474,900 for the
Arizona state hospital. The Arizona state hospital shall provide a
certified public expense form for the amount of qualifying disproportionate
share hospital expenditures made on behalf of this state to the Arizona health
care cost containment system administration on or before March 31,
2027. The administration shall assist the Arizona state hospital in
determining the amount of qualifying disproportionate share hospital
expenditures. Once the administration files a claim with the federal
government and receives federal financial participation based on the amount
certified by the Arizona state hospital, the administration shall deposit the
entire amount of federal financial participation in the state general
fund. If the certification provided is for an amount less than
$28,474,900, the administration shall notify the governor, the president of the
senate and the speaker of the house of representatives and shall deposit the
entire amount of federal financial participation in the state general
fund. The certified public expense form provided by the Arizona
state hospital must contain both the total amount of qualifying
disproportionate share hospital expenditures and the amount limited by section
1923(g) of the social security act.

2. $884,800 for private
qualifying disproportionate share hospitals.� The Arizona health care cost
containment system administration shall make payments to hospitals consistent
with this appropriation and the terms of the state plan, but payments are
limited to those hospitals that either:

(
a
) Meet
the mandatory definition of disproportionate share qualifying hospitals under
section 1923 of the social security act.

(
b
) Are
located in Yuma county and contain at least three hundred beds.

B.
After the distributions made pursuant to subsection A of
this section, the allocations of disproportionate share hospital payments made
pursuant to section 36-
2903.01,
subsection P, Arizona Revised Statutes, shall be made available in the
following order to qualifying private hospitals that are:

1. Located in a county with
a population of less than four hundred thousand persons.

2. Located in a county with
a population of at least four hundred thousand persons but less than nine
hundred thousand persons.

3. Located in a county with
a population of at least nine hundred thousand persons.

Sec. 4.
AHCCCS transfer; counties; federal monies; fiscal year
2026-2027

On or
before December 31, 2027, notwithstanding any other law, for fiscal year 2026-2027,
the Arizona health care cost containment system administration shall transfer
to the counties the portion, if any, as may be necessary to comply with section
10201(c)(6) of the patient protection and affordable care act (P.L. 111-148),
regarding the counties' proportional share of this state's contribution.

Sec. 5.
County acute care
contributions; fiscal year 2026-2027; intent

A. Notwithstanding section
11-292, Arizona Revised Statutes, for fiscal year 2026-2027 for the provision
of hospitalization and medical care, the counties shall contribute the
following amounts:

1. Apache ��������������������������������� $ 268,800

2. Cochise��������������������������������� $ 2,214,800

3. Coconino�������������������������������� $ 742,900

4. Gila������������������������������������ $ 1,413,200

5. Graham���������������������������������� $ 536,200

6. Greenlee�������������������������������� $ 190,700

7. La Paz���������������������������������� $ 212,100

8. Maricopa�������������������������������� $14,417,300

9. Mohave���������������������������������� $ 1,237,700

10. Navajo��������������������������������� $ 310,800

11. Pima����������������������������������� $14,951,800

12. Pinal���������������������������������� $ 2,715,600

13. Santa Cruz����������������������������� $ 482,800

14. Yavapai�������������������������������� $ 1,427,800

15. Yuma����������������������������������� $ 1,325,100

B. If a county does not
provide funding as specified in subsection A of this section, the state
treasurer shall subtract the amount owed by the county to the Arizona health
care cost containment system fund and the long-term care system fund
established by section 36-2913, Arizona Revised Statutes, from any payments
required to be made by the state treasurer to that county pursuant to section
42-5029, subsection D, paragraph 2, Arizona Revised Statutes, plus interest on
that amount pursuant to section 44-1201, Arizona Revised Statutes, retroactive
to the first day the funding was due. If the monies the state
treasurer withholds are insufficient to meet that county's funding requirements
as specified in subsection A of this section, the state treasurer shall
withhold from any other monies payable to that county from whatever state
funding source is available an amount necessary to fulfill that county's
requirement. The state treasurer may not withhold distributions from
the Arizona highway user revenue fund pursuant to title 28, chapter 18, article
2, Arizona Revised Statutes.

C. Payment of an amount
equal to one-twelfth of the total amount determined pursuant to subsection A of
this section shall be made to the state treasurer on or before the fifth day of
each month. On request from the director of the Arizona health care
cost containment system administration, the state treasurer shall require that
up to three months' payments be made in advance, if necessary.

D. The state treasurer
shall deposit the amounts paid pursuant to subsection C of this section and
amounts withheld pursuant to subsection B of this section in the Arizona health
care cost containment system fund and the long-term care system fund
established by section 36-2913, Arizona Revised Statutes.

E. If payments made
pursuant to subsection C of this section exceed the amount required to meet the
costs incurred by the Arizona health care cost containment system for the
hospitalization and medical care of those persons defined as an eligible person
pursuant to section 36-2901, paragraph 6, subdivisions (a), (b) and (c),
Arizona Revised Statutes, the director of the Arizona health care cost
containment system administration may instruct the state treasurer either to
reduce remaining payments to be paid pursuant to this section by a specified
amount or to provide to the counties specified amounts from the Arizona health
care cost containment system fund and the long-term care system fund
established by section 36-2913, Arizona Revised Statutes.

F. The legislature intends
that the Maricopa county contribution pursuant to subsection A of this section
be reduced in each subsequent year according to the changes in the GDP price
deflator.� For the purposes of this subsection, "GDP price deflator"
has the same meaning prescribed in section 41-563, Arizona Revised Statutes.

Sec. 6.
Department of
administration; state employee health insurance; premiums; intent

A. Notwithstanding sections
38-651, 38-651.01 and 38-654, Arizona Revised Statutes, for
the health insurance benefit plan year 2027 the department of administration
shall implement a ten percent increase to the health insurance premium
contributions paid by full-time officers and employees of this state and
by former employees who worked for this state and who opt on retirement to
enroll or continue enrollment in the group health and accident coverage for
active employees working for this state.

B. The legislature intends
that for the health insurance benefit plan years 2028 and 2029 the department
of administration implement in each plan year a five percent increase to the
health insurance premium contributions paid by full-time officers and
employees of this state and by former employees who worked for this state and
who opt on retirement to enroll or continue enrollment in the group health and
accident coverage for active employees working for this state.

Sec. 7.
AHCCCS; mental health medication utilization; report;
definition

A. Not
later than January 31, 2027, the Arizona health care cost containment system
administration shall prepare and issue a report to the governor, the
chairpersons of the house of representatives and senate health and human
services committees, or their successor committees, the director of the joint
legislative budget committee and the director of the governor's office of
strategic planning and budgeting that includes information about the costs and
aggregate spending on and aggregate utilization of mental health medications
during contract year 2024-2025.� The administration shall provide a copy
of the report to the secretary of state.

B. The report required by
subsection A of this section shall include the annual aggregate gross amount
spent for each mental health medication class and the annual aggregate net
amount spent by this state for each mental health medication class after
rebates without disclosing any information about manufacturer-negotiated
supplemental rebate agreements for any specific drug. The report
shall also include the average annual cost by class for generic and nongeneric
mental health medications. Without disclosing any information about
manufacturer-negotiated supplemental rebate agreements that could
compromise the competitive or proprietary nature of these agreements, for
antipsychotic and antidepressant medications, the report shall include the
total number of prior authorizations submitted for nonpreferred antipsychotic
and nonpreferred antidepressant medications, the percentage of prior
authorization approvals and denials, the generic antipsychotic and generic
antidepressant medication utilization percentages and the total amount of
antipsychotic and antidepressant medication claims.

C. For purposes of this
section, "mental health medication" means the following medications:

1. Antipsychotics.

2. Antidepressants.

3. Anxiolytics.

4. Stimulants.

5. Sedative hypnotics.

Sec. 8.
Proposition 204
administration; exclusion; county expenditure limitations

County contributions for the
administrative costs of implementing sections 36-2901.01 and 36-2901.04,
Arizona Revised Statutes, that are made pursuant to section 11-292, subsection
O, Arizona Revised Statutes, are excluded from the county expenditure limitations.

Sec. 9.
Competency
restoration; exclusion; county expenditure limitations

County contributions made pursuant to
section 13-4512, Arizona Revised Statutes, are excluded from the county
expenditure limitations.

Sec. 10.
AHCCCS; risk
contingency rate setting

Notwithstanding any other law, for the
contract year beginning October 1, 2026 and ending September 30, 2027, the
Arizona health care cost containment system administration may continue the
risk contingency rate setting for all managed care organizations and the
funding for all managed care organizations administrative funding levels that
were imposed for the contract year beginning October 1, 2010 and ending
September 30, 2011.

Sec. 11.
Legislative
intent; implementation of program

The legislature intends that for
fiscal year 2026-2027 the Arizona health care cost containment system
administration implement a program within the available appropriation.

Sec. 12.
Effective date

Sections 36-2903.18 and 36-2903.19,
Arizona Revised Statutes, as added by this act, are effective from and after
December 31, 2026.