Hospital Assessment

January 16, 2015 Update New

While AHCCCS has been reluctant to increase the hospital assessment mid-year, an increase for the period of January 1– June 30, 2015 to cover $270 million in state costs for the full year had previously been discussed. However, AHCCCS has decided to continue to monitor the growth in the Proposition 204 population and therefore wait to make any changes to the assessment amount until the State Fiscal Year (SFY) 2015 4th quarter payment, due May 15, 2015. AHCCCS is working to accelerate supplemental payments to hospitals for cash flow purposes, as follows:

  • 2015 CAH Payments: the first payment was made in December 2014 and the second payment will be made in the beginning of May 2015
  • 2015 Proposition 202 Trauma and Emergency Funds: AHCCCS will resume making two payments, the first of which will be made in late February (AHCCCS must receive the revenues from the Department of Gaming before the payments can be made, and these revenues are typically received in early-to-mid-February)
  • 2015 Rural Hospital Inpatient Fund (SAVE) funds: payments will be made by the beginning of May 2015
  • 2015 GME: AHCCCS is exploring options to determine if payments may be made earlier than usual
  • EHR Incentive Payments: completed and valid attestations will have an expedited review process with a projected turn-around time of eight weeks from time of submission (to ensure timely payment, all necessary documentation should be submitted in its entirety and in the requested format)

We will continue to monitor this and share information on a regular basis. Please contact Amy Upston if you have any questions.

December 3, 2014 Update New

On December 3, 2014, AHCCCS provided an update to the Workgroup and provided models showing how increasing the SFY 2015 Hospital Assessment from $233 million to $250 million or $270 million would impact the hospitals.

Hospital Assessment Update 

On October 29, 2014, AHCCCS provided an update to the Workgroup.

Final Rule

Effective July 1, 2014, AHCCCS filed the Updated Final Rule for the Hospital Assessment with the Arizona Secretary of State.

SFY 2015 Hospital Assessment Final Rule [PDF] | [RTF]

FY 2015 Hospital Assessment

We would like to thank the hospitals and hospitals systems which took the time to submit feedback regarding the 3 models presented at the February 27, 2014 Hospital Assessment Workgroup. After listening to hospital feedback and carefully considering other relevant factors, AHCCCS has decided to continue with the same structure as the SFY 2014 assessment, or Model 1 [PDF] | [RTF].

AHCCCS will continue to monitor the impact of the expansion and restoration of Medicaid benefits on hospitals as well as the impact of the assessment, and will continue to post relevant data on this website. We remain committed to an open and transparent process and will reconvene the workgroup should the FY 15 analysis demonstrate changes to the model are needed, and for the development of the FY 16 rate.

Feedback from February 27, 2014 Workgroup

At the February 27, 2014 Hospital Assessment Workgroup meeting, AHCCCS presented 3 models for consideration. All models continue to assess hospitals based on patient discharges from the 2011 Medicare Cost Reports. Model 1 [PDF] | [RTF] contains the same structure as the SFY 2014 assessment based on the original principles developed by AHCCCS. Model 2 [PDF] | [RTF] is based on formal comments received from Banner [PDF] | [RTF] during the rule-making process, and excludes hospitals with a 50% or higher Medicare volume which have at least 5,000 Medicare discharges. Model 3 [PDF] | [RTF] excludes all Medicare discharges from the assessment and makes other necessary adjustments to pass CMS-required tests. All models continue the same exclusions included in SFY 2014 and update the assessed amounts to account for a full year of collections and the phase-in of restoring Childless Adults. Feedback on the models are below:

Tracking Revenue Associated with the Hospital Assessment

Hospital providers have expressed interest in identifying AHCCCS payments for hospital services for populations funded by the recently-implemented assessment. Populations covered by the assessment include the Proposition 204 (Childless Adults) Restoration population from 0-100% of the Federal Poverty Level (FPL), as well as the Newly Eligible Adult Expansion population from 100-133% FPL. These members are displayed by a yellow bar in the Hospital Assessment Funding by Medicaid Eligibility Category Chart [PDF]. (NOTE: For ease of display and understanding, for the purposes of this chart, the Newly Eligible Adult Expansion Population from 100-133% FPL is shown as associated with the existing eligibility groups, e.g., persons with disabilities who are under age 65 who do not qualify for Medicare, parents and childless adults. In the AHCCCS enrollment reporting for this category, those groups will all be displayed together as part of the Newly Eligible Adult Expansion.) Additionally, the hospital assessment will fund a portion of coverage for parents from 22-100% FPL, displayed by the red bar in the chart.

The Rate Code Table [PDF] | [RTF] lists specific codes that define the majority of the population covered by the assessment (those populations displayed in the yellow bars), referred to as rate codes. Hospitals have access to these rate codes by utilizing the AHCCCS Online Provider Website: Member Eligibility and Enrollment Verifications, or via Electronic Data Interchange (EDI): 270/271 Batch Eligibility Request and Response. Rate code information can be used to track revenue from AHCCCS and its Contractors. It will not be possible to identify revenue associated with members represented by the red bar.

Providers may also be interested in AHCCCS Acute Care Program enrollment activity since the implementation of the assessment. A month-by-month statewide tracking of estimated populations compared to actual populations is available in the Population Tracking Sheet [PDF] | [RTF].

Hospital Assessment Workgroup Materials February 27, 2014

  1. Agenda [PDF] | [RTF]
  2. Enrollment and Expenditure Update [PowerPoint]
  3. Model 1 [PDF] | [RTF]
  4. Model 2 [PDF] | [RTF]
  5. Model 3 [PDF] | [RTF]
  6. Summary of Models [PDF] | [RTF]
  7. Hospital Charge Master Transparency Slideshow [PowerPoint]
  8. Hospital Charge Master Transparency Report Summary and Recommendations [PDF] | [RTF]
  9. Inpatient data on top 10 APR-DRGs

Email Addresses for Hospital Assessment Invoices

As a reminder, a statewide hospital assessment will be in place beginning in January 2014 to cover the state costs (not covered by other funds) associated with restoring coverage required by Proposition 204 (General Election 2000), in which voters increased AHCCCS eligibility for all persons up to 100% of the federal poverty level. Laws 2013, 1st Special Session, Chapter 10 (adding new section 36-2901.08, Arizona Revised Statutes) also increased eligibility for Medicaid up to 133% of the federal poverty level. The cost for this new population is, initially, funded entirely with federal funds; future state costs will be funded by the assessment. For the first six months of State Fiscal Year 2014, the assessment is expected to generate $75.4 million.

AHCCCS is currently awaiting CMS approval of the assessment proposal, and expects to have this approval in time to begin in January 2014 as planned.

AHCCCS will be sending email notifications to all Arizona hospitals subject to the assessment on or before January 15, 2014 and April 15, 2014, that the assessment invoice is available on a secure website. No invoices will be produced on paper or mailed to a physical address. As such, it is imperative that AHCCCS have a dedicated group email address for every facility. We will not send emails to individual people as staffing changes occur often and we must ensure that invoices are not lost or missed due to individual staff schedules or termination. This email address should be accessed by multiple staff to ensure proper delivery. Please submit any group email changes to

Notice of Proposed Rulemaking December 13,2013

The Administration is proposing a new rule to describe the process for establishing, administering and collecting the assessment on hospitals. A.R.S. § 41-1005 (A)(32) exempts the Administration from Title 41, Chapter 6 of the Arizona Revised Statutes (the Arizona Administrative Procedure Act) for purposes of implementing and establishing the hospital assessment; however, that provision requires the Administration to provide public notice and an opportunity for public comment at least thirty days before doing so.

Hospital Assessment Notice of Proposed Rulemaking

Federal Interface

On September 20, 2013, AHCCCS submitted the statewide hospital assessment proposal to CMS. Below are links with the narrative request and assessment model. After carefully reviewing comments, AHCCCS made the following changes from the model distributed to hospitals on August 22, 2013:

  • Exempted rehabilitation subprovider discharges (as reported on the 2011 Medicare Cost Report) of Acute Care hospitals from the model, consistent with the exemption of Freestanding Rehabilitation Hospitals.
  • Restructured the Pediatric Intensive Acute Care Hospitals group by:
    • Calculating pediatric, PICU and NICU beds as a percent of total licensed beds.
    • Creating two distinct rates:
      • Pediatric Intensive Acute Care Hospital (Pediatric, PICU and NICU beds are 20% or more of total licensed beds): 80% of General Acute Hospital Rate
      • Medium Pediatric Intensive Acute Care Hospital (Pediatric, PICU and NICU beds are 10% or more but less than 20% of total licensed beds): 90% of General Acute Hospital Rate.

AHCCCS will post to this website CMS action on this request, and the proposed state rule will be posted for public comment on or about November 15, 2013.

As has been discussed in each workgroup meeting, AHCCCS considers the development of the hospital assessment to be an iterative process. This proposed rate is for the first six months of calendar year 2014 only, and further workgroup meetings and modeling will be completed for the State Fiscal Year 2015 (July 1, 2014-June 30, 2015) rate period.

CMS Approval Letter 1/14/14
Revised CMS Request
Revised 2014 Assessment Model (including 2015 data)
CMS Request 9/20/13
Initial Proposed Assessment Model (see Updates below)


Model Update
Subsequent to the submission of this assessment model to CMS, a minor change was made to the model to account for a separately licensed hospital that falls into one of the exemption categories that is located within a larger hospital which is subject to the assessment. A very small number of discharges associated with the separately licensed facility were reduced from the hospital’s total number of discharges. Because the number of discharges was so small, this change does not impact the overall 2014 rate, and it does not result in changes to the assessment amounts for any other hospital.

SFY 15
As noted above, the proposed assessment rate is limited to the first six months of calendar year 2014. AHCCCS anticipates that a new analysis will be completed in order to determine the assessment rate for the period of July 1, 2014 through June 30, 2015 (State Fiscal Year 2015). Modeled results for the State Fiscal Year 2015 period are provided for informational purposes only and the actual SFY 2015 rates will be updated based on further analysis, Workgroup discussions and updated data.

Projected Coverage Payments
As discussed in Workgroup meetings, the projected coverage payments displayed in the model represent payments associated only with those populations funded by the hospital assessment. See the Assessment Population Chart at the top of this page for a summary of populations funded by the assessment. The projected coverage payments do not represent the full impact to hospitals of the various changes in coverage expected beginning January 1, 2014, including the expansion of coverage for children and the woodwork effect on traditional Medicaid populations. Hospitals should not use the projected coverage payments to estimate the total increase in hospital revenue associated with the coverage changes beginning January 1, 2014.

Hospital Assessment Workgroup Materials August 22, 2013

Below please find the AHCCCS Draft Proposed Hospital Assessment Rule and the associated model. These documents will be discussed at the Hospital Workgroup meeting on August 22 and are available for your written comments until September 4, 2013. Please send your written comments to AHCCCS expects to post a proposed rule in November, with a 30 day formal public comment period, for expected implementation of the final rule on January 1, 2014.

  1. Agenda
  2. Draft Proposed Rule
  3. Proposed Model
  4. Comments to Draft Proposed Hospital Assessment Rule

Supplemental Workgroup Materials – Follow-Up from August 22, 2013 Meeting

At the request of Workgroup members, below please find an updated proposed model which includes the SFY 15 impacts by hospitals. The SFY 15 impacts are for illustration purposes only and will change as AHCCCS updates its budget projections for SFY 15, and based on possible changes to peer group assessment rates as revenues and expenses are monitored on an ongoing basis. Other than the addition of SFY 15 data, this model is identical to the August 22, 2013 version except for the reclassification of one urban hospital which was incorrectly included in the rural hospital peer group.

Proposed Model Including SFY 15 impacts

Hospital Assessment Workgroup Materials July 18, 2013

  1. Agenda
  2. Model A
  3. Model B
  4. Model C
  5. Model D
  6. Summary of Models
  7. Issues List

Hospital Assessment Workgroup Materials June 26, 2013

  1. Agenda
  2. Workgroup Scope
  3. Legislation
  4. Budget and Enrollment Projections
  5. Benefit Analysis
  6. Draft Discharge Model
  7. Hospital Assessment Timeline

Hospital Assessment Workgroup Presentation May 8, 2013

Hospital Assessment Workgroup Materials April 4, 2013

On April 4, 2013, AHCCCS hosted a meeting with hospital providers to discuss the Governor’s proposal to expand Medicaid coverage through hospital assessment funding. In this meeting, AHCCCS presented some of the principles and next steps in moving forward with this plan.

AHCCCS will form workgroups of hospital representatives to work through the methodology and issues related to the assessment. If you are interested in participating, please contact AHCCCS at

AHCCCS Hospital Assessment Workgroup



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