Arizona State Innovation Model Strategy

CMS established the State Innovation Models (SIM) Initiative to provide support and funding for state multi-payer efforts around payment reform and health care system transformation. The goal of the SIM effort is to achieve statewide transformation for the preponderance of care delivered within the state and to improve health, transform the delivery system, and lower costs. The Initiative provides funding for states to either design or test health care innovation models.

In 2013, CMS awarded six states (OR, MN, AR, ME, VT and MA) a total of $250 million to test their innovation models. An additional three states received pre-test assistance to continue design work, and 16 states received grants to design models.

On May 22, 2014, CMS released Round Two of SIM grant opportunities, with applications due July 21, 2014


On December 16, 2014, CMS announced grants for the State Innovation Model Initiative, Round 2. Although Arizona did not receive a Model Test award, it did receive a Model Design award to "create and refine its proposal for multi-payer and health delivery system transformation." More information about the SIM Round 2 awards can be found on the CMS website:

Grant Submission  New Tag

On July 19, Arizona submitted an application for the CMS State Innovation Model Funding. The Arizona State Innovation Model (SIM) Initiative will accelerate the state’s delivery system transformation towards a value-based integrated model that focuses on whole person health in all settings and regardless of coverage source. Arizona will undertake transformation of the health care delivery system using three overarching strategies: 1) Facilitating Integration and Decreasing System Fragmentation; 2) Improving Care Coordination; 3) Driving Payment Reform. Arizona will distribute almost 90% of the $85.7 million in SIM funding through largely competitive processes to community partners engaged in delivery system transformation.

Tens of thousands of providers will benefit from the variety of strategies Arizona will employ, including expanding the use of Health Information Technology and data sharing among various fragmented entities. The Arizona SIM Initiative, in addition to providing support for enhanced access to data, will also provide funding to accelerate organizations’ ability to enter into modernized payment structures. Arizona expects these efforts, in conjunction with the state’s State Health Improvement Plan, will improve individual and population health and increase payer and provider accountability for outcomes and costs. The SIM Initiative will begin by focusing on critical populations including individuals with serious mental illness (SMI) or who have other significant medical and behavioral health needs (super-utilizers), individuals dually eligible for Medicare and Medicaid, individuals transitioning from the justice system, members moving between Qualified Health Plans (QHPs) and Medicaid health plans, and the American Indian population. The initiative will improve care for all of Arizona’s 1.5 million AHCCCS enrollees (including 150,000 American Indians enrolled in Medicaid), tens of thousands of Arizonans transitioning between AHCCCS and QHPs, the estimated 100,000 individuals who transition from incarceration to AHCCCS every year, and, ultimately, a significant number of Medicare beneficiaries and commercially-insured individuals. As evidenced by over 55 letters of support from community partners, the Arizona SIM strategy will be a statewide collaborative effort towards transforming the health care delivery system for all Arizonans.

Grant Submittal 7/19/14 [PDF]

Arizona's Proposed Strategy
Accelerate the delivery system’s evolution towards a value-based integrated model that focuses on whole person health throughout the continuum and in all settings.

Governor Brewer’s leadership to restore Medicaid coverage for adults addressed a major challenge facing the health care system in Arizona. Due to the success of her efforts, Arizona is well positioned to focus on driving continued innovation in the health care delivery system by expanding the public-private partnership that has been so successful in the state. The SIM proposal would build on a number of initiatives that are already underway to reduce fragmentation, integrate the delivery system and align incentives to improve quality and lower costs. These efforts are critical to ensuring sustainability of health care delivery within Arizona and improved health outcomes for Arizona citizens.

The SIM proposal will allow for an acceleration of these efforts and enable savings to accrue more quickly. The major focus of the proposal is to integrate the delivery system, with a particular focus on ensuring behavioral health services and needs are not siloed from the physical health delivery system. Significant efforts are occurring across the state led by multiple organizations and payers. However, the results of stakeholder engagement make it clear that there are substantial gaps within initiatives related to behavioral health needs and the impact on population health and individual behavior within the health care system (e.g., where an individual accesses care, the level and frequency of care sought, etc.). This is magnified by the historical structure of the state-funded health care system in which behavioral health and physical health are administered separately. Major payers, including AHCCCS, are also driving value-based purchasing (which will be most successful in an integrated delivery system), but additional provider education and incentives are needed to accelerate that process. Arizona has undertaken numerous disparate efforts to align incentives and drive integration and value-based purchasing, and this proposal will support their objectives and accelerate their implementation.

AHCCCS Presentation [Power Point]

Stakeholder Engagement
Stakeholder involvement and input is critical to Arizona’s success. AHCCCS is accepting public comments, including letters of support from family members, providers, payers, advocacy groups and other interested parties and will submit them with its proposal and post them on this website. Comments received to date can be found on the links below:

Arizona Governor Janice K. Brewer [PDF]
Advisory Council on Indian Health Care [PDF]
Aetna Medicaid Administrators, LLC [PDF]
Arizona Medical Association [PDF]
Arizona Academy of Family Physicians [PDF]
Arizona Alliance for Community Health Centers [PDF]
Arizona Association of Health Plans [PDF]
Arizona Board of Regents [PDF]
Arizona Connected Care ACO [PDF]
Arizona Department of Corrections [PDF]
Arizona Department of Health Services [PDF]
Arizona Health Care Association [PDF]
Arizona Health-e Connection/Health Information Network of Arizona [PDF]
Arizona Hospital and Healthcare Association [PDF]
Arizona Osteopathic Medical Association (AOMA) [PDF]
ASU College of Health Solutions, Center for Applied Behavioral Health Policy [PDF]
Banner Health [PDF]
Behavioral Health Information Network of Arizona, LLC [PDF]
Blue Cross Blue Shield of Arizona [PDF]
Bridgeway Health Solutions & Cenpatico BH of AZ [PDF]
Care 1st Health Plan Arizona, Inc. [PDF]
Chicanos Por La Causa, Inc. [PDF]
College of Nursing and Health Innovation, ASU [PDF]
Commonwealth Primary Care ACO [PDF]
Community Partnership of Southern Arizona [PDF]
Comprehensive Medical and Dental Program [PDF]
Corporation for Supportive Housing [PDF]
Council of Human Service Providers [PDF]
County Supervisors Association of Arizona [PDF]
Dignity Health [PDF]
El Rio Community Health Center [PDF]
Health Net [PDF]
Jewish Family & Children's Service [PDF]
Magellan Health Services of Arizona, Inc. [PDF]
Maricopa Consumers Advocates and Providers [PDF]
Maricopa County [PDF]
Maricopa Integrated Health System [PDF]
Mercy Care Plan [PDF]
Mercy Maricopa Integrated Care [PDF]
NAMI Arizona [PDF]
Northern Arizona Healthcare [PDF]
Northern Arizona Regional Behavioral Health Authority [PDF]
People of Color Network [PDF]
Phoenix Area Indian Health Service [PDF]
Phoenix Children's Hospital [PDF]
Pima County Access Program [PDF]
Scottsdale Lincoln Health Network [PDF]
St. Luke’s Health Initiatives [PDF]
Tenet Healthcare [PDF]
Topaz Information Solutions, LLC [PDF]
Touchstone Behavioral Health [PDF]
Tucson Medical Center [PDF]
United Healthcare [PDF]
University of Arizona Health Network [PDF]
West Yavapai Guidance Clinic [PDF]
Your Partners in Quality, LLC [PDF]

Final Award and Decision Points

Although Arizona was invited to present in person regarding its proposal, the State was only awarded a $2.5 million planning grant. This grant is designed to provide the State with funds to engage stakeholders across all payer types, providers, consumers and others to build a road map for reforming the health care delivery system. Since the State’s initial proposal was not for a planning grant, the State needs to determine the scope of the planning grant. Once that is determined, the State will communicate with CMS and begin the stakeholder engagement process. In the alternative, the State could decline the planning grant funds.


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