Phoenix, AZ (January 17, 2025) — Arizona Health Care Cost Containment System (AHCCCS) and other State agencies joined Governor Hobbs as she released her FY2026 Executive Budget, which funds critical programs and initiatives that AHCCCS members and the broader Arizona community depend on for essential health care, housing, and supportive services.
"Governor Hobbs’ Executive Budget reaffirms her unwavering commitment to the health and well-being of mothers, children, Tribal members, and Arizona’s vulnerable populations,” said Carmen Heredia, AHCCCS Director. “This funding enables us to continue providing comprehensive, high-quality care and address the diverse needs of AHCCCS members. We look forward to working closely with key stakeholders and policy makers to bring these vital resources within reach for Arizonans."
In partnership with Governor Hobbs, AHCCCS is proud to highlight just a few of the key initiatives to be funded in the budget proposal:
The Executive Budget includes $1.3 million ongoing from the State’s General Fund. Total Fund Budget includes $221.5 million in ongoing federal funds. In response to requests for coverage of Traditional Healing services from Tribal leaders and health providers, AHCCCS first established a Traditional Healing workgroup in 2015. After a decade of collaboration, for the first time in Medicaid history, the Centers for Medicare and Medicaid Services (CMS) issued an approval to several states, including Arizona, for a pilot program to cover Traditional Healing. This proposed funding demonstrates the importance of recognizing the role that cultural health care services, practiced over generations, play in addressing the physical, mental, and emotional health of members.
The Executive Budget includes an investment of $5.3 million that will draw down $49.8 million in additional federal monies. The Housing and Health Opportunities (H2O) pilot program was approved in 2022, with services beginning in October 2024; it is federally authorized through FY2027 to provide transitional housing, rental assistance, and tenancy support to unsheltered Medicaid members. H2O provides services for members living with a serious mental illness (SMI) determination, with nearly 250 members receiving H2O services to date. This community investment provides housing support to Medicaid members who are experiencing both homelessness and one or more chronic diseases or conditions. H2O is anticipated to lower the total cost of member care by increasing participation in preventive and habilitative care.
The Executive Budget includes $1.0 million ongoing from the General Fund and $2.7 million ongoing in federal funding for 50.0 new full-time equivalent (FTE) positions to address growing provider enrollment and Arizona Long Term Care System (ALTCS) membership needs.
ALTCS is a critical program that provides health care coverage and support services to individuals who are elderly, or are living with a physical or developmental disability and require assistance with daily living. Membership in ALTCS hit an all-time high in 2024, surpassing 70,000 members and over 51,000 applications received. The 28.0 FTE Pre-Admission Assessors will help expedite ALTCS application reviews and redeterminations.
Additionally, the proposed investment in 22.0 FTE positions to decrease processing time for provider enrollments will further enable AHCCCS to have a strong and high-quality provider network by expediting provider application timeliness, decreasing turnaround times, and ensuring that providers can be appropriately validated—while also allowing enhancing processes aimed at preventing fraud, waste, and abuse.
While the Executive Budget represents a comprehensive plan to strengthen Medicaid services, the proposed investments are subject to legislative approval. AHCCCS remains committed to working with state leaders to prioritize these critical needs. Read more about the proposed FY2026 Executive Budget Summary.
Founded in 1982, the Arizona Health Care Cost Containment System (AHCCCS) is Arizona's Medicaid agency that offers health care programs to serve Arizona residents. Built on a system of competition and choice, AHCCCS operates under an integrated managed care model, through a Research and Demonstration 1115 Waiver. Contracted health plans coordinate and pay for physical and behavioral health care services delivered by more than 100,000 health care providers to more than 2 million Arizonans.
