Blog

AZ Legislative Update – June 10, 2022

Posted by [email protected] on Jun. 10, 2022  /  AZ Legislative Update  /  Subscribe 0

AZ Legislative Update – June 10, 2022

Today marks the 152^nd day of the Arizona 55^th Legislature, 2^nd Regular Session.  Of the 1,781 bills introduced this year, the Legislature has now passed 305 with the Governor signing 283 and vetoing one. 

After several months of negotiations, legislative leadership and the Governor’s Office have reached a tentative deal on the framework for a $15.1 billion budget package; however, the proposal currently lacks the needed 31 and 16 votes to pass in both the House and Senate.

In what has become a yearly occurrence, the elusive budget spreadsheet, that legislative leadership tries to keep heavily guarded, has leaked out to the lobbying community and the press. 

According to the leaked budget document, the FY 2023 spending package includes a $1.3 billion tax cut over the next three years. Additionally, the proposal invests roughly $1 billion into water infrastructure and it allocates close to $1 billion for various road projects while adding another $425 million into the state rainy day fund.  The proposed package also pays down roughly $1 billion in pension liability, provides a 20 percent pay raise to all Department of Corrections employees and includes more than a half billion dollars for border security.

With regards to K-12 education spending, the proposed budget plan includes $474 million which is a far cry from the $900 million to $1 billion Republican Senator Paul Boyer has been requesting.  Boyer has told leadership that he will not support the budget unless they come up substantially on that number.   Additionally, other Republican senators, including Senator Michelle Ugenti-Rita, have argued that the budget does not do enough with regards to tax relief and reducing the impact of inflation on Arizona families. 

With Republicans holding onto just a one seat advantage in both chambers, legislative leadership cannot afford to lose a single Republican vote, unless they plan to try and court Democrat members; however, at this point, getting a partisan or bipartisan budget will certainly require significant modifications to the current proposal. 

Leadership is continuing to meet with members to reach an agreement; however, lawmakers only have until June 30^th to pass a balanced budget. 

In the meantime, please find attached your full tracking list of bills. We are continuing to engage members and staff on your top legislative priorities.  If you have any questions or concerns, please do not hesitate to contact us.

Notable Legislation

HB 2121 Insurance; Omnibus (Livingston): It appears that we have reached a tentative agreement with regards to passing the Insurance Omnibus bill in the House.  In a strange turn of events, Representative Cook has requested that we simply remove our fire/flood language from the bill, and in return, he will back down from his original opposition. 

While this deal still seems just too good to be true, we are currently working with staff to make this change which will either be done through a conference committee amendment to HB 2121 or a floor amendment to Senator Livingston’s original insurance omnibus bill, SB 1118. 

HB 2121 is the annual insurance industry omnibus bill.  It makes various minor changes to statutes relating to insurance regulations which currently include:

• DIFI Fee Reduction: Eliminates the filing fee amount for a certificate of director, under seal. Currently DIFI is required to charge at least $1.50. This proposed legislation would allow the agency to drop the amount to zero.
• Title Insurance Company Names: Currently, title insurance companies within Arizona are prohibited from using the word “title” in their name, unless they also include the words “agent” or “agency.” DIFI has asked for this prohibition in statute to removed.
• Modernization Language for Client Communications: The proposed legislation includes modernization language allowing for oral communications, with a contemporaneous record of the communication or a recording of an oral communication to qualify as consent from a customer.

• Flood Insurance: With the growing number of wildfires in Arizona there is also an increased risk of flood damage from burn scares months after the fire. Rain events on recently burned land can create flood risks even in properties not located in a flood plain.  Homeowner’s insurance does not cover flood damage as that coverage is provided by the federal flood insurance program. The language, which was worked out with the homeowner insurance industry, requires increased notification to homeowners about the availability of federal flood insurance program by insurers.  In addition, the language requires the Department of Forestry and DIFI to post educational links about the federal flood program on their websites.  The goal of this language is to increase the awareness of the risk of flooding after a wildfire and inform homeowners how to protect their property with the proper coverage. 

• Advisory Organizations: The bill makes clarifying changes to the definition of “advisory organization” which is consistent with other states. 
• Medicare Supplement Insurance: The bill makes it clear that the Medicare Supplement insurers can still offer early enrollment discounts under Arizona’s current regulatory system.  Approximately 75 percent of the Medicare Supplement market offers these discounts and the bill protects these discounts.  The language ensures that discounts work within Arizona’s current regulatory system that protects against age discrimination.

• Eliminates a Redundant Filing Requirement for Health Insurers: The bill eliminates the requirement that health insures file statements of credible coverage with DIFI annually.  The Affordable Care Act provisions have made the need for these filings obsolete and unnecessary.  The legislation reduces the filing burden on health plans and reduces the administrative burden on DIFI.  This change is supported by DIFI.  

SB 1176 340B Drug Programs; Prohibition (Gowan):  SB 1176 passed out of the Senate on Tuesday, 24-2 and is now awaiting the Governor’s signature.  The bill was favorably amended to resemble the Georgia 340B language. 

The bill applies the 340B third-party prohibitions to all contracts issues, delivered or renewed on or after January 1, 2024, to a third party that reimburses for 340B drugs. SB 1176 prohibits a third party that reimburses for 340B drugs from doing any of the following:

• Discriminating in reimbursement on the basis that a pharmacy dispenses a 340B drug;
• Assessing any clawback, fee, adjustment or chargeback on the basis that a pharmacy dispenses a 340B drug;
• Excluding a pharmacy from a third party's pharmacy network on the basis that a pharmacy dispenses a 340B drug; or
• Restricting the pharmacies or methods by which a 340B covered entity may dispense or deliver 340B drugs.

The bill exempts the following entities from the 340B third-party prohibitions:

• The Arizona Health Care Cost Containment System (AHCCCS) and its contractors to the extent services are provided pursuant to statute relating to AHCCCS, behavioral health services or equivalent Medicaid programs from other states;
• The Department of Health Services to the extent services are provided under the AIDS Drug Assistance Program; and
• Any Individual or identity identified under the AHCCCS mandatory exclusion statute.

Additionally, SB 1176 specifies that the provisions apply to third parties providing or managing drug coverage under an Arizona health care plan. 

Return to list