Today, Medicaid celebrates its 60th Anniversary. Medicaid started as a program to combat the “War on Poverty,” and six decades later, Medicaid has become the foundation of America’s health care system. In Arizona, Medicaid provides nearly two million Arizonans with life-saving health care, and provides health care for 41% of all children in Arizona.   

Although Arizona was the last state to implement a Medicaid program, Arizona transformed the health care system in 1982 by being the first state to create a publicly funded, privately operated managed care Medicaid program – the Arizona Health Care Cost Containment System (AHCCCS). AHCCCS is nationally recognized for providing high-quality, cost-effective health care throughout Arizona. This allows Arizonans who have health care through AHCCCS to use the same hospitals, see the same doctors, and have access to the same quality health care as Arizonans who are privately insured.  

Medicaid is one of the most popular programs in the nation, with 83% of the American public having a favorable view of Medicaid. This translates locally to our state as well when the people of Arizona showed their support for AHCCCS/Medicaid by voting overwhelmingly (58%) to expand Medicaid to cover more Arizonans. Repeatedly, bipartisan groups of legislators and governors have expanded Medicaid to include KidsCare (Children’s Health Insurance Program) and to extend eligibility to more adults and children. 

AHCCCS/Medicaid plays an especially important role in providing health coverage for people living in small towns and rural communities in Arizona, a trend that is particularly striking among children. AHCCCS and KidsCare cover 55% of children in small towns and rural areas of Arizona, while covering 34.9% in metro areas, according to an analysis by the Georgetown University Center for Children and Families (CCF). 

When more children and adults have access to health care, it’s good for them and for our state. However, much of this progress is at risk due to cuts of nearly $1 trillion to the Medicaid program by Congress, putting the health and economic well-being of individuals, families, and communities at risk. The Congressional Budget Office estimates that recent cuts by Congress will increase the number of uninsured people by 10 million over the next ten years.  

This puts rural hospitals and health centers at risk of reducing services or even closing. The Arizona Hospital and Healthcare Association estimates “more than 55% of Arizona hospitals could operate in the red.” Reductions in services, financially strained hospitals and health care providers, and job losses will impact everyone in Arizona. AHCCCS/Medicaid is a lifeline to AHCCCS/Medicaid recipients, and has a crucial role in our health care system and economy.  

How can you help? The fight to protect this important program is not over. It is important that we continue to share our stories – at the federal and state level – about the devastating impact of recent federal cuts so AHCCCS/Medicaid can continue providing health care for another 60+ years. 

Honoring military service means caring for the whole family. In Arizona, that commitment includes protecting access to affordable, reliable health coverage through AHCCCS — our state’s Medicaid program, which helps military families get much-needed care without the added stress of high medical fees or out-of-pocket expenses.  

A new report from Georgetown University’s Center for Children and Families (CCF), “Medicaid: Important for Military Families & Future Readiness,” shows how Medicaid helps fill the gaps left by TRICARE, our nation’s military health plan, and ensures active-duty members and veterans — and their families — have access to health coverage and care.    

In Arizona, nearly 8,000 military-connected children call our state home, and many of them depend on AHCCCS to get the care they need to grow and thrive.  

Children make up 40% of all Arizonans who receive health care through AHCCCS, including for doctor visits, immunizations, dental care, and more. This includes military-connected children whose families may still face coverage gaps and high out-of-pocket costs, even with TRICARE. That’s where Medicaid steps in for some families as a secondary payer to bridge those gaps and protect low-income military families from medical expenses they shouldn’t have to shoulder alone.  

When service members are confident their families have access to high-quality, affordable health care, they can focus on their missions with peace of mind. But the deep cuts that Congress is considering will make it harder for many military families to get the care they need and add financial stress for families who already sacrifice so much.   

AHCCCS is more than just a public program. It’s a vital source of security and care for Arizona’s children, veterans, and military families. We must stand together to protect it.

Health care services delivered in schools are an opportunity to meet children where they are and deliver critical health services in a setting where they spend most of their time. School-based health services are especially important in low-income and rural communities where access to health care services is limited or difficult to access.  

The Individuals with Disabilities Education Act (IDEA) ensures that students with a disability are provided with a Free Appropriate Public Education that is tailored to their individual needs. Outside of specific local and state funding efforts to support these needs, the Medicare Catastrophic Coverage Act authorized federal funding to provide medically necessary services to students per their Individualized Education Program (IEP) or Individualized Family Services Plan (IFSP). In 1995, local education agencies (LEAs), also known as school districts, became eligible providers under the Medicaid program to receive reimbursement for services provided in the school setting. With this, school-based Medicaid became a joint federal and state program that funds certain medical and transportation services to eligible students.  

The Medicaid School-Based Claiming Program 

Access to school-based health services is critical to improving health and academic outcomes for students. In Arizona, the Medicaid School-Based Claiming (MSBC) Program is the state’s school-based Medicaid program, where the Arizona Health Care Cost Containment System (AHCCCS) reimburses LEAs for providing medical and transportation services to eligible students. There are three revenue funding streams available within the MSBC Program, which include: 

• Direct Service Claiming (DSC)- where eligible providers log and bill certain Medicaid-covered services for payment 

• Medicaid Administrative Claiming- where reimbursement is included for routine administrative outreach activities within the school setting through a quarterly cost report 

• Annual Cost Settlement- where reimbursement is included for costs associated with the medical and transportation services that are included on an annual cost report that is then reconciled with the DSC paid claims 

In 2014, the Centers for Medicare and Medicaid Services (CMS) issued a letter to State Medicaid Directors addressing the reversal of the long-standing ‘Free Care’ policy. This allowed LEAs the flexibility to claim reimbursement for services beyond those written into an IEP or IFSP. The expansion opportunity serves more Medicaid-enrolled students who have another medical plan of care, where medical necessity has been established. This program expansion opportunity, called ‘Open Care,’ was introduced by AHCCCS in 2021 and increases Medicaid reimbursement for LEAs that participate in the MSBC Program.  

Impact of Medicaid Cuts on Students with Disabilities in Arizona 

Proposed Medicaid cuts pose a significant threat to student health services, particularly affecting students with disabilities. LEAs depend on Medicaid to fund essential services such as nursing, mental health counseling, and specialized therapies. A survey¹ by the Healthy Schools Campaign revealed that: 

• 80% of LEAs anticipate staff reductions in health services 

• 70% expect cuts to mental and behavioral health programs 

• 62% foresee decreased resources for assistive technologies if these cuts proceed  

Such reductions could hinder academic performance and well-being, especially for students with disabilities who rely on these critical supports. 

For Arizona students, these proposed cuts would severely disrupt school-based health services provided under IEPs. In 2023, 51,237 students received Medicaid-covered services, and 85% of Arizona students attend schools enrolled in the MSBC Program.² Critical services at risk include nursing care, such as medication administration, as well as behavioral health support, including therapy, counseling, and psychological testing. A full list of services and provider types eligible for Medicaid reimbursement can be found here. With Medicaid funding essential for these programs, Medicaid cuts would force LEAs to shift resources or eliminate services altogether, threatening student health, academic success, and overall well-being. 

CAA Role and Next Steps 

Children’s Action Alliance (CAA) has continued efforts highlighting the importance of the MSBC Program, specifically with the Open Care expansion, by working with stakeholders and increasing program awareness. Although the program has expanded, CAA has identified a need for greater awareness about the MSBC Program, including how to participate, what types of services are eligible, and that MSBC-participating LEAs can now submit for reimbursement through Open Care. As most Arizona students are attending an LEA that participates, there is still a strong desire for increased participation and utilization throughout the state.  

AHCCCS is also adding additional changes and flexibilities through a State Plan Amendment (SPA) based on 2023 CMS guidance. Although the submission of the SPA is currently delayed following the threats at the federal level, CAA is taking this opportunity to continue to work with AHCCCS, LEAs, billers, and other stakeholders to promote the program and increase program comprehension. As we are unsure of what the changes at the federal level will bring to the MSBC Program, CAA does know that the MSBC Program is important and is a vital funding stream for many LEAs in the state.

CAA acknowledges that potential cuts to Medicaid not only impact the health and well-being of students, but also puts added financial pressure on LEAs.  

 “With Medicaid cuts, the salaries for the current related services staff would then have to be taken out of the general fund, which has a negative ripple effect on all student services.”— Director of Special Education, Arizona 

With the current fight to protect Medicaid, know that Medicaid in schools remains a CAA priority. For more information and to learn how to participate if you are at an LEA that does not currently participate, please click here. 

If you are interested in being a stakeholder and/or would like to find solutions to increase program comprehension, please e-mail CAA’s Director of Early Learning and Education, Kyrstyn Paulat, at kpaulat@azchildren.org  

¹ Health School Campaign. (March 12, 2025) New Report: How Medicaid Cuts Will Harm Students & Schools. https://healthyschoolscampaign.org/blog/report-how-medicaid-cuts-will-harm-students-schools/

² Arizona Health Cost Containment System. (2024) Medicaid School-Based Billing Fact Sheet. https://www.azahcccs.gov/PlansProviders/FeeForServiceHealthPlans/ProgramsAndPopulations/thirdpartyaccounts/SBC.html