How Arizona pays for disability services

Waiver inventory

Total DDD clients served as of June 2025: 61,227. Primary disability breakdown: autism 25,008 (40.9 percent), intellectual disability 15,486 (25.3 percent), at risk 14,318 (23.4 percent), cerebral palsy 3,579 (5.8 percent), epilepsy 2,208 (3.6 percent), Down syndrome 628 (1.0 percent). Source: FY2027 JLBC Appropriations Report, Table 2.

The 1115 authorizes ALTCS along with AHCCCS Complete Care, the Comprehensive Health Plan for children in foster care, and Regional Behavioral Health Agreements, plus Targeted Investments 2.0 and Housing and Health Opportunities. STCs: azahcccs.gov

State-only funded programs

All figures below are General Fund unless otherwise noted, from the FY2027 JLBC Appropriations Report, Department of Economic Security, "Developmental Disabilities: State-Only Funding." Administering agency: DES Division of Developmental Disabilities. URL: azjlbc.gov

Sum of the FY2027 state-only line items listed above: $109,310,400.

County / regional / local funding

Arizona counties are statutorily required to contribute to ALTCS. County ALTCS contributions are deposited into the Long Term Care System Fund and function as the non-federal share alongside the General Fund. FY2027 county ALTCS contributions total $445,813,900 (FY2026: $409,537,600). Source: FY2027 JLBC Appropriations Report, AHCCCS section, Table 2. azjlbc.gov

Counties separately contribute to acute care ($42,447,600 in FY2027) and to the Behavioral Health Services Fund ($5,304,500), which are not DD-specific.

Funding scale

All from the FY2027 JLBC Appropriations Report unless noted. azjlbc.gov

• DDD Medicaid line items, FY2027 approved: Home and Community Based Services, Medicaid $3,576,977,500 (FY2026 estimate $3,573,691,000; FY2025 actual $2,838,271,700); Physical and Behavioral Health Services, Medicaid $1,099,120,100; Case Management, Medicaid $134,970,400; DDD Premium Tax Payment $102,012,200; Institutional Services, Medicaid $54,157,200; Targeted Case Management, Medicaid $25,755,000; Medicare Clawback Payments $8,888,400. Sum of these seven line items: $5,001,880,800. A separate State Match Transfer from AHCCCS of $1,841,698,500 is an expenditure-authority pass-through and is not additive.
• Medicaid HCBS DD waiver spending specifically: $3,576,977,500 approved for FY2027 (GF $1,283,205,200 + Long Term Care System Fund expenditure authority $2,293,772,300). This line funds residential programs, day programs, support services, the Parents as Paid Caregivers program, and staff in state-operated group homes.
• State-only DD spending FY2027: $109,310,400 (sum of the line items in the State-only section above).
• State vs federal share: the JLBC report gives the regular federal match rate as 64.84 percent in FY2026 falling to 63.94 percent in FY2027, with 63.81 percent assumed for FY2028 and FY2029. KFF lists Arizona's FY2027 FMAP at 63.81 percent. The FY2027 DES agency total is $7,819,325,100, of which General Fund is $2,148,224,800 and Long Term Care System Fund (Federal Match) expenditure authority is $5,173,230,600. kff.org
• Spending per participant: the budget assumes a DDD capitation rate of $8,191 per month in FY2027, or $98,291 annually.
• Number of people served: 47,503 DES/DDD ALTCS members as of August 2026 (https://www.azahcccs.gov/Resources/Downloads/PopulationStatistics/PopulationbyContractor08062026.pdf); 46,501 in the LTC program as of June 2025; 61,227 total DDD clients as of June 2025.
• Waiting list: none identified for ALTCS-DD. ALTCS is budgeted on a caseload formula (6.2 percent growth in FY2026, 5.0 percent in FY2027) rather than a fixed slot allocation, and no DD waiting list appears anywhere in the FY2027 JLBC Appropriations Report. The only DES waiting list described in the report is for the Child Care Subsidy program (13,485 children as of July 2026), which is unrelated. Neither the AHCCCS DD-ALTCS page nor the DES member categories page mentions a DD waiting list.
• ICF/IID: the Arizona Training Program at Coolidge (ATP-Coolidge), including residents of state-operated group homes, had enrollment of 48 in FY2025, down 3 from FY2024. Institutional Services, Medicaid is $54,157,200 in FY2027 with 383 FTE.

Residential funding detail

Arizona funds residential support through the ALTCS capitation to DES/DDD, paid out to providers on the DDD rate book. Settings funded:

• Group homes. Standard (T2016 HAB), behavioral-supported (T2016 HPD), and nursing-supported Levels I to III (T2016 HAN). Rate structure: the 2024 rate rebase built these with an Independent Rate Model, developing an hourly unit rate from DSP and supervisor wages, employee-related expenses, transportation and fleet, and administrative overhead, then converting to a per diem "by applying hourly rates to a weekly staffing matrix based on total weekly staff hours and home occupancy." Indirect time is set at 8.0 percent for standard group homes, with one supervisor per 18 DSPs. The rate book states that for group home services other than nursing-supported, "one unit of service equals one hour (60 minutes) of direct service time" and "this unit of service is converted to a daily rate for billing purposes," and that "staff hours shall only apply to the provision of service by awake staff." Nursing-supported group homes are true all-inclusive per diems by level.
• Developmental homes, Arizona's host home / shared living model, licensed for up to 3 people. Habilitation, Vendor Supported Developmental Home, adult (T2016 HBA) and child (T2016 HBC), paid as a day rate.
• Individually designed living arrangements / supported living. Two billing paths: a 15-minute unit (T2017 HAI) and a daily rate (T2016 HID) that scales across 20 weekly-hours ranges.
• Assisted living centers and ICF/IID (ATP-Coolidge and private facilities), funded through Institutional Services, Medicaid.
• In-home and family settings through attendant care, habilitation support, homemaker, respite, and the Parents as Paid Caregivers program, all inside the HCBS Medicaid line item.

Room and board is state-funded, not left to SSI alone. This is Arizona's most distinctive feature. The State-Funded Long Term Care Services line item "primarily funds room and board expenses (e.g., rent and food) for DDD clients in residential settings," because "room and board costs for home and community-based settings are ineligible for Federal Funds reimbursement from AHCCCS." FY2027 approved: $46,084,300 (General Fund $10,567,200 plus Long Term Care System Fund $35,517,100), with an $853,600 increase for caseload growth in ALTCS-eligible DDD clients receiving residential services with room and board expenses. The rate book separately publishes room and board rates: A9270 RBD for developmental homes at $14.58 per day, and A9270 RRB for all group homes, varying by county, bedroom count, and occupancy (for example, Maricopa County urban, 3 bedrooms, 3 occupants, $23.58 per day; 4 and 4, $21.01 per day).

A High-Need Client Supplement of $26,320,000 in FY2027 covers members whose HCBS costs exceed the institutional cost threshold the federal waiver imposes, which is the mechanism that keeps high-acuity residential placements viable in the community.

Rate structure link: des.az.gov

Comparable service rates

All from the DDD Rate Book effective 1/1/2026 (posted 6/15/2026). Statewide rates shown; Flagstaff has a separate higher schedule, and supported employment splits urban and rural.

Official rate schedule links

• DDD Rate Book, current, effective 1/1/2026 (posted 6/15/2026): des.az.gov
• DDD Rate Book Lookup File, 1/1/2026 (machine-readable): des.az.gov
• Rate Book 8/14/2025: des.az.gov
• Rate Book 4/28/2025: des.az.gov
• Rate Book 4/4/2025: des.az.gov
• Rate Book 1/1/2025: des.az.gov
• 2024 Rate Rebase / HCBS Market Rate Report (5/2/2024), the source of the current Independent Rate Model and the 1,576 rate cohorts: des.az.gov
• 2024 HCBS Rate Adequacy Report: des.az.gov
• 2023 HCBS Rate Adequacy Study (10/13/2023): des.az.gov
• Rates, Authorizations and Billing index: des.az.gov
• AHCCCS 1115 waiver and expenditure authorities and STCs (6/25/2025): azahcccs.gov

Notable features and flags

• Capitation increases: 4.3 percent effective 10/1/2025 for inflation and utilization, plus an additional 1.4 percent proposed by AHCCCS actuaries in May 2026 retroactive to 10/1/2025, for a 5.7 percent FY2026 total, then 3.0 percent in FY2027. The 1.4 percent add-on was tied to "the ability of DES/DDD to realize savings associated with the series of reforms required by HB 2945."
• Parents as Paid Caregivers is the flashpoint. HB 2945 of the 2025 session required PPCG statutory reforms, and AHCCCS actuaries assumed roughly $47,000,000 in annual General Fund savings from utilization reductions, including about $25,000,000 from a strengthened standardized assessment tool for DDD children. DES implemented the tool on 10/1/2025 and the Executive suspended its use on 10/16/2025; implementation has slipped to Fall 2026. A special audit of PPCG and the assessment tool, funded at $355,000 from the Prescription Drug Rebate Fund under Laws 2025 Ch. 93, was contracted in June 2025 and has been essentially suspended pending the tool's restart.
• FY2026 supplemental: $82,818,700 General Fund plus $216,304,700 Long Term Care System Fund expenditure authority, $299,123,400 total, for higher-than-budgeted DDD formula costs. Removed in FY2027.
• The FY2027 Health Care Budget Reconciliation Bill exempts AHCCCS from rulemaking requirements on service frequency and hour limitation policy changes in FY2027, requiring only 30 days' public comment. This affects the HB 2945 assessment tool changes and would also reach roughly 406 children with physical disabilities outside DDD.
• Auditor General performance audit of DES/DDD published September 2025 found the department did not appropriately classify and investigate some member complaints and failed to investigate and resolve some reported quality-of-care violations. Sixteen recommendations were issued, 12 to DES and 4 to AHCCCS. Both agencies agreed with the findings. No budget implications were attached.
• The Group Home Monitoring Program, run by the Protection and Advocacy System under Laws 2022 Ch. 316 as modified by Laws 2025 Ch. 241, is zeroed out in FY2027, with FY2026 monies non-lapsing until 12/31/2027.
• Long-term pressure: the three-year plan projects DES General Fund costs, driven by DDD formula growth, rising $65,811,900 in FY2028 above FY2027 and $166,528,900 in FY2029 above FY2028, based on 5.0 percent DDD caseload growth, 3.0 percent capitation growth, and a 63.81 percent FMAP.

Confidence

Solid: appropriation figures, caseload counts, capitation assumptions, county ALTCS contributions, the room and board funding mechanism, and the PPCG and HB 2945 timeline, all read directly from the FY2027 JLBC Appropriations Report. Published rates and their effective date come from the current DDD Rate Book. ALTCS-DD enrollment of 47,503 as of August 2026 comes from the AHCCCS population-by-contractor report. Estimated: none of the dollar figures are estimates, but the JLBC PDF's text layer garbles some digits, so figures were cross-read against the narrative sections where both a table and a narrative statement exist; the sums labeled as sums are my arithmetic on the published line items, not published totals. Uncertain: the group home habilitation rate of $28.20 carries a "Day" unit label in the rate book while the rate book's own group home instructions say "one unit of service equals one hour (60 minutes) of direct service time" that "is converted to a daily rate for billing purposes," and the 2024 rebase describes a weekly staffing matrix producing per diems. I could not locate the asterisked footnote that would settle this, so the figure is reported exactly as published with the rate book's own language attached rather than restated as a 24-hour per diem. Could not find: a published support coordination fee-schedule rate (there is none; it is staff-delivered and capitated), and an affirmative published statement that ALTCS-DD has no waiting list. The no-waiting-list conclusion rests on the absence of any DD waiting list in the FY2027 Appropriations Report combined with the formula-driven caseload budgeting, not on a direct quotation. Direct file download from des.az.gov is blocked by the site's bot protection; the rate book was read through a fetch-and-convert path rather than downloaded.