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Arizona - Skilled Nursing Services — Licensing, Medicaid Enrollment and Startup Requirements

Last reviewed: 2026-09-09

The Arizona Department of Health Services (ADHS) licenses in-home RN and LPN services under the Home Health Agency (HHA) classification pursuant to Arizona Administrative Code (A.A.C.) Title 9, Chapter 10, Article 12, while the Arizona Health Care Cost Containment System (AHCCCS) funds these services primarily through the Arizona Long Term Care System (ALTCS) program. Providers deliver skilled nursing assessments, medication administration, and physician-ordered treatments directly in the member's home.

Operating as a Medicaid skilled nursing provider requires securing the ADHS HHA license, completing institutional enrollment through the AHCCCS Provider Enrollment Portal (APEP) as a Provider Type 23 (Home Health Agency), and executing a network contract with at least one regional ALTCS Managed Care Organization (MCO). Without an active MCO contract, an AHCCCS-enrolled agency cannot receive prior authorizations or reimbursement for ALTCS members.

1. Service Definition and Scope

In Arizona, Skilled Nursing Services encompass intermittent or continuous care provided by a Registered Nurse (RN) or Licensed Practical Nurse (LPN) under the direction of a physician's plan of care. These services are delivered in the member's residence to manage complex medical conditions, administer medications, and perform skilled treatments.

The ALTCS program covers these services to prevent institutionalization. LPNs must operate under the direct supervision of an RN, and all services must be medically necessary and prior-authorized by the member's assigned health plan.

2. Regulatory and Oversight Agencies

The Arizona Department of Health Services (ADHS) is the primary regulatory body responsible for licensing and surveying Home Health Agencies. They enforce state health and safety standards outlined in the Arizona Administrative Code.

The Arizona Health Care Cost Containment System (AHCCCS) serves as the state Medicaid agency, managing provider enrollment, setting global policies, and overseeing the ALTCS Managed Care Organizations that directly administer the waiver benefits.

3. Gatekeeping Prerequisites: Who Can Even Apply

Arizona does not utilize a Certificate of Need (CON) program for Home Health Agencies, meaning there is no state-mandated market need review prior to applying for an ADHS license. Any legally formed business entity may apply for licensure provided they meet the operational and staffing requirements.

However, to serve Medicaid members, providers face a strict managed care contracting gate. AHCCCS operates under a mandatory managed care model for ALTCS. Providers must secure a network contract with an ALTCS MCO (such as Mercy Care, Banner University Family Care, or UnitedHealthcare Community Plan) in their specific Geographic Service Area (GSA). MCOs may close their networks to new providers if they determine they have adequate network capacity, effectively blocking new agencies from receiving Medicaid referrals.

4. Licensure and Certification Requirements

Agencies must apply for a Home Health Agency license through the ADHS Public Health Licensing division. The process involves submitting a comprehensive application, architectural plans if applicable to a physical clinic space, and passing an initial on-site licensing survey.

The agency must demonstrate compliance with A.A.C. Title 9, Chapter 10, Article 12, which dictates administrative structures, nursing supervision, patient rights, and clinical record-keeping.

5. Medicaid Provider Enrollment

Once licensed by ADHS, the agency must enroll in the AHCCCS Provider Enrollment Portal (APEP). Home Health Agencies are classified as Provider Type 23 and are considered "High Risk" under ACA screening guidelines, requiring an application fee and fingerprint-based background checks.

The enrollment process requires the submission of the ADHS license, an NPI number, a W-9, and an Electronic Funds Transfer (EFT) authorization form. AHCCCS generally processes APEP applications within 60 days of submission.

6. Staffing, Training and Background Checks

All clinical staff must hold active, unencumbered licenses from the Arizona State Board of Nursing. The agency must employ a Director of Nursing (DON) or clinical supervisor to oversee all LPNs and field staff.

Because Home Health Agencies are high-risk providers, owners with a 5% or greater interest must undergo a Fingerprint-based Criminal Background Check (FCBC). Direct care staff must possess a valid Arizona Department of Public Safety (DPS) Fingerprint Clearance Card.

7. Documentation, Policies and Records

Agencies must maintain comprehensive clinical records for every member, including the physician-signed Plan of Care, nursing assessments, medication administration records (MAR), and daily visit notes. ADHS requires these records to be retained for a minimum of six years.

Internal policies must cover infection control, emergency preparedness, patient rights, and grievance procedures. Documentation must clearly link the services provided to the specific goals outlined in the member's ALTCS service plan.

8. Billing, Rates and Claims

While AHCCCS establishes a baseline fee schedule for Provider Type 23, actual reimbursement rates are negotiated and paid by the contracted ALTCS MCOs. Claims are submitted directly to the MCO (e.g., Mercy Care) rather than to AHCCCS fee-for-service, except for specific exempt populations.

Providers must use standard CMS-1500 or UB-04 claim formats, utilizing appropriate HCPCS codes (such as G0299 for RN services and G0300 for LPN services) along with any MCO-specific modifiers.

9. Approval Sequence and Timeline

The approval process is strictly sequential. An applicant must first establish the business entity and apply for the ADHS Home Health Agency license, which can take 3 to 6 months depending on survey scheduling.

Following licensure, the provider submits the APEP application to AHCCCS (approximately 60 days). Finally, the provider must apply for network inclusion with regional MCOs, a credentialing and contracting phase that can add another 90 to 120 days.

10. Common Denials and Survey Findings

ADHS frequently cites agencies during initial or renewal surveys for incomplete personnel files, specifically missing Fingerprint Clearance Cards or lapsed CPR certifications. Clinical record deficiencies, such as failing to obtain physician signatures on the Plan of Care within required timeframes, are also common.

At the AHCCCS enrollment level, applications are routinely delayed or denied due to mismatched tax ID information, failure to pay the $750 application fee, or incomplete Fingerprint-based Criminal Background Checks for owners.

11. Key Contacts and Resources

Providers should rely on the official state portals for the most current regulations, fee schedules, and application forms. The AHCCCS Solutions Center is the primary help desk for APEP enrollment issues.

For licensing questions, the ADHS Public Health Licensing division provides direct guidance on survey readiness and application status.

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