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State Medicaid agency sides with foes of minimum wage boost

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Arizona’s Medicaid agency is siding with opponents of a voter-approved increase in the minimum wage by arguing in court papers that it is required to spend money because of Proposition 206.

The filing contradicts the position of the Attorney General’s office, which argues that the initiative approved in November mandates no new state spending and there’s nothing in the law that requires the state to increase wages to its contractors.

The measure raises the minimum wage from $8.05 an hour to $10 on Jan. 1 and to $12 in 2020.

A judge is set to hear arguments in the case brought by the Arizona Chamber of Commerce and Industry on Tuesday afternoon.

The state Medicaid program has decided to increase the rates it pays to nursing home, home health aide and developmentally disabled program providers on Jan. 1. That’s expected to cost $48 million for six months.

The Chamber argues that the measure approved by 58 percent of the voters saddles the state with new costs without identifying a funding source and claims Proposition 206 illegally added a second, unrelated issue, mandatory paid time off.

Assistant Attorney General Charles Grube argues in his court filing that there is no mandatory state spending triggered by the new law and the time off requirement is related to wages.

“Proposition 206 does not expressly or directly require an expenditure of state revenues, and the Plaintiffs do not argue that it does,” Grube wrote. “Instead, they point out that the practical effect of raising the minimum wage and requiring some employers to offer paid leave will be to raise the future costs for the State to purchase goods and services.”

But the attorney for the state Medicaid program known as the Arizona Health Care cost Containment System or AHCCCS, takes the opposite view.

In a brief to the court that takes no position on the Chamber lawsuit, AHCCCCS attorney Logan Johnston argues that federal law requires it to pay providers what is needed to ensure patients have access to care, and it is therefore required to boost its contracted rates.

“To be clear, it is AHCCCS’ position that an increase in payments is necessary under the appropriate legal standards and the present circumstances, including the increased labor costs resulting from Proposition 206, for nursing facilities and providers of Home and Community Based Services that provide services to AHCCCS eligible individuals,” Johnson wrote. “It is also AHCCCS’ position that the net effect of Proposition 206 on payment rates is to impose a requirement of the expenditure of State revenues that would not be necessary but for Proposition 206.”

The backers of Proposition 206 have joined the defense of the lawsuit, represented by attorney Jim Barton. In his court filings, Barton also says that the proposition doesn’t mandate any state spending and doesn’t violate the multiple subject law.

In addition, Barton says the Chamber and other plaintiffs have no right to sue and seek a complete blocking of the law, something that contemplated by the law. He also said the Chamber waited too long to bring the suit.

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