A.R.S. tit. 36 ch. 29 — Arizona Revised Statutes Title 36 Chapter 29 — Arizona Health Care Cost Containment System Administration

36-2901. Definitions In this article, unless the context otherwise requires: 1. "Administration" means the Arizona health care cost containment system administration. 2. "Administrator" means the administrator of the Arizona health care cost containment system. 3. "Contractor" means a person or entity that has a prepaid capitated contract with the administration pursuant to section 36-2904 or chapter 34 of this title to provide health care to members under this article or persons under chapter 34 of this title either directly or through subcontracts with providers. 4. "Department" means the department of economic security. 5. "Director" means the director of the Arizona health care cost containment system administration. 6. "Eligible person" means any person who is: (a) Any of the following: (i) Defined as mandatorily or optionally eligible pursuant to title XIX of the social security act as authorized by the state plan. (ii) Defined in title XIX of the social security act as an eligible pregnant woman or a woman who is less than one year postpartum with a family income that does not exceed one hundred fifty percent of the federal poverty guidelines, as a child under the age of six years and whose family income does not exceed one hundred thirty-three percent of the federal poverty guidelines or as children who have not attained nineteen years of age and whose family income does not exceed one hundred thirty-three percent of the federal poverty guidelines. (iii) Under twenty-six years of age and who was in the custody of the department of child safety pursuant to title 8, chapter 4 when the person became eighteen years of age. (iv) Defined as eligible pursuant to section 36-2901.01. (v) Defined as eligible pursuant to section 36-2901.04. (vi) Defined as eligible pursuant to section 36-2901.07. (b) A full-time officer or employee of this state or of a city, town or school district of this state or other person who is eligible for hospitalization and medical care under title 38, chapter 4, article 4. (c) A full-time officer or employee of any county in this state or other persons authorized by the county to participate in county medical care and hospitalization programs if the county in which such officer or employee is employed has authorized participation in the system by resolution of the county board of supervisors. (d) An employee of a business within this state. (e) A dependent of an officer or employee who is participating in the system. (f) Not enrolled in the Arizona long-term care system pursuant to article 2 of this chapter. (g) Defined as eligible pursuant to section 1902(a)(10)(A)(ii)(XV) and (XVI) of title XIX of the social security act and who meets the income requirements of section 36-2929. 7. "Graduate medical education" means a program, including an approved fellowship, that prepares a physician for the independent practice of medicine by providing didactic and clinical education in a medical discipline to a medical student who has completed a recognized undergraduate medical education program. 8. "Malice" means evil intent and outrageous, oppressive or intolerable conduct that creates a substantial risk of tremendous harm to others. 9. "Member" means an eligible person who enrolls in the system. 10. "Modified adjusted gross income" has the same meaning prescribed in 42 United States Code section 1396a(e)(14). 11. "Noncontracting provider" means a person who provides health care to members pursuant to this article but not pursuant to a subcontract with a contractor. 12. "Physician" means a person who is licensed pursuant to title 32, chapter 13 or 17. 13. "Prepaid capitated" means a mode of payment by which a health care contractor directly delivers health care services for the duration of a contract to a maximum specified number of members based on a fixed rate per member notwithstanding: (a) The actual number of members who receive care from the contractor. (b) The amount of health care services provided to any member. 14. "Primary care physician" means a physician who is a family practitioner, general practitioner, pediatrician, general internist, or obstetrician or gynecologist. 15. "Primary care practitioner" means a nurse practitioner or certified nurse midwife who is certified pursuant to title 32, chapter 15 or a physician assistant who is licensed pursuant to title 32, chapter 25. This paragraph does not expand the scope of practice for nurse practitioners or certified nurse midwives as defined pursuant to title 32, chapter 15 or for physician assistants as defined pursuant to title 32, chapter 25. 16. "Regional behavioral health authority" has the same meaning prescribed in section 36-3401. 17. "Section 1115 waiver" means the research and demonstration waiver granted by the United States department of health and human services. 18. "Special health care district" means a special health care district organized pursuant to title 48, chapter 31. 19. "State plan" has the same meaning prescribed in section 36-2931. 20. "System" means the Arizona health care cost containment system established by this article. 36-2901.01. Additional definition of eligibility for the Arizona health care cost containment system; enforcement; private right of action (Caution: 1998 Prop. 105 Applies) A. For the purposes of section 36-2901, "eligible person" includes any person who has an income level that, at a minimum, is between zero and one hundred per cent of the federal poverty guidelines as published annually by the United States department of heath and human services and based on the resource limits that are defined by the director of the Arizona health care cost containment system administration and that are not less than the resource limits in effect on November 5, 1996, and also based on other eligibility requirements of federal law or the health care financing administration pursuant to section 1115 of the social security act. The people acting through initiative, or the legislature by a simple majority vote, may change the eligibility threshold to a percentage of the federal poverty guidelines that is even more inclusive. Neither the executive department nor the legislature may establish a cap on the number of eligible persons who may enroll in the system. B. To ensure that sufficent monies are available to provide benefits to all persons who are eligible pursuant to this section, funding shall come from the Arizona tobacco litigation settlement fund established by section 36-2901.02 and shall be supplemented, as necessary, by any other available sources including legislative appropriations and federal monies. C. An eligible person or a prospective eligible person may bring an action in the superior court against the director of the health care cost containment system adminstration and this state to enforce this section and section 36-2901.02. The court has jurisdiction to enforce this section and section 36-2901.02 and any rule adopted pursuant to these sections and may apply appropriate civil sanctions and equitable remedies. 36-2901.02. Arizona tobacco litigation settlement fund; nonlapsing (Caution: 1998 Prop 105 Applies) A. The Arizona tobacco litigation settlement fund is established consisting of all monies that this state receives pursuant to the tobacco litigation master settlement agreement entered into on November 23, 1998 and interest earned on these monies. The director of the Arizona health care cost containment system administration shall administer the fund. The state treasurer shall invest monies in the fund pursuant to section 35-313 and shall credit monies earned from these investments to the fund. B. The director shall use fund monies as follows and in the following order: 1. Withdraw an amount necessary in each fiscal year to fully implement and fully fund the programs and services required as a result of the expanded definition of an eligible person pursuant to section 36-2901.01. 2. Withdraw an amount necessary in each fiscal year to fully implement and fully fund each of the programs listed in section 5-522, subsection E, as amended pursuant to the initiative measure approved by the voters on November 5, 1996, at funding levels that when annually adjusted for inflation, as provided in said initiative, are equal to or greater than those provided for in that election. The joint legislative budget committee shall compute these adjusted levels and provide this information to the director of the Arizona health care cost containment system administration. The director shall transfer these monies to the agencies responsible for administering each of the programs. The legislature may modify the funding provided pursuant to this subsection by simple majority vote not less than ten years after the effective date of this section. C. The director may use any remaining fund monies to fund expanded coverage in the Arizona health care cost containment system including the premium sharing program and as approved by the voters or by the legislature by simple majority vote. D. The legislature may appropriate any monies that remain in the fund after the programs prescribed in subsection B, paragraphs 1 and 2 of this section are fully funded and implemented only for programs that benefit the health of the residents of this state. E. Monies in the fund: 1. Shall be used to supplement and not supplant existing and future appropriations to the Arizona health care cost containment system administration for existing and future programs. 2. Do not revert to the state general fund. 3. Are exempt from the provisions of section 35-190 relating to lapsing of appropriations. 4. Are continuously appropriated. 36-2901.03. Federal poverty program; eligibility A. The administration shall adopt rules for a streamlined eligibility determination process for any person who applies to be an eligible person as defined in section 36-2901, paragraph 6, subdivision (a), item (iv). The administration shall adopt these rules in accordance with state and federal requirements and the section 1115 waiver. B. The administration must base eligibility on an adjusted gross income that does not exceed one hundred per cent of the federal poverty guidelines. C. For persons who the administration determines are eligible pursuant to this section, the date of eligibility is the first day of the month of application. D. Except as provided in subsection E of this section, the administration shall determine an eligible person's continued eligibility at least annually. E. Every six months the administration shall determine the continued eligibility of any adult who is at least twenty-one years of age and who is subject to redetermination of eligibility for temporary assistance for needy families cash benefits by the department. Acute care redeterminations pursuant to this subsection shall occur simultaneously with redeterminations of eligibility for temporary assistance for needy families cash benefits. 36-2901.04. Medical expense deduction eligibility process A. The administration shall adopt rules for a streamlined medical expense deduction eligibility process to determine eligibility for any person who applies to be an eligible person as defined in section 36-2901, paragraph 6, subdivision (a), item (v). The administration shall adopt these rules in accordance with state and federal requirements and the section 1115 waiver. B. To be eligible for the medical expense deduction program established pursuant to this section a person must meet the following requirements: 1. Have a family income that does not exceed forty per cent of the federal poverty guidelines after deducting allowable medical expenses. 2. Have family resources that do not exceed one hundred thousand dollars in net worth, including five thousand dollars in liquid assets. The administration shall exclude one vehicle. C. An applicant may use the allowable medical expenses of a member of the applicant's family unit to reduce income to the required income level prescribed in subsection A of this section. The administration shall calculate income by using medical expenses that are not reimbursable by first or third party liability and that are incurred in a three month period beginning with the month before the month of application, the month of application and the following month. D. To determine when spend down is met, the administration shall deduct from the applicant's family income incurred medical expenses sequentially beginning with the month before the month of application. E. Eligibility is the date that spend down is met as determined by the department or the first day of the month of application, whichever is later. F. The administration shall grant eligibility for five continuous months plus any remaining days starting with the first day of eligibility but not to exceed a maximum period of six months. 36-2901.05. Breast and cervical cancer treatment; additional definition of eligibility A. For the purposes of this article, beginning January 1, 2002, "eligible person" includes a person who meets all of the following requirements: 1. Has been screened for breast and cervical cancer by a provider or entity that is recognized by the well woman healthcheck program administered by the department of health services as part of its program under title XV of the public health service act and that operates consistently with well woman healthcheck program guidelines. 2. Needs treatment for breast or cervical cancer. 3. Has an income level that is at or below two hundred fifty per cent of the federal poverty guidelines. 4. Is under sixty-five years of age. 5. Is not otherwise covered under creditable coverage as defined in section 2701(c) of the public health services act (42 United States Code section 300gg(c)). B. The administration shall limit the assistance it provides pursuant to this section to medically necessary services provided during the period that the person requires treatment for breast or cervical cancer as determined by the administration. C. The administration shall use a simplified eligibility form that the applicant may mail to the administration. Once the administration receives a completed application, the administration shall expedite the eligibility determination and enrollment on a prospective basis. 36-2901.06. Capitation rate adjustments; limitation Capitation rate adjustments shall be limited to utilization of existing services and inflation unless policy changes, including creation or expansion of programs, have been approved by the legislature or are specifically required by federal law or court mandate. 36-2901.07. Definition of eligible person; conditional eligibility (Conditionally Rpld.) A. Beginning January 1, 2014, for the purposes of section 36-2901, "eligible person" includes a person who is eligible pursuant to 42 United States Code section 1396a(a)(10)(A)(i)(VIII) and whose household's modified adjusted gross income is more than one hundred per cent but equal to or less than one hundred thirty-three per cent of the federal poverty guidelines. B. The administration shall discontinue eligibility for a person who is eligible pursuant to subsection A of this section if the federal medical assistance percentage established pursuant to 42 United States Code section 1396d(y) or 1396d(z) that is applicable to this state is less than eighty per cent. C. The administration shall discontinue eligibility for persons who are eligible pursuant to subsection A of this section if the maximum amount that can be assessed under section 36-2901.08 without causing a reduction in federal financial participation, in combination with the monies specified in section 36-2901.09 and any other monies appropriated for the costs of this section and costs specified in section 36-2901.08, subsection A, is insufficient to cover those costs. 36-2901.08. Hospital assessment (Conditionally Rpld.) A. The director shall establish, administer and collect an assessment on hospital revenues, discharges or bed days for the purpose of funding the nonfederal share of the costs, except for costs of the services described in section 36-2907, subsection F, that are incurred beginning January 1, 2014 and that are not covered by the proposition 204 protection account established by section 36-778 and the Arizona tobacco litigation settlement fund established by section 36-2901.02 or any other monies appropriated to cover these costs, for all of the following individuals: 1. Persons who are defined as eligible pursuant to section 36-2901.07. 2. Persons who do not meet the eligibility standards described in the state plan or the section 1115 waiver that were in effect immediately before November 27, 2000, but who meet the eligibility standards described in the state plan as effective October 1, 2001. 3. Persons who are defined as eligible pursuant to section 36-2901.01 but who do not meet the eligibility standards in either section 36-2934 or the state plan in effect as of January 1, 2013. B. The director shall adopt rules regarding the method for determining the assessment, the amount or rate of the assessment, and modifications or exemptions from the assessment. The assessment is subject to approval by the federal government to ensure that the assessment is not established or administered in a manner that causes a reduction in federal financial participation. C. The director may establish modifications or exemptions to the assessment. In determining the modifications or exemptions, the director may consider factors including the size of the hospital, the specialty services available to patients and the geographic location of the hospital. D. Before implementing the assessment, and thereafter if the methodology is modified, the director shall present the methodology to the joint legislative budget committee for review. E. The administration shall not collect an assessment for costs associated with service after the effective date of any reduction of the federal medical assistance percentage established by 42 United States Code section 1396d(y) or 1396d(z) that is applicable to this state to less than eighty per cent. F. The administration shall deposit the revenues collected pursuant to this section in the hospital assessment fund established by section 36-2901.09. G. A hospital shall not pass the cost of the assessment on to patients or third-party payors that are liable to pay for care on a patient's behalf. As part of its financial statement submissions pursuant to section 36-125.04, a hospital shall submit to the department of health services an attestation that it has not passed on the cost of the assessment to patients or third-party payors. H. If a hospital does not comply with this section as prescribed by the director, the director may suspend or revoke the hospital's Arizona health care cost containment system provider agreement registration. If the hospital does not comply within one hundred eighty days after the director suspends or revokes the hospital's provider agreement, the director shall notify the director of the department of health services, who shall suspend or revoke the hospital's license pursuant to section 36-427. 36-2901.09. Hospital assessment fund A. The hospital assessment fund is established consisting of monies collected pursuant to section 36-2901.08. The director shall administer the fund. B. The director shall use fund monies only as necessary to supplement monies in the proposition 204 protection account established by section 36-778 and the Arizona tobacco litigation settlement fund established by section 36-2901.02. C. Monies in the fund: 1. Do not revert to the state general fund. 2. Are exempt from the provisions of section 35-190 relating to lapsing of appropriations. 3. Are continuously appropriated. 36-2902. Arizona health care cost containment system administration; director; compensation A. There is established the Arizona health care cost containment system administration. B. The administration shall be administered by a director appointed by the governor and confirmed by the senate. C. The director of the administration is eligible to receive compensation pursuant to section 38-611. 36-2902.01. Arizona advisory council on Indian health care; membership; compensation; meetings A. The Arizona advisory council on Indian health care is established to give tribal governments, tribal organizations and urban Indian health care organizations in this state representation in shaping medicaid and health care policies and laws that impact the populations they serve. B. The council consists of the following members: 1. Twenty-two representatives of the federally recognized American Indian tribes in this state who are appointed by the governor. Each federally recognized American Indian tribe in this state may recommend to the governor names of persons to represent the tribe on and for appointment to the council. Representatives shall be appointed from those names submitted by the tribes. Recommended representatives may have experience serving the elderly, youth, children or families or persons with disabilities. 2. One representative from the inter tribal council of Arizona who is recommended by the president of the inter tribal council of Arizona and who is appointed by governor. 3. One representative from an urban Indian health organization in this state that receives Indian health services funding pursuant to 25 United States Code chapter 18 who is recommended jointly by the urban Indian health organizations and who is appointed by the governor. 4. One representative from the Arizona health care cost containment system who is appointed by the director. 5. One representative from the department of health services who is appointed by the director of the department of health services. 6. One representative from the department of economic security who is appointed by the director of the department of economic security. 7. One representative from the Arizona early childhood development and health board who is appointed by the executive director of the Arizona early childhood development and health board. C. A majority of the council members shall be members of federally recognized American Indian tribes in this state. The council shall contact each tribe to solicit names of persons to recommend for expired terms under subsection B, paragraph 1. D. The council shall invite federal representatives of the centers for medicare and medicaid services, the Indian health service, the United States social security administration and the United States department of veterans affairs to serve as technical advisors to the council. These representatives shall be ex officio members and may serve a three-year term on the council. E. Except as provided in subsection B, paragraphs 4, 5, 6 and 7 of this section, a member of the council may not be an employee of this state. F. Members of the council are not eligible to receive compensation, but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2. G. Members who are appointed pursuant to subsection B, paragraphs 1, 2 and 3 shall serve staggered three-year terms. A member who is absent without notice from three consecutive meetings vacates the individual's membership. The governor may appoint a new member within thirty days after the third unexcused absence. Vacancies occurring on the council shall be filled for the balance of the term. H. The council shall elect, from persons appointed pursuant to subsection B, paragraph 1, 2 or 3 of this section, a chairperson and vice chairperson. The chairperson and vice chairperson shall be members of a federally recognized American Indian tribe in this state. The election shall be held the second Monday in July every other year. The term of office shall be two years. The council shall meet at least six times a year and may meet more often at the call of the chairperson or vice chairperson. A majority of seated council members constitutes a quorum. I. An ex officio member serving pursuant to subsection D of this section is not eligible to vote and is not a member for purposes of determining whether a quorum is present. J. Meetings are open to the public and minutes of each meeting are open for public inspection. 36-2902.02. Arizona advisory council on Indian health care; duties; appropriation request A. The Arizona advisory council on Indian health care shall: 1. Hire and employ a director who shall hire and employ staff, subject to legislative appropriation, for purposes relating to the functions of the council. The staff shall provide technical assistance to tribal governments on tribal health care initiatives. The director, on behalf of the council, shall annually notify the director of the Arizona health care cost containment system administration of the amount of appropriation required by the council for the following fiscal year. 2. Assist tribes and urban Indian health organizations to develop comprehensive medical and public health care delivery and financing systems to meet the needs of American Indian tribes in this state. In performing this duty, the council shall: (a) Recommend new title XIX and XXI programs, services, funding options, policies and demonstration projects to meet the needs of American Indian tribes and urban Indian health organizations, both on and off reservations, in cooperation with this state and the federal government. (b) Facilitate communications, planning, advocacy and discussion among tribes and urban Indian health organizations in this state and with this state and federal agencies regarding operations, financing, policy and legislation relating to Indian medical and public health care. (c) Recommend and advocate tribal, state and federal policy and legislation that support the design and implementation of medical and public health care delivery and financing systems for tribes and urban Indian health organizations in this state. (d) Conduct and commission studies and research to further the purpose of the council and to address identified Indian health care disparities in this state. (e) Conduct periodic public hearings to gather input and recommendations from tribal populations on their health care issues and concerns. (f) Apply for and seek grants, contracts and funding to further the purpose of the council. The funding shall supplement and not diminish annual appropriations for the council. (g) Notwithstanding section 36-2903.01, subsection B, in conjunction with the administration and a tribe that operates a temporary assistance for needy families program, request a federal waiver from the United States department of health and human services that allows tribal governments that perform eligibility determinations for temporary assistance for needy families programs to perform the medicaid eligibility determinations for persons who apply for services pursuant to section 36-2901, paragraph 6, subdivision (a). If the waiver is approved, the state shall provide the state matching monies for the administrative costs associated with the medicaid eligibility based on federal guidelines. As part of the waiver, the administration shall recoup from a tribal government all federal fiscal sanctions that result from inaccurate eligibility determinations. (h) Perform other duties as requested by the legislature. B. The director, on notification by the council, shall include the amount of the council's appropriation request in the agency's annual appropriations request. 36-2903. Arizona health care cost containment system; administrator; powers and duties of director and administrator; exemption from attorney general representation; definition A. The Arizona health care cost containment system is established consisting of contracts with contractors for the provision of hospitalization and medical care coverage to members. Except as specifically required by federal law and by section 36-2909, the system is only responsible for providing care on or after the date that the person has been determined eligible for the system, and is only responsible for reimbursing the cost of care rendered on or after the date that the person was determined eligible for the system. B. An agreement may be entered into with an independent contractor, subject to title 41, chapter 23, to serve as the statewide administrator of the system. The administrator has full operational responsibility, subject to supervision by the director, for the system, which may include any or all of the following: 1. Development of county-by-county implementation and operation plans for the system that include reasonable access to hospitalization and medical care services for members. 2. Contract administration and oversight of contractors, including certification instead of licensure for title XVIII and title XIX purposes. 3. Provision of technical assistance services to contractors and potential contractors. 4. Development of a complete system of accounts and controls for the system including provisions designed to ensure that covered health and medical services provided through the system are not used unnecessarily or unreasonably including but not limited to inpatient behavioral health services provided in a hospital. Periodically the administrator shall compare the scope, utilization rates, utilization control methods and unit prices of major health and medical services provided in this state in comparison with other states' health care services to identify any unnecessary or unreasonable utilization within the system. The administrator shall periodically assess the cost effectiveness and health implications of alternate approaches to the provision of covered health and medical services through the system in order to reduce unnecessary or unreasonable utilization. 5. Establishment of peer review and utilization review functions for all contractors. 6. Assistance in the formation of medical care consortiums to provide covered health and medical services under the system for a county. 7. Development and management of a contractor payment system. 8. Establishment and management of a comprehensive system for assuring the quality of care delivered by the system. 9. Establishment and management of a system to prevent fraud by members, subcontracted providers of care, contractors and noncontracting providers. 10. Coordination of benefits provided under this article to any member. The administrator may require that contractors and noncontracting providers are responsible for the coordination of benefits for services provided under this article. Requirements for coordination of benefits by noncontracting providers under this section are limited to coordination with standard health insurance and disability insurance policies and similar programs for health coverage. 11. Development of a health education and information program. 12. Development and management of an enrollment system. 13. Establishment and maintenance of a claims resolution procedure to ensure that ninety per cent of the clean claims shall be paid within thirty days of receipt and ninety-nine per cent of the remaining clean claims shall be paid within ninety days of receipt. For the purposes of this paragraph, "clean claims" has the same meaning prescribed in section 36-2904, subsection G. 14. Establishment of standards for the coordination of medical care and patient transfers pursuant to section 36-2909, subsection B. 15. Establishment of a system to implement medical child support requirements, as required by federal law. The administration may enter into an intergovernmental agreement with the department of economic security to implement this paragraph. 16. Establishment of an employee recognition fund. 17. Establishment of an eligibility process to determine whether a medicare low income subsidy is available to persons who want to apply for a subsidy as authorized by title XVIII. C. If an agreement is not entered into with an independent contractor to serve as statewide administrator of the system pursuant to subsection B of this section, the director shall ensure that the operational responsibilities set forth in subsection B of this section are fulfilled by the administration and other contractors as necessary. D. If the director determines that the administrator will fulfill some but not all of the responsibilities set forth in subsection B of this section, the director shall ensure that the remaining responsibilities are fulfilled by the administration and other contractors as necessary. E. The administrator or any direct or indirect subsidiary of the administrator is not eligible to serve as a contractor. F. Except for reinsurance obtained by contractors, the administrator shall coordinate benefits provided under this article to any eligible person who is covered by workers' compensation, disability insurance, a hospital and medical service corporation, a health care services organization, an accountable health plan or any other health or medical or disability insurance plan including coverage made available to persons defined as eligible by section 36-2901, paragraph 6, subdivisions (b), (c), (d) and (e), or who receives payments for accident-related injuries, so that any costs for hospitalization and medical care paid by the system are recovered from any other available third party payors. The administrator may require that contractors and noncontracting providers are responsible for the coordination of benefits for services provided under this article. Requirements for coordination of benefits by noncontracting providers under this section are limited to coordination with standard health insurance and disability insurance policies and similar programs for health coverage. The system shall act as payor of last resort for persons eligible pursuant to section 36-2901, paragraph 6, subdivision (a), section 36-2974 or section 36-2981, paragraph 6 unless specifically prohibited by federal law. By operation of law, eligible persons assign to the system and a county rights to all types of medical benefits to which the person is entitled, including first party medical benefits under automobile insurance policies based on the order of priorities established pursuant to section 36-2915. The state has a right to subrogation against any other person or firm to enforce the assignment of medical benefits. The provisions of this subsection are controlling over the provisions of any insurance policy that provides benefits to an eligible person if the policy is inconsistent with the provisions of this subsection. G. Notwithstanding subsection E of this section, the administrator may subcontract distinct administrative functions to one or more persons who may be contractors within the system. H. The director shall require as a condition of a contract with any contractor that all records relating to contract compliance are available for inspection by the administrator and the director subject to subsection I of this section and that such records be maintained by the contractor for five years. The director shall also require that these records be made available by a contractor on request of the secretary of the United States department of health and human services, or its successor agency. I. Subject to existing law relating to privilege and protection, the director shall prescribe by rule the types of information that are confidential and circumstances under which such information may be used or released, including requirements for physician-patient confidentiality. Notwithstanding any other provision of law, such rules shall be designed to provide for the exchange of necessary information among the counties, the administration and the department of economic security for the purposes of eligibility determination under this article. Notwithstanding any law to the contrary, a member's medical record shall be released without the member's consent in situations or suspected cases of fraud or abuse relating to the system to an officer of the state's certified Arizona health care cost containment system fraud control unit who has submitted a written request for the medical record. J. The director shall prescribe rules that specify methods for: 1. The transition of members between system contractors and noncontracting providers. 2. The transfer of members and persons who have been determined eligible from hospitals that do not have contracts to care for such persons. K. The director shall adopt rules that set forth procedures and standards for use by the system in requesting county long-term care for members or persons determined eligible. L. To the extent that services are furnished pursuant to this article, and unless otherwise required pursuant to this chapter, a contractor is not subject to title 20. M. As a condition of the contract with any contractor, the director shall require contract terms as necessary in the judgment of the director to ensure adequate performance and compliance with all applicable federal laws by the contractor of the provisions of each contract executed pursuant to this chapter. Contract provisions required by the director shall include at a minimum the maintenance of deposits, performance bonds, financial reserves or other financial security. The director may waive requirements for the posting of bonds or security for contractors that have posted other security, equal to or greater than that required by the system, with a state agency for the performance of health service contracts if funds would be available from such security for the system on default by the contractor. The director may also adopt rules for the withholding or forfeiture of payments to be made to a contractor by the system for the failure of the contractor to comply with a provision of the contractor's contract with the system or with the adopted rules. The director may also require contract terms allowing the administration to operate a contractor directly under circumstances specified in the contract. The administration shall operate the contractor only as long as it is necessary to assure delivery of uninterrupted care to members enrolled with the contractor and accomplish the orderly transition of those members to other system contractors, or until the contractor reorganizes or otherwise corrects the contract performance failure. The administration shall not operate a contractor unless, before that action, the administration delivers notice to the contractor and provides an opportunity for a hearing in accordance with procedures established by the director. Notwithstanding the provisions of a contract, if the administration finds that the public health, safety or welfare requires emergency action, it may operate as the contractor on notice to the contractor and pending an administrative hearing, which it shall promptly institute. N. The administration for the sole purpose of matters concerning and directly related to the Arizona health care cost containment system and the Arizona long-term care system is exempt from section 41-192. O. Notwithstanding subsection F of this section, if the administration determines that according to federal guidelines it is more cost-effective for a person defined as eligible under section 36-2901, paragraph 6, subdivision (a) to be enrolled in a group health insurance plan in which the person is entitled to be enrolled, the administration may pay all of that person's premiums, deductibles, coinsurance and other cost sharing obligations for services covered under section 36-2907. The person shall apply for enrollment in the group health insurance plan as a condition of eligibility under section 36-2901, paragraph 6, subdivision (a). P. The total amount of state monies that may be spent in any fiscal year by the administration for health care shall not exceed the amount appropriated or authorized by section 35-173 for all health care purposes. This article does not impose a duty on an officer, agent or employee of this state to discharge a responsibility or to create any right in a person or group if the discharge or right would require an expenditure of state monies in excess of the expenditure authorized by legislative appropriation for that specific purpose. Q. Notwithstanding section 36-470, a contractor or program contractor may receive laboratory tests from a laboratory or hospital-based laboratory for a system member enrolled with the contractor or program contractor subject to all of the following requirements: 1. The contractor or program contractor shall provide a written request to the laboratory in a format mutually agreed to by the laboratory and the requesting health plan or program contractor. The request shall include the member's name, the member's plan identification number, the specific test results that are being requested and the time periods and the quality improvement activity that prompted the request. 2. The laboratory data may be provided in written or electronic format based on the agreement between the laboratory and the contractor or program contractor. If there is no contract between the laboratory and the contractor or program contractor, the laboratory shall provide the requested data in a format agreed to by the noncontracted laboratory. 3. The laboratory test results provided to the member's contractor or program contractor shall only be used for quality improvement activities authorized by the administration and health care outcome studies required by the administration. The contractors and program contractors shall maintain strict confidentiality about the test results and identity of the member as specified in contractual arrangements with the administration and pursuant to state and federal law. 4. The administration, after collaboration with the department of health services regarding quality improvement activities, may prohibit the contractors and program contractors from receiving certain test results if the administration determines that a serious potential exists that the results may be used for purposes other than those intended for the quality improvement activities. The department of health services shall consult with the clinical laboratory licensure advisory committee established by section 36-465 before providing recommendations to the administration on certain test results and quality improvement activities. 5. The administration shall provide contracted laboratories and the department of health services with an annual report listing the quality improvement activities that will require laboratory data. The report shall be updated and distributed to the contracting laboratories and the department of health services when laboratory data is needed for new quality improvement activities. 6. A laboratory that complies with a request from the contractor or program contractor for laboratory results pursuant to this section is not subject to civil liability for providing the data to the contractor or program contractor. The administration, the contractor or a program contractor that uses data for reasons other than quality improvement activities is subject to civil liability for this improper use. R. For the purposes of this section, "quality improvement activities" means those requirements, including health care outcome studies specified in federal law or required by the centers for medicare and medicaid services or the administration, to improve health care outcomes. 36-2903.01. Additional powers and duties; report; definition A. The director of the Arizona health care cost containment system administration may adopt rules that provide that the system may withhold or forfeit payments to be made to a noncontracting provider by the system if the noncontracting provider fails to comply with this article, the provider agreement or rules that are adopted pursuant to this article and that relate to the specific services rendered for which a claim for payment is made. B. The director shall: 1. Prescribe uniform forms to be used by all contractors. The rules shall require a written and signed application by the applicant or an applicant's authorized representative, or, if the person is incompetent or incapacitated, a family member or a person acting responsibly for the applicant may obtain a signature or a reasonable facsimile and file the application as prescribed by the administration. 2. Enter into an interagency agreement with the department to establish a streamlined eligibility process to determine the eligibility of all persons defined pursuant to section 36-2901, paragraph 6, subdivision (a). At the administration's option, the interagency agreement may allow the administration to determine the eligibility of certain persons, including those defined pursuant to section 36-2901, paragraph 6, subdivision (a). 3. Enter into an intergovernmental agreement with the department to: (a) Establish an expedited eligibility and enrollment process for all persons who are hospitalized at the time of application. (b) Establish performance measures and incentives for the department. (c) Establish the process for management evaluation reviews that the administration shall perform to evaluate the eligibility determination functions performed by the department. (d) Establish eligibility quality control reviews by the administration. (e) Require the department to adopt rules, consistent with the rules adopted by the administration for a hearing process, that applicants or members may use for appeals of eligibility determinations or redeterminations. (f) Establish the department's responsibility to place sufficient eligibility workers at federally qualified health centers to screen for eligibility and at hospital sites and level one trauma centers to ensure that persons seeking hospital services are screened on a timely basis for eligibility for the system, including a process to ensure that applications for the system can be accepted on a twenty-four hour basis, seven days a week. (g) Withhold payments based on the allowable sanctions for errors in eligibility determinations or redeterminations or failure to meet performance measures required by the intergovernmental agreement. (h) Recoup from the department all federal fiscal sanctions that result from the department's inaccurate eligibility determinations. The director may offset all or part of a sanction if the department submits a corrective action plan and a strategy to remedy the error. 4. By rule establish a procedure and time frames for the intake of grievances and requests for hearings, for the continuation of benefits and services during the appeal process and for a grievance process at the contractor level. Notwithstanding sections 41-1092.02, 41-1092.03 and 41-1092.05, the administration shall develop rules to establish the procedure and time frame for the informal resolution of grievances and appeals. A grievance that is not related to a claim for payment of system covered services shall be filed in writing with and received by the administration or the prepaid capitated provider or program contractor not later than sixty days after the date of the adverse action, decision or policy implementation being grieved. A grievance that is related to a claim for payment of system covered services must be filed in writing and received by the administration or the prepaid capitated provider or program contractor within twelve months after the date of service, within twelve months after the date that eligibility is posted or within sixty days after the date of the denial of a timely claim submission, whichever is later. A grievance for the denial of a claim for reimbursement of services may contest the validity of any adverse action, decision, policy implementation or rule that related to or resulted in the full or partial denial of the claim. A policy implementation may be subject to a grievance procedure, but it may not be appealed for a hearing. The administration is not required to participate in a mandatory settlement conference if it is not a real party in interest. In any proceeding before the administration, including a grievance or hearing, persons may represent themselves or be represented by a duly authorized agent who is not charging a fee. A legal entity may be represented by an officer, partner or employee who is specifically authorized by the legal entity to represent it in the particular proceeding. 5. Apply for and accept federal funds available under title XIX of the social security act (P.L. 89-97; 79 Stat. 344; 42 United States Code section 1396 (1980)) in support of the system. The application made by the director pursuant to this paragraph shall be designed to qualify for federal funding primarily on a prepaid capitated basis. Such funds may be used only for the support of persons defined as eligible pursuant to title XIX of the social security act or the approved section 1115 waiver. 6. At least thirty days before the implementation of a policy or a change to an existing policy relating to reimbursement, provide notice to interested parties. Parties interested in receiving notification of policy changes shall submit a written request for notification to the administration. 7. In addition to the cost sharing requirements specified in subsection D, paragraph 4 of this section: (a) Charge monthly premiums up to the maximum amount allowed by federal law to all populations of eligible persons who may be charged. (b) Implement this paragraph to the extent permitted under the federal deficit reduction act of 2005 and other federal laws, subject to the approval of federal waiver authority and to the extent that any changes in the cost sharing requirements under this paragraph would permit this state to receive any enhanced federal matching rate. C. The director is authorized to apply for any federal funds available for the support of programs to investigate and prosecute violations arising from the administration and operation of the system. Available state funds appropriated for the administration and operation of the system may be used as matching funds to secure federal funds pursuant to this subsection. D. The director may adopt rules or procedures to do the following: 1. Authorize advance payments based on estimated liability to a contractor or a noncontracting provider after the contractor or noncontracting provider has submitted a claim for services and before the claim is ultimately resolved. The rules shall specify that any advance payment shall be conditioned on the execution before payment of a contract with the contractor or noncontracting provider that requires the administration to retain a specified percentage, which shall be at least twenty percent, of the claimed amount as security and that requires repayment to the administration if the administration makes any overpayment. 2. Defer liability, in whole or in part, of contractors for care provided to members who are hospitalized on the date of enrollment or under other circumstances. Payment shall be on a capped fee-for-service basis for services other than hospital services and at the rate established pursuant to subsection G of this section for hospital services or at the rate paid by the health plan, whichever is less. 3. Deputize, in writing, any qualified officer or employee in the administration to perform any act that the director by law is empowered to do or charged with the responsibility of doing, including the authority to issue final administrative decisions pursuant to section 41-1092.08. 4. Notwithstanding any other law, require persons eligible pursuant to section 36-2901, paragraph 6, subdivision (a), section 36-2931 and section 36-2981, paragraph 6 to be financially responsible for any cost sharing requirements established in a state plan or a section 1115 waiver and approved by the centers for medicare and medicaid services. Cost sharing requirements may include copayments, coinsurance, deductibles, enrollment fees and monthly premiums for enrolled members, including households with children enrolled in the Arizona long-term care system. E. The director shall adopt rules that further specify the medical care and hospital services that are covered by the system pursuant to section 36-2907. F. In addition to the rules otherwise specified in this article, the director may adopt necessary rules pursuant to title 41, chapter 6 to carry out this article. Rules adopted by the director pursuant to this subsection shall consider the differences between rural and urban conditions on the delivery of hospitalization and medical care. G. For inpatient hospital admissions and outpatient hospital services on and after March 1, 1993, the administration shall adopt rules for the reimbursement of hospitals according to the following procedures: 1. For inpatient hospital stays from March 1, 1993 through September 30, 2014, the administration shall use a prospective tiered per diem methodology, using hospital peer groups if analysis shows that cost differences can be attributed to independently definable features that hospitals within a peer group share. In peer grouping the administration may consider such factors as length of stay differences and labor market variations. If there are no cost differences, the administration shall implement a stop loss-stop gain or similar mechanism. Any stop loss-stop gain or similar mechanism shall ensure that the tiered per diem rates assigned to a hospital do not represent less than ninety percent of its 1990 base year costs or more than one hundred ten percent of its 1990 base year costs, adjusted by an audit factor, during the period of March 1, 1993 through September 30, 1994. The tiered per diem rates set for hospitals shall represent no less than eighty-seven and one-half percent or more than one hundred twelve and one-half percent of its 1990 base year costs, adjusted by an audit factor, from October 1, 1994 through September 30, 1995 and no less than eighty-five percent or more than one hundred fifteen percent of its 1990 base year costs, adjusted by an audit factor, from October 1, 1995 through September 30, 1996. For the periods after September 30, 1996 no stop loss-stop gain or similar mechanisms shall be in effect. An adjustment in the stop loss-stop gain percentage may be made to ensure that total payments do not increase as a result of this provision. If peer groups are used, the administration shall establish initial peer group designations for each hospital before implementation of the per diem system. The administration may also use a negotiated rate methodology. The tiered per diem methodology may include separate consideration for specialty hospitals that limit their provision of services to specific patient populations, such as rehabilitative patients or children. The initial per diem rates shall be based on hospital claims and encounter data for dates of service November 1, 1990 through October 31, 1991 and processed through May of 1992. The administration may also establish a separate reimbursement methodology for claims with extraordinarily high costs per day that exceed thresholds established by the administration. 2. For rates effective on October 1, 1994, and annually through September 30, 2011, the administration shall adjust tiered per diem payments for inpatient hospital care by the data resources incorporated market basket index for prospective payment system hospitals. For rates effective beginning on October 1, 1999, the administration shall adjust payments to reflect changes in length of stay for the maternity and nursery tiers. 3. Through June 30, 2004, for outpatient hospital services, the administration shall reimburse a hospital by applying a hospital specific outpatient cost-to-charge ratio to the covered charges. Beginning on July 1, 2004 through June 30, 2005, the administration shall reimburse a hospital by applying a hospital specific outpatient cost-to-charge ratio to covered charges. If the hospital increases its charges for outpatient services filed with the Arizona department of health services pursuant to chapter 4, article 3 of this title, by more than 4.7 percent for dates of service effective on or after July 1, 2004, the hospital specific cost-to-charge ratio will be reduced by the amount that it exceeds 4.7 percent. If charges exceed 4.7 percent, the effective date of the increased charges will be the effective date of the adjusted Arizona health care cost containment system cost-to-charge ratio. The administration shall develop the methodology for a capped fee-for-service schedule and a statewide cost-to-charge ratio. Any covered outpatient service not included in the capped fee-for-service schedule shall be reimbursed by applying the statewide cost-to-charge ratio that is based on the services not included in the capped fee-for-service schedule. Beginning on July 1, 2005, the administration shall reimburse clean claims with dates of service on or after July 1, 2005, based on the capped fee-for-service schedule or the statewide cost-to-charge ratio established pursuant to this paragraph. The administration may make additional adjustments to the outpatient hospital rates established pursuant to this section based on other factors, including the number of beds in the hospital, specialty services available to patients and the geographic location of the hospital. 4. Except if submitted under an electronic claims submission system, a hospital bill is considered received for purposes of this paragraph on initial receipt of the legible, error-free claim form by the administration if the claim includes the following error-free documentation in legible form: (a) An admission face sheet. (b) An itemized statement. (c) An admission history and physical. (d) A discharge summary or an interim summary if the claim is split. (e) An emergency record, if admission was through the emergency room. (f) Operative reports, if applicable. (g) A labor and delivery room report, if applicable. Payment received by a hospital from the administration pursuant to this subsection or from a contractor either by contract or pursuant to section 36-2904, subsection I is considered payment by the administration or the contractor of the administration's or contractor's liability for the hospital bill. A hospital may collect any unpaid portion of its bill from other third-party payors or in situations covered by title 33, chapter 7, article 3. 5. For services rendered on and after October 1, 1997, the administration shall pay a hospital's rate established according to this section subject to the following: (a) If the hospital's bill is paid within thirty days of the date the bill was received, the administration shall pay ninety-nine percent of the rate. (b) If the hospital's bill is paid after thirty days but within sixty days of the date the bill was received, the administration shall pay one hundred percent of the rate. (c) If the hospital's bill is paid any time after sixty days of the date the bill was received, the administration shall pay one hundred percent of the rate plus a fee of one percent per month for each month or portion of a month following the sixtieth day of receipt of the bill until the date of payment. 6. In developing the reimbursement methodology, if a review of the reports filed by a hospital pursuant to section 36-125.04 indicates that further investigation is considered necessary to verify the accuracy of the information in the reports, the administration may examine the hospital's records and accounts related to the reporting requirements of section 36-125.0