SB1390 - 492R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 36-2907, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2907. Covered health and medical services; modifications; related delivery of service requirements

A. Unless modified pursuant to this section, contractors shall provide the following medically necessary health and medical services:

1. Inpatient hospital services that are ordinarily furnished by a hospital for the care and treatment of inpatients and that are provided under the direction of a physician or a primary care practitioner. For the purposes of this section, inpatient hospital services exclude services in an institution for tuberculosis or mental diseases unless authorized under an approved section 1115 waiver.

2. Outpatient health services that are ordinarily provided in hospitals, clinics, offices and other health care facilities by licensed health care providers. Outpatient health services include services provided by or under the direction of a physician or a primary care practitioner but do not include occupational therapy, or speech therapy for eligible persons who are twenty‑one years of age or older.

3. Other laboratory and x‑ray services ordered by a physician or a primary care practitioner.

4. Medications that are ordered on prescription by a physician or a dentist licensed pursuant to title 32, chapter 11. Beginning January 1, 2006, Persons who are dually eligible for title XVIII and title XIX services must obtain available medications through a medicare licensed or certified medicare advantage prescription drug plan, a medicare prescription drug plan or any other entity authorized by medicare to provide a medicare part D prescription drug benefit.

5. Emergency dental care and extractions for persons who are at least twenty‑one years of age.

6. Medical supplies, equipment and prosthetic devices, not including hearing aids or dentures, ordered by a physician or a primary care practitioner. Suppliers of durable medical equipment shall provide the administration with complete information about the identity of each person who has an ownership or controlling interest in their business and shall comply with federal bonding requirements in a manner prescribed by the administration.

7. For persons who are at least twenty‑one years of age, treatment of medical conditions of the eye, excluding eye examinations for prescriptive lenses and the provision of prescriptive lenses.

8. Early and periodic health screening and diagnostic services as required by section 1905(r) of title XIX of the social security act for members who are under twenty‑one years of age.

9. Family planning services that do not include abortion or abortion counseling. If a contractor elects not to provide family planning services, this election does not disqualify the contractor from delivering all other covered health and medical services under this chapter. In that event, the administration may contract directly with another contractor, including an outpatient surgical center or a noncontracting provider, to deliver family planning services to a member who is enrolled with the contractor that elects not to provide family planning services.

10. Podiatry services performed by a podiatrist licensed pursuant to title 32, chapter 7 and ordered by a primary care physician or primary care practitioner.

11. Nonexperimental transplants approved for title XIX reimbursement.

12. Ambulance and nonambulance transportation.

B. Beginning on October 1, 2002, Circumcision of newborn males is not a covered health and medical service.

C. The system shall pay noncontracting providers only for health and medical services as prescribed in subsection A of this section and as prescribed by rule.

D. The director shall adopt rules necessary to limit, to the extent possible, the scope, duration and amount of services, including maximum limitations for inpatient services that are consistent with federal regulations under title XIX of the social security act (P.L. 89‑97; 79 Stat. 344; 42 United States Code section 1396 (1980)). To the extent possible and practicable, these rules shall provide for the prior approval of medically necessary services provided pursuant to this chapter.

E. The director shall make available home health services in lieu of hospitalization pursuant to contracts awarded under this article. For the purposes of this subsection, "home health services" means the provision of nursing services, home health aide services or medical supplies, equipment and appliances, which are provided on a part‑time or intermittent basis by a licensed home health agency within a member's residence based on the orders of a physician or a primary care practitioner. Home health agencies shall comply with the federal bonding requirements in a manner prescribed by the administration.

F. The director shall adopt rules for the coverage of behavioral health services for persons who are eligible under section 36‑2901, paragraph 6, subdivision (a). The administration shall contract with the department of health services for the delivery of all medically necessary behavioral health services to adults with serious mental illness and persons who are under twenty-one years of age and who are eligible under rules adopted pursuant to this subsection. The division of behavioral health in the department of health services shall establish a diagnostic and evaluation program to which other state agencies shall refer children persons who are under twenty-one years of age and who are not already enrolled pursuant to this chapter and who may be in need of behavioral health services. In addition to an evaluation, the division of behavioral health shall also identify children persons who are under twenty-one years of age and who may be eligible under section 36‑2901, paragraph 6, subdivision (a) or section 36‑2931, paragraph 5 and shall refer the children these persons to the appropriate agency responsible for making the final eligibility determination. The administration shall contract for the delivery of all medically necessary behavioral health services for persons other than adults with serious mental illness and persons who are under twenty-one years of age. The administration shall require that funding for behavioral health services be spent only on behavioral health services and administrative costs associated with behavioral health services.

G. The director shall adopt rules for the provision of transportation services and rules providing for copayment by members for transportation for other than emergency purposes. Prior authorization is not required for medically necessary ambulance transportation services rendered to members or eligible persons initiated by dialing telephone number 911 or other designated emergency response systems.

H. The director may adopt rules to allow the administration, at the director's discretion, to use a second opinion procedure under which surgery may not be eligible for coverage pursuant to this chapter without documentation as to need by at least two physicians or primary care practitioners.

I. If the director does not receive bids within the amounts budgeted or if at any time the amount remaining in the Arizona health care cost containment system fund is insufficient to pay for full contract services for the remainder of the contract term, the administration, on notification to system contractors at least thirty days in advance, may modify the list of services required under subsection A of this section for persons defined as eligible other than those persons defined pursuant to section 36‑2901, paragraph 6, subdivision (a). The director may also suspend services or may limit categories of expense for services defined as optional pursuant to title XIX of the social security act (P.L. 89‑97; 79 Stat. 344; 42 United States Code section 1396 (1980)) for persons defined pursuant to section 36‑2901, paragraph 6, subdivision (a). Such reductions or suspensions do not apply to the continuity of care for persons already receiving these services.

J. Additional, reduced or modified hospitalization and medical care benefits may be provided under the system to enrolled members who are eligible pursuant to section 36‑2901, paragraph 6, subdivision (b), (c), (d) or (e).

K. All health and medical services provided under this article shall be provided in the geographic service area of the member, except:

1. Emergency services and specialty services provided pursuant to section 36‑2908.

2. That the director may permit the delivery of health and medical services in other than the geographic service area in this state or in an adjoining state if the director determines that medical practice patterns justify the delivery of services or a net reduction in transportation costs can reasonably be expected. Notwithstanding the definition of physician as prescribed in section 36‑2901, if services are procured from a physician or primary care practitioner in an adjoining state, the physician or primary care practitioner shall be licensed to practice in that state pursuant to licensing statutes in that state similar to title 32, chapter 13, 15, 17 or 25 and shall complete a provider agreement for this state.

L. Covered outpatient services shall be subcontracted by a primary care physician or primary care practitioner to other licensed health care providers to the extent practicable for purposes including, but not limited to, making health care services available to underserved areas, reducing costs of providing medical care and reducing transportation costs.

M. The director shall adopt rules that prescribe the coordination of medical care for persons who are eligible for system services. The rules shall include provisions for the transfer of patients, the transfer of medical records and the initiation of medical care. END_STATUTE

Sec. 2. Section 36-3403, Arizona Revised Statutes, is amended to read:

START_STATUTE36-3403. Powers and duties of the deputy director; study; capitation rates

A. The deputy director may, on approval of the director, may:

1. Employ professional, secretarial and clerical staff as are determined necessary by the director to carry out the functions and duties of the division, subject to legislative appropriation.

2. Contract for the services of consultants and other persons which that are reasonably necessary to enable the division to carry out its functions and duties, subject to legislative appropriation.

3. Contract and incur obligations which that are reasonably necessary within the general scope of the division.

4. Adopt rules which that are necessary to carry out the requirements of the division.

5. Contract or enter into intergovernmental agreements with other public and private nonprofit agencies and entities.

6. Use monies, facilities or services to provide matching contributions under federal or other programs which that further the objectives and programs of the division.

7. Accept gifts, grants, matching monies or direct payments from public or private agencies or private persons and enterprises for the conduct of programs which that are consistent with the general purposes and objectives of the division.

8. Lease at fair market value real property currently occupied by the southern Arizona mental health center for the purposes of operating a private nonprofit behavioral health care facility. Monies collected from the lease of the real property shall be deposited into the building renewal fund established pursuant to section 36‑545.09.

B. The deputy director shall administer:

1. Unified mental health programs, to include the functions of the state hospital and community mental health.

2. Addictive behavior programs to include alcohol and drug abuse.

C. The programs administered by the deputy director pursuant to subsection B of this section do not include programs administered by the Arizona health care cost containment system administration pursuant to section 36-2907.

C. D. Notwithstanding any other law the deputy director may waive or reduce the requirements for local match.

D. E. The superintendent of the Arizona state hospital shall be appointed by the deputy director, subject to the approval of the director, and shall report directly to the deputy director.

E. F. The department shall contract with an independent consulting firm for an annual study of the adequacy and appropriateness of title XIX reimbursement rates to providers of behavioral health services. The department may require, and the department's contracted providers shall provide, financial data to the department in the format prescribed by the department to assist in the study. A complete study of reimbursement rates shall be completed no less than once every five years. The department shall provide the report to the joint legislative budget committee and the Arizona health care cost containment system administration by October 1, 2002 and by October 1 of each year thereafter. The department shall include the results of the study in its yearly capitation request to the Arizona health care cost containment system administration. If results of the study are not completely incorporated into the capitation rate, the Arizona health care cost containment system administration shall provide a report to the joint legislative budget committee within thirty days of setting the final capitation rate, including reasons for differences between the rate and the study.

F. G. 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. END_STATUTE

Sec. 3. Integrated physical and behavioral health care services pilot program; report; delayed repeal

A. Notwithstanding any other law, on or before July 1, 2011, the department of health services, in collaboration with the Arizona health care cost containment system administration and subject to approval by the centers for medicare and medicaid services, shall begin a two year pilot program to implement an integrated physical and behavioral health service delivery model for adults with serious mental illness.

B. Enrollment in the pilot program is voluntary and is limited to adults with serious mental illness who are eligible for services pursuant to title XIX of the social security act and who reside in a county with a population of at least three million persons. To the extent possible, pilot program participants must be a representative sample of all adults with serious mental illness in this state to allow the department of health services and the Arizona health care cost containment system administration to compare outcomes of the pilot program participants to a representative sample of persons who were not in the pilot program.

C. The Arizona health care cost containment system administration shall contract with the department of health services for the managed care delivery of medically necessary physical and behavioral health services pursuant to section 36-2907, Arizona Revised Statutes, as amended by this act. The services offered to enrollees in the pilot program must be equivalent to those offered pursuant to section 36-2907, Arizona Revised Statutes, as amended by this act, and section 36-3407, Arizona Revised Statutes, to individuals who are not enrolled in the pilot program. The department may enter into subcontracts with entities meeting the requirements of sections 36-2906 and 36-2906.01, Arizona Revised Statutes, to act as managed care organizations providing for the integrated delivery of physical and behavioral health services.

D. The Arizona health care cost containment system administration shall provide oversight of the pilot program to ensure compliance with the requirements of title XIX of the social security act and the continued flow of federal matching funding. The Arizona health care cost containment system administration, in consultation with the department of health services, shall also:

1. Develop and oversee funding needs for the pilot program, including identifying appropriate funding levels and setting the capitation rates that include blended funding for both physical and behavioral health.

2. Develop performance measures.

3. Facilitate network development and management for the physical health component of the pilot program.

E. The department of health services, in consultation with the Arizona health care cost containment system administration, shall conduct an evaluation of the pilot program and submit a written evaluation to the governor, the president of the senate and the speaker of the house of representatives within one hundred twenty days after completion of the pilot program. The evaluation shall compare the pilot program participants to a comparable population that did not participate in the pilot program regarding measures of quality of service, outcomes and cost.

F. This section is repealed from and after September 30, 2014.

Sec. 4. Exemption from rule making

For the purposes of this act, the Arizona health care cost containment system administration and the department of health services are exempt from the rule making requirements of title 41, chapter 6, Arizona Revised Statutes, for two years after the effective date of this act.

Sec. 5. Equal priority of services; separate use of monies

It is the intent of the legislature that behavioral health care and acute care be delivered with equal priority. Monies appropriated for behavioral health services and administration shall be used only for that purpose, and monies appropriated for acute care services and administration shall be used only for that purpose.