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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
genetic sequencing; insurance; prohibition
Purpose
Allows an insurer and the Arizona Health Care Cost Containment System (AHCCCS) to limit coverage for genetic sequencing if the company or operation is associated with a foreign adversary. Establishes prohibitions and requirements for health care institutions and research facilities relating to genetic sequencers and software used for genetic sequencing.
Background
The Department of Insurance and Financial Institutions regulates policies, certificates, evidences of coverage and contracts of insurance (insurance policies) that are issued or delivered by health care insurers. Health care insurers include disability insurers, group disability insurers, blanket disability insurers, health care services organizations, hospital service corporations and medical service corporations (insurers) (A.R.S. § 20-1379). AHCCCS contracts with health professionals to provide medically necessary health and medical services to eligible members, including inpatient and outpatient health services and early and periodic health screening and diagnostic services (A.R.S. § 36-2907).
Genetic sequencing is a laboratory method that is used to determine the entire genetic makeup of a specific organism or cell type. This method can be used to find changes in areas of the genome, which may help scientists understand how specific diseases form. Results of genomic sequencing may also be used to diagnose and treat disease (NCI).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows an insurance policy and AHCCCS, subject to approval of the U.S. Centers for Medicare and Medicaid Services, to limit coverage to a member for genetic sequencing if the genetic sequencing is performed on a device that is either:
a) produced by a company domiciled in a foreign adversary; or
b) produced by a company owned or substantially controlled by a company domiciled in a foreign adversary.
2. Specifies that the authorization to limit coverage for genetic sequencing does not:
a) require coverage for genetic sequencing; or
b) limit an insurer from denying coverage for any valid reason.
3. Prohibits a health care institution or research facility from using genetic sequencers or any operational or research software used for genetic sequencing for the purposes of conducting genetic sequencing if the sequencers or software is produced in or by a:
a) foreign adversary or its affiliate;
b) company, subsidiary or enterprise deemed as a Chinese military company or its affiliate pursuant to federal annual publication requirements;
c) company, subsidiary or enterprise domiciled in a foreign adversary or its affiliate; or
d) company owned or controlled subsidiary of a company that is domiciled in a foreign adversary or its affiliate.
4. Requires all prohibited sequencers and software that are not permanently disabled to be removed and replaced with non-prohibited sequencers and software.
5. Requires, by December 31, 2026, and annually thereafter, an attorney for the health care institution or research facility to certify in writing that the institution or facility complies with the sequencing restrictions.
6. Subjects a health care institution or research facility that spends state monies in violation of the sequencing restrictions to a civil penalty of $20,000 for each violation.
7. Specifies that a violation is each instance of an individual's genome having undergone genetic sequencing using sequencers and software used for genetic sequencers or genetic sequencing that are prohibited.
8. Allows any individual to notify the Attorney General of a violation or suspected violation:
a) if the notifying individual is an employee of the health care institution or research facility, the employee has whistleblower protection; and
b) if the notifying individual is a patient or research subject and the provider of the human genome used in the violation, that individual is entitled to recover statutory damages of at least $1,000 for each instance in which that individual's human genome was processed using prohibited technology.
9. Requires all genetic sequencing data to be stored in the United States and prohibits any remote access of data storage, other than open data, unless approved in writing by the Director of the Department of Health Services.
10. Requires health care institutions and research facilities that store genetic sequencing data, including contracts with third-party data storage companies, to ensure that the data is secured through reasonable encryption methods, restriction on access and other cybersecurity measures.
11. Defines foreign adversary as the People's Republic of China, Russia, Iran, North Korea, Cuba, Venezuela, Syria or the Hong Kong Special Administrative Region and includes:
a) a country designated as a foreign adversary by the federal government; and
b) any agent or entity under significant control of a foreign adversary.
12. Defines terms.
13. Becomes effective on the general effective date.
House Action
HHS 2/3/25 DP 9-3-0-0
3rd Read 2/17/25 39-20-1
Prepared by Senate Research
March 17, 2025
MM/slp