AN ACT

Amending section 36-2907, Arizona Revised Statutes; making appropriations; relating to the Arizona health care cost containment system.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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; definition

A.  Subject to the limitations and exclusions specified in 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.

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.  Medical supplies, durable medical equipment and prosthetic devices 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.

6.  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.

7.  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.

8.  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.

9.  Podiatry services ordered by a primary care physician or primary care practitioner.

10.  Nonexperimental transplants approved for title XIX reimbursement.

11.  Ambulance and nonambulance transportation, except as provided in subsection G of this section.

B.  The limitations and exclusions for health and medical services provided under this section are as follows:

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

2.  For eligible persons who are at least twenty‑one years of age:

(a)  Outpatient health services do not include occupational therapy or speech therapy.

(b)  Prosthetic devices do not include hearing aids, dentures, bone anchored hearing aids or cochlear implants.  Prosthetic devices, except prosthetic implants, may be limited to twelve thousand five-hundred five hundred dollars per contract year.

(c)  Insulin pumps, percussive vests and orthotics are not covered health and medical services.

(d)  Durable medical equipment is limited to items covered by medicare.

(e)  Podiatry services do not include services performed by a podiatrist.

(f)  Nonexperimental transplants do not include the following:

(i)  Pancreas only transplants.

(ii)  Pancreas after kidney transplants.

(iii)  Lung transplants.

(iv)  Hemopoetic cell allogenic unrelated transplants.

(v)  Heart transplants for non‑ischemic cardiomyopathy.

(vi)  Liver transplants for diagnosis of hepatitis C.

(g)  (f)  Beginning October 1, 2011, bariatric surgery procedures, including laparoscopic and open gastric bypass and restrictive procedures, are not covered health and medical services.

(h)  (g)  Well exams are not a covered health and medical service, except mammograms, pap smears and colonoscopies.

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 persons 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 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 who may be eligible under section 36‑2901, paragraph 6, subdivision (a) or section 36‑2931, paragraph 5 and shall refer the children to the appropriate agency responsible for making the final eligibility determination.

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.  Subject to approval by the centers for medicare and medicaid services, nonemergency medical transportation shall not be provided to persons who are eligible pursuant to sections 36‑2901.01 and 36‑2901.04 and who reside in a county with a population of more than five hundred thousand persons.  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.

N.  For the purposes of this section, "ambulance" has the same meaning prescribed in section 36‑2201. END_STATUTE

Sec. 2.  Appropriations; AHCCCS; transplant services; covered services; exemption

A.  In addition to any other appropriations made in fiscal year 2010‑2011 to the Arizona health care cost containment system administration:

1.  The sum of $1,205,900 is appropriated from the state general fund and $3,083,600 in additional expenditure authority of federal monies is appropriated in fiscal year 2010-2011 to the Arizona health care cost containment system administration for transplant services.

2.  The sum of $14,400,000 is appropriated from the state general fund and $35,634,700 in additional expenditure authority of federal monies is appropriated in fiscal year 2010-2011 to the Arizona health care cost containment system administration for other covered services.

B.  The appropriations made in subsection A of this section are exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.

Sec. 3.  Legislative intent

It is the intent of the legislature that the increase in transaction privilege taxes collected by this state from the repeal of the accounting and reporting expenses tax credit be used to fund organ transplants and other covered health and medical services provided to Arizona health care cost containment system recipients.

Sec. 4.  Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.