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HB2250 - 572R - I Ver
REFERENCE TITLE:
prior authorizations; habilitative services
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
HB 2250
Introduced by
Representative
Bliss
AN
ACT
amending section 20-2501, Arizona
Revised Statutes; amending title 20, chapter 15, article 1, Arizona Revised
Statutes, by adding sections 20-2512, 20-2513 and 20-2514;
amending sections 20-2531, 20-3403, 20-3404 and 20-3405,
Arizona Revised Statutes; relating to health insurance.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-2501, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-2501.
Definitions; scope
A. In this chapter, unless the context otherwise
requires:
1. "Adverse determination":
(a) Means a utilization review determination by the
utilization review agent that a requested service or claim for service or a
denial, reduction or termination of a service, in whole or in part, is not a
covered service, or is not medically necessary or appropriate, including health
care setting, level of care or effectiveness of a covered benefit, or is
experimental or investigational under the plan if that determination results in
a documented denial or nonpayment of the service or claim.
(b) Includes a rescission.
2. "Benefits based on the health status of the
insured" means a contract of insurance to pay a fixed benefit amount,
without regard to the specific services received, to a policyholder who meets
certain eligibility criteria based on health status including:
(a) A disability income insurance policy that pays a
fixed daily, weekly or monthly benefit amount to an insured who is deemed to
have a disability as defined by the policy terms.
(b) A hospital indemnity policy that pays a fixed
daily benefit during hospital confinement.
(c) A disability insurance policy that pays a fixed
daily, weekly or monthly benefit amount to an insured who is certified by a
licensed health care professional as chronically ill as defined by the policy
terms.
(d) A disability insurance policy that pays a fixed
daily, weekly or monthly benefit amount to an insured who suffers from a
prolonged physical illness, disability or cognitive disorder as defined by the
policy terms.
3. "Claim":
(a) Means a request for payment for a service
already provided.�
(b) Does not include:
(i) Claim adjustments for usual and customary
charges for a service or coordination of benefits between health care insurers.
(ii) A request for payment under a policy or
contract that pays benefits based on the health status of the insured and that
does not reimburse the cost of or provide covered services.
4. "Covered service" means a service that
is included in a policy, evidence of coverage or similar document that
specifies which services, insurance or other benefits are included or covered.
5. "Denial":
(a) Means a direct or
indirect determination regarding all or part of a request for any service.
(b) Includes a
denial, reduction or termination of a service or a rescission or a direct
determination regarding a claim that may trigger a request for review.�
(c) Does not include:
(i) Enforcement of a health care insurer's
deductibles, copayments or coinsurance requirements or adjustments for usual
and customary charges, deductibles, copayments or coinsurance requirements for
a service or coordination of benefits between health care insurers.
(ii) The rejection of a request for payment under a
policy or contract that pays benefits based on the health status of the insured
and that does not reimburse the cost of or provide covered services.
6. "Enrollee" has the same
meaning prescribed in section 20-3401.
6.
7.
"Final
internal adverse determination" means an adverse determination that is
upheld, in whole or in part, at the completion of the health care insurer's
internal levels of review
or an adverse
determination with respect to which the internal levels of review have
been waived or deemed exhausted.
7.
8.
"Grandfathered
individual plan" means coverage provided by an individual health care
insurer which was purchased before March 23, 2010 and which has not lost such
status due to changes in benefits.
8.
9.
"Health
care insurer" means a disability insurer, group disability insurer,
blanket disability insurer, health care services organization, hospital service
corporation, prepaid dental plan organization, medical service corporation,
dental service corporation or optometric service corporation or a hospital,
medical, dental and optometric service corporation.
9.
10.
"Health care setting"
:
(
a
)
Means
an institution providing health care services
.
, including
but not limited to,
(
b
) includes:
(
i
)
Hospitals
and other licensed inpatient centers
.
,
(
ii
)
Ambulatory
surgical or treatment centers
.
,
(
iii
)
Skilled
nursing centers
.
,
(
iv
)
Residential
treatment centers
.
,
(
v
)
Diagnostic,
laboratory and imaging centers
.
and
(
vi
)
Rehabilitation
and other therapeutic health settings.
10.
11.
"Indirect
denial" means a failure to communicate authorization or nonauthorization
to the member by the utilization review agent within the prescribed time frames
pursuant to section 20-3404 after the utilization review agent receives
the request for a covered service.
11.
12.
"Internal levels
of
review" means
any of the following
:
(a) An expedited
medical review and expedited appeal pursuant to section 20-2534.
(b) An initial internal appeal pursuant to section
20-2535.
(c) A voluntary internal appeal pursuant to section
20-2536, if applicable.
12.
13.
"Provider"
means the physician or other licensed practitioner identified to the
utilization review agent as having primary responsibility for providing care,
treatment and services rendered to a patient.
13.
14.
"Rescission"
means a retroactive cancellation of coverage that is not related to a failure
to timely pay required premiums.
14.
15.
"Service"
means a diagnostic or therapeutic medical or health care service, benefit or
treatment.
15.
16.
"Utilization
review" means a system for reviewing the appropriate and efficient
allocation of inpatient hospital resources, inpatient medical services and
outpatient surgery services that are being given or are proposed to be given to
a patient, and of any medical, surgical and health care services or claims for
services that may be covered by a health care insurer depending on determinable
contingencies, including without limitation outpatient services, in-office
consultations with medical specialists, specialized diagnostic testing, mental
health services, emergency care and inpatient and outpatient hospital services.
Utilization review does not include elective requests for the clarification of
coverage.
16.
17.
"Utilization
review agent" means a person or entity that performs utilization
review. For purposes of article 2 of this chapter, utilization
review agent has the same meaning prescribed in section 20-2530.� For
purposes of this chapter, utilization review agent does not include:
(a) A governmental agency.
(b) An agent that acts on behalf of the governmental
agency.
(c) An employee of a utilization review agent.
17.
18.
"Utilization
review plan" means a summary description of the utilization review
guidelines, protocols, procedures and written standards and criteria of a
utilization review agent.
B. For the purposes of this chapter, utilization
review by an optometric service corporation applies only to nonsurgical medical
and health care services.
END_STATUTE
Sec. 2. Title 20, chapter 15, article 1,
Arizona Revised Statutes, is amended by adding sections 20-2512, 20-2513 and
20-2514, to read:
START_STATUTE
20-2512.
Continuity of care for enrollees
A. a health care insurer or
utilization review agent shall honor a prior authorization that was granted to
an enrollee by a previous health care insurer or utilization review agent for
at least ninety days after the enrollee's coverage under a new health care plan
commences if both of the following apply:
1. The health care service is a
covered benefit under the new health care plan.
2. The enrollee, the enrollee's
provider or the previous health care insurer provides documentation to the
health care insurer or utilization review agent regarding the granted prior
authorization.
B. During the time period prescribed
in subsection a of this section, a health care insurer or utilization review
agent may perform its own review to grant a new authorization.
C. If there is a change in coverage
or approval criteria for a previously authorized health care service under an
enrollee's current health care plan, the change in coverage or approval
criteria may not affect the enrollee if the enrollee received a prior
authorization within one year before the effective date of the change in
coverage or approval criteria.� A health care insurer or utilization review
agent may require a new prior authorization request one year after the
enrollee's previous prior authorization request.
D. An enrollee may not be required to
repeat a step therapy protocol if the enrollee, while under the enrollee's
current or previous health care plan, Used a prescription drug that was
required by the step therapy protocol or another prescription drug in the same
pharmacological class with a similar efficacy or side effect profile or the
same mechanism of action and the enrollee discontinued using the prescription
drug due to lack of efficacy or effectiveness or an adverse event or because the
prescription drug was contraindicated.� The enrollee's prescribing provider
shall submit any justification and clinical information, on request, that
demonstrates a clinically valid reason for why the covered prescribed drug is
needed and documentation of completion of any previous step therapy protocols
for the prescribed drug.
END_STATUTE
START_STATUTE
20-2513.
Prior authorization for rehabilitative or habilitative services
A. A health care insurer or
utilization review agent may not require a prior authorization for
rehabilitative or habilitative services that include physical therapy services
or occupational therapy services for the first twelve visits for each new
episode of care.� For the purposes of this subsection, "new episode of
care" means either of the following:
1. Treatment for a new condition.
2. Treatment for a recurring
condition that the enrollee has not been treated for within the previous ninety
days.
B. This section does not limit the
right of a health care insurer or utilization review agent to deny a claim if
an appropriate prospective or retrospective utilization review concludes that
the health care service was not medically necessary.
END_STATUTE
START_STATUTE
20-2514.
Provider exemptions from prior authorization requirements
A. A provider is exempt from
completing a prior authorization request for a health care service, excluding
the practice of pharmacy and prescription drugs, for twelve months if:
1. In the most recent twelve-month
period, the HEALTH care insurer or utilization review agent authorized at least
ninety percent of prior authorization requests, rounded down to the nearest
whole number, that the provider submitted for that health care service.
2. The provider has made a prior
authorization request for that health care service at least five times in the
most recent twelve-month period.
B. A health care insurer or
utilization review agent may evaluate whether a provider continues to qualify
for an exemption prescribed in subsection A of this section.� This subsection
does not require a health care insurer or utilization review agent to evaluate
an existing exemption or prevent a health care insurer or utilization review
agent from establishing a longer exemption period.
C. A provider is not required to
request an exemption in order to be exempt under subsection A of this section.
D. A provider who does not receive an
exemption under subsection A of this section may request from the health care
insurer or utilization review agent evidence as to why the health care insurer
or utilization review agent denied the provider's request for the
exemption. The provider may make this request one time per calendar
year per health care service requested. A provider may appeal a
health care insurer's or utilization review agent's decision to deny an
exemption.
E. A health care insurer or
utilization review agent may revoke a provider's exemption only at the end of
the twelve-month exemption period if the HEALTH care insurer or
utilization review agent:
1. Makes a determination that the
provider would not have met the ninety percent, rounded down to the nearest
whole number, authorization based criteria on a retrospective review of the
claims for a particular health care service for WHICH the exemption applied.
2. Provides the provider with
information that the health care insurer or utilization review agent relied on
in making a determination to revoke the exemption.
3. Provides the provider with a plain
language explanation that includes instructions on how to appeal the
determination to revoke the exemption.
F. An exemption under subsection A of
this section remains in effect until either:
1. the thirtieth calendar day after
the date the health care insurer or utilization review agent notifies the
provider of the health care insurer's or utilization review agent's
determination to revoke the exemption.�
2. the Fifth calendar day after the
exemption revocation is upheld on appeal, If the provider appeals the
determination.
G. A determination to revoke or deny
an exemption shall be made by a licensed health care provider who is of the
same or similar specialty as the provider being considered for an exemption and
who has experience in providing the health care service for which the potential
exemption applies.
H. A health care insurer or
utilization review agent shall give notice to a provider who receives an
exemption that includes all of the following:
1. A statement that the provider
qualifies for an exemption for prior authorization requirements.
2. A list of health care services for
which the exemption applies.
3. A statement that the duration of
the exemption is twelve months.
I. A health care insurer or
utilization review agent may not deny or reduce payment for a health care
service that is exempted from a prior authorization requirement under this
section and that includes a health care service that is performed or supervised
by another provider if the provider who ordered the health care service
received a prior authorization exemption, unless the rendering provider:�
1. Knowingly and materially
misrepresents the health care service in a request for payment that is
submitted to the health care insurer or UTILIZATION review agent with the
specific intent to deceive and obtain an unlawful payment from the health care
insurer or utilization review agent.
2. Fails to substantially perform the
health care service.
END_STATUTE
Sec. 3. Section 20-2531, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-2531.
Applicability; requirements; exception
A. Notwithstanding article 1 of this chapter and
subject to subsection
B
c
of
this section, this article applies to all utilization review decisions made by
utilization review agents and health care insurers operating in this state.
B. if an enrollee's provider
initiates an appeal, the enrollee's provider may request that a provider who
has specialized knowledge in a practice area review the appeal.�
B.
C.
Each
utilization review agent and each health care insurer operating in this state
whose utilization review system includes the power to affect the direct or
indirect denial of requested medical or health care services or claims for
medical or health care services shall adopt written utilization review
standards and criteria and processes for the review, reconsideration and appeal
of denials that do all of the following:
1. Meet the requirements of this article.
2. Are consistent with chapter 1 of this title.
3. Comply with section 20-2505, paragraphs 2
through 6.
4. Comply with section 20-3403,
subsection A, paragraph 4.
5. Ensure that a provider who reviews
an appeal meets all of the following:
(
a
) complies
with paragraph 6 of this subsection.
(
b
) Does not
have a financial interest in the determination.
(
c
) is not
directly involved in the initial adverse determination.
(
d
) Considers
all known CLINICAL aspects of the HEALTH care service under review, including a
review of all of the following:
(
i
) Pertinent
medical records that are provided to the health care insurer or utilization
review agent.
(
ii
) Relevant
records that are provided to the health care insurer or utilization review
agent by a health care facility.
(
iii
) Pertinent
records or materials that are provided by the enrollee.
(
iv
) Pertinent
information that is provided by the enrollee's provider and any medical
literature.
6. require A provider who reviews an
appeal to:
(
a
) Have a
current and unrestricted license to practice within the scope of the provider's
medical profession in this state or any other territory or state.
(
b
) Have
KNowledge of the coverage criteria.
(
c
) Have
sufficient medical knowledge in an applicable practice area or specialty.
(
d
) Not have
been employed by a health care plan or utilization review agent or been under
contract with the health care plan or utilization review agent other than to
participate in one or more of the health care insurer's or utilization review
AGENT'S health care provider networks, to perform reviews of appeals or to
otherwise have any financial interest in the outcome of the appeal.
C.
D.
This
article does not apply to utilization review:
1. Performed under contract with the federal
government for utilization review of patients eligible for all services under
title XVIII of the social security act.
2. Performed by a self-insured or self-funded
employee benefit plan or a multiemployer employee benefit plan created in
accordance with and pursuant to 29 United States Code section 186(c) if the
regulation of that plan is preempted by section 514(b) of the employee
retirement income security act of 1974 (29 United States Code section 1144(b)),
but this article does apply to a health care insurer that provides coverage for
services as part of an employee benefit plan.
3. Of work related injuries and illnesses covered
under the workers' compensation laws in title 23.
4. Performed under
the terms of a policy that pays benefits based on the health status of the
insured and does not reimburse the cost of or provide covered services.
5. Performed under
the terms of a long-term care insurance policy as defined in section 20-1691.
6. Performed under the terms of a medicare
supplement policy as defined by the department.
D.
E.
This
article does not create any new private right or cause of action for or on
behalf of any member. This article provides only an administrative
process for a member to pursue an external independent review of a denial for a
covered service or claim for a covered service.
E.
F.
Utilization
review activities involving retrospective claims review are limited to the
provisions of this article only as clearly and specifically provided in the
provisions of this article.
F.
G.
The
processes available under this article do not apply to a denial of a
nonformulary exception request that was appealed pursuant to 45 Code of Federal
Regulations section 156.122(c). A provider or enrollee may appeal a
denial of a nonformulary exception for a plan covered by 45 Code of Federal
Regulations section 156.122(c) through the process prescribed in the federal
rule.
END_STATUTE
Sec. 4. Section 20-3403, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-3403.
Prior authorization requirements; disclosures; access; rules
A. If a health care services plan contains a prior
authorization requirement, all of the following apply:
1. The health care services plan or its utilization
review agent shall make available to all providers
and enrollees
and the public
on its
publicly accessible
website
or provider portal
a listing of all prior authorization
requirements
and restrictions and shall describe these
requirements and restrictions in detail and in easily understandable language
. The
listing shall clearly identify the specific health care services, drugs or
devices to which a prior authorization requirement exists, including specific
information or documentation that a provider must submit in order for the prior
authorization request to be considered complete.
2. Each health care services plan or
its utilization review agent may not implement a new or amended prior
authorization requirement or restriction unless the health care services plan's
or its utilization review agent's website is updated to reflect the new or
amended prior authorization requirement or restriction.� A health care services
plan or its utilization review agent shall provide a copy of the restrictions
or requirements to a provider within twenty-four hours on request of the provider.
3. Each health care services plan or
its utilization review agent shall provide affected contracted providers and
enrollees with written notice of any new or amended prior authorization
requirement or restriction at least sixty days before the new or amended prior
authorization requirement or restriction is implemented.
4. Each health care services plan or
its utilization review agent shall ensure that all adverse determinations are
made by a licensed physician or other appropriate provider who has:
(
a
) Sufficient
medical knowledge in an applicable practice area or specialty and who currently
holds an unrestricted license, registration or certificate to practice in this
state or any other state.
(
b
) Knowledge
of the coverage criteria.
(
c
) Knowledge
of the enrollee's medical history and diagnosis.
2.
5.
The
health care services plan or its utilization review agent shall allow providers
to access the uniform prior authorization request forms approved by the
department pursuant to section 20-3406 through the applicable electronic
software system.
3.
6.
The
health care services plan or its utilization review agent shall accept prior
authorization requests through a secure electronic transmission.
4.
7.
The
health care services plan or its utilization review agent shall provide at
least two forms of access to request a prior authorization including telephone,
fax or electronic means and shall have emergency after-hours procedures.
B. The health care services plan or its utilization
review agent shall accept and respond to prior authorization requests for
prescription benefits through a secure electronic transmission.
C. The health care services plan or its utilization
review agent may enter into a contractual arrangement with a provider under
which the plan agrees to process and respond to prior authorization requests
that are not submitted electronically because of the financial hardship that
electronic submission of prior authorization requests would create for the
provider or because internet connectivity is limited or unavailable where the
provider is located.
D. The department may adopt rules
that require health care insurers or utilization review agents to disclose
information regarding prior authorization requests and adverse determinations
to the department and to the public in statistical form.� At a minimum, the
statistics shall include all of the following categories:
1. The provider's specialty.
2. Any medication or diagnostic test
or procedure.
3. The indication offered.
4. The reason for the adverse
determination.
5. Whether the adverse determination
was appealed.
6. Whether the adverse determination
was upheld or reversed on appeal.
7. The time between the submission of
the prior authorization request and the request authorization or the initial
adverse determination.
END_STATUTE
Sec. 5. Section 20-3404, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-3404.
Prior authorization requirement timelines
A. If
a plan offered by
a
health care services plan contains a prior authorization requirement, all of
the following apply:
1. For prior authorization requests concerning
urgent health care services, the health care services plan or its utilization
review agent shall
:
(
a
)
Notify
the provider of the prior authorization or adverse determination not later than
five
�three calendar
days after the
receipt of all necessary information to support the prior authorization
request.
(
b
) Provide an
opportunity for the provider to discuss the medical necessity of the health
care service with an individual who has decision-making authority and who
is responsible for authorizing the health care service.
2. For prior authorization requests concerning
health care services that are not urgent health care services, the health care
services plan or its utilization review agent shall
:
(
a
)
Notify
the provider of the prior authorization or adverse determination not later than
fourteen
five calendar
days after
receipt of all necessary information to support the prior authorization
request.
(
b
) Provide an
opportunity for the provider to discuss the medical necessity of the health
care service with an individual who has decision-making authority and who
is responsible for authorizing the health care service.
3. On receipt of information from the provider in
support of a prior authorization request, the health care services plan or its
utilization review agent shall provide a receipt in the same format that the
request was made to the provider acknowledging that the information was
received, unless the necessary return contact information is not provided.
B. The notification required under subsection A of
this section shall state whether the prior authorization request is approved,
denied or incomplete.� If the prior authorization request is denied, the health
care services plan or its utilization review agent shall state the specific
reason for the denial.� For a request that is considered incomplete, the
provider shall have the opportunity to submit additional information.� Once the
provider submits additional information on incomplete requests, the health care
services plan has five days to review and respond to requests for health care
services deemed urgent and fourteen days to review and respond to requests for
health care services deemed not urgent.
C. A prior authorization request is deemed granted
if a health care services plan or its utilization review agent fails to comply
with the deadlines and notification requirements of this section.
D. A prior authorization request, once granted or
deemed granted, is binding on the health care services plan, may be relied on
by the enrollee and provider and may not be rescinded or modified by a health
care services plan or its utilization review agent after the provider renders
the authorized health care services in good faith and pursuant to the
authorization unless there is evidence of fraud or misrepresentation by the
provider.
E. On a denial of a prior authorization request, the
enrollee and the provider may exercise the review and appeal rights specified
in chapter 15, article 2 of this title.
END_STATUTE
Sec. 6. Section 20-3405, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-3405.
Prior authorization of prescription drugs for chronic pain
conditions
A. For a prior authorization request related to a
chronic pain condition, the health care services plan or its utilization review
agent shall honor a prior authorization that is granted for an approved
prescription drug for the earliest of the following:
1. Six months after the date of the prior
authorization approval.
2. The last day of the enrollee's coverage under the
plan.
B. In relation to a prior authorization described in
subsection A of this section, the health care services plan or its utilization
review agent may request that the provider submit information to the health
care services plan or its utilization review agent indicating that the
enrollee's chronic pain condition has not changed and that the continuation of
the treatment is not negatively impacting the enrollee's health. If
the provider does not respond within five business days after the date on which
the request was received, the health care services plan or its utilization
review agent may terminate the prior authorization.
C. This section does not apply to:
1. Prescription medications if the United States
food and drug administration recommends that the drug be used only for periods
of less than six months.
2. Any opioid or benzodiazepine or other schedule I
or II controlled substance.
3. Any medication that is prescribed
for opioid use disorder.
D. This section does
not prohibit the substitution of any drug that has received a six-month
prior authorization under subsection A of this section when there is a release
of a United States food and drug administration-approved comparable brand
product or a generic counterpart of a brand product that is listed as
therapeutically equivalent in the United States food and drug administration's
publication titled approved drug products with therapeutic equivalence evaluations.
E. This section does not prohibit a health care
services plan from granting a prior authorization for a duration longer than
six months.
END_STATUTE