insurance coverage; autologous breast reconstruction

SB1604 - 572R - I Ver

REFERENCE TITLE:
insurance coverage; autologous breast reconstruction

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1604

Introduced by

Senators
Alston: Angius, Bravo, Diaz, Epstein, Gabald�n, Gonzales, Miranda, Ortiz,
Sears, Sundareshan;� Representative Connolly

AN
ACT

amending sections 20-826, 20-1057,
20-1342, 20-1383, 20-1402, 20-1404 and 20-2341,
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 20-826, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-826.

Subscription contracts; definitions

A. A contract between a corporation and its
subscribers shall not be issued unless the form of such contract is approved in
writing by the director.

B. Each contract shall plainly state the services to
which the subscriber is entitled and those to which the subscriber is not
entitled under the plan, and shall constitute a direct obligation of the
providers of services with which the corporation has contracted for hospital,
medical, dental or optometric services.

C. Each contract, except for dental services or
optometric services, shall be so written that the corporation shall pay
benefits for each of the following:

1. Performance of any surgical service that is
covered by the terms of such contract, regardless of the place of service.

2. Any home health services that are performed by a
licensed home health agency and that a physician has prescribed in lieu of
hospital services, as defined by the director, providing the hospital services
would have been covered.

3. Any diagnostic service that a physician has
performed outside a hospital in lieu of inpatient service, providing the
inpatient service would have been covered.

4. Any service performed in a hospital's outpatient
department or in a freestanding surgical facility, if such service would have
been covered if performed as an inpatient service.

D. Each contract for dental or optometric services
shall be so written that the corporation shall pay benefits for contracted
dental or optometric services provided by dentists or optometrists.

E. Any contract, except accidental death and
dismemberment, applied for that provides family coverage, as to such coverage
of family members, shall also provide that the benefits applicable for children
shall be payable with respect to a newly born child of the insured from the
instant of such child's birth, to a child adopted by the insured, regardless of
the age at which the child was adopted, and to a child who has been placed for
adoption with the insured and for whom the application and approval procedures
for adoption pursuant to section 8-105 or 8-108 have been completed
to the same extent that such coverage applies to other members of the
family. The coverage for newly born or adopted children or children
placed for adoption shall include coverage of injury or sickness, including
necessary care and treatment of medically diagnosed congenital defects and
birth abnormalities. If payment of a specific premium is required to provide
coverage for a child, the contract may require that notification of birth,
adoption or adoption placement of the child and payment of the required premium
must be furnished to the insurer within thirty-one days after the date of
birth, adoption or adoption placement in order to have the coverage continue
beyond the thirty-one day period.

F. Each contract that is delivered or issued for
delivery in this state after December 25, 1977 and that provides that coverage
of a dependent child shall terminate on attainment of the limiting age for
dependent children specified in the contract shall also provide in substance
that attainment of such limiting age shall not operate to terminate the
coverage of such child while the child is and continues to be both incapable of
self-sustaining employment by reason of intellectual disability or
physical disability and chiefly dependent on the subscriber for support and
maintenance. Proof of such incapacity and dependency shall be
furnished to the corporation by the subscriber within thirty-one days of
the child's attainment of the limiting age and subsequently as may be required
by the corporation, but not more frequently than annually after the two-year
period following the child's attainment of the limiting age.

G. A corporation may not cancel or refuse to renew
any subscriber's contract without giving notice of such cancellation or
nonrenewal to the subscriber under such contract. A notice by the
corporation to the subscriber of cancellation or nonrenewal of a subscription
contract shall be mailed to the named subscriber at least forty-five days
before the effective date of such cancellation or nonrenewal. The
notice shall include or be accompanied by a statement in writing of the reasons
for such action by the corporation.� Failure of the corporation to comply with
this subsection shall invalidate any cancellation or nonrenewal except a
cancellation or nonrenewal for nonpayment of premium.

H. A contract that provides coverage for surgical
services for a mastectomy shall also provide coverage
:

1. That is
incidental to the
patient's covered mastectomy for surgical services for reconstruction of the
breast on which the mastectomy was performed, surgery and reconstruction of the
other breast to produce a symmetrical appearance, prostheses, treatment of physical
complications for all stages of the mastectomy, including lymphedemas, and at
least two external postoperative prostheses subject to all of the terms and
conditions of the policy.

2. For autologous breast
reconstruction procedures and any related medically necessary service,
procedure and imaging, including revisions to an autologous breast
reconstruction procedure.� All of the following apply to coverage for an
autologous breast reconstruction procedure:

(
a
) The
coverage may not:

(
i
) Be less
favorable than the coverage for other covered breast reconstruction services.�

(
ii
) Be subject
to any terms and conditions, including out-of-pocket expenses such
as copayments, deductibles and coinsurance, unless the terms and conditions
also apply under the contract for in-network providers.

(
b
) The
coverage shall:

(
i
) Satisfy
network adequacy standards as required by federal and state law.

(
ii
) Comply
with the accepted standards of care and clinical practice guidelines that are
generally recognized by providers and evidence-based sources.�

(
iii
) Contract
with a network of providers that is sufficient in quantity and geographic
locations to ensure that the services and procedures are accessible to all
subscribers without unreasonable delay.

(
iv
) Ensure
that all subscribers have geographic access without unreasonable delay to an
out-of-network provider for the services and procedures.

(
v
) Be subject
to utilization review requirements.

(
c
) An out-of-network
provider may not charge a subscriber for the cost of a covered service and
procedure in an amount in excess of the reimbursement paid under the contract.

(
d
) A contract
that reimburses out-of-network providers for the services and procedures shall
reimburse the out-of-network providers at rates that are not less than the
average in-network reimbursement rates for comparable services and
procedures.

I. A contract that provides coverage for surgical
services for a mastectomy shall also provide coverage for preventive
mammography screening and diagnostic imaging performed on dedicated equipment
for diagnostic purposes on referral by a patient's physician, subject to all of
the terms and conditions of the policy, including:

1. A mammogram.

2. Digital breast
tomosynthesis, magnetic resonance imaging, ultrasound or other modality and at
such age and intervals as recommended by the national comprehensive cancer
network.� This includes patients at risk for breast cancer who have a family
history with one or more first or second degree relatives with breast cancer,
prior diagnosis of breast cancer, positive testing for hereditary gene
mutations or heterogeneously or dense breast tissue based on the breast imaging
reporting and data system of the American college of radiology.

J. Any contract that is issued to the insured and
that provides coverage for maternity benefits shall also provide that the
maternity benefits apply to the costs of the birth of any child legally adopted
by the insured if all of the following are true:

1. The child is adopted within one year of birth.

2. The insured is legally obligated to pay the costs
of birth.

3. All preexisting conditions and other limitations
have been met by the insured.

4. The insured has notified the insurer of the
insured's acceptability to adopt children pursuant to section 8-105,
within sixty days after such approval or within sixty days after a change in
insurance policies, plans or companies.

K. The coverage prescribed by subsection J of this
section is excess to any other coverage the natural mother may have for
maternity benefits except coverage made available to persons pursuant to title
36, chapter 29. If such other coverage exists, the agency, attorney
or individual arranging the adoption shall make arrangements for the insurance
to pay those costs that may be covered under that policy and shall advise the
adopting parent in writing of the existence and extent of the coverage without
disclosing any confidential information such as the identity of the natural
parent.� The insured adopting parents shall notify their insurer of the
existence and extent of the other coverage.

L. The director may disapprove any contract if the benefits
provided in the form of such contract are unreasonable in relation to the
premium charged.

M. The director shall adopt emergency rules
applicable to persons who are leaving active service in the armed forces of the
United States and returning to civilian status including:

1. Conditions of eligibility.

2. Coverage of dependents.

3. Preexisting conditions.

4. Termination of insurance.

5. Probationary periods.

6. Limitations.

7. Exceptions.

8. Reductions.

9. Elimination periods.

10. Requirements for replacement.

11. Any other condition of subscription contracts.

N. Any contract that provides maternity benefits
shall not restrict benefits for any hospital length of stay in connection with
childbirth for the mother or the newborn child to less than forty-eight
hours following a normal vaginal delivery or ninety-six hours following a
cesarean section.� The contract shall not require the provider to obtain
authorization from the corporation for prescribing the minimum length of stay
required by this subsection. The contract may provide that an
attending provider in consultation with the mother may discharge the mother or
the newborn child before the expiration of the minimum length of stay required
by this subsection.� The corporation shall not:

1. Deny the mother or the newborn child eligibility
or continued eligibility to enroll or to renew coverage under the terms of the
contract solely for the purpose of avoiding the requirements of this
subsection.

2. Provide monetary payments or rebates to mothers
to encourage those mothers to accept less than the minimum protections
available pursuant to this subsection.

3. Penalize or otherwise reduce or limit the
reimbursement of an attending provider because that provider provided care to
any insured under the contract in accordance with this subsection.

4. Provide monetary or other incentives to an
attending provider to induce that provider to provide care to an insured under
the contract in a manner that is inconsistent with this subsection.

5. Except as described in subsection O of this
section, restrict benefits for any portion of a period within the minimum
length of stay in a manner that is less favorable than the benefits provided
for any preceding portion of that stay.

O. Subsection N of this section does not:

1. Require a mother to give birth in a hospital or
to stay in the hospital for a fixed period of time following the birth of the
child.

2. Prevent a corporation from imposing deductibles,
coinsurance or other cost sharing in relation to benefits for hospital lengths
of stay in connection with childbirth for a mother or a newborn child under the
contract, except that any coinsurance or other cost sharing for any portion of
a period within a hospital length of stay required pursuant to subsection N of
this section shall not be greater than the coinsurance or cost sharing for any
preceding portion of that stay.

3. Prevent a corporation from negotiating the level
and type of reimbursement with a provider for care provided in accordance with
subsection N of this section.

P. Any contract that provides coverage for diabetes
shall also provide coverage for equipment and supplies that are medically
necessary and that are prescribed by a health care provider, including:

1. Blood glucose monitors.

2. Blood glucose monitors for the legally blind.

3. Test strips for glucose monitors and visual
reading and urine testing strips.

4. Insulin preparations and glucagon.

5. Insulin cartridges.

6. Drawing up devices and monitors for the visually
impaired.

7. Injection aids.

8. Insulin cartridges for the legally blind.

9. Syringes and lancets, including automatic lancing
devices.

10. Prescribed oral agents for controlling blood
sugar that are included on the plan formulary.

11. To the extent coverage is required under
medicare, podiatric appliances for prevention of complications associated with
diabetes.

12. Any other device, medication, equipment or
supply for which coverage is required under medicare from and after January 1,
1999. The coverage required in this paragraph is effective six
months after the coverage is required under medicare.

Q. Subsection P of this section does not prohibit a
medical service corporation, a hospital service corporation or a hospital,
medical, dental and optometric service corporation from imposing deductibles,
coinsurance or other cost sharing in relation to benefits for equipment or
supplies for the treatment of diabetes.

R. Any hospital or medical service contract that
provides coverage for prescription drugs shall not limit or exclude coverage
for any prescription drug prescribed for the treatment of cancer on the basis
that the prescription drug has not been approved by the United States food and
drug administration for the treatment of the specific type of cancer for which
the prescription drug has been prescribed, if the prescription drug has been
recognized as safe and effective for treatment of that specific type of cancer
in one or more of the standard medical reference compendia prescribed in
subsection S of this section or medical literature that meets the criteria
prescribed in subsection S of this section. The coverage required
under this subsection includes covered medically necessary services associated
with the administration of the prescription drug.� This subsection does not:

1. Require coverage of any prescription drug used in
the treatment of a type of cancer if the United States food and drug
administration has determined that the prescription drug is contraindicated for
that type of cancer.

2. Require coverage for any experimental
prescription drug that is not approved for any indication by the United States
food and drug administration.

3. Alter any law with regard to provisions that
limit the coverage of prescription drugs that have not been approved by the
United States food and drug administration.

4. Notwithstanding section 20-841.05, require
reimbursement or coverage for any prescription drug that is not included in the
drug formulary or list of covered prescription drugs specified in the contract.

5. Notwithstanding section 20-841.05, prohibit
a contract from limiting or excluding coverage of a prescription drug, if the
decision to limit or exclude coverage of the prescription drug is not based
primarily on the coverage of prescription drugs required by this section.

6. Prohibit the use of deductibles, coinsurance,
copayments or other cost sharing in relation to drug benefits and related
medical benefits offered.

S. For the purposes of subsection R of this section:

1. The acceptable standard medical reference
compendia are the following:

(a) The American hospital formulary service drug
information, a publication of the American society of health system
pharmacists.

(b) The national comprehensive cancer network drugs
and biologics compendium.

(c) Thomson Micromedex compendium DrugDex.

(d) Elsevier gold standard's clinical pharmacology
compendium.

(e) Other authoritative compendia as identified by
the secretary of the United States department of health and human services.

2. Medical literature may be accepted if all of the
following apply:

(a) At least two articles from major peer reviewed
professional medical journals have recognized, based on scientific or medical
criteria, the drug's safety and effectiveness for treatment of the indication
for which the drug has been prescribed.

(b) No article from a major peer reviewed
professional medical journal has concluded, based on scientific or medical
criteria, that the drug is unsafe or ineffective or that the drug's safety and
effectiveness cannot be determined for the treatment of the indication for
which the drug has been prescribed.

(c) The literature meets the uniform requirements
for manuscripts submitted to biomedical journals established by the
international committee of medical journal editors or is published in a journal
specified by the United States department of health and human services as
acceptable peer reviewed medical literature pursuant to section 186(t)(2)(B) of
the social security act (42 United States Code section 1395x(t)(2)(B)).

T. A corporation shall not issue or deliver any
advertising matter or sales material to any person in this state until the
corporation files the advertising matter or sales material with the
director. This subsection does not require a corporation to have the
prior approval of the director to issue or deliver the advertising matter or
sales material.� If the director finds that the advertising matter or sales
material, in whole or in part, is false, deceptive or misleading, the director
may issue an order disapproving the advertising matter or sales material,
directing the corporation to cease and desist from issuing, circulating,
displaying or using the advertising matter or sales material within a period of
time specified by the director but not less than ten days and imposing any
penalties prescribed in this title. At least five days before
issuing an order pursuant to this subsection, the director shall provide the
corporation with a written notice of the basis of the order to provide the
corporation with an opportunity to cure the alleged deficiency in the
advertising matter or sales material within a single five-day period for
the particular advertising matter or sales material at issue.� The corporation
may appeal the director's order pursuant to title 41, chapter 6, article
10. Except as otherwise provided in this subsection, a corporation
may obtain a stay of the effectiveness of the order as prescribed in section 20-162.�
If the director certifies in the order and provides a detailed explanation of
the reasons in support of the certification that continued use of the
advertising matter or sales material poses a threat to the health, safety or
welfare of the public, the order may be entered immediately without opportunity
for cure and the effectiveness of the order is not stayed pending the hearing
on the notice of appeal but the hearing shall be promptly instituted and
determined.

U. Any contract that is offered by a hospital
service corporation or medical service corporation and that contains a
prescription drug benefit shall provide coverage of medical foods to treat
inherited metabolic disorders as provided by this section.

V. The metabolic disorders triggering medical foods
coverage under this section shall:

1. Be part of the newborn screening program
prescribed in section 36-694.

2. Involve amino acid, carbohydrate or fat
metabolism.

3. Have medically standard methods of diagnosis,
treatment and monitoring, including quantification of metabolites in blood,
urine or spinal fluid or enzyme or DNA confirmation in tissues.

4. Require specially processed or treated medical
foods that are generally available only under the supervision and direction of
a physician who is licensed pursuant to title 32, chapter 13 or 17 or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15,
that must be consumed throughout life and without which the person may suffer
serious mental or physical impairment.

W. Medical foods eligible for coverage under this
section shall be prescribed or ordered under the supervision of a physician
licensed pursuant to title 32, chapter 13 or 17 as medically necessary for the
therapeutic treatment of an inherited metabolic disease.

X. A hospital service corporation or medical service
corporation shall cover at least fifty percent of the cost of medical foods
prescribed to treat inherited metabolic disorders and covered pursuant to this
section.� A hospital service corporation or medical service corporation may
limit the maximum annual benefit for medical foods under this section to
$5,000, which applies to the cost of all prescribed modified low protein foods
and metabolic formula.

Y. Any contract between a corporation and its
subscribers is subject to the following:

1. If the contract provides coverage for
prescription drugs, the contract shall provide coverage for any prescribed drug
or device that is approved by the United States food and drug administration
for use as a contraceptive. A corporation may use a drug formulary,
multitiered drug formulary or list but that formulary or list shall include
oral, implant and injectable contraceptive drugs, intrauterine devices and
prescription barrier methods. The corporation may not impose
deductibles, coinsurance, copayments or other cost containment measures for
contraceptive drugs that are greater than the deductibles, coinsurance,
copayments or other cost containment measures for other drugs on the same level
of the formulary or list.

2. If the contract provides coverage for outpatient
health care services, the contract shall provide coverage for outpatient
contraceptive services.� For the purposes of this paragraph, "outpatient
contraceptive services" means consultations, examinations, procedures and
medical services provided on an outpatient basis and related to the use of
approved United States food and drug administration prescription contraceptive
methods to prevent unintended pregnancies.

3. This subsection does not apply to contracts
issued to individuals on a nongroup basis.

Z. Notwithstanding subsection Y of this section, a
religiously affiliated employer may require that the corporation provide a
contract without coverage for specific items or services required under
subsection Y of this section because providing or paying for coverage of the
specific items or services is contrary to the religious beliefs of the
religiously affiliated employer offering the plan. If a religiously
affiliated employer objects to providing coverage for specific items or services
required under subsection Y of this section, a written affidavit shall be filed
with the corporation stating the objection. On receipt of the
affidavit, the corporation shall issue to the religiously affiliated employer a
contract that excludes coverage for specific items or services required under
subsection Y of this section.� The corporation shall retain the affidavit for
the duration of the contract and any renewals of the contract. This
subsection shall not exclude coverage for prescription contraceptive methods ordered
by a health care provider with prescriptive authority for medical indications
other than for contraceptive, abortifacient, abortion or sterilization
purposes. A religiously affiliated employer offering the plan may
state religious beliefs in its affidavit and may require the subscriber to
first pay for the prescription and then submit a claim to the hospital service
corporation, medical service corporation or hospital, medical, dental and
optometric service corporation along with evidence that the prescription is not
for a purpose covered by the objection. A hospital service
corporation, medical service corporation or hospital, medical, dental and
optometric service corporation may charge an administrative fee for handling
these claims.

AA. Subsection Z of this section does not authorize
a religiously affiliated employer to obtain an employee's protected health
information or to violate the health insurance portability and accountability
act of 1996 (P.L. 104-191; 110 Stat. 1936) or any federal regulations
adopted pursuant to that act.

BB. Subsection Z of this section does not restrict
or limit any protections against employment discrimination that are prescribed
in federal or state law.

CC. For the purposes of:

1. This section:

(a) "Inherited metabolic disorder"
:

(
i
)
Means
a disease
that is
caused by an inherited abnormality of
body chemistry
.

and

(
ii
)
Includes
a disease
that is
tested under the newborn screening
program prescribed in section 36-694.

(b) "Medical foods" means modified low
protein foods and metabolic formula.

(c) "Metabolic formula" means foods that
are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17.

(ii) Processed or formulated to be deficient in one
or more of the nutrients present in typical foodstuffs.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

(d) "Modified low protein foods" means
foods that are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17.

(ii) Processed or formulated to contain less than
one gram of protein per unit of serving, but does not include a natural food
that is naturally low in protein.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

2. Subsection E of this section, "child",
for purposes of initial coverage of an adopted child or a child placed for
adoption but not for purposes of termination of coverage of such child, means a
person who is under eighteen years of age.

3. Subsection H of this section:

(
a
) "Autologous
breast reconstruction procedure" includes all of the following:

(
i
) Superior
gluteal artery perforator flap.

(
ii
) Inferior
gluteal artery perforation flap.

(
iii
) Intercostal
artery perforator flap.

(
iv
) Lateral
thigh perforator flap.

(
v
) Lumbar
artery perforator flap.

(
vi
) Muscle
sparking transverse upper gracilis flap.

(
vii
) Profunda
artery perforator flap.

(
viii
) Superficial
inferior epigastric artery flap.

(
ix
) Abdominal
perforator exchange flap.

(
x
) Thoracodorsal
artery perforator flap.

(
xi
) Body lift
perforator flap.

(
xii
) Stacked
hemiabdominal extended perforator flap.

(
xiii
) Deep
inferior epigastric perforator artery.

(
xiv
) Hybrid
procedures that involve both an autologous breast reconstruction procedure and
breast implantations.

(
b
) "Revisions
to an autologous breast reconstruction procedure" includes any of the
following:

(
i
) Liposuction.

(
ii
) Grafting.

(
iii
) Nipple
reconstruction.

(
iv
) Nipple and
areola tattoos.

(
v
) Fat
necrosis excision.

(
vi
) Capsulotomy.

(
vii
) Breast
capsulorrhaphy.

3.
4.
Subsections
Z and AA of this section, "religiously affiliated employer" means
either:

(a) An entity for which all of the following apply:

(i) The entity primarily employs persons who share
the religious tenets of the entity.

(ii) The entity primarily serves persons who share
the religious tenets of the entity.

(iii) The entity is a nonprofit organization as
described in section 6033(a)(3)(A)(i) or (iii) of the internal revenue code of
1986, as amended.

(b) An entity whose articles of incorporation
clearly state that it is a religiously motivated organization and whose
religious beliefs are central to the organization's operating principles.
END_STATUTE

Sec. 2. Section 20-1057, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1057.

Evidence of coverage by health care services organizations;
renewability; definitions

A. Every enrollee in a health care plan shall be
issued an evidence of coverage by the responsible health care services
organization.

B. Any contract, except accidental death and
dismemberment, applied for that provides family coverage shall also provide, as
to such coverage of family members, that the benefits applicable for children
shall be payable with respect to a newly born child of the enrollee from the
instant of such child's birth, to a child adopted by the enrollee, regardless
of the age at which the child was adopted, and to a child who has been placed
for adoption with the enrollee and for whom the application and approval procedures
for adoption pursuant to section 8-105 or 8-108 have been completed
to the same extent that such coverage applies to other members of the family.�
The coverage for newly born or adopted children or children placed for adoption
shall include coverage of injury or sickness including necessary care and
treatment of medically diagnosed congenital defects and birth abnormalities. If
payment of a specific premium is required to provide coverage for a child, the
contract may require that notification of birth, adoption or adoption placement
of the child and payment of the required premium must be furnished to the
insurer within thirty-one days after the date of birth, adoption or
adoption placement in order to have the coverage continue beyond the thirty-one
day period.

C. Any contract, except accidental death and
dismemberment, that provides coverage for psychiatric, drug abuse or alcoholism
services shall require the health care services organization to provide
reimbursement for those services in accordance with the terms of the contract
without regard to whether the covered services are rendered in a psychiatric
special hospital or general hospital.

D. An evidence of coverage or amendment to the
coverage shall not be issued or delivered to any person in this state until a
copy of the form of the evidence of coverage or amendment to the coverage has
been filed with and approved by the director.

E. An evidence of coverage shall contain a clear and
complete statement if a contract, or a reasonably complete summary if a
certificate of contract, of:

1. The health care services and the insurance or
other benefits, if any, to which the enrollee is entitled under the health care
plan.

2. Any limitations of the services, kind of
services, benefits or kind of benefits to be provided, including any deductible
or copayment feature.

3. Where and in what manner information is available
as to how services may be obtained.

4. The enrollee's obligation, if any, respecting
charges for the health care plan.

F. An evidence of coverage shall not contain
provisions or statements that are unjust, unfair, inequitable, misleading or
deceptive, that encourage misrepresentation or that are untrue.

G. The director shall approve any form of evidence
of coverage if the requirements of subsections E and F of this section are
met.� It is unlawful to issue such form until approved.� If the director does
not disapprove any such form within forty-five days after the filing of
the form, it is deemed approved. If the director disapproves a form
of evidence of coverage, the director shall notify the health care services
organization.� In the notice, the director shall specify the reasons for the
director's disapproval.� The director shall grant a hearing on such disapproval
within fifteen days after a request for a hearing in writing is received from
the health care services organization.

H. A health care services organization shall not
cancel or refuse to renew an enrollee's evidence of coverage that was issued on
a group basis without giving notice of the cancellation or nonrenewal to the
enrollee and, on request of the director, to the department of insurance and
financial institutions. A notice by the organization to the enrollee
of cancellation or nonrenewal of the enrollee's evidence of coverage shall be
mailed to the enrollee at least sixty days before the effective date of such
cancellation or nonrenewal. The notice shall include or be
accompanied by a statement in writing of the reasons as stated in the contract
for such action by the organization.� Failure of the organization to comply
with this subsection shall invalidate any cancellation or nonrenewal except a
cancellation or nonrenewal for nonpayment of premium, for fraud or
misrepresentation in the application or other enrollment documents or for loss
of eligibility as defined in the evidence of coverage. A health care
services organization shall not cancel an enrollee's evidence of coverage
issued on a group basis because of the enrollee's or dependent's age, except
for loss of eligibility as defined in the evidence of coverage, sex, health
status-related factor, national origin or frequency of utilization of
health care services of the enrollee. An evidence of coverage issued
on a group basis shall clearly delineate all terms under which the health care
services organization may cancel or refuse to renew an evidence of coverage for
an enrollee or dependent.
Nothing in
This
subsection
prohibits
does not prohibit

the cancellation or nonrenewal of a health benefits plan contract issued on a
group basis for any of the reasons allowed in section 20-2309. A
health care services organization may cancel or nonrenew an evidence of
coverage issued to an individual on a nongroup basis only for the reasons
allowed by subsection N of this section.

I. A health care plan that provides coverage for
surgical services for a mastectomy shall also provide coverage
:

1. That is
incidental to the
patient's covered mastectomy for surgical services for reconstruction of the
breast on which the mastectomy was performed, surgery and reconstruction of the
other breast to produce a symmetrical appearance, prostheses, treatment of physical
complications for all stages of the mastectomy, including lymphedemas, and at
least two external postoperative prostheses subject to all of the terms and
conditions of the policy.

2. For
autologous breast reconstruction procedures and any related medically necessary
service, procedure and imaging, including revisions to an autologous breast
reconstruction procedure. All of the following apply to coverage for
an autologous breast reconstruction procedure:

(
a
) The
coverage may not:

(
i
) Be less
favorable than the coverage for other covered breast reconstruction services.�

(
ii
) Be subject
to any terms and conditions, including out-of-pocket expenses such
as copayments, deductibles and coinsurance, unless the terms and conditions
also apply under the health benefit plan for in-network providers.

(
b
) The
coverage shall:

(
i
) Satisfy
network adequacy standards as required by federal and state law.

(
ii
) Comply
with the accepted standards of care and clinical practice guidelines that are
generally recognized by providers and evidence-based sources.�

(
iii
) Contract
with a network of providers that is sufficient in quantity and geographic
locations to ensure that the services and procedures are accessible to all
enrollees without unreasonable delay.

(
iv
) Ensure
that all enrollees have geographic access without unreasonable delay to an
out-of-network provider for the services and procedures.

(
v
) Be subject
to utilization review requirements.

(
c
) An out-of-network
provider may not charge an enrollee for the cost of a covered service and
procedure in an amount in excess of the reimbursement paid under the health
benefit's plan.

(
d
) A health
benefit's plan that reimburses out-of-network providers for the services and
procedures shall reimburse the out-of-network providers at rates that
are not less than the average in-network reimbursement rates for
comparable services and procedures.

J. A contract that provides coverage for surgical
services for a mastectomy shall also provide coverage for preventive
mammography screening and diagnostic imaging performed on dedicated equipment
for diagnostic purposes on referral by a patient's physician, subject to all of
the terms and conditions of the policy, including:

1. A mammogram.

2. Digital breast
tomosynthesis, magnetic resonance imaging, ultrasound or other modality and at
such age and intervals as recommended by the national comprehensive cancer
network.� This includes patients at risk for breast cancer who have a family
history with one or more first or second degree relatives with breast cancer,
prior diagnosis of breast cancer, positive testing for hereditary gene
mutations or heterogeneously or dense breast tissue based on the breast imaging
reporting and data system of the American college of radiology.

K. Any contract that is issued to the enrollee and
that provides coverage for maternity benefits shall also provide that the
maternity benefits apply to the costs of the birth of any child legally adopted
by the enrollee if all the following are true:

1. The child is adopted within one year of birth.

2. The enrollee is legally obligated to pay the
costs of birth.

3. All preexisting conditions and other limitations
have been met and all deductibles and copayments have been paid by the
enrollee.

4. The enrollee has notified the insurer of the
enrollee's acceptability to adopt children pursuant to section 8-105
within sixty days after such approval or within sixty days after a change in
insurance policies, plans or companies.

L. The coverage prescribed by subsection K of this
section is excess to any other coverage the natural mother may have for
maternity benefits except coverage made available to persons pursuant to title
36, chapter 29. If such other coverage exists the agency, attorney
or individual arranging the adoption shall make arrangements for the insurance
to pay those costs that may be covered under that policy and shall advise the
adopting parent in writing of the existence and extent of the coverage without
disclosing any confidential information such as the identity of the natural
parent. The enrollee adopting parents shall notify their health care
services organization of the existence and extent of the other
coverage. A health care services organization is not required to pay
any costs in excess of the amounts it would have been obligated to pay to its
hospitals and providers if the natural mother and child had received the
maternity and newborn care directly from or through that health care services
organization.

M. Each health care services organization shall
offer membership to the following in a conversion plan that provides the basic
health care benefits required by the director:

1. Each enrollee including the enrollee's enrolled
dependents leaving a group.

2. Each enrollee and the enrollee's dependents who
would otherwise cease to be eligible for membership because of the age of the
enrollee or the enrollee's dependents or the death or the dissolution of
marriage of an enrollee.

N. A health care services organization shall not
cancel or nonrenew an evidence of coverage issued to an individual on a
nongroup basis, including a conversion plan, except for any of the following
reasons and in compliance with the notice and disclosure requirements contained
in subsection H of this section:

1. The individual has failed to pay premiums or
contributions in accordance with the terms of the evidence of coverage or the
health care services organization has not received premium payments in a timely
manner.

2. The individual has performed an act or practice
that constitutes fraud or the individual made an intentional misrepresentation
of material fact under the terms of the evidence of coverage.

3. The health care services organization has ceased
to offer coverage to individuals that is consistent with the requirements of
sections 20-1379 and 20-1380.

4. If the health care services organization offers a
health care plan in this state through a network plan, the individual no longer
resides, lives or works in the service area served by the network plan or in an
area for which the health care services organization is authorized to transact
business but only if the coverage is terminated uniformly without regard to any
health status-related factor of the covered individual.

5. If the health care services organization offers
health coverage in this state in the individual market only through one or more
bona fide associations, the membership of the individual in the association has
ceased but only if that coverage is terminated uniformly without regard to any
health status-related factor of any covered individual.

O. A conversion plan may be modified if the
modification complies with the notice and disclosure provisions for
cancellation and nonrenewal under subsection H of this section.� A modification
of a conversion plan that has already been issued shall not result in the
effective elimination of any benefit originally included in the conversion
plan.

P. Any person who is a United States armed forces
reservist, who is ordered to active military duty on or after August 22, 1990
and who was enrolled in a health care plan shall have the right to reinstate
such coverage on release from active military duty subject to the following
conditions:

1. The reservist shall make written application to
the health plan within ninety days of discharge from active military duty or
within one year of hospitalization continuing after discharge.� Coverage shall
be effective on receipt of the application by the health plan.

2. The health plan may exclude from such coverage
any health or physical condition arising during and occurring as a direct
result of active military duty.

Q. The director shall adopt emergency rules that are
applicable to persons who are leaving active service in the armed forces of the
United States and returning to civilian status consistent with subsection P of
this section and that include:

1. Conditions of eligibility.

2. Coverage of dependents.

3. Preexisting conditions.

4. Termination of insurance.

5. Probationary periods.

6. Limitations.

7. Exceptions.

8. Reductions.

9. Elimination periods.

10. Requirements for replacement.

11. Any other conditions of evidences of coverage.

R. Any contract that provides maternity benefits
shall not restrict benefits for any hospital length of stay in connection with
childbirth for the mother or the newborn child to less than forty-eight
hours following a normal vaginal delivery or ninety-six hours following a
cesarean section.� The contract shall not require the provider to obtain
authorization from the health care services organization for prescribing the
minimum length of stay required by this subsection.� The contract may provide
that an attending provider in consultation with the mother may discharge the
mother or the newborn child before the expiration of the minimum length of stay
required by this subsection.� The health care services organization shall not:

1. Deny the mother or the newborn child eligibility
or continued eligibility to enroll or to renew coverage under the terms of the
contract solely for the purpose of avoiding the requirements of this
subsection.

2. Provide monetary payments or rebates to mothers
to encourage those mothers to accept less than the minimum protections
available pursuant to this subsection.

3. Penalize or otherwise reduce or limit the
reimbursement of an attending provider because that provider provided care to
any insured under the contract in accordance with this subsection.

4. Provide monetary or other incentives to an
attending provider to induce that provider to provide care to an insured under
the contract in a manner that is inconsistent with this subsection.

5. Except as described in subsection S of this
section, restrict benefits for any portion of a period within the minimum
length of stay in a manner that is less favorable than the benefits provided
for any preceding portion of that stay.

S. Subsection R of this section does not:

1. Require a mother to give birth in a hospital or
to stay in the hospital for a fixed period of time following the birth of the
child.

2. Prevent a health care services organization from
imposing deductibles, coinsurance or other cost sharing in relation to benefits
for hospital lengths of stay in connection with childbirth for a mother or a
newborn child under the contract, except that any coinsurance or other cost
sharing for any portion of a period within a hospital length of stay required
pursuant to subsection R of this section shall not be greater than the
coinsurance or cost sharing for any preceding portion of that stay.

3. Prevent a health care services organization from
negotiating the level and type of reimbursement with a provider for care
provided in accordance with subsection R of this section.

T. Any contract or evidence of coverage that
provides coverage for diabetes shall also provide coverage for equipment and
supplies that are medically necessary and that are prescribed by a health care
provider including:

1. Blood glucose monitors.

2. Blood glucose monitors for the legally blind.

3. Test strips for glucose monitors and visual
reading and urine testing strips.

4. Insulin preparations and glucagon.

5. Insulin cartridges.

6. Drawing up devices and monitors for the visually impaired.

7. Injection aids.

8. Insulin cartridges for the legally blind.

9. Syringes and lancets including automatic lancing
devices.

10. Prescribed oral agents for controlling blood
sugar that are included on the plan formulary.

11. To the extent coverage is required under
medicare, podiatric appliances for prevention of complications associated with
diabetes.

12. Any other device, medication, equipment or
supply for which coverage is required under medicare from and after January 1,
1999. The coverage required in this paragraph is effective six
months after the coverage is required under medicare.

U. Subsection T of this section does not:

1. Entitle a member or enrollee of a health care
services organization to equipment or supplies for the treatment of diabetes
that are not medically necessary as determined by the health care services
organization medical director or the medical director's designee.

2. Provide coverage for diabetic supplies obtained
by a member or enrollee of a health care services organization without a
prescription unless otherwise allowed pursuant to the terms of the health care
plan.

3. Prohibit a health care services organization from
imposing deductibles, coinsurance or other cost sharing in relation to benefits
for equipment or supplies for the treatment of diabetes.

V. Any contract or evidence of coverage that
provides coverage for prescription drugs shall not limit or exclude coverage
for any prescription drug prescribed for the treatment of cancer on the basis
that the prescription drug has not been approved by the United States food and
drug administration for the treatment of the specific type of cancer for which
the prescription drug has been prescribed, if the prescription drug has been
recognized as safe and effective for treatment of that specific type of cancer
in one or more of the standard medical reference compendia prescribed in
subsection W of this section or medical literature that meets the criteria
prescribed in subsection W of this section. The coverage required
under this subsection includes covered medically necessary services associated
with the administration of the prescription drug.� This subsection does not:

1. Require coverage of any prescription drug used in
the treatment of a type of cancer if the United States food and drug
administration has determined that the prescription drug is contraindicated for
that type of cancer.

2. Require coverage for any experimental
prescription drug that is not approved for any indication by the United States
food and drug administration.

3. Alter any law with regard to provisions that
limit the coverage of prescription drugs that have not been approved by the
United States food and drug administration.

4. Notwithstanding section 20-1057.02, require
reimbursement or coverage for any prescription drug that is not included in the
drug formulary or list of covered prescription drugs specified in the contract
or evidence of coverage.

5. Notwithstanding section 20-1057.02,
prohibit a contract or evidence of coverage from limiting or excluding coverage
of a prescription drug, if the decision to limit or exclude coverage of the
prescription drug is not based primarily on the coverage of prescription drugs
required by this section.

6. Prohibit the use of deductibles, coinsurance,
copayments or other cost sharing in relation to drug benefits and related
medical benefits offered.

W. For the purposes of subsection V of this section:

1. The acceptable standard medical reference
compendia are the following:

(a) The American hospital formulary service drug
information, a publication of the American society of health system
pharmacists.

(b) The national comprehensive cancer network drugs
and biologics compendium.

(c) Thomson Micromedex compendium DrugDex.

(d) Elsevier gold standard's clinical pharmacology
compendium.

(e) Other authoritative compendia as identified by
the secretary of the United States department of health and human services.

2. Medical literature may be accepted if all of the
following apply:

(a) At least two articles from major peer reviewed
professional medical journals have recognized, based on scientific or medical
criteria, the drug's safety and effectiveness for treatment of the indication
for which the drug has been prescribed.

(b) No article from a major peer reviewed
professional medical journal has concluded, based on scientific or medical
criteria, that the drug is unsafe or ineffective or that the drug's safety and
effectiveness cannot be determined for the treatment of the indication for
which the drug has been prescribed.

(c) The literature meets the uniform requirements
for manuscripts submitted to biomedical journals established by the
international committee of medical journal editors or is published in a journal
specified by the United States department of health and human services as
acceptable peer reviewed medical literature pursuant to section 186(t)(2)(B) of
the social security act (42 United States Code section 1395x(t)(2)(B)).

X. A health care services organization shall not
issue or deliver any advertising matter or sales material to any person in this
state until the health care services organization files the advertising matter
or sales material with the director. This subsection does not
require a health care services organization to have the prior approval of the
director to issue or deliver the advertising matter or sales material.� If the
director finds that the advertising matter or sales material, in whole or in
part, is false, deceptive or misleading, the director may issue an order
disapproving the advertising matter or sales material, directing the health
care services organization to cease and desist from issuing, circulating,
displaying or using the advertising matter or sales material within a period of
time specified by the director but not less than ten days and imposing any
penalties prescribed in this title.� At least five days before issuing an order
pursuant to this subsection, the director shall provide the health care
services organization with a written notice of the basis of the order to
provide the health care services organization with an opportunity to cure the
alleged deficiency in the advertising matter or sales material within a single
five-day period for the particular advertising matter or sales material
at issue.� The health care services organization may appeal the director's
order pursuant to title 41, chapter 6, article 10. Except as
otherwise provided in this subsection, a health care services organization may
obtain a stay of the effectiveness of the order as prescribed in section 20-162. If
the director certifies in the order and provides a detailed explanation of the
reasons in support of the certification that continued use of the advertising
matter or sales material poses a threat to the health, safety or welfare of the
public, the order may be entered immediately without opportunity for cure and
the effectiveness of the order is not stayed pending the hearing on the notice
of appeal but the hearing shall be promptly instituted and determined.

Y. Any contract or evidence
of coverage that is offered by a health care services organization and that
contains a prescription drug benefit shall provide coverage of medical foods to
treat inherited metabolic disorders as provided by this section.

Z. The metabolic disorders
triggering medical foods coverage under this section shall:

1. Be part of the newborn screening program
prescribed in section 36-694.

2. Involve amino acid, carbohydrate or fat
metabolism.

3. Have medically standard methods of diagnosis,
treatment and monitoring including quantification of metabolites in blood,
urine or spinal fluid or enzyme or DNA confirmation in tissues.

4. Require specially processed or treated medical
foods that are generally available only under the supervision and direction of
a physician who is licensed pursuant to title 32, chapter 13 or 17 or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15,
that must be consumed throughout life and without which the person may suffer
serious mental or physical impairment.

AA. Medical foods eligible
for coverage under this section shall be prescribed or ordered under the
supervision of a physician licensed pursuant to title 32, chapter 13 or 17 or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15
as medically necessary for the therapeutic treatment of an inherited metabolic
disease.

BB. A health care services
organization shall cover at least fifty percent of the cost of medical foods
prescribed to treat inherited metabolic disorders and covered pursuant to this
section.� An organization may limit the maximum annual benefit for medical
foods under this section to $5,000, which applies to the cost of all prescribed
modified low protein foods and metabolic formula.

CC. Unless preempted under federal law or unless
federal law imposes greater requirements than this section, this section
applies to a provider sponsored health care services organization.

DD. For the purposes
of:

1. This section:

(a) "Inherited
metabolic disorder"
:

(
i
)
Means a disease
that is

caused by an inherited abnormality of body chemistry
.

and

(
ii
)
Includes a disease
that is

tested under the newborn screening program prescribed in section 36-694.

(b) "Medical foods" means modified low
protein foods and metabolic formula.

(c) "Metabolic formula" means foods that
are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17 or a registered nurse practitioner who is licensed
pursuant to title 32, chapter 15.

(ii) Processed or formulated to be deficient in one
or more of the nutrients present in typical foodstuffs.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

(d) "Modified low protein foods" means
foods that are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17 or a registered nurse practitioner who is licensed
pursuant to title 32, chapter 15.

(ii) Processed or formulated to contain less than
one gram of protein per unit of serving, but does not include a natural food
that is naturally low in protein.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

2. Subsection B of this section, "child",
for purposes of initial coverage of an adopted child or a child placed for
adoption but not for purposes of termination of coverage of such child, means a
person who is under eighteen years of age.

3. Subsection
I of this section:

(
a
) "Autologous
breast reconstruction procedure" includes all of the following:

(
i
) Superior
gluteal artery perforator flap.

(
ii
) Inferior
gluteal artery perforation flap.

(
iii
) Intercostal
artery perforator flap.

(
iv
) Lateral
thigh perforator flap.

(
v
) Lumbar
artery perforator flap.

(
vi
) Muscle
sparking transverse upper gracilis flap.

(
vii
) Profunda
artery perforator flap.

(
viii
) Superficial
inferior epigastric artery flap.

(
ix
) Abdominal
perforator exchange flap.

(
x
) Thoracodorsal
artery perforator flap.

(
xi
) Body lift
perforator flap.

(
xii
) Stacked
hemiabdominal extended perforator flap.

(
xiii
) Deep
inferior epigastric perforator artery.

(
xiv
) Hybrid
procedures that involve both an autologous breast reconstruction procedure and
breast implantations.

(
b
) "Revisions
to an autologous breast reconstruction procedure" includes any of the
following:

(
i
) Liposuction.

(
ii
) Grafting.

(
iii
) Nipple
reconstruction.

(
iv
) Nipple and
areola tattoos.

(
v
) Fat
necrosis excision.

(
vi
) Capsulotomy.

(
vii
) Breast
capsulorrhaphy.

END_STATUTE

Sec. 3. Section 20-1342, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1342.

Scope and format of policy; definitions

A. A policy of disability
insurance shall not be delivered or issued for delivery to any person in this
state unless it otherwise complies with this title and complies with the
following:

1. The entire money and
other considerations shall be expressed in the policy.

2. The time when the
insurance takes effect and terminates shall be expressed in the policy.

3. It shall purport to
insure only one person, except that a policy may insure, originally or by
subsequent amendment, on the application of the policyholder or the
policyholder's spouse, any two or more eligible members of that family,
including husband, wife, dependent children or any children under a specified
age that does not exceed nineteen years and any other person dependent on the
policyholder.� Any policy, except accidental death and dismemberment, applied
for that provides family coverage, as to such coverage of family members, shall
also provide that the benefits applicable for children shall be payable with
respect to a newly born child of the insured from the instant of such child's
birth, to a child adopted by the insured, regardless of the age at which the
child was adopted, and to a child who has been placed for adoption with the
insured and for whom the application and approval procedures for adoption
pursuant to section 8-105 or 8-108 have been completed to the same
extent that such coverage applies to other members of the family.� The coverage
for newly born or adopted children or children placed for adoption shall
include coverage of injury or sickness including necessary care and treatment
of medically diagnosed congenital defects and birth abnormalities. If
payment of a specific premium is required to provide coverage for a child, the
policy may require that notification of birth, adoption or adoption placement
of the child and payment of the required premium must be furnished to the
insurer within thirty-one days after the date of birth, adoption or
adoption placement in order to have the coverage continue beyond the thirty-one
day period.

4. The style, arrangement
and overall appearance of the policy shall give no undue prominence to any
portion of the text, and every printed portion of the text of the policy and of
any endorsements or attached papers shall be plainly printed in light-faced
type of a style in general use, the size of which shall be uniform and not less
than ten point with a lower case unspaced alphabet length of not less than one
hundred and twenty point.� "Text" shall include all printed matter
except the name and address of the insurer, name or title of the policy, the
brief description, if any, and captions and subcaptions.

5. The exceptions and
reductions of indemnity shall be set forth in the policy and, other than those
contained in sections 20-1345 through 20-1368, shall be printed
and, at the insurer's option, either included with the benefit provision to
which they apply or under an appropriate caption such as
"exceptions", or "exceptions and reductions", except that
if an exception or reduction specifically applies only to a particular benefit
of the policy, a statement of such exception or reduction shall be included with
the benefit provision to which it applies.

6. Each such form,
including riders and endorsements, shall be identified by a form number in the
lower left-hand corner of the first page.

7. The policy shall
contain no provision purporting to make any portion of the charter, rules,
constitution or bylaws of the insurer a part of the policy unless such portion
is set forth in full in the policy, except in the case of the incorporation of,
or reference to, a statement of rates or classification of risks, or short-rate
table filed with the director.

8. Each contract shall be
so written that the corporation shall pay benefits:

(a) For performance of any
surgical service that is covered by the terms of such contract, regardless of
the place of service.

(b) For any home health
services that are performed by a licensed home health agency and that a
physician has prescribed in lieu of hospital services, as defined by the
director, providing the hospital services would have been covered.

(c) For any diagnostic
service that a physician has performed outside a hospital in lieu of inpatient
service, providing the inpatient service would have been covered.

(d) For any service
performed in a hospital's outpatient department or in a freestanding surgical
facility, providing such service would have been covered if performed as an
inpatient service.

9. A disability insurance
policy that provides coverage for the surgical expense of a mastectomy shall
also provide coverage
:

(
a
) That is
incidental to the patient's covered
mastectomy for the expense of reconstructive surgery of the breast on which the
mastectomy was performed, surgery and reconstruction of the other breast to
produce a symmetrical appearance, prostheses, treatment of physical
complications for all stages of the mastectomy, including lymphedemas, and at
least two external postoperative prostheses subject to all of the terms and
conditions of the policy.

(
b
) For
autologous breast reconstruction procedures and any related medically necessary
service, procedure and imaging, including revisions to an autologous breast
reconstruction procedure.

10. All of the following apply to The
coverage prescribed by paragraph 9, subdivision (
b
) of
this subsection:

(
a
) The
coverage may not:

(
i
) Be less
favorable than the coverage for other covered breast reconstruction services.�

(
ii
) Be subject
to any terms and conditions, including out-of-pocket expenses such
as copayments, deductibles and coinsurance, unless the terms and conditions
also apply under the policy for in-network providers.

(
b
) the
coverage shall:

(
i
) Satisfy
network adequacy standards as required by federal and state law.

(
ii
) Comply
with the accepted standards of care and clinical practice guidelines that are
generally recognized by providers and evidence-based sources.�

(
iii
) Contract
with a network of providers that is sufficient in quantity and geographic
locations to ensure that the services and procedures are accessible to all
insureds without unreasonable delay.

(
iv
) Ensure
that all insureds have geographic access without unreasonable delay to an
out-of-network provider for the services and procedures.

(
v
) Be subject
to utilization review requirements.

(
c
) An out-of-network
provider may not charge an insured for the cost of a covered service and
procedure in an amount in excess of the reimbursement paid under the policy.

(
d
) A policy
that reimburses out-of-network providers for the services and procedures shall
reimburse the out-of-network providers at rates that are not less than the
average in-network reimbursement rates for comparable services and
procedures.

10.
11.
A
contract, except a supplemental contract covering a specified disease or other
limited benefits, that provides coverage for surgical services for a mastectomy
shall also provide coverage for preventive mammography screening and diagnostic
imaging performed on dedicated equipment for diagnostic purposes on referral by
a patient's physician, subject to all of the terms and conditions of the
policy, including:

(a) A mammogram.

(b) Digital breast
tomosynthesis, magnetic resonance imaging, ultrasound or other modality and at
such age and intervals as recommended by the national comprehensive cancer
network.� This includes patients at risk for breast cancer who have a family
history with one or more first or second degree relatives with breast cancer,
prior diagnosis of breast cancer, positive testing for hereditary gene
mutations or heterogeneously or dense breast tissue based on the breast imaging
reporting and data system of the American college of radiology.

11.
12.
Any
contract that is issued to the insured and that provides coverage for maternity
benefits shall also provide that the maternity benefits apply to the costs of
the birth of any child legally adopted by the insured if all the following are
true:

(a) The child is adopted
within one year of birth.

(b) The insured is legally
obligated to pay the costs of birth.

(c) All preexisting
conditions and other limitations have been met by the insured.

(d) The insured has
notified the insurer of the insured's acceptability to adopt children pursuant
to section 8-105, within sixty days after such approval or within sixty
days after a change in insurance policies, plans or companies.

12.
13.
The
coverage prescribed by paragraph
11
12

of this subsection is excess to any other coverage the natural mother may have
for maternity benefits except coverage made available to persons pursuant to
title 36, chapter 29. If such other coverage exists the agency,
attorney or individual arranging the adoption shall make arrangements for the
insurance to pay those costs that may be covered under that policy and shall
advise the adopting parent in writing of the existence and extent of the
coverage without disclosing any confidential information such as the identity
of the natural parent. The insured adopting parents shall notify
their insurer of the existence and extent of the other coverage.

B. Any contract that
provides maternity benefits shall not restrict benefits for any hospital length
of stay in connection with childbirth for the mother or the newborn child to
less than forty-eight hours following a normal vaginal delivery or ninety-six
hours following a cesarean section.� The contract shall not require the
provider to obtain authorization from the insurer for prescribing the minimum
length of stay required by this subsection. The contract may provide
that an attending provider in consultation with the mother may discharge the
mother or the newborn child before the expiration of the minimum length of stay
required by this subsection.� The insurer shall not:

1. Deny the mother or the
newborn child eligibility or continued eligibility to enroll or to renew
coverage under the terms of the contract solely for the purpose of avoiding the
requirements of this subsection.

2. Provide monetary
payments or rebates to mothers to encourage those mothers to accept less than
the minimum protections available pursuant to this subsection.

3. Penalize or otherwise
reduce or limit the reimbursement of an attending provider because that
provider provided care to any insured under the contract in accordance with
this subsection.

4. Provide monetary or
other incentives to an attending provider to induce that provider to provide
care to an insured under the contract in a manner that is inconsistent with
this subsection.

5. Except as described in
subsection C of this section, restrict benefits for any portion of a period
within the minimum length of stay in a manner that is less favorable than the
benefits provided for any preceding portion of that stay.

C. Subsection B of this
section does not:

1. Require a mother to
give birth in a hospital or to stay in the hospital for a fixed period of time
following the birth of the child.

2. Prevent an insurer from
imposing deductibles, coinsurance or other cost sharing in relation to benefits
for hospital lengths of stay in connection with childbirth for a mother or a
newborn child under the contract, except that any coinsurance or other cost
sharing for any portion of a period within a hospital length of stay required
pursuant to subsection B of this section shall not be greater than the
coinsurance or cost sharing for any preceding portion of that stay.

3. Prevent an insurer from
negotiating the level and type of reimbursement with a provider for care
provided in accordance with subsection B of this section.

D. Any contract that
provides coverage for diabetes shall also provide coverage for equipment and
supplies that are medically necessary and that are prescribed by a health care
provider including:

1. Blood glucose monitors.

2. Blood glucose monitors
for the legally blind.

3. Test strips for glucose
monitors and visual reading and urine testing strips.

4. Insulin preparations
and glucagon.

5. Insulin cartridges.

6. Drawing up devices and
monitors for the visually impaired.

7. Injection aids.

8. Insulin cartridges for
the legally blind.

9. Syringes and lancets
including automatic lancing devices.

10. Prescribed oral agents for controlling blood
sugar that are included on the plan formulary.

11. To the extent coverage is required under
medicare, podiatric appliances for prevention of complications associated with
diabetes.

12. Any other device, medication, equipment or
supply for which coverage is required under medicare from and after January 1,
1999. The coverage required in this paragraph is effective six
months after the coverage is required under medicare.

E. Subsection D of this
section does not:

1. Prohibit a disability
insurer from imposing deductibles, coinsurance or other cost sharing in
relation to benefits for equipment or supplies for the treatment of diabetes.

2. Require a policy to
provide an insured with outpatient benefits if the policy does not cover
outpatient benefits.

F. Any contract that
provides coverage for prescription drugs shall not limit or exclude coverage
for any prescription drug prescribed for the treatment of cancer on the basis
that the prescription drug has not been approved by the United States food and
drug administration for the treatment of the specific type of cancer for which
the prescription drug has been prescribed, if the prescription drug has been
recognized as safe and effective for treatment of that specific type of cancer
in one or more of the standard medical reference compendia prescribed in
subsection G of this section or medical literature that meets the criteria
prescribed in subsection G of this section.� The coverage required under this
subsection includes covered medically necessary services associated with the
administration of the prescription drug.� This subsection does not:

1. Require coverage of any
prescription drug used in the treatment of a type of cancer if the United
States food and drug administration has determined that the prescription drug
is contraindicated for that type of cancer.

2. Require coverage for
any experimental prescription drug that is not approved for any indication by
the United States food and drug administration.

3. Alter any law with
regard to provisions that limit the coverage of prescription drugs that have
not been approved by the United States food and drug administration.

4. Require reimbursement
or coverage for any prescription drug that is not included in the drug
formulary or list of covered prescription drugs specified in the contract.

5. Prohibit a contract
from limiting or excluding coverage of a prescription drug, if the decision to
limit or exclude coverage of the prescription drug is not based primarily on
the coverage of prescription drugs required by this section.

6. Prohibit the use of
deductibles, coinsurance, copayments or other cost sharing in relation to drug
benefits and related medical benefits offered.

G. For the purposes of
subsection F of this section:

1. The acceptable standard
medical reference compendia are the following:

(a) The American hospital
formulary service drug information, a publication of the American society of
health system pharmacists.

(b) The national comprehensive cancer network drugs
and biologics compendium.

(c) Thomson Micromedex compendium DrugDex.

(d) Elsevier gold standard's clinical pharmacology
compendium.

(e) Other authoritative
compendia as identified by the secretary of the United States department of
health and human services.

2. Medical literature may
be accepted if all of the following apply:

(a) At least two articles
from major peer reviewed professional medical journals have recognized, based
on scientific or medical criteria, the drug's safety and effectiveness for
treatment of the indication for which the drug has been prescribed.

(b) No article from a
major peer reviewed professional medical journal has concluded, based on
scientific or medical criteria, that the drug is unsafe or ineffective or that
the drug's safety and effectiveness cannot be determined for the treatment of
the indication for which the drug has been prescribed.

(c) The literature meets
the uniform requirements for manuscripts submitted to biomedical journals
established by the international committee of medical journal editors or is
published in a journal specified by the United States department of health and
human services as acceptable peer reviewed medical literature pursuant to
section 186(t)(2)(B) of the social security act (42 United States Code section
1395x(t)(2)(B)).

H. Any contract that is
offered by a disability insurer and that contains a routine outpatient
prescription drug benefit shall provide coverage of medical foods to treat
inherited metabolic disorders as provided by this section.

I. The metabolic disorders
triggering medical foods coverage under this section shall:

1. Be part of the newborn
screening program prescribed in section 36-694.

2. Involve amino acid,
carbohydrate or fat metabolism.

3. Have medically standard
methods of diagnosis, treatment and monitoring including quantification of
metabolites in blood, urine or spinal fluid or enzyme or DNA confirmation in
tissues.

4. Require specially
processed or treated medical foods that are generally available only under the
supervision and direction of a physician who is licensed pursuant to title 32,
chapter 13 or 17

or a registered nurse practitioner
who is licensed pursuant to title 32, chapter 15, that must be consumed
throughout life and without which the person may suffer serious mental or
physical impairment.

J. Medical foods eligible
for coverage under this section shall be prescribed or ordered under the
supervision of a physician licensed pursuant to title 32, chapter 13 or 17 or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15
as medically necessary for the therapeutic treatment of an inherited metabolic
disease.

K. An insurer shall cover
at least fifty percent of the cost of medical foods prescribed to treat
inherited metabolic disorders and covered pursuant to this section.� An insurer
may limit the maximum annual benefit for medical foods under this section to
$5,000, which applies to the cost of all prescribed modified low protein foods
and metabolic formula.

L. For the purposes of:

1. This section:

(a) "Inherited
metabolic disorder"
:

(
i
)
Means a disease
that is

caused by an inherited abnormality of body chemistry
.

and

(
ii
)
Includes a disease
that is

tested under the newborn screening program prescribed in section 36-694.

(b) "Medical
foods" means modified low protein foods and metabolic formula.

(c) "Metabolic
formula" means foods that are all of the following:

(i) Formulated to be
consumed or administered enterally under the supervision of a physician who is
licensed pursuant to title 32, chapter 13 or 17

or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15.

(ii) Processed or
formulated to be deficient in one or more of the nutrients present in typical
foodstuffs.

(iii) Administered for the
medical and nutritional management of a person who has limited capacity to
metabolize foodstuffs or certain nutrients contained in the foodstuffs or who
has other specific nutrient requirements as established by medical evaluation.

(iv) Essential to a
person's optimal growth, health and metabolic homeostasis.

(d) "Modified low
protein foods" means foods that are all of the following:

(i) Formulated to be
consumed or administered enterally under the supervision of a physician who is
licensed pursuant to title 32, chapter 13 or 17

or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15.

(ii) Processed or
formulated to contain less than one gram of protein per unit of serving, but
does not include a natural food that is naturally low in protein.

(iii) Administered for the
medical and nutritional management of a person who has limited capacity to
metabolize foodstuffs or certain nutrients contained in the foodstuffs or who
has other specific nutrient requirements as established by medical evaluation.

(iv) Essential to a
person's optimal growth, health and metabolic homeostasis.

2. Subsection A of this section
:
, the term

(
a
) "Autologous
breast reconstruction procedure" includes all of the following:

(
i
) Superior
gluteal artery perforator flap.

(
ii
) Inferior
gluteal artery perforation flap.

(
iii
) Intercostal
artery perforator flap.

(
iv
) Lateral
thigh perforator flap.

(
v
) Lumbar
artery perforator flap.

(
vi
) Muscle
sparking transverse upper gracilis flap.

(
vii
) Profunda
artery perforator flap.

(
viii
) Superficial
inferior epigastric artery flap.

(
ix
) Abdominal
perforator exchange flap.

(
x
) Thoracodorsal
artery perforator flap.

(
xi
) Body lift
perforator flap.

(
xii
) Stacked
hemiabdominal extended perforator flap.

(
xiii
) Deep
inferior epigastric perforator artery.

(
xiv
) Hybrid
procedures that involve both an autologous breast reconstruction procedure and
breast implantations.

(
b
)
"Child",
for purposes of initial coverage of an adopted child or a child placed for
adoption but not for purposes of termination of coverage of such child, means a
person who is under eighteen years of age.

(
c
) "Revisions
to an autologous breast reconstruction procedure" includes any of the
following:

(
i
) Liposuction.

(
ii
) Grafting.

(
iii
) Nipple
reconstruction.

(
iv
) Nipple and
areola tattoos.

(
v
) Fat
necrosis excision.

(
vi
) Capsulotomy.

(
vii
) Breast
capsulorrhaphy.

END_STATUTE

Sec. 4. Section 20-1383, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1383.

Individual health insurance policies; mandatory coverage
exemption; definitions

A. A disability insurer may issue a policy to an
uninsured individual that is not subject to the requirements of any of the
following:

1. Section 20-461, subsection A, paragraph 17
and subsection B.

2. Section 20-1342, subsection A, paragraphs
11 and
12
and 13
.

3. Section 20-1342, subsections H, I, J and K.

4. Section 20-1376, subsections A and C.

5. Sections 20-1342.01, 20-1376.01, 20-1376.02,
20-1376.03 and 20-1376.04.

B. For the purposes of this section:

1. "Health insurance coverage":

(a) Means a health care plan or arrangement that
pays for or furnishes medical or health services and that is issued by a
disability insurer, group disability insurer, blanket disability insurer,
health care services organization, hospital service corporation, medical
service corporation or medical, hospital, dental and optometric service
corporation or a similar entity in another state.

(b) Includes a self-insured or self-funded
employee benefit plan or multiemployer employee benefit plan created 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
insurance

income
security act of 1974 (29 United States Code
section 1144(b)).

(c) Does not include limited benefit coverage as
defined in section 20-1137.

2. "Uninsured individual" means a person
who has either:

(a) Not had health insurance coverage for the ninety
days immediately before the effective date of coverage issued pursuant to this
section, except that this requirement does not apply at the renewal of coverage
pursuant to this section.

(b) Lost health insurance coverage in one of the
following ways within ninety days immediately before the effective date of
coverage issued pursuant to this section:

(i) The individual left a job that provided health
insurance coverage.

(ii) The individual's employer discontinued offering
health insurance coverage.

(iii) The individual exhausted continuation coverage
under a COBRA continuation provision as defined in section 20-2301.

(iv) The individual's family health insurance
coverage was discontinued due to the death of a spouse or a divorce.

(v) The individual attained the maximum age for
dependent coverage under a health insurance policy.

(vi) The individual's participation in a public
health care program was discontinued.
END_STATUTE

Sec. 5. Section 20-1402, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1402.

Provisions of group disability policies; definitions

A. Each group disability
policy shall contain in substance the following provisions:

1. A provision that, in
the absence of fraud, all statements made by the policyholder or by any insured
person shall be deemed representations and not warranties, and that no
statement made for the purpose of effecting insurance shall avoid such
insurance or reduce benefits unless contained in a written instrument signed by
the policyholder or the insured person, a copy of which has been furnished to
the policyholder or to the person or beneficiary.

2. A provision that the
insurer will furnish to the policyholder, for delivery to each employee or
member of the insured group, an individual certificate setting forth in summary
form a statement of the essential features of the insurance coverage of the
employee or member and to whom benefits are payable. If dependents
or family members are included in the coverage additional certificates need not
be issued for delivery to the dependents or family members. Any
policy, except accidental death and dismemberment, applied for that provides
family coverage, as to such coverage of family members, shall also provide that
the benefits applicable for children shall be payable with respect to a newly
born child of the insured from the instant of such child's birth, to a child
adopted by the insured, regardless of the age at which the child was adopted,
and to a child who has been placed for adoption with the insured and for whom
the application and approval procedures for adoption pursuant to section 8-105
or 8-108 have been completed to the same extent that such coverage
applies to other members of the family.� The coverage for newly born or adopted
children or children placed for adoption shall include coverage of injury or
sickness including the necessary care and treatment of medically diagnosed
congenital defects and birth abnormalities.� If payment of a specific premium
is required to provide coverage for a child, the policy may require that
notification of birth, adoption or adoption placement of the child and payment
of the required premium must be furnished to the insurer within thirty-one
days after the date of birth, adoption or adoption placement in order to have
the coverage continue beyond such thirty-one day period.

3. A provision that to the
group originally insured may be added from time to time eligible new employees
or members or dependents, as the case may be, in accordance with the terms of
the policy.

4. Each contract shall be
so written that the corporation shall pay benefits:

(a) For performance of any
surgical service that is covered by the terms of such contract, regardless of
the place of service.

(b) For any home health
services that are performed by a licensed home health agency and that a
physician has prescribed in lieu of hospital services, as defined by the
director, providing the hospital services would have been covered.

(c) For any diagnostic
service that a physician has performed outside a hospital in lieu of inpatient
service, providing the inpatient service would have been covered.

(d) For any service
performed in a hospital's outpatient department or in a freestanding surgical
facility, providing such service would have been covered if performed as an
inpatient service.

5. A group disability
insurance policy that provides coverage for the surgical expense of a
mastectomy shall also provide coverage
:

(
a
) THat is
incidental to the patient's covered
mastectomy for the expense of reconstructive surgery of the breast on which the
mastectomy was performed, surgery and reconstruction of the other breast to
produce a symmetrical appearance, prostheses, treatment of physical
complications for all stages of the mastectomy, including lymphedemas, and at
least two external postoperative prostheses subject to all of the terms and
conditions of the policy.

(
b
) For
autologous breast reconstruction procedures and any related medically necessary
service, procedure and imaging, including revisions to an autologous breast
reconstruction procedure.�

6. All of the following apply to the
coverage prescribed by paragraph 5, subdivision (
b
) of
this subsection:

(
a
) the
coverage may not:

(
i
) Be less
favorable than the coverage for other covered breast reconstruction services.�

(
ii
) Be subject
to any terms and conditions, including out-of-pocket expenses such
as copayments, deductibles and coinsurance, unless the terms and conditions
also apply under the policy for in-network providers.

(
b
) This
coverage shall:

(
i
) Satisfy
network adequacy standards as required by federal and state law.

(
ii
) Comply
with the accepted standards of care and clinical practice guidelines that are
generally recognized by providers and evidence-based sources.�

(
iii
) Contract
with a network of providers that is sufficient in quantity and geographic
locations to ensure that the services and procedures are accessible to all
insureds without unreasonable delay.

(
iv
) Ensure
that all insureds have geographic access without unreasonable delay to an
out-of-network provider for the services and procedures.

(
v
) Be subject
to utilization review requirements.

(
c
) An out-of-network
provider may not charge an insured for the cost of a covered service and
procedure in an amount in excess of the reimbursement paid under the policy.

(
d
) A policy
that reimburses out-of-network providers for the services and procedures shall
reimburse the out-of-network providers at rates that are not less than the
average in-network reimbursement rates for comparable services and
procedures.

6.
7.
A contract, except a supplemental
contract covering a specified disease or other limited benefits, that provides
coverage for surgical services for a mastectomy shall also provide coverage for
preventive mammography screening and diagnostic imaging performed on dedicated
equipment for diagnostic purposes on referral by a patient's physician, subject
to all of the terms and conditions of the policy, including:

(a) A mammogram.

(b) Digital breast
tomosynthesis, magnetic resonance imaging, ultrasound or other modality and at
such age and intervals as recommended by the national comprehensive cancer
network.� This includes patients at risk for breast cancer who have a family
history with one or more first or second degree relatives with breast cancer,
prior diagnosis of breast cancer, positive testing for hereditary gene
mutations or heterogeneously or dense breast tissue based on the breast imaging
reporting and data system of the American college of radiology.

7.
8.
Any contract that is issued to the
insured and that provides coverage for maternity benefits shall also provide
that the maternity benefits apply to the costs of the birth of any child
legally adopted by the insured if all the following are true:

(a) The child is adopted within one year of birth.

(b) The insured is legally obligated to pay the
costs of birth.

(c) All preexisting
conditions and other limitations have been met by the insured.

(d) The insured has
notified the insurer of the insured's acceptability to adopt children pursuant
to section 8-105, within sixty days after such approval or within sixty
days after a change in insurance policies, plans or companies.

8.
9.
The
coverage prescribed by paragraph
7
8

of this subsection is excess to any other coverage the natural mother may have
for maternity benefits except coverage made available to persons pursuant to
title 36, chapter 29. If such other coverage exists the agency,
attorney or individual arranging the adoption shall make arrangements for the
insurance to pay those costs that may be covered under that policy and shall
advise the adopting parent in writing of the existence and extent of the
coverage without disclosing any confidential information such as the identity
of the natural parent. The insured adopting parents shall notify
their insurer of the existence and extent of the other coverage.

B. Any policy that
provides maternity benefits shall not restrict benefits for any hospital length
of stay in connection with childbirth for the mother or the newborn child to
less than forty-eight hours following a normal vaginal delivery or ninety-six
hours following a cesarean section.� The policy shall not require the provider
to obtain authorization from the insurer for prescribing the minimum length of
stay required by this subsection. The policy may provide that an
attending provider in consultation with the mother may discharge the mother or
the newborn child before the expiration of the minimum length of stay required
by this subsection.� The insurer shall not:

1. Deny the mother or the
newborn child eligibility or continued eligibility to enroll or to renew
coverage under the terms of the policy solely for the purpose of avoiding the
requirements of this subsection.

2. Provide monetary
payments or rebates to mothers to encourage those mothers to accept less than
the minimum protections available pursuant to this subsection.

3. Penalize or otherwise
reduce or limit the reimbursement of an attending provider because that
provider provided care to any insured under the policy in accordance with this
subsection.

4. Provide monetary or
other incentives to an attending provider to induce that provider to provide
care to an insured under the policy in a manner that is inconsistent with this
subsection.

5. Except as described in
subsection C of this section, restrict benefits for any portion of a period
within the minimum length of stay in a manner that is less favorable than the
benefits provided for any preceding portion of that stay.

C. Subsection B of this
section does not:

1. Require a mother to
give birth in a hospital or to stay in the hospital for a fixed period of time
following the birth of the child.

2. Prevent an insurer from
imposing deductibles, coinsurance or other cost sharing in relation to benefits
for hospital lengths of stay in connection with childbirth for a mother or a
newborn child under the policy, except that any coinsurance or other cost
sharing for any portion of a period within a hospital length of stay required
pursuant to subsection B of this section shall not be greater than the
coinsurance or cost sharing for any preceding portion of that stay.

3. Prevent an insurer from
negotiating the level and type of reimbursement with a provider for care
provided in accordance with subsection B of this section.

D. Any contract that
provides coverage for diabetes shall also provide coverage for equipment and
supplies that are medically necessary and that are prescribed by a health care
provider including:

1. Blood glucose monitors.

2. Blood glucose monitors
for the legally blind.

3. Test strips for glucose
monitors and visual reading and urine testing strips.

4. Insulin preparations
and glucagon.

5. Insulin cartridges.

6. Drawing up devices and monitors
for the visually impaired.

7. Injection aids.

8. Insulin cartridges for
the legally blind.

9. Syringes and lancets
including automatic lancing devices.

10. Prescribed oral agents for controlling blood
sugar that are included on the plan formulary.

11. To the extent coverage is required under
medicare, podiatric appliances for prevention of complications associated with
diabetes.

12. Any other device, medication, equipment or
supply for which coverage is required under medicare from and after January 1,
1999. The coverage required in this paragraph is effective six
months after the coverage is required under medicare.

E. Subsection D of this
section does not prohibit a group disability insurer from imposing deductibles,
coinsurance or other cost sharing in relation to benefits for equipment or
supplies for the treatment of diabetes.

F. Any contract that
provides coverage for prescription drugs shall not limit or exclude coverage
for any prescription drug prescribed for the treatment of cancer on the basis
that the prescription drug has not been approved by the United States food and
drug administration for the treatment of the specific type of cancer for which
the prescription drug has been prescribed, if the prescription drug has been
recognized as safe and effective for treatment of that specific type of cancer
in one or more of the standard medical reference compendia prescribed in
subsection G of this section or medical literature that meets the criteria
prescribed in subsection G of this section.� The coverage required under this
subsection includes covered medically necessary services associated with the
administration of the prescription drug.� This subsection does not:

1. Require coverage of any
prescription drug used in the treatment of a type of cancer if the United
States food and drug administration has determined that the prescription drug
is contraindicated for that type of cancer.

2. Require coverage for
any experimental prescription drug that is not approved for any indication by
the United States food and drug administration.

3. Alter any law with
regard to provisions that limit the coverage of prescription drugs that have
not been approved by the United States food and drug administration.

4. Require reimbursement
or coverage for any prescription drug that is not included in the drug
formulary or list of covered prescription drugs specified in the contract.

5. Prohibit a contract
from limiting or excluding coverage of a prescription drug, if the decision to
limit or exclude coverage of the prescription drug is not based primarily on
the coverage of prescription drugs required by this section.

6. Prohibit the use of
deductibles, coinsurance, copayments or other cost sharing in relation to drug
benefits and related medical benefits offered.

G. For the purposes of
subsection F of this section:

1. The acceptable standard
medical reference compendia are the following:

(a) The American hospital
formulary service drug information, a publication of the American society of
health system pharmacists.

(b) The national comprehensive cancer network drugs
and biologics compendium.

(c) Thomson Micromedex compendium DrugDex.

(d) Elsevier gold standard's clinical pharmacology
compendium.

(e) Other authoritative
compendia as identified by the secretary of the United States department of
health and human services.

2. Medical
literature may be accepted if all of the following apply:

(a) At
least two articles from major peer reviewed professional medical journals have
recognized, based on scientific or medical criteria, the drug's safety and
effectiveness for treatment of the indication for which the drug has been
prescribed.

(b) No article from a
major peer reviewed professional medical journal has concluded, based on
scientific or medical criteria, that the drug is unsafe or ineffective or that
the drug's safety and effectiveness cannot be determined for the treatment of
the indication for which the drug has been prescribed.

(c) The literature meets
the uniform requirements for manuscripts submitted to biomedical journals
established by the international committee of medical journal editors or is
published in a journal specified by the United States department of health and
human services as acceptable peer reviewed medical literature pursuant to
section 186(t)(2)(B) of the social security act (42 United States Code section
1395x(t)(2)(B)).

H. Any contract that is
offered by a group disability insurer and that contains a prescription drug
benefit shall provide coverage of medical foods to treat inherited metabolic
disorders as provided by this section.

I. The metabolic disorders
triggering medical foods coverage under this section shall:

1. Be part of the newborn
screening program prescribed in section 36-694.

2. Involve amino acid,
carbohydrate or fat metabolism.

3. Have medically standard
methods of diagnosis, treatment and monitoring including quantification of
metabolites in blood, urine or spinal fluid or enzyme or DNA confirmation in
tissues.

4. Require specially processed
or treated medical foods that are generally available only under the
supervision and direction of a physician who is licensed pursuant to title 32,
chapter 13 or 17

or a registered nurse practitioner
who is licensed pursuant to title 32, chapter 15, that must be consumed
throughout life and without which the person may suffer serious mental or
physical impairment.

J. Medical foods eligible
for coverage under this section shall be prescribed or ordered under the
supervision of a physician licensed pursuant to title 32, chapter 13 or 17 or a
registered nurse practitioner who is licensed pursuant to title 32, chapter 15
as medically necessary for the therapeutic treatment of an inherited metabolic
disease.

K. An insurer shall cover
at least fifty percent of the cost of medical foods prescribed to treat
inherited metabolic disorders and covered pursuant to this section.� An insurer
may limit the maximum annual benefit for medical foods under this section to
$5,000, which applies to the cost of all prescribed modified low protein foods
and metabolic formula.

L. Any group disability
policy that provides coverage for:

1. Prescription drugs shall also provide coverage
for any prescribed drug or device that is approved by the United States food
and drug administration for use as a contraceptive. A group
disability insurer may use a drug formulary, multitiered drug formulary or list
but that formulary or list shall include oral, implant and injectable
contraceptive drugs, intrauterine devices and prescription barrier
methods. The group disability insurer may not impose deductibles,
coinsurance, copayments or other cost containment measures for contraceptive
drugs that are greater than the deductibles, coinsurance, copayments or other
cost containment measures for other drugs on the same level of the formulary or
list.

2. Outpatient health care services shall also
provide coverage for outpatient contraceptive services.� For the purposes of
this paragraph, "outpatient contraceptive services" means
consultations, examinations, procedures and medical services provided on an
outpatient basis and related to the use of approved United States food and drug
administration prescription contraceptive methods to prevent unintended
pregnancies.

M. Notwithstanding subsection L of this section, a
religiously affiliated employer may require that the insurer provide a group
disability policy without coverage for specific items or services required
under subsection L of this section because providing or paying for coverage of
the specific items or services is contrary to the religious beliefs of the
religiously affiliated employer offering the plan. If a religiously
affiliated employer objects to providing coverage for specific items or
services required under subsection L of this section, a written affidavit shall
be filed with the insurer stating the objection. On receipt of the
affidavit, the insurer shall issue to the religiously affiliated employer a
group disability policy that excludes coverage for specific items or services
required under subsection L of this section.� The insurer shall retain the
affidavit for the duration of the group disability policy and any renewals of
the policy. This subsection shall not exclude coverage for
prescription contraceptive methods ordered by a health care provider with
prescriptive authority for medical indications other than for contraceptive,
abortifacient, abortion or sterilization purposes. A religiously
affiliated employer offering the policy may state religious beliefs in its
affidavit and may require the insured to first pay for the prescription and
then submit a claim to the insurer along with evidence that the prescription is
not for a purpose covered by the objection. An insurer may charge an
administrative fee for handling these claims.

N. Subsection M of
this section does not authorize a religiously affiliated employer to obtain an
employee's protected health information or to violate the health insurance
portability and accountability act of 1996 (P.L. 104-191; 110 Stat. 1936)
or any federal regulations adopted pursuant to that act.

O. Subsection M of this section shall not be
construed to restrict or limit any protections against employment
discrimination that are prescribed in federal or state law.

P. For the purposes of:

1. This section:

(a) "Inherited
metabolic disorder"
:

(
i
)
Means a disease
that is

caused by an inherited abnormality of body chemistry
.

and

(
ii
)
Includes a disease
that is

tested under the newborn screening program prescribed in section 36-694.

(b) "Medical
foods" means modified low protein foods and metabolic formula.

(c) "Metabolic
formula" means foods that are all of the following:

(i) Formulated to be
consumed or administered enterally under the supervision of a physician who is
licensed pursuant to title 32, chapter 13 or 17 or a registered nurse
practitioner who is licensed pursuant to title 32, chapter 15.

(ii) Processed or
formulated to be deficient in one or more of the nutrients present in typical
foodstuffs.

(iii) Administered for the
medical and nutritional management of a person who has limited capacity to
metabolize foodstuffs or certain nutrients contained in the foodstuffs or who
has other specific nutrient requirements as established by medical evaluation.

(iv) Essential to a
person's optimal growth, health and metabolic homeostasis.

(d) "Modified low
protein foods" means foods that are all of the following:

(i) Formulated to be
consumed or administered enterally under the supervision of a physician who is
licensed pursuant to title 32, chapter 13 or 17 or a registered nurse
practitioner who is licensed pursuant to title 32, chapter 15.

(ii) Processed or
formulated to contain less than one gram of protein per unit of serving, but
does not include a natural food that is naturally low in protein.

(iii) Administered for the
medical and nutritional management of a person who has limited capacity to
metabolize foodstuffs or certain nutrients contained in the foodstuffs or who
has other specific nutrient requirements as established by medical evaluation.

(iv) Essential to a
person's optimal growth, health and metabolic homeostasis.

2. Subsection A of this
section
:
, the term

(
a
) "Autologous
breast reconstruction procedure" includes all of the following:

(
i
) Superior
gluteal artery perforator flap.

(
ii
) Inferior
gluteal artery perforation flap.

(
iii
) Intercostal
artery perforator flap.

(
iv
) Lateral
thigh perforator flap.

(
v
) Lumbar
artery perforator flap.

(
vi
) Muscle
sparking transverse upper gracilis flap.

(
vii
) Profunda
artery perforator flap.

(
viii
) Superficial
inferior epigastric artery flap.

(
ix
) Abdominal
perforator exchange flap.

(
x
) Thoracodorsal
artery perforator flap.

(
xi
) Body lift
perforator flap.

(
xii
) Stacked
hemiabdominal extended perforator flap.

(
xiii
) Deep
inferior epigastric perforator artery.

(
xiv
) Hybrid
procedures that involve both an autologous breast reconstruction procedure and
breast implantations.

(
b
)
"Child", for purposes of initial
coverage of an adopted child or a child placed for adoption but not for
purposes of termination of coverage of such child, means a person who is under
eighteen years of age.

(
c
) "Revisions to an autologous breast reconstruction
procedure" includes any of the following:

(
i
) Liposuction.

(
ii
) Grafting.

(
iii
) Nipple
reconstruction.

(
iv
) Nipple and
areola tattoos.

(
v
) Fat
necrosis excision.

(
vi
) Capsulotomy.

(
vii
) Breast
capsulorrhaphy.

3. Subsections M and N of this section,
"religiously affiliated employer" means either:

(a) An entity for which all of the following apply:

(i) The entity primarily employs persons who share
the religious tenets of the entity.

(ii) The entity serves primarily persons who share
the religious tenets of the entity.

(iii) The entity is a nonprofit organization as
described in section 6033(a)(3)(A)(i) or (iii) of the internal revenue code of
1986, as amended.

(b) An entity whose articles of incorporation
clearly state that it is a religiously motivated organization and whose
religious beliefs are central to the organization's operating principles.
END_STATUTE

Sec. 6. Section 20-1404, Arizona Revised Statutes, is amended to read:

START_STATUTE
20-1404.

Blanket disability insurance; definitions

A. Blanket disability insurance is that form of
disability insurance covering special groups of persons as enumerated in one of
the following paragraphs:

1. Under a policy or contract issued to any common
carrier or to any operator, owner or lessee of a means of transportation, which
shall be deemed the policyholder, covering a group defined as all persons who
may become passengers on such common carrier or means of transportation.

2. Under a policy or contract issued to an employer,
who shall be deemed the policyholder, covering all employees or any group of
employees defined by reference to hazards incident to an activity or activities
or operations of the policyholder.� Dependents of the employees and guests of
the employer or employees may also be included where exposed to the same
hazards.

3. Under a policy or contract issued to a college,
school or other institution of learning or to the head or principal thereof,
who or which shall be deemed the policyholder, covering students, teachers,
employees or volunteers.

4. Under a policy or contract issued in the name of
any volunteer fire department or any first aid, civil defense or other such
volunteer group, or agency having jurisdiction thereof, which shall be deemed
the policyholder, covering all or any group of the members, participants or
volunteers of the fire department or first aid, civil defense or other group.

5. Under a policy or contract issued to a creditor,
who shall be deemed the policyholder, to insure debtors of the creditor.

6. Under a policy or contract issued to a sports
team or to a camp or sponsor thereof, which team or camp or sponsor thereof
shall be deemed the policyholder, covering members, campers, employees,
officials, supervisors or volunteers.

7. Under a policy or contract issued to an
incorporated or unincorporated religious, charitable, recreational, educational
or civic organization, or branch thereof, which organization shall be deemed
the policyholder, covering any group of members, participants or volunteers
defined by reference to hazards incident to an activity or activities or
operations sponsored or supervised by or on the premises of the policyholder.

8. Under a policy or contract issued to a newspaper
or other publisher, which shall be deemed the policyholder, covering its
carriers.

9. Under a policy or contract issued to a
restaurant, hotel, motel, resort, innkeeper or other group with a high degree
of potential customer liability, which shall be deemed the policyholder,
covering patrons or guests.

10. Under a policy or contract issued to a health
care provider or other arranger of health services, which shall be deemed the
policyholder, covering patients, donors or surrogates provided that the
coverage is not made a condition of receiving care.

11. Under a policy or contract issued to a bank,
financial vendor or other financial institution, or to a parent holding company
or to the trustee, trustees or agent designated by one or more banks, financial
vendors or other financial institutions, which shall be deemed the
policyholder, covering account holders, debtors, guarantors or purchasers.

12. Under a policy or contract issued to an
incorporated or unincorporated association of persons having a common interest
or calling, which association shall be deemed the policyholder, formed for
purposes other than obtaining insurance, covering members of such association.

13. Under a policy or contract issued to a travel
agency or other organization that provides travel-related services, which
agency or organization shall be deemed the policyholder, to cover all persons
for whom travel-related services are provided.

14. Under a policy or contract issued to a qualified
marketplace platform, which is deemed the policyholder, covering qualified
marketplace contractors that have executed a written contract with the
qualified marketplace platform.� For the purposes of this paragraph,
"qualified marketplace contractor" and "qualified marketplace
platform" have the same meanings prescribed in section 20-485.

15. Under a policy or contract that is issued to any
other substantially similar group and that, in the discretion of the director,
may be subject to the issuance of a blanket disability policy or contract.� The
director may exercise discretion on an individual risk basis or class of risks,
or both.

B. An individual application need not be required
from a person covered under a blanket disability policy or contract, nor shall
it be necessary for the insurer to furnish each person with a certificate.

C. All benefits under any blanket disability policy
shall be payable to the person insured, or to the insured's designated
beneficiary or beneficiaries, or to the insured's estate, except that if the
person insured is a minor, such benefits may be made payable to the insured's
parent or guardian or any other person actually supporting the insured, and
except that the policy may provide that all or any portion of any indemnities
provided by any such policy on account of hospital, nursing, medical or surgical
services, at the insurer's option, may be paid directly to the hospital or
person rendering such services, but the policy may not require that the service
be rendered by a particular hospital or person.� Payment so made shall
discharge the insurer's obligation with respect to the amount of insurance so
paid.

D. This section does not affect the legal liability
of policyholders for the death of or injury to any member of the group.

E. Any policy or contract, except accidental death
and dismemberment, applied for that provides family coverage, as to such
coverage of family members, shall also provide that the benefits applicable for
children shall be payable with respect to a newly born child of the insured
from the instant of such child's birth, to a child adopted by the insured,
regardless of the age at which the child was adopted, and to a child who has
been placed for adoption with the insured and for whom the application and approval
procedures for adoption pursuant to section 8-105 or 8-108 have
been completed to the same extent that such coverage applies to other members
of the family. The coverage for newly born or adopted children or
children placed for adoption shall include coverage of injury or sickness
including necessary care and treatment of medically diagnosed congenital
defects and birth abnormalities. If payment of a specific premium is
required to provide coverage for a child, the policy or contract may require
that notification of birth, adoption or adoption placement of the child and
payment of the required premium must be furnished to the insurer within thirty-one
days after the date of birth, adoption or adoption placement in order to have
the coverage continue beyond the thirty-one day period.

F. Each policy or contract shall be so written that
the insurer shall pay benefits:

1. For performance of any surgical service that is
covered by the terms of such contract, regardless of the place of service.

2. For any home health services that are performed
by a licensed home health agency and that a physician has prescribed in lieu of
hospital services, as defined by the director, providing the hospital services
would have been covered.

3. For any diagnostic service that a physician has
performed outside a hospital in lieu of inpatient service, providing the
inpatient service would have been covered.

4. For any service performed in a hospital's
outpatient department or in a freestanding surgical facility, providing such
service would have been covered if performed as an inpatient service.

G. A blanket disability insurance policy that
provides coverage for the surgical expense of a mastectomy shall also provide
coverage
:

1. That is
incidental to the
patient's covered mastectomy for the expense of reconstructive surgery of the
breast on which the mastectomy was performed, surgery and reconstruction of the
other breast to produce a symmetrical appearance, prostheses, treatment of physical
complications for all stages of the mastectomy, including lymphedemas, and at
least two external postoperative prostheses subject to all of the terms and
conditions of the policy.

2. For autologous breast
reconstruction procedures and any related medically necessary service,
procedure and imaging, including revisions to an autologous breast
reconstruction procedure. All of the following apply to coverage for
an autologous breast reconstruction procedure:

(
a
) The
coverage may not:

(
i
) Be less
favorable than the coverage for other covered breast reconstruction services.�

(
ii
) Be subject
to any terms and conditions, including out-of-pocket expenses such
as copayments, deductibles and coinsurance unless the terms and conditions also
apply under the policy for in-network providers.

(
b
) The
coverage shall:

(
i
) Satisfy
network adequacy standards as required by federal and state law.

(
ii
) Comply
with the accepted standards of care and clinical practice guidelines that are
generally recognized by providers and evidence-based sources.�

(
iii
) Contract
with a network of providers that is sufficient in quantity and geographic
locations to ensure that the services and procedures are accessible to all
insureds without unreasonable delay.

(
iv
) Ensure
that all insureds have geographic access without unreasonable delay to an
out-of-network provider for the services and procedures.

(
v
) Be subject
to utilization review requirements.

(
c
) An out-of-network
provider may not charge an insured for the cost of a covered service and
procedure in an amount in excess of the reimbursement paid under the policy.

(
d
) A policy
that reimburses out-of-network providers for the services and procedures shall
reimburse the out-of-network providers at rates that are not less than the
average in-network reimbursement rates for comparable services and
procedures.

H. A contract that provides coverage for surgical
services for a mastectomy shall also provide coverage for preventive
mammography screening and diagnostic imaging performed on dedicated equipment
for diagnostic purposes on referral by a patient's physician, subject to all of
the terms and conditions of the policy, including:

1. A mammogram.

2. Digital breast
tomosynthesis, magnetic resonance imaging, ultrasound or other modality and at
such age and intervals as recommended by the national comprehensive cancer
network.� This includes patients at risk for breast cancer who have a family
history with one or more first or second degree relatives with breast cancer,
prior diagnosis of breast cancer, positive testing for hereditary gene
mutations or heterogeneously or dense breast tissue based on the breast imaging
reporting and data system of the American college of radiology.

I. Any contract that is issued to the insured and
that provides coverage for maternity benefits shall also provide that the
maternity benefits apply to the costs of the birth of any child legally adopted
by the insured if all the following are true:

1. The child is adopted within one year of birth.

2. The insured is legally obligated to pay the costs
of birth.

3. All preexisting conditions and other limitations
have been met by the insured.

4. The insured has notified the insurer of his
acceptability to adopt children pursuant to section 8-105, within sixty
days after such approval or within sixty days after a change in insurance
policies, plans or companies.

J. The coverage prescribed by subsection I of this
section is excess to any other coverage the natural mother may have for
maternity benefits except coverage made available to persons pursuant to title
36, chapter 29. If such other coverage exists the agency, attorney
or individual arranging the adoption shall make arrangements for the insurance
to pay those costs that may be covered under that policy and shall advise the
adopting parent in writing of the existence and extent of the coverage without
disclosing any confidential information such as the identity of the natural
parent.� The insured adopting parents shall notify their insurer of the
existence and extent of the other coverage.

K. Any contract that provides maternity benefits
shall not restrict benefits for any hospital length of stay in connection with
childbirth for the mother or the newborn child to less than forty-eight
hours following a normal vaginal delivery or ninety-six hours following a
cesarean section.� The contract shall not require the provider to obtain
authorization from the insurer for prescribing the minimum length of stay
required by this subsection. The contract may provide that an
attending provider in consultation with the mother may discharge the mother or
the newborn child before the expiration of the minimum length of stay required
by this subsection.� The insurer shall not:

1. Deny the mother or the newborn child eligibility
or continued eligibility to enroll or to renew coverage under the terms of the
contract solely for the purpose of avoiding the requirements of this
subsection.

2. Provide monetary payments or rebates to mothers
to encourage those mothers to accept less than the minimum protections
available pursuant to this subsection.

3. Penalize or otherwise reduce or limit the
reimbursement of an attending provider because that provider provided care to
any insured under the contract in accordance with this subsection.

4. Provide monetary or other incentives to an
attending provider to induce that provider to provide care to an insured under
the contract in a manner that is inconsistent with this subsection.

5. Except as described in subsection L of this
section, restrict benefits for any portion of a period within the minimum
length of stay in a manner that is less favorable than the benefits provided
for any preceding portion of that stay.

L. Subsection K of this section does not:

1. Require a mother to give birth in a hospital or
to stay in the hospital for a fixed period of time following the birth of the
child.

2. Prevent an insurer from imposing deductibles,
coinsurance or other cost sharing in relation to benefits for hospital lengths
of stay in connection with childbirth for a mother or a newborn child under the
contract, except that any coinsurance or other cost sharing for any portion of
a period within a hospital length of stay required pursuant to subsection K of
this section shall not be greater than the coinsurance or cost sharing for any
preceding portion of that stay.

3. Prevent an insurer from negotiating the level and
type of reimbursement with a provider for care provided in accordance with
subsection K of this section.

M. Any contract that provides coverage for diabetes
shall also provide coverage for equipment and supplies that are medically
necessary and that are prescribed by a health care provider including:

1. Blood glucose monitors.

2. Blood glucose monitors for the legally blind.

3. Test strips for glucose monitors and visual
reading and urine testing strips.

4. Insulin preparations and glucagon.

5. Insulin cartridges.

6. Drawing up devices and monitors for the visually
impaired.

7. Injection aids.

8. Insulin cartridges for the legally blind.

9. Syringes and lancets including automatic lancing
devices.

10. Prescribed oral agents for controlling blood
sugar that are included on the plan formulary.

11. To the extent coverage is required under
medicare, podiatric appliances for prevention of complications associated with
diabetes.

12. Any other device, medication, equipment or
supply for which coverage is required under medicare from and after January 1,
1999. The coverage required in this paragraph is effective six
months after the coverage is required under medicare.

N. Subsection M of this section does not prohibit a
blanket disability insurer from imposing deductibles, coinsurance or other cost
sharing in relation to benefits for equipment or supplies for the treatment of
diabetes.

O. Any contract that provides coverage for
prescription drugs shall not limit or exclude coverage for any prescription
drug prescribed for the treatment of cancer on the basis that the prescription
drug has not been approved by the United States food and drug administration
for the treatment of the specific type of cancer for which the prescription
drug has been prescribed, if the prescription drug has been recognized as safe
and effective for treatment of that specific type of cancer in one or more of
the standard medical reference compendia prescribed in subsection P of this
section or medical literature that meets the criteria prescribed in subsection
P of this section.� The coverage required under this subsection includes
covered medically necessary services associated with the administration of the
prescription drug.� This subsection does not:

1. Require coverage of any prescription drug used in
the treatment of a type of cancer if the United States food and drug
administration has determined that the prescription drug is contraindicated for
that type of cancer.

2. Require coverage for any experimental
prescription drug that is not approved for any indication by the United States
food and drug administration.

3. Alter any law with regard to provisions that
limit the coverage of prescription drugs that have not been approved by the
United States food and drug administration.

4. Require reimbursement or coverage for any
prescription drug that is not included in the drug formulary or list of covered
prescription drugs specified in the contract.

5. Prohibit a contract from limiting or excluding
coverage of a prescription drug, if the decision to limit or exclude coverage
of the prescription drug is not based primarily on the coverage of prescription
drugs required by this section.

6. Prohibit the use of deductibles, coinsurance,
copayments or other cost sharing in relation to drug benefits and related
medical benefits offered.

P. For the purposes of subsection O of this section:

1. The acceptable standard medical reference
compendia are the following:

(a) The American hospital formulary service drug
information, a publication of the American society of health system
pharmacists.

(b) The national comprehensive cancer network drugs
and biologics compendium.

(c) Thomson Micromedex compendium DrugDex.

(d) Elsevier gold standard's clinical pharmacology
compendium.

(e) Other authoritative compendia as identified by
the secretary of the United States department of health and human services.

2. Medical literature may be accepted if all of the
following apply:

(a) At least two articles from major peer reviewed
professional medical journals have recognized, based on scientific or medical
criteria, the drug's safety and effectiveness for treatment of the indication
for which the drug has been prescribed.

(b) No article from a major peer reviewed
professional medical journal has concluded, based on scientific or medical
criteria, that the drug is unsafe or ineffective or that the drug's safety and
effectiveness cannot be determined for the treatment of the indication for
which the drug has been prescribed.

(c) The literature meets the uniform requirements
for manuscripts submitted to biomedical journals established by the
international committee of medical journal editors or is published in a journal
specified by the United States department of health and human services as
acceptable peer reviewed medical literature pursuant to section 186(t)(2)(B) of
the social security act (42 United States Code section 1395x(t)(2)(B)).

Q. Any contract that is offered by a blanket
disability insurer and that contains a prescription drug benefit shall provide
coverage of medical foods to treat inherited metabolic disorders as provided by
this section.

R. The metabolic disorders triggering medical foods
coverage under this section shall:

1. Be part of the newborn screening program
prescribed in section 36-694.

2. Involve amino acid, carbohydrate or fat
metabolism.

3. Have medically standard methods of diagnosis,
treatment and monitoring including quantification of metabolites in blood,
urine or spinal fluid or enzyme or DNA confirmation in tissues.

4. Require specially processed or treated medical
foods that are generally available only under the supervision and direction of
a physician who is licensed pursuant to title 32, chapter 13 or 17

or a registered nurse practitioner who is licensed
pursuant to title 32, chapter 15, that must be consumed throughout life and
without which the person may suffer serious mental or physical impairment.

S. Medical foods eligible for coverage under this
section shall be prescribed or ordered under the supervision of a physician
licensed pursuant to title 32, chapter 13 or 17 or a registered nurse
practitioner who is licensed pursuant to title 32, chapter 15 as medically
necessary for the therapeutic treatment of an inherited metabolic disease.

T. An insurer shall cover at least fifty percent of
the cost of medical foods prescribed to treat inherited metabolic disorders and
covered pursuant to this section.� An insurer may limit the maximum annual
benefit for medical foods under this section to $5,000, which applies to the
cost of all prescribed modified low protein foods and metabolic formula.

U. Any blanket disability policy that provides
coverage for:

1. Prescription drugs shall also provide coverage
for any prescribed drug or device that is approved by the United States food
and drug administration for use as a contraceptive. A blanket
disability insurer may use a drug formulary, multitiered drug formulary or list
but that formulary or list shall include oral, implant and injectable
contraceptive drugs, intrauterine devices and prescription barrier
methods. The blanket disability insurer may not impose deductibles,
coinsurance, copayments or other cost containment measures for contraceptive
drugs that are greater than the deductibles, coinsurance, copayments or other
cost containment measures for other drugs on the same level of the formulary or
list.

2. Outpatient health care services shall also
provide coverage for outpatient contraceptive services. For the
purposes of this paragraph, "outpatient contraceptive services" means
consultations, examinations, procedures and medical services provided on an
outpatient basis and related to the use of approved United States food and drug
administration prescription contraceptive methods to prevent unintended
pregnancies.

V. Notwithstanding subsection U of this section, a
religiously affiliated employer may require that the insurer provide a blanket
disability policy without coverage for specific items or services required
under subsection U of this section because providing or paying for coverage of
the specific items or services is contrary to the religious beliefs of the
religiously affiliated employer offering the plan. If a religiously
affiliated employer objects to providing coverage for specific items or
services required under subsection U of this section, a written affidavit shall
be filed with the insurer stating the objection. On receipt of the
affidavit, the insurer shall issue to the religiously affiliated employer a
blanket disability policy that excludes coverage for specific items or services
required under subsection U of this section. The insurer shall retain the
affidavit for the duration of the blanket disability policy and any renewals of
the policy. This subsection shall not exclude coverage for
prescription contraceptive methods ordered by a health care provider with
prescriptive authority for medical indications other than for contraceptive,
abortifacient, abortion or sterilization purposes.� A religiously affiliated
employer offering the policy may state religious beliefs in its affidavit and
may require the insured to first pay for the prescription and then submit a
claim to the insurer along with evidence that the prescription is not for a
purpose covered by the objection.� An insurer may charge an administrative fee
for handling these claims under this subsection.

W. Subsection V of this section does not authorize a
religiously affiliated employer to obtain an employee's protected health
information or to violate the health insurance portability and accountability
act of 1996 (P.L. 104-191; 110 Stat. 1936) or any federal regulations
adopted pursuant to that act.

X. Subsection V of this section shall not be
construed to restrict or limit any protections against employment
discrimination that are prescribed in federal or state law.

Y. For the purposes of:

1. This section:

(a) "Inherited metabolic disorder"
:

(
i
)
Means
a disease caused by an inherited abnormality of body chemistry
.

and

(
ii
)
Includes
a disease tested under the newborn screening program prescribed in section 36-694.

(b) "Medical foods" means modified low
protein foods and metabolic formula.

(c) "Metabolic formula" means foods that
are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17 or a registered nurse practitioner who is licensed
pursuant to title 32, chapter 15.

(ii) Processed or formulated to be deficient in one
or more of the nutrients present in typical foodstuffs.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

(d) "Modified low protein foods" means
foods that are all of the following:

(i) Formulated to be consumed or administered
enterally under the supervision of a physician who is licensed pursuant to
title 32, chapter 13 or 17 or a registered nurse practitioner who is licensed
pursuant to title 32, chapter 15.

(ii) Processed or formulated to contain less than
one gram of protein per unit of serving, but does not include a natural food
that is naturally low in protein.

(iii) Administered for the medical and nutritional
management of a person who has limited capacity to metabolize foodstuffs or
certain nutrients contained in the foodstuffs or who has other specific
nutrient requirements as established by medical evaluation.

(iv) Essential to a person's optimal growth, health
and metabolic homeostasis.

2. Subsection E of this section,
the
term
"child", for purposes of initial coverage of an adopted
child or a child placed for adoption but not for purposes of termination of
coverage of such child, means a person who is under eighteen years of age.

3. Subsection G of this section:

(
a
) "Autologous
breast reconstruction procedure" includes all of the following:

(
i
) Superior
gluteal artery perforator flap.

(
ii
) Inferior
gluteal artery perforation flap.

(
iii
) Intercostal
artery perforator flap.

(
iv
) Lateral
thigh perforator flap.

(
v
) Lumbar
artery perforator flap.

(
vi
) Muscle
sparking transverse upper gracilis flap.

(
vii
) Profunda
artery perforator flap.

(
viii
) Superficial
inferior epigastric artery flap.

(
ix
) Abdominal
perforator exchange flap.

(
x
) Thoracodorsal
artery perforator flap.

(
xi
) Body lift
perforator flap.

(
xii
) Stacked
hemiabdominal extended perforator flap.

(
xiii
) Deep
inferior epigastric perforator artery.

(
xiv
) Hybrid
procedures that involve both an autologous breast reconstruction procedure and
breast implantations.

(
b
) "Revisions
to an autologous breast reconstruction procedure" includes any of the
following:

(
i
) Liposuction.

(
ii
) Grafting.

(
iii
) Nipple reconstruction.

(
iv
) Nipple and
areola tattoos.

(
v
) Fat
necrosis excision.

(
vi
) Capsulotomy.

(
vii
) Breast
capsulorrhaphy.

3.
4.
Subsections
V and W of this section, "religiously affiliated employer" means
either:

(a) An entity for which all of the following apply:

(i) The entity primarily employs persons who share
the religious tenets of the entity.

(ii) The entity serves primarily persons who share
the religious tenets of the entity.

(iii) The entity is a nonprofit organization as
described in section 6033(a)(3)(A)(i) or (iii) of the internal revenue code of
1986, as amended.

(b) An entity whose articles of incorporation
clearly state that it is a religiously motivated organization and whose
religious beliefs are central to the organization's operating principles.
END_STATUTE

Sec. 7. Section 20-2341, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-2341.

Uninsured small business health insurance plans; mandatory
coverage exemption; definitions

A. A policy, subscription contract, contract, plan
or evidence of coverage issued to an uninsured small business by a health care
insurer is not subject to the requirements of any of the following:

1. Section 20-461, subsection A, paragraph 17
and subsection B.

2. Section 20-826, subsection C, paragraph 1.

3. Section 20-826, subsections F, J, K, U, V,
W, X and Y.

4. Sections 20-841, 20-841.01, 20-841.02,
20-841.03, 20-841.04, 20-841.06, 20-841.07 and 20-841.08.

5. Section 20-841.05, subsections B and E.

6. Section 20-1057, subsections C, K, L, Y, Z,
AA and BB.

7. Sections 20-1057.01, 20-1057.03, 20-1057.04,
20-1057.05 and 20-1057.08.

8. Section 20-1057.02, subsection B.

9. Section 20-1342, subsection A, paragraph 8,
subdivision (a).

10. Section 20-1342, subsection A, paragraphs
11 and
12
and 13
.

11. Section 20-1342, subsections H, I, J and
K.

12. Section 20-1342.01.

13. Sections 20-1376, 20-1376.01, 20-1376.02,
20-1376.03 and 20-1376.04.

14. Section 20-1402, subsection A, paragraph
4, subdivision (a).

15. Section 20-1402, subsection A, paragraphs
7 and
8
and 9
.

16. Section 20-1402, subsections H, I, J, K
and L.

17. Section 20-1404, subsection F, paragraph
1.

18. Section 20-1404, subsections I, Q, R, S, T
and U.

19. Section 20-1406.

20. Sections 20-1406.01, 20-1406.02, 20-1406.03
and 20-1406.04.

21. Section 20-1407.

22. Section 20-2321.

23. Section 20-2327.

24. Section 20-2329.

B. Section 20-2304, subsection B does not
apply to a policy, subscription contract, contract, plan or evidence of
coverage issued to an uninsured small business pursuant to subsection A of this
section.

C. In this article, unless the context otherwise
requires:

1. "Health care insurer" means a
disability insurer, group disability insurer, blanket disability insurer,
health care services organization, hospital service corporation, medical
service corporation or hospital and medical service corporation.

2. "Uninsured small business" means a
small employer that did not provide a health benefits plan for at least ninety
days immediately before the effective date of coverage provided pursuant to
this section, except that this requirement does not apply at the renewal of
coverage pursuant to this section.
END_STATUTE