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SB1776 - 572R - S Ver
Senate Engrossed
traditional healing
services; AHCCCS
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SENATE BILL 1776
AN
ACT
Amending sections 36-2907 and 36-2939,
Arizona Revised Statutes; relating to the Arizona health care cost containment
system.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it
enacted by the Legislature of the State of Arizona:
Section 1. Section 36-2907, Arizona Revised
Statutes, is amended to read:
START_STATUTE
36-2907.
Covered health and medical services; modifications; related
delivery of service requirements; rules; definitions
A. Subject to the limits and exclusions specified in
this section, contractors shall provide the following medically necessary
health and medical services:
1. Inpatient hospital services that are ordinarily
furnished by a hospital to care for and treat inpatients and that are provided
under the direction of a physician or a primary care
practitioner. For the purposes of this section, inpatient hospital
services exclude services in an institution for tuberculosis or mental diseases
unless authorized under an approved section 1115 waiver.
2. Outpatient health services that are ordinarily
provided in hospitals, clinics, offices and other health care facilities by
licensed health care providers. Outpatient health services include
services provided by or under the direction of a physician or a primary care
practitioner, including occupational therapy.
3. Other laboratory and X-ray services ordered
by a physician or a primary care practitioner.
4. Medications that are ordered on prescription by a
physician or a dentist who is licensed pursuant to title 32, chapter 11.�
Persons who are dually eligible for title XVIII and title XIX services must
obtain available medications through a medicare licensed or certified medicare
advantage prescription drug plan, a medicare prescription drug plan or any
other entity authorized by medicare to provide a medicare part D prescription
drug benefit.
5. Medical supplies, durable medical equipment,
insulin pumps and prosthetic devices ordered by a physician or a primary care
practitioner. Suppliers of durable medical equipment shall provide the
administration with complete information about the identity of each person who
has an ownership or controlling interest in their business and shall comply
with federal bonding requirements in a manner prescribed by the administration.
6. For persons who are at least twenty-one
years of age, treatment of medical conditions of the eye, excluding eye
examinations for prescriptive lenses and the provision of prescriptive lenses.
7. Early and periodic health screening and
diagnostic services as required by section 1905(r) of title XIX of the social
security act for members who are under twenty-one years of age.
8. Family planning services that do not include
abortion or abortion counseling. If a contractor elects not to
provide family planning services, this election does not disqualify the
contractor from delivering all other covered health and medical services under
this chapter. In that event, the administration may contract
directly with another contractor, including an outpatient surgical center or a
noncontracting provider, to deliver family planning services to a member who is
enrolled with the contractor that elects not to provide family planning
services.
9. Podiatry services that are performed by a
podiatrist who is licensed pursuant to title 32, chapter 7 and ordered by a
primary care physician or primary care practitioner.
10. Nonexperimental transplants approved for title
XIX reimbursement.
11. Dental services as follows:
(a) Except as provided in subdivision (b) of this
paragraph, for persons who are at least twenty-one years of age,
emergency dental care and extractions in an annual amount of not more than
$1,000 per member.
(b) Subject to approval by the centers for medicare
and medicaid services, for persons treated at an Indian health service or
tribal facility, adult dental services that are eligible for a federal medical
assistance percentage of one hundred percent and that exceed the limit
prescribed in subdivision (a) of this paragraph.
12. Ambulance and nonambulance transportation,
except as provided in subsection G of this section.
13. Hospice care.
14. Orthotics, if all of the following apply:
(a) The use of the orthotic is medically necessary
as the preferred treatment option consistent with medicare guidelines.
(b) The orthotic is less expensive than all other
treatment options or surgical procedures to treat the same diagnosed condition.
(c) The orthotic is ordered by a physician or
primary care practitioner.
15. Subject to approval by the centers for medicare
and medicaid services, medically necessary chiropractic services that are
performed by a chiropractor who is licensed pursuant to title 32, chapter 8 and
that are ordered by a primary care physician or primary care practitioner
pursuant to rules adopted by the administration. The primary care
physician or primary care practitioner may initially order up to twenty visits
annually that include treatment and may request authorization for additional
chiropractic services in that same year if additional chiropractic services are
medically necessary.
16. For
up to ten program hours annually, diabetes outpatient self-management
training services, as defined in 42 United States Code section 1395x, if
prescribed by a primary care practitioner in either of the following
circumstances:
(a) The
member is initially diagnosed with diabetes.
(b) For
a member who has previously been diagnosed with diabetes, either:
(i) A
change occurs in the member's diagnosis, medical condition or treatment
regimen.
(ii) The member is not meeting appropriate clinical
outcomes.
17. Pursuant to the terms and conditions that are
approved by the centers for medicare and medicaid services and subject to
available funding, traditional healing services, if both of the following
apply:
(a) The member qualifies for services through the
Indian health service or a tribal facility pursuant to the conditions of
participation outlined in 42 Code of Federal Regulations section 136.12.
(b) The traditional healing service is delivered by
or through the Indian health service
, an urban Indian
organization
or a tribal facility.
B. The limits and exclusions for health and medical
services provided under this section are as follows:
1. Circumcision of newborn males is not a covered
health and medical service.
2. For eligible persons who are at least twenty-one
years of age:
(a) Prosthetic devices do not include hearing aids,
dentures or bone-anchored hearing aids. Prosthetic devices,
except prosthetic implants, may be limited to $12,500 per contract year.
(b) Percussive vests are not covered health and
medical services.
(c) Durable medical equipment is limited to items
covered by medicare.
(d) Nonexperimental transplants do not include
pancreas-only transplants.
(e) Bariatric surgery procedures, including
laparoscopic and open gastric bypass and restrictive procedures, are not
covered health and medical services.
C. The system shall pay noncontracting providers
only for health and medical services as prescribed in subsection A of this
section and as prescribed by rule.
D. The director shall adopt rules necessary to
limit, to the extent possible, the scope, duration and amount of services,
including maximum limits for inpatient services that are consistent with
federal regulations under title XIX of the social security act (P.L. 89-97;
79 Stat. 344; 42 United States Code section 1396 (1980)). To
the extent possible and practicable, these rules shall provide for the prior
approval of medically necessary services provided pursuant to this chapter.
E. The director shall make available home health
services in lieu of hospitalization pursuant to contracts awarded under this
article.� For the purposes of this subsection, "home health services"
means the provision of nursing services, home health aide services or medical
supplies, equipment and appliances that are provided on a part-time or
intermittent basis by a licensed home health agency within a member's residence
based on the orders of a physician or a primary care practitioner.� Home health
agencies shall comply with the federal bonding requirements in a manner
prescribed by the administration.
F. The director shall adopt rules for the coverage
of behavioral health services for persons who are eligible under section 36-2901,
paragraph 6, subdivision (a). The administration acting through
the regional behavioral health authorities shall establish a diagnostic and
evaluation program to which other state agencies shall refer children who are
not already enrolled pursuant to this chapter and who may be in need of
behavioral health services. In addition to an evaluation, the
administration acting through regional behavioral health authorities shall also
identify children who may be eligible under section 36-2901,
paragraph 6, subdivision (a) or section 36-2931, paragraph 5 and
shall refer the children to the appropriate agency responsible for making the
final eligibility determination.
G. The director shall adopt rules providing for
transportation services and rules providing for copayment by members for
transportation for other than emergency purposes. Subject to
approval by the centers for medicare and medicaid services, nonemergency
medical transportation shall not be provided except for stretcher vans and
ambulance transportation. Prior authorization is required for transportation by
stretcher van and for medically necessary ambulance transportation initiated
pursuant to a physician's direction. Prior authorization is not
required for medically necessary ambulance transportation services rendered to
members or eligible persons initiated by dialing telephone number 911 or other
designated emergency response systems.
H. The director may adopt rules to allow the
administration, at the director's discretion, to use a second opinion procedure
under which surgery may not be eligible for coverage pursuant to this chapter
without documentation as to need by at least two physicians or primary care
practitioners.
I. If the director does not receive bids within the
amounts budgeted or if at any time the amount remaining in the Arizona health
care cost containment system fund is insufficient to pay for full contract
services for the remainder of the contract term, the administration, on
notification to system contractors at least thirty days in advance, may modify
the list of services required under subsection A of this section for persons
defined as eligible other than those persons defined pursuant to section 36-2901,
paragraph 6, subdivision (a).� The director may also suspend services or may
limit categories of expense for services defined as optional pursuant to title
XIX of the social security act (P.L. 89-97; 79 Stat. 344; 42 United
States Code section 1396 (1980)) for persons defined pursuant to section 36-2901,
paragraph 6, subdivision (a). Such reductions or suspensions do not
apply to the continuity of care for persons already receiving these services.
J. All health and medical services provided under
this article shall be provided in the geographic service area of the member,
except:
1. Emergency services and specialty services
provided pursuant to section 36-2908.
2. That the director may allow the delivery of
health and medical services in other than the geographic service area in this
state or in an adjoining state if the director determines that medical practice
patterns justify the delivery of services or a net reduction in transportation
costs can reasonably be expected. Notwithstanding the definition of
physician as prescribed in section 36-2901, if services are procured from
a physician or primary care practitioner in an adjoining state, the physician
or primary care practitioner shall be licensed to practice in that state
pursuant to licensing statutes in that state that are similar to title 32,
chapter 13, 15, 17 or 25 and shall complete a provider agreement for this
state.
K. Covered outpatient services shall be
subcontracted by a primary care physician or primary care practitioner to other
licensed health care providers to the extent practicable for purposes
including, but not limited to, making health care services available to
underserved areas, reducing costs of providing medical care and reducing
transportation costs.
L. The director shall adopt rules that prescribe the
coordination of medical care for persons who are eligible for system
services. The rules shall include provisions for transferring
patients and medical records and initiating medical care.
M. Pursuant to the terms and conditions that are
approved by the centers for medicare and medicaid services and subject to
available funding, the director shall implement limited benefit coverage
prerelease services to eligible incarcerated individuals and committed youth
for up to ninety days immediately before
the individuals'
each individual's
or committed youth's expected date of
release from a prison, jail, secure care facility or tribal correctional
facility.
N. Notwithstanding section 36-2901.08, monies
from the hospital assessment fund established by section 36-2901.09 may
not be used to provide any of the following:
1. Chiropractic services as prescribed in subsection
A, paragraph 15 of this section.
2. Diabetes
outpatient self-management training services as prescribed in subsection A,
paragraph 16 of this section.
3. Speech
therapy provided in an outpatient setting to eligible persons who are at least
twenty-one years of age.
4. Cochlear
implants to eligible persons who are at least twenty-one years of age.
O. For the purposes of this section:
1. "Ambulance" has the same meaning
prescribed in section 36-2201.
2. "Tribal facility" has the same meaning
prescribed in section 36-2981.
3. "Urban Indian
organization" means an urban Indian organization in this state that receives
Indian health services funding pursuant to 25 United States Code chapter 18.
END_STATUTE
Sec. 2. Section 36-2939, Arizona Revised
Statutes, is amended to read:
START_STATUTE
36-2939.
Long-term care system services; definitions
A. The following services shall be provided by the
program contractors to members who are determined to need institutional
services pursuant to this article:
1. Nursing facility services other than services in
an institution for tuberculosis or mental disease.
2. Notwithstanding any other law, behavioral health
services if these services are not duplicative of long-term care services
provided as of January 30, 1993 under this subsection and are authorized
by the program contractor through the long-term care case management
system. If the administration is the program contractor, the
administration may authorize these services.
3. Hospice services. For the purposes of
this paragraph, "hospice" means a program of palliative and
supportive care for terminally ill members and their families or caregivers.
4. Case management services as provided in section
36-2938.
5. Health and medical services as provided in
section 36-2907.
6. Dental services as follows:
(a) Except as provided in subdivision (b) of this
paragraph, in an annual amount of not more than $1,000 per member.
(b) Subject to approval by the centers for medicare
and medicaid services, for persons treated at an Indian health service or
tribal facility, adult dental services that are eligible for a federal medical
assistance percentage of one hundred percent and that are in excess of the
limit prescribed in subdivision (a) of this paragraph.
7. Pursuant to the terms and conditions that are
approved by the centers for medicare and medicaid services and subject to
available funding, traditional healing services if both of the following apply:
(a) The member qualifies for services through the
Indian health service or a tribal facility pursuant to the conditions of
participation outlined in 42 Code of Federal Regulations section 136.12.
(b) The traditional healing service is delivered by
or through the Indian health service
, an urban Indian
organization
or a tribal facility.
B. In addition to the services prescribed in
subsection A of this section, the department, as a program contractor, shall
provide the following services if appropriate to members who have a
developmental disability as defined in section 36-551 and who are
determined to need institutional services pursuant to this article:
1. Intermediate care facility services for a member
who has a developmental disability as defined in section 36-551. For
purposes of this article, a facility shall meet all federally approved
standards and may only include the Arizona training program facilities, a state
owned and operated service center, state owned or operated community
residential settings and private facilities that contract with the department.
2. Home and community based services that may be
provided in a member's home, at an alternative residential setting as
prescribed in section 36-591 or at other behavioral health alternative
residential facilities licensed by the department of health services and
approved by the director of the Arizona health care cost containment system
administration and that may include:
(a) Home health, which means the provision of
nursing services, licensed health aide services, home health aide services or
medical supplies, equipment and appliances, that are provided on a part-time
or intermittent basis by a licensed home health agency within a member's
residence based on a physician's or allowed practitioner's orders and in
accordance with federal law. Physical therapy, occupational therapy,
or speech and audiology services provided by a home health agency may be
provided in accordance with federal law.� Home health agencies shall comply
with federal bonding requirements in a manner prescribed by the administration.
(b) Licensed health aide services, which means a
home health agency service provided pursuant to subsection G of this section
that is ordered by a physician or an allowed practitioner on the member's plan
of care and provided by a licensed health aide who is licensed pursuant to
title 32, chapter 15.
(c) Home health aide, which means a service that
provides intermittent health maintenance, continued treatment or monitoring of
a health condition and supportive care for activities of daily living provided
within a member's residence.
(d) Homemaker, which means a service that provides
assistance in the performance of activities related to household maintenance
within a member's residence.
(e) Personal care, which means a service that
provides assistance to meet essential physical needs within a member's
residence.
(f) Day care for persons with developmental
disabilities, which means a service that provides planned care supervision and
activities, personal care, activities of daily living skills training and
habilitation services in a group setting during a portion of a continuous
twenty-four-hour period.
(g) Habilitation,
which means the provision of physical therapy, occupational therapy, speech or
audiology services or training in independent living, special developmental
skills, sensory-motor development, behavior intervention, and orientation
and mobility in accordance with federal law.
(h) Respite care, which means a service that
provides short-term care and supervision available on a twenty-four-hour
basis.
(i) Transportation, which means a service that
provides or assists in obtaining transportation for the member.
(j) Other services or licensed or certified settings
approved by the director.
C. In addition to services prescribed in subsection
A of this section, home and community based services may be provided in a
member's home, in an adult foster care home as prescribed in section 36-401,
in an assisted living home or assisted living center as defined in section 36-401
or in a level one or level two behavioral health alternative residential
facility approved by the director by program contractors to all members who do
not have a developmental disability as defined in section 36-551 and are
determined to need institutional services pursuant to this article. Members
residing in an assisted living center must be provided the choice of single
occupancy. The director may also approve other licensed residential
facilities as appropriate on a case-by-case basis for traumatic
brain injured members. Home and community based services may include
the following:
1. Home health, which means the provision of nursing
services, home health aide services or medical supplies, equipment and
appliances, that are provided on a part-time or intermittent basis by a
licensed home health agency within a member's residence based on a physician's
or allowed practitioner's orders and in accordance with federal
law. Physical therapy, occupational therapy, or speech and audiology
services provided by a home health agency may be provided in accordance with
federal law. Home health agencies shall comply with federal bonding
requirements in a manner prescribed by the administration.
2. Licensed health aide services, which means a home
health agency service provided pursuant to subsection G of this section that is
ordered by a physician or an allowed practitioner on the member's plan of care
and provided by a licensed health aide who is licensed pursuant to title 32,
chapter 15.
3. Home health aide, which means a service that
provides intermittent health maintenance, continued treatment or monitoring of
a health condition and supportive care for activities of daily living provided
within a member's residence.
4. Homemaker, which
means a service that provides assistance in the performance of activities
related to household maintenance within a member's residence.
5. Personal care,
which means a service that provides assistance to meet essential physical needs
within a member's residence.
6. Adult day health, which means a service that
provides planned care supervision and activities, personal care, personal
living skills training, meals and health monitoring in a group setting during a
portion of a continuous twenty-four-hour period. Adult
day health may also include preventive, therapeutic and restorative health
related services that do not include behavioral health services.
7. Habilitation, which means the provision of
physical therapy, occupational therapy, speech or audiology services or
training in independent living, special developmental skills, sensory-motor
development, behavior intervention, and orientation and mobility in accordance
with federal law.
8. Respite care, which means a service that provides
short-term care and supervision available on a twenty-four-hour
basis.
9. Transportation, which means a service that
provides or assists in obtaining transportation for the member.
10. Home delivered meals, which means a service that
provides for a nutritious meal that contains at least one-third of the
recommended dietary allowance for an individual and that is delivered to the
member's residence.
11. Other services or licensed or certified settings
approved by the director.
D. The amount of monies expended by program
contractors on home and community based services pursuant to subsection C of
this section shall be limited by the director in accordance with the federal
monies made available to this state for home and community based services
pursuant to subsection C of this section. The director shall
establish methods for allocating monies for home and community based services
to program contractors and shall monitor expenditures on home and community
based services by program contractors.
E. Notwithstanding subsections A, B, C, F and G of
this section, a service may not be provided that does not qualify for federal
monies available under title XIX of the social security act or the section 1115
waiver.
F. In addition to services provided pursuant to
subsections A, B and C of this section, the director may implement a
demonstration project to provide home and community based services to special
populations, including persons with disabilities who are eighteen years of age
or younger, are medically fragile, reside at home and would be eligible for
supplemental security income for the aged, blind or disabled or the state
supplemental payment program, except for the amount of their parent's income or
resources. In implementing this project, the director may provide
for parental contributions for the care of their child.
G. Consistent with the services provided pursuant to
subsections A, B, C and F of this section and subject to approval by the
centers for medicare and medicaid services, the director shall implement a
program under which licensed health aide services may be provided to members
who are under twenty-one years of age, who are eligible pursuant to
section 36-2934, including members with developmental disabilities as
defined in chapter 5.1, article 1 of this title, and who require continuous
skilled nursing or skilled nursing respite care services. The
licensed health aide services may be provided only by a parent, guardian or
family member who is a licensed health aide employed by a medicare-certified
home health agency service provider. Not later than sixty days after
the approval of the rules implementing section 32-1645, subsection C, the
director shall request any necessary approvals from the centers for medicare
and medicaid services to implement this subsection and to qualify for federal
monies available under title XIX of the social security act or the section 1115
waiver. The reimbursement rate for services provided under this
subsection shall reflect the special skills needed to meet the health care
needs of these members and shall exceed the reimbursement rate for home health
aide services.
H. Subject to section 36-562, the
administration by rule shall prescribe a deductible schedule for programs
provided to members who are eligible pursuant to subsection B of this section,
except that the administration shall implement a deductible based on family
income. In determining deductible amounts and whether a family is
required to have deductibles, the department shall use adjusted gross
income. Families whose adjusted gross income is at least four
hundred percent and less than or equal to five hundred percent of the federal
poverty guidelines shall have a deductible of two percent of adjusted gross
income.� Families whose adjusted gross income is more than five hundred percent
of adjusted gross income shall have a deductible of four percent of adjusted
gross income.� Only families whose children are under eighteen years of age and
who are members who are eligible pursuant to subsection B of this section may
be required to have a deductible for services. For the purposes of
this subsection, "deductible" means an amount a family, whose
children are under eighteen years of age and who are members who are eligible
pursuant to subsection B of this section, pays for services, other than
departmental case management and acute care services, before the department
will pay for services other than departmental case management and acute care
services.
I. For the purposes
of this section:
1. "Allowed
practitioner" means a nurse practitioner who is certified pursuant to
title 32, chapter 15, a clinical nurse specialist who is certified pursuant to
title 32, chapter 15 or a physician assistant who is certified pursuant to
title 32, chapter 25.
2. "Tribal facility" has the same meaning
prescribed in section 36-2981.
3. "Urban Indian
organization" means an urban Indian organization in this state that
receives Indian health services funding pursuant to 25 United States Code
chapter 18.
END_STATUTE