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Arizona—Summary of Recent Healthcare Reform Developments


Email Alert

By Shari L. Miller*

December 2, 2008

Two key healthcare reform issues have been debated in Arizona's legislative session that ended in April 2008. The first involves the HealthCare Group (HCG), which is a high-risk pool plan implemented over twenty years ago for members that are uninsurable in the private insurance market. The plan is administered by the State's medical assistance agency—the Arizona Health Care Cost Containment System (AHCCCS). It is anticipated that this plan will continue to receive much attention because of the expanding need and cost balanced against attempts to limit the growing fiscal impact while providing the benefits of the plan as it was originally intended.1

In addition, politics may come into play. Since Governor Janet Napolitano accepted the Homeland Security cabinet post, she will be replaced by a Republican governor. This recent development, coupled with a Republican majority in the legislature and a new Speaker of the House keenly interested in the HCG, will likely affect the dynamics of any such programs with fiscal impact.

The second issue covered in the last legislative session resulted in a piece of legislation—Steven's Law—designed to address the coverage gap for Autism Spectrum Disorder (ASD). Beginning on July 1, 2009, this law requires certain health insurers to provide coverage for the diagnosis and treatment of ASD, with some limitations.2

In addition to state legislative activity, on November 4, 2008, Proposition 101 was narrowly defeated with 50.3% against the measure designed to prevent a government-run, universal health plan in Arizona. Supporters of universal health coverage in Arizona recognize that even though the defeat of this proposition removes one potential hurdle, it will be an uphill climb to get such a concept passed in the legislature.


Additional changes to AHCCCS and HCG for the 2008-2009 fiscal year, detailed in the appropriations bill, include:

  • Enhances eligibility verification for childless recipients over age twenty-one;
  • Makes permanent the KidsCare Parents Program (an affordable health plan for children) as long as certain federal matching funds exist;
  • HCG was designed to be self funded, but is now running at a deficit; thus the following plan design changes were implemented:
    • Requirement to set premiums that cover projected medical and administrative costs in the aggregate for the contract period, based upon generally accepted actuarial principals and practices by an independent actuary;
    • Requirement to consider age, sex, health status-related factors, group size, geographic area, and community rating when establishing premiums;
    • Eligibility is limited to groups of two or more, changed from individual eligibility;
    • The waiting period of being without any coverage is reduced from 180 to 90 days;
    • A growth control mechanism that replaced a cap;
    • Priority given to uninsured groups for new enrollment;
    • Except in emergency situations, a noncontracted hospital will not be reimbursed for treating an HCG member;
    • Allows direct contracting of AHCCCS with rural providers to provide HCG benefits;
    • Requires establishing utilization management control standards for participating contractors that meet nationally recognized standards for managed care utilization, or risk the loss of stop-loss coverage for medical expenses in excess of these standards; and
    • Requires submission to the Joint Legislative Budget Committee of quarterly financial reports, an annual fiscal audit and the actuarial analysis used to establish premiums.

Steven's Law

  • Types of insurers that must provide Autism Spectrum Disorder (ASD) coverage under the law:
    • Hospital service corporations or medical service corporations;
    • Healthcare service organizations;
    • Group disability insurers; and
    • Blanket disability insurers.
  • Coverage limits for behavioral therapy:
    • $50,000 maximum benefit per year for an eligible person up to age nine; and
    • $25,000 maximum benefit per year for an eligible person who is between the ages of nine and sixteen;
  • Prohibits:
    • Excluding or denying coverage for a treatment, including diagnosis, assessment, and services based solely on the diagnosis of ASD;
    • Imposing dollar limits, deductibles, or co-insurance provisions based solely on the diagnosis of ASD;
    • Excluding or denying coverage for medically necessary therapy services.
  • Coverage is subject to all the terms and conditions of the contract, policy, or evidence of coverage.
  • Allows the insurer to impose deductible, coinsurance, or other cost sharing on the coverage.
  • Exempts the following from the following requirements:
    • Individual or small employer contract, policies, or evidences of coverage;
    • Limited benefit coverage;
    • Long term care insurance, life insurance, and annuities offered by a group disability insurer; and
    • Services provided outside of Arizona.

*We would like to thank Shari L. Miller, Esquire (The Phoenix Law Group of Feldman Brown Wala Hall & Agena PLC, Scottsdale, AR) for providing this summary.

1 Appropriations Committee, Legislation Enacted, 2008 legislative session committee summary, compiled by K. Yanez and J. Agron.
2 Steven’s Law, from Fact Sheet for H.B. 2847/S.B. 1263, prepared by Arizona Senate Research, March 25, 2008.
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