Arizona

SUMMARY

In the 2018 legislative term, Arizona introduced legislation relating to health care price transparency. The state legislature unanimously passed the Prescription Drug Pricing Patient Protection Act (HB 2107), which prohibits mandatory “clawbacks,” where insured patients pay more in copays than pharmacies receive in reimbursements. It also prevents “gag clauses” that forbid pharmacists from telling consumers about cheaper options.

In the 2017 legislative term, the state passed SB1441, which creates a process to help consumers who receive large, unexpected medical bills from providers.

 

LEGISLATION/REGULATION

Legislative Calendar

Arizona’s most recent legislative session ran from 1/8/2018 – 4/21/2018.

 

Legislative Updates 

Healthcare Transparency

2018 SB1471 AN ACT RELATING TO HEALTH CARE SERVICES: Health care systems offering a health care plan in the state must establish an interactive mechanism on its publicly accessible website that enables an enrollee to request and obtain information on the payments made by the health care system to network health care facilities or health care providers for comparable health care services as well as quality data for those health care facilities or health care providers to the extent available.

The interactive mechanism shall allow an enrollee seeking information about the cost of a particular health care service to compare allowed amounts among network health care facilities or health care providers, estimate out‑of‑pocket costs applicable to the enrollee’s health care plan and learn the average payment made to a network health care facility or health care provider for the procedure or health care facilities or health care service under the enrollee’s health care plan within a reasonable time frame not to exceed one year.

Inactive/Dead – Failed to pass on 3/19/18.
HB2083 RELATING TO INSURANCE CONTRACTS: Amends Rev. Stat. Ann. § 20-1119, which requires every insurance contract to be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended or modified by any rider, endorsement or application attached to and made a part of the policy. The amendment explains that translations of the policy are not to be construed as modifications. Every translation of the policy must have a disclaimer to that effect. Passed – Signed by the Governor on 4/12/18 and codified at § 20-1119.
HB2107 AN ACT RELATING TO PHARMACY BENEFITS MANAGERS: Pharmacy benefits manager may not do any of the following: 1) Prohibit a pharmacist or pharmacy from providing an insured individual information on the amount of the insured’s cost share for the insured’s prescription drug and the clinical efficacy of a more affordable alternative drug if one is available. A pharmacy benefits manager may not penalize a pharmacy or pharmacist for disclosing such information to an insured or for selling to an insured a more affordable alternative if one is available.2) Require a pharmacist or pharmacy to charge or collect from an insured a copayment that exceeds the total submitted charges by the network pharmacy.

This section applies to all contracts between a pharmacy benefits manager and a pharmacy or a pharmacy’s contracting representative or agent that are entered into or renewed on or after the effective date of this section.

Passed – Signed by Governor on 4/5/18 and codified at Rev. Stat. Ann. §§ 44-1751 & 44-1752.
2015 HB2332 ACCOUNTABLE HEALTH PLANS: requires health care services organization with a prescription drug benefit that uses a drug formulary as a component of the evidence of coverage shall provide to its enrollees notice in the evidence of coverage regarding the applicable drug formulary treatment. Passed—Signed by the Governor on 3/30/15. Chapter 116.
HB2417)

 

HEALTH SERVICE PRICE TRANSPARENCY: requires healthcare providers to make available, on request or online, the direct pay price for at least the twenty-five most commonly provided services, if applicable, for the health care provider. The direct pay price must be for the standard treatment provided for the service and may include the cost of treatment for complications or exceptional treatment.  Health care providers who are owners or employees of a legal entity with fewer than three licensed health care providers are exempt from the requirements of this subsection. A health care provider is not required to report the direct pay prices to a government agency or department or to a government-authorized or government‑created entity for review or filing.

A healthcare facility with more than fifty inpatient beds must make available, on request or online, the direct pay price for at least the fifty most used diagnosis-related group codes, if applicable, for the facility and at least the fifty most used outpatient service codes, if applicable, for the facility. A healthcare facility with fifty or fewer inpatient beds must make available, on request or online, the direct pay price for at least the thirty‑five most used diagnosis-related group codes, if applicable, for the facility and at least the thirty‑five most used outpatient service codes if applicable, for the facility. The direct pay price is for the standard treatment provided for the service and may include the cost of treatment for complications or exceptional treatment.

Passed—Signed by the Governor on 4/10/15. Chapter 266.

 

 

Healthcare Cost

2018 HB 2202 PHARMACY PATIENT FAIR PRACTICE ACT: A pharmacy benefits manager may not do any of the following: 1) Charge or collect from an enrollee a cost sharing requirement for a prescription or pharmacy service that exceeds the amount retained by the pharmacist or pharmacy from all payment sources for filling the prescription or providing the service. 2) Prohibit a pharmacist or pharmacy from doing either of the following: (a) informing an enrollee of the difference between the enrollee’s cost sharing requirement for a prescription drug and the amount the enrollee would pay if the enrollee did not use prescription drug coverage to cover the cost. (b) selling a prescription drug to an enrollee who chooses not to use prescription drug coverage to cover the cost. 3) Prohibit or otherwise restrict a pharmacist or pharmacy from offering prescription delivery services to an enrollee. 4) Restrict a pharmacy from dispensing a ninety‑day fill of a prescription medication pursuant to Arizona state board of pharmacy rules. Efforts to restrict, prohibit or refer an enrollee to another pharmacy for this benefit is prohibited. Inactive – Second House Reading on 1/25/18, no action since then.
2017 SB 1441 HEALTHCARE INSURER ARBITRATION: Limits the financial exposure of consumers who get care from a hospital or doctor that are part of their insurance provider’s network and are surprisingly billed by an out of network anesthesiologist, emergency-medicine doctor, surgical assistant or others who were part of the chain of care. Legislation takes effect in 2019 and will allow a consumer with and out of network bill exceeding $1,000 to contact the AZ Department of Insurance to request the appointment of an arbitrator. The insurer and healthcare provider must try to settle the dispute though and informed telephone conference within 30 days of the consumer’s arbitration request. The case advances to arbitration if the two sides cannot agree to an amount, with the insurer and healthcare provider splitting the cost. Passed—Signed by the Governor on 4/24/17.

 

Healthcare Markets

2018 SB 1064 AN ACT RELATING TO TIMELY PAYMENT OF CLAIMS: Outlines rules governing arbitration proceedings as they related to surprised out-of-network health care bills. Passed – signed by Governor and codified at Rev. Stat. Ann. §§ 20-3111, 20-3112, 20-3113, 20-3114 & 20-3115.
2017 HB 2189 DISABILITY INSURANCE AND SERVICE COVERAGE: All policies issued, delivered or renewed on or after July 1, 2017 by a disability insurer in this state must provide coverage for lawful health care services that are provided by a health care provider to an insured regardless of the familial relationship of the health care provider to the insured if the health care service would be covered were it provided to an insured who was not related to the health care provider. Passed—Signed by the Governor on 3/21/17.

 

Key Statutes

We compile state statutes that relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.

Transparency in Healthcare

  • Stat. Ann. § 20-1057.02 requires health care services organization with a prescription drug benefit that uses a drug formulary as a component of the evidence of coverage shall provide to its enrollees notice in the evidence of coverage regarding the applicable drug formulary treatment.

 

  • Stat. Ann. §§ 20-3401 through 20-3405 defines the timeline, disclosure, and other miscellaneous requirements for prior authorization in insurance policies.

 

  • Stat. Ann.§ 32-3216 requires healthcare providers to make available, on request or online, the direct pay price for at least the twenty-five most commonly provided services, if applicable, for the health care provider. The direct pay price must be for the standard treatment provided for the service and may include the cost of treatment for complications or exceptional treatment.  Health care providers who are owners or employees of a legal entity with fewer than three licensed health care providers are exempt from the requirements of this subsection. A health care provider is not required to report the direct pay prices to a government agency or department or to a government-authorized or government‑created entity for review or filing. A healthcare facility with more than fifty inpatient beds must make available, on request or online, the direct pay price for at least the fifty most used diagnosis-related group codes, if applicable, for the facility and at least the fifty most used outpatient service codes, if applicable, for the facility. A healthcare facility with fifty or fewer inpatient beds must make available, on request or online, the direct pay price for at least the thirty‑five most used diagnosis-related group codes, if applicable, for the facility and at least the thirty‑five most used outpatient service codes if applicable, for the facility. The direct pay price is for the standard treatment provided for the service and may include the cost of treatment for complications or exceptional treatment.

 

  • Rev. Stat. Ann. § 36-436 requires that prior to conducting business, a new hospital must submit a schedule of rates and charges to the director of health for review.

 

  • Rev. Stat. Ann. § 36-436.02 prohibits a hospital from increases any rate or charge until the proposed increase has been filed with and approved by the director of health.

 

  • Rev. Stat. Ann. § 36-437 directs healthcare facilities to make the direct pay price (the entire price for healthcare services if paid in full directly to the healthcare facility by the person receiving the service) for the specified number of diagnosis-related group codes (DRGs) available on request or online. The service prices must be updated at least annually. The direct pay price may include the cost of treatment for complications or exceptional treatment. A facility must give the required notice and disclaimer to an insured in-network patient attempting to pay directly that, among other things, the patient may not be required to pay the facility directly for the services covered by their plan over and above the cost-sharing amount. See, for example, Mayo Clinic’s pricing information.

 

  • Rev. Stat. Ann. §36-125.05, in order to promote cost containment, the department of health shall has implemented a uniform patient reporting system for hospital inpatient and emergency department services to include, without limitation, the following data: the average length of stay, the average charge per day, the average charge per confinement, and the average charge per confinement for each attending physician. Emergency departments must report outpatient data, including the date of service, surgical procedures performed, related diagnosis, and the charge for services. All reports pursuant to this section are to be made public and are available on the department of health services website.

 

  • Rev. Stat. Ann. §36-125.06 requires that the director of health services publish a semiannual comparative report of patient charges utilizing the statistical data collected under § 36-125.05 (see above), including a brochure with simple and concise comparisons among hospitals and emergency departments by region and cost.

 

  • Rev. Stat. Ann. §§ 44-1751 & 44-1752 prohibits a pharmacy benefits manager (PBM) from stopping a pharmacist or pharmacy from providing an insured individual information on the amount of the insured’s cost share for the insured’s prescription drug and the clinical efficacy of a more affordable alternative drug if one is available. PBMs also may not penalize a pharmacy or pharmacist for disclosing such information to an insured or for selling to an insured a more affordable alternative if one is available. They may also not require a pharmacist or pharmacy to charge or collect from an insured a copayment that exceeds the total submitted charges by the network pharmacy (i.e., mandatory clawbacks).

 

Healthcare Cost

  • Stat. Ann. §§ 20-3101, through 20-3115 limit the financial exposure of consumers who get care from a hospital or doctor that are part of their insurance provider’s network and are surprisingly billed by an out of network anesthesiologist, emergency-medicine doctor, surgical assistant or others who were part of the chain of care. Legislation takes effect in 2019 and will allow a consumer with and out of network bill exceeding $1,000 to contact the AZ Department of Insurance to request the appointment of an arbitrator. The insurer and healthcare provider must try to settle the dispute though and informed telephone conference within 30 days of the consumer’s arbitration request. The case advances to arbitration if the two sides cannot agree to an amount, with the insurer and healthcare provider splitting the cost.

 

Healthcare Markets

  • Const. art. 27, § 2 permits a person to pay directly for healthcare services and prohibits providers from penalizing or fining a person for direct payment.

 

  • Stat. Ann. § 20-1119 requires every insurance contract to be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended or modified by any rider, endorsement or application attached to and made a part of the policy. The amendment explains that translations of the policy are not to be construed as modifications. Every translation of the policy must have a disclaimer to that effect.

 

  • Stat. Ann. §§ 20-1376.09 and 20-1406.09 requires that all policies issued, delivered or renewed on or after July 1, 2017 by a disability insurer in this state provide coverage for lawful health care services that are provided by a health care provider to an insured regardless of the familial relationship of the health care provider to the insured if the health care service would be covered were it provided to an insured who was not related to the health care provider. 

 

FY 2018 BUDGET

Budgets are set for a fiscal year.  The fiscal year is the 12‐month period beginning on July 1 and ending June 30 of the following year. Arizona passed its FY 2018 Budget on May 5, 2017. To view Arizona’s Department of Health and Welfare FY 2018 spending plan, go to pages 15-19.

 

LITIGATION/ENFORCEMENT  

 

 

KEY RESOURCES

Arizona State Legislature

Arizona Office of the Attorney General