HB2250 - Prior authorizations; habilitative services

REFERENCE TITLE: prior authorizations; habilitative services State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026 HB 2250 Introduced by Representative Bliss AN ACT amending section 20-2501, Arizona Revised Statutes; amending title 20, chapter 15, article 1, Arizona Revised Statutes, by adding sections 20-2512, 20-2513 and 20-2514; amending sections 20-2531, 20-3403, 20-3404 and 20-3405, Arizona Revised Statutes; relating to health insurance. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 20-2501, Arizona Revised Statutes, is amended to read: START_STATUTE 20-2501. Definitions; scope A. In this chapter, unless the context otherwise requires: 1. "Adverse determination": (a) Means a utilization review determination by the utilization review agent that a requested service or claim for service or a denial, reduction or termination of a service, in whole or in part, is not a covered service, or is not medically necessary or appropriate, including health care setting, level of care or effectiveness of a covered benefit, or is experimental or investigational under the plan if that determination results in a documented denial or nonpayment of the service or claim. (b) Includes a rescission. 2. "Benefits based on the health status of the insured" means a contract of insurance to pay a fixed benefit amount, without regard to the specific services received, to a policyholder who meets certain eligibility criteria based on health status including: (a) A disability income insurance policy that pays a fixed daily, weekly or monthly benefit amount to an insured who is deemed to have a disability as defined by the policy terms. (b) A hospital indemnity policy that pays a fixed daily benefit during hospital confinement. (c) A disability insurance policy that pays a fixed daily, weekly or monthly benefit amount to an insured who is certified by a licensed health care professional as chronically ill as defined by the policy terms. (d) A disability insurance policy that pays a fixed daily, weekly or monthly benefit amount to an insured who suffers from a prolonged physical illness, disability or cognitive disorder as defined by the policy terms. 3. "Claim": (a) Means a request for payment for a service already provided. (b) Does not include: (i) Claim adjustments for usual and customary charges for a service or coordination of benefits between health care insurers. (ii) A request for payment under a policy or contract that pays benefits based on the health status of the insured and that does not reimburse the cost of or provide covered services. 4. "Covered service" means a service that is included in a policy, evidence of coverage or similar document that specifies which services, insurance or other benefits are included or covered. 5. "Denial": (a) Means a direct or indirect determination regarding all or part of a request for any service. (b) Includes a denial, reduction or termination of a service or a rescission or a direct determination regarding a claim that may trigger a request for review. (c) Does not include: (i) Enforcement of a health care insurer's deductibles, copayments or coinsurance requirements or adjustments for usual and customary charges, deductibles, copayments or coinsurance requirements for a service or coordination of benefits between health care insurers. (ii) The rejection of a request for payment under a policy or contract that pays benefits based on the health status of the insured and that does not reimburse the cost of or provide covered services. 6. "Enrollee" has the same meaning prescribed in section 20-3401. 6. 7. "Final internal adverse determination" means an adverse determination that is upheld, in whole or in part, at the completion of the health care insurer's internal levels of review or an adverse determination with respect to which the internal levels of review have been waived or deemed exhausted. 7. 8. "Grandfathered individual plan" means coverage provided by an individual health care insurer which was purchased before March 23, 2010 and which has not lost such status due to changes in benefits. 8. 9. "Health care insurer" means a disability insurer, group disability insurer, blanket disability insurer, health care services organization, hospital service corporation, prepaid dental plan organization, medical service corporation, dental service corporation or optometric service corporation or a hospital, medical, dental and optometric service corporation. 9. 10. "Health care setting" : ( a ) Means an institution providing health care services . , including but not limited to, ( b ) includes: ( i ) Hospitals and other licensed inpatient centers . , ( ii ) Ambulatory surgical or treatment centers . , ( iii ) Skilled nursing centers . , ( iv ) Residential treatment centers . , ( v ) Diagnostic, laboratory and imaging centers . and ( vi ) Rehabilitation and other therapeutic health settings. 10. 11. "Indirect denial" means a failure to communicate authorization or nonauthorization to the member by the utilization review agent within the prescribed time frames pursuant to section 20-3404 after the utilization review agent receives the request for a covered service. 11. 12. "Internal levels of review" means any of the following : (a) An expedited medical review and expedited appeal pursuant to section 20-2534. (b) An initial internal appeal pursuant to section 20-2535. (c) A voluntary internal appeal pursuant to section 20-2536, if applicable. 12. 13. "Provider" means the physician or other licensed practitioner identified to the utilization review agent as having primary responsibility for providing care, treatment and services rendered to a patient. 13. 14. "Rescission" means a retroactive cancellation of coverage that is not related to a failure to timely pay required premiums. 14. 15. "Service" means a diagnostic or therapeutic medical or health care service, benefit or treatment. 15. 16. "Utilization review" means a system for reviewing the appropriate and efficient allocation of inpatient hospital resources, inpatient medical services and outpatient surgery services that are being given or are proposed to be given to a patient, and of any medical, surgical and health care services or claims for services that may be covered by a health care insurer depending on determinable contingencies, including without limitation outpatient services, in-office consultations with medical specialists, specialized diagnostic testing, mental health services, emergency care and inpatient and outpatient hospital services. Utilization review does not include elective requests for the clarification of coverage. 16. 17. "Utilization review agent" means a person or entity that performs utilization review. For purposes of article 2 of this chapter, utilization review agent has the same meaning prescribed in section 20-2530. For purposes of this chapter, utilization review agent does not include: (a) A governmental agency. (b) An agent that acts on behalf of the governmental agency. (c) An employee of a utilization review agent. 17. 18. "Utilization review plan" means a summary description of the utilization review guidelines, protocols, procedures and written standards and criteria of a utilization review agent. B. For the purposes of this chapter, utilization review by an optometric service corporation applies only to nonsurgical medical and health care services. END_STATUTE Sec. 2. Title 20, chapter 15, article 1, Arizona Revised Statutes, is amended by adding sections 20-2512, 20-2513 and 20-2514, to read: START_STATUTE 20-2512. Continuity of care for enrollees A. a health care insurer or utilization review agent shall honor a prior authorization that was granted to an enrollee by a previous health care insurer or utilization review agent for at least ninety days after the enrollee's coverage under a new health care plan commences if both of the following apply: 1. The health care service is a covered benefit under the new health care plan. 2. The enrollee, the enrollee's provider or the previous health care insurer provides documentation to the health care insurer or utilization review agent regarding the granted prior authorization. B. During the time period prescribed in subsection a of this section, a health care insurer or utilization review agent may perform its own review to grant a new authorization. C. If there is a change in coverage or approval criteria for a previously authorized health care service under an enrollee's current health care plan, the change in coverage or approval criteria may not affect the enrollee if the enrollee received a prior authorization within one year before the effective date of the change in coverage or approval criteria. A health care insurer or utilization review agent may require a new prior authorization request one year after the enrollee's previous prior authorization request. D. An enrollee may not be required to repeat a step therapy protocol if the enrollee, while under the enrollee's current or previous health care plan, Used a prescription drug that was required by the step therapy protocol or another prescription drug in the same pharmacological class with a similar efficacy or side effect profile or the same mechanism of action and the enrollee discontinued using the prescription drug due to lack of efficacy or effectiveness or an adverse event or because the prescription drug was contraindicated. The enrollee's prescribing provider shall submit any justification and clinical information, on request, that demonstrates a clinically valid reason for why the covered prescribed drug is needed and documentation of completion of any previous step therapy protocols for the prescribed drug. END_STATUTE START_STATUTE 20-2513. Prior authorization for rehabilitative or habilitative services A. A health care insurer or utilization review agent may not require a prior authorization for rehabilitative or habilitative services that include physical therapy services or occupational therapy services for the first twelve visits for each new episode of care. For the purposes of this subsection, "new episode of care" means either of the following: 1. Treatment for a new condition. 2. Treatment for a recurring condition that the enrollee has not been treated for within the previous ninety days. B. This section does not limit the right of a health care insurer or utilization review agent to deny a claim if an appropriate prospective or retrospective utilization review concludes that the health care service was not medically necessary. END_STATUTE START_STATUTE 20-2514. Provider exemptions from prior authorization requirements A. A provider is exempt from completing a prior authorization request for a health care service, excluding the practice of pharmacy and prescription drugs, for twelve months if: 1. In the most recent twelve-month period, the HEALTH care insurer or utilization review agent authorized at least ninety percent of prior authorization requests, rounded down to the nearest whole number, that the provider submitted for that health care service. 2. The provider has made a prior authorization request for that health care service at least five times in the most recent twelve-month period. B. A health care insurer or utilization review agent may evaluate whether a provider continues to qualify for an exemption prescribed in subsection A of this section. This subsection does not require a health care insurer or utilization review agent to evaluate an existing exemption or prevent a health care insurer or utilization review agent from establishing a longer exemption period. C. A provider is not required to request an exemption in order to be exempt under subsection A of this section. D. A provider who does not receive an exemption under subsection A of this section may request from the health care insurer or utilization review agent evidence as to why the health care insurer or utilization review agent denied the provider's request for the exemption. The provider may make this request one time per calendar year per health care service requested. A provider may appeal a health care insurer's or utilization review agent's decision to deny an exemption. E. A health care insurer or utilization review agent may revoke a provider's exemption only at the end of the twelve-month exemption period if the HEALTH care insurer or utilization review agent: 1. Makes a determination that the provider would not have met the ninety percent, rounded down to the nearest whole number, authorization based criteria on a retrospective review of the claims for a particular health care service for WHICH the exemption applied. 2. Provides the provider with information that the health care insurer or utilization review agent relied on in making a determination to revoke the exemption. 3. Provides the provider with a plain language explanation that includes instructions on how to appeal the determination to revoke the exemption. F. An exemption under subsection A of this section remains in effect until either: 1. the thirtieth calendar day after the date the health care insurer or utilization review agent notifies the provider of the health care insurer's or utilization review agent's determination to revoke the exemption. 2. the Fifth calendar day after the exemption revocation is upheld on appeal, If the provider appeals the determination. G. A determination to revoke or deny an exemption shall be made by a licensed health care provider who is of the same or similar specialty as the provider being considered for an exemption and who has experience in providing the health care service for which the potential exemption applies. H. A health care insurer or utilization review agent shall give notice to a provider who receives an exemption that includes all of the following: 1. A statement that the provider qualifies for an exemption for prior authorization requirements. 2. A list of health care services for which the exemption applies. 3. A statement that the duration of the exemption is twelve months. I. A health care insurer or utilization review agent may not deny or reduce payment for a health care service that is exempted from a prior authorization requirement under this section and that includes a health care service that is performed or supervised by another provider if the provider who ordered the health care service received a prior authorization exemption, unless the rendering provider: 1. Knowingly and materially misrepresents the health care service in a request for payment that is submitted to the health care insurer or UTILIZATION review agent with the specific intent to deceive and obtain an u [Text truncated for display. Full text available on LegiScan.]