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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
American Indian health program; administration
Purpose
An emergency measure that, beginning October 1, 2027, requires the Arizona Health Care Cost Containment System (AHCCCS) to contract with an administrative services organization to perform specified administrative functions for members enrolled in the American Indian Health Program (AIHP).
Background
American Indians
and Alaska Natives (AI/AN) enrolled in AHCCCS or the Children's Health
Insurance Program may choose to receive coverage through the AIHP or an
AHCCCS-contracted managed care organization. Members who choose coverage under
the AIHP receive services under a fee-for-service model, with AHCCCS directly
administering coverage and paying registered providers for covered services. AHCCCS
covers behavioral health services, including mental health, substance use
treatment and crisis services, provided at Indian Health Service-covered Tribal
facilities or at an AHCCCS registered provider. Recipients do not need a
referral to receive behavioral health services. Under the AIHP, covered
services include:
1) inpatient services in a hospital or other facilities; 2) partial care; 3)
individual, group and family counseling and therapy; 4) emergency and crisis
services; 5) behavior management; 6) evaluation and diagnosis; 7) medicine and
monitoring of medicine; 8) psychosocial rehabilitation;
9) laboratory and radiology services; 10) screening; 11) emergency and
non-emergency transportation; and 12) limited respite care (AHCCCS
AIHP Guide).
The Joint Legislative Budget Committee estimates that S.B. 1611 would generate state costs for AHCCCS to contract out specified functions to an administrative services organization, potentially in the tens of millions of dollars. JLBC notes that costs may be partially offset if AHCCCS reduces staffing in affected areas or if the contractor implements cost-containment or fraud-detection measures (JLBC fiscal note).
Provisions
1. Requires AHCCCS, beginning October 1, 2027, to contract with a qualified contractor or other entity to serve as the administrative services organization for purposes of performing specified functions for members enrolled in the AIHP, excluding services provided to AI/AN members through the Indian Health Service (IHS) or a tribal facility.
2. Specifies that the contract must comply with all federal and state requirements, including the protections for Indians, Indian health care providers and Indian managed care entities.
3. Requires AHCCCS to retain ultimate responsibility for administering the AIHP, including fee-for-service rate setting and oversight of any administrative services organization contractor.
4. Prohibits AHCCCS from eliminating the AIHP as a fee-for-service option for eligible AI/AN members.
5. Requires the Director of AHCCCS, within 30 days after the effective date of this legislation and before issuing any request for proposals for an administrative services organization, to request any necessary approvals from the U.S. Centers for Medicare and Medicaid Services to implement the administrative services organization requirements for the AIHP and qualify for available federal monies.
6. Requires AHCCCS, before issuing any request for proposals for an administrative services organization, to:
a) present the proposed procurement strategy, minimum qualifications and evaluation factors to the Senate and House of Representatives Health and Human Services Committees, or their successor committees (HHS Committees); and
b) receive and thoughtfully consider written and oral comments from committee members and the public, including tribal governments, Indian health care providers and urban Indian organizations.
7. Allows AHCCCS to respond to written and oral comments received from committee members and the public.
8. Authorizes the President of the Senate and the Speaker of the House of Representatives to each appoint 11 nonvoting observers to the AHCCCS source-selection evaluation committee.
9. Specifies that the designated nonvoting observers may attend evaluation meetings and review materials submitted by offers but may not score proposals, participate in final ranking or make or direct an award decision.
10. Requires AHCCCS, after completing proposal evaluations and before executing a contract, to transmit and present a summary of evaluation results and the proposed award recommendation to the Senate and House of Representatives HHS Committees.
11. Declares that the administrative services organization requirements for the AIHP do not:
a) transfer source-selection or contract-award authority from AHCCCS to the Legislature, any legislative committee or any tribal government; or
b) conflict with the Arizona procurement code or any applicable federal procurement requirement.
12. Affirms that AHCCCS remains responsible for awarding the contract and must comply with all applicable state and federal procurement laws and regulations.
13. Requires any AIHP administrative arrangement to preserve:
a) the rights of eligible AI/AN members to elect the AIHP fee-for-service coverage;
b) the rights of AI/AN members to voluntarily enroll in and disenroll from a managed care organization consistent with federal law; and
c) the protections afforded to Indians and Indian health care providers under federal law, including out-of-network access and appropriate payment requirements for Indian health care providers.
14. Requires any entity procured to perform administrative functions for the AIHP to be organized and operated as a qualified contractor.
15. Specifies that the administrative services organization's performance of program integrity functions does not supersede the AHCCCS Office of Inspector General's authority to investigate fraud.
16. Defines administrative services organization as a Medicaid managed care organization that is a qualified contractor or other qualified entity that contracts with AHCCCS to perform administrative functions, including program integrity, care management, provider support, quality improvement, data analytics and claims payment.
17. Defines American Indian health program as the fee-for-service program operated by AHCCCS for eligible AI/AN members as required under federal law to preserve a fee-for-service option for AI/AN beneficiaries, excluding services provided to AI/AN members through the IHS or a tribal facility.
18. Defines terms.
19. Contains a statement of legislative finding.
20. Becomes effective on the signature of the Governor, if the emergency clause is enacted.
Amendments Adopted by Committee
1. Excludes from the oversight of the administrative services organization any services provided through the IHS or a tribal facility.
2. Requires the Senate President and the Speaker of the House of Representatives to designate eleven nonvoting observers to the AHCCCS source-selection evaluation committee, as specified, rather than individual legislators designated by the chairs of the HHS Committees.
3. Specifies that the administrative services organization's performance of program integrity functions does not supersede the AHCCCS Office of Inspector General's authority to investigate fraud.
4. Allows AHCCCS to respond to written and oral comments received from committee members and the public.
5. Specifies that source-selection and contract-award authority for the AIHP administrative services organization are not transferred from AHCCCS to any tribal government.
6. Defines terms.
Senate Action
HHS 2/3/2026 DPA 5-2-0
Prepared by Senate Research
February 12, 2026
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