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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 a tribal health program.
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. Requires AHCCCS, as part of any request for proposals for an administrative services organization, to require each offeror to demonstrate a proven history of competency and experience in providing robust case management and complaint services to AI/AN populations in coordination with tribal health programs.
5. Prohibits AHCCCS from eliminating the AIHP as a fee-for-service option for eligible AI/AN members.
6. Requires AHCCCS, before issuing any request for proposals for an administrative services organization, to complete meaningful and timely tribal consultation and urban confer regarding implementation of the administrative services organization requirements and subsequently, within 30 days, submit any necessary state plan amendment or waiver to the U.S. Centers for Medicare and Medicaid Services.
7. Requires AHCCCS, before issuing any request for proposals for an administrative services organization, to:
a) transmit 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, thoughtfully consider and meaningfully and timely respond to written and oral comments from committee members and the public, including tribal governments, Indian health care providers and urban Indian organizations.
8. Authorizes each federally recognized Indian tribe in Arizona to appoint one nonvoting observer to the AHCCCS source-selection evaluation committee and requires that each observer be a member of a different tribe.
9. Specifies that the designated nonvoting observers may attend evaluation meetings, review materials submitted by offerors, ask questions and make statements, 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 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. Requires the administrative services organization and AHCCCS to establish a streamlined provider screening and registration process to ensure only qualified providers are issued a valid AHCCCS provider identification number and prohibits the administrative services organization from requiring any additional registration.
17. Specifies that AHCCCS and the administrative services organization are not prohibited from monitoring providers to ensure compliance with applicable laws, rules and policies.
18. Prohibits the administrative services organization from requiring prior authorization for services provided to an AIHP member when the member is referred from a tribal health program to a nontribal provider or facility.
19. Prohibits AHCCCS and the administrative services organization from requiring prior authorization for services provided to an AIHP member by a nontribal provider or facility in a manner that is different from the AHCCCS policy in effect on January 1, 2026.
20. Prohibits any changes to prior authorization requirements or policy affecting the AIHP from being implemented until after the quarterly tribal consultation.
21. Requires the administrative services organization to conduct its duties in a corrective, efficient, competent, state-of-the-art and culturally informed manner.
22. Requires the administrative services organization, if an AIHP member receives services from a nontribal health program due to a referral, to:
a) coordinate care management and utilization management activities with the tribal health programs, when appropriate; and
b) facilitate communication regarding referrals, authorizations and claims processing and payment issues.
23. Prohibits the administrative services organization from interfering with or overriding the clinical determinations or care management decisions of a referring tribal health program.
24. Requires the administrative services organization to establish an office of tribal relations and requires the office to:
a) coordinate and communicate with the federally recognized Indian tribes in Arizona, tribal members and tribal health programs;
b) serve as the primary point of contact between the administrative services organization and tribal governments and tribal health programs; and
c) participate in tribal consultation and stakeholder meetings as requested by tribal governments or AHCCCS.
25. Requires AHCCCS and the administrative services organization to consult quarterly with the Governor or the Governor's designee, tribal health programs, representatives of Arizona's federally recognized Indian tribes, AHCCCS providers and AIHP members to evaluate the administrative services organization's performance and data analytics gathered during the previous quarter to ensure tribal members are receiving quality, safe and appropriate care.
26. 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.
27. 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 a tribal health program.
28. Defines tribal health program as any of the following:
a) a tribal facility that is operated by an Indian tribe or tribal organization and that is authorized to provide services pursuant to P.L. 93-638, as amended;
b) any health care provider or facility that is operated by the Indian Health Service;
c) a tribal health program or facility that is operated by a federally recognized Indian tribe in Arizona;
d) any health care provider or facility that is owned, operated or governed by a federally recognized Indian tribe in Arizona;
e) a tribal regional behavioral health authority;
f) an urban Indian organization that is contracted or receives grants to provide services pursuant to 25 U.S.C. ch. 18; or
g) a tribal health facility that is operated under an intergovernmental agreement between two or more Indian tribes in Arizona.
29. Defines terms.
30. Contains a statement of legislative finding.
31. 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.
Amendments Adopted by Committee of the Whole
1. Excludes services provided to AI/AN members through a tribal health program from the oversight of the administrative services organization.
2. Requires AHCCCS, as part of any request for proposals for an AIHP administrative services organization, to require each offeror to demonstrate a proven history of competency and experience in providing robust case management and complaint services to AI/AN populations in coordination with tribal health programs.
3. Requires AHCCCS, before issuing any request for proposals for an administrative services organization, to complete meaningful and timely tribal consultation and urban confer regarding implementation and subsequently, within 30 days, submit any necessary state plan amendment or waiver to the U.S. Centers for Medicare and Medicaid Services.
4. Replaces legislative appointments of observers to the AHCCCS source-selection committee with appointments by each federally recognized Indian tribe in Arizona and requires each observer to be a member of a different tribe.
5. Requires, rather than allows, AHCCCS to respond to written and oral comments received from committee members and the public.
6. Requires the administrative services organization and AHCCCS to establish a streamlined provider screening and registration process to ensure only qualified providers are enrolled and prohibits the administrative services organization from requiring any additional registration.
7. Prohibits the administrative services organization from requiring prior authorization for services provided to an AIHP member when the member is referred from a tribal health program to a nontribal provider or facility.
8. Prohibits AHCCCS and the administrative services organization from requiring prior authorization for services provided to an AIHP member by a nontribal provider or facility in a manner that is different from the AHCCCS policy in effect on January 1, 2026.
9. Prohibits any changes to prior authorization requirements or policy affecting the AIHP from being implemented until after the quarterly tribal consultation.
10. Requires the administrative services organization, if an AIHP member receives services from a nontribal health program due to a referral, to:
a) coordinate care management and utilization management activities with the tribal health programs, when appropriate; and
b) facilitate communication regarding referrals, authorizations and claims processing and payment issues.
11. Requires the administrative services organization to establish an office of tribal relations and outlines duties of the office.
11. Requires AHCCCS and the administrative services organization to consult quarterly with the Governor or the Governor's designee, tribal health programs, representatives of Arizona's federally recognized Indian tribes, AHCCCS providers and AIHP members to evaluate the administrative services organization's performance and data analytics gathered during the previous quarter to ensure tribal members are receiving quality, safe and appropriate care.
13. Modifies defined terms.
14. Makes technical and conforming changes.
Senate Action
HHS 2/3/26 DPA 5-2-0
Prepared by Senate Research
March 10, 2026
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