 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
claims denial; prior authorization; reporting
Purpose
Requires health care services plans, beginning July 1, 2027, to annually report specified claims denial and prior authorization data to the Department of Insurance and Financial Institutions (DIFI) and directs DIFI to aggregate and publish the data, as prescribed. Requires DIFI, by July 1, 2032, to evaluate the quality, relevance and usefulness of the data and submit recommendations regarding whether the reporting should be continued.
Background
When reviewing a requested service or a claim for service, a health care insurer may issue an adverse determination, determining that the service or claim is: 1) not medically necessary or appropriate; 2) experimental or investigational; or 3) not a covered service. A denied claim is issued when the member has already received care and the insurer has denied payment for the care. A denied service is issued when the plan does not authorize treatment or service and the treatment or service has not yet been received, but the member or doctor believes that the treatment or service is medically necessary and covered by the policy. When a health insurer denies a claim of service, it must advise the member of the right to appeal the denial (DIFI).
Health care insurers must establish internal processes for resolving payment disputes and contractual grievances with health care providers and maintain records of health care provider grievances. Semiannually, each health care insurer must provide the Director of DIFI with a summary of all health care provider grievances received in the prior six months. By August 1 of each year, the Director of DIFI must post a report on DIFI's public website that includes: 1) the prescribed grievance summaries submitted by insurers; 2) the total number of grievances received; 3) the average time to resolve a grievance; and 4) the percentage of grievances in which an insurer's decision was overturned (A.R.S. § 20-3102).
A health care services plan is a plan offered by a disability insurer, group disability insurer, blanket disability insurer, health care services organization, hospital service corporation or medical service corporation that contractually agrees to pay or make reimbursements for health care services expenses for one or more individuals residing in Arizona (A.R.S. § 20-3401).
A prior authorization requirement is a practice implemented by a health care services plan, or its utilization review agent, in which coverage of a health care service is dependent on an enrollee or a provider obtaining approval from the health care services plan before the service is performed, received or prescribed. A health care services plan must allow at least one modality of medication assisted treatment to be available without prior authorization (A.R.S. § 20-3401).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires a health care services plan, by July 1, 2027, and each July 1 thereafter, to report on a prescribed form to DIFI the following aggregated data related to the service plan's claims denial practices for the prior year:
a) the total number of claims requests, including the total number of claims requests that were not submitted electronically;
b) the total number of claims requests partially denied and completely denied;
c) the total number of appeals received for the following levels of review:
i. initial appeal;
ii. voluntary internal appeal
iii. external independent review;
iv. expedited medical review;
v. expedited appeal; and
vi. expedited external independent review;
d) the total number of adverse determinations that were partially reversed on appeal and the total number of adverse determinations that were completely reversed on appeal;
e) the total number of claims that were completely downcoded;
f) the top 10 inpatient and top 10 outpatient services claims that were denied in the categories of:
i. medical and surgical procedures;
ii. diagnostic tests and diagnostic images;
iii. behavioral health services;
iv. orthopedic services; and
g) the top five reasons why claims requests were denied.
2. Requires DIFI, by October 31, 2027, and each October 1 thereafter, to:
a) aggregate the data collected in the prescribed reports into a standard report that is written in easily understandable language and separates each health care services plan that submitted data by name;
b) post the standard report on DIFI's publicly accessible website;
c) maintain at least three years of standard reports on DIFI's publicly accessible website; and
d) send a copy of the standard report to the Speaker of the House of Representatives (House) and the President of the Senate.
3. Requires a health care services plan, by July 1, 2027, and each July 1 thereafter, to report on a prescribed form to DIFI the following aggregated data related to the services plan's prior authorization practices for the prior year:
a) the total number of prior authorization requests, including the total number of prior authorization requests that were not submitted electronically;
b) the total number of prior authorization requests that were partially denied and completely denied;
c) the total number of appeals that were received for the following levels of review:
i. initial appeal;
ii. voluntary internal appeal
iii. external independent review;
iv. expedited medical review;
v. expedited appeal; and
vi. expedited external independent review;
d) the total number of adverse determinations that were partially reversed on appeal and the total number of adverse determinations that were completely reversed on appeal;
e) the top 10 inpatient and top 10 outpatient services that were denied in each of the following categories:
i. medical and surgical procedures;
ii. diagnostic tests and diagnostic images;
iii. behavioral health services;
iv. orthopedic services; and
v. outpatient services;
f) the top five reasons why claims requests were denied;
g) the average and median time that elapsed between the submission of a request and a determination by the issuer for standard prior authorizations; and
h) the average and median time that elapsed between the submission of a request and a determination by the issuer for expedited prior authorizations.
4. Requires DIFI, by October 31, 2027, and each October 1 thereafter, to:
a) aggregate the data collected in the prescribed reports into a standard report that is written in easily understandable language and separates each health care services plan that submitted data by name;
b) post the report on DIFI's publicly accessible website;
c) maintain at least three years of standard reports on DIFI's publicly accessible website; and
d) send a copy of the standard report to the Speaker of the House and the President of the Senate.
5. Requires DIFI, by July 1, 2032, to convene a stakeholders meeting that includes health care insurers, health care services plans, health care institutions regulated by the Department of Health Services, health care providers, businesses and consumers to determine the quality, relevance and usefulness of the data that was reported by the prescribed reports.
6. Requires DIFI, by October 31, 2032, to submit a report to the Governor, the President of the Senate and the Speaker of the House with recommendations to amend, repeal or make no changes to statutes governing the prescribed reports.
8. Allows the Director of DIFI to adopt rules to implement the reporting requirements.
9. Defines downcode as the unilateral alteration by a health care insurer of the level of evaluation and management service code or other service code that was submitted on a claim and that resulted in a lower payment.
10. Defines health care services plan.
11. Makes technical and conforming changes.
12. Becomes effective on the general effective date, with a retroactive provision as noted.
Amendments Adopted by Committee of the Whole
1. Applies the reporting requirements relating to claims denial practices to health care services plans, rather than health care insurers.
2. Requires claims denial and prior authorization reports to specify the total number of adverse determinations that were partially reversed on appeal and the total number of adverse determinations that were completely reversed on appeal.
3. Requires the prescribed reports to include the number of appeals received for specified levels of review and the total number of claims that were completely downcoded.
4. Specifies that the reporting requirement for the top 10 denied services applies to both inpatient and outpatient services claims and authorization request that were denied.
5. Allows the Director of DIFI to adopt rules to implement the reporting requirements.
6. Defines downcode and health care services plan.
7. Makes technical and conforming changes.
Senate Action
FIN 2/12/26 W/D
HHS 2/18/26 DP 7-0-0
Prepared by Senate Research
February 26, 2026
MM/SDR/hk