EX-10.1 2 exhibit10_1.htm VANGUARD HEALTH SYSTEMS, INC.

SECTION B: CAPITATION RATES

The Contractor shall provide services as described in this contract. In consideration for these services, the Contractor
will be paid Contractor-specific rates per member per month for the term October 1, 2008 through September 30,
2009. See attached rates.

SECTION C:        DEFINITIONS

638 TRIBAL FACILITY
A facility that is operated by an Indian tribe and that is authorized to provide
services pursuant to Public Law (P.L.) 93-638, as amended.

1931 (also referred to as TANF related)
Eligible individuals and families under Section 1931 of the Social Security Act,
with household income levels at or below 100% of the federal poverty level
(FPL).

ACOM
AHCCCS Contractor Operations Manual, available on the AHCCCS website at
www.azahcccs.gov.

ADHS
Arizona Department of Health Services, the state agency mandated to serve the
public health needs of all Arizona citizens.

ADHS BEHAVIORAL HEALTH RECIPIENT
A Title XIX or Title XXI acute care member who is eligible for and is receiving
behavioral health services through ADHS and its subcontractors.

ADJUDICATED CLAIMS
Claims that have been received and processed by the Contractor, and which
resulted in a payment or denial of payment

AGENT
Any person who has been delegated the authority to obligate or act on behalf of
another person or entity on who has been delegated the authority to obligate or
act on behalf of another person or entity.

AHCCCS
Arizona Health Care Cost Containment System, which is composed of the
Administration, Contractors, and other arrangements through which health care
services are provided to an eligible person, as defined by A.R.S. § 36-2902, et
seq.

AHCCCS BENEFITS
See “COVERED SERVICES”.

AHCCCS CARE
Eligible individuals and childless adults whose income is less than 100% of the
FPL, and who are not categorically linked to another Title XIX program. Also
known as “NON MEDICAL EXPENSE DEDUCTION MEMBER (NONMED)”

AHCCCS MEMBER
See “MEMBER”.

ALTCS
The Arizona Long Term Care System, a program under AHCCCS that delivers
long-term, acute, behavioral health and case management services to members, as
authorized by A.R.S. § 36-2932.

AMBULATORY CARE
Preventive, diagnostic and treatment services provided on an outpatient basis by
physicians, nurse practitioners, physician assistants and other health care
providers.

AMERICAN INDIAN HEALTH PROGRAM (AIHP)
The program that delivers health care to the eligible Native American population
living on reservations through the Indian Health Service (IHS). Formerly known
as AHCCCS IHS FFS Program.

AMPM
AHCCCS Medical Policy Manual, available on the AHCCCS website at
www.azahcccs.gov.

ANNUAL ENROLLMENT CHOICE (AEC)
The opportunity, given each member annually, to change to another Contractor in
their GSA.

APPEAL RESOLUTION
The written determination by the Contractor concerning an appeal.

ARIZONA ADMINISTRATIVE CODE (A.A.C.)
State regulations established pursuant to relevant statutes. For purposes of this
solicitation, the relevant sections of the A.A.C. are referred to throughout this
document as “AHCCCS Rules”.

A.R.S.
Arizona Revised Statutes.

BBA
The Balanced Budget Act of 1997.

BIDDER’S LIBRARY
A repository of manuals, statutes, rules and other reference material located on
the AHCCCS website at www.azahcccs.gov.

BOARD CERTIFIED
An individual who has successfully completed all prerequisites of the respective
specialty board and successfully passed the required examination for
certification.

BORDER COMMUNITIES
Cities, towns or municipalities located in Arizona and within a designated
geographic service area whose residents typically receive primary or emergency
care in adjacent Geographic Service Areas (GSA) or neighboring states,
excluding neighboring countries, due to service availability or distance. (R9-22-
201.F, R9-22-201.G, R9-22-101.B)

BREAST AND CERVICAL CANCER TREATMENT PROGRAM (BCCTP)
Eligible individuals under the Title XIX expansion program for women with
income up to 250% of the FPL, who are diagnosed with and need treatment for
breast and/or cervical cancer or cervical lesions and are not eligible for other
Title XIX programs providing full Title XIX services. Qualifying individuals
cannot have other creditable health insurance coverage, including Medicare.

CAPITATION
Payment to a Contractor by AHCCCS of a fixed monthly payment per person in
advance, for which the Contractor provides a full range of covered services as
authorized under A.R.S. § 36-2904 and § 36-2907.

CATEGORICALLY LINKED TITLE XIX MEMBER
Member eligible for Medicaid under Title XIX of the Social Security Act
including those eligible under 1931 provisions of the Social Security Act, Sixth
Omnibus Budget Reconciliation Act (SOBRA), Supplemental Security Income
(SSI), and SSI-related groups. To be categorically linked, the member must be
aged 65 or over, blind, disabled, a child under age 19, a parent of a dependent
child, or pregnant.

CLAIM DISPUTE
A dispute, filed by a provider or Contractor, whichever is applicable, involving a
payment of a claim, denial of a claim, imposition of a sanction or reinsurance.

CLEAN CLAIM
A claim that may be processed without obtaining additional information from the
provider of service or from a third party, but does not include a claim under
investigation for fraud or abuse or under review for medical necessity.

CMS
Centers for Medicare and Medicaid Services, an organization within the U.S.
Department of Health and Human Services, which administers the Medicare and
Medicaid programs and the State Children’s Health Insurance Program.

COMPETITIVE BID PROCESS
A state procurement system used to select Contractors to provide covered
services on a geographic basis.

CONTINUING OFFEROR (INCUMBENT)
An AHCCCS Contractor during CYE ‘08 that submits a proposal pursuant to this
solicitation.

CONTRACT SERVICES
See “COVERED SERVICES”.

CONTRACT YEAR (CY)
Corresponds to the federal fiscal year (October 1 through September 30).

CONTRACTOR
An organization or entity agreeing through a direct contracting relationship with
AHCCCS to provide the goods and services specified by this contract in
conformance with the stated contract requirements, AHCCCS statute and rules,
and federal law and regulations.

CONVICTED
A judgment of conviction has been entered by a federal, state or local court,
regardless of whether an appeal from that judgment is pending.

COPAYMENT
A monetary amount specified by the Director that the member pays directly to a
Contractor or provider at the time covered services are rendered, as defined in
R9-22-701.

COVERED SERVICES
Health care services to be delivered by a Contractor, which are designated in
Section D of this contract; AHCCCS Rules R9-22, Article 2, and R9-31, Article
2, and the AMPM [42 CFR 438.210(a)(4)].

CRS
The Children's Rehabilitative Services administered by ADHS, as defined in R9-
22-1401.

CRS-ELIGIBLE
An individual who has completed the CRS application process, as delineated in
the CRS Policy and Procedure Manual, and has met all applicable criteria to be
eligible to receive CRS-related services.

CY
See “CONTRACT YEAR”.

CYE
Contract Year Ending; same as “CONTRACT YEAR”.

DAYS
Calendar days, unless otherwise specified as defined in the text, as defined in
R9-22-101.

DELEGATED AGREEMENT
A type of subcontract with a qualified organization or person to perform one or
more functions required to be provided by the Contractor pursuant to this
contract.

DIRECTOR
The Director of AHCCCS.

DISENROLLMENT
The discontinuance of a member’s ability to receive covered services through a
Contractor.

DME
Durable medical equipment, which is an item or appliance that can withstand
repeated use, is designated to serve a medical purpose, and is not generally useful
to a person in the absence of a medical condition, illness or injury as defined in
R9-22-101.

DUAL ELIGIBLE
A member who is eligible for both Medicare and Medicaid.

ELIGIBILITY DETERMINATION
A process of determining, through a written application and required
documentation, whether an applicant meets the qualifications for Title XIX or
Title XXI.

EMERGENCY MEDICAL CONDITION
A medical condition manifesting itself by acute symptoms of sufficient severity
(including severe pain) such that a prudent layperson who possesses an average
knowledge of health and medicine could reasonably expect the absence of
immediate medical attention to result in: a) placing the patient’s health (or, with
respect to a pregnant woman, the health of the woman or her unborn child) in
serious jeopardy, b) serious impairment to bodily functions, or c) serious
dysfunction of any bodily organ or part [42 CFR 438.114(a)].

EMERGENCY MEDICAL SERVICE
Covered inpatient and outpatient services provided after the sudden onset of an
emergency medical condition as defined above. These services must be furnished
by a qualified provider, and must be necessary to evaluate or stabilize the
emergency medical condition [42 CFR 438.114(a)].

ENCOUNTER
A record of a health care-related service rendered by a provider or providers
registered with AHCCCS to a member who is enrolled with a Contractor on the
date of service.

ENROLLEE
An eligible person who is enrolled in AHCCCS, as defined in A.R.S. § 36-2901,
A.R.S. § 36-2981, A.R.S. § 36-2901.01, and 42 CFR 438.10(a).

ENROLLMENT
The process by which an eligible person becomes a member of a Contractor’s
plan.

EPSDT
Early and Periodic Screening, Diagnosis and Treatment; services for persons
under 21 years of age, as described in AHCCCS Rules R9-22, Article 2.

FAMILY PLANNING SERVICES EXTENSION PROGRAM
A program that provides only family planning services for a maximum of two
consecutive 12-month periods to a SOBRA woman whose pregnancy has ended
and who is not otherwise eligible for full Title XIX services.

FEDERALLY QUALIFIED HEALTH CENTER (FQHC)
An entity that meets the requirements and receives a grant and funding pursuant
to Section 330 of the Public Health Service Act. An FQHC includes an
outpatient health program or facility operated by a tribe or tribal organization
under the Indian Self-Determination and Education Assistance Act (P.L. 93-638)
or an urban Indian organization receiving funds under Title V of the Indian
Health Care Improvement Act (P.L. 94-437).

FEE-FOR-SERVICE (FFS)
A method of payment to registered providers on an amount per-service basis.

FES
Federal Emergency Services program covered under R9-22-217, to treat an
emergency medical condition for a member who is determined eligible under
A.R.S. § 36-2903.03 (D).

FFP
Federal financial participation (FFP) refers to the contribution that the federal
government makes to the Title XIX and Title XXI program portions of
AHCCCS, as defined in 42 CFR 400.203.

FISCAL YEAR (FY)
The budget year - federal fiscal year: October 1 through September 30; State
fiscal year: July 1 through June 30.

FREEDOM OF CHOICE (FC)
The opportunity given to each member who does not specify a Contractor
preference at the time of enrollment to choose between the Contractors available
within the Geographic Service Area in which the member is enrolled.

FREEDOM TO WORK (TICKET TO WORK)
Eligible individuals under the Title XIX expansion program that extends
eligibility to individuals 16 through 64 years old who meet SSI disability criteria;
whose earned income, after allowable deduction, is at or below 250% of the FPL
and who are not eligible for any other Medicaid program.

GEOGRAPHIC SERVICE AREA (GSA)
A specific county or defined grouping of counties designated by AHCCCS
within which a Contractor provides, directly or through subcontract, covered
health care to members enrolled with that Contractor.

GRIEVANCE SYSTEM
A system that includes a process for enrollee grievances, enrollee appeals,
provider claim disputes, and access to the state fair hearing system.

HEALTHCARE GROUP OF ARIZONA (HCG)
A prepaid medical coverage plan marketed to small, uninsured businesses and
political subdivisions within the state.

HEALTH PLAN
See “CONTRACTOR”.

HIFA
The CMS Health Insurance Flexibility and Accountability Demonstration
Initiative , which targets State Children's Health Insurance Program (Title XXI)
funding for populations with incomes at or below 200 % of the FPL.

HIFA PARENTS
Parents of Medicaid-(SOBRA) and KidsCare-eligible children who are not
otherwise eligible for Medicaid. All eligible parents except Native Americans
must pay an enrollment fee and a monthly premium based on household income.

HIPAA
The Health Insurance Portability and Accountability Act (P.L. 104-191); also
known as the Kennedy-Kassebaum Act, signed August 21, 1996.

IBNR
Incurred but not reported: liability for services rendered for which claims have
not been received.

IHS
Indian Health Service authorized as a federal agency pursuant to 25 U.S.C. 1661.

KIDSCARE
A program for individuals under the age of 19 years, who are eligible under the
SCHIP program, in households with income at or below 200% FPL. All
members, except Native American members, are required to pay a premium
amount based on the number of children in the family and the gross family
income. Also referred to as “Title XXI”.

LIABLE PARTY
A person or entity that is or may be, by agreement, circumstance or otherwise,
liable to pay all or part of the medical expenses incurred by an AHCCCS
applicant or member.

LIEN
A legal claim, filed with the County Recorder’s office in the county in which a
member resides and/or in the county an injury was sustained, for the purpose of
ensuring that AHCCCS receives reimbursement for medical services paid. The
lien is attached to any settlement the member may receive as a result of an injury.

MANAGED CARE
Systems that integrate the financing and delivery of health care services to
covered individuals by means of arrangements with selected providers to furnish
comprehensive services to members; establish explicit criteria for the selection of
health care providers; have financial incentives for members to use providers and
procedures associated with the plan; and have formal programs for quality,
utilization management and the coordination of care.

MANAGEMENT SERVICES AGREEMENT
A type of subcontract with an entity in which the owner of the Contractor
delegates some or all of the comprehensive management and administrative
services necessary for the operation of the Contractor.

MANAGEMENT SERVICES SUBCONTRACTOR
An entity to which the Contractor delegates the comprehensive management and
administrative services necessary for the operation of the Contractor

MANAGING EMPLOYEE
A general manager, business manager, administrator, director, or other individual
who exercises operational or managerial control over or who directly or
indirectly conducts the day-to-day operation of an institution, organization or
agency.

MATERIAL OMISSION
Facts, data or other information excluded from a report, contract, etc.; the
absence of which could lead to erroneous conclusions following reasonable
review of such report, contract, etc.

MAJOR UPGRADE
Any upgrade or changes that may result in a disruption to the following: loading
of contracts, providers or members, issuing prior authorizations or the
adjudication of claims.

MEDICAID
A federal/state program authorized by Title XIX of the Social Security Act, as
amended.

MEDICAL EXPENSE DEDUCTION (MED)
Title XIX waiver member whose family income exceeds the limits of all other
Title XIX categories (except ALTCS) and has family medical expenses that
reduce income to or below 40% of the FPL. MED members may or may not
have a categorical link to Title XIX.

MEDICAL MANAGEMENT
An integrated process or system that is designed to assure appropriate utilization
of health care resources, in the amount and duration necessary to achieve desired
health outcomes, across the continuum of care (from prevention to end of life
care).

MEDICARE
A federal program authorized by Title XVIII of the Social Security Act, as
amended.

MEDICARE MANAGED CARE PLAN
A managed care entity that has a Medicare contract with CMS to provide services
to Medicare beneficiaries, including Medicare Advantage Plan (MAP), Medicare
Advantage Prescription Drug Plan (MAPDP), MAPDP Special Needs Plan, or
Medicare Prescription Drug Plan

MEDICARE PART DEXCLUDED DRUGS
Medicare Part D is the prescription drug coverage option available to Medicare
beneficiaries, including those also eligible for Medicaid. Medications that are
available under this benefit are not covered by AHCCCS. Certain drugs that are
excluded from coverage by Medicare continue to be covered by AHCCCS.
Those medications are barbiturates, benzodiazepines, and over-the-counter
medication as defined in the AMPM. Prescription medications that are covered
under Medicare, but are not on a Part D health plan’s formulary are not
considered excluded drugs, and are not covered by AHCCCS.

MEMBER
See “ENROLLEE”.

NON-CONTRACTING PROVIDER
A person or entity that provides services as prescribed in A.R.S. § 36-2901, but
does not have a subcontract with an AHCCCS Contractor.

NON-MEDICAL EXPENSE DEDUCTION (NON MED) MEMBER
See “AHCCCS CARE”.

NPI
National Provider Identifier assigned by the CMS contracted national
enumerator.

OFFEROR
An organization or other entity that submits a proposal to the Administration in
response to this RFP, as defined in R9-22-101.

PERFORMANCE STANDARDS
A set of standardized measures designed to assist AHCCCS in evaluating,
comparing and improving the performance of its Contractors.

PMMIS
AHCCCS’s Prepaid Medical Management Information System.

POST STABILIZATION SERVICES
Medically necessary services, related to an emergency medical condition,
provided after the member’s condition is sufficiently stabilized in order to
maintain, improve or resolve the member’s condition so that the member could
be safely discharged or transferred to another location [42 CFR 438-114(a)].

POTENTIAL ENROLLEE
A Medicaid-eligible recipient who is not yet enrolled with a Contractor [42 CFR
438.10(a)].

PRIMARY CARE PROVIDER (PCP)
An individual who meets the requirements of A.R.S. § 36-2901, and who is
responsible for the management of a member’s health care. A PCP may be a
physician defined as a person licensed as an allopathic or osteopathic physician
according to A.R.S. Title 32, Chapter 13 or Chapter 17, or a practitioner defined
as a physician assistant licensed under A.R.S. Title 32, Chapter 25, or a certified
nurse practitioner licensed under A.R.S. Title 32, Chapter 15.

PRIOR PERIOD
The period of time, prior to a member’s enrollment, during which the member is
eligible for covered services. The time frame is from the effective date of
eligibility to the day a member is enrolled with a Contractor.

PROVIDER
Any person or entity that contracts with AHCCCS or a Contractor for the
provision of covered services to members according to the provisions A.R.S. §
36-2901 or any subcontractor of a provider delivering services pursuant to A.R.S.
§ 36-2901.

QUALIFIED MEDICARE BENEFICIARY DUAL ELIGIBLE (QMB DUAL)
A person, eligible under A.R.S. § 36-2971(6), who is entitled to Medicare Part A
insurance and meets certain income and residency requirements of the Qualified
Medicare Beneficiary program. A QMB who is also eligible for Medicaid, is
commonly referred to as a QMB dual eligible.

RATE CODE
Eligibility classification for capitation payment purposes.

REGIONAL BEHAVIORAL HEALTH AUTHORITY (RBHA)
An organization under contract with ADHS, that administers covered behavioral
health services in a geographically specific area of the state. Tribal governments,
through an agreement with ADHS, may operate a tribal regional behavioral
health authority (TRBHA) for the provision of behavioral health services to
Native American members living on-reservation.

REINSURANCE
A risk-sharing program provided by AHCCCS to Contractors for the
reimbursement of certain contract service costs incurred for a member beyond a
predetermined monetary threshold.

RELATED PARTY
A party that has, or may have, the ability to control or significantly influence a
Contractor, or a party that is, or may be, controlled or significantly influenced by
a Contractor. "Related parties" include, but are not limited to, agents, managing
employees, persons with an ownership or controlling interest in the Offeror and
their immediate families, subcontractors, wholly-owned subsidiaries or suppliers,
parent companies, sister companies, holding companies, and other entities
controlled or managed by any such entities or persons.

RISK GROUP
Grouping of rate codes that are paid at the same capitation rate.

RFP
Request For Proposal is a document prepared by AHCCCS, which describes the
services required and instructs prospective Offerors about how to prepare a
response (proposal), as defined in R9-22-101.

RURAL HEALTH CLINIC (RHC)
A clinic located in an area designated by the Bureau of Census as rural, and by
the Secretary of the DHHS as medically underserved or having an insufficient
number of physicians, which meets the requirements under 42 CFR 491.

SCHIP
State Children’s Health Insurance Program under Title XXI of the Social
Security Act. The Arizona version of SCHIP is referred to as “KidsCare”. See
“KIDSCARE”.

SCOPE OF SERVICES See “COVERED SERVICES”.

SERVICE LEVEL AGREEMENT
A type of subcontract with a corporate owner or any of its divisions or subsidiaries
that requires specific levels of service for administrative functions or services for
the Contractor, specifically related to fulfilling the Contractor’s obligations to
AHCCCS under the terms of this contract.

SOBRA
Eligible pregnant women under Section 9401 of the Sixth Omnibus Budget and
Reconciliation Act of 1986, amended by the Medicare Catastrophic Coverage
Act of 1988, 42 U.S.C. 1396a(a)(10)(A)(ii)(IX), November 5, 1990, with
individually budgeted incomes at or below 150% of the FPL, and children in
families with individually budgeted incomes ranging from below 100% to 140%
of the FPL, depending on the age of the child.

SOBRA FAMILY PLANNING
Female members eligible for family planning services only, for a maximum of
two consecutive 12-month periods following the loss of SOBRA eligibility.

SPECIAL HEALTH CARE NEEDS
Members with special health care needs are those members who have serious and
chronic physical, developmental or behavioral conditions, and who also require
medically necessary health and related services of a type or amount beyond that
generally required by members.

STATE
The State of Arizona.

STATE ONLY TRANSPLANT MEMBERS
Individuals who are eligible under one of the Title XIX eligibility categories and
found eligible for a transplant, but subsequently lose Title XIX eligibility due to
excess income become eligible for one of two extended eligibility options as
specified in A.R.S. 36-2907.10 and A.R.S. 36-2907.11.

STATE PLAN
The written agreements between the State and CMS, which describe how the
AHCCCS program meets CMS requirements for participation in the Medicaid
program and the State Children’s Health Insurance Program.

SUBCONTRACT
An agreement entered into by the Contractor with a provider of health care
services, who agrees to furnish covered services to members, or with any other
organization or person who agrees to perform any administrative function or
service for the Contractor specifically related to fulfilling the Contractor's
obligations to AHCCCS under the terms of this contract, as defined in R9-22-
101.

SUBCONTRACTOR
(1) A provider of health care who agrees to furnish covered services to members.
(2) A person, agency or organization with which the Contractor has contracted or
delegated some of its management/administrative functions or responsibilities.
(3) A person, agency or organization with which a fiscal agent has entered into a
contract, agreement, purchase order or lease (or leases of real property) to obtain
space, supplies, equipment or services provided under the AHCCCS agreement.

SUPPLEMENTAL SECURITY INCOME (SSI) AND SSI RELATED GROUPS
Eligible individuals receiving income through federal cash assistance programs
under Title XVI of the Social Security Act who are aged, blind or disabled and
have household income levels at or below 100% of the FPL.

SUPPLEMENTAL SECURITY DISABILITY INSURANCE TEMPORARY
MEDICAL COVERAGE (SSDITMC)
Eligible individuals who have been enrolled in AHCCCS at any time within the
most recent 24 months and became ineligible for AHCCCS coverage due to
excess income; and who are not covered by creditable health insurance, including
Medicare.

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)
A federal cash assistance program under Title IV of the Social Security Act
established by the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (P.L. 104-193). It replaced Aid To Families With Dependent
Children (AFDC).

THIRD PARTY LIABILITY (TPL)
See “LIABLE PARTY”.

TITLE XIX MEMBER
A member eligible for federally funded Medicaid programs under Title XIX of
the Social Security Act including those eligible under 1931 provisions of the
Social Security Act, Sixth Omnibus Budget Reconciliation Act (SOBRA),
Supplemental Security Income (SSI), SSI-related groups, Title XIX Waiver
groups, Medicare Cost Sharing groups, Breast and Cervical Cancer Treatment
program and Freedom to Work program.

TITLE XIX WAIVER GROUP (TWG)MEMBER
All AHCCCS Care (Non-MED) and MED members who do not meet the
requirements of a categorically linked Medicaid program.

TITLE XXI MEMBER
A member eligible for acute care services under Title XXI of the Social Security
Act, referred to in Federal legislation as the “State Children’s Health Insurance
Program” (SCHIP and HIFA). The Arizona version of SCHIP is referred to as
“KidsCare.”

WWHP
Well Woman Health-Check Program, administered by the Arizona Department
of Health Services and funded by the Centers for Disease Control and Prevention.
(See AMPM Chapter 300, Section 320)

YEAR
See “CONTRACT YEAR”.

YOUNG ADULT TRANSITIONAL INSURANCE (YATI)
Eligible individuals, between 18 and 21 years of age who were formerly enrolled
through the foster care program.

[END OF DEFINITIONS]

SECTION D: PROGRAM REQUIREMENTS

INTRODUCTION

The Arizona Health Care Cost Containment System (AHCCCS) Administration is the single state agency for the
Medicaid and SCHIP programs. AHCCCS has operated under an 1115 Research and Demonstration Waiver since
1982 when it became the first statewide Medicaid managed care system in the nation. The program is a model
public-private collaboration that includes the state and its counties, the federal government, and managed care
contractors and providers from both the public and private sectors. AHCCCS has remained a leader in Medicaid
Managed Care through the diligent pursuit of excellence and cost effectiveness by Managed Care Contractors
(MCOs) in collaboration with the AHCCCS Administration.

In order to continue this collaboration, Contractors must continue to add value to the program. A Contractor adds
value when it:

                – Recognizes that Medicaid members are entitled to care and assistance navigating the service delivery
                  system and demonstrates special effort to assure members receive necessary services, including
                  prevention and screening services.
                • Recognizes that Medicaid members with special health care needs or chronic health conditions require
                  care coordination, and provides that coordination. This is particularly true if a member must receive
                  services from other AHCCCS Contractors in addition to the Contractor.
                • Recognizes that Medicaid members have the right to contact their elected officials in an effort to
                  secure necessary services and assist members in order to reduce their need to contact elected officials.
                  The Contractor provides information to elected officials to help them respond to the member.
                • Recognizes that health care providers are an essential partner in the delivery of health care services,
                  and operates in a manner that is efficient and effective for health care providers as well as the
                  Contractor.
                • Avoids administrative practices that place unnecessary burdens on providers with little or no impact
                  on quality of care or cost containment.
                • Recognizes that performance improvement is both clinical and operational in nature and self monitors
                  and self corrects as necessary to improve contract compliance or operational excellence.
                • Recognizes that the program is publicly funded, and as such is subject to public scrutiny and behaves
                  in a manner that is supported by the general public.
                • Recognizes that the program is subject to significant regulation and operates in compliance with those
                  regulations.

AHCCCS encourages Contractor innovation and application of best practices. The AHCCCS administration is
always looking for ways to reduce administrative costs and improve program efficiency. Over the term of the
contract, AHCCCS will work collaboratively with contractors to evaluate ways to reduce program complexity,
improve chronic disease management, reduce administrative burdens, leverage joint purchasing power, and
reduce unnecessary Medicaid/SCHIP administrative and medical costs.

1. TERM OF CONTRACT AND OPTION TO RENEW

The initial term of this contract shall be 10/1/08 through 9/30/11, with two additional one-year options to renew.
All contract renewals shall be through contract amendment. AHCCCS shall issue amendments prior to the end
date of the contract when there is an adjustment to capitation rates and/or changes to the scope of services
contained herein. Changes to the scope of services include, but are not limited, to changes in the enrolled
population, changes in covered services and changes in GSAs.

If the Contractor has been awarded a contract in more than one GSA, each such contract will be considered
separately renewable. AHCCCS may renew the Contractor’s contract in one GSA, but not in another. In
addition, if the Contractor has had significant problems of non-compliance in one GSA, it may result in the capping
of the Contractor’s enrollment in all GSAs. Further, AHCCCS may require the Contractor to renew all
currently awarded GSAs, or may terminate the contract if the Contractor does not agree to renew all currently
awarded GSAs.

When AHCCCS issues an amendment to the contract, the provisions of such renewal will be deemed to have
been accepted 60 days after the date of mailing by AHCCCS, even if the amendment has not been signed by the
Contractor, unless within that time the Contractor notifies AHCCCS in writing that it refuses to sign the renewal
amendment. If the Contractor provides such notification, AHCCCS will initiate contract termination
proceedings.

Contractor’s Notice of Intent Not To Renew: If the Contractor chooses not to renew this contract, the
Contractor may be liable for certain costs associated with the transition of its members to a different Contractor.
If the Contractor provides AHCCCS written notice of its intent not to renew this contract at least 180 days before
its expiration, this liability for transition costs may be waived by AHCCCS.

Contract Termination: In the event that the contract or any portion thereof is terminated for any reason, or
expires, the Contractor shall assist AHCCCS in the transition of its members to other Contractors, and shall
abide by standards and protocols set forth in Paragraph 9, Transition of Members. In addition, AHCCCS
reserves the right to extend the term of the contract on a month-to-month basis to assist in any transition of
members. The Contractor shall make provision for continuing all management and administrative services
until the transition of all members is completed and all other requirements of this contract are satisfied. The
Contractor shall be responsible for providing all reports set forth in this contract and necessary for the
transition process, and shall be responsible for the following:

a. Notification of subcontractors and members.
b. Payment of all outstanding obligations for medical care rendered to members. Until AHCCCS is satisfied
    that the Contractor has paid all such obligations, the Contractor shall provide the following reports to
    AHCCCS on a monthly basis (due the 15th day of the month, for the preceding month):
                (1) A monthly claims aging report by provider/creditor including IBNR amounts;
                (2) A monthly summary of cash disbursements and provider/creditor settlements;
                (3) A monthly accounting of Member Grievances and Provider Claim Disputes and their disposition;
                (4) Additional reporting as requested in the termination letter issued by AHCCCS.
c. Quarterly and Audited Financial Statements up to the date of contract termination. The financial statement
    requirement will not be absolved without an official release from AHCCCS.
d. Encounter reporting until all services rendered prior to contract termination have reached adjudicated status
    and data validation of the information has been completed, as communicated by a letter of release from
    AHCCCS.
e. Cooperation with reinsurance audit activities on prior contract years until release has been granted by
    AHCCCS.
f. Cooperation with any open reconciliation activities including, but not limited to, PPC, Med Prospective, or SSDI-
   TMC until release has been granted by AHCCCS.
g. Quarterly Quality Management and Medical Management reports will be submitted as required by Section
    D, Paragraphs 23, Quality Management, and 24, Medical Management, as appropriate to provide AHCCCS
    with information on services rendered up to the date of Contract termination. This will include quality of care
    (QOC) concern reporting based on the date of service, as opposed to the date of reporting, for a period of 3
    months after contract termination.
h. Performance Bond will be required until remaining AHCCCS liabilities are less than $50,000.
i. In the event of termination or suspension of the contract by AHCCCS, such termination or suspension shall
    not affect the obligation of the Contractor to indemnify AHCCCS for any claim by any third party against the
    State or AHCCCS arising from the Contractor's performance of this contract and for which the Contractor
    would otherwise be liable under this contract.
j. Any dispute by the Contractor, with respect to termination or suspension of this contract by AHCCCS, shall
   be exclusively governed by the provisions of Section E, Paragraph 26, Disputes.
k. Any funds advanced to the Contractor for coverage of members for periods after the date of termination shall
   be returned to AHCCCS within 30 days of termination of the contract.
l. Record retention requirements, as described in Section D Paragraph 63; Section E, Paragraph 40 and
   Attachment A, Paragraph 20, will apply.

2. ELIGIBILITY CATEGORIES

AHCCCS is Arizona’s Title XIX Medicaid program operating under an 1115 Waiver and Title XXI program
operating under Title XXI State Plan authority. Arizona has the authority to require mandatory enrollment in
managed care. All Acute Care Program members eligible for AHCCCS benefits, with exceptions as identified
below, are enrolled with Acute Care Contractors that are paid on a capitated basis. AHCCCS pays for health
care expenses on a fee-for-service (FFS) basis for Title XIX- and Title XXI- eligible members who receive
services through the Indian Health Service; for Title XIX eligible members who are entitled to emergency
services under the Federal Emergency Services (FES) program; and for Medicare cost sharing beneficiaries
under QMB programs.

The following describes the eligibility groups enrolled in the managed care program and covered under this
contract [42 CFR 434.6(a)(2)].

Title XIX

1931 (Also referred to as TANF-related): Eligible individuals and families under the 1931 provision of
the Social Security Act, with household income levels at or below 100% of the FPL.

SSI and SSI Related Groups: Eligible individuals receiving income through federal cash assistance
programs under Title XVI of the Social Security Act who are aged, blind or disabled and have
household income levels at or below 100% of the FPL.

Freedom to Work (Ticket to Work): Eligible individuals under the Title XIX expansion program that
extends eligibility to individuals 16 through 64 years old who meet SSI disability criteria, and whose
earned income after allowable deductions is at or below 250% of the FPL, and who are not eligible for
any other Medicaid program. These members must pay a premium to AHCCCS, depending on income.

SOBRA: Under the Sixth Omnibus Budget Reconciliation Act of 1986, eligible pregnant women, with
individually budgeted income at or below 150% of the FPL, and children in families with individually
budgeted incomes ranging from below 100% to 140% of the FPL, depending on the age of the child.

SOBRA Family Planning: Family planning extension program that covers the costs for family
planning services only, for a maximum of two consecutive 12-month periods following the loss of
SOBRA eligibility.

Breast and Cervical Cancer Treatment Program (BCCTP): Eligible individuals under the Title XIX
expansion program for women with incomes up to 250% of the FPL, who are diagnosed with and need
treatment for breast and/or cervical cancer or cervical lesions and are not eligible for other Title XIX
programs. Eligible members cannot have other creditable health insurance coverage, including
Medicare.

Young Adult Transitional Insurance (YATI): Former foster care children between 18 and 21 years of
age.

Title XIX Waiver Group

AHCCCS Care (Non-MED): Eligible individuals and couples whose income is at or below 100% of the
FPL, and who are not categorically linked to another Title XIX program. Also known as Non-MED
members.

MED: Title XIX waiver member whose family income exceeds the limits of all other Title XIX
categories (except ALTCS) and has family medical expenses that reduce income to at or below 40% of
the FPL. MED members may or may not have a categorical link to Title XIX.

Title XXI

KidsCare: Individuals under the age of 19 years, eligible under the SCHIP program, who are in
households with incomes at or below 200% FPL. All members except Native American members are
required to pay a premium amount based on the number of children in the family and the gross family
income. Also referred to as Title XXI.

HIFA Parents: Non-Title XIX-eligible parents of KidsCare children or parents of Title XIX SOBRA eligible
children who are eligible under the HIFA demonstration initiative waiver. HIFA parents (except
Native American members) are required to pay a one-time enrollment fee and a monthly premium to
AHCCCS, based on household income. Due to funding considerations, this program has an enrollment
cap.

State-Only

Social Security Disability Insurance Temporary Medical Coverage (SSDI-TMC): Laws 2006, Chapter
373 established a Temporary Medical Coverage Program. SSDI-TMC provides health care coverage to
persons who:

1. Are citizens or qualified immigrants and residents who have been enrolled in AHCCCS at any time
   within the last 24 months; and
2. Become ineligible for AHCCCS coverage due to excess income making them over income for
   Medicaid; and
3. Are not yet eligible for Medicare; and
4. Are not covered by creditable health insurance.

In order to participate in SSDI-TMC, eligible persons must pay a premium. Participants become
ineligible for SSDI-TMC once they become eligible for Medicare. SSDI-TMC is funded entirely by the
State. Contractors will be capitated for these members under unique rate codes. SSDI-TMC members
are not eligible for prior period coverage, any supplemental payments or reinsurance. Members are
entitled to all AHCCCS Acute Care covered services. This program is subject to the availability of funds
and enrollment may be capped and/or frozen.

State-Only Transplants: Title XIX individuals, for whom medical necessity for a transplant has been
established and who subsequently lose Title XIX eligibility may become eligible for and select one of
two extended eligibility options as specified in A.R.S. 36-2907.10 and A.R.S. 36-2907.11. The extended
eligibility is authorized only for those individuals who have met all of the following conditions:

                1. The individual has been determined ineligible for Title XIX due to excess income;
                2. The individual has been placed on a donor waiting list before eligibility expired;
                3. The individual has entered into a contractual arrangement with the transplant facility to pay the
                   amount of income which is in excess of the eligibility income standards (referred to as
                   transplant share of cost).

The following options for extended eligibility are available to these members:

Option 1: Extended eligibility is for one 12-month period immediately following the loss of AHCCCS
eligibility. The member is eligible for all AHCCCS covered services as long as they continue to be
medically eligible for a transplant. If determined medically ineligible for a transplant at any time during
the period, eligibility will terminate at the end of the calendar month in which the determination is
made.

Option 2: As long as medical eligibility for a transplant (status on a transplant waiting list) is
maintained, at the time that the transplant is scheduled to be performed the transplant candidate will be
re-enrolled with his/her previous Contractor to receive all covered transplant services. Option 2-eligible
individuals are not eligible for any non-transplant related health care services from AHCCCS.

3. ENROLLMENT AND DISENROLLMENT

AHCCCS has the exclusive authority to enroll and disenroll members. The Contractor shall not disenroll any
member for any reason unless directed to do so by AHCCCS. The Contractor may request AHCCCS to
change the member’s enrollment in accordance with the ACOM Enrollment Choice and Change of Contractor
Policy. The Contractor may not request disenrollment because of an adverse change in the member’s health
status or because of the member’s utilization of medical services, diminished mental capacity, or
uncooperative or disruptive behavior resulting from his or her special needs. An AHCCCS member may
request disenrollment from the Contractor for cause at any time. Requests due to situations defined in Section
A (1) of the ACOM Change of Plan Policy should be referred to AHCCCS Member Services via mail or at
(602) 417-4000 or ###-###-####. For medical continuity requests, the Contractor shall follow the
procedures outlined in the ACOM Change of Plan Policy, before notifying AHCCCS. AHCCCS will disenroll
the member through the ACOM Change of Plan Policy when the member:

                1. Becomes ineligible for the AHCCCS program;
                2. Moves out of the Contractor’s service areas;
                3. Changes contractors during the member’s open enrollment/annual enrollment choice period;
                4. The Contractor does not, because of moral or religious objections, cover the service the member seeks;
                   or
                5. When approved for a Contractor change [42 CFR 438.56].

Members may submit plan change requests to the Contractor or the AHCCCS Administration. A denial of any
plan change request must include a description of the member’s right to appeal the denial.

Eligibility for the various AHCCCS coverage groups is determined by one of the following agencies:

Social Security Administration (SSA)
SSA determines eligibility for the Supplemental Security Income
(SSI) cash program. SSI cash recipients are automatically
eligible for AHCCCS coverage.

Department of Economic Security (DES)
DES determines eligibility for families with children under
section 1931 of the Social Security Act, pregnant women and
children under SOBRA, the Adoption Subsidy Program, Title IVE
foster care children, Young Adult Transitional Insurance
Program, the Federal Emergency Services program (FES), HIFA
parents of SOBRA-eligible children and Title XIX Waiver
Members.

AHCCCS
AHCCCS determines eligibility for the SSI/Medical Assistance
Only groups, including the FES program for this population
(aged, disabled, blind), the Arizona Long Term Care System
(ALTCS), the Qualified Medicare Beneficiary program and other
Medicare cost sharing programs, BCCTP, the Freedom to Work
program, the Title XXI KidsCare program, HIFA parents of
KidsCare children, the SSDI-TMC program, and the State-Only
Transplant program.

AHCCCS Acute Care members are enrolled with Contractors in accordance with the rules set forth in A.A.C
R9-22, Article 17, A.A.C. R9-31, Articles 3 and 17.

Member Choice of Contractor

All AHCCCS members eligible for services covered under this contract have a choice of available Contractors.
Information about these Contractors will be given to each applicant during the application process for
AHCCCS benefits. If there is only one Contractor available for the applicant’s Geographic Service Area, no
choice is offered as long as the Contractor offers the member a choice of PCPs. Members who do not choose a
Contractor prior to AHCCCS being notified of their eligibility are automatically assigned to a Contractor based
on family continuity or the auto-assignment algorithm. Once assigned, AHCCCS sends a Freedom of Choice
notice to the member and gives them 30 days to choose a different Contractor from the auto-assigned
Contractor. See Section D, Paragraph 6, Auto-Assignment Algorithm, for further explanation.

The Contractor will share with AHCCCS the cost of providing information about the Acute Care Contractors
to potential members and to those eligible for annual enrollment choice.

Exceptions to the above enrollment policies for Title XIX members include previously enrolled members who
have been disenrolled for less than 90 days. These members will be automatically enrolled with the same
Contractor, if still available. Women who become eligible for the Family Planning Services Extension
Program, will remain assigned to their current Contractor.

The effective date of enrollment for a new Title XIX member with the Contractor is the day AHCCCS takes
the enrollment action. The Contractor is responsible for payment of medically necessary covered services
retroactive to the member’s beginning date of eligibility, as reflected in PMMIS.

SSDI-Temporary Medical Coverage and KidsCare Title XXI members must select a Contractor prior to being
determined eligible, and therefore will not be auto-assigned. HIFA parents who do not choose a Contractor
will be enrolled with their child’s Contractor following the enrollment rules set forth in R9-31-1719.

When a member is transferred from Title XIX to Title XXI and has not made a Contractor choice for Title
XXI, the member will remain with his/her current Contractor and a Freedom of Choice notice will be sent to
the member. The member may then change plans no later than 30 days from the date the Freedom of Choice
notice is sent.

The effective date of enrollment for a Title XXI member (including HIFA parents) and SSDI-Temporary
Medical Coverage members will be the first day of the month following notification to the Contractor. In the
event that eligibility is determined on or after the 25th day of the month, eligibility will begin on the 1st day of
the second month following the determination.

Prior Period Coverage: AHCCCS provides prior period coverage for the period of time prior to the Title XIX
member’s enrollment during which the member is eligible for covered services. The time frame is from the
effective date of eligibility to the day the member is enrolled with the Contractor. The Contractor receives
notification from the Administration of the member’s enrollment. The Contractor is responsible for payment of
all claims for medically necessary covered services, including all behavioral health services, provided to
members during prior period coverage. This may include services provided prior to the contract year (See
Section D, Paragraph 53, Compensation, for a description of the Contractor’s reimbursement from AHCCCS
for this eligibility time period).

For behavioral health services, the 72-hour maximum liability period specified in A.A.C. R9-22-210.01 does
NOT apply to services provided during prior period coverage. Additionally, behavioral health services
provided during the PPC period are not considered in the calculation of the maximum of 72 hours of inpatient
emergency behavioral health services as described in the rule. Pursuant to A.R.S. 36-545 et seq., court-ordered
behavioral health screening and evaluation services are the responsibility of the county. Refer also to Section
D, Paragraph 12, Behavioral Health Services.

Newborns: Newborns born to AHCCCS eligible mothers enrolled at the time of the child's birth will be
enrolled with the mother's Contractor, when newborn notification is received by AHCCCS. The Contractor is
responsible for notifying AHCCCS of a child’s birth to an enrolled member. Capitation for the newborn will
begin on the date notification is received by AHCCCS. The effective date of AHCCCS eligibility will be the
newborn’s date of birth, and the Contractor is responsible for all covered services to the newborn, whether or
not AHCCCS has received notification of the child’s birth. AHCCCS is currently available to receive
notification 24 hours a day, 7 days a week via phone or the AHCCCS website. Each eligible mother of a
newborn is sent a letter advising her of her right to choose a different Contractor for her child; the date of the
change will be the date of processing the request from the mother. If the mother does not request a change, the
child will remain with the mother's Contractor.

Newborns of FES mothers are auto-assigned to a Contractor and mothers of these newborns sent letters
advising them of their right to choose a different Contractor for their children. In the event the FES mother
chooses a different Contractor, AHCCCS will recoup all capitation paid to the originally assigned Contractor
and the baby will be enrolled retroactive to the date of birth with the second Contractor. The second
Contractor will receive prior period capitation from the date of birth to the day before assignment and
prospective capitation from the date of assignment forward. The second Contractor will be responsible for all
covered services to the newborn from date of birth.

Enrollment Guarantees: Upon initial capitated enrollment as a Title XIX-eligible member, the member is
guaranteed a minimum of five full months of continuous enrollment. Upon initial capitated enrollment as a
Title XXI-eligible member, the member is guaranteed a minimum of 12 full months of continuous enrollment.
Enrollment guarantees do not apply to HIFA parents and SSDI-Temporary Medical Coverage members. The
enrollment guarantee is a one-time benefit. If a member changes from one Contractor to another within the
enrollment guarantee period, the remainder of the guarantee period applies to the new Contractor. The
enrollment guarantee may not be granted or may be terminated if the member is incarcerated, or if a minor
child is adopted. AHCCCS Rules R9-22, Article 17, and R9-31, Article 3, describes other reasons for which
the enrollment guarantee may not apply.

Native Americans: Native Americans, on- or off-reservation, may choose to receive services from Indian
Health Service (IHS), a P.L. 93-638 tribal facility or any available Contractor. If a choice is not made within
the specified time limit, Native American Title XIX members living on-reservation will be assigned to the
AHCCCS American Indian Health Program (AIHP) as FFS members. The designation of a zip code as a
‘reservation zip code’, not the physical location of the residence, is the factor that determines whether a
member is considered on or off-reservation for these purposes. Further, if the member resides in a zip code that
contains land on both sides of a reservation boundary and the zip code is assigned as off-reservation, the
physical location of the residence does not change the off-reservation designation for the member. Native
American Title XIX members living off-reservation who do not make a Contractor choice will be assigned to
an available Contractor using the AHCCCS protocol for family continuity and the auto-assignment algorithm.
Native American Title XXI members must make a choice prior to being determined eligible. Title XXI HIFA
parent members’ enrollment will follow the Title XIX enrollment rules. Native Americans may change from
AHCCCS AIHP FFS to a Contractor or from a Contractor to AHCCCS AIHP FFS at any time.

4. ANNUAL ENROLLMENT CHOICE

AHCCCS conducts an Annual Enrollment Choice (AEC) for members on their annual anniversary date [42
CFR 438.56(c)(2)(ii)]. AHCCCS may hold an open enrollment in any GSA or combination of GSAs, as
deemed necessary. During AEC, members may change Contractors subject to the availability of other
Contractors within their Geographic Service Area. A members is mailed a printed enrollment form and other
information required by the Balanced Budget Act of 1997 (BBA) 60 days prior to his/her AEC date and may
choose a new Contractor by contacting AHCCCS to complete the enrollment process. If the member does not
participate in the AEC, no change of Contractor will be made (except for approved changes under the ACOM
Change of Plan Policy) during the new anniversary year. This holds true if a Contractor’s contract is renewed
and the member continues to live in a Contractor’s service area. The Contractor shall comply with the ACOM
Member Transition for Annual Enrollment Choice Policy, Open Enrollment and Other Plan Changes Policy,
and the AMPM.

5. ENROLLMENT AFTER CONTRACT AWARD

In the event that AHCCCS does not award a CYE ’09 contract to an incumbent contractor, AHCCCS will
direct enrollment effective October 1, 2008, for those members enrolled with an exiting Contractor. Members
will be auto assigned to all or select Contractors utilizing the auto assignment algorithm found in the
Conversion Group Assignment section of Attachment G, Auto-Assignment Algorithm. The members in the
Conversion Group will have the opportunity to choose an alternate Contractor, according to the details in
Attachment G, Auto-Assignment Algorithm.

AHCCCS will also use an enhanced auto-assignment algorithm in certain GSAs for new Contractors or those
incumbent Contractors defined as small Contractors. This enhanced algorithm may be in effect beginning
October 1, 2008, for a period of no less than three months and no more than six months. Those Contractors not
defined as new or small Contractors in a GSA may not receive auto-assigned members during the enhanced
algorithm period. See Attachment G, Auto-Assignment Algorithm, for details.

In addition to auto-assignment, AHCCCS will make changes to both annual enrollment choice materials and
new enrollee materials prior to October 1, 2008, to reflect the change in available contractors. The auto
assignment algorithm will be adjusted to exclude auto assignment of new enrollees to exiting Contractor(s)
effective August 1, 2008.

6. AUTO-ASSIGNMENT ALGORITHM

Members who do not exercise their right to choose and do not have family continuity are assigned to a Contractor
through an auto-assignment algorithm. Once auto-assigned, AHCCCS sends a Freedom of Choice notice to the
member and gives him/her 30 days to choose a different Contractor from the auto-assigned Contractor. The
algorithm is a mathematical formula used to distribute members to the various Contractors in a manner that is
predictable and consistent with AHCCCS goals. The algorithm favors those Contractors with lower capitation
rates and higher Program scores in this procurement and as described below. For further details on the AHCCCS
Auto-Assignment Algorithm, refer to Attachment G. AHCCCS may change the algorithm at any time during the
term of the contract in response to Contractor-specific issues (e.g. imposition of an enrollment cap).

In future contract years, AHCCCS may adjust the auto-assignment algorithm in consideration of Contractors’
clinical performance measure results when calculating target percentages. Ranking in the algorithm may be
weighted, based on the number of Performance Measures for which a Contractor is meeting the current AHCCCS
Minimum Performance Standard (MPS) as a percentage of the total number of measures utilized in the
calculation. AHCCCS will determine and communicate the Performance Measures to be used to evaluate
Contractor performance prior to the beginning of the contract year to be measured.

7. AHCCCS MEMBER IDENTIFICATION CARDS

The Contractor is responsible for paying the costs of producing AHCCCS member identification cards. The
Contractor will receive an invoice the month following the issue date of the identification card.

8. MAINSTREAMING OF AHCCCS MEMBERS

To ensure mainstreaming of AHCCCS members, the Contractor shall take affirmative action so that members
are provided covered services without regard to payer source, race, color, creed, gender, religion, age, national
origin (to include those with limited English proficiency), ancestry, marital status, sexual preference, genetic
information, or physical or mental handicap, except where medically indicated. The Contractor must take into
account a member’s literacy and culture when addressing members and their concerns, and must take
reasonable steps to encourage subcontractors to do the same. The Contractor must make interpreters, including
assistance for the vision- or hearing- impaired, available free of charge for all members to ensure appropriate
delivery of covered services. The Contractor must provide members with information instructing them how to
access these services.

Prohibited practices include, but are not limited to, the following, in accordance with Title VI of the US Civil
Rights Act of 1964, 42 USC, Section 2001, Executive Order 13166, and rules and regulation promulgated
according to, or as otherwise provided by law:

a. Denying or not providing a member any covered service or access to an available facility.
b. Providing to a member any covered service which is different, or is provided in a different manner or at a
   different time from that provided to other members, other public or private patients or the public at large,
   except where medically necessary.
c. Subjecting a member to segregation or separate treatment in any manner related to the receipt of any
   covered service; restricting a member in any way in his or her enjoyment of any advantage or privilege
   enjoyed by others receiving any covered service.
d. The assignment of times or places for the provision of services on the basis of the race, color, creed,
   religion, age, sex, national origin, ancestry, marital status, sexual preference, income status, AHCCCS
   membership, or physical or mental handicap of the participants to be served.

If the Contractor knowingly executes a subcontract with a provider with the intent of allowing or permitting
the subcontractor to implement barriers to care (i.e., the terms of the subcontract act to discourage the full
utilization of services by some members); the Contractor will be in default of its contract.

If the Contractor identifies a problem involving discrimination by one of its providers, it shall promptly
intervene and implement a corrective action plan. Failure to take prompt corrective measures may place the
Contractor in default of its contract.

9. TRANSITION OF MEMBERS

The Contractor shall comply with the AMPM and the ACOM Member Transition for Annual Enrollment
Choice, Open Enrollment and Other Plan Changes Policy standards for member transitions between
Contractors or GSAs, participation in or discharge from CRS or CMDP, to or from an ALTCS Contractor, and
upon termination or expiration of a contract. AHCCCS may discontinue enrollment of members with the
Contractor three months prior to the contract termination date. The Contractor shall develop and implement
policies and procedures which comply with these policies to address transition of:

a. Members with significant medical conditions such as a high-risk pregnancy or pregnancy within the last
   30 days, the need for organ or tissue transplantation, chronic illness resulting in hospitalization or nursing
   facility placement, etc.;
b. Members who are receiving ongoing services such as dialysis, home health, chemotherapy and/or radiation
   therapy, or who are hospitalized at the time of transition;
c. Members who have conditions requiring ongoing monitoring or screening such as elevated blood lead
   levels and members who were in the NICU after birth.
d. Members who frequently contact AHCCCS, state and local officials, the Governor’s Office and/or the media.
e. Members who have received prior authorization for services such as scheduled surgeries, out-of-area
   specialty services, or nursing home admission;
f. Prescriptions, DME and medically necessary transportation ordered for the transitioning member by the
   relinquishing Contractor; and
g. Medical records of the transitioning member (the cost, if any, of reproducing and forwarding medical
   records shall be the responsibility of the relinquishing AHCCCS Contractor).
h. Any members transitioning to CMDP.

When relinquishing members, the Contractor is responsible for timely notification to the receiving Contractor
regarding pertinent information related to any special needs of transitioning members. The Contractor, when
receiving a transitioning member with special needs, is responsible for coordinating care with the relinquishing
Contractor in order that services are not interrupted, and for providing the new member with Contractor and
service information, emergency numbers and instructions about how to obtain services.

10. SCOPE OF SERVICES

The Contractor shall provide covered services to AHCCCS members in accordance with all applicable federal
and state laws regulations and policies, including those listed by reference in attachments and this contract.
The services are described in detail in AHCCCS Rules R9-22, Article 2, the AHCCCS Medical Policy Manual
(AMPM) and the AHCCCS Contractor Operations Manual (ACOM), all of which are incorporated herein by
reference, except for provisions specific to the Fee-for-Service program, and may be found on the AHCCCS
website (http://www.azahcccs.gov/) [42 CFR 438.210(a)(1)]. To be covered, services must be medically
necessary and cost effective. The covered services are briefly described below. Except for annual well woman
exams, behavioral health and children’s dental services, covered services must be provided by or coordinated
with a primary care provider.

The Contractor shall coordinate all services it provides to a member with any services the member receives
from other entities, including behavioral health services the member receives through an ADHS/RBHA
provider and Children’s Rehabilitative Services (CRS) provided through ADHS/CRSA. The Contractor shall
ensure that, in the process of coordinating care, each member’s privacy is protected in accordance with the
privacy requirements in 45 CFR Parts 160 and 164, Subparts A and E, to the extent that they are applicable [42
CFR 438.208(b)(4) and 438.224].

Services must be rendered by providers that are appropriately licensed or certified, operating within their scope
of practice, and registered as an AHCCCS provider. The Contractor shall provide the same standard of care
for all members, regardless of the member's eligibility category. The Contractor shall ensure that the services
are sufficient in amount, duration and scope to reasonably be expected to achieve the purpose for which the
services are furnished. The Contractor shall not arbitrarily deny or reduce the amount, duration, or scope of a
required service solely because of diagnosis, type of illness, or condition of the member. The Contractor may
place appropriate limits on a service on the basis of criteria such as medical necessity; or for utilization control,
provided the services furnished can reasonably be expected to achieve their purpose [42 CFR 438.210(a)(3)].

If the Contractor does not, because of a moral or religious objection, cover one or more of the services listed in
this contract, it must notify AHCCCS of the objection. The Contractor must arrange for those services to be
provided by another entity. Any alternative arrangement must be approved in advance by AHCCCS. Requests
for approval must be submitted to the Division of Health Care Management, Acute Care Operations Unit, 90
days prior to implementation.

Authorization of Services: For the processing of requests for initial and continuing authorizations of services,
the Contractor shall have in place and follow written policies and procedures. The Contractor shall have
mechanisms in place to ensure consistent application of review criteria for authorization decisions. Any
decision to deny a service authorization request or to authorize a service in an amount, duration or scope that is
less than requested, shall be made by a health care professional who has appropriate clinical expertise in
treating the member’s condition or disease [42 CFR 438.210(b)].

Notice of Action: The Contractor shall notify the requesting provider and give the member written notice of
any decision by the Contractor to deny, reduce, suspend or terminate a service authorization request, or to
authorize a service in an amount, duration, or scope that is less than requested. The notice shall meet the
requirements of 42 CFR 438.404, AHCCCS Rules and ACOM Notice of Action Policy. The notice to the
provider must also be in writing as specified in Attachment H(1) of this contract. See Attachment F, Periodic
Report Requirements, for information regarding the reporting of service provision and grievance tracking for
specific items covered under this paragraph.

The Contractor shall ensure that its providers are not restricted or inhibited in any way from communicating
freely with members regarding their health care, medical needs and treatment options, even if needed services
are not covered by the Contractor.

Ambulatory Surgery: The Contractor shall provide surgical services for either emergency or scheduled
surgeries when provided in an ambulatory or outpatient setting, such as a freestanding surgical center or a
hospital-based outpatient surgical setting.

American Indian Health Program (AIHP): AHCCCS will reimburse claims on a FFS basis for acute care
services that are medically necessary, eligible for 100% Federal reimbursement, and are provided to Title XIX
members enrolled with the Contractor in an IHS or a 638 tribal facility. Encounters for Title XIX services in
IHS or tribal facilities will not be accepted by AHCCCS or considered in capitation rate development.

The Contractor is responsible for reimbursement to IHS or tribal facilities for services provided to Title XXI
Native American members enrolled with the Contractor. The Contractor may choose to subcontract with an
IHS or 638 tribal facility as part of its provider network for the delivery of Title XXI covered services.
Expenses incurred by the Contractor for Title XXI services delivered in an IHS or 638 tribal facility shall be
encountered and considered in capitation rate development.

Anti-hemophilic Agents and Related Services: The Contractor shall provide services for the treatment of
hemophilia and Von Willebrand’s disease (See Section D, Paragraph 57, Reinsurance, Catastrophic
Reinsurance).

Audiology: The Contractor shall provide audiology services to members under the age of 21 years, including
the identification and evaluation of hearing loss and rehabilitation of the hearing loss through medical or
surgical means. Only the identification and evaluation of hearing loss are covered for members 21 years of
age and older unless the hearing loss is due to an accident or injury-related emergent condition. Pursuant to
A.A.C. R9-22-212, hearing aids are not covered for members 21 and older.

Behavioral Health: The Contractor shall provide behavioral health services as described in Section D,
Paragraph 12, Behavioral Health Services. Also refer to Prior Period Coverage in Section D, Paragraph 3,
Enrollment and Disenrollment.

Children's Rehabilitative Services (CRS): The program for children with CRS-covered conditions is
administered by the Arizona Department of Health Services (ADHS) for children who meet CRS eligibility
criteria. The Contractor shall refer children to the CRS program who are potentially eligible for services
related to CRS-covered conditions, as specified in R9-22, Article 2, and A.R.S. Title 36, Chapter 2, Article 3.
The Contractor is responsible for care of members until Children’s Rehabilitative Services Administration
(CRSA) determines those members eligible. In addition, the Contractor is responsible for covered services for
CRS-eligible members unless and until the Contractor has received written confirmation from CRSA that
CRSA will provide the requested service. The Contractor shall require the member’s Primary Care Provider
(PCP) to coordinate the member’s care with the CRS Program. For more detailed information regarding
eligibility criteria, referral practices, and Contractor-CRS coordination issues, refer to the CRS Policy and
Procedures Manual located on the Arizona Department of Health Services website at http://www.azdhs.gov/
and the related ACOM policy.

The Contractor shall respond to requests for services potentially covered by CRSA in accordance with the
related ACOM policy. The Contractor is responsible for addressing prior authorization requests if CRSA fails
to comply with the timeframes specified in the related ACOM policy. The Contractor remains ultimately
responsible for the provision of all covered services to its members, including emergency services not related
to a CRS condition, emergency services related to a CRS condition rendered outside the CRS network, and
AHCCCS-covered services denied by CRSA for the reason that it is not a service related to a CRS condition.

Referral to CRSA does not relieve the Contractor of the responsibility for providing timely medically
necessary AHCCCS services not covered by CRSA. In the event that CRSA denies a medically necessary
AHCCCS service for the reason that it is not related to a CRS condition, the Contractor must promptly respond
to the service authorization request and authorize the provision of medically necessary services. CRSA cannot
contest the Contractor prior authorization determination if CRSA fails to timely respond to a service
authorization request. The Contractor, through its Medical Director, may request review from the CRS
Regional Medical Director when it denies a service for the reason that it is not covered by the CRS Program.
The Contractor may also request a hearing with the Administration if it is dissatisfied with the CRSA
determination. If the AHCCCS Hearing Decision determines that the service should have been provided by
CRSA, CRSA shall be financially responsible for the costs incurred by the Contractor in providing the service.

A member with private insurance is not required to utilize CRSA. This includes members with Medicare
whether they are enrolled in Medicare FFS or a Medicare Managed Care plan. If a member uses the private
insurance network or Medicare for a CRS-covered condition, the Contractor is responsible for all applicable
deductibles and copayments. If the member is on Medicare, the ACOM Medicare Cost Sharing for Members
in Traditional Fee for Service Medicare Policy and Medicare Cost Sharing for Members in Medicare
Managed Care Plans Policy shall apply. When the private insurance or Medicare is exhausted, or certain
annual or lifetime limits are reached with respect to CRS-covered conditions, the Contractor shall refer the
member to CRSA for determination of eligibility for CRS services. If the member with private insurance or
Medicare chooses to enroll with CRS, CRS becomes the secondary payer responsible for all applicable
deductibles and copayments. The Contractor is not responsible to provide services in instances when the
CRS-eligible member who has no primary insurance or Medicare refuses to receive CRS-covered services through
the CRS program. If the Contractor becomes aware that a member with a CRS-covered condition refuses to
participate in the CRS application process or refuses to receive services through the CRS Program, the member
may be billed by the provider in accordance with AHCCCS regulations regarding billing for unauthorized
services.

Chiropractic Services: The Contractor shall provide chiropractic services to members under age 21 when
prescribed by the member’s PCP and approved by the Contractor in order to ameliorate the member’s medical
condition. Medicare approved chiropractic services for any member shall also be covered, subject to
limitations specified in 42 CFR 410.22, for Qualified Medicare Beneficiaries if prescribed by the member’s
PCP and approved by the Contractor.

Dialysis: The Contractor shall provide medically necessary dialysis, supplies, diagnostic testing and
medication for all members when provided by Medicare-certified hospitals or Medicare-certified end stage
renal disease (ESRD) providers. Services may be provided on an outpatient basis or on an inpatient basis if the
hospital admission is not solely to provide chronic dialysis services.

Early and Periodic Screening, Diagnosis and Treatment (EPSDT): The Contractor shall provide
comprehensive health care services through primary prevention, early intervention, diagnosis and medically
necessary treatment to correct or ameliorate defects and physical or mental illness discovered by the screenings
for members under age 21. The Contractor shall ensure that these members receive required health screenings,
including those for developmental/behavioral health, in compliance with the AHCCCS periodicity schedule.
The Contractor shall submit all EPSDT reports to the AHCCCS Division of Health Care Management, as
required by the AMPM. The Contractor is required to meet specific participation/utilization rates for members
as described in Section D, Paragraph 23, Quality Management.

The Contractor shall ensure the initiation and coordination of a referral to the ADHS/RBHA system for
members in need of behavioral health services. The Contractor shall follow up with the RBHA to monitor
whether members have received these health services.

The Contractor is encouraged to assign EPSDT-aged members to providers that are trained on and who use
AHCCCS-approved developmental screening tools.

Early Detection Health Risk Assessment, Screening, Treatment and Primary Prevention: The Contractor
shall provide primary prevention education to adult members. The Contractor shall provide health care services
through screening, diagnosis and medically necessary treatment for members 21 years of age and older. These
services include, but are not limited to, screening and treatment for hypertension; elevated cholesterol; colon
cancer; sexually transmitted diseases; tuberculosis; HIV/AIDS; breast and cervical cancer; and prostate cancer.
Nutritional assessment and treatment are covered when medically necessary to meet the nutritional needs of
members who may have a chronic debilitating disease. Physical examinations, diagnostic work-ups and
medically necessary immunizations are also covered as found in Arizona Administrative Code Section R9-22-
205. Required assessment and screening services for members under age 21 are specified in the AHCCCS
EPSDT periodicity schedule.

Emergency Services: The Contractor shall have and/or provide the following as a minimum:

a. Emergency services facilities adequately staffed by qualified medical professionals to provide prehospital,
    emergency care on a 24-hour-a-day, 7-day-a-week basis, for the sudden onset of a medically
    emergent condition. Emergency medical services are covered without prior authorization. The
    Contractor is encouraged to contract with emergency service facilities for the provision of emergency
    services. The Contractor shall be responsible for educating members and providers regarding
    appropriate utilization of emergency room services including behavioral health emergencies. The
    Contractor shall monitor emergency service utilization (by both provider and member) and shall have
    guidelines for implementing corrective action for inappropriate utilization;
b. All medical services necessary to rule out an emergency condition; and
c. Emergency transportation.

Per the Balanced Budget Act of 1997, 42 CFR 438.114, the following conditions apply with respect to
coverage and payment of emergency services:

The Contractor must cover and pay for emergency services regardless of whether the provider that furnishes
the service has a contract with the Contractor.

The Contractor may not deny payment for treatment obtained under either of the following circumstances:

1. A member had an emergency medical condition, including cases in which the absence of medical
   attention would not have resulted in the outcomes identified in the definition of emergency medical
   condition under 42 CFR 438.114.
2. A representative of the Contractor (an employee or subcontracting provider) instructs the member to
   seek emergency medical services.

Additionally, the Contractor may not:

1. Limit what constitutes an emergency medical condition as defined in 42 CFR 438.114, on the basis of
   lists of diagnoses or symptoms.
2. Refuse to cover emergency services based on the failure of the emergency room provider, hospital, or
   fiscal agent to notify the Contractor of the member’s screening and treatment within 10 calendar days
   of presentation for emergency services. Claims submission by the hospital within 10 calendar days of
   presentation for the emergency services constitutes notice to the Contractor. This notification
   stipulation is only related to the provision of emergency services.
3. Require notification of Emergency Department treat and release visits as a condition of payment
   unless the plan has prior approval of the AHCCCS Administration.

A member who has an emergency medical condition may not be held liable for payment of subsequent
screening and treatment needed to diagnose the specific condition or stabilize the patient.

The attending emergency physician, or the provider actually treating the member, is responsible for
determining when the member is sufficiently stabilized for transfer or discharge, and such determination is
binding on the Contractor responsible for coverage and payment. The Contractor shall comply with BBA
guidelines regarding the coordination of post-stabilization care.

For additional information and requirements regarding emergency services, refer to AHCCCS Rules R9-22-201
et seq. and 42 CFR 438.114.

Family Planning: The Contractor shall provide family planning services in accordance with the AMPM, for
all members who choose to delay or prevent pregnancy. These include medical, surgical, pharmacological and
laboratory services, as well as contraceptive devices. Information and counseling, which allow members to
make informed decisions regarding family planning methods, shall also be included. If the Contractor does not
provide family planning services, it must contract for these services through another health care delivery
system.

The Contractor shall provide services to members enrolled in the Family Planning Services Extension
Program, a program that provides family planning services only, for a maximum of two consecutive 12-month
periods, to women whose SOBRA eligibility has terminated. The Contractor is also responsible for notifying
AHCCCS when a SOBRA woman is sterilized to prevent inappropriate enrollment in the SOBRA Family
Planning Services Extension Program. Notification should be made at the time the newborn is reported or
after the sterilization procedure is completed.

Home and Community Based Services (HCBS): Assisted living facility, alternative residential setting, or
home and community based services (HCBS) as defined in R9-22, Article 2, and R9-28, Article 2 that meet the
provider standards described in R9-28, Article 5, and subject to the limitations set forth in the AMPM. These
services are covered in lieu of a nursing facility.

Home Health: This service shall be provided under the direction of a physician to prevent hospitalization or
institutionalization and may include nursing, therapies, supplies and home health aide services. It shall be
provided on a part-time or intermittent basis.

Hospice: These services are covered for members who are certified by a physician as being terminally ill and
having six months or less to live. See the AMPM for details on covered hospice services.

Hospital: Inpatient services include semi-private accommodations for routine care, intensive and coronary
care, surgical care, obstetrics and newborn nurseries, and behavioral health emergency/crisis services. If the
member’s medical condition requires isolation, private inpatient accommodations are covered. Nursing
services, dietary services and ancillary services such as laboratory, radiology, pharmaceuticals, medical
supplies, blood and blood derivatives, etc. are also covered. Outpatient hospital services include any of the
above, which may be appropriately provided on an outpatient or ambulatory basis (i.e., laboratory, radiology,
therapies, ambulatory surgery, etc.). Observation services may be provided on an outpatient basis, if
determined reasonable and necessary, when deciding whether the member should be admitted for inpatient
care. Observation services include the use of a bed and periodic monitoring by hospital nursing staff and/or
other staff to evaluate, stabilize or treat medical conditions of a significant degree of instability and/or
disability.

Immunizations: The Contractor shall provide immunizations for adults (21 years of age and older) to include
but not limited to: diphtheria-tetanus, influenza, pneumococcus, rubella, measles and hepatitis-B and others as
medically indicated. For all members under the age of 21, immunization requirements include but are not
limited to: diphtheria, tetanus, pertussis vaccine (DTaP), inactivated polio vaccine (IPV), measles, mumps,
rubella (MMR) vaccine, H. influenza, type B (HIB) vaccine, hepatitis B (Hep B) vaccine, varicella zoster virus
(VZV) vaccine and pneumococcal conjugate vaccine (PCV) (see Section D, Paragraph 15, Pediatric
Immunizations and the Vaccines for Children Program). The Contractor is required to meet specific
immunization rates for members under the age of 21, which are described in Section D, Paragraph 23, Quality
Management. (Please refer to the AMPM for current immunization requirements.)

Incontinence Supplies: The Contractor shall cover incontinence supplies as specified in AHCCCS Rule
A.A.C. R9-22-212 and the AMPM.

Laboratory: Laboratory services for diagnostic, screening and monitoring purposes are covered when
provided by a CLIA (Clinical Laboratory Improvement Act) approved free-standing laboratory, hospital,
clinic, physician office or other health care facility laboratory.

Upon written request, the Contractor may obtain laboratory test data on members from a freestanding
laboratory or hospital- based laboratory subject to the requirements specified in A.R.S. § 36-2903(Q) and (R).
The data shall be used exclusively for quality improvement activities and health care outcome studies required
and/or approved by the Administration.

Maternity: The Contractor shall provide pre-conception counseling, pregnancy identification, prenatal care,
treatment of pregnancy related conditions, labor and delivery services, and postpartum care for members.
Services may be provided by physicians, physician assistants, nurse practitioners, or certified nurse midwives.
Members may select or be assigned to a PCP specializing in obstetrics. All members, anticipated to have a
low-risk delivery, may elect to receive labor and delivery services in their home, if this setting is included in
the allowable settings of the Contractor and the Contractor has providers in its network that offer home labor
and delivery services. All members anticipated to have a low-risk prenatal course and delivery may elect to
receive prenatal care, labor and delivery and postpartum care provided by certified nurse midwives, if these
providers are in the Contractor’s network. Members receiving maternity services from a certified nurse
midwife must also be assigned to a PCP for other health care and medical services. The Contractor shall allow
women and their newborns to receive up to 48 hours of inpatient hospital care after a routine vaginal delivery
and up to 96 hours of inpatient care after a cesarean delivery. The attending health care provider, in
consultation with the mother, may discharge the mother or newborn prior to the minimum length of stay. A
normal newborn may be granted an extended stay in the hospital of birth when the mother’s continued stay in
the hospital is beyond the 48 or 96 hour stay.

The Contractor shall inform all assigned AHCCCS pregnant women of voluntary prenatal HIV testing and the
availability of medical counseling if the test is positive. The Contractor shall provide information in the
member handbook and annually in the member newsletter, which encourages pregnant women to be tested and
provides instructions about where testing is available. Semi-annually, the Contractor shall report to AHCCCS
the number of pregnant women who have been identified as HIV/AIDS-positive. This report is due no later
than 30 days after the end of the second and fourth quarters of the contract year.

Medical Foods: Medical foods are covered within limitations defined in the AMPM for members diagnosed
with a metabolic condition included under the ADHS Newborn Screening Program and specified in the
AMPM. The medical foods, including metabolic formula and modified low protein foods, must be prescribed
or ordered under the supervision of a physician.

Medical Supplies, Durable Medical Equipment (DME), Orthotic and Prosthetic Devices: These services are
covered when prescribed by the member’s PCP, attending physician, practitioner, or by a dentist. Medical
equipment may be rented or purchased only if other sources, which provide the items at no cost, are not
available. The total cost of the rental must not exceed the purchase price of the item. Reasonable repairs or
adjustments of purchased equipment are covered to make the equipment serviceable and/or when the repair
cost is less than renting or purchasing another unit.

Nursing Facility: The Contractor shall provide services in nursing facilities, including religious non-medical
health care institutions, for members who require short-term convalescent care not to exceed 90 days per
contract year. In lieu of a nursing facility, the member may be placed in an assisted living facility, an
alternative residential setting, or receive home and community based services (HCBS) as defined in R9-22,
Article 2 and R9-28, Article 2 that meet the provider standards described in R9-28, Article 5, and subject to the
limitations set forth in the AMPM.

Nursing facility services must be provided in a dually-certified Medicare/Medicaid nursing facility, which
includes in the per-diem rate: nursing services; basic patient care equipment and sickroom supplies; dietary
services; administrative physician visits; non-customized DME; necessary maintenance and rehabilitation
therapies; over-the-counter medications; social, recreational and spiritual activities; and administrative,
operational medical direction services. See Section D, Paragraph 41, Responsibility for Nursing Facility
Reimbursement, for further details.

The Contractor shall notify the Assistant Director of the Division of Member Services, by Email, when a
member has been residing in a nursing facility for 75 days. This will allow AHCCCS time to follow-up on the
status of the ALTCS application and to consider potential fee-for-service coverage, if the stay goes beyond the
90-day per contract year maximum. The notice should be sent via e-mail to
***@***.

                Notifications must include:
                1. Member Name
                2. AHCCCS ID
                3. Date of Birth
                4. Name of Facility
                5. Admission Date to the Facility
                6. Date they reach the 75 days
                7. Name of Contractor of enrollment

Nutrition: Nutritional assessments may be conducted as a part of the EPSDT screenings for members under
age 21, and to assist members 21 years of age and older whose health status may improve with nutritional
intervention. Assessment of nutritional status on a periodic basis may be provided as determined necessary,
and as a part of the health risk assessment and screening services provided by the member’s PCP. AHCCCS
covers nutritional therapy on an enteral, parenteral or oral basis, when determined medically necessary to
provide either complete daily dietary requirements or to supplement a member’s daily nutritional and caloric
intake and when AHCCCS criteria specified in the AMPM are met.

Oral Health: The Contractor shall provide all members under the age of 21 years with all medically necessary
dental services including emergency dental services, dental screening and preventive services in accordance
with the AHCCCS periodicity schedule, as well as therapeutic dental services, dentures, and pretransplantation
dental services. The Contractor shall monitor compliance with the EPSDT periodicity schedule
for dental screening services. The Contractor is required to meet specific utilization rates for members as
described in Section D, Paragraph 23, Quality Management. The Contractor shall ensure that members are
notified when dental screenings are due if the member has not been scheduled for a visit. If a dental screening
is not received by the member, a second notice must be sent. Members under the age of 21 may request dental
services without referral and may choose a dental provider from the Contractor’s provider network. For
members who are 21 years of age and older, the Contractor shall provide emergency dental care, medically
necessary dentures and dental services for transplantation services as specified in the AMPM.

Physician: The Contractor shall provide physician services to include medical assessment, treatments and
surgical services provided by licensed allopathic or osteopathic physicians.

Podiatry: The Contractor shall provide podiatry services to include bunionectomies, casting for the purpose of
constructing or accommodating orthotics, medically necessary orthopedic shoes that are an integral part of a
brace, and medically necessary routine foot care for patients with a severe systemic disease that prohibits care
by a nonprofessional person.

Post-stabilization Care Services Coverage and Payment: Pursuant to AHCCCS Rule A.A.C. R9-22-210 and
42 CFR 438.114, 422.113(c) and 422.133, the following conditions apply with respect to coverage and
payment of emergency and of post-stabilization care services, except where otherwise noted in the contract:

The Contractor must cover and pay for post-stabilization care services without authorization, regardless of
whether the provider that furnishes the service has a contract with the Contractor, for the following situations:

1. Post-stabilization care services that were pre-approved by the Contractor; or
2. Post-stabilization care services were not pre-approved by the Contractor because the Contractor
   did not respond to the treating provider’s request for pre-approval within one hour after being
   requested to approve such care or could not be contacted for pre-approval.
3. The Contractor representative and the treating physician cannot reach agreement concerning the
   member’s care and a Contractor physician is not available for consultation. In this situation, the
   Contractor must give the treating physician the opportunity to consult with a Contractor physician
   and the treating physician may continue with care of the patient until a Contractor physician is
   reached or one of the criteria in 42 CFR 422.113(c)(3) is met.

Pursuant to 42 CFR 422.113(c)(3), the Contractor’s financial responsibility for post-stabilization care services
that have not been pre-approved ends when:

1. A Contractor physician with privileges at the treating hospital assumes responsibility for the
   member’s care;
2. A Contractor physician assumes responsibility for the member’s care through transfer;
3. A Contractor representative and the treating physician reach an agreement concerning the
   member’s care; or
4. The member is discharged.

Pregnancy Terminations: AHCCCS covers pregnancy termination if the pregnant member suffers from a
physical disorder, physical injury, or physical illness, including a life endangering physical condition caused
by or arising from the pregnancy itself, that would, as certified by a physician, place the member in danger of
death unless the pregnancy is terminated, or the pregnancy is a result of rape or incest.

The attending physician must acknowledge that a pregnancy termination has been determined medically
necessary by submitting the Certificate of Necessity for Pregnancy Termination. This certificate must be
submitted to the Contractor’s Medical Director. The Certificate must certify that, in the physician's
professional judgment, one or more of the previously mentioned criteria have been met.

Prescription Drugs: Medications ordered by a PCP, attending physician, dentist or other authorized prescriber
and dispensed under the direction of a licensed pharmacist are covered subject to limitations related to
prescription supply amounts, Contractor formularies and prior authorization requirements. The Contractor
may include over-the-counter medications in the formulary, as defined in the AMPM. An appropriate overthe-
counter medication may be prescribed, when it is determined to be a lower-cost alternative to prescription
drugs.

Medicare Part D: AHCCCS covers those drugs ordered by a PCP, attending physician, dentist or other
authorized prescriber and dispensed under the direction of a licensed pharmacist subject to limitations related
to prescription supply amounts, and the Contractor’s prior authorization requirements if they are excluded from
Medicare Part D coverage. Medications that are covered by Part D, but are not on a specific Part D Health
Plan’s formulary are not considered excluded drugs and will not be covered by AHCCCS.

Primary Care Provider (PCP): PCP services are covered when provided by a physician, physician assistant or
nurse practitioner selected by, or assigned to, the member. The PCP provides primary health care and serves
as a coordinator in referring the member for specialty medical services [42 CFR 438.208(b)]. The PCP is
responsible for maintaining the member’s primary medical record, which contains documentation of all health
risk assessments and health care services of which they are aware whether or not they were provided by the
PCP.

Radiology and Medical Imaging: These services are covered when ordered by the member’s PCP, attending
physician or dentist and are provided for diagnosis, prevention, treatment or assessment of a medical condition.
Services are generally provided in hospitals, clinics, physician offices and other health care facilities.

Rehabilitation Therapy: The Contractor shall provide occupational, physical and speech therapies. Therapies
must be prescribed by the member’s PCP or attending physician for an acute condition and the member must
have the potential for improvement due to the rehabilitation. Physical therapy for all members, and
occupational and speech therapies for members under the age of 21, are covered in both inpatient and
outpatient settings. For those members who are 21 and over, occupational and speech therapies are covered in
inpatient settings only.

Respiratory Therapy: This therapy is covered in inpatient and outpatient settings when prescribed by the
member’s PCP or attending physician, and is necessary to restore, maintain or improve respiratory functioning.

Transplantation of Organs and Tissue, and Related Immunosuppressant Drugs: These services are covered
within limitations defined in the AMPM for members diagnosed with specified medical conditions. Services
include pre-transplant inpatient or outpatient evaluation; donor search; organ/tissue harvesting or procurement;
preparation and transplantation services; and convalescent care. In addition, if a member receives, or has
received, a transplant covered by a source other than AHCCCS, medically necessary non-experimental
services are provided, within limitations, after the discharge from the acute care hospitalization for the
transplantation. AHCCCS has contracted with transplantation providers for the Contractor’s use or the
Contractor may select its own transplantation provider.

Transportation: These services include emergency and non-emergency medically necessary transportation.
Emergency transportation, including transportation initiated by an emergency response system such as 911,
may be provided by ground, air or water ambulance to manage an AHCCCS member’s emergency medical
condition at an emergency scene and transport the member to the nearest appropriate medical facility.
Non-emergency transportation shall be provided for members who are unable to provide their own transportation
for medically necessary services. The Contractor shall ensure that members have coordinated, reliable,
medically necessary transportation to ensure members arrive on-time for regularly scheduled appointments and
are picked up upon completion of the entire scheduled treatment.

Triage/Screening and Evaluation: These are covered services when provided by acute care hospitals, IHS
facilities, a PL 93-638 tribal facility and after-hours settings to determine whether or not an emergency exists,
assess the severity of the member’s medical condition and determine what services are necessary to alleviate or
stabilize the emergent condition. Triage/screening services must be reasonable, cost effective and meet the
criteria for severity of illness and intensity of service.

Vision Services/Ophthalmology/Optometry: The Contractor shall provide all medically necessary emergency
eye care, vision examinations, prescriptive lenses, and treatments for conditions of the eye for all members
under the age of 21. For members who are 21 years of age and older, the Contractor shall provide emergency
care for eye conditions which meet the definition of an emergency medical condition. Also covered for this
population is cataract removal, and medically necessary vision examinations and prescriptive lenses, if
required, following cataract removal and other eye conditions as specified in the AMPM.

Members shall have full freedom to choose, within the Contractor’s network, a practitioner in the field of eye
care, acting within the scope of their practice, to provide the examination, care or treatment for which the
member is eligible. A “practitioner in the field of eye care” is defined to be either an ophthalmologist or an
optometrist.

11. SPECIAL HEALTH CARE NEEDS

The Contractor shall have in place a mechanism to identify all members with special health care needs [42
CFR 438.240(b)(4)]. The Contractor shall implement mechanisms to assess each member identified as having
special health care needs, in order to identify any ongoing special conditions of the member which require a
course of treatment or regular care monitoring. The assessment mechanisms shall use appropriate health care
professionals [42 CFR 438.208(c)(2)]. The Contractor shall share with other entities providing services to that
member the results of its identification and assessment of that member’s needs so that those activities need not
be duplicated [42 CFR 438.208(b)(3)].

For members with special health care needs determined to need a specialized course of treatment or regular
care monitoring, the Contractor must have procedures in place to allow members to directly access a specialist
(for example through a standing referral or an approved number of visits) as appropriate for the member’s
condition and identified needs [42 CFR 438.208(c)(4)].

The Contractor shall have a methodology to identify providers willing to provide medical home services and
make reasonable efforts to offer access to these providers.

The American Academy of Pediatrics (AAP) describes care from a medical home as:
                • Accessible
                • Continuous
                • Coordinated
                • Family-centered
                • Comprehensive
                • Compassionate
                • Culturally effective

The Contractor shall ensure that populations with ongoing medical needs, including but not limited to dialysis,
radiation and chemotherapy, have coordinated, reliable, medically necessary transportation to ensure members
arrive on-time for regularly scheduled appointments and are picked up upon completion of the entire scheduled
treatment.

12. BEHAVIORAL HEALTH SERVICES

AHCCCS members, except for SOBRA Family Planning members, are eligible for comprehensive behavioral
health services. For SOBRA Family Planning members, there is no behavioral health coverage. With the
exception of the Contractor’s providers’ medical management of certain behavioral health conditions as
described under “Medication Management Services”, the behavioral health benefit for these members is
provided through the ADHS - Regional Behavioral Health Authority (RBHA) system. The Contractor shall be
responsible for member education regarding these benefits; provision of limited emergency inpatient services;
and screening and referral to the RBHA system of members identified as requiring behavioral health services.

Member Education: The Contractor shall be responsible for educating members in the member handbook and
other printed documents about covered behavioral health services and where and how to access services.
Covered services include:

a. Behavior Management (behavioral health personal care, family support/home care training, self-help/peer
   support)
b. Behavioral Health Case Management Services (limited)
c. Behavioral Health Nursing Services
d. Emergency Behavioral Health Care
e. Emergency and Non-Emergency Transportation
f. Evaluation and Assessment
g. Individual, Group and Family Therapy and Counseling
h. Inpatient Hospital Services (the Contractor may provide services in alternative inpatient settings that are
    licensed by the Arizona Department of Health Services, Division of Assurance and Licensure, the Office
    of Behavioral Health Licensure, in lieu of services in an inpatient hospital. These alternative settings must be
    lower cost than traditional inpatient settings. The cost of the alternative settings will be considered in
    capitation rate development)
i.  Non-Hospital Inpatient Psychiatric Facilities Services (Level I residential treatment centers and sub-acute
    facilities)
j.  Laboratory and Radiology Services for Psychotropic Medication Regulation and Diagnosis
k. Opioid Agonist Treatment
l.  Partial Care (Supervised day program, therapeutic day program and medical day program)
m. Psychosocial Rehabilitation (living skills training; health promotion; supportive employment services)
n. Psychotropic Medication
o. Psychotropic Medication Adjustment and Monitoring
p. Respite Care (with limitations)
q. Rural Substance Abuse Transitional Agency Services
r. Screening
s. Behavioral Health Therapeutic Home Care Services

Referrals: As specified in Section D, Paragraph 10, Scope of Services, EPSDT, the Contractor must provide
developmental/behavioral health screenings for members up to 21 years of age in compliance with the
AHCCCS periodicity schedule. The Contractor shall ensure the initiation and coordination of behavioral
health referrals of these members to the RBHA when determined necessary through the screening process.
The Contractor is responsible for RBHA referral and follow-up collaboration, as necessary, for other members
identified as needing behavioral health evaluation and treatment. Members may also access the RBHA system
for evaluation by self-referral or be referred by schools, State agencies or other service providers. The
Contractor is responsible for providing transportation to a member’s first RBHA evaluation appointment if a
member is unable to provide his/her own transportation.

Emergency Services: Once a member is enrolled, the Contractor is responsible for providing up to 72 hours
inpatient emergency behavioral health services to members with psychiatric or substance abuse diagnoses who
are not behavioral health recipients in accordance with AHCCCS Rule R9-22-210.01. These emergency
inpatient behavioral health services are in addition to a Contractor’s responsibility to reimburse all medically
necessary behavioral health services received during prior period coverage. Reimbursement for court ordered
screening and evaluation services is not the responsibility of the Contractor and instead falls to the county
pursuant to A.R.S. 36-545. For additional information regarding behavioral health services refer to Title 9
Chapter 22 Articles 2 and 12. It is expected that the Contractor initiate a referral to the RBHA for evaluation
and behavioral health recipient eligibility as soon as possible after admission.

When members present in an emergency room setting, the Contractor is responsible for all emergency medical
services including triage, physician assessment and diagnostic tests. For members who are not ADHS
behavioral health recipients, the Contractor is responsible to provide medically necessary psychiatric
consultations or psychological consultations in emergency room settings to help stabilize the member or
determine the need for inpatient behavioral health services. ADHS is responsible for medically necessary
psychiatric consultations provided to ADHS behavioral health recipients in emergency room settings.

Comorbidities: The Contractor must ensure that members with diabetes who are being discharged from the
Arizona State Hospital (AzSH) are issued the same brand and model of both glucometer and supplies they were
trained to use while in the facility. Care must be coordinated with the AzSH prior to discharge to ensure that all
supplies are authorized and available to the member upon discharge.

In the event that a member’s mental health status renders them incapable or unwilling to manage their medical
condition and the member has a skilled medical need, the Contractor must arrange ongoing medically necessary
nursing services.

Coordination of Care: The Contractor is responsible for ensuring that a medical record is established by the
PCP when behavioral health information is received from the RBHA or provider about an assigned member even
if the PCP has not yet seen the assigned member. In lieu of actually establishing a medical record, such
information may be kept in an appropriately labeled file but must be associated with the member’s medical record
as soon as one is established. The Contractor shall require the PCP to respond to RBHA/provider information
requests pertaining to ADHS behavioral health recipient members within 10 business days of receiving the
request. The response should include all pertinent information, including, but not limited to, current diagnoses,
medications, laboratory results, last PCP visit, and recent hospitalizations. The Contractor shall require the PCP to
document or initial signifying review of member behavioral health information received from a RBHA
behavioral health provider who is also treating the member. For prior period coverage, the Contractor is
responsible for payment of all claims for medically necessary covered behavioral health services.

Medication Management Services: The Contractor shall allow PCPs to provide medication management
services (prescriptions, medication monitoring visits, laboratory and other diagnostic tests necessary for
diagnosis and treatment of behavioral disorders) to members with diagnoses of depression, anxiety and
attention deficit hyperactivity disorder. The Contractor shall make available, on the Contractor’s formulary,
medications for the treatment of these disorders. AHCCCS has established a work group to identify best
practices and evidence-based practice guidelines for the treatment of anxiety, depression and ADHD disorders.
The Contractor shall be required to participate in the AHCCCS work group meetings. Decisions from the work
group shall be implemented by the Contractor, and may include, but are not limited to, assuring that PCPs are
trained on and follow AHCCCS-approved evidence-based practice guidelines, implementation of monitoring
processes and reporting of guidelines.

The Contractor may implement step therapy for behavioral health medications used for treating anxiety,
depression and ADHD disorders. If the RBHA/behavioral health provider provides documentation to the
Contractor that step therapy has already been completed, or is medically contraindicated, the Contractor shall
continue to provide the medication at the dosage at which the member has been stabilized, unless there is
subsequently a change in medical condition of the member.

The Contractor shall ensure that training and education are available to PCPs regarding behavioral health
referral and consultation procedures. The Contractor shall establish policies and procedures for referral and
consultation and shall describe them in its provider manual. Policies for referral must include, at a minimum,
criteria, processes, responsible parties and minimum requirements no less stringent than those specified in this
contract for the forwarding of member medical information.

Transfer of Care: When a PCP has initiated medication management services for a member to treat a
behavioral health disorder, and it is subsequently determined by the PCP or Contractor that the member should
be transferred to a RBHA prescriber for evaluation and/or continued medication management services, the
Contractor will require and ensure that the PCP or Contractor coordinates the transfer of care. All affected
subcontracts shall include this provision. The Contractor shall establish policies and procedures for the
transition of members who are referred to the RBHA for ongoing treatment. The Contractor shall ensure that
PCPs maintain continuity of care for these members. The policies and procedures must address, at a
minimum, the following:

1. Guidelines for when a transition of the member to the RBHA for ongoing treatment is indicated.
2. Protocols for notifying the RBHA of the member’s transfer, including reason for transfer, diagnostic
    information, and medication history.
3. Protocols and guidelines for the transfer of medical records, including but not limited to which parts of
    the medical record are to be copied, timeline for making the medical record available to the RBHA,
    observance of confidentiality of the member’s medical record, and protocols for responding to RBHA
    requests for additional medical record information.
4. Protocols for transition of prescription services, including but not limited to notification to the RBHA
    of the member’s current medications and timeframes for dispensing and refilling medications during
    the transition period. This coordination must ensure at a minimum, that the member does not run out
    of prescribed medications prior to the first appointment with a RBHA prescriber and that all relevant
    member pertinent medical information as outlined above and including the reason for transfer is
    forwarded to the receiving RBHA prescriber prior to the member’s first scheduled appointment with
    the RBHA prescriber.
5. Contractor activities to monitor to ensure that members are appropriately transitioned to the RBHA for
    care.

The Contractor shall ensure that its quality management program incorporates monitoring of the PCP’s
management of behavioral health disorders and referral to, coordination of care with and transfer of care to
RBHA providers as required under this contract.

13. AHCCCS GUIDELINES, POLICIES AND MANUALS

All AHCCCS guidelines, policies and manuals are hereby incorporated by reference into this contract. All
guidelines, policies and manuals are available on the AHCCCS internet website, located at www.azahcccs.gov.
The Contractor is responsible for complying with the requirements set forth within. In addition, linkages to
AHCCCS Rules (Arizona Administrative Code), Statutes and other resources are also available to all
interested parties through the AHCCCS website. Upon adoption by AHCCCS, updates will be made available
to the Contractor. The Contractor shall be responsible for implementing these requirements and maintaining
current copies of updates.

14. MEDICAID SCHOOL BASED CLAIMING PROGRAM (MSBC)

Pursuant to an Intergovernmental Agreement with the Department of Education, and a contract with a Third
Party Administrator, AHCCCS reimburses participating school districts for specifically identified Medicaid
services when provided to Medicaid eligible children who are included under the Individuals with Disabilities
Education Act (IDEA). The Medicaid services must be identified in the member’s Individual Education Plan
(IEP) as medically necessary for the child to obtain a public school education.

MSBC services are provided in a school setting or other approved setting specifically to allow children to
receive a public school education. They do not replace medically necessary services provided outside the
school setting or other MSBC approved alternative setting. Currently, services include audiology, therapies
(OT, PT and speech/language); behavioral health evaluation and counseling; nursing and attendant care; and
specialized transportation. The Contractor’s evaluations and determinations of medical necessity shall be
made independent of the fact that the child is receiving MSBC services.

The Contractor and its providers must coordinate with schools and school districts that provide MSBC services
to the Contractor’s enrolled members. Services should not be duplicative. Contractor case managers, working
with special needs children, should coordinate with the appropriate school staff working with these members.
Transfer of member medical information and progress toward treatment goals between the Contractor and the
member’s school or school district is required as appropriate and should be used to enhance the services
provided to members.

15. PEDIATRIC IMMUNIZATIONS AND THE VACCINES FOR CHILDREN PROGRAM

Through the Vaccines for Children Program, the Federal and State governments purchase, and make available
to providers free of charge, vaccines for AHCCCS children under age 19. The Contractor shall not utilize
AHCCCS funding to purchase vaccines for members under the age of 19. If vaccines are not available through
the VFC Program, the Contractor shall contact the AHCCCS Division of Health Care Management, Clinical
Quality Management Unit. Any provider, licensed by the State to administer immunizations, may register with
ADHS as a "VFC provider" and receive free vaccines. The Contractor shall not reimburse providers for the
administration of the vaccines in excess of the maximum allowable as set by CMS, found in the AHCCCS fee
schedule. The Contractor shall comply with all VFC requirements and monitor its providers to ensure that, a
physician if acting as primary care physician (PCP) to AHCCCS members under the age of 19 is registered
with ADHS/VFC.

In some GSAs, providers may choose not to provide vaccinations due to low numbers of children in their
panels, etc. The Contractor must develop processes to ensure that vaccinations are available through a VFC
enrolled provider or through the county Health Department. In all instances, the antigens are to be provided
through the VFC program. The Contractor must develop processes to pay the administration fee to whoever
administers the vaccine regardless of their contract status with the Contractor.

Arizona State law requires the reporting of all immunizations given to children under the age of 19.
Immunizations must be reported at least monthly to the ADHS. Reported immunizations are held in a central
database known as ASIIS (Arizona State Immunization Information System), which can be accessed by
providers to obtain complete, accurate immunization records. Software is available from ADHS to assist
providers in meeting this reporting requirement. The Contractor must educate its provider network about these
reporting requirements and the use of this resource and monitor to ensure compliance.

16. STAFF REQUIREMENTS AND SUPPORT SERVICES

The Contractor shall have in place the organizational, operational, managerial and administrative systems
capable of fulfilling all contract requirements. For the purposes of this contract, the Contractor shall not
employ or contract with any individual who has been debarred, suspended or otherwise lawfully prohibited
from participating in any public procurement activity or from participating in non-procurement activities under
regulations issued under Executive Order No. 12549 or under guidelines implementing Executive Order 12549
[42 CFR 438.610 (a) & (b)].

The Contractor is responsible for maintaining a significant local (within the State of Arizona) presence. This
presence includes staff designated below with an asterisk (*).All staff or functions designated with an asterisk
must be located within the State of Arizona at all times throughout the term of the Contract. The Contractor
must obtain approval from AHCCCS prior to moving functions not designated with an asterisk outside the
State of Arizona after Contract initiation. Such a request for approval must be submitted to the Division of
Health Care Management at least 60 days prior to the proposed change in operations and must include a
description of the processes in place that assure rapid responsiveness to effect changes for contract compliance.
The Contractor shall be responsible for any additional costs associated with on-site audits or other oversight
activities of required functions located outside of the State of Arizona. At the beginning of each contract year
the Contractor must provide, to the Division of Health Care Management, a listing of all functions and their
locations.

The Contractor must employ sufficient staffing and utilize appropriate resources to achieve contractual
compliance. The Contractor’s resource allocation must be adequate to achieve outcomes in all functional areas
within the organization. Adequacy will be evaluated based on outcomes and compliance with contractual and
AHCCCS policy requirements, including the requirement for providing culturally competent services. If the
Contractor does not achieve the desired outcomes or maintain compliance with contractual obligations,
additional monitoring and regulatory action may be employed by AHCCCS, up to and including actions
specified in Section D, Paragraph 72, Sanctions, of the Contract.

An individual staff member shall be limited to occupying a maximum of two of the Key Staff positions listed
below. The Contractor shall inform AHCCCS, Division of Health Care Management, in writing within seven
days, when an employee leaves one of the Key Staff positions listed below (this requirement does not apply to
Additional Required Staff, also listed below). The name of the interim contact person should be included with
the notification. The name and resume of the permanent employee should be submitted as soon as the new hire
has taken place. At a minimum, the following staff is required:

Key Staff

a. *Administrator/CEO/COO or designee must be available, full time, to fulfill the responsibilities of the
    position and to oversee the entire operation of the Contractor. The Administrator shall devote sufficient
    time to the Contractor’s operations to ensure adherence to program requirements and timely responses to
    AHCCCS Administration.
b. *Medical Director/CMO who shall be an Arizona-licensed physician. The Medical Director shall be
    actively involved in all-major clinical programs and QM and MM components of the Contractor. The
    Medical Director shall devote sufficient time to the Contractor to ensure timely medical decisions,
    including after-hours consultation as needed.
c. Chief Financial Officer/CFO who is available, full time, to fulfill the responsibilities of the position and
    to oversee the budget and accounting systems implemented by the Contractor.
d. Pharmacy Director/Coordinator who is an Arizona licensed pharmacist or physician who oversees and
    administers the prescription drug and pharmacy benefits. The Pharmacy Coordinator/Director may be an
    employee or Contractor of the Plan.
e. Dental Director/Coordinator who is responsible for coordinating dental activities of the health plan and
    providing required communication between the plan and AHCCCS. The Dental Director/Coordinator may
    be an employee or Contractor of the plan and must be licensed in Arizona if they are required to review or
    deny dental services.
f. *Compliance Officer who will implement and oversee the Contractor’s compliance program. The
    compliance officer shall be an on-site management official, available to all employees, with designated
    and recognized authority to access records and make independent referrals to the AHCCCS Office of
    Program Integrity. See Section D, Paragraph 62, Corporate Compliance
g. *Grievance Manager who will manage and adjudicate member and provider disputes arising under the
    Grievance System including member grievances, appeals, and requests for hearing and provider claim
    disputes.
h. Business Continuity Planning Coordinator as noted in the ACOM Business Continuity and Recovery
    Plan Policy
i. *Contract Compliance Officer who will serve as the primary point-of-contact for all Contractor
    operational issues.
    The primary functions of the Contract Compliance Officer are:
     –Coordinate the tracking and submission of all contract deliverables
     –Field and coordinate responses to AHCCCS inquiries
     –Coordinate the preparation and execution of contract requirements such as OFRS, random and
    periodic audits and ad hoc visits
j. *Quality Management Coordinator who is an Arizona-licensed registered nurse, physician or physician's
    assistant or a Certified Professional in Healthcare Quality (CPHQ). The QM Coordinator must have
    experience in quality management and quality improvement.
    The primary functions of the Quality Management Coordinator position are:
     –Ensure individual and systemic quality of care
     –Integrate quality throughout the organization
     –Implement process improvement
     –Resolve, track and trend quality of care grievances
     –Ensure a credentialed provider network
k. Performance/Quality Improvement Coordinator The Performance/Quality Improvement Coordinator will
    have a minimum qualification as a Certified Professional in Healthcare Quality (CPHQ) or comparable
    education and experience in data and outcomes measurement.
    The primary functions of the Performance/Quality Improvement Coordinator are:
     –Focus organizational efforts on improving clinical quality performance measures
     –Develop and implement performance improvement projects
     –Utilize data to develop intervention strategies to improve outcomes
     –Report quality improvement/performance outcomes
l. *Maternal Health/EPSDT (child health) Coordinator who shall be an Arizona licensed nurse, physician
    or physician's assistant; or have a Master's degree in health services, public health, health care
    administration or other related field, and/or a Certified Professional in Health Care Quality (CPHQ).
    Staffing under this position should be sufficient to meet quality and performance measure goals.
    The primary functions of the MCH/EPSDT Coordinator are:
     –Ensuring receipt of EPSDT services
     –Ensuring receipt of maternal and postpartum care
     –Promoting family planning services
     –Promoting preventive health strategies
     –Identification and coordination assistance for identified member needs
     –Interface with community partners
m. *Medical Management Coordinator who is an Arizona licensed registered nurse, physician or physician’s
    assistant if required to make medical necessity determinations; or have a Master’s degree in health
    services, health care administration, or business administration if not required to make medical necessity
    determination.
    The primary functions of the Medical Management Coordinator are:
     –Ensure adoption and consistent application of appropriate inpatient and outpatient medical necessity
    criteria.
     –Ensure appropriate concurrent review and discharge planning of inpatient stays is conducted.
     –Develop, implement and monitor the provision of care coordination, disease management and case
    management functions.
     –Monitor, analyze and implement appropriate interventioins based on utilization data, including
    identifying and correcting over or under utilization of services.
n. *Behavioral Health Coordinator who shall be a behavioral health professional as described in Health
    Services Rule R9-20. The Behavioral Health Coordinator shall devote sufficient time to ensure that the
    Contractor’s behavioral health referral and coordination activities are implemented per AHCCCS
    requirements.
    The primary functions of the Behavioral Health Coordinator are:
     –Coordinate member behavioral care needs with the RBHA system
     –Develop processes to coordinate behavioral health care between PCPs and RBHAs
     –Participate in the identification of best practices for behavioral health in a primary care setting
     –Coordinate behavioral care with medically necessary services
o. Member Services Manager who shall coordinate communications with members; serve in the role of
    member advocate; coordinate issues with appropriate areas within the organization; resolve member
    inquiries/problems and meet standards for resolution, telephone abandonment rates and telephone hold
    times.
p. *Provider Services Manager who shall coordinate communications between the Contractor, its
    subcontractors, IHS and tribally-operated health programs under P.L. 93-638 (Indian Self-Determination
    and Education Assistance Act); provide assistance to providers in resolving problems; respond to provider
    inquiries; educate providers about participation in the AHCCCS program and maintain a sufficient
    provider network.
q. Claims Administrator
    The primary functions of the Claims Administrator are:
     –Develop and implement claims processing systems capable of paying claims in accordance with state
    and federal requirements
     –Develop processes for cost avoidance
     –Ensure minimization of claims recoupments
     –Meet claims processing timelines
     –Meet AHCCCS encounter reporting requirements
r. *Provider Claims Educator (full-time equivalent employee for a Contractor with over 100,000 members)
    The position is fully integrated with the Contractor’s grievance, claims processing, and provider relations
    systems and facilitates the exchange of information between these systems and providers.
    The primary functions of the Provider Claims Educator are:
     –Educate contracted and non-contracted providers (i.e.: professional and institutional) regarding
    appropriate claims submission requirements, coding updates, electronic claims transactions and
    electronic fund transfer, and available Contractor resources such as provider manuals, website, fee
    schedules, etc.
     –Interfaces with the Contractor’s call center to compile, analyze, and disseminate information from
    provider calls
     –identifies trends and guides the development and implementation of strategies to improve provider
    satisfaction
     –Frequently communicates (i.e.: telephonic and on-site) with providers to assure the effective exchange
    of information and gain feedback regarding the extent to which providers are informed about
    appropriate claims submission practices

Additional Required Staff

s. Prior Authorization staff to authorize health care 24 hours per day, 7 days per week. This staff shall
    include an Arizona-licensed nurse, physician or physician's assistant. The staff will work under the
    direction of an Arizona-licensed registered nurse, physician, or physician’s assistant.
t. *Concurrent Review staff to conduct inpatient concurrent review. This staff shall consist of an Arizona-licensed
    nurse, physician, or physician's assistant. The staff will work under the direction of an Arizona-licensed
    nurse.
u. *Clerical and Support staff to ensure appropriate functioning of the Contractor's operation.
v. Member Services staff There shall be sufficient Member Service staff to enable members to receive
    prompt resolution of their inquiries/problems.
w. *Provider Services staff There shall be sufficient Provider Services staff to enable providers to receive
    prompt responses and assistance (See Section D, Paragraph 29, Network Management, for more
    information).
x. Claims Processing staff There shall be sufficient, appropriately trained, Claim Processing staff to ensure
    the timely and accurate processing of original claims, resubmissions and overall adjudication of claims.
y. Encounter Processing staff There shall be sufficient, appropriately trained, Encounter Processing staff to
    ensure the timely and accurate processing and submission to AHCCCS of encounter data and reports.

Staff Training and Meeting Attendance

The Contractor shall ensure that all staff members have appropriate training, education, experience and
orientation to fulfill the requirements of the position. AHCCCS may require additional staffing for a
Contractor that has substantially failed to maintain compliance with any provision of this contract and/or
AHCCCS policies.

The Contractor must provide initial and ongoing staff training that includes an overview of AHCCCS;
AHCCCS Policy and Procedure Manuals; Contract requirements and State and Federal requirements specific
to individual job functions. The Contractor shall ensure that all staff members having contact with members or
providers receive initial and ongoing training with regard to the appropriate identification and handling of
quality of care/service concerns.

New and existing transportation, prior authorization and member services representatives must be trained in
the geography of any/all GSA(s) in which the Contractor holds a contract and have access to mapping search
engines (e.g. MapQuest, Yahoo Maps, Google Maps, etc) for the purposes of authorizing services in;
recommending providers in; and transporting members to, the most geographically appropriate location.

The Contractor shall provide the appropriate staff representation for attendance and participation in meetings
and/or events scheduled by AHCCCS. All meetings shall be considered mandatory unless otherwise indicated.

17. WRITTEN POLICIES, PROCEDURES AND JOB DESCRIPTIONS

The Contractor shall develop and maintain written policies, procedures and job descriptions for each functional
area of its plan, consistent in format and style. The Contractor shall maintain written guidelines for
developing, reviewing and approving all policies, procedures and job descriptions. All policies and procedures
shall be reviewed at least annually to ensure that the Contractor's written policies reflect current practices.
Reviewed policies shall be dated and signed by the Contractor's appropriate manager, coordinator, director or
administrator. Minutes reflecting the review and approval of the policies by an appropriate committee are also
acceptable documentation. All medical and quality management policies must be approved and signed by the
Contractor's Medical Director. Job descriptions shall be reviewed at least annually to ensure that current duties
performed by the employee reflect written requirements.

Based on provider or member feedback, if AHCCCS deems a Contractor policy or process to be inefficient
and/or place unnecessary burden on the members or providers, the Contractor will be required to work with
AHCCCS to change the policy or procedure within a time period specified by AHCCCS.

18. MEMBER INFORMATION

The Contractor shall be accessible by phone for general member information during normal business hours.
All enrolled members will have access to a toll free phone number. All informational materials, prepared by
the Contractor, shall be approved by AHCCCS prior to distribution to members. The reading level and name of
the evaluation methodology used should be included. The Contractor should refer to the ACOM Member
Information Policy for further information and requirements.

All materials shall be translated when the Contractor is aware that a language is spoken by 3,000 or 10%,
whichever is less, of the Contractor’s members, who also have limited English proficiency (LEP).

All vital materials shall be translated when the Contractor is aware that a language is spoken by 1,000 or 5%,
whichever is less, of the Contractor’s members, who also have LEP. Vital materials must include, at a
minimum, Notices of Action, vital information from the member handbooks and consent forms.

All written notices informing members of their right to interpretation and translation services in a language
shall be translated when the Contractor is aware that 1,000 or 5%, whichever is less, of the Contractor’s
members speak that language and have LEP [42 CFR 438.10(c)(3)].

Oral interpretation services must be available and free of charge to all members regardless of the prevalence of
the language. The Contractor must notify all members of their right to access oral interpretation services and
how to access them. Refer to the ACOM Member Information Policy [42 CFR 438.10(c)(4) and (5)].

The Contractor shall make every effort to ensure that all information prepared for distribution to members is
written using an easily understood language and format and as further described in the AHCCCS Member
Information Policy. Regardless of the format chosen by the Contractor, the member information must be
printed in a type, style and size, which can easily be read by members with varying degrees of visual
impairment. The Contractor must notify its members that alternative formats are available and how to access
them [42 CFR 438.10(d)].

When there are program changes, notification shall be provided to the affected members at least 30 days before
implementation.

The Contractor shall produce and provide the following printed information to each member or family within
10 days of receipt of notification of the enrollment date [42 CFR 438.10(f)(3)]:

I. A member handbook which, at a minimum, shall include the items listed in the ACOM Member
   Information Policy.

   The Contractor shall review and update the Member Handbook at least once a year. The handbook must be
   submitted to AHCCCS, Division of Health Care Management for approval by August 15th of each
   contract year, or within four weeks of receiving the annual renewal amendment, whichever is later.

II. A description of the Contractor’s provider network, which at a minimum, includes those items listed in the
     ACOM Member Information Policy.

The Contractor must give written notice about termination of a contracted provider, within 15 days after
receipt or issuance of the termination notice, to each member who received their primary care from, or is seen
on a regular basis by, the terminated provider. Affected members must be informed of any other changes in
the network 30 days prior to the implementation date of the change [42 CFR 438.10(f)(4) and (5)]. The
Contractor shall have information available for potential enrollees as described in the ACOM Member
Information Policy.

The Contractor must develop and distribute, at a minimum, quarterly newsletters during the contract year. The
following types of information are to be contained in the newsletter:

            • Educational information on chronic illnesses and ways to self-manage care
                • Reminders of flu shots and other prevention measures at appropriate times
                • Medicare Part D issues
                • Cultural Competency
                • Contractor specific issues
                • Tobacco cessation information
                • HIV/AIDS testing for pregnant women
                • Other information as required by the Administration

The Contractor will, on an annual basis, inform all members of their right to request the following information
[42 CFR 438.10(f)(6) and 42 CFR 438.100(a)(1) and (2)]:

                a. An updated member handbook at no cost to the member
                b. The network description as described in the ACOM Member Information Policy

This information may be sent in a separate written communication or included with other written information
such as in a member newsletter.

19. SURVEYS

The Contractor may be required to perform its own annual general or focused member survey. All such
Contractor surveys, along with a timeline for the project, shall be approved in advance by AHCCCS DHCM.
The results and the analysis of the results shall be submitted to the Acute Care Operations Unit within 45 days
of the completion of the project. AHCCCS may require inclusion of certain questions.

AHCCCS may periodically conduct surveys of a representative sample of the Contractor's membership and
providers. AHCCCS will consider suggestions from the Contractor for questions to be included in each
survey. The results of these surveys, conducted by AHCCCS, will become public information and available to
all interested parties upon request. The draft reports from the surveys will be shared with the Contractor prior
to finalization. The Contractor will be responsible for the cost of these surveys based on its share of AHCCCS
enrollment.

20. CULTURAL COMPETENCY

The Contractor shall have a Cultural Competency Plan that meets the requirements of the ACOM Cultural
Competency Policy. An annual assessment of the effectiveness of the plan, along with any modifications to the
plan, must be submitted to the Division of Health Care Management, no later than 45 days after the start of
each contract year. This plan should address all services and settings [42 CFR 438.206(c)(2)].

21. MEDICAL RECORDS

The member's medical record is the property of the provider who generates the record. Each member is entitled
to one copy of his or her medical record free of charge. The Contractor shall have written policies and
procedures to maintain the confidentiality of all medical records.

The Contractor is responsible for ensuring that a medical record is established when information is received about
a member. If the PCP has not yet seen the member, such information may be kept temporarily in an
appropriately labeled file, in lieu of establishing a medical record, but must be associated with the member’s
medical record as soon as one is established.

The Contractor shall have written policies and procedures for the maintenance of medical records so that those
records are documented accurately and in a timely manner, are readily accessible, and permit prompt and
systematic retrieval of information.

The Contractor shall have written standards for documentation on the medical record for legibility, accuracy and
plan of care, which comply with the AMPM.

The Contractor shall have written plans for providing training and evaluating providers' compliance with the
Contractor's medical records standards. Medical records shall be maintained in a detailed and comprehensive
manner, which conforms to good professional medical practice, permits effective professional medical review
and medical audit processes, and which facilitates an adequate system for follow-up treatment. Medical records
must be legible, signed and dated.

When a member changes PCPs, his or her medical records or copies of medical records must be forwarded to the
new PCP within 10 business days from receipt of the request for transfer of the medical records.

AHCCCS is not required to obtain written approval from a member, before requesting the member's medical
record from the PCP or any other agency. The Contractor may obtain a copy of a member's medical records
without written approval of the member, if the reason for such request is directly related to the administration of
the AHCCCS program. AHCCCS shall be afforded access to all members' medical records whether electronic or
paper within 20 business days of receipt of request.

Information related to fraud and abuse may be released so long as protected HIV-related information is not
disclosed (A.R.S. §36-664(I)).

22. ADVANCE DIRECTIVES

In accordance with 42 CFR 422.128, the Contractor shall maintain policies and procedures addressing
advanced directives for adult members that specify:

1. Each contract or agreement with a hospital, nursing facility, home health agency, hospice or organization
   responsible for providing personal care, must comply with Federal and State law regarding advance
   directives for adult members [42 CFR 438.6(i)(1)]. Requirements include:

a) Maintaining written policies that address the rights of adult members to make decisions about medical
   care, including the right to accept or refuse medical care, and the right to execute an advance directive.
   If the agency/organization has a conscientious objection to carrying out an advance directive, it must
   be explained in policies. (A health care provider is not prohibited from making such objection when
   made pursuant to A.R.S. § 36-3205.C.1.)
b) Provide written information to adult members regarding each individual’s rights under State law to
   make decisions regarding medical care, and the health care provider's written policies concerning
   advance directives (including any conscientious objections) [42 CFR 438.6(i)(3)]
c) Documenting in the member’s medical record whether or not the adult member has been provided the
   information and whether an advance directive has been executed.
d) Not discriminating against a member because of his or her decision to execute or not execute an
   advance directive, and not making it a condition for the provision of care.
e) Providing education to staff on issues concerning advance directives including notification of direct
   care providers of services, such as home health care and personal care, of any advanced directives
   executed by members to whom they are assigned to provide services.

2. The Contractor shall require subcontracted PCPs, which have agreements with the entities described in
   paragraph 1 above, to comply with the requirements of subparagraphs 1 (a) through (e) above. The
   Contractor shall also encourage health care providers specified in subparagraph a. to provide a copy of the
   member’s executed advanced directive, or documentation of refusal, to the member’s PCP for inclusion in
   the member’s medical record.

3. The Contractor shall provide written information to adult members that describe the following:

a) A member’s rights under State law, including a description of the applicable State law.
b) The organization’s policies respecting the implementation of those rights, including a statement of any
   limitation regarding the implementation of advance directives as a matter of conscience.
c) The member’s right to file complaints directly with AHCCCS.
d) Changes to State law as soon as possible, but no later than 90 days after the effective date of the
   change [42 CFR 438.6(i)(4)].

23. QUALITY MANAGEMENT (QM)

The Contractor shall provide quality medical care and services to members, regardless of payer source or
eligibility category. The Contractor shall promote improvement in the quality of care provided to enrolled
members through established quality management and performance improvement processes. The Contractor
shall execute processes to assess, plan, implement and evaluate quality management and performance

improvement activities, as specified in the AMPM [42 CFR 438.240(a)(1) and (e)(2)].

The Contractor quality assessment and performance improvement programs, at a minimum, shall comply with
the requirements outlined in the AMPM and this Paragraph.

A. Quality Management Program:
The Conractor shall have an ongoing quality management program for the services it furnishes to members
that includes the requirements listed in AMPM Capter 900 and the following:
1. A written Quality Assessment and Performance Improvement (QA/PI) plan, an evaluation of the
   previous year’s QA/PI program, and Quarterly QA/PI reports that address its strategies for
   performance improvement and conducting the quality management activites.
2. QM/PI Program monitoring and evaluation activites that includes Peer Review and Quality
   Management Committees chaired by the Contractor’s Chief Medical Officer.
3. Protection of medical records and any other personal health and enrollment information that identifies
   a particular member or subset of members in accordance with Federal and State privacy requirements.
4. Member rights and responsibilities.
5. Uniform provisional credentialing, initial credentialing, re-credentialing and organizational credential
   verification [42 CFR 438.206(b)(6)]. The Contractor shall demonstrate that its providers are
   credentialed and reviewed through the Contractor’s Credentialing Committee that is chaired by the
   Contractor’s Medical Director [42 CFR 438.214]. The Contractor should refer to Section D, Paragraph
   25, Administrative Performance Standards, and Attachement F, Periodic Report Requirements, for
   reporting requirements. The process:
                a. Shall follow a documented process for provisional credentialing, initial credentialing, recredentialing
                   and organizational credential verification of providers who have signed
                   contracts or participation agreements with the Contractor;
                b. Shall not discriminate against particular providers that serve high-risk populations or
                   specialize in conditions that require costly treatment;
                c. Shall not employ or contract with providers excluded from participation in Federal health care
                   programs.
6. Tracking and trending of member and provider issues, which includes investigation and analysis of
   quality of care issues, abuse, neglect and unexpected deaths. The resolution process must include:
                a. Acknowledgement letter to the originator of the concern;
                b. Documentation of all steps utilized during the investigation and resolution process;
                c. Follow-up with the member to assist in ensuring immediate health care needs are met;
                d. Closure/resolution letter that provides sufficient detail to ensure that the member has an
                   understanding of the resolution of their issue, any responsibilities they have in ensuring all
                   covered, medically necessary care needs are met, and a Contractor contact name/telephone
                   number to call for assistance or to express any unresolved concerns;
                e. Documentation of implemented corrective action plan(s) or action(s) taken to resolve the
                   concern;
                f. Analysis of the effectiveness of the interventions taken.
7. Mechanisms to assess the quality and appropriateness of care furnished to members with special
   health care needs.
8. Participation in community initiatives including applicable activities of the Medicare Quality
   Improvement Organization (QIO).
9. Performance improvement programs including performance measures and performance improvement
   projects.

B. Performance Improvement:
The Contractor’s quality management program shall be designed to achieve, through ongoing measurements
and intervention, significant improvement, sustained over time, in the areas of clinical care and non-clinical
care that are expected to have a favorable effect on health outcomes and member satisfaction. The Contractor
must [42 CFR 438.240(b)(2) and (c)]:
                1. Measure and report to the State its performance, using standard measures required by the State, or as
                   required by CMS;
                2. Submit to the State data specified by the State, that enables the State to measure the Contractor’s
                   performance; or
                3. Perform a combination of the activities.

I. Performance Measures:

The Contractor shall comply with AHCCCS quality management requirements to improve performance for all
AHCCCS established performance measures. Complete descriptions of the AHCCCS clinical quality
Performance Measure can be found in the most recently published reports of acute-care performance measures
located on the AHCCCS website. AHCCCS uses Healthcare Effectiveness Data and Information Set (also
known as the Health Plan Employer Data and Information Set, or HEDIS) technical specifications from the
National Committee for Quality Assurance (NCQA) for all clinical quality performance Measures. The only
exception to AHCCCS’ use of the HEDIS methodology is in the performance measure titled “EPSDT
Participation”. AHCCCS bases the measurement of EPSDT Participation on the methodology established in
CMS “Form 416” which can be found on the CMS website (www.cms.hhs.gov).

Contractors must comply with national performance measures and levels that may be identified and developed
by the Centers for Medicare and Medicaid Services in consultation with AHCCCS and/or other relevant
stakeholders. CMS has been working in partnership with states in developing core performance measures for
Medicaid and SCHIP programs. The current AHCCCS-established performance measures may be subject to
change when these core measures are finalized and implemented.

AHCCCS intends to implement a hybrid methodology for collecting and reporting Performance Measure rates,
as allowed by NCQA, for selected HEDIS measures. Contractors shall collect data from medical records and
provide these data with supporting documentation, as instructed by AHCCCS, for each hybrid measure as
requested. The number of records that each Contractor will be required to collect will be based on HEDIS
sampling guidelines and may be affected by the Contractor’s previous rate for the measure being collected.

AHCCCS may begin implementation of the hybrid methodology with the following measures: Adolescent
Immunizations, Cervical Cancer Screening and Timeliness of Prenatal Care. AHCCCS may implement hybrid
methodology for collecting and reporting additional measures in this, or future, contract years.

In addition, the Contractor must have in place a process for internal monitoring of Performance Measure rates,
using a standard methodology established or adopted by AHCCCS, for each required Performance Measure.
The Contractor’s Quality Assessment/Performance Improvement Program will report its performance on an
ongoing basis to its Administration. It also will report this Performance Measure data to AHCCCS in
conjunction with its Quarterly EPSDT and Adult Quarterly Monitoring Report.

The Contractor must meet AHCCCS stated Minimum Performance Standards for each population/eligibility
category for which AHCCCS reports results. However, it is equally important that the Contractor continually
improve performance measure outcomes from year to year. The Contractor shall strive to meet the goal
established by AHCCCS.

                Minimum Performance Standard – A Minimum Performance Standard (MPS) is the minimal
                expected level of performance by the Contractor. If a Contractor does not achieve this standard, the
                Contractor will be required to submit a corrective action plan and may be subject to a sanction of up to
                $100,000 dollars for each deficient measure.

                Goal – If the Contractor has already met or exceeded the AHCCCS Minimum Performance Standard
                for any measure, the Contractor must strive to meet the established Goal for the measure(s).

A Contractor must show demonstrable and sustained improvement toward meeting AHCCCS Performance
Standards. AHCCCS may impose sanctions on Contractors that do not show statistically significant
improvement in a measure rate and require the Contractor to demonstrate that they are allocating increased
administrative resources to improving rates for a particular measure or service area. AHCCCS also may
require a corrective action plan and may sanction any Contractor that shows a statistically significant decrease
in its rate, even if it meets or exceeds the Minimum Performance Standard.

An evidence-based corrective action plan must be received by AHCCCS within 30 days of receipt of
notification of the deficiency from AHCCCS. This plan must be approved by AHCCCS prior to
implementation. AHCCCS may conduct one or more follow-up on-site reviews to verify compliance with a
corrective action plan.

All Performance Measures apply to all member populations [42 CFR 438.240(a)(2), (b)(2) and (c)]. AHCCCS
may analyze and report results by line of business, by GSA or county, and/or applicable demographic factors.

AHCCCS has established standards for the measures listed below.

The following table identifies the Minimum Performance Standards (MPS) and Goals for each measure:

                                Acute-care Contractor Performance Standards

Performance Measure                       Minimum Performance Standard    Goal (Health People Goals)

Immunization of Two-year-olds
4:3:1:3:3:1 Series                                                   82%                                                        80%
4:3:1:3:3:1:4 Series                                                43%                                                        80%
DTaP - 4 doses                                                     85%                                                        90%
Polio - 3 doses (*)                                                90%                                                        90%
MMR - 1 dose (*)                                                90%                                                        90%
Hib - 3 doses (*)                                                   86%                                                        90%
HBV - 3 doses (*)                                                 90%                                                        90%
Varicella - 1 dose (*)                                            86%                                                        90%
PCV – 4 doses (*)                                                47%                                                        90%
Adolescent Immunizations(1)                            TBD                                                        90%

Children’s Dental Visits 2 to 21

Years                                                                      55%                                                        57%
Well-child Visits 15 Months                              65%                                                        90%
Well-child Visits 3 - 6 Years                               64%                                                        80%
Adolescent Well-care Visits                              41%                                                        50%
EPSDT Participation                                            68%                                                        80%
Children's Access to PCPs 24 Months             93%                                                        97%
Children's Access to PCPs 25
months-6 Years                                                    83%                                                        97%
Children’s Access to PCPs 7-11
Years                                                                      83%                                                        97%
Children's Access to PCPs 12-19 Years            81%                                                        97%
Cervical Cancer Screening                                  65%                                                        90%
Breast Cancer Screening                                     54%                                                        70%
Adult Preventive/Ambulatory
Care 20-44 Years                                                   78%                                                        96%
Adult Preventive/Ambulatory
Care 45-64 Years                                                   85%                                                        96%
Timeliness of Prenatal Care                                80%                                                        90%
Chlamydia Screening                                           51%                                                        62%
Appropriate Medications for Asthma              86%                                                        93%
Diabetes Care: Hb A1c Testing                         77%                                                        89%
Diabetes Care: Eye Exam                                     49%                                                        68%
Diabetes Care: LDL-C Screening                       81%                                                        91%

Notes:
Contractor Performance is evaluated annually on the AHCCCS-reported rate for each measure. Rates
for measures that include only members under 21 years of age are reported and evaluated separately
for Title XIX and Title XXI eligibility groups.

The MPS is based on the national HEDIS Medicaid mean for 2006 as reported by NCQA or, if the
most recent AHCCCS statewide average is greater than the national Medicaid mean, the MPS is based
on the AHCCCS statewide average for Medicaid members.

Goals are based on Healthy People 2010 Objectives; if there was no comparable objective set for a
particular measure, the most recent HEDIS 90th percentile rate for Medicaid plans nationally was used
as the benchmark.

(*) AHCCCS will continue to measure and report results of these individual antigens; however, a
Contractor may not be held accountable for specific Performance Standards unless AHCCCS
determines that completion of a specific antigen or antigens is affecting overall completion of the
childhood immunization series.

(1) NCQA is in the process of making revisions to the measure, and current AHCCCS data is not yet
available.

The Contractor shall participate in immunization audits, at intervals specified by AHCCCS, based on random
sampling to verify the immunization status of members at 24 months of age. If records are missing for more
than 5 percent of the Contractor’s final sample, the Contractor is subject to sanctions by AHCCCS. An
External Quality Review Organization (EQRO) may conduct a study to validate the Contractor’s reported
rates.

In addition, AHCCCS shall measure and report the Contractor’s EPSDT Participation Rate, utilizing the CMS
416 methodology. The Contractor must take affirmative steps to increase member participation in the EPSDT
program. The EPSDT participation rate is the number of children younger than 21 years receiving at least one
medical screen during the contract year, compared to the number of children expected to receive at least one
medical screen. The number of children expected to receive at least one medical screen is based on the
AHCCCS EPSDT periodicity schedule and the average period of eligibility.

The Contractor must monitor rates for postpartum visits and low/very low birth weight deliveries and
implement interventions as necessary to improve or sustain these rates. These activities will be monitored by
AHCCCS during the Operational and Financial Review.

II. Performance Improvement Program:

The Contractor shall have an ongoing program of performance improvement projects that focus on clinical and
non-clinical areas as specified in the AMPM, and that involve the following [42 CFR 438.240(b)(1) and
(d)(1)]:

1. Measurement of performance using objective quality indicators.
2. Implementation of system interventions to achieve improvement in quality
3. Evaluation of the effectiveness of the interventions.
4. Planning and initiation of activities for increasing or sustaining improvement.

The Contractor shall report the status and results of each project to AHCCCCS as requested. Each
performance improvement project must be completed in a reasonable time period so as to generally allow
information on the success of performance improvement projects in the aggregate to produce new information
on quality of care every year [42 CFR 438.240(d)(2)].

III. Data Collection Procedures:

When requested, the Contractor must submit data for standardized Performance Measures and/or Performance
Improvement Projects as required by AHCCCS within specified timelines and according to AHCCCS
procedures for collecting and reporting the data. Contractor is responsible for collecting valid and reliable data
and using qualified staff and personnel to collect the data. Data collected for Performance Measures and/or
Performance Improvement Projects must be returned by the Contractor in the format and according to
instructions from AHCCCS, by the due date specified. Any extension for additional time to collect and report
data must be made in writing in advance of the initial due date. Failure to follow the data collection and
reporting instructions that accompany the data request may result in sanctions imposed on the Contractor.

24. MEDICAL MANAGEMENT (MM)

The Contractor shall execute processes to assess, plan, implement and evaluate medical management activities,
as specified in the AMPM Chapter 1000, Utilization Management, that include at least the following:

1. Pharmacy Management; including the evaluation, reporting, analysis and interventions based on the data
and reported through the MM Committee.
2. Prior authorization and Referral Management;
For the processing of requests for initial and continuing authorizations of services the Contractor shall:
                a) Have in effect mechanisms to ensure consistent application of review criteria for
                   authorization decisions;
                b) Consult with the requesting provider when appropriate [42 CFR 438.210(b)(2)];
                c) Monitor and ensure that all enrollees with special health care needs have direct access to care.
3. Development and/or Adoption of Practice Guidelines [42 CFR 438.236(b)], that
                a) Are based on valid and reliable clinical evidence or a consensus of health care professionals
                   in the particular field;
                b) Consider the needs of the Contractor’s members;
                c) Are adopted in consultation with contracting health care professionals;
                d) Are reviewed and updated periodically as appropriate;
                e) Are disseminated by the Contractor to all affected providers and, upon request, to enrollees
                   and potential enrollees [42 CFR 438.236(c)];
                f) Provide a basis for consistent decisions for utilization management, member education,
                   coverage of services, and other areas to which the guidelines apply [42 CFR 438.236(d)].
4. Concurrent review:
                a) Consistent application of review criteria; Provide a basis for consistent decisions for
                   utilization management, coverage of services, and other areas to which the guidelines apply;
                b) Discharge planning.
5. Continuity and coordination of care;
6. Monitoring and evaluation of over and/or under utilization of services [42 CFR 438-240(b)(3)];
7. Evaluation of new medical technologies, and new uses of existing technologies;
8. Disease Management or Chronic Care Program that reports results and provides for analysis of the program
   through the MM Committee; and
9. Quarterly Utilization Management Report (details in the AMPM)
10. Within the first two years of the contract term, the Contractor must review all prior authorization
   requirements for services, items or medications and submit a report to AHCCCS providing the rationale for the
   requirements. AHCCCS shall determine and provide a format for the report.

The Contractor shall have a process to report MM data and management activities through a MM Committee.
The Contractor’s MM committee will analyze the data, make recommendations for action, monitor the
effectiveness of actions and report these findings to the committee. The Contractor shall have in effect
mechanisms to assess the quality and appropriateness of care furnished to members with special health care
needs [42 CFR 438.240(b)(4)].

The Contractor will assess, monitor and report quarterly through the MM Committee medical decisions to
assure compliance with Notice of Action timeliness, language and content, and that the decisions comply with
all Contractor coverage criteria. This includes quarterly evaluation of all Notice of Action decisions that are
made by a subcontracted entity.

The Contractor shall maintain a written MM plan that addresses its plan for monitoring MM activities
described in this section. The plan must be submitted for review by AHCCCS Division of Health Care
Management within timelines specified in Attachment F.

In addition to care coordination as specified in this contract, the Contractor must proactively provide care
coordination for members who have multiple complaints regarding services or the AHCCCS Program. This
includes, but is not limited to, members who do not meet the Contractor's criteria for case management as well
as members who contact governmental entities for assistance, including AHCCCS.

25. ADMINISTRATIVE PERFORMANCE STANDARDS

This paragraph contains requirements for the Contractor’s Member Services, Provider Services and Claims
Services telephonic performance; as well as the measurement of credentialing timeliness. All reported data is
subject to validation through periodic audit and/or Operational and Financial Review.

Telephone Standards

The maximum allowable speed of answer (SOA) is 45 seconds. The SOA is defined as the on line wait time in
seconds that the member/provider waits from the moment the call is connected in the Contractor’s phone
switch until the call is picked up by a Contractor representative or Interactive Voice Recognition System
(IVR). If the Contractor has IVR capabilities, callers must be given the choice of completing their call by IVR
or by Contractor representative.

The Contractor shall meet the following standards for its member services and centralized provider telephone
line statistics. All calls to the line shall be included in the measure.
                a. The Monthly Average Abandonment Rate shall be 5% or less;
                b. First Contact Call Resolution shall be 70% or better; and
                c. The Monthly Average Service Level shall be 75% or better.

The Monthly Average Abandonment Rate (AR) is:

Number of calls abandoned in a 24-hour period
Total number of calls received in a 24-hour period

The ARs are then summed and divided by the number of days in the reporting period.

First Contact Call Resolution Rate (FCCR) is:

                Number of calls received in 24-hour period for which no follow up communication or internal
                phone transfer is needed, divided by Total number of calls received in 24-hour period

The daily FCCRs are then summed and divided by the number of days in the reporting period.

The Monthly Average Service Level (MASL) is:

Calls answered within 45 seconds for the month reported
Total of month’s answered calls + month’s abandoned calls + (if available) month’s calls receiving a busy signal

Note: Do not use average daily service levels divided by the days in the reporting period.

On a monthly basis the measures are to be reported for both the Member Services and Provider telephone lines.
For each of the Administrative Measures a. through c., the Contractor shall also report the number of days in
the reporting period that the standard was not met. The Contractor shall include in the report the instances of
down time for the centralized telephone lines, the dates of occurrence and the length of time they were out of
service. The reports should be sent to the Contractor's assigned Operations and Compliance Officer in the
Acute Care Operations Unit of the Division of Health Care Management. The deadline for submission of the
reports is the 15th day of the month following the reporting period (or the first business day following the
15th). Back up documentation for the report, to the level of measured segments in the 24-hour period, shall be
retained for a rolling 12-month period. AHCCCS will review the performance measure calculation procedures
and source data for this report.

Credentialing Timeliness

The Contractor is required to process credentialing applications in a timely manner. To assess the timeliness of
provisional and initial credentialing a Contractor will divide the number of complete applications processed
(approved/denied) during the time period by the number of complete applications that were received during the
time period, as follows:

Complete applications processed
Complete applications received

The standards for processing are listed by category below:

Type of Credentialing         14 days                  90 days                  120 days                                180 days
Provisional                            100%
Initial                                                                      90%                        95%                                        100%

The Contractor will also report the following information with regard to all credentialing applications on a
quarterly basis, as specified in Attachment F, Periodic Report Requirements:

                1. Number of applications received
                2. Number of completed applications received (separated by type: provisional, initial)
                3. Number of completed provisional credentialing applications approved
                4. Number of completed provisional credentialing applications denied
                5. Number of initial credentialing applications approved
                6. Number of initial credentialing applications denied
                7. Number of initial (include provisional in this number) applications processed within 90, 120, 180 days

26. GRIEVANCE SYSTEM

The Contractor shall have in place a written grievance system process for subcontractors, enrollees and non-
contracted providers, which defines their rights regarding disputed matters with the Contractor. The
Contractor’s grievance system for enrollees includes a grievance process (the procedures for addressing
enrollee grievances), an appeals process and access to the state’s fair hearing process. The Contractor shall
provide the appropriate personnel to establish implement and maintain the necessary functions related to the
grievance systems process. Refer to Attachments H(1) and H(2) for Enrollee Grievance System and Provider
Grievance System Standards and Policy, respectively.

The Contractor may delegate the grievance system process to subcontractors, however, the Contractor must
ensure that the delegated entity complies with applicable Federal and State laws, regulations and policies,
including, but not limited to 42 CFR Part 438 Subpart F. The Contractor shall remain responsible for
compliance with all requirements. The Contractor shall also ensure that it timely provides written information
to both enrollees and providers, which clearly explains the grievance system requirements. This information
must include a description of: the right to a state fair hearing, the method for obtaining a state fair hearing, the
rules that govern representation at the hearing, the right to file grievances, appeals and claim disputes, the
requirements and timeframes for filing grievances, appeals and claim disputes, the availability of assistance in
the filing process, the toll-free numbers that the enrollee can use to file a grievance or appeal by phone, that
benefits will continue when requested by the enrollee in an appeal or state fair hearing request concerning
certain actions which are timely filed, that the enrollee may be required to pay the cost of services furnished
during the appeal/hearing process if the final decision is adverse to the enrollee, and that a provider may file an
appeal on behalf of an enrollee with the enrollee’s written consent. Information to enrollees must meet cultural
competency and limited English proficiency requirements as specified in Section D, Paragraph 18, Member
Information, and Section D, Paragraph 20, Cultural Competency.

The Contractor shall be responsible to provide the necessary professional, paraprofessional and clerical
services for the representation of the Contractor in all issues relating to the grievance system and any other
matters arising under this contract which rise to the level of administrative hearing or a judicial proceeding.
Unless there is an agreement with the State in advance, the Contractor shall be responsible for all attorney fees
and costs awarded to the claimant in a judicial proceeding.

The Contractor will provide reports on the Grievance System as required in the Grievance System Reporting
Guide available on the AHCCCS website.

27. NETWORK DEVELOPMENT

The Contractor shall develop and maintain a provider network that is designed to support a medical home for
members and sufficient to provide all covered services to AHCCCS members [42 CFR 438.206(b)(1)]. It shall
ensure covered services are provided promptly and are reasonably accessible in terms of location and hours of
operation [42 CFR 438.206(c)(1)(i) and (ii)]. There shall be sufficient personnel for the provision of covered
services, including emergency medical care on a 24-hour-a-day, 7-days-a-week basis [42 CFR 438.206(c)(1)(iii)].

The network shall be sufficient to provide covered services within designated time and distance limits. For
Maricopa and Pima Counties only, this includes a network such that 95% of its members residing within the
boundary area of metropolitan Phoenix and Tucson do not have to travel more than 5 miles to visit a PCP, dentist
or pharmacy. Additionally, a Contractor in Maricopa and/or Pima counties must have at least one contracted
hospital in each of the service districts specified in Attachment B. In rural counties the contractor must have a
sufficient network of physicians to provide adequate inpatient and outpatient services to the Contractor’s
members.. For inpatient services Hospitalists may satisfy this requirement. See Attachment B for GSA
specific requirements.

The Contractor is expected to design a network that provides a geographically convenient flow of patients
among network providers. The provider network shall be designed to reflect the needs and service
requirements of AHCCCS’s culturally and linguistically diverse member population. The Contractor shall
design their provider networks to maximize the availability of community based primary care and specialty
care access and that reduces utilization of emergency services, one day hospital admissions, hospital based
outpatient surgeries when lower cost surgery centers are available, and hospitalization for preventable medical
problems. The Contractor must provide a comprehensive provider network that ensures its membership has
access at least equal to community norms. Services shall be as accessible to AHCCCS members in terms of
timeliness, amount, duration and scope as those services are available to non-AHCCCS persons within the same
service area [42 CFR 438.210(a)(2)]. The Contractor is expected to consider the full spectrum of care when
developing its network. The Contractor is encouraged to have available non-emergent after-hours physician or
primary care services within its network. The Contractor must also consider communities whose residents
typically receive care in neighboring states/border communities. If the Contractor is unable to provide any
services locally, it must notify AHCCCS and shall provide reasonable alternatives for members to access care.
These alternatives must be approved by AHCCCS. If the Contractor’s network is unable to provide medically
necessary services required under contract, the Contractor must adequately and timely cover these services
through an out of network provider until a network provider is contracted. The Contractor and out of network
provider must coordinate with respect to authorization and payment issues in these circumstances [42 CFR
438.206(b)(4) and (5)].

The Contractor must pay all AHCCCS registered Arizona Early Intervention Program (AzEIP) providers,
regardless of their contract status with the Contractor, when Individual Family Service Plans identify and meet
the requirement for medically necessary EPSDT covered services.

The Contractor is also encouraged to develop non-financial incentive programs to increase participation in its
provider network.

AHCCCS is committed to workforce development and support of the medical residency and dental student
training programs in the state of Arizona. AHCCCS expects the Contractor to support these efforts. AHCCCS
encourages plans to contract with or otherwise support the many Graduate Medical Education (GME)
Residency Training Programs currently operating in the state and to investigate opportunities for resident
participation in Contractor medical management and committee activities. In the event of a contract
termination between the Contractor and a Graduate Medical Education Residency Training Program or training
site, the Contractor may not remove members from that program in such a manner as to harm the stability of
the program. AHCCCS reserves the right to determine what constitutes risk to the program. If a Residency
Training Program is in need of patients in order to maintain accreditation, AHCCCS may require a Contractor
within the program’s GSA to make members available to the program. Further, the Contractor must attempt to
contract with graduating residents and providers that are opening new practices in, or relocating to, Arizona,
especially in rural or underserved areas.

The Contractor shall not discriminate with respect to participation in the AHCCCS program, reimbursement or
indemnification against any provider based solely on the provider’s type of licensure or certification [42 CFR
438.12(a)(1)]. In addition, the Contractor must not discriminate against particular providers that service high-risk
populations or specialize in conditions that require costly treatment [42 CFR 438.214(c)]. This provision,
however, does not prohibit the Contractor from limiting provider participation to the extent necessary to meet the
needs of the Contractor’s members. This provision also does not interfere with measures established by the
Contractor to control costs consistent with its responsibilities under this contract [42 CFR 438.12(b)(1)]. If a
Contractor declines to include individual or groups of providers in its network, it must give the affected providers
timely written notice of the reason for its decision [42 CFR 438.12(a)(1)]. The Contractor may not include
providers excluded from participation in Federal health care programs, under either section 1128 or section
1128A of the Social Security Act [42 CFR 438.214(d)].

See Attachment B, Minimum Network Requirements, for details on network requirements by Geographic Service
Area.

Provider Network Development and Management Plan: The Contractor shall develop and maintain a provider
network development and management plan, which ensures that the provision of covered services will occur as
stated above. The requirements for the Network Development and Management Plan are found in the ACOM
Provider Network Development and Management Plan Policy [42 CFR 438.207(b)]. This plan shall be updated
annually and submitted to AHCCCS, Division of Health Care Management, 45 days from the start of each
contract year.

28. PROVIDER AFFILIATION TRANSMISSION

The Contractor shall submit information quarterly regarding its provider network. This information shall be
submitted in the format described in the Provider Affiliation Transmission User Manual on October 15, January
15, April 15, and July 15 of each contract year. The manual may be found on the AHCCCS website. If the
provider affiliation transmission is not timely, accurate and complete, the Contractor may be required to submit a
corrective action plan and may be subject to sanction.

29. NETWORK MANAGEMENT

The Contractor shall have policies on how the Contractor will [42 CFR 438.214(a)]:

a. Communicate with the network regarding contractual and/or program changes and requirements;
b. Monitor network compliance with policies and rules of AHCCCS and the Contractor, including compliance
   with all policies and procedures related to the grievance process and ensuring the member’s care is not
   compromised during the grievance process;
c. Evaluate the quality of services delivered by the network;
d. Provide or arrange for medically necessary covered services should the network become temporarily
   insufficient within the contracted service area;
e. Monitor the adequacy, accessibility and availability of its provider network to meet the needs of its members,
   including the provision of care to members with limited proficiency in English;
f. Process expedited and temporary credentials;
g. Recruit, select, credential, re-credential and contract with providers in a manner that incorporate quality
   management, utilization, office audits and provider profiling;
h. Provide training for its providers and maintain records of such training;
i. Track and trend provider inquiries/complaints/requests for information and take systemic action as necessary
   and appropriate;
j. Ensure that provider calls are acknowledged within 3 business days of receipt; resolved and the result
   communicated to the provider within 30 business days of receipt.

Contractor policies shall be subject to approval by AHCCCS, Division of Health Care Management, and shall
be monitored through operational audits.

The Contractor is required to obtain prior approval from AHCCCS, DHCM regarding material changes to
operations. A material change to operations is defined as any change in overall business operations (i.e.,
policy, process, protocol, etc.) that could have an impact on or reasonably be foreseen to have an impact on
more than 5% of the members and/or providers. The Contractor must submit the request for approval of
material change, including draft notification to affected members and providers, 60 days prior to the expected
implementation of the change. The request should contain, at a minimum, information regarding the nature of
the change; the reason for the change; methods of communication to be used; and the anticipated effective
date. If AHCCCS does not respond to the Contractor within 30 days; the request and the notices are deemed
approved. A material change in Contractor operations requires 30 days advance written notice to affected
providers and members. The requirements regarding material changes do not extend to contract negotiations
between the Contractor and a provider.

The Contractor may be required to conduct meetings with providers to address issues (or to provide general
information, technical assistance, etc.) related to federal and state requirements, changes in policy,
reimbursement matters, prior authorization and other matters as identified or requested by the Administration.

The Contractor shall give hospitals and provider groups 90 days notice prior to a contract termination without
cause. Contracts between the Contractor and single practitioners are exempt from this requirement.

All material changes in the Contractor's provider network must be approved in advance by AHCCCS, Division of
Health Care Management [42 CFR 438.207(c)]. A material change to the network is defined as one which
affects, or can reasonably be foreseen to affect, the Contractor's ability to meet the performance and network
standards as described in this contract. It also includes any change that would cause more than 5% of members in
the GSA to change the location where services are received or rendered. The Contractor must submit the request
for approval of material change, including draft notification to affected members, 60 days prior to the expected
implementation of the change. The request must include a description of any short-term gaps identified as a
result of the change and the alternatives that will be used to fill them. If AHCCCS does not respond within 30
days the request and the notice are deemed approved. A material change in Contractor network requires 30
days advance written notice to affected members. For emergency situations, AHCCCS will expedite the
approval process.

The Contractor shall notify AHCCCS, Division of Health Care Management, within one business day of any
unexpected changes that would impair its provider network. This notification shall include (1) information about
how the change will affect the delivery of covered services, and (2) the Contractor's plans for maintaining the
quality of member care, if the provider network change is likely to affect the delivery of covered services.

Homeless Clinics:
A Contractor in Maricopa and Pima County must contract with homeless clinics at the AHCCCS Fee-for-Service
rate for Primary Care services. Contracts must stipulate that:

                1. Only those members that request a homeless clinic as a PCP may be assigned to them; and
                2. Members assigned to a homeless clinic may be referred out-of-network for needed specialty services

The Contractor must make resources available to assist homeless clinics with administrative issues such as
obtaining Prior Authorization, and resolving claims issues.

AHCCCS will convene meetings, as necessary, with the Contractor and the homeless clinics to resolve
administrative issues and perceived barriers to the homeless members receiving care. Representatives from the
Contractor must attend these meetings.

E-Prescribing:
The Contractor must work in collaboration with the Administration to implement E-Prescribing.

30. PRIMARY CARE PROVIDER STANDARDS

The Contractor shall include in its provider network a sufficient number of PCPs to meet the requirements of
this contract. Health care providers designated by the Contractor as PCPs shall be licensed in Arizona as
allopathic or osteopathic physicians who generally specialize in family practice, internal medicine, obstetrics,
gynecology, or pediatrics; certified nurse practitioners or certified nurse midwives; or physician’s assistants
[42 CFR 438.206(b)(2)].

The Contractor shall assess the PCP’s ability to meet AHCCCS appointment availability and other standards
when determining the appropriate number of its members to be assigned to a PCP. The Contractor should also
consider the PCP’s total panel size (i.e., AHCCCS and non-AHCCCS patients) when making this
determination. AHCCCS members shall not comprise the majority of a PCP’s panel of patients. AHCCCS
shall inform the Contractor when a PCP has a panel of more than 1,800 AHCCCS members (assigned by a
single Contractor or multiple Contractors), to assist in the assessment of the size of their panel. This
information will be provided on a quarterly basis. The Contractor will adjust the size of a PCP’s panel, as
needed, for the PCP to meet AHCCCS appointment and clinical performance standards.

The Contractor shall have a system in place to monitor and ensure that each member is assigned to an
individual PCP and that the Contractor’s data regarding PCP assignments is current. The Contractor is
encouraged to assign members with complex medical conditions, who are age 12 and younger, to board
certified pediatricians. PCP’s, with assigned members diagnosed with AIDS or as HIV positive, shall meet
criteria and standards set forth in the AMPM.

The Contractor shall ensure that providers serving EPSDT-aged members utilize AHCCCS-approved standard
developmental screening tools and are trained in the use of the tools. The Contractor is encouraged to assign
EPSDT-aged members to providers that are trained in the use of, and have expressed willingness to use,
AHCCCS-approved developmental screening tools.

To the extent required by this contract, the Contractor shall offer members freedom of choice within its
network in selecting a PCP [42 CFR 438.6(m) and 438.52(d)]. The Contractor may restrict this choice when a
member has shown an inability to form a relationship with a PCP, as evidenced by frequent changes, or when
there is a medically necessary reason. When a new member has been assigned to the Contractor, the
Contractor shall inform the member in writing of his enrollment and of his PCP assignment within 10 days of
the Contractor's receipt of notification of assignment by AHCCCS. The Contractor shall include with the
enrollment notification a list of all the Contractor's available PCPs, the process for changing the PCP
assignment, should the member desire to do so, as well as the information required in the ACOM Member
Information Policy. The Contractor shall confirm any PCP change in writing to the member. Members may
make both their initial PCP selection and any subsequent PCP changes either verbally or in writing.

At a minimum, the Contractor shall hold the PCP responsible for the following activities [42 CFR
438.208(b)(1)]:

a. Supervision, coordination and provision of care to each assigned member;
b. Initiation of referrals for medically necessary specialty care;
c. Maintaining continuity of care for each assigned member;
d. Maintaining the member’s medical record, including documentation of all services provided to the
   member by the PCP, as well as any specialty or referral services. Services potentially requiring medical
   follow up are the only dental services whose documentation must be included in the medical record.

The Contractor shall establish and implement policies and procedures to monitor PCP activities and to ensure
that PCPs are adequately notified of, and receive documentation regarding, specialty and referral services
provided to assigned members by specialty physicians, and other health care professionals. Contractor policies
and procedures shall be subject to approval by AHCCCS, Division of Health Care Management, and shall be
monitored through operational audits.

The Contractor will work with AHCCCS to develop a methodology to reimburse school based clinics.
AHCCCS and the Contractor will identify coordination of care processes and reimbursement mechanisms.
The Contractor will be responsible for payment of these services directly to the clinics.

31. MATERNITY CARE PROVIDER STANDARDS

The Contractor shall ensure that a maternity care provider is designated for each pregnant member for the

duration of her pregnancy and postpartum care and that those maternity services are provided in accordance
with the AMPM. The Contractor may include in its provider network the following maternity care providers:

a. Arizona licensed allopathic and/or osteopathic physicians who are Obstetricians or general
   practitice/family practice providers who provide maternity care services.
b. Physician Assistants
c. Nurse Practitioners
d. Certified Nurse Midwives

Pregnant members may choose, or be assigned, a PCP who provides obstetrical care. Such assignment shall be
consistent with the freedom of choice requirements for selecting health care professionals while ensuring that
the continuity of care is not compromised. Members who choose to receive maternity services from a certified
nurse midwife shall also be assigned to a PCP for medical care, as primary care is not within the scope of
practice for certified nurse midwives.

All physicians and certified nurse midwives who perform deliveries shall have OB hospital privileges or a
documented hospital coverage agreement for those practitioners performing deliveries in alternate settings.
Certified midwives perform deliveries only in the member’s home. Labor and delivery services may also be
provided in the member’s home by physicians, certified nurse practitioners and certified nurse midwives who
include such services within their practice.

32. REFERRAL MANAGEMENT PROCEDURES AND STANDARDS

The Contractor shall have adequate written procedures regarding referrals to specialists, to include, at a
minimum, the following:

a. Use of referral forms clearly identifying the Contractor.
b. PCP referral shall be required for specialty physician services, except that women shall have direct access
   to in-network GYN providers, including physicians, physician assistants and nurse practitioners within the
   scope of their practice, without a referral for preventive and routine services [42 CFR 438.206(b)(2)]. In
   addition, for members with special health care needs determined to need a specialized course of treatment
   or regular care monitoring, the Contractor must have a mechanism in place to allow such members to
   directly access a specialist (for example through a standing referral or an approved number of visits) as
   appropriate for the member’s condition and identified needs. Any waiver of this requirement by the
   Contractor must be approved in advance by AHCCCS.
c. Specialty physicians shall not begin a course of treatment for a medical condition other than that for which
   the member was referred, unless approved by the member’s PCP.
d. A process in place that ensures the member's PCP receives all specialist and consulting reports and a
   process to ensure PCP follow-up of all referrals including EPSDT referrals for behavioral health services.
e. A referral plan for any member who is about to lose eligibility and who requests information on low-cost
   or no-cost health care services.
f. Referral to Medicare Managed Care Plan.
g. Allow for a second opinion from a qualified health care professional within the network, or if one is not
   available in network, arrange for the member to obtain one outside the network, at no cost to the member
    [42 CFR 438.206(b)(3)].

The Contractor shall comply with all applicable physician referral requirements and conditions defined in
Sections 1903(s) and 1877 of the Social Security Act and their implementing regulations which include, but
are not limited to, 42 CFR Part 411, Part 424, Part 435 and Part 455. Sections 1903(s) and 1877 of the Act
prohibits physicians from making referrals for designated health services to health care entities with which the
physician or a member of the physician’s family has a financial relationship. Designated health services
include:

                a. Clinical laboratory services
                b. Physical therapy services
                c. Occupational therapy services
                d. Radiology services
                e. Radiation therapy services and supplies
                f. Durable medical equipment and supplies
                g. Parenteral and enteral nutrients, equipment and supplies
                h. Prosthetics, orthotics and prosthetic devices and supplies
                i. Home health services
                j. Outpatient prescription drugs
                k. Inpatient and outpatient hospital services

33. APPOINTMENT STANDARDS

The Contractor shall monitor appointment availability utilizing the methodology found in the ACOM
Appointment Availability Monitoring and Reporting Policy to ensure that the following standards are met:

Wait time for Appointment:
For Primary Care Appointments, the Contractor shall be able to provide:

a. Emergency PCP appointments - same day of request
b. Urgent care PCP appointments - within 2 days of request
c. Routine care PCP appointments - within 21 days of request

For specialty referrals, the Contractor shall be able to provide:

a. Emergency appointments - within 24 hours of referral
b. Urgent care appointments - within 3 days of referral
c. Routine care appointments - within 45 days of referral

For dental appointments, the Contractor shall be able to provide:

a. Emergency appointments - within 24 hours of request
b. Urgent care appointments - within 3 days of request
c. Routine care appointments - within 45 days of request

For maternity care, the Contractor shall be able to provide initial prenatal care appointments for enrolled
pregnant members as follows:

a. First trimester - within 14 days of request
b. Second trimester - within 7 days of request
c. Third trimester - within 3 days of request
d. High risk pregnancies - within 3 days of identification of high risk by the Contractor or maternity
   care provider, or immediately if an emergency exists

For purposes of the sections above, “urgent” is defined as an acute, but not necessarily life-threatening
condition which, if not attended to, could endanger the patient’s health.

Wait time in Office:
The Contractor shall actively monitor and ensure that a member's waiting time for a scheduled appointment at
the PCP’s or specialist’s office is no more than 45 minutes, except when the provider is unavailable due to an
emergency.

Wait time for Transportation:
If a member needs non-emergent medically necessary transportation, the Contractor shall require its
transportation provider to schedule the transportation so that the member arrives on time for the appointment,
but no sooner than one hour before the appointment; does not have to wait more than one hour after calling for
transportation after the conclusion of the appointment to be picked up; nor have to wait for more than one hour
after conclusion of the treatment for transportation home; nor be picked up prior to the completion of
treatment. The Contractor must develop and implement a quarterly performance auditing protocol to evaluate
compliance with the standards above for all subcontracted transportation vendors/brokers and require
corrective action if standards are not met.

The Contractor must use the results of appointment availability monitoring to assure adequate appointment
availability in order to reduce unnecessary emergency department utilization. The Contractor is also encouraged
to contract with or employ the services of non-emergency facilities to address member non-emergency care issues
occurring after regular office hours or on weekends.

The Contractor shall establish processes to monitor and reduce the appointment “no-show” rate by provider
and service type. As best practices are identified, AHCCCS may require implementation by the Contractor.

The Contractor shall have written policies and procedures about educating its provider network regarding
appointment time requirements. The Contractor must assign a specific staff member or unit within its
organization to monitor compliance with appointment standards. The Contractor must develop a corrective
action plan when appointment standards are not met; if appropriate, the corrective action plan should be
developed in conjunction with the provider [42 CFR 438.206(c)(1)(iv), (v) and (vi)]. Appointment standards
shall be included in the Provider Manual. The Contractor is encouraged to include the standards in the provider
subcontract.

34. FEDERALLY QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS

The Contractor is encouraged to use FQHCs/RHCs in Arizona to provide covered services. AHCCCS requires
the Contractor to negotiate rates of payment with FQHCs/RHCs for non-pharmacy services that are comparable
to the rates paid to providers that provide similar services. AHCCCS reserves the right to review a Contractor’s
negotiated rates with an FQHC/RHC for reasonableness and to require adjustments when negotiated rates are
found to be substantially less than those being paid to other, non-FQHC/RHC providers for comparable services.

The Contractor is required to submit member information for Title XIX members for each FQHC/RHC on a
quarterly basis to the AHCCCS Division of Health Care Management. AHCCCS will perform periodic audits of
the member information submitted. The Contractor should refer to the AHCCCS Reporting Guide for Acute
Care Contractors with the Arizona Health Care Cost Containment System for further guidance. The
FQHCs/RHCs registered with AHCCCS are listed on the AHCCCS website (www.azahcccs.gov).

35. PROVIDER MANUAL

The Contractor shall develop, distribute and maintain a provider manual as described in the ACOM Provider
Information Policy.

36. PROVIDER REGISTRATION

The Contractor shall ensure that all of its subcontractors register with AHCCCS as an approved service provider.
A Provider Participation Agreement must be signed by each provider who is not already an AHCCCS registered
provider. The original shall be forwarded to AHCCCS. The provider registration process must be completed in
order for the Contractor to report services a provider renders to enrolled members and for the Contractor to be
paid reinsurance. The National Provider Identifier (NPI) is required on all claim submissions and subsequent
encounters (from providers who are eligible for a NPI). The Contractor shall work with providers to obtain their
NPI.

Except as otherwise required by law or as otherwise specified in a contract between a Contractor and a provider,
the AHCCCS Administration fee-for-service provisions referenced in the AHCCCS Provider Participation
Agreement located on the AHCCCS website (e.g. billing requirements, coding standards, payment rates) are in
force between the provider and Contractor.

37. SUBCONTRACTS

The Contractor shall be legally responsible for contract performance whether or not subcontracts are used [42

CFR 438.230(a) and 434.6(c)]. No subcontract shall operate to terminate the legal responsibility of the
Contractor to assure that all activities carried out by the subcontractor conform to the provisions of this contract.
Subject to such conditions, any function required to be provided by the Contractor pursuant to this contract may
be subcontracted to a qualified person or organization. All such subcontracts must be in writing [42 CFR
438.6(L)]. See the ACOM Contractor Claims Processing by Health Plan Subcontracted Providers Policy.

All subcontracts entered into by the Contractor are subject to prior review and written approval by AHCCCS,
Division of Health Care Management, and shall incorporate by reference the terms and conditions of this
contract. The following types of Administrative Services subcontracts shall be submitted to AHCCCS, Division
of Health Care Management for prior approval at least 30 days prior to the beginning date of the subcontract.

Administrative Services Subcontracts:

                1. Delegated agreements that subcontract:
                                a) Any function related to the management of the contract with AHCCCS. Examples include
                                   member services, provider relations, quality management, medical management (e.g., prior
                                   authorization, concurrent review, medical claims review)
                                b) Claims processing, including pharmacy claims.
                                c) Credentialing including those for only primary source verification
                2. All Management Service Agreements
                3. All Service Level Agreements with any Division or Subsidiary of a corporate parent owner

AHCCCS may, at its discretion, communicate directly with the governing body or Parent Corporation of the
Contractor regarding the performance of a subcontractor or Contractor respectively.

The Contractor shall maintain a fully executed original of all subcontracts, which shall be accessible to AHCCCS
within two business days of request by AHCCCS. All requested subcontracts must have full disclosure of all
terms and conditions and must fully disclose all financial or other requested information. Information may be
designated as confidential but may not be withheld from AHCCCS as proprietary. Information designated as
confidential may not be disclosed by AHCCCS without the prior written consent of the Contractor except as
required by law. All subcontracts shall comply with the applicable provisions of Federal and State laws,
regulations and policies.

Before entering into a subcontract which delegates Contractor duties or responsibilities to a subcontractor, the
Contractor must evaluate the prospective subcontractor’s ability to perform the activities to be delegated. If the
Contractor delegates duties or responsibilities such as utilization management or claims processing to a
subcontractor, then the Contractor shall establish a written agreement that specifies the activities and reporting
responsibilities delegated to the subcontractor. The written agreement shall also provide for revoking delegation
or imposing other sanctions if the subcontractor’s performance is inadequate. In order to determine adequate
performance, the Contractor shall monitor the subcontractor’s performance on an ongoing basis and subject it to
formal review according to a periodic schedule. The schedule for review shall be submitted to AHCCCS,
Division of Health Care Management for prior approval. As a result of the performance review, any deficiencies
must be communicated to the subcontractor in order to establish a corrective action plan. The results of the
performance review and the correction plan shall be communicated to AHCCCS upon completion [42 CFR
438.230(b)].

A merger, reorganization or change in ownership of an Administrative Services subcontractor of the Contractor
shall require a contract amendment and prior approval of AHCCCS.

Contractor must submit the Annual Subcontractor Assignment and Evaluation Report (within 90 days from
the start of the contract year) detailing any Contractor duties or responsibilities that have been subcontracted as
described under administrative subcontracts previously in this section. If the Contractor does not assign any
duties under the subcontract types listed in the paragraph above, a statement to this effect must be submitted in
lieu of the Annual Subcontractor Assignment and Evaluation Report. The Annual Subcontractor Assignment
and Evaluation Report will include the following:

            • Subcontractor’s name
                • Delegated duties and responsibilities
                • Most recent review date of the duties, responsibilities and financial position of the subcontractor
                • A comprehensive evaluation of the performance (operational and financial) of the subcontractor
                • Identified areas of deficiency
                • Corrective action plans as necessary
                • Next scheduled review date

The Contractor shall promptly inform AHCCCS, Division of Health Care Management, in writing if a
subcontractor is in significant non-compliance that would affect their abilities to perform the duties and
responsibilities of the subcontract.

The Contractor shall not include covenant-not-to-compete requirements in its provider agreements. Specifically,
the Contractor shall not contract with a provider and require that the provider not provide services for any other
AHCCCS Contractor. In addition, except for cost sharing requirements, the Contractor shall not enter into
subcontracts that contain compensation terms that discourage providers from serving any specific eligibility
category.

The Contractor must enter into a written agreement with any provider (including out-of-state providers) the
Contractor reasonably anticipates will be providing services at the request of the Contractor more than 25 times
during the contract year [42 CFR 438.206(b)(1)]. Exceptions to this requirement include the following:

1. If a provider who provides services more than 25 times during the contract year refuses to enter into a written
   agreement with the Contractor, the Contractor shall submit documentation of such refusal to AHCCCS,
   Division of Health Care Management within seven days of its final attempt to gain such agreement.
2. If a provider performs emergency services such as an emergency room physician or an ambulance company,
   a written agreement is not required.
3. Individual providers as detailed in the AMPM.
4. Hospitals, as discussed in Section D, Paragraph 40, Hospital Subcontracting and Reimbursement.
5. If a provider primarily performs services in an inpatient setting.
6. If upon the Medical Director’s review, it is determined that the Contractor or members would not benefit by
   adding the provider to the contracted network.

Any other exceptions to this requirement must be approved by AHCCCS, Division of Health Care Management.
If AHCCCS does not respond within 30 days; the requested exception is deemed approved. The Contractor may
request an expedited review and approval.

All subcontracts must contain verbatim all the provisions of Attachment A, Minimum Subcontract Provisions. In
addition, each provider subcontract must contain the following [42 CFR 438.206(b)(1)]:

1. Full disclosure of the method and amount of compensation or other consideration to be received by the
   subcontractor.
2. Identification of the name and address of the subcontractor.
3. Identification of the population, to include patient capacity, to be covered by the subcontractor.
4. The amount, duration and scope of medical services to be provided, and for which compensation will be
   paid.
5. The term of the subcontract including beginning and ending dates, methods of extension, termination and
   re-negotiation.
6. The specific duties of the subcontractor relating to coordination of benefits and determination of third-party
   liability.
7. A provision that the subcontractor agrees to identify Medicare and other third-party liability coverage and to
   seek such Medicare or third party liability payment before submitting claims to the Contractor.
8. A description of the subcontractor's patient, medical, dental and cost record keeping system.
9. Specification that the subcontractor shall cooperate with quality management/quality improvement programs,
   and comply with the utilization management and review procedures specified in 42 CFR Part 456, as
   specified in the AMPM.
10. A provision stating that a merger, reorganization or change in ownership of an Administrative Services
   subcontractor of the Contractor shall require a contract amendment and prior approval of AHCCCS.
11. A provision that indicates that AHCCCS is responsible for enrollment, re-enrollment and disenrollment of
   the covered population.
12. A provision that the subcontractor shall be fully responsible for all tax obligations, Worker's Compensation
   Insurance, and all other applicable insurance coverage obligations which arise under this subcontract, for
   itself and its employees, and that AHCCCS shall have no responsibility or liability for any such taxes or
   insurance coverage.
13. A provision that the subcontractor must obtain any necessary authorization from the Contractor or AHCCCS
   for services provided to eligible and/or enrolled members.
14. A provision that the subcontractor must comply with encounter reporting and claims submission
   requirements as described in the subcontract.
15. Provision(s) that allow the Contractor to suspend, deny, refuse to renew or terminate any subcontractor in
   accordance with the terms of this contract and applicable law and regulation.
16. A provision that the subcontractor may provide the member with factual information, but is prohibited from
   recommending or steering a member in the member’s selection of a Contractor.
17. A provision that compensation to individuals or entities that conduct utilization management and concurrent
   review activities is not structured so as to provide incentives for the individual or entity to deny, limit or
   discontinue medically necessary services to any enrollee (42 CFR 438.210(e)).

38. CLAIMS PAYMENT/HEALTH INFORMATION SYSTEM

The Contractor shall develop and maintain a health information system that collects, analyzes, integrates, and reports data.  The system shall provide information on areas including, but not limited to, service utilization, claim disputes and appeals [42 CFR 438.242(a)].

The Contractor will ensure that changing or making major upgrades to the information systems affecting claims processing, or any other major business component, will be accompanied by a plan which includes a timeline, milestones, and adequate testing before implementation.  At least six months before the anticipated implementation date, the Contractor shall provide the system change plan to AHCCCS for review and comment.

The Contractor must have a health information system that integrates member demographic data, provider information, service provision, claims submission and reimbursement. This system must be capable of collecting, storing and producing information for the purposes of financial, medical and operational management.

In support of this requirement, the Contractor will be required to have an independent audit of the Claims Payment/Health Information System completed within two (2) calendar years of the initiation of the Contract; or by September 30, 2010 (CYE10). The Contractor must submit a signed agreement on or before December 31^st 2008, with a schedule for completion, entered into with an independent auditing firm of their selection to be approved by the AHCCCS Division of Health Care Management. The Division of Health Care Management will monitor the scope of this audit, to include no less than a verification of contract information management (contract loading and auditing), claims processing and encounter submission processes. In addition to this requirement, the Contractor may be required in future contract years to initiate additional independent Claim System/Health Information System audit at the direction of the AHCCCS Administration. In the event of a system change or upgrade, the Contractor will be required to initiate an independent Claim System/Health Information System audit.

In addition to the above required audit, the Contractor shall develop and implement an internal claims audit function that will include the following:
                – Verification that provider contracts are loaded correctly
                – Accuracy of payments against provider contract terms

The findings of the audits described above must be documented and any deficiencies noted in the resulting reports must be met with corrective action.

The Contractor shall develop and maintain a HIPAA compliant claims processing and payment system capable of processing, cost avoiding and paying claims in accordance with A.R.S. §§ 36-2903 and 2904 and  AHCCCS Rules R9-22 Article 7.  The system must be adaptable to updates in order to support future AHCCCS claims related Policy requirements as needed.

The contractor must include nationally recognized methodologies to correctly pay claims including but not limited to:
                – Correct Coding Initiative (CCI) for Professional and Outpatient services;
                – Multiple Surgical Reductions;
                – Global Day Bundling;
                – Multi Channel Lab Test Bundling

The Contractor claims payment system must be able to assess and/or apply the following data related edits:
                – Benefit Package Variations;
                – Timeliness Standards;
                – Data Accuracy;
                – Adherence to AHCCCS Policy;
                – Provider Qualifications;
                – Member Eligibility and Enrollment;
                – Over-Utilization Standards

This system must produce a remittance advice related to the Contractor’s payments and/or denials to providers and must include at a minimum:
                – an adequate description of all denials and adjustments;
                – the reasons for such denials and adjustments;
                – the amount billed;
                – the amount paid;
                – application of COB;
                – provider rights for claim disputes.

The related remittance advice must be sent with the payment, unless the payment is made by electronic funds transfer (EFT).  The remittance advice sent related to an EFT must be mailed, or sent to the provider, no later than the date of the EFT. If the remittance is made through EFT, a notice of the provider’s right for claim dispute must be sent to the provider concurrently.

The Contractor’s claims payment system, as well as its prior authorization and concurrent review process, must minimize the likelihood of having to recoup already-paid claims.  Any individual recoupment in excess of $50,000 per provider within a contract year must be approved in advance by AHCCCS, Division of Health Care Management, Acute Care Operations Unit.  If AHCCCS does not respond within 30 days the recoupment request is deemed approved.  AHCCCS must be notified of any cumulative recoupment greater than $50,000 per provider Tax Identification Number per contract year.  A Contractor shall not recoup monies from a provider later than 12 months after the date of original payment on a clean claim, without prior approval from AHCCCS, as further described in the ACOM Recoupment Request Policy.

The Contractor is required to reimburse providers for previously recouped monies if the provider was subsequently denied payment by the primary insurer based on timely filing limits or lack of prior authorization and the member failed to disclose additional insurance coverage other than AHCCCS.

The Contractor must void encounters for claims that are recouped in full.  For recoupments that result in a reduced claim value or adjustments that result in an increased claim value, replacement encounters must be submitted. AHCCCS will validate the submission of applicable voids and replacement encounters upon completion of any approved recoupment that meets the qualifications of this section. All replaced or voided encounters must reach adjudicated status within 120 days of the approval of the recoupment. The Contractor should refer to the ACOM Recoupment Request Policy and AHCCCSEncounter Reporting User Manual for further guidance.

Unless a subcontract specifies otherwise, a Contractor with 50,000 or more members shall ensure that for each form type (Dental/Professional/Institutional), 95% of all clean claims are adjudicated within 30 days of receipt of the clean claim and 99% are adjudicated within 60 days of receipt of the clean claim.  Unless a subcontract specifies otherwise, a Contractor with fewer than 50,000 members shall ensure that for each form type (Dental/Professional/Institutional), 90% of all clean claims are adjudicated within 30 days of receipt of the clean claim and 99% are adjudicated within 60 days of receipt of the clean claim.  Additionally, unless a shorter time period is specified in contract, the Contractor shall not pay a claim initially submitted more than 6 months after date of service or pay a clean claim submitted more than 12 months after date of service; except as directed by AHCCCS or otherwise noted in this contract.  Claim payment requirements pertain to both contracted and non-contracted providers.  The receipt date of the claim is the date stamp on the claim or the date electronically received.  The receipt date is the day the claim is received at the Contractor’s specified claim mailing address.  The paid date of the claim is the date on the check or other form of payment [42 CFR 447.45(d)]. Claims submission deadlines shall be calculated from the claim end date or the effective date of eligibility posting, whichever is later as stated in A.R.S. 36-2904.H. 

Effective for all non-hospital clean claims, in the absence of a contract specifying other late payment terms, a Contractor is required to pay interest on late payments.  Late claims payments are those that are paid after 45 days of receipt of the clean claim (as defined in this contract).  In grievance situations, interest shall be paid back to the date interest would have started to accrue beyond the applicable 45 day requirement.  Interest shall be at the rate of ten per cent per annum, unless a different rate is stated in a written contract.  In the absence of interest payment terms in a subcontract, interest shall accrue starting on the first day after a clean claim is contracted to be paid.  For hospital clean claims, a slow payment penalty shall be paid in accordance with A.R.S. 2903.01.  When interest is paid, the Contractor must report the interest as directed in the AHCCCSEncounter Reporting User Manual.

If the Contractor or the Director's Decision reverses a decision to deny, limit, or delay authorization of services, and the member received the disputed services while an appeal was pending, the Contractor shall process a claim for payment from the provider in a manner consistent with the Contractor's or Director's Decision and applicable statutes, rules, policies, and contract terms. The provider shall have 90 days from the date of the reversed decision to submit a clean claim to the Contractor for payment. For all claims submitted as a result of a reversed decision, the Contractor is prohibited from denying claims for untimeliness if they are submitted within the 90 day timeframe. Contractors are also prohibited from denying claims submitted as a result of a reversed decision because the member failed to request continuation of services during the appeals/hearing process: a member's failure to request continuation of services during the appeals/hearing process is not a valid basis to deny the claim.

AHCCCS will require the Contractor to participate in an AHCCCS workgroup to develop uniform guidelines for standardizing hospital outpatient and outpatient provider claim requirements, including billing rules and documentation requirements. The workgroup may be facilitated by an AHCCCS selected consultant. The Contractor will be held responsible for the cost of this project based on its share of AHCCCS enrollment.

The Contractor is required to accept and generate HIPAA compliant electronic claims transactions from/to any provider interested and capable of electronic submission or electronic remittance receipt; and must be able to make claims payments via electronic funds transfer.  In addition, the Contractor shall implement and meet the following milestone in order to make claims processing and payment more efficient and timely:

                – Receive and pay 60% of all claims (based on volume of actual claims excluding claims processed by
                  Pharmacy Benefit Managers (PBMs)) electronically by July 1, 2009

In accordance with the Deficit Reduction Act of 2005, Section 6085, Contractor is required to reimburse non-contracted emergency services providers at no more than the AHCCCS Fee-For-Service rate.  This applies to in state as well as out of state providers.

In accordance with Arizona Revised Statute 36-2903 and 36-2904, in the absence of a written negotiated rate, Contractor is required to reimburse non-contracted non-emergent in state providers at the AHCCCS fee schedule and methodology, or pursuant to 36-2905.01, at ninety-five percent of the AHCCCS Fee-For-Service rates for urban hospital days.  All payments are subject to other limitations that apply, such as provider registration, prior authorization, medical necessity, and covered service.

The Contractor shall submit a monthly Claims Dashboard as specified in the AHCCCS Claims Dashboard Reporting Guide.  The Monthly report must be received by the AHCCCS Division of Healthcare Management, no later than 15 days from the end of each month.

Within the first 6 months of the contract term, the Contractor must review claim requirements, including billing rules and documentation requirements, and submit a report to AHCCCS that will include the rationale for the requirements. AHCCCS shall determine and provide a format for the report.

39. SPECIALTY CONTRACTS

AHCCCS may at any time negotiate or contract on behalf of the Contractor and AHCCCS for specialized hospital and medical services.  AHCCCS will consider existing Contractor resources in the development and execution of specialty contracts.  AHCCCS may require the Contractor to modify its delivery network to accommodate the provisions of specialty contracts.  AHCCCS may consider waiving this requirement in particular situations if such action is determined to be in the best interest of the State; however, in no case shall reimbursement exceeding that payable under the relevant AHCCCS specialty contract be considered in capitation rate development or risk sharing arrangements, including reinsurance.

During the term of specialty contracts, AHCCCS may act as an intermediary between the Contractor and specialty Contractors to enhance the cost effectiveness of service delivery.   Adjudication of claims related to payments provided under specialty contracts shall remain the responsibility of the Contractor.  AHCCCS may provide technical assistance prior to the implementation of any specialty contracts.

Currently, AHCCCS only has specialty contracts for transplant services and anti-hemophilic agents and related pharmaceutical services.   AHCCCS shall provide at least 60 days advance written notice to the Contractor prior to the implementation of any specialty contract. See Section D, Paragraph 57, Reinsurance, for further details.

40. HOSPITAL SUBCONTRACTING AND REIMBURSEMENT

Maricopa and Pima counties only:   The Inpatient Hospital Reimbursement Program is defined in the Arizona Revised Statutes (A.R.S.) 36-2905.01, and requires hospital subcontracts to be negotiated between the Contractor and hospitals in Maricopa and Pima counties to establish reimbursement levels, terms and conditions.  Subcontracts shall be negotiated by the Contractor and hospitals to cover operational concerns, such as timeliness of claims submission and payment, payment of discounts or penalties and legal resolution which may, as an option, include establishing arbitration procedures.  These negotiated subcontracts shall remain under close scrutiny by AHCCCS to ensure availability of quality services within specific service districts, equity of related party interests and reasonableness of rates.  The general provisions of this program encompass acute care hospital services and outpatient hospital services that result in an admission.  The Contractor, upon request, shall make available to AHCCCS, all hospital subcontracts and amendments.  For non-emergency patient-days, the Contractor shall ensure that at least 65% of its members use contracted hospitals.  AHCCCS reserves the right to subsequently adjust the 65% standard.  Further, if in AHCCCS’s judgment the number of emergency days at a particular non-contracted hospital becomes significant, AHCCCS may require a subcontract at that hospital. In accordance with R9-22-718, unless otherwise negotiated by both parties, the reimbursement for inpatient services, including outliers, provided at a non-contracted hospital shall be based on the rates as defined in A.R.S. § 36-2903.01, multiplied by 95%.

All counties EXCEPT Maricopa and Pima:  The Contractor shall reimburse hospitals for member care in accordance with AHCCCS Rule R9-22-705.  The Contractor is encouraged to obtain subcontracts with hospitals in all GSAs. The Contractor, upon request, shall make available to AHCCCS, all hospital subcontracts and amendments.

Out-of-State Hospitals:  The Contractor shall reimburse out-of-state hospitals in accordance with AHCCCS Rule R9-22-705.  A Contractor serving border communities (excluding Mexico) is strongly encouraged to establish contractual agreements with those out-of-state hospitals that are identified by GSA in Attachment B.

Outpatient hospital services:   In the absence of a contract, the default payment rate for outpatient hospital services billed on a UB-92 will be based on the AHCCCS outpatient hospital fee schedule, rather than a hospital-specific cost-to-charge ratio (pursuant to ARS 36-2904).

Hospital Recoupments:  The Contractor may conduct prepayment and post-payment medical reviews of all hospital claims including outlier claims.  Erroneously paid claims are subject to recoupment.  If the Contractor fails to identify lack of medical necessity through concurrent review and/or prepayment medical review, lack of medical necessity identified during post-payment medical review shall not constitute a basis for recoupment by the Contractor.  This prohibition does not apply to recoupments that are a result of an AHCCCS reinsurance audit.  See also Section D, Paragraph 38, Claims Payment/Health Information System.  For a more complete description of the guidelines for hospital reimbursement, please consult the AHCCCS website for applicable statutes and rules.

41. RESPONSIBILITY FOR NURSING FACILITY REIMBURSEMENT

The Contractor shall provide medically necessary nursing facility services as outlined in Section D, Paragraph 10, Scope of Services. The Contractor shall also provide medically necessary nursing facility services for any enrolled member who has a pending ALTCS application who is currently residing in a nursing facility and is eligible for services provided under this contract. If the member becomes ALTCS eligible and is enrolled with an ALTCS Contractor before the end of the maximum 90 days per contract year of nursing facility coverage, the Contractor is only responsible for nursing facility reimbursement during the time the member is enrolled with the Contractor as shown in the PMMIS. Nursing facility services covered by another liable party (including Medicare) while the member is enrolled with the Contractor, shall be applied to the 90 day per contract year limitation.

The Contractor shall not deny nursing facility services when the member’s eligibility, including prior period coverage, had not been posted at the time of admission. In such situations the Contractor shall impose reasonable authorization requirements. There is no ALTCS enrollment, including prior period coverage, that occurs concurrently with AHCCCS acute enrollment.

The Contractor shall notify the Assistant Director of the Division of Member Services, when a member has been residing in a nursing facility for 75 days as specified in Section D, Paragraph 10, Scope of Services, under the heading Nursing Facility. This will allow AHCCCS time to follow-up on the status of the ALTCS application and to consider potential fee-for-service coverage if the stay goes beyond the 90 day per contract year maximum.

42. PHYSICIAN INCENTIVES/PAY FOR PERFORMANCE

Physician Incentives
Reporting of Physician Incentive Plans has been suspended by CMS until further notice.  No reporting is required until suspension is lifted.

The Contractor must comply with all applicable physician incentive requirements and conditions defined in 42 CFR 417.479.  These regulations prohibit physician incentive plans that directly or indirectly make payments to a doctor or a group as an inducement to limit or refuse medically necessary services to a member.  The Contractor is required to disclose all physician incentive agreements to AHCCCS and to AHCCCS members who request them. 

The Contractor shall not enter into contractual arrangements that place providers at significant financial risk as defined in 42 CFR 417.479 unless specifically approved in advance by the AHCCCS Division of Health Care Management.  In order to obtain approval, the following must be submitted to the AHCCCS Division of Health Care Management 45 days prior to the implementation of the contract [42 CFR 438.6(g)]:

1.             A complete copy of the contract
2.             A plan for the member satisfaction survey
3.             Details of the stop-loss protection provided
4.             A summary of the compensation arrangement that meets the substantial financial risk definition.

The Contractor shall disclose to AHCCCS the information on physician incentive plans listed in 42 CFR 417.479(h)(1) through 417.479(I) upon contract renewal, prior to initiation of a new contract, or upon request from AHCCCS or CMS. 

The Contractor shall also provide for compliance with physician incentive plan requirements as set forth in 42 CFR 422.208, 422.210 and 438.6(h).  These regulations apply to contract arrangements with subcontracted entities that provide utilization management services.

Value Driven Healthcare/Pay for Performance
AHCCCS may explore opportunities to develop and implement system-wide Value Driven Healthcare programs and pay for performance initiatives. The Contractor shall participate in the development and implementation of such programs as requested by AHCCCS. Should the Contractor’s individual pay for performance program conflict with AHCCCS programs, the Contractor may be required to close out the individual program. AHCCCS may require the Contractor to provide PCP assignment information. The Contractor shall provide this information in a format specified by AHCCCS upon request.

Transparency
AHCCCS programs will be in compliance with Federal and State transparency initiatives. AHCCCS may publicly report or make available any data, reports, analysis or outcomes related to Contractor activities, operations and/or performance. Public reporting may include, but is not limited to, the following components:

           a)      Use of evidence based guidelines
           b)     Identification and publication of top performing Contractors
           c)      Identification and publication of top performing providers
           d)     Program pay for performance payouts
           e)      Mandated publication of guidelines
           f)      Mandated publication of outcomes
           g)     Identification of Centers of Excellence for specific conditions, procedures or member populations
           h)     Establishment of Return on Investment goals

Any Contractor-selected and/or -developed pay for performance initiative that meets the requirements of 42 CFR 417.479 must be approved by AHCCCS Division of Health Care Management prior to implementation.

Public Reporting of Contractor Cost Management, Satisfaction and Quality Performance
AHCCCS is in the process of developing a cost management, satisfaction, and quality score card as part of the AHCCCS value driven decision support initiative. The score card information will made available to beneficiaries, legislators and the public.  These reports will be posted on the AHCCCS website and made available at enrollment and reenrollment or at any time that beneficiaries are choosing a Contractor. Contractors are also encouraged to provide quality and cost information on network hospitals and providers to help enrollees choose among high performing value driven providers and hospitals.

43. MANAGEMENT SERVICES AGREEMENT AND COST ALLOCATION PLAN

If a Contractor has subcontracted for management services, the management service agreement must be approved in advance by AHCCCS, Division of Health Care Management. If there is a cost allocation plan as part of the management services agreement, it is subject to review by AHCCCS upon request.   AHCCCS reserves the right to perform a thorough review of actual management fees charged and/or corporate allocations made. 

If there is a change in ownership of the entity with which the Contractor has contracted for management services, AHCCCS must review and provide prior approval of the assignment of the subcontract to the new owner.  AHCCCS may offer open enrollment to the members assigned to the Contractor should a change in ownership occur.  AHCCCS will not permit two Contractors to utilize the same management service company in the same GSA.

The performance of management service subcontractors must be evaluated and included in the Annual Subcontractor Assignment and Evaluation Report required by Section D, Paragraph 37, Subcontracts and Attachment F: Periodic Report Requirements.

44. RESERVED

45. RESERVED

46. PERFORMANCE BOND OR BOND SUBSTITUTE

The Contractor shall be required to provide a performance bond of standard commercial scope issued by a surety company authorized to do business in this State, an irrevocable letter of credit, or a cash deposit ("Performance Bond") to AHCCCS for as long as the Contractor has AHCCCS-related liabilities of $50,000 or more outstanding, or 15 months following the termination date of this contract, whichever is later, to guarantee: (1) payment of the Contractor's obligations to providers, non-contracting providers, and non-providers; and (2) performance by the Contractor of its obligations under this contract [42 CFR 438.116(a)(1) and (b)(1)].  The Performance Bond shall be in a form acceptable to AHCCCS as described in the ACOMPerformance Bond Policy available on the AHCCCS website.

In the event of a default by the Contractor, AHCCCS shall, in addition to any other remedies it may have under this contract, obtain payment under the Performance Bond or substitute security for the purposes of the following:

1.    Paying any damages sustained by providers, non-contracting providers and non-providers by reason of a breach of
       the Contractor's obligations under this contract,
2.    Reimbursing AHCCCS for any payments made by AHCCCS on behalf of the Contractor, and
3.    Reimbursing AHCCCS for any extraordinary administrative expenses incurred by reason of a breach of the
       Contractor's obligations under this contract, including, but not limited to, expenses incurred after termination of this
       contract for reasons other than the convenience of the State by AHCCCS.

In the event AHCCCS agrees to accept substitute security in lieu of the Performance Bond, irrevocable letter of credit or cash deposit, the Contractor agrees to execute any and all documents and perform any and all acts necessary to secure and enforce AHCCCS's security interest in such substitute security including, but not limited to, security agreements and necessary UCC filings pursuant to the Arizona Uniform Commercial Code. The Contractor must request acceptance from AHCCCS when a substitute security in lieu of the performance bond, irrevocable letter of credit or cash deposit is established.  In the event such substitute security is agreed to and accepted by AHCCCS, the Contractor acknowledges that it has granted AHCCCS a security interest in such substitute security to secure performance of its obligations under this contract.  The Contractor is solely responsible for establishing the credit-worthiness of all forms of substitute security.  AHCCCS may, after written notice to the Contractor, withdraw its permission for substitute security, in which case the Contractor shall provide AHCCCS with a form of security described above. 

The Contractor may not change the amount, duration or scope of the performance bond without prior written approval from AHCCCS, Division of Health Care Management. The Contractor shall not leverage the bond for another loan or create other creditors using the bond as security.

47. AMOUNT OF PERFORMANCE BOND

The initial amount of the Performance Bond shall be equal to 80% of the total capitation payment expected to be paid to the Contractor in the first month of the contract year, or as determined by AHCCCS.  The total capitation amount (including delivery supplement)  excludes premium tax.  This requirement must be satisfied by the Contractor no later than 30 days after notification by AHCCCS of the amount required.  Thereafter, AHCCCS shall review the adequacy of the Performance Bond on a monthly basis to determine if the Performance Bond must be increased.  The Contractor shall have 30 days following notification by AHCCCS to increase the amount of the Performance Bond.  The Performance Bond amount that must be maintained after the contract term shall be sufficient to cover all outstanding liabilities and will be determined by AHCCCS.  The Contractor may not change the amount of the performance bond without prior written approval from AHCCCS, Division of Health Care Management.  Refer to the ACOM Performance Bond and Equity Per Member Requirements Policy for more details.

48. ACCUMULATED FUND DEFICIT

The Contractor and its owners must review for accumulated fund deficits on a quarterly basis. In the event the Contractor has a fund deficit, the Contractor and its owners shall fund the deficit through capital contributions in a form acceptable to AHCCCS within 30 days after the quarterly, draft or final annual financial statements in which the deficit is reported are due to AHCCCS, or in a timeframe otherwise requested by AHCCCS.  AHCCCS may, at its option, impose enrollment caps in any or all GSA’s as a result of an accumulated deficit, even if unaudited.

49. ADVANCES, DISTRIBUTIONS, LOANS AND INVESTMENTS

The Contractor shall not, without the prior approval of AHCCCS, make any advances, distributions, loans or loan guarantees to related parties or affiliates including another fund or line of business within its organization.  The Contractor shall not, without prior approval of AHCCCS, make advances to providers in excess of $50,000.  All requests for prior approval are to be submitted to the AHCCCS Division of Health Care Management. Refer to the ACOM Provider and Affiliate Advance Request Policy for further information.

50. FINANCIAL VIABILITY STANDARDS

The Contractor must comply with the AHCCCS-established financial viability standards.  On a quarterly basis, AHCCCS will review the following ratios with the purpose of monitoring the financial health of the Contractor: Current Ratio; Equity per Member; Medical Expense Ratio; and the Administrative Cost Percentage.

Sanctions may be imposed if the Contractor does not meet these financial viability standards.  AHCCCS will take into account the Contractor’s unique programs for managing care and improving the heath status of members when analyzing medical expense and administrative ratio results.  However, if a critical combination of the Financial Viability Standards are not met, or if the Contractor’s experience differs significantly from other Contractors, additional monitoring, such as monthly reporting, may be required. 

FINANCIAL VIABILITY STANDARDS

Current Ratio
Current assets divided by current liabilities. "Current assets" includes
any long-term investments that can be converted to cash within 24
hours without significant penalty (i.e., greater than 20%). A request to
include long-term investments that can be converted to cash within 24
hours in the current ratio calculation must be sent to AHCCCS, DHCM,
within 30 days of the contract start date and within 30 days of contract
renewal.

Standard: At least 1.00

If current assets include a receivable from a parent company, the parent
company must have liquid assets that support the amount of the intercompany
loan.

Equity per Member
Unrestricted equity, less on-balance sheet performance bond, divided by
the number of non-SOBRA Family Planning Extension Services
members enrolled at the end of the period.

Standard: At least $150 for Contractors with enrollment < 100,000
$100 for Contractors with enrollment of 100,000+

Additional information regarding the Equity per Member requirement
may be found in the Performance Bond and Equity per Member
Requirements policy in the ACOM.

Medical Expense Ratio
Total medical expenses divided by the sum of total capitation + Delivery
Supplement +TPL+ Reinsurance less premium tax

Standard: At least 84%

Administrative Cost Percentage
Total administrative expenses divided by the sum of total capitation +
Delivery Supplement + TPL + Reinsurance less premium tax

Standard: No greater than 10%

The Contractor shall comply with all financial reporting requirements contained in Attachment F, Periodic Report Requirements and the Reporting Guide for Acute Health Care Contractors with the Arizona Health Care Cost Containment System, a copy of which may be found on the AHCCCS website.  The required reports are subject to change during the contract term and are summarized in Attachment F, Periodic Report Requirements.

51. SEPARATE INCORPORATION

Within 60 days of contract award, a non-governmental Contractor shall have established a separate corporation for the purposes of this contract, whose sole activity is the performance of the requirements of this contract.

52. MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP

A proposed merger, reorganization or change in ownership of the Contractor shall require prior approval of AHCCCS and may require a contract amendment.  AHCCCS may terminate this contract pursuant to Section D, Paragraph 1, Term of Contract and Option to Renew, if the Contractor does not obtain prior approval or AHCCCS determines that the change in ownership is not in the best interest of the State. AHCCCS may offer open enrollment to the members assigned to the Contractor should a change in ownership occur.  AHCCCS will not permit one organization to own or manage more than one contract in the same GSA.

The Contractor must submit a detailed merger, reorganization and/or transition plan to AHCCCS, Division of Health Care Management, for review at least 60 days prior to the effective date of the proposed change.  The purpose of the plan review is to ensure uninterrupted services to members, evaluate the new entity's ability to support the provider network, ensure that services to members are not diminished and that major components of the organization and AHCCCS programs are not adversely affected by such merger, reorganization or change in ownership.

53. COMPENSATION

The method of compensation under this contract will be Prior Period Coverage (PPC) capitation, prospective capitation, delivery supplement, reinsurance and third party liability, as described and defined within this contract and appropriate laws, regulations or policies.  

Actuaries establish the capitation rates using practices established by the Actuarial Standards Board.  AHCCCS provides the following data to its actuaries for the purposes of rebasing the capitation rates.

           a.   Utilization and unit cost data derived from adjudicated encounters
           b.  Both audited and unaudited financial statements reported by the Contractor
           c.   Market basket inflation trends
           d.  AHCCCS fee-for-service schedule pricing adjustments
           e.   Programmatic or Medicaid covered service changes that affect reimbursement
           f.   Other changes to medical practices or administrative requirements that affect reimbursement

AHCCCS adjusts its rates to best match payment to risk.  This further ensures the actuarial basis for the capitation rates.  The following are examples of risk factors that may be included:

           a.   Reinsurance (as described in Section D, Paragraph 57)
           b.  Age/Gender
           c.   Medicare enrollment for SSI members
           d.  Delivery supplemental payment
           e.   Geographic Service Area adjustments
           f.   Risk sharing arrangements for specific populations
           g.  Member specific statistics, e.g. member acuity, member choice, member diagnosis, etc.

The above information is reviewed by AHCCCS’ actuaries in renewal years to determine if adjustments are necessary.  A Contractor may cover services that are not covered under the State Plan; however those services are not included in the data provided to actuaries for setting capitation rates [42 CFR 438.6(e)].

AHCCCS will be utilizing a national episodic/diagnostic risk adjustment model that will be applied to all Contractor specific capitation rates for all non-reconciled risk groups. Further methodology details will be shared with the Contractor prior to implementation.

Given anticipated membership changes that may be occurring due to the enhanced auto-assignment discussed in Section I Paragraph 9, Award of Contract, AHCCCS anticipates applying these risk factors by April 1, 2009 retroactively to the October 1, 2008, awarded capitation rates. For CYE 09, AHCCCS will apply approximately 80% of the capitation rate risk adjustment factor. Effective October 1, 2009, the full impact of the model will be applied.

Prospective Capitation:   The Contractor will be paid capitation for all prospective member months, including partial member months.  This capitation includes the cost of providing medically necessary covered services to members during the prospective period coverage.

Prior Period Coverage (PPC ) Capitation: Except for SOBRA Family Planning, SSDI-TMC, KidsCare, HIFA Parents and State Only Transplants,the Contractor will be paid capitation for all PPC member months, including partial member months.  This capitation includes the cost of providing medically necessary covered services, including behavioral health services, to members during prior period coverage.  The PPC capitation rates will be set by AHCCCS and will be paid to the Contractor along with the prospective capitation described above.  The Contractor will not receive PPC capitation for newborns of members who were enrolled at the time of delivery.

Reconciliation of PPC Costs to Reimbursement:  AHCCCS will reconcile the Contractor’s PPC medical cost expenses to PPC capitation paid to the Contractor during the year.  This reconciliation will limit the Contractor’s profits and losses to 2%.  Any losses in excess of 2% will be reimbursed to the Contractor, and likewise, profits in excess of 2% will be recouped.  Adjudicated encounter data will be used to determine medical expenses.  Refer to the ACOM PPC Reconciliation Policy for further details.

Reconciliation of Prospective MED Costs to Reimbursement:AHCCCS will reconcile the Contractor’s prospective MED medical cost expenses to prospective MED net capitation paid to the Contractor for dates of service during the contract year being reconciled. This reconciliation will limit the Contractor’s profits and losses to 3%. Any losses in excess of 3% will be reimbursed to the Contractor, and likewise, profits in excess of 3% will be recouped. Encounter data will be used to determine medical expenses. Refer to the Prospective MED Reconciliation Policy included in the ACOM for further details.

For all Contractors, the PPC TWG population, both MED and non-MED, will be reconciled with the PPC reconciliation referred to above.

Reconciliation of SSDI-TMC Costs to Reimbursement:  AHCCCS will reconcile the Contractor’s SSDI-TMC medical expenses to SSDI-TMC capitation paid to the Contractor during the year.  This reconciliation will limit the Contractor’s profits and losses to 2%.  Any losses in excess of 2% will be reimbursed to the Contractor, and likewise, profits in excess of 2% will be recouped.  Adjudicated encounter data will be used to determine medical expenses.  Refer to the ACOM SSDI-Temporary Medical Coverage Reconciliation Policy for further details.

Delivery Supplement:  When the Contractor has an enrolled woman who delivers during a prospective enrollment period, the Contractor will be entitled to a supplemental payment.  Supplemental payments will not apply to women who deliver in a prior period coverage time period, SSDI-TMC members or State Only Transplant members.  AHCCCS reserves the right at any time during the term of this contract to adjust the amount of this payment for women who deliver at home.

State Only Transplants Option 1 and Option 2:  The Contractor will only be paid capitation for an administrative component for those member months the member is enrolled with the Contractor.  For Option 1 members the Contractor will be paid the administrative component up to a 12-month continuous period of extended eligibility.  For Option 2 members the administrative component will be paid for the period of time the transplant is scheduled or performed. All medically necessary covered services will be reimbursed 100% with no deductible through Reinsurance payments based on adjudicated encounters.  Delivery supplement payments will not apply to women who deliver during the 12 month continuous period of extended eligibility specified as Option 1.

Liability for Payment: The Contractor must ensure that members are not held liable for:

           a.   The Contractor’s or any subcontractor’s debts in the event of Contractor’s or the subcontractor’s
                 insolvency;
           b.  Covered services provided to the member, for which AHCCCS does not pay the Contractor and the
                 Contractor does not pay subcontractors; or,

           c.   Payments to the Contractor or any subcontractors for covered services furnished under a contract, referral
                 or other arrangement, to the extent that those payments are in excess of the amount the member would owe
                 if the Contractor or any subcontractor provided the services directly.

54. PAYMENTS TO CONTRACTORS

Subject to the availability of funds, AHCCCS shall make payments to the Contractor in accordance with the terms of this contract provided that the Contractor’s performance is in compliance with the terms and conditions of this contract.  Payment must comply with requirements of A.R.S. Title 36.  AHCCCS reserves the option to make payments to the Contractor by wire or National Automated Clearing House Association (NACHA) transfer and will provide the Contractor at least 30 days notice prior to the effective date of any such change.

Where payments are made by electronic funds transfer, AHCCCS shall not be liable for any error or delay in transfer or indirect or consequential damages arising from the use of the electronic funds transfer process.  Any charges or expenses imposed by the bank for transfers or related actions shall be borne by the Contractor.  Except for adjustments made to correct errors in payment, and as otherwise specified in this section, any savings remaining to the Contractor as a result of favorable claims experience and efficiencies in service delivery at the end of the contract term may be kept by the Contractor.

All funds received by the Contractor pursuant to this contract shall be separately accounted for in accordance with generally accepted accounting principles.

Except for funds received from the collection of permitted copayments and third-party liabilities, the only source of payment to the Contractor for the services provided hereunder is the Arizona Health Care Cost Containment System Fund.  An error discovered by the State, with or without an audit, in the amount of fees paid to the Contractor will be subject to adjustment or repayment by AHCCCS making a corresponding decrease in a current Contractor’s payment or by making an additional payment to the Contractor.  When the Contractor identifies an overpayment, AHCCCS must be notified and reimbursed within 30 days of identification. 

No payment due the Contractor by AHCCCS may be assigned or pledged by the Contractor.  This section shall not prohibit AHCCCS at its sole option from making payment to a fiscal agent hired by the Contractor.

55. CAPITATION ADJUSTMENTS

Except for changes made specifically in accordance with this contract, the rates set forth in Section B shall not be subject to re-negotiation or modification during the contract period.  AHCCCS may, at its option, review the effect of a program change and determine if a capitation adjustment is needed.  In these instances the adjustment will be prospective with assumptions discussed with the Contractor prior to modifying capitation rates.  The Contractor may request a review of a program change if it believes the program change was not equitable; AHCCCS will not unreasonably withhold such a review.

If the Contractor is in any manner in default in the performance of any obligation under this contract, AHCCCS may, at its option and in addition to other available remedies, adjust the amount of payment until there is satisfactory resolution of the default.  The Contractor shall reimburse AHCCCS and/or AHCCCS may deduct from future monthly capitation for any portion of a month during which the Contractor was not at risk due to, for example:

                a.             death of a member
                b.             inmate of a public institution
                c.             duplicate capitation to the same Contractor
                d.             adjustment based on change in member’s contract type
                e.             voluntary withdrawal

Upon becoming aware that a member may be an inmate of a public institution, the Contractor must contact AHCCCS for an eligibility determination.

If a member is enrolled twice with the same Contractor, recoupment will be made as soon as the double capitation is identified.  AHCCCS reserves the right to modify its policy on capitation recoupments at any time during the term of this contract.

56. RESERVED

57. REINSURANCE

Reinsurance is a stop-loss program provided by AHCCCS to the Contractor for the partial reimbursement of covered services, as described below, for a member with an acute medical condition beyond an annual deductible level.  AHCCCS self-insures the reinsurance program through a deduction to capitation rates.  For all reinsurance payments AHCCCS bases reimbursement on adjudicated and approved encounters. Refer to the AHCCCS Reinsurance Processing Manual for further details on the Reinsurance Program.

Inpatient Reinsurance

Inpatient reinsurance covers partial reimbursement of covered inpatient facility medical services.  See the table below for applicable deductible levels and coinsurance percentages.  The coinsurance percent is the rate at which AHCCCS will reimburse the Contractor for covered inpatient costs incurred above the deductible.  The deductible is the responsibility of the Contractor.  Per diem rates paid for nursing facility services provided within 30 days of an acute hospital stay, including room and board, provided in lieu of hospitalization for up to 90 days in any contract year shall be eligible for reinsurance coverage. Same-day admit-and-discharge services do not qualify for reinsurance.

The following table represents deductible and coinsurance levels effective October 1, 2008, through September 30, 2009:

                                                                                Annual Deductible
Statewide Plan Enrollment                               Prospective Reinsurance                   Coinsurance
0-34,999                                                                  $20,000                                                   75%
35,000-49,999                                                         $35,000                                                   75%
50,000 and over                                                    $50,000                                                   75%

Annual deductible levels apply to all members except for SSDI-TMC, State Only Transplant and SOBRA Family Planning members. Beginning October 1, 2009, and annually thereafter, each of the deductible levels above will increase by $5,000.

Prospective Reinsurance: This coverage applies to prospective enrollment periods.  The deductible level is based on the Contractor’s statewide AHCCCS acute care enrollment (not including SOBRA Family Planning Extension services) as of October 1st each contract year, as shown in the table above. AHCCCS will adjust the Contractor’s deductible level at the beginning of a contract year if the Contractor’s enrollment changes to the next enrollment level.  A Contractor at or above the 35,000 enrollment deductible level may elect a lower deductible prior to the beginning of a new contract year.  These deductible levels are subject to change by AHCCCS during the term of this contract.  Any change in deductible levels will have a corresponding impact on capitation rates.

PPC inpatient expenses are not covered for any members under the reinsurance program unless they qualify under catastrophic or transplant reinsurance.

Catastrophic Reinsurance

The Catastrophic Reinsurance program encompasses members receiving certain biotech drugs (listed below), and those members diagnosed with hemophilia, Von Willebrand’s Disease or Gaucher’s Disease. For additional detail and restrictions refer to the AHCCCS Reinsurance Processing Manual and the AMPM. There are no deductibles for catastrophic reinsurance cases. For member’s receiving Biotech drugs outside of the specific conditions mentioned in this paragraph, AHCCCS will reimburse at 85% of the cost of the drug only. For those members diagnosed with hemophilia, Von Willebrand’s Disease and Gaucher’s Disease, all medically necessary covered services provided during the contract year shall be eligible for reimbursement at 85% of the AHCCCS allowed amount or the Contractor’s paid amount, whichever is lower, depending on the subcap code. Reinsurance coverage for anti-hemophilic blood factors will be limited to 85% of the AHCCCS contracted amount or the Contractor’s paid amount, whichever is lower. All catastrophic claims are subject to medical review by AHCCCS.

AHCCCS holds a single-source specialty contract for anti-hemophilic agents and related services for hemophilia.  Non-hemophilia related services are not covered under this specialty contract.   Non-hemophilia-related care is defined as any care that is provided not related to the hemophilia services. 

The Contractor may access anti-hemophilic agents and related pharmaceutical services for hemophilia or Von Willebrand’s under the terms and conditions of the specialty contract for members enrolled in their plans. In that instance, the Contractor is the authorizing payor. As such, the Contractor will provide prior authorization, care coordination, and reimbursement for all components covered under the contract for their members. A Contractor utilizing the contract will comply with the terms and conditions of the contract.  A Contractor may use the AHCCCS contract or contract with a provider of their choice.

The Contractor must notify AHCCCS, Division of Health Care Management, Medical Management Unit, of cases identified for catastrophic reinsurance coverage, excluding coverage of Biotech drugs outside of those condition mentioned in this paragraph, within 30 days of initial diagnosis and/or enrollment with the Contractor, and annually 30 days prior to the beginning of each contract year.  Catastrophic reinsurance will be paid for a maximum 30-day retroactive period from the date of notification to AHCCCS.  The determination of whether a case or type of case is catastrophic shall be made by the Director or designee based on the following criteria; 1) severity of medical condition, including prognosis; and 2) the average cost or average length of hospitalization and medical care, or both, in Arizona, for the type of case under consideration.

HEMOPHILIA:  Catastrophic reinsurance coverage is available for all members diagnosed with Hemophilia (ICD9 codes 286.0, 286.1, 286.2).

VON WILLEBRAND’S DISEASE:  Catastrophic reinsurance coverage is available for all members diagnosed with von Willebrand’s Disease who are non-DDAVP responders and dependent on Plasma Factor VIII.

GAUCHER’S DISEASE:  Catastrophic reinsurance is available for members diagnosed with Gaucher’s Disease classified as Type I and are dependent on enzyme replacement therapy.

BIOTECH DRUGS:  Catastrophic reinsurance is available to cover the cost of certain biotech drugs when medically necessary.  These drugs, collectively referred to as Biotech Drugs, are the responsibility of the Contractor unless the members is CRS enrolled, the medications are related to the management of a CRS-covered condition, and CRS is providing coverage.  Catastrophic reinsurance will cover the drug cost only.  The drugs covered are Cerazyme, Aldurazyme, Fabryzyme, Myozyme, Elaprase, and Ceprotin.  The Biotech Drugs covered under reinsurance will be reviewed by AHCCCS at the start of each contract year.  AHCCCS reserves the right to require the use of a generic equivalent where applicable. AHCCCS will reimburse at the lesser of the Biotech Drug or its generic equivalent for reinsurance purposes. 

Transplants

This program covers members who are eligible to receive covered major organ and tissue transplantation including bone marrow, heart, heart/lung, lung, liver, kidney, and other organ transplantation.  Bone grafts and cornea transplantation services are not eligible for transplant reinsurance coverage but are eligible under the regular inpatient reinsurance program.  Refer to the AMPM for covered services for organ and tissue transplants.   Reinsurance coverage for transplants received at an AHCCCS contracted facility is paid at the lesser of 85% of the AHCCCS contract amount for the transplantation services rendered or 85% of the Contractor’s paid amount. Reinsurance coverage for transplants received at a non-AHCCCS contracted facility is paid the lesser of 85% of the lowest AHCCCS contracted rate, for the same organ or tissue, or the Contractor paid amount. The AHCCCS contracted transplantation rates may be found on the AHCCCS website.  When a member is referred to a transplant facility for an AHCCCS-covered organ transplant, the Contractor shall notify AHCCCS, Division of Health Care Management, Medical Management Unit.

Option 1 and Option 2 Transplant Services: Reinsurance coverage for State Only Option 1 and Option 2 members (as described in Section D, Paragraph 2, Eligibility Categories) for transplants received at an AHCCCS contracted facility is paid at the lesser of 100% of the AHCCCS contract amount for the transplantation services rendered, or the Contractor paid amount, less the transplant share of cost. For transplants received at a facility not contracted with AHCCCS, payment is made at the lesser of 100% of the lowest AHCCCS contracted amount for the transplantation services rendered, or the Contractor paid amount, less the transplant share of cost. The AHCCCS contracted transplantation rates may be found on the AHCCCS website.  When a member is referred to a transplant facility for an AHCCCS-covered organ transplant, the Contractor shall notify AHCCCS, Division of Health Care Management, Medical Management Unit as specified in the AMPM Chapter 300, Policy 310 Attachments A and B, Extended Eligibility Process/Procedure for Covered Solid Organ and Tissue Transplants.

Option 1 Non-transplant Reinsurance

All medically necessary covered services provided to Option 1 members, unrelated to the transplant, shall be eligible for reimbursement, with no deductible, at 100% of the Contractor’s paid amount based on adjudicated encounters.

Other

For all reinsurance case types other than transplants, the Contractor will be reimbursed 100% for all medically necessary covered expenses provided in a contract year, after the Contractor paid amount in the reinsurance case reaches $650,000.  It is the responsibility of the Contractor to notify AHCCCS, Division of Health Care Management, Reinsurance Supervisor, once a reinsurance case reaches $650,000. The Contractor is required to split encounters as necessary once the reinsurance case reaches $650,000. Failure to notify AHCCCS or failure to split and adjudicate encounters appropriately within 15 months from the end date or service will disqualify the related encounters for 100% reimbursement consideration.

Encounter Submission and Payments for Reinsurance

a)  Encounter Submission: All reinsurance associated encounters must reach a clean claim status within fifteen months from the end date of service, or date of eligibility posting, whichever is later.  Encounters for reinsurance claims that have passed the fifteen month deadline and are being adjusted due to a claim dispute or hearing decision must be submitted and pass all encounter and reinsurance edits within 90 calendar days of the date of the claim dispute decision or hearing decision, or Director’s decision, whichever is applicable.  Failure to submit the encounter within this timeframe will result in the loss of any related reinsurance dollars.

The Contractor must void encounters for any claims that are recouped in full. For recoupments that result in a reduced claim value or any adjustments that result in an increased claim value, replacement encounters must be submitted. For replacement encounters resulting in an increased claim value, the replacement encounter must reach adjudicated status within 15 months of end date of service to receive additional reinsurance benefits. The Contractor should refer to Section D, Paragraph 65, Encounter Data Reporting, for encounter reporting requirements.

b)  Payment of Inpatient and Catastrophic Reinsurance Cases:   AHCCCS will reimburse a Contractor for costs incurred in excess of the applicable deductible level, subject to coinsurance percentages and Medicare/TPL payment, less any applicable quick pay discounts, slow payment penalties and interest.  Amounts in excess of the deductible level shall be paid based upon costs paid by the Contractor, minus the coinsurance and Medicare/TPL payment, unless the costs are paid under a subcapitated arrangement.  In subcapitated arrangements, the Administration shall base reimbursement of reinsurance encounters on the lower of the AHCCCS allowed amount or the reported health plan paid amount, minus the coinsurance and Medicare/TPL payment and applicable quick pay discounts, slow payment penalties and interest.

When a member with an annual enrollment choice changes Contractors within a contract year, for reinsurance purposes, all eligible inpatient costs, nursing facility costs and inpatient psychiatric costs incurred for that member do not follow the member to the receiving Contractor.  Encounters from the Contractor the member is leaving (for dates of service within the current contract year) will not be applied toward the receiving Contractor’s deductible level.  For further details regarding this policy and other reinsurance policies refer to the AHCCCS Reinsurance Processing Manual.

c) Payment of Transplant Reinsurance Cases:   Reinsurance benefits are based upon the lower of the AHCCCS contract amount or the Contractor’s paid amount, subject to coinsurance percentages.  The Contractor is required to submit all supporting encounters for transplant services.  Reinsurance payments will be linked to transplant encounter submissions.  In order to receive reinsurance payment for transplant stages, billed amounts and health plan paid amounts for adjudicated encounters must agree with related claims and/or invoices.  Timeliness for each stage payment will be calculated based on the latest adjudication date for the complete set of encounters related to the stage.  Please refer to the AHCCCS Reinsurance Processing Manual for the appropriate billing of transplant services.

Reinsurance Audits

Pre-Audit:Any medical audits on reinsurance cases will be conducted on a statistically significant random sample selected based on utilization trends. The Division of Health Care Management will select reinsurance cases based on encounter data received during the contract year to assure timeliness of the audit process. The Contractor will be notified of the documentation required for the medical audit.  For closed contracts, a 100% audit may be conducted.

Audit:  AHCCCS will give the Contractor at least 45 days advance notice of any audit.  The Contractor shall have all requested medical records and financial documentation available to the nurse auditors.  Any documents not requested in advance by AHCCCS shall be made available upon request of the Audit Team during the course of the audit.  The Contractor representative shall be available to the Audit Team at all times during AHCCCS audit activities.  If an audit should be conducted on-site, the Contractor shall provide the Audit Team with workspace, access to a telephone, electrical outlets and privacy for conferences.

Audits may be completed without an on-site visit.  For these audits, the Contractor will be asked to send the required documentation to AHCCCS.  The documentation will then be reviewed by AHCCCS.

Audit Considerations:  Reinsurance consideration will be given to inpatient facility contracts and hearing decisions rendered by the Office of Legal Assistance.  Pre-hearing and/or hearing penalties discoverable during the review process will not be reimbursed under reinsurance. 

Per diem rates may be paid for nursing facility and rehabilitation services provided the services are rendered within 30 days of an acute hospital stay, including room and board, provided in lieu of hospitalization for up to 90 days in any contract year. The services rendered in these sub-acute settings must be of an acute nature and, in the case of rehabilitative or restorative services, steady progress must be documented in the medical record.

Audit Determinations:The Contractor will be furnished a copy of the Reinsurance Post-Audit Results letter approximately 45 days after the audit and given an opportunity to comment and provide additional medical or financial documentation on any audit findings. AHCCCS may limit reinsurance reimbursement to a lower or alternative level of care if the Director or designee determines that the less costly alternative could and should have been used by the Contractor. A recoupment of reinsurance reimbursements made to the Contractor may occur based on the results of the medical audit. 

A Contractor whose reinsurance case is reduced or denied shall be notified in writing by AHCCCS and will be informed of rationale for reduction or denial determination and the applicable grievance and appeal process available.

58. COORDINATION OF BENEFITS

Pursuant to federal and state law, AHCCCS is the payer of last resort except under limited situations.  This means AHCCCS shall be used as a source of payment for covered services only after all other sources of payment have been exhausted.  The Contractor shall coordinate benefits in accordance with 42 CFR 433.135 et seq., ARS 36-2903, and A.A.C. R9-22-1001 et seq. so that costs for services otherwise payable by the Contractor are cost avoided or recovered from a liable party.  The term “State” shall be interpreted to mean “Contractor” for purposes of complying with the federal regulations referenced above. The Contractor may require subcontractors to be responsible for coordination of benefits for services provided pursuant to this contract.

The two methods used in the coordination of benefits are cost avoidance and post payment recovery.  The Contractor shall use these methods as described in A.A.C. R9-22-1001 et seq. and federal and state law.  See also Section D, Paragraph 60, Medicare Services and Cost Sharing.

Cost Avoidance:  The Contractor shall take reasonable measures to determine all legally liable parties.  This refers to any individual, entity or program that is or may be liable to pay all or part of the expenditures for covered services. The Contractor shall cost-avoid a claim if it has established the probable existence of a liable party at the time the claim is filed. Establishing liability takes place when the Contractor receives confirmation that another party is, by statute, contract, or agreement, legally responsible for the payment of a claim for a healthcare item or service delivered to a member. If the probable existence of a party’s liability cannot be established the Contractor must adjudicate the claim. The Contractor must then utilize post payment recovery which is described in further detail below.  If the Administration determines that the Contractor is not actively engaged in cost avoidance activities the Contractor shall be subject to sanctions in an amount not less than three times the amount that could have been cost avoided.

The Contractor shall not deny a claim for timeliness if the untimely claim submission results from a provider’s efforts to determine the extent of liability.

If a third party insurer other than Medicare requires the member to pay any copayments, coinsurance or deductible, the Contractor is responsible for making these payments, even if the services are provided outside of the Contractor network.  The Contractor is not responsible for paying coinsurance and deductibles that are in excess of what the Contractor would have paid for the entire service per a written contract with the provider performing the service, or the AHCCCS FFS payment equivalent when no contract exists. If the Contractor refers the member for services to a third-party insurer, other than Medicare, and the insurer requires payment in advance of all copayments, coinsurance and deductibles, the Contractor must make such payments in advance.

Members with CRS condition: A member with private insurance or Medicare coverage is not required to utilize CRSA. This includes members with Medicare whether they are enrolled in Medicare FFS or a Medicare Managed Care Plan. If the member uses the private insurance network for a CRS-covered condition, the Contractor is responsible for all applicable deductibles and copayments.  However, if the member has Medicare coverage, the AHCCCS Policy 201- Medicare Cost Sharing for Members in Traditional Fee for Service Medicare and Policy 202 - Medicare Cost Sharing for Members in Medicare Managed Care Plans shall apply. When the private insurance or Medicare is exhausted, or certain annual or lifetime limits are reached with respect to CRS-covered conditions, the Contractor shall refer the member to CRSA for determination for CRS services. If the member with private insurance or Medicare chooses to enroll with CRS, CRS becomes the secondary payer responsible for all applicable deductibles and copayments. The Contractor is not responsible to provide services in instances when the CRS-eligible member, who has no primary insurance or Medicare, refuses to receive CRS-covered services through the CRS Program.  If the Contractor becomes aware that a member with a CRS-covered condition refuses to participate in the CRS application process or refuses to receive services through the CRS Program, the member may be billed by the provider in accordance with AHCCCS regulations regarding billing for unauthorized services.

Post-payment Recoveries:  Post-payment recovery is necessary in cases where the Contractor has not established the probable existence of a liable party at the time services were rendered or paid for, or was unable to cost-avoid. The following sections set forth requirements for Contractor recovery actions including recoupment activities, other recoveries and total plan case requirements.

Recoupments: The Contractor must follow the protocols established in the ACOM Recoupment Request Policy. The Contractor must void encounters for claims that are recouped in full.  For recoupments that result in an adjusted claim value, the Contractor must submit replacement encounters.

Other Recoveries: The Contractor shall identify the existence of potentially liable parties through the use of trauma code edits, utilizing diagnostic codes 799.9 and 800 to 999.9 (excluding code 994.6), and other procedures.  The Contractor shall not pursue recovery in the following circumstances, unless the case has been referred to the Contractor by AHCCCS or AHCCCS’s authorized representative:

Uninsured/underinsured motorist insurance                  Restitution Recovery
First-and third-party liability insurance                            Worker’s Compensation
Tortfeasors, including casualty                                         Estate Recovery
Special Treatment Trust Recovery

Upon identification of any of the above situations, the Contractor shall promptly report cases to AHCCCS’s authorized representative for determination of a “total plan” case. The Contractor is responsible for all recovery actions for a “total plan” case. A total plan case is a case where payments for services rendered to the member are exclusively the responsibility of the Contractor; no reinsurance or fee-for-service payments are involved. By contrast, a “joint” case is one where fee-for-service payments and/or reinsurance payments are involved. In joint cases, the Contractor shall notify AHCCCS’s authorized representative within 10 business days of the identification of a liable party. Failure to report these cases may result in one of the remedies specified in Section D, Paragraph 72, Sanctions. The Contractor shall cooperate with AHCCCS’s authorized representative in all collection efforts.

Total Plan Case Requirements: In “total plan” cases, the Contractor is responsible for performing all research, investigation, the mandatory filing of initial liens on cases that exceed $250, lien amendments, lien releases, and payment of other related costs in accordance with A.R.S. 36-2915 and A.R.S. 36-2916. The Contractor shall use the AHCCCS-approved casualty recovery correspondence when filing liens and when corresponding to others in regard to casualty recovery.  The Contractor may retain up to 100% of its recovery collections if all of the following conditions exist:

                a. Total collections received do not exceed the total amount of the Contractor’s financial
                   liability for the member;
                b. There are no payments made by AHCCCS related to fee-for-service, reinsurance or
                   administrative costs (i.e., lien filing , etc.); and
                c. Such recovery is not prohibited by state or Federal law.

Prior to negotiating a settlement on a total plan case, the Contractor shall notify AHCCCS to ensure that there is no reinsurance or fee-for-service payment that has been made by AHCCCS. Failure to report these cases prior to negotiating a settlement amount may result in one of the remedies specified in Section D, Paragraph 72, Sanctions.

Total Plan Cases: the Contractor shall report settlement information to AHCCCS, utilizing the AHCCCS-approved casualty recovery Notification of Settlement form, within 10 business days from the settlement date. Failure to report these cases may result in one of the remedies specified in Section D, Paragraph 72, Sanctions.

Joint Cases: AHCCCS’s authorized representative is responsible for performing all research, investigation and payment of lien-related costs, subsequent to the referral of any and all relevant case information to AHCCCS’s authorized representative by the Contractor. In joint cases, AHCCCS’s authorized representative is also responsible for negotiating and acting in the best interest of all parties to obtain a reasonable settlement in joint cases and may compromise a settlement in order to maximize overall reimbursement, net of legal and other costs.  The Contractor will be responsible for their prorated share of the contingency fee.  The Contractor’s share of the contingency fee will be deducted from the settlement proceeds prior to AHCCCS remitting the settlement to the Contractor.

Other Reporting Requirements:  If a Contractor discovers the probable existence of a liable party that is not known to AHCCCS, the Contractor must report the information to the AHCCCS contracted vendor not later than 10 days from the date of discovery. In addition, the Contractor shall notify AHCCCS of any known changes in coverage within deadlines and in a format prescribed by AHCCCS in the Technical Interface Guidelines. Failure to report these cases may result in one of the remedies specified in Section D, Paragraph 72, Sanctions.

At AHCCCS’s request, the Contractor shall provide an electronic extract of the Casualty cases, including open and closed cases.  Data elements include, but are not limited to: the member’s first and last name; AHCCCS ID; date of incident; claimed amount; paid/recovered amount; and case status.  The AHCCCS TPL Section shall provide the format and reporting schedule for this information to the Contractor. AHCCCS will provide the Contractor with a file of all other coverage information, for the purpose of updating the Contractor’s files, as described in the Technical Interface Guidelines.

Title XXI (KidsCare), HIFA Parents, BCCTP, SOBRA Family Planning and SSDI-TMC:  Eligibility for KidsCare, HIFA Parents, BCCTP, SOBRA Family Planning and SSDI-TMC benefits require that the applicant/member not be enrolled with any other creditable health insurance plan.  If the Contractor becomes aware of any such coverage, the Contractor shall notify AHCCCS immediately.   AHCCCS will determine if the other insurance meets the creditable coverage definition in A.R.S. 36-2982(G).

Contract Termination:  Upon termination of this contract, the Contractor will complete the existing third party liability cases or make any necessary arrangements to transfer the cases to AHCCCS’s authorized TPL representative.

59. COPAYMENTS

Most of the AHCCCS members remain exempt from copayments while others are subject to an optional copayment.  Those populations exempt or subject to optional copayments may not be denied services for the inability to pay the copayment [42 CFR 438.108]. Any copayments collected shall belong to the Contractor or its subcontractors.  Attachment K, Copayments, provides detail of the populations and their related copayment structure.

60. MEDICARE SERVICES AND COST SHARING

AHCCCS has members enrolled who are eligible for both Medicaid and Medicare.  These members are referred to as “dual eligible”.  Generally, the Contractor is responsible for payment of Medicare coinsurance and/or deductibles for covered services provided to dual eligible members.  However, there are different cost-sharing responsibilities that apply to dual eligible members based on a variety of factors.  Unless prior approval is obtained from AHCCCS, the Contractor must limit their cost sharing responsibility according to the ACOM Medicare Cost Sharing Policy.  The Contractor shall have no cost sharing obligation if the Medicare payment exceeds what the Contractor would have paid for the same service of a non-Medicare member. Please refer to Section D, Paragraph 10, Scope of Services, for information regarding prescription medication for Medicare Part D.

When a person with Medicare who is also eligible for Medicaid (dual eligible) is in a medical institution that is funded by Medicaid for a full calendar month, the dual eligible person is not required to pay copayments for their Medicare covered prescription medications for the remainder of the calendar year.  To ensure appropriate information is communicated for these members to the Centers for Medicare and Medicaid Services (CMS), the Contractor must, using the approved form, notify the AHCCCS Member Database Management Administration (MDMA), via fax at ###-###-#### as soon as it determines that a dual eligible person is expected to be in a medical institution that is funded by Medicaid for a full calendar month, regardless of the status of the dual eligible person’s Medicare lifetime or annual benefits.   This includes:

                a. Members who have Medicare part “B” only;
                b. Members who have used their Medicare part “A” life time inpatient benefit;
                c. Members who are in a continuous placement in a single medical institution or any
                   combination of continuous placements in a medical institution.

For purposes of the medical institution notification, medical institutions are defined as acute hospitals, psychiatric hospital – Non IMD, psychiatric hospital – IMD,  residential treatment center – Non IMD, residential treatment center – IMD, skilled nursing facilities, and Intermediate Care Facilities for the Mentally Retarded.

61. MARKETING

The Contractor shall submit all proposed marketing and outreach materials and events that will involve the general public to the AHCCCS Marketing Committee for prior approval in accordance with the ACOMMarketing Outreach and Incentives Policy [42 CFR 438.104]. The Contractor must have signed contracts with PCPs, specialists, dentists, and pharmacies in order for them to be included in marketing materials. Marketing materials that have received prior approval must be resubmitted to the Division of Health Care Management every two years for re-approval.

62. CORPORATE COMPLIANCE

In accordance with A.R.S. Section 36-2918.01, and AHCCCS Contractor Operation Manual (ACOM), Chapter 100, the Contractor and its subcontractors and providers are required to immediately notify the AHCCCS Office of Program Integrity (OPI) regarding any suspected fraud and report the information within 10 business days of discovery by completing the confidential AHCCCS Referral for Preliminary Investigation form for any and all suspected fraud or abuse [42 CFR 455.1(a)(1)]  This shall include acts of suspected fraud or abuse that were resolved internally but involved AHCCCS members or funds.

As stated in A.R.S. Section 13-2310, incorporated herein by reference, any person who knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises, or material omissions is guilty of a Class 2 felony.

The Contractor agrees to permit and cooperate with any onsite review.  A review by the AHCCCS Office of Program Integrity may be conducted without notice and for the purpose of ensuring program compliance.  The Contractor also agrees to respond to electronic, telephonic or written requests for information within the timeframe specified by AHCCCS Administration. The Contractor agrees to provide documents, including original documents, to representatives of the Office of Program Integrity upon request. The OPI shall allow a reasonable time for the Contractor to copy the requested documents, not to exceed 20 business days from the date of the OPI request.

The Contractor must have a mandatory compliance program, supported by other administrative procedures, that is designed to guard against fraud and abuse [42 CFR 438.608(a) and (b)]  The Contractor shall have written criteria for selecting a Compliance Officer and job description that clearly outlines the responsibilities and authority of the position.  The Compliance Officer shall have the authority to assess records and independently refer suspected member fraud, provider fraud and member abuse cases to AHCCCS, Office of Program Integrity or other duly authorized enforcement agencies [42 CFR 455.17].

The compliance program shall be designed to both prevent and detect suspected fraud or abuse.  The compliance program must include:

1. The written designation of a compliance officer and a compliance committee that are accountable to
   the Contractor’s top management.
2. The Compliance Officer must be an onsite management official who reports directly to top
   management.
3. Effective training and education.
4. Effective lines of communication between the compliance officer and the organization’s employees.
5. Enforcement of standards through well-publicized disciplinary guidelines.
6. Provision for internal monitoring and auditing.
7. Provision for prompt response to problems detected.
8. Written policies, procedures, and standards of conduct that articulate the organization’s commitment
   to comply with all applicable Federal and state standards.
9. A Compliance Committee which shall be made up of, at a minimum, the Compliance Officer, a
   budgetary official and other executive officials with decision making authority. The Compliance
   Committee will assist the Compliance Officer in monitoring, reviewing and assessing the
   effectiveness of the compliance program and timeliness of reporting.
10. Pursuant to the Deficit Reduction Act of 2005 (DRA), the Contractor, as a condition for receiving
   payments shall establish written policies for employees detailing:
                a. The federal False Claims Act provisions;
                b. The administrative remedies for false claims and statements;
                c. Any state laws relating to civil or criminal penalties for false claims and statements;
                d. The whistleblower protections under such laws.
11. The Contractor must establish a process for training existing staff and new hires on the compliance
   program and on the items in section 10. All training must be conducted in such a manner that can be
   verified by AHCCCS.
12. The Contractor must require, through documented policies and subsequent contract amendments, that
   providers train their staff on the following aspects of the Federal False Claims Act provisions:
                a. The administrative remedies for false claims and statements;
                b. Any state laws relating to civil or criminal penalties for false claims and statements;
                c. The whistleblower protections under such laws.

The Contractor is required to research potential overpayments identified by the AHCCCS Office of Program Integrity [42 CFR 455.1(a)]. After conducting a cost benefit analysis to determine if such action is warranted, the Contractor should attempt to recover any overpayments identified.  The AHCCCS Office of Program Integrity shall be advised of the final disposition of the research and advised of actions, if any, taken by the Contractor.

63 RECORDS RETENTION

The Contractor shall maintain records relating to covered services and expenditures including reports to AHCCCS and documentation used in the preparation of reports to AHCCCS.  The Contractor shall comply with all specifications for record keeping established by AHCCCS.  All records shall be maintained to the extent and in such detail as required by AHCCCS Rules and policies.  Records shall include but not be limited to financial statements, records relating to the quality of care, medical records, prescription files and other records specified by AHCCCS.

The Contractor agrees to make available, at all reasonable times during the term of this contract, any of its records for inspection, audit or reproduction by any authorized representative of AHCCCS, State or Federal government.  The Contractor shall be responsible for any costs associated with the reproduction of requested information.

The Contractor shall preserve and make available all records for a period of five years from the date of final payment under this contract.  HIPAA related documents must be retained for a period of six years per 45 CFR 164.530(j)(2).

If this contract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of five years from the date of any such termination.  Records which relate to grievances, disputes, litigation or the settlement of claims arising out of the performance of this contract, or costs and expenses of this contract to which exception has been taken by AHCCCS, shall be retained by the Contractor for a period of five years after the date of final disposition or resolution thereof.

64. DATA EXCHANGE REQUIREMENTS

The Contractor is authorized to exchange data with AHCCCS relating to the information requirements of this contract and as required to support the data elements to be provided to AHCCCS in the formats prescribed by AHCCCS, which include formats prescribed by the Health Insurance Portability and Accountability Act (HIPAA).  Details for the formats may be found in the HIPAA Transaction Companion Documents & Trading Partner Agreements, the AHCCCS Encounter Reporting User Manual and in the AHCCCS Technical Interface Guidelines, available on the AHCCCS website. 

The information so recorded and submitted to AHCCCS shall be in accordance with all procedures, policies, rules, or statutes in effect during the term of this contract.  If any of these procedures, policies, rules, regulations or statutes are hereinafter changed, both parties agree to conform to these changes following appropriate notification by AHCCCS.

The Contractor is responsible for any incorrect data, delayed submission or payment (to the Contractor or its subcontractors), and/or penalty applied due to any error, omission, deletion, or erroneous insert caused by Contractor-submitted data.  Any data that does not meet the standards required by AHCCCS shall not be accepted by AHCCCS.

The Contractor is responsible for identifying any inconsistencies immediately upon receipt of data from AHCCCS.  If any unreported inconsistencies are subsequently discovered, the Contractor shall be responsible for the necessary adjustments to correct its records at its own expense.

The Contractor shall accept from AHCCCS original evidence of eligibility and enrollment in a form appropriate for electronic data exchange.  Upon request by AHCCCS, the Contractor shall provide to AHCCCS updated date-sensitive PCP assignments in a form appropriate for electronic data exchange.

The Contractor shall be provided with a Contractor-specific security code for use in all data transmissions made in accordance with contract requirements.  Each data transmission by the Contractor shall include the Contractor's security code.  The Contractor agrees that by use of its security code, it certifies that any data transmitted is accurate and truthful, to the best of the Contractor's Chief Executive Officer, Chief Financial Officer or designee’s knowledge [42 CFR 438.606].  The Contractor further agrees to indemnify and hold harmless the State of Arizona and AHCCCS from any and all claims or liabilities, including but not limited to consequential damages, reimbursements or erroneous billings and reimbursements of attorney fees incurred as a consequence of any error, omission, deletion or erroneous insert caused by the Contractor in the submitted input data.  Neither the State of Arizona nor AHCCCS shall be responsible for any incorrect or delayed payment to the Contractor’s AHCCCS services providers (subcontractors) resulting from such error, omission, deletion, or erroneous input data caused by the Contractor in the submission of AHCCCS claims.

The costs of software changes are included in administrative costs paid to the Contractor.  There is no separate payment for software changes.  A PMMIS systems contact will be assigned after contract award.  AHCCCS will work with the contractor as they evaluate Electronic Data Interchange options.

Health Insurance Portability and Accountability Act (HIPAA):  The Contractor shall comply with the Administrative Simplification requirements of Subpart F of the HIPAA of 1996 (Public Law 107-191, 110 Statutes 1936) and all Federal regulations implementing that Subpart that are applicable to the operations of the Contractor by the dates required by the implementing Federal regulations as well as all subsequent requirements and regulations as published.

65. ENCOUNTER DATA REPORTING

Encounter Submissions

The accurate and timely reporting of encounter data is crucial to the success of the AHCCCS program.  AHCCCS uses encounter data to pay reinsurance benefits, set fee-for-service and capitation rates, determine reconciliation amounts, determine disproportionate share payments to hospitals, and to determine compliance with performance standards.  The Contractor shall submit encounter data to AHCCCS for all services for which the Contractor incurred a financial liability and claims for services eligible for processing by the Contractor where no financial liability was incurred, including services provided during prior period coverage.  This requirement is a condition of the CMS grant award [42 CFR 438.242(b)(1)].

A Contractor shall prepare, review, verify, certify, and submit, encounters for consideration to AHCCCS.  Upon submission, the Contractor certifies that the services listed were actually rendered [42 CFR 455.1(a)(2)].  The encounters must be submitted in the format prescribed by AHCCCS.

Encounter data must be provided to AHCCCS as outlined in the HIPAA Transaction Companion Documents & Trading Partner Agreements and theAHCCCS Encounter Reporting User Manual and should be received by AHCCCS no later than 240 days after the end of the month in which the service was rendered, or the effective date of the enrollment with the Contractor, whichever date is later. Refer to Paragraph 64, Data Exchange Requirements, for further information.

The Contractor will be assessed sanctions for noncompliance with encounter submission requirements.

Encounter Reporting

An Encounter Submission Tracking Report (ESTR) must be maintained and made available to AHCCCS upon request.  The Tracking Report’s purpose is to link each claim to an adjudicated or pended encounter returned to the Contractor.  Further information regarding the Encounter Submission Tracking Report may be found in theAHCCCS Encounter Reporting User Manual.

In addition to the Encounter Submission Tracking Report, the Contractor must maintain and review a report which reconciles financial fields of a claim (health plan paid, billed amount, health plan allowed, etc.) with the financial fields of adjudicated encounters.  This report shall be available to AHCCCS upon request.

At least twice each month, AHCCCS provides the Contractor with full replacement files containing provider and medical coding information.  These files should be used by the Contractor to ensure accurate Encounter Reporting.  Refer to the AHCCCS Encounter Reporting User Manual for further information.

Pended Encounter Corrections

The Contractor must resolve all pended encounters within 120 days of the original processing date.  Sanctions will be imposed according to the following schedule for each encounter pended for more than 120 days unless the pend is due to AHCCCS error:

0 – 120 days          121 – 180 days      181 – 240 days      241 – 360 days      361 + days
No sanction          $ 5 per month        $ 10 per month      $ 15 per month      $ 20 per month

“AHCCCS error” is defined as a pended encounter, which (1) AHCCCS acknowledges to be the result of its own error, and/or (2) requires a change to the system programming, an update to the database reference table, or further research by AHCCCS.  AHCCCS reserves the right to adjust the sanction amount if circumstances warrant.  Upon completion of any changes to the AHCCCS system programming or updates to the database reference tables, sanctions may be imposed from date of resolution. AHCCCS reserves the right to adjust the sanction amount if circumstances warrant.

Before imposing sanctions, AHCCCS will notify the Contractor, in writing, of the total number of sanctionable encounters pended more than 120 days.  Pended encounters shall not be voided by the Contractor as a means of avoiding sanctions for failure to correct encounters within 120 days.  The Contractor shall document voided encounters and shall maintain a record of the voided Claim Reference Number(s) (CRN) with appropriate reasons indicated.  The Contractor shall, upon request, make this documentation available to AHCCCS for review. Refer to the AHCCCS Encounter Reporting User Manual for further information.

Encounter Corrections

Contractors are required to submit replacement or voided encounters in the event that claims are subsequently corrected following the initial encounter submission as described below.  This includes corrections as a result of inaccuracies identified by fraud and abuse audits or investigations conducted by AHCCCS or the Contractor.  The Contractor must void encounters for claims that are recouped in full. For recoupments that result in a reduced claim value or adjustments that result in an increased claim value, replacement encounters must be submitted. For those recoupments requiring approval from AHCCCS, replacement encounters must be submitted within 120 days of the recoupment approval from AHCCCS. Refer to the AHCCCS Encounter Reporting User Manual for instructions regarding the submission of corrected encounters.

Encounter Validation Studies

Per the CMS requirement, AHCCCS will conduct encounter validation studies of the Contractor’s encounter submissions, and sanction the Contractor for noncompliance with encounter submission requirements.  The purpose of encounter validation studies is to compare recorded utilization information from a medical record or other source with the Contractor’s submitted encounter data.  Any and all covered services may be validated as part of these studies.  Encounter validation studies will be conducted at least yearly.

AHCCCS may revise study methodology, timelines, and sanction amounts based on agency review or as a result of consultations with CMS.  The Contractor will be notified in writing of any significant change in study methodology.

AHCCCS will notify the Contractor in writing of the sanction amounts and of the selected data needed for encounter validation studies.  The Contractor will have 90 days to submit the requested data to AHCCCS.  In the case of medical records requests, the Contractor’s failure to provide AHCCCS with the records requested within 90 days may result in a sanction of $1,000 per missing medical record.  If AHCCCS does not receive a sufficient number of medical records from the Contractor to select a statistically valid sample for a study, the Contractor may be sanctioned up to 5% of its annual capitation payment.

The criteria used in encounter validation studies may include timeliness, correctness, and omission of encounters. Refer to the AHCCCS Data Validation User Manual for further information.

AHCCCS may also perform special reviews of encounter data, such as comparing encounter reports to the Contractor’s claims files. Any findings of incomplete or inaccurate encounter data may result in the imposition of sanctions or requirement of a corrective action plan.

66. ENROLLMENT AND CAPITATION TRANSACTION UPDATES

AHCCCS produces daily enrollment transaction updates identifying new members and changes to existing members' demographic, eligibility and enrollment data, which the Contractor shall use to update its member records.  The daily enrollment transaction update, that is run immediately prior to the monthly enrollment and capitation transaction, is referred to as the "last daily" and will contain all rate code changes made for the prospective month, as well as any new enrollments and disenrollments as of the 1^st of the prospective month.

AHCCCS also produces a daily Manual Payment Transaction, which identifies enrollment or disenrollment activity that was not included on the daily enrollment transaction update due to internal edits.  The Contractor shall use the Manual Payment Transaction in addition to the daily enrollment transaction update to update its member records.

On a monthly basis AHCCCS provides the Contractor with an electronic file of all Acute members who must complete a review of their eligibility in order to maintain enrollment with the Contractor. AHCCCS strongly encourages the Contractor to utilize this file to support member retention efforts.

A weekly capitation transaction will be produced to provide the Contractor with member-level capitation payment information.  This file will show changes to the prospective capitation payments, as sent in the monthly file, resulting from enrollment changes that occur after the monthly file is produced.  This file will also identify mass adjustments to and/or manual capitation payments that occurred at AHCCCS after the monthly file is produced.

The monthly enrollment and monthly capitation transaction updates are generally produced two days before the end of every month.  The update will identify the total active population for the Contractor as of the first day of the next month.  These updates contain the information used by AHCCCS to produce the monthly capitation payment for the next month.  The Contractor must reconcile their member files with the AHCCCS monthly update.  After reconciling the monthly update information, the Contractor will record the results of the reconciliation, which will be made available upon request, and will resume posting daily updates beginning with the last two days of the month.  The last two daily updates are different from the regular daily updates in that they pay and/or recoup capitation into the next month.  If the Contractor detects an error through the monthly update process, the Contractor shall notify AHCCCS, Information Services Division.

Refer to Section D, Paragraph 64, Data Exchange Requirements, for further information.

67. PERIODIC REPORT REQUIREMENTS

AHCCCS, under the terms and conditions of its CMS grant award, requires periodic reports and other information from the Contractor.  The submission of late, inaccurate, or otherwise incomplete reports shall constitute failure to report subject to the penalty provisions described in Section D, Paragraph 72, Sanctions and Attachment F, Periodic Report Requirements.

Standards applied for determining adequacy of required reports are as follows [42 CFR 438.242(b)(2)]:

                a. Timeliness: Reports or other required data shall be received on or before scheduled due dates.
                b. Accuracy: Reports or other required data shall be prepared in strict conformity with appropriate
                   authoritative sources and/or AHCCCS defined standards.
                c. Completeness: All required information shall be fully disclosed in a manner that is both responsive
                   and pertinent to report intent with no material omissions.

The Contractor shall comply with all reporting requirements contained in this contract.  AHCCCS requirements regarding reports, report content and frequency of submission of reports are subject to change at any time during the term of the contract.  The Contractor shall comply with all changes specified by AHCCCS. The Contractor shall be responsible for continued reporting beyond the term of the contract. 

68. REQUESTS FOR INFORMATION

AHCCCS may, at any time during the term of this contract, request financial or other information from the Contractor.  Responses shall fully disclose all financial or other information requested.  Information may be designated as confidential but may not be withheld from AHCCCS as proprietary.  Information designated as confidential may not be disclosed by AHCCCS without the prior written consent of the Contractor except as required by law.  Upon receipt of such written requests for information, the Contractor shall provide complete information as requested no later than 30 days after the receipt of the request unless otherwise specified in the request itself.

69. DISSEMINATION OF INFORMATION

Upon request, the Contractor shall assist AHCCCS in the dissemination of information prepared by AHCCCS or the Federal government to its members.  The cost of such dissemination shall be borne by the Contractor.  All advertisements, publications and printed materials that are produced by the Contractor and refer to covered services shall state that such services are funded under contract with AHCCCS.

70. OPERATIONAL AND FINANCIAL READINESS REVIEWS

AHCCCS may conduct Operational and Financial Readiness Reviews on the Contractor and will, subject to the availability of resources, provide technical assistance as appropriate.  The Readiness Review will be conducted prior to the start of business. The purpose of a Readiness Review is to assess Contractor’s readiness and ability to provide covered services to members at the start of the contract.  The Contractor will be permitted to commence operations only if the Readiness Review factors are met to AHCCCS's satisfaction.

71. OPERATIONAL AND FINANCIAL REVIEWS

In accordance with CMS requirements, AHCCCS, or an independent external agent, will conduct annual Operational and Financial Reviews for the purpose of (but not limited to) identifying best practices and ensuring operational and financial program compliance [42 CFR 438.204].  The reviews will identify areas where improvements can be made and make recommendations accordingly, monitor the Contractor's progress towards implementing mandated programs and provide the Contractor with technical assistance if necessary.  The Contractor shall comply with all other medical audit provisions as required by AHCCCS Rule R9-22-521.

The type and duration of the Operational and Financial Review will be solely at the discretion of AHCCCS.  Except in cases where advance notice is not possible or advance notice may render the review less useful, AHCCCS will give the Contractor at least three weeks advance notice of the date of the on-site review.  In preparation for the on-site Operational and Financial Reviews, the Contractor shall cooperate fully with AHCCCS and the AHCCCS Review Team by forwarding in advance such policies, procedures, job descriptions, contracts, logs and other information that AHCCCS may request.  The Contractor shall have all requested medical records on-site.  Any documents, not requested in advance by AHCCCS, shall be made available upon request of the Review Team during the course of the review.  The Contractor personnel, as identified in advance, shall be available to the Review Team at all times during AHCCCS on-site review activities.  While on-site, the Contractor shall provide the Review Team with appropriate workspace, access to a telephone, electrical outlets, internet access and privacy for conferences. 

The Contractor will be furnished a draft copy of the Operational and Financial Review Report and given an opportunity to comment on any review findings prior to AHCCCS publishing the final report.  Operational and Financial Review findings may be used in the scoring of subsequent bid proposals by that Contractor.  Recommendations, made by the Review Team to bring the Contractor into compliance with Federal, State, AHCCCS, and/or contract requirements, must be implemented by the Contractor.  AHCCCS may conduct a follow-up Operational and Financial Review to determine the Contractor's progress in implementing recommendations and achieving program compliance.  Follow-up reviews may be conducted at any time after the initial Operational and Financial Review.

The Contractor shall not distribute or otherwise make available the Operational and Financial Review Tool, draft Operational and Financial Review Report nor final report to other AHCCCS Contractors.

AHCCCS may conduct an Operational and Financial Review in the event the Contractor undergoes a merger, reorganization, has a change in ownership or makes changes in three or more key staff positions within a 12-month period.

AHCCCS may request, at the expense of the Contractor, to conduct on-site reviews of functions performed at out-of-state locations.  AHCCCS will coordinate travel arrangements and accommodations with the Contractor.

In addition to the annual Operational and Financial Review AHCCCS may conduct unannounced site visits to monitor contractual requirements and performance as needed.

72. SANCTIONS

AHCCCS may impose monetarysanctions, suspend, deny, refuse to renew, or terminate this contract or any related subcontracts in accordance with AHCCCS Rules R9-22-606, ACOM Sanctions Policy and the terms of this contract and applicable Federal or State law and regulations [42 CFR 422.208, 42 CFR 438.700, 702, 704 and 45 CFR 92.36(i)(1)].  Written notice will be provided to the Contractor specifying the sanction to be imposed, the grounds for such sanction and either the length of suspension or the amount of capitation to be withheld.  The Contractor may dispute the decision to impose a sanction in accordance with the process outlined in A.A.C. 9-34-401 et seq.  Intermediate sanctions may be imposed, but are not limited to the following actions:

a. Substantial failure to provide medically necessary services that the Contractor is required to provide under
   the terms of this contract to its enrolled members.
b. Imposition of premiums or charges in excess of the amount allowed under the AHCCCS 1115 Waiver.
c. Discrimination among members on the basis of their health status of need for health care services.
d. Misrepresentation or falsification of information furnished to CMS or AHCCCS.
e. Misrepresentation or falsification of information furnished to an enrollee, potential enrollee, or provider.
f. Failure to comply with the requirement for physician incentive plan as delineated in Section D, Paragraph 42,
   Physician Incentives/Pay for Performance.
g. Distribution directly, or indirectly through any agent or independent Contractor, of marketing materials that
   have not been approved by AHCCCS or that contain false or materially misleading information.
h. Failure to meet AHCCCS Financial Viability Standards.
i. Material deficiencies in the Contractor’s provider network.
j. Failure to meet quality of care and quality management requirements.
k. Failure to meet AHCCCS encounter standards.
l. Violation of other applicable State or Federal laws or regulations.
m. Failure to fund accumulated deficit in a timely manner.
n. Failure to increase the Performance Bond in a timely manner.
o. Failure to comply with any provisions contained in this contract and all policies referenced in this contract.
p. Failure to report recovery cases as described in Section D, Paragraph 58, Coordination of Benefits.

AHCCCS may impose the following types of intermediate sanctions:

a. Civil monetary penalties
b. Appointment of temporary management for a Contractor as provided in 42 CFR 438.706 and
   A.R.S. §36-2903 (M).
c. Granting members the right to terminate enrollment without cause and notifying the affected members of
   their right to disenroll [42 CFR 438.702(a)(3)].
d. Suspension of all new enrollments, including auto assignments after the effective date of the sanction.
e. Suspension of payment for recipients enrolled after the effective date of the sanction until CMS or AHCCCS
   is satisfied that the reason for imposition of the sanction no longer exists and is not likely to recur.
f. Additional sanctions allowed under statue or regulation that address areas of noncompliance.

Cure Notice Process:  Prior to the imposition of a sanction for non-compliance, AHCCCS may provide a written cure notice to the Contractor regarding the details of the non-compliance.  The cure notice will specify the period of time during which the Contractor must bring its performance back into compliance with contract requirements.  If, at the end of the specified time period, the Contractor has complied with the cure notice requirements, AHCCCS will take no further action.  If, however, the Contractor has not complied with the cure notice requirements, AHCCCS may proceed with the imposition of sanctions. Refer to theACOMSanctions Policy for details.

Automatic Sanctions:   AHCCCS will assess the sanctions listed in Attachment F, Periodic Reporting Requirements on deliverables listed under DHCM Acute Care Operations, Clinical Quality Management and Medical Management that are not received by 5:00 PM on the due date indicated. If the due date falls on a weekend or a State Holiday, sanctions will be assessed on deliverables not received by 5:00 PM on the next business day.

73. BUSINESS CONTINUITY AND RECOVERY PLAN

The Contractor shall adhere to all elements of the ACOM Business Continuity and Recovery Plan Policy.  The Contractor shall develop a Business Continuity and Recovery Plan to deal with unexpected events that may affect its ability to adequately serve members. This plan shall, at a minimum, include planning and staff training for:

            • Electronic/telephonic failure at the Contractor's main place of business
                • Complete loss of use of the main site and satellite offices out of state
                • Loss of primary computer system/records
                • Communication between the Contractor and AHCCCS in the event of a business disruption
                • Periodic Testing

The Business Continuity and Recovery Plan shall be updated annually.  The Contractor shall submit a summary of the plan as specified in the ACOM Business Continuity and Recovery Plan Policy 15 days after the start of the contract year.  All key staff shall be trained and familiar with the Plan.

74. TECHNOLOGICAL ADVANCEMENT

The Contractor must have a website with links to the following information:

                1. Formulary
                2. Provider manual
                3. Member handbook
                4. Provider listing
                5. When available, Member and Provider Survey Results
                6. Performance Measure Results
                7. Prior Authorization criteria
                8. Evidence Based Medicine Guidelines

In addition to the above, the Contractor must include member related information, as described in the Website section of the ACOM Member Information Policy and ACOMProvider Network Information Policy, on its website.

The Contractor must be able to perform the following functions electronically:

                1. Provide Enrollment Verification in a HIPAA compliant 270/271 format
                2. Accept the Benefit Enrollment and Maintenance transaction (834 format)
                3. Accept the Payroll Deduction and Other Group Premium Payment for Insurance Products
                   transaction (820 format)
                4. Allow Claims inquiry and response in a HIPAA compliant 276/277 format
                5. Accept HIPAA compliant electronic claims transactions in the 837 format (See Section D,
                   Paragraph 38, Claims Payment/Health Information System)
                6. Generate HIPAA compliant electronic remittance in the 835 format (See Section D, Paragraph 38,
                   Claims Payment/Health Information System)
                7. Make Claims payments via electronic funds transfer (See Section D, Paragraph 38, Claims
                   Payment/Health Information System)
                8. Acceptance of Prior Authorization requests, in a HIPAA compliant 278 format, no later than
                   10/01/09. AHCCCS will work with Contractors to develop functionality requirements.

Use of Website:  The Contractor is required to post their clinical performance indicators compared to AHCCCS standard and statewide averages on their website.  In addition, AHCCCS will post Contractor performance indicators on its website.

Arizona Health-e Connection

In February of 2007, AHCCCS was awarded a CMS Transformation Grant of $11.7M to build a health information exchange (HIE) and a web based suite of applications for accessing electronic health records (EHR). The HIE will serve to provide real time patient health information and clinical care automation for AHCCCS contracted health care providers, in accordance with the Governor’s executive order #2005-25 on Arizona Health-e Connection Roadmap.

AHCCCS will develop a unified approach for AHCCCS Contractors to meet the goal of the executive order and to connect AHCCCS, AHCCCS Contractors, ancillary subcontractors and registered providers into a common web based electronic health information data exchange that will meet the standards established by State and Federal governments. AHCCCS health plans and program Contractors will cooperate in assisting AHCCCS with developing the Health-e project plan and shall implement required data exchange interfaces as required to meet the goals of the Governor's executive order.

CMS will provide grants to state Medicaid agencies to support development of IT infrastructure and applications to achieve the goal of health information data exchange. AHCCCS Contractors will be required to:

                1) Encourage lab, pharmacy and ancillary subcontractors to develop common electronic
                    interfaces for the exchange of data using standards based transactions.

                2) AHCCCS may issue Minimum Subcontract language that will require subcontractors to
                    participate in the e-Health Initiative. The Contractor must amend all provider subcontracts to
                    include the amended Minimum Subcontract provisions within six (6) months of issuance.

                3) The Contractor will cooperate in passing on any AHCCCS professional fee or facility
                    reimbursement rate adjustments to primary care providers, nursing facility contractor,
                    hospitals and any other providers determined by AHCCCS to be eligible for reimbursement
                    for participation in the health information data exchange.

AHCCCS will continually work to enhance the functionality of the health information exchange, electronic health records, electronic prescribing and web based applications. The AHCCCS Contractor is expected to deploy upgrades and enhancements as necessary to contracted providers.

75. PENDING LEGISLATIVE / OTHER ISSUES

The following constitute pending items that may be resolved after the issuance of this contract.  Any program changes due to the resolution of the issues will be reflected in future amendments to the contract.  Capitation rates may also be adjusted to reflect the financial impact of program changes. The items in this paragraph are subject to change and should not be considered all-inclusive.

Federal and State Legislation:AHCCCS and its Contractors are subject to legislative mandates that may result in changes to the program.  AHCCCS will either amend the contract or incorporate changes in policies incorporated in the contract by reference.

Member Incentives: AHCCCS may explore opportunities to develop member incentive programs to increase the use of preventive health services and compliance with guidelines for recommended care and services for specific health conditions. The Contractor shall participate in the development and implementation of such programs as directed by AHCCCS.

Medical Home: AHCCCS shall initiate a process to develop, implement and expand the medical home concept. Through the RFP process, a Contractor may be selected to work with AHCCCS and take the leadership role in creating medical homes in conjunction with the Acute Care program. The selected Contractor will be paid an administrative fee for the development of the medical home model. The administrative fee will only be paid until the project is completed, as determined by AHCCCS. The Contractor will be expected to participate in all phases of this project. The Contractor shall deploy best practices in medical home concepts as identified and selected for implementation.

KidsShare: KidsShare is a health insurance buy-in program for children, which is currently being proposed.  KidsShare would allow families below 350% of the FPL to purchase health insurance coverage from the State based on the KidsCare model.  Eligible children would also be required to meet other challenges, such as: being priced out of the private insurance market; having pre-existing conditions that make obtaining private insurance extremely difficult; or not having access to employer based insurance because either it is not offered at their parents' work or their parents' employer does not extend coverage to dependents.  Unlike KidsCare, the program would not be subsidized by the State. Benefit packages and premium levels would be designed to make the program affordable yet self sustaining.  KidsShare would be administered through KidsCare health plans; these plans would have to go through a bidding process in order to participate.

SSDI-TMC: Due to limited funding and the high cost of the population, the covered services array is being evaluated and may be changed.

Enrollment Guarantees: AHCCCS intends to modify the rule requiring a 6 month enrollment guarantee as described in R9-22 Article 17.

Eligibility Privatization: AHCCCS is currently conducting an RFP process to evaluate the potential of awarding a contract to a private vendor for the determination of eligibility for KidsCare and HIFA Parents.  A similar RFP process will be conducted for the Title XIX eligibility determination process as well.

Coordination of Benefits: Based on the Deficit Reduction Act of 2006, there may be changes to Coordination of Benefits requirements.

76. SUPPORT OF ARIZONA BASED TRANSLATIONAL AND CLINICAL RESEARCH

AHCCCS is collaborating with the University of Arizona Medical School, Arizona State University, TGen, and other Arizona based research programs to encourage greater participation of the community in Arizona based translation and clinical research. The Contractor is encouraged to support AHCCCS-approved volunteer opportunities for member participation in community based clinical studies and translation research. As part of this collaboration AHCCCS providers will have the opportunity to be community research associates. The Arizona Translational Research and Education Consortium will provide statewide governance and oversight of the community engagement in Arizona translational and clinical research. The Consortium is expecting to receive a grant from the National Institutes of Health to support the infrastructure for this community involvement in beneficially translation research trials and studies.

77. RESERVED

78. RESERVED

[END OF SECTION D]