EXHIBIT 10.3

[AHCCCS
LOGO]

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM ADMINISTRATION
DIVISION OF BUSINESS AND FINANCE
SECTION A: CONTRACT

 

1.  AMENDMENT
     NUMBER:
            8

2.  CONTRACT NO.:
     YH09-0001-07

3.  EFFECTIVE DATE OF AMENDMENT
     October 1, 2009

4.  PROGRAM
  DHCM - ACUTE

 

5.  CONTRACTOR'S NAME AND ADDRESS:

VHS Phoenix Health Plan, LLC
7878 N. 16th St., Suite 105
Phoenix, AZ 85020

 

6.  PURPOSE OF AMENDMENT:  To amend Section D Paragraph 53, Compensation.

 

7.  THE CONTRACT REFERENCED ABOVE FOLLOWS
A.            Section D, Paragraph 53, Compensation has had one paragraph
revised with the following language.

Reconciliation of Prospective non-MED Costs to Reimbursement: AHCCCS will
reconcile the
Contractor’s prospective non-MED medical cost expenses to prospective non-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 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 Prospective non-MED
Reconciliation Policy included in
the ACOM for further details.

NOTE:  Please sign, date, and return executed file by E-Mail to:Mark Held at
Mark.Held@azahcccs.gov
                                                                                                              
Sr. Procurement Specialist
                                                                                                              
AHCCCS Contracts and Purchasing
                                                                                                              
and Georgina Maya at
                                                                                                              
Georgina.Maya@azahcccs.gov

 

8.  EXCEPT AS PROVIDED FOR HEREIN, ALL TERMS AND CONDITIONS OF THE ORIGINAL
CONTRACT NOT HERETOFORE CHANGED AND/OR AMENDED REMAIN UNCHANGED AND IN FULL
EFFECT.

IN WITNESS WHEREOF THE PARTIES HERETO SIGN THEIR NAMES IN AGREEMENT

9.  SIGNATURE OF AUTHORIZED REPRESENTATIVE:
     /s/ Nancy Novick

TYPED NAME:    NANCY NOVICK
TITLE:                    CHIEF EXECUTIVE OFFICER
DATE:                    9/17/09

 

10.  SIGNATURE OF AHCCCSA CONTRACTING OFFICER:

       /s/ Michael Veit

 

 

MICHAEL VEIT

CONTRACTS & PURCHASING ADMINISTRATOR
DATE:    SEP 16 2009

TABLE OF CONTENTS

SECTION A: CONTRACT

 

 

1

 

SECTION B: CAPITATION RATES

 

 

6

 

SECTION C: DEFINITIONS

 

 

7

 

SECTION D: PROGRAM REQUIREMENTS

 

 

16

INTRODUCTION

16

1. TERM OF CONTRACT AND OPTION TO RENEW

16

2. ELIGIBILITY CATEGORIES

18

3. ENROLLMENT AND DISENROLLMENT

20

4. ANNUAL ENROLLMENT CHOICE

23

5. ENROLLMENT AFTER CONTRACT AWARD

23

6. AUTO-ASSIGNMENT ALGORITHM

24

7. AHCCCS MEMBER IDENTIFICATION CARDS

24

8. MAINSTREAMING OF AHCCCS MEMBERS

24

9. TRANSITION OF MEMBERS

25

10. SCOPE OF SERVICES

25

11. SPECIAL HEALTH CARE NEEDS

34

12. BEHAVIORAL HEALTH SERVICES

35

13. AHCCCS GUIDELINES, POLICIES ANDMANUALS

38

14. MEDICAID SCHOOL BASED CLAIMING PROGRAM (MSBC)

38

15. PEDIATRIC IMMUNIZATIONS AND THE VACCINES FOR CHILDREN PROGRAM

38

16. STAFF REQUIREMENTS AND SUPPORT SERVICES

39

17. WRITTEN POLICIES, PROCEDURES AND JOB DESCRIPTIONS

43

18. MEMBER INFORMATION

43

19. SURVEYS

44

20. CULTURAL COMPETENCY

45

21. MEDICAL RECORDS

45

22. ADVANCE DIRECTIVES

46

23. QUALITYMANAGEMENT (QM)

47

24. MEDICAL MANAGEMENT (MM)

51

25. ADMINISTRATIVE PERFORMANCE STANDARDS

52

26. GRIEVANCE SYSTEM

54

27. NETWORK DEVELOPMENT

54

28. PROVIDER AFFILIATION TRANSMISSION

56

29. NETWORK MANAGEMENT

57

30. PRIMARY CARE PROVIDER STANDARDS

58

31. MATERNITY CARE PROVIDER STANDARDS

59

32. REFERRALMANAGEMENT PROCEDURES AND STANDARDS

61

33. APPOINTMENT STANDARDS

61

34. FEDERALLY QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS

63

35. PROVIDER MANUAL

63

36. PROVIDER REGISTRATION

63

37. SUBCONTRACTS

63

38. CLAIMS PAYMENT/HEALTH INFORMATION SYSTEM

66

39. SPECIALTY CONTRACTS

69

40. HOSPITAL SUBCONTRACTING AND REIMBURSEMENT

71

41. RESPONSIBILITY FOR NURSING FACILITY REIMBURSEMENT

71

42. PHYSICIAN INCENTIVES/PAY FOR PERFORMANCE

72

43. MANAGEMENT SERVICES AGREEMENT AND COST ALLOCATION PLAN

73

44. RESERVED

73

45. RESERVED

73

46. PERFORMANCE BOND OR BOND SUBSTITUTE

73

47. AMOUNT OF PERFORMANCE BOND

74

48. ACCUMULATED FUND DEFICIT

74

49. ADVANCES, DISTRIBUTIONS, LOANS AND INVESTMENTS

75

50. FINANCIAL VIABILITY STANDARDS

75

51. SEPARATE INCORPORATION

77

52. MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP

77

53. COMPENSATION

77

54. PAYMENTS TO CONTRACTORS

79

55. CAPITATION ADJUSTMENTS

79

56. RESERVED

80

57. REINSURANCE

80

58. COORDINATION OF BENEFITS

85

59. COPAYMENTS

88

60. MEDICARE SERVICES AND COST SHARING

89

61. MARKETING

89

62. CORPORATE COMPLIANCE

89

63. RECORDS RETENTION

91

64. DATA EXCHANGE REQUIREMENTS

91

65. ENCOUNTER DATA REPORTING

92

66. ENROLLMENT AND CAPITATION TRANSACTION UPDATES

94

67. PERIODIC REPORT REQUIREMENTS

95

68. REQUESTS FOR INFORMATION

95

69. DISSEMINATION OF INFORMATION

95

70. OPERATIONAL AND FINANCIAL READINESS REVIEWS

95

71. OPERATIONAL AND FINANCIAL REVIEWS

96

72. SANCTIONS

96

73. BUSINESS CONTINUITY AND RECOVERY PLAN

97

74. TECHNOLOGICAL ADVANCEMENT

99

75. PENDING LEGISLATIVE / OTHER ISSUES

100

76. SUPPORT OF ARIZONA BASED TRANSLATIONAL AND CLINICAL RESEARCH

101

77. RESERVED

101

78. RESERVED

101

 

 

 

 

SECTION E: CONTRACT CLAUSES

102

1) APPLICABLE LAW

102

2) AUTHORITY

102

3) ORDER OF PRECEDENCE

102

4) CONTRACT INTERPRETATION AND AMENDMENT

102

5) SEVERABILITY

102

6) RELATIONSHIP OF PARTIES

102

7) ASSIGNMENT AND DELEGATION

102

8) INDEMNIFICATION

103

9) INDEMNIFICATION -- PATENT AND COPYRIGHT

103

10) COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS

103

11) ADVERTISING AND PROMOTION OF CONTRACT

103

12) PROPERTY OF THE STATE

103

13) THIRD PARTY ANTITRUST VIOLATIONS

104

14) RIGHT TO ASSURANCE

104

15) TERMINATION FOR CONFLICT OF INTEREST

104

16) GRATUITIES

104

17) SUSPENSION OR DEBARMENT

104

18) TERMINATION FOR CONVENIENCE

104

19) TEMPORARY MANAGEMENT/OPERATION OF A CONTRACTOR AND TERMINATION

105

20) TERMINATION - AVAILABILITY OF FUNDS

106

21) RIGHT OF OFFSET

106

22) NON-EXCLUSIVE REMEDIES

106

23) NON-DISCRIMINATION

106

24) EFFECTIVE DATE

106

25) INSURANCE

106

26) DISPUTES

107

27) RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS

107

28) INCORPORATION BY REFERENCE

107

29) COVENANT AGAINST CONTINGENT FEES

107

30) CHANGES

108

31) TYPE OF CONTRACT

108

32) AMERICANS WITH DISABILITIES ACT

108

33) WARRANTY OF SERVICES

108

34) NO GUARANTEED QUANTITIES

108

35) CONFLICT OF INTEREST

108

36) CONFIDENTIALITY AND DISCLOSURE OF CONFIDENTIAL INFORMATION

108

37) COOPERATION WITH OTHER CONTRACTORS

109

38) ASSIGNMENT OF CONTRACT AND BANKRUPTCY

109

39) OWNERSHIP OF INFORMATION AND DATA

109

40) AUDITS AND INSPECTIONS

109

41) LOBBYING

110

42) CHOICE OF FORUM

110

43) DATA CERTIFICATION

110

44) OFF SHORE PERFORMANCE OF WORK PROHIBITED

110

45) FEDERAL IMMIGRATION AND NATIONALITY ACT

110

46) IRS W-9 FORM

110

47) CONTINUATION OF PERFORMANCE THROUGH TERMINATION

110

 

 

 

 

SECTION F :RESERVED

111

 

SECTION G: RESERVED

112

 

SECTION H: RESERVED

113

 

SECTION I: RESERVED

114

 

SECTION J: LIST OF ATTACHMENTS

115

 

ATTACHMENT A: MINIMUM SUBCONTRACT PROVISIONS

116

1. ASSIGNMENT AND DELEGATION OF RIGHTS AND RESPONSIBILITIES

116

2. AWARDS OF OTHER SUBCONTRACTS

116

3. CERTIFICATION OF COMPLIANCE – ANTI-KICKBACK AND LABORATORY TESTING

116

4. CERTIFICATION OF TRUTHFULNESS OF REPRESENTATION

116

5. CLINICAL LABORATORY IMPROVEMENTAMENDMENTS OF 1988

117

6. COMPLIANCE WITH AHCCCS RULES RELATING TO AUDIT AND INSPECTION

117

7. COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS

117

8. CONFIDENTIALITY REQUIREMENT

117

9. CONFLICT IN INTERPRETATION OF PROVISIONS

117

10. CONTRACT CLAIMS AND DISPUTES

117

11. ENCOUNTER DATA REQUIREMENT

117

12. EVALUATION OF QUALITY, APPROPRIATENESS, OR TIMELINESS OF SERVICES

118

13. FRAUD AND ABUSE

118

14. GENERAL INDEMNIFICATION

118

15. INSURANCE

118

16. LIMITATIONS ON BILLING AND COLLECTION PRACTICES

118

17. MAINTENANCE OF REQUIREMENTS TO DO BUSINESS AND PROVIDE SERVICES

118

18. NON-DISCRIMINATION REQUIREMENTS

118

19. PRIOR AUTHORIZATION AND UTILIZATION MANAGEMENT

119

20. RECORDS RETENTION

119

21. SEVERABILITY

119

22. SUBJECTION OF SUBCONTRACT

119

23. TERMINATION OF SUBCONTRACT

119

24. VOIDABILITY OF SUBCONTRACT

120

25. WARRANTY OF SERVICES

120

26. OFF-SHORE PERFORMANCE OF WORK PROHIBITED

120

27. FEDERAL IMMIGRATION AND NATIONALITY ACT

120

 

ATTACHMENT B: MINIMUM NETWORK STANDARDS (BY GEOGRAPHIC SERVICE)

121

 

ATTACHMENT C: RESERVED

132

 

ATTACHMENT D: SAMPLE LETTER OF INTENT

133

 

ATTACHMENT E: RESERVED

139

 

ATTACHMENT F: PERIODIC REPORT REQUIREMENTS

140

 

ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM

147

 

ATTACHMENT H(1): ENROLLEE GRIEVANCE SYSTEM STANDARDS AND POLICY

150

 

ATTACHMENT H(2): PROVIDER CLAIM DISPUTE STANDARDS AND POLICY

155

 

ATTACHMENT I: RESERVED

157

 

ATTACHMENT J: RESERVED

158

 

ATTACHMENT J(2): RESERVED

159

 

ATTACHMENT K: COST SHARING COPAYMENTS

160

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, 2009
through September 30, 2010.

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.

 

 

 

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 (NON-MED)”

 

 

 

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)

AIHP is an acute care program that delivers acute care health care services to
the eligible American Indians who choose to receive services through the Indian
Health Service (IHS) or tribal health programs operated under PL 93-638 (known
as 638 facilities).  AIHP is formerly known as the 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 EEE 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.

 

 

 

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 D EXCLUDED 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.

 

 

 

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, or MED Prospective 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.

State-Only

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 nor 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
(800) 962-6690.  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 ACOMChange 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 IV-E foster care children, Young Adult Transitional
Insurance Program, the Federal Emergency Services program (FES) 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 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.

KidsCare  Title XXI  members must select a Contractor prior to being determined
eligible, and therefore will not be auto-assigned.

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 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.  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
AHCCCSprotocol for family continuity and the auto-assignment  algorithm.  Native
American Title XXI  members must make a choice prior to being determined
eligible.  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 ACOMMember 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 all emergency services (in or out of 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 pre-hospital, 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
theAMPM 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, certified
nurse midwives, or licensed 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 or licensed midwives, if these
providers are in the Contractor’s network.  Members receiving maternity services
from a certified nurse midwife or a licensed midwife must also be assigned to a
PCP for other health care and medical services.  A certified nurse midwife may
provide those primary care services that s/he is willing to provide and that the
member elects to receive from the certified nurse midwife.  Members receiving
care from a certified nurse midwife may also elect to receive some or all her
primary care from the assigned PCP.  Licensed midwives may not provide any
additional medical services as primary care is not within their scope of
practice.  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 HealthPlan75DayNotice@azahcccs.gov.

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
pre-transplantation  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 over-the-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 theAMPM 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 are 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. 
The Contractor shall also have a mechanism in place for tracking members for
whom ongoing medically necessary services are required.

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 facilitated the development of Clinical tool kits for the
treatment of anxiety, depression, and ADHD.  These tool kits are a resource only
and may not apply to all patients and all clinical situations.  They are not
intended to replace clinical judgment.  The Contractor shall ensure that PCPs
and Pediatricians who have an interest or are actively treating members with
these disorders are aware of these resources and/or are utilizing other
recognized tools/evidence-based guidelines.  The Contractor shall develop a
monitoring process to ensure that PCPs utilize evidence-based
guidelines/recognized clinical tools when prescribing medications to treat
depression, anxiety, and ADHD.

The Contractor may implement step therapy for behavioral health medications used
for treating anxiety, depression and ADHD disorders.  The Contractor shall
provide education and training for providers regarding the concept of step
therapy.  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 monitor PCPs to
ensure that they prescribe medication at the dosage at which the member has been
stabilized.

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 any
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. 
Each year on October 15th, the Contractor must provide the name, Social Security
Number and date of birth of the staff members performing the duties of the Key
Staff listed as a, b and c below.  AHCCCS will compare this information against
federal databases to confirm that those individuals have not been banned or
debarred from participating in Federal programs [42 CFR 455.104].  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 andto 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/CMOwho 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 Managerwho 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  Coordinatorwho 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) Coordinatorwho 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 interventions 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 staffto 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  Processingstaff   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 handbookwhich, 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 within four weeks of receiving the annual renewal
amendment and upon any changes prior to distribution.

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, semi-annual
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)]:

An updated member handbook at no cost to the member

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.

For non AHCCCS required surveys, the Contractor shall provide AHCCCS
notification 15 days prior to conducting any Contractor initiated member or
provider survey.  The notification must include a project scope statement,
project timeline and a copy of the survey.  The results and the analysis of the
results of any Contractor initiated surveys shall be submitted to the Acute Care
Operations Unit within 45 days of the completion of the project.

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.

At least quarterly, the Contractor is required to survey a sample of its
membership that have received services to verify that services the Contractor
paid for were delivered as outlined in the ACOM [42 CFR 455.201].

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)].

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:

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.)

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)].

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.

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.

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.

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.

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 Contractor shall have an ongoing quality management program for the services
it furnishes to members that includes the requirements listed in AMPM Chapter
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
activities.
2.             QM/PI Program monitoring and evaluation activities 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
Attachment 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   (Healthy People Goals)

Immunization of Two-year-olds

    4:3:1:3:3:1 Series

71%

80%

    4:3:1:3:3:1:4 Series

66%

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 12-24 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

50%

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

70%

91%

Notes:

Contractor Performance is evaluated annually on the AHCCCS-reported rate for
each measure.  Rates for measures that include only members less than 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 and
is subject to approval by AHCCCS.  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 define 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 manualmay 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 practice/family
                practice providers who provide maternity care services;
b.             Physician Assistants;
c.             Nurse Practitioners;
d.             Certified Nurse Midwives;
e.             Licensed 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 receiving maternity services
from a certified nurse midwife or a licensed midwife must also be assigned to a
PCP for other health care and medical services.  A certified nurse midwife may
provide those primary care services that s/he is willing to provide and that the
member elects to receive from the certified nurse midwife.  Members receiving
care from a certified nurse midwife may also elect to receive some or all her
primary care from the assigned PCP.  Licensed midwives may not provide any
additional medical services as primary care is not within their scope of
practice.

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 an 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.

The 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 Reportwill 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.

For all subcontracts in which the Contractor and Subcontractor have a capitated
arrangement/risk sharing arrangement, the following provision must be included
verbatim in every contract:
                If the Subcontractor does not bill the Contractor (e.g.,
Subcontractor is capitated), the Subcontractor’s
                encounter data that is required to be submitted to the
Contractor pursuant to contract is defined for these
                purposes as a “claim for payment”.  The Subcontractor’s
provision of any service results in a “claim for
                payment” regardless of whether there is any intention of
payment.  All said claims shall be subject to review
                under any and all fraud and abuse statutes, rules and
regulations, including but not limited to Arizona Revised
                Statute (A.R.S.) §36-2918.

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 31st 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

Audits of provider contract terms should be performed on a regular and periodic
basis and consist of a random, statistically significant sampling of all
contracts in effect at the time of the audit.  The audit sampling methodology
should be documented in policy and attempt to review the contract loading of
both large groups and individual practitioners at least once every 5 year period
in addition to any time a contract change is initiated during that timeframe. 
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 E & M 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 at the end of the month that is being reported 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 at the end of the month
that is being reported 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 required HIPAA compliant
electronic 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-04 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 (Clinical tool kits)
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%).

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 inter-company 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.  For CYE 10,
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,
KidsCare 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.

Reconciliation of Prospective non-MED Costs to Reimbursement:  AHCCCS will
reconcile the Contractor’s prospective non-MED medical cost expenses to
prospective non-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 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 Prospective non-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.

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, 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.  See below for
details on applicable deductible levels effective October 1, 2009 through
September 30, 2010.

 

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 State Only Transplant
and SOBRA Family Planning members.  Beginning October 1, 2010, 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.

For the contract year beginning October 1, 2009, Contractors that were at or
above the 35,000 enrollment deductible level for the contract year beginning
October 1, 2008 will have their deductible level reduced to the next lowest
level.  See the table below for details.

Deductible at October 1, 2008           

Deductible for October 1, 2009

$20,000

$20,000

$35,000

$20,000

$50,000

$35,000

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
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,
and other organ transplantation.  Bone grafts, cornea and kidney (beginning
October 1, 2009) 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.  The
Contractor must notify AHCCCS Division of Health Care Management, Medical
Management Unit when a member is referred to a transplant facility for
evaluation for an AHCCCS-covered organ transplant.  In order to qualify for
reinsurance benefits, the notification must be received by AHCCCS Medical
Management Unit within 30 days of referral to the transplant facility for
evaluation,

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
copayment, coinsurance or deductible, the Contractor is responsible for making
these payments under the method described below, even if the services are
provided outside of the Contractor network.

A.            If the provider is CONTRACTED with the Contractor:

The Contractor shall pay the lesser of the difference between:
1)             The Primary Insurance Paid amount and the Primary Insurance rate,
i.e., the member’s copayment required under the Primary Insurance
OR
2)             The Primary Insurance Paid amount and the Contractor’s Contracted
Rate

The lesser of methodology applies unless the Contractor’s contract with the
provider requires a different payment scheme.

B.            If the provider is NOT CONTRACTED with the Contractor:

The Contractor shall pay the lesser of the difference between:
1)             The Primary Insurance Paid amount and the Primary Insurance Rate,
i.e., the member’s copayment required under the Primary Insurance
OR
2)             The Primary Insurance Paid amount and the AHCCCS Fee for Service
Rate

Examples

Scenario 1

 

AHCCCS FFS Rate $50

 

Contractor Rate $55

 

Primary Insurance Rate $45

 

Primary Paid $30

 

Contractor Payment to Contracted Provider in this example

 

$15  (this is calculated from the lesser of: $45-$30 vs. $55 - $30)

Contractor Payment to NonContracted Provider in this example

$15   (this is calculated from the lesser of: $45-30 vs. $50-30)

 

 

Scenario 2

 

AHCCCS FFS Rate $50

 

Contractor Rate $55

 

Primary Insurance Rate $60

 

Primary Paid $40

 

 

 

Contractor Payment to Contracted Provider in this example

$15 (this is calculated from the lesser of: $60 - $40 vs. $55-$40)

Contractor Payment to NonContracted Provider in this example

$10 (this is calculated from the lesser of: $60-$40 vs. $50-$40)

 

 

Scenario 3

 

AHCCCS FFS Rate $50

 

Contractor Rate $55

 

Primary Insurance Rate $70

 

Primary Paid $60

 

 

 

Contractor Payment to Contracted Provider in this example

 $0 (this is calculated from the lesser of: $70 - $60 vs. $55-$60)

Contractor Payment to NonContracted Provider in this example?

 $0 (this is calculated from the lesser of: $70-$60 vs. $50-$60)

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

Tort feasors, 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), BCCTP, and SOBRA Family Planning:  Eligibility for
KidsCare, BCCTP, and SOBRA Family Planning 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.

AHCCCS has developed a process and agreement with Blue Cross Blue Shield of
Arizona (BCBSAZ) to receive both historic and current BCBSAZ coverage data.

Based on this information, AHCCCS will be submitting claims on behalf of AHCCCS
Contractors for services reimbursed for dates of services 1/15/06 through
3/31/08.  From the monies recovered, AHCCCS will disburse 50% to the Agency for
recoveries of non-TWG, non-PPC, non-Reinsurance related claims.  For these
claims, AHCCCS will withhold 12% of the disbursement to the Contractor to
compensate the vendor recovering the funds.  AHCCCS will retain 100% of any
BCBSAZ recoveries related to PPC, TWG and Reinsurance-related claims.  The
Contractor is restricted from recouping any funds for BCBSAZ liability for the
period of 1/15/06-3/31/08.  However, the Contractor is responsible for
coordination of benefits from 4/1/08 forward.

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 (602) 253-4807 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 1st 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 statute 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 with the implementation of
                5010 formats.  AHCCCS will work with Contractors to develop
functionality requirements.
9.             Acceptance of Electronic Medical documentation, in a HIPAA
compliant 275 format, with the
                implementation of 5010 formats.  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.

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.  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]

SECTION E: CONTRACT CLAUSES

1)            APPLICABLE LAW
Arizona Law - The law of Arizona applies to this contract including, where
applicable, the Uniform Commercial Code, as adopted in the State of Arizona.

Implied Contract Terms  - Each provision of law and any terms required by law to
be in this contract are a part of this contract as if fully stated in it.

2)            AUTHORITY
This contract is issued under the authority of the Contracting Officer who
signed this contract.  Changes to the contract, including the addition of work
or materials, the revision of payment terms, or the substitution of work or
materials, directed by an unauthorized state employee or made unilaterally by
the Contractor are violations of the contract and of applicable law.  Such
changes, including unauthorized written contract amendments, shall be void and
without effect, and the Contractor shall not be entitled to any claim under this
contract based on those changes.

3)            ORDER OF PRECEDENCE
The parties to this contract shall be bound by all terms and conditions
contained herein.  For interpreting such terms and conditions the following
sources shall have precedence in descending order:  The Constitution and laws of
the United States and applicable Federal regulations; the terms of the CMS 1115
waiver for the State of Arizona; the Constitution and laws of Arizona, and
applicable State rules; the terms of this contract, including any attachments
and executed amendments and modifications; and AHCCCS policies and procedures.

4)            CONTRACT INTERPRETATION AND AMENDMENT
No Parole Evidence - This contract is intended by the parties as a final and
complete expression of their agreement.  No course of prior dealings between the
parties and no usage of the trade shall supplement or explain any term used in
this contract.

No Waiver  - Either party's failure to insist on strict performance of any term
or condition of the contract shall not be deemed a waiver of that term or
condition even if the party accepting or acquiescing in the non-conforming
performance knows of the nature of the performance and fails to object to it.

Written Contract Amendments   - The contract shall be modified only through a
written contract amendment within the scope of the contract signed by the
procurement officer on behalf of the State.

5)            SEVERABILITY
The provisions of this contract are severable to the extent that any provision
or application held to be invalid shall not affect any other provision or
application of the contract, which may remain in effect without the invalid
provision, or application.

6)            RELATIONSHIP OF PARTIES
The Contractor under this contract is an independent contractor.  Neither party
to this contract shall be deemed to be the employee or agent of the other party
to the contract.

7)            ASSIGNMENT AND DELEGATION
The Contractor shall not assign any right nor delegate any duty under this
contract without prior written approval of the Contracting Officer, who will not
unreasonably withhold such approval.

8.             INDEMNIFICATION
Contractor/Vendor Indemnification (Not Public Agency)

The parties to this contract agree that the State of Arizona, its departments,
agencies, boards and commissions shall be indemnified and held harmless by the
Contractor for the vicarious liability of the State as a result of entering into
this contract.  The Contractor agrees to indemnify, defend, and hold harmless
the State from and against any and all claims, losses, liability, costs, and
expenses, including attorney’s fees and costs, arising out of litigation against
the AHCCCS Administration including, but not limited to, class action lawsuits
challenging actions by the Contractor.  The requirement for indemnification
applies irrespective of whether or not the Contractor is a party to the
lawsuit.  Each Contractor shall indemnify the State, on a pro rata basis based
on population, attorney’s fees and costs awarded against the State as well as
the attorney’s fees and costs incurred by the State in defending the lawsuit. 
The Contractor shall also indemnify the AHCCCS Administration, on a pro rata
basis based on population, the administrative expenses incurred by the AHCCCS
Administration to address Contractor deficiencies arising out of the
litigation.  The parties further agree that the State of Arizona, its
departments, agencies, boards and commissions shall be responsible for its own
negligence and/or willful misconduct.  Each party to this contract is
responsible for its own negligence and/or willful misconduct.

Contractor/Vendor Indemnification (Public Agency)

Each party (“as indemnitor”) agrees to indemnify, defend, and hold harmless the
other party (“as indemnitee”) from and against any and all claims, losses,
liability, costs, or expenses (including reasonable attorney’s fees)
(hereinafter collectively referred to as ‘claims’) arising out of bodily injury
of any person (including death) or property damage but only to the extent that
such claims which result in vicarious/derivative liability to the indemnitee,
are caused by the act, omission, negligence, misconduct, or other fault of the
indemnitor, its officers, officials, agents, employees, or volunteers.

9)            INDEMNIFICATION -- PATENT AND COPYRIGHT
To the extent permitted by applicable law, the Contractor shall defend,
indemnify and hold harmless the State against any liability including costs and
expenses for infringement of any patent, trademark or copyright arising out of
contract performance or use by the State of materials furnished or work
performed under this contract.  The State shall reasonably notify the Contractor
of any claim for which it may be liable under this paragraph.

10)          COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS
The Contractor shall comply with all applicable Federal and State laws and
regulations including Title VI of the Civil Rights Act of 1964; Title IX of the
Education Amendments of 1972 (regarding education programs and activities); the
Age Discrimination Act of 1975; the Rehabilitation Act of 1973 (regarding
education programs and activities), and the Americans with Disabilities Act; EEO
provisions; Copeland Anti-Kickback Act; Davis-Bacon Act; Contract Work Hours and
Safety Standards; Rights to Inventions Made Under a Contract or Agreement; Clean
Air Act and Federal Water Pollution Control Act; Byrd Anti-Lobbying Amendment. 
The Contractor shall maintain all applicable licenses and permits.

11)          ADVERTISING AND PROMOTION OF CONTRACT
The Contractor shall not advertise or publish information for commercial benefit
concerning this contract without the prior written approval of the Contracting
Officer.

12)          PROPERTY OF THE STATE
Except as otherwise provided in this contract, any materials, including reports,
computer programs and other deliverables, created under this contract are the
sole property of AHCCCS.  The Contractor is not entitled to maintain any rights
on those materials and may not transfer any rights to anyone else.  The
Contractor shall not use or release these materials without the prior written
consent of AHCCCS.

If a Contractor declares information to be confidential, AHCCCS will maintain
the information as confidential and will not disclose it unless it is required
by law or court order.

13)          THIRD PARTY  ANTITRUST VIOLATIONS
The Contractor assigns to the State any claim for overcharges resulting from
antitrust violations to the extent that those violations concern materials or
services supplied by third parties to the Contractor toward fulfillment of this
contract.

14)          RIGHT TO ASSURANCE
If AHCCCS, in good faith, has reason to believe that the Contractor does not
intend to perform or continue performing this contract, the procurement officer
may demand in writing that the Contractor give a written assurance of intent to
perform.  The demand shall be sent to the Contractor by certified mail, return
receipt required.  Failure by the Contractor to provide written assurance within
the number of days specified in the demand may, at the State's option, be the
basis for terminating the contract.

15)          TERMINATION FOR CONFLICT OF INTEREST
AHCCCS may cancel this contract without penalty or further obligation if any
person significantly involved in initiating, negotiating, securing, drafting or
creating the contract on behalf of AHCCCS is, or becomes at any time while the
contract or any extension of the contract is in effect, an employee of, or a
consultant to, any other party to this contract with respect to the subject
matter of the contract.  The cancellation shall be effective when the Contractor
receives written notice of the cancellation unless the notice specifies a later
time.

If the Contractor is a political subdivision of the State, it may also cancel
this contract as provided by A.R.S. 38-511.

16)          GRATUITIES
AHCCCS may, by written notice to the Contractor, immediately terminate this
contract if it determines that employment or a gratuity was offered or made by
the Contractor or a representative of the Contractor to any officer or employee
of the State for the purpose of influencing the outcome of the procurement or
securing the contract, an amendment to the contract, or favorable treatment
concerning the contract, including the making of any determination or decision
about contract performance.  AHCCCS, in addition to any other rights or
remedies, shall be entitled to recover exemplary damages in the amount of three
times the value of the gratuity offered by the Contractor.

17)          SUSPENSION OR DEBARMENT
The Contractor shall not employ, consult, subcontract  or enter into any
agreement for Title XIX  services with any person or entity who is debarred,
suspended or otherwise excluded from Federal 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) and (b)].  This prohibition extends to any entity which
employs, consults, subcontracts with or otherwise reimburses for services any
person substantially involved in the management of another entity which is
debarred, suspended or otherwise excluded from Federal procurement activity.

The Contractor shall not retain as a director, officer, partner or owner of 5%
or more of the Contractor entity, any person, or affiliate of such a person, who
is debarred, suspended or otherwise excluded from Federal procurement activity.

AHCCCS may, by written notice to the Contractor, immediately terminate this
contract if it determines that the Contractor has been debarred, suspended or
otherwise lawfully prohibited from participating in any public procurement
activity.

18)          TERMINATION FOR CONVENIENCE
AHCCCS reserves the right to terminate the contract in whole or in part at any
time for the convenience of the State without penalty or recourse.  The
Contracting Officer shall give written notice by certified mail, return receipt
requested, to the Contractor of the termination at least 90 days before the
effective date of the termination.  In the event of termination under this
paragraph, all documents, data and reports prepared by the Contractor under the
contract shall become the property of and be delivered to AHCCCS.  The
Contractor shall be entitled to receive just and equitable compensation for work
in progress, work completed and materials accepted before the effective date of
the termination.

19)          TEMPORARY MANAGEMENT/OPERATION OF A CONTRACTOR AND TERMINATION
Temporary Management and Operation of a Contractor:  Pursuant to the Balanced
Budget Act of 1997, 42 CFR 438.700 et seq. and State Law ARS §36-2903, AHCCCSA
is authorized to impose temporary management for a Contractor under certain
conditions.  Under federal law, temporary management may be imposed if AHCCCS
determines that there is continued egregious behavior by the Contractor,
including but not limited to the following:  substantial failure to provide
medically necessary services the Contractor is required to provide;  imposition
on enrollees premiums or charges that exceed those permitted by AHCCCSA; 
discrimination among enrollees on the basis of health status or need for health
care services; misrepresentation or falsification of information to AHCCCSA or
CMS;  misrepresentation or falsification of information furnished to an enrollee
or provider;  distribution of marketing materials that have not been approved by
AHCCCS or that are false or misleading;  or behavior contrary to any
requirements of Sections 1903(m) or 1932 of the Social Security Act.  Temporary
management may also be imposed if AHCCCSA determines that there is substantial
risk to enrollees’ health or that temporary management is necessary to ensure
the health of enrollees while the Contractor is correcting the deficiencies
noted above or until there is an orderly transition or reorganization of the
Contractor.  Under federal law, temporary management is mandatory if AHCCCSA
determines that the Contractor has repeatedly failed to meet substantive
requirements in Sections 1903(m) or 1932 of the Social Security Act.  In these
situations, AHCCCSA shall not delay imposition of temporary management to
provide a hearing before imposing this sanction.

State law ARS §36-2903 authorizes AHCCCSA to operate a Contractor as specified
in this contract.  In addition to the bases specified in 42 CFR 438.700 et seq.,
AHCCCSA may directly operate the Contractor if, in the judgment of AHCCCSA, the
Contractor's performance is in material breach of the contract or the Contractor
is insolvent.  Under these circumstances, AHCCCSA may directly operate the
Contractor to assure delivery of care to members enrolled with the Contractor
until cure by the Contractor of its breach, by demonstrated financial solvency
or until the successful transition of those members to other Contractors.  Prior
to operation of the Contractor by AHCCCSA pursuant to state statute, the
Contractor shall have the opportunity for a hearing.  If AHCCCSA determines that
emergency action is required, operation of the Contractor may take place prior
to hearing.  Operation by AHCCCSA shall occur only as long as it is necessary to
assure delivery of uninterrupted care to members, to accomplish orderly
transition of those members to other Contractors, or until the Contractor
reorganizes or otherwise corrects contract performance failure.

If AHCCCS undertakes direct operation of the Contractor, AHCCCS, through
designees appointed by the Director, shall be vested with full and exclusive
power of management and control of the Contractor as necessary to ensure the
uninterrupted care to persons and accomplish the orderly transition of persons
to a new or existing Contractor, or until the Contractor corrects the Contract
Performance failure to the satisfaction of AHCCCS.  AHCCCS shall have the power
to employ any necessary assistants, to execute any instrument in the name of the
Contractor, to commence, defend and conduct in its name any action or proceeding
in which the Contractor may be a third party; such powers shall only apply with
respect to activities occurring after AHCCCS undertakes direct operation of the
Contractor in connection with this Section.

All reasonable expenses of AHCCCS related to the direct operation of the
Contractor, including attorney fees, cost of preliminary or other audits of the
Contractor and expenses related to the management of any office or other assets
of the Contractor, shall be paid by the Contractor or withheld from payment due
from AHCCCS to the Contractor.

Termination:  AHCCCSA reserves the right to terminate this contract in whole or
in part due to the failure of the Contractor to comply with any term or
condition of the contract and as authorized by the Balanced Budget Act of 1997
and 42 CFR 438.708.  If the Contractor is providing services under more than one
contract with AHCCCSA, AHCCCSA may deem unsatisfactory performance under one
contract to be cause to require the Contractor to provide assurance of
performance under any and all other contracts.  In such situations, AHCCCSA
reserves the right to seek remedies under both actual and anticipatory breaches
of contract if adequate assurance of performance is not received.   The
Contracting Officer shall mail written notice of the termination and the
reason(s) for it to the Contractor by certified mail, return receipt requested. 
Pursuant to the Balanced Budget Act of 1997 and 42 CFR 438.708, AHCCCSA shall
provide the contractor with a pre-termination hearing before termination of the
contract.

Upon termination, all documents, data, and reports prepared by the Contractor
under the contract shall become the property of and be delivered to AHCCCSA on
demand.

AHCCCSA may, upon termination of this contract, procure on terms and in the
manner that it deems appropriate, materials or services to replace those under
this contract.  The Contractor shall be liable for any excess costs incurred by
AHCCCSA in re-procuring the materials or services.

20)          TERMINATION - AVAILABILITY OF FUNDS
Funds are not presently available for performance under this contract beyond the
current fiscal year.  No legal liability on the part of AHCCCS for any payment
may arise under this contract until funds are made available for performance of
this contract.

Notwithstanding any other provision in the Agreement, this Agreement may be
terminated by AHCCCS, if, for any reason, there are not sufficient appropriated
and available monies for the purpose of maintaining this Agreement.  In the
event of such termination, the Contractor shall have no further obligation to
AHCCCS, except as otherwise provided in this contract.

21)          RIGHT OF OFFSET
AHCCCS shall be entitled to offset against any amounts due the Contractor any
expenses or costs incurred by AHCCCS concerning the Contractor's non-conforming
performance or failure to perform the contract.

22)          NON-EXCLUSIVE REMEDIES
The rights and the remedies of AHCCCS under this contract are not exclusive.

23)          NON-DISCRIMINATION
The Contractor shall comply with State Executive Order No. 99-4, which mandates
that all persons, regardless of race, color, religion, gender, national origin
or political affiliation, shall have equal access to employment opportunities,
and all other applicable Federal and state laws, rules and regulations,
including the Americans with Disabilities Act and Title VI.  The Contractor
shall take positive action to ensure that applicants for employment, employees,
and persons to whom it provides service are not discriminated against due to
race, creed, color, religion, gender, national origin or disability.

24)          EFFECTIVE DATE
The effective date of this contract shall be the date referenced on page 1 of
this contract.

25)          INSURANCE
A certificate of insurance naming the State of Arizona and AHCCCS as the
"additional insured" must be submitted to AHCCCS within 10 days of notification
of contract award and prior to commencement of any services under this
contract.  This insurance shall be provided by carriers rated as "A+" or higher
by the A.M. Best Rating Service.  The following types and levels of insurance
coverage are required for this contract:

a.             Commercial General Liability:  Provides coverage of at least
$1,000,000 for each occurrence for bodily
                injury and property damage to others as a result of accidents on
the premises of or as the result of
                operations of the Contractor.
b.             Commercial Automobile Liability:  Provides coverage of at least
$1,000,000 for each occurrence for bodily
                injury and property damage to others resulting from accidents
caused by vehicles operated by the
                Contractor.
c.             Workers Compensation:  Provides coverage to employees of the
Contractor for injuries sustained in the
                course of their employment.  Coverage must meet the obligations
imposed by Federal and State statutes and
                must also include Employer's Liability minimum coverage of
$100,000.  Evidence of qualified self-insured
                status will also be considered.
d.             Professional Liability (if applicable):  Provides coverage for
alleged professional misconduct or lack of
                ordinary skills in the performance of a professional act of
service.

The above coverage may be evidenced by either one of the following:

a.             The State of Arizona Certificate of Insurance:  This is a form
with the special conditions required by the
                contract already pre-printed on the form.  The Contractor's
agent or broker must fill in the pertinent policy
                information and ensure the required special conditions are
included in the Contractor's policy.
b.             The Accord form:  This standard insurance industry certificate of
insurance does not contain the pre-printed
                special conditions required by this contract.  These conditions
must be entered on the certificate by the
                agent or broker and read as follows:

                The State of Arizona and Arizona Health Care Cost Containment
System are hereby added as additional
                insureds.  Coverage afforded under this Certificate shall be
primary and any insurance carried by the State
                or any of its agencies, boards, departments or commissions shall
be in excess of that provided by the
                insured Contractor.  No policy shall expire, be canceled or
materially changed without 30 days written
                notice to the State.  This Certificate is not valid unless
countersigned by an authorized representative of the
                insurance company.
c.             If the Contractor is insured pursuant to A.R.S. § 11-981, the
Insurance provisions required by the Contract
                are satisfied.

26)          DISPUTES
Contract claims and disputes shall be adjudicated in accordance with State Law,
AHCCCS Rules and this contract.

Except as provided by 9 A.A.C. Chapter 22, Article 6, the exclusive manner for
the Contractor to assert any dispute against AHCCCS shall be in accordance with
the process outlined in 9 A.A.C. Chapter 34, Article 4 and ARS §36-2903.01.  All
disputes except as provided under 9 A.A.C. Chapter 22, Article 6 shall be filed
in writing and be received by AHCCCS no later than 60 days from the date of the
disputed notice.  All disputes shall state the factual and legal basis for the
dispute.  Pending the final resolution of any disputes involving this contract,
the Contractor shall proceed with performance of this contract in accordance
with AHCCCS's instructions, unless AHCCCS specifically, in writing, requests
termination or a temporary suspension of performance.

27)          RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS
AHCCCS may, at reasonable times, inspect the part of the plant or place of
business of the Contractor or subcontractor  that is related to the performance
of this contract, in accordance with A.R.S. §41‑2547.

28)          INCORPORATION BY REFERENCE
This solicitation and all attachments and amendments, the Contractor's proposal,
best and final offer accepted by AHCCCS, and any approved subcontracts are
hereby incorporated by reference into the contract.

29)          COVENANT AGAINST CONTINGENT FEES
The Contractor warrants that no person or agency has been employed or retained
to solicit or secure this contract upon an agreement or understanding for a
commission, percentage, brokerage or contingent fee.  For violation of this
warranty, AHCCCS shall have the right to annul this contract without liability.

30)          CHANGES
AHCCCS may at any time, by written notice to the Contractor, make changes within
the general scope of this contract.  If any such change causes an increase or
decrease in the cost of, or the time required for, performance of any part of
the work under this contract, the Contractor may assert its right to an
adjustment in compensation paid under this contract.  The Contractor must assert
its right to such adjustment within 30 days from the date of receipt of the
change notice.  Any dispute or disagreement caused by such notice shall
constitute a dispute within the meaning of Section E, Paragraph 26, Disputes,
and be administered accordingly.

When AHCCCS issues an amendment to modify the contract, the provisions of such
amendment 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 amendment.  If the Contractor provides such notification, AHCCCS will
initiate termination proceedings.

31)          TYPE OF CONTRACT
Firm Fixed-Price stated as capitated per member per month, except as otherwise
provided.

32)          AMERICANS WITH DISABILITIES ACT
People with disabilities may request special accommodations such as
interpreters, alternative formats or assistance with physical accessibility. 
Requests for special accommodations must be made with at least three days prior
notice by contacting the Solicitation Contact person.

33)          WARRANTY OF SERVICES
The Contractor warrants that all services provided under this contract will
conform to the requirements stated herein.  AHCCCS's acceptance of services
provided by the Contractor shall not relieve the Contractor from its obligations
under this warranty.  In addition to its other remedies, AHCCCS may, at the
Contractor's expense, require prompt correction of any services failing to meet
the Contractor's warranty herein.  Services corrected by the Contractor shall be
subject to all of the provisions of this contract in the manner and to the same
extent as the services originally furnished.

34)          NO GUARANTEED QUANTITIES
AHCCCS does not guarantee the Contractor any minimum or maximum quantity of
services or goods to be provided under this contract.

35)          CONFLICT OF INTEREST
The Contractor shall not undertake any work that represents a potential conflict
of interest, or which is not in the best interest of AHCCCS or the State without
prior written approval by AHCCCS.  The Contractor shall fully and completely
disclose any situation that may present a conflict of interest.  If the
Contractor is now performing or elects to perform during the term of this
contract any services for any AHCCCS contractor, provider or Contractor or an
entity owning or controlling same, the Contractor shall disclose this
relationship prior to accepting any assignment involving such party.

36)          CONFIDENTIALITY AND DISCLOSURE OF CONFIDENTIAL INFORMATION
The Contractor shall safeguard confidential information in accordance with
Federal and State laws and regulations, including but not limited to, 42 CFR
431.300 et seq., 45 CFR parts 160 and 164, and AHCCCS Regulation A.A.C.
R9-22-512.

The Contractor shall establish and maintain procedures and controls that are
acceptable to AHCCCS for the purpose of assuring that no information contained
in its records or obtained from AHCCCS or others carrying out its functions
under the contract shall be used or disclosed by its agents, officers or
employees, except as required to efficiently perform duties under the contract. 
Except as required or permitted by law, the contractor also agrees that any
information pertaining to individual persons shall not be divulged other than to
employees or officers of the contractor as needed for the performance of duties
under the contract, unless otherwise agreed to, in writing, by AHCCCS.

The Contractor shall not, without prior written approval from AHCCCS, either
during or after the performance of the services required by this contract, use,
other than for such performance, or disclose to any person other than AHCCCS
personnel with a need to know, any information, data, material, or exhibits
created, developed, produced, or otherwise obtained during the course of the
work required by this contract.  This nondisclosure requirement shall also
pertain to any information contained in reports, documents, or other records
furnished to the Contractor by AHCCCS.

37)          COOPERATION WITH OTHER CONTRACTORS
AHCCCS may award other contracts for additional work related to this contract
and Contractor shall fully cooperate with such other contractors and AHCCCS
employees or designated agents, and carefully fit its own work to such other
contractors' work.  The Contractor shall not commit or permit any act which will
interfere with the performance of work by any other contractor or by AHCCCS
employees.

38)          ASSIGNMENT OF CONTRACT AND BANKRUPTCY
This contract is voidable and subject to immediate cancellation by AHCCCS upon
the Contractor becoming insolvent or filing proceedings in bankruptcy or
reorganization under the United States Code, or assigning rights or obligations
under this contract without the prior written consent of AHCCCS.

39)          OWNERSHIP OF INFORMATION AND DATA
Any data or information system, including all software, documentation and
manuals, developed by the Contractor pursuant to this contract, shall be deemed
to be owned by AHCCCS.  The Federal government reserves a royalty‑free,
nonexclusive, and irrevocable license to reproduce, publish, or otherwise use
and to authorize others to use for Federal government purposes, such data or
information system, software, documentation and manuals.  Proprietary software
which is provided at established catalog or market prices and sold or leased to
the general public shall not be subject to the ownership or licensing provisions
of this section.

Data, information and reports collected or prepared by the Contractor in the
course of performing its duties and obligations under this contract shall be
deemed to be owned by AHCCCS.  The ownership provision is in consideration of
the Contractor's use of public funds in collecting or preparing such data,
information and reports.  These items shall not be used by the Contractor for
any independent project of the Contractor or publicized by the Contractor
without the prior written permission of AHCCCS.  Subject to applicable state and
Federal laws and regulations, AHCCCS shall have full and complete rights to
reproduce, duplicate, disclose and otherwise use all such information.  At the
termination of the contract, the Contractor shall make available all such data
to AHCCCS within 30 days following termination of the contract or such longer
period as approved by AHCCCS, Office of the Director.  For purposes of this
subsection, the term "data" shall not include member medical records.

Except as otherwise provided in this section, if any copyrightable or patentable
material is developed by the Contractor in the course of performance of this
contract, the Federal government, AHCCCS and the State of Arizona shall have a
royalty‑free, nonexclusive, and irrevocable right to reproduce, publish, or
otherwise use, and to authorize others to use, the work for state or Federal
government purposes.  The Contractor shall additionally be subject to the
applicable provisions of 45 CFR Part 74 and 45 CFR Parts 6 and 8.

40)          AUDITS AND INSPECTIONS
The Contractor shall comply with all provisions specified in applicable AHCCCS
Rule R9-22-521 and AHCCCS policies and procedures relating to the audit of the
Contractor's records and the inspection of the Contractor's facilities.  The
Contractor shall fully cooperate with AHCCCS staff and allow them reasonable
access to the Contractor's staff, subcontractors, members, and records [42 CFR
438.6(g)].

At any time during the term of this contract, the Contractor's or any
subcontractor's books and records shall be subject to audit by AHCCCS and, where
applicable, the Federal government, to the extent that the books and records
relate to the performance of the contract or subcontracts [42 CFR
438.242(b)(3)].

AHCCCS, or its duly authorized agents, and the Federal government may evaluate
through on-site inspection or other means, the quality, appropriateness and
timeliness of services performed under this contract.

41)          LOBBYING
No funds paid to the Contractor by AHCCCS, or interest earned thereon, shall be
used for the purpose of influencing or attempting to influence an officer or
employee of any Federal or State agency, a member of the United States Congress
or State Legislature, an officer or employee of a member of the United States
Congress or State Legislature in connection with awarding of any Federal or
State contract, the making of any Federal or State grant, the making of any
Federal or State loan, the entering into of any cooperative agreement, and the
extension, continuation, renewal, amendment or modification of any Federal or
State contract, grant, loan, or cooperative agreement.  The Contractor shall
disclose if any funds, other than those paid to the Contractor by AHCCCS, have
been used or will be used to influence the persons and entities indicated above
and will assist AHCCCS in making such disclosures to CMS.

42)          CHOICE OF FORUM
The parties agree that jurisdiction over any action arising out of or relating
to this contract shall be brought or filed in a court of competent jurisdiction
located in the State of Arizona.

43)          DATA CERTIFICATION
The Contractor shall certify that financial and encounter data submitted to
AHCCCS is complete, accurate and truthful.  Certification of financial and
encounter data must be submitted concurrently with the data.  Certification may
be provided by the Contractor CEO, CFO or an individual who is delegated
authority to sign for, and who report directly to the CEO or CFO [42 CFR 438.604
et seq.].

44)          OFF SHORE PERFORMANCE OF WORK PROHIBITED
Due to security and identity protection concerns, direct services under this
contract shall be performed within the borders of the United States.  Any
services that are described in the specifications or scope of work that directly
serve the State of Arizona or its clients and may involve access to secure or
sensitive data or personal client data or development or modification of
software for the State shall be performed within the borders of the United
States.  Unless specifically stated otherwise in the specifications, this
definition does not apply to indirect or “overhead” services, redundant back-up
services or services that are incidental to the performance of the contract. 
This provision applies to work performed by subcontractors at all tiers.

45)          FEDERAL IMMIGRATION AND NATIONALITY ACT
The Contractor shall comply with all federal, state and local immigration laws
and regulations relating to the immigration status of their employees during the
term of the contract.  Further, the Contractor shall flow down this requirement
to all subcontractors utilized during the term of the contract.  The State shall
retain the right to perform random audits of Contractor and subcontractor
records or to inspect papers of any employee thereof to ensure compliance. 
Should the State determine that the Contractor and/or any subcontractors be
found noncompliant, the State may pursue all remedies allowed by law, including,
but not limited to; suspension of work, termination of the contract for default
and suspension and/or debarment of the Contractor.

46)          IRS W-9 FORM
In order to receive payment under any resulting contract, the Contractor shall
have a current IRS W-9 Form on file with the State of Arizona.

47)          CONTINUATION OF PERFORMANCE THROUGH TERMINATION
The Contractor shall continue to perform, in accordance with the requirements of
the contract, up to the date of termination and as directed in the termination
notice.

[END OF SECTION E]

SECTION F: RESERVED

SECTION G: RESERVED

SECTION H: RESERVED

SECTION I: RESERVED

SECTION J: LIST OF ATTACHMENTS

Attachment A: Minimum Subcontract Provisions
Attachment B: Geographic Service Area; Minimum Network Requirements
Attachment C: RESERVED
Attachment D: Sample Letter of Intent: Network Submission Requirements
Attachment E:  RESERVED
Attachment F:  Periodic Reporting Requirements
Attachment G: Auto-Assignment Algorithm
Attachment H: Grievance System Standards and Policy
Attachment I:  RESERVED
Attachment J:  RESERVED
Attachment K: Cost Sharing Copayments

ATTACHMENT A: MINIMUM SUBCONTRACT  PROVISIONS

For the sole purpose of this Attachment, the following definitions apply:

“Subcontract” means any contract between the Contractor and a third party for
the performance of any or all services or requirements specified under the
Contractor’s contract with AHCCCS.

“Subcontractor” means any third party with a contract with the Contractor for
the provision of any or all services or requirements specified under the
Contractor’s contract with AHCCCS.

Subcontractors who provide services under the AHCCCS ALTCS and or the Acute Care
Program must comply with the following applicable rules and statutes:

                –Rules for the ALTCS are found in Arizona Administrative Code
(AAC) Title 9, Chapter 28.  AHCCCS
                  statutes for long term care are generally found in Arizona
Revised Statue (ARS) 36, Chapter 29, Article 2.

                –Rules for the Acute Care Program are found in AAC Title 9,
Chapter 22.  AHCCCS statutes for the Acute
                  Care Program are generally found in ARS 36, Chapter 29,
Article 1.  Rules for the KidsCare Program are
                  found in AAC Title 9, Chapter 31 and the statutes for KidsCare
Program may be found in ARS 36,
                  Chapter 29, Article 4.

All statutes, rules and regulations cited in this attachment are listed for
reference purposes only and are not intended to be all inclusive.

[The following provisions must be included verbatim in every contract.]

1.             ASSIGNMENT AND DELEGATION OF RIGHTS AND RESPONSIBILITIES

No payment due the Subcontractor under this subcontract may be assigned without
the prior approval of the Contractor.  No assignment or delegation of the duties
of this subcontract shall be valid unless prior written approval is received
from the Contractor. (AAC R2-7-305)

2.             AWARDS OF OTHER SUBCONTRACTS

AHCCCS and/or the Contractor may undertake or award other contracts for
additional or related work to the work performed by the Subcontractor and the
Subcontractor shall fully cooperate with such other contractors, subcontractors
or state employees.  The Subcontractor shall not commit or permit any act which
will interfere with the performance of work by any other contractor,
subcontractor or state employee. (AAC R2-7-308)

3.             CERTIFICATION OF COMPLIANCE – ANTI-KICKBACK AND LABORATORY
TESTING

By signing this subcontract, the Subcontractor certifies that it has not engaged
in any violation of the Medicare Anti-Kickback statute (42 USC §§1320a-7b) or
the “Stark I” and “Stark II” laws governing related-entity referrals (PL 101-239
and PL 101-432) and compensation there from.  If the Subcontractor provides
laboratory testing, it certifies that it has complied with 42 CFR §411.361 and
has sent to AHCCCS simultaneous copies of the information required by that rule
to be sent to the Centers for Medicare and Medicaid Services. (42 USC
§§1320a-7b; PL 101-239 and PL 101-432; 42 CFR §411.361)

4.             CERTIFICATION OF TRUTHFULNESS OF REPRESENTATION

By signing this subcontract, the Subcontractor certifies that all
representations set forth herein are true to the best of its knowledge.

5.             CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988

The Clinical Laboratory Improvement Amendment (CLIA) of 1988 requires
laboratories and other facilities that test human specimens to obtain either a
CLIA Waiver or CLIA Certificate in order to obtain reimbursement from the
Medicare and Medicaid (AHCCCS) programs.  In addition, they must meet all the
requirements of 42 CFR 493, Subpart A.

To comply with these requirements, AHCCCS requires all clinical laboratories to
provide verification of CLIA Licensure or Certificate of Waiver during the
provider registration process.  Failure to do so shall result in either a
termination of an active provider ID number or denial of initial registration. 
These requirements apply to all clinical laboratories.

Pass-through billing or other similar activities with the intent of avoiding the
above requirements are prohibited. The Contractor may not reimburse providers
who do not comply with the above requirements (CLIA of 1988; 42 CFR 493, Subpart
A).

6.             COMPLIANCE WITH AHCCCS RULES RELATING TO AUDIT AND INSPECTION

The Subcontractor shall comply with all applicable AHCCCS Rules and Audit Guide
relating to the audit of the Subcontractor's records and the inspection of the
Subcontractor's facilities.  If the Subcontractor is an inpatient facility, the
Subcontractor shall file uniform reports and Title XVIII and Title XIX cost
reports with AHCCCS (ARS 41-2548; 45 CFR 74.48 (d)).

7.             COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS

The Subcontractor shall comply with all federal, State and local laws, rules,
regulations, standards and executive orders governing performance of duties
under this subcontract, without limitation to those designated within this
subcontract [42 CFR 434.70 and 42 CFR 438.6(l)].

8.             CONFIDENTIALITY REQUIREMENT

The Subcontractor shall safeguard confidential information in accordance with
federal and state laws and regulations, including but not limited to, 42 CFR
Part 431, Subpart F, ARS §36-107, 36-2903, 41-1959 and 46-135, AHCCCS Rules, the
Health Insurance Portability and Accountability Act (Public Law 107-191, 110
Statutes 1936), and 45 CFR Parts 160 and 164.

9.             CONFLICT IN INTERPRETATION OF PROVISIONS

In the event of any conflict in interpretation between provisions of this
subcontract and the AHCCCS Minimum Subcontract Provisions, the latter shall take
precedence.

10.          CONTRACT CLAIMS AND DISPUTES

Contract claims and disputes arising under A.R.S Title 36, Chapter 29 shall be
adjudicated in accordance with AHCCCS Rules and A.R.S. §36-2903.01.

11.          ENCOUNTER DATA REQUIREMENT

If the Subcontractor does not bill the Contractor (e.g., Subcontractor is
capitated), the Subcontractor shall submit encounter data to the Contractor in a
form acceptable to AHCCCS.

12.          EVALUATION OF QUALITY, APPROPRIATENESS, OR TIMELINESS OF SERVICES

AHCCCS or the U.S. Department of Health and Human Services may evaluate, through
inspection or other means, the quality, appropriateness or timeliness of
services performed under this subcontract.

13.          FRAUD AND ABUSE

If the Subcontractor discovers, or is made aware, that an incident of suspected
fraud or abuse has occurred, the Subcontractor shall report the incident to the
prime Contractor as well as to AHCCCS, Office of Program Integrity.  All
incidents of potential fraud should be reported to AHCCCS, Office of the
Director, Office of Program Integrity.

14.          GENERAL INDEMNIFICATION

The parties to this contract agree that AHCCCS shall be indemnified and held
harmless by the Contractor and Subcontractor for the vicarious liability of
AHCCCS as a result of entering into this contract.  However, the parties further
agree that AHCCCS shall be responsible for its own negligence.  Each party to
this contract is responsible for its own negligence.

15.          INSURANCE

[This provision applies only if the Subcontractor provides services directly to
AHCCCS members]

The Subcontractor shall maintain for the duration of this subcontract a policy
or policies of professional liability insurance, comprehensive general liability
insurance and automobile liability insurance in amounts that meet Contractor’s
requirements.  The Subcontractor agrees that any insurance protection required
by this subcontract, or otherwise obtained by the Subcontractor, shall not limit
the responsibility of Subcontractor to indemnify, keep and save harmless and
defend the State and AHCCCS, their agents, officers and employees as provided
herein.  Furthermore, the Subcontractor shall be fully responsible for all tax
obligations, Worker's Compensation Insurance, and all other applicable insurance
coverage, for itself and its employees, and AHCCCS shall have no responsibility
or liability for any such taxes or insurance coverage.  (45 CFR Part 74) The
requirement for Worker’s Compensation Insurance does not apply when a
Subcontractor is exempt under ARS 23-901, and when such Subcontractor executes
the appropriate waiver (Sole Proprietor/Independent Contractor) form.

16.          LIMITATIONS ON BILLING AND COLLECTION PRACTICES

Except as provided in federal and state law and regulations, the Subcontractor
shall not bill, or attempt to collect payment from a person who was AHCCCS
eligible at the time the covered service(s) were rendered, or from the
financially responsible relative or representative for covered services that
were paid or could have been paid by the System.

17.          MAINTENANCE OF REQUIREMENTS TO DO BUSINESS AND PROVIDE SERVICES

The Subcontractor shall be registered with AHCCCS and shall obtain and maintain
all licenses, permits and authority necessary to do business and render service
under this subcontract and, where applicable, shall comply with all laws
regarding safety, unemployment insurance, disability insurance and worker's
compensation.

18.          NON‑DISCRIMINATION REQUIREMENTS

The Subcontractor shall comply with State Executive Order No. 99-4, which
mandates that all persons, regardless of race, color, religion, gender, national
origin or political affiliation, shall have equal access to employment
opportunities, and all other applicable Federal and state laws, rules and
regulations, including the Americans with Disabilities Act and Title VI.  The
Subcontractor shall take positive action to ensure that applicants for
employment, employees, and persons to whom it provides service are not
discriminated against due to race, creed, color, religion, sex, national origin
or disability. (Federal regulations, State Executive order # 99-4)

19.          PRIOR AUTHORIZATION AND UTILIZATION MANAGEMENT

The Contractor and Subcontractor shall develop, maintain and use a system for
Prior Authorization and Utilization Review that is consistent with AHCCCS Rules
and the Contractor’s policies.

20.          RECORDS RETENTION

The Subcontractor shall maintain books and records relating to covered services
and expenditures including reports to AHCCCS and working papers used in the
preparation of reports to AHCCCS.  The Subcontractor shall comply with all
specifications for record keeping established by AHCCCS.  All books and 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, dental
records, prescription files and other records specified by AHCCCS.

The Subcontractor agrees to make available at its office at all reasonable times
during the term of this contract and the period set forth in the following
paragraphs, any of its records for inspection, audit or reproduction by any
authorized representative of AHCCCS, State or Federal government.

The Subcontractor shall preserve and make available all records for a period of
five years from the date of final payment under this contract unless a longer
period of time is required by law.

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 Subcontractor for a
period of five years after the date of final disposition or resolution thereof
unless a longer period of time is required by law. (45 CFR 74.53; 42 CFR 431.17;
ARS 41-2548)

21.          SEVERABILITY

If any provision of these standard subcontract terms and conditions is held
invalid or unenforceable, the remaining provisions shall continue valid and
enforceable to the full extent permitted by law.

22.          SUBJECTION OF SUBCONTRACT

The terms of this subcontract shall be subject to the applicable material terms
and conditions of the contract existing between the Contractor and AHCCCS for
the provision of covered services.

23.          TERMINATION OF SUBCONTRACT

AHCCCS may, by written notice to the Subcontractor, terminate this subcontract
if it is found, after notice and hearing by the State, that gratuities in the
form of entertainment, gifts, or otherwise were offered or given by the
Subcontractor, or any agent or representative of the Subcontractor, to any
officer or employee of the State with a view towards securing a contract or
securing favorable treatment with respect to the awarding, amending or the
making of any determinations with respect to the performance of the
Subcontractor; provided, that the existence of the facts upon which the state
makes such findings shall be in issue and may be reviewed in any competent
court.  If the subcontract is terminated under this section, unless the
Contractor is a governmental agency, instrumentality or subdivision thereof,
AHCCCS shall be entitled to a penalty, in addition to any other damages to which
it may be entitled by law, and to exemplary damages in the amount of three times
the cost incurred by the Subcontractor in providing any such gratuities to any
such officer or employee. (AAC R2-5-501; ARS 41-2616 C.; 42 CFR 434.6, a. (6))

24.          VOIDABILITY OF SUBCONTRACT

This subcontract is voidable and subject to immediate termination by AHCCCS upon
the Subcontractor becoming insolvent or filing proceedings in bankruptcy or
reorganization under the United States Code, or upon assignment or delegation of
the subcontract without AHCCCS’s prior written approval.

25.          WARRANTY OF SERVICES

The Subcontractor, by execution of this subcontract, warrants that it has the
ability, authority, skill, expertise and capacity to perform the services
specified in this contract.

26.          OFF-SHORE PERFORMANCE OF WORK PROHIBITED

Due to security and identity protection concerns, direct services under this
contract shall be performed within the borders of the United States. Any
services that are described in the specifications or scope of work that directly
serve the State of Arizona or its clients and may involve access to secure or
sensitive data or personal client data or development or modification of
software for the State shall be performed within the borders of the United
States.  Unless specifically stated otherwise in specifications, this definition
does not apply to indirect or “overhead” services, redundant back-up services or
services that are incidental to the performance of the contract.  This provision
applies to work performed by subcontractors at all tiers.

27.          FEDERAL IMMIGRATION AND NATIONALITY ACT

The Subcontractor shall comply with all federal, state and local immigration
laws and regulations relating to the immigration status of their employees
during the term of the contract.  Further, the Subcontractor shall flow down
this requirement to all subcontractors utilized during the term of the
contract.  The State shall retain the right to perform random audits of
Contractor and subcontractor records or to inspect papers of any employee
thereof to ensure compliance.  Should the State determine that the Contractor
and/or any subcontractors be found noncompliant, the State may pursue all
remedies allowed by law, including, but not limited to; suspension of work,
termination of the contract for default and suspension and/or debarment of the
Contractor.

ATTACHMENT B: MINIMUM NETWORK STANDARDS (By Geographic Service Area)

INSTRUCTIONS:

Contractors shall have in place an adequate network of providers capable of
meeting contract requirements.  The information that follows describes the
minimum network requirements by Geographic Service Area (GSA).

In some GSAs there are required service sites located outside of the
geographical boundary of a GSA.  The reason for this relates to practical access
to care.  In certain instances, a member must travel a much greater distance to
receive services within their assigned GSA, than if the member were not allowed
to receive services in an adjoining Border Community.

Split zip codes occur in some counties.  Split zip codes are those which
straddle two different counties.  Enrollment for members residing in these zip
codes is based upon the county and GSA to which the entire zip code has been
assigned by AHCCCS.  The Contractor shall be responsible for providing services
to members residing in the entire zip code that is assigned to the GSA for which
the Contractor has agreed to provide services.  The split zip codes GSA
assignments are as follows:

ZIP CODE             

SPLIT BETWEEN
THESE COUNTIES

COUNTY ASSIGNED TO               

ASSIGNED GSA

85120

Pinal and Maricopa

Maricopa

12

85142

Pinal and Maricopa

Maricopa

12

85192

Gila and Pinal

Gila

8

85342

Yavapai and Maricopa

Maricopa

12

85358

Yavapai and Maricopa

Maricopa

12

85390

Yavapai and Maricopa

Maricopa

12

85643

Graham and Cochise

Cochise

14

85645

Pima and Santa Cruz

Santa Cruz

10

85943

Apache and Navajo

Navajo

4

86336

Coconino and Yavapai

Yavapai

6

86351

Coconino and Yavapai

Coconino

4

86434

Mohave and Yavapai

Yavapai

6

86340

Coconino and Yavapai

Yavapai

6

If outpatient specialty services (OB, family planning, and pediatrics) are not
included in the primary care provider contract, at least one subcontract is
required for each of these specialties in the service sites specified.

In Tucson (GSA 10) and Metropolitan Phoenix (GSA 12), the Contractor must have a
network that is able to provide PCP, dental and pharmacy services so that
members do not need to travel more than 5 miles from their residence.  The
Contractor must also obtain at least one hospital contract in each service
district listed on the Hospitals in Phoenix and Tucson Metropolitan area pages
within this section, respectively.  Metropolitan Phoenix is further defined on
the Minimum Network Standard page specific to GSA # 12.

At a minimum, the Contractor shall have contracts with physicians with admitting
and treatment privileges at each hospital in its network.

For the remaining GSAs and areas not included in the Phoenix or Tucson
Metropolitan Areas, the Contractor is required to obtain contracts with
Physician(s) with admission and treatment privileges in the communities
identified under Hospitals on the Minimum Network Standard page specific to each
GSA.  The Contractor must have a network that is able to provide PCP, dental and
pharmacy services in each of the communities identified on the Minimum Network
Standard Page specific to each GSA.

Provider categories required at various service delivery sites included in the
Service Area Minimum Network Standards are indicated as follows:

                H             Hospitals
                P              Primary Care Providers (physicians, certified
nurse practitioners and physician assistants)
                D             Dentists
                Ph           Pharmacies

HOSPITALS IN PHOENIX METROPOLITAIN AREA (By service district, by zip code)

DISTRICT 1

85006                      Banner Good Samaritan Medical Center
85281                      St. Luke’s Medical Center
85008                      Maricopa Medical Center
85013                      St. Joseph’s Hospital & Medical Center
85020                      John C. Lincoln Hospital – North Mountain

DISTRICT 2

85015                      Phoenix Baptist Hospital & Medical Center
85027                      John C. Lincoln Hospital – Deer Valley
85037                      Banner Estrella Medical Center
85306                      Banner Thunderbird Medical Center
85308                      Arrowhead Community Hospital & Medical Center
85338                      West Valley Hospital
85351                      Walter O. Boswell Memorial Hospital
85375                      Del E. Webb Memorial Hospital
85031                      Maryvale Hospital Medical Center

DISTRICT 3

85031                      Paradise Valley Hospital
85054                      Mayo Clinic Hospital
85251                      Scottsdale Healthcare – Osborn
85261                      Scottsdale Healthcare – Shea
85255                      Scottsdale Healthcare – Thompson Peak

DISTRICT 4

85201                      Mesa General Hospital Medical Center
85201                      Mesa Lutheran Hospital
85202                      Banner Desert Medical Center
85206                      Valley Lutheran Hospital
85224                      Chandler Regional Hospital
85281                      Tempe St. Luke’s Hospital
85296                      Mercy Gilbert
85234                      Banner Gateway
85209                      Mountain Vista

HOSPITALS IN TUCSON METROPOLITAN AREA   (By service district, by zip code)

DISTRICT 1

85719      University Medical Center
85741      Northwest Hospital
85745      Carondelet St. Mary’s Hospital
85775      Northwest Medical Center Oro Valley

DISTRICT 2

85711      Carondelet St. Joseph’s Hospital
85717      Tucson Medical Center
85713      University Physicians Hospital at Kino Campus

COUNTIES:          LA PAZ AND YYMA
Geographic Service Area 2

Hospitals Physician(s) w/admit and treatment privileges required in the
following communities
Blythe, CA
Lake Havasu City
Parker
Yuma

Primary Care Providers
Blythe, CA
Lake Havasu City
Parker
San Luis
Somerton
Wellton
Yuma

Dentists
Blythe, CA
Lake Havasu City
Parker
San Luis
Yuma

Pharmacies
Blythe, CA
Lake Havasu City
Parker
Somerton
San Luis
Yuma

COUNTIES:          APACHE, COCONINO, MAHAVE, AND NAVAJO
Geographic Service Area 4

Hospitals Physician(s) w/admit and treatment privileges required in the
following communities
Bullhead City
Flagstaff
Gallup, NM
Kanab, UT
Kingman
Lake Havasu City
Needles, CA
Page
Payson
Show Low
Springerville
St. George, UT
Winslow

Primary Care Providers
Ash Fork/Seligman
Bullhead City
Colorado City or Hilldale or Kanab, UT
Flagstaff
Fort Mohave
Gallup, NM
Holbrook
Kingman
Lake Havasu City
Page
Payson
Sedona
Show Low or Pinetop or Lakeside
Snowflake or Taylor
Springerville or Eager
St. George, UT or Mesquite, NV
St. Johns
Williams
Winslow

Dentists
SAME AS PRIMARY
CARE PROVIDERS
(except for Fort Mohave, no dentist required)

Pharmacies
SAME AS PRIMARY
CARE PROVIDERS

COUNTIES:          YAVAPAI
Geographic Service Area 6

Hospitals Physician(s) w/admit and treatment privileges required in the
following communities
Cottonwood
Flagstaff
Maricopa County
Prescott

Primary Care Providers
Ash Fork or Seligman
Camp Verde
Cottonwood
Maricopa County or Wickenburg
Prescott
Prescott Valley
Sedona

Dentists
SAME AS PRIMARY CARE
PROVIDERS

Pharmacies
SAME AS PRIMARY CARE
PROVIDERS

(except for Ash Fork/Seligman, no pharmacy required)

COUNTIES:          PINAL AND GILA
Geographic Service Area 8

Hospitals Physician(s) w/admit and treatment privileges required in the
following communities
Casa Grande
Globe
Maricopa County District 4
Payson

Primary Care Providers
Apache Junction
Casa Grande
Coolidge or Florence
Eloy
Globe or Miami or Claypool
Kearney
Mammoth or San Manuel or Oracle
Mesa or Gilbert or Queen Creek
Payson

Dentists
Apache Junction
Casa Grande
Coolidge or Florence
Eloy
Globe or Miami or Claypool
Kearney
Mammoth or San Manuel or Oracle
Mesa or Gilbert or Queen Creek
Payson

Pharmacies
Apache Junction
Casa Grande
Coolidge or Florence
Globe or Miami or Claypool
Kearney
Mammoth or San Manuel or Oracle
Mesa or Gilbert or Queen Creek
Payson

COUNTIES:          PIMA AND SANTA CRUZ
Geographic Service Area 10

Hospital
Tucson
District 1
   Contract Required
District 2
   Contract Required
Nogales
Physician(s) w/admit and treatment privileges required

Primary Care Providers
Ajo
Green Valley
Marana
Nogales
Oro Valley
Tucson

Dentists

SAME AS PRIMARY CARE PROVIDERS

Pharmacies
SAME AS PRIMARY CARE PROVIDERS

COUNTY:             MARICOPA
Geographic Service Area 12

Hospital
Metropolitan Phoenix*
District 1
   Contract Required
District 2
   Contract Required
District 3
   Contract Required
District 4
   Contract Required

Primary Care Providers
Buckeye
Cave Creek or Carefree
Gila Bend
Goodyear or Litchfield Park
Metropolitan Phoenix*
Queen Creek
Wickenburg

Dentists
Buckeye or Goodyear or Litchfield Park
Metropolitan Phoenix*
Wickenburg

Pharmacies
Buckeye
Cave Creek or Carefree
Goodyear or Litchfield Park
Metropolitan Phoenix*
Wickenburg

*For Purposes of this RFP, Metropolitan Phoenix encompasses the following:
Apache Junction, Avondale, Chandler, El Mirage, Fountain Hills, Gilbert,
Glendale, Mesa, Paradise Valley, Peoria, Phoenix, Scottsdale, Sun City/Sun City
West, Surprise, Tempe, Tolleson, and Youngtown. Within this area, distance
standards must be met as specified in Attachment B.

COUNTIES:          CONCHISE, GRAHAM AND GREENLEE
Geographic Service Area 14

Hospitals Physician(s) w/admit and treatment privileges required in the
following communities
Benson
Bisbee
Douglas
Safford
Sierra Vista
Tucson
Willcox

Primary Care Providers
Benson
Bisbee
Douglas
Morenci or Clifton
Safford
Sierra Vista
Willcox

Dentists
Benson or Willcox
Bisbee
Douglas
Morenci or Clifton
Safford
Sierra Vista

Pharmacies
Benson
Bisbee
Douglas
Morenci or Clifton
Safford or Thatcher
Sierra Vista
Willcox

ATTACHMENT C: RESERVED

ATTACHMENT D: SAMPLE LETTER OF INTENT

The following information is provided as early notification for Offerors’
benefit.  However, complete instructions regarding this Letter of Intent will be
provided when the RFP is released.   Only instructions included in the RFP are
considered official.  Do not send completed Letter of Intent to AHCCCS at this
time.

Letter of Intent Instructions

The following is the mandated format for the Arizona Health Care Cost
Containment System, Contract Year Ending 2007 Letter of Intent (LOI).  It is to
be used to show a provider’s intention to enter into a contract with an
Offeror.  No alterations or changes are permitted, except for shaded areas which
identify the Offeror.  The Offeror may print the form on its letterhead or
insert its name or logo in the box at the top of the forms.  The completed LOI
or an executed contract will be acceptable evidence of an Offeror’s proposed
network.

If a provider has multiple sites that offer identical services, only one LOI
should be signed, with additional service site information (items 1 to 6)
attached to the LOI. If services differ between sites, a separate LOI must be
obtained for each service site.

If a representative signs an LOI on behalf of a provider, evidence of authority
for the representative must be available upon request.

[OFFEROR’S LOGO]

Please do not sign this Letter of Intent unless you seriously intend to enter
into negotiations with the Offeror mentioned below and understand that the
Arizona Health Care Cost Containment System Administration (AHCCCS) requires all
contracts to include Minimum Subcontract Provisions as listed at
http://www.azahcccs.gov/Contracting/BidderLib_Acute.asp.

No alterations or changes are permitted, except for shaded areas which identify
the Offeror.  This letter is subject to verification by AHCCCS.

The provider signing below is willing to enter into contract negotiations with
(Offeror’s name), for provision of covered services to AHCCCS members enrolled
with (Offeror’s name).  This provider intends to sign a contract with (Offeror’s
name) if (Offeror’s name) is awarded an AHCCCS contract beginning October 1,
2008 in the provider’s service area and an acceptable agreement can be reached
between the provider and (Offeror’s name).  Signing this Letter of Intent does
not obligate the provider to sign a contract with (Offeror’s name) however,
please do not sign this Letter of Intent unless you seriously intend to enter
into negotiations with the above mentioned health plan.

The following information is furnished by the provider:

1. NATIONAL PROVIDER IDENTIFICATION NUMBER (NPI) or AHCCCS PROVIDER
IDENTIFICATION NUMBER
_____________________________________________________________

2. PROVIDER’S PRINTED NAME
____________________________________________________________

3. ADDRESS (where services will be provided)
___________________________________________________

_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

___ Please check here if additional service site information is attached to the
Letter of Intent

7. CHECK ALL THAT APPLY

___ A. Primary Care Physician
___ Family Practice
___ General Practice
___ Pediatrics
___ Internal Medicine

Services:                ___ EPSDT
                                ___ OB

___ B. Primary Care Nurse Practitioner
___ Family Practice
___ Adult
___ Pediatrics
___ Midwife

Services:                ___ EPSDT
                                ___ OB

___ C. Primary Care Physician’s Assistant

Services:                ___ EPSDT
                                ___ OB

___ D. Physician – Specialist –
(Specify)_____________________________________________________
___ E. Hospital
___ F. Urgent Care Facility
___ G. Pharmacy
___ H. Laboratory
___ I. Medical Imaging
___ J. Medically Necessary Transportation
___ K. Nursing Facility
___ L. Dentist
___ M. Therapy (Specify Physical Therapy, Occupational Therapy, Speech,
Respiratory)   ______________
               
________________________________________________________________________________
___ N. Behavioral Health Provider (Specify)
__________________________________________________
___ O. Durable Medical Equipment
___ P. Home Health Agency
___ Q. Other (Please
Specify)______________________________________________________________

8. LANGUAGES SPOKEN BY THE PROVIDER (OTHER THAN ENGLISH) _____________________
__________________________________________________________________________

9. NAME OF HOSPITAL(S) WHERE PHYSICIAN HAS ADMITTING PRIVILEGES  ______________
______________________________________________________________________________________

NOTICE TO PROVIDERS: This Letter of Intent will be used by AHCCCS in its bid
evaluation and contract award process.  You should only sign this Letter of
Intent if you intend to enter into contract negotiations with (Offeror’s name)
should they receive a contract award.  If you are signing on behalf of a
physician, please provide evidence of your authority to do so.

Do not return completed Letter of Intent to AHCCCS.  Completed Letter of Intent
needs to be returned to (Offeror’s name).

10. PROVIDER’S SIGNATURE ____________________________________DATE
_______________

11.  PRINTED NAME OF SIGNER _________________________________TITLE
_______________

[OFFEROR’S LOGO]

ADDITIONAL SERVICE SITES:

1. NATIONAL PROVIDER IDENTIFICATION NUMBER (NPI) or AHCCCS PROVIDER
IDENTIFICATION NUMBER
_____________________________________________________________

2. PROVIDER’S PRINTED NAME
____________________________________________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

3. ADDRESS (where services will be provided)
___________________________________________________
_________________________________________________ZIP
CODE________________________________

4. COUNTY ________________ 5. TELEPHONE ________________ 6. FAX
_________________________

ATTACHMENT E: RESERVED

ATTACHMENT F: PERIODIC REPORT REQUIREMENTS

The following table is a summary of the periodic reporting requirements for the
Contractor and is subject to change at any time during the term of the
contract.  The table is presented for convenience only and should not be
construed to limit the Contractor’s responsibilities in any manner.  Content for
all deliverables is subject to review; AHCCCS may assess sanctions if it is
determined that inaccurate or incomplete data is submitted.

The deliverables listed below are due by 5:00 PM on the due date indicated, if
the due date falls on a weekend or a State Holiday the due date is 5:00 PM on
the next business day.

If a Contractor is in compliance with the contractual standards on the
deliverables below marked with an asterisk (*), for a period of three
consecutive months, the Contractor may request to submit each months data on a
quarterly basis.  However, if the Contractor is non-compliant with any standard
on the deliverable or AHCCCS has concerns during the reporting quarter, the
Contractor must immediately begin to submit on a monthly basis until three
consecutive months of compliance are achieved.

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Finance

Monthly Financial Reporting Package

30 days after the end of the month, only when required by AHCCCS

Reporting Guide For Acute Health Care Contractors

Finance Manager

Quarterly Financial Reporting Package

60 days after the end of each quarter

Reporting Guide For Acute Health Care Contractors

Finance Manager

FQHC Member Information

60 days after the end of each quarter

Reporting Guide For Acute Health Care Contractors;
Section D, Paragraph 34

Finance Manager

Draft Annual Financial Reporting Package

90 days after the end of each fiscal year

Reporting Guide For Acute Health Care Contractors

Finance Manager

Final Annual Financial Reporting Package

120 days after the end of each fiscal year

Reporting Guide For Acute Health Care Contractors

Finance Manager

Advances/Loans/Equity Distributions

Submit for approval prior to effective date

Section D, Paragraph 49;

Finance Manager

Premium Tax Reporting

March 15th, June 15th, September 15th and December 15th

ACOM Premium Tax Reporting Policy

Finance Manager

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Data Analysis and Research

 

 

 

Corrected Pended Encounter  Data

Monthly, according to established schedule

Encounter  Reporting User Manual

Encounter  Administrator

New Day Encounter

Monthly, according to established schedule

Encounter  Reporting User Manual

Encounter  Administrator

Medical Records for Data Validation

90 days after the request received from AHCCCS

Data Validation User Manual

Encounter  Administrator

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

Office of Program Integrity

Provider Fraud/Abuse Report

Within 10 days of discovery

  Section D, Paragraph 62

Office of Program Integrity Manager

Eligible Person Fraud/Abuse Report

Within 10 days of discovery

  Section D, Paragraph 62

Office of Program Integrity Manager

AHCCCS will assess the following sanctions on the deliverables listed below,
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.

Late Deliverables
1st time “late” sanction/ 1-10 days:                    $5,000
1st time “late” sanction/ 11-20 days:                  $10,000
1st time “late” sanction/ over 21 days:              $15,000

2nd time “late” sanction/ 1-10 days:                   $10,000
2nd time “late” sanction/ 11-20 days:                  $20,000
2nd time “late” sanction/over 21 days:              $30,000

3rd time “late” sanction/ 1-10 days:                   $20,000
3rd time “late” sanction/ 11-20 days:                  $40,000
3rd time “late” sanction/over 21 days:               $60,000

The sanctions outlined above are deliverable specific.  For example, if the
Contractor submits its claims dashboard 5 days late in January, a $5,000
sanction will be assessed.  The next month, if the Contractor submits its
administrative measures 5 days late, it will be assessed a 1st time late
sanction of $5,000.  However if the Contractor submits the claims dashboard 5
days late again in March AHCCCS will asses a 2nd time late sanction of $10,000.

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Acute Care Operations

 

 

 

  Annual Subcontractor Assignment  and Evaluation Report

90 days after the beginning of the contract year

Section D, Paragraph 37; Section D, Paragraph 43

Operations and Compliance Officer

Provider Affiliation Transmission

15 days after the end of each quarter

Provider Affiliation Transmission Manual, submitted to PMMIS
Provider-to-Contractor FTP

Operations and Compliance Officer

* Claims Dashboard

15th day of each month following the reporting period

Section D, Paragraph 38; Claims Dashboard Reporting Guide

Operations and Compliance Officer

Subcontracts

As required by Contract

Section D, Paragraph 37;  ACOM Templates Policy

Operations and Compliance Officer

Third Party Administrator subcontracts

30 days prior to the effective date of the subcontract

Section D, Paragraph 37; ACOM Templates Policy

Operations and Compliance Officer

Provider Advances

As required by Policy

ACOM Provider and Affiliate Advance Request Policy

Operations and Compliance Officer

Claim recoupments >$50,000

Upon identification by Contractor

Section D, Paragraph 38; ACOM Recoupment Request Policy

Operations and Compliance Officer

*Administrative Measures

15th day of each month following the reporting period

Section D, Paragraph 25

Operations and Compliance Officer

Grievance System Report

See Grievance System Reporting Guide for frequency

Section D, Paragraph 26; Grievance System Reporting Guide

Operations and Compliance Officer

Provider Network Development and Management Plan

45 days after the first day of a new contract year

Section D, Paragraph 27; ACOM Provider Network Development and Management Plan
Policy

Operations and Compliance Officer

Cultural Competency Plan

45 days after the first day of a new contract year

ACOM Cultural Competency Policy

Operations and Compliance Officer

Business Continuity and Recovery Plan

15 days after the beginning of each contract year

ACOM Business Continuity and Recovery Plan Policy

Operations and Compliance Officer

Marketing Attestation Statement

45 days after the beginning of each contract year

ACOM Marketing Outreach and Incentives Policy

Operations and Compliance Officer

Marketing and Outreach Materials

30 days prior to dissemination

ACOM Marketing Outreach and Incentives Policy

Marketing Committee Chairperson

Member Handbook

Within 4 weeks of receiving annual amendment and upon any changes prior to
distribution.

Section D, Paragraph 18; ACOM Member Information Policy

Operations and Compliance Officer

Provider Network – Material Change

Submit change for approval prior to effective date

Section D, Paragraph 29; ACOM Provider Network Information Policy

Operations and Compliance Officer

Provider Network – Unexpected change

Within one business day

Section D, Paragraph 29

Operations and Compliance Officer

System Change Plan

Six months prior to implementation

Section D, Paragraph 38

Operations and Compliance Officer

Key Staff Demographics

October 15th

Section D, Paragraph 16

Operations and Compliance Officer

Key Position Change

Within 7 days after an employee leaves and as soon as new hire has taken place

Section D, Paragraph 16

Operations and Compliance Officer

Listing of Local Presence

Within 45 days of the beginning of the Contract Year

Section D, Paragraph 16

Operations and Compliance Officer

Wheelchair Reporting

15th day of each month following the reporting period

Section D, Paragraph 10

Operations and Compliance Officer

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Clinical Quality Management

 

 

 

EPSDT Annual Monitoring Report

Annually on December 15th

Section D, Paragraph 10, Scope of Services, AMPM, Chapter 400

DHCM/CQM

EPSDT  Improvement and Adult Quarterly Monitoring Report (Template must be used)

15 days after the end of each quarter

Section D, Paragraph 10, Scope of Services,

AMPM, Chapter 400

See Suspension list for specific items being suspended

DHCM/CQM

Quality Assessment/Performance Improvement  Plan and Evaluation (Checklist to be
submitted with Document)

Annually on December 15th

AMPM, Chapter 900

DHCM/CQM

Credentialing Quarterly Report

30 days after the end of each quarter

Section D, Paragraph 25

DHCM/CQM

Monthly Pregnancy  Termination Report

End of the month following the pregnancy termination

AMPM, Chapter 400

DHCM/CQM

Maternity  Care Plan

Annually on December 15th

AMPM, Chapter 400

DHCM/CQM

Stillbirth Report

Immediately following procedure

AMPM, Chapter 400

DHCM/CQM

Semi-annual report of number of pregnant women who are HIV/AIDS positive

30 days after the end of the 2nd and 4th quarter of each contract year

AMPM, Chapter 400

DHCM/CQM

Performance Improvement Project Baseline Report (Standardized format to be
utilized)

Annually on December 15th

AMPM, Chapter 900

DHCM/CQM

Performance Improvement Project Re-measurement Report (Standardized format to be
utilized)

Annually on December 15th

AMPM, Chapter 900

DHCM/CQM

Performance Improvement Project Final Report (Standardized format to be
utilized)

Within 180 days of the end of the project, as defined in the project proposal
approved by AHCCCS DHCM

AMPM, Chapter 900

DHCM/CQM

QM Quarterly Report

30 Days after the end of each quarter

  Section D, Paragraph 23

DHCM/CQM

Pediatric Immunization Audit

As requested

Section D, Paragraph 23

DHCM/CQM

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Medical Management

Quarterly Inpatient  Hospital Showing

15 days after the end of each quarter

State Medicaid Manual and the AMPM, Chapter 1000

DHCM/MM

Utilization Management  Plan and Evaluation

Annually on December 15th

AMPM, Chapter 900

DHCM/MM

UM Quarterly Report

60 Days after the end of each quarter

  Section D, Paragraph 24

DHCM/MM

HIV Specialty Provider List

Annually, on December 15th

AMPM, Chapter 300

DHCM/MM

Transplant Report

15 days after the end of each month

AMPM, Chapter 1000

DHCM/MM

Non-Transplant Catastrophic Reinsurance  covered Diseases

Annually, within 30 days of the beginning of the contract year, enrollment to
the plan, and when newly diagnosed.

Section D, Paragraph 57

DHCM/MM

Suspensions and Modifications

The following describes suspensions and modifications made during the current
contract or renewal period with limited application.  The following suspensions
and modifications will be in effect for the period from October 1, 2009 through
September 30, 2010.  These changes do not serve to remove the requirement for
the Contractor to collect, analyze, and respond to the internal monitoring
mechanisms that support compliance with contractual and statutory requirements
but serve only to condense deliverable requirements in order to ease
administrative burden.

Suspensions

Suspensions will be defined as a complete temporary release from the deliverable
requirement as presented in Contract for the term shown in this Attachment.

Section D, Paragraph 10, Scope of Services
Certain requirements contained in the EPSDT Quarterly Report are being
suspended.  The reporting requirements are being reduced by suspending the PEDS
tracking, Obesity Tracking, Performance Measure reporting.

Section D, Paragraph 24, Medical Management
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.

Section D, Paragraph 25, Administrative Performance Standards
The Quarterly Credentialing Report is being suspended.  The standards will
continue to be monitored during OFRs and AHCCCS will consider re-implementing
based on the results.

Section D, Paragraph 38, Claims Payment/Health Information System
The Contractor must submit a signed agreement on or before December 31st 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

Section D, Paragraph 38, Claims Payment/Health Information System
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.

Attachment F, Periodic Reporting Requirements

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Medical Management

 

 

 

UM Quarterly Report

60 Days after the end of each quarter

Section D, Paragraph 24

DHCM/MM

Modifications

Modifications will be defined as a reduction in the frequency or content of a
deliverable requirement that will remain in place throughout the temporary term
shown in this Attachment.

There are no modifications at this time.

ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM

Members who have the right to choose, but do not exercise this right, will be
assigned to a Contractor through an auto-assignment algorithm.  The algorithm is
a mathematical formula used to distribute members to the various Contractors in
a manner that is consistent with AHCCCS goals.

With the exception of an enhanced auto-assignment algorithm that may be in
effect at the start of a new contract cycle (October 1, 2008) for a three to six
month period, the auto-assignment algorithm calculation details are as follows:

The algorithm employs a data table and a formula to assign cases (a case may be
a member or a household of members) to Contractors using the target percentages
developed.  The algorithm data table consists of all the geographic service
areas (GSA) in the state, all Contractors serving each GSA, and the target
percentages by risk group within each GSA.

The Contractor farthest away from its target percentage within a GSA and risk
group, the largest negative difference, is assigned the next case for that GSA. 
The equation used is:

                                (t/T) – P = d

t =  The total members assigned to the GSA, per risk group category, for the
Contractor
T =  The total members assigned to the GSA, per risk group category, all
Contractors combined
P =  The target percentage of members per risk group for the Contractor
d =  The difference

The algorithm is calculated after each assignment to give a new difference for
each Contractor.  When more than one Contractor has the same difference, and
their differences are greater than all other Contractors, the Contractor with
the lowest Health Plan I.D. Number will be assigned the case.

Assignment by the algorithm applies to:

                1.             Members who are newly eligible to the AHCCCS
program that did not choose a Contractor within
                                the prescribed time limits.

                2.             Members whose assigned health plan is no longer
available after the member moves to a new GSA
                                and did not choose a new Contractor within the
prescribed time limits.

All Contractors, within a given geographic service area (GSA) and for each risk
group, will have a placement in the algorithm and will receive members
accordingly.  A Contractor with a more favorable target percentage in the
algorithm will receive proportionally more members.  Conversely, a Contractor
with a lower target percentage in the algorithm will receive proportionally
fewer members.  The initial algorithm formula favors Contractors with both lower
awarded capitation rates and higher scores on the Program Component of the
proposal.

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 the
Performance Measures used to evaluate Contractor performance and apply the
criterion universally when making the adjustment.

Development of the Target Percentages

Beginning in CYE ’09, the algorithm target percentages will be developed using
the methodology described below, subject to the enhanced algorithm described
below, if applicable.  However, for subsequent years, AHCCCS reserves the right
to change the algorithm methodology to assure assignments are made in the best
interest of the AHCCCS program and the State.

A Contractor’s placement in the algorithm is based upon the following two
factors, which are weighted as follows:

#

Factor

Weighting

1

The Contractor’s final awarded capitation rate from AHCCCS.

50%

2

The Contractor’s score on the Program component of the proposal.

50%

Points will be assigned to each Contractor by risk group by GSA.  Based on the
rankings of the final awarded capitation rates and the final Program component
scores, each Contractor will be assigned a number of points for each of these
two components separately using the table below:

TABLE OF POINTS FOR FACTORS #1 (LOWEST CAPITATION RATE) AND #2 (HIGHEST PROGRAM
SCORE)

Number of Awards in GSA

1st Place

2nd

Place

3rd

Place

4th

Place

5th

Place

6th

Place

2

60

40

 

 

 

 

3

44

32

24

 

 

 

4

35

28

22

15

 

 

5

30

25

20

15

10

 

6

26

23

19

15

11

6

Two or more Contractors that have equal final awarded capitation rates or
Program component scores in a GSA for the same risk group will be given an equal
percentage of the points for all of the positions held by the tied Contractors
combined.

The points awarded for the two components will be combined as follows to give
the target percentage for each Contractor by GSA by risk group:

Final Awarded Capitation Rate (.50) + Program Component Score (.50)  = TARGET
PERCENTAGE

Enrollment Considerations

AHCCCS will favor new and small Contractors in each GSA with increased
auto-assignment.  A new Contractor is defined as a Contractor new to the AHCCCS
program or an incumbent Contractor that is new to a GSA.  Small Contractors will
be determined based on enrollment as of May 1, 2008.  A small Contractor is
defined by GSA and has a membership level as delineated in the following table:

County/GSA

GSA-specific Enrollment Threshold

Maricopa – GSA 12   

<50,000

Pima County Only

<30,000

Rural GSAs (including Santa Cruz County)

less than or equal to 45% of enrollment in the entire GSA as of May 1, 2008

Conversion Group Auto-Assignment

Members who are enrolled as of June 30, 2008 in an Exiting Contractor
(Conversion Group) will be assigned to new and small Contractors within their
GSA, effective October 1, 2008 via the coversion auto-assignment algorithm. 
These members will be allowed to remain with the Contractor to which they were
auto-assigned or to choose a different Contractor by August 31, 2008 from any of
the incumbent or new Contractors in the GSA that are effective October 1, 2008. 
These members will again have an opportunity to change Contractors from October
1, 2008 until November 30, 2008 in order to provide them with the choice of any
incumbent or new Contractors.

If the number of members in the Conversion Group in a GSA is enough to bring all
new and small Contractors within the GSA above the thresholds listed in the
table above, the conversion auto-assignment algorithm will be applied until all
of the new and small Contractors reach the thresholds.  The remaining members of
the Conversion Group will be auto-assigned to all Contractors in the GSA
according to the initial algorithm methodology based on awarded capitation rates
and Program Component scores.

If the number of Conversion Group members in a GSA is not enough to bring all
new and small Contractors within the GSA above the thresholds listed in the
table above, an enhanced auto-assignment will be utilized to bring all new and
small Contractors as close to equal as possible, without reducing any Contractor
size.

In a rural GSA, if both Contractors are new to AHCCCS, the Conversion Group
members will be auto-assigned approximately equally between the two Contractors.

For details on member choice of Contractors for the months of July, August and
September 2008, see Section I.  For members being auto-assigned in July 2008,
the algorithm will be based on the CYE 08 Contract.  For members auto-assigned
during August and September 2008, the algorithm will be based on the CYE 08
Contract with exiting Contractors in each GSA excluded, except in family
continuity, newborn enrollment, and 90-day re-enrollment situations.  For GSAs
in which all Contractors are exiting, the CYE 08 algorithm will remain in effect
through September 30, 2008.

Post-Conversion Auto-Assignment

For purposes of determining the enhanced algorithm, new Contractors and
Continuing Contractors still below the thresholds on September 1, 2008 will
receive members under the enhanced auto-assign algorithm beginning October 1,
2008.  The enhanced algorithm will continue to favor those Contractors below the
threshold, for at least three months but no longer than six months, regardless
of their membership level during or at the end of the time period.  In this
situation, the plans not qualifying for the enhanced auto-assignment algorithm
will not receive any members via auto-assignment for the time period.  After the
three to six month time period, the algorithm will revert to the initial
methodology based on final awarded capitation and Program Component score and
all Contractors will again be included in the algorithm.

All efforts will be made to auto-assign members based on the methodology and
thresholds above, however amounts may not be exact due to issues such as family
continuity, newborns, 90-day re-enrollment etc.

ATTACHMENT H(1): ENROLLEE GRIEVANCE  SYSTEM STANDARDS AND POLICY

The Contractor shall have a written policy delineating its Grievance System
which shall be in accordance with applicable Federal and State laws, regulations
and policies, including, but not limited to 42 CFR Part 438 Subpart F.  The
Contractor shall provide the ACOM Enrollee Grievance Policy to all providers and
subcontractors at the time of contract.  The Contractor shall also furnish this
information to enrollees within a reasonable time after the Contractor receives
notice of the enrollment.  Additionally, the Contractor shall provide written
notification of any significant change in this policy at least 30 days before
the intended effective date of the change.

The written information provided to enrollees describing the Grievance System
including the grievance process, the appeals process, enrollee rights, the
grievance system requirements and timeframes, shall be in each prevalent
non-English language occurring within the Contractor’s service area and in an
easily understood language and format.  The Contractor shall inform enrollees
that oral interpretation services are available in any language, that additional
information is available in prevalent non-English languages upon request and how
enrollees may obtain this information.

Written documents, including but not limited to the Notice of Action, the Notice
of Appeal Resolution, Notice of Extension for Resolution, and Notice of
Extension of Notice of Action shall be translated in the enrollee’s language if
information is received by the Contractor, orally or in writing, indicating that
the enrollee has a limited English proficiency.  Otherwise, these documents
shall be translated in the prevalent non-English language(s) or shall contain
information in the prevalent non-English language(s) advising the enrollee that
the information is available in the prevalent non-English language(s) and in
alternative formats along with an explanation of how enrollees may obtain this
information.  This information must be in large, bold print appearing in a
prominent location on the first page of the document.

At a minimum, the Contractor’s Grievance System Standards and Policy shall
specify:

1.             That the Contractor shall maintain records of all grievances and
appeals and requests for hearing.

2.             Information explaining the grievance, appeal, and fair hearing
procedures and timeframes.  This
                information shall include a description of the circumstances
when there is a right to a hearing, the method
                for obtaining a hearing, the requirements which govern
representation at the hearing, the right to file
                grievance and appeals and the requirements and timeframes for
filing a grievance, appeal, or request for
                hearing.

3.             The availability of assistance in the filing process and the
Contractor’s toll-free numbers that an enrollee
                can use to file a grievance or appeal by phone if requested by
the enrollee.

4.             That the Contractor shall acknowledge receipt of each grievance
and appeal.  For Appeals, the Contractor
                shall acknowledge receipt of standard appeals in writing within
five business days of receipt and within one
                business day of receipt of expedited appeals.

5.             That the Contractor shall permit both oral and written appeals
and grievances and that oral inquiries
                appealing an action are treated as appeals.

6.             That the Contractor shall ensure that individuals who make
decisions regarding grievances and appeals are
                individuals not involved in any previous level of review or
decision making and that individuals who make
                decisions regarding: 1) appeals of denials based on lack of
medical necessity, 2) a grievance regarding
                denial of expedited resolution of an appeal or 3) grievances or
appeals involving clinical issues are health
                care professionals as defined in 42 CFR 438.2 with the
appropriate clinical expertise in treating the
                enrollee’s condition or disease.

7.             The resolution timeframes for standard appeals and expedited
appeals may be extended up to 14 days if the
                enrollee requests the extension or if the Contractor establishes
a need for additional information and that
                the delay is in the enrollee’s interest.

8.             That if the Contractor extends the timeframe for resolution of an
appeal when not requested by the enrollee,
                the Contractor shall provide the enrollee with written notice of
the reason for the delay.

9.             The definition of grievance as a member’s expression of
dissatisfaction with any aspect of their care, other
                than the appeal of actions.

10.           That an enrollee must file a grievance with the Contractor and
that the enrollee is not permitted to file a
                grievance directly with the AHCCCS Administration.

11.           That the Contractor must dispose of each grievance in accordance
with the ACOM Enrollee Grievance
                Policy, but in no case shall the timeframe exceed 90 days.

12.           The definition of action as the [42 CFR 438.400(b)]:
                a.             Denial or limited authorization of a requested
service, including the type or level of service;
                b.             Reduction, suspension, or termination of a
previously authorized service;
                c.             Denial, in whole or in part, of payment for a
service;
                d.             Failure to provide services in a timely manner;
                e.             Failure to act within the timeframes required for
standard and expedited resolution of appeals and
                                standard disposition of grievances; or
                f.              Denial of a rural enrollee’s request to obtain
services outside the Contractor’s network under 42
                                CFR 438.52(b)(2)(ii), when the contractor is the
only Contractor in the rural area.

13.           The definition of a service authorization request as an enrollee’s
request for the provision of a service [42
                CFR 431.201].

14.           The definition of appeal as the request for review of an action,
as defined above.

15.           Information explaining that a provider acting on behalf of an
enrollee and with the enrollee’s written
                consent, may file an appeal.

16.           That an enrollee may file an appeal of: 1) the denial or limited
authorization of a requested service
                including the type or level of service, 2) the reduction,
suspension or termination of a previously authorized
                service, 3) the denial in whole or in part of payment for
service, 4) the failure to provide services in a
                timely manner, 5) the failure of the Contractor to comply with
the timeframes for dispositions of grievances
                and appeals and 6) the denial of a rural enrollee’s request to
obtain services outside the Contractor’s
                network under 42 CFR 438.52(b)(2)(ii) when the Contractor is the
only Contractor in the rural area.

17.           The definition of a standard authorization request.  For standard
authorization decisions, the Contractor
                must provide a Notice of Action to the enrollee as expeditiously
as the enrollee’s health condition requires,
                but not later than 14 days following the receipt of the
authorization request with a possible extension of up
                to 14 days if the enrollee or provider requests an extension or
if the Contractor establishes a need for
                additional information and delay is in the enrollee’s best
interest [42 CFR 438.210(d)(1)].  The Notice of
                Action must comply with the advance notice requirements when
there is a termination or reduction of a
                previously authorized service OR when there is a denial of an
authorization request and the physician
                asserts that the requested service/treatment is a necessary
continuation of a previously authorized service.

18.           The definition of an expedited authorization request.  For
expedited authorization decisions, the Contractor
                must provide a Notice of Action to the enrollee as expeditiously
as the enrollee’s health condition requires,
                but not later than 3 business days following the receipt of the
authorization request with a possible
                extension of up to 14 days if the enrollee or provider requests
an extension or if the Contractor establishes a
                need for additional information and delay is in the enrollee’s
interest [42 CFR 438.210(d)(2)].

19.           That the Notice of Action for a service authorization decision not
made within the standard or expedited
                timeframes, whichever is applicable, will be made on the date
that the timeframes expire.  If the Contractor
                extends the timeframe to make a standard or expedited
authorization decision, the contractor must give the
                enrollee written notice of the reason to extend the timeframe
and inform the enrollee of the right to file a
                grievance if the enrollee disagrees with the decision.  The
Contractor must issue and carry out its decision
                as expeditiously as the enrollee’s health condition requires and
no later than the date the extension expires.

20.           That the Contractor shall notify the requesting provider of the
decision to deny or reduce a service
                authorization request.  The notice to the provider must be
written.

21.           The definition of a standard appeal and that the Contractor shall
resolve standard appeals no later than 30
                days from the date of receipt of the appeal unless an extension
is in effect.  If a Notice of Appeal
                Resolution is not completed when the timeframe expires, the
member’s appeal shall be considered to be
                denied by the Contractor, and the member can file a request for
hearing.

22.           The definition of an expedited appeal and that the Contractor
shall resolve all expedited appeals not later
                than three business days from the date the Contractor receives
the appeal (unless an extension is in effect)
                where the Contractor determines (for a request from the
enrollee), or the provider (in making the request on
                the enrollee’s behalf indicates) that the standard resolution
timeframe could seriously jeopardize the
                enrollee’s life or health or ability to attain, maintain or
regain maximum function.  The Contractor shall
                make reasonable efforts to provide oral notice to an enrollee
regarding an expedited resolution appeal.  If a
                Notice of Appeal Resolution is not completed when the timeframe
expires, the member’s appeal shall be
                considered to be denied by the Contractor, and the member can
file a request for hearing.

23.           That if the Contractor denies a request for expedited resolution,
it must transfer the appeal to the 30-day
                timeframe for a standard appeal.  The Contractor must make
reasonable efforts to give the enrollee prompt
                oral notice and follow-up within two days with a written notice
of the denial of expedited resolution.

24.           That an enrollee shall be given 60 days from the date of the
Contractor’s Notice of Action to file an appeal.

25.           That the Contractor shall mail a Notice of Action: 1) at least 10
days before the date of a termination,
                suspension or reduction of previously authorized AHCCCS
services, except as provided in (a)-(e) below; 2)
                at least 5 days before the date of action in the case of
suspected fraud; 3) at the time of any action affecting
                the claim when there has been a denial of payment for a service,
in whole or in part; 4)  within 14 days
                from receipt of a standard service authorization request and
within three business days from receipt of an
                expedited service authorization request, unless an extension is
in effect.  For service authorization
                decisions, the Contractor shall also ensure that the Notice of
Action provides the enrollee with advance
                notice and the right to request continued benefits for all
terminations and reductions of a previously
                authorized service and for denials when the physician asserts
that the requested service/treatment which has
                been denied is a necessary continuation of a previously
authorized service.  As described below, the
                Contractor may elect to mail a Notice of Action no later than
the date of action when:
                a.             The Contractor receives notification of the death
of an enrollee;
                b.             The enrollee signs a written statement requesting
service termination or gives information
                                requiring termination or reduction of services
(which indicates understanding that the termination
                                or reduction will be the result of supplying
that information);
                c.             The enrollee is admitted to an institution where
he is ineligible for further services;
                d.             The enrollee’s address is unknown and mail
directed to the enrollee has no forwarding address;
                e.             The enrollee has been accepted for Medicaid in
another local jurisdiction.

26.           That the Contractor include, as parties to the appeal, the
enrollee, the enrollee’s legal representative, or the
                legal representative of a deceased enrollee’s estate.

27.           That the Notice of Action must explain: 1) the action
theContractor has taken or intends to take, 2) the
                reasons for the action, 3) the enrollee’s right to file an
appeal with the Contractor, 4) the procedures for
                exercising these rights, 5) circumstances when expedited
resolution is available and how to request it and 6)
                the enrollee’s right to receive continued benefits pending
resolution of the appeal, how to request continued
                benefits and the circumstances under which the enrollee may be
required to pay for the cost of these
                services.  The Notice of Action shall comply with ACOM Policy
414.

28.           That benefits shall continue until a hearing decision is rendered
if: 1) the enrollee files an appeal before the
                later of a) 10 days from the mailing of the Notice of Action or
b) the intended date of the Contractor’s
                action, 2) a) the appeal involves the termination, suspension,
or reduction of a previously authorized course
                of treatment or b) the appeal involves a denial and the
physician asserts that the requested service/treatment
                is a necessary continuation of a previously authorized service,
3) the services were ordered by an
                authorized provider and 4) the enrollee requests a continuation
of benefits.

                For purposes of this paragraph, benefits shall be continued
based on the authorization which was in place
                prior to the denial, termination, reduction, or suspension which
has been appealed.

29.           That for appeals, the Contractor provides the enrollee a
reasonable opportunity to present evidence and
                allegations of fact or law in person and in writing and that the
Contractor informs the enrollee of the limited
                time available in cases involving expedited resolution.

30.           That for appeals, the Contractor provides the enrollee and his
representative the opportunity before and
                during the appeals process to examine the enrollee’s case file
including medical records and other
                documents considered during the appeals process.

31.           That the Contractor must ensure that punitive action is not taken
against a provider who either requests an
                expedited resolution or supports an enrollee’s appeal.

32.           That the Contractor shall provide written Notice of Appeal
Resolution to the enrollee and the enrollee’s
                representative or the representative of the deceased enrollee’s
estate which must contain: 1) the results of
                the resolution process, including the legal citations or
authorities supporting the determination, and the date
                it was completed, and 2) for appeals not resolved wholly in
favor of enrollees: a) the enrollee’s right to
                request a State fair hearing (including the requirement that the
enrollee must file the request for a hearing in
                writing) no later than 30 days after the date the enrollee
receives the Contractor’s notice of appeal
                resolution and how to do so, b) the right to receive continued
benefits pending the hearing and how to
                request continuation of benefits and c) information explaining
that the enrollee may be held liable for the
                cost of benefits if the hearing decision upholds the Contractor.

33.           That the Contractor continues extended benefits originally
provided to the enrollee until any of the
                following occurs: 1) the enrollee withdraws appeal, 2) the
enrollee has not specifically requested continued
                benefits pending a hearing decision within 10 days of the
Contractor mailing of the appeal resolution notice,
                or 3) the AHCCCS Administration issues a state fair hearing
decision adverse to the enrollee.

34.           That if the enrollee files a request for hearing the Contractor
must ensure that the case file and all
                supporting documentation is received by the AHCCCS Office of
Administrative Legal Services (OALS) as
                specified by  OALS.  The file provided by the Contractor must
contain a cover letter that includes:
                a.             Enrollee’s name
                b.             Enrollee’s AHCCCS I.D. number
                c.             Enrollee’s address
                d.             Enrollee’s phone number (if applicable)
                e.             date of receipt of the appeal
                f.              summary of the Contractor’s actions undertaken
to resolve the appeal and summary of the appeal
                                resolution

35.           The following material shall be included in the file sent by the
Contractor:

                a.             the Enrollee’s written request for hearing
                b.             copies of the entire appeal file which includes
all supporting documentation including pertinent
                                findings and medical records
                c.             the Contractor’s Notice of Appeal Resolution
                d.             other information relevant to the resolution of
the appeal

36.           That if the Contractor or the State fair hearing decision reverses
a decision to deny, limit or delay services
                not furnished during the appeal or the pendency of the hearing
process, the Contractor shall authorize or
                provide the services promptly and as expeditiously as the
enrollee's health condition requires irrespective of
                whether the Contractor contests the decision.

37.           That if the Contractor or State fair hearing decision reverses a
decision to deny authorization of services and
                the disputed services were received pending appeal, the
Contractor shall pay for those services, as specified
                in policy and/or regulation.

38.           That 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
the 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.

39.           That if the Contractor or State fair hearing decision upholds a
decision to deny authorization of services and
                the disputed services were received pending appeal, the
Contractor may recover the cost of those services
                from the enrollee.

ATTACHMENT H(2): PROVIDER CLAIM DISPUTE STANDARDS AND POLICY

The Contractor shall have in place a written claim dispute policy for
providers.  The policy shall be in accordance with applicable Federal and State
laws, regulations and policies.  The claim dispute policy shall include the
following provisions:

1.             The Provider Claim Dispute Policy shall be provided to all
subcontractors at the time of contract.  For
                providers without a contract, the claim dispute policy may be
mailed with a remittance advice, provided the
                remittance is sent within 45 days of receipt of a claim.

2.             The Provider Claim Dispute Policy must specify that all claim
disputes challenging claim payments,
                denials or recoupments must be filed in writing with the
Contractor no later than 12 months from the date
                of service, 12 months after the date of eligibility posting or
within 60 days after the payment, denial or
                recoupment of a timely claim submission, whichever is later.

3.             Specific individuals are appointed with authority to require
corrective action and with requisite experience
                to administer the claim dispute process.

4.             A log is maintained for all claim disputes containing sufficient
information to identify the Complainant,
                date of receipt, nature of the claim dispute and the date the
claim dispute is resolved.  Separate logs must be
                maintained for provider and behavioral health recipient claim
disputes.

5.             Within five business days of receipt, the Complainant is informed
by letter that the claim dispute has been
                received.

6.             Each claim dispute is thoroughly investigated using the
applicable statutory, regulatory, contractual and
                policy provisions, ensuring that facts are obtained from all
parties.

7.             All documentation received by the Contractor during the claim
dispute process is dated upon receipt.

8.             All claim disputes are filed in a secure designated area and are
retained for five years following the
                Contractor’s decision, the Administration’s decision, judicial
appeal or close of the claim dispute,
                whichever is later, unless otherwise provided by law.

9.             A copy of the Contractor’s Notice of Decision (hereafter referred
to as Decision) shall be mailed to all
                parties no later than 30 days after the provider files a claim
dispute with the Contractor, unless the provider
                and Contractor agree to a longer period.  The Decision must
include and describe in detail, the following:

                a.             the nature of the claim dispute
                b.             the issues involved
                c.             the reasons supporting the Contractor’s Decision,
including references to applicable statute, rule,
                                applicable contractual provisions, policy and
procedure
                d.             the Provider’s right to request a hearing by
filing a written request for hearing to the Contractor no
                                later than 30 days after the date the Provider
receives the Contractor’s decision.
                e.             If the claim dispute is overturned, the
requirement that the Contractor shall reprocess and pay the
                                claim(s) in a manner consistent with the
decision within 15 business days of the date of the
                                Decision.

10.           If the Provider files a written request for hearing, the
Contractor must ensure that all supporting
                documentation is received by the AHCCCS Office Administrative
Legal Services (OALS), no later than
                five business days from the date the Contractor receives the
provider’s written hearing request.  The file
                sent by the Contractor must contain a cover letter that
includes:

                a.             Provider’s  name
                b.             Provider’s  AHCCCS ID number
                c.             Provider’s  address
                d.             Provider’s  phone number (if applicable)
                e.             the date of receipt of claim dispute
                f.              a summary of the Contractor’s actions undertaken
to resolve the claim dispute and basis of the
                                determination

11.           The following material shall be included in the file sent by the
Contractor:

                a.             written request for hearing filed by the Provider
                b.             copies of the entire file which includes
pertinent records; and the Contractor’s Decision
                c.             other information relevant to the Notice of 
Decision of the claim dispute

12.           If the Contractor’s decision regarding a claim dispute is reversed
through the appeal process, the Contractor
                shall reprocess and pay the claim (s) in a manner consistent
with the decision within 15 business days of the
                date of the Decision.

ATTACHMENT I: RESERVED

ATTACHMENT J: RESERVED

ATTACHMENT J(2): RESERVED

ATTACHMENT K: COST SHARING COPAYMENTS

I.              EXEMPT POPULATIONS (REGARDLESS OF RATE CODE)
                The following populations are exempt from copayments for ALL
services ($0 copay):
                –All members under the age of 19, including all KidsCare members
                –All Pregnant Women
                –All ALTCS enrolled members
                –All persons with Serious Mental Illness receiving RBHA services
                –All members who are receiving CRS services
                –SOBRA Family Planning Services Only members

                Additionally, no member may be asked to make a copayment for
family planning services or supplies.

II.            STANDARD COPAYMENTS APPLY TO THE TITLE XIX WAIVER GROUP
                Services to this population may not be denied for failure to pay
copayment.

                The standard copayments apply to the Title XIX Waiver Group,
including RBHA General Mental Health
                and Substance Abuse service members.  The standard copayments
are as follows:

Service

Copayment

Generic Prescriptions or Brand Name if generic not available

$  0

Brand Name Prescriptions when generic is available

$ 0

Non Emergency Use of ER

$ 1

Physician Office Visits

$ 1

III.           STANDARD COPAYMENTS APPLY TO THE FOLLOWING POPULATIONS
                Services to this population may not be denied for failure to pay
copayment.
                –AHCCCS for Families with Children
                –Supplemental Security Income with and without Medicare

Service

Copayment

Generic Prescriptions or Brand Name if generic not available

$  0

Brand Name Prescriptions when generic is available

$  0

Non Emergency Use of ER

$  1

Physician Office Visits

$  1