EXHIBIT 10.1

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM ADMINISTRATION
DIVISION OF BUSINESS AND FINANCE
CONTRACT AMENDMENT

1.             AMENDMENT NO.:
                15

2.             CONTRACT NO.:
                YH04-0001-06

3.             EFFECTIVE DATE OF AMENDMENT:
                October 1, 2006

4.             PROGRAM:
                DHCM

5.             CONTRACTOR/PROVIDER NAME AND ADDRESS:
                Phoenix Health Plan/Community Connection
                7878 N. 16th Street
                Phoenix, Arizona  85020

6.             PURPOSE:
                To amend Sections B, C, D and E and Attachments A, H and I.

7.             The above referenced contract is hereby amended as follows:

                A.  CHANGES IN REQUIREMENTS:  In accordance with Section E.
Paragraph 30, “Changes”, various
                      changes in contract requirements are indicated in this
contract restatement.

                B.  By signing this contract amendment, the Contractor is
agreeing to the terms of the contract as amended.

NOTE:  Please sign and date both and return one original to:                    
Pat Watkinson, Contracts Manager
                                                                                                                               
AHCCCS Contracts and Purchasing
                                                                                                                               
701 E. Jefferson, MD 5700
                                                                                                                               
Phoenix, AZ  85034

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.             NAME OF CONTRACTOR:  PHOENIX HEALTH PLAN
                SIGNATURE OF AUTHORIZED INDIVIDUAL:  /s/ NANCY NOVICK
                TYPED NAME:  NANCY NOVICK
                TITLE:  CHIEF EXECUTIVE OFFICER
                DATE:  SEPTEMBER 5, 2006

10.          ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
                SIGNATURE:  /s/ MICHAEL VEIT
                TYPED NAME:  MICHAEL VEIT
                TITLE:  CONTRACT SNA PURCHASING ADMINISTRATOR
                DATE:  August 9, 2006

--------------------------------------------------------------------------------

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

1.             AMENDMENT NUMBER.:
                ###

2.             CONTRACT NO.:
                YH04-0001

3.             EFFECTIVE DATE OF AMENDMENT:
                October 1, 2006

4.             PROGRAM:
                DHCM

5.             CONTRACTOR/PROVIDER NAME AND ADDRESS:

6.             PURPOSE OF AMENDMENT:
                To amend Sections B, C, D and E and Attachments A, B, F, G, H, I
and L.

7.             THE CONTRACT REFERENCED ABOVE IS AMENDED AS FOLLOWS:

                A.  CHANGES IN REQUIREMENTS:  In accordance with Section E.
Paragraph 30, “Changes”, various
                      changes in contract requirements are indicated in this
contract restatement.

                B.  By signing this contract amendment, the Contractor is
agreeing to the terms of the contract as amended.

NOTE:  Please sign and date both and then return one
to:                           Michael Veit, MD 5700
                                                                                                                               
AHCCCS Contracts and Purchasing
                                                                                                                               
701 E. Jefferson Street
                                                                                                                               
Phoenix, AZ  85034

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:
                TYPED NAME:
                TITLE:
                DATE:

10.          SIGNATURE OF AHCCCSA CONTRACTING OFFICER:
                /s/  MICHAEL VEIT
                CONTRACTS & PURCHASING ADMINISTRATOR

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--------------------------------------------------------------------------------

TABLE OF CONTENTS

SECTION A.  CONTRACT AMENDMENT  1

SECTION B:  CAPITATION RATES  6

SECTION C: DEFINITIONS  7

SECTION D: PROGRAM REQUIREMENTS  15

1.             TERM OF CONTRACT AND OPTION TO RENEW  15
2.             ELIGIBILITY CATEGORIES  16
3.             ENROLLMENT AND DISENROLLMENT  17
4.             ANNUAL ENROLLMENT CHOICE  20
5.             OPEN ENROLLMENT  20
6.             AUTO-ASSIGNMENT ALGORITHM  20
7.             AHCCCS MEMBER IDENTIFICATION CARDS  200
8.             MAINSTREAMING OF AHCCCS MEMBERS  200
9.             TRANSITION OF MEMBERS  21
10.           SCOPE OF SERVICES  22
11.           SPECIAL HEALTH CARE NEEDS  30
12.           BEHAVIORAL HEALTH SERVICES  30
13.           AHCCCS GUIDELINES, POLICIES and MANUALS  33
14.           MEDICAID SCHOOL BASED CLAIMING PROGRAM (MSBC)  33
15.           PEDIATRIC IMMUNIZATIONS AND THE  VACCINES FOR CHILDREN  PROGRAM 
33
16.           STAFF REQUIREMENTS AND SUPPORT SERVICES  34
17.           WRITTEN POLICIES, PROCEDURES AND JOB DESCRIPTIONS  35
18.           MEMBER INFORMATION  36
19.           SURVEYS  37
20.           CULTURAL COMPETENCY  37
21.           MEDICAL RECORDS  37
22.           ADVANCE DIRECTIVES  38
23.           QUALITY MANAGEMENT AND MEDICAL MANAGEMENT (QM/MM)  39
24.           PERFORMANCE STANDARDS  41
25.           GRIEVANCE SYSTEM  45
26.           QUARTERLY GRIEVANCE SYSTEM REPORTS  45
27.           NETWORK DEVELOPMENT  46
28.           PROVIDER AFFILIATION TRANSMISSION  48
29.           NETWORK MANAGEMENT  48
30.           PRIMARY CARE PROVIDER  STANDARDS  50
31.           MATERNITY CARE PROVIDER STANDARDS  51
32.           REFERRAL MANAGEMENT PROCEDURES AND STANDARDS  51
33.           APPOINTMENT STANDARDS  52
34.           FEDERALLY QUALIFIED HEALTH CENTERS (FQHC) and RURAL HEALTH CLINICS
(RHC)  53
35.           PROVIDER MANUAL  53
36.           PROVIDER  REGISTRATION  54
37.           SUBCONTRACTS  54
38.           CLAIMS PAYMENT/HEALTH INFORMATION SYSTEM  57
39.           SPECIALTY CONTRACTS  58
40.           HOSPITAL SUBCONTRACTING AND REIMBURSEMENT  59
41.           NURSING FACILITY REIMBURSEMENT  60
42.           PHYSICIAN INCENTIVES/PAY FOR PERFORMANCE  60
43.           MANAGEMENT SERVICES AGREEMENT AND COST ALLOCATION PLAN  61

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44.           RESERVED  61
45.           MINIMUM CAPITALIZATION REQUIREMENTS  61
46.           PERFORMANCE BOND OR BOND SUBSTITUTE  62
47.           AMOUNT OF PERFORMANCE BOND  63
48.           ACCUMULATED FUND DEFICIT  63
49.           ADVANCES, DISTRIBUTIONS, LOANS AND INVESTMENTS  63
50.           FINANCIAL VIABILITY STANDARDS / PERFORMANCE GUIDELINES  63
51.           SEPARATE INCORPORATION  64
52.           MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP  65
53.           COMPENSATION  65
54.           PAYMENTS TO CONTRACTORS  66
55.           CAPITATION ADJUSTMENTS  67
56.           INCENTIVES  67
57.           REINSURANCE  68
58.           COORDINATION OF BENEFITS / THIRD PARTY LIABILITY  71
59.           COPAYMENTS  74
60.           MEDICARE SERVICES AND COST SHARING  74
61.           MARKETING  75
62.           CORPORATE COMPLIANCE  75
63.           RECORDS RETENTION  76
64.           DATA EXCHANGE REQUIREMENTS  77
65.           ENCOUNTER DATA REPORTING  77
66.           ENROLLMENT AND CAPITATION TRANSACTION UPDATES  78
67.           PERIODIC REPORT REQUIREMENTS  79
68.           REQUESTS FOR INFORMATION  79
69.           DISSEMINATION OF INFORMATION  79
70.           OPERATIONAL AND FINANCIAL READINESS REVIEWS  79
71.           OPERATIONAL AND FINANCIAL REVIEWS  80
72.           SANCTIONS  80
73.           BUSINESS CONTINUITY AND RECOVERY PLAN  81
74.           TECHNOLOGICAL ADVANCEMENT  82
75.           PENDING LEGISLATIVE / OTHER ISSUES  83
76.           BALANCED BUDGET ACT OF 1997 (BBA)  83
77.           RESERVED  83
78.           MEDICARE MODERNIZATION ACT (MMA)  83

SECTION E: CONTRACT CLAUSES  85

1)             APPLICABLE LAW  85
2)             AUTHORITY  85
3)             ORDER OF PRECEDENCE  85
4)             CONTRACT INTERPRETATION AND AMENDMENT  85
5)             SEVERABILITY  85
6)             RELATIONSHIP OF PARTIES  85
7)             ASSIGNMENT AND DELEGATION  85
8)             INDEMNIFICATION  85
9)             INDEMNIFICATION -- PATENT AND COPYRIGHT  85
10)           COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS  86
11)           ADVERTISING AND PROMOTION OF CONTRACT  86
12)           PROPERTY OF THE STATE  86
13)           THIRD PARTY ANTITRUST VIOLATIONS  86
14)           RIGHT TO ASSURANCE  86
15)           TERMINATION FOR CONFLICT OF INTEREST  87
16)           GRATUITIES   87
17)           SUSPENSION OR DEBARMENT  87
18)           TERMINATION FOR CONVENIENCE  87

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19)           TEMPORARY MANAGEMENT/OPERATION OF A CONTRACTOR AND TERMINATION  87
20)           TERMINATION - AVAILABILITY OF FUNDS  88
21)           RIGHT OF OFFSET  88
22)           NON-EXCLUSIVE REMEDIES  88
23)           NON-DISCRIMINATION  89
24)           EFFECTIVE DATE  89
25)           INSURANCE  89
26)           DISPUTES  89
27)           RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS  90
28)           INCORPORATION BY REFERENCE  90
29)           COVENANT AGAINST CONTINGENT FEES  90
30)           CHANGES  90
31)           TYPE OF CONTRACT  90
32)           AMERICANS WITH DISABILITIES ACT  90
33)           WARRANTY OF SERVICES  90
34)           NO GUARANTEED QUANTITIES  90
35)           CONFLICT OF INTEREST  90
36)           DISCLOSURE OF CONFIDENTIAL INFORMATION  91
37)           COOPERATION WITH OTHER CONTRACTORS  91
38)           ASSIGNMENT OF CONTRACT AND BANKRUPTCY  91
39)           OWNERSHIP OF INFORMATION AND DATA  91
40)           AHCCCSA RIGHT TO OPERATE CONTRACTOR  91
41)           AUDITS AND INSPECTIONS  92
42)           LOBBYING  92
43)           CHOICE OF FORUM  92
44)           DATA CERTIFICATION  92
45)           OFF SHORE PERFORMANCE OF WORK PROHIBITED  92
46)           FEDERAL IMMIGRATION AND NATIONALITY ACT  93
47)           IRS W-9 FORM  93
48)           CONTINUATION OF PERFORMANCE THROUGH TERMINATION  93

SECTION F: INDEX - PROGRAM REQUIREMENTS AND CONTRACT CLAUSES  94

ATTACHMENT A: MINIMUM SUBCONTRACT PROVISIONS  97

1.             ASSIGNMENT AND DELEGATION OF RIGHTS AND
RESPONSIBILITIES             97
2.             AWARDS OF OTHER SUBCONTRACTS  97
3.             CERTIFICATION OF COMPLIANCE – ANTI-KICKBACK AND LABORATORY
TESTING  97
4.             CERTIFICATION OF TRUTHFULNESS OF REPRESENTATION  97
5.             CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988  98
6.             COMPLIANCE WITH AHCCCSA RULES RELATING TO AUDIT AND INSPECTION 
98
7.             COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS  98
8.             CONFIDENTIALITY REQUIREMENT  98
9.             CONFLICT IN INTERPRETATION OF PROVISIONS  98
10.           CONTRACT CLAIMS AND DISPUTES  98
11.           ENCOUNTER DATA REQUIREMENT  98
12.           EVALUATION OF QUALITY, APPROPRIATENESS, OR TIMELINESS OF SERVICES 
98
13.           FRAUD AND ABUSE  99
14.           GENERAL INDEMNIFICATION  99
15.           INSURANCE  99
16.           LIMITATIONS ON BILLING AND COLLECTION PRACTICES  99
17.           MAINTENANCE OF REQUIREMENTS TO DO BUSINESS AND PROVIDE SERVICES 
99
18.           NON‑DISCRIMINATION REQUIREMENTS  99
19.           PRIOR AUTHORIZATION AND UTILIZATION MANAGEMENT  100
20.           RECORDS RETENTION  100
21.           SEVERABILITY  100

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22.           SUBJECTION OF SUBCONTRACT  100
23.           TERMINATION OF SUBCONTRACT  100
24.           VOIDABILITY OF SUBCONTRACT  101
25.           WARRANTY OF SERVICES  101
26.           OFF-SHORE PERFORMANCE OF WORK PROHIBITED  101
27.           FEDERAL IMMIGRATION AND NATIONALITY ACT  101

ATTACHMENT B: MINIMUM NETWORK STANDARDS (By Geographic Service Area)  102

ATTACHMENT F: PERIODIC REPORT REQUIREMENTS  106

ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM  110

ATTACHMENT H (1): ENROLLEE GRIEVANCE SYSTEM STANDARDS AND POLICY  113

ATTACHMENT H(2)          PROVIDER CLAIM DISPUTE STANDARDS AND POLICY  118

ATTACHMENT I: ENCOUNTER SUBMISSION REQUIREMENTS  120

ATTACHMENT L: COST SHARING COPAYMENTS  123

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SECTION B:  CAPITATION RATES

The Contractor shall provide services as described in this contract.  In
consideration for these services, the Contractor will be paid the attached
Contractor specific rates per member per month for the term October 1, 2006
through September 30, 2007.

See attached.

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ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
CAPITATION RATE SUMMARY – ACUTE RATES
Phoenix Health Plan
10/1/06-9/30/07

 

 

 

 

 

 

 

 

 

Maternity

 

 

 

TANF

TANF

TANF

TANF

TANF

SSI

SSI

Delivery

MED Hospital

Title XIX and KidsCare Rates;

<1, M/F

1-13, M/F

14-44, F

14-44, M

45+, M/F

w/Med

w/o Med

SFP

Supplement

Non-MED

MED

Supplement

8  Gila/Pinal

$505.20

$111.91

$182.99

$125.65

$348.62

$180.31

$565.41

$17.89

$6,348.42

$415.06

$979.58

$10,372.10

12  Maricopa

$497.71

$110.24

$183.67

$134.33

$385.37

$172.58

$626.64

$19.15

$6,320.99

$458.01

$981.99

$10,249.18

TANF

TANF

TANF

TANF

TANF

SSI

SSI

PPC Rates:

<1, M/F

1-13, M/F

14-44, F

14-44, M

45+, M/F

w/Med

w/o Med

Non-MED

MED

8  Gila/Pinal

$831.54

$47.94

$172.04

$150.56

$333.68

$73.38

$156.57

$692.11

$1,701.01

12  Maricopa

$1,348.09

$47.94

$178.93

$156.58

$347.02

$57.58

$147.72

$672.07

$1,688.16

HIFA

HIFA

HIFA

HIV/AIDS

PPC Rates:

14-44, F

14-44, M

45+, M/F

Supplement

SSDi

8  Gila/Pinal

$209.21

$136.93

$385.84

$1,051.86

$696.76

12  Maricopa

$205.74

$137.69

$398.89

$1,051.86

$696.76

*Rates have been adjusted for $50,000 Reinsurance Deductibles

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 93-638, as amended.

 

 

1931

Eligible individuals and families under the 1931 provision of the Social
Security Act, with household income levels at or below 100% of the 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 which have been received and processed by the Contractor 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 MEMBER

See “MEMBER”.

 

 

AHCCCSA

Arizona Health Care Cost Containment System Administration.

 

 

ALTCS

The Arizona Long Term Care System, a program under AHCCCSA 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.

 

 

AMPM

AHCCCS Medical Policy Manual.

 

 

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 AAC are referred to throughout
this document as “AHCCCS Rules”.

 

 

A.R.S.

Arizona Revised Statutes.

 

 

BBA

The Balanced Budget Act  of 1997.

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BCCTP

Breast and Cervical Cancer  Treatment Program, a Title XIX  eligibility
expansion program for women who are not otherwise Title XIX eligible and are
diagnosed as needing treatment for breast and/or cervical cancer or lesions.

 

 

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.

 

 

CAPITATION

Payment to Contractor by AHCCCSA 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),
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 claims under
investigation for fraud or abuse or claims 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 03 that submits a proposal pursuant to this
solicitation.

 

 

CONTRACT
SERVICES

See "COVERED SERVICES".

 

 

CONTRACT YEAR
(CY)

Corresponds to Federal fiscal year (Oct. 1 through Sept. 30).  For example,
Contract Year 04 is 10/01/03 – 9/30/04.

 

 

CONTRACTOR

An organization or entity agreeing through a direct contracting relationship
with AHCCCSA 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
R9-22-107.

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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
R9-22-114.

 

 

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.

 

 

CRS RECIPIENT

A CRS recipient is a CRS eligible individual who has completed the initial
medical visit at an approved CRS Clinic, which allows the individual to
participate in the CRS program. 

 

 

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.

 

 

DELEGATEDAGREEMENT

An agreement 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 AHCCCSA.

 

 

DISCLOSING ENTITY

An AHCCCS provider or a fiscal agent.

 

 

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 R9-22-102.

 

 

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 AHCCCSA to a member who is enrolled with a Contractor on the
date of service. 

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ENROLLEE

A Medicaid recipient who is currently enrolled with a contractor.  [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 24
months to SOBRA  women whose pregnancy  has ended and who are not otherwise
eligible for full Title XIX services.

 

 

FEDERALLY QUALIFIED HEALTH CENTER (FQHC)

An entity which 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 Act (PL 93-638) or an urban
Indian organization receiving funds under Title V of the Indian Health Care
Improvement Act.

 

 

FEE‑FOR‑SERVICE (FFS)

A method of payment to registered providers on an amount per service basis.

 

 

FES

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

 

 

FFP

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

 

 

FISCAL YEAR (FY)

The budget year ‑ Federal Fiscal Year: October 1 through September 30; State
fiscal year: July 1 through June 30.

 

 

FREEDOM TO WORK
(TICKET TO WORK)

A Federal program that expands Title XIX  eligibility to individuals, 16 through
64 years old, who are disabled and whose earned income, after allowable
deductions, is at or below 250% of the Federal Poverty Level.

 

 

GEOGRAPHIC
SERVICE AREA
(GSA)

A specific county or defined grouping of counties designated by AHCCCSA 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 below 200 percent of the Federal Poverty Level,
seeking to maximize private health insurance coverage options. 

 

 

HIFA  PARENTS

Parents of   Medicaid (SOBRA) and KidsCare eligible  children who are eligible
for AHCCCS benefits under the HIFA  Waiver.  All eligible parents must pay an
enrollment fee and a monthly premium based on household income.

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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

Individuals under the age of 19, 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.

 

 

LIEN

A legal claim, filed with the County Recorder’s office in which a member resides
and 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.

 

 

MANAGEMENTSERVICES AGREEMENT

An agreement 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, 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 is more than 100% of the Federal
Poverty Level and has family medical expenses that reduce income to or below 40%
of the Federal Poverty Level.  MED’s may have a categorical link to a Title XIX
category; however, their income exceeds the limits of the Title XIX category.

 

 

MEDICALMANAGEMENT

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.

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MEDICARE MANAGED CARE PLAN

A managed care entity that has a Medicare contract with CMS to provide services
to Medicare beneficiaries, including 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 will not be covered by AHCCCS post January 1,
2006.  There are certain drugs that are excluded from coverage by Medicare, and
will 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 will not be
covered by AHCCCS.

 

 

MEMBER

An eligible person who is enrolled in the system, as defined in A.R.S. §
36-2901, A.R.S. § 36-2981 and A.R.S. § 36-2981.01.

 

 

NEW OFFEROR

An organization or entity that submits a proposal in response to this
solicitation and which has not been an AHCCCS Contractor during CYE 03.

 

 

NON-CONTRACTING PROVIDER

A person who provides services as prescribed in A.R.S. § 36-2939 and who does
not have a subcontract  with an AHCCCS Contractor.

 

 

OFFEROR

An organization or other entity that submits a proposal to the Administration in
response to this RFP,  as defined in R9-22-106.

 

 

PERFORMANCE STANDARDS

A set of standardized indicators designed to assist AHCCCSA in evaluating,
comparing and improving the performance of its Contractors.  Specific
descriptions of health services measurement goals are found in Section D,
Paragraph 24, Performance Standards.

 

 

PMMIS

AHCCCSA’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
alternatively 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 the member’s enrollment, during which a 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 who contracts with AHCCCSA 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.

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QUALIFIED MEDICARE BENEFICIARY (QMB)

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, who 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 AHCCCSA to Contractors for the reimbursement
of certain contract service costs incurred for a member beyond a certain
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 disclosing entity, 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 AHCCCSA, which describes the
services required and instructs prospective offerors about how to prepare a
response (proposal), as defined in R9-22-106.

 

 

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 LEVELAGREEMENT

An agreement with a 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 AHCCCSA under the terms of this contract, as defined in
R9-22-101.

 

 

SOBRA

Section 9401 of the Sixth Omnibus Budget  and Reconciliation Act, 1986, amended
by the Medicare Catastrophic Coverage Act of 1988, U.S.C.
1396a(a)(10)(A)(ii)(IX), November 5, 1990.

 

 

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
required by members generally.

 

 

STATE

The State of Arizona.

 

 

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.

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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 AHCCCSA 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)

Federal cash assistance program under Title XVI of the Social Security Act.

 

 

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 Act of 1996.  It
replaced Aid To Families With Dependent Children (AFDC).

 

 

THIRD PARTY

An individual, entity or program that is or may be liable to pay all or part of
the medical cost of injury, disease or disability of an AHCCCS applicant or
member, as defined in R9-22-1001.

 

 

THIRD PARTY LIABILITY

The resources available from 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, as defined in R9-22-1001.

 

 

TITLE XIX MEMBER

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.

 

 

TITLE XIX WAIVER  MEMBER

All MED (Medical Expense Deduction) members, and adults or childless couples at
or below 100% of the Federal Poverty Level who are not categorically linked to
another Title XIX  program.  This would also include Title XIX linked
individuals whose income exceeds the limits of the categorical program.

 

 

TITLE XXI  MEMBER

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 400)

 

 

YEAR

See "Contract Year".

[END OF DEFINITIONS]

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SECTION D:  PROGRAM REQUIREMENTS

1.             TERM OF CONTRACT AND OPTION TO RENEW

The initial term of this contract shall be 10/1/03 through 9/30/06, with two
one-year options to renew.  All contract renewals shall be through contract
amendment.  AHCCCSA 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
service contained herein.  Changes to scope of service include but are not
limited to changes in the enrolled population, changes in covered services,
changes in GSA’s

If the Contractor has been awarded a contract in more than one GSA, each such
contract will be considered separately renewable.  AHCCCSA 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,
AHCCCSA may require the Contractor to renew all currently awarded GSA’s, or may
terminate the contract if the Contractor does not agree to renew all currently
awarded GSA’s.

When AHCCCSA 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
AHCCCSA, even if the amendment has not been signed by the Contractor, unless
within that time the Contractor notifies AHCCCSA in writing that it refuses to
sign the renewal amendment.  If the Contractor provides such notification,
AHCCCSA 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 AHCCCSA 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 AHCCCSA.

Contract Termination:In the event the contract, or any portion thereof, is
terminated for any reason, or expires, the Contractor shall assist AHCCCSA 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,
AHCCCSA 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.
c.             Until AHCCCSA is satisfied that the Contractor has paid all such
obligations, the Contractor shall provide
                the following reports to AHCCCSA:
                                (1) A monthly claims aging report by
provider/creditor including IBNR  amounts;
                                (2) A monthly summary of cash disbursements;
                                (3) Copies of all bank statements received by
the Contractor.
d.             Such reports shall be due on the fifth day of each succeeding
month for the prior month.
e.             In the event of termination or suspension of the contract by
AHCCCSA, such termination or suspension
                shall not affect the obligation of the Contractor to indemnify
AHCCCSA for any claim by any third party 
                against the State or AHCCCSA arising from the Contractor's
performance of this contract and for which the
                Contractor would otherwise be liable under this contract.
f.              Any dispute by the Contractor, with respect to termination or
suspension of this contract by AHCCCSA,
                shall be exclusively governed by the provisions of Section E,
Paragraph 26, Disputes.

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g.             Any funds, advanced to the Contractor for coverage of members for
periods after the date of termination,
                shall be returned to AHCCCSA within 30 days of termination of
the contract.

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 members
eligible for AHCCCS benefits, with few exceptions, are enrolled with acute care
contractors and paid for on a capitated basis. AHCCCSA 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; 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):  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
Supplemental Security Income (SSI) or who
                are aged, blind or disabled with 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, whose earned
                income, after allowable deduction, 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 AHCCCSA
ranging from $10 to $35,
                depending on income.

                SOBRA:Under the Sixth Omnibus Budget and Reconciliation Act of
1986, eligible pregnant women, with
                household income levels at or below 133% of the FPL, and
children in families with household 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 24 months following the loss of
SOBRA eligibility. 

                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.  Eligible members
cannot have other creditable health
                insurance coverage, including Medicare.   

Title XIX  Waiver  Group

                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.

                MED:  Eligible individuals and families whose income is above
100% of the FPL with medical expenses
                that reduce income to or below 40% of the FPL.

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Title XXI

                KidsCare:  Individuals under the age of 19, whose income does
not exceed 200% FPL.  All members,
                except Native American members, are required to pay a premium
amount to AHCCCSA based on the
                number of children in the family and the gross family income.

                HIFA Parents:  Non-Title XIX-eligible parents of KidsCare
children or parents of Title XIX  SOBRA
                eligible children who are eligible under the HIFA  demonstration
initiative waiver. HIFA parents are
                required to pay a one-time enrollment fee and a monthly premium
to AHCCCSA ranging from $15 to $25
                per parent (except Native American  members), based on household
income.  Due to funding
                considerations, this program has an enrollment cap.

Social Security Disability Insurance Temporary Medical Coverage (SSDI-TMC)
Laws 2006, Chapter 373 established a Temporary Medical Coverage Program.
SSDI-TMC provides health care coverage to persons who:
                1. Are citizens and residents who have been enrolled in AHCCCS
at any time within the last 24 months
                2. And became ineligible for AHCCCS coverage due to federal
disability insurance benefit payments
                making them over income for Medicaid,
                3. And they are not yet eligible for Medicare.

In order to participate in SSDI-TMC, eligible persons must pay a premium.
Participants become ineligible for SSDI-TMC once they become eligible for
Medicare.  SSDI-TMC is funded entirely by the State.  Contractors will be
capitated for these members under unique rate codes and AHCCCS may provide a
reconciliation to limit the profit or loss of this population.  If
reconciliation is to be implemented, an SSDI-TMC reconciliation policy will be
developed which will discuss the details of the reconciliation calculations and
timelines.  SSDI-TMC members will not be eligible for behavioral health
services, prior period coverage, any supplemental payments or reinsurance. 
Members will be entitled to all other AHCCCS Acute Care benefits.

3.             ENROLLMENT  AND DISENROLLMENT

AHCCCSA 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 AHCCCSA.  The Contractor may request AHCCCSA to change the member’s
enrollment in accordance with the ACOM Enrollment Choice and Change of
Contractor Policy.  The Contractor may not request disenrollment because of an
adverse change in the member’s health status, or because of the member’s
utilization of medical services, diminished mental capacity, or uncooperative or
disruptive behavior resulting from his or her special needs.  An AHCCCS member
may request disenrollment from the Contractor for cause at any time.  Refer
those requests due to situations defined in Section A (1) of the ACOM Change of
Plan Policy to AHCCCSA to the AHCCCS Verification Unit 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 the AHCCCSA.  AHCCCSA will disenroll the member when the member
becomes ineligible for the AHCCCS program, moves out of the Contractor’s service
areas, changes contractors during the member’s open enrollment/annual
enrollment  choice period, the Contractor does not, because of moral or
religious objections, cover the service the member seeks or when approved for a
Contractor change through the ACOM Change of Plan Policy. [42 CFR 438.56]  
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 the
families with children under

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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), HIFA  parents  of SOBRA eligible
                                                                               
children, the Title XIX  Waiver  Members.

AHCCCSA                                                            AHCCCSA
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 HIFA  parents  of KidsCare children.

AHCCCS acute care members are enrolled with Contractors in accordance with the
rules set forth in R9-22, Article 17, R9-31-306, 307, 309 and 1719.

Health Plan Choice

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 prior to AHCCCSA 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
choice notice to the member and gives them 16 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 AHCCCSA 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. Members who have less than 30 days of continued eligibility will not
be enrolled with a Contractor, but will be placed on Fee for Service.  FES
members are not enrolled with a contractor.  Women, who become eligible for the
Family Planning  Services Extension Program, will remain assigned to their
current contractor.  Some specialty groups will also be FFS, such as persons
approved only for the inpatient hospital stay.  These are inmates who are
temporarily residing in a hospital.

The effective date of enrollment for a new Title XIX  member with the Contractor
is the day AHCCCSA takes the enrollment action, generally the day prior to the
date the Contractor receives notification from AHCCCSA via the daily roster. 
However, the Contractor is responsible for payment of medically necessary
covered services retroactive to the member’s beginning date of eligibility.

KidsCare  members must select a contractor prior to being determined eligible
and therefore, will not be auto-assigned.  If the HIFA parent does not choose,
they will be enrolled with their child’s contractor following the enrollment
rules set forth in R9-31-1719.  When a member is transferred from Title XIX  to
Title XXI and has not made a contractor choice for Title XXI, the member will
remain with their current contractor and a choice notice will be sent to the
member.  The member may then change plans no later than 16 days from the date
the choice notice is sent.

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The effective date of enrollment for a Title XXI  member, including HIFA 
parents, will be the first day of the month following notification to the
contractor, with few exceptions.

Prior Period  Coverage:  AHCCCS provides prior period coverage for the period of
time, prior to the Title XIX member’s enrollment, during which a member is
eligible for covered services.  The time frame is from the effective date of
eligibility to the day a 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 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
AHCCCSA for this eligibility time period.)

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 AHCCCSA.  The Contractor is responsible for
notifying AHCCCSA of a child’s birth to an enrolled member. Capitation  for the
newborn will begin on the date notification is received by AHCCCSA (except for
cases of births during prior period  coverage).  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 AHCCCSA has
received notification of the child’s birth.  AHCCCSA is currently available to
receive notification 24 hours a day, 7 days a week via phone or the AHCCCS
website.  Eligible mothers of newborns are sent a letter advising them of their
right to choose a different contractor for their 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 are sent a letter advising them of their right to choose a different
contractor for their child.  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 in the
second contractor.  The second contractor will receive prior period  capitation
from the date of birth to the day before assignment and prospective capitation
from the date of assignment forward.  The second contractor will be responsible
for all covered services to the newborn from date of birth.

Enrollment Guarantees:  Upon initial capitated enrollment as a Title
XIX-eligible member, the member is guaranteed a minimum of five full months of
continuous enrollment.  Upon initial capitated enrollment as a Title
XXI-eligible member, the member is guaranteed a minimum of 12 full months of
continuous enrollment. Enrollment guarantees do not apply to HIFA  parents.  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 Rule 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 PL 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 AHCCCS FFS.  Native American Title XIX members living off-reservation will be
assigned to an available contractor using AHCCCS’ Family Continuity Policy and
auto-assignment  algorithm.  Native American Title XXI  members must make a
choice prior to being determined eligible.  Title XXI HIFA parent members’
enrollment will follow the Title XIX enrollment rules.  Native Americans may
change from AHCCCS FFS to a contractor or from a contractor to AHCCCS FFS at any
time.

Member Rights:  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.

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4.             ANNUAL ENROLLMENT CHOICE

AHCCCSA conducts an Annual Enrollment  Choice (AEC) for members on their annual
anniversary date.  [42 CFR 438.56(c)(2)(ii)] AHCCCSA may hold an open
enrollment  as deemed necessary.  During AEC, members may change contractors
subject to the availability of other contractors within their Geographic Service
Area.  Members are mailed a printed enrollment form and other information
required by the Balanced Budget Act  of 1997 (BBA) 60 days prior to their AEC
date and may choose a new contractor by contacting AHCCCSA 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, Open Enrollment and Other Plan Changes Policy and the AMPM.

5.             OPEN ENROLLMENT

In the event that AHCCCSA does not award a CYE ’04 contract to an incumbent
contractor, AHCCCSA will hold an open enrollment  for those members enrolled
with the exiting contractor.  If those members do not elect to choose a
contractor, they will be auto assigned.  In addition to open enrollment, AHCCCSA
will make changes to both annual enrollment  choice materials and new enrollee
materials prior to October 1, 2003 to reflect the change in available
contractors.   The auto assignment algorithm will be adjusted to exclude auto
assignment of new enrollees to exiting contractors(s).  The exact dates for the
open enrollment and other changes described above have not yet been determined,
but will be communicated when they are finalized.

6.             AUTO-ASSIGNMENT ALGORITHM

Once auto-assigned, AHCCCS sends a choice notice to the member and gives them 16
days to choose a different contractor from the auto-assigned contractor. 
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. 
The algorithm is a mathematical formula used to distribute members to the
various contractors in a manner that is predictable and consistent with AHCCCSA
goals.  The algorithm favors those contractors with lower capitation  rates in
the latest contract award and higher rates in selected Performance Measures. 
For further details on the AHCCCS Auto-Assignment Algorithm, refer to Attachment
G.  AHCCCSA 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).    Capitation rates may be adjusted to reflect changes to a contractor’s
risk due to changes in the algorithm.

7.             AHCCCS MEMBER IDENTIFICATION CARDS

Contractors are 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. Contractors 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 visual or hearing
impaired,  available free of charge for all members to ensure appropriate

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delivery of covered services.  The Contractor must provide members with
information instructing them about how to access these services.

Examples of 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 CRSor CMDP, to or from an ALTCS Contractor  and upon
termination or expiration of a contract.  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 received prior authorization  for services such
as scheduled surgeries, out-of-area
                specialty services, nursing home admission;
d.             Prescriptions, DME  and medically necessary transportation 
ordered for the transitioning member by the
                relinquishing contractor; and
e.             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).
f.              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 not be interrupted, and
for providing the new member with contractor and service information, emergency
numbers and instructions about how to obtain services.

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10.          SCOPE OF SERVICES

The Contractor shall provide covered services to AHCCCS members in accordance
with all applicable Federal, State and local laws, rules, regulations and
policies, including services listed in this document, listed by reference in
attachments, and AHCCCS policies referenced in this document.  The services are
described in detail in AHCCCS Rules R9-22, Article 2 and the AHCCCS Medical
Policy Manual (AMPM), all of which are incorporated herein by reference, except
for provisions specific to the Fee-for-Service  program, and may be found in the
Bidder’s Library.  [42 CFR 438.210(a)(1)] The covered services must be medically
necessary and are briefly described below.  [42 CFR 438.210(a)(4)] 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 the services it provides to a member
with services the member receives from other entities, including behavioral
health services the member receives through an ADHS/RBHA provider.  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, or 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)]

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, except for the requirement that the
notice to the provider be in writing.  [42 CFR 438.210(c)]

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

Ambulatory  Surgery and Anesthesiology:  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.

Anti-hemophilic Agents and Related Services:  The Contractor shall provide
services for the treatment of hemophilia and Von Willebrands disease (See
Paragraph 57, REINSURANCE, Catastrophic Reinsurance).  AHCCCSA holds a
single-source specialty contract for anti-hemophilic agents and related services
for hemophilia.  Non-hemophilia related services are not covered under this
contract.   Non-hemophilia-related care is defined as any care that is provided
not related to the hemophilia services.

-22-

AHCCCSA’s participating Contractors may access anti-hemophilic agents and
related pharmaceutical services for hemophilia or Von Willebrands under the
terms and conditions of this 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. Contractors utilizing
the contract will comply with the terms and conditions of the contract. 
Contractors may use the AHCCCSA contract or contract with a provider of their
choice.

Audiology:  The Contractor shall provide audiology services to members under the
age of 21 including the identification and evaluation of hearing loss and
rehabilitation  of the hearing loss through medical or surgical means (i.e.
hearing aids).  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.

Behavioral Health:  The Contractor shall provide behavioral health services as
described in Section D, Paragraph 12, Behavioral Health Services.

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 and the ACOM, including Section 409 “Notices of Action.”

The Contractor shall respond to requests for services potentially covered by
CRSA in accordance with Section 409 “Notices of Action” of the ACOM.  The
Contractor is responsible to address prior authorization requests if CRSA fails
to comply with the timeframes specified in Section 409. The Contractor remains
ultimately responsible for the provision of all covered services to its members,
including emergency services not related to a CRS condition, emergency services
related to a CRS condition rendered outside the CRS network, and AHCCCS covered
services denied by CRSA for the reason that it is not a service related to a CRS
condition.

Referral to CRSA does not relieve the Contractor of the responsibility for
timely providing 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. Contractors, through their Medical Directors, may request review from
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 the 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 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

-23-

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 shall also be covered, subject to limitations
specified in CFR 410.22, for Qualified Medicare Beneficiaries if prescribed by
the member’s PCP and approved by the Contractor.

Dental:  The Contractor shall provide all members under the age of 21 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 24, Performance Standards.  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. 

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
24, Performance Standards.

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

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 is also
encouraged to contract with or employ the services of
                                non-emergency facilities (e.g. urgent care
centers) to address member non-emergency care issues
                                occurring after regular office hours or on
weekends.  The Contractor shall be responsible for
                                educating members and providers regarding
appropriate utilization of emergency room services
                                including behavioral health  emergencies.

-24-

                                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;
                c.             Emergency  transportation; and
                d.             Member access by telephone to a physician,
registered nurse, physician assistant or nurse
                                practitioner for advice in emergent or urgent
situations, 24 hours per day, 7 days per week.

Per the Balanced Budget Act  of 1997, 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 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 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..

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

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

-25-

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, which allows members freedom of choice in selecting
a provider. 

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 24 months, to women whose SOBRA  eligibility has
terminated.  The Contractor is also responsible for notifying AHCCCSA 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. 

Health Risk  Assessment and Screening:  The Contractor shall provide these
services for non-hospitalized members, 21 years of age and older.  These
services include, but are not limited to, screening for hypertension, elevated
cholesterol, colon cancer, sexually transmitted diseases, tuberculosis and
HIV/AIDS; nutritional assessment in cases when the member has a chronic
debilitating disease affected by nutritional needs; mammograms and prostate
screenings; physical examinations and diagnostic work-ups; and immunizations.
Required assessment and screening services for members under age 21 are included
in the AHCCCS EPSDT  periodicity schedule.

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.  This
service is 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. Itshall be provided on a
part-time or intermittent basis.

Hospice:  These services are covered for members under 21 years of age 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 diphtheria-tetanus, influenza, pneumococcus,
rubella, measles and hepatitis-B, or others as medically indicated.  For all
members under the age of 21, immunization requirements include diphtheria,
tetanus, pertussis vaccine (DPT), 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).  The Contractor is required to meet specific immunization rates
for members under the age of 21, which are described in Paragraph 24,
Performance Standards. (Please refer to the AMPM for current immunization
requirements.)

-26-

Indian Health Service  (IHS):  AHCCCSA 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.  The Contractor is responsible
for reimbursement to IHS or tribal facilities for emergency 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 their provider network for the delivery of covered services, however, the
Contractor will be liable for the cost of the care in the event they choose to
do so.

Laboratory:  Laboratory services for diagnostic, screening and monitoring
purposes are covered when provided by a CLIA (Clinical Laboratory Improvement
Act) approved free standing, 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(R) and (S).  The data shall be used
exclusively for quality improvement activities and health care outcome studies
required and/or approved by the Administration.

Maternity:  The Contractor shall provide pre-conception counseling, pregnancy 
identification, prenatal  care, treatment of pregnancy related conditions, labor
and delivery services, and postpartum  care for members.  Services may be
provided by physicians, physician assistants, nurse practitioners, or certified
nurse midwives. Members may select or be assigned to a PCP  specializing in
obstetrics.  All members, anticipated to have a low-risk delivery, may elect to
receive labor and delivery services in their home, if this setting is included
in the allowable settings of the Contractor and the Contractor has providers in
its network that offer home labor and delivery services.  All members,
anticipated to have a low-risk prenatal course and delivery, may elect to
receive prenatal care, labor and delivery and postpartum care provided by
licensed midwives, if these providers are in the Contractor’s network.  All
licensed midwife labor and delivery services must be provided in the member’s
home, as licensed midwives do not have admitting privileges in hospitals or
AHCCCS registered freestanding birthing centers.  Members receiving maternity
services from a licensed midwife must also be assigned to a PCP for other health
care and medical services. The Contractor shall allow women and their newborns
to receive up to 48 hours of inpatient  hospital care after a routine vaginal
delivery and up to 96 hours of inpatient care after a cesarean delivery.  The
attending health care provider, in consultation with the mother, may discharge
the mother or newborn prior to the 48-hour 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

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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 Paragraph 41, Nursing Facility Reimbursement, for further
details.

The Contractor shall notify the Assistant Director of the Division of Member
Services, in writing, when a member has been residing in a nursing facility  for
75 days.  This will allow AHCCCSA time to follow-up on the status of the ALTCS
application and to prepare for potential fee-for-service  coverage, if the stay
goes beyond the 90-day maximum.

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.

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 which prohibits care by a nonprofessional person. 

Post-stabilization Care Services Coverage and Payment:   Pursuant to 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 CFR
422.113(c)(3) is met.

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Pursuant to 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; 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 appropriate
assigned Contractor 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. 
Contractors may include over-the-counter medications in their 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. 

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

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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.

Triage/Screening and Evaluation:  These are covered services when provided by
acute care hospitals, IHS  facilities and urgent care centers 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.

11.          SPECIAL HEALTH CARE NEEDS

The Contractor shall have in place a mechanism to identify and stratify 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

12.          BEHAVIORAL HEALTH SERVICES

AHCCCS members, except for SOBRA Family Planning and SSDI-TMC members, are
eligible for comprehensive behavioral health  services.  For SOBRA Family
Planning and SSDI-TMC 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”
below, the behavioral

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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
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.             Therapeutic Foster 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: Contractors are 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.  For additional information regarding behavioral
health services refer to Title 9 Chapter 22 Articles 2 and 12.  It is expected
that Contractors 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.

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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.  All affected subcontracts shall
include this provision by July 1, 2005.  For prior period  coverage, the
Contractor is responsible for payment of all claims for medically necessary
covered behavioral health services to members who are not ADHS behavioral health
recipients.

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.

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 by July
1, 2005.  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.

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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 Home Page on the Internet at www.azahcccs.gov or upon request. 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 Home Page.   Upon adoption by AHCCCS, updates will be made available to
the Contractors.  Once notification to the Contractors has taken place, the
Contractor shall be responsible for implementing 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, AHCCCSA 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, about whether services are
medically necessary, should be made independent of the fact that the child is
receiving MSBC services. 

Contractors and their 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 school or school district case
managers/special education teachers, 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 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 AHCCCSA
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.  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.

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

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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.  Contractors must educate their provider network about these
reporting requirements and the use of this resourceand monitor to ensure
compliance.

16.          STAFF REQUIREMENTS  AND SUPPORT SERVICES

The Contractor shall have in place the organization, management 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 that 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)
and (b)]. The Contractor is responsible for maintaining a significant local
(within the State of Arizona) presence.  This presence would include staff as
described in a., b., d., e., f., g., i., k., n., o., p. and q. below.  The
Contractor must obtain approval from AHCCCS prior to moving functions outside
the State of Arizona.  Such a request for approval 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 which result from required system
located outside of the State of Arizona.

At a minimum, the following staff is required:

a.             A full‑time Administrator/CEO/COO or designee must be available
during working hours 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.             AMedical Director who shall be an Arizona-licensed physician. 
The Medical Director shall be actively
                involved in all-major clinical programs and QM/UM 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.             A Chief Financial Officer/CFO who is available at all times to
fulfill the responsibilities of the position
                and to oversee the budget and accounting systems implemented by
the Contractor.
d.             A Quality Management/ Coordinatorwho is an Arizona-licensed
registered nurse, physician or physician's
                assistant.
e.             A Utilization Management/Medical Management Coordinator who is an
Arizona licensed registered
                nurse, physician or physician’s assistant.
f.              A Maternal Health/EPSDT  (child health) Coordinatorwho shall be
an Arizonalicensed nurse, physician
                or physician's assistant; or have a Master's degree in health
services, public health or health care
                administration or other related field.
g.             ABehavioral Health  Coordinatorwho 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 AHCCCSA
                requirements.
h.             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.
i.              Concurrent Review staff to conduct inpatient  concurrent
review.  This staff shall consist of an Arizona-
                licensed nurse, physician, physician's assistant.  The staff
will work under the direction of an Arizona-
                licensed registered nurse, physician or physician's assistant.
j.              Member Services Manager and staffto coordinate communications
with members and act as member
                advocates.  There shall be sufficient Member Service staff to
enable members to receive prompt resolution

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                to their inquiries/problems, and to meet the Contractor’s
standards for resolution, telephone abandonment
                rates and telephone hold times.
k.             Provider Services Manager and staffto coordinate communications
between the Contractor and its
                subcontractors.  There shall be sufficient Provider Services
staff to enable providers to receive prompt
                resolution to their problems or inquiries and appropriate
education about participation in the AHCCCS
                program.
l.              A Claims Administrator and Claims Processors to ensure the
timely and accurate processing of original
                claims, resubmissions and overall adjudication of claims.
m.            Encounter  Processorsto ensure the timely and accurate processing
and submission to AHCCCSA of
                encounter data and reports.
n.             A Grievance Manager who will manage and adjudicate member and
provider disputes arising under the
                Grievance System including member grievances, appeals, and
requests for hearing and provider claim
                disputes..
o.             ACompliance 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 AHCCCSA, Office of
                Program Integrity.  See Paragraph 62, Corporate Compliance, for
more information.
p.             Contractor Staff sufficient to implement and oversee compliance
with both the Contractor’s Cultural
                Competency Plan and the ACOM Cultural Competency Policy, and to
oversee compliance with all
                AHCCCS requirements pertaining to limited English proficiency
(LEP).
q.             Clerical and Support staffto ensure appropriate functioning of
the Contractor's operation.
r.              Business Continuity Planning Coordinator as noted in the ACOM
Business Continuity and Recovery Plan
                Policy
s.             A Pharmacy Coordinator/Directorwho 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.
t.              Dental Director/Coordinator that 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.

The Contractor shall inform AHCCCS, Division of Health Care Management, in
writing within seven days, when an employee leaves one of the key positions
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.

               
Administrator                                                       Member
Services Manager
                Medical
Director                                                  Provider Services
Manager
                Chief Financial Officer                                        
Claims Administrator
                Maternal Health/EPSDT Coordinator               Quality
Management/Utilization Management
                Grievance Manager                                            
Coordinator
                Compliance Officer                                             
Behavioral Health Coordinator

The Contractor shall ensure that all staff have appropriate training, education,
experience and orientation to fulfill the requirements of the position. 

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.

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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.

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 AHCCCSA prior to distribution to members. The reading level
and name of the evaluation methodology used should be included.

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 by August 15th of each contract
                year, or within four weeks of receiving the annual renewal
amendment, whichever is later.

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

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

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

                –Educational information on chronic illnesses and ways to
self-manage care
                –Reminders of flu shots and other prevention measures at
appropriate times
                –Medicare Part D issues
                –Cultural Competency
                –Contractor specific issues

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

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

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

19.          SURVEYS

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

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

20.          CULTURAL COMPETENCY

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

21.          MEDICAL RECORDS

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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. 
Medicalrecords 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.

AHCCCSA 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.  AHCCCSA 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:

a.             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:

                (1)           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.)
                (2)           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)]

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                (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.
                (4)           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.
                (5)           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.

b.             Contractors shall require subcontracted PCPs, which have
agreements with the entities described in
                paragraph a. above, to comply with the requirements of
subparagraphs a. (2) through (5) above. 
                Contractors 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.
c.             The Contractor shall provide written information to adult members
that describe the following:

                (1)           A member’s rights under State law, including a
description of the applicable State law
                (2)           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.
                (3)           The member’s right to file complaints directly
with AHCCCSA.
                (4)           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 AND MEDICAL MANAGEMENT (QM/MM)

Quality Management  (QM):  The Contractor shall provide quality medical care to
members, regardless of payer source or eligibility category.  The Contractor
shall use and disclose medical records and any other health and enrollment
information that identifies a particular member in accordance with Federal and
State privacy requirements.  The Contractor shall execute processes to assess,
plan, implement and evaluate quality management and performance improvement
activities, as specified in the AMPM, that include at least the following [42
CFR 438.240(a)(1) and (e)(2)]:

1.             Conducting Performance Improvement Projects (PIPs);
2.             QM monitoring and evaluation activities;
3.             Investigation, analysis, tracking and trending of quality of care
issues, abuse and/or complaints that
                includes:
                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 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
4.             AHCCCS mandated performance measures; and
5.             Credentialing,  recredentialing and provisional credentialing
processes for provider and organizations [42
                CFR 438.206(b)(6)].

AHCCCS has established a uniform credentialing, recredentialing and provisional
credentialing policy.  The Contractor shall demonstrate that its providers are
credentialed [42 CFR 438.214] and:

                a.             Shall follow a documented process for
credentialing and recredentialing of providers who have
                                signed contracts or participation agreements
with the Contractor;

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                b.             Shall not discriminate against particular
providers that serve high-risk populations or specialize in
                                conditions that require costly treatment; and
                c.             Shall not employ or contract with providers
excluded from participation in Federal health care
                                programs.

The Contractor shall submit, within timelines specified in Attachment F, a
written QM plan, QM evaluation of the previous year’s QM program, and Quarterly
Quality Management Report that addresses its strategies for performance
improvement and conducting the quality management activities described in this
section. The Contractor shall conduct performance improvement projects as
required in the AMPM. 

The Contractor may combine its quality management plan with the plan that
addresses utilization management as described below.

MedicalManagement  (MM):  The Contractor shall execute processes to assess,
plan, implement and evaluate medical management activities, as specified in the
AMPM, 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; and
                                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 Contractors
to all affected providers and, upon request, to enrollees
                                                and potential enrollees [42 CFR
438.236(c)]; and
                                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
8.             Quarterly Utilization Management Report (details in the AMPM)

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)]

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The Contractor will assess, monitor and report quarterly through the MM
Committee medical decisions to assure compliance with timeliness, language and
Notice of Action intent, and that the decisions comply with all Contractor
coverage criteria.

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.

24.          PERFORMANCE STANDARDS

Administrative Measures:

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 Health Plan 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

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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.  AHCCCSA
will review the performance measure calculation procedures and source data for
this report.

Performance Measures:

All Performance Measures  described below apply toall member populations [42 CFR
438.240(a)(2), (b)(2) and (c)].

Contractors must meet AHCCCS stated Minimum Performance Standards.  However, it
is equally important that Contractors continually improve their performance
measure outcomes from year to year.  Contractors shall strive to meet the
ultimate standard, or benchmark, established by AHCCCS.

AHCCCS has established three levels of performance:

                Minimum Performance Standard– A Minimum Performance Standard is
the minimal expected level of
                performance by the Contractor.   If a Contractor does not
achieve this standard, or any measure rate
                declines to a level below the AHCCCS Minimum Performance
Standard, the Contractor will be required to
                submit a corrective action plan and may be subject to sanctions.

                Goal– A Goal is a reachable standard for a given performance
measure for the Contract Year.  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).

                Benchmark– A Benchmark is the ultimate standard to be achieved. 
Contractors that have already
                achieved or exceeded the Goal for any performance measure must
strive to meet the Benchmark for the
                measure(s).  Contractors that have achieved the Benchmark are
expected to maintain this level of
                performance for future years.

A Contractor must show demonstrable and sustained improvement toward meeting
AHCCCS Performance Standards.  In addition to corrective action plans, AHCCCS
may impose sanctions on Contractors that do not meet the Minimum Performance
Standard and do not show statistically significant improvement in a measure rate
and/or require those Contractors 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 of any
Contractor that shows a statistically significant decrease in its rate, even if
it meets or exceeds the Minimum Performance Standard.

The corrective action plan must be received by AHCCCS within 30 days of receipt
of notification 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.

Performance Measures:  The Contractor shall comply with AHCCCS quality
management requirements to improve performance for all AHCCCS established
performance measures.  Complete descriptions of these measures can be found in
the most recently published results and analysis of acute-care performance
measures, or upon request from AHCCCSA.  The measures for postpartum  visits and
low birth weight deliveries have been eliminated as contractual performance
standards.  The Contractor shall continue to monitor rates for postpartum visits
and low birth weight deliveries and implement interventions as necessary to
improve or sustain these rates.  These activities will be monitored by AHCCCSA
during the Operational and Financial Review.

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.

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In addition, AHCCCS has established standards for the following measures:

EPSDT  Participation:  The Contractor shall take affirmative steps to increase
member participation in the EPSDT program.  The 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 following table identifies the Minimum Performance Standards, Goals and
Benchmarks for each measure:

Acute-care Contractor Performance Standards

 

Performance Measure

CYE 07 Minimum
Performance
Standard

CYE 07 Goal

Benchmark (Healthy
People Goals)

Immunization of Two-year-olds

    4:3:1 Series

84%

90%

90%

    4:3:1:3:3 Series

74%

80%

80%

    DTaP - 4 doses

85%

90%

90%

    Polio - 3 doses

90%

90%

90%

    MMR - 1 dose

90%

90%

90%

    Hib - 3 doses

86%

90%

90%

    HBV - 3 doses

90%

90%

90%

    Varicella - 1 dose

86%

90%

90%

Adolescent Immunizations(1)

60%

63%

90%

Children’s Dental Visits

51%

57%

57%

Well-child Visits 15 Months (2)

70%

72%

90%

Well-child Visits 3 - 6 Years

56%

58%

80%

Adolescent Well-care Visits

37%

38%

50%

EPSDT Participation

68%

69%

80%

Children's Access to PCPs 12-24 Months

85%

86%

97%

Children's Access to PCPs 25 months-6 Years

78%

80%

97%

Children's Access to PCPs 7-11 Years

77%

79%

97%

Children's Access to PCPs 12-19 Years

79%

81%

97%

Cervical Cancer Screening

57%

60%

90%

Breast Cancer Screening

50%

52%

70%

Adult Preventive/Ambulatory Care 20-44 Years

78%

80%

96%

Adult Preventive/Ambulatory Care 45-64 Years

83%

84%

96%

Timeliness of Prenatal Care

70%

72%

90%

Chlamydia Screening(3)

43%

45

62%

(1)  This measure cannot be reliably generated through administrative data, and
current AHCCCS data is not yet available. MPS and Goal are based on NCQA
Medicaid average

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(2)  CYE 2007 Minimum Performance Standard and Goal for Well-child Visits in the
First 15 Months of Life is unchanged from the CYE 2006 contract because
validated data for this measure was not available in time to be incorporated
into the contract renewal.
(3) Baseline rate generated from AHCCCS Decision Support System (ADDS)
MeasureBase and used to establish MPS and Goal; Benchmark based on HP 2010
objective 25-16b.

Quality Improvement:

Contractors shall implement an ongoing quality assessment and performance
improvement programs for the services it furnishes to members.  [42 CFR
438.240(a)(1)]  Basic elements of the Contractor quality assessment and
performance improvement programs, at a minimum, shall comply with the following
requirements:

A.  Quality Assessment Program:

The Contractor shall have an ongoing quality assessment program for the services
it furnishes to members that includes the following:

1.             The program shall be designed to achieve, through ongoing
measurements and intervention, significant
                improvement, sustained over time, in clinical care and
non-clinical care areas that are expected to have a
                favorable effect on health outcomes and member satisfaction.
2.             The Contractor must [42 CFR 438.240(b)(2) and (c)]:
                                a.             Measure and report to the State
its performance, using standard measures required by the
                                                State, or as required by CMS,
                                b.             Submit to the State, data
specified by the State, that enables the State to measure the
                                                Contractor’s performance; or
                                c.             Perform a combination of the
activities.
3.             The Contractor must have in effect mechanisms to detect both
under utilization and over utilization of
                services.
4.             The Contractor must have in effect mechanisms to assess the
quality and appropriateness of care furnished
                to members with special health care needs.
5.             The Contractor must have in place a process for internal
monitoring of Performance Measure rates, using
                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 AHCCCSA in
                conjunction with its Quarterly EPSDT Progress Report, according
to a format developed by AHCCCS.

B.  Performance Improvement Program:

The Contractor shall have an ongoing program of performance improvement projects
that focus on clinical and non-clinical areas, 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 the
AHCCCSA 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)]

C.  Data Collection Procedures:

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

The Contractor shall participate in immunization audits, at intervals specified
by AHCCCSA, 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
AHCCCSA.  An External Quality Review Organization (EQRO) may conduct a study to
validate the Contractor’s reported rates.

25.          GRIEVANCE  SYSTEM

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

The Contractor may delegate the grievance system process to subcontractors,
however, the Contractor must ensure that standards which are delegated comply
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 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.

26.          QUARTERLY GRIEVANCE SYSTEM  REPORTS

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Enrollee Appeal and Provider Claim Dispute Report:  The Contractor must submit
the Enrollee Appeal and Provider Claim Dispute Report to AHCCCSA, Division of
Health Care Management, using the Quarterly Grievance System Report Format,  no
later than 45 days from the end of each quarter.

Enrollee Grievance Report:  The Contractor must accept, resolve and track
enrollee grievances as required in the ACOM Enrollee Grievance Policy.  The
Contractor must submit the Enrollee Grievance Report no later than 45 days from
the end of each quarter. The report must include the following:

                A.  Number of grievances received in the reporting period
                                i.   Total
                                ii.  By the categories used in the Contractor's
executive summary reports

                B.  Number of days to resolution
                                i.   Number resolved within 10 days
                                ii.   Number resolved in 11 or more days, but
less than 29 days
                                iii. Number resolved in 30 or more days, but
less than 59 days
                                iv. Number resolved in 60 to 90 days
                                v.  Average days to resolution
Report A. and B. above by the current quarter, prior quarter and current quarter
for the previous year.

The Contractor shall trend and analyze grievance, appeals and claim disputes at
least quarterly; any identified trends and corrective action plans shall be
reported to AHCCCSA, Division of Health Care Management with the Enrollee Appeal
and Provider Claim Dispute Report. 

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 proposed 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 see a PCP, dentist or pharmacy.  PCPs and
specialists who provide inpatient  services to the Contractor’s members shall
have admitting and treatment privileges in a minimum of one general acute care
hospital within the Contractor’s service area.  Hospitalists may satisfy this
requirement. Contractors in Maricopa and/or Pima counties must have at least one
hospital contract in each of the service districts specified in Attachment B.

Contractors must provide a comprehensive provider network that ensures its
membership has access at least equal to, or better than, community norms. 
Services shall be as accessible to AHCCCS members in terms of timeliness,
amount, duration and scope as those services are 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
must also consider communities whose residents typically receive care in
neighboring states.  If the Contractor is unable to provide those services
locally, it must so demonstrate to AHCCCSA and shall provide reasonable
alternatives for members to access care.  These alternatives must be approved by
AHCCCSA.  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 is also encouraged to develop non-financial incentive programs to
increase participation in its provider network.

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AHCCCS is committed to workforce development and support of the medical
residency and dental student training programs in the state of Arizona.  Working
proactively with these programs is beneficial to protect their viability, and
also provides an excellent opportunity for the Contractors to educate future
providers on the principles of managed care.  In addition, AHCCCS believes that
these programs can influence the provider capacity issues in Arizona.  In the
future, AHCCCS would like to provide incentives to those programs that are
working to retain physicians in Arizona after completion of the program.

AHCCCS encourages plans to work with the many residency programs currently
operating in the state and to investigate opportunities for resident
participation in contractor medical management and committee activities.  If any
Contractor or Contractors enter into the Graduate Medical Education Memorandum
of Understanding with a residency program and assign members to it, AHCCCSA may
increase the auto-assignment algorithm to favor those Contractors.

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 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. [42 CFR
438.207(b)]  This plan shall be updated annually and submitted to AHCCCSA,
Division of Health Care Management, 45 days from the start of each contract
year.  The plan shall identify the methodology used by the Contractor to
determine a geographically appropriate distribution of medical disciplines for
primary care, obstetrical care and individual medical specialties for its
membership.  The plan shall also contain a description of the Contractor’s
criteria used to determine the numbers and kinds of PCP providers and of
specialists, and whether hospital privileges are considered when making this
determination.  A similar description should be included for the dental and
pharmacy networks and for the adequacy of non-emergency transportation
services.  The plan shall identify the current status of the Contractor’s
network, and project future needs based upon, at a minimum, membership growth;
the number and types (in terms of training, experience and specialization) of
providers that exist in the Contractor’s service area, as well as the number of
physicians who have privileges with and practice in hospitals; the expected
utilization of service, given the characteristics of its population and its
health care needs; the numbers of providers not accepting new Medicaid patients;
and access of its membership to specialty services as compared to the general
population of the community. [42 CFR 438.206(b)(1)] The plan, at a minimum,
shall also include the following: 

                a.             Current network gaps and the methodology used to
identify them;
                b.             Immediate short-term interventions when a gap
occurs, including expedited or temporary
                                credentialing;
                c.             Interventions to fill network gaps and barriers
to those interventions;
                d.             Outcome measures/evaluation of interventions;
                e.             Ongoing activities for network development;
                f.              Coordination between internal departments;
                g.             Coordination with outside organizations;

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                h.             A description of network design by GSA for the
general population, including details regarding
                                special populations including, but not limited
to, the developmentally delayed (Arizona Early
                                Intervention Program (AzEIP), the homeless and
those in border communities.

                                The description should cover:
                                                i. how members access the system
                                                ii. relationships between
various levels of the system
                                                iii. the plan for incorporating
the medical home for members and the progress in its
                                                     implementation

                i.              A description of the adequacy of the geographic
access to tertiary hospital services for the
                                Contractor's membership.
                j.              The assistance provided to PCPs when they refer
members to specialists.  The methods used to
                                communicate the availability of this assistance
to the providers.
                k.             The methodology (ies) the Contractor uses to
collect and analyze provider feedback about the
                                  network designs and implementation.  When
specific provider issues are identified, the protocols
                                for handling them.

The plan must include answers to the following questions:
                a.             How does the Contractor assess the medical and
social needs of new members to determine how
                                the contractor may assist the member in
navigating the network more efficiently?
                b.             What assistance is provided to members with a
high severity of illness or higher utilization to
                                better navigate the provider network?
                c.             Does the Contractor utilize any of the following
strategies to reduce unnecessary emergency
                                department utilization by the membership?  If
so, how are members educated about these options?
                                                i.              Physician
coverage/call availability after-hours and on weekends
                                                ii.             Same-day PCP
appointments
                                                iii.            Nurse call-in
centers/information lines
                                                iv.            Urgent Care
facilities
                d.             Are members with special health care needs
assigned to specialists for their primary care needs?
                e.             What are the most significant barriers to
efficient network deployment within the Contractor’s
                                service area?  How can AHCCCS best support the
Contractor’s efforts to improve its network and
                                the quality of care delivered to its membership?

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 in the Bidder’s
Library.  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 and procedures in place that pertain to all
service specifications described in the AMPM.  In addition, 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 AHCCCSA 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;

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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;
and
h.             Provide training for its providers and maintain records of such
training.

Contractor policies shall be subject to approval by AHCCCSA, Division of Health
Care Management, and shall be monitored through operational audits.  A material
change in Contractor policy or process requires 30 days advance notice to
affected providers and members. A material change is defined as any change in
overall business practice that could have an impact on 5% or more of the
members, providers, or AHCCCS program, or may significantly impact the delivery
of services provided by an AHCCCS Contractor.  Contractors are required to
submit the member notices to AHCCCS for approval 30 days prior to the notice
being sent.  Upon receipt of the member notice for review, AHCCCSA may comment
on the material change or may intervene if the policy/process change will have
an adverse affect to the overall system.

Provider notices do not require prior approval, however, the Contractor must
notify AHCCCSA of the material policy change 15 days prior to the provider
notice being sent out.  During the 15 day time period, AHCCCS shall have the
right to comment or may intervene if the change to policy/process will lead to
an adverse affect to the overall system.  This provision is not intended to
include contract negotiations between Contractors and providers.

Contractors may be required to conduct meetings with providers to address issues
(or to provider 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.

Contractors 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 AHCCCSA, Division of Health Care Management [42 CFR 438.207(c)].  A
material change 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.  AHCCCSA will assess proposed changes
in the Contractor's provider network for potential impact on members' health
care and provide a written response to the Contractor.  For emergency
situations, AHCCCSA will expedite the approval process. 

The Contractor shall notify AHCCCSA, 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:
Contractors in Maricopa and Pima County must contract with homeless clinics at
the AHCCCS Fee-for-Service rate for Primary Care services on or before April 1,
2006.  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.

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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.  AHCCCSA 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.

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 AHCCCSA.  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; and
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

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and procedures shall be subject to approval by AHCCCSA, Division of Health Care
Management, and shall be monitored through operational audits. 

Contractors will work with AHCCCSA to develop a methodology to reimburse clinics
for the homeless and school based clinics.  AHCCCSA and Contractors 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 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
general practitioners or specialize in
                family practice or obstetrics
b.             Physician Assistants
c.             Nurse Practitioners
d.             Certified Nurse Midwives

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

All physicians and certified nurse midwives  who perform deliveries shall have
OB hospital privileges or a documented hospital coverage agreement for those
practitioners performing deliveries in alternate settings.  Licensed 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.             A system for resolving disputes regarding the referrals
c.             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 AHCCCSA.
d.             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.
e.             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

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f.              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
g.             Referral  to Medicare Managed Care Plan including payment of
copayments 
h.             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. 
Upon finalization of the regulations, the Contractor shall comply with all
applicable physician referral requirements and conditions defined in 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
                g.             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

For purposes of this section, "urgent" is defined as an acute, but not
necessarily life-threatening disorder, which, if not attended to, could endanger
the patient’s health.  The Contractor shall have procedures in place that ensure
the following standards are met:

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

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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

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 making the call to be picked up; nor have to wait for more than one
hour after conclusion of the appointment for transportation home.

The Contractor shall actively monitor the adequacy of its appointment processes
and reduce the unnecessary use of alternative methods such as emergency  room
visits [42 CFR 438.206(c)(1)(i)].  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.

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 (FQHC) and RURAL HEALTH CLINICS
(RHC)

The Contractor is encouraged to use FQHCs/RHCs in Arizona to provide covered
services and must comply with the Federal mandates.  AHCCCS expects the
contractors 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.

Contractors are required to submit member information for Title XIX  members for
each FQHC/RHC  on a quarterly basis to the AHCCCSA Division of Health Care
Management.  AHCCCSA will perform periodic audits of the member information
submitted.  Contractors should refer to the AHCCCS Division of Health Care
Management’s policy on FQHC/RHC reimbursement 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.  The
Contractor shall ensure that each contracted provider is made aware of a website
provider manual or, if requested, issued a hard copy of the provider manual and
is encouraged to distribute a provider manual to any individual or group that
submits claim and encounter  data.  The Contractor remains liable for ensuring
that all providers, whether contracted or not, meet the applicable AHCCCS
requirements such as covered services, billing, etc.  At a minimum, the
Contractor's provider manual must contain information on the following:

a.             Introduction to the Contractor which explains the Contractor's
organization and administrative structure
b.             Provider responsibility and the Contractor's expectation of the
provider
c.             Overview of the Contractor's Provider Service department and
function
d.             Listing and description of covered and non-covered services,
requirements and limitations including
                behavioral health  services
e.             Emergency room utilization (appropriate and non-appropriate use
of the emergency room)

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f.              EPSDT  Services - screenings include a comprehensive history,
developmental/behavioral health  screening,
                comprehensive unclothed physical examination, appropriate
vision  testing, hearing testing, laboratory  tests,
                dental  screenings and immunizations.  EPSDT providers must
document immunizations into ASIIS and
                enroll every year in the Vaccine for Children program.
g.             Dental  services
h.             Maternity/Family Planning  services
i.              The Contractor's policy regarding PCP  assignments
j.              Referrals  to specialists and other providers, including access
to behavioral health  services provided by the
                ADHS/RBHA  system
k.             Grievance system process and procedures for providers and
enrollees
l.              Billing and encounter  submission information
m.            Information about policies and procedures relevant to the
providers including, but not limited to, utilization
                management and claims submission
n.             Reimbursement, including reimbursement for dual eligibles  (i.e.
Medicare and Medicaid) or members with
                other insurance
o.             Cost sharing  responsibility
p.             Explanation of remittance advice
q.             Prior authorization  and notification requirements
r.              Claims medical review
s.             Concurrent review
t.              Fraud and Abuse
u.             Formulary information, including updates when changes occur, must
be provided in advance to providers,
                including pharmacies.  The Contractor is not required to send a
hard copy, unless requested, of the
                formulary each time it is updated.  A memo may be used to notify
providers of updates and changes, and
                refer providers to view the updated formulary on the
Contractor’s website.
v.             AHCCCS appointment standards
w.            Americans with Disabilities Act (ADA) requirements and Title VI,
as applicable
x.             Eligibility verification
y.             Cultural competency information, including notification about
Title VI of the Civil Rights Act of 1964.
                Providers should also be informed of how to access
interpretation services to assist members who speak a
                language other the English or who use sign language.
z.             Peer review and appeal process.
aa.           Medication management services as described in Section D,
Paragraph 12.
bb.          Information about a member’s right to be treated with dignity and
respect as specified in 42 CFR 438.100.
cc.           Notification that the contractor has no policies which prevent the
provider from advocating on behalf of the
                member.
dd.          Information on how to access or obtain Practice Guidelines and
coverage criteria for authorization
                decisions.

36.          PROVIDER   REGISTRATION

The Contractor shall ensure that all of its subcontractors register with AHCCCSA
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 AHCCCSA.  This provider registration process must
be completed in order for the Contractor to report services a subcontractor 
renders to enrolled members and for the Contractor to be paid reinsurance.The
National Provider Identifier (NPI) will be required on all claim submissions and
subsequent encounters (from providers who are eligible for a NPI) effective for
dates of service on or after May 23, 2007.  Contractors shall work with
providers to obtain their NPI.

37.          SUBCONTRACTS

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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 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:

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

The Contractor shall maintain a fully executed original of all subcontracts,
which shall be accessible to AHCCCSA within two business days of request by
AHCCCSA.   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 AHCCCSA, 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)]

The Contractor must submit annually (within 90 days from the start of the
contract year) a statement whether any Contractor duties or responsibilities
have been delegated to a subcontractor.  If duties or responsibilities have been
delegated to a subcontractor, the Contractor must submit annually (within 90
days from the start of the contract year) a report listing the following:

                –Subcontractor’s name
                –Delegated duties and responsibilities
                –Most recent review date of the duties, responsibilities and
financial position of the subcontractor
                –Next scheduled review date
                –Identified areas of deficiency

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                –Contractor’s corrective action plan

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:

a.             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.
b.             If a provider performs emergency  services such as an emergency
room physician or an ambulance company, a
                written agreement is not required.
c.             Individual providers as detailed in the AMPM.
d.             Hospitals, as discussed in Section D, Paragraph 40, Hospital
Subcontracting and Reimbursement.
e.             If a provider primarily performs services in an inpatient
setting.
f.              If upon the Medical Director’s review, it is determined that the
Contractor or members would not benefit by
                adding the provider to the contracted network.

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

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

a.             Full disclosure of the method and amount of compensation or other
consideration to be received by the
                subcontractor.
b.             Identification of the name and address of the subcontractor.
c.             Identification of the population, to include patient capacity, to
be covered by the subcontractor.
d.             The amount, duration and scope of medical services to be
provided, and for which compensation will be paid.
e.             The term of the subcontract  including beginning and ending
dates, methods of extension, termination and re-
                negotiation.
f.              The specific duties of the subcontractor  relating to
coordination of benefits and determination of third‑party
                liability.
g.             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.
h.             A description of the subcontractor's patient, medical, dental 
and cost record keeping system.
i.              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.
j.              A provision stating that a merger, reorganization or change in
ownership of a subcontractor  that is related to or
                affiliated with the Contractor shall require a contract
amendment and prior approval of AHCCCSA.

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k.             Procedures for enrollment or re‑enrollment of the covered
population (may also refer to the Provider
                Manual).
l.              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 AHCCCSA shall have no
responsibility or liability for any such taxes or
                insurance coverage.
m.            A provision that the subcontractor  must obtain any necessary
authorization from the Contractor or
                AHCCCSA for services provided to eligible and/or enrolled
members.
n.             A provision that the subcontractor  must comply with encounter 
reporting and claims submission
                requirements as described in the subcontract.
o.             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.
p.             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.
q.             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 AHCCCSA for review and comment.

The Contractor shall develop and maintain a claims payment  system capable of
processing, cost avoiding and paying claims in accordance with A.R.S. §§ 36-2903
and 2904 and   AHCCCS Rules R9-28 Article 7.  This system must produce a
remittance advice related to the Contractor’s payments to providers and must
contain, 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 and
                –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.

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 AHCCCSA, Division
of Health Care Management, Acute 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 AHCCCSA, unless the

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recoupment is a result of fraud, reinsurance audit findings, data validation or
audits conducted by the AHCCCSA Office of Program Integrity.

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.

Unless a subcontract  specifies otherwise, Contractors with 50,000 or more
members shall ensure that 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, Contractors with
fewer than 50,000 members shall ensure that 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.  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 date of service or the
effective date of eligibility posting, whichever is later.  Remittance advices
accompanying the Contractor's payments to providers must contain, at a minimum,
adequate descriptions of all denials  and adjustments, the reasons for such
denials and adjustments, the amount billed, the amount paid, and provider rights
for claim dispute.

Effective for all non-hospital clean claims with dates of service October 1,
2004 and thereafter, in the absence of a contract specifying other late payment
terms, Contractors are 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 Encounter
Manual.

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

                –Receive and pay 50% of all claims (based on volume of actual
claims excluding claims processed by
                  Pharmacy Benefit Managers (PBMs)) electronically by July 1,
2006

The Contractor shall submit a monthly Claims Dashboard as specified in the
AHCCCS Claims Reporting Guide.  Beginning October 1, 2006, the Contractor shall
submit:  1)  Claims Dashboard reporting claims received on a UB92 or 837I 2)
Claims Dashboard reporting claims received on a CMS1500, dental claim form, 837P
or 837D 3) Claims Dashboard combining all claims.  The Monthly report must be
received by the AHCCCSA, Division of Healthcare Management, no later than 15
days from the end of each month.

39.          SPECIALTY CONTRACTS

AHCCCSA may at any time negotiate or contract on behalf of the Contractor and
AHCCCSA for specialized hospital and medical services.  AHCCCSA will consider
existing Contractor resources in the development and execution of specialty
contracts.  AHCCCSA may require the Contractor to modify its delivery network to
accommodate the provisions of specialty contracts.  Specialty contracts shall
take precedence over, and

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supersede, existing and future subcontracts for services that are subject to
specialty contracts.  AHCCCSA 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 exceed that payable under the
relevant AHCCCSA specialty contract.

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

Currently, AHCCCSA only has specialty contracts for transplant services and
anti-hemophilic agents and related pharmaceutical services.   AHCCCSA shall
provide at least 60 days advance written notice to the Contractor prior to the
implementation of any specialty contract.

40.          HOSPITAL SUBCONTRACTING  AND REIMBURSEMENT

Maricopa and Pima counties only:   Effective October 1, 2003, legislation
authorizes the Inpatient Hospital Reimbursement Program (Program).  The Program
is defined in the Arizona Revised Statutes (A.R.S.) 36-2905.01, and requires
hospital subcontracts to be negotiated between contractors 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 AHCCCSA 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 AHCCCSA, all
hospital subcontracts and amendments.  For non-emergency patient-days, the
Contractor shall ensure that at least 65% of its members use contracted
hospitals.  AHCCCSA reserves the right to subsequently adjust the 65% standard. 
Further, if in AHCCCSA’s judgment the number of emergency days at a particular
non-contracted hospital becomes significant, AHCCCSA may require a subcontract 
at that hospital. Pursuant to Section 6085 of the Federal Deficit Reduction Act,
non-contracted providers of emergency services shall be paid no more than the
AHCCCS Fee-for-Service rates.  Furthermore, in accordance with R9-22-718, unless
otherwise negotiated by both parties, the reimbursement for inpatient services
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 GSA’s and
must submit copies of these subcontracts, including amendments, to AHCCCSA,
Division of Health Care Management.

Out-of-State Hospitals:  The Contractor shall reimburse out-of-state hospitals
in accordance with AHCCCS Rule R9-22-705.  Contractors serving border
communities (excluding Mexico) are strongly encouraged to establish contractual
agreements with those out-of-state hospitals that are identified by GSA  in
Attachment B.  For non-contracted out-of-state providers of emergency services,
Contractors shall pay no more than the AHCCCS Fee-For-Service rates, pursuant to
Section 6085 of the Federal Deficit Reduction Act.

Outpatient hospital services:   With passage of SB 1410 (Laws of 2004, Chapter
279), effective for dates of service on and after July 1, 2005, in absence of a
contract, the default payment rate for outpatient hospital services billed on a
UB-92 will be based on the AHCCCS outpatient hospital fee schedule, rather than
a hospital-specific cost-to-charge ratio (pursuant to ARS 36-2904).

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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  System.  For a more complete
description of the guidelines for hospital reimbursement, please consult the
Bidder’s Library for applicable statutes and rules.

41.          NURSING FACILITY REIMBURSEMENT

The Contractor shall not deny nursing facility  services if the nursing facility
is unable to obtain prior authorization  in situations where acute care
eligibility and ALTCS eligibility overlap and the member is enrolled with an
AHCCCS acute care contractor.  In such situations, the Contractor shall impose
reasonable authorization requirements.  The Contractor's payment responsibility,
described above, applies only in situations where the nursing facility has not
been notified in advance of the member's enrollment with an AHCCCS acute care
contractor.  When ALTCS eligibility overlaps AHCCCS acute care enrollment, the
acute care enrollment takes precedence.  Although the member could be ALTCS
eligible for this time period, there is no ALTCS enrollment that occurs on the
same days as AHCCCS acute enrollment.

The Contractor shall provide medically necessary nursing facility  services for
any 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 coverage
during the time the member is enrolled with the Contractor.  Nursing facility
services, covered by a third party  insurer (including Medicare) while the
member is enrolled with the Contractor, shall be applied to the 90 day per
contract year limitation.

The Contractor shall notify the Assistant Director of the Division of Member
Services in writing, when a member has been residing in a nursing facility  for
75 days.  This will allow AHCCCSA time to follow-up on the status of the ALTCS
application process and to prepare for 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
AHCCCSA 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 CFR 417.479 unless
specifically approved in advance by the AHCCCSA Division of Health Care
Management.  In order to obtain approval, the following must be submitted to the
AHCCCSA 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

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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 AHCCCSA 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 AHCCCSA or CMS. 
Please refer to the Physician Incentive Plan Disclosure by Contractors Policy in
the Bidder’s Library for details on providing required disclosures. 

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.

Pay for PerformanceAny pay for performance that meets the requirements of 42 CFR
417.479 must be approved by AHCCCS Division of Health Care Management prior to
implementation.

43.          MANAGEMENT SERVICES  AGREEMENT AND COST ALLOCATION PLAN

If a Contractor has subcontracted for management services, the management
service agreement and the corporate cost allocation plan must be approved in
advance by AHCCCSA, Division of Health Care Management.  The cost allocation
plan must be submitted with the proposed management fee agreement.  AHCCCSA
reserves the right to perform a thorough review of actual management fees
charged and/or corporate allocations made.  If the fees or allocations actually
paid out are determined to be unjustified or excessive, amounts may be subject
to repayment to the Contractor.  In addition, sanctions  may be imposed.

44.          RESERVED

45.          MINIMUM CAPITALIZATION  REQUIREMENTS

In order to be considered for a contract award, the Offeror must meet a minimum
capitalization requirement for each GSA  bid.  The capitalization requirement
for both new and continuing offerors must be met within 30 days after contract
award. [42 CFR 438.116]

Minimum capitalization requirements by GSA  are as follows:

Geographic Service Area  (GSA)

Capitalization
Requirement—
New Contractors

Capitalization Requirement—
Existing Contractors

Mohave/Coconino/Apache/Navajo

$4,400,000

$3,000,000

La Paz/Yuma

$3,000,000

$2,000,000

Maricopa

$5,000,000

$4,000,000

Pima/Santa Cruz

$4,500,000

$3,000,000

Cochise/Graham/ Greenlee

$2,150,000

$2,000,000

Pinal/Gila

$2,400,000

$2,000,000

Yavapai*

$1,600,000

$1,600,000

                *Yavapai’s minimum capitalization requirement for both new and
existing offerors is limited to $150 times
                the estimated number of members.

New Offerors:  To be considered for a contract award in a given GSA  or group of
GSA’s, a new offeror must meet the minimum capitalization requirements listed
above.  The capitalization requirement is subject to a  $10,000,000 ceiling
regardless of the number of GSA’s awarded.  This requirement is in addition to
the

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Performance Bond requirements defined in Paragraphs 46 and 47 below and must be
met with cash with no encumbrances, such as a loan subject to repayment. The
capitalization requirement may be applied toward meeting the equity per member
requirement (see Section D, Paragraph 50, Financial Viability
Standards/Performance Guidelines) and is intended for use in operations of the
Contractor.

Continuing Offerors:  Continuing offerors that are bidding a county or GSA  in
which they currently have a contract must meet the equity per member standard
(see Section D, Paragraph 50, Financial Viability Standards/Performance
Guidelines) for their current membership.  Continuing offerors that do not meet
the equity standard must fund, through capital contribution, the necessary
amount to meet the minimum capitalization requirement.  Continuing offerors that
are bidding a new GSA must provide the additional capitalization for the new GSA
they are bidding. The amount of the required capitalization for continuing
offers may differ from that for new offerors due to size of the existing
offerors current enrollment. (See the table of requirements by GSA above).

Continuing offerors will not be required to provide additional capitalization if
they currently meet the equity per member standard with their existing
membership and their excess equity is sufficient to cover the proposed
additional members, or they have at least $10,000,000 in equity.

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 doing business in this State, an
irrevocable letter of credit, or a cash deposit ("Performance Bond") to AHCCCSA
for as long as the Contractor has AHCCCS-related liabilities of $50,000 or more
outstanding, or 15 months following the effective 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 AHCCCSA as
described in the ACOMPerformance Bond Policy available in the Bidder’s Library.

In the event of a default by the Contractor, AHCCCSA 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:

a.             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,
b.             Reimbursing AHCCCSA for any payments made by AHCCCSA on behalf of
the Contractor, and
c.             Reimbursing AHCCCSA 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 AHCCCSA.

In the event AHCCCSA 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 AHCCCSA'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.  In the event such substitute
security is agreed to and accepted by AHCCCSA, the Contractor acknowledges that
it has granted AHCCCSA 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.  AHCCCSA may, after written notice to the Contractor, withdraw its
permission for substitute security, in which case the Contractor shall provide
AHCCCSA 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 AHCCCSA, Division of Health Care Management.

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The Contractor must request an annual acceptance from AHCCCSA when a substitute
security in lieu of the performance bond, irrevocable letter of credit or cash
deposit is established.

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 AHCCCSA.  The total capitation amount
shall include  delivery and hospital supplemental payments.  This requirement
must be satisfied by the Contractor no later than 30 days after notification by
AHCCCSA of the amount required.  Thereafter, AHCCCSA shall evaluate the
enrollment statistics of the Contractor on a monthly basis to determine if the
Performance Bond must be increased.  The Contractor shall have 30 days following
notification by AHCCCSA 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
AHCCCSA.  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 Policy for more
details.

48.          ACCUMULATED FUND DEFICIT

The Contractor and its owners shall fund any accumulated fund deficit through
capital contributions in a form acceptable to AHCCCSA within 30 days after
receipt by AHCCCSA of the final audited financial statements, or as otherwise
requested by AHCCCSA.  AHCCCSA 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 AHCCCSA, 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 notification to AHCCCSA, make advances
to its subcontractors in excess of $50,000.  All requests for prior approval and
notifications are to be submitted to the AHCCCSA Division of Health Care
Management.

50.          FINANCIAL VIABILITY STANDARDS / PERFORMANCE GUIDELINES

AHCCCSA has established financial viability standards/performance guidelines. 
On a quarterly basis, AHCCCSA will review the following ratios with the purpose
of monitoring the financial health of the Contractor. The two financial
viability standards, the Current Ratio and Equity per Member, are the standards
that best represent the financial solvency of the Contractor. Therefore, the
Contractor must comply with these two financial viability standards.

AHCCCSA will also monitor the Medical Expense Ratio, the Administrative Cost
Percentage, and the RBUC’s Days Outstanding.  These guidelines are analyzed as
part of AHCCCSA’s due diligence in financial statement monitoring.  Sanctions 
will not automatically be imposed if the Contractor does not meet these
performance guidelines.  AHCCCSA takes into account Contractors’ 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 and Performance Guidelines are
not met, or if a Contractor’s experience differs significantly from other
Contractors’, additional monitoring, such as monthly reporting, may be required.

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FINANCIAL VIABILITY STANDARDS

Current Ratio

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

Standard: At least 1.00

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

For purposes of this measurement, the equity will be measured according to the
"Performance Bond and Equity per Member Requirements" policy effective October
1, 2007.

(Failure to meet this standard may result in an enrollment cap being imposed in
any or all contracted GSAs.)

 

 

PERFORMANCE GUIDELINES 

 

 

Medical Expense Ratio

Total medical expenses divided by the sum of total capitation  + Delivery
Supplement + Hospital Supplemental Payment +TPL+ Reinsurance  + HIV/AIDS
Supplement less premium tax

Standard:  At least 84%

 

 

Administrative Cost Percentage

Total administrative expenses  divided by the sum of total capitation  +
Delivery Supplement + Hospital Supplemental Payment + TPL + Reinsurance  +
HIV/AIDS Supplement less premium tax

Standard: No more than 10%

 

 

Received But Unpaid Claims
     (Days Outstanding)                       

Received but unpaid claims divided by the average daily medical expenses for the
period, net of sub-capitation  expense.
Standard:  No more than 30 days

51.          SEPARATE INCORPORATION

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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 contract function with AHCCCS.

52.          MERGER, REORGANIZATION AND CHANGE OF OWNERSHIP

A proposed merger, reorganization or change in ownership of the Contractor shall
require prior approval of AHCCCSA and a subsequent contract amendment.  The
Contractor must submit a detailed merger, reorganization and/or transition plan
to AHCCCSA, Division of Health Care Management, for review.  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, hospitalized
supplement for Medical Expense Deduction  (MED)  members, HIV-AIDS 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
to establish rates for the purposes of rebasing the capitation rates. 

                a.             Utilization and unit cost data derived from
reported encounters
                b.             Both Audited and unaudited financial statements
reported by Contractors
                c.             Local market basket inflation trends
                d.             AHCCCS fee for service schedule pricing
adjustments
                e.             Programmatic or Medicaid covered service changes
that affect reimbursement
                f.              Additional administrative requirements for
Contractors
                g.             Other changes to medical practices 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 risk factors will
be included:

                a.             Reinsurance  (as described in Paragraph 57)
                b.             HIV/AIDS supplemental payment
                c.             Age/Gender for the 1931(b), SOBRA, KidsCare  and
BCCTP  eligibility groups
                d.             Medicare enrollment for SSI  members
                e.             Delivery supplemental payment
                f.              Hospitalized supplemental payments for MED
members
                g.             Geographic Service Area  adjustments
                h.             Risk sharing for Title XIX  Waiver  Group
reimbursement (if applicable)
                i.              Risk sharing for PPC reimbursement
                j.              Member choice statistic for Title XIX  Waiver 
Group
                k.             Member share of cost amounts

The above information is reviewed by AHCCCS’ actuaries in renewal years to
determine if adjustments are necessary to maintain actuarially sound rates.  A
Contractor may cover services for members 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)].  In addition to the above data
used to review the appropriateness of capitation rates, during renewal years,
AHCCCS may look at other factors that potentially impact appropriate

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reimbursement including the medical cost experience of members who exercise
their right to choose a contractor upon initial enrollment versus those who are
auto assigned to a contractor.

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 HIFA  Parents,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 to members during prior
period coverage.  The PPC capitation rates will be set by AHCCCSA and will be
paid to the Contractor along with the prospective capitation described below. 
Contractors will not receive PPC capitation for newborns of members who were
enrolled at the time of delivery.

Reconciliation of PPC Costs to Reimbursement:  AHCCCSA 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.  Encounter  data will be
used to determine medical expenses.  Refer to the ACOM PPC Reconciliation Policy
for further details.

Risk Sharing  for Title XIX  Waiver  Members:  Effective October 1, 2006,
AHCCCSA will no longer reconcile the prospective Title XIX Waiver Member
population (TWG).  The PPC TWG population will be reconciled with the PPC
reconciliation referred to above.  Capitation rates will be adjusted where
necessary.

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.  AHCCCSA 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. The delivery supplemental payment is not made if the
hospitalized supplemental payment has already been paid.

Hospitalized Supplemental Payment: If an MED member is an inpatient  on the date
of application for AHCCCS eligibility, and the date of application falls within
the member’s eligibility period, the Contractor is entitled to a supplemental
payment to help defray costs related to the inpatient stay.  The payment is a
one-time supplement that is paid when the member is enrolled with the Contractor
and is subject to review during the term of the contract.  If the member has
Medicare Part A or other third party insurance coverage, they will not be
eligible for the supplemental payment

HIV-AIDS Supplement:  On a quarterly basis, the Contractor shall submit to
AHCCCSA, Division of Health Care Management, an unduplicated monthly count of
members, by rate code, who are using approved HIV/AIDS drugs along with the
supporting pharmacy  log.  The report shall be submitted, along with the
quarterly financial reporting package, within 60 days after the end of each
quarter.  AHCCCSA reserves the right to recoup any amounts paid for ineligible
members as well as an associated penalty for incorrect encounter  reporting. 
The approved HIV/AIDS drug list is located on the AHCCCS website at
www.azahcccs.gov.

Refer to the ACOM Contractor HIV/AIDS Supplemental Payments Policyfor further
details and requirements.

54.          PAYMENTS TO CONTRACTORS

Subject to the availability of funds, AHCCCSA 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.  AHCCCSA
reserves the option to

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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, AHCCCSA 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
AHCCCSA making a corresponding decrease in a current Contractor’s payment or by
making an additional payment to the Contractor.  Whena contractor identifies an
overpayment, AHCCCSA must be notified and reimbursed within 30 days of
identification.

No payment due the Contractor by AHCCCSA may be assigned or pledged by the
Contractor.  This section shall not prohibit AHCCCSA at its sole option from
making payment to a fiscal agent hired by 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.  AHCCCSA 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;
AHCCCSA 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, AHCCCSA 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 AHCCCSA
and/or AHCCCSA 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.             member’s incarceration (not eligible for AHCCCS benefits from the
date of incarceration)
c.             duplicate capitation  to the same Contractor
d.             adjustment based on change in member’s contract type
e.             voluntary withdrawal

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

56.          INCENTIVES

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AHCCCSA will be implementing an incentive program that utilizes financial and/or
non-financial incentives to promote program quality.  AHCCCSA will use
contractor clinical performance indicators in the development of an incentive
program.  Examples of incentive programs are listed below.

Auto assignment algorithm:  Effective CYE ’07, AHCCCSA will adjust the auto
assignment algorithm methodology to incorporate contractor’s clinical
performance indicator results in the calculation of target percentages.  AHCCCSA
will use the following performance indicators:

                Prenatal  Care in the First Trimester, measurement period CYE
2005, reported in CYE 2006
                Well-Child Visits 3-6 Years, measurement period CYE 2005,
reported in CYE 2006

Administrative requirements:  AHCCCSA may elect to reduce Operational Financial
Review (OFR) requirements for high performing contractors.

57.          REINSURANCE

Reinsurance  is a stop-loss program provided by AHCCCSA 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.  AHCCCSA
“self-insures” the reinsurance program through a deduction to capitation rates
that is intended to be budget neutral.  Refer to the AHCCCSA Reinsurance Claims
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
AHCCCSA will reimburse the Contractor for covered inpatient  services 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.

The following table represents deductible and coinsurance levels:

 

Annual Deductible*

Title XIX  Waiver  Group
Annual Deductible

 

Statewide Plan
Enrollment

Prospective
Reinsurance

Prospective
Reinsurance

Coinsurance

 

 

 

 

0-34,999

$20,000

$15,000

75%

35,000-49,999

$35,000

$15,000

75%

50,000 and over

$50,000

$15,000

75%

*applies to all members except for Title XIX  Waiver  Group, SSDI-TMCand SOBRA
Family Planning members

a)  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 for all rate codes and counties, as shown
in the table above.  AHCCCSA will adjust the Contractor’s deductible level at
the beginning of a contract year if the Contractor’s enrollment changes to the
next enrollment level.  A Contractor at the $35,000 or $50,000 deductible level
may elect a lower deductible prior to the beginning of a new contract year. 
These deductible

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levels are subject to change by AHCCCSA during the term of this contract.  Any
change will have a corresponding impact on capitation rates. 

b)  Prior Period  Coverage Reinsurance:  Effective October 1, 2006, AHCCCSA will
no longer cover PPC inpatient  expenses under the reinsurance program for any
members.

c)  Title XIX  Waiver  Members: A separate reinsurance  deductible for the Title
XIX Waiver Group applies for the prospective  coverage time period.

Catastrophic Reinsurance

The reinsurance  program includes a special Catastrophic Reinsurance program.
This program encompasses members diagnosed with hemophilia, von Willebrand’s
Disease, and Gaucher’s Disease.    For additional detail and restrictions refer
to the AHCCCS Reinsurance Claims Processing Manual and the AMPM.  There are no
deductibles for catastrophic reinsurance cases.  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, depending
on 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.  Capitation rates may be adjusted to reflect any cost
savings resulting from the implementation of the AHCCCS anti-hemophilic blood
factor contract.  All catastrophic claims are subject to medical review by
AHCCCSA.

The Contractor shall notify AHCCCSA, Division of Health Care Management,
Reinsurance  Unit, of cases identified for catastrophic reinsurance coverage
within 30 days of (a) initial diagnosis, (b) enrollment with the Contractor, and
(c) the beginning of each contract year.  Catastrophic reinsurance will be paid
for a maximum 30-day retroactive period from the date of notification to
AHCCCSA.  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.

Transplants

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

Other

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For all reinsurance  case types other than transplants, Contractors will be
reimbursed 100% for all medically necessary covered expenses provided in a
contract year, after the reinsurance case reaches $650,000.

Encounter  Submission and Payments for Reinsurance

a)  Encounter  Submission:A Contractor shall prepare, review, verify, certify,
and submit, encounters for consideration to AHCCCSA.  Upon submission, the
Contractor certifies that the services listed were actually rendered.  The
encounters must be submitted in the format prescribed by AHCCCSA. The Contractor
must initiate and evaluate an encounter for probable 1st and 3rd party liability
before submitting the encounter for reinsurance  consideration, unless the
encounter involves underinsured or uninsured motorist liability insurance, 1st
and 3rd party liability insurance or a tort feasor.

The Contractor must maintain evidence that costs incurred have been paid by the
Contractor before submitting reinsurance  encounters.  This information is
subject to AHCCCSA review.  Collections from 1st and 3rd parties should be
reflected by the Contractor as reductions in the encounters submitted on a
dollar-for-dollar basis.  For purposes of AHCCCSA reinsurance, payments made by
Contractor-purchased reinsurance are not considered 1st and 3rd party
collections.

All reinsurance  claims 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, whichever is
applicable.  Failure to submit the encounter within this timeframe will result
in the loss of any related reinsurance dollars.

b)  Encounter  Processing:  AHCCCSA will accept for processing only those
encounters that are submitted directly by an AHCCCS Contractor and that comply
with the AHCCCSA Encounter Reporting User Manual.

c)  Payment of Inpatient  and Catastrophic Reinsurance  Cases:  AHCCCSA will
reimburse a Contractor for costs incurred in excess of the applicable deductible
level, subject to coinsurance percentagesand 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.  Reimbursement for these reinsurance  benefits
will be made to the Contractor each month.

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 will
follow the member to the receiving contractor.  Therefore, all submitted
encounters from the contractor the member is leaving (for dates of service
within the current contract year) will be applied toward, but not exceed, the
receiving contractor’s deductible level.  For further details regarding this
policy and other reinsurance policies refer to the AHCCCS Reinsurance Claims
Processing Manual.

d)  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.  Effective for dates of service on or after
October 1, 2004, Contractors are required to submit all supporting service
encounters for transplant services.  Reinsurance payments will be linked to
transplant encounter submissions.  Please refer to the AHCCCS Reinsurance Claims
Processing Manual for the appropriate billing of transplant services.
Reimbursement for these reinsurance benefits will be made to the Contractor each
month.

Reinsurance  Audits

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For CYE 2002, CYE 2003, CYE 2004, and CYE 2005, the Reinsurance Audit Process as
described in contract is discontinued.  No audit related recoupments will be
made on reinsurance payments made for services delivered in the above listed
contract years. 

Pre-Audit:Beginning in CYE 2006 medical audits on prospective and prior period
coverage 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:  AHCCCSA 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 AHCCCSA 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 AHCCCSA 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 AHCCCSA.  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. AHCCCSA 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 AHCCCSA and will be informed of rationale for reduction or denial 
determination and the applicable grievance and appeal process available.

58.          COORDINATION OF BENEFITS / THIRD PARTY  LIABILITY

Pursuant to federal and state law, AHCCCSA is the payer of last resort.  This
means AHCCCSA 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 first or third-party
payer.  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.

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Cost Avoidance:  The Contractor shall take reasonable measures to determine the
legal liability of third parties who are liable to pay for covered services. 
The Contractor shall cost-avoid a claim if it establishes the probable existence
of a third party or has information that establishes that third party liability
exists.  However, if the probable existence of third party liability cannot be
established or third party liability benefits are not available to pay the claim
at the time the claim is filed, the Contractor must process the claim.

If a third party insurer (other than Medicare) requires the member to pay any
co-payment, coinsurance or deductible, the Contractor is responsible for making
these payments, even if the services are provided outside of the Contractor
network.  The Contractor is not responsible for paying coinsurance and
deductibles that are in excess of what the Contractor would have paid for the
entire service per a written contract with the provider performing the service,
or the AHCCCS FFS payment equivalent.    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 co-payments, coinsurance and deductibles, the
Contractor must make such payments in advance.

If the Contractor knows that the third party insurer will not pay the claim for
a covered service due to untimely claim filing or as a result of the underlying
insurance coverage (e.g. the service is not a covered benefit), the Contractor
shall not deny the service, deny payment of the claim based on third party
liability, or require a written denial letter if the service is medically
necessary.  The Contractor shall communicate any known change in health
insurance information, including Medicare, to AHCCCS Administration, Division of
Member Services, not later than 10 days from the date of discovery using the
approved AHCCCS correspondence.  Failure to report these cases may result in one
of the remedies specified in Section D, Paragraph 72, Sanctions.  If the
Contractor does not know whether a particular service is covered by the third
party, and the service is medically necessary, the Contractor shall contact the
third party and determine whether or not such service is covered rather than
requiring the member to do so.  In the event that the service is not covered by
the third party, the Contractor shall arrange for the timely provision of the
service.  (See also Section D, Paragraph 60, Medicare Services and Cost
Sharing.)

The requirement to cost-avoid applies to all AHCCCS covered services.  For
prenatal  care and preventive pediatric services, AHCCCS may require the
Contractor to provide such service and then coordinate payment with the
potentially liable third party  (“pay and chase”).  In emergencies, the
Contractor shall provide the necessary services and then coordinate payment with
the third-party payer.  The Contractor shall also provide medically necessary
transportation  so the member can receive medical benefits.  Further, if a
service is medically necessary, the Contractor shall ensure that its cost
avoidance efforts do not prevent a member from receiving such service and that
the member shall not be required to pay any coinsurance or deductibles for use
of the other insurer’s providers.

Members with CRS condition:
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 the 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 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.

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Post-payment Recoveries:  Post-payment recovery is necessary in cases where the
Contractor was not aware of third-party coverage at the time services were
rendered or paid for, or was unable to cost-avoid. The Contractor shall
identify, 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 notify AHCCCSA’s authorized representative within 10 business days of the
identification of a third-party liability case with reinsurance or fee-for
service payments made by AHCCCS.  Failure to report these cases may result in
one of the remedies specified in Section D, Paragraph 72, Sanctions.  The
Contractor shall identify all potentially liable third parties and pursue
reimbursement from them except in the circumstances below.

The Contractor shall not pursue reimbursement in the following circumstances,
unless the case has been referred to the Contractor by AHCCCSA or AHCCCSA’s
authorized representative:

Uninsured/underinsured motorist insurance                      

Restitution Recovery

First-and third-party liability insurance

Worker’s Compensation

Tortfeasors, including casualty

Estate Recovery

Special Treatment Trust Recovery

The Contractor shall report any cases involving the above circumstances to
AHCCCSA’s authorized representative should the Contractor identify such a
situation.    The Contractor shall cooperate with AHCCCSA’s authorized
representative in all collection efforts.  In joint cases involving both AHCCCS
fee-for-service  or reinsurance  and the Contractor, AHCCCSA’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 AHCCCSA’s authorized representative by the
Contractor.  AHCCCSA’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 AHCCCSA remitting the settlement to the Contractor.  For total
plan cases involving only payments made by the Contractor, 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 third-party
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.

Reporting:  The Contractor may be required to report the amount of third-party
collections and cost avoidance.  In addition, upon AHCCCSA’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 AHCCCSA TPL Section shall provide
the format and reporting schedule for this information to the Contractor. Prior
to negotiating a settlement on a total plan case, the Contractor shall notify
AHCCCSA to ensure that there is no reinsurance or fee for service payments that
have been made by AHCCCS.  For 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.

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AHCCCSA will provide the Contractor, on an agreed upon schedule, with a complete
file of all third-party coverage information (other than Medicare) for the
purpose of updating the Contractor’s files.  The Contractor shall notify AHCCCSA
of any known changes in coverage within deadlines and in a format prescribed by
AHCCCSA.

Title XXI  (KidsCare), HIFA  Parents  and BCCTP:  Eligibility for KidsCare, HIFA
Parents and BCCTP 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 AHCCCSA immediately.  
AHCCCSA will determine if the other insurance meets the creditable 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 AHCCCSA’s authorized TPL representative.

59.          COPAYMENTS

Most of the AHCCCS members remain exempt from copayments while others are
subject to an optional copayment.  Those populations exempt or subject to
optional copayments may not be denied services for the inability to pay the
copayment. [42 CFR 438.108]

Any copayments collected shall belong to the Contractor or its subcontractors.

Attachment L 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 eligibles”.  Generally, Contractors are
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 AHCCCSA, 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.

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 co-payments for their Medicare
covered prescription medications for the remainder of the calendar year.  To
ensure appropriate information is communicated for these members to the Center
for Medicare and Medicaid Services (CMS), effective January 1, 2006 the
Contractor must, using the approved form, notify the AHCCCS Member File
Integrity Section (MFIS), 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,

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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.

62.          CORPORATE COMPLIANCE

In accordance with A.R.S. Section 36-2918.01, all contractors are required to
notify the AHCCCS, Office of Program Integrity (OPI) immediately of all
suspected fraud or abuse.  The Contractor agrees to promptly (within ten
business days of discovery) inform OPI in writing of instances of 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 funds, contractors or
sub-contractors.

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 AHCCCS, OPI 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
AHCCCSA.

The Contractor shall be in compliance with 42 CFR 438.608.  The Contractor must
have a mandatory compliance program, supported by other administrative
procedures, that is designed to guard against fraud and abuse.  The Contractor
shall have written criteria for selecting a Compliance Officer and a job
description that clearly outlines the responsibilities and the authority of the
position.  The Compliance Officer shall have the authority to access records and
independently refer suspected member fraud, provider fraud and member abuse
cases to AHCCCS, OPI or other duly authorized enforcement agencies.

Pursuant to the Deficit Reduction Act of 2005 (DRA) the contractor will not be
entitled to payment for services unless they establish a compliance program
which shall both prevent and detect suspected fraud or abuse and must include:

                1.             Written policies, procedures, and standards of
conduct that articulate the organization’s
                                commitment to and processes for complying with
all applicable federal and state standards.
                2.             The written designation of a compliance committee
who are accountable to the Contractor’s top
                                management.
                3.             The Compliance Officer must be an onsite
management official who reports directly to the
                                Contractor’s top management.  Any exceptions
must be approved by AHCCCSA.
                4.             Effective training and education.
                5.             Effective lines of communication between the
compliance officer and the organization’s
                                employees.
                6.             Enforcement of standards through well-publicized
disciplinary guidelines.
                7.             Provision for internal monitoring and auditing.
                8.             Provision for prompt response to problems
detected.

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                9.             A Compliance Committee which will be made up of,
at a minimum, the Compliance Officer, a
                                budgetary official and other executive officials
with the authority to commit resources.  The
                                Compliance Committee will assist the Compliance
Officer with monitoring, reviewing and
                                assessing the effectiveness of the compliance
program and timeliness of compliance reporting.
                10.           The Contractor must 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 policies
documented in the Provider Manual and subsequent
                                contract amendments, that providers train their
staff on the following aspects of the Federal False
                                Claims Act provisions;
                                                –The administrative remedies for
false claims and statements;
                                                –Any state laws relating to
civil or criminal penalties for false claims and statements;
                                                –The whistleblower protections
under such laws.

The Contractor Provider Manual must be updated to include the requirements
listed above on or before January 1, 2007.  Contracts must be amended according
to the Contractor contract update schedule, but no later than April 1, 2007

The Contractor is required to research potential overpayments identified by
AHCCCS, OPI.  After conducting a cost benefit analysis to determine if such
action is warranted, the Contractor should attempt to recover any overpayments
identified.  The AHCCCS OPI 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 books and records relating to covered services and
expenditures including reports to AHCCCSA and working papers used in the
preparation of reports to AHCCCSA.  The Contractor shall comply with all
specifications for record keeping established by AHCCCSA.  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,
prescription  files and other records specified by AHCCCSA.

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 AHCCCSA, 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).

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 AHCCCSA, shall be retained by the Contractor for a
period of five years after the date of final disposition or resolution thereof.

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65.          DATA EXCHANGE  REQUIREMENTS

The Contractor is authorized to exchange data with AHCCCSA relating to the
information requirements of this contract and as required to support the data
elements to be provided AHCCCSA in the formats prescribed by AHCCCSA and in
formats prescribed by the Health Insurance Portability and Accountability Act 
(HIPAA).  Details for the formats may be found in the draft HIPAA Transaction
Companion Documents & Trading Partner Agreements, and in the AHCCCS Technical
Interface Guidelines, available in the Bidder’s Library.

The information so recorded and submitted to AHCCCSA 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 to both parties by AHCCCSA.

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 AHCCCSA shall not be accepted by AHCCCSA.

The Contractor is responsible for identifying any inconsistencies immediately
upon receipt of data from AHCCCSA.  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 AHCCCSA original evidence of eligibility and
enrollment in a form appropriate for electronic data exchange.  Upon request by
AHCCCSA, the Contractor shall provide to AHCCCSA 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 AHCCCSA 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 AHCCCSA 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.  AHCCCSA will work with the
contractors 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.

65.          ENCOUNTER  DATA REPORTING

The accurate and timely reporting of encounter  data is crucial to the success
of the AHCCCS program.  AHCCCSA uses encounter data to pay reinsurance 
benefits, set fee-for-service  and capitation  rates, determine disproportionate
share payments to hospitals, and to determine compliance with performance
standards.  The

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Contractor shall submit encounter data to AHCCCSA 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 AHCCCSA.  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 AHCCCSA.

Encounter  data must be provided to AHCCCSA by electronic media and should be
received by AHCCCSA 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.  Requirements for encounter data are
described in the AHCCCSA Encounter Manualand theAHCCCSA Encounter Companion
Document.  The Encounter Submission Requirements are included herein as
Attachment I.  Refer to Paragraph 64, Data Exchange Requirements, for further
information.

An Encounter  Submission Tracking Report must be maintained and made available
to AHCCCSA 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
The AHCCCSA Encounter Reporting User’s Manual.

Twice each month AHCCCSA provides the Contractor with full replacement files
containing provider and medical procedure coding information.  These files
should be used to assist the Contractor in accurate Encounter  Reporting.  Refer
to Paragraph 64, Data Exchange Requirements, for further information.

66.          ENROLLMENT  AND CAPITATION  TRANSACTION UPDATES

AHCCCSA produces daily enrollment transaction updates identifying new members
and changes to members' demographic, eligibility and enrollment data, which the
Contractor shall use to update its member records.  The daily enrollment
transaction update, which is run prior to the monthly enrollment and capitation
transaction update, 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.

AHCCCSA 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.

A weekly capitation transaction will be produced to provide contractors 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 AHCCCSA to produce the
monthly capitation  payment for the next month.  The Contractor will reconcile
their member files with the AHCCCS monthly update.  After reconciling the
monthly update information, the Contractor resumes 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 AHCCCSA, Division of Health
Care Management.

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

67.          PERIODIC REPORT REQUIREMENTS

AHCCCSA, under the terms and conditions of its CMS grant award, requires
periodic reports, encounter  data, 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 this
contract.

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.

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 AHCCCSA.

The Contractor shall be responsible for continued reporting beyond the term of
the contract.  For example, processing claims and reporting encounter  data will
likely continue beyond the term of the contract because of lag time in filing
source documents by subcontractors.

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

68.          REQUESTS FOR INFORMATION

AHCCCSA 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 AHCCCSA in the dissemination of
information prepared by AHCCCSA 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 AHCCCSA.

70.          OPERATIONAL AND FINANCIAL READINESS REVIEWS

AHCCCSA may conduct Operational and Financial Readiness Reviews on all
contractors and will, subject to the availability of resources, provide
technical assistance as appropriate.  The Readiness Reviews will be conducted

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prior to the start of business. The purpose of Readiness Reviews is to assess
new Contractors' readiness and ability to provide covered services to members at
the start of the contract year and current Contractors’ readiness to expand to
new geographic service areas.  A new Contractor will be permitted to commence
operations only if the Readiness Review factors are met to AHCCCSA's
satisfaction.

71.          OPERATIONAL AND FINANCIAL REVIEWS

In accordance with CMS requirements, AHCCCSA, or an independent external agent,
will conduct annual Operational and Financial Reviews for the purpose of (but
not limited to) 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 and R9-31-521.

The type and duration of the Operational and Financial Review will be solely at
the discretion of AHCCCSA.  Except in cases where advance notice is not possible
or advance notice may render the review less useful, AHCCCSA 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 AHCCCSA and the AHCCCSA Review Team by
forwarding in advance such policies, procedures, job descriptions, contracts,
logs and other information that AHCCCSA may request.  The Contractor shall have
all requested medical records on-site.  Any documents, not requested in advance
by AHCCCSA, 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 AHCCCSA on-site review
activities.  While on-site, the Contractor shall provide the Review Team with
workspace, access to a telephone, electrical outlets and privacy for
conferences.  Certain documentation submission requirements may be waived at the
discretion of AHCCCSA, if the Contractor has obtained accreditation from NCQA,
JCAHO or any other nationally recognized accrediting body.  The Contractor must
submit the entire accreditation report to AHCCCSA for such waiver consideration.

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 AHCCCSA 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.  AHCCCSA 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.

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

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

72.          SANCTIONS

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AHCCCSA 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 
prepayment 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 AHCCCSA.
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 Paragraph 42.
g.             Distribution directly, or indirectly through any agent or
independent contractor, of marketing materials that
                have not been approved by AHCCCSA 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.
p.             Failure to report third party liability cases as described in
Paragraph 58.

AHCCCSA 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 enrollment, 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
f.              HCCCSA is satisfied that the reason for imposition of the
sanction no longer exists and is not likely to
                recur.
g.             Additional sanctions  allowed under statue or regulation that
address areas of noncompliance.

               

Cure Notice Process:  Prior to the imposition of a sanction for non-compliance,
AHCCCSA 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, AHCCCSA will take no
further action.  If, however, the Contractor has not complied with the cure
notice requirements, AHCCCSA may proceed with the imposition of sanctions. Refer
to theACOMSanctions  Policy for details.

73.          BUSINESS CONTINUITY AND RECOVERY PLAN

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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
training for:

                –Electronic/telephonic failure at the Contractor's main place of
business
                –Complete loss of use of the main siteand satellite offices out
of state
                –Loss of primary computer system/records
                –Communication between the Contractor and AHCCCSA 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

Contractors 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

Contractors must be able to perform the following functions electronically:

                1.             Enrollment Verification
                2.             Claims inquiry
                3.             Accept HIPAA compliant electronic claims
transactions (See paragraph 38)
                4.             Make Claims payments via electronic funds
transfer (See paragraph 38)

Contractors must also provide searchable provider directories on their web
site.  Web based directories must include the following search functions and
must be updated at least monthly, if necessary:

                1.             Name
                2.             Specialty/Service
                3.             Languages spoken by Practitioner
                4.             Office locations (e.g. county, city or zip code)

Use of Website:  Contractors are required to post their clinical performance
indicators compared to AHCCCS standard and statewide averages on their website. 
In addition, AHCCCSA will post contractor performance indicators on its website.

Arizona Health-e Connection

AHCCCS supports the Governor executive order # 2005-25 on Arizona Health-e
Connection Roadmap. This executive order directs the development of an
electronic health information data exchange (HIE) of personal health information
between providers, payers and members and the deployment of necessary health
information technology to facilitate electronic health records in provider
offices.

AHCCCS will develop a unified approach for AHCCCS health plans and program
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

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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 in standard file
formats.

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

                3)             Contractors 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 and web based applications. AHCCCS health plan and program
contractors are 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.

1115 Waiver Changes:

AHCCCS is in negotiations with CMS to renew the 1115 waiver that enables AHCCCS
to operate a mandatory managed care program.  These negotiations may result in
changes to the program.  AHCCCS will either amend the contract or incorporate
changes in policies incorporated in the contract by reference.

76.          BALANCED BUDGET ACT OF 1997 (BBA)

In August 2002, CMS issued final regulations for the implementation of the BBA. 
AHCCCS continues to review all areas of the regulations to ensure full
compliance with the BBA; however, there are some issues that may require further
clarification from CMS.  Any program changes due to the resolution of the issues
will be reflected in amendments to the contract.  Capitation rates may also be
adjusted to reflect the financial impact of the program changes.

77.          RESERVED

78.          MEDICARE MODERNIZATION ACT (MMA)

The Medicare Modernization Act of 2003 created a prescription drug benefit
called Medicare Part D for individuals who are eligible for Medicare Part A
and/or enrolled in Medicare Part B.  Beginning January 1, 2006, AHCCCS no longer
covers prescription drugs that are covered under Part D for dual eligible
members.

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AHCCCS will not cover prescription drugs for this population whether or not they
are enrolled in Medicare Part D.  Capitation rates reflect this coverage.

Drugs Excluded from Medicare Part D:  AHCCCS does cover 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, contractor formularies and 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.

As the Medicare Modernization Act is fully implemented, there may be required
changes to business practices of AHCCCS and contractors or the contract.  AHCCCS
will identify potential impacts and work with contractors to implement necessary
program changes.

[END OF SECTION D]

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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 AHCCCSA policies and procedures.

4)            CONTRACT INTERPRETATION AND AMENDMENT

No Parol 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)

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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.  However, the parties further agree that the State of Arizona,
its departments, agencies, boards and commissions shall be responsible for its
own negligence.  Each party to this contract is responsible for its own
negligence.

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

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 AHCCCSA. 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 AHCCCSA. 

If a Contractor declares information to be confidential, AHCCCSA 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 AHCCCSA, 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.

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15)          TERMINATION FOR CONFLICT OF INTEREST

AHCCCSA 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 AHCCCSA 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

AHCCCSA 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.  AHCCCSA, 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.

AHCCCSA 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

AHCCCSA 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 AHCCCSA.  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/Operation by AHCCCSA: 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

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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. 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.

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 AHCCCSA 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 AHCCCSA, 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
AHCCCSA, except as otherwise provided in this contract.

21)          RIGHT OF OFFSET

AHCCCSA shall be entitled to offset against any amounts due the Contractor any
expenses or costs incurred by AHCCCSA concerning the Contractor's non-conforming
performance or failure to perform the contract.

22)          NON-EXCLUSIVE REMEDIES

The rights and the remedies of AHCCCSA under this contract are not exclusive.

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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 AHCCCSA as the
"additional insured" must be submitted to AHCCCSA 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 coverages 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.

26)          DISPUTES

Contract claims and disputes shall be adjudicated in accordance with AHCCCS
rules.

Except as provided by 9AAC Chapter 28, Article 6, the exclusive manner for the
Contractor to assert any dispute against AHCCCSA shall be in accordance with the
process outlined in 9 A.A.C. Chapter 22and ARS §36-2903.01.  Pending the final
resolution of any disputes involving this contract, the Contractor shall proceed

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with performance of this contract in accordance with AHCCCSA's instructions,
unless AHCCCSA specifically, in writing, requests termination or a temporary
suspension of performance.

27)          RIGHT TO INSPECT PLANT OR PLACE OF BUSINESS

AHCCCSA 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 AHCCCSA, 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, AHCCCSA shall have the right to annul this contract without liability.

30)          CHANGES

AHCCCSA 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 AHCCCSA 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 AHCCCSA, even if the amendment has not been signed by the Contractor, unless
within that time the Contractor notifies AHCCCSA in writing that it refuses to
sign the amendment.  If the Contractor provides such notification, AHCCCSA 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.  AHCCCSA'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, AHCCCSA 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

AHCCCSA 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 AHCCCSA or the State
without prior written approval by AHCCCSA.  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,

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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)          DISCLOSURE OF CONFIDENTIAL INFORMATION

The Contractor shall not, without prior written approval from AHCCCSA, 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 AHCCCSA
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 AHCCCSA.

37)          COOPERATION WITH OTHER CONTRACTORS

AHCCCSA may award other contracts for additional work related to this contract
and Contractor shall fully cooperate with such other contractors and AHCCCSA
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 AHCCCSA
employees.

38)          ASSIGNMENT OF CONTRACT AND BANKRUPTCY

This contract is voidable and subject to immediate cancellation by AHCCCSA 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 AHCCCSA.

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 AHCCCSA.  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 AHCCCSA.  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 AHCCCSA.  Subject to applicable state
and Federal laws and regulations, AHCCCSA 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 AHCCCSA within 30 days following termination of the contract or such longer
period as approved by AHCCCSA, 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, AHCCCSA 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)          AHCCCSA RIGHT TO OPERATE CONTRACTOR

If, in the judgment of AHCCCSA, the Contractor's performance is in material
breach of the contract or the Contractor is insolvent, 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.

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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 party.

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.

41)          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 AHCCCSA 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 AHCCCSA 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)]

AHCCCSA, 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.

42)          LOBBYING

No funds paid to the Contractor by AHCCCSA, 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 AHCCCSA, have
been used or will be used to influence the persons and entities indicated above
and will assist AHCCCSA in making such disclosures to CMS.

43)          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.

44)          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 438.604et seq.

45)          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

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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.

46)          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.

47)          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.

48)          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]

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A

Accumulated Fund Deficit, 65

Advance Directives, 40

Advances, 66

Ambulatory, 23, 27

Annual Enrollment, 21

Appointment Standards, 54

Auto-Assignment, 19, 20, 21

Auto-Assignment Algorithm, 19, 20, 21

B

BBA, 21, 26, 88

Behavioral Health, 23, 24, 25, 27, 32, 33, 34, 35, 36, 37, 54, 56

Breast and Cervical Cancer, 17, 19, 68, 77

Business Continuity Plan, 86

C

Capitalization, 64

Capitation, 20, 21, 65, 67, 68, 69, 70, 82, 85

Chiropractic, 25

Claims

Clean, 60, 73

Payment, 59, 62

Compensation, 67

Contraceptive, 27

Convalescent Care, 29, 31

Coordination of Benefits, 74

Coordination of Care, 33

Copayment, 54, 70

Copayments, 77

Cost Avoidance, 75

Cost Sharing, 17, 19, 56, 75, 77

Covered Services, 23, 33

Credentialing, 41, 49

CRS, 22, 24

Cultural Competency, 39

Cure Notice, 85

D

Data Exchange, 81

Denials, 60, 74

Dental, 23, 25, 54, 56

Dialysis, 22, 25

Disenrollment, 82

Distributions, 66

DME, 22, 28, 29

Dual Eligibles, 56, 77

E

Eligibility

CRS, 24

Emergency, 17, 25, 26, 28, 31, 54, 55, 58

Encounter, 36, 55, 56, 59, 68, 69, 73, 81, 82, 83, 85

Enrollment, 18, 21, 82

Annual, 18, 21, 22, 73

Guarantees, 20

Open, 18, 21

EPSDT, 25, 27, 29, 33, 36, 37, 45, 54, 56

F

Family Planning, 17, 19, 26, 27, 56, 67

Fee-for-Service, 23, 29, 63, 76, 82

Financial Viability Standards, 66

Formulary, 30, 33, 86

FQHC, 55

Fraud and Abuse, 40, 56, 78

Freedom to Work, 17, 19

G

Geographic Service Area, 16, 19, 21, 49, 62, 64, 66, 68, 84

Grievance, 47

H

HIFA, 18, 19, 20, 68, 77

HIFA Parents, 18, 19, 20, 68, 77

HIFA PARENTS, 18, 19, 20, 77

HIPAA, 81

HIV/AIDS, 27, 28, 40, 52, 67, 68, 69

Home Health, 22, 27, 40, 54

Hospice, 27, 40

Hospital Subcontracting, 61

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I

IBNR, 16

Identification Cards, 21

Immunizations, 27, 35, 56

Indian Health Service, 17, 18, 20, 22, 28, 31

Inpatient, 25, 27, 28, 30, 31, 32, 33, 36, 48, 54, 69, 71, 72, 73, 74

Investments, 66

K

KidsCare, 18, 19, 68, 77

L

Laboratory, 27, 28, 33, 54, 56

Limited English Proficiency (LEP), 38

Loans, 66

M

Management Services, 33, 63, 64

Maternity, 28, 53, 55, 56

Medicaid in the Public Schools (MIPS), 34, 35

Medical Expense Deduction, 67

Medical Foods, 28

Member

Education, 32

Handbook, 38

Information, 37, 38, 52

Mainstreaming, 21

Surveys, 39

Transition, 22

Midwives, 28, 53

N

Network Management, 50

Non-Contracting Provider, 65

Nurse Practitioners, 28, 52, 53

Nursing Facility, 22, 29, 40, 62, 63, 71, 73, 74

Nutrition, 29

O

Observation, 27

Omission, 81

Optometry, 26

Outpatient, 23, 25, 27, 30, 31, 54, 61

P

Performance Bond, 64, 65

Performance Standards, 25, 27, 43, 44, 45, 82

Periodicity Schedule, 25, 27, 33, 45

Pharmacy, 42, 48, 69

Physician Assistants, 28, 53

Physician Incentives, 63

Podiatry, 29

Postpartum Care, 28, 44, 53

Post-stabilization, 26, 29, 30

Pregnancy, 22, 26, 28, 30, 53

Terminations, 30

Prenatal Care, 28, 55, 70, 75

Prescription Drugs, 30, 54, 80

Prescription Medication, 25, 30, 33, 54, 80

Primary Care Physician, 25, 28, 29, 30, 33, 34, 39, 40, 41, 48, 52, 53, 54, 55,
56, 81

Prior Authorization, 22, 25, 30, 42, 56, 60, 62

Prior Period Coverage, 20, 33, 67, 68, 69, 71, 72, 82

Provider, 50, 52, 53, 55, 56

Provider Manual, 55, 59

Provider Registration, 56

Q

QMB, 19

Quality Management, 35, 36, 37, 41

R

Radiology, 27, 30, 54

Rate Code, 69, 71, 82

RBHA, 32, 33, 56

Referral, 25, 31, 32, 33, 36, 37, 52, 53, 54, 56, 76, 77

Rehabilitation, 24, 29, 30, 74

Reinsurance, 56, 62, 67, 68, 71, 72, 73, 74, 76, 82

Related Party, 61

Reporting Requirements, 81, 83

Respiratory, 30

Reviews, 84

RFP, 84, 85, 88

Risk Sharing, 27, 69

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Roster, 19, 82

S

Sanctions, 44, 63, 66, 85

SOBRA, 17, 18, 27, 65, 67, 68, 71

SOBRA Family Planning, 17, 27, 67, 71

SSI, 17, 18, 19, 68

Staff Requirements, 35

Sterilization, 27

Subcontract, 22, 28, 55, 57, 58, 59, 60, 62, 93

Subcontractor, 22, 56, 57, 58, 59, 95, 98

Supplies, 25, 27, 28, 29, 54

T

TANF, 17

Technological Advancement, 86

Third Party, 16, 35, 59, 62, 68, 74, 75, 77, 92

Third Party Liability, 74

Ticket to Work, 17, 19

Title XIX, 17, 18, 19, 20, 28, 33, 55, 67, 68, 69, 71, 72, 93

Title XIX Waiver, 17, 18, 67, 68, 69, 71, 72

Title XXI, 17, 18, 19, 20, 28, 33, 77

Transplants, 22, 25, 30, 72

Transportation, 22, 26, 31, 33, 35, 55, 75

Triage, 31, 33

U

Utilization Management, 37, 42

V

Vaccine for Children, 35

Vision, 26, 56

[END OF SECTION F]

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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 both the AHCCCS ALTCS and the Acute
Care Program please see the following:

                –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

AHCCCSA 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 AHCCCSA 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.

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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, AHCCCSA 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 AHCCCSA 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 AHCCCSA.  (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) [42 CFR 438.6(l)]

8.             CONFIDENTIALITY REQUIREMENT

Confidential information shall be safeguarded pursuant to 42 CFR Part 431,
Subpart F, ARS §36-107, 36-2932, 41-1959 and 46-135, AHCCCS Rules and the Health
Insurance Portability and Accountability Act (CFR 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 shall be adjudicated in accordance with AHCCCS
Rules.

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 AHCCCSA.

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

AHCCCSA 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.

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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 AHCCCSA, Office of Program Integrity.  All
incidents of potential fraud should be reported to AHCCCSA, 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 AHCCCSA, 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 AHCCCSA 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 underARS23-901, 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 AHCCCSA 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 )

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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 AHCCCSA and working papers used in the
preparation of reports to AHCCCSA.  The Subcontractor shall comply with all
specifications for record keeping established by AHCCCSA.  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 AHCCCSA.

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 AHCCCSA, 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 AHCCCSA, 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 AHCCCSA for
the provision of covered services.

23.          TERMINATION OF SUBCONTRACT

AHCCCSA 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,
AHCCCSA 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))

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24.          VOIDABILITY OF SUBCONTRACT

This subcontract is voidable and subject to immediate termination by AHCCCSA
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 AHCCCSA’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.

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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 GSA’s 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, if the member were not allowed to
receive services in an adjoining GSA or state.

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

 

 

 

 

85220

Pinal and Maricopa

Maricopa

12

85242

Pinal and Maricopa

Maricopa

12

85292

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
demonstrate its ability to provide PCP, dental and pharmacy services so that
members don’t need to travel more than 5 miles from their residence. 
Metropolitan Phoenix is defined on the Minimum Network Standard page specific to
GSA # 12.

At a minimum, the Contractor shall have a physician with admitting and treatment
privileges with each hospital in its network.  Contractors in GSA 10 and/or GSA
12 must have at least one hospital contract in each service district.  This
requirement is part of the Hospital Subcontracting and Reimbursement Pilot
Program, described more fully in Section D, Paragraph 35, Hospital
Reimbursement.  A list of Phoenix and Tucson area hospitals are included.

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

-102-

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

-103-

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

DISTRICT 1

85006                      Banner Good Samaritan Medical Center
                                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

DISTRICT 3

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

DISTRICT 4

85201                      Mesa General Hospital Medical Center
                                Mesa Lutheran Hospital
                                Banner Mesa Medical Center
85202                      Banner Desert Medical Center
85206                      Valley Lutheran Hospital
85224                      Chandler Regional Hospital
85281                      Tempe St. Luke’s Hospital

-104-

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

DISTRICT 2

85711      Carondelet St. Joseph’s Hospital
85712      El Dorado Hospital
                Tucson Medical Center
85713      Kino Community Hospital

-105-

ATTACHMENT F: PERIODIC REPORT REQUIREMENTS

The following table is a summary of the periodic reporting requirements for
AHCCCS acute care contractors 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. 
“Reporting Guide” refers to the Reporting Guide for Acute Health Care
Contractors with the Arizona Health Care Cost Containment System.

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 AHCCCSA

Reporting Guide

Financial Manager

Quarterly Financial Reporting Package

60 days after the end of each quarter

Reporting Guide

Financial Manager

FQHC Member Information

60 days after the end of each quarter

Reporting Guide

Section D, Paragraph 34

Financial Manager

HIV/AIDS Report

60 days after the end of each quarter

Reporting Guide

Section D, Paragraph 53

Financial Manager

Draft Annual Financial Reporting Package

90 days after the end of each fiscal year

Reporting Guide

Financial Manager

Final Annual Financial Reporting Package

120 days after the end of each fiscal year

Reporting Guide

Financial Manager

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

Reinsurance  Manager

Cost Allocation Plans

Within 30 days of the effective date

Section D, Paragraph 43

Financial Manager

Subcontracts

As required per Contract

Section D, Paragraph 37

Financial Manager

TPA Subcontracts

Within 30 days of the effective date

Section D, Paragraph 37

Financial Manager

Physician Incentive Plan (PIP) reporting

Suspended by CMS

  Section D, Paragraph 42

Financial Manager

Advances/Loans/Equity Distributions

Submit for approval prior to effective date

Section D, Paragraph 49

Financial Manager

DHCM Health Plan Operations

Report of all subcontracts which delegate Contractor duties and responsibilities

90 days after the beginning of the contract year

Section D, Paragraph 37

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

Operations and Compliance Officer

Claim recoupments >$50,000

Upon identification by Contractor

Section D, Paragraph 38

Operations and Compliance Officer

-106-

Administrative Measures

15th day of each month following the reporting period

Section D, Paragraph 24

Operations and Compliance Officer

Enrollee Appeal and Provider Claim Dispute Report

45 days after the end of each quarter

  Section D, Paragraph 26

Operations and Compliance Officer

Enrollee Grievance Report

45 days after the end of each quarter

  Section D, Paragraph 26

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

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

Operations and Compliance Officer

Member Handbook

By August 15th of contract year, or within 4 weeks of receiving annual
amendment, whichever is later.

Section D, Paragraph 18

Operations and Compliance Officer

Provider Network – Material Change

Submit change for approval prior to effective date

Section D, Paragraph 29

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

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Data Analysis and Research

Corrected Pended Encounter  Data

Monthly, according to established schedule

Encounter  Manual

Encounter  Administrator

New Day Encounter

Monthly, according to established schedule

Encounter  Manual

Encounter  Administrator

Medical Records for Data Validation

90 days after the request received from AHCCCSA

RFP  Attachment I, Encounter  Submission Requirements

Encounter  Administrator

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

DHCM Clinical Quality Management

Comprehensive EPSDT  Plan including Dental 

Annually on December 15th

RFP  Section D, Paragraph 24

DHCM/CQM

EPSDT  Progress Report including Dental  - Quarterly Update

15 days after the end of each quarter

AMPM, Chapter 400

DHCM/CQM

-107-

Quality Management    Plan and Evaluation

Annually on December 15th

AMPM, Chapter 900

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

Sterilization

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 Proposal (initial/baseline year of the project)

Annually on December 15th

AMPM, Chapter 900

DHCM/CQM

Performance Improvement Project Re-measurement Report

Annually on December 15th

AMPM, Chapter 900

DHCM/CQM

Performance Improvement Project Final Report

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

45 Days after the end of each quarter

  Section D, Paragraph 23

DHCM/CQM

Pediatric Immunization Audit

As requested

Section D, Paragraph 24

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

45 Days after the end of each quarter

  Section D, Paragraph 23

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

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

Office of Program Integrity

Provider Fraud/Abuse Report

Immediately following discovery

  Section D, Paragraph 62

Office of Program Integrity Manager

-108-

Eligible Person Fraud/Abuse Report

Immediately following discovery

  Section D, Paragraph 62

Office of Program Integrity Manager

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

Office of the Director

Prescription Drug  Utilization Report

Quarterly, within 45 days of quarter end

AMPM

Pharmacy  Program Administrator

REPORT

WHEN DUE

SOURCE/REFERENCE

SEND TO:

As Required/Needed

Contract Termination Reports

5 days after the end of each month

Section D, Paragraph 1

Financial Manager

Nursing Facility Stay

When a member has been residing in a nursing facility for 75 days

Section D, Paragraph 10, Nursing Facility

Division of Member Services Assistant Director

Key Position Change

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

Section D, Paragraph 16

DHCM Assistant Director

Third Party Liability Updates

Within 10 days of discovery

Section D, Paragraph 58

TPL Administrator

Third Party Liability Case Identification

Within 10 days of discovery

Section D, Paragraph 58

TPL Administrator

Certificate of Insurance

Within 10 days of contract award

Section E, #25

Contract Manager

Generic Extra Credit Requirement

As required per your contract

Per Contract Award Requirement

Per Your Contract

-109-

ATTACHMENT G: AUTO-ASSIGNMENT ALGORITHM

Members who do not have the right to choose a Contractor or members who have the
right to choose but do not exercise this right, are 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
predictable and consistent with AHCCCSA goals.

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 that 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.

                3.             Members whose assigned plan is no longer
available at the beginning of a contract cycle that did not
                                choose a 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 algorithm favors Contractors with both lower final bids and
awarded rates.  The algorithm also favors those Contractors that score higher on
selected Performance Measures (See Section D, Paragraph 24, Performance
Measures). 

For Contractors in the Maricopa and Pima/Santa Cruz GSAs with fewer than 25,000
members statewide, a temporary adjustment will be made to the algorithm formula
in order to ensure a minimum membership (see the discussion entitled “Adjustment
Methodology for Contractors with Fewer than 25,000 Members” for more
information).

Development of the Target Percentages

-110-

Beginning in CYE ’06, the algorithm target percentages will be developed using
the methodology described below.  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 three
factors, which are weighted as follows:

#

Factor

Weighting

1

The final capitation rate bid submitted by the Contractor.  Final bids that are
below the bottom of the rate range will be assigned to the bottom of the rate
range for development of the target percentages.

30%

2

The Contractor’s final awarded rate from AHCCCSA.

30%

3

The Contractor’s ranking in Well-Child visits, 3, 4, 5, and 6 Years of Age
(weighted 75%) and Timeliness of Prenatal Care (weighted 25%) Performance
measures as reported from the Data Warehouse at AHCCCS (measurement period CYE
2005, reported in CYE 2006). 

40%

Points will be assigned to each Contractor by risk group by GSA.  Based on the
rankings of the final bid rates and the final awarded rates, each Contractor
will be assigned a number of points for each of these two components separately
as follows:

TABLE FOR FACTORS #1 AND #2

Number of
Awards in GSA

Lowest Rate

2nd
Lowest
Rate

3rd
Lowest
Rate

4th
Lowest
Rate

5th
Lowest
Rate

6th
Lowest
Rate

7th
Lowest
Rate

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

7

25

20

17

14

11

8

5

Contractors that have equal bids in a GSA for the same risk group will be given
an equal percentage of the points for all of the positions combined.

The third component of the calculation, Performance Measure Rates(PMR), will be
assigned a number of points based on the Contractor’s ranking among the rates
for the selected Performance Measures.  The higher the rate, the more points
assigned.  AHCCCS may update the algorithm assignment annually based on the
results of Factor #3.    For this component, points will be assigned as follows:

TABLE FOR FACTOR #3

Number of
Awards in GSA

Highest
PMR

2nd
Highest
PMR

3rd
Highest
PMR

4th
Highest
PMR

5th
Highest
PMR

6th
Highest
PMR

7th
Highest
PMR

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

7

25

20

17

14

11

8

5

-111-

Contractors that have equal Performance Measure Rates will be given an equal
percentage of the points for all of the positions combined.

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

Final Bid Points (.30) + Awarded Bid Points (.30) + Performance Measure Points
(.40)= TARGET
PERCENTAGE      100

Adjustment Methodology for Contractors with Fewer than 25,000 Members

At the beginning of the new contract cycle, the auto-assignment algorithm for
the Maricopa and Pima/Santa Cruz GSAs will be adjusted to favor Contractors with
fewer than 25,000 members statewide.  The adjusted algorithm will be utilized
until a target membership of 25,000 members statewide, per Contractor, is
reached.

The adjustment will be made to the final percentages developed using the
methodology above.  A pre-determined percentage, based on the table below, will
be added to the affected Contractor(s) and subtracted evenly from the other
Contractors.

Number of Contractors Below 25,000
Statewide Minimum Enrollment

Percentage
Added
To
New Contractor
Target

Percentage To Be Evenly
Subtracted From Remaining
Bidders

1

20%

20%

2

15%

30%

3

10%

30%

*In the event that there are more than three affected Contractors, AHCCCS will
disclose adjustment methodology by July 1, 2003.

In the event that a Contractor only receives an award in rural GSAs, AHCCCS
reserves the right to make a temporary adjustment to the auto-assignment target
to favor the new Contractor until a minimum enrollment is reached.   

AHCCCSA reserves the right to adjust capitation rates for potential changes to
the populations risk due to the adjusted algorithm.

-112-

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 subcontractor’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
appealsand 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.

-113-

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 State.

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 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.

-114-

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 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 need not 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.

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.

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;

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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 the
Contractor 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.

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 AHCCCSA, Office of
Legal Assistance (OLA) as specified by
                OLA.   The file provided by the Contractor must contain a cover
letter that includes:
                                a.             Enrollee’s name
                                b.             Enrollee’s AHCCCS I.D. number

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                                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 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 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.

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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) will be
                                communicated in writing to all parties.  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 AHCCCSA, Office
of Legal Assistance, 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:

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                                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.

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ATTACHMENT I:  ENCOUNTER  SUBMISSION REQUIREMENTS

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

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 AHCCCSA 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

“AHCCCSA error” is defined as a pended encounter, which (1) AHCCCSA acknowledges
to be the result of its own error, and (2) requires a change to the system
programming, an update to the database reference table, or further research by
AHCCCSA.  AHCCCSA reserves the right to adjust the sanction amount if
circumstances warrant.

When the Contractor notifies AHCCCSA, in writing, that the resolution of a
pended encounter  depends on AHCCCSA rather than the Contractor, AHCCCSA will
respond in writing within 30 days of receipt of such notification.  The AHCCCSA
response will report the status of each pending encounter problem or issue in
question.

Pended encounters will not qualify as AHCCCSA errors if AHCCCSA reviews the
Contractor’s notification and asks the Contractor to research the issue and
provide additional substantiating documentation, or if AHCCCSA disagrees with
the Contractor’s claim of AHCCCSA error.  If a pended encounter  being
researched by AHCCCSA is later determined not to be caused by AHCCCSA error, the
Contractor may be sanctioned retroactively.

Before imposing sanctions, AHCCCSA will notify the Contractor, in writing, of
the total number of sanctionable encounters pended more than 120 days.  Pended
encounters shall not be deleted by the Contractor as a means of avoiding
sanctions  for failure to correct encounters within 120 days.  The Contractor
shall document deleted encounters and shall maintain a record of the deleted
CRNs with appropriate reasons indicated.  The Contractor shall, upon request,
make this documentation available to AHCCCSA for review.

Encounter  Validation Studies

Per CMS requirement, AHCCCSA 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.

AHCCCSA 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.

AHCCCSA will conduct two encounter  validation studies.  Study “A” examines
non-institutional services (form HCFA 1500 encounters), and Study “B” examines
institutional services (form UB-92 encounters).

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AHCCCSA 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 AHCCCSA.  In the case of medical
records requests, the Contractor’s failure to provide AHCCCSA with the records
requested within 90 days may result in a sanction of $1,000 per missing medical
record.  If AHCCCSA 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.   These criteria are defined as
follows:

Timeliness:   The time elapsed between the date of service and the date that the
encounter  is received at AHCCCS.  For all encounters for which timeliness is
evaluated, a sanction per encounter error extrapolated to the population of
encounters may be assessed if the encounter record is received by AHCCCSA more
than 240 days after the end of the month in which the service was rendered, or
the effective date of the enrollment..  It is anticipated that the sanction
amount will be $1.00 per error extrapolated to the population of encounters;
however, sanction amounts may be adjusted if AHCCCSA determines that encounter
quality has changed, or if CMS changes sanction requirements.  The Contractor
will be notified of the sanction amount in effect for the studies at the time
the studies begin. 

Correctness:   A correct encounter  contains a complete and accurate description
of AHCCCS covered services provided to a member.  A sanction per encounter error
extrapolated to the population of encounters may be assessed if the encounter is
incomplete or incorrectly coded.  It is anticipated that the sanction amount
will be $1.00 per error extrapolated to the population of encounters; however,
sanction amounts may be adjusted if AHCCCSA determines that encounter quality
has changed, or if CMS changes sanction requirements.  The Contractor will be
notified of the sanction amount in effect for the studies at the time the
studies begin.

Omission  of data:   An encounter  not submitted to AHCCCSA or an encounter
inappropriately deleted from AHCCCSA’s pending encounter file or historical
files in lieu of correction of such record.  For Study “A” and for Study “B”, a
sanction per encounter error extrapolated to the population of encounters may be
assessed for an omission.  It is anticipated that the sanction amount will be
$5.00 per error extrapolated to the population of encounters for Study “A” and
$10.00 per error extrapolated to the population of encounters for Study “B”;
however, sanction amounts may be adjusted if AHCCCSA determines that encounter
quality has changed, or if CMS changes sanction requirements.  The Contractor
will be notified of the sanction amount in effect for the studies at the time
the studies begin.

For encounter  validation studies, AHCCCSA will select all approved and pended
encounters to be studied no earlier than 240 days after the end of the month in
which the service was rendered.  Once AHCCCSA has selected the Contractor’s
encounters for encounter validation studies, subsequent encounter submissions
for the period being studied will not be considered.

AHCCCSA may review all of the Contractor’s submitted encounters, or may select a
sample.  The sample size, or number of encounters to be reviewed, will be
determined using statistical methods in order to accurately estimate the
Contractor’s error rates.  Error rates will be calculated by dividing the number
of errors found by the number of encounters reviewed.  A 95% confidence interval
will be used to account for limitations caused by sampling.  The confidence
interval shows the range within which the true error rate is estimated to be. 
If error rates are based on a sample, the error rate used for sanction purposes
will be the lower limit of the confidence interval.

Encounter  validation methodology and statistical formulas are provided in the
AHCCCS Encounter Data Validation Technical Document, which is available in the
Bidders Library.  This document also provides

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examples, which illustrate how AHCCCSA determines study sample sizes, error
rates, confidence intervals, and sanction amounts.

Written preliminary results of all encounter  validation studies will be sent to
the Contractor for review and comment.  The Contractor will have a maximum of 30
days to review results and provide AHCCCSA with additional documentation that
would affect the final calculation of error rates and sanctions.  AHCCCSA will
examine the Contractor’s documentation and may revise study results if
warranted.  Written final results of the study will then be sent to the
Contractor and communicated to CMS, and any sanctions will be assessed.

The Contractor may file a written challenge to sanctions  assessed by AHCCCSA
not more than 35 days after the Contractor receives final study results from
AHCCCSA.  Challenges will be reviewed by AHCCCSA and a written decision will be
rendered no later than 60 days from the date of receipt of a timely challenge. 
Sanctions shall not apply to encounter  errors successfully challenged.  A
challenge must be filed on a timely basis and a decision must be rendered by
AHCCCSA prior to filing a claim dispute and request for hearing pursuant to
A.A.C. 9-34-401 et seq.  Sanction amounts will be deducted from the Contractor’s
capitation payment. 

Encounter  Corrections

Contractors are required to submit replacement or voided encounters in the event
that claims are subsequently corrected following the initial encounter 
submission.  This includes corrections as a result of inaccuracies identified by
fraud and abuse  audits or investigations conducted by AHCCCSA or the
Contractor.  Contractors shall refer to the Encounter Reporting User Manual for
instructions regarding submission of corrected encounters.

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ATTACHMENT L: COST SHARING COPAYMENTS

I.              MPT 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  per Rx

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

IV.           OTHER CO-PAYS
                HIFA Parents (Parents of KidsCare and SOBRA Children)
                –Copayment is not mandatory
                –EXCEPTION: Native American Contractor Enrolled Parents are
exempt from any copayment

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

$  0

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