36-2944

36-2944. Qualified plan health service
contracts; proposals; administration; contract terms

A. For each county that has a population of four hundred thousand persons or less
according to the most recent United States decennial census and that was not approved as
a program contractor before January 1, 1994 or that officially states that it wishes to
end its status as a program contractor, the director at least every five years shall
prepare and issue a request for proposal and a proposed contract format to qualified
group disability insurers, hospital and medical service corporations, health care
services organizations and any other qualified public or private persons to be a program
contractor and provide services pursuant to this article on a capitation rate basis to
members who are enrolled with the program contractors by the system, who are not
developmentally disabled as defined in section 36-551 and who are residents of the county
at the time of application for the system.

B. The director may adopt rules regarding the request for proposal process which
provide:

1. For the award of contracts by categories of members or services in order to
secure the most financially advantageous proposals for the system.

2. That each qualified proposal shall be entered with separate categories for the
distinct groups of members or services to be covered by the proposed contracts, as set
forth in the request for proposal.

3. For the procurement of reinsurance for expenses incurred by any program
contractor, any member or the system in providing services in excess of amounts specified
by the director in any contract year.

4. For second round competitive proposals to request voluntary price reduction
of proposals from only those proposals that have been tentatively selected for award,
before the final award or rejection of proposals.

C. Contracts shall be awarded as otherwise provided by law, except that in no event
may a contract be awarded to any program contractor which will cause the system to lose
any federal monies to which it is otherwise entitled.

D. After contracts are awarded pursuant to this section, the director may negotiate
with any successful proposal respondent for the expansion or contraction of services or
service areas if there are unnecessary gaps or duplications in services or service areas.

E. Payments to program contractors pursuant to this section shall be made monthly
or quarterly and may be subject to contract provisions requiring the retention of a
specified percentage of the payment by the director, a reserve fund or other contract
provisions by which adjustments to the payments are made based on utilization efficiency,
including incentives for maintaining quality care and minimizing unnecessary inpatient
services. Reserve funds withheld from contracts shall be distributed to program
contractors who meet performance standards established by the director. Any reserve fund
established pursuant to this subsection shall be established as a separate account within
the Arizona long-term care system fund.

F. Payments made pursuant to this section shall begin after a member is enrolled in
the system.

G. Each program contractor pursuant to this section shall submit an annual audited
financial and programmatic report for the preceding fiscal year as required by the
administration. The report shall include beginning and ending fund balances, revenues
and expenditures including specific identification of administrative costs. The report
shall include the number of members served by the program contractor and the cost
incurred for various types of services provided to members in a format prescribed by the
director.

H. The director shall require contract terms necessary to ensure adequate
performance by the program contractor of the provisions of each contract executed
pursuant to this section. Contract provisions required by the director shall include the
maintenance of deposits, performance bonds, financial reserves or other financial
security.