38-651

38-651. Expenditure of monies for health and
accident insurance; definition

A. The department of administration may expend public monies appropriated for such
purpose to procure health and accident coverage for full-time officers and employees of
this state and its departments and agencies. The department of administration may adopt
rules that provide that if an employee dies while the employee's surviving spouse's
health insurance is in force, the surviving spouse is entitled to no more than thirty-six
months of extended coverage at one hundred two per cent of the group rates by paying the
premiums. Except as provided by section 38-1103, no public monies may be expended to pay
all or any part of the premium of health insurance continued in force by the surviving
spouse. The department of administration shall seek a variety of plans, including
indemnity health insurance, hospital and medical service plans, dental plans and health
maintenance organizations. On a recommendation of the department of administration and
the review of the joint legislative budget committee, the department of administration
may self-insure for the purposes of this subsection. If the department of administration
self-insures, the department may contract directly with preferred provider organizations,
physician and hospital networks, indemnity health insurers, hospital and medical service
plans, dental plans and health maintenance organizations. If the department self-insures,
the department shall provide that the self-insurance program include all health coverage
benefits that are mandated pursuant to title 20. The self-insurance program shall
include provisions to provide for the protection of the officers and employees, including
grievance procedures for claim or treatment denials, creditable coverage determinations,
dissatisfaction with care and access to care issues. The department of administration by
rule shall designate and adopt performance standards, including cost competitiveness,
utilization review issues, network development and access, conversion and implementation,
report timeliness, quality outcomes and customer satisfaction for qualifying plans. The
qualifying plans for which the standards are adopted include indemnity health insurance,
hospital and medical service plans, closed panel medical and dental plans and health
maintenance organizations, and for eligibility of officers and employees to participate
in such plans. Any indemnity health insurance or hospital and medical service plan
designated as a qualifying plan by the department of administration must be open for
enrollment to all permanent full-time state employees, except that any plan established
prior to June 6, 1977 may be continued as a separate plan. Any closed panel medical or
dental plan or health maintenance organization designated as the qualifying plan by the
department of administration must be open for enrollment to all permanent full-time state
employees residing within the geographic area or area to be served by the plan or
organization. Officers and employees may select coverage under the available options.

B. The department of administration may expend public monies appropriated for such
purpose to procure health and accident coverage for the dependents of full-time officers
and employees of this state and its departments and agencies. The department of
administration shall seek a variety of plans, including indemnity health insurance,
hospital and medical service plans, dental plans and health maintenance organizations.
On a recommendation of the department of administration and the review of the joint
legislative budget committee, the department of administration may self-insure for the
purposes of this subsection. If the department of administration self-insures, the
department may contract directly with preferred provider organizations, physician and
hospital networks, indemnity health insurers, hospital and medical service plans, dental
plans and health maintenance organizations. If the department self-insures, the
department shall provide that the self-insurance program include all health coverage
benefits that are mandated pursuant to title 20. The self-insurance program shall
include provisions to provide for the protection of the officers and employees, including
grievance procedures for claim or treatment denials, creditable coverage determinations,
dissatisfaction with care and access to care issues. The department of administration by
rule shall designate and adopt performance standards, including cost competitiveness,
utilization review issues, network development and access, conversion and implementation,
report timeliness, quality outcomes and customer satisfaction for qualifying plans. The
qualifying plans for which the standards are adopted include indemnity health insurance,
hospital and medical service plans, closed panel medical and dental plans and health
maintenance organizations, and for eligibility of the dependents of officers and
employees to participate in such plans. Any indemnity health insurance or hospital and
medical service plan designated as a qualifying plan by the department of administration
must be open for enrollment to all permanent full-time state employees, except that any
plan established prior to June 6, 1977 may be continued as a separate plan. Any closed
panel medical or dental plan or health maintenance organization designated as a
qualifying plan by the department of administration must be open for enrollment to all
permanent full-time state employees residing within the geographic area or area to be
served by the plan or organization. Officers and employees may select coverage under the
available options.

C. The department of administration may designate the Arizona health care cost
containment system established by title 36, chapter 29 as a qualifying plan for the
provision of health and accident coverage to full-time state officers and employees and
their dependents. The Arizona health care cost containment system shall not be the
exclusive qualifying plan for health and accident coverage for state officers and
employees either on a statewide or regional basis.

D. Except as provided in section 38-652, public monies expended pursuant to this
section each month shall not exceed:

1. Five hundred dollars multiplied by the number of officers and employees who
receive individual coverage.

2. One thousand two hundred dollars multiplied by the number of married couples if
both members of the couple are either officers or employees and each receives individual
coverage or family coverage.

3. One thousand two hundred dollars multiplied by the number of officers or
employees who receive family coverage if the spouses of the officers or employees are not
officers or employees.

E. Subsection D of this section:

1. Establishes a total maximum expenditure of public monies pursuant to this
section.

2. Does not establish a minimum or maximum expenditure for each individual officer
or employee.

F. In order to ensure that an officer or employee does not suffer a financial
penalty or receive a financial benefit based on the officer's or employee's age, gender
or health status, the department of administration shall consider implementing the
following:

1. Requests for proposals for health insurance that specify that the carrier's
proposed premiums for each plan be based on the expected age, gender and health status of
the entire pool of employees and officers and their family members enrolled in all
qualifying plans and not on the age, gender or health status of the individuals expected
to enroll in the particular plan for which the premium is proposed.

2. Recommendations from a legislatively established study group on risk adjustments
relating to a system for reallocating premium revenues among the contracting qualifying
plans to the extent necessary to adjust the revenues received by any carrier to reflect
differences between the average age, gender and health status of the enrollees in that
carrier's plan or plans and the average age, gender and health status of all enrollees in
all qualifying plans.

G. Each officer or employee shall certify on the initial application for family
coverage that the officer or employee is not receiving more than the contribution for
which eligible pursuant to subsection D of this section. Each officer or employee shall
also provide the certification on any change of coverage or marital status.

H. If a qualifying health maintenance organization is not available to an officer
or employee within fifty miles of the officer's or employee's residence and the officer
or employee is enrolled in a qualifying plan, the officer or employee shall be offered
the opportunity to enroll with a health maintenance organization when the option becomes
available. If a health maintenance organization is available within fifty miles and it
is determined by the department of administration that there is an insufficient number of
medical providers in the organization, the department may provide for a change in
enrollment from plans designated by the director when additional medical providers join
the organization.

I. Notwithstanding subsection H of this section, officers and employees who enroll
in a qualifying plan and reside outside the area of a qualifying health maintenance
organization shall be offered the option to enroll with a qualified health maintenance
organization offered through their provider under the same premiums as if they lived
within the area boundaries of the qualified health maintenance organization, if:

1. All medical services are rendered and received at an office designated by the
qualifying health maintenance organization or at a facility referred by the health
maintenance organization.

2. All nonemergency or nonurgent travel, ambulatory and other expenses from the
residence area of the officer or employee to the designated office of the qualifying
health maintenance organization or the facility referred by the health maintenance
organization are the responsibility of and at the expense of the officer or employee.

3. All emergency or urgent travel, ambulatory and other expenses from the residence
area of the officer or employee to the designated office of the qualifying health
maintenance organization or the facility referred by the health maintenance organization
are paid pursuant to any agreement between the health maintenance organization and the
officer or employee living outside the area of the qualifying health maintenance
organization.

J. The department of administration shall allow any school district in this state
that meets the requirements of section 15-388, a charter school in this state that meets
the requirements of section 15-187.01 or a city, town, county, community college
district, special taxing district, authority or public entity organized pursuant to the
laws of this state that meets the requirements of section 38-656 to participate in the
health and accident coverage prescribed in this section, except that participation is
only allowed in a health plan that is offered by the department and that is subject to
title 20, chapter 1, article 1. A school district, a charter school, a city, a town, a
county, a community college district, a special taxing district, an authority or any
public entity organized pursuant to the laws of this state rather than this state shall
pay directly to the benefits provider the premium for its employees.

K. The department of administration shall determine the actual administrative and
operational costs associated with school districts, charter schools, cities, towns,
counties, community college districts, special taxing districts, authorities and public
entities organized pursuant to the laws of this state participating in the state health
and accident insurance coverage. These costs shall be allocated to each school district,
charter school, city, town, county, community college district, special taxing district,
authority and public entity organized pursuant to the laws of this state based on the
total number of employees participating in the coverage. This subsection only applies to
a health plan that is offered by the department and that is subject to title 20, chapter
1, article 1.

L. Insurance providers contracting with this state shall separately maintain
records that delineate claims and other expenses attributable to participation of a
school district, charter school, city, town, county, community college district, special
taxing district, authority and public entity organized pursuant to the laws of this state
in the state health and accident insurance coverage and, by November 1 of each year,
shall report to the department of administration the extent to which state costs are
impacted by participation of school districts, charter schools, cities, towns, counties,
community college districts, special taxing districts, authorities and public entities
organized pursuant to the laws of this state in the state health and accident insurance
coverage. By December 1 of each year, the director of the department of administration
shall submit a report to the president of the senate and the speaker of the house of
representatives detailing the information provided to the department by the insurance
providers and including any recommendations for possible legislative action.

M. Notwithstanding subsection J of this section, any school district in this state
that meets the requirements of section 15-388, a charter school in this state that meets
the requirements of section 15-187.01 or a city, town, county, community college
district, special taxing district, authority or public entity organized pursuant to the
laws of this state that meets the requirements of section 38-656 may apply to the
department of administration to participate in the self-insurance program that is
provided by this section pursuant to rules adopted by the department. A participating
entity shall reimburse the department for all premiums and administrative or other
insurance costs. The department shall actuarially prescribe the annual premium for each
participating entity to reflect the actual cost of each participating entity.

N. Any person that submits a bid to provide health and accident coverage pursuant
to this section shall disclose any court or administrative judgments or orders issued
against that person within the last ten years before the submittal.

O. For the purposes of this section, "dependent" means a spouse under the laws of
this state, a child who is under twenty-six years of age or a child who was disabled
before reaching nineteen years of age, who continues to be disabled under 42 United
States Code section 1382c and for whom the employee had custody before reaching nineteen
years of age.