The Department of Insurance and Financial Institutions announced that its final rules implementing the Arizona Mental Health Parity Act (Jake’s Law) are effective September 4, 2022. These five rules provide guidance for plans issued in the state to report their compliance with the statute.

Jake’s Law implements the federal MHPAEA at the state level. MHPAEA generally establishes that health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits may not, among other things, impose less favorable benefit limitations on MH/SUD benefits than on medical/surgical benefits. Specifically, healthcare insurers cannot apply financial requirements or quantitative treatment limitations (QTLs) to MH/SUD policy benefits that are more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits. Healthcare insurers cannot impose nonquantitative treatment limitations (NQTLs) with respect to MH/SUD benefits in any classification unless the processes, strategies, evidentiary standards or other factors used in applying the NQTL to MH/SUD benefit classifications are comparable to those used with medical surgical/benefits classifications.

The rules provide a process by which plans issued in the state report their compliance with Jake’s Law. Issuers must file reports for each plan they offer, informing the state whether the plans cover MH/SUD benefits, and, if so, whether those benefits are in parity with medical/surgical benefits. Issuers are required to file a report for each plan every three years demonstrating its compliance with NQTL requirements, with an annual report requirement that provides any updates to the last triennial report as well as an attestation by an officer or director of the healthcare insurer that the healthcare plan follows MHPAEA. The new rules also provide an exhibit that lists all the required information for those reports.

In addition, the new rules require healthcare insurers that issue health plans in Arizona and whose policy forms are not exempt from the form filing requirement to demonstrate their compliance with the financial requirements and QTL parity requirements of MHPAEA through their form and rate filings with the Department.

Employers with plans issued in the state should be aware of these new requirements.

DIFI Notice of Final Rulemaking – Mental Health Parity »

The Department of Insurance and Financial Institutions recently extended the ability of health insurance carriers in the individual and small group market to continue transitional health insurance plans indefinitely until such time as CMS issues an announcement ending the nonenforcement of certain market reforms.

On March 23, 2022, CMS provided guidance for a transition policy extension that allows insurers the option to renew non-grandfathered non-ACA-compliant plans if the state allows for such an extension. Such transition policies are not required to comply with certain ACA mandates, including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. This bulletin applies this most recent federal extension to Arizona and allows the issuer to renew these non-ACA-compliant plans.

Small employers that are interested in renewing their non-ACA-compliant plan should work with their advisors and insurers.

Arizona Announces Extension of Major Medical Transitional Policies Until Further Notice »

On April 3, 2020, the Department of Insurance issued Regulatory Bulletin 2020-02. As discussed in the March 31, 2020, edition of Compliance Corner, Gov. Ducey issued an executive order instructing the department to clarify the order’s requirements imposed upon health plans of any type in response to the COVID-19 outbreak. Pursuant to that mandate, this regulatory bulletin, which applies to plans issued or delivered in the state, requires those plans to: cover out-of-network lab testing; waive cost sharing for diagnostic testing related to COVID-19 (including office and urgent care visits); and to cover telemedicine services.

On April 16, 2020, the department issued Regulatory Bulletin 2020-04 to all insurers providing health coverage, among other types of coverage. The bulletin encourages insurers to work with insureds to make sure that policies do not lapse, including refraining from cancelling policies due to nonpayment.

The bulletins are primarily directed at insurers. However, employers should also be aware of these developments.

Regulatory Bulletin 2020-02 »
Regulatory Bulletin 2020-04 »

On April 2, 2020, Gov. Ducey issued Executive Order 2020-20, which requires the Arizona Board of Pharmacy to allow pharmacists to utilize their professional judgement to dispense emergency refills of maintenance medications for up to a 90-day supply and an additional 90-day supply if necessary. The board must also waive electronic prescribing requirements, waive the requirement that companies making hand sanitizer must have a permit, and other measures to facilitate an effective response to the COVID-19 outbreak.

The executive order is primarily directed at the state’s pharmacy board. However, employers and insurers should also be aware of these developments and their impact on costs to health plans.

Executive Order 2020-20 »

On March 11, 2020, Gov. Ducey signed Executive Order 2020-07 directing insurance companies to cover the costs of COVID-19 diagnostic testing from all qualified laboratories, regardless of whether the laboratory is in the insurance company’s provider network; waive copays, coinsurance, and deductibles (cost-sharing requirements) related to COVID-19 diagnostic testing; and pass less cost to health plan members for telemedicine visits than for in-person visits, and encourage use of telemedicine during the health emergency.

On March 23, 2020, Gov. Ducey signed Executive Order 2020-12, declaring insurance services as essential business operations.

On March 25, 2020, Gov. Ducey signed Executive Order 2020-15 directing insurance companies regulated by Arizona to provide coverage for all health care services that are provided through telemedicine if the health care service would be covered were it provided through an in-person visit. Insurers can establish reasonable requirements and parameters for this coverage, but they cannot be any more restrictive or less favorable than those delivered in-person. In addition, insurers must reimburse health care providers at the same level for telemedicine visits as they would in-person visits and allow all electronic means of delivering telehealth.

Employers with policies regulated by Arizona should be aware of these developments.

Executive Orders 2020-07, 2020-12, and 2020-15 »