Assigned to FICO FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2599
health care appeals
Purpose
Effective January 1, 2025, modifies procedures and health care insurer (insurer) and
utilization review agent requirements relating to health care appeals.
Background
Statute prescribes and governs the health care appeal process for members whose covered
service or claim for a service has been denied by an insurer. Each utilization review agent and
insurer whose utilization review system includes the power to affect the direct or indirect denial
of requested medical or health care services or claims for medical or health care services must
adopt written utilization review standards, criteria and processes for the review, reconsideration
and appeal of denials.
Statute requires the Director of the Department of Insurance and Financial Institutions
(DIFI) to require any member who files a complaint with DIFI relating to an adverse decision to
pursue the review process prescribed by law. There are two types of health care appeals, an
expedited appeal for urgent matters and a standard appeal. Each type of appeal has three levels of
review. The appeals operate in a similar fashion, except that expedited appeals are expedited
because of a member's condition (A.R.S. Title 20, Chapter 15, Article 2; DIFI).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
Insurer Levels of Review
1. Prohibits a minimum dollar amount from being imposed on any claim that is the subject of an
adverse determination for a member to pursue the applicable review process and specifies that
a member who receives an adverse determination may pursue the applicable review process.
2. Replaces the formal appeals process with the voluntary internal appeal level of review.
3. Removes the authorization for an insurer to offer additional levels of review as long as the
additional levels of review do not increase the statutory time period limitations.
4. Requires the initial appeal process to be performed by a licensed health care professional when
the member's complaint involves an issue of medical appropriateness, including health care
setting, level of care or effectiveness of a covered benefit or is experimental or investigational
under the coverage document. FACT SHEET
H.B. 2599
Page 2
5. Requires an insurer to provide a written determination by the applicable deadline and include
the basis, criteria used, clinical reasons and rationale for the determination.
6. Requires an insurer, before the insurer makes a final internal adverse determination that relies
on new or additional evidence generated by the insurer, to provide the new or additional
information to the member free of charge sufficiently in advance of the determination to allow
the member a reasonable opportunity to respond within the applicable time frames for the
insurer to provide the member with a written determination.
7. Requires an insurer, for individual and group plans for which the insurer does not elect to offer
a voluntary internal appeal, to:
a) send the member a written determination within 30 days after the insurer receives the
appeal request, except for a claim denial for service that has already been provided; and
b) for a claim denial for service that has already been provided, send the member a written
determination within 60 days after the insurer receives the appeal request.
8. Requires a member to be considered to have exhausted an insurer's internal levels of review if
the insurer fails to comply with health care appeals laws, except to the extent that the member
requested or agreed to the delay, and allows the member to simultaneously initiate an expedited
external independent review.
Expedited Medical Review Requirements
9. Specifies that any member who receives an adverse determination, except for a claim denial
for service or a rescission of coverage, may pursue an expedited medical review if the provider
certifies and provides documentation that the appeal time frames are likely to cause a
significant negative change in the member's medical condition.
10. Increases, from one business day to 72 hours, the time period within which a utilization review
agent must make a determination after receiving certification and supporting documentation
from the provider.
11. Requires a utilization review agent, if the member's complaint involves an issue of medical
appropriateness, including health care setting, level of care or effectiveness of a covered benefit
or is experimental or investigational under the coverage document, to consult with specified
health care professionals before making a determination.
12. Requires the utilization review agent, if a member choose to proceed with an expedited medical
review and the member's complaint involves an issue of medical necessity or appropriateness,
including health care setting, level of care or effectiveness of a covered benefit or is
experimental or investigational under the coverage document, to select a health care provider
to review the appeal and render the determination based on the utilization review plan adopted
by the agent.
Initial Appeals
13. Replaces the term informal reconsideration with the term initial appeal and applies the
requirements relating to informal reconsiderations to initial appeals. FACT SHEET
H.B. 2599
Page 3
14. Specifies that any member who receives an adverse determination, rather than any member
who is denied a service, to request an initial appeal of the denial.
15. Requires a utilization review agent, if the member's appeal involves an issue of medical
necessity or appropriateness, including health care setting, level of care or effectiveness of a
covered benefit or is experimental or investigational under the coverage document, to select a
provider to review the appeal and render a determination based on the utilization review plan.
16. Requires a utilization review agent to send, within the applicable timeframe, the member and
the member's treating provider notice of the determination and the basis, criteria used, clinical
reasons and rationale.
17. Requires a determination to include a notice of the option to proceed to the voluntary internal
appeal process or the external independent review, whichever is applicable.
Voluntary Internal Appeal
18. Allows an insurer, for group plans and grandfathered individual plans, to elect to offer a
voluntary internal appeal as an additional internal level of review after a determination of an
initial appeal.
19. Requires an insurer that elects to offer a voluntary internal appeal for the insurer's group plans:
a) send the member a written determination within 15 days after the insurer receives the initial
appeal request and within 15 days after the insurer receives the voluntary internal appeal
request, except for a claim denial for service that has already been provided; and
b) for a claim denial for service that has already been provided, send the member a written
determination within 30 days after the insurer receives the initial appeal request and within
30 days after the insurer receives the voluntary internal appeal request.
20. Requires the voluntary internal appeal to be decided by a physician, provider or other health
care professional when the member's complaint involves an issue of medical appropriateness,
including health care setting, level of care or effectiveness of a covered benefit or is
experimental or investigational under the coverage document.
21. Specifies that a member may appeal an adverse determination to the voluntary appeal level if
an insurer elects to include, as part of its internal review levels, a voluntary internal appeal
level.
22. Replaces the term formal appeal with the term voluntary internal appeal and applies the
requirements relating to informal reconsiderations to initial appeals.
External Independent Review
23. Stipulates that, if a member's request for a covered service or claim for a covered service is
denied at all applicable levels of review or exhausted, the member may initiate an external
independent review within four months after receiving notice of the adverse determination. FACT SHEET
H.B. 2599
Page 4
24. Requires an insurer and an independent review organization to maintain all records related to
internal and external appeals and exception requests for at least three years after the completion
of the appeals process or exception request process.
25. Requires a utilization review agent's acknowledgment of a request for an external independent
review to include notice to the member that the member has five business days after receiving
the notice to submit additional written evidence to DIFI for consideration by the assigned
independent review organization.
26. Requires the Director of DIFI, within one business day after receiving additional written
evidence, to provide a copy of the evidence to the insurer and independent review organization.
27. Require an independent review organization to consider the evidence in making its
determination and allows the independent review organization, in its discretion, to consider
evidence submitted after five business days.
28. Requires an independent review organization's determination to be consistent with the
following:
a) the independent review organization reviewer must consider the following in rendering a
determination, as appropriate and available under the circumstances: and
i. the member's pertinent medical records;
ii. the treating provider's recommendation;
iii. any consulting report from a health care professional;
iv. any document submitted by an insurer or member;
v. for claims or requests for services denied for reasons other than as experimental or
investigational, the independent review organization must also consider: and
1. the most appropriate practice guidelines, which must include applicable evidence-
based standards and may include any other practice guidelines developed by the
federal government, national or professional medical societies, boards and
associations;
2. any applicable clinical review criteria developed and used by the health carrier or
its designee utilization review organization; and
3. the opinion of the independent review organization’s clinical reviewer or reviewers
after considering specified information to the extent the information or documents
are available and the clinical reviewer or reviewers consider appropriate;
vi. for claims or requests for services denied as experimental or investigational, the
independent review organization must also consider the terms of coverage under the
member's policy with the insurer to ensure that except for an insurer's determination
for an experimental or investigational service, the reviewer's opinion is not contrary to
the terms of coverage and any of the following:
1. whether the service has been approved by the U.S. Food and Drug Administration
for the condition; or
2. whether the medical or scientific evidence or evidence-based standards
demonstrate that the expected benefit of the service is more likely than not to be
beneficial to the member than any available standard service and that any adverse
risk is not substantially increased over adverse risks of available standard services;
b) the independent review organization reviewer's written determination must include:
i. a description of the covered person's medical condition; FACT SHEET
H.B. 2599
Page 5
ii. a description of the indicators relevant to determining whether there is sufficient
evidence to demonstrate that the expected benefit of the service is more likely than not
to be beneficial to the member than any available standard service and that any adverse
risk is not substantially increased over adverse risks of available standard services;
iii. a description and analysis of any medical or scientific evidence considered in reaching
the determination;
iv. a description and analysis of any evidence-based standard; and
v. information on whether the reviewer's rationale for the determination is based on
specified information.
29. Reduces, from 30 days to 10 days, the extension period for external independent review
determinations that an independent review organization, member or utilization review agent
may request from the Director of DIFI.
30. Allows a member to request to initiate an expedited external independent review, in specified
circumstances, within four months, rather than five business days, after the member receives
notice of the adverse determination.
31. Allows a member, for an adverse determination involving an experimental or investigational
service, to make an oral request if the member's treating physician certifies in writing that the
recommended service or treatment would be significantly less effective if not promptly
initiated.
Miscellaneous
32. Requires an insurer's policy information packet to be prominently displayed on its website.
33. Replaces the definition of adverse decision with adverse determination and modifies the
definition.
34. Modifies the definition of indirect denial to include the timelines prescribed for prior
authorizations.
35. Modifies the definition of denial to include a denial, reduction or termination of service or a
rescission.
36. Defines terms.
37. Makes technical and conforming changes.
38. Becomes effective on January 1, 2025.
House Action
COM 2/13/24 DPA 10-0-0-0
3
rd
Read 2/29/24 55-4-0-0-1
Prepared by Senate Research
March 7, 2024
MG/cs