Free Declaration - District Court of Arizona - Arizona

EXHIBIT 16 TO SUPPLEMENTAL DECLARATION OF ELLEN KATZ

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DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850

Center for Medicaid and State Operations

Mr. Anthony D. Rodgers Director Arizona Health Care Cost Containment System 801 East Jefferson Phoenix, AZ 85034 Dear Mr. Rodgers: Thank you for acceptance letter of November 21, 2006 to the State of Arizona's section 1115 demonstration projects (nos. 11-W-00032/09 and 21-W-00009/9) for the five year period beginning October 27, 2006. This letter serves to document the Center of Medicaid and Medicare's (CMS) acceptance of those technical clarifications to the demonstration's waiver list, cost not otherwise matchable authorities (CNOM) and Special Terms and Conditions (STC) as detailed within the letter. CMS agrees that these technical clarifications will help to ensure that the documentation associated with the demonstration extension accurately reflects the historical operation of the State's section 1115 demonstration project. CMS agrees to the following:
· ·

Revising the Freedom of Choice waiver to include a reference for pre-paid inpatient health plans. Clarifying the Medicaid CNOM list by: o Adding the existing authority to incur expenditures eligible for Federal matching funds to provide Medicaid coverage to individuals with adjusted net countable family income at or below 100 percent of the FPL; o Limiting the basis for a person enrolled with a managed care organization to disenroll for cause at any time to issues related to continuity of care; o Permitting the State to employ a preadmission screening (PAS) assessment rather than the SSA disability standards to determine persons eligible for long-term care and home and community based services; o Permitting the State to restrict the application of the special income limit of 300 percent of the FBR to persons who meet the standard established by the State's PAS assessment regardless of whether the person resides in a hospital, nursing facility or ICF-MR ­ this includes permitting the State to apply the special income standard as soon as the person meets the standards of the PAS; o Permitting the State to exclude parental income for children under the age of 18 who meet the standards of the PAS without regard to whether the child has been out of the home for 30 or more days; however, to the extent that the child has

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Page 2 ­ Mr. Anthony D. Rodgers countable income, post-eligibility treatment of income regulations will apply to that income for children receiving long term care or home and community based services. CMS recognizes that the State is committed to implementation of an Employer Sponsored Insurance program and the precise parameters of that program have not been finalized the State will be bound by the terms finally approved by CMS on October 27, 2006 in the Special Terms and Conditions. It is also agreed that the "per member ­ per month" costs reflected in paragraph 66(a)(iii) and the required financial reporting by the State to CMS are effective as of October 1, 2006. Enclosed are the waiver list, CNOM list and STCs with the prescribed technical clarifications. We would like to thank you and your staff for working with us on this project, and we look forward to continuing our collaborative efforts. Sincerely,

Clarke Cagey Director Division of State Waivers and Demonstrations

Cc:

Linda Minamoto Steven Rubio

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CENTERS FOR MEDICARE & MEDICAID SERVICES WAIVER LIST NUMBERS: 11-W-00032/09 (Title XIX) 21-W-00009/9 (Title XXI) Arizona Medicaid Section 1115 Demonstration Arizona Health Care Cost Containment System (AHCCCS)

TITLE: AWARDEE:

All Medicaid and State Children's Health Insurance Program requirements expressed in law, regulation, and policy statement not expressly waived or identified as not applicable in this list, shall apply to the demonstration project beginning October 27, 2006, through September 30, 2011. In addition, these waivers may only be implemented consistent with the approved Special Terms and Conditions (STCs). 1. Proper and Efficient Administration Section 1902(a)(4) (42 CFR 438.52, 438.56) To permit the State to limit acute care enrollee's and ALTCS enrollees' choice of managed care plans to a single Prepaid Inpatient Health Plan (PIHP) -- Children's Rehabilitative Services Program (CRS) ­ for the treatment of conditions covered under that program and to permit the State to limit acute care enrollees' choice of managed care plans to a single PIHP ­ the Arizona Department of Health Services Division of Behavioral Health ­ for the treatment of behavioral health conditions, as long as enrollees in such plans may request change of primary care provider at least at the times described in Federal regulations at 42 CFR 438.56(c). To permit the State to automatically reenroll an individual who loses Medicaid eligibility for a period of 90 days or less in the same PIHP in which he or she was previously enrolled. To permit the State to restrict the ability to disenroll without cause after an initial 30 day period from a managed care plan. To permit the state to restrict beneficiary disenrollment based on 42 CFR 438.56(d)(2)(iv), which provides for disenrollment for causes including but not limited to, poor quality of care, lack of access to services covered under the contract, or lack of access to providers experienced in dealing with the enrollee's health care needs 2. Cost Sharing Section 1902(a)(14) (42 CFR 447.51 and 447.52)

To enable the State to charge a premium to parents of ALTCS Medicaid qualified disabled children (under 18 years of age) when the parent's annual adjusted gross income is at or exceeds 400 percent of the FPL. 3. Disproportionate Share Hospital (DSH) Requirements Section 1902(a)(13)

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To relieve the State from the obligation to make payments for inpatient hospital services that take into account the situation of hospitals with a disproportionate share of low-income patients in accordance with the provisions for disproportionate share hospital payments that are described in the STCs. 4. Freedom of Choice Section 1902(a)(23) (42 CFR 431.51)

To enable the State to restrict freedom of choice of providers by furnishing benefits through enrollment of eligible individuals in managed care organizations and/or Prepaid Inpatient Health Plans. 5. Drug Rebate Section 1902(a) (54) (42 CFR 456.700 through 456.725)

To enable the State to receive payment for FFS and PIHP outpatient drugs without having to comply with the requirements of section 1927(g) of the Act pertaining to drug use review. 6. Retroactive Eligibility Section 1902(a) (34) (42 CFR 435.914)

To enable the State to waive the requirement to provide medical assistance for up to 3 months prior to the date that an application for assistance is made for AHCCCS. 7. Amount, Duration, Scope of Services Section 1902(a)(10)(B) (42 CFR 440.240 and 440.230)

To enable the State to offer different or additional services to some categorically eligible or medically needy individuals, than to other eligible individuals, based on differing care arrangements in the Spouses as Paid Caregivers Program. To permit managed care organizations (MCOs) and PIHPs to provide additional or different benefits to enrollees, that may not be available to other eligible individuals. 8. Estate Recovery Section 1902(a)(18)() (42 CFR 433.36) To enable the State to exempt from estate recovery as required by section 1917(b), the estates of acute care enrollees age 55 or older who receive long-term care services. Section 1902(a)(10)(A)(ii)(V) (42 CFR 435.217 and 435.236)

. 9. Eligibility Based on Institutional Status

To the extent that the State would be required to make eligible individuals who are in an acute care hospital for greater than 30 days and who do not meet the level of care standard for long term care services.

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CENTERS FOR MEDICARE & MEDICAID SERVICES EXPENDITURE AUTHORITY NUMBERS: 11-W-00032/09 21-W-00009/9 Arizona Medicaid Section 1115 Demonstration Arizona Health Care Cost Containment System (AHCCCS)

TITLE: AWARDEE:

Medicaid Costs Not Otherwise Matchable Under the authority of section 1115(a)(2) of the Social Security Act (the Act), expenditures made by the State for the items identified below (which would not otherwise be included as matchable expenditures under section 1903) shall, for the period of this demonstration, be regarded as matchable expenditures under the State's Medicaid State plan: I. Expenditures Related to Administrative Simplification and Delivery Systems 1. Expenditures under contracts with managed care entities that do not meet the requirements in section 1903(m)(2)(A) of the Act specified below. AHCCCS's managed care plans participating in the demonstration will have to meet all the requirements of section 1903(m) except the following: a Section 1903(m)(2)(A)(i), but only insofar as the provisions of section 1903(m)(1)(A)(i) would otherwise preclude Native Americans from having a choice to enroll in either Indian Health Service facilities or AHCCCS plans. b Section 1903(m)(2)(A)(vi) insofar as it requires compliance with requirements in section 1932(a)(4) and Federal regulations at 42 CFR 438.56(c)(2)(i) that enrollees be permitted an initial period after enrollment to disenroll without cause that would be longer than 30 days. c Section 1903(m)(2)(A)(xii) but only insofar as it requires the State to comply with section 1932(a)(3) and Federal regulations at 42 CFR 438.52 to offer a choice of at least two managed care organizations (MCOs) in the Arizona Long Term Care Service (ALTCS) and Comprehensive Medical and Dental Program (CMDP) programs, as long as enrollees in such plans have a choice of at least two primary care providers, and may request change of primary care provider at least at the times described in Federal regulations at 42 CFR 438.56(c). Notwithstanding this authority, the State must offer a choice of at least two MCOs to elderly and physically disabled individuals in Maricopa County. d Section 1903(m)(2)(H) and Federal regulations at 42 CFR 438.56(g) but only insofar as to allow the State to automatically reenroll an individual who loses Medicaid eligibility for a period of 90 days or less in the same managed care plan from which the individual was previously enrolled.

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2. Expenditures that would have been disallowed under section 1903(u) of the Act and Federal regulations at 42 CFR 431.865 based on Medicaid Eligibility Quality Control findings. 3. Expenditures for outpatient drugs which are not otherwise allowable under section 1903(i)(10). 4. Expenditures for direct payments to Critical Access Hospitals for services provided to AHCCCS enrollees in the Acute Care and ALTCS managed care programs that are not otherwise allowable under Federal regulations at 42 CFR 438.60. 5. Expenditures for inpatient hospital and long-term care facility services, other institutional and non-institutional services (including drugs) provided to AHCCCS fee-for-service beneficiaries, that exceed the amounts allowable under section 1902(a)(30)(A) (Federal regulations at 42 CFR 447.250 through 447.280, 447.300 through 447.334) but are in accordance with STC #53 entitled "Applicability of Feefor-Service Upper Payment Limit." 6. Expenditures for inpatient hospital services that take into account the situation of hospitals with a disproportionate share of low-income patients but are not allowable under sections 1902(a)(13)(A) and 1923 of the Act, but are in accordance with the provisions for DSH payments that are described in the STCs. II. Expenditures Related to Expansion of Existing Eligibility Groups based on Eligibility Simplification 7. Expenditures related to: a. Medical assistance furnished to ALTCS enrollees who are eligible only as a result of the disregard from eligibility of income currently excluded under section 1612(b) of the Act, and medical assistance that would not be allowable for some of those enrollees but for the disregard of such income from posteligibility calculations. b. Medical assistance furnished to ALTCS enrollees who are financially eligible with income equal to or less than 300 percent of the Federal Benefit Rate and who meet the criteria in the preadmission screening instrument (PAS) regardless of whether or how long they actually have been in an institutional setting; that is, notwithstanding the requirements of 42 CFR 435.540 (regarding disability determination in accordance with SSI standards) and 435.662 (regarding residence in an institutional setting for at least 30 days). c. Medical assistance furnished to some dependent children or spouses who qualify for ALTCS based on a disregard of income and resources of legally responsible relatives or spouses during the month of separation from those relatives or spouses. d. Medical assistance furnished to individuals who are eligible as Qualified Medicare Beneficiary, Special Low Income Beneficiary, Qualified Individuals-

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1, or Supplemental Security Income Medical Assistance Only (SSI MAO) beneficiaries based only on a disregard of in-kind support and maintenance (ISM). e. Medical assistance furnished to individuals who are eligible based only on an alternate budget calculation for ALTCS and SSI-MAO income eligibility determinations when spousal impoverishment requirements of section 1924 of the Act do not apply or when the applicant/recipient is living with a minor dependent child. f. Medical assistance furnished to individuals who are eligible in SSI-MAO groups based only on a disregard of resources in the form of insurance and burial funds, household goods, mineral rights, oil rights, timber rights, and personal effects. g. Medical assistance furnished to individuals who are eligible only based on the disregard of interest and dividend from resources, and are in the following eligibility groups: i. ii. iii. iv. The Pickle Amendment Group under 42 CFR 435.135; The Disabled Adult Child under section 1634(c); Disabled Children under section 1902(a)(10)(A)(i)(II); and The Disabled Widow/Widower group under section 1634(d)

h. Medical assistance furnished to ALTCS enrollees under the eligibility group described in section 1902(a)(10)(A)(ii)(V) of the Act that exceeds the amount that would be allowable except for a disregard of interest and dividend from the post-eligibility calculations. i. Medical assistance provided to individuals who would be eligible but for excess resources under the "Pickle Amendment," section 503 of Public Law Number 94-566; section 1634(c) of the Act (disabled adult children); or section 1634(b) of the Act (disabled widows and widowers). j. Medical assistance that would not be allowable but for the disregard of quarterly income totaling less than $20 from the post-eligibility determination. III. Expenditures Related to Benefits 8. Expenditures associated with the provision of Home & Community-Based Services (HCBS) to disabled individuals under the age of 18 with income levels up to 300 percent of the SSI income level without considering parental income as otherwise required by section 1902(a)(10)(C)(i) and 42 CFR 435.602. 9. Expenditures associated with the provision of Home & Community-Based Services (HCBS) to individuals with income levels up to 300 percent of the SSI income level or are enrolled in the ALTCS Transitional program and who meet the criteria in the preadmission screening instrument (PAS) regardless of whether or how long they actually have been in an institutional setting.

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10. Expenditures for family planning services for up to 24 months, with an annual redetermination at 12 months, for uninsured women that have lost Medicaid pregnancy coverage within the last year at the conclusion of their 60-day postpartum period and who are not otherwise eligible for Medicare, Medicaid (including other components of this section 1115 demonstration), State Children's Health Insurance Program, or have other public or creditable private health insurance coverage (Family Planning Extension Program). 11. Expenditures for services to an AHCCCS enrollee age 21-64 residing in an Institution for Mental Disease for the first 30 days of an inpatient episode, subject to an aggregate annual limit of 60 days. The proportion of total State expenditures that will be recognized under this demonstration will be phased out, in accordance with clause 55 of the Terms and Conditions, and will expire entirely in fiscal year 2009. 12. Expenditures for demonstration caregiver services provided by spouses of the demonstration participants. 13. Expenditures to provide coverage through employer-sponsored insurance for eligible employees of small businesses and with family income below 200 percent of the Federal poverty level (FPL) that would not otherwise be allowable because it is not cost effective. 14. Expenditures to provide Medicaid coverage to individuals who have medical bills incurred by the family unit sufficient to reduce their adjusted net countable family income to 40 percent or less of the FPL and who are not otherwise eligible for Medicaid. 15. Expenditures to provide Medicaid coverage to individuals with adjusted net countable family income at or below 100 percent of the FPL who are not otherwise eligible for Medicaid. 16. Expenditures to provide coverage to parents of Medicaid or SCHIP children with adjusted net countable income from 100 percent up to and including 200 percent of the FPL who are not otherwise eligible for Medicare, Medicaid, or SCHIP and for whom the State may claim title XIX funding when title XXI funding is exhausted. Medicaid Requirements Not Applicable Medicaid populations made eligible by virtue of the expenditure authorities expressly granted in this Demonstration are not subject to Medicaid laws or regulations except as specified in the STCs and waiver and expenditure authorities for this Demonstration. The following Medicaid requirements will not apply to such demonstration populations: 1. Cost Sharing Section 1902(a)(14) (42 CFR 447.50 through 447.56)

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To enable the State to impose cost sharing, to the extent necessary, for parents of Medicaid or SCHIP children with adjusted net countable income from 100 up to and including 200 percent of the FPL, for those in the employer- sponsored insurance program individuals without dependent children between 0-100 percent of the FPL, and for the MED expansion group. 2. Amount, Duration, Scope of Services Section 1902(a)(10)(B) (42 CFR 440.210)

To enable the State to modify the Medicaid benefits package for those in the employer-sponsored insurance program in order to offer a different benefit package than would otherwise be required under the State plan. This authority is granted only to the extent necessary to allow those in the employer-sponsored insurance plan to receive coverage through a private or employer-sponsored insurance plan, which may offer a different benefit package than that available through the State plan. 3. Retroactive Coverage Section 1902(a)(34) (42 CFR 435.914)

Individuals who enroll in the employer-sponsored insurance program and parents of Medicaid or SCHIP children with adjusted net countable income from 100 up to and including 200 percent of the FPL, individuals without dependent children between 0100 percent of the FPL, and for the MED expansion group will not be retroactively eligible. 4. Providing Medical Assistance Section 1902(a)(10)

To enable the State to deny eligibility for medical assistance to parents of Medicaid or SCHIP children who have voluntarily terminated health insurance coverage during the 3 month period prior to application and who have adjusted net countable income from 100 up to and including 200 percent of the FPL. Medicaid Requirements Not Applicable to the Family Planning Extension Program: 1. Amount, Duration, and Scope (Comparability) Section 1902(a)(10)(B) (42 CFR 440.240) To the extent necessary to allow the State to offer the demonstration population a benefit package consisting only of CMS-approved family planning services. Section 1902(a)(43)(A) (42 CFR 440.40 and 441.50 through 441.62)

2. Early and Periodic Screening, Diagnostic and Treatment (EPSDT)

The State will not furnish or arrange for EPSDT services to the demonstration population.

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3. Retroactive Eligibility

Section 1902(a)(34) (42 CFR 435.914)

Individuals in the Family Planning Extension program will not be retroactively eligible. 4. Prospective Payment System for Federally Section 1902(a)(15) Qualified Health Centers and Rural Health Clinics (42 CFR 447.371) To enable the State to establish reimbursement levels to these clinics that would compensate them solely for family planning services. 5. Eligibility Re-determination Section 1902(a)(19) (42 CFR 435.916)

To enable the State to exempt women, who are eligible for the family planning program by virtue of losing Medicaid eligibility at the conclusion of their 60-day postpartum period (SOBRA women), from reporting changes in income during their 12-month eligibility period. SCHIP Costs Not Otherwise Matchable Under the authority of section 1115(a)(2) of the Act as incorporated into title XXI by section 2107(e)(2)(A), State expenditures described below, shall, for the period of this project and to the extent of the State's available allotment under section 2104 of the Act, be regarded as matchable expenditures under the State's title XXI plan. All requirements of title XXI will be applicable to such expenditures for the demonstration populations described below, except those specified below as not applicable to these expenditure authorities. 1. Childless Adults. Subject to STC #38, expenditures to provide coverage to uninsured individuals over age 18 with adjusted net countable family income between 40 percent and 100 percent of the FPL, who are childless adults, and who are not otherwise eligible for Medicare, Medicaid (except for demonstration title XIX expansion groups), or have other creditable health insurance coverage. 2. Parents. Subject to STC #38, expenditures to provide health care coverage consistent with the requirements of section 2103 to uninsured individuals whose adjusted net countable family income above 100 percent of the FPL up to and including 200 percent of the FPL, who are parents of children enrolled in the Arizona Medicaid or title XXI program, and who are not otherwise eligible for Medicare, Medicaid, or have other creditable health insurance coverage. 3. Employer-Sponsored Insurance. Expenditures to provide coverage through employer-sponsored insurance for employees of small businesses and with family income below 200 percent of the FPL and who are not eligible for Medicare or Medicaid should CMS approve the use of title XXI funds. 6 Page 11 of 49

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SCHIP Requirements Not Applicable to SCHIP Expenditure Authorities 1. General Requirements, Eligibility, and Outreach Section 2102 (42 CFR 457.90)

The State child health plan does not have to reflect the demonstration population, and eligibility standards do not have to be limited by the general principles in section 2102(b) of the Act. The State must perform eligibility screenings to ensure the demonstration populations do not include individuals otherwise eligible for Medicare, Medicaid (except for childless adults described in SCHIP CNOM #1) or have other creditable health insurance coverage. 2. Federal Matching Payment and Family Coverage Limits Section 2105 (42 CFR 457.618)

The State will be allowed to receive Federal matching payment for the Demonstration Populations without the restrictions described in section 2105(c)(2) that would otherwise require the State to cover populations other than targeted low-income children under the 10 percent administrative cap. This provision does not waive the 10 percent administrative cap for title XXI expenditures. It does, however, allow the State to cover a population besides children outside of a health service initiative and the 10 percent administrative cap, which would be the customary vehicle for covering a population other than targeted low-income children.

3. Annual Reporting Requirements

Section 2108 (42 CFR 457.700 through 457.750)

The State does not have to meet the annual reporting requirements (the submission of an annual report into the State Annual Report Template System of section 457.750 for the demonstration populations. The State will report on issues related to the demonstration populations in quarterly and annual reports and enrollment data through the Statistical Enrollment Data System. 4. Cost Sharing Section 2103(e) (42 CFR 457.530 through 457.560)

Rules governing cost sharing under section 2103(e) of the Act shall not apply to the demonstration populations to the extent necessary to impose cost sharing for parents, childless adults, and for those in the employer- sponsored insurance program. 5. Restrictions on Coverage and Eligibility To Targeted Low-Income Children Section 2103 and 2110

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Coverage and eligibility for the demonstration populations are not restricted to targeted low-income children. 6. Benefit Package Requirements Section 2103

To permit the State to offer a benefit package for the employer-sponsored insurance program that does not meet the requirements of section 2103 at Federal regulations at 42 CFR 457.410(b)(1).

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SPECIAL TERMS AND CONDITIONS ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM (AHCCCS) MEDICAID SECTION 1115 DEMONSTRATION

NUMBER:

11-W-00032/09 21-W-00009/9 Arizona Health Care Cost Containment System -- AHCCCS, A Statewide Approach of Cost Effective Health Care Financing

TITLE:

AWARDEE: Arizona Health Care Cost Containment System

I. PREFACE The following are the Special Terms and Conditions (STCs) for Arizona's section 1115(a) Medicaid demonstration extension (hereinafter "Demonstration"). The parties to this agreement are the State of Arizona and the Centers for Medicare & Medicaid Services (CMS). This Demonstration is approved for a 5-year period, from October 27, 2006, through September 30, 2011. The STCs set forth below and the lists of waivers and expenditure authorities are incorporated in their entirety into the letter approving the Demonstration. The STCs are effective October 14, 2006, unless otherwise specified. All previously approved STCs are superseded by the STCs set forth below. The STCs have been arranged into the following subject areas: Program Overview; General Program Requirements; General Reporting Requirements; Demonstration Program Design Inclusive of Eligibility; Benefits and Enrollment; Cost-Sharing for Acute Care Services; Long Term Care Services; Health Insurance Flexibility & Accountability (HIFA); Family Planning; Institution for Mental Disease Phase-Down; Evaluation; General Financial Requirements; Monitoring Budget & Allotment Neutrality: and a Timeline of State Deliverables.

II. PROGRAM OVERVIEW Until 1982, Arizona was the only State that did not have a Medicaid program under title XIX. In October 1982, Arizona implemented the AHCCCS as a section 1115 demonstration project. From October 1982 until December 1988, AHCCCS covered only acute care services, except for 90-day post-hospital skilled nursing facility coverage. In November 1988, a 5-year extension of the program was approved (later amended to 6 years) by CMS to allow Arizona to implement a capitated long term care (LTC) program for the elderly and physically disabled (EPD) and the developmentally disabled (DD) populations. The Arizona Long Term Care System (ALTCS) began in December 1988 for DD members and in January 1989 for EPD members. It is administered as a distinct program from the acute care program. Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 14 of 49 1

On October 1, 1990, AHCCCS began phasing in comprehensive behavioral health services, beginning with coverage of seriously emotionally disabled children under the age of 18 years who require residential care. Over the next 5 years, behavioral health coverage was extended to all Medicaid-eligible persons. In November of 2000, Arizona voters approved Proposition 204, which expanded income limits to 100 percent of the Federal poverty level (FPL) for full acute care Medicaid. This expansion was approved in January 2001 by CMS and included coverage up to 100 percent for traditional Temporary Assistance for Needy Families and SSI populations as well as adults without dependent children in addition to the Medical Expense Deduction (MED) program for Medicaideligible persons. In 2001 the AHCCCS program submitted a HIFA amendment and the State received permission from CMS to use title XXI funds to expand coverage to two populations: (1) adults over age 18 without dependent children and with adjusted net family income at or below 100 percent of the FPL, and (2) individuals with adjusted net family income above 100 percent FPL and at or below 200 percent FPL who are parents of children enrolled in the Arizona Medicaid or State Health Insurance Program (SCHIP) programs, but who themselves are not eligible for either program. Children are enrolled in the Arizona SCHIP program, known as "KidsCare." On March 13, 2006, Arizona submitted a "Waiver Renewal Proposal" for its entire section 1115 demonstration. This renewal is significant in that it is the first time that the ALTCS portion of the demonstration is required to establish budget neutrality. III. GENERAL PROGRAM REQUIREMENTS 1. Compliance with Federal Non-Discrimination Statutes. The State agrees that it shall comply with all applicable Federal statutes relating to non-discrimination. These include, but are not limited to, the Americans with Disabilities Act of 1990, Title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975. 2. Compliance with Medicaid Law, Regulation, and Policy. All requirements of the Medicaid program expressed in law, regulation, and policy statement, not expressly waived or identified as not applicable in the award letter of which these terms and conditions are part, shall apply to the Demonstration. 3. Compliance with the Deficit Reduction Act of 2005. For the current extension period of this demonstration, the foregoing requirement shall apply to all applicable regulation and policy issued by CMS, with respect to the Deficit Reduction Act (DRA) signed into law on February 8, 2006, including but not limited to the documentation of citizenship requirements contained in 1903(x) of the Social Security Act (the Act). 4. Changes in Law. The State must, within the time frame specified in law, come into compliance with any changes in Federal law affecting the Medicaid and SCHIP programs that occur after the approval date of this Demonstration, unless the change is made to a requirement that has been explicitly waived. Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 15 of 49 2

5. Impact on Demonstration of Changes in Federal Law, Regulation and Policy Statements. To the extent that a change in Federal law impacts State Medicaid spending on program components included in the Demonstration, CMS shall incorporate such changes into a modified budget neutrality expenditure cap for the demonstration. The modified budget neutrality expenditure cap would be effective upon implementation of the change in the Federal law. The growth rates for the budget neutrality baseline are not subject to this STC. If mandated changes in the Federal law require State legislation, the changes must take effect on the day such State legislation becomes effective, or on the last day such legislation was required to be in effect under the law. 6. State Plan Amendments. The State shall not be required to submit title XIX or title XXI State plan amendments for changes to any populations covered solely through the Demonstration. If a population covered through the State plan is affected by a change to the Demonstration, a conforming amendment to the State plan may be required except as otherwise noted in these STCs. 7. Changes Subject to the Amendment Process. Changes related to eligibility, enrollment limitations, benefits, enrollee rights, delivery systems, cost sharing, evaluation design, sources of non-Federal share of funding, supplemental payment programs, budget and allotment neutrality, and other comparable program elements must be submitted to CMS as amendments to the Demonstration. The state must not implement changes to these elements without prior approval by CMS. Amendments to the Demonstration are not retroactive and Federal financial participation (FFP) may not be available for changes to the Demonstration that have not been approved through the amendment process set forth in paragraph 8 below. This paragraph does not apply to changes that are subject to the State plan amendment process. However, copies of all State plan amendments must be submitted to the Demonstration Project Officer as well as to the Regional Office. 8. Demonstration Amendment Process: Demonstration amendment requests must be submitted to CMS for approval no later than 120-days prior to the date of implementation and may not be implemented until approved. Amendment requests must be reviewed by the Federal Review Team and must include, but are not limited to, the following: a) An explanation of the public process used by the State to reach a decision regarding the requested amendment; b) A data analysis that identifies the specific "with waiver" impact of the proposed amendment on the current budget neutrality expenditure cap. Such analysis shall include current "with waiver" and "without waiver" status on both a summary and detailed level through the current extension approval period using the most recent actual expenditures, as well as summary and detailed projections of the change in the "with waiver" expenditure total as a result of the proposed amendment which isolates (by Eligibility Group) the impact of the amendment; c) An analysis of the impact on allotment neutrality if the amendment affects a title XXI HIFA population d) A detailed description of the amendment, including impact on beneficiaries, with sufficient supporting documentation; and e) A description of how the evaluation design shall be modified to incorporate the amendment provisions. Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 16 of 49 3

9. Extension of the Demonstration. If the State intends to extend the Demonstration beyond the period of approval granted herein the State is responsible for reviewing, complying and adhering to the timeframes and reporting requirements as set forth in section 1115 (e) the Act and the STCs. During the 6-month period ending 1-year before the date this extension is scheduled to expire (September 30, 2011), the State must submit to CMS written notice of the State's intent to extend the Demonstration. Regardless of the authority for the extension, the State must submit to CMS no later than September 30, 2010, a complete extension application, including any proposed Demonstration modifications, and complete budget and allotment neutrality data. 10. Demonstration Phase-Out. The State may suspend or terminate this Demonstration in whole or in part at any time prior to the date of expiration. The State must promptly notify CMS in writing of the reason(s) for the suspension or termination, together with the effective date. In the event the State elects to phase out the Demonstration, the State shall submit a phase-out plan to CMS at least 6-months prior to initiating phase-out activities. The State may also submit an extension plan on a timely basis to prevent disenrollment of Demonstration enrollees. Nothing herein shall be construed as preventing the State from submitting a phase-out plan with an implementation deadline shorter than 6-months when such action is necessitated by emergent circumstances. The phase-out plan and extension plan are subject to CMS approval. If the project is terminated or any relevant waivers suspended by the State, FFP shall be limited to normal closeout costs associated with terminating the Demonstration, including services and administrative costs of disenrolling participants. 11. Enrollment Limitation During Demonstration Phase-Out. If the State elects to suspend, terminate, or not renew this Demonstration as described in STC #10, during the last 6 months of the Demonstration, the enrollment of individuals who would not be eligible for Medicaid under the current Medicaid State plan shall not be permitted. Enrollment may be suspended if CMS notifies the State in writing that the waiver will not be renewed. 12. CMS Right to Terminate or Suspend. CMS may suspend or terminate the Demonstration in whole or in part at any time before the date of expiration, whenever it determines, following a hearing that the State has materially failed to comply with the terms of the project. CMS shall promptly notify the State in writing of the determination and the reasons for the suspension or termination, together with the effective date. If CMS suspends or terminates the Demonstration, CMS and the State will agree on a phase-out plan. 13. Finding of Non-Compliance. The State does not relinquish its rights to challenge CMS' finding that the State materially failed to comply. 14. Withdrawal of Waiver Authority. CMS reserves the right to withdraw waivers or expenditure authorities at any time it determines that continuing the waivers or expenditure authorities would no longer be in the public interest or promote the objectives of titles XIX or XXI. CMS shall promptly notify the State in writing of the determination and the reasons for the withdrawal, together with the effective date, and shall afford the State an opportunity to request a hearing to challenge CMS' determination prior to the effective date. If a waiver or expenditure authority is withdrawn, CMS and the State will agree on a phase-out plan and Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 17 of 49 4

effective date. Upon the effective date, FFP is limited to normal closeout costs associated with terminating the Demonstration including services and administrative costs of disenrolling participants. 15. Adequacy of Infrastructure. The State will ensure the availability of adequate resources for implementation and monitoring of the Demonstration, including education, outreach, and enrollment; maintaining eligibility systems; compliance with cost sharing requirements; and reporting on financial and other Demonstration components. 16. Public Notice and Consultation with Interested Parties. The State must continue to comply with the State Notice Procedures set forth in 59 Fed. Reg. 49249 (1994) when any program changes to the Demonstration, including, but not limited to, those referenced in paragraph 7, are proposed by the State. 17. Compliance with Managed Care Regulations. The State must comply with the managed care regulations at 42 CFR section 438 et. seq., except as expressly waived or referenced in the expenditure authorities incorporated into the STCs. These managed care regulations apply equally to all managed care organization (MCO) and Prepaid Inpatient Health Plan (PIHP) contracts AHCCCS holds, including managed care contracts with other State agencies. Capitation rates, must be developed and certified as actuarially sound in accordance with Federal regulations at 42 CFR section 438.6(c). 18. Federal Funds Participation. No Federal matching funds for expenditures for this Demonstration will take effect until the effective date identified in the Demonstration approval letter. No FFP is available for this Demonstration for Medicare Part D drugs.

IV. GENERAL REPORTING REQUIREMENTS 19. General Financial Requirements. The State shall comply with all general financial requirements under title XIX and title XXI. 20. Reporting Requirements Relating to Budget and Allotment Neutrality. The State shall comply with all reporting requirements for monitoring budget and allotment neutrality set forth in this Agreement. 21. Budget Neutrality Information. For each quarter, the State will correctly report expenditures and member months that are subject to budget neutrality. Where data are incorrect and upon the request of CMS, the State must submit corrected budget neutrality data. 22. Encounter Data. Any MCOs or PIHPs in the Demonstration shall be responsible for the collection of all data on services furnished to enrollees through encounter data or other methods as specified by the State, and the maintenance of these data at the plan level. The State shall, in addition, develop mechanisms for the collection, reporting, and analysis of these data (which should at least include all inpatient hospital and physician services), as well as a process to validate that each plan's encounter data are timely, complete and accurate. Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 18 of 49 5

The State will take appropriate actions to identify and correct deficiencies identified in the collection of encounter data. The State shall have contractual provisions in place to impose financial penalties if accurate data are not submitted in a timely fashion. 23. Encounter Data Validation Study for New MCOs or PIHPs. If the State contracts with new MCOs or PIHPs, the State shall conduct a validation study 18 months after the effective date of the contract to determine completeness and accuracy of encounter data. The initial study shall include validation through a sample of medical records of Demonstration enrollees. 24. Submission of Encounter Data. The State shall submit encounter data to the Medicaid Statistical Information System (MSIS) system as is consistent with Federal law and section VIII of this document. The State must assure that encounter data maintained at MCOs or PIHPs can be linked with eligibility files maintained at the State. 25. Monthly Calls. CMS shall schedule monthly conference calls with the State. The purpose of these calls is to discuss any significant actual or anticipated developments affecting the Demonstration. Areas to be addressed include, but are not limited to, MCO operations (such as contract amendments and rate certifications), health care delivery, enrollment, cost sharing, family planning issues, quality of care, access, the benefit package, audits, lawsuits, financial reporting and budget neutrality issues, health plan financial performance that is relevant to the Demonstration, progress on evaluations, State legislative developments, and any Demonstration amendments, concept papers, or State plan amendments the State is considering submitting. CMS shall update the State on any amendments or concept papers under review as well as Federal policies and issues that may affect any aspect of the Demonstration. The State and CMS shall jointly develop the agenda for the calls. 26. Quarterly Reports. The State shall submit progress reports in a format agreed upon by CMS and the State no later than 60 days following the end of each quarter. The intent of these reports is to present the State's analysis and the status of the various operational areas. These quarterly reports shall include, but not be limited to (Attachment A ­ Quarterly Report Guidelines): a) A discussion of events occurring during the quarter or anticipated to occur in the near future that affect health care delivery, enrollment, quality of care, access, health plan financial performance that is relevant to the Demonstration, the benefit package, and other operational issues; b) Action plans for addressing any policy and administrative issues identified; c) The quarterly reports must also include at least enrollment data, member month data, and budget neutrality monitoring tables. d) The number of individuals enrolled in the family planning extension program at the end of the quarter, as well as the number of individuals receiving services during the prior quarter; e) HIFA data as required by paragraph 38(f) of this Agreement as well as information on any issues which arise in conjunction with the Employer Sponsored Insurance (ESI) portion of the program, including but not limited to enrollment, quality of care, grievances, and other operational issues; and f) Evaluation activities. Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 19 of 49 6

27. Annual Report. The State shall submit a draft annual report documenting accomplishments, project status, quantitative and case study findings, utilization data, the status of the collection and verification of encounter data and policy and administrative difficulties in the operation of the Acute Care, ALTCS, HIFA, ESI and Family Planning components of the Demonstration. The State shall submit the draft annual report no later than 120-days after the end of each operational year. Within 30-days of receipt of comments from CMS, a final annual report shall be submitted. 28. Final Report. The State shall submit a final report pursuant to the requirements of section 1115 of the Act. 29. Contractor Reviews. The State will forward summaries of the financial and operational reviews that the Arizona Department of Health Services/ Behavioral Health Services (ADHS/BHS) completes on the Regional Behavioral Health Authorities (RBHAs), as well as summaries of reviews that the Arizona Department of Economic Security/Division of Developmental Disabilities (DES/DDD) performs on its subcontracting MCOs. The State will also forward summaries of the financial and operational reviews that AHCCCS completes on the Children's Rehabilitative Services Program (CRS) at the Arizona Department of Health Services (ADHS) as well as the Comprehensive Medical and Dental Program (CMDP) at the Arizona Department of Economic Security (DES). 30. Contractor Quality. AHCCCS will require the same level of quality reporting for DES/DDD, DES/CMDP, ADHS/BHS and ADHS/CRS as for Health Plans and Program Contractors, subject to the same time lines and penalties. 31. Contractor Disclosure of Ownership. Before contracting with any provider of service, the State will obtain from the provider full disclosure of ownership and control and related party transactions, as specified in sections 1124 and 1902(a)(38) of the Act. No FFP will be available for providers that fail to provide this information.

V. ELIGIBILITY, ENROLLMENT, BENEFITS & COST SHARING 32. Eligibility: Arizona covers all of the mandatory Medicaid eligibility groups, 12 optional groups and 4 expansion groups. Mandatory and optional State plan groups described below are subject to all applicable Medicaid laws and regulations except as expressly waived. Those groups made eligible by virtue of the expenditure authorities expressly granted in this Demonstration are not subject to Medicaid laws or regulations except as specified in the STCs and waiver and expenditure authorities for this Demonstration. The criteria for Arizona eligibility groups are as follows (Table 1):
Table 1 ­ Demonstration Groups
Description Program Social Security Act Cite 42CFR Cite

MANDATORY TITLE XIX COVERAGE GROUPS Families and Children

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Description 1931 (Title IVA program that was in place in July 1 996) including: · pregnant women with no other eligible children (coverage for third trimester) · persons 18 years of age, if a full-time student · family with unemployed parent Twelve months continued coverage (transitional medical assistance) 1931 ineligible due to increase in income from employment or work hours or loss of "income disregard." 1931 Extension-Extension of MA when child or spousal support collection results in 1931 ineligibility. (4 months continued coverage)

Program AACP

Social Security Act Cite 1902(a)(10)(A)(i)(I)

42CFR Cite 435.110

AACP

1902(a)(52) 1902(e)(l) 1925(a)(b)(c)

435.112

AACP

408(a)(11)(B) 1902 (a) (10) (A) (i) (I) 1931 (c)

435.115

MANDATORY TITLE XIX COVERAGE GROUPS Pregnant Women, Children, and Newborns
Qualified pregnant women who: · would be AFDC eligible if child were born and · meet AFDC income & resource criteria "S.O.B.R.A. WOMEN & INFANTS" Pregnant women & infants under age 1 with incomes less than or equal to 133% FPL. (optional group extends coverage up to 140% FPL for infants under age 1) "S.O.B.R.A. CHILDREN" Children age 1+ but not yet 6 with incomes at or below 133% FPL. AACP 1902(a)(10)(A)(i)III 1905(n) 435.116

AACP ALTCS

1902(a)(10)(A)(i)(IV) 1902(l)(1)(A)

AACP ALTCS

1902(a)(10)(A)(i)(VI) 1902(l)(1)(C)

"S.O.B.R.A. CHILDREN" AACP Children age 6+ but not yet 19, born after 9-30- ALTCS 83, with income less than or equal to 100% FPL. "DEEMED CATEGORICAL NEWBORNS" Children born to a woman who was eligible and received Medicaid on the date of the child's birth. Children living with their mothers are eligible for 1 year as long as mothers are eligible or would be eligible if pregnant.* AACP

1902(a)(10)(A)(i)(VII) 1902(l)(1)(D)

1902(e)(4)

435.117

MANDATORY TITLE XIX COVERAGE GROUPS Qualified Family Members
Qualified members of family with unemployed principal wage earner (persons who would be eligible if state did not limit number of months AFDC-UP cash was available). AACP 1902(a)(10)(A)(i) 1905(m)(l) 435.119

MANDATORY TITLE XIX COVERAGE GROUPS Aged, Blind, and Disabled
All SSI cash recipients: aged, blind or disabled AACP persons ALTCS 1902(a)(10)(A)(i)(II) 435.120

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Description Qualified severely impaired working blind or disabled persons < 65 who were: a) receiving Title XIX, SSI or state supplement under 1619(a); or b) eligible for Medicaid under 1619(b) in 6/87 "DAC" Disabled adult child (age 18+) who lost SSI by becoming OASDI eligible (i.e., due to blindness or disability that began before age 22) or due to increase in amount of child's benefits. SSI cash or state supplement ineligible for reasons prohibited by Title XIX. SSA Beneficiaries who lost SSI or state supplement cash benefits due to cost of living adjustment (COLA) increase in Title II benefits Disabled widow/widower who lost SSI or state supplement due to 1984 increase in OASDI caused by elimination of reduction factor in PL 98-21. (person must apply for this by 7/88) Disabled widow/widower (age 60-64 and ineligible for Medicare Part A) who lost SSI or state supplement due to early receipt of Social Security benefits. "DC Children" Children under the age of 18 who were receiving SSI Cash on 8/26/96 and would continue to be eligible for SSI Cash if their disability met the childhood definition of disability that was in effect prior to 8/26/96. Children in adoption subsidy/foster care Title IV-E programs

Program AACP

Social Security Act Cite 1902(a)(10)(A)(i)(II) 1905(q)

42CFR Cite 435.120

AACP

1634(c)

AACP ALTCS AACP

435.122 435.135

AACP

1634(b)

435.137

AACP

1634(d)

435.138

AACP

1902(a)(10)(A)(i)(II)

MANDATORY TITLE XIX COVERAGE GROUPS Adoption Assistance and Foster Care Children
473(b)(l) 1902(a)(10)(A)(i)(I) MANDATORY TITLE XIX COVERAGE GROUPS Special Groups "POSTPARTUM" AACP 1902(e)(5) 1902(e)(6) Title XIX eligible women who apply on or before pregnancy ends, (continuous coverage through the month in which the 60th day postpartum period ends) AACP ALTCS 435.145

435.170

OPTIONAL TITLE XIX COVERAGE GROUPS
Description Program Social Security Act Cite 1902(a)(10)(A)(ii)(I) "210 GROUP" Persons who meet AFDC, SSI AACP or state supplement income & resource criteria. ALTCS Case Management "211 GROUP" Persons who would be eligible ALTCS for cash assistance except for their institutional status. "GUARANTEED ENROLLMENT" AACP Continuous coverage for persons enrolled in AHCCCS Health Plans who lose categorical eligibility prior to 6 months from enrollment. (5 full months plus month of enrollment) "S.O.B.R.A. Infants" infants with incomes AACP between the 133% FPL mandatory group ALTCS maximum and a 140% FPL optional state maximum. 42CFR Cite 435.210

1902(a)(10)(A)(ii)(IV)

435.211

1902(e)(2)

435.212

1902(a)(10)(A)(ii)(IX)

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Description Pregnant women, including postpartum, who maintain eligibility without regard to changes in income. "HCBS GROUP" Persons receiving HCBS under a waiver with incomes < or equal to 300% of the Federal benefit rate (FBR). "State Adoption Subsidy" Children who receive a state adoption subsidy payment. "236 GROUP" Persons in medical institutions for 30 consecutive days who meet state-set income level of < or equal to 300% of FBR. "Freedom to Work" Basic Coverage Group ­ individuals aged 16-64 with a disability who would be eligible, except for earnings, for SSI up to and including 250% of FPL. "Freedom to Work" Medical Improvement Group ­ employed individuals aged 16-64 with a medically improved disability up to and including 250% of FPL. Women under 65 who need treatment for breast or cervical cancer, and not otherwise eligible for Medicaid. Children who have aged out of foster care at 18 up to age 21 1931 Expansion-Income Greater than 36% FPL and less than or equal to 100% FPL. SSI-MAO Expansion (Optional 210 Group)- aged, blind, or disabled individuals with income greater than 100% FBR and less than or equal to 100% FPL. Description Individuals with adjusted net countable income at or below 100% FPL who are not otherwise eligible for Medicaid. Uninsured parents of Medicaid or SCHIP children with family income from 100% up to and including 200% of the FPL for whom the State is claiming Title XXI funding. AHCCCS eligible women who lose SOBRA eligibility at 60 days postpartum and who are not otherwise eligible for Medicare or Medicaid (up to 24 months following the postpartum period).** Medical Expense Deduction ­ Individuals, couples, or families whose income exceeds the Medicaid limits may be eligible after deducting their medical expenses from their income.

Program AACP

Social Security Act Cite 1902(e)(6)

42CFR Cite

ALTCS

1902(a)(10)(A)(ii)(VI)

435.217

AACP ALTCS

1902(a)(10)(ii)(VIII) 1902(a)(10)(A)(ii)(V)

435.227 435.236

AACP ALTCS

1902(a)(10)(A)(ii)(XV)

AACP ALTCS

1902(a)(10)(A)(ii)(XVI)

AACP

1902(a)(10)(A)(ii)(XVIII)

AACP AACP

1902(a)(10)(A)(ii)(XVII)

AACP

Arizona State Plan

TITLE XIX AND XXI EXPANSION GROUPS
Program AACP Reference ARS 36-2901.01

AACP

2006 Ariz. Sess. Laws, Ch. 331. §32

Family Planning

ARS 36-2907.04

AACP

ARS 36-2901.04

*Arizona's 1115 Waiver provides the authority to waive some of the provisions. ** A phase down of individuals currently covered with other insurance will occur pursuant to STC #39.

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33. Arizona Acute Care Program (AACP). The AACP is a statewide, managed care system which delivers acute care services through prepaid, capitated MCOs that AHCCCS calls "Health Plans." Most Health Plan contracts are awarded by Geographic Service Area (GSA), which is a specific county or defined grouping of counties designated by AHCCCS within which a Contractor provides, directly or through subcontract, covered health care to members enrolled with that Contractor. AACP enrollees receive most Medicaid-covered services through the Health Plans, but receive behavioral health services and certain specialty care services for children eligible under the CRS Program on a "carve-out" basis through separate PIHP contracts with the ADHS. a. AACP Eligibility ­ Those Groups are identified in paragraph 32 Table 1 b. Enrollment - The Arizona DES processes applications and determines acute care Medicaid eligibility for children, pregnant women, families and non-disabled adults under the age of 65 years and the MED population. The Social Security Administration determines eligibility for the Supplemental Security Income (SSI) cash-related groups, and AHCCCS determines eligibility for the SSI- related aged and disabled groups, Medicare Savings Programs, women diagnosed with breast or cervical cancer, Freedom to Work recipients, and parents of children eligible for title XIX or XXI. Individuals determined eligible must then select and enroll in a Health Plan, or they will be auto-assigned by the AHCCCS administration. c. Benefits ­ As outlined in Tables 2 and 3 and subject to limitations set forth in the existing State plan.
Table 2 ­ AACP Acute Care
Benefit Age Audiology Behavioral Health Breast Reconstruction after Mastectomy Case Management (Administrative) Chiropractic Services Cochlear Implants Dental Services Emergency Dental Services Medically Necessary Dentures Preventive & Therapeutic Dialysis Emergency Services-Medical Eye Examination / Optometry Emergency Eye Exam Vision Exam / Prescriptive Lenses Lens Post Cataract Surgery Treatment for Medical Conditions of the Eye Health Risk Assessment & Screening Tests (over 21) HIV/AIDS Antiretroviral Therapy Home Health Services Hospice Hospital Services Inpatient Medical Observation Outpatient Medical Hysterectomy (Medically Necessary) Immunizations Laboratory Maternal & Child Health Services Title XIX < 21 yrs > 21 yrs x x See Table 3 x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x Title XXI < 19 yrs x x x x x x x x x x x x x x x x x x x x x x x

x x x x x x

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Maternity Services Family Planning EPSDT (Medical Services) Other EPSDT Covered by Title XXI Medical Foods Medical Supplies / Equipment DME Medical Supplies Prosthetic / Orthotic Devices Nursing facilities (up to 90 days) Non Physician First Surgical Assistant Physician Services Podiatry Prescription Drugs PCP Services Private Duty Nursing Radiology and Medical Imaging Rehabilitation Therapies OT - Inpatient OT - Outpatient PT Speech Therapy ­ Inpatient Speech Therapy - Outpatient Respiratory Therapy Total Outpatient Parental Nutrition Transplantation Non-Experimental transplants approved for title XIX reimbursement Related Immunosupressant drugs Transportation ­ Emergency Transportation ­ Non Emergency Triage

x x x x x x x x x x x x x x x x x x x x x x x x x x x x

x x

x x x x x x x x x x x x x x x x x x x x x x

x x x x x x x x x x x x x x x x x x x x x x x x x x x x

Table 3 ­ AACP Behavioral Management
Behavioral Management Case Management Emergency Behavioral Health Care Evaluation Therapeutic Residential Support (in home, excluding room and board ) Inpatient Services Inpatient Hospital Inpatient Psychiatric Facilities Consistent with STC paragraph 55. Lab & X ­ Ray Medications (Psychotropic) Medication Adjustment & Monitoring Methadone / IAAM Partial Care Professional Services Individual Group & Family Psychosocial Rehabilitation Respite (with limits) Screening Transportation ­ Emergency Transportation ­ Non Emergency x x x x x x x x x x x x x x x

x x x x x x x x x x x x x x

x x x x x x x x x x x x x x

x x x x x x x x x x x x x x

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d. AACP Cost Sharing ­ With the exception of individuals eligible for the title XIX waiver group (the MED Expansion Group and adults without dependent children 0100 percent FPL), cost sharing does not exceed nominal cost sharing limits. Individuals eligible for the title XIX waiver group are subject to the following copayments: i. Generic prescriptions or brand name prescriptions if generic is not available $4 ii. Brand name prescriptions when generic is available -$10 iii. Non-emergency use of the emergency room - $30 iv. Physician office visit - $5 34. Children in Foster Care ­ Services for Arizona's children in foster care are provided through an MCO contract between AHCCCS and the Arizona DES/CMDP. CMDP operates in the same manner as other AACP Health Plans, but children in foster care who receive acute care services will be enrolled in CMDP instead of other Health Plans. Children in foster care who are eligible for or receive ALTCS will be enrolled or remain with the Program Contractor. Case Management services provided and reimbursed through this contractual relationship must be provided consistent with the provisions within section 6052 of the Deficit Reduction Act of 2005 and any forthcoming regulations. a. Federal Financial Participation. FFP will not be available for: 1. Duplicate payments made to public agencies or private entities under other program authorities for case management services or other Medicaid services for the same purpose; or 2. Activities integral to the administration of the foster care program excluding any health care related activities. 35. Children Rehabilitative Services (CRS). AHCCCS contracts on a sole-source, capitated basis with the Arizona Department of Health Services/Office of Children with Special Health Care Needs/Children's Rehabilitative Services Administration (CRSA) for the CRS program. Children enrolled in the Acute Care and ALTCS plans with qualifying conditions receive their specialty care for these conditions through CRSA while they remain enrolled in their acute care or ALTCS plan. a. CRSA Performance. AHCCCS and the State's contracted external quality review organization have found ongoing problems with CRSA's performance, including Balanced Budget act of 1997 (BBA) non-compliance and deficiencies in quality-ofcare. b. Corrective Action. The State must submit a Corrective Action Plan to CMS for approval by January 5, 2007, which details the areas of CRSA deficiency, planned corrective action, monitoring timeframes, and outcomes. The State must provide CMS with a quarterly report of the corrective action process as required in paragraph 26 (b). In the event that CRSA fails to successfully implement required corrective actions in a timely manner, AHCCCS shall take necessary actions to ensure that CRS-enrolled children are receiving timely access to quality care. Possible actions shall include, but are not limited to, Demonstration Approval Period: October 27, 2006 through September 30, 2011 Case 2:03-cv-02506-EHC Document 138-2 Filed 03/10/2008 Page 26 of 49 13

those described by Federal regulations at 42 CFR 438.702(a)(3)-(5), as determined appropriate by AHCCCS. 36. Arizona Long Term Care System (ALTCS). The ALTCS program is for individuals who are aged (65 and over), blind, or disabled and who need ongoing services at a nursing facility level of care. Program eligibles do not have to reside in a nursing home and may live in their own homes or an alternative residential setting and receive needed in-home services. ALTCS participants are also covered for medical care identical to the AACP inclusive of doctor's office visits, hospitalization, prescriptions, lab work, behavioral health services, and rehabilitative services. Rehabilitative services may only be eligible for FFP if these services reduce disability or restore the program enrollee to the best possible level of functionality. The ALTCS is administered through a separate, statewide, managed care system which delivers acute, long-term care, home-and-community based services, and behavioral health care services through capitated MCOs that AHCCCS calls "Program Contractors." ALTCS enrollees receive most Medicaid-covered services through the Program Contractors, but receive certain specialty care services for children eligible under the CRS Program on a "carve-out" basis through a separate PIHP contract with the ADHS. With one exception, ALTCS contracts are awarded using the same GSA system as the AACP. This exception is for the ALTCS MCO contract with the Arizona DES/DDD to provide services on a sta