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AZ Legislative Update – June 2, 2022

Posted by [email protected] on Jun. 2, 2022  /  AZ Legislative Update  /  Subscribe 0

AZ Legislative Update – June 2, 2022

Today marks the 144^th day of the Arizona 55^th Legislature, 2^nd Regular Session.  Of the 1,780 bills introduced this year, the Legislature has now passed 287 with the Governor signing 267 and vetoing one, an election bill that would have allowed for voter registrations to be cancelled under certain circumstances. 

With no budget deal or sine die in sight, we are now only four weeks away from a possible government shutdown. The Arizona Constitution requires the Legislature to pass a balanced budget by June 30^th and it appears we are on a collision course to hit that deadline. 

Despite numerous discussions of various agreed upon budget packages, securing the necessary votes in each chamber remains the biggest obstacle moving forward, with K-12 education spending, the expansion of the school voucher program, additional dollars for transportation infrastructure, and the establishment of an Arizona water authority remaining the key points of contention.

Nevertheless, things are subject to change quickly.  In the meantime, please find attached your full tracking list of bills. 

We are continuing to engage members and staff on your top legislative priorities.  If you have any questions or concerns, please do not hesitate to contact us.

Notable Legislation

HB 2121 Insurance; Omnibus (Livingston): Despite passing out of the Senate unanimously, 25-0, a couple of weeks ago, SB 2121 failed to pass out of the House on Tuesday afternoon.  Representative Cook took issue with the bill for not addressing fire/flood coverage to his liking and was able to convince enough members to vote no.  That being said, we have followed up with various members on what exactly this bill entails, and we plan to bring it back up for reconsideration as early as next week where we are cautiously optimistic it will pass this time. 

HB 2121 is the annual insurance industry omnibus bill.  It makes various minor changes to statutes relating to insurance regulations which include:

• DIFI Fee Reduction: Eliminates the filing fee amount for a certificate of director, under seal. Currently DIFI is required to charge at least $1.50. This proposed legislation would allow the agency to drop the amount to zero.
• Title Insurance Company Names: Currently, title insurance companies within Arizona are prohibited from using the word “title” in their name, unless they also include the words “agent” or “agency.” DIFI has asked for this prohibition in statute to removed.
• Modernization Language for Client Communications: The proposed legislation includes modernization language allowing for oral communications, with a contemporaneous record of the communication or a recording of an oral communication to qualify as consent from a customer.

• Flood Insurance: With the growing number of wildfires in Arizona there is also an increased risk of flood damage from burn scares months after the fire. Rain events on recently burned land can create flood risks even in properties not located in a flood plain.  Homeowner’s insurance does not cover flood damage as that coverage is provided by the federal flood insurance program. The language, which was worked out with the homeowner insurance industry, requires increased notification to homeowners about the availability of federal flood insurance program by insurers.  In addition, the amendment requires the Department of Forestry and DIFI to post educational links about the federal flood program on their websites.  The goal of this language is to increase the awareness of the risk of flooding after a wildfire and inform homeowners how to protect their property with the proper coverage. 

• Advisory Organizations: The bill makes clarifying changes to the definition of “advisory organization” which is consistent with other states. 
• Medicare Supplement Insurance: The bill makes it clear that the Medicare Supplement insurers can still offer early enrollment discounts under Arizona’s current regulatory system.  Approximately 75 percent of the Medicare Supplement market offers these discounts and the bill protects these discounts.  The language ensures that discounts work within Arizona’s current regulatory system that protects against age discrimination.

• Eliminates a Redundant Filing Requirement for Health Insurers: The bill eliminates the requirement that health insures file statements of credible coverage with DIFI annually.  The Affordable Care Act provisions have made the need for these filings obsolete and unnecessary.  The legislation reduces the filing burden on health plans and reduces the administrative burden on DIFI.  This change is supported by DIFI.  

SB 1176 340B Drug Programs; Prohibition (Gowan):  SB 1176 passed out of the House on Tuesday afternoon, 53-0, and now goes back to the Senate for concurrence.  The bill was favorably amended to resemble the Georgia 340B language. 

SB 1176 prohibits all contracts issued, delivered or renewed on or after January 1, 2024, for a third party that reimburses for 340B drugs, from:

• discriminating in reimbursement on the basis that the pharmacy dispenses a 340B drug;
• assessing any fee, chargeback, clawback or adjustment on the basis that a pharmacy dispenses a 340B drug;
• excluding a pharmacy from a third party's pharmacy network on the basis that the pharmacy dispenses a 340B drug; and
• restricting the methods or pharmacies within a third-party network by which a 340B covered entity may dispense or deliver 340B drugs.

The bill applies the 340B Program prohibitions to third parties that provide or manage drug coverage under a health care plan in the state.  It excludes each of the following from the 340B Program prohibitions:

• the Arizona Health Care Cost Containment System (AHCCCS) and its contractors to the extent the services are provided in accordance with behavioral health, state Medicaid or equivalent Medicaid programs from other states;
• the Department of Health Services to the extent the services are provided under the AIDS Drug Assistance Program; and
• any individual or entity excluded from AHCCCS coverage

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