January 1, 2019

Arizona enacted one of the more robust state surprise billing laws prior to the federal NSA. The state established its own payment dispute resolution process, which CMS recognizes as a Specified State Law (SSL) for insured plans. This means Arizona is bifurcated and uses its own state arbitration system—not the federal NSA IDR—for most commercially insured claims.

Arizona law protects patients from balance billing when:

• They receive emergency services from an OON provider or facility.
• They receive OON services at an in-network facility when the patient did not choose the OON provider.
• They receive facility-based services such as anesthesiology, radiology, pathology, surgery, neonatology, or hospitalist care, at an in-network hospital or ASC.

Under Arizona’s law:

• Patients pay only their in-network cost-sharing amounts.
• Providers and carriers must negotiate reimbursement outside of patient involvement.
• If they cannot agree, the state’s Dispute Resolution (DR) process applies.

Arizona does not set a fixed benchmark rate—instead it relies on baseball-style arbitration handled within the state’s regulatory framework.

Arizona does maintain its own state IDR system, overseen by the Arizona Department of Insurance and Financial Institutions (DIFI).

This process:

• Applies to commercially insured patients in Arizona-regulated plans.
• Uses a state-run arbitration system where providers and insurers submit final offers.
• Requires state-certified arbitrators to select one of the two offers (no averaging).

Because Arizona’s process qualifies as a Specified State Law, the federal NSA IDR does not apply for insured claims regulated by the state.

Before entering Arizona’s state DR system:

• Providers and carriers must attempt to resolve the payment dispute.
• This negotiation period is typically 30 days, similar to NSA’s open negotiation period.
• If unresolved, either party may request arbitration through DIFI’s Surprise Billing Dispute Resolution Program.

The process is highly structured and more localized than the federal approach.

Arizona arbitrators may consider:

• Provider training, education, and experience
• The complexity of services delivered
• Prevailing hospital and provider charge data
• Contracted rates between the parties
• Market rates for comparable services
• Any supporting documentation submitted by either party

Unlike the federal NSA, Arizona does not center its analysis on the QPA, because the federal IDR system is not used for insured claims.

Arizona’s surprise billing and arbitration laws are found in:

• A.R.S. § 20-3101 through § 20-3113 – Arizona’s Surprise Out-of-Network Billing Act
• Arizona Department of Insurance and Financial Institutions (DIFI) – Administration of dispute resolution
• State guidance and regulatory rules establishing the DR program

This legal framework constitutes a Specified State Law (SSL) accepted by CMS for the purpose of OON rate determination.

Arizona is officially a bifurcated state.

• Fully insured commercial health plans in Arizona
• Individual and small-group insurance regulated by the state
• Applicable emergency and non-emergency OON claims

• Self-funded ERISA plans, unless they opt into Arizona’s state program (rare)
• Federal programs (FEHBP, TRICARE, etc.)
• Claims not covered under Arizona’s defined SBL scenarios

For most commercial Arizona OON payment disputes:

• The state DR system is used, not federal IDR.
• QPA does not control payment methodology.
• Arizona arbitrators rely on local market data and statutory factors.

This makes Arizona one of the clearest examples of a state-law superseding federal arbitration under NSA.