State Law

Arkansas Code-Title 23-Subtitle 3-Chapter 99-Subchapter 11. Prior Authorization Transparency Act

07/10/2023 Arkansas Section 23-99-1103


Medical Necessity-Definition, U.R. Criteria

See bold sections below:

As used in this subchapter:


(A) “Adverse determination” means a decision by a utilization review entity to deny, reduce, or terminate coverage for a healthcare service furnished or proposed to be furnished to a subscriber on the basis that the healthcare service is not medically necessary or is experimental or investigational in nature.

(B) “Adverse determination” does not include a decision to deny, reduce, or terminate coverage for a healthcare service on any basis other than medical necessity or that the healthcare service is experimental or investigational in nature;

(2) “Authorization” means that a utilization review entity has:

(A) Reviewed the information provided concerning a healthcare service furnished or proposed to be furnished;

(B) Found that the requirements for medical necessity and appropriateness of care have been met; and

(C) Determined to pay for the healthcare service according to the provisions of the health benefit plan;

U.R. Criteria

(3) “Clinical criteria” means any written policy, written screening procedures, drug formularies, lists of covered drugs, determination rules, determination abstracts, clinical protocols, practice guidelines, medical protocols, and other criteria or rationale used by the utilization review entity to determine the medical necessity of a healthcare service;


(A) “Emergency healthcare service” means a healthcare service provided in a fixed facility in the first few hours after an injury or after the onset of an acute medical or obstetric condition that manifests itself by one (1) or more symptoms of such severity, including severe pain, that in the absence of immediate medical care, the injury or medical or obstetric condition would reasonably be expected to result in:

(i) Serious impairment of bodily function;

(ii) Serious dysfunction of or damage to any bodily organ or part; or

(iii) Death or threat of death.

(B) “Emergency healthcare service” includes the medically necessary surgical treatment of a condition discovered in the course of a surgical procedure originally intended for another purpose, so long as the subsequent surgical procedure is a covered benefit under the healthcare plan, and whether or not the originally intended surgical procedure or the subsequent surgical procedure for the condition discovered during surgery is subject to a prior authorization requirement;

(5) “Expedited prior authorization” means prior authorization and notice of that prior authorization for an urgent healthcare service to a subscriber or the subscriber’s healthcare provider within one (1) business day after the utilization review entity receives all information needed to complete the review of the requested urgent healthcare service;

(6) “Fail first” means a protocol requiring that a healthcare service preferred by a utilization review entity shall fail to help a patient before the patient receives coverage for the healthcare service ordered by the patient’s healthcare provider;


(A) “Health benefit plan” means any individual, blanket, or group plan, policy, or contract for healthcare services issued or delivered by a healthcare insurer in this state.

(B) “Health benefit plan” does not include a plan that includes only dental benefits or eye and vision care benefits;



(i) “Healthcare insurer” means an entity that:

(a) Is subject to state insurance regulation, including an insurance company, a health maintenance organization, a hospital and medical service corporation, a risk-based provider organization, and a sponsor of a nonfederal self-funded governmental plan; or

(b) Has any subscribers in this state.

(ii) “Healthcare insurer” includes Medicaid where specifically referenced in § 23-99-1119 – 23-99-1126.

(B) “Healthcare insurer” does not include:

(i) A workers’ compensation plan;

(ii) Medicaid, except as provided under § 23-99-1119 – 23-99-1126 or when Medicaid services are managed or reimbursed by a healthcare insurer; or

(iii) An entity that provides only dental benefits or eye and vision care benefits;

(9) “Healthcare provider” means:

(A) A doctor of medicine, a doctor of osteopathy, or another licensed healthcare professional acting within the professional’s licensed scope of practice; or

(B) A healthcare facility licensed in the state where the facility is located to provide healthcare services;


(A) “Healthcare service” means a healthcare procedure, treatment, or service provided by a healthcare provider.

(B) “Healthcare service” includes the provision of pharmaceutical products or services or durable medical equipment;

(11) “Medicaid” means the state-federal medical assistance program established by Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq.;

Medical Necessity-Definition


(A) “Medical necessity” or “medically necessary” means a healthcare service that a healthcare provider provides to a patient that is:

(i) In accordance with generally accepted standards of medical practice;

(ii) Clinically appropriate in terms of type, frequency, extent, site, and duration; and

(iii) Not primarily for the economic benefit of a health plan or purchaser or for the convenience of the patient, treating physician, or other healthcare provider.

(B) “Medical necessity” includes the terms “medical appropriateness”, “primary coverage criteria”, and any other terminology used by a utilization review entity that refers to a determination that is based in whole or in part on clinical justification for a healthcare service;

(13) “Prescription for medication-assisted treatment” means any prescription for medication used as treatment for opioid addiction approved by the United States Food and Drug Administration;

(14) “Prescription pain medication” means any medication prescribed as treatment for pain;


(A) “Prior authorization” means the process by which a utilization review entity determines the medical necessity of an otherwise covered healthcare service before the healthcare service is rendered, including without limitation preadmission review, pretreatment review, utilization review, case management, fail first protocol, and step therapy.

(B) “Prior authorization” may include the requirement that a subscriber or healthcare provider notify the health insurer or utilization review entity of the subscriber’s intent to receive a healthcare service before the healthcare service is provided;

(16) “Self-insured health plan for employees of governmental entities” means a trust established under § 14-54-101 et seq. or § 25-20-104 to provide benefits such as accident and health benefits, death benefits, disability benefits, and disability income benefits;

(17) “Step therapy” means a protocol requiring that a subscriber shall not be allowed coverage of a prescription drug ordered by the subscriber’s healthcare provider until other less expensive drugs have been tried;


(A) “Subscriber” means an individual eligible to receive coverage of healthcare services by a healthcare insurer under a health benefit plan.

(B) “Subscriber” includes a subscriber’s legally authorized representative;

(19) “Terminal illness” means an illness, a progressive disease, or an advanced disease state from which:

(A) There is no expectation of recovery; and

(B) Death as a result of the illness or disease is reasonably expected within six (6) months;

(20) “Urgent healthcare service” means a healthcare service for a non-life-threatening condition that, in the opinion of a physician with knowledge of a subscriber’s medical condition, requires prompt medical care in order to prevent:

(A) A serious threat to life, limb, or eyesight;

(B) Worsening impairment of a bodily function that threatens the body’s ability to regain maximum function;

(C) Worsening dysfunction or damage of any bodily organ or part that threatens the body’s ability to recover from the dysfunction or damage; or

(D) Severe pain that cannot be managed without prompt medical care; and


(A) “Utilization review entity” means an individual or entity that performs prior authorization for at least one (1) of the following:

(i) A healthcare insurer;

(ii) A preferred provider organization or health maintenance organization; or

(iii) Any other individual or entity that provides, offers to provide, or administers hospital, outpatient, medical, or other health benefits to a person treated by a healthcare provider in this state under a policy, health benefit plan, or contract.

(B) A healthcare insurer is a utilization review entity if it performs prior authorization.

(C) “Utilization review entity” does not include an insurer of automobile, homeowner’s, or casualty and commercial liability insurance or the insurer’s employees, agents, or contractors.

(D) A third-party administrator of a self-insured healthcare insurer is a utilization review entity if it performs prior authorizations.

(22) “Random sample” means at least five (5) claims but no more than twenty (20) claims for a particular healthcare service that are selected 16 without method or conscious decision; and

(23) “Value-based reimbursement” means reimbursement that:

(A) Ties a payment for the provision of healthcare services to the quality of health care provided;

(B) Rewards a healthcare provider for efficiency and effectiveness; and

(C) May impose a risk-sharing requirement on a healthcare provider for healthcare services that do not meet the healthcare insurer’s requirements for quality, effectiveness, and efficiency.


This section was updated in 2023 by SB 141 and HB 1271.  See


Section 21(D) was added by HB 1274 (2023). See

Sections (22) and (23) were added by HB 1274 (2023).  See