(a) As used in this section:

(1) "Adverse action" means the denial, termination, suspension, or reduction of Medicaid eligibility or covered services;

(2) "Beneficiary" means:

(A) A person who has applied for medical assistance under the state Medicaid program; or

(B) A person who is a recipient of medical assistance under the state Medicaid program; and

(3) "Department" means the Department of Human Services.

(b) If an application or claim for medical assistance is denied, in whole or in part, or is not acted upon with reasonable promptness, the department shall provide written notice:

(1) Of the beneficiary's right and opportunity for a fair hearing under the Arkansas Administrative Procedure Act, § 25-15-201 et seq.;

(2) Of the method by which the beneficiary may obtain a fair hearing; and

(3) That the beneficiary may:

(A) Represent himself or herself; or

(B) Be represented by:

(i) Legal counsel;

(ii) A friend; or

(iii) Any other spokesperson except a corporation.

(c) A notice required under subsection (b) of this section shall include, but not be limited to:

(1) A statement detailing:

(A) The type and amount of medical assistance that the beneficiary has requested; and

(B) The adverse action that the department has taken or proposes to take; and

(2) A statement of the reasons for the adverse action that shall include, but not be limited to:

(A) The specific facts regarding the individual beneficiary that support the action; and

(B) The sources from which the facts were derived.

(d) If the adverse action that the department has taken or proposes to take is based on a determination of medical necessity or other clinical decision, the notice required under subsection (b) of this section shall:

(1) (A) Include all of the following:

(i) Specification of the medical records upon which the physician or clinician relied in making the determination; and

(ii) Specification of any portion of the criteria for medical necessity or coverage that is not met by the beneficiary.

(B) Generic rationales or explanations shall not suffice to meet the requirements of subdivision (d)(1)(A) of this section;

(2) (A) Include a statement of:

(i) The specific regulations that support the adverse action; or

(ii) The change in federal or state law, if any, since the application was filed, that requires the adverse action.

(B) The information required under subdivision (d)(2)(A) of this section shall include a brief statement of the reasons for the adverse action based on the individual beneficiary's circumstances.

(C) The department and others acting on behalf of the department may not cite or rely on policies that are inconsistent with federal or state laws and regulations or that were not properly promulgated; and

(3) Include an explanation of:

(A) The beneficiary's right to request a fair hearing, if available; or

(B) In cases of an adverse action based on a change in law:

(i) The circumstances under which a fair hearing will be granted; and

(ii) An explanation of the circumstances under which medical assistance is provided or continued if a fair hearing is requested.

(e)

(1) If a beneficiary appeals an adverse action under the Arkansas Administrative Procedure Act, § 25-15-201 et seq., the reviewing authority shall consider only those adverse actions that were included in the written notice to the beneficiary as required under subsections (c) and (d) of this section.

(2) All determinations of the medical necessity of any request for medical assistance shall be based on the individual needs of the beneficiary and his or her medical history.

(f) If the department receives an appeal from a beneficiary regarding an adverse action, the department shall provide the beneficiary all records or documents pertaining to the department's decision or the department's contractor's decision to take the adverse action.

(g) If the adverse action is based upon a determination that the requested medical assistance is, or was, not medically necessary, the records and documents required to be provided under this section shall include all relevant material produced by the department or a contractor of the department that contains relevant information concerning the medical necessity determination.