New California Law Broadens Scope of MH/SUD Coverage
This Bulletin is brought to you by AHLA’s Behavioral Health Task Force.
- October 30, 2020
- Lisa Caccavo , Lyra Health
California has taken another step to ensure mental health parity for its citizens by further expanding coverage for mental health and substance use disorder (MH/SUD) services. California Governor Gavin Newsom signed into law SB 855 on September 25, 2020, imposing new requirements on the state's commercial health plans, especially in the area of medical necessity determinations with respect to MH/SUD services.
The establishment of “medical necessity” for a given treatment or service is a heavily litigated standard in disputes between health plans and their enrollees. SB 855 provides for a detailed standard for evaluating medical necessity of MH/SUD services. The new law states that “medically necessary treatment” of MH/SUD illnesses are to include services that are in accordance with the “generally accepted standards of mental health and substance use disorder care.”[1] The standards of care are further defined as those that are “recognized by health care providers practicing in relevant clinical specialties” and can be found in “peer-reviewed scientific studies and medical literature, clinical practice guidelines and recommendations of nonprofit health care provider professional associations, specialty societies and federal government agencies and drug labeling” as approved by the Food and Drug Administration.[2]
The law also requires health plans and insurers to apply guidelines developed by the nonprofit professional association for the relevant clinical specialty in conducting utilization reviews, such as the Anxiety and Depression Association of America. Similarly, health plans and insurers may not use more restrictive criteria than that developed by the nonprofit professional associations when evaluating the appropriate level of care for an enrollee.[3]
Changes to Parity
California’s Mental Health Parity Act (MHPA) already requires health plans and insurers to cover certain mental health diagnoses on the same terms and conditions as medical services.[4] However, these mental health diagnoses were limited to nine enumerated severe mental illnesses.[5] The MHPA did not require parity for the treatment of substance use disorders, anxiety, or post-traumatic stress disorders. SB 855 expands this coverage to include all MH/SUD diagnoses as identified in the most recent edition of either the International Classification of Diseases (ICD) or the Diagnostic and Statistical Manual of Mental Disorders (DSM).[6]
The law also shifts the focus of “parity” away from purely patient financial responsibilities and into a broader realm that considers qualitative limitations.[7] The federal Mental Health Parity and Addiction Equity Act (MHPAEA) established a similar qualitative standard for use in determining whether a service offering met the MHPAEA’s requirements. SB 855 aims to ensure that California health plans and insurers that had previously been exempt from the federal statute are required to comply with the same.
Other Significant Changes
SB 855 also modified other aspects of the laws governing MH/SUD services. Significantly:
- Health plans and insurers are required to provide out-of-network providers for medically necessary services, where no such services exist in-network, on the same access and geographical standards as in-network services.[8]
- MH/SUD services may not be limited to “short-term or acute treatment.”[9]
- Elimination of a “deferential standard of review” for coverage determinations in ERISA governed health plans.[10]
SB 855 attempts to close some of the remaining gaps in California’s mental health regulations that have been exposed in recent litigation in the state. The law will impose new requirements on health plans and insurers in the state and compliance with the law will likely be a focus for many stakeholders. While the supporters of the law hope it will provide increased parity and improved access to MH/SUD services, especially in light of the recent uptick in mental health issues brought on in large part by the COVID-19 pandemic, the benefits will only be seen by Californians if all involved stakeholders—payers, regulators, consumer groups and providers—come together to help solve the ongoing problem of insufficient access to quality MH/SUD services in the state.
The author thanks Laura Ashpole, General Counsel, Community Psychiatry, for serving as editor.
[1] S.B. 855, 2019-20 Leg., Reg. Sess. (Cal. 2020).
[2] Id.
[3] Id.
[4] See Cal. Health and Safety Code § 1374.72 (West 2019); See also Cal. Ins. Code § 10144.5 (West 2019).
[5] Id.
[6] See supra note 1.
[7] Id.
[8] Id.
[9] Id.
[10] Id.