Existing federal law generally requires a health insurance issuer that offers group or individual health insurance coverage that provides both medical and surgical benefits and mental health or substance use disorder benefits to establish parity in the terms and conditions applicable to medical and mental health benefits, as specified. Existing state law subjects nongrandfathered individual and small group health insurance policies that provide coverage for essential health benefits to those provisions of federal law governing mental health parity. Existing law requires every policy of disability insurance that covers hospital, medical, or surgical expenses in this state to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified.

This bill would require large group, individual, and small group health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with those provisions of federal law governing mental health parity.

Existing federal law generally requires a health insurance issuer that offers group or individual health insurance coverage that provides both medical and surgical benefits and mental health or substance use disorder benefits to establish parity in the terms and conditions applicable to medical and mental health benefits, as specified. Existing state law subjects nongrandfathered individual and small group health insurance policies that provide coverage for essential health benefits to those provisions of federal law governing mental health parity. Existing law requires every policy of disability insurance that covers hospital, medical, or surgical expenses in this state to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified.

This bill would require large group, individual, and small group health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with those provisions of federal law governing mental health parity.

Existing federal law generally requires a health insurance issuer that offers group or individual health insurance coverage that provides both medical and surgical benefits and mental health or substance use disorder benefits to establish parity in the terms and conditions applicable to medical and mental health benefits, as specified. Existing state law subjects nongrandfathered individual and small group health insurance policies that provide coverage for essential health benefits to those provisions of federal law governing mental health parity. Existing law requires every policy of disability insurance that covers hospital, medical, or surgical expenses in this state to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified.

This bill would require large group, individual, and small group health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with those provisions of federal law governing mental health parity. The bill would authorize the Insurance Commissioner to issue guidance to health insurers, until January 1, 2019, regarding compliance with these requirements.

Existing federal law generally requires a health insurance issuer that offers group or individual health insurance coverage that provides both medical and surgical benefits and mental health or substance use disorder benefits to establish parity in the terms and conditions applicable to medical and mental health benefits, as specified. Existing state law subjects nongrandfathered individual and small group health insurance policies that provide coverage for essential health benefits to those provisions of federal law governing mental health parity. Existing law requires every policy of disability insurance that covers hospital, medical, or surgical expenses in this state to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified.

This bill would require large group, individual, and small group health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, and all rules, regulations, and guidance issued pursuant to applicable provisions of the federal Public Health Service Act. those provisions of federal law governing mental health parity. The bill would authorize the Insurance Commissioner to issue guidance to health insurers, until January 1, 2019, regarding compliance with these requirements.

Existing law requires every policy of disability insurance that covers hospital, medical, or surgical expenses in this state to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified.

This bill would require large group, individual, and small group health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, and all rules, regulations, and guidance issued pursuant to applicable provisions of the federal Public Health Service Act. The bill would authorize the Insurance Commissioner to issue guidance to health insurers, until January 1, 2019, regarding compliance with these requirements.

 UNFINISHED BUSINESS  

Bill No: SB 374

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 7-0, 3/29/17

AYES: Hernandez, Nguyen, Leyva, Mitchell, Monning, Newman, Nielsen

NO VOTE RECORDED: Atkins, Roth

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 39-0, 4/24/17

AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: De León

ASSEMBLY FLOOR: 74-0, 7/6/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: California Association of Marriage and Family Therapists

California Psychiatric Association

California Psychological Association

DIGEST:

This bill requires large group, small group, and individual health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and all rules, regulations, and guidance issued pursuant to MHPAEA.

Assembly Amendments delete a provision that would have permitted, until
January 1, 2019, the California Department of Insurance (CDI) Commissioner to issue guidance to health insurers regarding compliance with this bill and exempted this guidance from the Administrative Procedure Act (APA) only until the Commissioner adopts regulations pursuant to the APA.

ANALYSIS:

Existing law:

1. Regulates health care service plans through the Department of Managed Health Care (DMHC) and health insurance policies through the CDI.
2. Requires health care service plans that provide hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of severe mental illnesses of a person of any age and serious emotional disturbances of a child.
3. Requires a large group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA.
4. Requires an individual or small group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA all rules, regulations, and guidance issued pursuant to MHPAEA and California’s essential health benefit (EHB) law.
5. Establishes as California's EHBs the Kaiser Small Group HMO plan along with 10 federally mandated benefits under the Patient Protection and Affordable Care Act (ACA) as well as other state mandated benefits.

This bill:

1. Requires a large group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations and guidance issued pursuant to MHPAEA.
2. Requires an individual or small group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA and California’s EHB law.

Comments

Author’s statement. According to the author, current federal law requires health insurers to comply with MHPAEA, but state law does not yet incorporate this requirement into the California Insurance Code for some health insurance policies. State regulators have primary enforcement authority for MHPAEA in health coverage regulated under state law. The Insurance Code already requires health insurers to comply with MHPAEA through the EHB mandate, which applies only to non-grandfathered individual and small group health insurance policies. The purpose of this bill is to establish express state enforcement authority for MHPAEA with respect to all applicable health insurance coverage independent of the EHB mandate.

Related/Prior Legislation

SB 857 (Committee on Budget and Fiscal Review, Chapter 31, Statutes of 2014), a budget trailer bill which was effective June 20, 2014, among other provisions, provided DMHC with the authority to enforce federal mental health parity rules and conforms to federal rules to impose these requirements on large group products.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, potential minor costs to CDI, likely under $50,000 annually, for enforcement of existing federal rules (Insurance Fund).

SUPPORT: (Verified 7/7/17)

California Association of Marriage and Family Therapists (co-source)

California Psychiatric Association (co-source)

California Psychological Association (co-source)

AFSCME, Local 685

Association for Los Angeles Deputy Sheriffs

Association of Deputy District Attorneys

Autism Speaks

California Academy of Child and Adolescent Psychiatry

California Access Coalition

California Association of Professional Employees

California Chapter of the American College of Emergency Physicians

California Coalition for Mental Health

CaliforniaHealth+ Advocates

Center for Autism and Related Disorders

Los Angeles County Deputy Probation Officers’ Union

Los Angeles County Professional Peace Officers Association

Los Angeles Police Protective League

NAMI California

National Alliance on Mental Illness

National Association of Social Workers, California Chapter

Riverside Sheriffs’ Association

San Diego County Court Employees Association

San Luis Obispo County Employees Association

The Organization of SMUD Employees

OPPOSITION: (Verified 7/7/17)

None received

ARGUMENTS IN SUPPORT: The California Psychological Association indicates that currently while DMHC regulates 80% of health care policies in California, 20% are regulated by CDI, who currently lacks the enforcement ability necessary to enforce MHPAEA. If this bill passes, all state regulated health insurance policies and health plans would be subject to enforcement of the federal requirements. The California Psychiatric Association (CPA) writes that it is vital that MHPAEA be enforced robustly to end discrimination against those who need mental health and substance use services. Additionally, CPA believes this bill insulates California enforcement of MHPAEA from the effects of possible ACA repeal and replacement. The California Chapter of the American College of Emergency Physicians (CalACEP) writes that emergency physicians know firsthand the difficulties facing patient in need of psychiatric care because patients in mental health crisis often find themselves in emergency departments. CalACEP believes the system if failing psychiatric patients and that this bill will strengthen mental health parity for health insurance policies and provide much needed oversight. The CaliforniaHealth+ Advocates believes this bill enhances the provision of behavioral health services to Californians through the recognition of the important role mental health plays in overall health.

ASSEMBLY FLOOR: 74-0, 7/6/17

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Levine, Limón, Low, Maienschein, Mathis, Mayes, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Bocanegra, Calderon, Dababneh, Gray, Lackey, McCarty

Prepared by:

7/7/17 14:25:36

**** END ****

Date of Hearing: June 28, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 374

Author:(Newman) – As Amended Ver:June 12, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows the California Department of Insurance (CDI) to enforce federal rules that require health insurers to cover mental health and substance use disorder benefits at parity with medical benefits, by specifying in state law that large-group, small-group, and individual health insurance policies shall provide all covered mental health and substance use disorder benefits in compliance with specified federal rules.

FISCAL EFFECT:

Potential minor costs to CDI, likely under $50,000 annually, for enforcement of existing federal rules (Insurance Fund).

COMMENTS:

1. Purpose. According to the author, this bill closes gaps with respect to the authority of CDI to enforce federal rules for certain health plans. This bill is co-sponsored by a number of mental health provider associations and has no opposition.
2. Background. Insurance is divided into three major market segments: individual, small-group (mostly small employers), and large-group (generally large employers and labor trusts). Over the last decade or so, a number of state and federal laws have improved health insurance coverage for mental health and substance use services, and lessened restrictions on accessing such services. Applicable requirements vary by market segment. Major federal legislation addressing mental health and substance use disorder coverage includes the following:
   1. The federal Mental Health Parity and Addiction Equity Act of 2008 (MHPHEA) required large-group health plans and insurers, if they include services for mental health or substance use disorders as part of their benefits, to provide those services at "parity," or under the same terms and conditions as other medical services. This means, for instance, co-payments for a mental health visit cannot be significantly higher than co-payments for a medical visit.
   2. The federal Patient Protection and Affordable Care Act (ACA) of 2010 applied MHPAEA rules to individual-market products. The ACA also required individual and small-group products to cover ten essential health benefits (EHBs), including mental health and substance abuse treatment services, and applied MHPAEA rules to these products. California’s conforming EHB statute also specifically states that MHPAEA applies to health plans that must comply with EHBs, including products offered off the exchange. Notably, the ACA required coverage of these benefits, not just parity for covered benefits.

A pending federal legislative proposal, H.R. 1628 or the American Health Care Act (AHCA), passed the U.S House of Representatives in May 2017. It includes a provision that would allow states to apply for a waiver to redefine EHBs. Changes to EHBs could potentially impact which policies must comply with mental health and substance use coverage and parity requirements.

1. Current CDI authority, and what this bill does. This bill allows CDI to enforce mental health and substance use parity and coverage rules under MHPAEA and the 2010 ACA's expansion of MHPAEA rules to most individual and small-group policies, as well as regulations issued pursuant to these laws. This authority would allow CDI to enforce the federal laws that apply in any market segment. Currently, CDI has MHPAEA enforcement authority as it relates to most individual and small-group insurance policies, based on authority provided in the state statute related to EHBs.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: June 20, 2017

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

SBPCA Bill Id:SB 374

Author:(Newman) – As Amended Ver:June 12, 2017

SENATE VOTE: 39-0

SUBJECT: Health insurance: discriminatory practices: mental health.

SUMMARY: Requires large group, small group, and individual health insurance policies regulated by the California Department of Insurance (CDI) to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (Act) and all rules, regulations, and guidance issued pursuant to the Act.

EXISTING LAW:

1. Requires large group carriers that offer mental health and substance use disorders to do so in a manner comparable to medical and surgical benefits. Ensures that financial requirements (such as copays and deductibles) and treatment limitations (such as visit limits) applicable to mental health benefits are no more restrictive than those applied to medical or surgical benefits under the Act.
2. Regulates health care service plans through the Department of Managed Health Care (DMHC) and health insurance policies through the CDI.
3. Requires health care service plans (health plans) that provide hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of severe mental illnesses of a person of any age and serious emotional disturbances of a child.
4. Requires a large group health plan contract to provide all covered mental health and substance use disorder benefits in compliance with the Act and all rules, regulations, and guidance issued pursuant to the Act.
5. Requires an individual or small group health plan contract to provide all covered mental health and substance use disorder benefits in compliance with the Act all rules, regulations, and guidance issued pursuant to the Act and California’s essential health benefit (EHB) law.
6. Requires issuers of individual and small group coverage to, at a minimum, cover EHBs in the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and, pediatric services, including oral and vision care.
7. Permits until January 1, 2016, the DMHC Director to issue guidance to health plans regarding compliance with 4) and 5) above, and exempts this guidance from the Administrative Procedures Act (APA) only until the DMHC Director adopts regulations pursuant to the APA.
8. Requires DMHC to consult with CDI in issuing guidance under 7).

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, current federal law requires health insurers to comply with the Act, but state law does not yet incorporate this requirement into the California Insurance Code for some health insurance policies. State regulators have primary enforcement authority for the Act in health coverage regulated under state law. The Insurance Code already requires health insurers to comply with the Act through the EHB mandate, which applies only to non-grandfathered individual and small group health insurance policies. The author states that the purpose of this bill is to establish express state enforcement authority for the Act with respect to all applicable health insurance coverage independent of the EHB mandate.
2. BACKGROUND.
   1. Federal Mental Health Parity. In 1996, the U.S. Congress passed the Mental Health Parity Act (MHPA), which prohibits large group health plans from imposing higher annual or lifetime dollar limits on mental health benefits. However, the MHPA did not mandate coverage for mental health services and only applied to group health plans that offered mental health benefits. The MHPA also did not apply to substance use disorders, services limits, limitations on the types of facilities covered, or differences in cost sharing, and plans could have stricter prior authorization requirements for mental health services than for other medical services.
   2. State Mental Health Parity. In 1999, California passed AB 88 (Thompson), Chapter 534, Statutes of 1999, which requires a health plan contract or disability insurance policy to provide coverage for the diagnosis and medically necessary services of severe mental illnesses of a person of any age and of serious emotional disturbances of a child. Benefits must be applied under the same terms and conditions as applied to other medical conditions. AB 88 also requires copayments, deductibles and maximum lifetime benefits to be applied equally to all benefits under the plan.
   3. Federal Act. In 2008, Congress passed the Act to cover some of the gaps in the MHPA. Similar to the MHPA, the Act only applies to large-group health plans. However, the Act also included Medicare Advantage plans offered through group health plans, state and local government plans, Medicaid managed care plans, and state Children’s Health Insurance Program plans. Unlike the MHPA, the Act prohibited differences in services limits, cost-sharing, in-and-out-of-network coverage, and applied to services for substance use disorders.
      
      The Act requires, if health plans include services for mental health or substance use disorders as part of their benefits, to provide those services under the same terms and conditions as other medical services. The Act eliminated all differences between mental health and substance use disorder services and other medical services as they related to: services and visit limits; deductibles; copayments; coinsurance; and, the use of out-of-network providers when a health plan gave this option. Further, federal regulations in 2010 and then the final rule in 2013, prohibited health plans from imposing a financial requirement or services limit restriction that is more restrictive than what they offered for medical and surgical benefits in the same classification.
   4. The Patient Protection and Affordable Care Act (ACA) of 2010 and EHBs. The ACA applied the Act to issuers in the individual market and qualified health plans offered through a health benefit exchange, including small group products. The ACA also specified coverage of the 10 EHBs, including mental health and substance abuse treatment services. California’s EHB statute also specifically states that the Act applies to health plans that must comply with EHBs, including products offered off the exchange. The ACA states that coverage of mental health and substance use disorders services along with any scope and duration limits imposed on the benefits shall be in compliance with the Act and all rules, regulations, and guidance issued pursuant to the Act. According to a 2015 Health Affairs Health Policy Brief, the ACA went beyond the Act by mandating coverage instead of requiring parity only if coverage is provided.
   5. American Health Care Act (AHCA). On May 4, 2017, the House of Representatives voted 217-213 to pass the AHCA (H.R. 1628). The AHCA would repeal and replace the ACA. While the AHCA is pending federal legislation and its final form and disposition is unknown at this time, H.R. 1628 included a provision that would allow states to apply for a waiver to redefine and create specific EHBs beginning in 2020, including mental health services.
   6. State enforcement. Both DMHC and CDI provide regulatory oversight of federal and California parity laws and are monitoring filings for compliance with these laws. CDI and DMHC currently has the Act enforcement authority as it relates to non-grandfathered individual and small group insurance policies based on the authority in the state EHB statute. SB 857 (Committee on Budget and Fiscal Review), Chapter 31, Statutes of 2014, the Health Budget trailer bill permitted the DMHC to enforce the Act with respect to the large group market. DMHC has a two phase process for reviewing health plan compliance with the Act:
      
      1. Phase one was to ensure compliant classification of benefits and that the plans charged enrollees appropriate cost sharing. Phase two is on onsite examination of health plans to verify that revisions have been made to policies and procedures and product/benefit designs that were reviewed in phase one.
         
      2. Phase two is expected to be complete by June 2017. CDI has issued instructions to CDI’s Mental Health Parity Supporting Documentation Template for 2018 requesting information on how the health insurer meets the parity requirements in state law, the Act, and other general questions. This bill ensures CDI has enforcement authority for large group policies as well.
3. SUPPORT. The California Association of Marriage and Family Therapists, the sponsor of this bill, states in support that current federal law requires health insurers to comply with the Act, but state law does not yet incorporate this requirement into the California Insurance Code for some health insurance policies.
4. PREVIOUS LEGISLATION.
   1. SB 857 included an urgency clause to ensure that the provisions would go into immediate effect upon enactment, therefore SB 857 became effective on the day the Governor signed it on June 20, 2014. Among other provisions, SB 857 provides DMHC with the authority to enforce federal mental health parity rules and conforms to federal rules to impose these requirements on large group products.
   2. SB 22 (Beall) of 2013 would have required health plans and insurers to report to DMHC and CDI, respectively, on compliance with state and federal law related to mental health parity. SB 22 was held in the Assembly Appropriations Committee.
   3. AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB 951 (Hernandez), Chapter 866, Statutes of 2012, establishes California's EHBs.
   4. SB 946 (Steinberg), Chapter 650, Statutes of 2011, requires health plans and health insurance policies to cover behavioral health treatment for pervasive developmental disorder or autism, requires health plans and insurers to maintain adequate networks of autism service providers, establishes a task force in DMHC, and makes other technical changes to existing law regarding HIV reporting and mental health services payments.
   5. AB 88 requires a health plan contract or disability insurance policy to provide coverage for severe mental illnesses, and for the serious emotional disturbances of a child.

REGISTERED SUPPORT / OPPOSITION:

Support

California Association of Marriage and Family Therapists (co-sponsor)

California Psychiatric Association (co-sponsor)

AFSCME, Local 685

Association for Los Angeles Deputy Sheriffs

Association of California Life & Health Insurance Companies

Association of Deputy District Attorneys

Association of Regional Center Agencies

Autism Speaks

Board of Behavioral Sciences

California Academy of Child & Adolescent Psychiatry

California Academy of Family Physicians

California Access Coalition

California Association of Health Underwriters

California Association of Professional Employees

California Coalition for Mental Health

California College of Emergency Physicians (California ACEP)

California Consortium of Addiction Programs and Professionals

California Council of Community Behavioral Health Agencies

California Department of Insurance

California Health+ Advocates

California Psychological Association

Center for Autism and Related Disorders

Community Clinic Association of Los Angeles

Depression and Bipolar Support Alliance

Los Angeles County Professional Peace Officers Association

Los Angeles County Deputy Probation Officers’ Union

Los Angeles Police Protective League

Mental Health America of Los Angeles

National Alliance on Mental Illness California

National Association of Social Workers – California Chapter

Organization of SMUD Employees

Riverside Sheriffs’ Association

San Diego County Court Employees Association

San Luis Obispo County Employees Association

United Public Employees

Opposition

None file.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097

 THIRD READING  

Bill No: SB 374

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 7-0, 3/29/17

AYES: Hernandez, Nguyen, Leyva, Mitchell, Monning, Newman, Nielsen

NO VOTE RECORDED: Atkins, Roth

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: California Association of Marriage and Family Therapists

California Psychiatric Association

California Psychological Association

DIGEST: This bill requires large group, small group, and individual health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and all rules, regulations, and guidance issued pursuant to MHPAEA. This bill allows the California Department of Insurance (CDI) to issue guidance to health insurers until January 1, 2019, that is exempt from the Administrative Procedure Act (APA).

ANALYSIS:

Existing law:

1. Regulates health care service plans through the Department of Managed Health Care (DMHC) and health insurance policies through the CDI.
2. Requires health care service plans that provide hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of severe mental illnesses of a person of any age and serious emotional disturbances of a child.
3. Requires a large group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA.
4. Requires an individual or small group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA all rules, regulations, and guidance issued pursuant to MHPAEA and California’s essential health benefit (EHB) law.
5. Permits until January 1, 2016, the DMHC director to issue guidance to health care service plans regarding compliance with 3) and 4) above, and exempts this guidance from the APA only until the DMHC director adopts regulations pursuant to the APA.
6. Requires DMHC to consult with CDI in issuing guidance under 5).
7. Establishes as California's EHBs the Kaiser Small Group HMO plan along with 10 federally mandated benefits under the Patient Protection and Affordable Care Act (ACA) as well as other state mandated benefits.

This bill:

1. Requires a large group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations and guidance issued pursuant to MHPAEA.
2. Requires an individual or small group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA and California’s EHB law.
3. Permits, until January 1, 2019, the CDI Commissioner to issue guidance to health insurers regarding compliance with this bill. Exempts this guidance from the APA only until the Commissioner adopts regulations pursuant to the APA.
4. Requires CDI to consult with the DMHC in issuing guidance under this bill.

Comments

1. Author’s statement. According to the author, current federal law requires health insurers to comply with MHPAEA, but state law does not yet incorporate this requirement into the California Insurance Code for some health insurance policies. State regulators have primary enforcement authority for MHPAEA in health coverage regulated under state law. The Insurance Code already requires health insurers to comply with MHPAEA through the EHB mandate, which applies only to non-grandfathered individual and small group health insurance policies. The purpose of this bill is to establish express state enforcement authority for MHPAEA with respect to all applicable health insurance coverage independent of the EHB mandate.
2. Federal and state laws. Mental health insurance coverage is governed by state and federal law which has evolved over time. According to a Health Affairs policy brief on mental health parity, insurance plans have historically covered services for mental health and substance abuse disorders at a much lower rate than benefits for other health conditions. For instance, coverage for mental health and substance use disorders typically would have its own cost-sharing structure, more restrictive limits on inpatient and outpatient visits allowed, separate annual and lifetime caps on coverage, and different prior authorization requirements than coverage for other medical services. To address this issue, in 1996, Congress passed the Wellstone and Domenici Mental Health Parity Act (MHPA), which prohibited large group health plans from imposing higher annual or lifetime dollar limits on mental health benefits. However, the law did not mandate coverage for mental health services. The MHPA also did not apply to substance use disorders, services limits, limitations on the types of facilities covered, or differences in cost sharing, and plans could have stricter prior authorization requirements for mental health services than for other medical services.

In 1999, California passed its own state Mental Health Parity Law (AB 88, Thomson, Chapter 534, Statutes of 1999) which requires all California health insurance plans provide coverage for the diagnosis and medically necessary services of severe mental illnesses of a person of any age and of serious emotional disturbances of a child. Benefits must be applied under the same terms and conditions as applied to other medical conditions. AB 88 also requires copayments, deductibles and maximum lifetime benefits to be applied equally to all benefits under the plan. California also mandates behavioral health treatment, including Applied Behavioral Analysis, for autism.

In 2008, Congress passed MHPAEA to cover some of the gaps in the MHPA. Similar to the MHPA, the MHPAEA only applies to large-group health plans. However, the MHPAEA also included Medicare Advantage plans offered through group health plans, state and local government plans, Medicaid managed care plans, and state Children’s Health Insurance Program plans. Unlike the MHPA, the MHPAEA prohibited differences in services limits, cost-sharing, in-and-out-of-network coverage, and applied to services for substance use disorders. Like the MHPA though, the MHPAEA did not mandate mental health or substance services. MHPAEA requires, if health plans include services for mental health or substance use disorders as part of their benefits, to provide those services under the same terms and conditions as other medical services. The MHPAEA eliminated all differences between mental health and substance use disorder services and other medical services as they related to: services and visit limits; deductibles, copayments, and coinsurance; and the use of out-of-network providers when a health plan gave this option. Further, federal regulations in 2010 and then the final rule in 2013, prohibited plans from imposing a financial requirement or services limit restriction that is more restrictive than what they offered for medical and surgical benefits in the same classification.

1. ACA. The passage of ACA, in 2010, took coverage for mental health and substance abuse disorders a step further than the MHPAEA by mandating coverage for services, instead of only requiring parity, if mental health coverage is provided. The ACA applied to all health plans in the individual market and qualified health plans offered through health benefit exchanges, including those products in the Small Business Health Options Program. The ACA also specified that coverage of mental health and substance use services must be included as one of the ten EHBs. Due to the ACA, all non-grandfathered health insurance plans in the individual and small-group market, inside and outside the Exchange, must now include coverage for the services of mental health and substance use disorders and be in compliance with MHPAEA. California’s EHB statute also specifically states that MHPAEA applies to plans that must comply with EHBs. The statute states that coverage of mental health and substance use disorders services along with any scope and duration limits imposed on the benefits shall be in compliance with MHPAEA and all rules, regulations and guidance issued pursuant to MHPAEA.
2. EHB repeal. The American Health Care Act (AHCA) has been proposed in Congress and is an effort by the Congressional Republicans and the Trump Administration to fulfill promises to repeal and replace the ACA. The AHCA is pending federal legislation and its final form and disposition is unknown at this time. An amendment has been discussed to repeal the EHB requirements.
3. State enforcement. Both DMHC and CDI provide regulatory oversight of federal and California parity laws and are monitoring filings for compliance with these laws. DMHC has a two phase process for reviewing health care service plan compliance with MHPAEA. Phase one was to ensure compliant classification of benefits and that the plans charged enrollees appropriate cost sharing. Phase two is on onsite examination of health plans to verify that revisions have been made to policies and procedures and product/benefit designs that were reviewed in phase one. Phase two is expected to be complete by June 2017. CDI has issued questionnaires to insurers requesting information on how the health insurer meets the parity requirements in state law, MHPAEA, and other general questions. CDI also filed amicus briefs on behalf of patients in two cases involving health plan coverage for mental health services: Harlick vs. Blue Shield and Rea vs. Blue Shield. In both cases, patients were seeking coverage for medically necessary services for anorexia that had been denied by the health plan. The courts ruled in favor of the plaintiffs. CDI indicated that it filed the amicus brief because CDI does not have regulatory authority to take action against the health plan (because health plans are regulated by DMHC).
4. CDI authority. CDI currently has MHPAEA enforcement authority as it relates to non-grandfathered individual and small group insurance policies based on the authority explicit in the state EHB statute. This bill ensures CDI has enforcement authority for large group policies as well.
5. Support if Amended. The Association of California Life and Health Insurance Companies strongly believes that the current regulatory framework provided through the APA is a far more appropriate process for CDI to utilize when deciding to issue additional guidance. This process is designed to provide the public with a meaningful opportunity to participate in the adoption of state regulations and to ensure that regulations are clear, necessary, and legally valid; points that are incredibly important to all parties involved in the process.

Related/Prior Legislation

SB 857 (Committee on Budget and Fiscal Review, Chapter 31, Statutes of 2014), a budget trailer bill which was effective June 20, 2014, among other provisions, provided DMHC with the authority to enforce federal mental health parity rules and conforms to federal rules to impose these requirements on large group products.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 4/17/17)

California Association of Marriage and Family Therapists (co-source)

California Psychiatric Association (co-source)

California Psychological Association (co-source)

AFSCME, Local 685

Association for Los Angeles Deputy Sheriffs

Association of Deputy District Attorneys

Autism Speaks

California Academy of Child and Adolescent Psychiatry

California Access Coalition

California Association of Professional Employees

California Chapter of the American College of Emergency Physicians

California Coalition for Mental Health

CaliforniaHealth+ Advocates

Center for Autism and Related Disorders

Los Angeles County Deputy Probation Officers’ Union

Los Angeles County Professional Peace Officers Association

Los Angeles Police Protective League

NAMI California

National Alliance on Mental Illness

National Association of Social Workers, California Chapter

Riverside Sheriffs’ Association

San Diego County Court Employees Association

San Luis Obispo County Employees Association

The Organization of SMUD Employees

OPPOSITION: (Verified 4/17/17)

None received

ARGUMENTS IN SUPPORT: The California Psychological Association indicates that currently while DMHC regulates 80% of health care policies in California, 20% are regulated by CDI, who currently lacks the enforcement ability necessary to enforce MHPAEA. If this bill passes, all state regulated health insurance policies and health plans would be subject to enforcement of the federal requirements. The California Psychiatric Association (CPA) writes that it is vital that MHPAEA be enforced robustly to end discrimination against those who need mental health and substance use services. Additionally, CPA believes this bill insulates California enforcement of MHPAEA from the effects of possible ACA repeal and replacement. The California Chapter of the American College of Emergency Physician (CalACEP) writes that emergency physicians know firsthand the difficulties facing patient in need of psychiatric care because patients in mental health crisis often find themselves in emergency departments. CalACEP believes the system if failing psychiatric patients and that this bill will strengthen mental health parity for health insurance policies and provide much needed oversight. The CaliforniaHealth+ Advocates believes this bill enhances the provision of behavioral health services to Californians through the recognition of the important role mental health plays in overall health.

Prepared by:

4/19/17 14:05:36

**** END ****

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 374

SUBJECT: Health insurance: discriminatory practices: mental health

SUMMARY:

Requires large group, small group, and individual health insurance policies to provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPHEA) and all rules, regulations, and guidance issued pursuant to MHPAEA. Allows the California Department of Insurance to issue guidance to health insurers until January 1, 2019 that is exempt from the Administrative Procedure Act.

Existing law:

1. Regulates health care service plans through the Department of Managed Health Care (DMHC) and health insurance policies through the California Department of Insurance (CDI).
   
2. Requires health care service plans that provide hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of severe mental illnesses of a person of any age and serious emotional disturbances of a child.
   
3. Requires a large group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA.
   
4. Requires an individual or small group health care service plan contract to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA all rules, regulations, and guidance issued pursuant to MHPAEA and California’s essential health benefit (EHB) law.
   
5. Permits until January 1, 2016, the DMHC director to issue guidance to health care service plans regarding compliance with 3) and 4) above, and exempts this guidance from the Administrative Procedure Act (APA) only until the DMHC director adopts regulations pursuant to the APA.
   
6. Requires DMHC to consult with CDI in issuing guidance under 5).
   
7. Establishes as California's EHBs the Kaiser Small Group HMO plan along with the following 10 federally mandated benefits under the Patient Protection and Affordable Care Act (ACA) as well as other state mandated benefits:

a) Ambulatory patient services;

b) Emergency services;

c) Hospitalization;

d) Maternity and newborn care;

1. Mental health and substance use disorder services, including behavioral health treatment; f) Prescription drugs;

g) Rehabilitative and habilitative services and devices;

h) Laboratory services;

i) Preventive and wellness services and chronic disease management; and,

j) Pediatric services, including oral and vision care.

This bill:

1. Requires a large group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations and guidance issued pursuant to MHPAEA.
   
2. Requires an individual or small group health insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA and all rules, regulations, and guidance issued pursuant to MHPAEA.
   
3. Permits, until January 1, 2019, the CDI Commissioner to issue guidance to health insurers regarding compliance with this bill. Exempts this guidance from the APA only until the Commissioner adopts regulations pursuant to the APA.
   
4. Requires CDI to consult with the DMHC in issuing guidance under this bill.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, current federal law requires health insurers to comply with MHPAEA, but state law does not yet incorporate this requirement into the California Insurance Code for some health insurance policies. State regulators have primary enforcement authority for MHPAEA in health coverage regulated under state law. The Insurance Code already requires health insurers to comply with MHPAEA through the EHB mandate, which applies only to non-grandfathered individual and small group health insurance policies. The purpose of this bill is to establish express state enforcement authority for MHPAEA with respect to all applicable health insurance coverage independent of the EHB mandate.
   
2. Federal and state laws. Mental health insurance coverage is governed by state and federal law which has evolved over time. According to a Health Affairs policy brief on mental health parity, insurance plans have historically covered services for mental health and substance abuse disorders at a much lower rate than benefits for other health conditions. For instance, coverage for mental health and substance use disorders typically would have its own cost-sharing structure, more restrictive limits on inpatient and outpatient visits allowed, separate annual and lifetime caps on coverage, and different prior authorization requirements than coverage for other medical services. To address this issue, in 1996, Congress passed the Wellstone and Domenici Mental Health Parity Act (MHPA), which prohibited large group health plans from imposing higher annual or lifetime dollar limits on mental health benefits. However, the law did not mandate coverage for mental health services. The MHPA also did not apply to substance use disorders, services limits, limitations on the types of facilities covered, or differences in cost sharing, and plans could have stricter prior authorization requirements for mental health services than for other medical services.

In 1999, California passed its own state Mental Health Parity Law (AB 88, Thomson, Chapter 534, Statutes of 1999) which requires all California health insurance plans provide coverage for the diagnosis and medically necessary services of severe mental illnesses of a person of any age and of serious emotional disturbances of a child. Benefits must be applied under the same terms and conditions as applied to other medical conditions. AB 88 also requires copayments, deductibles and maximum lifetime benefits to be applied equally to all benefits under the plan. California also mandates behavioral health treatment, including Applied Behavioral Analysis, for autism.

In 2008, Congress passed MHPAEA to cover some of the gaps in the MHPA. Similar to the MHPA, the MHPAEA only applies to large-group health plans. However, the MHPAEA also included Medicare Advantage plans offered through group health plans, state and local government plans, Medicaid managed care plans, and state Children’s Health Insurance Program plans. Unlike the MHPA, the MHPAEA prohibited differences in services limits, cost-sharing, in-and-out-of-network coverage, and applied to services for substance use disorders. Like the MHPA though, the MHPAEA did not mandate mental health or substance services. MHPAEA requires, if health plans include services for mental health or substance use disorders as part of their benefits, to provide those services under the same terms and conditions as other medical services. The MHPAEA eliminated all differences between mental health and substance use disorder services and other medical services as they related to: services and visit limits; deductibles, copayments, and coinsurance; and the use of out-of-network providers when a health plan gave this option. Further, federal regulations in 2010 and then the final rule in 2013, prohibited plans from imposing a financial requirement or services limit restriction that is more restrictive than what they offered for medical and surgical benefits in the same classification.

1. ACA. The passage of ACA, in 2010, took coverage for mental health and substance abuse disorders a step further than the MHPAEA by mandating coverage for services, instead of only requiring parity, if mental health coverage is provided. The ACA applied to all health plans in the individual market and qualified health plans offered through health benefit exchanges, including those products in the Small Business Health Options Program. The ACA also specified that coverage of mental health and substance use services must be included as one of the ten EHBs. Due to the ACA, all non-grandfathered health insurance plans in the individual and small-group market, inside and outside the Exchange, must now include coverage for the services of mental health and substance use disorders and be in compliance with MHPAEA. California’s EHB statute also specifically states that MHPEA applies to plans that must comply with EHBs. The statute states that coverage of mental health and substance use disorders services along with any scope and duration limits imposed on the benefits shall be in compliance with MHPAEA and all rules, regulations and guidance issued pursuant to MHPAEA.
2. EHB repeal. The American Health Care Act (AHCA) is pending in Congress and is an effort by the Congressional Republicans and the Trump Administration to fulfill promises to repeal and replace the ACA. The AHCA is pending federal legislation and its final form and disposition is unknown at this time. An amendment has been discussed to repeal the EHB requirements.

1. State enforcement. Both DMHC and CDI provide regulatory oversight of federal and California parity laws and are monitoring filings for compliance with these laws. DMHC has a two phase process for reviewing health care service plan compliance with MHPAEA. Phase one was to ensure compliant classification of benefits and that the plans charged enrollees appropriate cost sharing. Phase two is on onsite examination of health plans to verify that revisions have been made to policies and procedures and product/benefit designs that were reviewed in phase one. Phase two is expected to be complete by June 2017. CDI has issued questionnaires to insurers requesting information on how the health insurer meets the parity requirements in state law, MHPAEA, and other general questions. CDI also filed amicus briefs on behalf of patients in two cases involving health plan coverage for mental health services: Harlick vs. Blue Shield and Rea vs. Blue Shield. In both cases, patients were seeking coverage for medically necessary services for anorexia that had been denied by the health plan. The courts ruled in favor of the plaintiffs. CDI indicated that it filed the amicus brief because CDI does not have regulatory authority to take action against the health plan (because health plans are regulated by DMHC).
   
2. Prior legislation. AB 796 (Nazarian, Chapter 493, Statutes of 2016) eliminates the sunset date on the health insurance mandate to cover behavioral health treatment for pervasive developmental disorder or autism.
   

SB 857 (Budget Trailer Bill, Chapter 31, Statutes of 2014) effective June 20, 2014, among, other provisions, the trailer bill provided DMHC with the authority to enforce federal mental health parity rules and conforms to federal rules to impose these requirements on large group products.

SB 22 (Beall of 2013) would have required health plans and insurers to report to DMHC and CDI, respectively, on compliance with state and federal law related to mental health parity. SB 22 was held in the Assembly Appropriations Committee.

SB 126 (Steinberg, Chapter 680, Statutes of 2013) extends, until January 1, 2017, the sunset date of an existing state health benefit mandate that requires health plans and health insurance policies to cover behavioral health treatment for pervasive developmental disorder or autism and requires plans and insurers to maintain adequate networks of these service providers.

SB 946 (Steinberg, Chapter 650, Statutes of 2011) requires health plans and health insurance policies to cover behavioral health treatment for pervasive developmental disorder or autism, requires health plans and insurers to maintain adequate networks of autism service providers, establishes a task force in DMHC, sunsets the autism mandate provisions on July 1, 2014, and makes other technical changes to existing law regarding HIV reporting and mental health services payments.

AB 88 requires a health care service plan contract or disability insurance policy to provide coverage for severe mental illnesses, and for the serious emotional disturbances of a child.

1. Support. The California Psychological Association indicates that currently while DMHC regulates 80% of health care policies in California, 20% are regulated by CDI, who currently lacks the enforcement ability necessary to enforce MHPAEA. If this bill passes, all state regulated health insurance policies and health plans would be subject to enforcement of the federal requirements. The California Psychiatric Association (CPA) writes that it is vital that MHPAEA be enforced robustly to end discrimination against those who need mental health and substance use services. Additionally, CPA believes this bill insulates California enforcement of MHPAEA from the effects of possible ACA repeal and replacement. The California Chapter of the American College of Emergency Physician (California ACEP) writes that emergency physicians know firsthand the difficulties facing patient in need of psychiatric care because patients in mental health crisis often find themselves in emergency departments. CalACEP believes the system if failing psychiatric patients and that this bill will strengthen mental health parity for health insurance policies and provide much needed oversight. The Californiahealth+ Advocates believes this bill enhances the provision of behavioral health services to Californians through the recognition of the important role mental health plays in overall health.
   
2. Oppose. The California Association of Health Underwriters (CAHU) believes the way this bill is written it would force people to give up their grandfathered plans.
   
3. CDI authority. CDI currently has MHPAEA enforcement authority as it relates to non-grandfathered individual and small group insurance policies based on the authority explicit in the state EHB statute. This bill would ensure CDI has enforcement authority for large group policies as well.
   
4. Parallel statute. The sponsors have drafted a slightly different statute for CDI than what applies to DMHC. The difference being that a reference to the state EHB statute in paragraph (b) has been excluded. The CDI indicates that it is a redundant reference and that the state EHB statute has a tieback to the federal EHB mandate and that federal mental health parity laws will continue to be in effect regardless of the fate of the federal EHB mandate, so compliance by insurers and state enforcement of those laws should also continue.

SUPPORT AND OPPOSITION:

Support: California Association of Marriage and Family Therapists (co-sponsor)

California Coalition for Mental Health

California Psychiatric Association (co-sponsor)

California Psychological Association (co-sponsor)

Autism Speaks

California Access Coalition

California Chapter of the American College of Emergency Physicians

California Coalition for Mental Health

CaliforniaHealth + Advocates

California Coalition for Mental Health

Center for Autism and Related Disorders

NAMI California

National Alliance on Mental Illness

National Association of Social Workers, California Chapter

Oppose: California Association of Health Underwriters

-- END --