Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plan contracts or health insurance policies issued, amended, or renewed on or after July 1, 2000, to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses, as defined, and of serious emotional disturbances of a child, as specified, under the same terms and conditions applied to other medical conditions.

Existing federal law, the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), requires group health plans and health insurance issuers that provides both medical and surgical benefits and mental health or substance use disorder benefits to ensure that financial requirements and treatment limitations applicable to mental health or substance use disorder benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical and surgical benefits. Existing state law subjects nongrandfathered individual and small group health care service plan contracts and health insurance policies that provide coverage for essential health benefits to those provisions of the MHPAEA.

This bill would require a health care service plan and a health insurer to submit an annual report to the Department of Managed Health Care or the Department of Insurance, as appropriate, certifying compliance with state and federal mental health parity laws, as specified. The bill would require the departments to review the reports submitted by health care service plans to ensure compliance with state and federal mental health parity laws, and would require the departments to make the reports and the results of the reviews available upon request and to post the reports and the results of the reviews on the departments Internet Web site. The bill would also require the departments to report to the Legislature the information obtained through the reports and the results of the review of the reports and on all other activities taken to enforce state and federal mental health parity laws.

Existing law authorizes a health care service plan and a health insurer to utilize formularies, prior authorization, step therapy, or other reasonable medical management practices, as specified, in the provision of outpatient prescription drug coverage.

The bill would prohibit a health care service plan and a health insurer that provides prescription drug benefits for the treatment of substance use disorders from, among other things, imposing any prior authorization requirements on, or any step therapy requirements before authorizing coverage for, a prescription medication approved by the federal Food and Drug Administration for the treatment of substance use disorders.

Because a willful violation of the bills provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 11 (Beall) - Health care coverage: mental health parity

Bill Summary:

Senate Bill 11 would require health plans and insurers that provide prescription drug benefits for the treatment of substance use disorders (SUDs) to place prescription medications approved by the federal Food and Drug Administration (FDA) for the treatment of substance use disorders on the lowest cost-sharing tier of the plan or insurer’s prescription drug formulary. Would prohibit plans and insurers from, among other things, imposing any prior authorization requirements on, or any step therapy requirements before authorizing coverage for, a prescription medication. Would require DMHC and CDI to report information on activates taken to enforce state and federal mental health parity laws.

Fiscal Impact:

The DMHC estimates the total cost of this bill to be approximately $1.2 (Managed Care Fund [MCF]) and 2.1 PYs in FY 2019-20; $1.1 MCF and 2.1 PYs in FY 2020-21; $1.0 MCF and 1.4 PYs in FY 2021-22, and ongoing. Additional detail is included in Staff Comments.

According to the California Health Benefits Review Program, approximately 95.6% of enrollees in plans and policies regulated by DMHC or CDI have a pharmacy benefit that would need to be altered to be compliant with SB 11.

All Medi-Cal beneficiaries enrolled in DMHC-regulated plans have coverage for these medications — though for opioid use disorder and alcohol use disorder medications it is through a “carve-out” to Medi-Cal fee-for-service (FFS). The FFS program coverage would comply SB 11, except for the more costly auto-injector formulation of naloxone which most patients prefer, for OUD. Post-mandate, these enrollees would have coverage from their DMHC regulated plans as well, including SB 11–compliant naloxone coverage.

Background:

AB 88 (Thomson), Chapter 534, Statutes of 1999) requires health plans and insurers to cover the diagnosis and medically necessary treatment of “severe mental illness” of a person of any age, and of “serious emotional disturbances” of a child. Coverage is required to be at parity - under the same terms and conditions applied to other medical conditions. Such terms and conditions include, but are not limited to, maximum lifetime benefits, copayments, and individual and family deductibles. The state law requires parity with respect to enrollee cost-sharing for covered benefits. California’s current mental health parity law applies to the large group, small group, and individual markets.

According to DMHC, parity in cost-sharing means the cost-sharing to treat a behavioral health condition is not higher than the most common cost-sharing for treating substantially all medical conditions, on an inpatient or outpatient basis. Under the ACA, private health plans must provide coverage for a range of preventive services and may not impose cost-sharing (such as copayments, deductibles, or co-insurance) on patients receiving these services. These requirements apply to all private plans – including individual, small group, large group, and self-insured plans – with the exception of those plans that maintain “grandfathered” status (in existence prior to March 23, 2010 and no significant changes to their coverage).

Proposed Law: This bill includes the following provisions, among others:

• Requires the department to report specified information to the Legislature
• Requires a health care service plan or insurer that provides prescription drug benefits for the treatment of substance use disorders must place all prescription medications for the treatment of substance use disorders on the lowest tier of the drug formulary developed and maintained by the health care service plan, and must not do any of the following:
  • Impose any prior authorization requirements on any prescription medication approved by FDA for the treatment of substance use disorders.
  • Impose any step therapy requirements before authorizing coverage for a prescription medication approved by the FDA for the treatment of substance use disorders.
  • Exclude coverage for any prescription medication approved by the FDA for the treatment of substance use disorders and any associated counseling or wraparound services on the grounds that those medications and services were court ordered.

Provides the bill is a non-reimburseable mandate.

Related Legislation:

AB 2384 (Arambula of 2018) would have mandated coverage for at least one MAT, relapse prevention and overdose reversal prescription drug for opioid use disorder; and prohibits health plans and insurers from using prior authorization, fail first or step-therapy and other utilization management requirements for at least one version of each MAT, relapse prevention and overdose reversal prescription drug. AB 2384 was vetoed by Governor Brown who stated:

This bill requires health plans to cover at least one version of each drug used in medication-assisted treatment for opioid disorders and restricts health plans' ability to manage the utilization of these drugs. While the drugs specified in this bill are useful to treat opioid addiction, I'm not willing to eliminate requirements that may be in the best interest of patients.

AB 2760 (Wood, Chapter 324, Statutes of 2018) requires a prescriber to offer a prescription for naloxone hydrochloride or another drug federally approved for the complete or partial reversal of opioid depression for patients when certain conditions are present and to provide specified education to those patients and provide education about how these drugs may be used to prevent an overdose.

Staff Comments:

The DMHC provided detail and assumptions on their estimated workload, specifically:

• $436,000 and 1.0 PY in FY 2019-20; $286,000 and 0.3 PY in FY 2020-21; and, $284,000 and 0.3 PY in FY 2021-22, and ongoing, for the Office of Plan Monitoring’s workload to revise technical assistance guides, legal review of information for the annual report, and for a clinical consultant ($224,000) to assist with utilization management processes for compliance.
• $707,000 and 1.0 PY in FY 2019-20, $715,000 and 1.0 PY in FY 2020-21, $707,000 and 1.0 PY in FY 2021-22, and ongoing, for the Office of Plan Licensing to review, and ensure compliance, Annual Report filings, formularies, and other health care service plan documents to ensure compliance with the requirements set forth in SB 11. These amounts include $495,000 annually for a clinical consultant to assist OPL with the review health plan prescription drug formularies for compliance.
• $133,000 and 0.7 PY in FY 2020-21 only for the Office of Legal Services to prepare three legal memoranda during the bill’s first year of implementation.
• $13,000 and 0.1 PY in FY 2019-20, $14,000 and 0.1 PY in FY 2020-21, $13,000 and 0.1 PY in FY 2021-22, and ongoing, for the Help Center to process increased volume of consumer calls.

The CHBRP analysis on the bill found the following:

• SB 11 would increase total net annual expenditures by $20,671,000 or 0.0133% for enrollees with DMHC-regulated plans and CDI-regulated policies. This increase is primarily driven by an increase of $17,820,000 (0.0257%) in spending by private employers for group insurance and $6,018,000 (0.0283%) in spending by enrollees with group insurance, CalPERS HMOs, and small group Covered California policies.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Dr. Richard Pan, Chair

BILL NO: SB 11

SUBJECT: Health care coverage: mental health parity

SUMMARY:

• 1. Requires health plans and health insurers to submit an annual report to either the Department of Managed Health Care (DMHC) or the California Department of Insurance (CDI) certifying compliance with state and federal mental health parity laws, requires DMHC and CDI to make the annual reports available, upon request, and, to post the reports on their Internet Websites, and, requires the California State Auditor to review DMHC and CDI’s implementation of this bill and report its findings to the Legislature. Prohibits prior authorization or step therapy requirements on any prescription medication approved by the federal Food and Drug Administration for the treatment of substance use disorders.

Existing law:

1. Establishes DMHC to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act) and CDI to regulate health insurance. [HSC §1340, et seq. and INS §106, et seq.]
   
2. Establishes as California's essential health benefits (EHBs) benchmark the Kaiser Small Group Health Maintenance Organization, existing California mandates, and ten federal Affordable Care Act (ACA) mandated benefits, which include prescription drug coverage. Requires nongrandfathered individual and small group health plan contracts and health insurance policies to cover these EHBs and comply with Knox-Keene Act requirements including those related to prescription drug coverage Requires coverage of mental health and substance use disorder services along with any scope and duration limits in compliance with the federal Paul Wellstone and Pete Dominici Mental Health Parity and Addiction act of 2008 (MHPAEA). [HSC §1367.005 and INS §10112.27]
   
3. Requires nongrandfathered individual and small group contracts and policies that have drug formularies grouped in tiers to use the following definitions until January 1, 2024:
   1. Tier one to consist of most generic drugs and low-cost preferred brand name drugs;
   2. Tier two to consist of nonpreferred generic drugs, preferred brand name drugs, and any other drugs recommended by the pharmacy and therapeutics committee based on safety, efficacy, and cost;
   3. Tier three to consist of nonpreferred brand name drugs or drugs that are recommended by the pharmacy and therapeutics committee based on safety, efficacy, and cost, or that generally have a preferred and often less costly therapeutic alternative at a lower tier; and,
   4. Tier four to consist of drugs that are biologics, drugs that the federal Food and Drug Administration (FDA) or manufacturer requires to be distributed through a specialty pharmacy, drugs that require special training or clinical monitoring for self-administration, or drugs that cost more than $600 net of rebates for a one month supply. [HSC §1342.73 and INS §10123.1932]
      
4. Prevents the law from being construed to require a health plan or health insurer to impose cost sharing, or to require cost sharing for prescription drugs that state or federal law otherwise requires to be provided without cost sharing. [HSC §1342.73 and IC §10123.1931]
   
5. Requires a health plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs, including nonformulary drugs determined to be medically necessary. Prohibits, consistent with existing law, formularies for outpatient prescription drugs from discouraging enrollment of individuals with health conditions and not reduce the generosity of benefits with a particular condition that is not based on clinical indication or reasonable medical management practices. [HSC §1372.41 and INS §10123.193]
6. Permits, in the provision of outpatient prescription drug coverage, a health plan or health insurer to utilize a formulary, prior authorization, step therapy, or other reasonable medical management practices. Requires any limit or utilization management to be consistent with and based on clinical guidelines and peer-reviewed scientific and medical literature. Requires a health plan or insurer to include information on cost-sharing tiers and utilization controls, including prior authorization or step therapy requirements, for each drug covered by the product. [HSC §1342.71, §1367.205, INS §10123.192, and §10123.193]
   
7. Requires a health plan that provides prescription drug benefits to maintain an expeditious process by which prescribing providers may obtain authorization for a medically necessary nonformulary prescription drug. [HSC §1367.24]
8. Requires, if a health plan or health insurer that provides coverage for prescription drugs fails to respond to a prior authorization request, as specified, within 72 hours for nonurgent requests, and within 24 hours if exigent circumstances exist, upon the receipt of a completed form, the request to be deemed granted. [HSC §1367.241 and INS §10123.191]
   
9. Requires a request for an exception to a health plan’s or health insurer’s step therapy process for prescription drugs to be submitted in the same manner as a request for prior authorization pursuant to 7) above and treated in the same manner and responded to in the same manner. [HSC §1367.244 and INS §10123.197]
10. Requires, to the extent required by federal law, a group or individual health plan or insurer to comply with the ACA related to coverage for preventive services without cost-sharing. [42 USC §300gg-13, HSC §1367.002 and INS §10112.2]
11. Requires health plans, except Medi-Cal managed care contracts, and insurers to provide coverage for the diagnosis and medical necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbance of a child under the same terms and conditions applied to other medical conditions, as specified. Requires the benefits to include outpatient services, inpatient hospital services, partial hospital services, and prescription drugs, if in the contract or policy. Requires terms and conditions to be applied equally to all benefits under the contract or policy, including, but not limited to, the following:
    1. Maximum lifetime benefits;
    2. Copayments; and,
    3. Individual and family deductibles. [HSC §1374.72 and INS §10144.41]
       
12. Defines “serious mental illness” to include:
    1. Schizophrenia;
    2. Schizoaffective disorder;
    3. Bipolar disorder;
    4. Major depressive disorder;
    5. Panic disorder;
    6. Obsessive-compulsive disorder;
    7. Pervasive developmental disorder or autism;
    8. Anorexia nervosa; and,
    9. Bulimia nervosa. [HSC §1374.72 and INS §10144.41]
       
13. Requires a large group, small group, and individual health plan contract or insurance policy to provide all covered mental health and substance use disorder benefits in compliance with MHPAEA, as specified. [HSC §1374.76 and INS §10144.42 ]
    
14. Requires reviews, for purposes of Independent Medical Review (IMR), to determine whether the disputed health care service was medically necessary based on the specific medical needs of the enrollee or insured and any of the following:
15. Peer-reviewed scientific and medical evidence regarding the effectiveness of the disputed service;
16. Nationally recognized professional standards;
17. Expert opinion;
18. Generally accepted standards of medical practice; or,
19. Treatments that are likely to provide a benefit to a patient for conditions for which other treatments are not clinically efficacious. [HSC §1374.33 and INS §10169.3]

This bill:

1. Requires a health plan and insurer to submit an annual report to DMHC or CDI on or before March 1 of each year certifying compliance with state and federal mental health parity laws and additional requirements imposed by this bill. Requires DMHC and CDI to make the annual report available, upon request, and, to post the report on DMHC and CDI’s websites.
   
2. Requires a health plan and insurer to annually report, including but not be limited to, all of the following:
   1. A description of the process used to develop or select the medical necessity criteria for mental health and substance use disorder benefits and the process used to develop or select the medical necessity criteria for medical and surgical benefits;
   2. Identification of all nonquantitative treatment limitations (NQTLs), as defined in MHPAEA, that are applied to both mental health and substance use disorder benefits and medical and surgical benefits within each classification of benefits;
   3. The results of an analysis that demonstrates that for the medical necessity criteria, and each NQTL, as written and in operation, the processes, strategies, evidentiary standards, or other factors used in applying the medical necessity criteria, and, for each NQTL mental health and substance use disorder benefits within each classification of benefits, comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the medical necessity criteria and each NQTL, to medical and surgical benefits within the corresponding classification of benefits. Requires, at a minimum, the results of the analysis to do the following:
      1. Identify the factors used to determine that an NQTL will apply to a benefit, including factors that were considered, but rejected;
      2. Identify and define the specific evidentiary standards used to define the factors and any other evidence relied upon in designing each NQTL;
      3. Provide the comparative analyses, including the results of the analyses performed to determine that the processes and strategies used to design each NQTL, as written, and the written processes and strategies used to apply the NQTL to mental health and substance use disorder benefits as compared to medical and surgical benefits;
      4. Provide the comparative analyses, including the results of the analyses performed to determine that the processes and strategies used to apply each NQTL, in operation, for mental health and substance use disorder benefits as compared to medical surgical benefits; and,
      5. Disclose the specific findings and conclusions reached by the health plan or insurer that the results of the analyses indicate that the health plan or insurer is in compliance with MHPAEA.
         
3. Prohibits a report submitted to DMHC or CDI pursuant to this bill from including any information that may individually identify enrollees or insureds, including, but not limited to, medical record numbers, names, and addresses.
   
4. Requires DMHC and CDI to review the reports to ensure compliance with state and federal mental health parity laws, as specified; make the results of the review available upon request; and, post the review of the reports on the DMHC and CDI websites.
   
5. Requires DMHC and CDI to annually report to the Legislature the information obtained through the reports and the results of the review of the reports and on all other activities taken to enforce this bill and state and federal mental health parity laws, as specified.
   
6. Requires the California State Auditor to review DMHC and CDI’s implementation of this bill and report its findings from the review to the Legislature.
   
7. Requires, notwithstanding any other law, a health plan or insurer that provides prescription drug benefits for the treatment of substance use disorders to place all prescription medications approved by the FDA for the treatment of substance abuse disorders on the lowest tier of the drug formulary developed and maintained by the health plan or insurer, and prohibits any of the following:
   1. Prior authorization requirements on any prescription medication approved by the FDA for the treatment of substance use disorders;
   2. Step therapy requirements before authorizing coverage for prescription medication approved by the FDA for the treatment of substance use disorders; and,
   3. Exclusion of coverage for any prescription medication approved by the FDA for the treatment of substance use disorders and any associated counseling or wraparound services on the grounds those medications and services were court ordered.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, this bill will put into place some of the nation’s most stringent mental health parity laws. This year, the State of Illinois passed a set of mental health parity reforms, that the Kennedy Forum deemed the “gold standard” of parity laws of any state. Specifically, the Illinois bill (SB 1707) established oversight requirements for their Insurance Commissioner and Legislature to ensure plan compliance to parity laws. Fortunately in California, the DMHC already has oversight authority on health plans, and reports which plans are in compliance of federal law, and for those that aren’t, prescribe corrective actions. Oversight is key to ensuring mental health parity, but we must hold health plans accountable with the types of mental health services they offer and ensuring timely access to them. In 2013, I introduced SB 22, which would have strengthened parity enforcement in the state, but that bill was held in Assembly Appropriations Committee. This bill continues the spirit of my 2013 bill by strengthening parity oversight and requiring our State Auditor to review DMHC’s compliance with parity laws. But this bill also prohibits plans from imposing prior-authorization requirements on any FDA-approved medication to treat substance use disorder. The bill also prohibits step-therapy requirements for substance use disorder drugs. Step therapy requirements enable a “Fail First” approach, which is used by health insurers to control costs. It is time-consuming from a physician and patient standpoint, is more expensive from a direct and indirect out-of-pocket cost perspective, and denies patients the drugs they need when they need them.
   
2. State and federal mental health parity law. There are three separate provisions of law on coverage of mental health. Under current state law, as enacted by AB 88 (Thomson, Chapter 534, Statutes of 1999) health plans and insurers are required to cover the diagnosis and medically necessary treatment of “severe mental illness” of a person of any age, and of “serious emotional disturbances” of a child. Coverage is required to be at parity - under the same terms and conditions applied to other medical conditions. Such terms and conditions include, but are not limited to, maximum lifetime benefits, copayments, and individual and family deductibles. The state law requires parity with respect to enrollee cost-sharing for covered benefits. California’s current mental health parity law applies to the large group, small group, and individual markets.
   
   Under the federal MHPAEA of 2008, carriers providing group coverage that cover mental health and substance use disorders must provide coverage that is no more restrictive than coverage for other medical/surgical benefits. MHPAEA does not require a carrier to provide mental health and substance use disorder benefits. Rather, if a carrier provides medical/surgical and mental health and substance use disorder benefits, it must comply with MHPAEA’s parity requirements. This parity provision applies to financial requirements (for example, deductibles and copayments) and treatment limitations. The federal Department of Labor (DOL), the federal Department of Health and Human Services, and the U.S. Treasury collectively promulgated interim final regulations on February 2, 2010 to implement the provisions of MHPAEA. Final regulations were finalized in 2013. The ACA explicitly includes mental health and substance use disorder, including behavioral health treatment, as one of the ten categories of service that must be covered as EHB’s. The ACA further mandates that mental health and substance use disorder benchmark coverage be provided at parity with other medical and surgical benefits offered by carriers, pursuant to MHPAEA.
   
   According to DMHC, parity in cost-sharing means the cost-sharing to treat a behavioral health condition is not higher than the most common cost-sharing for treating substantially all medical conditions, on an inpatient or outpatient basis. For example, if the most common cost-sharing for treating a blocked artery or other physical condition in the hospital is $200 per day, then cost-sharing for treating bipolar disorder in the hospital cannot be $300 per day. Parity in day and visit limits to treat a behavioral health condition cannot be greater than the most typical day or visit limits for treating substantially all medical conditions, on an inpatient or outpatient visit. For example, if there are no annual limits on the number of office visits to see a primary or specialty doctor to treat a cold, rash, pregnancy, or other medical condition, a health plan cannot limit an enrollee to ten counseling visits each year with a psychiatrist to treat depression or alcoholism. Pre-authorization policies are not in parity if pre-authorization is required for outpatient chemical dependency counseling, but not for outpatient treatment of a cold, or rash, or pregnancy. A preferred provider organization violates parity if it excludes coverage of inpatient out-of-network treatment for chemical dependency when obtained out of state, but does not exclude coverage of inpatient out-of-network back surgery out of state.
3. State oversight of compliance. The two state agencies that have primary oversight of health plan and insurer compliance with state and federal mental health parity laws and their implementing regulations are DMHC and CDI. At least once every three years, DMHC conducts a Routine Medical Survey of a plan which includes a review of the plans policies and procedures and the overall performance of the plan in providing health care benefits and meeting the health needs of its enrollees. Similarly, CDI routinely conducts Market Conduct Examinations. Both market conduct examinations and non-routine medical surveys are also scheduled based on consumer complaint activity and by special request. Individuals covered by carriers in California are also entitled to an IMR if a carrier denies health care services or payment for health care services based on medical necessity. An IMR is a process where expert independent medical professionals are selected to review specific medical decisions made by the plans or insurers. DMHC and CDI administer the IMR program to enable consumers to request an impartial appraisal of medical decisions within certain guidelines specified in law. An IMR can only be requested if the carrier’s decision involves the medical necessity of a treatment, an experimental or investigational therapy for certain medical conditions, or a claims denial for emergency or urgent medical services.
   
4. Milliman report. A December 2017 report commissioned by Mental Health Treatment and Research Institute LLC, based on an analysis of two large research databases of administrative claims data, identified significantly higher rates of out-of-network use for behavioral care compared to medical/surgical care, and found that medical/surgical providers are paid at higher rates than behavioral providers, often for providing the same services. The report focuses on two quantitative analyses: out-of-network utilization rates for inpatient, outpatient facility services, and professional office visits; and, reimbursement rates for office visits for in-network health care providers. The proportion of behavioral office visits that were provided out-of-network was 4.8 to 5.1 times higher than for medical/surgical primary care office visits, and 3.6 to 3.7 times higher than for medical/surgical specialist office visits. For California, the report showed the proportion of out-network PPO utilization in 2015 for behavioral health inpatient rates were 7.4 times higher than for medical/surgical inpatient utilization (based on a sample size of 66,167 medical/surgical claims and 6,434 behavioral health claims). For outpatient facilities, out-of-network PPO utilization in 2015 was 7.6 times higher for behavioral health than for medical/surgical (based on a sample size of claims of 198,024 medical/surgical and 102,989 behavioral health claims). For office visits to specialists in PPOs in 2015, the in-network payment levels relative to Medicare were 30% higher for medical/surgical compared to behavioral health.
   
5. Preventive services coverage. Under the ACA, private health plans must provide coverage for a range of preventive services and may not impose cost-sharing (such as copayments, deductibles, or co-insurance) on patients receiving these services. These requirements apply to all private plans – including individual, small group, large group, and self-insured plans – with the exception of those plans that maintain “grandfathered” status (in existence prior to March 23, 2010 and no significant changes to their coverage). The required preventive services come from recommendations made by four expert medical and scientific bodies – the U.S. Preventive Services Task Force (USPSTF), the Advisory Committee on Immunization Practices (ACIP), the Health Resources and Services Administration’s (HRSA’s) Bright Futures Project, and HRSA and the Institute of Medicine (IOM) committee on women’s clinical preventive services. Tobacco cessation and counseling falls under this preventive services coverage mandate.
   
6. Medication-assisted treatment. According to the Substance Abuse and Mental Health Services Administration (SAMHSA), medicated-assisted treatment (MAT) is the use of FDA- approved medications, in combination with counseling and behavioral therapies, to provide a “whole-patient” approach to the treatment of substance use disorders. In a September 2017 report, CHCF included a table to show the medications available, how they work, and how they are provided.

*Retention in treatment at 12 months with significant reduction or elimination of illicit drug use.

1. CHBRP analysis. AB 1996 (Thomson, Chapter 795, Statutes of 2002) requests the University of California to assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996, and reviewed this bill.
   
   1. Substance use disorders. According to CHBRP, substance use disorder is the clinical diagnosis for substance use that meets criteria per the Diagnostic and Statistical Manual of Mental Disorders (DSM-5), including impaired control, social impairment, risky use, increased tolerance, and withdrawal symptoms. The American Society of Addiction Medicine (ASAM) characterizes addiction as “the inability to consistently abstain, impairment in behavioral control, craving, diminished recognition of significant problems with one’s behaviors and interpersonal relationships, and a dysfunctional emotional response. Like other chronic diseases, addiction often involves cycles of relapse and remission.” There are a number of licit and illicit substances that qualify for a substance use disorder diagnosis including: opioids (heroin and misuse of prescription pain medications such as fentanyl and oxycodone), alcohol, cannabis, nicotine, inhalants, hallucinogens, amphetamine, caffeine, cocaine, and sedatives. Treatments for substance use disorder include residential, inpatient, and outpatient care using behavioral therapy, counseling, and/or prescription medication. Mutual help groups (e.g., Alcoholics Anonymous, Narcotics Anonymous) also support those with substance use disorder to quit substance use and maintain sobriety. Ten medications are approved by the FDA for the treatment of opioid use disorder, alcohol use disorder, and tobacco use disorder.
      
      Data sources and prevalence rates in California vary among the three use disorders:
      1. Opioid use disorder prevalence ranges between 0.51% and 1.1%;
      2. Alcohol use disorder prevalence is 5.51%; and,
      3. Tobacco use disorder prevalence is 16.23% (based on all tobacco products).

In the U.S., among those reporting alcohol use disorder, 23.8% also report nicotine dependence, and 3.9% report a concomitant prescription opioid use disorder. Among those reporting a prescription opioid use disorder, 35.2% also reported alcohol use disorder and 45.4% reported concomitant nicotine dependence.

• 1. Barriers to treatment. Barriers to accessing treatment for these disorders include drug utilization management techniques, provider supply, geographic access, and patient receptiveness to treatment. Significant federal prescribing restrictions limit access to opioid use disorder medications. Federal law restricts methadone treatment to federally certified programs, and in order to prescribe buprenorphine, federal law requires providers to receive special training and certification. Certified providers can treat no more than 30 patients at the same time during the first year, and a provider must reapply to increase to 100 patients.
     
  2. Assumptions. CHBRP’s analysis is focused on alcohol use disorder, opioid use disorder, and tobaccos use disorder, as there are no medications approved by the FDA as treatment for other substance use disorder treatments (such as amphetamines or cocaine). CHBRP also focused on prescription-only medications FDA approved as treatments for substance use disorder, not off-label use or over-the-counter medications.
     
  3. Medi-Cal. CHBRP assumes that DMHC-regulated Medi-Cal managed care plans would be required to comply with this bill. In some cases, where a medication is currently part of a “carve-out” (covered through fee-for-service Medi-Cal or another program, rather than the managed care plan), this bill would create “double-coverage,” which would allow a beneficiary to access benefit coverage through the plan or the carve-out route. However, CHBRP assumes the enrollee would continue to use the care-out coverage.
     
  4. Preventive services. According to CHBRP, it appears that the prevention services mandate is stricter on cost-sharing (prohibits it), compared to this bill which allows tobacco use disorder medications to be placed on the lowest formulary tier, which may include some cost-sharing. However, the prevention services mandate may not be as broadly applicable as this bill (as it is silent on coverage of brand-name vs generic and whether all formulations (patches, spray, lozenge, etc) must be covered without cost-sharing).
     
  5. Coverage impacts and enrollees covered. Approximately 95.6% of enrollees in plans and policies regulated by DMHC or CDI have a pharmacy benefit that would need to be altered to be compliant with this bill. Most commercial and CalPERS enrollees have on-formulary coverage for most of these medications; all would postmandate. Few of these enrollees have tier one cost sharing for most brand-name medications; all would postmandate. Few of these enrollees have prior authorization or step therapy protocols applicable to their coverage for these medications; none would postmandate. All Medi-Cal beneficiaries enrolled in DMHC-regulated plans have coverage for these medications — though for opioid use disorder and alcohol use disorder medications it is through a “carve-out” to the Medi-Cal fee-for-service program. With the exception of coverage for the more costly auto-injector formulation of naloxone for opioid use disorder (the anti-overdose drug), Medi-Cal coverage is compliant with this bill. Postmandate, these enrollees would have coverage from their DMHC-regulated plans as well, including SB 11–compliant naloxone coverage.
     
  6. EHB. This bill would alter the terms and conditions of existing benefit coverage but would not require coverage for a new state benefit mandate. The bill appears not to exceed the definition of EHB in California.
     
  7. Medical effectiveness. The evidence is related to use of the medications when prescribed and used as directed. Many persons have difficulty “using as directed” for the recommended period due to structural and attitudinal barriers to treatment. In addition, many people relapse and need to receive treatment repeatedly to abstain from using opioids, alcohol, or tobacco.
     1. However, for prescription-only medications approved by the FDA, opioid use disorder used as directed for the recommended period:
        1. There is clear and convincing evidence that methadone, buprenorphine, and buprenorphine-naloxone are effective;
        2. There is a preponderance of evidence that orally administered naltrexone is not effective; and,
        3. Evidence comparing medications is inconclusive.
     2. For prescription-only medications approved by the FDA for alcohol use disorder:
        1. There is clear and convincing evidence that acamprosate and naltrexone are effective;
        2. There is limited evidence that disulfiram is not effective; and,
        3. Evidence comparing medications is inconclusive.
     3. For prescription-only medications approved by the FDA for tobacco use disorder:
        1. There is clear and convincing evidence that prescription medications are effective;
        2. There is a preponderance of evidence favoring varenicline over nicotine replacement therapy (NRT); and,
        3. There is a preponderance of evidence that there is no difference between NRT and bupropion.
           
  8. Utilization. Generally, use of the medications would increase among commercial enrollees and enrollees associated with CalPERS – and new users would be expected for some of the medications. The exceptions are:
     1. No utilization increase is expected for lofexidine for opioid use disorder (used to treat short-term withdrawal symptoms), as the medication is newly approved and not likely to be prescribed much by providers during the initial year after implementation of this bill.
     2. Within the increased utilization of naloxone for opioid use disorder (used to treat overdoses) there would be a shift such that the more costly auto-injector formulation would represent half of all filled prescriptions.
     3. No utilization increase is expected for methadone because it may only be prescribed and delivered through federally certified centers, which do not bill for medication alone (as would be covered by a pharmacy benefit that is compliant with this bill).
     4. No utilization increase is expected for disulfiram for alcohol, as providers have concerns regarding its lack of effectiveness.
        
  9. Impact on expenditures. This bill would increase total net annual expenditures by $20.6 million, driven by an increase in $18 million in spending by private employers, and $6 million in spending by enrollees with group insurance. The premium increases are less than 0.1% for all market segments less than a 0.1% decrease in total enrollee out-of-pocket expenses (cost-sharing) for covered benefits. Cost-sharing impacts among enrollees using the medications would range from no impact (for Medi-Cal beneficiaries, who have no premandate cost sharing) to an average annual decrease of $418.28 among enrollees in individual market plans and policies.
     
  10. Public health. In the first postmandate year, CHBRP estimates as enrollees may use more than one medication, these enrollee estimates reflect an upper bound. Approximately 3,100 enrollees with newly compliant benefit coverage would use FDA-approved opioid use disorder medications, though 40% to 60% may experience relapse. Health outcomes related to successful use of these medications may include reducing illicit opioid use, opioid overdose and associated mortality, transmission of hepatitis C and HIV, and poor maternal-infant outcomes. Among those new users, this bill would also increase maintenance treatment retention and increase overdose reversals (through the use of naloxone). Approximately 2,200 enrollees with newly compliant benefit coverage would use FDA-approved alcohol use disorder medications, though 50% or more may experience relapse. Health outcomes of successful treatment would include decreases in undesirable outcomes such as injuries/accidents and poor pregnancy outcomes. Approximately 5,500 enrollees with newly compliant benefit coverage would use FDA-approved tobacco use disorder medications, some of whom will relapse. Health outcomes of successful treatment would include increasing quit rates and sustaining abstinence, as well as decreases in undesirable outcomes, such as poor birth outcomes and smoking-exacerbated conditions (e.g., cancer and heart attacks).
      

1. Related legislation. SB 159 (Wiener) authorizes a pharmacist to furnish preexposure prophylaxis (PrEP) and postexposure prophylaxis (PEP), in specified amounts, if the pharmacist completes a training program approved by the Board of Pharmacy and complies with specified requirements, such as assessing a patient and providing a patient with counseling and tests. Prohibits plans and insurers from subjecting combination antiretroviral drug treatments that are medically necessary for the prevention of AIDS/HIV, including PrEP and PEP, to prior authorization or step therapy, and expands the Medi-Cal schedule of benefits to include PrEP and PEP as pharmacist services. SB 159 is set for hearing in this Committee on April 24, 2019.
   
   SB 163 (Portantino) expands the definition of behavioral health treatment (BHT) and expands the provider qualifications to include more provider types that can provide BHT under the mandate that health plans and insurers cover BHT for pervasive developmental disorder or autism. Prohibits the setting, location, or time of treatment recommended by a qualified autism services provider from being used as the only reason to deny or reduce coverage for medically necessary services. Requires the setting to be consistent with the standard of care for BHT. SB 163 passed the Senate Health Committee by a vote of 8-0 on April 10, 2019.
   
   SB 583 (Jackson) expands coverage for clinical trials to include a clinical trial relating to the prevention, detection, or treatment of a life-threatening disease or condition, as defined, and include a trial funded by, among others, a qualified nongovernmental research entity. SB 583 is set for hearing in this Committee on April 24, 2019.
   
   SB 600 (Portantino) clarifies coverage for standard fertility preservation services when a medically necessary treatment may cause iatrogenic infertility to an enrollee or insured. SB 600 is set for hearing in this Committee on April 24, 2019.

SB 746 (Bates) requires that coverage for chemotherapy or radiation therapy for the treatment of cancer includes coverage for anticancer medical devices. SB 746 is set for hearing in this Committee on April 24, 2019.

AB 598 (Bloom) requires coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified. AB 598 is set for hearing in the Assembly Health Committee on April 23, 2019.

AB 651 (Grayson) requires when an the enrollee, insured, or subscriber receives covered services from a noncontracting air ambulance provider, to pay no more than the same cost sharing that the enrollee, insured, or subscriber would pay for the same covered services received from a contracting air ambulance provider. AB 651 is set for hearing in the Assembly Health Committee on April 23, 2019.

AB 744 (Aguiar-Curry) requires reimbursement of a healthcare provider for the diagnosis, consultation, or treatment of an enrollee, subscriber, insured, or policyholder delivered through telehealth services on the same basis and to the same extent as the same service provided through in-person diagnosis, consultation, or treatment. AB 744 is set for hearing in the Assembly Health Committee on April 23, 2019.

AB 767(Wicks) requires coverage for in vitro fertilization, as a treatment of infertility, and mature oocyte cryopreservation. AB 767 is set for hearing in the Assembly Health Committee on April 23, 2019.

AB 993 allows health plans to include HIV specialists as eligible primary care providers (PCPs), if the provider requests PCP status and meets the health insurer’s eligibility criteria. AB 993 passed the Assembly Health Committee by a vote of 15-0 on April 9, 2019.

AB 1246 (Limon) requires large group health insurance policies to include coverage for medically necessary basic health care services and, to the extent the policy covers prescription drugs, coverage for medically necessary prescription drugs. AB 1246 passed the Assembly Health Committee by a vote of 11-3 on April 9, 2019.

AB 1611(Chiu) requires that if an enrollee or insured receives covered services from a noncontracting hospital, he or she is prohibited from paying more than the same cost sharing that he or she would pay for the same covered services received from a contracting hospital. AB 1611 is set for hearing in the Assembly Health Committee on April 23, 2019.

AB 1676 (Maienschein) requires coverage for a telehealth consultation program that provides providers who treat children and pregnant and postpartum persons with access to a psychiatrist, as specified, in order to more quickly diagnose and treat children and pregnant and postpartum persons suffering from mental illness. AB 1676 is set for hearing in the Assembly Health Committee on April 23, 2019.

1. Prior legislation. AB 2384 (Arambula of 2018) would have mandated coverage for at least one MAT, relapse prevention and overdose reversal prescription drug for opioid use disorder; and prohibits health plans and insurers from using prior authorization, fail first or step-therapy and other utilization management requirements for at least one version of each MAT, relapse prevention and overdose reversal prescription drug. AB 2384 was vetoed by Governor Brown who stated:

This bill requires health plans to cover at least one version of each drug used in medication-assisted treatment for opioid disorders and restricts health plans' ability to manage the utilization of these drugs. While the drugs specified in this bill are useful to treat opioid addiction, I'm not willing to eliminate requirements that may be in the best interest of patients.

AB 2760 (Wood, Chapter 324, Statutes of 2018) requires a prescriber to offer a prescription for naloxone hydrochloride or another drug federally approved for the complete or partial reversal of opioid depression for patients when certain conditions are present and to provide specified education to those patients and provide education about how these drugs may be used to prevent an overdose.

SB 22 (Beall of 2013) would have required health plans and insurers to submit an annual report to state regulators certifying compliance with state and federal mental health parity laws. SB 22 was held in the Assembly Appropriations Committee.

AB 1963 (Waldron of 2018) would have required DHCS to increase the Medi-Cal provider reimbursement rates by an unspecified percentage for MAT, buprenorphine/naloxone combination treatment, methadone treatment, and naltrexone treatments provided by certified providers, for opioid addiction. AB 1963 was held on the Assembly Appropriations Committee suspense file.

AB 623 (Wood of 2015) would have prohibited health care service plans or health insurers from requiring the use of opioids that have no abuse-deterrent properties; required pharmacists to provide patients who receive opioid product information about proper storage and disposal; and authorized providers to prescribe less than 30-day supplies of opioids. AB 623 was held on the Assembly Appropriations Committee suspense file.

AB 374 (Nazarian, Chapter 621, Statutes of 2015) permits an exception to a health plan or insurer’s step therapy process to be submitted in the same manner as a request for prior authorization for prescription drugs. Requires those requests to be treated in the same manner, and responded to by the plan or insurer in the same manner, as a prior authorization request.

1. Support. The California Chronic Care Coalition writes that according to the California Attorney General’s office, “access to MAT should be encouraged and accessible for all patients who would benefit from it. A critical step toward increasing the use of MAT is ensuring that patients are able to receive the medications that their doctors prescribe.” Health care denials prevent access to medications that patients need to be able to address their substance use disorder. In fact, according to a 2016 National Survey on Drug Use and Health, almost 90% of patients do not have access to treatment services. Another report explains that insurance authorization policies can present major obstacles for patients and providers. Barriers such as limits on prescribed dosages, annual or lifetime medication limits, inadequate coverage of counseling services among others, all run contrary to the intent of the federal parity laws and regulations. Alkermes, the manufacturer of vivitrol, writes well-intended utilization management practices in coverage policies can limit or delay treatment for a condition where the window in which a patient decides to seek treatment can oftentimes be brief. Alkermes believes this bill would align with the goal of expanding patient access to MAT by prohibiting prior authorizations, step therapy and fail-first policies that restrict patient access to these important treatment options. The County Behavioral Health Directors Association of California believes this bill is critically important given the opioid misuse and heroin epidemic that is devastating communities in California. The Mental Health Services Oversight and Accountability Commission writes that it is eager to cosponsor this bill, along with the Kennedy Forum and the Steinberg Institute, and that this bill and the work that will come out of this effort will help break the stigma of mental health care and promote equity in the insurance coverage of those individuals with unmet mental health needs and substance use disorders. The Steinberg Institute writes that reporting and evaluating compliance to state and federal mental health parity laws will not only provide a benchmark for improvement but will help ensure that Californians receive comparable services and coverage. The California Judges Association supports this bill because a number of the defendants that they see are marginally employed, or unemployed and indigent. However, some have some form of health insurance that in most cases has been provided by their parents or relatives. In nearly all cases, the provisions for mental health and substance abuse are so limited by the private insurers and take so long to access, that these offenders do not receive the same level of services (residential, crisis residential or similar high level of treatment) as the indigent offenders who are receiving benefits through Medi-Cal or other resources. In the interim they receiving no treatment other than at emergency psychiatric services in a hospital and are at very high risk to return to the criminal justice system with new offenses.
   
2. Opposition. Mental health parity lawyers from Kantor and Kantor, who are also members of the Kennedy Forum’s Legal Task Force, write that the mental health parity provisions in this bill will hurt, rather than help, patients with mental illness. There are two main concerns raised by Kantor and Kantor. First, under the recent Wit v. United Behavioral Health decision, released March 5, 2019, the Magistrate moved away from carrier-developed guidelines used in developing medical necessity criteria, in favor of guidelines developed by non-profit clinically based organizations, such as the American Society of Addiction Medicine, the American Academy of Child and Adolescent Psychiatry, the American Psychiatric Association, and others. This is a shift that the California Legislature should support. Kantor and Kantor believe the provisions in this bill support the current medical necessity development processes that are not generally subject to peer review, are overly-restrictive, and may not be publicly available. The second concern has to do with the NQTL reporting. Kantor and Kantor has successfully argued that NQTLs are not expressed numerically, but otherwise limit the scope or duration of benefits, such as a return on investment analysis associated with a specific treatment. Kantor and Kantor does not believe these types of NQTL will be meaningfully identified, and if they are, will evolve quickly to some other undetectable NQTLs, and the reporting will give carriers a false veneer of compliance while maintaining their barriers to treatment behind the scenes. Kantor and Kantor states that the citizens of the State of California have strong protections under the current California Mental Health Parity Act, which have been solidified by expansive legal decisions achieved in several cases, which could be undermined by the mental health parity provisions of this bill.
   
   The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose mandate bills that lead to higher premiums, harming affordability and access for small businesses and individual market consumers. Over the past several years, employers have been losing more and more flexibility to set their own benefit designs due to costly state and federal regulations. These mandates will add to those higher health care costs.
   
3. Policy comments:
   1. Multiple mandates and market uncertainty. California’s existing coverage mandates including EHB already provide very comprehensive benefit coverage. The Committee will be hearing multiple bills this year that will have small to large relative impacts on health insurance premiums. This bill is one of six Senate Bills to be considered. While many policy arguments can be made to advance all of these bills, committee members may also wish to consider the cumulative effect of these bills and the tradeoffs associated with increasing health insurance premiums in the context of the already high cost of health insurance, another potential restructuring of health insurance markets nationally and in California because of actions taking place at the federal level to repeal the ACA, and in consideration of the Governor’s budget proposal, and other legislation, to provide state financial assistance and to require Californians to purchase health insurance.
      
   2. Reporting provisions. The mental health parity reporting provisions of this bill do not take into account existing monitoring and enforcement activities of DMHC and CDI, could be duplicative and administratively burdensome, and, may cause harm rather than help consumers. Rather than relying on reports by the plans, DMHC currently reviews utilization management files to compare processes, conducts interviews, and reviews financial requirements and relevant documents through an extensive focused survey process. A final report of the plan surveys are available on the DMHC website. If the author and sponsors wish to be regularly updated on compliance and enforcement activities, perhaps a regular reporting requirement with aggregated information could be placed on the regulators to update the Legislature and public on existing MHPAEA compliance and enforcement activities, instead of the current reporting provisions in this bill.
      
   3. Utilization management. As indicated by CHBRP, there are many challenges to getting people with substance use disorders onto, and to maintain, treatment. For their part, health plans and insurers can and should do more to ease administrative burdens that do not serve a critical clinical purpose. This bill may go to an extreme in eliminating utilization management tools along with the other provisions that could affect the health plans’ and health insurers’ ability to manage benefits and networks. Last year, AB 2384, which was limited to MAT for opioid use disorder, was amended in the Senate Health Committee to ensure that at least one form of each medication would be available without being subject to utilization management. The Committee may wish to consider requesting similar amendments to this bill.
      
   4. Tier one. This bill requires, notwithstanding any other provision of law, all prescription medications approved by the FDA for the treatment of substance use disorders to be placed on the lowest tier of the drug formulary developed and maintained by a health plan and insurer. This provision may conflict with federal law and existing state law: a) as indicated by CHBRP, it appears that the ACA prevention services mandate is stricter on cost-sharing (prohibits it), compared to this bill which requires tobacco use disorder medications to be placed on the lowest formulary tier, which may include some cost-sharing; and b) tier one is defined as a category for generic and low cost preferred brand name drugs. The Committee and author may wish to resolve these potential conflicts.

SUPPORT AND OPPOSITION:

Support: Steinberg Institute (cosponsor)

Mental Health Services Oversight and Accountability Commission (cosponsor)
Kennedy Forum (cosponsor)

Alkermes, Inc

American Academy of Pediatrics, California

Association of Community Human Service Agencies

California Academy of Child and Adolescent Psychiatry

California Alliance of Child and Family

California Association of Marriage and Family Therapists

California Association of Veteran Service Agencies

California Children’s Trust

California Chronic Care Coalition

California Coalition for Mental Health

California Council of Community Behavioral Health Agencies

California Judges Association

California Life Sciences Association

California Psychological Association

California Society of Addiction Medicine

Children’s Institute

City of San Jose

Community Mental Health Certificate Program at City College of San Francisco

County Behavioral Health Directors Association of California

County of Santa Clara

Depression and Bipolar Support Alliance

Disability Rights California

Exodus Recovery, Inc.

Legal Action Center

Mental Health America of California

National Association of Social Workers, California Chapter

National Health Law Program

Optimist Youth Homes & Family Services

SEIU

Seneca Family of Agencies

Voices Project

Oppose: America’s Health Insurance Plans

Association of California Life and Health Insurance Companies

California Association of Health Plans (oppose unless amended)

California Chamber of Commerce

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