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 also provides for the regulation of health insurers by the Department of Insurance. Existing law authorizes health care service plans and health insurers that cover prescription drugs to utilize reasonable medical management practices, including prior authorization and step therapy, consistent with applicable law.

This bill would prohibit a health care service plan contract or a health insurance policy that is issued, amended, or renewed on or after January 1, 2027, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness or substance use disorder, as those terms are defined. defined, except as specified. The bill would specify that the prohibition on step therapy does not apply when the United States Food and Drug Administration-labeled indications and usage of a drug indicate that some prior medication must be taken. Because a willful violation of this provision 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.

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 also provides for the regulation of health insurers by the Department of Insurance. Existing law authorizes health care service plans and health insurers that cover prescription drugs to utilize reasonable medical management practices, including prior authorization and step therapy, consistent with applicable law.

This bill would prohibit a health care service plan contract or a health insurance policy that is issued, amended, or renewed on or after January 1, 2027, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of mental health or substance use disorders, as defined. a serious mental illness or substance use disorder, as those terms are defined. The bill would specify that the prohibition on step therapy does not apply when the United States Food and Drug Administration-labeled indications and usage of a drug indicate that some prior medication must be taken. Because a willful violation of this provision 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.

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 also provides for the regulation of health insurers by the Department of Insurance. Existing law authorizes health care service plans and health insurers that cover prescription drugs to utilize reasonable medical management practices, including prior authorization and step therapy, consistent with applicable law.

This bill would prohibit a health care service plan contract or a health insurance policy that is issued, amended, or renewed on or after January 1, 2027, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of mental health or substance use disorders, as defined. The bill would specify that the prohibition on step therapy does not apply when the United States Food and Drug Administration-labeled indications and usage of a drug indicate that some prior medication must be taken. Because a willful violation of this provision 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

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

AB 1970 (Harabedian) - Health care coverage: mental health or substance use disorders

Bill Summary:

AB 1970 would prohibit health plans and insurers from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness or substance use disorder, as specified.

Fiscal Impact:

• The Department of Managed Health Care (DMHC) estimates minor and absorbable costs for state administration.
• The California Department of Insurance (CDI) estimates costs of $11,000 in 2026-27 and $23,000 in 2027-28 for state administration (Insurance Fund).
• Unknown ongoing General Fund costs, potentially high tens of thousands, due to increases in CalPERS plan premiums.
• The Department of Health Care Services (DHCS) expects a negligible fiscal impact to the Medi-Cal program. Medications that would be prescribed for serious mental illnesses and substance use disorders are existing benefits under either the medical or pharmacy benefit, regardless of prior authorization or step therapy protocols.

Background:

Current law requires every health plan and disability insurance policy that provides hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of mental health and substance use disorders, under the same terms and conditions applied to other medical conditions, as specified. Current law defines “medically necessary treatment of mental health or substance use disorder” to include that the service or product is in accordance with generally accepted standards of mental health or substance use disorder care, and clinically appropriate in terms of type, frequency, extent, site, and duration.

Prior authorization is a form of utilization review or utilization management used by health plans and insurers to determine whether to authorize, modify, or deny health care services. Utilization review can occur prospectively, retrospectively, or concurrently and a plan or insurer can approve, modify, delay or deny in whole or in part a request based on its medical necessity. Step therapy is a type of utilization management that also may be applied to prescription drugs by health plans and insurers. Step therapy may require an enrollee/insured to try and fail one or more medications prior to receiving coverage for the initially prescribed medication. Step therapy protocols usually recommend starting with a medication that is less expensive. Current law authorizes a health plan or insurer to impose step therapy if there is more than one drug that is clinically appropriate for the treatment of the medical condition.

Proposed Law:

Specific provisions of the bill would:

• Prohibit health plans and insurers from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness or substance use disorder, except as provided; and provide that if there is more than one therapeutic or clinical equivalent approved by the United States Food and Drug Administration, this provision does not require a health plan/insurer to cover all therapeutic or clinical equivalents without step therapy if at least one therapeutic or clinical equivalent is available without step therapy.
• Apply these provisions to Medi-Cal managed care plan contracts only to the extent that the Department of Health Care Services (DHCS) obtains any necessary federal approvals, and federal financial participation under the Medi-Cal program is available and not otherwise jeopardized; and specify these provisions do not require or authorize a health plan that contracts with the DHCS to provide services to Medi-Cal beneficiaries to provide coverage for prescription drugs that are not required pursuant to those programs or contracts, or to limit or exclude any prescription drugs that are required by those programs or contracts.

Staff Comments:

According to the California Health Benefits Review Program (CHBRP) analysis of AB 1970 (March 24,2026 version), for DMHC-regulated plans and CDI-regulated policies, the bill would increase total premiums paid by employers and enrollees for newly covered benefits by approximately $2,440,000. This includes an increase of $116,000 for CalPERS plan premiums. CHBRP indicates that with the June 29, 2026 amendments, it is likely that fewer individuals would have coverage subject to the bill.

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SENATE COMMITTEE ON HEALTH

Senator Akilah Weber Pierson, Chair

BILL NO: AB 1970

SUBJECT: Health care coverage: mental health or substance use disorders

SUMMARY:

1. Prohibits, notwithstanding any other law, a health plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2027, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness or substance use disorder.

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act); California Department of Insurance (CDI) to regulate health and other insurance; and the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [HSC §1340, et seq., INS §106, et seq., and WIC §14000, et seq.]
2. Authorizes a plan or insurer to impose step therapy if there is more than one drug that is clinically appropriate for the treatment of the medical condition. [HSC §1367.206 and INS §10123.201]
3. Requires a health plan or insurer to expeditiously grant a request for a step therapy exception within the applicable time limit if a prescribing provider submits necessary justification and supporting clinical documentation that the required prescription drug is inconsistent with good professional practice for provision of medically necessary covered services, taking into consideration the enrollee’s or insured’s needs and medical history. Permits the basis of the provider’s determination to include, but not be limited to, any of the following criteria:
   1. The prescription drug required by the plan or insurer is contraindicated or is likely, or expected, to cause an adverse reaction or physical or mental harm in comparison to the requested prescription drug;
   2. The required prescription drug is expected to be ineffective based on the known clinical characteristics of the enrollee or insured and the known characteristics and history of the enrollee’s or insured’s prescription drug regimen;
   3. The enrollee or insured has tried the required prescription drug while covered by their current or previous health coverage or Medicaid, and that prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect, or an adverse reaction. Permits the plan or insurer to require the submission of documentation demonstrating that the enrollee or insured tried the required prescription drug before it was discontinued;
   4. The required prescription drug is not clinically appropriate for the enrollee or insured because the required drug is expected to do any of the following, as determined by the prescribing provider:
      1. Worsen a comorbid condition;
      2. Decrease the capacity to maintain a reasonable functional ability in performing daily activities; or,
      3. Pose a significant barrier to adherence to, or compliance with, the enrollee’s drug regimen or plan of care.
   5. The enrollee or insured is stable on a prescription drug selected by the prescribing provider for the medical condition under consideration while covered by their current or previous health coverage or Medicaid. [HSC §1367.206 and INS §10123.201]
      
4. Authorizes a health care provider or prescribing provider, enrollee, insured, or their designee or guardian to appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request consistent with the plan’s or insurer’s current utilization management process. [HSC §1367.206 and INS §10123.201]
5. Authorizes a health plan or insurer or utilization review organization to require an enrollee or insured to try an AB-rated generic equivalent, biosimilar, or interchangeable biological product before providing coverage for the equivalent branded prescription. This does not prohibit or supersede a step therapy exception request. [HSC §1367.206 and INS §10123.201]
6. Defines “step therapy” as a type of protocol that specifies the sequence in which different prescription drugs for a given medical condition and medically appropriate for a particular patient are to be prescribed. [INS §10123.201]
7. Defines “step therapy” as a process, specifying the sequence in which different prescription drugs for a given medical condition and medically appropriate for a particular patient are prescribed. Permits the plan to require the enrollee to try one or more drugs to treat the enrollee’s medical condition before the health plan will cover a particular drug for the condition pursuant to a step therapy request. Requires, if the enrollee’s prescribing provider submits a request for step therapy exception, the plans to make exceptions to step therapy when the criteria are met. [Cal. Code Regs. Tit. 28 §1300.67.205 (d)(2)(Q)]
8. Defines “serious mental disorder” as a mental disorder that is severe in degree and persistent in duration, which may cause behavioral functioning that interferes substantially with the primary activities of daily living, and which may result in an inability to maintain stable adjustment and independent functioning without treatment, support, and rehabilitation for a long or indefinite period of time. Serious mental disorders include, but are not limited to, schizophrenia, bipolar disorder, post-traumatic stress disorder, as well as major affective disorders or other severely disabling mental disorders. [WIC §5600.3]

This bill:

1. Prohibits, notwithstanding any other law, a health plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2027, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness or substance use disorder.
   
2. Prohibits the ban on step therapy from applying when the U.S. Food and Drug Administration (FDA)-labeled indications and usage of a drug indicate that some prior medication must be taken.
   
3. Defines “serious mental illness” as having the same meaning as serious mental disorders defined in existing law, as specified.
   
4. Defines “substance use disorder” as a substance-related and addictive disorder, as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders.
   
5. Applies to Medi-Cal managed care plan contracts only to the extent DHCS obtains any necessary federal approvals, and federal financial participation under the Medi-Cal program is available and not otherwise jeopardized.
   
6. Indicates this bill does not require or authorize a health plan that contracts with DHCS to provide services to Medi-Cal beneficiaries to provide coverage for prescription drugs that are not required by those programs or contracts.
   
7. Exempts specialized health plan contracts and insurance policies that cover only dental or vision benefits or a Medicare supplement contract.

FISCAL EFFECT:

According to the Assembly Appropriations Committee:

1. California Health Benefits Review Program (CHBRP) estimates this bill will increase premiums for DMHC-regulated health plans in the California Public Employees Retirement System (CalPERS) by $96,000. The state's share would be about $50,000 (General Fund). There would also be an increase of an unknown, but likely smaller, amount, to the state's share of premiums for CDI-regulated insurance policies in CalPERS.
2. DMHC anticipates minor and absorbable costs.
3. CDI estimates costs of $11,000 in fiscal year (FY) 2026-27 and $23,000 in FY 2027-28 for policy form reviews and corresponding prescription drug formularies (Insurance Fund).
4. DHCS anticipates negligible costs to the Medi-Cal program.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, people living with serious mental illness and substance use disorders should not have to “fail first” on medications that may not work before receiving the treatment their doctor recommends. Step therapy policies can delay access to effective care, putting patients at risk of relapse, hospitalization, homelessness, or involvement with the criminal justice system. For individuals already navigating instability, even short delays in treatment can have devastating consequences. This bill puts doctors in charge of treatment, not insurers. This bill removes unnecessary barriers so patients can be prioritized and have access to the medications they need to stabilize, recover, and stay connected to care and their communities.
   
2. CHBRP report. 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. Key findings include:
   
   1. Coverage impacts and enrollees covered. CHBRP finds that 72% of enrollees in state regulated plans do not currently have step therapy in place for drugs used to treat serious mental illness and substance use disorders.
      
   2. Medical effectiveness. According to CHBRP, there is some evidence that step therapy requirements decrease utilization of prescription drugs for serious mental illness and increased hospitalizations. CHBRP indicates these findings should be interpreted with caution because some of the studies analyzed older atypical antipsychotic drugs that are no longer subject to step therapy. CHBRP did not identify any direct evidence on the effect of step therapy requirements for prescription drugs used to treat serious mental illness. There were few studies that directly compare branded versus generic drugs for serious mental illness. CHBRP found some evidence that branded atypical antipsychotics are less effective than generic atypical antipsychotics at reducing symptoms of bipolar disorder and schizophrenia. CHBRP did not identify studies regarding step therapy for or comparative effectiveness of prescription drugs for substance use disorder.
      
   3. Utilization. Immediate utilization impact is projected to be a small shift from generic to branded drugs for serious mental illness and substance use disorder among a narrow subset of affected enrollees. Approximately 26,000 enrollees are using prescription drugs for serious mental illness or substance use disorder currently subject to step therapy. An estimated 300 enrollees accessing drugs currently subject to step therapy would shift from generic to branded drugs. CHBRP estimates approximately 668,000 commercially insured adults have serious mental illness and 1,781,000 have substance use disorder.
      
   4. Medi-Cal. Medi-Cal enrollees have pharmacy drug coverage through Medi-Cal Rx, and not through Medi-Cal managed care plans. However, CHBRP indicates Medi-Cal does not have a step therapy requirement and estimates this bill would have no impact on Medi-Cal.
      
   5. Impact on expenditures. An additional $2,440,000 in total annual premiums would be paid by employers ($1,581,000) and enrollees ($415,000) due to the use of higher-cost drugs. Individual market premiums for people without employer subsidized insurance would increase by $444,000 and enrollee cost-sharing would increase by a total of $158,000. For commercial insurance, the premium impact per member per month is between $.014 and $.016. In Covered California, the increase per member per month is between $.015 and $.017. CalPERS increases per member per month are $.012. Unit cost of drugs subject to step therapy is $1,100 compared to $20 for drugs not subject to step therapy.
      
   6. Public health. This bill is not expected to have an impact on public health outcomes.
      
   7. Essential health benefits (EHBs). There is no impact on EHBs.
      
3. Prior legislation. SB 40 (Wiener, Chapter 737, Statutes of 2025) prohibits health plans and health insurers from imposing step therapy as a prerequisite to authorizing coverage of insulin, except if at least one insulin in each drug type is covered without step therapy. Prohibits a health plan contract and health insurance policy from imposing a copayment, coinsurance, deductible, or any other cost-sharing on an insulin prescription drug that exceeds $35 for a 30-day supply. Requires at least one insulin for a given drug type in all forms and concentrations to be on the prescription drug formulary.
   

SB 339 (Wiener, Chapter 1, Statutes of 2024) prohibits a health plan or insurer from subjecting to prior authorization or step therapy drugs, devices, or products for the prevention of HIV/AIDS, except if the FDA has approved one or more therapeutic equivalents of a drug, device, or product for the prevention of HIV/AIDS, the plan or insurer has to cover at least one therapeutically equivalent version without prior authorization or step therapy.

AB 1842 (Reyes, Chapter 633, Statutes of 2024) requires a group or individual health plan or health insurer to provide coverage without prior authorization or step therapy, or utilization review for at least one medication approved by the FDA in each of four specified categories. Indicates this bill does not prohibit a health plan or insurer from selecting an AB-rated generic equivalent, biosimilar, as defined in the United States Code, or interchangeable biological product, as defined in the United States Code, to meet the requirements of this bill.

SB 621 (Caballero, Chapter 495, Statutes of 2023) authorizes a health plan, health insurance policy, or utilization review organization to require an enrollee or insured to try a biosimilar before providing coverage for the branded prescription drug. SB 621 clarifies that a requirement to try a biosimilar, generic, or interchangeable drug does not prohibit or supersede a step therapy exception request.

AB 347 (Arambula, Chapter 742, Statutes of 2021) requires a health plan or health insurer to expeditiously grant a step therapy exception if specified criteria are met, including that the health care provider submit necessary justification and supporting clinical documentation supporting the provider's determination that the required prescription drug is inconsistent with good professional practice for provision of medically necessary covered services, as specified. AB 347 authorizes an enrollee or insured or their designee, guardian, health care provider or prescribing provider to appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request or step therapy exception request by filing a grievance, as specified. AB 347 deems a prior authorization request or step therapy exception request approved for the duration of the prescription, including refills, if a health plan, health insurer, or contracted physician group, or utilization review organization fails to notify a prescribing provider of its coverage determination within a specified timeframe.

1. Support. The California Behavioral Health Association (CBHA), this bill’s sponsor, writes that this bill prioritizes vulnerable populations while addressing the costly downstream consequences of delayed care, ensuring that small, upfront investments help avoid far more expensive emergency, inpatient, and crisis interventions. The California State Association of Psychiatrists writes for patients with serious behavioral health conditions, timely access to the medication their provider prescribes is critical and because psychiatric medications are not interchangeable and responses vary widely, delays associated with step therapy can worsen symptoms, trigger relapse, or lead patients to disengage from treatment altogether. The California Psychological Association writes this bill assures that patients can begin treatment with the medication their provider determines is most appropriate, and by removing unnecessary administrative barriers, this bill will improve continuity of care, reduce crises and hospitalizations, and support better outcomes for some of California’s most vulnerable residents. The California Consortium of Addiction Programs and Professionals writes for individuals with substance use disorders or serious mental health conditions, delays in accessing the right medication can lead to relapse, hospitalization, overdose, or other preventable crises, and step therapy is particularly dangerous in this context because treatment needs can change rapidly, and clinical decisions must be based on individualized assessments, not rigid insurance protocols.
   
2. Opposition. The California Association of Health Plans and the Association of California Life and Health Insurance Companies write this bill would undermine important patient safety protections and increase costs for consumers at a time when health care affordability remains a critical concern. Opponents indicate step therapy is a narrowly used, clinically grounded utilization management tool designed to ensure patients receive safe and appropriate treatment based on their medical needs. It is also used to promote affordability, such as trying to use therapeutically equivalent generic medication before a significantly more expensive branded drug. The number of drugs subject to step therapy is limited and generally applies only where multiple therapeutic alternatives exist to treat the same condition. Opponents provide an example of an add-on therapy to antidepressants for the treatment of major depressive disorder and for the treatment of schizophrenia that has not been found to offer any clinically significant advantages over alternatives that have costs of $1,400 compared to multiple therapeutically equivalent alternatives available for $15-$20 per prescription.
   
3. Policy comments and questions.
   1. Current law allows for the use of step therapy and creates opportunities for exceptions from plan or insurer step therapy requirements. CHBRP’s analysis indicates that more than 70% of enrollees in state regulated plans are not subject to step therapy for serious mental disorder or substance use disorder. CHBRP also indicates that this bill will result in a shift from generic to brand name drugs and CHBRP found some evidence that branded atypical antipsychotics are less effective than generic versions at reducing symptoms of bipolar disorder and schizophrenia.
   2. Current law prohibits step therapy requirements for products for the prevention of HIV/AIDS, medication assisted treatment and insulin. However, those laws also limit the step therapy prohibition so that if there are therapeutic equivalents, step therapy would be allowed on therapeutic equivalents if at least one therapeutic equivalent is available without step therapy.
   3. Policymakers have goals of ensuring access to affordable health care coverage for Californians. Consistent with this goal, SB 1094 (Weber Pierson) has been introduced to promote more take-up of clinically equivalent generics, biosimilars, and interchangeable biologics in place of more expensive branded products. This bill conflicts with SB 1094.
      
4. Amendment. The Chair has requested an amendment to reconcile conflicts.
   

SUPPORT AND OPPOSITION:

Support: California Behavioral Health Association (sponsor)

Advantage Healthcare Services
AIDS Healthcare Foundation
Alliance for Patient Access
Association of Community Human Service Agencies
Biocom California
Bleeding Disorders Council of California
California Academy of Family Physicians
California Access Coalition

California Association of Social Rehabilitation Agencies
California Chronic Care Coalition
California Community Foundation
California Consortium of Addiction Programs and Professionals
California Federation of Labor Unions
California Hospital Association
California Life Sciences Association

California Long Term Care Ombudsman Association
California Medical Association
California Peer Watch

California Primary Care Association Advocates
California Psychological Association
California State Association of Psychiatrists

California Teachers Association
Chronic Disease Coalition

Disability Rights California
Drug Policy Alliance
Hillsides Pasadena
Mental Health America of California
National Alliance on Mental Illness California

National Association of Social Workers California
National Health Law Program
Stars Behavioral Health Group
Sycamores
The Village Family Services
UNITE HERE International Union
Western Center on Law & Poverty, INC.

Oppose: Association of California Life & Health Insurance Companies
California Association of Health Plans

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1970

Author:(Harabedian)

As Amended Ver:March 24, 2026

Majority vote

SUMMARY

Prohibits a health plan or health insurer from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness (SMI) or substance use disorder (SUD). Applies the provisions of this bill to Medi-Cal managed care plans only to the extent that the Department of Health Care Services (DHCS) obtains any necessary federal approvals, and federal financial participation under Medi-Cal is available and not otherwise jeopardized.

Major Provisions

COMMENTS

SMI. SMI is defined as a diagnosable mental, behavioral, or emotional disorder (within the past year) in a person aged 18 years or older that substantially interferes with their life and ability to function. For the purpose of this bill, California code states that SMI includes but is not limited to diagnoses of schizophrenia, bipolar disorder, post-traumatic stress disorder, and major affective disorders or other severely disabling mental disorders. This bill defines SUD as a substance-related and addictive disorder (encompassing major sub-types of opioid use disorder, alcohol use disorder, and the residual substances) as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders.

SUD. A 2022 publication from the California Health Care Foundation (CHCF), titled "Substance Use in California: Prevalence and Treatment" reported that substance use in California is widespread with over half of Californians over age 12 reporting using alcohol in the past month and 20% reporting using marijuana in the past year. According to the report, 9% of Californians have met the criteria for a SUD within the last year. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. This epidemic is disproportionately impacting American Indian and Alaskan Native Californians who have the highest rate of opioid overdose deaths, followed by white and Black Californians. According to the California Department of Public Health's Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023. In the first two quarters of 2024, 2,975 opioid-related overdose deaths were recorded in California. In August 2024, Health Management Associates, with support of the CHCF published "Substance Use Disorder in California — a Focused Landscape Analysis" and found that a key barrier to accessing care for people with substance use disorders is the lack of access to housing and residential services.

Mental Health (MH) Disorders. A 2022 publication from CHCF, titled "Mental Health in California" reported that nearly 1 in 7 California adults experience a mental illness, and 1 in 26 has a serious MH condition that makes it difficult to carry out daily activities. One in 14 children has an emotional disturbance that limits functioning in family, school, or community activities. According to the report, the prevalence of serious mental illness varies by income, with the highest rates in adults and children in families with incomes below 100% of the federal poverty level.

A 2019 survey by the Substance Abuse and Mental Health Services Administration found nearly five million, or 16%, of Black Americans reported having a mental illness. However, only 1 in 3 Black adults who need MH care receive it. Similarly, a 2021 study by the University of California Los Angeles Center for Health Policy Research found that almost half of Latino adults who had a perceived need for MH services experienced an unmet need for care.

California Health Benefits Review Program (CHBRP). CHBRP was created in response to AB 1996 (Thomson), Chapter 795, Statutes of 2002, which 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. SB 125 (Hernandez), Chapter 9, Statutes of 2015, added an impact assessment on essential health benefits (EHBs), and legislation that impacts health insurance benefit designs, cost-sharing, premiums, and other health insurance topics to CHBRP's purview. CHBRP reviewed this bill and included the following impact estimates in their analysis:

1. Premium & out-of-pocket increases. CHBRP notes that the immediate utilization impact of this bill is projected to be a small shift from generic to branded SMI and SUD drugs among a narrow subset of affected enrollees. CHBRP estimates there would be no net change in the number of enrollees using SMI or SUD drugs, however, an estimated 300 enrollees accessing drugs currently subject to step therapy would shift from generic to branded drugs. An additional $2,440,000 in total annual premiums would be paid by employers and enrollees due to the use of higher-cost drugs to treat SMI and SUDs, ranging from $0-$0.017 per member per month. Of this, annual enrollee premiums — which include premiums for enrollees using and not using the benefit — would increase by a total of $859,000. Enrollee cost sharing would increase by a total of $158,000.
2. Medical effectiveness. CHBRP found some evidence that step therapy requirements for prescription drugs used to treat SMI decrease utilization of those drugs and increase hospitalizations. However, these findings should be interpreted with caution because some of the studies analyzed older atypical antipsychotic drugs that are no longer subject to step therapy. CHBRP did not identify any direct evidence on the effect of step therapy requirements for prescription drugs used to treat SMI on health outcomes.
3. Public health impacts. CHRBP determined that the shift from utilization of generic to branded drugs for SMI and SUD as a result of this bill would not have an impact on public health outcomes.

Office of Health Care Affordability (OHCA) cost targets. OHCA was established in 2022 in response to widespread cost-related access challenges across California. According to the California Health Care Foundation (CHCF), over half of Californians say they skip or delay health care due to costs. OHCA collects, analyzes, and publicly reports data on total health care expenditures and enforces spending targets. OHCA's spending targets are intended to reduce excess spending and slow health care spending growth. In April of 2024, OHCA approved a statewide cost growth target of 3.5% starting in 2025 and phasing down to 3% by 2029. Health care entities, including health plans and insurers, are subject to the statewide spending target and are subject to progressive enforcement if the entity's costs exceed the target. Some entities have raised concerns that new legislative insurance mandates will make it difficult for them to meet the established cost growth target.

Current law does not explicitly require OHCA to adjust the cost growth targets based on changes to state policy, such as insurance mandates, that may increase spending. However, it does require OHCA to consider state benefit mandates in its development and enforcement of cost growth targets. Specifically, when establishing cost growth target methodology, OHCA is required to review relevant state policy changes impacting covered benefits, provider reimbursement, and costs, among other factors. In addition, in enforcing cost growth targets, OHCA is required to consider factors that contribute to spending in excess of the applicable target, and the extent to which each entity has control over the applicable components of its cost target.

According to the Author

People living with serious mental illness and substance use disorders should not have to "fail first" on medications that may not work before receiving the treatment their doctor recommends. The author continues that step therapy policies can delay access to effective care, putting patients at risk of relapse, hospitalization, homelessness, or involvement with the criminal justice system. The author notes that individuals already navigating instability, even short delays in treatment can have devastating consequences. The author argues that this bill puts doctors in charge of treatment, not insurers. The author concludes that this bill removes unnecessary barriers so patients can access the medications they need to stabilize, recover, and stay connected to care and their communities.

Arguments in Support

The California Behavioral Health Association (CBHA) is sponsoring this bill, stating that it addresses a significant barrier to timely behavioral health treatment. CBHA continues that step therapy, or "fail-first," forces patients to try insurer-preferred medications before accessing the medication their provider has determined is clinically appropriate. For individuals living with SMI or SUD, these delays can have negative and sometimes dangerous effects. CBHA states that delayed access to the right medication can worsen symptoms, increase relapse risk, disrupt care, and drive avoidable psychiatric crises, emergency department use, hospitalization, and readmission. CBHA continues that the burden falls heavily on the patients least able to manage a delay. CBHA argues that vulnerable populations, including unhoused and transient patients, often lack stable housing, transportation, communication access, or pharmacy access. CBHA continues that step therapy assumes repeated follow-up and ongoing administrative navigation that many patients cannot sustain. CBHA notes that when medication is delayed, providers may lose contact with patients, leading to missed treatment windows that result in no treatment at all. CBHA concludes that the Legislature has already recognized that step therapy can create dangerous delays in other clinical contexts and this bill applies that same principle to behavioral health, where treatment timing, stabilization, and continuity directly impact the outcome.

Arguments in Opposition

The California Association of Health Plans (CAHP) and Association of California Life and Health Insurance Companies (ACLHIC) are opposed to this bill, stating that step therapy is a narrowly used, clinically grounded utilization management (UM) tool designed to ensure patients receive safe and appropriate treatment based on their medical needs. CAHP and ACLHIC note that it is also used to promote affordability, such as trying a therapeutically equivalent generic medication before a significantly more expensive branded drug. CAHP and ACLHIC continue that the number of drugs subject to step therapy is limited and generally applies only where multiple therapeutic alternatives exist to treat the same condition. CAHP and ACLHIC note that for SMI and SUD specifically, UM protocols are driven by safety considerations and cost control strategies. CAHP and ACLHIC share the example that some medications used in these settings are subject to Food and Drug Administration Risk Evaluation and Mitigation Strategies due to serious safety risks. CAHP and ACLHIC continue that Spravato, a drug used for severe, treatment-resistant depression, carries significant risks including sedation, dissociation, addiction, and high abuse potential – it also requires specialized provider training, registry participation, and strict administration protocols. CAHP and ACLHIC note that step therapy helps ensure that patients can first try clinically appropriate alternatives with fewer risks before progressing to high-risk treatments. CAHP and ACLHIC state that some medications for SMI and SUD also have more affordable therapeutically equivalent versions available. CAHP and ACLHIC provide another example, Rexulti, an add-on therapy to antidepressants for the treatment of major depressive disorder and for the treatment of schizophrenia, has the approximate cost of $1,400/prescription. However, CAHP and ACLHIC note that there are multiple therapeutically equivalent alternatives available for $15-$20/prescription, and Rexulti has not been found to offer any clinically significant advantages over these alternatives in the same class.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations:

1. CHBRP estimates this bill will increase premiums for Department of Managed Care (DMHC)-regulated health plans in the California Public Employees Retirement System (CalPERS) by $96,000. The state's share would be about $50,000 (General Fund). There would also be an increase of an unknown, but likely smaller, amount, to the state's share of premiums for Department of Insurance (CDI)-regulated insurance policies in CalPERS.
2. DMHC anticipates minor and absorbable costs.
3. CDI estimates costs of $11,000 in fiscal year (FY) 2026-27 and $23,000 in FY 2027-28 for policy form reviews and corresponding prescription drug formularies (Insurance Fund).
4. DHCS anticipates negligible costs to the Medi-Cal program.

VOTES

ASM HEALTH: 15-0-1

YES: Bonta, Chen, Addis, Aguiar-Curry, Ahrens, Caloza, Carrillo, Mark González, Patel, Patterson, Rogers, Sanchez, Schiavo, Sharp-Collins, Stefani

ABS, ABST OR NV: Johnson

ASM APPROPRIATIONS: 14-0-1

YES: Wicks, Hoover, Bauer-Kahan, Calderon, Caloza, Ellis, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Ta

ABS, ABST OR NV: Tangipa

UPDATED

VERSION: March 24, 2026

CONSULTANT: Riana King / HEALTH / (916) 319-2097 FN: 0002545

Date of Hearing: May 13, 2026

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 1970

Author:(Harabedian) – As Amended Ver:March 24, 2026

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

SUMMARY:

This bill prohibits a health plan or health insurer, including a Medi-Cal managed care plan, from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness (SMI) or substance use disorder (SUD).

The bill includes Medi-Cal managed care plans only to the extent the Department of Health Care Services (DHCS) obtains any necessary federal approvals, and federal financial participation under Medi-Cal is available and not otherwise jeopardized.

FISCAL EFFECT:

1. The California Health Benefits Review Program (CHBRP) estimates this bill will increase premiums for Department of Managed Care (DMHC)-regulated health plans in the California Public Employees Retirement System (CalPERS) by $96,000. The state’s share would be about $50,000 (General Fund). There would also be an increase of an unknown, but likely smaller, amount, to the state’s share of premiums for Department of Insurance (CDI)-regulated insurance policies in CalPERS.
2. DMHC anticipates minor and absorbable costs.
3. CDI estimates costs of $11,000 in fiscal year (FY) 2026-27 and $23,000 in FY 2027-28 for policy form reviews and corresponding prescription drug formularies (Insurance Fund).
4. DHCS anticipates negligible costs to the Medi-Cal program.

COMMENTS:

1. Purpose. This bill is sponsored by the California Behavioral Health Association (CBHA). According to the author:

People living with serious mental illness and substance use disorders should not have to “fail first” on medications that may not work before receiving the treatment their doctor recommends. Step therapy policies can delay access to effective care, putting patients at risk of relapse, hospitalization, homelessness, or involvement with the criminal justice system. For individuals already navigating instability, even short delays in treatment can have devastating consequences. AB 1970 puts doctors in charge of treatment, not insurers. This bill removes unnecessary barriers so patients can access the medications they need to stabilize, recover, and stay connected to care and their communities.

1. Background. SMI is defined as a diagnosable mental, behavioral, or emotional disorder in a person aged 18 years or older that substantially interferes with their life and ability to function. California code states that SMI includes but is not limited to diagnoses of schizophrenia, bipolar disorder, post-traumatic stress disorder, and major affective disorders or other severely disabling mental disorders. This bill defines SUD as a substance-related and addictive disorder, as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders.
   
   A 2022 publication from the California Health Care Foundation reported that substance use in California is widespread, with over half of Californians over age 12 reporting using alcohol in the past month and 20% reporting marijuana use in the past year. According to the report, 9% of Californians met the criteria for a SUD within the last year. In addition, overdose deaths from both opioids and psychostimulants, such as amphetamines, are soaring. In addition, fentanyl-related deaths increased 10-fold between 2015 and 2019.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 21, 2026

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 1970

Author:(Harabedian) – As Amended Ver:March 24, 2026

SUBJECT: Health care coverage: mental health or substance use disorders.

SUMMARY: Prohibits a health plan or health insurer from imposing step therapy as a prerequisite to authorizing coverage of any prescription drug used for the treatment of a serious mental illness (SMI) or substance use disorder (SUD). Applies the provisions of this bill to Medi-Cal managed care plans only to the extent that the Department of Health Care Services (DHCS) obtains any necessary federal approvals, and federal financial participation under Medi-Cal is available and not otherwise jeopardized.

EXISTING LAW:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 and California Department of Insurance (CDI) to regulate health insurers. [Health and Safety Code (HSC) § 1340, et seq., and Insurance Code (INS) § 106, et seq.]
2. Establishes California's Essential Health Benefits (EHBs) benchmark under the Patient Protection and Affordable Care Act (ACA) as the Kaiser Small Group Health Maintenance Organization. Establishes existing California health insurance mandates and the 10 ACA mandated benefits, including mental health (MH) and SUD coverage. [HSC § 1367.005 and INS § 10112.27]
3. Requires every disability insurance policy and health plan that provides hospital, medical, or surgical coverage to provide coverage for medically necessary treatment of MH and SUDs, under the same terms and conditions applied to other medical conditions, as specified. [HSC § 1374.72 and INS § 10144.5]
4. Defines medically necessary treatment of MH or SUD including that the service or product is in accordance with generally accepted standards of MH or SUD care, clinically appropriate in terms of type, frequency, extent, site, and duration. [HSC § 1374.72 and INS §10144.5]
5. Requires a health plan or insurer that provides hospital, medical, or surgical coverage to base any medical necessity determination or the utilization review (UR) criteria on current generally accepted standards of MH and SUD care, as specified. Requires medical necessity determinations concerning service intensity, level of care placement, continued stay, and transfer or discharge of enrollees diagnosed with MH and SUDs to be conducted in accordance with the requirements in 6) below. [HSC §1374.72 and INS §10144.5]
6. Requires a health plan or insurer that provides hospital, medical, or surgical coverage to base any medical necessity determination or the UR criteria that the plan, and any entity acting on the plan’s behalf, applies to determine the medical necessity of health care services and benefits for the diagnosis, prevention, and treatment of MH and SUDs on current generally accepted standards of MH and SUD care, as specified. Requires a health plan or insurer to apply the criteria and guidelines set forth in the most recent versions of treatment criteria developed by the nonprofit professional association for the relevant clinical specialty in conducting UR of all covered health care services and benefits for the diagnosis, prevention, and treatment of MH and SUDs in children, adolescents, and adults. [HSC § 1374.721 and INS § 10144.52]
7. Requires the criteria or guidelines used by health plans and insurers, or any entities with which plans or insurers contract for UR or utilization management (UM) functions, to determine whether to authorize, modify, or deny health care services to:
   1. Be developed with involvement from actively practicing health care providers;
   2. Be consistent with sound clinical principles and processes;
   3. Be evaluated, and updated if necessary, at least annually;
   4. If used as the basis of a decision to modify, delay, or deny services in a specified case under review, be disclosed to the provider and the enrollee or insured in that specified case; and,
   5. Be available to the public upon request. [HSC § 1363.5 and INS § 10123.135]
8. Requires health plans to demonstrate that medical decisions are rendered by qualified medical providers, unhindered by fiscal and administrative management. [HSC § 1367]
9. Requires health plans and disability insurers and any contracted entity that performs UR or UM functions, prospectively, retrospectively, or concurrently, based on medical necessity requests to comply with specified requirements. [HSC § 1367.01 and INS § 10123.135]
10. Prohibits any individual, other than a licensed physician or a licensed health care professional who is competent to evaluate the specific clinical issues involved in the health care services requested by the provider, from denying or modifying requests for authorization of health care services for an enrollee or insured for reasons of medical necessity. Requires the decision to be communicated to the provider within 24 hours of the decision, and the enrollee (in writing) within two business days of the decision. Prohibits, in the case of concurrent review, discontinuance of care until the treating provider has been notified and has agreed to a care plan that is appropriate for the medical needs of the patient. [HSC § 1367.01 and INS § 10123.135]
11. Establishes the Medi-Cal Program, administered by DHCS, to provide comprehensive health benefits to low-income individuals who meet specified eligibility criteria. [Welfare and Institutions Code (WIC) § 14000, et seq.]
12. Establishes a schedule of benefits under the Medi-Cal program, including inpatient services. [WIC § 14132]

FISCAL EFFECT: Unknown. This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, people living with serious mental illness and substance use disorders should not have to “fail first” on medications that may not work before receiving the treatment their doctor recommends. The author continues that step therapy policies can delay access to effective care, putting patients at risk of relapse, hospitalization, homelessness, or involvement with the criminal justice system. The author notes that individuals already navigating instability, even short delays in treatment can have devastating consequences. The author argues that this bill puts doctors in charge of treatment, not insurers. The author concludes that this bill removes unnecessary barriers so patients can access the medications they need to stabilize, recover, and stay connected to care and their communities.
2. BACKGROUND. SMI is defined as a diagnosable mental, behavioral, or emotional disorder (within the past year) in a person aged 18 years or older that substantially interferes with their life and ability to function. For the purpose of this bill, California code states that SMI includes but is not limited to diagnoses of schizophrenia, bipolar disorder, post-traumatic stress disorder, and major affective disorders or other severely disabling mental disorders. This bill defines SUD as a substance-related and addictive disorder (encompassing major sub-types of opioid use disorder, alcohol use disorder, and the residual substances) as defined in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders.
   1. SUD. A 2022 publication from the California Health Care Foundation (CHCF), titled “Substance Use in California: Prevalence and Treatment” reported that substance use in California is widespread with over half of Californians over age 12 reporting using alcohol in the past month and 20% reporting using marijuana in the past year. According to the report, 9% of Californians have met the criteria for a SUD within the last year. Overdose deaths from both opioids and psychostimulants (such as amphetamines), are soaring. This issue, compounded by the increased availability of fentanyl, has resulted in a 10-fold increase in fentanyl related deaths between 2015 and 2019. This epidemic is disproportionately impacting American Indian and Alaskan Native Californians who have the highest rate of opioid overdose deaths, followed by white and Black Californians. According to the California Department of Public Health’s Overdose Prevention Initiative, 7,847 opioid-related overdose deaths occurred in California in 2023. In the first two quarters of 2024, 2,975 opioid-related overdose deaths were recorded in California. In August 2024, Health Management Associates, with support of the CHCF published “Substance Use Disorder in California — a Focused Landscape Analysis” and found that a key barrier to accessing care for people with substance use disorders is the lack of access to housing and residential services.
   2. MH Disorders. A 2022 publication from CHCF, titled “Mental Health in California” reported that nearly 1 in 7 California adults experience a mental illness, and 1 in 26 has a serious MH condition that makes it difficult to carry out daily activities. One in 14 children has an emotional disturbance that limits functioning in family, school, or community activities. According to the report, the prevalence of serious mental illness varies by income, with the highest rates in adults and children in families with incomes below 100% of the federal poverty level.

A 2019 survey by the Substance Abuse and Mental Health Services Administration found nearly five million, or 16%, of Black Americans reported having a mental illness. However, only 1 in 3 Black adults who needs MH care receives it. Similarly, a 2021 study by the University of California Los Angeles Center for Health Policy Research found that almost half of Latino adults who had a perceived need for MH services experienced an unmet need for care.

• 1. California Health Benefits Review Program (CHBRP). CHBRP was created in response to AB 1996 (Thomson), Chapter 795, Statutes of 2002, which 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. SB 125 (Hernandez), Chapter 9, Statutes of 2015, added an impact assessment on EHBs, and legislation that impacts health insurance benefit designs, cost-sharing, premiums, and other health insurance topics to CHBRP’s purview. CHBRP reviewed this bill and included the following impact estimates in their analysis:
     1. Premium & out-of-pocket increases. CHBRP notes that the immediate utilization impact of this bill is projected to be a small shift from generic to branded SMI and SUD drugs among a narrow subset of affected enrollees. CHBRP estimates there would be no net change in the number of enrollees using SMI or SUD drugs, however, an estimated 300 enrollees accessing drugs currently subject to step therapy would shift from generic to branded drugs. An additional $2,440,000 in total annual premiums would be paid by employers and enrollees due to the use of higher-cost drugs to treat SMI and SUDs, ranging from $0-$0.017 per member per month. Of this, annual enrollee premiums — which include premiums for enrollees using and not using the benefit — would increase by a total of $859,000. Enrollee cost sharing would increase by a total of $158,000.
     2. Medical effectiveness. CHBRP found some evidence that step therapy requirements for prescription drugs used to treat SMI decrease utilization of those drugs and increase hospitalizations. However, these findings should be interpreted with caution because some of the studies analyzed older atypical antipsychotic drugs that are no longer subject to step therapy. CHBRP did not identify any direct evidence on the effect of step therapy requirements for prescription drugs used to treat SMI on health outcomes.
     3. Public health impacts. CHRBP determined that the shift from utilization of generic to branded drugs for SMI and SUD as a result of this bill would not have an impact on public health outcomes.
  2. Office of Health Care Affordability (OHCA) cost targets. OHCA was established in 2022 in response to widespread cost-related access challenges across California. According to the California Health Care Foundation (CHCF), over half of Californians say they skip or delay health care due to costs. OHCA collects, analyzes, and publicly reports data on total health care expenditures and enforces spending targets. OHCA’s spending targets are intended to reduce excess spending and slow health care spending growth. In April of 2024, OHCA approved a statewide cost growth target of 3.5% starting in 2025 and phasing down to 3% by 2029. Health care entities, including health plans and insurers, are subject to the statewide spending target and are subject to progressive enforcement if the entity’s costs exceed the target. Some entities have raised concerns that new legislative insurance mandates will make it difficult for them to meet the established cost growth target.

Current law does not explicitly require OHCA to adjust the cost growth targets based on changes to state policy, such as insurance mandates, that may increase spending. However, it does require OHCA to consider state benefit mandates in its development and enforcement of cost growth targets. Specifically, when establishing cost growth target methodology, OHCA is required to review relevant state policy changes impacting covered benefits, provider reimbursement, and costs, among other factors. In addition, in enforcing cost growth targets, OHCA is required to consider factors that contribute to spending in excess of the applicable target, and the extent to which each entity has control over the applicable components of its cost target.

1. SUPPORT. The California Behavioral Health Association (CBHA) is sponsoring this bill, stating that it addresses a significant barrier to timely behavioral health treatment. CBHA continues that step therapy, or “fail-first,” forces patients to try insurer-preferred medications before accessing the medication their provider has determined is clinically appropriate. For individuals living with SMI or SUD, these delays can have negative and sometimes dangerous effects. CBHA states that delayed access to the right medication can worsen symptoms, increase relapse risk, disrupt care, and drive avoidable psychiatric crises, emergency department use, hospitalization, and readmission. CBHA continues that the burden falls heavily on the patients least able to manage a delay. CBHA argues that vulnerable populations, including unhoused and transient patients, often lack stable housing, transportation, communication access, or pharmacy access. CBHA continues that step therapy assumes repeated follow-up and ongoing administrative navigation that many patients cannot sustain. CBHA notes that when medication is delayed, providers may lose contact with patients, leading to missed treatment windows that result in no treatment at all. CBHA concludes that the Legislature has already recognized that step therapy can create dangerous delays in other clinical contexts and this bill applies that same principle to behavioral health, where treatment timing, stabilization, and continuity directly impact the outcome.
2. OPPOSITION. The California Association of Health Plans (CAHP) and Association of California Life and Health Insurance Companies (ACLHIC) are opposed to this bill, stating that step therapy is a narrowly used, clinically grounded UM tool designed to ensure patients receive safe and appropriate treatment based on their medical needs. CAHP and ACLHIC note that it is also used to promote affordability, such as trying a therapeutically equivalent generic medication before a significantly more expensive branded drug. CAHP and ACLHIC continue that the number of drugs subject to step therapy is limited and generally applies only where multiple therapeutic alternatives exist to treat the same condition. CAHP and ACLHIC note that for SMI and SUD specifically, UM protocols are driven by safety considerations and cost control strategies. CAHP and ACLHIC share the example that some medications used in these settings are subject to FDA Risk Evaluation and Mitigation Strategies due to serious safety risks. CAHP and ACLHIC continue that Spravato, a drug used for severe, treatment-resistant depression, carries significant risks including sedation, dissociation, addiction, and high abuse potential – it also requires specialized provider training, registry participation, and strict administration protocols. CAHP and ACLHIC note that step therapy helps ensure that patients can first try clinically appropriate alternatives with fewer risks before progressing to high-risk treatments. CAHP and ACLHIC state that some medications for SMI and SUD also have more affordable therapeutically equivalent versions available. CAHP and ACLHIC provide another example, Rexulti, an add-on therapy to antidepressants for the treatment of major depressive disorder and for the treatment of schizophrenia, has the approximate cost of $1,400/prescription. However, CAHP and ACLHIC note that there are multiple therapeutically equivalent alternatives available for $15-$20/prescription, and Rexulti has not been found to offer any clinically significant advantages over these alternatives in the same class.
3. PREVIOUS LEGISLATION.
   1. AB 384 (Connolly) of 2025, would have prohibited a health plan, health insurer, or Medi-Cal from requiring prior authorization for an individual to be admitted to medically necessary 24-hour inpatient settings for mental health and SUDs and for any medically necessary health care services provided to an individual while admitted for that care. AB 384 was held on the Assembly Appropriations Committee suspense file.
   2. AB 669 (Haney) of 2025, would have prohibited concurrent or retrospective review of medical necessity for the first 28 days of in-network inpatient SUD stay. Would have prohibited concurrent or retrospective review of medical necessity of in-network outpatient SUD visits. Would have prohibited retrospective review of medical necessity for the first 28 days of in-network intensive outpatient or partial hospitalization SUD services, as specified. Would have prohibited PA for in-network coverage of medically necessary outpatient prescription drugs to treat SUD. AB 669 was held on the Senate Appropriations Committee suspense file.
   3. AB 1451 (Jackson) of 2023, would have required a health plan contract or health insurance policy issued, amended, renewed, or delivered on or after January 1, 2024, to provide coverage for treatment of urgent and emergency MH and SUD without preauthorization. AB 1451 was vetoed by Governor Newsom who stated in part:

“I share the author's concern regarding the importance of accessible behavioral health services statewide, as evidenced by the billions of dollars we have invested to enhance access to timely and necessary behavioral health care, as well as the programs and reforms implemented to improve our delivery system. Existing law already prohibits prior authorization for emergency care, and requires mental health and substance use disorder services to meet timely access standards. The requirements in this bill would result in significant costs in the tens of millions of dollars, to the state General Fund and to consumers through health plan premium increases. These impacts should be considered as part of the annual budget process.”

• 1. SB 238 (Wiener) of 2023, would have required a health plan or a disability insurer that modifies, delays, or denies a health care service, based in whole or in part on medical necessity, to automatically submit within 24 hours a decision regarding a disputed health care service to the independent medical review system, as specified, if the decision is to deny, modify, or delay specified services relating to MH or SUD conditions for an enrollee or insured up to 26 years of age. SB 238 was held on the Assembly Appropriations suspense file.
  2. SB 855 (Wiener), Chapter 151, Statutes of 2020, revises and recasts California’s MH Parity provisions, and requires a health plan contract or disability insurance policy issued, amended, or renewed on or after January 1, 2021, to provide coverage for medically necessary treatment of MH and SUD, as defined, under the same terms and conditions applied to other medical conditions and prohibits a health plan or disability insurer from limiting benefits or coverage for MH and SUD to short-term or acute treatment. Specifies that if services for the medically necessary treatment of a MH and SUD are not available in network within the geographic and timely access standards in existing law, the health plan or insurer is required to arrange coverage to ensure the delivery of medically necessary out of network services and any medically necessary follow up services, as specified.

REGISTERED SUPPORT / OPPOSITION:

Support

California Behavioral Health Association (sponsor)

Alliance for Patient Access

Association of Community Human Service Agencies

Biocom

California Access Coalition

California Chronic Care Coalition

California Community Foundation

California Consortium of Addiction Programs and Professionals

California Federation of Labor Unions, Afl-cio

California Hospital Association

California Institute for Behavioral Health Solutions

California Life Sciences Association

California Medical Association

California Peer Watch

California Psychological Association

California State Association of Psychiatrists

Children's Institute, INC.

Chronic Disease Coalition

Drug Policy Alliance

Hillsides Pasadena

Kings View

Mental Health America of California

NASW California

National Alliance on Mental Illness

Pacific Clinics

Pathpoint

Portia Bell Hume Behavioral Health and Training Center

Safe Passages

Shields for Families

Sistahfriends

Southern California Health & Rehabilitation Program

Stars Behavioral Health Group

Steinberg Institute

Sycamores

Tarzana Treatment Centers, INC.

The Kennedy Forum

Turning Point Community Programs

Turning Point of Central California, INC.

U.S. Pain Foundation

Unite Here International Union, Afl-cio

Wellspace Health

Western Center on Law & Poverty

Opposition

Association of California Life and Health Insurance Companies

California Association of Health Plans

California Small Business Association

Analysis Prepared by: Riana King / HEALTH / (916) 319-2097