BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                  AB 1600|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  AB 1600
          Author:   Beall (D)
          Amended:  8/20/10 in Senate
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  6-0, 6/23/10
          AYES:  Alquist, Cedillo, Leno, Negrete McLeod, Pavley,  
            Romero
          NO VOTE RECORDED:  Strickland, Aanestad, Cox

           SENATE APPROPRIATIONS COMMITTEE  :  6-2, 7/15/10
          AYES:  Kehoe, Corbett, Leno, Price, Wolk, Yee
          NOES:  Emmerson, Walters
          NO VOTE RECORDED:  Alquist, Wyland

           ASSEMBLY FLOOR  :  50-27, 6/1/10 - See last page for vote


           SUBJECT  :    Health care coverage:  mental health services

           SOURCE  :     Author


           DIGEST  :    This bill requires health plans and health  
          insurers to cover the diagnosis and medically necessary  
          treatment of a mental illness, as defined, of a person of  
          any age, including a child, instead of limiting coverage  
          only for severe mental illness, as in current law, and  
          requires, the definition of mental illness to be subject to  
          revision to conform to, in whole or in part, the list of  
          mental disorders defined in the Diagnostic and Statistical  
          Manual of Mental Disorders IV, following publication of  
                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          2

          each subsequent volume of the DSM. 



           Senate Floor Amendments  of 8/20/10 allow health plans and  
          policies to explicitly exclude "V codes", as specified in  
          the DSM-IV, which are a subset of non-serious mental  
          illness conditions that include a broad range of diagnoses  
          such as occupational and academic problems, bereavement,  
          and adult antisocial behavior.


           ANALYSIS  :    Existing federal law:

          1. Under the Mental Health Parity Act of 1996, requires  
             group health plans with over 50 employees to provide  
             parity between mental health benefits and  
             medical/surgical benefits with respect to the  
             application of aggregate lifetime and annual dollar  
             limits.  The law does not apply to benefits for  
             substance abuse or chemical dependency.  

          2. Under the Mental Health Parity and Addiction Equity Act  
             of 2008 (MHPA), after October 3, 2009, requires a group  
             health insurance plan, with over 50 employees, that  
             offers mental health coverage, to cover mental illness  
             and substance abuse disorders on the same terms and  
             conditions as other illnesses.  

          Existing state law: 

          1. The Knox-Keene Health Care Service Plan Act of 1975  
             provides for the regulation and licensure of health  
             plans and specialized health plans by the Department of  
             Managed Health Care (DMHC) and health insurers by the  
             California Department of Insurance (CDI). 

          2. Requires health plans and insurers to cover various  
             health care services, including basic health care  
             services, such as physician services, hospital inpatient  
             and ambulatory care services, diagnostic laboratory  
             services, preventive health services, emergency health  
             care services, and hospice care.  


                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          3

          3. Requires health plans and health insurers to provide  
             coverage for the diagnosis and medically necessary  
             treatment of certain severe mental illnesses of a person  
             of any age, and of serious emotional disturbances of a  
             child, as defined, under the same terms and conditions  
             that are applied to other medical conditions (commonly  
             referred to as mental health parity).  For covered  
             conditions, existing law requires health plans to  
             eliminate any benefit limits and cost-sharing  
             requirements that make mental health benefits less  
             comprehensive than physical health benefits.  These  
             include higher co-payments and deductibles, and limits  
             on the number of outpatient visits or inpatient days  
             covered.  Benefits include outpatient services,  
             inpatient hospital services, partial hospital services,  
             and prescription drugs, if the health plan contract  
             includes coverage for prescription drugs.  

          4. Describes severe mental illness as several conditions,  
             including schizophrenia, schizoaffective disorder,  
             bipolar disorder (sometimes referred to as manic  
             depressive illness), major depressive disorders, panic  
             disorder, obsessive-compulsive disorder, pervasive  
             developmental disorder or autism, anorexia nervosa, and  
             bulimia nervosa.  

          5. Defines a child with serious emotional disturbances, as  
             a child who has one or more mental disorders as  
             identified in the Diagnostic and Statistical Manual of  
             Mental Disorders IV (DSM-IV), other than a primary  
             substance use disorder or developmental disorder that  
             results in behavior inappropriate to the child's age,  
             according to expected developmental norms.  

          6. Defines a specialized plan contract as a contract for  
             health care services in a single specialized area of  
             health care, including dental care, for subscribers or  
             enrollees, or which pays for, or reimburses any part of,  
             the cost for those services in return for a prepaid or  
             periodic charge, paid by, or on behalf of, subscribers  
             or enrollees.

          7. Defines specialized health insurance policy as a policy  
             of health insurance for covered benefits in a single  

                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          4

             specialized area of health care, including dental-only,  
             vision-only, and behavioral health-only policies.  There  
             is no requirement for health insurers subject to  
             regulation by CDI to cover medically necessary basic  
             services or any specific minimum basic benefits.  

          This bill:

          1. Requires health plans and health insurance policies that  
             provide coverage for hospital, medical, or surgical  
             expenses, to provide coverage for the diagnosis and  
             medically necessary treatment of a mental illness of a  
             person of any age, including a child, under the same  
             terms and conditions applied to other medical  
             conditions, including but not limited to maximum  
             lifetime benefits, co-payments, and individual and  
             family deductibles.  

          2. Defines mental illness as a mental disorder classified  
             in DSM IV and includes coverage for substance abuse.

          3. Requires the benefits provided under this bill to  
             include outpatient services; inpatient hospital  
             services; partial hospital services; and, prescription  
             drugs, if the plan contract already includes coverage  
             for prescription drugs.

          4. Requires, following publication of each subsequent  
             volume of the DSM-IV, the definition of "mental illness"  
             to be subject to revision to conform to, in whole or in  
             part, the list of mental disorders defined in the  
             then-current volume of the DSM-IV.

          5. Requires any revision to the definition of "mental  
             illness" to be established by regulation promulgated  
             jointly by DMHC and CDI.

          6. Allows a health plan or health insurer to provide  
             coverage for all or part of the mental health coverage  
             through a specialized health care service plan or mental  
             health plan and prohibits the health plan or health  
             insurer from being required to obtain an additional or  
             specialized license for this purpose.


                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          5

          7. Requires a health plan or health insurer to provide the  
             mental health coverage in its entire service area and in  
             emergency situations, as specified.

          8. Permits a health plan and health insurer to utilize case  
             management, network providers, utilization review  
             techniques, prior authorization, co-payments, or other  
             share-of-cost requirements, to the extent allowed by law  
             or regulation, in the provision of benefits required.

          9. Exempts contracts between the Department of Health Care  
             Services and a health plan for enrolled Medi-Cal  
             beneficiaries.

          10.Exempts accident-only, specified disease, hospital  
             indemnity, Medicare supplement, dental-only, or  
             vision-only insurance policies. 

          11.Prohibits a health care benefit plan, contract, or  
             health insurance policy with the Board of Administration  
             of the Public Employees' Retirement System from applying  
             to this bill unless the board elects to purchase a plan,  
             contract, or policy that provides mental health benefits  
             mandated under this bill.

          12.Excluded the following non-serious mental illness  
             diagnoses from the health care coverage required in the  
             bill, as defined in the manual:

              A.     Noncompliance With Treatment.
              B.     Partner Relational Problem.
              C.     Physical/Sexual Abuse of an Adult.
              D.     Parent-Child Relational Problem.
              E.     Child Neglect.
              F.     Physical/Sexual Abuse of a Child.
              G.     Sibling Relational Problem.
              H.     Relational Problem Related to a Mental Disorder  
                 or General Medical Condition.
              I.     Occupational Problem.
              J.     Academic Problem.
              K.     Acculturation Problem.
              L.     Relational Problems.
              M.     Bereavement.
              N.     Physical/Sexual Abuse of an Adult.

                                                           CONTINUED





                                                              AB 1600
                                                                Page  
          6

              O.     Borderline Intellectual Functioning.
              P.     Phase of Life Problem.
              Q.     Religious or Spiritual Problem.
              R.     Malingering.
              S.     Adult Antisocial Behavior.
              T.     Child or Adolescent Antisocial Behavior.
              U.     There is not a Diagnosis or a Condition on Axis  
                 I.
              V.     There is not a Diagnosis on Axis II.
              W.     Nicotine Dependence.

           Background
           
          MHPA, enacted in October 2008, requires group health  
          insurance plans to cover mental illness and substance abuse  
          disorders on the same terms and conditions as other  
          illnesses and help to end discrimination against those who  
          seek treatment for mental illness.  

          Pursuant to MHPA, the federal Departments of Labor, Health  
          and Human Services, and the Treasury issued an interim  
          final rule and accompanying guidelines governing  
          implementation of MHPA on February 2, 2010, that included a  
          90-day public comment period that closed May 3, 2010.  The  
          MHPA does not require group health plans to provide mental  
          health coverage.  However, if a plan does offer mental  
          health coverage, the MHPA requires equity in financial  
          requirements, such as deductibles, co-payments,  
          coinsurance, and out-of-pocket expenses; equity in  
          treatment limits, such as caps on the frequency or number  
          of visits, limits on days of coverage, or other similar  
          limits on the scope and duration of treatment; and, equity  
          in out-of-network coverage.  

          The MHPA applies to all group health plans for plan years  
          beginning after October 3, 2009, and exempts small firms of  
          50 or fewer employees.  Although AB 1600 defines mental  
          illness as those disorders identified in the DSM-IV, the  
          MHPA does not specify a definition for mental health and  
          substance abuse disorders.  

          According to a March 2010 report by Advocates for Human  
          Potential, Inc., a research and consulting firm that  
          provides a preliminary operational analysis of the MHPA  

                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          7

          interim final rule, the MHPA is expected to affect  
          approximately 111 million participants in 446,400 federally  
          regulated group health plans; 29 million participants in  
          approximately 20,300 state and local government employer  
          group health plans; 460 health insurers that provide  
          substance use disorder or mental health benefits in the  
          group health insurance market; and, 120 managed behavioral  
          health care organizations that provide substance use  
          disorder or mental health benefits to group health plans.    


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

          According to the Senate Appropriations Committee: 

                          Fiscal Impact (in thousands)

           Major Provisions                2010-11     2011-12     
           2012-13   Fund  
          DHHC regulations update       $135      $125       
          $0Special*

          *Managed Care Fund

           SUPPORT  :   (Verified  6/23/10)

          American Federation of State, County and Municipal  
          Employees, AFL-CIO
          California Academy of Family Physicians
          California Association of Alcohol and Drug Program  
          Executives, Inc
          California Medical Association
          California Mental Health Directors Association
          California School Employees Association, AFL-CIO
          California State Association of Counties
          California Psychological Association
          County Alcohol and Drug Program Administrators Association  
          of California
          Drug Policy Alliance
          National Alliance on Mental Illness, California
          National Association of Social Workers - California Chapter

           OPPOSITION  :    (Verified  6/23/10)

                                                           CONTINUED





                                                               AB 1600
                                                                Page  
          8


          Association of California Life & Health Insurance Companies
          California Association of Health Plans
          California Association of Health Underwriters
          California Association of Joint Powers Authorities
          California Chamber of Commerce
          Health Net

           ARGUMENTS IN SUPPORT :    The California Mental Health  
          Directors Association (CMHDA) and the California State  
          Association of Counties (CSAC) state that numerous studies  
          have shown that mental illness is not only treatable, but  
          that appropriate and timely treatment reduces costly  
          hospitalizations, incarcerations, homelessness, and most  
          importantly, human suffering. 

          CMHDA and CSAC add that a large percentage of mental health  
          clients also have co-occurring substance abuse disorders  
          and that treating one without treating the other is not  
          cost-effective.  Individuals who do not receive appropriate  
          treatment are more likely to self-medicate with drugs  
          and/or alcohol. CMHDA and CSAC contend that AB 1600 would  
          help ensure that private health plans treat individuals  
          with co-occurring disorders in a comprehensive manner, and  
          argue that many health plans fall short of meeting their  
          obligations under California's mental health parity.    

          California Psychological Association states that the costs  
          of increasing coverage to provide full parity for mental  
          disorders is negligible and likely outweighed significantly  
          by the costs of non-treatment.

          National Alliance on Mental Illness, California states that  
          AB 1600 would fill an important gap in coverage, and adds  
          that families cannot afford the financial and emotional  
          burdens caused by mental illness. 

           ARGUMENTS IN OPPOSITION  :   The California Association of  
          Health Underwriters (CAHU) states that AB 1600 would add a  
          mandate for expanded mental health coverage, and adds that  
          it has a long history of opposition to additional health  
          coverage mandates.  CAHU argues that this bill would be  
          counterproductive to making insurance more affordable for  
          Californians.  

                                                           CONTINUED





                                                              AB 1600
                                                                Page  
          9

           

           ASSEMBLY FLOOR  :  
          AYES:  Ammiano, Arambula, Bass, Beall, Block, Blumenfield,  
            Bradford, Brownley, Buchanan, Caballero, Charles  
            Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De  
            Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani,  
            Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,  
            Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,  
            Nava, V. Manuel Perez, Portantino, Ruskin, Salas,  
            Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,  
            Torrico, Yamada, John A. Perez
          NOES:  Adams, Anderson, Bill Berryhill, Blakeslee, Conway,  
            Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines,  
            Garrick, Gilmore, Hagman, Harkey, Jeffries, Knight,  
            Logue, Miller, Nestande, Niello, Nielsen, Norby, Silva,  
            Smyth, Tran, Villines
          NO VOTE RECORDED:  Tom Berryhill, Audra Strickland 


          CTW:nlk  8/23/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****




















                                                           CONTINUED