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