BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 22 AUTHOR: Beall AMENDED: April 2, 2013 HEARING DATE: April 10, 2013 CONSULTANT: Robinson-Taylor SUBJECT : Health care coverage: mental health parity. SUMMARY : Requires health plans and health insurers (collectively referred to as carriers) to submit annual reports to the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI) certifying their compliance with state and federal mental health parity laws. Existing law: 1.Requires carriers that provide hospital, medical, or surgical coverage to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child under the same terms and conditions applied to other medical conditions. Requires these benefits to include outpatient services, inpatient hospital services, partial hospital services, prescription drugs, if the carrier contract includes coverage for prescription drugs. 2.Lists the following conditions as "severe mental illnesses": a. Schizophrenia; b. Schizoaffective disorder; c. Bipolar disorder (manic-depressive illness); d. Major depressive disorders; e. Panic disorder; f. Obsessive-compulsive disorder; g. Pervasive developmental disorder or autism; h. Anorexia nervosa; and i. Bulimia nervosa. 3.Requires the terms and conditions applied to the benefits required to be applied equally to all benefits under the carrier contract, including, but not be limited to, maximum lifetime benefits, copayments, individual and family deductibles. 4.Requires, under the federal Patient Protection and Affordable Continued--- SB 22 | Page 2 Care Act (ACA) (Public Law 111-148), as amended by the Health Care Education and Reconciliation Act of 2010 (Public Law 111-152), the Secretary of the federal Department of Health and Human Services (HHS) to define the essential health benefits (EHBs). These benefits must include specified general categories and the items and services covered within specified categories, one of which is mental health and substance use disorder services, including behavioral health treatment. 5.Requires, under the federal Mental Health Parity and Addiction Equity Act (MHPAEA), group carriers that cover mental health or substance use disorders (MH/SUD) to ensure that financial requirements (such as copays and deductibles) and treatment limitations (such as visit limits) applicable to MH/SUD benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits. Exempts carrier policies sold to employers with 50 or fewer employees and policies sold to individuals. 6.Provides for the regulation of health insurers by the CDI under the Insurance Code and provides for the regulation of health plans by the DMHC pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act). This bill: 1.Requires on or after July 1, 2014, carriers to submit annual reports to DMHC and CDI certifying compliance with MHPAEA, its implementing regulations, and all federal guidance. 2.Requires the annual report to be a public record made available upon request and to be published on DMHC's and CDI's websites. 3.Permits DMHC and CDI to hold public hearings on the reports at its own discretion or at the request of any person. 4.Requires the annual report to provide an analysis of the plan's or contractor's compliance with MHPAEA using all of the elements set forth in those provisions of law, as well as the mental health parity standards (P-MHP 1, P-MHP 2, and P-MHP 3) of the American Accreditation HealthCare Commission (now known as URAC) Health Plan Accreditation Guide, Version 7, or any subsequent versions. SB 22 | Page 3 5.Requires, as a part of the annual report, carriers to conduct: a. A survey of enrollees to collect responses pertaining to enrollee experiences with mental health and substance use care; and, b. A survey of providers to collect responses pertaining to provider experiences with providing mental health and substance use care. 6.Requires carriers to use the compliance criteria set forth in the URAC mental health parity standards to structure the surveys. 7.Prohibits the annual reports from including any information that may individually identify enrollees including, but not limited to, medical record numbers, names, and addresses. 8.Exempts Medi-Cal contracts from the provisions of this bill. FISCAL EFFECT : This bill has not been analyzed by a fiscal committee COMMENTS : 1. Author's statement. While MH/SUD services are required benefits, access to such essential benefits heavily depends on plan compliance with MH/SUD parity and equity laws. According to the author, psychiatrists and other psychotherapy professional associations, hospital associations, and members of the National Alliance on Mental Illness (NAMI), have noted that too often consumers are denied access to, or are misinformed about, their MH/SUD benefits, which can hinder them from receiving necessary services in a timely manner. The author argues that these are discriminatory acts, they prevent patients with mental disorders from accessing and receiving medically necessary care to which they are entitled, and they violate both state and national parity laws. The author maintains that lack of timely access to appropriate, medically necessary MH/SUD services can cause conditions to worsen, and lead to costly emergency and inpatient care. The author argues without strong oversight, such compliance limitations are often left unaddressed. Too often the burden of ensuring parity compliance has been with the consumer (i.e., grievances, lawsuits, etc.), whereas it is clearly the carrier's responsibility to comply with federal and state laws. The author asserts that carriers are evading their obligations SB 22 | Page 4 to provide statutorily adequate levels of care and DMHC and CDI do not have MH/SUD population-specific tools that would enable adequate enforcement of parity. The author further argues that characteristics of persons living with mental illness or mental health concerns make it significantly less likely that they will file complaints through the formal channels, request an appeal, ask for help or engender independent medical reviews. This bill attempts to correct this problem by providing an additional data source for regulators to use to ensure that beneficiaries and patients are receiving MH/SUD services under conditions that are at parity with services for other health conditions. 2. State and federal mental health parity law. There are three separate provisions of law on carrier coverage of mental health. Under current state law, as enacted by AB 88 (Thomson), Chapter 534, Statutes of 1999, carriers are required to cover the diagnosis and medically necessary treatment of "severe mental illness" (SMI) of a person of any age, and of "serious emotional disturbances" of a child. Coverage is required to be at parity - under the same terms and conditions applied to other medical conditions. Such terms and conditions include, but are not limited to, maximum lifetime benefits, copayments, and individual and family deductibles. The state law requires parity with respect to enrollee cost-sharing for covered benefits. California's current mental health parity law applies to the large group, small group, and individual (non-group) markets. Under the federal MHPAEA of 2008, carriers providing group coverage that cover MH/SUD must provide coverage that is no more restrictive than coverage for other medical/surgical benefits. MHPAEA does not require a carrier to provide MH/SUD benefits. Rather, if a carrier provides medical/surgical and MH/SUD benefits, it must comply with MHPAEA's parity requirements. This parity provision applies to financial requirements (for example, deductibles and copayments) and treatment limitations. The federal law applies to all group carriers, but small groups with 50 or fewer employees are exempt. The federal Department of Labor (DOL), HHS, and the U.S. Treasury collectively promulgated interim final regulations on February 2, 2010 to implement the provisions of MHPAEA. Final regulations are anticipated by the end of this year to provide further guidance to clarify certain requirements to assist the marketplace with the implementation of and facilitate understanding of and compliance with MHPAEA. SB 22 | Page 5 The ACA explicitly includes MH/SUD services, including behavioral health treatment, as one of the ten categories of service that must be covered as EHB's. The ACA further mandates that MH/SUD benchmark coverage be provided at parity with other medical and surgical benefits offered by carriers, pursuant to MHPAEA. 3. URAC. URAC is a nonprofit independent organization promoting healthcare quality by accrediting healthcare organizations. URAC recently released accreditation standards that have incorporated MHAPEA and the interim federal regulations that govern the statute. According to the author, the inclusion of the federal parity law and its regulation in these accreditation standards provides an additional level of oversight on MHPAEA compliance for carriers. The accreditation standards require a carrier to provide: a detailed analysis documenting compliance with MHAPEA and/or state law or regulation; an analysis demonstrating utilization management protocols applied to MH/SUD benefits do not have more restrictive non-quantitative treatment limitations; documentation that MH/SUD parity is addressed in written agreements with contractors providing MH/SUD health care services. 4. State oversight of compliance. The two state agencies that have primary oversight of carrier compliance with state and federal mental health parity laws and their implementing regulations are DMHC and CDI. At least once every three years, DMHC conducts a Routine Medical Survey of a plan which includes a review of the plans policies and procedures and the overall performance of the plan in providing health care benefits and meeting the health needs of its enrollees. Similarly, CDI routinely conducts Market Conduct Examinations. Both market conduct examinations and non-routine medical surveys are also scheduled based on consumer complaint activity and by special request. Individuals covered by carriers in California are also entitled to an Independent Medical Review (IMR) if a carrier denies health care services or payment for health care services based on medical necessity. An IMR is a process where expert independent medical professionals are selected to review specific medical decisions made by the plans or insurers. DMHC and CDI administer the IMR program to enable consumers to request an impartial appraisal of medical decisions within SB 22 | Page 6 certain guidelines specified in law. An IMR can only be requested if the carrier's decision involves the medical necessity of a treatment, an experimental or investigational therapy for certain medical conditions, or a claims denial for emergency or urgent medical services. 5. Double referral. This bill is double referred. Should it pass out of this committee, it will be referred to the Senate Judiciary Committee. 6. Support. The sponsor of this legislation, the California Psychiatric Association (CPA), psychiatrists and other providers of mental health services know that simple mandates of benefits such as the mental health coverage required in both the California and federal parity laws is a necessary first step to correct discrimination in insurance and health service delivery. However, the sponsor argues, while benefits on paper are necessary they are not sufficient in themselves to deliver on the promise of equity in parity statutes. CPA maintains that in California, enforcement is complaint driven and many patients and their psychiatrists or other providers won't or don't complain about their care or their lack of care for a variety of reasons: stigma and discrimination; lack of time; bureaucratically complex and demanding processes to complain or appeal denials of care; the vicissitudes of mental illness which may make a person with a mental illness unable to persevere or persist in complaining if they even complain at all. This, according to the sponsor, is a weakness in the current regulatory scheme which relies heavily on complaints to enable enforcement. CPA maintains that this bill adds a new source of data for enforcement, and places the onus on plans and insurers for compliance. The National Alliance on Mental Illness (NAMI) and the California Alliance (CA) both state in support of this bill that complaint numbers are skewed because the current process requires a person who is likely grappling with a mental disorder to voluntarily file a complaint and cope with a morass of red tape once the complaint is filed. NAMI and CA assert that an enforcement system largely based on consumer complaints is neither appropriate nor does it accurately reflect an insurer's compliance with the law. 7. Opposition. The California Association of Health Plans (CAHP) and the Association of California Life and Health Insurance Companies (ACLHIC) both write in opposition to this SB 22 | Page 7 bill that while they appreciate the intent of this bill, they do not believe that legislation is necessary. CAHP and ACLHIC maintain that DMHC and CDI already have the authority to evaluate their policies to ensure compliance with all mandated coverage including services that fall under the state and federal mental health parity laws. Both argue that in this era of escalating costs and significant premium increases, mandating redundant reporting requirements, is counterproductive to their efforts to reduce administrative costs and make health insurance more affordable and available to Californians. CAHP and ACLHIC sustain that it is critical at this juncture to put all of their resources toward implementing the ACA in a meaningful way and oppose any bills that disrupt that work or place new regulatory or administrative costs on their members. SUPPORT AND OPPOSITION : Support: California Psychiatric Association (sponsor) California Alliance California Black Health Network California Council of Community Mental Health Agencies California Division of American Association for Marriage and Family Therapy California Mental Health Directors Association California Narcotics Officers' Association County Alcohol and Drug Program Administrators Association of California Drug Policy Alliance EMQ FamiliesFirst Health Access California Henrietta Weill Memorial Child Guidance Clinic Latino Coalition for a Health California Mental Health America of California National Alliance on Mental Illness Pacific Clinics Phoenix House Santa Clara County Board of Supervisors Oppose: Association of California Life and Health Insurance Companies California Association of Health Plans -- END -- SB 22 | Page 8