BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 22 (Beall) - Health care coverage: mental health parity.
          
          Amended: April 2, 2013          Policy Vote: Health 9-0
          Urgency: No                     Mandate: No
          Hearing Date: April 29, 2013                            
          Consultant: Brendan McCarthy    
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 22 would require health plans and health  
          insurers to submit annual reports to their regulators certifying  
          their compliance with state and federal mental health parity  
          requirements.

          Fiscal Impact: 
              One-time costs of about $190,000 for adoption of  
              regulations by the Department of Managed Health Care  
              (Managed Care Fund).

              Potential ongoing costs of about $180,000 for follow-up  
              surveys and enforcement activities by the Department of  
              Managed Health Care (Managed Care Fund). To the extent that  
              the required reports indicate that health plans are not  
              complying with state and federal requirements, the  
              Department would likely have to conduct follow-up surveys of  
              plan participants and potentially take enforcement actions.  
              The Department anticipates that, on average, it will need to  
              perform these actions for at least one health plan per year.

              Potential one-time costs of about $150,000 for the adoption  
              of regulations by the Department of Insurance (Insurance  
              Fund). The Department indicates that it will not need to  
              adopt regulations to implement the bill. However, the  
              provisions of the bill requiring surveys of enrollees and  
              providers may require additional clarification through  
              regulation.

              Potential ongoing enforcement costs of up to $150,000 by  
              the Department of Insurance (Insurance Fund). The Department  
              indicates that it does not anticipate significant  
              enforcement costs. However, should the required reports  








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              indicate that mental health parity requirements are not  
              being met, there may be costs to investigate those issues  
              and enforce current parity requirements.

          Background: Current state law requires health plans and health  
          insurers who provide hospital, medical, or surgical coverage to  
          provide coverage for the diagnosis and treatment of severe  
          mental illness (as specified in statute). In addition, health  
          plans and health insurers are required to provide additional  
          coverage for serious emotional disturbances of a child. In both  
          cases, coverage is required to be provided under the same terms  
          and conditions applied to other medical conditions.

          Under current federal law, health plans and health insurers that  
          offer coverage for mental health or substance abuse disorders  
          are required to provide that coverage under the same terms and  
          conditions as other covered benefits.

          Collectively, these requirements are referred to as "mental  
          health parity" requirements.

          Under current state law, health plans are regulated by the  
          Department of Managed Health Care and health insurers are  
          regulated by the Department of Insurance.

          Proposed Law: SB 22 would require health plans and health  
          insurers to submit annual reports to their regulators certifying  
          their compliance with state and federal mental health parity  
          requirements.

          Specifically, the bill would:
              Require the reports to be made available to the public and  
              authorize the regulating department to hold public hearings  
              on the reports.
              Require the reports to analyze the health plan or health  
              insurers compliance with the requirements of state and  
              federal law as well as compliance with specified mental  
              health parity standards developed by a specific third party  
              commission.
              Require health plans and health insurers to conduct surveys  
              of enrollees and providers.
              Exempt Medi-Cal contracts from these requirements.

          Staff Comments: Both regulators have indicated that health plans  








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          and health insurers have not always complied with mental health  
          parity requirements, for example by denying coverage for certain  
          treatments for mental illness. Based on these indications, it  
          seems likely that there will be some ongoing enforcement  
          activity by the regulators as the reporting requirements of this  
          bill provide the regulators with information on non-compliance  
          with mental health parity requirements.