BILL ANALYSIS Ó
SB 22
Page 1
Date of Hearing: June 25, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 22 (Beall) - As Amended: June 14, 2013
SENATE VOTE : 38-0
SUBJECT : Health care coverage: mental health parity.
SUMMARY : Requires health plans and insurers (collectively,
carriers) to submit an annual report to state regulators
certifying compliance with state and federal mental health
parity laws. Specifically, this bill :
1)Requires every health plan that provides hospital, medical, or
surgical coverage or any specialized mental health plan that
contracts with a health plan to provide mental health services
to submit an annual report to the Department of Managed Health
Care (DMHC) certifying compliance with state and federal
mental health parity laws, as specified.
2)Requires every health insurer to submit an annual report to
the California Department of Insurance (CDI) certifying
compliance with state and federal mental health parity laws,
as specified.
3)Requires a report submitted pursuant to 1) or 2) above to be a
public record and to be published on DMHC's or CDI's Website.
4)Allows DMHC and CDI, at their discretion, to hold public
hearings on the reports in 1) or 2) above.
5)Requires the reports in 1) and 2) above to provide an analysis
of the carrier's mental health parity compliance using all of
the elements set forth in state and federal mental health
parity laws, as well as in standards P-MHP 1, P-MHP 2, and
P-MHP 3 of the American Accreditation HealthCare Commission
(URAC) Health Plan Accreditation Guide, Version 7, or any
subsequent versions.
6)Requires carriers, as part of the report in 1) or 2) above, to
survey enrollees on experiences with mental health and
substance use care and to survey providers to collect
SB 22
Page 2
responses pertaining to provider experiences with providing
mental health and substance use care. Requires carriers to
use compliance criteria from URAC standards to structure the
surveys.
EXISTING LAW :
1)Requires every carrier that provides hospital, medical, or
surgical coverage to also provide coverage for diagnosis and
medically necessary treatment of severe mental illnesses and
of serious emotional disturbances of a child, as specified,
under the same terms and conditions applied to other medical
conditions. Exempts Medi-Cal managed care plans from this
parity requirement.
2)Requires the following conditions to be covered under the
parity requirement in 1) above: schizophrenia, schizoaffective
disorder, bipolar disorder, major depressive disorders, panic
disorder, obsessive-compulsive disorder, pervasive
developmental disorder or autism, anorexia nervosa, and
bulimia nervosa.
3)Under the federal Patient Protection and Affordable Care Act
(ACA), requires carriers to cover essential health benefits
(EHBs), which include items and services in 10 benefit
categories, one of which is mental health and substance use
disorder services including behavioral health treatment.
4)Under state law, for purposes of compliance with the
requirement in 3) above, defines California's EHBs as the
benefits covered under the Kaiser Small Group HMO plan, along
with the 10 mandated benefit categories under ACA.
5)Under federal law, requires large group carriers that cover
mental health or substance use disorders to ensure that
financial requirements (such as copays and deductibles) and
treatment limitations (such as visit limits) applicable to
mental health benefits are no more restrictive than those
applied to medical or surgical benefits.
6)Provides for the regulation of health insurers by CDI and
provides for the regulation of health plans by DMHC.
7)Requires every carrier that reviews and approves, modifies,
delays, or denies services based on medical necessity to have
SB 22
Page 3
written policies and procedures establishing the review
process.
8)Requires DMHC to conduct onsite medical surveys of the health
delivery system of each plan, including a review of the
procedures for obtaining health services, utilization
management, peer review mechanisms, quality assurance
procedures, and overall performance of the plan in meeting
enrollees' health needs. Requires these surveys to be
conducted at least every three years.
9)Establishes the Independent Medical Review System, under which
carriers are required to provide patients with the opportunity
to seek an independent medical review whenever health care
services have been denied, modified, or delayed by the
carrier, or by one of its contracting providers, if the
decision was based in whole or in part on a finding that the
proposed health care services are not medically necessary.
10)Requires every carrier to report annually to DMHC or CDI, as
appropriate, in a form and manner determined by DMHC in
consultation with CDI, the number of enrollees, by product
type, as of December 31 of the prior year, that receive health
care coverage under a health care service plan contract that
covers individuals, small groups, large groups, or
administrative services only.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill would have: 1) one-time costs of about
$190,000 for adoption of regulations by DMHC (Managed Care
Fund); 2) potential ongoing costs of about $180,000 for
follow-up surveys and enforcement activities by DMHC (Managed
Care Fund); 3) one-time costs of $160,000 for the adoption of
regulations by CDI (Insurance Fund); and 4) ongoing enforcement
costs of $90,000 by CDI (Insurance Fund).
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, patients
complain regularly that they can't get appointments with
mental health professionals in a timely way. In addition,
psychiatrists and other mental health service providers and
therapists routinely report that they are subject to
conditions, criteria, standards, processes, and operations of
health plans and insurers which are more stringent than the
SB 22
Page 4
comparable conditions, criteria, standards, processes, and
operations of health care service plans and insurers for other
health conditions. The author maintains that this disparity
is manifest in less adequate networks; lower reimbursement
rates; more stringent credentialing requirements for network
participation; more restrictions in formularies seen in drug
tiers or such practices as fail first or step therapy; more
stringent utilization review; and other conditions. The
author argues that these are discriminatory acts, in violation
of both state and federal law, that prevent patients with
mental disorders from accessing and receiving medically
necessary care to which they are entitled.
The author argues that current enforcement consists of
regulatory responses to complaints, appeals of health plan
decisions to state regulators, independent medical reviews,
and, for DMHC-regulated plans, focused medical reviews. The
author states that data from each of these sources has not
yielded adequate information to make determinations about
whether plans, in contrast to merely having written policies
and procedures in binders at headquarters, actually
operationalize the parity laws at the point of service
delivery. The author writes that 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 mental health and substance use
services under conditions that are at parity with services for
other health conditions.
Moreover, the author argues that a complaint driven
enforcement system is inadequate for enforcement of mental
health parity laws because people with depression, for
instance, are not as likely to complain, appeal, or apply for
independent medical review as patients with other health
conditions.
2)BACKGROUND .
a) State and Federal Mental Health Parity Laws .
California's mental health parity law, enacted in 1999,
requires all carriers (large group, small group, and
individual) to cover the diagnosis and medically necessary
treatment of severe mental illness of a person of any age,
and of serious emotional disturbances of a child. This
coverage is required to be at parity with other medical
SB 22
Page 5
conditions: no differences in maximum lifetime benefits,
copayments, deductibles, or cost sharing are permitted.
The federal Wellstone-Domenici Mental Health Parity and
Addiction Equity Act (Parity Act) of 2008, applies to plans
sponsored by private and public sector employers with more
than 50 employees. The federal Parity Act includes parity
protections with respect to annual and lifetime limits,
financial requirements, and treatment limitations for
mental health and substance use disorders. The federal
Parity Act only requires health plans to provide parity if
the plan provides both medical and surgical benefits and
mental health or substance use disorder benefits. The
federal Departments of Labor, Health and Human Services,
and the Treasury collectively promulgated interim final
regulations on February 2, 2010, to implement the
provisions of the federal Parity Act. Final regulations are
anticipated by the end of this year to provide further
guidance to clarify requirements.
Finally, the ACA explicitly includes mental health and
substance abuse services, including behavioral health
treatment, as one of the 10 categories of service that must
be covered as essential health benefits. Beginning in
2014, under the ACA, all new small group and individual
market plans will be required to cover these essential
health benefit categories and will be required to cover
them at parity with medical and surgical benefits.
b) URAC Standards . In 2011, URAC released Version 7 of its
standards for accreditation of health plans. These
standards incorporate Parity Act and the interim final
regulations that govern Parity Act implementation. To
comply with URAC standards, a plan must do the following:
i) Conduct a detailed internal audit and analysis to
assure that each medical management intervention applied
to behavioral health treatment is comparable to and no
more stringent than those applied to medical treatments;
ii) Ensure that contractors that provide mental health
or substance abuse services (e.g., a managed behavioral
health organization) are in full compliance with Parity
Act;
SB 22
Page 6
iii) Document that the plan has disclosed key aspects of
the behavioral health benefit to consumers and employers,
such as: how compliance with parity is achieved and any
restrictions or exclusion on the behavioral health
benefit; and,
iv) Document that the plan has provided parity between
medical and behavioral health treatment services in
certain levels and types of care, such as emergency care,
pharmacy, and inpatient and outpatient treatment.
For health plans that are accredited by URAC, a consumer
can make a complaint directly to URAC regarding compliance
with parity.
c) DMHC medical surveys . DMHC is required to conduct
onsite medical surveys of all licensed full-service and
specialty plans at least once every three years. A medical
survey is a comprehensive evaluation of a plan's compliance
with the law in the following health plan program areas:
quality management, grievances and appeals (member
complaints), access and availability, and utilization
management (referrals and authorizations).
In addition to these program areas, the listing of medical
surveys on DMHC's website indicates that routine surveys
often include data gathered specifically on compliance with
mental health parity. For example, a 2010 routine review
of Blue Shield of California included an analysis of the
plan's coverage of speech therapy for autism spectrum
disorders and found that the plan's policy was potentially
too restrictive, as it relied heavily on physical, rather
than mental, barriers to speech production. In 2009, DMHC
conducted a routine review of Kaiser Foundation Health Plan
and found that the plan's referral system does not provide
patients suspected of having a diagnosis of autism timely
access and ready referral, in a manner consistent with good
professional practice, for the purpose of diagnosis and
medically necessary treatment. In 2013, a routine review
of Kaiser's Behavioral Health Services found that the plan
did not provide accurate and understandable behavioral
health education services, including information regarding
the availability and optimal use of mental health care
services. The routine surveys document corrective actions
SB 22
Page 7
and compliance efforts of reviewed health plans.
Under its authority to conduct onsite medical surveys of
licensed health plans, DMHC conducted a series of focused
medical surveys in 2005 that specifically reviewed
compliance with mental health parity laws. The survey
results indicated that plans had established policies and
procedures, contracts, and evidence of coverage documents
that correctly reflect mental health parity requirements.
The results also indicated that the plans had developed
programs to expand and improve services, such as continuity
and coordination of care for enrollees with mental health
parity diagnoses, and to promote access to services for
enrollees in minority linguistic and cultural groups. The
focused surveys identified several aspects of compliance
with the requirements of the Parity Act that continued to
be problematic for the health plans, including payment of
emergency room claims, ensuring access to after-hours
services, and clear and concise explanations in denial
letters.
d) Enforcement Actions . In recent years, the Office of
Enforcement of DMHC has conducted several enforcement
actions against health plans that violated the state's
mental health parity laws. In 2010, DMHC imposed a $75,000
penalty on the Kaiser Foundation Health Plan due to an
unreasonable delay for formal autism evaluation. In 2009,
DMHC found that Universal Care health plan had improperly
denied coverage for speech therapy to treat a diagnosis of
autism. DMHC reached a settlement whereby Universal Care,
after reversing the decisions and making appropriate
changes to its practices and procedures, made a donation to
Mental Health of America of Los Angeles in the amount of
$2,500.00. In 2006, DMHC imposed an administrative penalty
of $25,000 after Health Net denied coverage for speech
therapy to treat autism. Also in 2006, Blue Cross was
fined $50,000 for denying coverage of nutritional
counseling for an enrollee with anorexia nervosa.
In July 2011, CDI filed an enforcement action against Blue
Shield of California to require Blue Shield to provide
coverage for Applied Behavior Analysis (ABA) Therapy, a
treatment for autism, in compliance with the state's mental
health parity law. In 2012, CDI reached a settlement
agreement with Blue Shield of California to secure
SB 22
Page 8
immediate coverage of behavioral therapy for autism as a
medical benefit. According to the terms of the settlement,
Blue Shield of California would cease: i) denying ABA
therapy as a non-covered service; ii) challenging the
medical necessity of ABA therapy; and iii) requiring
Independent Medical Review prior to covering treatment.
3)SUPPORT . In support, the California Psychological Association
argues that, due to complex bureaucracy, it is extremely
difficult to appeal denials of service and then file a
complaint, and that this bill will help proactively identify
patterns of non-compliance. The American Federation of State,
County and Municipal Employees writes that this bill will
encourage access to mental health and substance abuse
services, saving the state money on criminal justice, law
enforcement, health and social services, and other state
programs. Also in support, the California Insurance
Commissioner writes that, currently, the lack of information
available to state officials results in more focus on
micro-level complaints, whereas this bill will provide the
data necessary to focus regulatory resources on the
parity-related issues most in need of attention.
4)OPPOSITION . In opposition, the California Association of
Health Plans (CAHP) asserts that this bill is unnecessary, as
DMHC currently has the ability to review health plan
compliance with state law and suggest operational and other
improvements. CAHP notes that DMHC currently has authority to
conduct routine medical surveys that focus on access and
availability of services, quality management, utilization
management, grievances, and other issues. CAHP argues that,
if those surveys indicate correction is need, DMHC will note
deficiencies and issue progress reports on the status of the
initial findings. The Association of California Life and
Health Insurance Companies (ACLHIC), also in opposition,
maintains that this bill will impose redundant reporting
requirements, which is counterproductive to ACLHIC's efforts
to reduce administrative costs, make health insurance more
affordable, and implement the ACA.
5)PREVIOUS LEGISLATION .
a) AB 55 (Migden, Schiff, and Thomson), Chapter 533,
Statutes of 1999, establishes an independent medical review
system for enrollees to seek an independent review whenever
SB 22
Page 9
health care services have been denied, delayed, or
otherwise limited by a carrier or one of its contracting
providers based on a finding that the service is not
medically necessary.
b) AB 88 (Thomson), Chapter 534, Statutes of 1999, requires
carriers to provide coverage for the diagnosis and
medically necessary treatment of severe mental illnesses,
as defined, 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.
c) AB 154 (Beall) of 2012 would have expanded the mental
health parity law to require carriers to provide parity
coverage for the diagnosis and medically necessary
treatment of any mental disorder defined in the Diagnostic
and Statistical Manual of Mental Disorders IV, including
substance abuse, but excluding nicotine dependence and
specified diagnoses. AB 154 failed passage in the Senate
Health Committee.
d) SB 946 (Steinberg), Chapter 650, Statutes of 2011,
requires carriers to provide coverage for behavioral health
treatment for pervasive developmental disorder or autism
until July 1, 2014.
e) AB 244 (Beall) of 2009 contained requirements
substantially similar to AB 154. AB 244 was vetoed by
Governor Schwarzenegger, whose veto message read, "The
addition of a new mandate, especially one of this
magnitude, will only serve to significantly increase the
overall cost of health care. This, like other mandates,
also increases cost in an environment in which health
coverage is increasingly expensive."
6)POLICY COMMENT . This bill requires carriers' reports to
include an analysis of compliance with mental health parity
requirements using both standards in current law and in URAC
accreditation standards. This bill also requires carriers to
structure their surveys of patients and providers using
compliance criteria from the URAC standards. To ensure that
the data reported under the requirements in this bill are
standardized and intercomparable, and to maintain public
control over the reporting standards, the committee may wish
to amend this bill to require state regulators to collaborate
SB 22
Page 10
with experts and stakeholders to determine the form and manner
of the data to be reported by carriers.
REGISTERED SUPPORT / OPPOSITION :
Support
Insurance Commissioner Dave Jones
AARP California
American Academy of Pediatrics, California District IX
California Board of Behavioral Sciences
Drug Policy Alliance
Health Access California
Latino Coalition for a Healthy California
National Association of Social Workers, California Chapter
One individual
Opposition
Association of California Life and Health Insurance Companies
California Association of Health Plans
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097