BILL ANALYSIS
AB 244
Page 1
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 244 (Beall) - As Introduced: February 10, 2009
SUBJECT : Health care coverage: mental health services.
SUMMARY : 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,
and not limited to coverage for severe mental illness (SMI) as
in existing law. Specifically, this bill :
1)Requires health plans and those 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, copayments, and individual and
family deductibles. Existing law only requires such coverage
for SMIs, as defined.
2)Defines mental illness as a mental disorder classified in the
Diagnostic and Statistical Manual IV (DSM IV) and includes
coverage for substance abuse. 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.
3)Allows a health plan or health insurer to provide coverage for
all or part of the mental health coverage required by this
bill 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.
4)Requires a health plan or health insurer to provide the mental
health coverage required by this bill in its entire service
area and in emergency situations, as specified.
5)Permits a health plan and health insurer to utilize case
management, network providers, utilization review techniques,
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prior authorization, copayments, or other share-of-cost
requirements, to the extent allowed by law or regulation, in
the provision of benefits required by this bill.
6)Exempts contracts between the Department of Health Care
Services and a health plan for enrolled Medi-Cal beneficiaries
from the provisions of this bill.
7)Exempts accident-only, specified disease, hospital indemnity,
Medicare supplement, dental-only, or vision-only insurance
policies from the provisions of this bill.
8)Prohibits a health care benefit plan, contract, or health
insurance policy with the Board of Administration of the
Public Employees' Retirement System (CalPERS) 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.
EXISTING LAW :
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene) to regulate and license health plans and
specialized health plans by the Department of Managed Health
Care (DMHC) and provides for the regulation of health insurers
by the California Department of Insurance (CDI).
2)Requires every health plan contract or health insurance policy
issued, amended, or renewed on or after July 1, 2000, that
provides hospital, medical, or surgical coverage to provide
coverage for the diagnosis and medically necessary treatment
of SMIs of a person of any age, and of serious emotional
disturbances (SED) of a child, under the same terms and
conditions applied to other medical conditions, as specified.
3)Requires mental health benefits provided pursuant to #3) above
to include outpatient services, inpatient hospital services,
partial hospital services, and prescription drugs if the plan
contract includes coverage for prescription drugs.
4)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
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or on behalf of subscribers or enrollees.
5)Defines specialized health insurance policy as a policy of
health insurance for covered benefits in a single 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.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that this bill
corrects a serious discrimination problem that bankrupts
families and causes enormous taxpayer expense. The author
notes that many health plans do not provide coverage for
mental disorders and those that do, impose stricter limits on
mental health care than on other medical care. The author
asserts that a typical plan might cap lifetime mental health
treatment at $50,000 as opposed to $1 million for other
services. Individuals struggling with mental illness quickly
deplete limited coverage and personal savings and become
dependent on taxpayer-supported benefits. This bill is
intended to end the discrimination against patients with
mental disorders and substance abuse addictions by requiring
treatment and coverage of these illnesses that is equitable to
coverage provided for other medical illnesses.
2)MENTAL HEALTH PARITY IN CALIFORNIA . In 1999, the Legislature
passed and the Governor signed AB 88 (Thomson), Chapter 534,
Statutes of 1999, requiring health plans and health insurers
to provide coverage for the diagnosis and medically necessary
treatment of certain SMIs of a person of any age, and of SEDs
of a child, as defined, under the same terms and conditions
applied to other medical conditions. Nine specific diagnoses
are considered SMI: schizophrenia; schizoaffective disorder;
bipolar disorder; major depressive disorder; panic disorder;
obsessive compulsive disorder; pervasive developmental
disorders or autism; anorexia nervosa; and, bulimia nervosa.
For covered conditions, health plans are required to eliminate
benefit limits and share-of-cost requirements that have
traditionally rendered mental health benefits less
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comprehensive than physical health coverage. Current law
requires mental health parity (MHP) benefits to include
outpatient services, inpatient hospital services, partial
hospital services, and prescription drugs, if the health plan
contract includes coverage for prescription drugs. DMHC
promulgated MHP regulations that took effect in 2003 requiring
MHP to provide at least, in addition to all basic and other
health care services required by Knox-Keene, coverage for
crisis intervention and stabilization, psychiatric inpatient
services, including voluntary inpatient services, and services
from licensed mental health providers, including but not
limited to psychiatrists and psychologists. Since SMI
services are already covered under AB 88, this bill focuses on
the incremental effect of extending parity to non-SMI and
substance abuse disorders.
3)MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT . The Mental
Health Parity and Addiction Equity Act of 2008 (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 are
required to issue regulations within one year. MHPA does not
mandate group health plans provide any mental health
coverage. However, if a plan does offer mental health
coverage, then it 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, equality in out-of-network coverage. 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 this bill defines mental illness as
those disorders identified in the DSM-IV, the MHPA does not
specify a definition for mental health and substance abuse
(MH/SA) disorders.
4)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM . AB 1996
(Thomson), Chapter 795, Statutes of 2002, requests the
University of California to assess legislation proposing a
mandated benefit or service, and prepare a written analysis
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with relevant data on the public health, medical and economic
impact of proposed health plan and health insurance benefit
mandate legislation. CHBRP was created in response to AB
1996 and extended for four additional years in SB 1704
(Kuehl), Chapter 684, Statutes of 2006. In its analysis of
AB 244, CHBRP noted that the impacts described are based on
changes in coverage attributable to AB 244 after the
implementation of the federal MHPA. CHBRP reported:
a) Medical Effectiveness . The literature on all treatments
for MH/SA conditions covered by this bill, more than 400
diagnoses, could not be reviewed during the 60 days
allotted for completion of CHBRP reports. Instead, the
effectiveness review for this bill summarizes the
literature on the effects of parity in coverage for MH/SA
services. The findings from studies of parity in coverage
for MH/SA services suggest that when parity is implemented
in combination with intensive management of MH/SA services
and is provided to individuals who already have some level
of coverage for these services:
i) Consumers' average out-of-pocket costs for MH/SA
services decrease;
ii) There is a small decrease in health plans'
expenditures per user of MH/SA services;
iii) Rates of growth in the use and cost of MH/SA
services decrease;
iv) Inpatient admissions for MH/SA care per 1,000
members decrease;
v) Utilization of MH/SA services increases slightly
among individuals with SA disorders, individuals with
moderate levels of symptoms of mood and anxiety
disorders, and persons employed by moderately small firms
(50-100 employees) who have poor mental health or low
incomes; and,
vi) The effect on outpatient MH/SA visits depends on
whether individuals were enrolled in a fee-for-service
plan or a health maintenance organization or HMO prior to
the implementation of parity.
b) Utilization, Cost and Coverage Impacts . According to
CHBRP, roughly 18 million insured individuals would be
subject to this bill's mandate. CHBRP also points out that
approximately 64% of individuals in policies subject to
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this bill currently have parity coverage for non-SMI
disorders and 1% lack coverage; 64% of insured Californians
have parity coverage for substance use disorders and 6%
have none. CHBRP estimates that, among individuals in
policies affected by this bill, utilization would increase
by 9.1 outpatient mental health visits and 1.8 outpatient
substance abuse visits per 1,000 members per year.
Increased utilization would be the result of elimination of
benefit limits, and a reduction in cost sharing because
coinsurance rates are currently often higher for MH/SA or
behavioral health services than for other health care.
Utilization would also increase among insured individuals
who previously had no coverage for conditions other than
the SMI diagnoses covered under AB 88. However, CHBRP
notes that more stringent management of care would partly
offset increases in utilization due to more generous
coverage.
CHBRP also indicates that, as a result of this bill, total
health care expenditures, including total premiums and
out-of-pocket expenditures, will increase by $34.6 million
or 0.04%. Slightly more than half of the total increase in
health care expenditures is due to services for non-SMI
disorders ($24.2 million) and the remainder ($10.4 million)
is due to treatment of substance abuse disorders. This
bill is estimated to increase premiums by about $46.4
million. Total premiums paid by all private employers in
California would increase by about $21.1 million per year,
or 0.04%. Total premiums for individually purchased
insurance would increase by about $22.5 million, or 0.38%.
The increase in individual premium costs would be partly
offset by a decline in individual out-of-pocket costs of
about $12 million (-0.19%). Enrollee contributions toward
premiums for group or public insurance would increase by
about $4.7 million, or 0.04%. State premium expenditures
for Med-Cal, including Access for Infants and Mothers and
the Major Risk Medical Insurance Program, would decrease by
about $2 million (-0.05%), while state premiums for the
Healthy Families Program would increase by $104,000
(0.02%). The impact of this bill on per member, per month
premiums varies widely across all market segments, with
negligible premium increases or even decreases for public
programs, modest increases in the DMHC-regulated markets,
and larger increases in the CDI-regulated markets. CHBRP
also found that no measurable change in the number of
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uninsured is projected to occur as a result of this bill
because, on average, premium increases are estimated to
increase by less than 1%.
c) Public Health Impact . The scope of potential outcomes
related to MH/SA treatment includes reduced suicides,
reduced symptomatic distress, improved quality of life,
reduced pregnancy-related complications, reduced injuries,
improved medical outcomes, and improved social outcomes,
such as a decrease in criminal activity. Mental and
substance abuse disorders are a substantial cause of
mortality and disability in the U.S. Substance abuse, in
particular, often results in premature death. Currently
there is no evidence that parity laws like this bill result
in a reduction of premature death. There are sizeable
economic costs associated with mental and substance abuse
disorders relating to reduced productivity, unemployment,
absenteeism, and early retirement; however, the impact of
this bill on economic costs cannot be estimated. Finally,
CHBRP found that a potential benefit of this bill is that
it would eliminate an insurance coverage disparity in the
individual and small-group insurance market between
psychological and medical conditions and could therefore
help to destigmatize MH/SA treatment.
5)SUPPORT . Disability Rights California states in support of
this bill that defining mental illness is necessary to ensure
that MHP requirements apply to any diagnosed SMI and this bill
will prevent health plans and health insurers from adopting
narrow and restrictive definitions of mental illness.
Psychiatric Solutions, Inc., the nation's largest provider of
acute psychiatric services, writes in support that this bill
will make California a full parity state and eliminate the
unequal and unfair status that MH/SA treatment has within the
treatment of other health conditions. Drug Policy Alliance
notes that addiction and mental illness, which are often
co-occurring, are the only conditions, which left untreated,
often lead to the incarceration of the sufferer and the parity
requirement in this bill will reduce costs to the criminal
justice system. Health Access California points out that
children who have had coverage for autism and other conditions
that are not covered for adults are now beginning to age out
of their current coverage and their families are discovering
mental health coverage is lacking for their young adult
children. Health Access California contends that this bill
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will have a positive fiscal impact on the health care system
through ensuring earlier intervention to prevent, mitigate, or
reverse the need for care.
6)OPPOSITION . DMHC is opposed to this bill, stating that
although the intent of this bill has merit, its implementation
would be too costly and complicated to justify its purpose.
Additionally, DMHC asserts that, in an effort to pay for the
newly broadened coverage required by this bill, health plans
would likely further increase the monthly premiums of
enrollees, which may lead more individuals to drop existing
coverage and further increase the uninsured population. The
Association of California Life and Health Insurance Companies
and the California Association of Health Plans also object to
this bill, contending that it is an expensive and massive
expansion of state and federal laws that will lead to large
premium increases and related drops in coverage. The
California Association of Joint Powers Authorities opposes
this bill because it provides an unfair advantage to CalPERS
by exempting it from complying with the same coverage
expansion and costs that are being forced upon other
government agencies.
7)PRIOR LEGISLATION .
a) AB 1887 (Beall) of 2008 and AB 423 (Beall) of 2007, both
of which were nearly identical to this bill, were vetoed by
Governor Schwarzenegger. In his veto messages the Governor
shared the author's intent to improve access to MH/SA
services but remained concerned that mandates are a
significant driver of cost and mean some individuals may
lose their coverage and not receive health care at all.
b) SB 572 (Perata) of 2005 would have required a health
plan and a health insurer to provide coverage for the
diagnosis and medically necessary treatment of mental
illness. SB 572 was referred to the Senate Business,
Finance and Banking Committee but the hearing was cancelled
at the request of the author.
c) SB 1192 (Chesbro) of 2004 would have required health
plans and health insurers to provide coverage for the
medically necessary treatment of substance-related
disorders, excluding caffeine and nicotine related
disorders, on the same basis coverage is provided for any
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other medical condition. SB 1192 failed in the Assembly
Health Committee.
8)SUGGESTED TECHNICAL AMENDMENT . The author may wish to amend
this bill to exclude specialized health plans under the Knox
Keene Act, except those that provide behavioral health
services, from the mandate in this bill.
9)POLICY COMMENTS .
a) This bill exempts coverage under CalPERS from the
proposed mandate, unless the CalPERS board elects to
purchase such coverage. What is the rationale for
excluding state and local public employees from access to
MHP?
b) This bill is substantially similar to AB 1887 of 2008
and AB 423 of 2007, both of which were vetoed by Governor
Schwarzenegger. The author may wish to address the extent
to which he believes that this bill in any way addresses
the Governor's concerns.
REGISTERED SUPPORT / OPPOSITION :
Support
California Society for Clinical Social Work
California Medical Association
Disability Rights California
Drug Policy Alliance
Health Access California
Psychiatric Solutions, Inc.
Opposition
Association of California Life and Health Insurance Companies
California Association of Health Plans
California Association of Joint Powers Authorities
California Chamber of Commerce
Department of Managed Health Care
Health Net
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097