BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 244
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AUTHOR: Beall
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AMENDED: May 5, 2009
HEARING DATE: July 15, 2009
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CONSULTANT:
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Tadeo/
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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, of a person of any age, including a child, under
the same terms and conditions applied to other medical
conditions. Defines mental illness as a mental disorder
classified in the Diagnostic and Statistical Manual IV and
includes coverage for substance abuse.
CHANGES TO EXISTING LAW
Existing federal law:
Federal law, 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.
Federal law, the Mental Health Parity and Addiction Equity
Act of 2008 (MHPA), after October 3, 2009, requires a group
health insurance plan, for over 50 employees, that offers
mental health coverage, to cover mental illness and
Continued---
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substance abuse disorders on the same terms and conditions
as other illnesses.
Existing state law:
State law, the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene), 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).
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.
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.
Describes severe mental illness as several conditions,
including schizophrenia, schizoaffective disorder, bipolar
disorder (some times referred to as manic depressive
illness), major depressive disorders, panic disorder,
obsessive-compulsive disorder, pervasive developmental
disorder or autism, anorexia nervosa, and bulimia nervosa.
Defines a child with a 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
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developmental disorder that results in behavior
inappropriate to the child's age, according to expected
developmental norms.
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.
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.
This bill:
Requires health plans and those health insurance policies
issued, amended, or renewed on or after January 1, 2010,
that provide coverage for hospital, medical, or surgical
expenses, and also 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.
Defines mental illness as a mental disorder classified in
the 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.
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.
Requires a health plan or health insurer to provide the
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mental health coverage required by this bill in its entire
service area and in emergency situations, as specified.
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 by this
bill.
Exempts contracts between the Department of Health Care
Services (DHCS) and a health plan for enrolled Medi-Cal
beneficiaries from the provisions of this bill.
Exempts a health care benefit plan or contract or health
insurance policy purchased by the Board of CalPERS from the
requirements of the bill, unless the Board elects to
purchase a health care benefit plan, or health insurance
policy, that covers mental health services as described in
the bill.
Exempts contracts between DHCS and a health care service
plan for enrolled Medi-Cal beneficiaries and specified
disease, hospital indemnity, Medicare supplement,
dental-only, accident-only or vision-only policies from the
requirements of the bill.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of AB 244 annual costs to the Healthy Families program of
$104,000 (33 percent General Fund) and savings of $2
million in the Major Risk Medical Insurance Program and
Access for Infants and Mothers Program. Some portion of
these savings will be General Fund. Savings in these
programs reflect this bill providing full, rather than
partial, parity for treatment in those programs.
BACKGROUND AND DISCUSSION
According to the author, AB 244 is intended to end
discrimination against patients with mental disorders and
substance abuse addictions, by requiring treatment and
coverage of these illnesses that is equivalent to coverage
provided for other medical illnesses. The author states
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that inadequate access to mental health services forces law
enforcement officers to serve as the mental health
providers of last resort; the lack of access to appropriate
care result for mentally ill persons often results in
incarceration, and this misuse of the corrections system
costs state taxpayers roughly $1.8 billion per year.
The author argues that the practice by the private
insurance market of excluding or limiting coverage of
mental health services benefits the private insurance
market, and shifts that financial burden to the state and
to counties. The author adds that mentally ill persons who
lack access to appropriate care often end up in emergency
rooms and receive mental health services from county
programs. The author argues that almost all plans
discriminate against patients with biological brain
disorders such as schizophrenia, depression and manic
depression, as well as posttraumatic stress disorders
suffered by victims of crime, abuse or disaster.
The author contends that AB 244 would correct a serious
problem that bankrupts families and causes enormous
taxpayer expense.
The federal Mental Health Parity and Addiction Equity Act
of 2008 (MHPA)
The 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. MHPA does not mandate that group health plans
provide any mental health coverage. However, if a plan
does offer mental health coverage, the Act requires that
there be equity in financial requirements, such as
deductibles, co-payments, co-insurance, 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. MHPA
applies to all group health plans for plan years beginning
after October 3, 2009, and exempts small firms of 50 or
fewer employees. The MHPA does not provide a definition
for mental health and substance abuse disorders.
Mental health parity in California
Since 1999, health plans and health insurers are required
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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
applied to other medical conditions. Nine specific
diagnoses are considered severe mental illnesses:
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
comprehensive than physical health coverage. Mental health
parity requires benefits to include outpatient services,
inpatient hospital services, partial hospital services, and
prescription drugs, if the health plan contract includes
coverage for prescription drugs.
In 2003 DMHC promulgated mental health parity regulations,
that require mental health parity to provide, (in addition
to all basic and other health care services required by
Knox-Keene), at a minimum, coverage for crisis intervention
and stabilization; and psychiatric inpatient services,
including voluntary inpatient services and services from
licensed mental health providers, including but not limited
to psychiatrists and psychologists.
California Health Benefits Review Program
AB 1996 (Thomson), Chapter 795, Statutes of 2002, requests
the University of California to assess bills proposing a
mandated benefit or service, and prepare a written analysis
with relevant data on the medical, economic, and public
health impact of the proposed mandate. The Program was
extended for four additional years by SB 1704 (Kuehl),
Chapter 684, Statutes of 2006.
In its analysis of AB 244, California Health Benefits
Review Program (CHBRP) noted that the impacts described are
based on changes in coverage attributable to AB 244, after
the implementation of the federal MHPA.
Medical Effectiveness
The literature on all treatments for mental health
/substance abuse (MH/SA) conditions covered by this bill,
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more than 400 diagnoses, could not be reviewed during the
60 days allotted for completion of CHBRP reports. Instead,
the effectiveness review for the AB 244 report summarizes
the literature on the effects of parity in coverage for
MH/SA services on utilization, cost, access, process of
care, and the health status of persons with MH/SA
conditions.
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, the following effects occur:
Consumers' average out-of-pocket costs for MH/SA
services decrease;
There is a small decrease in health plans'
expenditures per user of MH/SA services;
Rates of growth in the use and cost of MH/SA
services decrease;
Inpatient admissions for MH/SA care per 1,000
members decrease;
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,
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.
Utilization, Cost and Coverage Impacts
CHBRP points out that in California, severe mental
illnesses services are already covered under AB 88
(Thomson), Chapter 534, Statutes of 1999, so AB 244 focuses
on the incremental effect of extending parity to non-severe
mental illnesses and substance abuse disorders. According
to CHBRP, approximately 18 million insured individuals
would be subject to the requirements in AB 244, however,
since services for non-severe mental illnesses and
substance abuse disorder services would already be covered
at parity, for employers with 50 or more employees under
MHPA, so the impact of AB 244 would be limited to the
small-group and individual markets. CHBRP points out that:
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approximately 64 percent of individuals in policies subject
to this bill have parity coverage for non-severe mental
illnesses disorders, 35 percent have less than full parity
coverage and 1 percent lack coverage. Approximately 64
percent of insured have parity coverage for substance use
disorders, 30 percent have less than full parity coverage
and 6 percent lack coverage. AB 244 would result in 100
percent of these individuals having coverage for both
non-severe mental illnesses and substance abuse disorders.
CHBRP estimates that among individuals in policies subject
to AB 244, utilization would increase by 9.1 outpatient
mental health visits (4.10 percent) and 1.8 outpatient
substance abuse visits (8.70 percent) per 1,000 members,
per year. Increased utilization would be the result of the
elimination of benefit limits, and a reduction in cost
sharing because co-insurance 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 severe mental illnesses diagnoses
covered under current law. However, CHBRP notes that more
stringent management of care would partly offset increases
in utilization due to more generous coverage.
CHBRP also estimates that, as a result of AB 244, total
health care expenditures, including total premiums and
out-of-pocket expenditures would increase by $34.6 million
or 0.04 percent. Slightly more than half of the total
increase in health care expenditures would be due to
services for non-severe mental illness disorders ($24.2
million) and the remainder ($10.4 million) would be due to
treatment of substance abuse disorders.
AB 244 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 percent. Total premiums for individually purchased
insurance would increase by about $22.5 million, or 0.38
percent. 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 percent). Enrollee
contributions toward premiums for group or public insurance
would increase by about $4.7 million, or 0.04 percent.
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State premium expenditures for Medi-Cal, the Access for
Infants and Mothers Program and the Major Risk Medical
Insurance Program would decrease by about $2 million
(-0.05 percent), while state premiums for the Healthy
Families program would increase by $104,000 (0.02 percent).
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
uninsured is projected to occur as a result of this bill
because, on average, premium increases are estimated to
increase by less than one percent.
Public Health Impact
According to CHBRP, 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.
Diagnostic and Statistical Manual of Mental Disorders (DSM)
The Diagnostic and Statistical Manual of Mental Disorders
(DSM), first published in 1952, is published by the
American Psychiatric Association, and is the standard
classification of mental disorders used by mental health
professionals in the United States. There have been four
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major revisions.
The DSM contains a listing of psychiatric disorders and
their corresponding diagnostic codes. Each disorder
included is accompanied by a set of diagnostic criteria and
text containing information about the disorder, such as
associated features, prevalence, familial patterns, age,
culture, gender-specific features, and differential
diagnosis. No information about treatment or presumed
etiology is included.
The DSM-IV, published in 1994, is the last major revision
of the DSM, the next major revision of the DSM, DSM-V, will
be published after 2011.
Related bills
SB 296 Lowenthal would require health plans, including
specialized health plans, and insurers that offer
professional mental health services to direct those
services to be provided in a coordinated manner, establish
websites that contain particular information by January 1,
2012, and provide benefit cards by July 1, 2011, as
specified. This bill is set to be heard in the Assembly
Health Committee on July 7, 2009.
Prior legislation
AB 1887 (Beall) of 2008 and AB 423 (Beall) of 2007, which
were similar to this bill, would have expanded the mental
health parity coverage requirement for certain health care
service plan contracts and health insurance policies to
include the diagnosis and treatment of a mental illness of
a person of any age and would have defined mental illness
for this purpose as a mental disorder as defined in the
Diagnostic and Statistical Manual IV. These bills were
vetoed by the Governor.
SB 572 (Perata, 2005) would have required a health plan and
a health insurer to provide coverage for the diagnosis and
medically necessary treatment of mental illness. This bill
was never heard in the Senate Banking, Finance and Business
Committee.
SB 1192 (Chesbro, 2004) would have required health plans
and health insurers to provide coverage for the medically
necessary treatment of substance-related disorders,
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excluding caffeine and nicotine related disorders, on the
same basis coverage is provided for any other medical
condition. This bill failed in the Assembly Health
Committee.
AB 88 (Thomson), Chapter 534, Statutes of 1999, requires
health plans and health insurers to provide coverage for
the diagnosis and medically necessary treatment of certain
severe mental illnesses, as defined, and of serious
emotional disturbances of a child, as defined, under the
same terms and conditions applied to other medical
conditions.
Arguments in support
The California State Association of Counties (CSAC) states
that numerous studies have shown that mental illness is
treatable, and that appropriate and timely treatment of
mental health conditions and disorders reduces costly
hospitalizations, incarcerations, homelessness, and human
suffering. CSAC argues that a growing body of evidence
suggests that mental health parity outweighs the societal
costs and risks associated with untreated illness. CSAC
contends that AB 244 would help ensure that private health
plans treat individuals with mental health, substance
abuse, or co-occurring disorders in a comprehensive way.
The California Council of Community Mental Health Agencies
(CCCMHA) and the California Coalition for Mental Health
(CCMH) state that, as a result of the federal mental health
parity law that goes into effect on October 3, 2009,
California needs to update its statute to be in full
compliance, and to fill in the gaps in service that will be
left uncovered by the federal bill. CCCMHA and CCMH argue
that, California was a national leader in passing a
landmark mental health parity law a decade ago, but will
fall behind other states if it fails to pass AB 244.
The Drug Policy Alliance (DPA) states 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. There are over 30,000 drug
violators in prisons today at a cost of $49,000 per
offender. DPA contends that AB 244 will reduce costs to
the criminal justice system.
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The Board of Behavioral Sciences (BBS) argues that any
costs associated with AB 244 would be more than offset by
increased productivity of workers, overall reduction of
medical costs, crime, and homelessness.
Arguments in opposition
The Office of the Insurance Advisor states that California
currently has 44 mandates on health insurance policies and
adding a new mandate, such as that in AB 244, would
increase health costs and simply shift costs without fully
addressing affordability, cost containment, and shared
responsibilities.
The Department of Managed Health Care (DMHC) states that,
although the intent of AB 244 has merit, health plans would
likely increase the monthly premiums of enrollees, which
may lead more individuals to drop existing coverage,
further increasing the uninsured population. DMHC further
states that, due to its nature as a mandate, AB 244 would
further elevate already high health care costs in
California.
The California Association of Health Plans (CAHP) argues
that, AB 244 goes much further than federal legislation
that will go into effect in October, 2009, by expanding
state level coverage requirements to include all 400
identified DSM IV disorders, and that expanding current
mandates in this manner increases costs for private
employers and individuals purchasing insurance in the
private market.
Additional arguments
The Developmental Disabilities Area Board 10 (DDAB 10)
states that AB 244 gives CalPERS the option to provide or
not provide mental health coverage and could create a
two-tiered system, one for 240,000 state employees and
another for other Californians.
DDAB 10 states that it would be in support of AB 244 if
this provision were removed.
PRIOR ACTIONS
Assembly Floor: 50-29
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Assembly Appropriations:12-5
Assembly Health: 12-5
POSITIONS
Support: Alliance of California Autism Organizations
American Federation of State, County and Municipal
Employees, AFL-CIO
Board of Behavioral Sciences
California Academy of Family Physicians
California Alliance for Retired Americans
California Association of Alcohol and Drug Program
Executives, Inc.
California Association of Marriage and Family
Therapists
California Coalition for Mental Health
California Council of Community Mental Health
Agencies
California Medical Association
California Mental Health Directors Association
California Psychological Association
California Society of Addiction Medicine
California Society for Clinical Social Work
California State Association of Counties
Congress of California Seniors
County Alcohol and Drug Program Administrators of
California
The Developmental Disabilities Area Board 10 (if
amended)
Disability Rights California
Drug Policy Alliance
Health Access California
Mental Health Association in California
National Alliance on Mental Illness, California
Affiliate
National Association of Social Workers, California
Chapter
Psychiatric Solutions, Inc.
Oppose: Anthem Blue Cross
Association of California Life and Health Insurance
Companies
California Association of Health Plans
California Association of Health Underwriters
California Association of Joint Powers Authority
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California Chamber of Commerce
Citizens Commission on Human Rights, Sacramento
Chapter
CSAC Express Insurance Authority
Department of Managed Health Care
Health Net
Office of the Insurance Advisor
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