BILL ANALYSIS
AB 1600
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1600 (Beall) - As Introduced: January 4, 2010
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)Requires, following publication of each subsequent volume of
the DSM-IV, the definition of "mental illness" to be subject
to revision to conform to, in whole or in part, the list of
mental disorders defined in the then-current volume of the
DSM-IV.
4)Requires any revision to the definition of "mental illness"
pursuant to 3) above to be established by regulation
promulgated jointly by the Department of Managed Health Care
(DMHC) and the Department of Insurance (CDI).
5)Allows a health plan or health insurer to provide coverage for
all or part of the mental health coverage required by this
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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.
6)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.
7)Permits a health plan and health insurer to utilize case
management, network providers, utilization review techniques,
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.
8)Exempts contracts between the Department of Health Care
Services and a health plan for enrolled Medi-Cal beneficiaries
from the provisions of this bill.
9)Exempts accident-only, specified disease, hospital indemnity,
Medicare supplement, dental-only, or vision-only insurance
policies from the provisions of this bill.
10)Prohibits a health care benefit plan, contract, or health
insurance policy with the Board of Administration of the
Public Employees' Retirement System 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 DMHC and provides for the
regulation of health insurers by 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 of a child, under the same terms and conditions
applied to other medical conditions, as specified.
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3)Requires mental health benefits provided pursuant to 2) 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
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 current federal law prohibits health plans from
setting annual or lifetime dollar limits on an enrollee's
mental health benefits that are lower than any such limits on
medical care. According to the author, an alarming number of
mentally ill persons end up incarcerated because they lack
access to appropriate care. The author maintains that
inadequate access to mental health services forces law
enforcement officers to serve as the mental health providers
of last resort, and this misuse of the corrections system
costs state taxpayers roughly $1.8 billion per year. The
author adds that an alarming number of these individuals wind
up in hospital emergency rooms and end up receiving services
from the counties. The author asserts that this shift by the
private insurance market over the last 20 years to exclude
entitled covered enrollees by cherry picking out "mental
illness" has been borne financially by the state and counties
to the benefit of private insurers. This bill is intended to
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end the discrimination against patients with biological brain
disorders, such as schizophrenia, depression, and manic
depression, as well as posttraumatic disorders suffered by
victims of crime, abuse or disaster, 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
serious emotional disturbances 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 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
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Labor, Health and Human Services, and the Treasury issued an
interim final rule and accompanying guidelines governing
implementation of MHPA on February 2, 2010, that includes a
90-day public comment period that closes May 3, 2010. The
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. The
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. According to a March 2010 report by
AHP Healthcare Solutions that provides a preliminary
operational analysis of the MHPA interim final rule, the MHPA
is expected to affect approximately 111 million participants
in 446,400 federally-regulated group health plans; 29 million
participants in approximately 20,300 state and local
government employer group health plans; 460 health insurers
that provide substance use disorder or mental health benefits
in the group health insurance market; and, 120 managed
behavioral healthcare organizations that provide substance
use disorder or mental health benefits to group health plans.
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
with relevant data on the public health, medical, and
economic impact of proposed health plan and health insurance
benefit mandate legislation. The California Health Benefits
Review Program (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 this bill,
CHBRP reports:
a) Medical Effectiveness . The literature on all treatments
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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 a range of techniques for 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) 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,
v) 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 16 million insured individuals would be
subject to this bill's mandate. CHBRP also points out that
approximately 66% of individuals in policies subject to
this bill currently have parity coverage for non-SMI
disorders and 1% lack coverage; 55% of insured Californians
have parity coverage for substance use disorders and 10%
have none. CHBRP estimates that, among individuals in
policies affected by this bill, utilization would increase
by 10.5 outpatient mental health visits and 3.1 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
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coinsurance rates are often higher for non-SMI MH/SA
treatment 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 existing state law. 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 about $44
million or 0.06%. More than half of the total increase in
health care expenditures is due to services for non-SMI
disorders ($26.6 million) and the remainder ($18.3 million)
is due to treatment of substance abuse disorders. This
bill is estimated to increase premiums by about $63
million. Total premium contributions from private
employers who purchase group insurance are estimated to
increase by $25 million per year, or 0.06%. Total premiums
for individually purchased insurance would increase by
about $29 million, or 0.48%. The increase in individual
premium costs would be partly offset by a decline in
individual out-of-pocket costs of about $18 million
(-0.31%). Enrollee contributions toward premiums for
publicly funded group insurance would increase by about $8
million, or 0.06%. 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 among the
DMHC-regulated health plan contracts and CDI-regulated
large group health insurance policies, and larger increases
in the CDI-regulated small-group and individual policies.
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 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
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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 lost productivity. Although it is
likely that this bill would reduce lost productivity for
those who are newly covered for MH/SA benefits, the total
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 a health insurance disparity in
the individual and small-group insurance market between
psychological and non-MH/SA health conditions and could
therefore help to destigmatize MH/SA treatment.
5)SUPPORT . The California Psychiatric Association (CPA) writes
in support of this bill that it would require coverage of the
full range of mental disorders and provide for their treatment
when medically necessary on the same terms and conditions as
other health conditions. CPA notes that mental disorders,
when untreated, cause significant suffering, disability, and
lost productivity and, unlike most other health conditions,
may also result in arrest, incarceration, and homelessness in
addition to costly hospitalizations and all too often death.
CPA contends that the costs of increasing coverage to provide
full parity for mental disorders is negligible and likely
outweighed significantly by the costs of non-treatment. The
National Alliance on Mental Illness (NAMI) adds in support
that mental illnesses are known to be biologically based brain
disorders and it is just, equitable, and practical to provide
insurance coverage equal to that for other physical illnesses.
NAMI states that people with mental illnesses or their
families pay premiums so parity in insurance is also just and
equitable. Crestwood Behavioral Health, Inc. writes in
support that this bill will end discrimination by health plans
and insurers against individuals with mental illness and
eliminate an enormous taxpayer expense that is generated when
individuals struggling with mental illness quickly deplete
limited coverage and become dependent on taxpayer-supported
benefits. The California Academy of Family Physicians adds
that by supporting this bill, not only will Californians have
greater access to mental health services, California as a
state will save money and lives through preventive medical
care.
6)OPPOSITION . Health Net objects to this bill because it
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greatly expands the types of mental health services that
health plans and insurers would be required to cover and
employers would have no choice but to purchase. Health Net
states that while some employers might choose to purchase
extensive mental health coverage, it would be rare for a
benefit plan to include all items in the DSM IV, such as
caffeine addiction. Health Net argues that coverage mandates,
such as coverage for the non-serious mental health conditions
required under this bill, take away freedom for employers to
decide how much behavioral health coverage they want to buy.
Opponents contend that, in this era of escalating medical
costs and significant premium increases, mandating additional
new benefits into all health insurance policies, while
well-intended, is counterproductive to their efforts to make
health insurance more affordable and available to all
Californians. The California Association of Joint Powers
Authorities adds in opposition that this bill imposes an
unreimbursed mandate on local public entities for costs
associated with the expansion and utilization of coverage
benefits.
7)PRIOR LEGISLATION .
a) AB 244 (Beall) of 2009, AB 1887 (Beall) of 2008, and AB
423 (Beall) of 2007, all of which were substantively
identical to this bill, were vetoed by Governor
Schwarzenegger. In his veto messages the Governor stated
that the addition of a new mandate, especially one of this
magnitude, will only serve to significantly increase the
overall cost of health care and remained concerned about
the rising costs of health care and the need to weigh the
potential benefits of a mandate with the comprehensive
costs to the entire delivery system.
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
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disorders, on the same basis coverage is provided for any
other medical condition. SB 1192 failed in the Assembly
Health Committee.
8)POLICY COMMENT . Given the pending comment period for the
recently issued interim regulations governing implementation
of the MHPA and the recent passage of health reform at the
federal level, the author may wish to address the extent to
which this bill is affected by these developments.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Academy of Family Physicians
California Academy of Physician Assistants
California Psychiatric Association
County Alcohol and Drug Program Administrators Association of
California
Crestwood Behavioral Health, Inc.
National Alliance on Mental Illness California
San Bernardino County Board of Supervisors
Opposition
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Underwriters
California Association of Joint Powers Authorities
Citizens Commission on Human Rights
Health Net
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097