BILL ANALYSIS �
AB 154
Page 1
Date of Hearing: April 5, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 154 (Beall) - As Amended: March 24, 2011
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, with specified exceptions,
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)Excludes treatment of nicotine addiction and certain illnesses
under the "V" code designation in the DSM-IV, such as adult
antisocial behavior and bereavement, among others, from the
definition in 2) above.
4)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.
5)Requires any revision to the definition of "mental illness"
pursuant to 4) above to be established by regulation
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promulgated jointly by the Department of Managed Health Care
(DMHC) and the Department of Insurance (CDI).
6)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.
7)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.
8)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.
9)Clarifies that nothing in this bill shall be construed to deny
or restrict in any way DMHC's authority to ensure a health
plan's compliance with this bill when the plan provides
prescription drug coverage.
10)Clarifies that, with regard to health insurance policies, any
action a health insurer takes to implement this bill,
including, but not limited to, contracting with preferred
provider organizations, shall not be deemed as an action that
would otherwise require licensure as a health care service
plan, as specified.
11)Exempts contracts between the Department of Health Care
Services and a health plan for enrolled Medi-Cal beneficiaries
from the provisions of this bill.
12)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.
13)Exempts accident-only, specified disease, hospital indemnity,
Medicare supplement, dental-only, or vision-only plans or
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insurance policies, except behavioral health-only policies,
from the provisions of this bill.
14)Prohibits this bill from being deemed to require a qualified
health plan that participates in the California Health Benefit
Exchange to provide any greater coverage than is required
under the minimum essential benefits package set forth in the
federal Patient Protection and Affordable Care Act (PPACA).
EXISTING LAW :
1)Enacts, in federal law, the PPACA to, among other things, make
statutory changes affecting the regulation of, and payment
for, certain types of private health insurance. Includes the
definition of an essential health benefits package that all
qualified health plans must cover, at a minimum, with some
exceptions.
2)Provides that the essential benefits package in 1) above will
be determined by the federal Department of Health and Human
Services (HHS) Secretary and must include, at a minimum,
ambulatory patient services; emergency services;
hospitalizations; mental health and substance abuse (MH/SA)
disorder services, including behavioral health; and,
prescription drugs; among other things.
3)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.
4)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.
5)Requires mental health benefits provided pursuant to 4) above
to include outpatient services, inpatient hospital services,
partial hospital services, and prescription drugs if the plan
contract includes coverage for prescription drugs.
6)Defines a specialized plan contract as a contract for health
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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.
7)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 . According to the author, individuals
struggling with mental illness quickly exhaust limited
coverage and personal savings and become dependent upon
taxpayer-supported benefits. The author notes that annual
national costs for mental illness are an estimated $23 billion
in lost work days to employers and another $150 billion in
treatment, social services, and lost productivity. The author
maintains that many people in our society with mental illness
and substance abuse problems are unable to obtain treatment
and, as a result, wind up in counties' indigent health care
pool, emergency rooms, and state and county jails.
Additionally, the author points to a December 2010 article in
the Wall Street Journal regarding a recent decision by the
Screen Actors Guild (SAG) to drop MH/SA benefits from its
health plan as evidence of the need for this bill. The
article reported that SAG opted to terminate this coverage for
nearly 12,000 participants because equalizing it with medical
or surgical benefits, as required under the Mental Health
Parity and Addiction Equity Act of 2008 (MHPA), would have
doubled the costs, to more than $3 million annually.
According to the article, SAG planned to advise participants
on how to apply for MH/SA treatment from community programs,
which, the author argues is another unfortunate reminder that
the cost of providing treatment will be shifted to taxpayers.
This bill is intended to end discrimination against patients
with MH/SA issues by requiring treatment and coverage of these
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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. Regulations promulgated in
2003 require 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.
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, with certain
exceptions.
3)MHPA . The MHPA 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. 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
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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.
According to information from the American Medical Association
(AMA), few employers have dropped mental health coverage due
to the federal parity law. According to the AMA, of those
employers that have taken this action, some claim to have
done so to avoid the cost of complying with parity, despite
projections that parity compliance would have only a minimal
impact on health insurance costs. The AMA indicates that the
Congressional Budget Office estimated an average cost
increase of 0.4% while a September 2010 report from the
Kaiser Family Foundation indicates that only about 1.2% of
insurers planned to drop mental health coverage in response
to federal parity requirements.
4)FEDERAL ESSENTIAL HEALTH BENEFITS . The PPACA requires
qualified health plans to cover specified categories of
federal essential health benefits (EHBs), including MH/SA
disorder services and behavioral health treatment, by 2014.
The HHS Secretary is tasked with defining these benefit
categories through regulation so that they mirror those
benefits offered by a "typical" employer plan. Qualified
plans are required to cover EHBs by 2014. Federal guidance
with respect to EHBs is expected later this year and in 2012.
In a January 2011 issue brief by the University of California's
Health Benefits Review Program (CHBRP) focusing on the
federal requirement to cover EHBs, CHBRP notes that
there is considerable legal ambiguity over how state mandates
requiring the coverage of the treatment for a specific
condition or disease will interact with federal law. CHBRP
states that these mandates often extend across multiple
benefit categories. CHBRP cites, as an example, California's
mandate to cover breast cancer treatment, which implicitly
requires coverage for screening and testing, medically
necessary physician services, ambulatory services,
prescription drugs, hospitalization, and surgery. CHBRP
writes that it is unclear how California benefit mandates
that overlap across several EHB categories would be evaluated
in relation to the EHB package.
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5)CHBRP . CHBRP was created in response to AB 1996 (Thomson),
Chapter 795, Statutes of 2002, which 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. In its analysis of this bill, CHBRP
reports:
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 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' 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 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 (HMO) prior to
the implementation of parity.
b) Utilization, Cost, and Coverage Impacts . According to
CHBRP, roughly 17 million insured individuals would be
subject to this bill's mandate. CHBRP points out that
approximately 74% of enrollees in plans and policies
subject to this bill currently have parity coverage for
non-SMI mental health services and nearly 64% have coverage
for substance abuse treatment that is at parity with their
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coverage for medical services, even with the MHPA in
effect. According to CHBRP, this bill would provide new
covered benefits for non-SMI mental health services for 4.5
million enrollees and substance abuse treatment for 6.3
million enrollees. CHBRP estimates that, among individuals
in plans and policies affected by this bill, utilization
would increase by 7.4 outpatient mental health visits and
2.3 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 current 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 notes that the impact of the bill would be most
extensive in the small group and individual markets since
services for non-SMI MH/SA treatment would already be
covered at parity for enrollees in large group plans or
policies under MHPA. CHBRP also indicates that, as a
result of this bill, net annual expenditures among
enrollees subject to state regulation are estimated to
increase by about $41 million, or 0.04%. Of this increase,
nearly $25 million will be due to increased coverage for
treatment of non-SMI mental health and $17 million will be
due to increased coverage for treatment of substance abuse.
This bill is estimated to increase premiums by about $67
million. Total premium contributions from private
employers who purchase group insurance are estimated to
increase by $28 million per year, or 0.05%. Total premiums
for individually purchased insurance would increase by
about $32 million, or 0.47%. The increase in individual
premium costs would be partially offset by a decline in
individual out-of-pocket costs of about $26 million
(-0.34%). Enrollee contributions toward premiums for those
in privately funded group insurance would increase by about
$7 million, or 0.05%. The impact of this bill on per
member, per month (PMPM) premiums varies by market segment.
Among DMHC-regulated health plans, total PMPM premiums
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would increase by $0.05 in the large-group market, $0.26 in
the small group market, and $0.61 in the individual market.
For CDI-regulated plans, total PMPM premiums would
increase by $0.16 in the large-group market, $1.64 in the
small-group market, and $1.62 in the individual market.
CHBRP 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 a reduction in adverse
social outcomes, such as absenteeism, unemployment, and
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 insufficient 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 markets between mental
and medical health conditions and could therefore help to
destigmatize MH/SA treatment.
5)SUPPORT . The California Mental Health Directors Association
and California State Association of Counties write in support
of this bill that, since the enactment of AB 88, numerous
studies have shown that mental illness is treatable, and that
appropriate and timely treatment of mental health conditions
reduces costly hospitalizations, incarcerations, homelessness,
and, most importantly, human suffering. The California
Hospital Association states that this bill will dramatically
improve consumers' understanding of their benefit coverage,
which, in turn, may lead to patients seeking prevention and
early intervention care before their condition rises to a
level requiring acute care hospitalization. The California
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Medical Association notes that its physicians have long called
for the elimination of MH/SA carve-outs from health plan
coverage in order to ensure adequate access to care for these
serious but treatable medical conditions. 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. Lastly, the County
Alcohol & Drug Program Administrators Association of
California states that this is a long-overdue bill that aims
to end insurance discrimination faced by too many people
seeking help and still struggling with mental illness or the
disease of addiction to alcohol and other drugs.
6)OPPOSITION . The California Association of Health Plans (CAHP)
objects to this bill, stating that it is the wrong time for
the Legislature to consider enacting new benefit mandates
since, starting in 2014, many Californians can enroll in
health coverage through the newly created insurance Exchange
established under the PPACA and in California through AB 1602
(John A. Perez), Chapter 655, Statutes of 2010. CAHP asserts
that, because the PPACA requires the cost of any additional
benefits required by state law that exceed the EHBs to be
borne by the states, this will have a harmful effect on
California's budget by requiring the state to pay for any
additional mandates that do not match the federal EHBs. CAHP
further contends that by carving out Medi-Cal, CalPERS, and
the Exchange, this bill unfairly raises costs for employers
and individuals in only certain market segments, thereby
creating uneven playing fields. America's Health Insurance
Plans (AHIP) and Health Net maintain that consumers select
coverage options based on the elements that they consider
desirable. AHIP and Health Net argue that benefit mandates
eliminate the ability of health insurers and HMOs to provide
unique benefit packages in response to the needs of consumers
by requiring individuals and consumers to purchase benefits
prescribed by the Legislature, not driven by consumer choice.
7)PRIOR LEGISLATION .
a) AB 1600 (Beall) of 2010, 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, in addition to his ongoing concerns regarding
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the overall rising cost of healthcare and lack of
affordability for employers and individuals struggling to
keep their existing coverage, this particular mandate would
have required a higher level of service than contemplated
on a federal level, and, as such, would have mandated
California to spend new General Fund dollars for these
benefits when the state is struggling to provide basic
levels of coverage to its most needy and fragile
populations.
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
other medical condition. SB 1192 failed passage in the
Assembly Health Committee.
8)POLICY COMMENT . This bill is one of several health mandates
introduced for legislative consideration this year. The
author may wish to address the extent to which the need for
this bill and others similar to it is premature, given that
federal regulations to define the parameters of the EHB
package have yet to be promulgated.
REGISTERED SUPPORT / OPPOSITION :
Support
Access Coalition
American Federation of State, County and Municipal Employees
Bonita House
California Academy of Family Physicians
California Alliance of Child and Family Services
California Association of Marriage and Family Therapists
California Coalition for Mental Health
California Communities United Institute
California Council of Community Mental Health Agencies
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California Emergency Nurses Association
California Hospital Association
California Medical Association
California Mental Health Directors Association
California Primary Care Association
California Psychiatric Association
California Psychological Association
California State Association of Counties
California Youth Empowerment Network
County Alcohol & Drug Program Administrators Association of
California
Developmental Disabilities Area Board 10
Disability Rights California
Drug Policy Alliance
Health Access California
Mental Health Association in California
National Alliance on Mental Illness, California
National Association of Social Workers
San Bernardino County Board of Supervisors
Santa Clara County Board of Supervisors
Opposition
America's Health Insurance Plans
California Association of Health Plans
California Chamber of Commerce
Citizens Commission on Human Rights
Health Net
Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097