BILL ANALYSIS
AB 88
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CONCURRENCE IN SENATE AMENDMENTS
AB 88 (Thomson)
As Amended September 8, 1999
Majority vote
ASSEMBLY: 59-18 (June 3, 1999)
SENATE: 30-6 (September 9, 1999)
Original Committee Reference: HEALTH
SUMMARY : Requires a health care service plan (health plan)
contract or disability insurance policy to provide coverage for
severe mental illnesses, and for the serious emotional
disturbances of a child. Specifically, this bill :
1)Requires every health plan or disability insurer contract
issued, amended, or renewed on or after July 1, 2000, that
provides hospital, medical, or surgical coverage, to cover
diagnosis and medically necessary treatment of severe mental
illnesses and for the serious emotional disturbances of a
child.
2)Defines "severe mental illnesses" as including schizophrenia,
schizoaffetive disorder, bipolar disorder (manic
depressiveness), major depressive disorders, panic disorder,
obsessive-compulsive disorder, pervasive developmental
disorder or autism, anorexia nervosa and bulimia nervosa.
3)Defines "serious emotional disturbances of a child" as one or
more mental disorders, other than substance abuse or
developmental disability, identified in the Diagnostic and
Statistical Manual of Mental Disorders.
4)Requires severe mental illness benefits to include outpatient
and inpatient services, hospital services, and prescription
drugs if a plan contract or insurance policy otherwise covers
prescription drugs. Requires terms for maximum lifetime
benefits, copayments and deductibles to be applied equally to
all benefits under a plan contract or insurance policy.
Requires a plan or insurer to provide mental health coverage
in its entire service area and in emergency situations as
required by law.
5)Permits a plan or insurer to provide coverage for all or part
of the mental health services required in this bill through a
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separate specialized health plan or mental health plan.
Permits plans that provide benefits through preferred provider
contracts to require enrollees who reside or work in
geographic areas served by specialized or mental health plans
to secure services within geographic areas served by those
plans. Permits insurers to require insureds who reside or
work in geographic areas served by specialized or mental
health plans to secure services within geographic areas served
by those plans.
6)Permits plans to utilize case management, network providers,
utilization review techniques, prior authorization,
copayments, or other cost sharing. Permits insurers to
utilize case management, managed care, or utilization review.
7)Exempts specialized health plan contracts and insurance
policies, including Medicare supplement policies, and Medi-Cal
contracts from the requirements of this bill. Provides that
any action an insurer takes to implement provisions of this
bill, including, but not limited to, contracting with
preferred provider organizations, shall not be deemed to be an
action that would require Knox-Keene licensure.
The Senate amendments insert language permitting plans and
insurers to meet the requirements of this bill through mental
health carve-out plans; change the effective date of the
provisions of this bill from January 1, 2000, to July 1, 2000;
permit use of case management and utilization review techniques.
EXISTING LAW requires a health plan contract or disability
insurance policy covering hospital, medical or surgical services
to cover the diagnosis and treatment of specified physical
conditions.
AS PASSED BY THE ASSEMBLY , this bill required a health plan
contract or disability insurance policy to provide coverage for
severe mental illnesses, and for the serious emotional
disturbances of a child.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, annual state costs of $1.6 million due to an
increase in rates for the Public Employees Retirement System.
COMMENTS : The author intends this bill to prohibit
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discrimination against people with biologically-based mental
illnesses, to dispel unsound distinctions between mental and
physical illnesses, and require equitable coverage to prevent
adverse risk selection. At least 19 states require equitable
coverage for mental illnesses. Benefits range from mental
illnesses, plus chemical dependency, to covering only selected
severe illnesses. This bill requires equitable coverage for
selected mental illnesses.
An April 1998 U.S. Department of Health and Human Services
report indicates that full parity for mental health and
substance abuse in managed care plans would increase premiums
less than 1%. This bill requires coverage of only nine severe
mental illnesses. In 1996, the Congressional Budget Office
(CBO) projected premium increases of 3.2% would result from
mental health parity, and increases of 4% would result from full
parity including chemical dependency coverage. These findings
are disputed by the RAND Corporation, because the CBO
projections "did not incorporate any cost distinction between
managed care or fee-for-service care" and concluded the CBO
projections "overestimate the cost effects of parity legislation
. . . ."
The California Alliance for the Mentally Ill (CAMI), the
sponsor, argues that this bill will benefit employers by
improving productivity, reducing homelessness, and lowering
criminal justice costs. The California Psychiatric Association
(CPA) argues that nearly all health plans discriminate against
patients with disorders such as schizophrenia, depression and
manic depression. The California Psychological Association
supports this bill in concept, and sponsored SB 468 (Polanco),
which would require coverage for all mental illnesses, but
failed passage in Assembly Appropriations.
The California Association of Health Plans (CAHP) opposes this
bill unless amended. CAHP wants the author to exclude
individuals and small employers from the requirements in this
bill. The California Network of Mental Health Clients is
opposed to this bill unless amended to exclude involuntary
treatment. The Citizens Commission on Human Rights (CCHR),
established by the Church of Scientology to address violations
of human rights, argues this bill mandates dubious science.
Analysis Prepared by : Ann Blackwood / HEALTH / (916) 319-2097
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