California requires the most comprehensive mental health and substance abuse health coverage in the nation. This is partially due to its updated Mental Health Parity Act that passed in September 2020 (SB 855). The bill, now a law, impacts all health plan contracts or policies issued, renewed, or modified after January 1, 2021. It expands the coverage and benefits available for mental health (MH) and substance use disorders (SUD). The law requires health care service plans and disability insurers to treat MH and SUD issues like other medical conditions. They must cover medically necessary treatment of MH and SUD under the same terms and conditions applied to other medical conditions. And this law is now enforceable. But what does it mean for you? What if you get a mental health insurance denial or a substance abuse insurance denial?
This page reviews the bill and its benefits for MH and SUD patients. We also provide tips on what to do if your health insurer denies medically necessary care you need. If you receive a mental health insurance denial or a substance use disorder insurance denial, call the Law Offices of Scott Glovsky and we can help.
What’s New About SB 855 for Mental Health and Substance Use Disorder Patients?
You may wonder what is new about this bill. After all, prior to this bill there was a Federal Mental Health Parity Act and an Addiction Equity Act. And the California Mental Health Parity Act first passed in 1999. First, this bill provides a significant expansion for the thousands of Californians suffering from mental health and substance abuse disorders. With this legislation, MH and SUD patients have the same access to care and treatment as other medical condition patients. How? These protections are now enforceable by regulators and through civil lawsuits if health plans and insurers fail to comply. California is pioneering the movement to put these disorders, and treatment for them, on par with more traditional medical conditions. And hopefully the bill also helps remove the stigma associated with mental health and substance abuse disorders.
Increased Rights and Protections from the former Mental Health Parity Act
The bill increases the rights and protections under California’s former Mental Health Parity Act. “Mental health parity” means that services are provided at the same cost, frequency, and availability as other medical services. The former act didn’t in practice necessitate the same coverage and benefits determinations for MH and SUD as other medical conditions. The court recognized this disparity and ambiguity in Wit v. United Behavioral Health 2019 WL 1033730 (N.D.CA Mar. 5, 2019). SB 855 now specifically relies upon the eight generally accepted standards for mental health and substance abuse care. Those generally accepted standards are now codified by this bill. Why is this important?
Generally Accepted Standards Instead of Health Insurer Standards of Medical Necessity
Health care service plans and disability insurers that provide hospital, medical, or surgical coverage must now base medical necessity determinations for services and benefits for the diagnosis, prevention, and treatment of mental health and substance use disorders on current generally accepted standards of MH and SUD care. As a result, health plans and insurers will not be permitted to employ their own standards to benefit determinations for MH and SUD. (Health insurer’s internal standards are often overly restrictive.) Rather, generally accepted standards for mental health and substance use disorders must be applied to benefit determinations for these patients.
The law also requires application of specified clinical criteria and guidelines in determining covered health care services and benefits. It also prohibits application of different, additional, or conflicting criteria than the criteria and guidelines specified. As a result, benefit determinations for mental health and substance abuse are standardized and current as opposed to varying from plan to plan. The use of alternative guidelines and criteria by health plans and insurers that are not consistent with the generally accepted standards is impermissible. This law eliminates concerns over losing these vital benefits if an individual changes an insurer or plan. It also removes the risk of denied benefits because an insurer or health plan uses outdated or non-standard criteria.
What is the Definition of Medical Necessity for Mental Health and Substance Use Disorders?
Part of the definition of medical necessity includes “In accordance with generally accepted standards of mental health and substance use disorder care” which are
- “Standards of care and clinical practice that are generally recognized by health care providers practicing in relevant clinical specialties” and
- Can be found in “peer reviewed scientific studies and medical literature, clinical practice guidelines and recommendations of nonprofit health care provider professional associations, specialty societies and federal government agencies, and drug labeling” approved by the FDA.
- Set by the nonprofit professional associations for the relevant clinical specialties.
SB 855 Increases the Breadth of Mental Health and Substance Use Disorders
The breadth of coverage for issues considered medically necessary now adheres to two important manuals. The first is the most recent edition of the “International Classification of Diseases and Related Health Problems (ICD).” The second is the most recent version of the “Diagnostic and Statistical Manual of Mental Disorders (DSM).” Practitioners often rely on these manuals when they submit for care to insurance companies.
Limitations on Coverage Removed
Health plans and health insurers are prohibited from limiting benefits or coverage for MH and SUD to short-term or acute treatment. Now members can access the care they actually need as opposed to benefits and services limited in duration or scope. And sufferers of MH and SUD are no longer subjected to disparate treatment because of the type of their illnesses. Limitations previously applied to their conditions will no longer be permitted under the new law.
Expansion of Covered Benefits Definition
In addition, the bill revises covered benefits to include basic health care services, intermediate services, and prescription drugs. These services were previously inaccessible in the same manner as for other medical conditions. Mental health and substance abuse are no longer second class conditions subject to inferior or limited care and services. Instead, these conditions have access to the same services and benefits afforded to patients of other medical conditions.
Out of Network Care at In-Network Costs
Typically, health insurers charge more for out-of-network providers. They often have different deductible plans for in- and out-of-network providers. If medically necessary treatment is not available in-network within the geographic and timely access standards set by the law or regulation, the bill requires that the plan arrange coverage to ensure the delivery of medically necessary out-of-network services and any medically necessary follow up services at the same cost-sharing level that the member would pay for in-network services.
Insurers May Not Rescind Authorization After The Fact
Insurers may not cancel authorization for MH and SUD services after the services have been provided.
How Is the Department of Managed Health Care Involved?
The bill authorizes the Director of the Department of Managed Health Care or the Insurance Commissioner to assess administrative or civil penalties for violation of the requirements. It also makes any provision in a health care service plan that reserves discretionary authority to the plan to determine eligibility for benefits or coverage, interpret the terms of the contract, or provide standards of interpretation or review that are inconsistent with California law, void and unenforceable. Any such provisions are severable from provisions that are consistent with California law.
What About Administrative Reviews?
On top of the regulatory enforcement mechanisms, subscribers can seek administrative reviews with their health plan or insurer. In the event that regulators and internal appeals fail to correct shortcomings under the law, individuals can also file suit for breach of contract and breach of the implied covenant of good faith and faith dealing (“bad-faith”). As a result, Californians have many mechanisms to ensure enforcement of this new law.
What Can You Do if You Get a Mental Health Insurance Denial or Substance Use Disorder Health Insurance Denial?
You have many options if you receive a mental health insurance denial or a substance use disorder health insurance denial for medically necessary treatment. You first want to evaluate what type of health insurance plan you have.
There are both ERISA and non-ERISA plans. ERISA stands for Employment Retirement Income Security Act of 1974. Most employee sponsored plans fall under ERISA. Exceptions include religious organization and government employee plans. Another exception is business plans in which the only people covered are the business owners. And the majority of plans purchased through Covered California are not ERISA plans. Finally, plans purchased directly from insurance companies like Anthem Blue Cross and Blue Shield are not ERISA plans.
If you have an ERISA plan, then file an appeal. Why? Because ERISA has a rigid structure in which to challenge a denial for absence of medical necessity. For this reason, your best bet is to speak with an ERISA lawyer before you do so. You can learn more here.
If you have a non-ERISA plan, you have more options. One option is to appeal. Likely how to appeal is on the backside of your denial letter. You can also ask for an “Independent Medical Review” (IMR). You can also pursue legal action. And you can do this before or after you file an IMR. Why would you look for an attorney? A lawsuit might get the insurance company to reevaluate your claim. There is also the possibility that “bad faith” occurred in which case you might get additional monies. You can learn more about options with non-ERISA plans here.
Contact Law Offices of Scott Glovsky if You Receive A Health Insurance Denial
The Law Offices of Scott Glovsky has represented injured consumers and victims of wrongful business practices for more than the past two decades. The firm focuses on health insurance bad faith, catastrophic personal injury, sexual abuse and consumer-related litigation. We get justice for our clients and hold the wrongdoers accountable.