The bill would require health plans to determine medical necessity by following "current generally accepted standards of mental health and substance use disorder care."
A newly revised bill out of the California State Legislature expands the scope of mental health care covered by insurance. As of 2021, insurers will be required to cover treatment for mental health and substance abuse disorders to the same extent as other illnesses.
The California Mental Health Parity Act was first passed over 20 years ago. It required that every health or disability insurance plan that offers hospital, medical, or surgical coverage also cover the "diagnosis and medically necessary treatment" of nine mental illnesses. That limitation "fails to encompass the range of mental health and substance use disorders whose complex interactions are contributing to overdose deaths from opioids and methamphetamines, the increase in suicides, and other so-called deaths of despair," according to the revised bill, introduced by Sen. Scott Wiener.
Recommended For You
The revised bill expands coverage to include mental health and substance abuse disorders "under the same terms and conditions applied to other medical conditions."
The Affordable Care Act included mental health and addiction coverage in its mandate, but failed to define "medical necessity." Under the revised bill, medically necessary treatment means any product or service "addressing the specific needs of that patient, for the purpose of preventing, diagnosing, or treating an illness, injury, condition, or its symptoms." That includes chronic or long-term treatments, according to the bill.
Effective Jan. 1, 2021, the revised bill:
- Requires health plans to determine medical necessity by following "current generally accepted standards of mental health and substance use disorder care."
- Requires health plans to follow the most current treatment criteria set forth by the nonprofit professional association related to that particular clinical specialty, and explicitly prohibits them from using their own utilization criteria in most cases. Plans may set their own criteria to keep up with advances in technology that are not covered by other relevant utilization guidelines.
- Authorizes the director of the Department of Managed Health Care or the Insurance Commissioner to assess penalties for violating utilization review requirements.
- Requires plans to sponsor formal education for any staff or third party that makes decisions regarding utilization.
Read more:
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
