California health insurers are having trouble complying with a new state law intended to protect people from paying high out-of-pocket expenses for psychological or addiction care.
The law (S.B. 855) requires every health plan that provides hospital, medical, or surgical coverage to also cover mental health and substance-use disorders listed in the Diagnostic and Statistical Manual of Mental Disorders, a handbook used by health-care professionals.
Since the law went into effect in January 2021, advocates say many health plans skirt the mandate to provide coverage for mental health care under the same terms and conditions as physical health care. Companies “are essentially shrugging their shoulders and leaving patients to fend for themselves,” said Meiram Bendat, a psychotherapist and attorney who helped write the law.
Health providers say they aren’t clear on what they’re supposed to do. Mary Ellen Grant, a spokeswoman for the trade group representing California health plans, says the statute’s ambiguous requirements are getting in the way of full compliance.
“If we are all operating under clear rules, our health care system can be improved,” Grant said. Her group, the California Association of Health Plans, vigorously opposed the law before the Legislature passed it and Gov.
The law directs health plans to arrange for out-of-network services care when in-network providers aren’t available, or to maintain “network adequacy.” That’s proven to be the toughest compliance requirement for insurers to meet, Bendat said.
Those difficulties were on full display at
The health provider last month settled with the National Union of Healthcare Workers to end the strike and has committed to hiring more staff.
Sarah Soroken, a therapist who recently left Kaiser to work for Solano County’s behavioral health services, said Kaiser didn’t make out-of-network referrals when no in-network provider was available.
“The more serious conditions are not provided an external referral, so they’re actually subjected to the longest wait times,” which last several weeks or months, Soroken said.
Marc T. Brown, a spokesman for Kaiser, rejected Soroken’s claims. “Consistent with applicable laws, Kaiser Permanente makes external referrals as needed and appropriate,” he said in an email.
Bendat said the health plans “have really done an abysmal job” at attempting network adequacy, adding that many companies don’t contract with enough providers and don’t inform patients of their rights to access that out-of-network care.
Part of the problem is in the disconnected way the compliance is being mapped out. The law tasks nonprofit professional associations to develop the criteria for when treatment is medically necessary and assigns a California health regulator to draft rules on the other parts.
The American Society of Addiction Medicine set the criteria for substance-use disorders, and the World Professional Association for Transgender Health has guidelines for gender dysphoria diagnoses, for example.
Health insurance companies are unsure how to transition to the new guidelines on medical necessity, which vary in detail. Some of the criteria is explicit in explaining how frequently a patient should receive care or how intense the treatment should be. Other guidelines are vague, Grant said.
“This creates a situation of moving goal posts for plans, providers, and our enrollees,” Grant said.
Before the mandate went into effect in 2021, insurers could come up with their own criteria on medical necessity.
The industry is pushing for more clarity in upcoming draft regulations from the Department of Managed Health Care, which are intended to specify how associations should write the medical necessity criteria. The agency plans to release those regulations “in the coming weeks,” spokeswoman Rachel Arrezola said.
It’s unclear how far off providers are from complying with the state law. There’s little data to show how equal, or unequal, a health plan’s mental health coverage is to its physical health benefits, state Sen. Scott Wiener (D), the bill’s author, said.
“We know, anecdotally, that there are still problems and the law is not being perfectly followed,” he said.
Bendat represented patients in court who were denied coverage mental health services, including the pivotal Wit v. United Behavioral Health, a class action with at least 50,000 members in which a district court found the insurer was using too-narrow guidelines for deciding covered services.
The issue isn’t yet settled: The U.S. Court of Appeals for the Ninth Circuit reversed that decision last year, and plaintiffs have petitioned for an en banc hearing. The court has indicated it might revisit the suit.
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