Compliance Confidence
California Governor Signs Expanded Mental Health Parity Bill
California Governor Signs Expanded Mental Health Parity Bill
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On September 25, 2020, California Governor Gavin Newsom signed Senate Bill (SB) 855, expanding mental health parity requirements for California individual and group health care service plan contracts and disability insurance issued, renewed, or amended on or after January 1, 2021.
The newly expanded requirements build on existing state and federal mental health parity and substance use disorder requirements. It mandates that any plan providing hospital, medical, or surgical coverage provide for all medically necessary treatment of mental health and substance use disorder, under the same terms and conditions applied to other medical conditions, while establishing new guidelines for determining medical necessity.
“‘Medically necessary treatment of a mental health or substance use disorder’ means a service or product addressing the specific needs of that patient, for the purpose of preventing, diagnosing, or treating an illness, injury, condition, or its symptoms, including minimizing the progression of that illness, injury, condition, or its symptoms,” including the following benefits:
- Basic health care services;
- Intermediate services including residential treatment, partial hospitalization and intensive outpatient treatment;
- Prescription drugs, if the plan includes such coverage.
Accordingly, plans are prohibited from limiting its mental health and substance use disorder benefits to short-term or acute care and treatment. These requirements also extend to out-of-network services when no in-network services are available to the extent that the participant cannot be required to pay more than the same cost-sharing that the participant would pay for the same covered services received from an in-network provider.
Generally, these new requirements will apply to all plans issued in the state of California. However, it remains to be seen whether the courts agree that this law would be preempted by ERISA like many other state laws that relate to insurance. If ERISA preemption is found to apply to this law, the state cannot require self-insured plans to comply with it. Nonetheless, the existing federal mental health parity framework would still apply to those self-insured plans.