On Friday September 25, 2020, California Governor Gavin Newsom signed a law that strengthens and expands mental health parity protections in California. This law amends the California Mental Health Parity Act by adding significant new protections that are good news for participants in both group and individual healthcare insurance policies (including disability policies that cover healthcare), and bad news for insurance companies that have continued to unfairly deny medically necessary coverage for the treatment of mental health and substance use disorders. Co-Founding Partner Lisa S. Kantor, working with other mental health advocates and one of the bill’s sponsors, was instrumental in the development of this law.
Among other highlights, the new law now covers all generally recognized mental health disorders as well as substance use disorders, whereas the prior law only covered a list of nine mental health disorders that were deemed severe. The legislature found the prior list was “not only incomplete and out-of-date, but also fails to encompass the range of mental health and substance use disorders whose complex interactions are contributing to overdose deaths from opioids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.”
The law clarifies that insurers must cover treatment at all intermediate levels of care for mental health and substance use disorders, including residential care, partial hospitalization, and intensive outpatient treatment. The legislation expressly cites two groundbreaking decisions in cases brought by Kantor & Kantor’s Co-Founding Partner Lisa Kantor – Harlick v. Blue Shield of California, and Rea v. Blue Shield of California – in which courts in California required residential treatment be covered under the prior law. Nevertheless, insurers have continued to insist that the California Mental Health Parity Act does not mandate necessary residential treatment for mental health disorder patients, an argument that should no longer be viable.
Addressing network inadequacy problems, the law also requires that, if timely and geographically appropriate treatment is not available in-network for mental health and substance use disorders, the insurer must ensure the delivery of medically necessary services out-of-network, and must strive to do so in a timely and geographically appropriate manner. In addition, the insurer must provide the required coverage in its entire service area.
The law forbids insurers from limiting treatment of mental health and substance use disorders to short-term or acute treatment, as a judge in the Northern District of California recently criticized a health insurer for doing in Wit v. United Behavioral Health.
With respect to medical necessity standards, the legislation again turned to Wit, where the judge concluded that United Behavioral Health created and applied its own flawed criteria. Thus, perhaps the most significant change other than the expansion of coverage to all mental health and substance use disorders is the new law’s requirement that medical necessity determinations be made under generally established standards of care based on “valid, evidence-based sources,” including “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 United States Food and Drug Administration.” Likewise, the law provides that “[i]n conducting utilization review of all covered health care services and benefits for the diagnosis, prevention, and treatment of mental health and substance use disorders in children, adolescents, and adults, a health care service plan shall apply the criteria and guidelines set forth in the most recent versions of treatment criteria developed by the nonprofit professional association for the relevant clinical specialty.”
All of these changes are significant and have made the California law the most protective mental health parity law in the nation. We are proud of the role of our firm in the development and passage of this bill.
If you or someone you know is suffering from mental illness, or any other illness, and you are being denied benefits by your insurer, please call Kantor & Kantor for a free consultation at 888-569-6013 or use our online contact form. We understand, and we can help