Governor Newsom Signs SB 855 Into Law, Requiring Health Plans Cover Medically Necessary Treatment of Mental Health and Substance Use Disorders

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By Alex Ruf

SB 855 (Wiener), as amended  August 24, 2020, and as it applies to the Department of Managed Health Care (DMHC), adds sections 1367.045 and 1374.721, and repeals and adds section 1374.72, to the Health and Safety Code to repeal California’s Mental Health Parity Act, and replace it with a broader requirement for health plans to cover medically necessary treatment of mental health and substance use disorders under the same terms and conditions applied to other medical conditions. This bill also establishes new requirements for medically necessary care determinations and utilization review, and bans discretionary clauses in health plan contracts. According to the bill’s author, Senator Scott Wiener, by updating the Mental Health Parity Act, California can save lives by treating mental health and substance use disorders early on, which can subsequently combat death and suicide. Wiener emphasized that COVID-19 has exacerbated the already-existing need for behavioral health treatments.

Specifically, section 1367.045 removes discretionary clauses in health plan contracts, and states that if a health care service plan contract that is offered, issued, delivered, amended, or renewed on or after January 1, 2021, contains a provision that reserves discretionary authority to the plan, or an agent of the plan, to determine eligibility for benefits or coverage, to interpret the terms of the contract, or to provide standards of interpretation or review that are inconsistent with the laws of this state, that provision is void and unenforceable.

Section 13474.72 was repealed, and in its new form, adds a requirement to the Health and Safety Code that every health care service plan contract issued, amended, or renewed on or after January 1, 2021, that provides hospital, medical, or surgical coverage, must provide coverage for medically necessary treatment of mental health and substance use disorders under the same terms and conditions applied to other medical conditions.

SB 855 also adds section 1374.721 to the Health and Safety Code, which states that a health care service plan that provides hospital, medical, or surgical coverage must base any medical necessity determination or utilization review criteria that the plan applies to determine the medical necessity of health care services and benefits for the prevention and treatment of mental health and substance use disorders on current generally accepted standards of mental health and substance use disorder care. It also authorizes DMHC’s Director to assess administrative penalties on health plans that do not comply with this requirement.

According to the Assembly Health Committee’s Analysis, DMHC requested multiple amendments to SB 855, including removing the prohibition on discretionary clauses and changing the definition of “medically necessary treatment of mental health substance use disorder,” but the amendments were not adopted.

Governor Newsom signed SB 855 on September 25, 2020 (Chapter 151, Statutes of 2020).

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