Department of Managed Health Care Issues All Plan Letter to Ensure Health Plans Comply with New Law Regarding Coverage for Mental Health and Substance Use Disorder


By Meena Kaypour

On January 5, 2021, the Department of Managed Health Care (DMHC) issued All Plan Letter APL 21-002 to all Commercial Full-Service Health Plans and Specialized Health Care Service Plans Offering Behavioral Health Services, entitled “Implementation of Senate Bill 855, Mental Health and Substance Use Disorder Coverage. ” The letter provides guidance regarding implementation of SB 855 (Wiener) (Chapter 151, Statutes of 2020), effective January 1, 2021, which repeals California’s mental health parity law and replaces it with a broader requirement that health plans cover medically necessary treatment of mental health and substance use disorders under the same terms and conditions applied to other medical conditions.  It also establishes new requirements for medically necessary care determinations and utilization review and bans discretionary clauses in health plan contracts.

The letter begins with an overview of SB 855 and advises that the new law requires every plan that provides hospital, medical, or surgical coverage to cover medically necessary treatment of mental health and substance use disorders that are set forth in the International Classification of Diseases (“ICD”) or the Diagnostic and Statistical Manual of Mental Disorders (“DSM”). The overview also advises plans that they may not limit benefits or coverage for mental health and substance abuse disorders to short-term or acute treatment; are required to arrange coverage for out-of-network services for medically necessary treatment of a mental health or substance use disorder when services are not available in-network within geographic and timely access standards; are prohibited from limiting benefits or coverage for medically necessary services on the basis that those services may be covered by a public entitlement program; and are required to base medical necessity determinations or utilization review criteria on current generally accepted standards of mental health and substance use disorder care.

The APL further provides plans with detailed instructions as to compliance filing dates, and offers a deadline roadmap of the notices, policies, and procedures to accommodate new coverage requirements outlined by SB 855.

The Department, in conjunction with health plans, the California Department of Insurance, and various stakeholder groups, compiled a list of the most recent versions of treatment criteria and clinical guidelines developed by nonprofit professional associations for the treatment of mental health and substance use disorders, and attached it to APL 21-002 as Attachment A.  In doing so, DMHC aims to “promote consistency among health care service plans and delegated entity partners in delivering mental health and substance abuse disorder” services.

The Department also posted a fact sheet on its website to help health plan enrollees understand the changes under SB 855, and released a newsroom update on January 5, 2021 alerting health plans and enrollees of the newly-issued APL issuance. According to the update, DMHC will be strengthening its enforcement of behavioral health parity laws, including focused investigations of commercial health plans, which the Department expects to begin in the first quarter of 2021.

Health plan enrollees having trouble accessing behavioral health care treatment or services, should contact their health plan at the member services phone number on their health plan member card. Their health plan will review the grievance and should ensure the enrollee is able to timely access medically necessary care. If the enrollee does not agree with their health plan’s response, they should contact the DMHC Help Center at or by calling 1-888-466-2219. The enrollee should contact the DMHC immediately if they are facing an urgent issue.


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