California Regulations

The California Department of Insurance (CDI) released supporting documents (pdf | Get Adobe® Reader®) to help insurers demonstrate compliance with the Federal Parity Law and the state parity law. The document contains three sections:

• Classification tables where the insurer needs to list all benefits listed in their policy forms as either inpatient in-network, out-of-network, outpatient in-network, or outpatient out-of-network
• A narrative explanation of the methods used to define the quantitative treatment limits applied to benefits
• A list of all factors used to determine which benefits will be subject to non-quantitative treatment limitations (NQTLs) and the NQTLs applied to medical/surgical and mental health/substance use disorder benefits.

The Department of Managed Health Care (DMHC) issued an enforcement action (pdf | Get Adobe® Reader®) against Blue Cross of California. Blue Cross denied an enrollee’s request for the continuation of major depressive disorder treatment. After multiple appeals to Blue Cross, the enrollee contacted DMHC, which concluded the insurer was in violation of section 1373.96 of the California Health and Safety Code, which requires insurers cover treatment for a serious chronic condition provided by an out-of-network provider to a new enrollee if this enrollee was already receiving services from that provider. Since major depression is a covered condition under California’s state mental health parity law, it is considered a serious chronic condition and insurers must cover the enrollee’s request. Blue Cross agreed to cover the enrollee’s care and pay a fine of $5,000.

The Department of Managed Health Care (DMHC) released a follow-up report (pdf | Get Adobe® Reader®) on Kaiser Foundation Health Plans regarding the steps Kaiser had taken to correct violations of state law identified by the Department in 2013 (summarized below 6/2013). The previous violations had resulted in a $4 million fine being levied against Kaiser.

The fourth of the four violations was directly relevant to parity in that the Department found that Kaiser and its providers were informing consumers that certain mental health services were not covered, which was in direct violation of the parity sections of California’s state laws (these sections of the law are summarized at the bottom of the page under “California Parity Law”). In this follow-up report the Department determined that Kaiser had not adequately corrected this violation. The Department found that while Kaiser had corrected this information on its website and in its explanation of benefits documents, its providers were still telling consumers that certain medically necessary services were not covered, like long-term therapy.

The report indicated that the Department is considering further disciplinary action. Here is Kaiser’s response (pdf | Get Adobe® Reader®) to this follow-up report.

The California Department of Insurance released a press release commending 60 minutes for featuring the story about Anthem Blue Cross’ denial of coverage for patients needing mental health treatment.

The Department of Managed Health Care (DMHC) reached a settlement (pdf | Get Adobe® Reader®) with Health Net of California for $300,000 after initially issuing a cease and desist order in November 2013. Among other accusations, Health Net was accused of “failure to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbances of a child, as specified, under the same terms and conditions applied to other medical conditions.” This was in violation of the parity provisions within the Health and Safety Code.

The DMHC issued guidance requiring all plans under its jurisdiction to submit reports showing their compliance with the Federal Parity Law no later than 9/18/2014. The DMHC provided insurers with detailed instructions (pdf | Get Adobe® Reader®) that required them to complete worksheets (pdf | Get Adobe® Reader®) that compare their behavioral health coverage to other medical coverage, and required them to complete (pdf | Get Adobe® Reader®) another worksheet comparing their application of non-quantitative treatment limitations for behavioral health coverage and other medical coverage.

The Insurance Commissioner issued updated regulations addressing autism within the parity provisions in the Insurance Code. Plans cannot impose a visit limit or “annual maximum , a copayment , a deductible , or any other financial term, when the same term or limit is not equally applicable to all benefits under the policy.” It also specifies that treatment or services within the relevant section of the Insurance Code “includes but is not limited to speech therapy, occupational therapy and behavioral health treatment.”

The regulation also specified that medically necessary care cannot be denied or delayed for the following reasons:

1. Based on an asserted need for cognitive, developmental or intelligence quotient (IQ) testing
2. On the grounds that behavioral health treatment is experimental, investigational, or educational
3. On the grounds that behavioral health treatment is not being, will not be, or was not, provided or supervised by a licensed person, entity or group when the provider or supervisor in question is certified by a national entity, such as the Behavior Analyst Certification Board, that is accredited by the National Commission for Certifying Agencies
4. On the grounds that behavioral health treatment has been, is being, should be or will be provided by a Regional Center contracting with the Department of Developmental Services
5. On the grounds that an annual visit limit has been reached or exceeded
6. For any other reason, provided, however, that the insurer may apply a deductible or other financial term or limit when the same term or limit is equally applicable to all benefits under the policy

The California Department of Insurance released a press release summarizing the regulations.

08/12/2013 The Department of Managed Health Care (DMHC) reached a settlement (pdf | Get Adobe® Reader®) with UnitedHealthCare of California (UHC) and US Behavioral Health Plan, California (USBHPC). UHC denied medically necessary Speech Therapy services (ST) for individuals with severe mental illness, including autism. Among other requirements, UHS agreed to cover medically necessary ST for all current and future enrollees as a basic health care service.

In July of 2013 the DMHC issued a regulation regarding essential health benefits for small group plans and individual plans. Several of the provisions were specific to parity . One section mandated that “chemical dependency” is covered and that coverage “shall be in compliance with federal parity requirements.” This section detailed the the services required for outpatient chemical dependency treatment:

1. Day-treatment programs
2. Intensive outpatient programs
3. Individual and group chemical dependency counseling
4. Medical treatment for withdrawal symptoms

This section also specified that inpatient hospitalization for detoxification includes “medical management of withdrawal symptoms, including room and board, physician services, medications, dependency recovery services, education, and counseling.“ It further specified that “transitional residential recovery services” must be provided.

Another section mandated coverage for mental health conditions not already required by the parity provisions in the Health and Safety Code. It specified that “plans shall cover any mental health condition identified as a ‘mental disorder’ in the Diagnostic and Statistical Manual of Mental Disorders , Fourth Edition, Text Revision (DSM IV).” It further specifies required outpatient treatment as:

1. Individual and group mental health evaluation and treatment
2. Psychological testing when necessary to evaluate a mental disorder
3. Outpatient services for the purpose of monitoring medication therapy

It also specifies that inpatient hospitalization coverage “shall include room and board, medications, and services of physicians and other providers who are licensed health care professionals acting within the scope of their license.” Finally, it details what is required for “intensive psychiatric treatment programs”:

1. Short-term hospital-based intensive outpatient care (partial hospitalization)
2. Short-term multidisciplinary treatment in an intensive outpatient psychiatric treatment program
3. Short-term treatment in a crisis residential program in a licensed psychiatric treatment facility with 24-hour-a-day monitoring by clinical staff for stabilization of an acute psychiatric crisis
4. Psychiatric observation for an acute psychiatric crisis

The DMHC fined (pdf | Get Adobe® Reader®) Kaiser Foundation Health Plan $4,000,000 for many violations, including one related to the parity provisions within the Health and Safety Code. Kaiser failed to provide “accurate and understandable behavioral health education services including information regarding the availability and optimal use of mental health care services available.” Kaiser also provided insureds with inaccurate information about benefits that would make the benefits appear to be noncompliant with parity laws and made recommendations that would lower the utilization of some behavioral health services.

The California Department of Insurance (CDI) released a FAQ sheet (pdf | Get Adobe® Reader®) to help enrollees understand how to obtain behavioral health treatment coverage from their insurer. The document explains an individual’s rights under the California Mental Health Parity Act. The FAQ also explains how to get a referral, the appeals process, and prior authorization requirements.

The California Department of Insurance (CDI) issued emergency regulations (pdf | Get Adobe® Reader®) to eliminate denials and care restrictions for autism treatment. The regulations prohibit the use of visit limits and dollar limits (unless dollar limits apply to physical health benefits). The department also released a press release.

The Autism Advisory Task Force released a report (pdf | Get Adobe® Reader®) to the Governor of California and the California State Legislature. SB 946 required the Department of Managed Health Care (DMHC) to convene an Autism Advisory Task Force to develop recommendations regarding medical necessity for behavioral health treatments (BHT) for individuals with autism or pervasive developmental disorder; the qualifications, training and supervisions for providers of such treatment; and education, training and experience requirements for unlicensed individuals providing BHT to obtain state licensure.

The California Department of Insurance (CDI) announced an enforcement action (pdf | Get Adobe® Reader®) against Anthem for denying coverage of applied behavioral analysis for individuals with autism and pervasive developmental disorder. CDI reached a settlement with Anthem when they agreed to cover ABA services for individuals diagnosed with autism or PDD and establish a network of ABA service providers. This agreement is very similar to the 2011 settlement with Blue Shield and the 2012 settlements with United, Health Net, and Cigna.

The Department of Managed Health Care (DMHC) released a notice (pdf | Get Adobe® Reader®) responding to a Petition (pdf | Get Adobe® Reader®) submitted by the Kaiser Foundation Health Plan, Inc. (Kaiser). The Petition concerned confusion among health plans in their ability to cover behavioral health therapies (BHT), including applied behavior analysis (ABA), provided by non-licensed professionals for Healthy Family Program (HFP) and CalPERS enrollees with autism spectrum disorder (ASD) and pervasive developmental disorder (PDD).

Section 1374.73 of the Knox Keene Act allows health plans to provide ABA by non-licensed professions but creates an exemption for Medi-Cal participants, HFP enrollees, and CalPERS members. However, the statute also specifically states that it does not affect, reduce, or limit the health plan’s obligations to cover medically necessary treatments, including BHT, under existing mental health parity laws. Kaiser submitted a Petition asking for clarification of this benefit. DMHC granted and denied the Petition in part:

• DMHC granted the request to initiate rulemaking proceedings to establish whether health plans are required to cover BHT, including ABA, by non-licensed professionals for CalPERS and HFP Enrollees with ASD or PDD following the enactment of Section 1374.73. Rulemaking began on August 20, 2012.
• DMHC denied the request to initiate rulemaking proceedings to establish the licensure and certification requirements for individuals who provide BHT to HFP and CalPERS enrollees. The Business and Professions Code Section 2052 requires a license or legislation exemption from licensure requirements to provide diagnoses or treatment of any mental conditions. Thus, the legislature, not DMHC, has the authority to establish licensure and certification requirements.
• DMHC denied the request to initiate rulemaking proceedings to establish the statutory obligations of the regional centers to provide BHT to CalPERS and HFP enrollees pursuant to their contracts with the state of California. The regional centers are under the jurisdiction of the California Department of Developmental Services (DDS). Thus, DDS, not DMHC, has the authority to adopt regulations creating statutory obligations for regional centers.

The California Department of Insurance (CDI) announced an enforcement action (pdf | Get Adobe® Reader®) against United for denying coverage of applied behavioral analysis (ABA) for individuals with autism and pervasive developmental disorder. CDI reached a settlement with United when they agreed to cover ABA services for individuals diagnosed with autism or PDD and establish a network of ABA service providers. This agreement is very similar to the 2011 settlement with Blue Shield and the 02/2012 settlements with Health Net and Cigna.

The California Department of Insurance issued a press release supporting the decision issued by the Ninth Circuit Court of Appeals confirming the previous 11/2011 holding in Harlick v. Blue Shield. Despite a few modification, the decision reaffirmed that Blue Shield must cover residential treatment for serious mental illness. For more information on this case refer to the California litigation page.

The Department of Managed Health Care (DMHC) issued a cease and desist order (pdf | Get Adobe® Reader®) against Kaiser Health Plan for denying members access to physical, occupational, and speech therapy. Under California law, health plans must cover medically necessary basic health care services, including speech, physical, and occupational therapy services. In addition, state parity law requires health plans cover medically necessary diagnosis and treatment for certain mental health conditions. Over 100 complaints to DMHC demonstrated that Kaiser denied coverage of these services for non-physical conditions without determining medical necessity.

The California Department of Insurance (CDI) announced an enforcement action against Health Net (pdf | Get Adobe® Reader®) and Cigna (pdf | Get Adobe® Reader®) for denying coverage for applied behavioral analysis for individuals with autism and pervasive developmental disorder. CDI reached settlements with both insurers when they agreed to cover ABA services for individuals diagnosed with autism or PDD and establish a network of ABA service providers. This agreement is very similar to the 2011 settlement with Blue Shield.

The California Department of Insurance issued an amicus brief (pdf | Get Adobe® Reader®) supporting the decision issued in the court case Harlick v. Blue Shield. In this case, Blue Shield denied the plaintiff treatment for anorexia at a residential facility. The court ruled that the California Mental Health Parity Act requires health plans to cover all medically necessary treatment for severe mental illness under the same terms and conditions as treatment for physical illnesses. Severe mental illness includes anorexia in California. Blue Shield was ordered to cover residential treatment. For more information on this case refer to the California litigation page.

The Department of Managed Health (DMHC) reached a settlement (pdf | Get Adobe® Reader®) with California Physicians’ Services Blue Shield (Blue Shield) concerning coverage of applied behavioral analysis (ABA) for the treatment of pervasive developmental disorder (PDD) and autism spectrum disorder (ASD). DMHC and Blue Cross disagreed over the obligation to provide coverage for ABA. Notwithstanding this dispute, the parties reached a settlement where, among other requirements, Blue Cross agreed to cover medically necessary ABA services when the services are ordered and deemed medically necessary by a licensed health care provider.

The California Department of Insurance (CDI) testified (pdf | Get Adobe® Reader®) at the Senate Select Committee’s hearing on Health Insurance Coverage for Autism Spectrum Disorders. CDI testified that Behavioral Intervention Therapies (BIT), like Applied Behavioral Analysis (ABA) therapy, are medically necessary treatments. They also stated that BIT should be viewed as a mandated benefit under California’s Mental Health Parity Act.

The California Department of Insurance (CDI) announced an enforcement action against Blue Shield for denying coverage of applied behavioral analysis for individuals with autism and pervasive developmental disorder. Blue Shield settled (pdf | Get Adobe® Reader®) with CDI when they agreed to cover ABA services for individuals diagnosed with autism or PDD and establish a network of ABA service providers.

The DMHC fined (pdf | Get Adobe® Reader®) Kaiser $75,000 for violating the parity provision of the Health and Safety Code. In a particular case, Kaiser was found to have been responsible for an unreasonable delay for a formal autism evaluation.