Insurers must obey the California mental health parity laws or pay a hefty sum, according to the recently passed California Senate bill (SB) 1046. Senator Jim Beall (D) introduced the consumer-minded bill to address insurance companies’ violations of the parity laws and to give penalty authority to California’s Department of Insurance (DOI), the state’s regulator of self-employer and individual insurance plans, as the Department of Managed Health Care (DMHC), the state’s health plan regulator in February 2014.
A chair of the Senate Mental Health Caucus, Beall said the bill “puts health insurers on the alert that they must live up to the law or face fines’’ of up to $2,500 per day. The existing California law allows the DMHC to levy per-day penalties for on-going mental health parity violations. However, California’s codes do not give the DOI the same authority, and some private insurers are taking advantage. The new law will allow the DOI to impose the fines and close loopholes for insurance companies seeking to escape the parity laws. The DOI handles approximately 10 percent of health care consumers.
Mental health parity also was addressed in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which requires that inpatient, outpatient, and emergency mental health services be available to underserved populations. A Final rule (78 FR 12834) issued by HHS in February 2013, implemented the ACA to require Exchanges and insurance issuers to cover mental health and substance use disorder services as one of the 10 essential health benefits (EHB) categories for the individual and small group markets. Section 1302 of the ACA implemented an EHB package that includes coverage requirements, cost-sharing limits, and actuarial value requirements for health plans. This paved the way to 2014 parity requirements, under which all health plans, including those sold through Exchanges or Marketplaces, must offer coverage of mental health services comparable to coverage of medical and surgical benefits. The ACA requirements comply with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which previously established parity requirements, but did not apply them to health plans without coverage for mental health care or to companies with less than 50 employees.
Other states, such as Washington, have been experiencing similar insurance parity violations, in which blanket exclusions on medically necessary mental-health care services are imposed and left out of policy text.
Beall strives to terminate the loopholes insurers have found and improve access to mental health care. According to Beall, there are approximately 2 million insured Californians who could not get needed mental health services. Beall has championed several health insurance efforts including his creation of the Children’s Health Initiative to provide every child in Santa Clara County with health insurance and his legislation to help foster care children, low-income families, and people with disabilities.
SB 1046 was passed by the state assembly on August 4, 2014, and is awaiting Governor Jerry Brown’s approval.