Insurance Denials Can Devastate Mental Health Patients. California Is Considering How to Fix That

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Frustrated Californians have long complained that they can’t get their health plans to cover desperately needed mental health treatment.

These days, state lawmakers appear to be hearing them — and trying to act.

One bill introduced this session would require health plans to cough up more data on coverage denials — and penalize those that wrongfully deny claims most often.

Another would require plans to wait at least 28 days after approving a patient to go into a substance use treatment center before they reassess whether the patient can remain there.

A third would prohibit health plans from requiring prior authorization for mental health and substance use treatment before and during a patient’s stay in a hospital.

The list goes on.

Four years after state leaders passed landmark legislation to improve mental health and substance use coverage, polls portray a public still deeply unhappy with what they’re getting. One such poll of Californians last year found that more than 80% of respondents wanted the governor and legislature to increase access to mental health treatment.

“Everybody’s been denied some form of care,” said John Drebinger, a senior advocate with the Steinberg Institute, a mental health advocacy organization. “Nobody likes this. If you haven’t been, you know somebody who has.”

At a February oversight hearing of the Senate budget and fiscal review committee, Scott Wiener, the Democratic San Francisco state senator who authored the 2020 coverage law, called the process by which consumers can appeal denials to the state’s Department of Managed Health Care “burdensome, opaque and time-consuming.”

In light of federal efforts to fire workers and remove data from government websites, he said, “it’s more important than ever for California to lead.”

It’s still early enough in the process that any of the proposed legislation could be stymied by a variety of factors, including federal fiscal uncertainty, health plan opposition and disagreement among advocates about the best approach.

Last year, a handful of bills designed to hold health plans accountable ended up dying late in the legislative process. Supporters blamed inflated cost estimates for their demise.

But some of those same lawmakers and advocates say the tenor of the conversation has changed in the months since 26-year-old Luigi Mangione shot and killed Brian Thompson, the chief executive officer of UnitedHealthcare, last December. That killing prompted an outpouring of public frustration and has become a cultural flashpoint.

At the February oversight hearing, Mary Watanabe, director of the Department of Managed Health Care, seemed open to requiring plans to provide more information about coverage denials.

“We really are seeking to understand the barriers that consumers experience navigating the behavioral health system,” she said.

Mary Ellen Grant, spokeswoman for the California Association of Health Plans, said in an email that it was premature to offer comment, given that the industry association has not yet taken a formal position on individual bills. She provided a fact sheet about the importance of prior authorization for “making health care safer, higher quality and more affordable.”

Here are some of the top bills attempting to tackle this issue:

More transparency about denials

Wiener would like to see much greater transparency from commercial health plans. His Senate Bill 363 would require plans to report granular data to the state about how often they deny treatment. This bill applies to denials of all types of medical care, not just mental health.

The state also has its own appeals process for consumers, known as  independent medical review. Wiener’s bill would also penalize plans if the state overturns their coverage denials more than half the time.

Wiener acknowledges that health plans have proven “worthy opponents” to some of his other bills. But he calls the push for greater accountability “long overdue.” Since he introduced the legislation, he said, he’s been struck by how many people have stopped him on the streets of San Francisco to share their personal nightmares about being denied coverage.

“This is touching a nerve,” he said.

Protecting the first 28 days

Assembly Bill 669 would keep plans from reviewing a patient’s eligibility for continuing substance use treatment until at least 28 days after they’ve been approved.

Matt Haney, a Democratic state Assembly member from San Francisco who authored the bill, says his interest in the bill was inspired by the story of Ryan Matlock. Matlock, a young man whose story was featured in CalMatters last fall, died of a fentanyl overdose not long after his health plan decided to stop covering his residential treatment. The plan initially decided Matlock did not need to remain at the treatment facility after he had spent just three days there. Matlock’s mother, Christine Dougherty, is testifying on behalf of the legislation.

Haney says 12 other states already have similar laws in place.

“It’s infuriating and mind-boggling that an insurer can deny someone care that they say they need and their physician says they need but it’s denied by the insurer’s employed ‘doctor’ who never even spoke to the patient,” he said. “That is dangerous and it’s wrong and it is not how medical decisions that can have such life or death consequences should be determined.”

Among the organizations sponsoring the bill are the California Consortium of Addiction Programs and Professionals, the California Behavioral Health Association, the Addiction Treatment Advocacy Coalition, and A New PATH (Parents for Addiction Treatment & Healing).

No prior authorization for inpatient mental health

The sweeping Mental Health Protection Act, AB 384, would prevent health plans from requiring prior authorization for inpatient care for mental health and substance use treatment. It would also prevent plans from requiring prior authorization for any medical care deemed necessary during the inpatient stay.

Damon Connolly, a Democratic state Assembly member from San Rafael, says he modeled the bill off of similar, successful legislation in Illinois.

“Too often prior authorization is creating delays in a situation where every second counts,” he said.

The California State Association of Psychiatrists and the California Behavioral Health Association are co-sponsoring the bill.

Defines ‘medically necessary’ care

Health plans are required to cover medically necessary health and mental health care. But what constitutes medical necessity? A bill by Democratic Fresno state Assemblymember Joaquin Arambula, AB 980, would define “medically necessary” to mean legally prescribed medical care that is reasonable and fits with standards set by the medical community. The bill also details the harms that plans may be held liable for if such care is not provided.

Behavioral health visits after a wildfire

With wildfires wiping out entire neighborhoods in the state, it is clear some people in devastated communities will need behavioral health treatment. A bill by Democratic state Assemblymembers John Harabedian from Pasadena and Robert Rivas from Salinas, AB 1032 would require health insurers to reimburse enrollees from a disaster zone for up to 12 visits with a licensed behavioral health provider during the year after a wildfire event.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.