Substance use disorder coverage., the official text

An act to add Sections 1367.047 and 1367.048 to the Health and Safety Code, and to add Sections 10144.521 and 10144.522 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL'S DIGEST

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or health insurer to use prior authorization and other utilization management functions, under which a licensed physician or a licensed health care professional who is competent to evaluate specific clinical issues may approve, modify, delay, or deny requests for health care services based on medical necessity. Existing law requires health care service plan contracts and health insurance policies that provide hospital, medical, or surgical coverage and are issued, amended, or renewed on or after January 1, 2021, to provide coverage for medically necessary treatment of mental health and substance use disorders under the same terms and conditions applied to other medical conditions, as specified.
On and after January 1, 2027, this bill would prohibit concurrent or retrospective review of medical necessity of in-network health care services and benefits (1) for the first 28 days of a treatment plan for inpatient or residential substance use disorder stay at a specified licensed facility during each plan or policy year or (2) for outpatient services provided by specified certified programs for substance use disorder visits, except as specified. The bill would authorize, after the 29th day, in-network health care services and benefits for inpatient or residential substance use disorder care to be subject to concurrent review. On and after January 1, 2027, the bill would prohibit retrospective review of medical necessity for the first 28 days of intensive outpatient or partial hospitalization services for substance use disorder, but would authorize concurrent or retrospective review for day 29 and days thereafter of that stay or service. With respect to health care service plans, the bill would specify that its provisions do not apply to Medi-Cal behavioral health delivery systems or Medi-Cal managed care plan contracts. Because a willful violation of the bill’s requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

The people of the State of California do enact as follows:

SECTION 1.
Section 1367.047 is added to the Health and Safety Code, to read:
1367.047.
(a) On and after January 1, 2027:
(1) The in-network health care services and benefits for the first 28 days of a treatment plan for inpatient or residential substance use disorder stay at a facility licensed by the State Department of Health Care Services pursuant to Chapter 7.5 (commencing with Section 11834.01) of Part 2 of Division 10.5, or by the State Department of Public Health pursuant to Section 1250.3, during each plan year shall not be subject to concurrent or retrospective review of medical necessity, but may be subject to prior authorization for the 28-day initial treatment period, consistent with the standards in Sections 1374.30 and 1374.76 and subdivision (b) of Section 1374.72.
(2) The treatment plan subject to paragraph (1) is not required to include a specific number of days of any level of care. The initial treatment plan may include any number of days, for any level of care, including inpatient, residential, partial hospitalization, or intensive outpatient therapy, as determined by medical necessity, consistent with the standards in Sections 1371.8, 1374.72, and 1374.721 and subdivision (b) of Section 1374.33.
(3) If a program physician determines that a level of care is no longer appropriate for an enrollee, or an enrollee voluntarily leaves a program to seek a different level of care, paragraph (1) does not apply to a subsequent treatment episode.
(4) An additional treatment episode that begins within 180 days after admission for the first episode of treatment is not subject to paragraph (1).
(5) The in-network health care services and benefits for inpatient or residential substance use disorder care after day 29 may be subject to concurrent review. Any authorization request for approval of inpatient or residential substance use disorder care beyond the first 28 days shall be submitted for review by the provider before the expiration of the previously approved treatment period.
(6) After 28 days, a health care service plan shall not initiate concurrent review more frequently than at two-week intervals. If a health care service plan determines that continued inpatient or residential substance use disorder care in a facility is no longer medically necessary, the health care service plan shall, within 24 hours, provide written notice to the enrollee and the enrollee’s physician of its decision and the right to file an expedited internal appeal of the determination.
(7) A health care service plan shall review and make a determination with respect to the internal appeal within 24 hours and communicate the determination and the right to appeal that determination to the enrollee and the enrollee’s physician. If the determination is to uphold the denial, the enrollee and the enrollee’s physician have the right to file an expedited external appeal with the department pursuant to Article 5.55 (commencing with Section 1374.30), if filed with the department within 72 hours of receipt of the determination.
(8) If the health care service plan’s determination is upheld by the department, the health care service plan shall continue benefit coverage for 24 hours after the determination is made. The facility shall not bill the enrollee for an amount more than the enrollee’s applicable copayment, deductible, and coinsurance as applicable under the contract.
(9) Unless the enrollee chooses to leave the inpatient or residential facility, the enrollee shall not be discharged or released from the inpatient or residential facility until all internal and department appeals are exhausted.
(10) Before discharge, the facility shall provide the enrollee and the health care service plan with a written discharge plan describing the arrangements for additional services needed following discharge using “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related and Co-occurring Conditions” by the American Society of Addiction Medicine (ASAM), or subsequent nationally adopted placement criteria.
(11) For purposes of this section, all medical necessity review shall, consistent with Section 1374.721, utilize “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and Co-occurring Conditions” by ASAM, or subsequent nationally adopted placement criteria.
(b) For purposes of this section:
(1) “Concurrent review” includes any utilization review, as defined in Section 1374.721, that takes place concurrent with the provision of health care services to enrollees.
(2) “Intensive outpatient services” and “partial hospitalization services” have the same meanings as defined in the ASAM Levels of Care.
(3) “Medically necessary” has the same meaning as “medically necessary treatment of a mental health or substance use disorder” as defined in Section 1374.72.
(4) “Prior authorization” includes any utilization review, as defined in Section 1374.721, that takes place before the provision of health care services to enrollees.
(5) “Retrospective review” includes any utilization review, as defined in Section 1374.721, that takes place after the completion of health care services to enrollees.
(6) “Substance use disorders” has the same meaning as defined in Section 1374.72.
(7) “Utilization review” has the same meaning as defined in Section 1374.721.
(c) This section does not apply to Medi-Cal behavioral health delivery systems, as defined in subdivision (i) of Section 14184.101 of the Welfare and Institutions Code, or Medi-Cal managed care plans that contract with the State Department of Health Care Services pursuant to Chapter 7 (commencing with Section 14000) of, Chapter 8 (commencing with Section 14200) of, or Chapter 8.75 (commencing with Section 14591) of, Part 3 of Division 9 of the Welfare and Institutions Code.
(d) The presence of additional related or unrelated diagnoses shall not be a basis to reduce or deny the benefits required by this section.

SEC. 2.
Section 1367.048 is added to the Health and Safety Code, to read:
1367.048.
On and after January 1, 2027:
(a) Except as provided in subdivision (b), for in-network health care services and benefits for outpatient services provided at programs certified pursuant to Chapter 7.1 (commencing with Section 11832) of Part 2 of Division 10.5, substance use disorder visits shall not be subject to concurrent or retrospective review of medical necessity or any other utilization management review.
(b) (1) The in-network health care services and benefits for the first 28 days of intensive outpatient or partial hospitalization services for substance use disorder shall not be subject to retrospective review of medical necessity, but may be subject to prior authorization for the 28-day initial treatment period, consistent with the standards in Sections 1374.30 and 1374.76 and subdivision (b) of Section 1374.72.
(2) The treatment plan subject to paragraph (1) is not required to include a specific number of days of any level of care. The initial treatment plan may include any number of days, for any level of care, including inpatient, residential, partial hospitalization, or intensive outpatient therapy, as determined by medical necessity, consistent with the standards in Sections 1371.8, 1374.72, and 1374.721 and subdivision (b) of Section 1374.33.
(3) If a program physician determines that a level of care is no longer appropriate for an enrollee, or an enrollee voluntarily leaves a program to seek a different level of care, paragraph (1) does not apply to a subsequent treatment episode.
(4) An additional treatment episode that begins within 180 days after admission for the first episode of treatment is not subject to paragraph (1).
(c) The in-network health care services and benefits for day 29 and days thereafter of intensive outpatient or partial hospitalization services for substance use disorder may be subject to a concurrent or retrospective review of the medical necessity of the services, consistent with the standards in Sections 1374.30 and 1374.76 and subdivision (b) of Section 1374.72.
(d) The presence of additional related or unrelated diagnoses shall not be a basis to reduce or deny the benefits required by this section.
(e) The facility shall not bill the enrollee for an amount more than the enrollee’s applicable copayment, deductible, and coinsurance as applicable under the contract.
(f) For purposes of this section, all medical necessity review shall, consistent with Section 1374.721, utilize “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and Co-occurring Conditions” by the American Society of Addiction Medicine, or subsequent nationally adopted placement criteria.
(g) This section does not apply to Medi-Cal behavioral health delivery systems, as defined in subdivision (i) of Section 14184.101 of the Welfare and Institutions Code, or Medi-Cal managed care plans that contract with the State Department of Health Care Services pursuant to Chapter 7 (commencing with Section 14000) of, Chapter 8 (commencing with Section 14200) of, or Chapter 8.75 (commencing with Section 14591) of, Part 3 of Division 9 of the Welfare and Institutions Code.

SEC. 3.
Section 10144.521 is added to the Insurance Code, to read:
10144.521.
(a) On and after January 1, 2027:
(1) The in-network health care services and benefits for the first 28 days of a treatment plan for inpatient or residential substance use disorder stay at a facility licensed by the State Department of Health Care Services pursuant to Chapter 7.5 (commencing with Section 11834.01) of Part 2 of Division 10.5 of the Health and Safety Code, or by the State Department of Public Health pursuant to Section 1250.3 of the Health and Safety Code, during each policy year shall not be subject to concurrent or retrospective review of medical necessity, but may be subject to prior authorization for the 28-day initial treatment period, consistent with the standards in Sections 796.04, 10144.5, and 10144.52 and subdivision (b) of Section 10169.3.
(2) The treatment plan subject to paragraph (1) is not required to include a specific number of days of any level of care. The initial treatment plan may include any number of days, for any level of care, including inpatient, residential, partial hospitalization, or intensive outpatient therapy, as determined by medical necessity, consistent with the standards in Sections 796.04, 10144.5, and 10144.52 and subdivision (b) of Section 10169.3.
(3) If a program physician determines that a level of care is no longer appropriate for an insured, or an insured voluntarily leaves a program to seek a different level of care, paragraph (1) does not apply to a subsequent treatment episode.
(4) An additional treatment episode that begins within 180 days after admission for the first episode of treatment is not subject to paragraph (1).
(5) The in-network health care services and benefits for inpatient or residential substance use disorder care after day 29 may be subject to concurrent review. Any authorization request for approval of inpatient or residential substance use disorder care beyond the first 28 days shall be submitted for review by the provider before the expiration of the previously approved treatment period.
(6) After 28 days, a health insurer shall not initiate concurrent review more frequently than at two-week intervals. If a health insurer determines that continued inpatient or residential substance use disorder care in a facility is no longer medically necessary, the health insurer shall, within 24 hours, provide written notice to the insured and the insured’s physician of its decision and the right to file an expedited internal appeal of the determination.
(7) A health insurer shall review and make a determination with respect to the internal appeal within 24 hours and communicate the determination and the right to appeal that determination to the insured and the insured’s physician. If the determination is to uphold the denial, the insured and the insured’s physician have the right to file an expedited external appeal with the department pursuant to Article 3.5 (commencing with Section 10169), if filed with the department within 72 hours of receipt of the determination.
(8) If the health insurer’s determination is upheld by the department, the health insurer shall continue benefit coverage for 24 hours after the determination is made. The facility shall not bill the insured for an amount more than the insured’s applicable copayment, deductible, and coinsurance as applicable under the policy.
(9) Unless the insured chooses to leave the inpatient or residential facility, the insured shall not be discharged or released from the inpatient or residential facility until all internal and department appeals are exhausted.
(10) Before discharge, the facility shall provide the insured and the insurer with a written discharge plan describing the arrangements for additional services needed following discharge using “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related and Co-occurring Conditions” by the American Society of Addiction Medicine (ASAM), or subsequent nationally adopted placement criteria.
(11) For purposes of this section, all medical necessity review shall, consistent with Section 1374.721, utilize “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and Co-occurring Conditions” by ASAM, or subsequent nationally adopted placement criteria.
(b) For purposes of this section:
(1) “Concurrent review” includes any utilization review, as defined in Section 10144.52, that takes place concurrent with the provision of health care services to insureds.
(2) “Intensive outpatient services” and “partial hospitalization services” have the same meanings as defined in the ASAM Levels of Care.
(3) “Medically necessary” has the same meaning as “medically necessary treatment of a mental health or substance use disorder” as defined in Section 10144.5.
(4) “Prior authorization” includes any utilization review, as defined in Section 10144.52, that takes place before the provision of health care services to insureds.
(5) “Retrospective review” includes any utilization review, as defined in Section 10144.52, that takes place after the completion of health care services to insureds.
(6) “Substance use disorders” has the same meaning as defined in Section 10144.5.
(7) “Utilization review” has the same meaning as defined in Section 10144.52.
(c) The presence of additional related or unrelated diagnoses shall not be a basis to reduce or deny the benefits required by this section.

SEC. 4.
Section 10144.522 is added to the Insurance Code, to read:
10144.522.
On and after January 1, 2027:
(a) Except as provided in subdivision (b), for in-network health care services and benefits for outpatient services provided at programs certified pursuant to Chapter 7.1 (commencing with Section 11832) of Part 2 of Division 10.5, substance use disorder visits shall not be subject to concurrent or retrospective review of medical necessity or any other utilization management review.
(b) (1) The in-network health care services and benefits for the first 28 days of intensive outpatient or partial hospitalization services for substance use disorder shall not be subject to retrospective review of medical necessity, but may be subject to prior authorization for the 28-day initial treatment period, consistent with the standards in Sections 10144.4 and 10144.5 and subdivision (b) of Section 10169.3.
(2) The treatment plan subject to paragraph (1) is not required to include a specific number of days of any level of care. The initial treatment plan may include any number of days, for any level of care, including inpatient, residential, partial hospitalization, or intensive outpatient therapy, as determined by medical necessity, consistent with the standards in Sections 796.04, 10144.5, and 10144.52 and subdivision (b) of Section 10169.3.
(3) If a program physician determines that a level of care is no longer appropriate for an insured, or an insured voluntarily leaves a program to seek a different level of care, paragraph (1) does not apply to a subsequent treatment episode.
(4) An additional treatment episode that begins within 180 days after admission for the first episode of treatment is not subject to paragraph (1).
(c) The in-network health care services and benefits for day 29 and days thereafter of intensive outpatient or partial hospitalization services for substance use disorder may be subject to a concurrent or retrospective review of the medical necessity of the services, consistent with the standards in Sections 796.04, 10144.4, 10144.5, and 10144.52 and subdivision (b) of Section 10169.3.
(d) The presence of additional related or unrelated diagnoses shall not be a basis to reduce or deny the benefits required by this section.
(e) The facility shall not bill the insured for an amount more than the insured’s applicable copayment, deductible, and coinsurance as applicable under the contract.
(f) For purposes of this section, all medical necessity review shall, consistent with Section 1374.721, utilize “The ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and Co-occurring Conditions” by the American Society of Addiction Medicine, or subsequent nationally adopted placement criteria.

SEC. 5.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.