Starting in January 2021, California residents with substance use disorders and mental health concerns will now have greater access to coverage. The amendment to SB-855 expands on legislation from September 2020 that requires state-based insurers to follow nationally-recognized and standardized medical criteria when determining reimbursement and coverage rates. Such regulations will now apply to the diagnosis and treatment of all mental health concerns, including substance use disorders.

In the event that a health insurance company and a referring provider do not agree upon the terms of treatment, insurance companies will be required to follow the standard national guidelines. This means insurers will not have as much determination over the coverage and reimbursement for frequency, dosage, and level of intervention. This may range from medication to residential treatment to outpatient therapy.

Legislation also extends to cover the terms of a diagnosis, so if certain diagnoses require 60 days of treatment in a residential rehabilitation facility, then state-based insurance companies in California will be expected to provide coverage for such an episode of care.

Such parity also applies to specific diagnoses that fall under the umbrella of mental health. Prior to this legislation, self-made verbiage from health insurers only required coverage for the treatment of nine “severe” mental diagnoses. This narrow list only covered common conditions such as schizophrenia, major depressive disorder, and bipolar disorder. This now extends to substance use disorders, behavioral conditions, and more broad mental health concerns such as Autism Spectrum Disorder (ASD) and Attention Deficit-Hyperactivity Disorder (ADHD), which may not have previously been eligible for coverage.

After recently surpassing one year since the start of the pandemic, a law such as this comes in good time. Many people are struggling with one or more mental health concerns that require some form of treatment or long-term management. It is expected that individuals will continue to reach out to providers in record numbers for assistance.

SB-855 will even help younger individuals with a range of concerns from mild to severe and complex. This also extends beyond previous insurance standards, which only warranted coverage for “significant emotional disturbances” in children.

Policy changes resulting from SB-855 will also limit waiting periods for individuals by requiring state-based health insurers to reimburse out-of-pocket visits at the in-network rate if people cannot access services in a timely manner.

California’s Mental Health Parity laws work to close large loopholes that have cost individuals a large amount of out-of-pocket expenses over the years. These changes give providers the power to make judgment calls based on patient needs rather than on the basis of insurance coverage.

While beneficial to California residents, it will be some time before similar legislation is in effect nationwide. In the meantime, insurers must build up their networks to avoid inadequacy fines and provider shortages. Contact TOG to safeguard your network the right way.