By Peter Johnson

California recently passed a law expanding the requirements of existing behavioral health parity statutes to require that plans reimburse all “medically necessary” behavioral health treatment, including substance use disorder treatment, starting in 2021.

Plans will be required to base their decisions about medical necessity on evidence-based standards developed by nonprofit professional associations like the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5). Previously, plans were only required to provide coverage at parity for nine behavioral health disorders.

The DSM-5, considered to be the gold standard of psychiatric diagnostic criteria, contains hundreds of mental health disorders — which means that California plans will need to drastically expand their coding for behavioral health treatment.

California payers opposed the legislation. Charles Bacchi, the CEO of the California Association of Health Plans, wrote in an editorial in the San Francisco Chronicle that “the bill writes into California law a narrow definition of medical necessity that will disrupt the ability of physicians and therapists to determine what is clinically appropriate for their patients.”

However, providers have said the opposite problem exists — that insurers have turned down medically necessary care due to the payers’ internal standards. California behavioral health care providers and patients have found reimbursement rules arbitrary, and acute services have not been reimbursed at proper levels, according to a September 2020 study prepared by Georgetown University Professor JoAnn Volk for the California Health Care Foundation.

A managed care policy expert who spoke to AIS Health on background says that insurers opposed the legislation out of concern that they would have to pay for indefinite care of chronic behavioral health conditions. The expert pointed out that there’s limited data on the efficacy of long-term treatment for behavioral health conditions, and as a result, plans will struggle to implement the kind of quality and efficacy metrics for behavioral health providers that are standard practice in network design for physical care.

Volk agrees that the literature on chronic behavioral health care is still emerging, but she points out that plans cover a wide variety of chronic physical conditions.

“There are chronic care issues here, and issuers may say that it seems like a really open-ended treatment plan,” says Volk. “But that’s what they do with diabetes and other lifelong illnesses. In that regard, it’s not different.”