What Health Plans Need to Know: California DMHC All Plan Letter on Implementing Senate Bill 855

On January 5, 2021, the California Department of Managed Health Care (DMHC) issued an All Plan Letter regarding the newly passed California Senate Bill 855 (Wiener, Stats. 2020, ch. 151 § 2) (SB 855).¹ SB 855 became effective on January 1, 2021. It amends the California Health and Safety Code and Insurance Code to expand state coverage requirements for mental health and substance use disorder services, and it requires health plans and insurers to adopt a standardized definition of “medical necessity” for those treatments.²

The All Plan Letter provides an overview of SB 855, identifies clinical criteria and guidelines that health plans³ must apply when determining the medical necessity of behavioral health treatments under the new law, and outlines compliance filing requirements. In this “Health Update,” we review key takeaways important for all those who do business in California, whether they are located within or outside of the state.

A. DMHC interpretive guidance

a. Required criteria and guidelines

Health and Safety Code Section 1374.721(b) requires plans conducting utilization review of covered mental health, substance use disorder and behavioral health services to apply “the most recent versions of treatment criteria developed by the nonprofit professional association of the relevant clinical specialty.” The DMHC provides, in Attachment A, a list of criteria and clinical guidelines that must be applied “to any and all relevant initial denials or modifications” for relevant services beginning January 1, 2021.⁴ Acknowledging that policy changes and training may take time, the DMHC instructs that by March 1, 2021, plans must submit an amendment filing detailing all changes to policies and procedures made in compliance with Section 1371.721.

Plans applying the most recent versions of the criteria in Attachment A will be considered by the DMHC to be in “safe harbor” compliance with Section 1374.721(b).⁵ That criteria includes the following:

• Substance Use Disorder (any age):
  - American Society of Addiction Medicine, ASAM Criteria, 3rd Edition (2013)
• Mental Health Disorders (age 18 years or older):
  - American Association of Community Psychiatrists, Level of Care Utilization System (LOCUS), Version 20
• Mental Health Disorders (ages 6 to 17 years):
  - American Association of Community Psychiatrists, Child and Adolescent Level of Care Utilization System (CALOCUS), Version 20; or
• American Academy of Child and Adolescent Psychiatry, Child and Adolescent Service Intensity Instrument (CASII) 2019
• Mental Health Disorders (ages 0 to 5 years):
  - American Academy of Child and Adolescent Psychiatry, Early Childhood Service Intensity Instrument (ESCII)
• Gender Dysphoria:
  - World Professional Association for Transgender Health (WPATH) Standards of Care, Version 7

Plans applying other nonprofit association criteria for conditions not specified in Attachment A will be required to demonstrate that those criteria comply with Section 1374.721(b).⁶

b. Formal education program requirements

Under the new Health and Safety Code Section 1374.721(e), the DMHC requires all plans to “ensure proper use” of the clinical criteria identified in Attachment A by sponsoring formal education programs by the nonprofit clinical specialty associations and disseminating training materials.⁷ Plans may develop these education programs separately or through a “coordinated effort.”⁸

c. Ability to contract with entities offering clinical criteria services

Plans may continue to contract with entities that offer clinical criteria services, but only to the extent that plans demonstrate that those entities apply the criteria identified in Attachment A and do not apply “different, additional, conflicting, or more restrictive” criteria than that set forth in Section 1374.721(b).⁹ Amendments to contracts and scopes of work demonstrating contracted entities’ compliance with this standard must be filed with the DMHC.¹⁰

In addition, under Health and Safety Code Section 1374.721(c), plans may use utilization review criteria that are outside the scope of sources identified in Section 1374.721(b), or that relate to advancements in technology or types of care not covered by those criteria, so long as the criteria are developed in accordance with Section 1374.721(a). If a plan purchases or licenses criteria under Section 1374.721(c), the plan must verify that the criteria were developed in accordance with Section 1374.721(a) by submitting a Notice of Material Modification to the DMHC.¹¹

B. DMHC compliance deadlines and filings

Plans must comply with Health and Safety Code Sections 1374.72 and 1374.721 by January 1, 2021.¹² Compliance must be demonstrated in filings submitted on the following schedule:

• DMHC Filing – Compliance with Section 1374.72.¹³
  - Deadline: February 1, 2021.
  - The plan must describe actions taken to comply with SB 855, describe documents requiring revisions and a timeline for the revisions, and affirm steps taken to comply with coverage and medical necessity definition requirements.
• DMHC Filing – Compliance with Section 1374.721.¹⁴
  - Deadline: March 1, 2021.
  - The plan must affirm that new nonprofit professional clinical criteria have been implemented, affirm how the plan will comply with Section 1374.721(e), file any contracts with nonprofit professional associations and other requirements.
• DMHC Filing – Amendment Filing Re: Revised Policies and Procedures.¹⁵
  - Deadline: March 1, 2021.
  - The plan must provide a road map for policy changes and describe changes relating to Section 1374.72, Section 1374.721 or both.
• DMHC Filing – Plan Documents.¹⁶
  - Deadline: Rolling, in the regular course of business under Health and Safety Code Section 1352 and DMHC guidelines.
  - The plan must describe changes relevant to SB 855 in evidence of coverage, plan-to-plan contracts, administrative service agreements and other documents.
• Interrater Reliability Reports.¹⁷
  - Deadline: Initial reports available no later than July 1, 2021.
  - The plan must develop and run interrater reliability reports under Health and Safety Code Sections 1374.721(e)(5)–(7).

The complete All Plan Letter contains additional information necessary for compliance. It may be reviewed on the DMHC website. All health plans operating in California—and attorneys advising them—should carefully review these changes to state regulation of mental health and substance use disorder coverage and take appropriate steps to comply with the DMHC’s instructions and deadlines for implementation of the new law.

_{¹ DMHC APL 21-002 – Implementation of Senate Bill 855, Mental Health and Substance Use Disorder Coverage (Jan. 5., 2021) (“All Plan Letter”), available at https://www.dmhc.ca.gov/licensingreporting/healthplanlicensing/allplanletters.aspx.}

_{² For additional background on key provisions of SB 855, see “Takeaways From California’s New Health Insurance Rules,” available at https://www.law360.com/articles/1319452/takeaways-from-calif-s-new-health-insurance-rules.}

_{³ The All Plan Letter applies to all commercial full-service health plans and specialized healthcare service plans operating in California that are regulated by the DMHC and that cover mental health, substance use disorder or behavioral health services. It does not apply to Medicare Advantage plans, Medi-Cal managed care plans or Medicare Supplement products.}

_{⁴ See All Plan Letter at 4, Attachment A.}

_{⁵ Id. Attachment A.}

_{⁶ See id.}

_{⁷ Id. at 4.}

_{⁸ See id.}

_{⁹ See id. at 4–5.}

_{¹⁰ Id. at 5.}

_{¹¹ Id.}

_{¹² See id. at 3–6.}

_{¹³ Id. at 2, 6.}

_{¹⁴ Id. at 2, 6–7.}

_{¹⁵ Id. at 3, 7.}

_{¹⁶ Id. at 3, 7–8.}

_{¹⁷ Id. at 5.}