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Patients Demand California Enforce Its Landmark Mental Health Law

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Workers in red shirts and carrying protest signs walk in a tight crowd.
Kaiser Permanente mental health workers carry signs as they march in front of Kaiser Permanente San Francisco Medical Center on December 10, 2018. (Justin Sullivan/Getty Images)

California’s top health insurance authority faces mounting criticism and impatience from lawmakers and advocates who accuse the regulator of going easy on health insurers and failing to ensure they abide by a three-year-old law to provide timely mental health care to their consumers.

A barrage of complaints was lodged at an oversight hearing in Sacramento on Wednesday, just days after the Department of Managed Health Care relied on the same law to levy a historic $50 million fine against Kaiser Permanente for failing to provide timely mental health care.

A woman holds her hands together emphasising a point, wearing a black blazer and a green shirt.
Mary Watanabe, director of the Department of Managed Health Care, speaks to a Senate mental health oversight committee.

“I know everybody’s framing this as ‘I’m in the hot seat,’” Mary Watanabe, director of the department, told the Senate mental health committee. “I’m happy to be here. This is an issue that is deeply important and personal to me.”

The Department of Managed Health Care oversees 96% of the state’s commercial and government health plans covering 30 million Californians. In 2021, a new state law took effect, SB 855, which was designed to curb insurers’ ability to deny mental health and substance abuse treatments for arbitrary or cost reasons. Instead, the law requires them to use clinical guidelines established by nonprofit health associations.

However, clinicians and health administrators testified in the Senate that health plans continue to violate the law. They said Anthem and other insurers were relying on unqualified doctors who ignored the standards set by the American Society of Addiction Medicine when deciding how long a person could stay in residential treatment.

“You can’t send a podiatrist to determine whether a stage 4 liver cancer patient needs chemotherapy,” said Joan Borsten, executive director of Summit Estate Recovery Center, which runs rehabs in Saratoga and San Jose. “It’s essentially what they’re doing.”

She gave the example of a 40-year-old man, a father of two small children, who came to rehab when his wife kicked him out of the house because of his alcohol addiction. After two weeks, two doctors working for Anthem, including a geriatric psychiatrist, reviewed the man’s medical record and said he had to go home.

“If I had left residential treatment early, I probably would have relapsed, lost my job and my family,” the man told his clinicians.

Borsten’s team helped the patient appeal the decision to state regulators, who overturned the denial, saying he needed to stay in residential treatment and the insurer had to pay for it. Anthem declined to comment.

Since the new mental health parity law took affect, about two-thirds of addiction and mental health treatment appeals had the same outcome, with the insurer ordered to pay for treatment it initially denied, according to state data.

This is a backward system, patients argued. They shouldn’t be forced to wade through layers of bureaucratic red tape, when they’re at the most vulnerable time in their lives, to get the treatment insurers should have granted in the first place.

“No one should have to have specialized knowledge to get basic access to health care that we deserve, let alone that we also pay for,” said Rebecca Farmer, a Kaiser patient who said she faced weeks-long delays and “obstacle after obstacle” trying to get care for major depression, anxiety and ADHD.

She struggled through multiple attempts to get help from regulators and ultimately found a therapist on her own, whom she paid $4,000 per year, out of pocket, for treatment.

“The recent settlement aside, the Department of Managed Health Care has been an absent regulator,” she said, “allowing Kaiser and likely other health insurance companies to effectively withhold adequate and timely mental health care when we need it the most.”


In its defense, Kaiser’s CEO Greg Adams pointed to the sharp increase in demand for mental health care during and after the pandemic, coupled with clinician burnout and turnover, but also acknowledged its “shortcomings” and said the regulatory action “provides an opportunity for Kaiser Permanente and all health plans to step up in a new way, to ensure that we are meeting the mental health care needs of our communities.”

Several advocates who track the regulatory department testified that enforcement staff worked too slowly, resolving patient complaints in twice the time allowed by law and taking three years and counting to issue rules and regulations for SB 855 that would give insurers more clarity on their responsibilities under the law.

When it was her turn at the microphone, Watanabe, the director of the Department of Managed Health Care, addressed the complaints outlined during the hearing one by one.

SB 855 regulations? She expects them to be finalized this fall and take effect next April, she said, having been through several drafts and public comment periods.

Slow appeals process? These take time, she said. The department has to determine jurisdiction, obtain medical records, review them and get more information from the health plan. Cases are getting more complex. “It’s very nuanced and case-specific, but I appreciate the urgency and the need to move this as quickly as possible,” she said.

Are unqualified doctors determining addiction coverage? Doctors need to be trained on the nonprofit clinical guidelines and follow them, but we will not require them to be certified in addiction medicine, Watanabe said. There aren’t enough addiction specialists, and we don’t want to pull them out of the workforce, seeing patients, to do administrative jobs.

Too cozy with insurers? The $50 million fine against Kaiser was the largest in the regulator’s history, and Kaiser agreed to invest another $150 million in additional behavioral health services. This was the result of an investigation the department initiated after noticing an uptick in complaints from Kaiser patients, Watanabe said. They plan to do more nonroutine audits like this on top of its regular investigations into five commercial plans every year, starting with the largest insurers in the state.

“I want to make sure that all health plan enrollees in our jurisdiction have access to appropriate behavioral health services when they need them,” Watanabe concluded. “This is one of my highest priorities.”


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