AB2011 - Nonquantitative treatment limitations.

Enrolled August 26, 2026 Passed IN Senate August 20, 2026 Passed IN Assembly August 24, 2026 Amended IN Senate August 13, 2026 Amended IN Senate June 15, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2011 Introduced by Assembly Member Hart (Principal coauthor: Senator Wiener) (Coauthors: Assembly Members Patel and Pellerin) February 17, 2026 An act to amend Section 1374.76 of the Health and Safety Code, and to amend Section 10144.4 of the Insurance Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGEST AB 2011, Hart. Nonquantitative treatment limitations. 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 also provides for the regulation of health insurers by the Department of Insurance. Existing federal law, the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), requires group health plans and health insurance issuers that provide both medical and surgical benefits and mental health or substance use disorder benefits to ensure that financial requirements and treatment limitations applicable to mental health or substance use disorder benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical and surgical benefits. Existing state law requires an individual, small group, or large group health care service plan contract or health insurance policy to provide covered mental health and substance use disorder benefits in compliance with the MHPAEA and specified federal rules, regulations, and guidance. This bill would require the above-described contracts and policies to provide covered mental health and substance use disorder benefits in compliance with specified federal rules, regulations, and guidance as they existed on January 1, 2025. Because a violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. The bill would also require the departments to review provisions of the bill that conflict with or materially differ from federal regulations and collaborate with each other to issue guidance on compliance. 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. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. (a) The Legislature finds and declares all of the following: (1) Mental health conditions and substance use disorders affect millions of individuals and families across the United States and are among the leading causes of disability, lost productivity, preventable illness, and premature death. (2) Timely access to effective mental health and substance use disorder treatment is essential to individual well-being, family stability, workforce participation, public safety, and the overall health of communities. (3) Historically, health insurance coverage for mental health and substance use disorder benefits has been subject to discriminatory limitations, higher cost sharing, more restrictive utilization management practices, and narrower provider networks than coverage for medical and surgical benefits. (4) The federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was enacted to address these inequities by requiring that financial requirements and treatment limitations applicable to mental health and substance use disorder benefits be no more restrictive than those applied to medical and surgical benefits. (5) Despite the enactment of the MHPAEA, federal and state enforcement actions, parity compliance reviews, and consumer complaints have consistently demonstrated persistent and systemic noncompliance, particularly with respect to nonquantitative treatment limitations, including prior authorization, medical necessity standards, network composition, and reimbursement practices. (6) Inconsistent interpretation and application of parity requirements have contributed to ongoing barriers to care, including delays in treatment, denials of medically necessary services, provider shortages, and increased out-of-pocket costs for patients and families. (7) Following implementation of earlier federal parity regulations, federal agencies identified the need for additional clarification, specificity, and operational guidance to ensure that existing statutory parity requirements were applied consistently and effectively, particularly with respect to nonquantitative treatment limitations. (8) In 2024, federal agencies issued final rules interpreting and implementing the MHPAEA that clarified existing statutory obligations, articulated standards for evaluating parity compliance, and specified documentation, transparency, and analytical requirements necessary for effective enforcement. (9) The 2024 federal final rules, as published in the Federal Register Volume 89, Number 184 on September 23, 2024, emphasize that parity compliance must be demonstrated both as written and in operation, including through meaningful analysis of the impact of nonquantitative treatment limitations on access to mental health and substance use disorder benefits. (10) Strong parity protections are particularly critical for children and youth, older adults, individuals with disabilities, veterans, communities of color, rural residents, and others who face disproportionate barriers to accessing mental health and substance use disorder services. (11) Effective enforcement of mental health parity laws reduces preventable crises, including avoidable psychiatric hospitalizations, emergency department utilization, homelessness, incarceration, and overdose deaths, while supporting early intervention and recovery-oriented care. (12) Recent litigation challenging federal parity regulations has created uncertainty regarding the continued availability and enforceability of the protections articulated in the 2024 federal final rules, notwithstanding the underlying statutory requirements of the MHPAEA. (13) Under existing state law, including Section 10144.4 of the Insurance Code and Section 1374.76 of the Health and Safety Code, the Department of Insurance and the Department of Managed Health Care are responsible for enforcing mental health parity requirements and have authority to implement and administer parity laws consistent with their existing regulatory powers. (b) Based on the findings, the Legislature declares all of the following: (1) Full and faithful implementation of the MHPAEA is a matter of significant public interest and is essential to achieving equity in health care coverage and outcomes. (2) The 2024 federal final rules reflect authoritative interpretations of existing parity obligations and provide necessary clarity regarding how those obligations are to be evaluated, documented, and enforced. (3) It is the intent of the Legislature that the provisions enacted by this act be construed as codifying and preserving existing parity protections, not as establishing new health care benefit mandates or expanding the scope of required covered services. (4) It is further the intent of the Legislature to ensure continuity, stability, and enforceability of parity protections under state law in the event of any repeal, amendment, or invalidation of federal parity regulations. (5) This act affirms and clarifies the authority of the Department of Insurance and the Department of Managed Health Care, consistent with their existing statutory powers, to issue regulations, guidance, and enforcement actions necessary to implement and enforce mental health parity requirements. (6) By codifying these standards in state law, the Legislature seeks to promote transparency, accountability, and effective oversight of parity compliance, while avoiding unnecessary duplication, disruption, or additional administrative burden. SEC. 2. Section 1374.76 of the Health and Safety Code is amended to read: 1374.76. (a) A large group health care service plan contract shall provide all covered mental health and substance use disorder benefits in compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Public Law 110-343) and all rules, regulations, and guidance issued pursuant to Section 2726 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26), as those rules, regulations, and guidance existed on January 1, 2025. (b) An individual or small group health care service plan contract shall provide all covered mental health and substance use disorder benefits in compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Public Law 110-343), all rules, regulations, and guidance issued pursuant to Section 2726 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26), as those rules, regulations, and guidance existed on January 1, 2025, and Section 1367.005. (c) (1) To the extent that a provision of this section is determined to impose requirements that conflict with or materially differ from federal regulations, that provision shall be reviewed by the department. In collaboration with the Department of Insurance, the department shall issue guidance to health care service plans on compliance with this section based on the conflict or material difference. (2) Any guidance issued by the department pursuant to paragraph (1) shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). (d) This section may be implemented utilizing existing resources of the department or upon appropriation of sufficient funds in the annual Budget Act or another measure providing funding. SEC. 3. Section 10144.4 of the Insurance Code is amended to read: 10144.4. (a) A large group health insurance policy shall provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Public Law 110-343) and all rules, regulations, and guidance issued pursuant to Section 2726 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26), as those rules, regulations, and guidance existed on January 1, 2025. (b) An individual or small group health insurance policy shall provide all covered mental health and substance use disorder benefits in compliance with the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Public Law 110-343), all rules, regulations, and guidance issued pursuant to Section 2726 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26), as those rules, regulations, and guidance existed on January 1, 2025, and Section 10112.27. (c) (1) To the extent that a provision of this section is determined to impose requirements that conflict with or materially differ from federal regulations, that provision shall be reviewed by the department. In collaboration with the Department of Managed Health Care, the department shall issue guidance to insurers on compliance with this section based on the conflict or material difference. (2) Any guidance issued by the department pursuant to paragraph (1) shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). (d) This section may be implemented utilizing existing resources of the department or upon appropriation of sufficient funds in the annual Budget Act or another measure providing funding. SEC. 4. 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.