SB1280 - Health care coverage for mental health and substance use disorders.

Amended IN Senate March 24, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1280 Introduced by Senator Valladares February 20, 2026 An act to amend Section 1367 1374.72 of the Health and Safety Code, and to amend Section 10144.5 of the Insurance Code, relating to health care. LEGISLATIVE COUNSEL'S DIGEST SB 1280, as amended, Valladares. Health care service plan requirements. Health care coverage for mental health and substance use disorders. 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 disability insurers by the Department of Insurance. Existing law requires a health care service plan contract or disability insurance policy issued, amended, or renewed on or after January 1, 2021, to provide coverage for medically necessary treatment of mental health and substance use disorders under the same terms and conditions applied to other medical conditions. Existing law requires a plan or insurer, if services for the medically necessary treatment of a mental health or substance use disorder are not available in network within the geographic and timely access standards set by law or regulation, to arrange coverage to ensure the delivery of medically necessary out-of-network services and any medically necessary followup services that, to the maximum extent possible, meet those geographic and timely access standards. Existing law prohibits an enrollee or insured from paying an out-of-network provider more than the same cost sharing that the individual would pay for the same covered services received from an in-network provider. This bill would require a health care service plan or disability insurer to reimburse a noncontracting individual health professional the greater of the average contracted rate or 125% of the amount Medicare reimburses for similar services, as specified, for out-of-network services that are provided as described above. The bill would prohibit an enrollee or insured from owing the health professional more than the in-network cost-sharing amount, and would prohibit the health professional from billing or collecting an amount from the enrollee or insured that is more than that amount. The bill would require any communication from the health professional to an enrollee or insured, before the receipt of information about the amount the individual owes for services provided, to include a notice informing the individual that it is not a bill and not to pay until they are informed by their plan or insurer of any applicable cost sharing. The bill would require a plan or insurer to inform an enrollee or insured and the noncontracting individual health professional of the in-network cost-sharing amount owed by the individual at the time of payment by the plan or insurer to the health professional. Under the bill, the payments made by the plan or insurer and enrollee or insured pursuant to these provisions would constitute full payment. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program. 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. 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. Existing law requires a health care service plan to meet specified requirements, and requires a health care service plan contract to provide to subscribers and enrollees specified basic health care services. This bill would make technical, nonsubstantive changes to those provisions. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO YES Local Program: NO YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 1374.72 of the Health and Safety Code is amended to read: 1374.72. (a) (1) Every health care service plan contract issued, amended, or renewed on or after January 1, 2021, that provides hospital, medical, or surgical coverage shall provide coverage for medically necessary treatment of mental health and substance use disorders, under the same terms and conditions applied to other medical conditions as specified in subdivision (c). (2) For purposes of this section, “mental health and substance use disorders” means a mental health condition or substance use disorder that falls under any of the diagnostic categories listed in the mental and behavioral disorders chapter of the most recent edition of the International Classification of Diseases or that is listed in the most recent version of the Diagnostic and Statistical Manual of Mental Disorders. Changes in terminology, organization, or classification of mental health and substance use disorders in future versions of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders or the World Health Organization’s International Statistical Classification of Diseases and Related Health Problems shall not affect the conditions covered by this section as long as a condition is commonly understood to be a mental health or substance use disorder by health care providers practicing in relevant clinical specialties. (3) (A) For purposes of this section, “medically necessary treatment of a mental health or substance use disorder” means a service or product addressing the specific needs of that patient, for the purpose of preventing, diagnosing, or treating an illness, injury, condition, or its symptoms, including minimizing the progression of that illness, injury, condition, or its symptoms, in a manner that is all of the following: (i) In accordance with the generally accepted standards of mental health and substance use disorder care. (ii) Clinically appropriate in terms of type, frequency, extent, site, and duration. (iii) Not primarily for the economic benefit of the health care service plan and subscribers or for the convenience of the patient, treating physician, or other health care provider. (B) This paragraph does not limit in any way the independent medical review rights of an enrollee or subscriber under this chapter. (4) For purposes of this section, “health care provider” means any of the following: (A) A person who is licensed under Division 2 (commencing with Section 500) of the Business and Professions Code. (B) An associate marriage and family therapist or marriage and family therapist trainee functioning pursuant to Section 4980.43.3 of the Business and Professions Code. (C) A qualified autism service provider certified by a national entity as defined in Section 4999.200 of the Business and Professions Code or a qualified autism service professional as defined in Section 4999.201 of the Business and Professions Code. (D) An associate clinical social worker functioning pursuant to Section 4996.23.2 of the Business and Professions Code. (E) An associate professional clinical counselor or professional clinical counselor trainee functioning pursuant to Section 4999.46.3 of the Business and Professions Code. (F) A registered psychologist, as described in Section 2909.5 of the Business and Professions Code. (F) A psychologist licensed pursuant to Chapter 6.6 (commencing with Section 2900) of Division 2 of the Business and Professions Code. (G) A registered psychological associate, as described in Section 2913 of the Business and Professions Code. (H) A psychology trainee or person supervised as set forth in Section 2910 or 2911 of, or subdivision (d) of Section 2914 of, the Business and Professions Code. (5) For purposes of this section, “generally accepted standards of mental health and substance use disorder care” has the same meaning as defined in paragraph (1) of subdivision (f) of Section 1374.721. (6) A health care service plan shall not limit benefits or coverage for mental health and substance use disorders to short-term or acute treatment. (7) All medical necessity determinations by the health care service plan concerning service intensity, level of care placement, continued stay, and transfer or discharge of enrollees diagnosed with mental health and substance use disorders shall be conducted in accordance with the requirements of Section 1374.721. This paragraph does not deprive an enrollee of the other protections of this chapter, including, but not limited to, grievances, appeals, independent medical review, discharge, transfer, and continuity of care. (8) A health care service plan that authorizes a specific type of treatment by a provider pursuant to this section shall not rescind or modify the authorization after the provider renders the health care service in good faith and pursuant to this authorization for any reason, including, but not limited to, the plan’s subsequent rescission, cancellation, or modification of the enrollee’s or subscriber’s contract, or the plan’s subsequent determination that it did not make an accurate determination of the enrollee’s or subscriber’s eligibility. This section shall not be construed to expand or alter the benefits available to the enrollee or subscriber under a plan. (b) The benefits that shall be covered pursuant to this section shall include, but not be limited to, the following: (1) Basic health care services, as defined in subdivision (b) of Section 1345. (2) Intermediate services, including the full range of levels of care, including, but not limited to, residential treatment, partial hospitalization, and intensive outpatient treatment. (3) Prescription drugs, if the plan contract includes coverage for prescription drugs. (c) The terms and conditions applied to the benefits required by this section, that shall be applied equally to all benefits under the plan contract, shall include, but not be limited to, all of the following patient financial responsibilities: (1) Maximum annual and lifetime benefits, if not prohibited by applicable law. (2) Copayments and coinsurance. (3) Individual and family deductibles. (4) Out-of-pocket maximums. (d) If (1) For the purposes of this subdivision, the following terms have the following meanings: (A) “Arrange coverage to ensure the delivery of medically necessary out-of-network services” includes providing services to secure medically necessary out-of-network options that are available to the enrollee within geographic and timely access standards. (B) “Average contracted rate” means the average of the contracted commercial rate paid by the plan or delegated entity for the same or similar services in the geographic region. (2) If services for the medically necessary treatment of a mental health or substance use disorder are not available in network within the geographic and timely access standards set by law or regulation, the health care service plan shall arrange coverage to ensure the delivery of medically necessary out-of-network services and any medically necessary followup services that, to the maximum extent possible, meet those geographic and timely access standards. As used in this subdivision, to “arrange coverage to ensure the delivery of medically necessary out-of-network services” includes, but is not limited to, providing services to secure medically necessary out-of-network options that are available to the enrollee within geographic and timely access standards. The enrollee shall pay no more than the same cost sharing that the enrollee would pay for the same covered services received from an in-network provider. (3) For services rendered pursuant to this subdivision, unless otherwise agreed to by the noncontracting individual health professional and the plan, the plan shall reimburse the greater of the average contracted rate or 125 percent of the amount Medicare reimburses on a fee-for-service basis for the same or similar services in the general geographic region in which the services were rendered. (4) An enrollee shall not owe the noncontracting individual health professional more than the in-network cost-sharing amount for services provided pursuant to this subdivision as determined by the plan. (5) A noncontracting individual health professional shall not bill or collect an amount from the enrollee for services rendered pursuant to this subdivision that is more than the in-network cost-sharing amount as determined by the plan. (6) Any communication from the noncontracting individual health professional to the enrollee before the receipt of information about the amount the enrollee owes for services provided as described in this subdivision shall include a notice in 12-point or larger bold type stating that the communication is not a bill and informing the enrollee that the enrollee shall not pay until they are informed by their plan of any applicable cost sharing. (7) At the time of payment by the plan to the noncontracting individual health professional, the plan shall inform the enrollee and the noncontracting individual health professional of the in-network cost-sharing amount owed by the enrollee. (8) A payment made by the health care service plan to the noncontracting health care professional pursuant to this section, in addition to the applicable cost sharing owed by the enrollee, shall constitute a payment in full for services rendered. (e) This section shall not apply to contracts entered into pursuant to Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code, between the State Department of Health Care Services and a health care service plan for enrolled Medi-Cal beneficiaries. (f) (1) For the purpose of compliance with this section, a health care service plan may provide coverage for all or part of the mental health and substance use disorder services required by this section through a separate specialized health care service plan or mental health plan, and shall not be required to obtain an additional or specialized license for this purpose. (2) A health care service plan shall provide the mental health and substance use disorder coverage required by this section in its entire service area and in emergency situations as may be required by applicable laws and regulations. For purposes of this section, health care service plan contracts that provide benefits to enrollees through preferred provider contracting arrangements are not precluded from requiring enrollees who reside or work in geographic areas served by specialized health care service plans or mental health plans to secure all or part of their mental health services within those geographic areas [Text truncated for display. Full text available on Congress.gov.]