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STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
45 Fremont Street, 21st Floor
San Francisco, California 94105
REG-2013-00006 November 22, 2013
INITIAL STATEMENT OF REASONS
MENTAL HEALTH PARITY
INTRODUCTION
California Insurance Commissioner Dave Jones will hold a public hearing to consider regulations to implement and make clear California Insurance Code section 10144.5, as enacted by Assembly Bill 88 (Thompson, 1999). The date, time, and location for the public hearing, as well as applicable contact information, are set forth in the Notice of Proposed Action for this rulemaking.
AB 88, California's Mental Health Parity Act ("MHPA" or "Act"), added section 10144.5 to the California Insurance Code, which requires all health plans and insurers within the scope of the Act to provide coverage for the diagnosis and medically necessary treatment of the enumerated severe mental illnesses, including autism, subject to the stated condition. It is also codified in Health and Safety Code Section 1374.72, in virtually identical terms. The Insurance Code specifies that "every policy of disability insurance that covers hospital, medical or surgical expenses in this state . . . shall provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses of a person of any age, and of serious emotional disturbance of a child . . ." Insurance Code § 10144.5. Autism is included in the list of conditions for which medically necessary treatment is mandated, subject to financial terms and conditions that are applied equally to all benefits under the policy.
The Legislature adopted the MHPA to remedy a history of inadequate insurance coverage for mental illnesses.1 The genesis for passage of the MHPA was legislative recognition that autism and the other nine listed severe mental conditions are seriously disabling and that inadequate coverage for their treatment results in significant social harm. The Legislature specifically found that insurers' failure to cover adequate treatment shifts the burden to state and local governments by forcing policyholders to seek treatment from local Regional Centers and other public agencies.2 In the historical and statutory notes of the legislation, the drafters stated that inadequate treatment "causes relapses and untold suffering as well as homelessness . . . and other significant social problems experienced by individuals with mental illness and their families." They concluded: "The failure to provide adequate coverage for mental illnesses in private health insurance policies has resulted in significant increased expenditures for state and local governments."3
SPECIFIC PURPOSE AND REASONABLE NECESSITY OF REGULATION; PROBLEM TO BE ADDRESSED; ANTICIPATED BENEFITS
The purpose of the proposed regulation is to help bring an end to the problem of improper insurer delay and denial of medically necessary treatment for individuals with autism. The proposed regulation seeks to ensure that private insurers comply with the MHPA and fulfill their obligation to provide all medically necessary treatments and services to California's children with autism, subject to financial terms and conditions applicable to all benefits under the policy. Another objective of the proposed regulations is to interpret SB 946 (2011, Steinberg). The regulation will accomplish these objectives by interpreting and making more specific the MHPA and providing guidance to industry, stakeholders and consumers about the scope of the MHPA's provisions as they relate to autism treatment.
The benefits anticipated from adoption of the proposed regulations for children and families include the cessation of improper denials of medically necessary treatment for autism and the elimination of unreasonable delays in providing these treatments, which are more likely to be successful when they are begun early. Coverage of early intervention through behavioral, speech, and occupational therapy will enable children with autism to improve in intelligence quotient, cognitive ability, receptive and expressive language skills, and adaptive behavior; and will lessen maladaptive, tantrum or self-injurious behaviors. Other anticipated benefits from adoption of the proposed regulation include the expectation that children will receive improved diagnoses from autistic disorder to pervasive developmental disorder (PDD), and a significant minority of children will recover from autism, resulting in lessening their needs for governmental services throughout their lifetimes.

Providing Clear Guidance to Industry, Stakeholders and Consumers on the Requirements of the MHPA

The proposed regulations have the primary objective of helping to bring an end to the pattern of improper insurer delay and denial of medically necessary treatment for individuals with autism. The proposed regulations make clear the obligations of private insurers under the MHPA to provide medically necessary treatment and services, subject to financial terms and conditions applicable to all benefits under the policy. Furthermore, the regulation seeks to provide guidance to industry, stakeholders and consumers about the scope of the MHPA's provisions as they relate to autism treatment specifically.

Establishing Medical Necessity as the Metric of What Services Must Be Covered

While the MHPA applies to several different diagnoses, the proposed regulations are limited to PDD or autism. Substantively, the proposed regulations benefit insurers and enhance fairness and consistency of decision making by clarifying that medical necessity is the test of whether services must be covered - if treatment of services is not medically necessary, neither the proposed regulations nor the MHPA require that the services of treatment be covered. However, it is conceivable that the regulation could be construed to require coverage when the treatment or services is not medically necessary. Therefore, the proposed regulations expressly do not preclude insurers from utilizing case management, utilization review, and similar techniques.

Prohibition on Annual Visit and Dollar Limits for Medically Necessary Treatment

The proposed regulations further seek to ensure that individuals with autism receive speech and occupational therapy as well as behavioral health treatment subject to certain prohibitions on limiting such services. The proposed regulations specifically prohibit annual visit limits, which are not financial terms or conditions as illustrated in subdivision (c) of the MHPA. Additionally, the proposed regulations prohibit annual dollar limits on such treatments and services which are not equally applicable to all benefits under the policy. Thus, the proposed regulations prohibit these two limitations with respect to autism and counteract insurers' continued imposition of unreasonable visit and dollar limits on ABA therapy, speech and occupational therapies and other vital treatments and services necessary to the health of individuals with autism.

Prohibition on Denials of Behavioral Health Treatment (BHT)

The proposed regulations also help ensure that behavioral health treatment for PDD or autism shall be covered in the same manner and subject to the same requirements. The proposed regulations make clear that BHT for PDD or autism is a requirement under both the MHPA and Insurance Code section 10144.51 (SB 946) and further require that coverage for BHT of a patient diagnosed with PDD or autism must be provided if it is medically necessary, subject to only financial terms and conditions that are equally applicable to all benefits under the policy. The proposed regulations specifically prohibit insurers from denying or delaying BHT on the grounds that such treatment is experimental, investigational or educational. Furthermore, a prohibition against conditioning medically necessary BHT on insurer-imposed cognitive, developmental or IQ testing is proposed to ensure that individuals with PDD or autism receive prompt treatment, without unreasonable delays. Such denials and delays of BHT are inconsistent with the MHPA and SB 946 (Insurance Code sections 10144.5 and 10144.51).

Protection of Public Health

The benefits anticipated to result from the adoption of the proposed regulations include the protection of public health as the provision of medically necessary therapies to California consumers with autism will transform the lives of young children and save state government millions of dollars over the lives of these children as they age. Furthermore, parents of individuals with autism will benefit by being more available to take on full- or part-time work as care for autistic children is coordinated and provided by insurers.


The Proposed Regulation Will Help Ensure that Autism Is Treated by Effective, Established Therapies
The benefits anticipated from this proposed regulation are the timely provision and coverage of medically necessary treatments that can ameliorate the core deficits of autism, saving the State enormous sums and enhancing the health and wellbeing of children with autism and their families. Behavioral health treatment is particularly useful in improving the condition of individuals with autism. ABA therapy, a type of behavioral health treatment, is defined as "the design, implementation, and evaluation of systemic instructional and environmental modifications to promote positive social behaviors and reduce or ameliorate behaviors which interfere with learning and social interaction."4 The remarkable success of behavioral therapy in substantially increasing IQ scores and improving cognitive ability, receptive and expressive language skills, and adaptive behavior, and enabling some children to achieve recovery from autism. The proposed regulation will enable many more children to receive and benefit from this life-changing therapy.
Research demonstrates that early intervention is vital to effective treatment of autism, indicating that treatment should begin immediately upon preliminary diagnosis.5 The National Institute for Mental Health recognizes that ABA is widely accepted as an effective treatment for individuals with autism. Effective programs will teach early communication and social interaction skills. In children younger than 3 years, appropriate interventions usually take place in the home or a child care center. These interventions target specific deficits in learning, language, imitation, attention, motivation, compliance, and initiation of interaction, and include behavioral, speech and occupational therapy.
The Department has examined several factors in its analysis of the benefits anticipated from this regulation, considering the long-term impact of treatment disruption and/or delay. The literature clearly establishes the efficacy of behavioral health treatment and the outcomes for children who undergo treatment provide benchmarks for measuring future medical and non-medical costs and savings. One such study by Chasson, et al. shows the substantial benefits resulting from treatment and provides strong support for the need for prompt enactment of the proposed regulation. That study concluded that upon receiving appropriate treatment, 47% of children with autism recover "typical" function, 40% make "significant" improvement, and just 13% make little progress.6 See Figure 1 below.

Figure 1: Chasson, et al.: Cost Comparison of Early Intensive Behavioral Intervention and Special Education for Children with Autism.


Another study titled "The Lifetime Distribution of the Incremental Societal Costs of Autism"7 calculates the lifetime societal costs associated with autism, including medical and non-medical costs, as well as lost productivity of both the diagnosed and his or her caretakers (parents). This study measured the lifetime per capita incremental societal cost of autism at $3.2 million, where lost productivity and adult care are the largest components. These costs are discounted in 2003 dollars.
In a 2009, Jon Hockenyos of Resources for Hope produced a Benefit-Cost analysis based on these two studies, among others, that show the difference in lifetime societal cost between Chasson's categories.8 The results are significant and are included in Figure 2 below.

Figure 2: Categorized lifetime costs


These analyses demonstrate that minimizing treatment disruption results in better outcomes for children which, in turn, results in significant lifetime societal cost savings. Children who are treated immediately upon diagnosis stand the best chance of falling into Chasson's "Typical Function" category. Widespread early intervention with these proven therapies, as a result of the proposed regulation, will enable more autistic children to learn in school and succeed in family and community life.
While an exact cost based on the length of treatment delay is unavailable, it is clear that a significant treatment disruption or delay has unacceptable financial consequences for the State of California. This is, of course, in addition to the moral and ethical challenges raised by delaying and disrupting treatment with full knowledge of the lifetime consequences associated with that decision for children, families, and society. It is for these reasons that the Department believes that it is in the best interests of California's government and the health and welfare of its citizens to minimize treatment delay and disruption by promulgating the proposed regulations.

The Proposed Regulation Will Help Curtail or Eliminate Pervasive and Harmful Insurer Delays and Denials of Treatment
Disputes over whether certain types of treatments are medically necessary or a covered health care service often delay necessary treatment for children with autism. CDI has tracked cases involving delays and denials of behavioral health treatment, as well as speech and occupational therapy, for children with this serious disorder since 2009. During that time, CDI has sent 23 cases related to denials of behavioral health and other autism treatment to external clinicians for Independent medical review. Of those, 19 denials were overturned by the reviewers, finding in favor of the insured child receiving treatment.
Individual delays in obtaining treatment for 40 closed cases average 5.8 months, nearly half a year; delays currently average 10.33 months, or almost a year, for those cases which are still open. Another 12 of those complaints are either awaiting submission of additional information or are in process. The cumulative total delays on open and closed cases combined total 12,864 days, or 35.2 years. These lengthy delays all involve treatment that experts agree is most effective when provided in early childhood. The benefits anticipated from the proposed regulation include significantly lessening or eliminating these delays and denials of treatment and substantially improving treatment efficacy and outcomes.

The Proposed Regulation Will Benefit Children with Autism As Well As State Entities and Taxpayers


California leads the nation with 72,000 individuals with a form of autism spectrum disorder (ASD).9 As the numbers of individuals with ASD increase, more burdens and financial demands are placed on the State's budget. Early behavioral intervention treatment not only protects children with autism, but reduces demands on limited public resources and thereby lessens the burden on taxpayer-provided healthcare networks and other support services.

At present, those burdens are enormous, as is explained in B.3.d above, because of the immense need for treatment and services. Between 22% and 41% of individuals with ASD need assistance with basic life skills. The 2012 Autism Society of California survey showed that 41% of individuals with ASD need assistance with dressing, 37% need assistance with toileting and 22% need assistance with feeding. Families also reported communication is an area of struggle for many individuals with ASD: 49% cannot indicate when they are sick; 29% cannot request items they need; and 26% cannot request items they want.10

Moreover, those needs are increasingly unmet because of declining access to Regional Center services. The percentage of families accessing services through the DDS has decreased since 2009. In 2009, 77% of California families said they were Regional Center clients, while only 70% were in 2012.11 Navigating the Regional Center service system provides yet another obstacle for parents and children to overcome: 81% of parents rated it moderate to very hard to navigate while 51% gave the medical health insurance system that rating.12

Insurer failures and refusals to provide therapy have exacerbated the public health crisis facing California. Despite the 1999 passage of the MHPA, expressing the California Legislature's purpose to shift ASD therapy costs away from state and local governments to private insurers, health insurers still pay the smallest percentage of overall ASD therapy costs. Parents report that school districts are currently funding 48% of ABA, speech, occupation and physical therapies. Regional Centers pay 22% of the bill - yet another significant cost to the State. Parents pay roughly 17% out-of-pocket for ASD therapies. Finally, health insurance companies, despite the MHPA, are still only paying 9-13%.13

The need for services for autism continues throughout the affected individuals' lives. The percentage of adults with ASD who are employed or attending day programs has decreased from 29% in 2009, to 20% in 2012. The number of employed ASD adults was 42% in 2009 and dropped to 25% in 2012. This means that there is a sharp increase in the number of ASD adults with no employment or day program. The percentage of ASD adults accessing Adult Services has decreased; only 65% of ASD adults reported being a current Regional Center client, compared to 90% of individuals under age 18.

When treatment and services are not effectively and timely provided, still further costs accrue from involvement of ASD individuals with yet other governmental entities. California's justice system is now encountering adults and youths with ASD: 14% of families had interactions with police, including school police; 5% reported severe behavior and interactions with Child Protective Services, neighbors, or school personnel; 3% said the person with ASD had been entered into a behavioral unit or confined under Section 5150; 3% received a warning from Law Enforcement; 1% were arrested; and 1% spent time in jail or a juvenile detention center.14

This crisis is imposing staggering costs on many of California's governmental entities and on its taxpayers. Through a pattern of failing to provide mandated services, insurers have shifted the costs of ASD therapies and services to California's public education system and school districts. Insurer failures to provide services have had devastating fiscal impacts on limited governmental and taxpayer resources, requiring the promulgation of the proposed regulations to rectify.

Sections 2562.1 through 2562.4 of the proposed regulations set forth prohibitions on limits for medically necessary treatments and services, including behavioral health treatment for individuals with autism. The specific purpose of each adoption and the rationale for the Commissioner's determination that each adoption is reasonably necessary to carry out the purpose for which it is proposed is set below.


Section 2562.1
This section limits the ambit of the regulations to the scope of the underlying statute (Insurance Code section 10144.5) and ensures that the proposed action addresses the problem, and secures the benefits, identified in this document. For this reason the products excluded by Subdivision (g) of Insurance Code section 10144.5 are also excluded by Subdivision (b) of Section 2562.1 of the proposed regulations. Further, though the MHPA by its terms applies to the broad category of "disability insurance, it was necessary in Subdivision (b) of Section 2562.1 of the proposed regulations to restrict the scope of the subject regulations to the slightly narrower category of "health insurance" as that term is defined in Insurance Code section 106. (Insurance Code section 10144.5, subd. (a).) This is true because the disability insurance products that are excluded from the definition of health insurance by Insurance Code section 106 are of such a limited and specialized nature that they cannot reasonably be expected to provide the kind of general coverage for health care which would trigger the requirement of parity for coverage for the parity diagnoses indicated in Subdivisions (d) and (e) of Insurance Code section 10144.5.
While the MHPA applies to several different diagnoses, the problem sought to be addressed by the proposed regulations is limited to pervasive developmental disorder or autism. The Department is unaware of similar problems encountered with respect to other parity diagnoses.Accordingly, it is reasonably necessary in Subdivision (a) of proposed Section 2562.1 to limit the scope of the regulations to pervasive developmental disorder or autism, to ensure that the regulations satisfy the necessity standard of the Administrative Procedure Act.
It is reasonably necessary in Subdivision (c) of Section 2562.1 to state that, for purposes of new Article 15.2, the term "behavioral health treatment" (BHT) has the same definition in the proposed regulation as in Insurance Code section 10144.5, because in order to satisfy the clarity and consistency standards of the Administrative Procedure Act the regulations must make clear to regulated entities what the required treatment is, and the requirements set forth in the regulations must be consistent with underlying statute.
Section 2562.2
Section 2562.2 will benefit insurers and enhance the fairness and consistency of decision making by clarifying that medical necessity is the test of whether services must be covered; if treatment or services are not medically necessary, neither this section nor the underlying statutes require that the treatment or services be covered. Accordingly it is reasonably necessary to state this fact in Subdivision (a). Otherwise, it is conceivable that the regulations could be construed to require coverage when the treatment or services in question are not medically necessary.
Subdivision (b) of proposed Section 2562.2 specifies that nothing in the regulation shall be construed to preclude an insurer from utilizing case management, utilization review, and similar techniques in accordance with Insurance Code sections 10144.5 and 10144.51. This language is reasonably necessary because, in the provision of the benefits required by Insurance Code sections 10144.5 and 10144.51, insurers are permitted by the express terms of those statutes to engage in the activities and techniques listed in Paragraphs (b)(1) through (b)(7) of proposed Section 2562.2. (Ins. Code section 10144.5, subd. (f)(3); Ins. Code section 10144.51, subd. (f).)
Section 2562.3
The Department of Insurance has received a petition for rulemaking, dated August 21, 2012, requesting that we interpret the MHPA. (Tab Q in the rulemaking file.) In interpreting the MHPA, the Department has maintained consistency with the construction of that statute set forth in Harlick v. Blue Shield of California (2011) 686 F.3d 699. While Harlick interpreted Health and Safety Code section 1374.72, and not the Insurance Code, that section is substantially identical to Insurance Code section 10144.5; both sections are part of the MHPA and were added by the same bill: AB 88 (1999, Thomson). The only difference between the two statutes is that the Health and Safety Code section applies to health care service plans or contracts, whereas the Insurance Code section refers to policies of disability insurance; while the names of the products differ, the substantive rules set forth in the act are identical and are expressed in identical language. It is reasonably necessary that the Department's interpretation be consistent with the construction set forth in Harlick, because Harlick is persuasive authority in this State, and the Department has chosen not to ignore the "rule of statutory construction that identical language appearing in separate statutory provisions should receive the same interpretation when the statutes cover the same or analogous subject matter." (People v. Cornett (2012) 53 Cal. 4th 1261, 1269, fn. 6 (citing Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 201; Walker v. Superior Court (1988) 47 Cal.3d 112, 132).)
In Harlick, Blue Shield denied coverage for medically necessary treatment or services for a patient diagnosed with anorexia nervosa, a condition that, like pervasive development disorder or autism, is specified in Subdivision (d) of Insurance Code section 10144.5 and of Health and Safety Code section 1374.72 (both sections are referred to collectively hereinafter as "the Parity Act"). The court ruled:
(686 F.3d at 715-16.) Nonetheless, there is a statutory exception to the rule that insurers must provide all medically necessary benefits to patients diagnosed with a condition set forth in Subdivision (d) of the Parity Act (each such condition, together with the conditions indicated in Subdivision (e) of the Parity Act, is referred to hereinafter as a "parity diagnosis"). Subdivision (c) of the Parity Act lists three examples of terms and conditions that are to be applied equally to all benefits under the policy (or plan): maximum lifetime benefits, copayments, and individual and family deductibles. This list is a nonexclusive list, introduced by the words "shall include, but not be limited to, the following." However, since each example is a financial term or condition, we follow the rule of statutory construction known as ejusdem generis to interpret Subdivision (c) as limiting to financial terms and conditions the restrictions on the benefits that the Parity Act requires insurers to provide to individuals diagnosed with a parity diagnosis. Again, the California Supreme Court teaches that this:
The Harlick court also acknowledges this exception to the rule set forth in the Parity Act that insurers must cover all medically necessary treatment of parity diagnoses:
(686 F.3d at 711.) Accordingly, financial terms or conditions that are "applied equally to all benefits under the disability insurance policy" may be applied to treatment or services rendered to an individual with a parity diagnosis.
Consistent with Harlick, Paragraph (b)(1) of proposed Section 2562.3 interprets the MHPA by specifically prohibiting annual visit limits, which are not financial terms or conditions and so do not fit within the stated exception. Similarly, paragraph (b)(2) prohibits annual dollar limits, copayments, deductibles and other financial benefits that are not equally applicable to all benefits under the policy; though an annual dollar limits, a copayment and a deductible are each a financial term or condition, an annual dollar limit that does not apply equally to all benefits under the policy does not fit within the exception set forth in Subdivision (c) of the Parity Act, because by the express terms of that subdivision, the exception applies only to terms and conditions that are applied equally to all benefits under the policy. (The requirement in stated in paragraph (b)(1) is not qualified by the phrase "applicable to all benefits under the policy" that appears in paragraph (b)(2).) Of course, the MHPA prohibits not just these two limitations with respect to an individual with pervasive developmental disorder or autism but a wider range of practices with respect to all the parity diagnoses. However, it is necessary to explicitly state in Subdivision (b) of proposed Section 2562.3 that annual visit limits, as well as financial terms and conditions not applicable to all benefits under the policy, are prohibited with respect to pervasive developmental disorder or autism, because the Department has become aware that insurers have engaged in these practices on a widespread basis with respect to that diagnosis, resulting in the serious harm to health, individuals, families and general welfare that is demonstrated in this document.
The protections provided by the MHPA apply only to medically necessary treatment of parity diagnoses. For this reason, it is necessary to state in Paragraphs (a)(1) and (a)(2) of proposed Section 2562.3 these conditions to the rule stated in Subdivision (b) of that section. However, it is also necessary to state in Paragraph (a)(3) of proposed Section 2562.3 the condition that the treatment or services in question must be rendered for the purpose of treating the parity diagnosis. This is true because the protections afforded by the MHPA apply not to all medical treatment or services rendered to an individual who has been diagnosed with a parity diagnosis but only to the diagnosis and treatment of the particular condition indicated in Subdivision (d) or (e) of the Parity Act with which the individual has been diagnosed. The MHPA does not speak to whether other treatment or services rendered to such an individual must be covered.
It is reasonably necessary to expressly specify in Subdivision (c) of Section 2562.3 that speech therapy, occupational therapy and behavioral health treatment are included within the meaning "treatment or services" as that phrase is used in Subdivision (a) of the same section. This is true because patients diagnosed with pervasive developmental disorder or autism have encountered barriers to obtaining legally mandated coverage for these treatments and services in particular, and pervasive developmental disorder or autism is the parity diagnosis to which the regulations apply.
Section 2562.4
It is reasonably necessary in Subdivision (a) of proposed Section 2562.4 to provide an additional limitation on the scope of this section, in order to avoid a consistency problem that would result if the scope of the proposed regulation exceeded that of the underlying statute, namely Insurance Code section 10144.51.
Subdivision (a) of Insurance Code section 10144.51 states that BHT for pervasive developmental disorder or autism shall be covered in the same manner and subject to the same requirements as provided by Insurance Code section 10144.5. As with coverage for other, unspecified kinds of treatment or services rendered for the purpose of treating a parity diagnosis, the MHPA, together with Insurance Code section 10144.51, requires that coverage for BHT of a patient diagnosed with pervasive developmental disorder or autism must be provided if it is medically necessary, subject only to financial terms and conditions that are equally applicable to all benefits under the policy.
Accordingly, there are many impermissible reasons that an insurer could cite for denying or unreasonably delaying coverage for BHT. However, it is reasonably necessary that Subdivision (b) of proposed Section 2562.4 should address the three such impermissible reasons that have come to the attention of the Department and are known to cause the harm demonstrated in this document.
Paragraph (b)(1) prohibits insurers from citing the need for cognitive, developmental or IQ testing as a barrier to coverage. The condition that the patient must have a certain IQ, for instance, is not a financial term or condition and is therefore prohibited, as explained above, by the Parity Act. Further, the only conceivable reason why coverage for BHT could rationally be withheld on the basis of IQ is that a low-IQ patient could not benefit from BHT. However, whether a particular treatment is indicated for any individual patient is a question of medical necessity and not a question of coverage. In any particular case, BHT is either medically necessary or it is not. In cases where BHT is medically necessary for an individual diagnosed with autism, the law is that it shall be covered, regardless of the patient's IQ. For this reason it is reasonably necessary that the proposed regulations preclude IQ testing as a barrier to coverage for BHT.
Similarly, it is necessary that Paragraph (b)(2) of proposed Section 2562.4 should prohibit insurers from denying or delaying coverage on the basis that BHT is experimental, investigational or educational, because these, again, are reasons why a particular medical treatment might not be efficacious or, in other words, might not be medically necessary. Either the particular BHT regime in question is medically necessary or it is not. In cases where it is medically necessary, the law is that the BHT shall be covered. At any rate, BHT in general is categorically not experimental, investigational or educational; otherwise the requirement that it be covered where medically necessary would not have been codified in statute.
Indeed, Paragraph (b)(1) of Insurance Code section 10144.51 provides a very extensive definition of BHT. Built into this definition are various specifications as to the qualifications and employment relationships of the personnel who can provide BHT. The statute authorizes "qualified autism service provider[s]" to administer BHT. (section 10144.51, subd. (c)(1)(b)(i).) The term "qualified autism service provider," in turn, is defined to be either a licensed person or a person, entity or group certified by a national entity, such as the Behavior Analyst Certification Board, that is accredited by the National Commission for Certifying Agencies. (Section 10144.51, subd. (c)(3)(A).) Accordingly, licensure is expressly not required. For this reason it is necessary that the proposed regulations bar insurers from imposing the nonlicensure of the provider or supervisor of BHT as a barrier to coverage when the BHT is provided or supervised by a person, entity or group certified by a national entity, such as the Behavior Analyst Certification Board, that is accredited by the National Commission for Certifying Agencies.
The mandate stated in Insurance Code sections 10144.5 and 10144.51 is that policies "shall provide coverage." Ins. Code section 10144.5, subd. (a); Ins. Code section 10144.51, subd. (a).) It is obvious that an indefinite delay in providing the required coverage would, in effect, amount to a prohibited denial of coverage. However, because early treatment is essential to success, the Department interprets the requirement to provide coverage to mean that insurers are required to provide coverage with a reasonable degree of promptness. For this reason, when an insurer unreasonably delays coverage, citing a legally invalid reason for the delay in making its coverage decision, it cannot accurately be said to have complied with the mandate. However, in certain cases, delays in making coverage decisions do not amount to a failure to provide required coverage. Because there are an infinite number of permutations of conceivable fact patterns, it is impossible to spell out a bright line rule that would definitively distinguish permissible delays from impermissible ones. Accordingly, it is reasonably necessary to impose a reasonableness standard in Subdivision (b) of proposed Section 2562.4; even when an insurer delays its coverage decision, citing as the basis for the delay a reason that is expressly identified as invalid in regulations that are binding upon the insurer, such a delay will not be interpreted as a violation of underlying statute unless the delay is unreasonable. Given the critical nature of the timing of medically necessary BHT for autism as explained in this document - and the serious harm that will result when treatment is not provided during critical periods in patients' development - even the slightest delay in providing required coverage would appear to be unwarranted. However, in the absence of a bright line rule, a reasonableness standard is appropriate.
It is reasonably necessary that Paragraph (b)(4) of the proposed regulations should put insurers on notice that they cannot delay or deny ABA therapy delivery on the grounds that BHT will be, is being, should be or will be provided by a Regional Center contracting with the Department of Developmental Services. Insurance Code section 10144.51 requires health care insurers to provide coverage for behavioral health treatment for PDD or autism. Therefore, the provision of ABA therapy cannot be denied or delayed on the grounds that the Regional Centers must or will pay for those services.
It is reasonably necessary in Paragraph (b)(5) of the proposed regulations to restate the rule articulated in Paragraph (b)(1) of Section 2562.3 of the proposed regulations, interpreting the MHPA, codified at Insurance Code section 10144.5: Annual visit limits may not be imposed. This is true because Insurance Code section 10144.51(a)(1) requires insurers to provide coverage for BHT in the same manner and subject to the same requirements as provided in Section 10144.5.
Similarly, it is reasonably necessary to state in Paragraph (b)(6) that - aside from enforcing deductibles or other financial terms or limits that are equally applicable to all benefits under the policy, which insurers are entitled to do - coverage for medically necessary BHT may not be delayed or unreasonably denied for any reason.
As discussed above, proposed Section 2562.4 interprets the MHPA by citing by way of example certain additional limitations on coverage for medically necessary BHT on grounds which are inconsistent with Insurance Code section 10144.5 or recently enacted Insurance Code section 10144.51, and which have come to the Department's attention. It is reasonably necessary to make clear in Paragraph (b)(6) that the list of example prohibited limitations on coverage for BHT set forth in Section 2562.4 of the proposed regulations is not an exclusive list. Instead, coverage for BHT must be provided in the same manner as with all other medically necessary treatment or services for PDD or autism pursuant to the MHPA.
The specific benefits anticipated from adoption of the regulation for children and families include the cessation of improper denials of medically necessary treatment for autism and the elimination of unreasonable delays in providing these treatments, which are more likely to be successful when they are begun early. Coverage of early intervention through behavioral, speech, and occupational therapy will enable children with autism to improve in intelligence quotient, cognitive ability, receptive and expressive language skills, and adaptive behavior; and will lessen maladaptive, tantrum or self-injurious behaviors. Other anticipated benefits from adoption of the proposed regulation include the expectation that children will receive improved diagnoses from autistic disorder to pervasive developmental disorder, and a significant minority of children will recover from autism, resulting in lessening their needs for governmental services throughout their lifetimes.
SPECIFIC TECHNOLOGIES OR EQUIPMENT
Adoption of the proposed regulations would not mandate the use of specific technologies or equipment.
IDENTIFICATION OF STUDIES
The Department is relying upon the following technical, theoretical, or empirical studies, reports, or similar documents in promulgating the proposed regulations. The table below outlines the source relied upon and its location in the Department's rulemaking file.


Document Name

Tab in Rulemaking File

Easter Seals Disability Services, 2012 State Autism Profiles California

A

Commission's Report to the Governor and Legislature: An Opportunity to Achieve Real Change for Californians with Autism Spectrum Disorders

B

Prevalence of Autism Spectrum Disorders-Autism and Developmental Disabilities Monitoring Network

C

Autism in California 2012 Survey

D

Problem Behavior Interventions for Young Children with Autism: A Research Synthesis

E

Long-term Outcome for Children with Autism Who Received Early Intensive Behavioral Treatment

F

Karen Fessel, Dr PH, Autism Health Insurance Project, letter to CDI Deputy Commissioner Patricia Sturdevant, Oct. 24, 2012.

G

Behavioral Treatment and Normal Educational and Intellectual Functioning in Young Autistic Children

H

Intensive Behavioral Treatment at School for 4- to 7-Year Old Children with Autism: A 1-Year Comparison Controlled Study Behavior Modification

I

Early Intervention in Autism

J

Challenges in Evaluating Psychosocial interventions for Autism Spectrum Disorders

K

Randomized, Controlled Trial of an Intervention for Toddlers With Autism: The Early Start Denver Model

L

Analysis of the Evidence Base for ABA and EIBI for Autism

M

UnitedHealthcare Medical Policy, Intensive Behavioral Therapy for Autism Spectrum Disorders, effective October 1, 2012

N

Market conduct examination of Aetna Life Insurance Company's claims handling practices for ABA and speech therapy for individuals with ASD for the period from June 1 through March 21, 2011

O

Blue Shield of California Life & Health Insurance Company, Vita Shield Plus 2900 Generic Rx Policy

P

Letter Petition for Rulemaking from Vice President of Government Affairs Anne Eowan, Association of California Life & Health Insurance Companies, to Insurance Commissioner Dave Jones

Q

DEPARTMENT OF DEVELOPMENTAL SERVICES
PROPOSALS TO ACHIEVE $200 MILLION GENERAL FUND SAVINGS, MAY 2012

R

Issue Alert: Senate Bill 946 Council Meeting Notice/Agenda

S

Implementation of Mental Health Parity Lessons from California

T

Self-Reported Unmet Need for Mental Health Care After California's Parity Legislation

U

Diagnostic History and Treatment of School-Aged Children with Autism Spectrum Disorder and Special Health Care Needs

V

The Adverse Effects and Societal Costs of Denying, Delaying, or Inadequately Providing EIBI for Children with Autism

W

Communication Intervention for Children with Autism: A Review of Treatment Efficacy

X

A New Social Communication Intervention for Children with Autism, Pilot Randomized Controlled Treatment Study Suggesting Effectiveness

Y

Auditory-Motor Mapping Training as an Intervention Facilitate Speech Output in Non-Verbal Children with Autism: A Proof of Concept Study

Z

"Can I Join the Club?" A Social Integration Scheme for Adolescents with Asperger Syndrome

1

The Potential Effectiveness of Social Skills Group for Adults with Autism

2

Teaching theory of mind: A New Approach to Social Skills Training for Individuals with Autism

3

Pediatric Feeding Disorders: A Quantitative Synthesis of Treatment Outcomes

4

The Costs of Autism

5

The Lifetime Distribution of the Incremental Societal Costs of Autism

6

Governor's Budget Summary 2012-13: K Thru 12 Education

7

Special Education Financing in California: A Decade After Reform

8

California Early Start Facts at a Glance

9

Autism Services Goes to Those Who Fight the Hardest

10

Building Our Future: Educating Students on the Autism Spectrum

11

Expert Interview: The Legal Rights of Children with Autism: An Expert Interview with Jill G. Escher

12

Information Brief: Unique Factors Impacting Regional Centers' Budget Growth

13

Autism Spectrum Disorders - Changes in the California Caseload - An Update: June 1997 - June 2007

14

Financial Issues Associated with Having a Child with Autism

15

McHenry v. PacificSource Health Plans, No. CV-08-562-ST, slip op

16

Intervention for Autism Spectrum Disorders

17

Benefit-Cost Analysis of Appropriate Intervention to Treat Autism

18

Letters from Michael J. Daponde, Legal Counsel for Anthem Blue Cross Life and Health Insurance

19

California Department of Developmental Services, November 2011 Regional Center Local Assistance Estimate for Fiscal Years 2011-12 and 2012-13 (Governor's Budget),

20

Cost-Benefit Estimates for Early Intensive Behavioral Intervention for Young Children with Autism: General Model and Single-State Case

21

Cost Comparison of Early Intensive Behavioral Intervention and Special Education for Children with Autism

22

Report of the Joint Legislative Audit and Review Commission To The Governor and the General Assembly of Virginia-Assessment of Services For Virginians With Autism Spectrum Disorders

23

Children with Special Health Care Needs: A Profile of Key Issues in California

24

Economic Impact Assessment of Mental Heath Parity Regulations, Department of Insurance

25

SPECIFIC TECHNOLOGIES OR EQUIPMENT
Adoption of these regulations would not mandate the use of specific technologies or equipment.
ALTERNATIVES
The Commissioner has considered and rejected the following reasonable alternatives to the proposed regulations:
Alternative #1. Retain the status quo.
The Department has considered not adopting the proposed regulations. Some suggest leaving things as they are would be less burdensome and more cost-effective for insurers than the proposed regulations, and equally effective or more effective in carrying out the purpose of the proposed regulations. The only method that would remain would be to continue to wait for incoming consumer complaints and bring enforcement actions against insurers to comply with the requirements of the MHPA.
Reasons for rejecting Alternative #1
This alternative would least fulfill the goal of providing medically necessary treatment for individuals with ASD. CDI enforcement staff would spend more time processing complaints, and the complaint resolution process would increase the delay in actual treatment for ASD. Furthermore, CDI has been petitioned by the Association of California Healthcare and Life Insurance Companies (ACHLIC) to promulgate regulations regarding the requirements for coverage relating to the treatment of ASD.
Alternative #2. Include all severe mental illnesses enumerated in the MHPA as part of the scope of this regulation.
The Department considered including all of the severe mental illnesses enumerated in the MHPA as part of the scope of this regulation.
Reasons for rejecting Alternative #2
There are no industry requests for regulations to address the application of the statute to those disorders. Complaints that CDI has received for other disorders covered under the MHPA do not indicate a systemic problem such as the one insureds are experiencing for coverage of treatment or services for autism or PDD.
ECONOMIC IMPACT ON SMALL BUSINESS

The Commissioner has identified no reasonable alternatives to the presently proposed regulations, nor have any such alternatives otherwise been identified and brought to the attention of the Department, that would lessen any impact on small business. Although performance standards were considered as an alternative, they were rejected, in part, because the kind of risks from which the regulations seek to protect consumers cannot practicably be gauged by means of a performance standard.


PRENOTICE DISCUSSIONS

The Commissioner has not conducted prenotice public discussions pursuant to Government Code section 11346.45, because it is unlikely that the interested parties - namely health insurers, who have been abiding by the corresponding emergency regulations for over six months - will find the modifications made by the Department to the language of the proposed permanent regulations to be too complex or multifarious to be reviewed easily during the comment period.


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1 Cal. Assem. Comm. on Health, Committee Analysis of A.B. 88: Mental Health Parity Act, Reg. Sess. (Mar. 9, 1999), available at http://www.leginfo.ca.gov/pub/99-00/bill/asm/ab_0051-0100/ab_88_cfa_19990309_113734_asm_comm.html ("The author argues that this bill will prohibit discrimination against people with biologically-based mental illnesses, dispel artificial and scientifically unsound distinctions between mental and physical illnesses, and require equitable mental health coverage among all health plans and insurers to prevent adverse risk selection by health plans and insurers. The author stresses that mental illness is treatable in a cost-effective manner and that the failure of the health care system to provide adequate treatment for persons with mental illness has been costly not only to mentally ill individuals and their families, but to society as a whole and particularly to state and local governments.").

2 Cal. Assem. Comm. on Appropriations, Committee Analysis of A.B. 88: Mental Health Parity Act, Reg. Sess. (Mar. 24, 1999), available at http://www.leginfo.ca.gov/pub/99-00/bill/asm/ab_0051-0100/ab_88_cfa_19990324_184728_asm_comm.html.

3 A.B. 88 Mental Health Parity Act § 1(b)(2)-(3), 1999 Leg., Reg. Sess. (Cal. 1999) (stating that "limitations in coverage for mental illness in private insurance policies have resulted in inadequate treatment for persons with these illnesses").

4 Cal. Gov't Code § 95021(d)(1) (West 2012).

5 See Scott Cross et al., The Adverse Effects and Societal Costs of Denying, Delaying, or Inadequately Providing EIBI for Children with Autism (2012), 137-42.

6 Gregory S. Chasson et al., Cost Comparison of Early Intensive Behavioral Intervention and Special Education for Children with Autism, 16 J. of Child and Fam. Studies 401, 401-13 (2007).

7 Michael L. Ganz, The Lifetime Distribution of the Incremental Societal Costs of Autism, 161 Archives of Pediatric and Adolescent Med. 343, 343-49 (2007).

8 Jon Hockenyos, Benefit-Cost Analysis of Appropriate Intervention To Treat Autism (2009), available at http://www.dads.state.tx.us/autism/publications/USAutismCost-BenefitAnalysisNovember2009.pdf.

9 Autism Soc'y of Cal., Autism in California 2012 Survey (2012), available at https://autismsocietyca.org/uploads/ASC_Survey_April_2012.pdf. Autism Society of California, Autism in California 2012 Survey (April, 2012), https://autismsocietyca.org/

uploads/ASC_Survey_April_2012.pdf.

10 Id.

11 Id.

12 Id. at 4.

13 Id. at 5.

14 Id. at 4.

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