The legislation would overhaul the process to appeal denials of coverage by private health insurance companies.

By Mark Kreidler, Capital & Main

This story is produced by the award-winning journalism nonprofit Capital & Main and co-published here with permission.

The height of the pandemic triggered waves of anxiety and emotional stress for isolated young people across the country, including those in California. But long before COVID was a common term, the need for greater access to youth mental health services in the Golden State had been growing.

Between 2016 and 2020, the percentage of children ages 3 to 17 in California diagnosed with anxiety or depression skyrocketed 70%, according to data analyzed by the Annie E. Casey Foundation. Among the 50 states and the District of Columbia, only South Dakota experienced a more dramatic rise during that period. And the pandemic was just beginning.

So when Lishaun Francis and her colleagues at the policy advocacy group Children Now undertook listening tours around the state over the past couple of years, they thought they had a pretty good idea of the stories they would encounter.

What they learned not only surprised them, however, but may lead to the passage of a new law.

“In conversations with parents, we heard again and again about denials of treatment for their kids’ mental health needs,” said Francis, the organization’s senior director for behavioral health. “Their kids needed help, but health plans were saying no — repeatedly.”

That’s not a complete shock. California health care providers have lagged significantly in providing mental health services to those who need them, and for profit-centered plans, it’s often cheaper to pay the state fines for running inadequate programs than it is to actually build them out to the needed capacity. (The health plans say they can’t hire enough mental health professionals; unions representing some of those workers contend that poor working conditions, not a talent-pool shortage, is to blame.)

So how many kids are denied care, and how often? Those are great questions. But under California law, commercial health plans aren’t required to disclose the number of times they deny treatment or service to their enrollees. “We have no idea what that number actually is,” Francis said.

Families can appeal such denials, of course — but by law those appeals must first go back to a family’s own insurer for review. It is only after the inhouse process plays out, which can take months, that the state of California might become involved. That timetable doesn’t work for kids suffering mental or behavioral health issues, advocates say.

A proposal currently making its way through the State Legislature would dramatically change that. Under Senate Bill 238, sponsored by Children Now and carried by State Sen. Scott Wiener (D-San Francisco), any person in California up to age 26 who is denied mental health or substance use disorder treatment would see their case automatically appealed to the state’s Independent Medical Review program — through which such health plan denials have been routinely overturned.

Cases being rerouted directly to IMR is precisely what the health plans don’t want to see, because they lose control of the process. Their advocates are fighting the proposed legislation furiously. But legislation like SB 238 may be the only way to learn how many young people have seen their mental or behavioral health needs denied by their families’ private plans. It also might be the best way to get them access to care.

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The independent review process is as straightforward as it is chilling to the health insurers. When an individual appeal reaches the state-run program, an independent medical expert is assigned to review it and determine whether the insurer’s denial of treatment was appropriate.

Time and again, the denials are reversed. According to a spokesman for the California Department of Managed Health Care (DMHC), which oversees the program, 68% of people who filed an appeal of any kind to IMR wound up receiving the service or treatment they had requested. In a recent op-ed, Wiener and Francis noted that more than half of the total cases before review were for a mental disorder diagnosis. (The DMHC figure is through Dec. 31 of last year, the most recent set of data.)

Francis said that 79% of youth mental health denials in California were overturned in 2022, meaning eight of every 10 appeals were successful. And the DMHC’s 68% figure includes a telling nugget: 17% of that total is in the form of self-reversals by the health plans once an IMR appeal has been filed.

But the safest bet of all is that most cases never get that far. In part, that’s because of the labyrinthine process currently in place.

Health insurers have long known that most enrollees never file an appeal. Researchers at the Kaiser Family Foundation reported in 2021 that HealthCare.gov consumers appealed fewer than two-tenths of 1% of their denied in-network claims. And when they did, they lost more often than not: The health insurers — who, again, are the ones hearing the appeals of their own decisions — upheld their denials 59% of the time.

There are lots of reasons individuals and families don’t appeal — and health insurers count on all of them. “By placing the burden on consumers to initiate the appeals process, the status quo pushes out children whose parents (don’t appeal) due to language barriers, health literacy, demanding jobs or other extenuating circumstances,” Wiener said in introducing his bill.

The equity aspect is impossible to ignore. Working families, families for whom English is a second language, those who understand little about their health plan — all are far less likely to traverse the long appeals process with their own providers. Fewer still even know the last-chance independent review program exists, advocates say.

Wiener’s office quoted DMHC call center records showing that between 2020 and 2022, 94% of independent appeals were filed in English and roughly 4% in Spanish, numbers that don’t remotely reflect California’s diverse population and health care reality. “If you speak any other language,” Francis said, “you’re in trouble.”

Wiener’s proposed legislation eliminates that burden by automatically routing the cases to IMR. And based on past numbers, a massive percentage of the denials will be overturned.

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The California Association of Health Plans lobbies on behalf of 43 full-service insurers that cover nearly 28 million Californians, and it represents the industry behemoths: Kaiser Permanente, Anthem Blue Cross, Health Net, Blue Shield and UnitedHealth, among others.

From the start, the CAHP has staunchly opposed SB 238. In an email distributed in June, the association urged a “no” vote by legislators, saying the proposal would “delay needed mental health care, putting patients at risk” by bypassing the health plans’ own “efficient secondary review process.”

Further, “SB 238’s complex administrative requirements will burden the health care system, driving up administrative costs, leading to higher health care premium costs passed on to all Californians,” the association’s email said. The CAHP suggested that enrollees might be forced to seek “alternative, potentially more expensive forms of care while waiting for (IMR) approvals.” A spokeswoman for CAHP declined further comment when contacted by Capital & Main.

The notion of cost certainly comes into play, as the legislation would require the health plans — not the state — to pay for the IMR process. In terms of the program’s capacity to take on an influx of new reviews, meanwhile, “The DMHC is evaluating the potential impact of the changes proposed by SB 238,” the department spokesperson said.

Francis suggested that the health plans, understanding the numbers and knowing how often they’re likely to lose independently reviewed appeals and foot the bill, might react proactively by approving more coverage in the first place — a desired outcome for youth advocates.

In the end, though, those plans are built to make money. They don’t enjoy the prospect of losing any of it. And even if the bill makes it all the way to the governor’s desk, that doesn’t mean they’re out of the fight.

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Gov. Gavin Newsom’s administration has put money behind his commitment to improve the state’s youth mental health picture. Last summer, the governor announced a $4.7 billion investment in mental health and substance abuse services for children and young people. Last December brought word of $480 million in grants for youth services.

At the same time, Newsom and some of the state’s biggest health players are old friends. Both UnitedHealth and Blue Shield have made significant contributions to Newsom in various forms through the years. Both were awarded contracts to do work for the state during COVID’s peak period. And although Newsom campaigned on a pledge to steer California toward a single-payer health system, he abandoned the idea — hugely unpopular with the health giants — once in office.

“I do wonder what the governor will do if SB 238 reaches his desk,” Francis said, an uncertainty shared by several others who spoke for this story but asked not to be identified.

Although it’s not clear that the bill will get that far, those who support it are cautiously optimistic. It passed out of the Assembly Health committee June 27 on a 12-3 vote, putting it on track for votes by the full Assembly and Senate later this summer.

“We’re experiencing a massive surge in youth mental health problems, and we need to do everything in our power to expand access,” Wiener said. One place to begin is determining the full scope of health plan denials of that access. An automatic independent review, no matter how problematic for insurers, would do just that.

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