March 5, 2025
Dominique Town, Associate Director, Benefits Compliance
With the new year already underway, benefits managers and other plan administrators must turn their attention to recent legislative updates that will impact group health care service plans[1] regulated by the Department of Managed Health Care (“DMHC”). This article summarizes newly enacted statutes requiring immediate review of policies, procedures, and plan documents to ensure full compliance. Some of these changes include, without limitation, medication-assisted treatment, maternal mental screenings, and fertility coverage. Additionally, carriers and insurers must take steps to meet certain filing deadlines and implement necessary amendments, if applicable.
Employer Action Items
- Review and Update Plan Documents (effective by March 21, 2025): Ensure each Evidence of Coverage (“EOC”), provider contract, and disclosure form aligns with newly enacted statutes.
- Confirm Compliance Amendment Filings with Carriers (due by March 21, 2025): Confirm with carriers that group health plan’s “Compliance with 2024 Legislation” amendment has been submitted via e-Filing.
- Evaluate Prescription Drug Coverage (due by March 21, 2025): Group health plans offering outpatient prescription drug benefits must verify coverage for FDA-approved medication-assisted treatments, including naloxone and buprenorphine, without the application of prior authorization requirements.
- Prepare for Mental Health Screening Requirements (effective January 1, 2025): Ensure compliance with Assembly Bill 1936 (“AB 1936”), which mandates maternal mental health screenings during pregnancy and postpartum.
- Implement Infertility Coverage Updates (effective July 1, 2025): Large group plans[2] must provide expanded coverage for infertility treatments, including three (3) oocyte retrievals and unlimited embryo transfers per industry guidelines.
Summary
The 2024 California legislative session introduced several mandates affecting employee benefits, particularly in health plan administration. Some of the most significant changes include:
Prescription Drug Coverage Expansion (Effective January 1, 2025)
Assembly Bill 1842 (“AB 1842”) requires most health plans to cover at least one medication in each major category for opioid overdose reversal and substance use disorder treatment without prior authorization. Plans must update their utilization management policies accordingly and submit an Exhibit J-9 filing to demonstrate compliance. Insurers and/or carriers complete this exhibit requirement as part of their submission of utilization management policies to the DMHC on the plan sponsor’s behalf, if applicable. Plan sponsors and employers should confirm with carriers and/or insurers to determine if they are (1) subject to this requirement and (2) confirm the carriers’/insurers’ timely filing as fiduciary best practice.
Maternal Mental Health and Preventative Care Enhancements (Effective January 1, 2025)
Assembly Bill 1936 (“AB 1936”) mandates maternal mental health screenings during pregnancy and postpartum. Plans must integrate these screenings into their existing maternal health programs and notify providers of the new requirements. Additionally, Assembly Bill 2556 (“AB 2556”) requires enrollees to receive an annual notice concerning behavioral health screenings for children aged 8-18. Reach out to insurers/carriers to confirm compliance with both statutes. These measures aim to enhance California’s longstanding commitment to mental health parity within group health plans.
Infertility and Fertility Treatment Expansion (Effective July 1, 2025, with a possible delay until January 1, 2026)[3]
Senate Bill 729 (“SB 729”) significantly broadens fertility benefits by requiring large group plans to cover a minimum of three (3) completed oocyte retrievals and unlimited embryo transfers using single embryo transfer where recommended. Large group plans must revise their EOCs and disclosure forms to reflect this expanded coverage.
Emergency and Preventative Health Services (Effective July 1, 2025)
Assembly Bill (“AB 2843”) removes cost-sharing requirements for emergency and follow-up medical care for individuals treated after experiencing rape or sexual assault. Additionally, Senate Bill 339 (“SB 339”) mandates coverage for pre-exposure and post-exposure prophylaxis (PrEP and PEP, respectively) when provided by pharmacists, ensuring greater access to essential and life-saving preventative HIV treatments.
Artificial Intelligence (“AI”) Utilization in Healthcare Review (Effective January 1, 2025)
Senate Bill 1120 (“SB 1120”) establishes guidelines for using AI in utilization review processes. Plans utilizing AI-driven decision-making must ensure that determinations consider individual medical history and do not rely solely on population datasets. A licensed healthcare professional must review any denials based on medical necessity. As a compliance check, fiduciaries (e.g., plan sponsors and/or employers) should inquire about and confirm compliance by inquiring as to the guidelines used by carriers or insurers, especially regarding adverse benefit determination decisions.
In conclusion, employer plan sponsors and benefit plan administrators should engage with brokers, insurers (or carriers), and legal counsel to ensure all required updates are completed in accordance with the aforementioned deadlines. Consider adding to an annual fiduciary compliance checklist confirmation of insurers’ or carriers’ adherence to these requirements to ensure your plans are fully compliant and your participants receive full access to care as required by law. This practice will help avert time-consuming plan appeals and maintain a strong compliance posture with plan participants.
Additional Resources:
- All Plan Letter 24-023: Newly Enacted Statutes
- AB 1936: Maternal Mental Health Screenings
- AB 1842: Health Care Coverage – Medication-assisted Treatment
- AB 2556: Behavioral Health and Wellness Screenings – Notice
- SB 729: Health Care Coverage – Treatment for Infertility and Fertility Services
- AB 2843: Health Care Coverage – Rape and Sexual Assault
- SB 339: HIV Preexposure Prophylaxis and Postexposure Prophylaxis
- SB 1120: Health Care Coverage – Utilization Review
[1] California interprets “group health care service plans” to include employer-sponsored fully-insured group health plans (likely subject to ERISA and state insurance laws) within their purview. California Department of Managed Health Care, Types of Coverage, https://www.dmhc.ca.gov/HealthCareinCalifornia/TypesofCoverage.aspx#group (last visited February 3, 2025).
[2] “Large group plans” means a group health care service plan contract other than a contract issued to a small employer that offers health coverage to businesses with more than 100 employees. California Department of Managed Health Care, Key Terms, https://www.dmhc.ca.gov/HealthCareinCalifornia/PremiumRateReview/KeyTerms.aspx (last visited February 3, 2025); California Department of Managed Health Care, AB 731 Large Group Guidance (5/1/23), https://www.insurance.ca.gov/0250-insurers/0500-legal-info/0200-regulations/HealthGuidance/upload/CDI-AB-731-Large-Group-Filing-Information.pdf (last visited February 3, 2025).
[3] On September 29, 2024, Governor Newsom requested that the Senate postpone the effective date to January 1, 2026. Governor Gavin Newsom, Signing Message for Senate Bill 729 (Sept. 29, 2024), https://www.gov.ca.gov/wp-content/uploads/2024/10/SB-729-SIGNING-Message.pdf (last visited February 3, 2025).
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