Updates and Resources for Providers Navigating Managed Care in California

Sara Jasper, JD
Staff Attorney
The Therapist
September/October 2021

California’s managed care delivery systems are complex, which often makes them difficult for even the most seasoned providers to navigate. This article provides an overview of the state’s managed care systems, reviews new laws intended to improve patients’ access to care, and offers resources to support providers and their patients. It will also discuss the types of audits managed care providers may be subjected to and explain how providers can lawfully respond to such audits.

Overview of California’s Managed Care
Delivery Systems
California’s managed care systems are responsible for delivering many of the health care services provided within the state. Within managed care systems, patients receive most of their health care through managed care plans. Managed care plans are made up of networks of providers, including psychotherapists. Managed care, however flawed, was conceived as a way to manage the costs, utilization, and quality of health care. California’s managed care systems are comprised of the following types of plans:

• Health Maintenance Organizations (HMOs)
• Preferred Provider Organizations (PPOs), Point of Service plans (POS), and Exclusive Provider organizations (EPOs)
• Medi-Cal Managed Care (for those who qualify based on low income)
• Medicare Advantage Plan (for seniors and the disabled)

These plans are controlled by state, and in some cases federal, entities. The Department of Managed Health Care (DMHC) is the state agency which regulates all of the HMOs in California, California Blue Cross and Blue Shield PPOs, most of the Medi- Cal managed care plans, and a few other kinds of health plans. The Department of Insurance (DOI) oversees most of the other insurance companies and their PPOs. The Department of Health Care Services (DHCS) is responsible for operating the Medi-Cal system in conjunction with the Centers for Medicare and Medicaid Services (CMS). CMS also regulates Medicare Advantage/HMO plans. Since it is rarely clear who providers and patients can turn to with coverage and claims questions when the managed care plans of are of no help, CAMFT has included a list of resources at the end of the article. See also Catherine Atkins’s “Managed Health Care: California Law and Your Rights” and Sara Jasper’s “Help Is Available for Providers” and “A Psychotherapist’s Basic Guide to Medi-Cal and Resources for Navigating the System” on the CAMFT website.

The New Parity Laws That May Improve
Patients’ Access to Care As of January 1, 2021, psychotherapists and their patients can rely on new laws which support greater access to care. Described in detail below, SB 855 not only expanded parity for mental health and substance use disorder services, it also added associates and trainees to the list of eligible providers of these services. AB 744 clarified health plans’ and insurers’ obligations regarding coverage of telehealth services and established parity for such services.

SB 855 “Medical Necessity”
In accordance with sections of California’s Health and Safety Code and Insurance Code, health plans and insurers must cover medically necessary treatment of mental health and substance use disorders contained in the Diagnostic and Statistical Manual of Mental Disorders (currently the DSM- 5) under the same terms and conditions applied to other medical conditions.¹ As a result of these changes in law, “medically necessary” treatment is now defined as “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 … in accordance with the generally accepted standards of mental health and substance use disorder care²; clinically appropriate in terms of type, frequency, extent, site, and duration.”³ Furthermore, health plans and insurers are prohibited from limiting benefits or coverage for mental health and substance use disorders to short-term or acute care.⁴

This is a significant expansion of parity law for mental health and substance use disorder services. Previous provisions of the California Mental Health Parity Act included only nine severe mental illnesses and did not require parity for the treatment of substance abuse, anxiety, opioid use, alcohol use, and posttraumatic stress disorders. California’s new mental health and substance use disorder parity statutes require health plans, insurers, and entities acting on their behalf to do all the following:

• Base medical necessity determinations and utilization review criteria on current, generally accepted standards of mental health and substance use disorder care.^{5 6}
• Apply clinical criteria and guidelines set forth in the most recent versions of the treatment criteria developed by the relevant clinical specialty when doing utilization review of all covered health care service benefits for the diagnosis, prevention, and treatment of mental health and substance use disorders in children, adolescents, and adults.⁷
• Refrain from applying different, additional, conflicting, or more restrictive criteria and guidelines than those in the sources specified by law when doing utilization review that involves level-of-care placement decisions or any other patient care decisions.⁸
• Refrain from rescinding or modifying authorizations after the providers render services in good faith because of the authorizations for any reason, including but not limited to subsequent rescission, cancellation, or modification of an enrollee’s or subscriber’s contract, or a subsequent finding that eligibility determinations were made in error.⁹
• Conduct and make all medical necessity determinations that concern service intensity, level-of-care placement, continued stay, and transfer or discharge of enrollees diagnosed with mental health and substance use disorders in accordance with the terms as stated above.¹⁰
• Arrange for treatment and medically necessary follow-up with uncontracted providers when in-network providers that meet the geographic and timely access standards are unavailable.¹¹ 

“Health Care Provider”
Due to CAMFT’s advocacy efforts, the term “health care provider” now clearly includes not only Licensed Marriage and Family Therapists, but also Associate Marriage and Family Therapists and Marriage and Family Therapist Trainees.¹² This addition clarifies that pre-licensees are eligible providers of mental health services, which means that plans and insurers may cover/reimburse for services they render.

The new laws promulgated by SB 855 are compelling plans and insurers to reassess terms of coverage and utilization review procedures. Some plans are also beginning to use properly supervised pre-licensees as part of their reimbursable provider populations. While CAMFT does not have a complete list of plans that have chosen to reimburse for services rendered by pre-licensees, staff attorneys have received calls through our legal and ethical hotline that suggest plans are embracing the new recognition afforded to pre-licensees by the law. CAMFT recommends contacting each plan’s provider relations department to determine the plan’s policies regarding coverage of pre-licensee services, credentialing of pre-licensees, and billing procedures for pre-licensee services. For more guidance on how to bill health plans and insurers for telehealth services, please see Ann Tran-Lien’s “Telehealth FAQs for Therapists During the COVID-19 Coronavirus Pandemic” on the CAMFT website.

AB 744 / Telehealth Reimbursement
As of 2021, health plans and insurers regulated by the DMHC and the DOI must reimburse their in-network providers for telehealth services on the same basis and to the same extent that the plan reimburses for in-person services.^{13 14} As a result of new telehealth laws, insurance plans are prohibited from doing the following:

• Requiring that providers use certain corporate telehealth providers
• Requiring cost-sharing for telehealth beyond what is required for the same services delivered in person¹⁵
• Imposing an annual or lifetime dollar amount maximum for telehealth services¹⁶
• Limiting the type of setting where the health care provider can provide services for the patient before payment is made¹⁷
• Requiring in-person contact between a provider and a patient before payment is made for the services appropriately provided through telehealth¹⁸
• Determining whether telehealth services are suitable or clinically appropriate for the patient—contracted providers retain that discretion

These new laws, which apply to all contracts issued, renewed, or amended during or after January 2021, resolve significant barriers to telehealth implementation by delivering payment parity for telehealth reimbursements and encouraging greater adoption and integration of telehealth by providers. These statutory changes expand coverage for rural and underserved communities by enabling providers and specialists to serve patients directly in those communities via telehealth.

While these laws improve access to care and offer greater flexibility for delivery of services, none of these statutory changes prohibit plans from requiring providers to be credentialed and trained in the use of telehealth. This means that plans may require contracted psychotherapists who wish to deliver services to patients via telehealth to take additional steps.

Managed Care Plans’ Coverage of Telehealth Services and HIPAA, CIMA Compliance
As discussed above, there are new laws in place to ensure that the availability of psychotherapy services via telehealth extends beyond the coronavirus pandemic and the declared state and national emergencies. However, as of the publication of this article, the state and the nation are still grappling with the pandemic. Therefore, governmental policies developed to support the use of telehealth during this time of state and national emergency are still applicable to the work of psychotherapists.

In accordance with the U.S. Department of Health and Human Services (HHS) Notification of Enforcement Discretion for Telehealth and Governor Newsom’s Executive Order N-43-20, psychotherapists can use telehealth to deliver treatment when it is clinically appropriate.19 Furthermore, both the HHS notice and the governor’s executive order prioritize access to care over strict compliance with HIPAA law regarding the protection and confidentiality of patients’ protected health information. While the state and national emergencies remain in effect, HHS will not impose penalties for noncompliance with Business Associate Agreement regulations or any other HIPAA rules that relate to the delivery of telehealth services. This means that providers offering telehealth services to their patients can use platforms that would otherwise not be HIPAA-compliant. Providers are permitted to use popular applications that allow for video chats, including Facebook Messenger video chat, Skype, and Google Hangouts video, to provide telehealth without penalty. While compliance laws related to the protection and confidentiality of patient information continue to be relaxed, psychotherapists must make reasonable efforts to safeguard patients’ protected health information. As indicated in the HHS notice, providers should continue to notify patients that third-party applications potentially introduce privacy risks. Providers should also enable all available encryption and privacy modes when using third-party applications. The BBS also recommends that psychotherapists take these precautions. 

Providers who offer telehealth services under these relaxed conditions should be aware that the law does not require written informed consent from clients to participate in telehealth. Additionally, the governor’s Executive Order N-43-20 suspended the requirement that therapists providing telehealth services must obtain either written or verbal consent from the client for the use of telehealth. Of course, it remains prudent for psychotherapists to obtain consent whenever possible. CAMFT offers a sample telehealth informed consent form on its website in the Members Only Sample Practice Forms section. 

Since compliance requirements may change at any time, it is important for psychotherapists to be alert to revisions of telehealth policies. The enforcement discretion notice states that it will remain in effect until HHS declares that the public health emergency no longer exists or until the expiration date of the declared public health emergency transpires. President Biden has indicated that he intends to extend the expiration date of the public health emergency to at least the end of this year. Governor Newsom’s executive order will remain in effect until either the order is replaced by a new one or the state of emergency is lifted. 

In addition to the guidance set forth by HHS and the governor, the California Department of Managed Health Care (DMHC) and the Department of Health Care Services (DHCS) have issued All Plan Letters (APLs) regarding the delivery of telehealth services by managed care and Medi-Cal providers.

The APLs from the DMHC instruct health plans to allow patients to obtain health care via telehealth when medically appropriate during the California declared state of emergency because of COVID-19.20 The DMHC’s letters offer guidance regarding coding for telehealth services, the types of services that can be provided via telehealth, and the types of providers who may render telehealth services. Per the letters, plans must reimburse providers for telehealth services at the same rate that they reimburse for in-person services. Health plans must also offer the same reimbursement for a telehealth service rendered via telephone as they would offer for a telehealth service rendered via video teleconference. Plans cannot subject patients receiving services via telehealth to greater cost-sharing requirements than those in place for in-person services. For example, health plans cannot implement higher copays or deductibles for telehealth services. In conjunction with its latest APL related to the use of telehealth during the coronavirus pandemic, the DMHC issued a Frequently Asked Questions document that can be found on its website at dmhc.ca.gov.

APLs issued by DHCS are in many respects similar to those issued by the DMHC, but they apply to the delivery of telehealth services by all the Medi-Cal managed care plans. In anticipation of the need, and the desire, for continued flexibility with regard to the delivery of medical and mental health care services, DHCS also published “Post- COVID-19 Public Health Emergency Telehealth Policy Recommendations,” which can be found on its website at dhcs.ca.gov.

Managed Care Plan Audits and Release of Records
Health insurers often request information and records from health care providers to conduct reviews or audits about coverage eligibility, medical necessity determinations, risk adjustment²¹, fraudulent billing, coding issues, inadequate recordkeeping, claim error processing, or recoupment for overpayment. Federal and state law, as well as provider contracts, give health insurers the right to request information and records from providers. While providers do not need patient authorization under these circumstances, psychotherapists have a responsibility to consider and respond to requests in accordance with confidentiality laws and ethical standards for practice. Explanations of coverage (EOCs) notify patients of health plans’ right to communicate with providers and make records requests. 

Federal Law Considerations: The HIPAA Privacy Rule
The Health Insurance Portability and Accountability Act’s “Privacy Rule” establishes a set of standards for the use and disclosure of individuals’ protected health information (PHI) by persons and organizations classified as “covered entities” under HIPAA.²² As covered entities²³, providers are permitted to release PHI in a variety of circumstances, such as for payment-related activities and health care operations. The term “health care operations” includes case management, quality assurance reviews, medical reviews, and insurance-related audits.²⁴

With respect to some requests, a therapist may be asked to release progress notes or the clinical record in its entirety. Therapists who are covered entities should be aware that HIPAA permits covered entities to provide only the minimum information necessary; this standard means that PHI should not be released if doing so is unnecessary. Providers who are covered entities should ask questions about the need for information and only provide the information or records necessary to fulfill a legitimate purpose or function.²⁵ For example, although health plans have a right to make requests for information and records for purposes of risk adjustment audits, providers can follow the minimum information necessary standard and provide only the dates of services and a diagnosis in response to such requests.²⁶

State Law Considerations: The Confidentiality of Medical Information Act—California Civil Code §56.104
The Confidentiality of Medical Information Act, found in Sections 56.10 through 56.16 of the California Civil Code, is the state law that governs when health care providers may share patient information and records.²⁷ Under the law, providers may release information about patients to health insurers when the information is being disclosed for a purpose related to the administration of the plan.²⁸ Although this is a fairly broad disclosure provision, health insurers are obligated to put their requests in writing and to provide psychotherapists with the following information:

• The specific information being requested that relates to a patient’s participation in outpatient treatment with a psychotherapist, and its specific intended use
• The length of time the information will be kept before being destroyed or disposed of
• A statement that the information will not be used for any purpose other than the one intended
• A statement that the person or entity requesting the information will destroy the information and all copies that are in the person’s or entity’s possession or control, will cause it to be destroyed, or will return it before or immediately after the length of time has expired29

Psychotherapists who receive requests without this information should ask for this information before responding.

Conclusion
California’s managed care delivery systems can be challenging for providers and patients to navigate. While advocacy efforts continue to result in improvements, providers and patients must arm themselves with information about the laws that support their causes in order to both survive and thrive. CAMFT staff attorneys are available through the legal and ethical hotline to answer members’ managed care-related questions. Below is a list of additional resources for providers and their patients.

Resources for Providers and Patients
When health care coverage and claims issues arise, providers and patients are often uncertain about where to turn for support, but a number of entities and resources exist to help:

California Department of Managed Health Care
For assistance with provider complaints, providers can email the Provider Complaint Unit at providercomplaintunit@dmhc.ca.gov or call 1-877-525-1295.

For assistance with consumer complaints, consumers or their authorized assistants can call the Help Center at 1-888-466-2219 or TDD at 1-877-688-9891.

California Department of Insurance
For assistance with consumer complaints, consumers can call the Consumer Communications Bureau hotline at 1-800- 927-4357 (HELP).

California Department of Health Care Services For assistance with provider issues, call the Medi-Cal Provider Relations Department at 1-916-323-1945 or email PED.corr@dhcs.ca.gov. For assistance with provider or consumer issues, call 1-800-541-5555 for the Telephone Service Center (outside of California, call 1-916-636-1200).

California Health Advocates
CHA (www.cahealthadvocates.org) offers free individual counseling about Medi-Cal/ Medicare through its Health Insurance Counseling and Advocacy Program (HICAP). The organization has offices in every county and a toll-free hotline: 1-800-434-0222.

State of California Office of the Patient Advocate
The Office of the Patient Advocate rates health plans and medical groups using health care perfor mance measures that are based on quality of care and patient experience. Its website provides information to help consumers compare health plans and medical groups, track consumer complaints, and identify patient rights and health care resources . More information can be found at https://www.opa.ca.gov/Pages/default.aspx.

Disability Rights California
Individuals, family members, and advocates for those with disabilities can call 1-800- 776-5746 or 1-800-719-5798 (TTY) if they have questions about legal rights related to disability. The service is available Monday through Friday, 9 a.m. to 4 p.m.

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Sara Jasper, JD, CAE, is a staff attorney for CAMFT. Sara is available to answer member calls regarding legal, ethical, and licensure issues.

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Endnotes 
¹ Cal. Health & Safety Code §§1374.72(a)(1) and (a)(2); Cal. Ins. Code §§10144.5(a)(1) and (a)(2) 
² “‘Generally accepted standards of mental health and substance use disorder care’ means standards of care and clinical practice that are generally recognized by health care providers practicing in relevant clinical specialties such as psychiatry, psychology, clinical sociology, addiction medicine and counseling, and behavioral health treatment pursuant to Section 1374.73. Valid, evidence based sources establishing generally accepted standards of mental health and substance use disorder care include peer-reviewed scientific studies and medical literature, clinical practice guidelines and recommendations of nonprofit health care provider professional associations, specialty societies and federal government agencies, and drug labeling approved by the United States Food and Drug Administration.” Cal. Health & Safety Code §1374.721(f)(1)
³ Cal. Health & Safety Code §1374.72(a)(3)(A)(i)-(ii); Cal. Ins. Code §10144.5(a)(3)(A)(i)-(ii)
⁴ Cal. Health & Safety Code §1374.72(a)(6); Cal. Ins. Code §10144.5(a)(6)
⁵ Cal. Health & Safety Code §1374.721(a); Cal. Ins. Code §10144.52(a)
⁶ Note: The phrase “generally accepted standards of mental health and substance use disorder care” means “standards of care and clinical practice that are generally recognized by health care providers practicing in relevant clinical specialties such as psychiatry, psychology, clinical sociology, addiction medicine and counseling, and behavioral health treatment pursuant to Section 1374.73. Valid, evidence-based sources establishing generally accepted standards of mental health and substance use disorder care include peer-reviewed scientific studies and medical literature, clinical practice guidelines and recommendations of nonprofit health care provider professional associations, specialty societies and federal government agencies, and drug labeling approved by the United States Food and Drug Administration.” Cal. Health & Safety Code §1374.721(f)(1); Cal. Ins. Code §10144.52(f)(1)
⁷ Cal. Health & Safety Code §1374.721(b); Cal. Ins. Code §10144.52(b)
⁸ Cal. Health & Safety Code §1374.72(c); Cal. Ins. Code §10144.52(c)
⁹ Cal. Health & Safety Code §1374.72(a)(8); Cal. Ins. Code §10144.5(a)(8)
¹⁰ Cal. Health & Safety Code §1374.72(a)(7); Cal. Ins. Code §10144.5(a)(7)
¹¹ Cal. Health & Safety Code §1374.72(d); Cal. Ins. Code §10144.5(d)
¹² Cal. Health & Safety Code §1374.72(a)(4)(B); Cal. Ins. Code §10144.5(a)(4)(B)
¹³ Cal. Health & Safety Code §§1374.14(a)(1) and (b)(1)
¹⁴ The new parity law provisions do not apply to Medi-Cal Managed Care Plans or Medicare plans.
¹⁵ Cal. Health & Safety Code §1374.14(c)
¹⁶ Cal. Health & Safety Code §1374.14(d)
¹⁷ Cal. Health & Safety Code §1374.13(d)
¹⁸ Cal. Health & Safety Code §1374.13(c)
¹⁹ For a copy of the Notification of Enforcement Discretion for Telehealth Remote Communications During the COVID-19 Nationwide Public Health Emergency issued by the U.S. Department of Health and Human Services’ Office for Civil Rights, visit https://www.hhs.gov/hipaa/for-professionals/special-topics/ emergency-preparedness/notification-enforcement-discretiontelehealth/ index.html; for a copy of Governor Newsom’s Executive Order N-43-20, visit https://www.gov.ca.gov/wp-content/ uploads/2020/04/4.3.20-EO-N-43-20.pdf
²⁰ For a copy of the DMHC’s All Plan Letter 20-032, visit https://www.dmhc.ca.gov/Portals/0/Docs/OPL/APL%20 20-032%20%20Continuation%20of%20DMHCs%20All%20 Plan%20Letters%20Regarding%20Telehealth%20(9_4_2020). pdf?ver=2020-09-04-113330-127
²¹ For more information about how to respond to risk adjustment audits, see Michael Griffin’s “Therapists as Diplomatic Gatekeepers” on the CAMFT website
²² 45 C.F.R. §164.103 (Privacy Rule)
²³ HIPAA only applies to organizations and providers that qualify as “covered entities.” Covered entities are defined as: (1) health plans, (2) health care clearinghouses, (3) health care providers who electronically transmit private health information (PHI) in connection with certain administrative or financial transactions known as covered transactions. For further information about covered entities, see David Jensen’s “Are You a Covered Entity” on the CAMFT website
²⁴ 45 C.F.R. §164.103
²⁵ 45 C.F.R. §§164.502(b), 164.514(d). The “minimum necessary standard” does not apply in all circumstances. Exceptions include but are not limited to: disclosures to, or requests by, a health care provider for treatment purposes; disclosures made pursuant to an individual’s authorization; disclosures to the patient; and disclosures that are requested by law. For further information, see David Jensen’s “HIPAA Minimum Necessary Standard,” The Therapist, January/February 2010 26 For more information about how to respond to records requests related to risk adjustment audits, see Michael Griffin’s “Therapists as Diplomatic Gatekeepers” on the CAMFT website 27 Cal. Civil Code §56.10, et seq. 28 Cal. Civil Code §56.10(c)(10) 29 Cal. Civil Code §56.104

This article is not intended to serve as legal advice and is offered for educational purposes only. The information provided should not be used as a substitute for independent legal advice and it is not intended to address every situation that could potentially arise. Please be aware that laws, regulations and technical standards change over time. As a result, it is important to verify and update any reference or information that is provided in this article.