Senator Wiener’s Health Plan Accountability Act – Tenfold Penalties for Unlawfully Denying Coverage – Signed into Law

Sacramento – Today, Governor Gavin Newsom signed into law Sen. Scott Wiener’s (D-San Francisco) legislation to impose stronger accountability on health plans by significantly increasing penalties for illegally denying health insurance coverage. Senate Bill 858, the Health Plan Accountability Act, would update and increase tenfold the penalties for health plans that violate state law by denying or delaying timely care. This law will be effective from January 1, 2023.

Health plan accountability is critical: current standards of excellence were set in the 1970s and are so low that they can be seen as the cost of doing business. As a result, health plans, at times, unlawfully deny or delay coverage. For example, Kaiser Permanente has yet to comply with the previous legislation authored by Senator Wiener.Senate Bill 221) — requiring timely access to mental health treatment — led to a strike by Kaiser mental health professionals.

“Californians rely on health insurance to cover critical, life-saving care, and we must follow the rules and hold health plans accountable for providing timely and adequate coverage,” he said. Senator Wiener. “California’s low and outdated optimal standards allow health plans to view these penalties as the sole cost of doing business. SB 858 makes clear what we mean when we pass legislation requiring coverage.

“For years, health care corporations have evaded consumer protection laws with minimal consequences. This new law will change the nature of these health plans and ensure Californians have access to the care they need,” he said. Diana DouglasHealth Access California Director of Policy and Legislative Advocacy.

While health plan premiums have quadrupled in the past 20 years, the amount paid for health plan malpractice has not changed since 1975.

This legislation comes at a critical time as the California Department of Health Care (DMHC) conducted an informal investigation into Kaiser Permanente’s deficiencies in providing patients with timely access to behavioral health services. As requested by Senator Wiener’s SB 221, which took effect this July, health care providers must ensure that patients undergoing mental health or substance use disorder treatment are scheduled for follow-up within 10 business days of their previous appointment. As Kaiser faces its seventh week of strike action by hundreds of behavioral health workers fed up with inadequate staffing and work conditions, it is clear that the health care provider is currently unable and unwilling to provide adequate and timely care. SB 858 encourages non-compliant providers like Kaiser Permanente to fix systemic problems that prevent behavioral health patients from getting care in a timely manner.

SB 858 increases civil penalties from a maximum of $2,500 to a maximum of $25,000 when health plans violate standards for: not providing coverage for medically necessary care, behavioral health care services, gender-affirming care, timely access to care, or other important consumer protections. When health plans fail to comply with state law, their practices can create significant — and life-threatening — health challenges. By strengthening California’s ability to enact health plans that do not impose behavior change penalties, access to health care will improve.

SB 858 gives the Department of Managed Health Care additional authority to issue higher penalties and issue corrective action plans when necessary. SB 858 would update penalty rates every 5 years, and improve the method by which penalty rates reflect the actual harm to enrollees. Effective civil and administrative penalties are enforcement measures that give regulators more tools to enforce the consumer protections we all support.

SB 858 is sponsored by Health Access California.