California’s SB 855 requires every state-regulated health plan to cover medically necessary treatment for all mental health and substance use disorders on the same terms it covers any other medical condition. The law took effect January 1, 2021, and it does more than promise parity in the abstract. It tells insurers which clinical standards to use when deciding whether treatment is necessary, bans them from limiting coverage to short-term care, and gives you an independent review path if you are denied.
What Your Plan Must Cover
SB 855 applies to any condition listed in the current edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM) or the World Health Organization’s International Classification of Diseases (ICD).1California Legislative Information. California Insurance Code 10144.5 There is no short list of favored diagnoses. If the condition is in either manual, treatment is covered, and when those manuals are updated, coverage follows automatically.
The law also requires coverage across the full continuum of care, not just weekly therapy. Required benefits include:1California Legislative Information. California Insurance Code 10144.5
- Basic outpatient services: psychotherapy, counseling, psychological testing, case management, and medication management.
- Intermediate services: residential treatment, partial hospitalization, and intensive outpatient programs.
- Prescription drugs, if your plan includes a drug benefit.
- Behavioral health crisis services, including care delivered through California’s 988 system.2California Department of Insurance. Commissioner Lara Expands Mental Health Access With Final Landmark Rulemaking to Enforce California Mental Health Parity Act
Your plan cannot impose visit limits, higher copays, stricter preauthorization, or narrower network standards on these services than it applies to comparable medical or surgical care. When medically necessary care is unavailable within the network’s access standards, the insurer must arrange and pay for out-of-network care.2California Department of Insurance. Commissioner Lara Expands Mental Health Access With Final Landmark Rulemaking to Enforce California Mental Health Parity Act
How Medical Necessity Is Now Decided
Before SB 855, insurers wrote their own internal criteria for what counted as medically necessary. Many were far more restrictive than what treating clinicians considered appropriate. SB 855 ended that. Plans must now base every medical necessity determination on “current generally accepted standards” of care, using clinical criteria developed by nonprofit professional associations for the relevant specialty.
For substance use disorders, the standard tool is the ASAM Criteria, developed by the American Society of Addiction Medicine, which assesses patients across six dimensions to identify the least intensive level of care that is still safe. For other mental health conditions, plans must use tools like the Level of Care Utilization System (LOCUS), the Child and Adolescent Level of Care Utilization System (CALOCUS/CASII), or the Early Childhood Service Intensity Instrument (ECSII).3Department of Managed Health Care. APL 24-007 – Implementation of SB 855
If a plan wants to use criteria from an organization not listed in the regulations, it must file notice with the Department of Managed Health Care and show that the criteria match generally accepted standards.3Department of Managed Health Care. APL 24-007 – Implementation of SB 855 Insurers can’t quietly apply proprietary rules that bear little resemblance to how clinicians practice.
The law also targets how the criteria get applied in practice. Plans must sponsor formal education programs, run by the relevant nonprofit clinical associations, for every employee or contractor who reviews claims or makes medical necessity decisions. They must run interrater reliability testing to check whether different reviewers reach the same conclusion on the same case, and they must hit a pass rate of at least 90 percent.4Department of Managed Health Care. APL 21-002 – SB 855, MH/SUD Coverage For substance use disorder cases, any denial must be signed off by an actively practicing, board-certified addiction specialist physician.2California Department of Insurance. Commissioner Lara Expands Mental Health Access With Final Landmark Rulemaking to Enforce California Mental Health Parity Act
No Short-Term Treatment Limits
One of SB 855’s most consequential provisions is a flat prohibition on limiting mental health or substance use disorder coverage to short-term or acute treatment.5LegiScan. CA SB855 2019-2020 Regular Session Chaptered Plans must state this obligation explicitly in their Evidence of Coverage documents.6Legal Information Institute. California Code of Regulations Title 28 Section 1300.74.72
This matters because insurers historically approved a brief course of treatment and then denied continued care, even when clinicians recommended ongoing therapy or a longer residential stay. Under SB 855, if the clinical criteria show you still meet the threshold for a given level of care, the plan must continue authorizing it. A plan also cannot retroactively rescind a treatment authorization after a provider has already delivered services in good faith.1California Legislative Information. California Insurance Code 10144.5
Does SB 855 Apply to Your Plan?
SB 855 applies to state-regulated health plans and insurance policies: individual market coverage and both small-group and large-group employer plans, as long as the plan is fully insured (meaning the insurer bears the financial risk).7California Legislative Information. California Health and Safety Code 1374.72 The Department of Managed Health Care (DMHC) oversees health care service plans like HMOs; the California Department of Insurance (CDI) oversees traditional insurance policies.
The major gap is self-insured employer plans. Many large employers in California fund their employees’ health benefits directly rather than buying a policy. Those arrangements are governed by the federal Employee Retirement Income Security Act (ERISA), which preempts state insurance mandates like SB 855.8U.S. Department of Labor. Self-Compliance Tool for the Mental Health Parity and Addiction Equity Act (MHPAEA) If your coverage comes through a self-insured employer plan, SB 855 does not reach you. Your protections come instead from the federal Mental Health Parity and Addiction Equity Act, enforced by the U.S. Department of Labor.
To find out which category you’re in, check your plan documents or ask your employer’s benefits department whether the plan is fully insured or self-funded. That answer decides which rules govern your coverage and which agency handles complaints.
How to Appeal a Denial
If your plan denies, delays, or modifies a request for mental health or substance use treatment, you have a structured path to challenge that decision. The process depends on which agency regulates your plan.
DMHC-Regulated Plans
Start by filing a grievance with your health plan. You need to go through the plan’s internal grievance process for 30 days before escalating. The exception: if there is an immediate, serious threat to your health, you can contact the DMHC right away.9Department of Managed Health Care. How to File a Complaint
If the plan doesn’t resolve your grievance within 30 days, or you disagree with the result, you can file an Independent Medical Review (IMR) and complaint with the DMHC on a single form. An independent medical expert who does not work for your plan reviews your case. Standard IMR decisions are generally issued within 45 days from the date the case qualifies. Expedited reviews, reserved for situations involving severe pain or risk of serious harm, move faster.9Department of Managed Health Care. How to File a Complaint
The IMR decision is final. Neither you nor the insurer can appeal it. If the reviewer overturns the denial, the plan must authorize the service.
CDI-Regulated Policies
For insurance policies overseen by the CDI, the process follows the same structure: internal appeal with the insurer first, then escalation to the CDI. The CDI’s consumer hotline is (800) 927-4357, and complaints can also be filed online through the CDI website.2California Department of Insurance. Commissioner Lara Expands Mental Health Access With Final Landmark Rulemaking to Enforce California Mental Health Parity Act
Regulators back these processes with real penalties. In one enforcement action, the DMHC fined a major California health plan $200 million after finding widespread violations, including failure to use the required nonprofit clinical criteria.
How SB 855 Goes Beyond Federal Parity Law
The federal Mental Health Parity and Addiction Equity Act (MHPAEA) requires group health plans to treat mental health and substance use disorder benefits no more restrictively than medical and surgical benefits.10Office of the Law Revision Counsel. 29 US Code 1185a – Parity in Mental Health and Substance Use Disorder Benefits SB 855 goes further in three concrete ways: it ties medical necessity to specific nonprofit clinical standards rather than leaving the definition to insurers, it bans short-term treatment limits outright, and it mandates utilization review training and interrater reliability testing that federal law does not.
A 2024 federal rule strengthened MHPAEA with new requirements on nonquantitative treatment limitations and data collection, with key provisions set to take effect for plan years beginning on or after January 1, 2026.11U.S. Department of Labor. Fact Sheet – Final Rules Under the Mental Health Parity and Addiction Equity Act (MHPAEA) The federal administration has since indicated it will not enforce those 2024 updates. For Californians with state-regulated plans, SB 855 continues to provide protections stronger than federal law regardless of how federal enforcement shifts.