SACRAMENTO – Today, Governor Gavin Newsom signed into law legislation by Sen. Scott Wiener (D-San Francisco) to enforce stricter accountability on health plans by significantly increasing the fines for illegally denying health insurance coverage. Senate Bill 858, the Health Plan Accountability Act, updates and increases tenfold the penalty amount for health plans that violate state laws by denying or delaying timely access to care. This law will enter into force on January 1, 2023.
Health plan accountability is critical: current penalty levels were set in the 1970s and are so low they can be seen as a cost of doing business. As a result, health plans sometimes illegally deny or delay coverage. For example, Kaiser Permanente is still out of compliance with a previous law created by Senator Wiener (Senate Bill 221) — requiring timely access to mental health treatment — leading to a strike by Kaiser mental health professionals.
“Californians rely on their health insurance to cover critical, even life-saving care, and we must hold health plans accountable for complying with the rules and providing timely and adequate coverage,” said Senator Wiener. “California’s low, outdated penalty rates allow health plans to treat these penalties as a normal cost of doing business. SB 858 makes it clear that when we pass a law requiring coverage, we mean it.”
“For years, healthcare corporations have been skirting consumer protection laws with minimal consequences. This new law will change the behavior of these health plans and ensure access to the care Californians need,” said Diana Douglasdirector of policy and legislative advocacy for Health Access California.
Health plan premiums have quadrupled over the past 20 years, while penalty amounts for health plan violations have not changed since 1975. This allows plans to sidestep liability and deny care if they determine the penalty is inconsequential or just a cost of doing business.
This legislation comes at a critical time, as the California Department of Managed Health Care (DMHC) recently announced a non-routine investigation into Kaiser Permanente’s shortcomings in providing patients with timely access to behavioral health services. As required by Senator Wiener’s SB 221, which took effect this July, health care providers must ensure that patients being treated for mental health or substance use conditions are scheduled for follow-up within 10 business days of their prior appointment. As Kaiser faces the seventh week of a strike by hundreds of behavioral health workers fed up with understaffing and working conditions, it’s clear the health care provider is currently unable — and unwilling — to provide adequate, timely care. SB 858 would incentivize non-compliant providers like Kaiser Permanente to correct systemic problems that prevent behavioral health patients from accessing care in a timely manner.
SB 858 increases the punitive amounts for civil penalties from a maximum of $2,500 to a maximum of $25,000 when health plans violate standards, including: failure to provide coverage for medically necessary care, behavioral health services, gender affirming care, timely access to care, or other critical protections to users. When health plans don’t comply with state laws, their actions can create significant—and even life-threatening—health challenges. By strengthening California’s ability to impose behavior-modifying fines on non-compliant health plans, access to health care will improve.
SB 858 gives the Department of Managed Health Care additional authority to impose higher fines and impose corrective action plans when necessary. SB 858 would modernize penalty amounts every 5 years and update the methodology to ensure that penalty amounts reflect the true harm caused to enrollees. Effective civil and administrative penalties are enforcement actions that give regulators more tools to enforce the consumer protections we all support.
SB 858 is sponsored by Health Access California.