Health care coverage: substance use disorder: residential facilities.

Plain English Breakdown

The bill summary does not specify what happens if the departments do not send the letters, leaving this as an unknown.

Health Care Coverage for Substance Use Disorder Treatment

This law requires certain health care and insurance departments to send letters to health plans about substance use disorder treatment in residential facilities.

What This Bill Does

• Requires the Department of Managed Health Care, the Department of Insurance, and the State Department of Health Care Services to write a letter to each chief financial officer of health care service plans, insurers, or Medi-Cal managed care plans that cover substance use disorder treatment in California.
• The letter must inform these plans that most substance use disorder treatment in residential facilities is nonmedical with rare exceptions.
• Allows the departments to consult with each other and the State Department of Social Services when making the letters.
• Requires the letters to be sent by October 1, 2026.

Who It Names or Affects

• Health care service plans
• Insurance companies
• Medi-Cal managed care plans

Terms To Know

Substance Use Disorder

A medical condition where a person has problems controlling their use of drugs or alcohol.

Residential Facilities

Places where people live and receive treatment for substance use disorder, like rehab centers.

Limits and Unknowns

• The bill does not specify the consequences if the departments do not send the letters.
• It is unclear how these letters will affect health care coverage or treatment options.
• The requirements in this law end on January 1, 2027.

Official Summary Text

AB 877, as amended, Dixon.
Health care coverage: substance use disorder: residential facilities.
Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance. Existing law requires a health care service plan contract or disability insurance policy to provide coverage for medically necessary treatment of mental health and substance use disorders, as defined, under the same terms and conditions applied to other medical conditions.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive medically necessary health care services, including specified mental health and substance use disorder services, pursuant to a schedule of benefits.
Existing law provides for the regulation of
community care facilities that provide nonmedical care, including residential facilities, short-term residential therapeutic programs, and group homes by the State Department of Social Services. Existing law requires the care and supervision provided by a short-term residential therapeutic program or group home to be nonmedical, except as otherwise permitted by law.
This bill would require the Department of Managed Health Care, the Department of Insurance, and the State Department of Health Care Services to prepare and send one letter to each chief financial officer of a health care service plan, health insurer, or Medi-Cal managed care plan that provides coverage, including out-of-network benefits, in California for substance use disorder in residential facilities, as defined. The bill would require the letter to include, among other things, a statement informing the plan or insurer that substance use disorder treatment in licensed
and certified
or unlicensed
residential facilities is almost exclusively nonmedical, with rare exceptions. The bill would authorize the Department of Managed Health Care, the Department of Insurance, and the State Department of Health Care Services to consult with each other, and would require those departments to consult with the State Department of Social Services, when preparing the contents of the letter. The bill would require the letters to be sent on or before
an unspecified date.
October 1, 2026.
The bill would repeal these provisions on January 1, 2027.

Current Bill Text

Download Bill PDF