Assembly BillFailedHealth and Safety
AB 877: Health care coverage: substance use disorder: residential facilities.
What AB 877 does, verified February 3, 2026
The bill aims to improve health care coverage for substance use disorder treatment in residential facilities in California. The state departments of managed health care, insurance, and health care services will prepare and send letters to health care service plans, insurers, and Medi-Cal managed care plans, informing them that substance use disorder treatment in licensed and certified residential facilities is almost exclusively nonmedical. The letters will be sent on or before a specified date and will require the departments to consult with each other and the state department of social services. The provisions will take effect on January 1, 2027, and will be repealed after that date.
Bill journey
✓IntroducedComplete
2In CommitteeCurrent
3First Chamber FloorPending
4Second ChamberPending
5GovernorPending
6ChapteredPending
Last action: From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. (2026-02-02)Alert me
Author and sponsors
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| Feb. 02, 2026 | From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. |
| Jan. 31, 2026 | Died pursuant to Art. IV, Sec. 10(c) of the Constitution. |
| Apr. 22, 2025 | Re-referred to Com. on HEALTH. |
| Apr. 21, 2025 | From committee chair, with author's amendments: Amend, and re-refer to Com. on HEALTH. Read second time and amended. |
| Mar. 03, 2025 | Referred to Com. on HEALTH. |
Latest bill textAmended version, April 21, 2025 · 1,550 words
| Amended IN Assembly April 21, 2025 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 877
| Introduced by Assembly Member Dixon |
February 19, 2025 |
An act to add and repeal Section 1348.97 of the Health and Safety Code, to add and repeal Section 10127.25 of the Insurance Code, and to add and repeal Section 14124.17 of the Welfare and Institutions Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
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.
The people of the State of California do enact as follows:
SECTION 1.
Section 1348.97 is added to the Health and Safety Code, to read:1348.97.
(a) The department shall prepare and send one digital or hardcopy letter to each chief financial officer of a health care service plan that provides coverage, including out-of-network benefits, in California for substance use disorder in residential facilities, in accordance with the following requirements:(1) (A) The letter shall include a statement informing the health care service plan that substance use disorder treatment in licensed and certified or unlicensed residential facilities is almost exclusively nonmedical, with rare exceptions.
(B) The letter shall include a statement informing the health care service plan of the requirements to bill nonmedical treatment accordingly.
(2) The letter shall include a statement that informs the health care service plan of the circumstances that allow for medical treatment for substance use disorder in licensed and certified or unlicensed residential facilities.
(b) For purposes of this section, “residential facility” means a place, building, or premises that provides residential care or services. all of the following:
(1) Any family home, group care facility, or similar facility determined by the department, for 24-hour nonmedical care of persons in need of personal services, supervision, or assistance essential for sustaining the activities of daily living or for the protection of the individual.
(2) An alcohol or other drug program certified by the State Department of Health Care Services pursuant to Chapter 7.1 (commencing with Section 11832) of Part 2 of Division 10.5.
(3) An alcohol or other drug recovery or treatment facility licensed by the State Department of Health Care Services pursuant to Chapter 7.5 (commencing with Section 11834.01) of Part 2 of Division 10.5.
(4) A recovery residence as defined in subdivision (f) of Section 11833.05.
(c) The department shall consult with the State Department of Social Services, and may consult with the Department of Insurance and the State Department of Health Care Services, when preparing the content of the letters required by subdivision (a).
(d) The department shall send the letters required by subdivision (a) on or before ____. October 1, 2026.
(e) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 2.
Section 10127.25 is added to the Insurance Code, to read:10127.25.
(a) The department shall prepare and send one digital or hardcopy letter to each chief financial officer of a health insurer that provides coverage, including out-of-network benefits, in California for substance use disorder in residential facilities, in accordance with the following requirements:(1) (A) The letter shall include a statement informing the health insurer that substance use disorder treatment in licensed and certified or unlicensed residential facilities is almost exclusively nonmedical, with rare exceptions.
(B) The letter shall include a statement informing the health insurer of the requirements to bill nonmedical treatment accordingly.
(2) The letter shall include a statement that informs the health insurer of the circumstances that allow for medical treatment for substance use disorder in licensed and certified or unlicensed residential facilities.
(b) For purposes of this section, “residential facility” means a place, building, or premises that provides residential care or services. all of the following:
(1) Any family home, group care facility, or similar facility determined by the department, for 24-hour nonmedical care of persons in need of personal services, supervision, or assistance essential for sustaining the activities of daily living or for the protection of the individual.
(2) An alcohol or other drug program certified by the State Department of Health Care Services pursuant to Chapter 7.1 (commencing with Section 11832) of Part 2 of Division 10.5 of the Health and Safety Code.
(3) An alcohol or other drug recovery or treatment facility licensed by the State Department of Health Care Services pursuant to Chapter 7.5 (commencing with Section 11834.01) of Part 2 of Division 10.5 of the Health and Safety Code.
(4) A recovery residence as defined in subdivision (f) of Section 11833.05 of the Health and Safety Code.
(c) The department shall consult with the State Department of Social Services, and may consult with the Department of Managed Health Care and the State Department of Health Care Services, when preparing the content of the letters required by subdivision (a).
(d) The department shall send the letters required by subdivision (a) on or before ____. October 1, 2026.
(e) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 3.
Section 14124.17 is added to the Welfare and Institutions Code, to read:14124.17.
(a) The department shall prepare and send one digital or hardcopy letter to each chief financial officer of a Medi-Cal managed care plan that provides coverage, including out-of-network benefits, in California for substance use disorder in residential facilities, in accordance with the following requirements:(1) (A) The letter shall include a statement informing the Medi-Cal managed care plan that substance use disorder treatment in licensed and certified or unlicensed residential facilities is almost exclusively nonmedical, with rare exceptions.
(B) The letter shall include a statement informing the Medi-Cal managed care plan of the requirements to bill nonmedical treatment accordingly.
(2) The letter shall include a statement that informs the Medi-Cal managed care plan of the circumstances that allow for medical treatment for substance use disorder in licensed and certified or unlicensed residential facilities.
(b) For purposes of this section, “residential facility” means a place, building, or premises that provides residential care or services. all of the following:
(1) Any family home, group care facility, or similar facility determined by the department, for 24-hour nonmedical care of persons in need of personal services, supervision, or assistance essential for sustaining the activities of daily living or for the protection of the individual.
(2) An alcohol or other drug program certified by the department pursuant to Chapter 7.1 (commencing with Section 11832) of Part 2 of Division 10.5 of the Health and Safety Code.
(3) An alcohol or other drug recovery or treatment facility licensed by the department pursuant to Chapter 7.5 (commencing with Section 11834.01) of Part 2 of Division 10.5 of the Health and Safety Code.
(4) A recovery residence as defined in subdivision (f) of Section 11833.05 of the Health and Safety Code.
(c) The department shall consult with the State Department of Social Services, and may consult with the Department of Managed Health Care and the Department of Insurance, when preparing the content of the letters required by subdivision (a).
(d) The department shall send the letters required by subdivision (a) on or before ____. October 1, 2026.
(e) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
Text of AB 877 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions