10123.52.
(a) (1) A health insurance policy issued, amended, or renewed on or after January 1, 2026, shall provide coverage for medically necessary treatment of physical conditions and diseases under the same terms and conditions applied to other medical conditions as specified in subdivision (c).
(2) A health insurance policy shall not limit benefits or coverage for physical conditions and diseases to short-term or acute treatment.
(b) The benefits covered pursuant to this section shall include all of the following:
(1) Basic health care services, as defined in Section 10112.281.
(2) Intermediate services, including the full range of levels of care, including residential treatment, partial hospitalization, and intensive outpatient treatment.
(3) Prescription drugs, if the policy includes coverage for prescription drugs.
(c) The terms and conditions applied to the benefits covered pursuant to this section that shall be applied equally to all benefits under the policy shall include all of the following insured financial responsibilities:
(1) Maximum annual and lifetime benefits, if not prohibited by applicable law.
(2) Copayments and coinsurance.
(3) Individual and family deductibles.
(4) Out-of-pocket maximums.
(d) If services for the medically necessary treatment of physical conditions and diseases are not available in network within the geographic and timely access standards set by law or regulation, the health insurer shall arrange coverage to ensure the delivery of medically necessary out-of-network services and any medically necessary follow-up services that, to the maximum extent possible, meet those geographic and timely access standards. As used in this subdivision, to “arrange coverage to ensure the delivery of medically necessary out-of-network services” includes providing services to secure medically necessary out-of-network options that are available to the insured within geographic and timely access standards. The insured shall pay no more than the same cost sharing that the insured would pay for the same covered services received from an in-network provider.
(e) (1) A health insurer shall base a medical necessity determination or the utilization review criteria that the insurer, and an entity acting on the insurer’s behalf, applies to determine the medical necessity of health care services and benefits for the diagnosis, prevention, and treatment of physical conditions and diseases on current generally accepted standards of health care.
(2) In conducting utilization review of all covered health care services and benefits for the diagnosis, prevention, and treatment of physical conditions and diseases in children, adolescents, and adults, a health insurer or an entity acting on the insurer’s behalf shall apply the criteria and guidelines set forth in the most recent versions of treatment criteria developed by the nonprofit professional association for the relevant clinical specialty.
(3) In conducting utilization review involving level of care placement decisions or any other patient care decisions that are within the scope of the sources specified in subdivision (b), a health insurer or an entity acting on the insurer’s behalf shall not apply different, additional, conflicting, or more restrictive utilization review criteria than the criteria and guidelines set forth in those sources. This subdivision does not prohibit a health insurer or an entity acting on the insurer’s behalf from applying utilization review criteria to health care services and benefits for physical conditions and diseases that meet either of the following criteria:
(A) Are outside the scope of the criteria and guidelines set forth in the sources specified in paragraph (2), provided the utilization review criteria were developed in accordance with paragraph (1).
(B) Relate to advancements in technology or types of care that are not covered in the most recent versions of the sources specified in paragraph (2), provided that the utilization review criteria were developed in accordance with paragraph (1).
(4) If a health insurer or an entity acting on the insurer’s behalf purchases or licenses utilization review criteria pursuant to subparagraph (A) or (B) of paragraph (3), the insurer or entity shall verify and document before use that the criteria were developed in accordance with paragraph (1).
(5) To ensure the proper use of the criteria described in paragraph (2), a health insurer or an entity acting on the insurer’s behalf shall do all of the following:
(A) Sponsor a formal education program by nonprofit clinical specialty associations to educate the health insurer’s staff, including any third parties contracted with the health insurer to review claims, conduct utilization reviews, or make medical necessity determinations about the clinical review criteria.
(B) Make the education program available to other stakeholders, including the health insurer’s participating providers and covered lives. Participating providers shall not be required to participate in the education program.
(C) Provide, at no cost, the clinical review criteria and any training material or resources to providers and insureds.
(D) Track, identify, and analyze how the clinical review criteria are used to certify care, deny care, and support the appeals process.
(E) Conduct interrater reliability testing to ensure consistency in utilization review decisionmaking covering how medical necessity decisions are made. This assessment shall cover all aspects of utilization review.
(F) Run interrater reliability reports about how the clinical guidelines are used in conjunction with the utilization management process and parity compliance activities.
(G) Achieve interrater reliability pass rates of at least 90 percent and, if this threshold is not met, immediately provide for the remediation of poor interrater reliability and interrater reliability testing for all new staff before they can conduct utilization review without supervision.
(6) A health insurer that authorizes a specific type of treatment by a provider pursuant to this section shall not rescind or modify the authorization after the provider renders the health care service in good faith and pursuant to this authorization for any reason, including the insurer’s subsequent rescission, cancellation, or modification of the insured’s or policyholder’s contract, or the insurer’s subsequent determination that it did not make an accurate determination of the insured’s or policyholder’s eligibility. This section does not expand or alter the benefits available to the insured.
(7) All medical necessity determinations by the health insurer concerning service intensity, level of care placement, continued stay, and transfer or discharge of insureds diagnosed with physical conditions and diseases shall be conducted in accordance with this subdivision. This subdivision does not deprive an insured of the other protections of this chapter, including grievances, appeals, independent medical review, discharge, transfer, and continuity of care.
(8) Notwithstanding any other law, a health insurer may utilize case management, network providers, utilization review techniques, prior authorization, copayments, or other cost sharing in the provision of benefits required by this section, if these practices are consistent with Section 10123.135 of this code, and Section 2052 of the Business and Professions Code.
(9) This section does not limit the independent medical review rights of an insured under this chapter.
(10) If the commissioner determines that an insurer has violated this subdivision, the commissioner may, after appropriate notice and opportunity for hearing in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), by order, assess a civil penalty not to exceed five thousand dollars ($5,000) for each violation, or, if a violation was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each violation.
(f) (1) To comply with this section, a health insurer may provide coverage for all or part of the health care services required by this section through a separate specialized health insurer or health insurer, and shall not be required to obtain an additional or specialized license for this purpose.
(2) A health insurer shall provide the physical conditions and diseases treatment coverage required by this section in its entire service area and in emergency situations as may be required by applicable laws and regulations. For purposes of this section, health insurance policies that provide benefits to insureds through preferred provider contracting arrangements may require insureds who reside or work in geographic areas served by specialized health insurers or health insurers to secure all or part of their health services within those geographic areas served by specialized health insurers or health insurers, if all physical conditions and diseases treatment services are actually available within those geographic service areas within timeliness standards.
(g) A health insurer shall not limit benefits or coverage for medically necessary services on the basis that those services should be or could be covered by a public entitlement program, including special education or an individualized education program, Medicaid, Medicare, Supplemental Security Income, or Social Security Disability Insurance, and shall not include or enforce a contract term that excludes otherwise covered benefits on the basis that those services should be or could be covered by a public entitlement program.
(h) A health insurer shall not adopt, impose, or enforce terms in its policies or provider agreements, in writing or in operation, that undermine, alter, or conflict with this section.
(i) For purposes of this section:
(1) “Generally accepted standards of care for physical conditions and diseases” means standards of care and clinical practice that are generally recognized by health care providers practicing in relevant clinical specialties. Valid, evidence-based sources establishing generally accepted standards of health care include peer-reviewed scientific studies and medical literature, clinical practice guidelines and recommendations of nonprofit health care provider professional associations, specialty societies and federal government agencies, and drug labeling approved by the United States Food and Drug Administration.
(2) “Medically necessary treatment of physical conditions and diseases” means a service or product addressing the specific needs of that insured, for the purpose of preventing, diagnosing, or treating an illness, injury, condition, or its symptoms, including minimizing the progression of that illness, injury, condition, or its symptoms, in a manner that is all of the following:
(A) In accordance with the generally accepted standards of care for physical conditions and diseases.
(B) Clinically appropriate in terms of type, frequency, extent, site, and duration.
(C) Not primarily for the economic benefit of the health insurer and policyholders or for the convenience of the insured, treating physician, or other health care provider.
(3) “Utilization review” means either of the following:
(A) Prospectively, retrospectively, or concurrently reviewing and approving, modifying, delaying, or denying, based in whole or in part on medical necessity, requests by health care providers, insureds, or their authorized representatives for coverage of health care services prior to, retrospectively or concurrent with the provision of health care services to insureds.
(B) Evaluating the medical necessity, appropriateness, level of care, service intensity, efficacy, or efficiency of health care services, benefits, procedures, or settings, under any circumstances, to determine whether a health care service or benefit subject to a medical necessity coverage requirement in a health insurance policy is covered as medically necessary for an insured.
(4) “Utilization review criteria” means any criteria, standards, protocols, or reviewed community guidelines used by a health insurer to conduct utilization review.
(j) This section does not apply to accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only insurance policies.
(k) This section does not deny or restrict the department’s authority to ensure insurer compliance with this chapter.