SB 855 — California's Mental Health and Substance Use Disorder Parity Law

What SB 855 Changed

Before SB 855, California's existing mental health parity act (dating to 1999) required parity coverage for only nine listed severe mental illnesses plus serious emotional disturbances in children. SB 855 expanded this to cover all mental health and substance use disorders listed in the DSM or ICD — a comprehensive expansion. SB 855 also defined 'medically necessary treatment' using a uniform standard tied to generally accepted standards of care published by relevant nonprofit professional associations, preventing insurers from defining medical necessity internally in ways that restrict coverage.

The Four Key Provisions for Inpatient Rehab Callers

(1) Residential and intermediate levels of care must be covered — not just acute outpatient. (2) Insurers cannot limit coverage to acute symptoms only — the underlying substance use disorder must be treated, not just the withdrawal. (3) Insurers cannot rescind prior authorization after care is delivered. (4) When no in-network provider is available within geographic or timely-access standards, the insurer must arrange out-of-network care at in-network cost-sharing levels. These four rules are actively enforced through the California Department of Insurance and Department of Managed Health Care.

The 2025 Enforcement Regulations

In July 2025, California Insurance Commissioner Ricardo Lara finalized new enforcement regulations under SB 855. Key provisions: adverse benefit determinations for substance use disorder treatment must be reviewed by a board-certified addiction specialist physician — not a general internist or non-specialist utilization reviewer. Integration with AB 988 crisis services means mobile crisis teams and stabilization are covered under parity. The regulations establish a formal complaint process and enforcement penalties for insurers that don't comply.

How to Appeal an SB 855-Covered Denial

Step 1: Internal appeal with the insurer within 180 days of the denial. Step 2: If the internal appeal fails, request an external Independent Medical Review (IMR) through the California Department of Managed Health Care (for DMHC-regulated HMOs and some PPOs) or Department of Insurance (for DI-regulated PPOs). IMR is free, decisions typically take 30 days or less, and when the IMR overturns a denial, the insurer must cover the care. Step 3: File a complaint with CDI at 1-800-927-4357 or CDI.insurance.ca.gov. Under the 2025 regulations, failure to use a board-certified addiction specialist in the denial review is itself grounds for complaint.

What SB 855 Does NOT Do

SB 855 applies to commercial plans regulated in California by DMHC or CDI. It does not apply to self-funded ERISA plans (which are regulated by federal law, primarily the federal Mental Health Parity and Addiction Equity Act — MHPAEA). Many large-employer plans are self-funded ERISA and therefore governed by MHPAEA, which has similar but not identical parity requirements. Check your plan documents or ask HR. It also does not apply to Medi-Cal, Medicare, or Tricare, which are governed separately.