An act to amend Section 3428 of the Civil Code, to add Section 1367.52 to the Health and Safety Code, and to add Section 10123.52 to the Insurance Code, relating to health care.
AB 980 would require California health care service plans and health insurance policies issued, amended, or renewed on or after January 1, 2026, to cover medically necessary treatment of physical conditions and diseases on the same terms and conditions applied to other medical conditions. The bill is structured to prohibit plans and insurers from limiting coverage to short-term or acute treatment and to require coverage of basic health care services, intermediate levels of care such as residential treatment, partial hospitalization, and intensive outpatient treatment, and prescription drugs when included in the policy or contract.
The bill also requires plans and insurers to provide out-of-network coverage when medically necessary services are not available in-network within geographic and timely access standards, with enrollees paying no more than in-network cost sharing. It further directs plans and insurers to base medical necessity and utilization review decisions on current generally accepted standards of care and the most recent specialty-society treatment criteria, and it imposes documentation, training, interrater reliability, and reporting requirements for utilization review processes. The bill applies to both Knox-Keene-regulated health care service plans and state-regulated health insurers, with specified exclusions for certain policy types and Medi-Cal managed care contracts.
AB 980 would amend Civil Code Section 3428 and add new provisions to the Health and Safety Code and Insurance Code, expanding statutory coverage rules for medically necessary treatment of physical conditions and diseases in commercial health plans and health insurance policies. It would create new compliance obligations for utilization review, out-of-network access, provider authorization stability, and parity in financial terms, while authorizing the Department of Managed Health Care and the Insurance Commissioner to enforce the new requirements through administrative or civil penalties. The bill also narrows the definition of medically necessary health care service in Civil Code Section 3428 to mean legally prescribed care that is reasonable and consistent with the medical community standard.
The bill appears to have been introduced as a health coverage expansion measure and, based on the legislative digest, received a majority key vote designation, suggesting it advanced with at least some support in committee. No committee transcript or recorded floor votes were provided, so there is no direct evidence of debate in the supplied materials. Overall, the measure is framed in consumer-protection terms, with an emphasis on equal treatment of physical health coverage and stronger oversight of insurer utilization review practices.
The main points of potential contention are likely to be the bill’s expanded coverage mandates and the detailed restrictions it places on utilization review, including the requirement to follow specialty-society criteria, the 90 percent interrater reliability threshold, and limits on rescinding prior authorizations after services are rendered. Insurers and managed care plans may view these provisions as increasing administrative burden, reducing flexibility in medical necessity review, and potentially increasing costs, while supporters would likely argue that the bill prevents restrictive coverage practices and improves access to medically necessary care. Another likely issue is the bill’s requirement to cover out-of-network services when in-network access is unavailable, which could raise cost and network-management concerns.