Senate budget committee presses DMHC on enforcement after Kaiser settlement and high IMR overturn rates

The California State Senate Budget and Fiscal Review Committee heard testimony on DMHC oversight of behavioral health coverage and enforcement of state parity and timely-access rules, with members pressing the regulator about high appeal reversal rates and ongoing network problems.

Chair Scott Wiener opened the hearing by saying the committee would examine “regulation of critical consumer protections in California's commercial health insurance market, and with enforcement by the Department of Managed Healthcare.”

Why it matters: Committee members and outside advocates told DMHC leadership the department’s enforcement must be stronger because many consumers never reach independent review, and when they do the denial is often overturned. Department witnesses described multi-year investigations and a high rate of reversals on independent medical reviews that the department said it is tracking and trying to address.

DMHC’s role and recent enforcement actions Mary Watanabe, director of the Department of Managed Health Care, told the panel the agency licenses about 40 health plans that cover nearly 30 million Californians and that DMHC is funded by assessments on health plans rather than the general fund. She summarized the department’s tools for enforcing parity and timely access — routine triannual medical surveys, complaint-driven nonroutine surveys, focused behavioral-health investigations funded in the 2021 budget and a new regulation implementing SB 855 and SB 221.

Watanabe described a multistage enforcement response to systemic problems at Kaiser Permanente: "The Kaiser settlement agreement is a good example of the various components of our oversight work and how we monitor compliance," she said, noting DMHC opened nonroutine surveys and a targeted enforcement investigation and later reached a settlement that…