On July 13, the California Department of Insurance (CDI) announced its issuance of a Show Cause Order and commencement of an enforcement action against Blue Shield of California Life and Health Insurance Company (Blue Shield) for failing to comply with the California Mental Health Parity Act (MHPA) and the California Insurance Code.  At issue is Blue Shield’s denial of coverage for autism treatments known as Applied Behavior Analysis (ABA) therapy.

The MHPA requires coverage for the diagnosis and medically necessary treatment of “severe mental illnesses” which the Act defines to include “[p]ervasive developmental disorder or autism.”  The CDI enforcement action arises from complaints filed by the parents of two children diagnosed with autism.  The children’s treating physicians prescribed ABA therapy.  Blue Shield denied coverage for the therapy, claiming that the treatments are medically unnecessary, experimental, not administered by a licensed provider, and a therapy for non-covered learning disabilities and social skills training.

The parents sought an Independent Medical Review (IMR) through the CDI. The IMR procedure allows California citizens to obtain an independent physician’s review and determination of whether a disputed health care service is medically necessary.  The IMR ruled the ABA therapy medically necessary for the treatment of autism for both children, and the CDI adopted the IMR decisions. The CDI then ordered Blue Shield to provide coverage for the medical services, but Blue Shield refused for the same reasons given initially.

The Order to Show Cause alleges claims for unfair competition and deceptive practices in violation of the California Insurance Code and violations of the MHPA.  The Order requires Blue Shield to appear before the Commissioner of Insurance on a date to be determined and seeks  a cease and desist order against Blue Shield, monetary penalties, and suspension of its certificate of authority not to exceed one year.  A copy of the Order is available by clicking here