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AB 980

Health care: medically necessary treatment.

2025-2026 Regular Session Introduced by Joaquin Arambula

Requires health plans to cover medically necessary treatment with parity, use defined criteria for reviews, and clarifies plan liability when denial or delay causes substantial har

Re-referred to Com. on HEALTH.
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Bill Summary · AB 980

AB 980 (Arambula) — Summary: Health care — medically necessary treatment

Status: Re-referred to Assembly Committee on Health (Apr 22, 2025)
Introduced: Feb 20, 2025

Purpose

AB 980 clarifies and expands requirements around coverage, utilization review, and insurer liability for medically necessary treatment. The bill aims to (1) require parity and access for medically necessary treatment of physical conditions and diseases and (2) define “medically necessary” for purposes of managed care duty-of-care liability.

Key provisions

  • Coverage parity (Health & Safety Code §1367.52 — new)

    • For health care service plan contracts issued, amended, or renewed on or after January 1, 2026, plans must provide coverage for medically necessary treatment of physical conditions and diseases under the same terms and conditions applied to other medical conditions (parity-style requirement).
    • If medically necessary services are not available within applicable geographic and timely access standards, the plan must deliver those services out of network.

  • Utilization review requirements

    • Plans and insurers must apply specified clinical criteria and guidelines when conducting utilization review of covered services for physical conditions and diseases (text references “specified clinical criteria and guidelines”; bill authorizes regulators to define/oversee use).
    • The Director of the Department of Managed Health Care (DMHC) and the Insurance Commissioner are authorized to assess administrative or civil penalties for violations of the utilization-review requirements.

  • Duty of care and definition of “medically necessary” (Civil Code §3428 — amended)

    • Amends the managed-care duty-of-care statute to define “medically necessary health care service” as “legally prescribed medical care that is reasonable and comports with the medical community standard.”
    • Retains existing elements of liability: a plan or managed care entity has a duty to arrange medically necessary care and is liable where failure to exercise ordinary care causes denial, delay, or modification of recommended care and the enrollee suffers “substantial harm” (defined in statute).

  • Other statutory clarifications retained

    • Health care service plans and managed care entities are not health care providers.
    • Plans may not seek indemnity from providers for liabilities under the duty-of-care provision.
    • Waiver by an enrollee of these rights is void.
    • Independent review exhaustion is generally required before suing, except where substantial harm has occurred or is imminent.

Who is affected

  • Health care service plans, managed care entities, and health insurers operating in California
  • Plan subscribers and enrollees (patients) who seek medically necessary treatment for physical conditions or diseases
  • Providers (may see increased out-of-network referrals and payment disputes)
  • Regulators (DMHC, Department of Insurance) — enforcement responsibilities

Enforcement, penalties, and fiscal notes

  • Regulators (DMHC and Insurance Commissioner) can levy administrative or civil penalties for noncompliance with utilization review and access requirements.
  • The bill makes willful violations by health care service plans a crime (per existing framework), which creates a state-mandated local program; however, the bill text states no state reimbursement is required for that mandate for a specified reason.

Timeline and legislative status

  • Applies to contracts issued, amended, or renewed on or after Jan 1, 2026.
  • Legislative actions: introduced Feb 20, 2025; referred to Health and Judiciary committees; amended and re-referred to Health (Apr 21–22, 2025). Full text in the posted version is partially truncated.

Potential impacts and considerations

  • Could increase access to out-of-network medically necessary services when in-network timely/geographic access is inadequate.
  • May require plans to revise utilization-review protocols, adopt defined clinical criteria, and possibly face increased administrative costs and penalties for noncompliance.
  • May raise litigation risk and clarify standards for liability where plan actions cause substantial harm.
  • Specific operational impacts (costs, premium effects) are not quantified in the bill text.

Note: Some bill text provided was truncated; this summary is based on the Legislative Counsel’s Digest and the available sections of the bill.

Compiled from official sources — confirm details with the bill’s official record.

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