Proposed legislation could make California one of only a handful of states that require insurers to disclose denial rates and reasoning, which the industry often considers proprietary information. Senate Bill 363 seeks to force insurers to be more judicious with denials by fining them up to $1 million per case if more than half of appeals filed with regulators are overturned in a year.
“When you have health insurance, you should have confidence that it’s going to cover your health care needs,” Democratic Sen. Scott Wiener of San Francisco, who introduced the bill, told the Los Angeles Times. “They can just delay, deny, obstruct and, in many cases, avoid having to cover medically necessary care, and it’s unacceptable.”
Recommended For You
About two-thirds of appeals made to the Department of Managed Health Care, which regulates the vast majority of health plans, resulted in an insurer’s initial denial being reversed in 2023. Although the proposed legislation would cover only about one-third of insured Californians whose health plans are regulated by the state, experts say it could be one of the boldest attempts in the nation to rein in health insurer denials, before and after care is given.
There no way to know how often insurers deny care in the state, which health experts say is especially troubling as mental health needs are reaching crisis levels among children and young adults. According to Keith Humphreys, a health policy professor at Stanford University, it’s easier to deny mental health care because a diagnosis can be more subjective than that of a broken limb or cancer.
Under Wiener’s proposal, private insurers regulated by the state’s Department of Managed Health Care, Department of Insurance or both would be required to submit detailed data about denials and appeals. They also would need to explain those denials and report the outcomes of appeals.
Lawmakers cross the nation increasingly have looked for ways to verify that insurers are paying claims fairly. In 2024, 17 states enacted legislation dealing with prior authorization of care by private insurers, according to the National Conference of State Legislatures. For example, Connecticut, which has one of the most robust denial rate disclosure laws, publishes an annual report card detailing the number and percentage of claims each insurer has denied, as well as the share that ends up getting reversed. Oregon published similar information until recently, when state disclosure requirements lapsed.
Large employers are starting to include language in contracts with claim administrators that would penalize insurance providers for approving too many or too few claims, said Shawn Gremminger, president of the National Alliance of Healthcare Purchaser Coalitions. A spokesperson for the California Association of Health Plans declined to comment, saying the group still was reviewing the bill‘s language.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
