Governor Jared Polis today signed bipartisan legislation to save Coloradans money on health care. The new law will reduce health care costs for families by standardizing insurance coverage determinations to ensure that mental health care is based on clinical evidence, not profit margins.
“Health care coverage decisions should be made using the best evidence-based recommendations of health care professionals, not on profit margins,” said Rep. Kyle Brown, D-Louisville. “Right now, too many Coloradans struggle to receive the care they need while insurance companies continue to deny coverage for behavioral health care. This new law helps standardize insurance coverage decisions so Coloradans can actually access the behavioral health services they pay for.”
“Access to mental health care and substance abuse treatment is crucial to the health and well-being of Colorado families,” said Sen. Judy Amabile, D-Boulder. “Far too often, insurance companies deny medically necessary mental health claims with little to no justification, and Coloradans who are already struggling end up with huge costs or no care at all. This legislation will help Coloradans get the care they need at a price they can afford.”
“Health insurance companies should cover services for mental health care at the same level they do for all other care, but far too often they deny claims when the care is necessary,” said Rep. Lindsay Gilchrist, D-Denver. “When insurance doesn’t cover claims, that drives up costs for families, and it makes it harder for Coloradans, especially young people, to receive critical care, as too many still don’t receive care at all. Colorado has made major strides in recent years to invest in behavioral health care, and this law carries on this work by ensuring providers can’t deny insurance coverage for medically necessary health care. We’re saving Coloradans money on health care and improving access to the care people need.”
HB25-1002, also sponsored by Senator Bryon Pelton, R-Sterling, ensures that insurance companies use transparent, evidence-based criteria and programming when deciding whether mental health care should be covered under an insurance plan. The law also codifies the federal Mental Health Parity and Addiction Equity Act into state law, requiring insurance companies to provide the same level of coverage for mental health services as they do for physical health services. The goal of HB25-1002 is to ensure that insurance providers are covering mental health care and to limit gaps in insurance coverage for Coloradans.
The law also clarifies state law around mental health parity and requires the use of clinical standards from select national organizations to ensure parity.
CAHP Raised Concerns About Implementation and Patient Impact
While supporting the goal of expanded access to behavioral health care, the Colorado Association of Health Plans (CAHP) raised several concerns about HB25-1002, emphasizing unintended consequences that could adversely affect patients, affordability, and health plan operations.
Potential for Unnecessary Institutionalization
CAHP warned that the law’s provisions may lead to longer stays at higher levels of care—even when patients could be safely treated in community-based or outpatient settings. Requiring coverage for the next higher level of care when a recommended setting is unavailable, without a mechanism to transition patients as they improve, risks prolonging stays and limiting access for those with more acute needs.
Overreliance on a Narrow Set of Criteria
The legislation mandates use of certain tools like LOCUS, which were designed for placement—not for comprehensive medical necessity determinations. CAHP expressed concern that the law excludes other widely accepted, evidence-based guidelines used by health plans, like InterQual or MCG (formerly Milliman), and limits insurer flexibility to make patient-centered decisions informed by evolving clinical science.
Risk of Increased Costs and Reduced Quality Oversight
CAHP highlighted potential cost increases due to mandatory coverage of services in high-cost residential settings, particularly when some providers may have financial incentives to recommend institutional care. Additionally, requiring insurers to coordinate care for out-of-network facilities without contractual oversight could strain plan resources and increase premiums.
Legal and Operational Ambiguity
The law reflects language drawn from the now-overturned Wit v. United Healthcare case, which CAHP believes introduces legal confusion. Moreover, tying implementation to the Department of Health Care Policy and Financing (HCPF) adopting identical criteria for Medicaid raises questions about timing and consistency across coverage programs.
“We fully support mental health parity, but we believe this legislation will have the opposite effect for some patients by reducing flexibility, limiting the use of other evidence-based criteria, and risking longer stays in higher-cost settings—even when they are not clinically necessary,” said Kevin McFatridge, Executive Director of CAHP. “Our focus remains on ensuring access to high-quality, affordable, and evidence-based mental health care that meets patients where they are.”
CAHP encourages ongoing dialogue with policymakers and regulators to ensure implementation supports both access and quality, and to minimize negative impacts on Colorado consumers and the broader health system.
