California’s latest health-care fight is zeroing in on a quiet but high-stakes corner of the system: what happens after an insurer says “no.” A new proposal, SB 363, would require insurers to publicly reveal how often they deny treatment and would hit them with escalating penalties when state reviewers later decide those denials were wrong. Supporters say the bill could keep more children, especially those needing mental-health care, from abruptly losing services their clinicians say they need. Insurers say the plan piles on duplicate rules and fresh costs.
How SB 363 would work and the penalties
Under SB 363, state-regulated plans and insurers would have to report every treatment denial and categorize them as medical, behavioral, surgical, or pharmaceutical. Those denial numbers would then be compared with the outcomes of independent medical reviews. If more than 50% of a plan’s reviews in any category are overturned, the plan would face fines that start at $25,000 and climb to at least $500,000 for repeat violations.
The bill directs regulators to publish the data and states that the intent is to use penalty funds to support child health services. The bill text on the California Legislature site notes that willful violations could trigger additional enforcement. State Sen. Scott Wiener, who authored the bill, has framed the measure as an accountability push on his Senate page.
Data show denials are often reversed — and most never get appealed
State numbers illustrate the gap that SB 363 seeks to close. Roughly 73% of cases that make it to the Department of Managed Health Care’s independent medical-review process end with the originally denied care being authorized, according to the DMHC. In other words, when consumers push hard enough to get an outside review, they often win.
But a KFF review of federal 2023 claims data found that consumers appeal fewer than 1% of denied claims, meaning the vast majority of denials never reach an external reviewer, KFF reported. Advocates say that combination — high overturn rates for the few cases that are challenged and extremely low appeal rates overall — is exactly why public reporting and tougher oversight matter so much for kids’ mental-health care.
Supporters say children pay the price; insurers warn of burden
Children Now, an Oakland-based child-advocacy group co-sponsoring SB 363, argues that denials set off a “domino effect” for families. When kids lose access to recommended treatment, parents scramble for alternatives, clinical progress can stall and already-fragile support systems get stretched thinner.
Industry groups are pushing back. The California Association of Health Plans says the bill duplicates some reporting requirements already on the books and would impose “severe penalties” that could raise costs and complicate day-to-day operations, Times of San Diego reports. That basic split — consumer accountability versus administrative and cost concerns — is already shaping how the bill is being received in Sacramento.
Enforcement history shows what penalties can do
California regulators have not been shy about using fines and settlements to force changes when they see systemic problems. In 2023, the Department of Managed Health Care announced a major settlement with Kaiser Permanente that included a $50 million penalty as part of a broader $200 million agreement intended to overhaul behavioral-health services. The DMHC said the settlement required corrective actions to improve access to and the timeliness of care.
At the same time, the broader coverage landscape is shifting. The Centers for Medicare & Medicaid Services reported about 22.8 million marketplace plan selections during the 2026 open-enrollment period, and the data indicate enrollment is lower than last year. Advocates say that kind of softening in coverage makes it even more urgent to protect children’s access to services that are supposed to be covered in the first place.
What comes next
SB 363 has already cleared the Senate and moved into the Assembly Appropriations Committee, where it was carried into the new legislative session. Lawmakers will now continue to haggle over amendments and stakeholder objections as hearings move forward.
Supporters argue that public data and meaningful penalties will curb improper denials and keep children in care. Critics warn the bill risks layering on repetitive reporting rules and extra administrative burden. For those tracking every step, the full bill text and action history remain available through the state legislature’s website.
