California health insurers have rejected $4.1 million in payments owed to 11 counties for mobile mental health crisis services since 2024, leaving local governments to absorb the cost of sending clinicians instead of police to people in psychiatric distress. Contra Costa County alone billed insurers $2.47 million for hundreds of crisis responses between 2024 and mid-2026 but received only about $210,000 back — less than 10% of what it was owed.
A Pattern Stretching Across Northern California
The gap between what counties billed and what insurers paid shows up again and again in records reviewed by Bay Area News Group, as reported by East Bay Times. San Francisco charged insurers $253,000 for crisis responses and received about $4,000 in return, while San Mateo County billed more than $248,000 over a one-year period and collected roughly $1,500. Staff in 10 other counties reported similar trends to state regulators this year, according to the same report.
Unpaid claims date back to early 2024, and disputes can drag on for more than a year before they are resolved, the outlet reports. Contra Costa County staff have spent up to an hour navigating and disputing each denied claim, and the county has more than 200 claims that were denied without any explanation, per the same account. Privately insured patients made up nearly 15% of Contra Costa's mobile crisis encounters in the last fiscal year, yet the county was reimbursed for less than 10% of its billed mobile crisis costs overall.
The Law Behind the Dispute
At the center of the fight is the Miles Hall Lifeline Act, a 2022 California law that requires insurers to cover crisis responses for their members without prior authorization, even when the service is considered out of network. The law, sponsored by Assemblymember Rebecca Bauer-Kahan, was named for Miles Hall, a 23-year-old who was killed by Walnut Creek police in 2019 during a mental health crisis, and it also established California's statewide 9-8-8 mental health hotline. Advocates have called on Governor Gavin Newsom's administration to more aggressively enforce the law.
Specific denials illustrate the pattern county officials describe. Contra Costa Health billed United Healthcare $2,350 for a crisis intervention in June 2025, and the insurer paid nothing, labeling the billing code non-payable. A separate 2024 claim for $2,283 submitted to United Healthcare was described by the insurer as non-covered. In Santa Cruz County, a roughly $2,500 bill sent to Cigna Healthcare for a crisis response last year was paid at just $27. Blue Shield of California denied more than $11,000 in Merced County crisis payments, citing out-of-network status and lack of preauthorization — grounds state law is supposed to prohibit when it comes to crisis responses.
State Regulators Are Watching
The California Department of Managed Health Care can fine insurers for mishandling payment disputes and is scrutinizing claims that counties say were denied or underpaid by United Healthcare, Anthem Blue Cross, Cigna and other insurers, East Bay Times reported. The agency sent insurers a compliance guidance letter in March 2025, and by the time California lawmakers held a hearing on mobile crisis billing in May, the department had already analyzed more than 1,000 denied or underpaid claims. Records collected by Bay Area News Group documented more than 1,800 denied or underpaid claims across the 11 counties, with Contra Costa County alone accounting for more than 1,000 of them. The agency has not said when its investigation will wrap up.
Mary Ellen Grant, responding on behalf of insurers, said carriers assess claims based on the completeness of billing documentation, coding issues and coverage requirements, and that some counties' reimbursement challenges deserve careful review. Michelle Doty Cabrera countered that insurance companies continue collecting premiums while the public safety net goes unpaid for doing the work. Tara Gamboa-Eastman said commercial insurance reimbursement problems persist statewide, not just in a handful of counties.
Why Counties Built These Teams in the First Place
Mobile crisis response teams now serve as an alternative to police for thousands of people with mental health conditions each year across Northern California, and state and local governments have spent hundreds of millions of taxpayer dollars building the programs since the pandemic. The Newsom administration set 2023 deadlines requiring every county to offer round-the-clock, non-law-enforcement crisis responses, following scrutiny of police shootings involving people in psychiatric crisis — including a Mercury News investigation that found 80% of people killed by San Jose police between 2014 and 2021 were mentally impaired or intoxicated. Contra Costa Health launched its own mobile crisis team in 2022, and in Santa Cruz County, pairs of clinicians respond to calls, offering either phone-based de-escalation or an in-person visit.
California made mobile crisis response a statewide Medi-Cal benefit effective January 1, 2023, a change the National Health Law Program notes was projected to cost roughly $1.4 billion over five years, with research showing crisis responders reduce unnecessary emergency department visits and inpatient psychiatric stays. But that funding stream now faces its own uncertainty. According to CalMatters, the governor has proposed making mobile crisis response an optional Medi-Cal benefit and funding it only through March 2027 before shifting costs to counties, which could then face annual bills of $150 million to $200 million to keep the programs running. San Joaquin County's behavioral health services director told CalMatters that crisis calls in her county rose 15% this year compared with last, even as the funding picture darkens. The National Health Law Program has warned that allowing counties to drop coverage once enhanced federal funding expires would sharply reduce the availability of these services statewide.
For now, the unresolved insurance disputes sit on top of that looming budget fight, leaving counties straining to pay for crisis teams that state law pushed them to build while insurers withhold reimbursement for the very law meant to guarantee it.
