On March 20, Governor Jared Polis signed House Bill 25-1002 into law, a measure designed to ensure insurance companies provide equitable coverage for mental health and substance use disorder treatment. The legislation establishes a uniform definition of “medical necessity” for behavioral health services, limiting insurers' ability to deny coverage based on their own criteria and reinforcing existing mental health parity laws.
The law mandates that insurers cover prevention, screening, and treatment for mental health and substance use disorders at levels comparable to physical health coverage. It also requires that placement decisions such as admission, continued stay, transfer, and discharge follow standards set by organizations like the American Academy of Child and Adolescent Psychiatry and the American Association for Community Psychiatry rather than relying on insurers’ internal guidelines. Treatments deemed medically necessary must align with nationally recognized standards, preventing insurers from using restrictive internal policies to deny claims.
By standardizing how insurers determine medical necessity, the legislation aims to prevent companies from arbitrarily rejecting coverage for mental health treatments. Proponents argue these changes will help ensure patients receive the care their providers recommend. Opponents have argued that the measure could drive up healthcare costs and restrict insurers' ability to manage coverage effectively.
The Colorado Center on Law and Policy (CCLP) has supported the measure, emphasizing that it will strengthen accountability and protect residents from the financial burden of denied reimbursements for essential treatments. The organization argues that by holding insurers accountable to federal and state parity laws, the bill will help address long-standing disparities in mental health care access.
In a press release, Governor Polis praised the law’s passage. “More transparency into how health insurers decide what services are covered and why helps providers and patients,” he said. “This new law reduces uncertainty and increases transparency in mental health coverage to ensure Coloradans get the care they need.”
The bill’s enactment marks a significant step toward achieving parity between mental and physical health care coverage. It comes as part of Colorado's broader efforts to improve behavioral health access, ensuring individuals receive comprehensive care without unnecessary barriers from insurance providers.
