People who have received mental health care know how difficult it is to get insurance to cover it.

A bill that passed both houses of the state Legislature last week would eliminate some of the obstacles in New Jersey that force many people to forgo care or go broke paying the bills, according to mental health advocates in the state.

Sponsored by state Assembly Speaker Craig Coughlin, D-Middlesex, and state Senate Minority Leader Tom Kean Jr., R-Union, the legislation (A2031) now awaits action by Gov. Phil Murphy, who can either veto it or sign it into law.

One of the goals of the legislation is to end the practice of expecting patients to “fail first” by taking a cheaper drug or going through outpatient care instead of receiving the medication or inpatient service their doctor recommended that invariably costs more, said Carolyn Beauchamp, the president and CEO of the Mental Health Association in New Jersey.

“Why would an insurance company know better than a doctor? Why we are listening to insurance companies? They are just trying to save money,” Beauchamp said.

People with serious mental illnesses and addictions are more likely than people with physical ailments to face rejection when they seek prior authorization from their insurance carrier, Beauchamp said. This inequity was supposed to be outlawed with the passage of the landmark federal Mental Health Parity and Addiction Equity Act of 2008. Insurance companies are required to provide equal coverage for mental illnesses in the same way they cover physical ailments and diseases.

And in some respects, the law worked, advocates said. Insurance companies are compelled to cover an agreed-to number of talk therapy sessions for a person with major depression just as they have covered a set number of physical therapy appointments with an injured ankle.

“There is much more stringent prior authorizations for mental health than for medical conditions, but there has been no way to prove that. This bill would provide transparency,” Beauchamp said.

Roxanne Schwartz of Hunterdon County said the failure of the parity law was evident after her son was discharged from an addiction treatment center in Florida, “despite the recommendations from the clinical staff he was at a high risk of relapse.”

“He was discharged and attempted suicide two days later,” Schwartz told the Assembly Insurance and Financial Institutions Committee when she testified in support of the bill in September.

After her son spent two days in the hospital, a judge ordered he be sent to inpatient treatment, Schwartz said.

“The insurance company denied it. We paid out of pocket," which meant liquidating retirement savings, she said. “We were just trying to keep him alive."

The bill requires coverage for all mental illnesses defined by the Diagnostic and Statistical Manual of Mental Disorders, the reference guide for all mental health practitioners. If the mental illness, emotional disorder, addiction, and developmental disability such as autism is in the manual, it must be covered.

Secondly, the legislation will require insurance companies to compile a report every year demonstrating how it complied with state and federal parity laws. The report must include information about policy holders challenges for denied mental health coverage, and the criteria the insurance carrier uses to show it treated requests for mental health the same as it does for physical ailments, according to the bill.

The state Department of Banking and Insurance must review these reports and determine whether the companies are following the law. The department must submit a report to the state Legislature every year “detailing any educational or corrective actions the department has taken to ensure compliance” with the parity law, according to the bill.

Individual insurance carriers won’t be identified, the bill said.

The report to the Legislature must be written in “understandable language” and posted on the Banking and Insurance website.

“The state is supposed to track complaints filed and enforce compliance with the parity law," said attorney Jodi Bouer, an adviser to the advocacy organization Autism New Jersey and whose law practice in Princeton focuses on families seeking coverage for the treatment of developmental disabilities. “The department is allowed to fine companies if they violate the law. That’s a really good thing.”

Bouer said she’s seen scores of “sneaky, insidious” violations of the parity act, like when an insurance company has denied residential treatment a patient blatantly needs, sending desperate families down a long path of appeals that often fail. She recalled representing a family whose child with autism tried to injury himself 150 times a day. His doctor recommended the child be sent to the Kennedy Krieger Institute, a residential facility in Maryland because New Jersey did not have a similar facility. The insurance carrier denied it.

The bill “creates a mechanism to collect these violations that can help families” and “stop carriers from systemically applying these arbitrary limits," Bouer said.

New Jersey would join California, Delaware, the District of Columbia, Illinois and Tennessee in holding insurance carriers accountable for the breadth of mental health coverage they provide. If Murphy signs the bill, mental health advocates would declare it a major consumer rights victory.

“While we have laws that require parity, this law would require accountability and transparency to assure these laws are carried out and followed,” Barbara Johnston, policy and advocacy director for the Mental Health Association in New Jersey.

The legislation won’t solve all of the problems that make mental health care unaffordable. Many psychiatrists, psychologists and other licensed mental health professors stopped accepting insurance long ago, frustrated by the the arduous paperwork required to collect what amounted to meager reimbursement rates.

Of the 1,500 psychiatrists practicing in New Jersey five years ago, only 172 were in-network, accepting new patients and able to see them within a two-week period, according to a survey by the Mental Health Association in New Jersey.

Would the passage of this law make mental health practitioners more likely to join an insurance network? “One can only hope,” Johnston said. "If that is a byproduct, that would be wonderful.

The New Jersey Association of Health Plans, the industry group for managed care companies, withdrew its opposition to the bill, association President Ward Sanders said.

“This will improve access to behavioral health care, just by assuring that there is equal access to treatment,” Johnston said.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.