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110th Congress Rept. 110-374
HOUSE OF REPRESENTATIVES
1st Session Part 2
======================================================================
PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF 2007
_______
October 15, 2007.--Ordered to be printed
_______
Mr. Rangel, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1424]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1424) to amend section 712 of the Employee
Retirement Income Security Act of 1974, section 2705 of the
Public Health Service Act, and section 9812 of the Internal
Revenue Code of 1986 to require equity in the provision of
mental health and substance-related disorder benefits under
group health plans, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Paul Wellstone
Mental Health and Addiction Equity Act of 2007''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 3. Amendments to the Public Health Service Act relating to the
group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.
SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974.
(a) Extension of Parity to Treatment Limits and Beneficiary Financial
Requirements.--Section 712 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1185a) is amended--
(1) in subsection (a), by adding at the end the following new
paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services,
the plan or coverage may not impose any treatment limit
on mental health and substance-related disorder
benefits that are classified in the same category of
items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items and
services furnished on an inpatient basis and
outside any network of providers established or
recognized under such plan or coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items and
services furnished on an outpatient basis and
outside any network of providers established or
recognized under such plan or coverage.
``(D) Treatment limit defined.--For purposes of this
paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this subsection,
a treatment limit or financial requirement with respect
to a category of items and services is considered to be
predominant if it is the most common or frequent of
such type of limit or requirement with respect to such
category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified
under paragraph (3)(C)), the plan or coverage may not
impose such a beneficiary financial requirement on
mental health and substance-related disorder benefits
for items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-pocket
limits, and similar financial requirements.--If
the plan or coverage includes a deductible, a
limitation on out-of-pocket expenses, or
similar beneficiary financial requirement that
does not apply separately to individual items
and services on substantially all medical and
surgical benefits within a category of items
and services (as specified in paragraph
(3)(C)), the plan or coverage shall apply such
requirement (or, if there is more than one such
requirement for such category of items and
services, the predominant requirement for such
category) both to medical and surgical benefits
within such category and to mental health and
substance-related disorder benefits within such
category and shall not distinguish in the
application of such requirement between such
medical and surgical benefits and such mental
health and substance-related disorder benefits.
``(ii) Other financial requirements.--If the
plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--For
purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that follows
through ``(1) as requiring'' and inserting ``construed
as requiring'';
(B) by striking ``; or'' and inserting a period; and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision of
Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section is
further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-network
benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--For
purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and services,
whether furnished on an inpatient or
outpatient basis, required for the
treatment of an emergency medical
condition (including an emergency
condition relating to mental health and
substance-related disorders).
``(II) Inpatient.--Items and services
not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a plan
(or coverage), the applicable percentage described in
this paragraph shall be--
``(i) 2 percent in the case of the first plan
year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations as
to increases in actual costs under a plan (or coverage)
for purposes of this subsection shall be made by a
qualified actuary who is a member in good standing of
the American Academy of Actuaries. Such determinations
shall be certified by the actuary and be made available
to the general public.
``(D) 6-month determinations.--If a group health plan
(or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--An election to modify coverage
of mental health and substance-related disorder
benefits as permitted under this paragraph shall be
treated as a material modification in the terms of the
plan as described in section 102(a)(1) and shall be
subject to the applicable notice requirements under
section 104(b)(1).''.
(f) Change in Exclusion for Smallest Employers.--Subsection (c)(1)(B)
of such section is amended--
(1) by inserting ``(or 1 in the case of an employer residing
in a State that permits small groups to include a single
individual)'' after ``at least 2'' the first place it appears;
and
(2) by striking ``and who employs at least 2 employees on the
first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be construed
to preempt any State law that provides greater consumer
protections, benefits, methods of access to benefits, rights or
remedies that are greater than the protections, benefits,
methods of access to benefits, rights or remedies provided
under this section.
``(2) ERISA.--Nothing in this section shall be construed to
affect or modify the provisions of section 514 with respect to
group health plans.''.
(i) Conforming Amendments to Heading.--
(1) In general.--The heading of such section is amended to
read as follows:
``SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act is amended by striking the item relating to section
712 and inserting the following new item:
``Sec. 712. Equity in mental health and substance-related disorder
benefits.''.
(j) Effective Date.--The amendments made by this section shall apply
with respect to plan years beginning on or after January 1, 2008.
SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE
GROUP MARKET.
(a) Extension of Parity to Treatment Limits and Beneficiary Financial
Requirements.--Section 2705 of the Public Health Service Act (42 U.S.C.
300gg-5) is amended--
(1) in subsection (a), by adding at the end the following new
paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services
(specified in subparagraph (C)), the plan or coverage
may not impose any treatment limit on mental health and
substance-related disorder benefits that are classified
in the same category of items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items and
services furnished on an inpatient basis and
outside any network of providers established or
recognized under such plan or coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items and
services furnished on an outpatient basis and
outside any network of providers established or
recognized under such plan or coverage.
``(D) Treatment limit defined.--For purposes of this
paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this subsection,
a treatment limit or financial requirement with respect
to a category of items and services is considered to be
predominant if it is the most common or frequent of
such type of limit or requirement with respect to such
category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified in
paragraph (3)(C)), the plan or coverage may not impose
such a beneficiary financial requirement on mental
health and substance-related disorder benefits for
items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-pocket
limits, and similar financial requirements.--If
the plan or coverage includes a deductible, a
limitation on out-of-pocket expenses, or
similar beneficiary financial requirement that
does not apply separately to individual items
and services on substantially all medical and
surgical benefits within a category of items
and services, the plan or coverage shall apply
such requirement (or, if there is more than one
such requirement for such category of items and
services, the predominant requirement for such
category) both to medical and surgical benefits
within such category and to mental health and
substance-related disorder benefits within such
category and shall not distinguish in the
application of such requirement between such
medical and surgical benefits and such mental
health and substance-related disorder benefits.
``(ii) Other financial requirements.--If the
plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--For
purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that follows
through ``(1) as requiring'' and inserting ``construed
as requiring'';
(B) by striking ``; or'' and inserting a period; and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision of
Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section is
further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-network
benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--For
purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and services,
whether furnished on an inpatient or
outpatient basis, required for the
treatment of an emergency medical
condition (including an emergency
condition relating to mental health and
substance-related disorders).
``(II) Inpatient.--Items and services
not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a plan
(or coverage), the applicable percentage described in
this paragraph shall be--
``(i) 2 percent in the case of the first plan
year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations as
to increases in actual costs under a plan (or coverage)
for purposes of this subsection shall be made by a
qualified actuary who is a member in good standing of
the American Academy of Actuaries. Such determinations
shall be certified by the actuary and be made available
to the general public.
``(D) 6-month determinations.--If a group health plan
(or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--A group health plan under this
part shall comply with the notice requirement under
section 712(c)(2)(E) of the Employee Retirement Income
Security Act of 1974 with respect to the a modification
of mental health and substance-related disorder
benefits as permitted under this paragraph as if such
section applied to such plan.''.
(f) Change in Exclusion for Smallest Employers.--Subsection (c)(1)(B)
of such section is amended--
(1) by inserting ``(or 1 in the case of an employer residing
in a State that permits small groups to include a single
individual)'' after ``at least 2'' the first place it appears;
and
(2) by striking ``and who employs at least 2 employees on the
first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be construed
to preempt any State law that provides greater consumer
protections, benefits, methods of access to benefits, rights or
remedies that are greater than the protections, benefits,
methods of access to benefits, rights or remedies provided
under this section.
``(2) Construction.--Nothing in this section shall be
construed to affect or modify the provisions of section 2723
with respect to group health plans.''.
(i) Conforming Amendment to Heading.--The heading of such section is
amended to read as follows:
``SEC. 2705.''.
(j) Effective Date.--The amendments made by this section shall apply
with respect to plan years beginning on or after January 1, 2008.
SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
(a) Extension of Parity to Treatment Limits and Beneficiary Financial
Requirements.--Section 9812 of the Internal Revenue Code of 1986 is
amended--
(1) in subsection (a), by adding at the end the following new
paragraphs:
``(3) Treatment limits.--In the case of a group health plan
that provides both medical and surgical benefits and mental
health or substance-related disorder benefits--
``(A) No treatment limit.--If the plan does not
include a treatment limit (as defined in subparagraph
(D)) on substantially all medical and surgical benefits
in any category of items or services (specified in
subparagraph (C)), the plan may not impose any
treatment limit on mental health or substance-related
disorder benefits that are classified in the same
category of items or services.
``(B) Treatment limit.--If the plan includes a
treatment limit on substantially all medical and
surgical benefits in any category of items or services,
the plan may not impose such a treatment limit on
mental health or substance-related disorder benefits
for items and services within such category that is
more restrictive than the predominant treatment limit
that is applicable to medical and surgical benefits for
items and services within such category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following five
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services not described in clause (v) furnished
on an inpatient basis and within a network of
providers established or recognized under such
plan.
``(ii) Inpatient, out-of-network.--Items and
services not described in clause (v) furnished
on an inpatient basis and outside any network
of providers established or recognized under
such plan.
``(iii) Outpatient, in-network.--Items and
services not described in clause (v) furnished
on an outpatient basis and within a network of
providers established or recognized under such
plan.
``(iv) Outpatient, out-of-network.--Items and
services not described in clause (v) furnished
on an outpatient basis and outside any network
of providers established or recognized under
such plan.
``(v) Emergency care.--Items and services,
whether furnished on an inpatient or outpatient
basis or within or outside any network of
providers, required for the treatment of an
emergency medical condition (including an
emergency condition relating to mental health
or substance-related disorders).
``(D) Treatment limit defined.--For purposes of this
paragraph, the term `treatment limit' means, with
respect to a plan, limitation on the frequency of
treatment, number of visits or days of coverage, or
other similar limit on the duration or scope of
treatment under the plan.
``(E) Predominance.--For purposes of this subsection,
a treatment limit or financial requirement with respect
to a category of items and services is considered to be
predominant if it is the most common or frequent of
such type of limit or requirement with respect to such
category of items and services.
``(4) Beneficiary financial requirements.--In the case of a
group health plan that provides both medical and surgical
benefits and mental health or substance-related disorder
benefits--
``(A) No beneficiary financial requirement.--If the
plan does not include a beneficiary financial
requirement (as defined in subparagraph (C)) on
substantially all medical and surgical benefits within
a category of items and services (specified in
paragraph (3)(C)), the plan may not impose such a
beneficiary financial requirement on mental health or
substance-related disorder benefits for items and
services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-pocket
limits, and similar financial requirements.--If
the plan includes a deductible, a limitation on
out-of-pocket expenses, or similar beneficiary
financial requirement that does not apply
separately to individual items and services on
substantially all medical and surgical benefits
within a category of items and services, the
plan shall apply such requirement (or, if there
is more than one such requirement for such
category of items and services, the predominant
requirement for such category) both to medical
and surgical benefits within such category and
to mental health and substance-related disorder
benefits within such category and shall not
distinguish in the application of such
requirement between such medical and surgical
benefits and such mental health and substance-
related disorder benefits.
``(ii) Other financial requirements.--If the
plan includes a beneficiary financial
requirement not described in clause (i) on
substantially all medical and surgical benefits
within a category of items and services, the
plan may not impose such financial requirement
on mental health or substance-related disorder
benefits for items and services within such
category in a way that results in greater out-
of-pocket expenses to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(iii) Construction.--Nothing in this
subparagraph shall be construed as prohibiting
the plan from waiving the application of any
deductible for mental health benefits or
substance-related disorder benefits or both.
``(C) Beneficiary financial requirement defined.--For
purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a
plan, any deductible, coinsurance, co-payment, other
cost sharing, and limitation on the total amount that
may be paid by a participant or beneficiary with
respect to benefits under the plan, but does not
include the application of any aggregate lifetime limit
or annual limit.'', and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that follows
through ``(1) as requiring'' and inserting ``construed
as requiring'',
(B) by striking ``; or'' and inserting a period, and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision of
Definition.--Section 9812 of such Code is further amended--
(1) by striking ``mental health benefits'' each place it
appears (other than in any provision amended by paragraph (2))
and inserting ``mental health or substance-related disorder
benefits'',
(2) by striking ``mental health benefits'' each place it
appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i),
and (a)(2)(C) and inserting ``mental health and substance-
related disorder benefits'', and
(3) in subsection (e), by striking paragraph (4) and
inserting the following new paragraphs:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan, but
does not include substance-related disorder benefits.
``(5) Substance-related disorder benefits.--The term
`substance-related disorder benefits' means benefits with
respect to services for substance-related disorders, as defined
under the terms of the plan.''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of section 9812 of such Code, as amended by
subsection (a)(1), is further amended by adding at the end the
following new paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits shall be made available by the plan administrator to
any current or potential participant, beneficiary, or
contracting provider upon request. The reason for any denial
under the plan of reimbursement or payment for services with
respect to mental health and substance-related disorder
benefits in the case of any participant or beneficiary shall,
upon request, be made available by the plan administrator to
the participant or beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of section 9812 of
such Code is further amended by adding at the end the following new
paragraph:
``(6) Minimum scope of coverage and equity in out-of-network
benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan that provides any mental health or
substance-related disorder benefits, the plan shall
include benefits for any mental health condition or
substance-related disorder included in the most recent
edition of the Diagnostic and Statistical Manual of
Mental Disorders published by the American Psychiatric
Association.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a group
health plan that provides both medical and
surgical benefits and mental health or
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan, the mental health
and substance-related disorder benefits shall
also be provided for items and services in such
category furnished outside any network of
providers established or recognized under such
plan in accordance with the requirements of
this section.
``(ii) Categories of items and services.--For
purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and services,
whether furnished on an inpatient or
outpatient basis, required for the
treatment of an emergency medical
condition (including an emergency
condition relating to mental health or
substance-related disorders).
``(II) Inpatient.--Items and services
not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of section
9812(c) of such Code is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan, if the application of this section to such plan
results in an increase for the plan year involved of
the actual total costs of coverage with respect to
medical and surgical benefits and mental health and
substance-related disorder benefits under the plan (as
determined and certified under subparagraph (C)) by an
amount that exceeds the applicable percentage described
in subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
during the following plan year, and such exemption
shall apply to the plan for 1 plan year.
``(B) Applicable percentage.--With respect to a plan,
the applicable percentage described in this paragraph
shall be--
``(i) 2 percent in the case of the first plan
year to which this paragraph applies, and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations as
to increases in actual costs under a plan for purposes
of this subsection shall be made by a qualified and
licensed actuary who is a member in good standing of
the American Academy of Actuaries. Such determinations
shall be certified by the actuary and be made available
to the general public.
``(D) 6-month determinations.--If a group health plan
seeks an exemption under this paragraph, determinations
under subparagraph (A) shall be made after such plan
has complied with this section for the first 6 months
of the plan year involved.''.
(f) Change in Exclusion for Smallest Employers.--Paragraph (1) of
section 9812(c) of such Code is amended to read as follows:
``(1) Small employer exemption.--
``(A) In general.--This section shall not apply to
any group health plan for any plan year of a small
employer.
``(B) Small employer.--For purposes of subparagraph
(A), the term `small employer' means, with respect to a
calendar year and a plan year, an employer who employed
an average of at least 2 (or 1 in the case of an
employer residing in a State that permits small groups
to include a single individual) but not more than 50
employees on business days during the preceding
calendar year. For purposes of the preceding sentence,
all persons treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 shall
be treated as 1 employer and rules similar to rules of
subparagraphs (B) and (C) of section 4980D(d)(2) shall
apply.''.
(g) Elimination of Sunset Provision.--Section 9812 of such Code is
amended by striking subsection (f).
(h) Conforming Amendments to Heading.--
(1) In general.--The heading of section 9812 of such Code is
amended to read as follows:
``SEC. 9812. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.''.
(2) Clerical amendment.--The table of sections for subchapter
B of chapter 100 of such Code is amended by striking the item
relating to section 9812 and inserting the following new item:
``Sec. 9812. Equity in mental health and substance-related disorder
benefits.''.
(i) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
with respect to plan years beginning on or after January 1,
2008.
(2) Elimination of sunset.--The amendment made by subsection
(g) shall apply to benefits for services furnished after
December 31, 2007.
(3) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to one or
more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of the enactment of this Act, the amendments made by this
section (other than subsection (g)) shall not apply to plan
years beginning before the later of--
(A) the date on which the last of the collective
bargaining agreements relating to the plan terminates
(determined without regard to any extension thereof
agreed to after the date of the enactment of this Act),
or
(B) January 1, 2010.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
imposed under an amendment under this section shall not be
treated as a termination of such collective bargaining
agreement.
SEC. 5. GOVERNMENT ACCOUNTABILITY OFFICE STUDIES AND REPORTS.
(a) Implementation of Act.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that evaluates the effect of the
implementation of the amendments made by this Act on--
(A) the cost of health insurance coverage;
(B) access to health insurance coverage (including
the availability of in-network providers);
(C) the quality of health care;
(D) Medicare, Medicaid, and State and local mental
health and substance abuse treatment spending;
(E) the number of individuals with private insurance
who received publicly funded health care for mental
health and substance-related disorders;
(F) spending on public services, such as the criminal
justice system, special education, and income
assistance programs;
(G) the use of medical management of mental health
and substance-related disorder benefits and medical
necessity determinations by group health plans (and
health insurance issuers offering health insurance
coverage in connection with such plans) and timely
access by participants and beneficiaries to clinically-
indicated care for mental health and substance-use
disorders; and
(H) other matters as determined appropriate by the
Comptroller General.
(2) Report.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General shall prepare
and submit to the appropriate committees of the Congress a
report containing the results of the study conducted under
paragraph (1).
(b) Biannual Report on Obstacles in Obtaining Coverage.--Every two
years, the Comptroller General shall submit to each House of the
Congress a report on obstacles that individuals face in obtaining
mental health and substance-related disorder care under their health
plans.
(c) Uniform Patient Placement Criteria.--Not later than 18 months
after the date of the enactment of this Act, the Comptroller General
shall submit to each House of the Congress a report on availability of
uniform patient placement criteria for mental health and substance-
related disorders that could be used by group health plans and health
insurance issuers to guide determinations of medical necessity and the
extent to which health plans utilize such critiera. If such criteria do
not exist, the report shall include recommendations on a process for
developing such criteria.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
PURPOSE
The bill modifies the mental health parity requirements
under the Employee Retirement Income Security Act of 1974
(ERISA), the Public Health Service Act, and the Internal
Revenue Code and expands such requirements to substance-related
disorder benefits. The requirements under the bill will result
in true parity in the way that physical and mental health
benefits are provided under group health plans. The provisions
of the bill are necessary to end the discrimination that exists
under many group health plans with respect to mental health and
substance-related disorder benefits.
SUMMARY
The provisions of the bill, H.R. 1424, as adopted by the
Subcommittee, are as follows:
Section 4 modifies the mental health parity
requirements under the Internal Revenue Code and applies such
requirements to substance-related disorder benefits. Section 4
expands the present law parity requirements to treatment limits
and beneficiary financial requirements. Section 4 also provides
minimum benefits that must be provided in the case of a plan
that offers mental health or substance-related disorder
benefits. Section 4 also eliminates the sunset under present
law, making the parity requirements for mental health and
substance-related disorders permanent.
B. Background and Need for Legislation
Many group health plans are discriminatory with respect to
the benefits provided for mental health and substance-related
disorder benefits. Many plans offer better treatment benefits
for physical health conditions than for mental health
conditions. Because of this discriminatory treatment, many
individuals with mental illness or chemical dependency are
unable to receive treatment for their conditions.
C. Legislative History
Background
H.R. 1424 was introduced in the House of Representatives on
March 8, 2007, and was referred to the Committee on Education
and Labor, the Committee on Energy and Commerce, and the
Committee on Ways and Means for a period to be determined by
the Speaker of the House, in each case for consideration of
such provisions as fall within the jurisdiction of the
Committee concerned. The bill, as amended, was ordered to be
reported by the Committee on Education and Labor on July 18,
2007.
Subcommittee hearings
The Subcommittee on Health of the Committee on Ways and
Means conducted a hearing on the bill on March 27, 2007.
Subcommittee action
The Subcommittee on Health of the Committee on Ways and
Means marked up the bill on September 19, 2007, and ordered the
bill, as amended, favorably reported to the full Committee on
Ways and Means.
Committee action
The Committee on Ways and Means marked up the bill on
September 26, 2007, and ordered the bill, as amended, favorably
reported.
II. EXPLANATION OF THE BILL
A. Expansion of Mental Health Parity Requirements (Sec. 9812 of the
Code)
PRESENT LAW
The Code, the Employee Retirement Income Security Act of
1974 (``ERISA'') and the Public Health Service Act (``PHSA'')
contain provisions under which group health plans that provide
both medical and surgical benefits and mental health benefits
cannot impose aggregate lifetime or annual dollar limits on
mental health benefits that are not imposed on substantially
all medical and surgical benefits (``mental health parity
requirements''). In the case of a group health plan which
provides benefits for mental health, the mental health parity
requirements do not affect the terms and conditions (including
cost sharing, limits on numbers of visits or days of coverage,
and requirements relating to medical necessity) relating to the
amount, duration, or scope of mental health benefits under the
plan, except as specifically provided in regard to parity in
the imposition of aggregate lifetime limits and annual limits.
The Code imposes an excise tax on group health plans which
fail to meet the mental health parity requirements. The excise
tax is equal to $100 per day during the period of noncompliance
and is generally imposed on the employer sponsoring the plan if
the plan fails to meet the requirements. In the case of
violations which are not corrected before the date a notice of
examination is sent to the employer and which occurred or
continued during the period under examination, the excise tax
cannot be less than the lesser of $2,500 or the amount of tax
imposed under the general rule. In the case that violations are
more than de minimis, the tax cannot be less than the lesser of
$15,000 or the amount imposed under the general rule. The
maximum tax that can be imposed during a taxable year cannot
exceed the lesser of 10 percent of the employer's group health
plan expenses for the prior year or $500,000. No tax is imposed
if the Secretary determines that the employer did not know, and
in exercising reasonable diligence would not have known, that
the failure existed.
The mental health parity requirements do not apply to group
health plans of small employers. A small employer generally
includes an employer who employs at least two, but no more than
50 employees on business days during the preceding calendar
year and who employs at least two employees on the first day of
the plan year.\1\ The mental parity requirements also do not
apply if their application results in an increase in the cost
under a group health plan of at least one percent. Further, the
mental health parity requirements do not require group health
plans to provide mental health benefits.
---------------------------------------------------------------------------
\1\The group health plan requirements do not apply to any group
health plan for any plan year if, on the first day of such plan year,
such plan has less than two participants who are current employees.
---------------------------------------------------------------------------
The Code, ERISA and PHSA mental health parity requirements
are scheduled to expire with respect to benefits for services
furnished after December 31, 2007.
REASONS FOR CHANGE
Employers and insurance companies routinely discriminate
against persons struggling with mental illness and addiction by
denying coverage for mental health and substance abuse
treatments. In addition, insurers often increase patients'
costs for mental health treatment by limiting inpatient days,
capping outpatient visits, and requiring higher co-payments
than for physical illnesses. It is estimated that over 90
percent of workers with employer-sponsored health insurance are
enrolled in plans that impose higher costs in at least one of
these ways. Furthermore, 48 percent are enrolled in plans that
impose all three Limitations.\2\ These unfair treatment
limitations are a major barrier to receiving care. Many
individuals cannot afford to pay out-of-pocket for such
treatment which results in many mental health and substance-
related disorder conditions going untreated.
---------------------------------------------------------------------------
\2\Colleen Barry et al., ``Design of Mental Health Benefits: Still
Unequal After All These Years,'' Health Affairs, September/October
2003.
---------------------------------------------------------------------------
The Committee believes that the discrimination that exists
under many group health plans with respect to mental health and
substance-related disorder benefits must be prohibited.
Diseases of the mind should be afforded the same treatment as
diseases of the body. The bill will end this discrimination by
prohibiting health insurers from placing discriminatory
restrictions on treatment and cost sharing. Extending these
requirements to out-of-network services is necessary to achieve
true parity. If a plan covers out-of-network services for
physical health, it should also provide out-of-network services
for mental health. Furthermore, restricting access to services
provided ``in-network'' seriously limits treatment options and
availability of appropriate providers.
The Committee believes that in the case of a plan that
provides mental health or substance-related disorder benefits,
certain minimum benefits must be provided. Recognizing the
Diagnostic and Statistical Manual (DSM) as the minimum benefit
standard ensures appropriate, scientifically-based coverage of
these conditions. The DSM was developed by more than 1,000
national and international health care researchers and
clinicians drawn from a wide range of mental and general health
fields and is widely acknowledged as the empirical guide for
diagnosing mental health disorders. Without this standard,
plans could continue the practice of using arbitrary, non-
scientific criteria in determining what mental illnesses and
addictive disorders they cover.
Mental health and substance abuse conditions are the only
disorders that have been systematically and unfairly excluded
from equal coverage. Unlike mental health, the usual medical/
surgical categorical exclusions made by insurers are for
treatments or procedures such as cosmetic surgery, not for a
whole class of diagnoses. Because of the historical precedence
of exclusion and discrimination, H.R. 1424 takes necessary
steps to clarify and require that such exclusions are no longer
acceptable or legal.
Finally, the Committee believes that the parity
requirements should be permanent to provide certainty as to the
applicable requirements.
EXPLANATION OF PROVISION
In general
The provision modifies the mental health parity
requirements under the Code and also expands the application of
such requirements to substance-related disorder benefits.\3\
This expansion applies to the rules under present law and to
the changes under the provision.
---------------------------------------------------------------------------
\3\The term ``substance related disorder benefits'' means benefits
with respect to services for substance-related disorders, as defined
under the terms of the plan.
---------------------------------------------------------------------------
The provision also eliminates the sunset under present law
and makes the requirements for group health plans relating to
mental health and substance-related disorder benefits
permanent.
Treatment limits and beneficiary financial requirements
Treatment limits
Under the provision, in the case of a group health plan
that provides both medical and surgical and mental health or
substance-related disorder benefits, if the plan does not
include a treatment limit on substantially all medical and
surgical benefits in any category of items or services, the
plan may not impose any treatment limit on mental health and
substance-related disorder benefits that are classified in the
same category of items or services. A treatment limit means,
with respect to a plan, limitation on the frequency of
treatment, number of visits or days of coverage, or other
similar limit on the duration or scope of treatment under the
plan.
If the plan includes a treatment limit on substantially all
medical and surgical benefits in any category of items or
services, the plan may not impose such a treatment limit on
mental health or substance-related disorder benefits for items
and services within such category that is more restrictive than
the predominant\4\ treatment limit that is applicable to
medical and surgical benefits for items and services within
such category.
---------------------------------------------------------------------------
\4\A treatment limit with respect to a category of items and
services is considered to be predominant if it is the most common or
frequent of such type of limit with respect to such category of items
and services.
---------------------------------------------------------------------------
The provision provides five categories of items and
services for benefits. All medical and surgical benefits and
all mental health and substance-related disorder benefits must
be classified into one of the five categories. The five
categories are as follows:
1. Inpatient, in-network--Items and services, not described
in (5) below, furnished on an inpatient basis and within a
network of providers established or recognized under such plan.
2. Inpatient, out-of-network--Items and services, not
described in (5) below, furnished on an inpatient basis and
outside any network of providers established or recognized
under such plan.
3. Outpatient, in-network--Items and services, not
described in (5) below, furnished on an outpatient basis and
within a network of providers established or recognized under
such plan.
4. Outpatient, out-of-network--Items and services, not
described in (5) below, furnished on an outpatient basis and
outside any network of providers established or recognized
under such plan.
5. Emergency care--Items and services, whether furnished on
an inpatient or outpatient basis or within or outside any
network of providers, required for the treatment of an
emergency medical condition (including an emergency medical
condition relating to mental health or substance-related
disorders).
Beneficiary financial requirements
The provision provides that in the case of a group health
plan that provides both medical and surgical benefits and
mental health or substance-related disorder benefits, if the
plan does not include a beneficiary financial requirement on
substantially all medical and surgical benefits within a
category of items and services (listed above), the plan may not
impose such a beneficiary financial requirement on mental
health or substance-related disorder benefits for items and
services within such category.
A beneficiary financial requirement includes, with respect
to a plan, any deductible, coinsurance, co-payment, other cost
sharing, and limitation on the total amount that may be paid by
a participant or beneficiary with respect to benefits under the
plan. A beneficiary financial requirement does not include the
application of any aggregate lifetime limit or annual limit.
If a plan includes a deductible, a limitation on out-of-
pocket expenses, or similar beneficiary financial requirement
that does not apply separately to individual items and
serviceson substantially all medical and surgical benefits within a
category of items and services, the plan must apply such
requirements\5\ both to medical and surgical benefits within such
category and mental health and substance-related disorder benefits
within such category and may not distinguish in the application of such
requirement between such medical and surgical benefits and such mental
health and substance-related disorder benefits.
---------------------------------------------------------------------------
\5\If there is more than one such requirement for such category of
items and services, the rule applies to the predominate requirement for
such category. A financial requirement with respect to a category of
items and services is considered to be predominant if it is the most
common or frequent of such type of requirement with respect to such
category of items and services.
---------------------------------------------------------------------------
If a plan includes a beneficiary financial requirement not
described in the preceding paragraph on substantially all
medical and surgical benefits within a category of items and
services, the plan may not impose such financial requirement on
mental health or substance-related disorder benefits for items
and services within such category in a way that results in
greater out-of-pocket expenses to the participant or
beneficiary than the predominate beneficiary financial
requirement applicable to medical and surgical benefits for
items and services within such category. The provision does not
prohibit the plan from waiving the application of any
deductible for mental health benefits or substance-related
disorder benefits (or both).
The provision deletes the present law rule that the mental
health parity requirements should not be construed as affecting
the terms and conditions of mental health benefits under a
plan.
Availability of plan information regarding criteria for medical
necessity
The provision also provides that the criteria for medical
necessity determinations made under the plan with respect to
mental health and substance-related disorder benefits must be
made available by the plan administrator to any current or
potential participant, beneficiary, or contract provider upon
request. The reason for any denial under the plan of
reimbursement or payment for services with respect to mental
health and substance-related disorder benefits in the case of
any participant or beneficiary must be made available by the
plan administrator to the participant or beneficiary upon
request.
Minimum benefit requirements
The provision provides rules for the minimum benefits that
must be provided in the case of a plan that provides mental
health and substance-related disorder benefits. Under the
provision, in the case of a group health plan that provides any
mental health or substance-related disorder benefits, the plan
must include benefits for any mental health condition or
substance-related disorder included in the most recent edition
of the Diagnostic and Statistical Manual of Mental Disorders
published by the American Psychiatric Association (currently
DSM-IV).
In the case of a plan that provides both medical and
surgical benefits and mental health or substance-related
disorder benefits, if medical and surgical benefits are
provided for substantially all items and services in a category
specified below furnished outside any network of providers
established or recognized under such plan, the mental health
and substance-related disorder benefits must also be provided
for items and services in such category furnished outside any
network of providers established or recognized under such plan
in accordance with the requirements under the provision. The
three categories are as follows:
1. Emergency--Items and services, whether furnished on an
inpatient or outpatient basis, required for the treatment of an
emergency medical condition (including an emergency condition
relating to mental health or substance-related disorders).
2. Inpatient--Items and services not described in (1)
furnished on an inpatient basis.
3. Outpatient--Items and services not described in (1)
furnished on an outpatient basis.
Increased cost exception
The provision modifies the increased cost exemption under
present law. Under the provision, if the application of the
mental health and substance-related disorder parity
requirements results in an increase for the plan year involved
of the actual total costs of coverage\6\ by an amount that
exceeds one percent (two percent in the case of the first plan
year to which the provision applies) of the actual total plan
costs, such requirements do not apply to the plan during the
following plan year. This exception applies to the plan for one
plan year. If a plan seeks use of the exemption, the
determination whether the exemption applies must be made after
the plan has complied with the rules for the first six months
of the plan year involved.
---------------------------------------------------------------------------
\6\Coverage refers to medical and surgical benefits and mental
health and substance-related disorder benefits under the plan.
---------------------------------------------------------------------------
Determinations as to increases in actual costs under a plan
for purposes of this exemption must be made by a qualified and
licensed actuary who is a member in good standing of the
American Academy of Actuaries. The determination must be
certified by the actuary and made available to the general
public.
The provision does not affect the application of State law
requirements or exceptions.
Small employer exception
The provision also modifies the small employer exemption.
Under the provision, a small employer is an employer who
employed an average of at least two but not more than 50
employees on business days during the preceding calendar year.
Under the provision, a small employer also includes an employer
who employed on average at least one employee during such
period in the case of an employer residing in a State that
permits small groups to include a single individual.
Effective date
The provision is effective with respect to plan years
beginning on or after January 1, 2008.
The elimination of the sunset of the present law mental
health parity requirements is effective for benefits for
services furnished after December 31, 2007.
In the case of a group health plan maintained pursuant to
one or more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of enactment, the provision (other than the elimination of
the sunset) does not apply to plan years beginning before the
later of (1) the date on which the last collective bargaining
agreement relating to the plan terminates (determined without
regard to any extension thereof agreed to after the date of
enactment), or (2) January 1, 2010. Any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
imposed under the provision is not treated as a termination of
such collective bargaining agreement.
III. VOTES OF THE COMMITTEE
A. Motion To Report the Bill
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the votes of the Committee on Ways and Means in its
consideration of the bill, H.R. 1424, the ``Paul Wellstone
Mental Health and Addiction Equity Act of 2007.''
The bill, H.R. 1424, as amended, was ordered favorably
reported by recorded vote of 27 yeas to 13 nays (with a quorum
being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... X ........ ......... Mr. McCrery...... ........ X .........
Mr. Stark...................... X ........ ......... Mr. Herger....... ........ X .........
Mr. Levin...................... X ........ ......... Mr. Camp......... ........ X .........
Mr. McDermott.................. X ........ ......... Mr. Ramstad...... X ........ .........
Mr. Lewis (GA)................. X ........ ......... Mr. Johnson...... ........ X .........
Mr. Neal....................... X ........ ......... Mr. English...... X ........ .........
Mr. McNulty.................... X ........ ......... Mr. Weller....... X ........ .........
Mr. Tanner..................... X ........ ......... Mr. Hulshof...... ........ X .........
Mr. Becerra.................... X ........ ......... Mr. Lewis (KY)... ........ X .........
Mr. Doggett.................... X ........ ......... Mr. Brady........ ........ X .........
Mr. Pomeroy.................... X ........ ......... Mr. Reynolds..... ........ X .........
Ms. Tubbs Jones................ X ........ ......... Mr. Ryan......... ........ X .........
Mr. Thompson................... X ........ ......... Mr. Cantor....... ........ X .........
Mr. Larson..................... X ........ ......... Mr. Linder....... ........ X .........
Mr. Emanuel.................... X ........ ......... Mr. Nunes........ ........ X .........
Mr. Blumenauer................. X ........ ......... Mr. Tiberi....... ........ X .........
Mr. Kind....................... X ........ ......... Mr. Porter....... ........ X .........
Mr. Pascrell................... X ........ .........
Ms. Berkley.................... X ........ .........
Mr. Crowley.................... X ........ .........
Mr. Van Hollen................. X ........ .........
Mr. Meek....................... X ........ .........
Ms. Schwartz................... X ........ .........
Mr. Davis...................... X ........ .........
----------------------------------------------------------------------------------------------------------------
B. Votes on Amendments
A rollcall vote was conducted on the following amendments
to the Chairman's amendment in the nature of a substitute.
An amendment by Mr. Hulshof, which would modify the minimum
benefit standards under the bill, was defeated by a rollcall
vote of 12 yeas to 26 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... ........ X ......... Mr. McCrery...... X ........ .........
Mr. Stark...................... ........ X ......... Mr. Herger....... X ........ .........
Mr. Levin...................... ........ X ......... Mr. Camp......... X ........ .........
Mr. McDermott.................. ........ X ......... Mr. Ramstad...... ........ X .........
Mr. Lewis (GA)................. ........ X ......... Mr. Johnson...... X ........ .........
Mr. Neal....................... ........ X ......... Mr. English...... ........ X .........
Mr. McNulty.................... ........ X ......... Mr. Weller....... ........ X .........
Mr. Tanner..................... ........ ........ ......... Mr. Hulshof...... X ........ .........
Mr. Becerra.................... ........ X ......... Mr. Lewis (KY)... X ........ .........
Mr. Doggett.................... ........ X ......... Mr. Brady........ X ........ .........
Mr. Pomeroy.................... ........ X ......... Mr. Reynolds..... X ........ .........
Ms. Tubbs Jones................ ........ X ......... Mr. Ryan......... X ........ .........
Mr. Thompson................... ........ X ......... Mr. Cantor....... X ........ .........
Mr. Larson..................... ........ X ......... Mr. Linder....... X ........ .........
Mr. Emanuel.................... ........ X ......... Mr. Nunes........ X ........ .........
Mr. Blumenauer................. ........ X ......... Mr. Tiberi....... X ........ .........
Mr. Kind....................... ........ X ......... Mr. Porter....... X ........ .........
Mr. Pascrell................... ........ X .........
Ms. Berkley.................... ........ X .........
Mr. Crowley.................... ........ X .........
Mr. Van Hollen................. ........ X .........
Mr. Meek....................... ........ X .........
Ms. Schwartz................... ........ X .........
Mr. Davis...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Camp, which would modify certain
provisions with respect to out-of-network coverage, was
defeated by a rollcall vote of 15 yeas to 25 nays. The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... ........ X ......... Mr. McCrery...... X ........ .........
Mr. Stark...................... ........ X ......... Mr. Herger....... ........ ........ .........
Mr. Levin...................... ........ X ......... Mr. Camp......... X ........ .........
Mr. McDermott.................. ........ X ......... Mr. Ramstad...... ........ X .........
Mr. Lewis (GA)................. ........ X ......... Mr. Johnson...... X ........ .........
Mr. Neal....................... ........ X ......... Mr. English...... X ........ .........
Mr. McNulty.................... ........ X ......... Mr. Weller....... X ........ .........
Mr. Tanner..................... ........ X ......... Mr. Hulshof...... X ........ .........
Mr. Becerra.................... ........ X ......... Mr. Lewis (KY)... X ........ .........
Mr. Doggett.................... ........ X ......... Mr. Brady........ X ........ .........
Mr. Pomeroy.................... ........ X ......... Mr. Reynolds..... X ........ .........
Ms. Tubbs Jones................ ........ X ......... Mr. Ryan......... X ........ .........
Mr. Thompson................... ........ X ......... Mr. Cantor....... X ........ .........
Mr. Larson..................... ........ X ......... Mr. Linder....... X ........ .........
Mr. Emanuel.................... ........ X ......... Mr. Nunes........ X ........ .........
Mr. Blumenauer................. ........ X ......... Mr. Tiberi....... X ........ .........
Mr. Kind....................... ........ X ......... Mr. Porter....... X ........ .........
Mr. Pascrell................... ........ X .........
Ms. Berkley.................... ........ X .........
Mr. Crowley.................... ........ X .........
Mr. Van Hollen................. ........ X .........
Mr. Meek....................... ........ X .........
Ms. Schwartz................... ........ X .........
Mr. Davis...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Hulshof, which would provide rules
relating to medical management, was defeated by a rollcall vote
of 15 yeas to 25 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... ........ X ......... Mr. McCrery...... X ........ .........
Mr. Stark...................... ........ X ......... Mr. Herger....... ........ ........ .........
Mr. Levin...................... ........ X ......... Mr. Camp......... X ........ .........
Mr. McDermott.................. ........ X ......... Mr. Ramstad...... ........ X .........
Mr. Lewis (GA)................. ........ X ......... Mr. Johnson...... X ........ .........
Mr. Neal....................... ........ X ......... Mr. English...... X ........ .........
Mr. McNulty.................... ........ X ......... Mr. Weller....... X ........ .........
Mr. Tanner..................... ........ X ......... Mr. Hulshof...... X ........ .........
Mr. Becerra.................... ........ X ......... Mr. Lewis (KY)... X ........ .........
Mr. Doggett.................... ........ X ......... Mr. Brady........ X ........ .........
Mr. Pomeroy.................... ........ X ......... Mr. Reynolds..... X ........ .........
Ms. Tubbs Jones................ ........ X ......... Mr. Ryan......... X ........ .........
Mr. Thompson................... ........ X ......... Mr. Cantor....... X ........ .........
Mr. Larson..................... ........ X ......... Mr. Linder....... X ........ .........
Mr. Emanuel.................... ........ X ......... Mr. Nunes........ X ........ .........
Mr. Blumenauer................. ........ X ......... Mr. Tiberi....... X ........ .........
Mr. Kind....................... ........ X ......... Mr. Porter....... X ........ .........
Mr. Pascrell................... ........ X .........
Ms. Berkley.................... ........ X .........
Mr. Crowley.................... ........ X .........
Mr. Van Hollen................. ........ X .........
Mr. Meek....................... ........ X .........
Ms. Schwartz................... ........ X .........
Mr. Davis...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Lewis of Kentucky, which would modify
the increased cost exemption, was defeated by a rollcall vote
of 15 yeas to 25 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... ........ X ......... Mr. McCrery...... X ........ .........
Mr. Stark...................... ........ X ......... Mr. Herger....... ........ ........ .........
Mr. Levin...................... ........ X ......... Mr. Camp......... X ........ .........
Mr. McDermott.................. ........ X ......... Mr. Ramstad...... ........ X .........
Mr. Lewis (GA)................. ........ X ......... Mr. Johnson...... X ........ .........
Mr. Neal....................... ........ X ......... Mr. English...... X ........ .........
Mr. McNulty.................... ........ X ......... Mr. Weller....... X ........ .........
Mr. Tanner..................... ........ X ......... Mr. Hulshof...... X ........ .........
Mr. Becerra.................... ........ X ......... Mr. Lewis (KY)... X ........ .........
Mr. Doggett.................... ........ X ......... Mr. Brady........ X ........ .........
Mr. Pomeroy.................... ........ X ......... Mr. Reynolds..... X ........ .........
Ms. Tubbs Jones................ ........ X ......... Mr. Ryan......... X ........ .........
Mr. Thompson................... ........ X ......... Mr. Cantor....... X ........ .........
Mr. Larson..................... ........ X ......... Mr. Linder....... X ........ .........
Mr. Emanuel.................... ........ X ......... Mr. Nunes........ X ........ .........
Mr. Blumenauer................. ........ X ......... Mr. Tiberi....... X ........ .........
Mr. Kind....................... ........ X ......... Mr. Porter....... X ........ .........
Mr. Pascrell................... ........ X .........
Ms. Berkley.................... ........ X .........
Mr. Crowley.................... ........ X .........
Mr. Van Hollen................. ........ X .........
Mr. Meek....................... ........ X .........
Ms. Schwartz................... ........ X .........
Mr. Davis...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Camp, which would substitute the
language in the Chairman's amendment with language from S. 558,
was defeated by a rollcall vote of 13 yeas to 26 nays. The vote
was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel..................... ........ X ......... Mr. McCrery...... X ........ .........
Mr. Stark...................... ........ X ......... Mr. Herger....... ........ ........ .........
Mr. Levin...................... ........ X ......... Mr. Camp......... X ........ .........
Mr. McDermott.................. ........ X ......... Mr. Ramstad...... ........ X .........
Mr. Lewis (GA)................. ........ X ......... Mr. Johnson...... X ........ .........
Mr. Neal....................... ........ X ......... Mr. English...... ........ X .........
Mr. McNulty.................... ........ X ......... Mr. Weller....... ........ X .........
Mr. Tanner..................... ........ X ......... Mr. Hulshof...... X ........ .........
Mr. Becerra.................... ........ X ......... Mr. Lewis (KY)... X ........ .........
Mr. Doggett.................... ........ X ......... Mr. Brady........ X ........ .........
Mr. Pomeroy.................... ........ X ......... Mr. Reynolds..... X ........ .........
Ms. Tubbs Jones................ ........ X ......... Mr. Ryan......... X ........ .........
Mr. Thompson................... ........ X ......... Mr. Cantor....... X ........ .........
Mr. Larson..................... ........ X ......... Mr. Linder....... X ........ .........
Mr. Emanuel.................... ........ X ......... Mr. Nunes........ X ........ .........
Mr. Blumenauer................. ........ X ......... Mr. Tiberi....... X ........ .........
Mr. Kind....................... ........ X ......... Mr. Porter....... X ........ .........
Mr. Pascrell................... ........ X .........
Ms. Berkley.................... ........ X .........
Mr. Crowley.................... ........ X .........
Mr. Van Hollen................. ........ X .........
Mr. Meek....................... ........ X .........
Ms. Schwartz................... ........ X .........
Mr. Davis...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of the revenue
provisions of the bill, H.R. 1424 as reported.
The effects of the bill on Federal budget receipts is
presented in the cost estimate provided by the Congressional
Budget Office (see below).
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
H.R. 1424--Paul Wellstone Mental Health and Addiction Equity Act of
2007
Summary: H.R. 1424 would prohibit group health plans and
group health insurance issuers that provide both medical and
surgical benefits and mental health benefits from imposing
treatment limitations or financial requirements for coverage of
mental health benefits (including benefits for substance abuse
treatment) that are different from those used for medical and
surgical benefits.
Enacting the bill would affect both federal revenues and
direct spending for Medicaid, beginning in 2008. The bill would
result in higher premiums for employer-sponsored health
benefits. Higher premiums, in turn, would result in more of an
employee's compensation being received in the form of
nontaxable employer-paid premiums, and less in the form of
taxable wages. As a result of this shift, federal income and
payroll tax revenues would decline. The Congressional Budget
Office estimates that the proposal would reduce federal tax
revenues by $1.1 billion over the 2008-2012 period and by $3.1
billion over the 2008-2017 period. Social Security payroll
taxes, which are off-budget, would account for about 35 percent
of those totals.
The bill's requirements for issuers of group health
insurance would apply to managed care plans in the Medicaid
program. CBO estimates that enacting H.R. 1424 would increase
federal direct spending for Medicaid by $310 million over the
2008-2012 period and by $820 million over the 2008-2017 period.
CBO has reviewed the non-tax provisions of the bill
(sections 2, 3, and 5) and has determined that sections 2 and 3
contain intergovernmental mandates as defined in the Unfunded
Mandates Reform Act (UMRA). The bill would preempt state laws
governing mental health coverage that conflict with those in
this bill. However, because the preemption only would prohibit
the application of state regulatory law, CBO estimates that the
costs of the mandate to state, local, or tribal governments
would not exceed the threshold established by UMRA ($66 million
in 2007, adjusted annually for inflation).
As a result of this legislation, some state, local, and
tribal governments would pay higher health insurance premiums
for their employees. However, these costs would not result from
intergovernmental mandates, but would be costs passed on to
them by private insurers who would face a private-sector
mandate to comply with the requirements of the bill.
The bill would impose a private-sector mandate on group
health plans and group health insurance issuers by prohibiting
them from imposing treatment limitations or financial
requirements for mental health benefits that differ from those
placed on medical and surgical benefits. Under current law, the
Mental Health Parity Act of 1996 requires a more-limited form
of parity between mental health and medical and surgical
coverage. That mandate is set to expire at the end of 2007.
Thus, H.R. 1424 would both extend and expand the existing
mandate requiring mental health parity. CBO estimates that the
direct costs of the private-sector mandate in the bill would
total about $1.3 billion in 2008, and would grow in later
years. That amount would significantly exceed the annual
threshold established by UMRA ($131 million in 2007, adjusted
for inflation) in each of the years that the mandate would be
in effect.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1424 is shown in the following table.
The costs of this legislation fall within budget function 550
(health).
ESTIMATED BUDGETARY EFFECTS OF H.R. 1424
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------------------------------
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008-2012 2008-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Income and HI Payroll Taxes:
(on-budget)......................... -20 -120 -170 -190 -210 -230 -250 -260 -280 -300 -710 -2,030
Social Security Payroll Taxes:
(off-budget)........................ -10 -70 -100 -100 -110 -120 -130 -140 -150 -160 -390 -1,090
---------------------------------------------------------------------------------------------------------------
Total Changes................... -30 -190 -270 -290 -320 -350 -380 -400 -430 -460 -1,100 -3,120
CHANGES IN DIRECT SPENDING
Medicaid:
Estimated Budget Authority.......... 30 60 70 70 80 90 90 100 110 120 310 820
Estimated Outlays................... 30 60 70 70 80 90 90 100 110 120 310 820
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: HI = Hospital Insurance (Part A of Medicare)
Basis of estimate: H.R. 1424 would prohibit group health
plans and group health insurance issuers who offer mental
health benefits (including benefits for substance abuse
treatment) from imposing treatment limitations or financial
requirements for those benefits that are different from those
used for medical and surgical benefits. For plans that offer
mental health benefits through a network of mental health
providers, the requirement for parity of benefits would be
established by comparing in-network medical and surgical
benefits with in-network mental health benefits, and comparing
out-of-network medical and surgical benefits with out-of-
network mental health benefits. The provision would apply to
benefits for any mental health condition that is covered under
the group health plan.
The bill would not require plans to offer mental health
benefits. It would, however, amend the Employee Retirement
Income Security Act of 1974 (ERISA) and the Public Health
Service Act (PHSA) to require mental health benefits of plans
that choose to offer such benefits to be at least as generous
as the Federal Employees Health Benefits Plan (FEHBP) with the
highest average enrollment as of the beginning of the most
recent plan year involved. It also would amend the Internal
Revenue Code (IRC) to require that the mental health benefits
of plans that choose to offer such benefits to include benefits
for any mental health condition or substance-related disorder
included in the most recent edition of the Diagnostic and
Statistical Manual (DSM) of Mental Disorders published by the
American Psychiatric Association (APA). CBO assumed that those
standards would not be materially different and would have a
negligible budgetary effect. In addition, existing laws in some
states require that plans cover all types of mental health
services or ailments, which would reduce the potential impact
of this bill on health plan premiums.
Revenues
The provisions of the bill would apply to both self-insured
and fully insured group health plans. Small employers (those
employing fewer than 50 employees in a year) would be exempt
from the bill's requirements, as would individuals purchasing
insurance in the individual market. The bill also would exempt
group health plans for whom the cost of complying with the
requirements would increase total plan costs (for medical and
surgical benefits and mental health benefits) by more than 2
percent in the first plan year following enactment, and 1
percent in subsequent plan years. In general, H.R. 1424 would
not preempt state laws regarding parity of mental health
benefits except to the extent that state laws prohibit the
application of a requirement of the bill.
CBO's estimate of the cost of this bill is based in part on
published results of a model developed by the Hay Group. That
model relies on data from several sources, including the claims
experience of private health insurers and the Medical
Expenditure Panel Survey. CBO adjusted those results to account
for the current and future use of managed care arrangements for
providing mental health benefits and the increased use of
prescription drugs that mental health parity would be likely to
induce. Also, CBO took account of the effects of existing state
and federal rules that place requirements similar to those in
the bill on certain entities. (For example, the Office of
Personnel Management implemented mental health and substance
abuse parity in the FEHBP in January 2001.)
CBO estimates that H.R. 1424, if enacted, would increase
premiums for group health insurance by an average of about 0.4
percent, before accounting for the responses of health plans,
employers, and workers to the higher premiums that would likely
be charged under the bill. Those responses would include
reductions in the number of employers offering insurance to
their employees and in the number of employees enrolling in
employer-sponsored insurance, changes in the types of health
plans that are offered (including eliminating coverage for
mental health benefits and/or substance benefits), and
reductions in the scope or generosity of health insurance
benefits, such as increased deductibles or higher copayments.
CBO expects that those behavioral responses would offset 60
percent of the potential impact of the bill on total health
plan costs.
The remaining 40 percent of the potential increase in
costs--less than 0.2 percent of group health insurance
premiums--would occur in the form of higher spending for health
insurance.
Those costs would be passed through to workers, reducing
both their taxable compensation and other fringe benefits. For
employees of private firms, CBO assumes that all of that
increase would ultimately be passed through to workers. State,
local, and tribal governments are assumed to absorb 75 percent
of the increase and to reduce their workers' taxable income and
other fringe benefits to offset the remaining one-quarter of
the increase. CBO estimates that the resulting reduction in
taxable income would grow from $400 million in 2008 to $4.5
billion in 2017.
Those reductions in workers' taxable compensation would
lead to lower federal tax revenues. CBO estimates that federal
tax revenues would fall by $30 million in 2008 and by $3.1
billion over the 2008-2017 period if H.R. 1424 were enacted.
Social Security payroll taxes, which are off-budget, would
account for about 35 percent of those totals.
Direct spending
The bill's requirements for issuers of group health
insurance would apply to managed care plans in the Medicaid
program. CBO estimates that enacting H.R. 1424 would increase
Medicaid payments to managed care plans by about 0.2 percent.
That is less than the 0.4 percent increase in the estimated
increase in spending for employer-sponsored health insurance
because Medicaid programs offer broader coverage of mental
health benefits than the private sector. CBO estimates that
enacting H.R. 1424 would increase federal spending for Medicaid
by $310 million over the 2008-2012 period and $820 million over
the 2008-2017 period.
Estimated impact on state, local, and tribal governments:
H.R. 1424 would preempt state laws governing mental health
coverage that conflict with those in this bill. That preemption
would be an intergovernmental mandate as defined in UMRA.
However, because the preemption would simply prohibit the
application of state regulatory laws that conflict with the new
federal standards, CBO estimates that the mandate would impose
no significant costs on state, local, or tribal governments.
An existing provision in the PHSA would allow state, local,
and tribal governments, as employers that provide health
benefits to their employees, to opt out of the requirements of
this bill. Consequently, the bill's requirements for mental
health parity would not be intergovernmental mandates as
defined in UMRA, and the bill would affect the budgets of those
governments only if they choose to comply with the requirements
on group health plans. Roughly two-thirds of employees in
state, local, and tribal governments are enrolled in self-
insured plans.
The remaining governmental employees are enrolled in fully
insured plans. Governments purchase health insurance for those
employees through private insurers and would face increased
premiums as a result of higher costs passed on to them by those
insurers. The increased costs, however, would not result from
intergovernmental mandates. Rather, they would be part of the
mandate costs initially borne by the private sector and then
passed on to the governments as purchasers of insurance. CBO
estimates that state, local, and tribal governments would face
additional costs of about $10 million in 2008, increasing to
about $155 million in 2012. This estimate reflects the
assumption that governments would shift roughly 25 percent of
the additional costs to their employees.
Because the bill's requirements would apply to managed care
plans in the Medicaid program, CBO estimates that state
spending for Medicaid also would increase by about $235 million
over the 2008-2012 period.
Estimated impact on the private sector: The bill would
impose a private-sector mandate on group health plans and
issuers of group health insurance that provide medical and
surgical benefits as well as mental health benefits (including
benefits for substance abuse treatment). H.R. 1424 would
prohibit those entities from imposing treatment limitations or
financial requirements for mental health benefits that differ
from those placed on medical and surgical benefits. The
requirements would not apply to coverage purchased by employer
groups with fewer than 50 employees. For plans that offer
mental health benefits through a network of mental health
providers, the requirement for parity of benefits would be
established by comparing in-network medical and surgical
benefits with in-network mental health benefits, and comparing
out-of-network medical and surgical benefits with out-of-
network mental health benefits.
Under current law, the Mental Health Parity Act of 1996
prohibits group health plans and group health insurance issuers
from imposing annual and lifetime dollar limits on mental
health coverage that are more restrictive than limits imposed
on medical and surgical coverage. The current mandate is set to
expire at the end of calendar year 2007. Consequently, H.R.
1424 would both extend and expand the current mandate requiring
mental health parity.
CBO's estimate of the direct costs of the mandate assumes
that affected entities would comply with H.R. 1424 by further
increasing the generosity of their mental health benefits. Many
plans currently offer mental health benefits that are less
generous than their medical and surgical benefits. We estimate
that the direct costs of the additional services that would be
newly covered by insurance because of the mandate would equal
about 0.4 percent of employer-sponsored health insurance
premiums compared to having no mandate at all.
CBO estimates that the direct costs of the mandate in H.R.
1424 would be $1.3 billion in 2008, rising to $3.0 billion in
2012. Those costs would exceed the threshold specified in UMRA
($131 million in 2007, adjusted annually for inflation) in each
year the mandate would be in effect.
Previous CBO estimates: On March 20, 2007, CBO transmitted
a cost estimate for S. 558, the Mental Health Parity Act of
2007, as ordered reported by the Senate Committee on Health,
Education, Labor, and Pensions on February 14, 2007. On
September 7, 2007, CBO transmitted a cost estimate for H.R.
1424, the Paul Wellstone Mental Health and Addiction Equity Act
of 2007, as ordered reported by the House Committee on
Education and Labor on July 18, 2007.
The Ways and Means Committee's version of H.R. 1424 differs
from the previous version in that it would not include a
mechanism for auditing group health plans or for providing
assistance to beneficiaries of such plans. In addition, it
would amend the IRC to require mental health benefits of plans
that choose to offer such benefits to include benefits that are
included in the most recent edition of the DSM of Mental
Disorders published by the APA. Because this change would not
be materially different from the requirement that such benefits
be at least as generous as the FEHBP with the highest average
enrollment as of the beginning of the most recent plan year,
CBO estimated that this would have a negligible budgetary
effect.
Both versions of H.R. 1424 differ from S. 558 in several
ways. H.R. 1424 would: (1) require mental health benefits of
plans that choose to offer such benefits to meet a minimum
benefits requirement; (2) exempt group health plans with
collective bargaining agreements from the requirements of the
bill until the later of the expiration of such agreements or
January 1, 2010; (3) make conforming modifications to the
Internal Revenue Code; and (4) apply to group health plans
beginning January 1, 2008 (while S. 558 specified that the
policy would be effective more than one year after the date of
the enactment, affecting plans beginning on or after January 1,
2009).
CBO estimates the minimum benefit requirement and exception
for the collective bargaining agreements under H.R. 1424 would
have no significant budgetary effect, while the difference in
the effective dates would affect our estimate in 2008 and 2009.
CBO and the Joint Committee on Taxation estimate that
conforming modifications to the IRC would result in a
negligible impact on excise tax revenue collected from
employers who fail to comply with the requirements of the bill.
Estimate prepared by: Federal costs: Jeanne De Sa and
Shinobu Suzuki; Impact on state, local, and tribal governments:
Lisa Ramirez-Branum; Impact on the private sector: Stuart
Hagen.
Estimate approved by: Keith J. Fontenot, Deputy Assistant
Director for Health and Human Resources, Budget Analysis
Division.
D. Macroeconomic Impact Analysis
In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: The effects of the bill on economic activity are so small
as to be incalculable within the context of a model of the
aggregate economy.
E. PAY-GO Rule
In compliance with clause 10 of rule XXI of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the revenue provisions
of the bill, H.R. 1424, as reported: The provisions of the bill
affecting revenues have the following net effect on the deficit
or surplus: (1) the bill would not increase the deficit or
reduce the surplus in fiscal year 2007; (2) the bill would
increase the deficit or reduce the surplus by $1.1 billion over
the fiscal year 2008-2012 period; and (2) the bill would
increase the deficit or reduce the surplus by $3.12 billion
over the fiscal year 2008-2017 period.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it is appropriate and timely to
enact the provisions included in the bill as reported.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Constitutional Authority Statement
With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives (relating to Constitutional
Authority), the Committee states that the Committee's action in
reporting this bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have Power To lay
and collect Taxes, Duties, Imposts and Excises . . .''), and
from the 16th Amendment to the Constitution.
D. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4). CBO has reviewed the non-tax provisions of the bill
(sections 2, 3, and 5) and has determined that sections 2 and 3
contain intergovernmental mandates as defined in the Unfunded
Mandates Reform Act (UMRA). The bill would preempt state laws
governing mental health coverage that conflict with those in
this bill. However, because the preemption would only prohibit
the application of state regulatory law, CBO estimates that the
costs of the mandate to state, local or tribal governments
would not exceed the threshold established by UMRA ($66 million
in 2007, adjusted annually for inflation).
As a result of this legislation, some state, local and
tribal governments would pay higher health insurance premiums
for their employees. However, these costs would not result from
intergovernmental mandates, but would be costs passed on to
them by private insurers who would face a private-sector
mandate to comply with requirements of the bill.
The bill would impose a private-sector mandate on group
health plans and group health insurance issuers by prohibiting
them from imposing treatment limitations or financial
requirements for mental health benefits that differ from those
placed on medical and surgical benefits. Under current law, the
Mental Health Parity Act of 1996 requires a more-limited form
of parity between mental health and medical and surgical
coverage. That mandate is set to expire at the end of 2007.
Thus, H.R. 1424 would both extend and expand the existing
mandate requiring mental health parity. CBO estimates that the
direct costs of the private-sector mandate in the bill would be
about $1.3 billion in 2008, and would grow in later years. That
amount would significantly exceed the threshold established by
UMRA ($131 million in 2007, adjusted for inflation) in each of
the years that the mandate would be in effect.
E. Applicability of House Rule XXI 5(b)
Clause 5 of rule XXI of the Rules of the House of
Representatives provides, in part, that ``A bill or joint
resolution, amendment, or conference report carrying a Federal
income tax rate increase may not be considered as passed or
agreed to unless so determined by a vote of not less than
three-fifths of the Members voting, a quorum being present.''
The Committee has carefully reviewed the provisions of the
bill, and states that the provisions of the bill do not involve
any Federal income tax rate increases within the meaning of the
rule.
F. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of the Treasury) to provide
a tax complexity analysis. The complexity analysis is required
for all legislation reported by the Senate Committee on
Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses.
The staff of the Joint Committee on Taxation has determined
that a complexity analysis is not required under section
4022(b) of the IRS Reform Act because the bill contains no
provisions that amend the Code and that have ``widespread
applicability'' to individuals or small businesses.
G. Limited Tax Benefits
Pursuant to clause 9 of rule XXI of the Rules of the House
of Representatives, the Ways and Means Committee has determined
that the bill as reported contains no congressional earmarks,
limited tax benefits, or limited tariff benefits within the
meaning of that Rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
SHORT TITLE AND TABLE OF CONTENTS
Section 1. This Act may be cited as the ``Employee Retirement
Income Security Act of 1974''.
TABLE OF CONTENTS
Sec. 1. Short title and table of contents.
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS
* * * * * * *
Part 7--Group Health Plan Requirements
* * * * * * *
Subpart A--Requirements Relating to Portability, Access, and
Renewability
[Sec. 712. Parity in the application of certain limits to mental health
benefits.]
Sec. 712. Equity in mental health and substance-related disorder
benefits.
* * * * * * *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS
* * * * * * *
Subtitle B--Regulatory Provisions
* * * * * * *
PART 7--Group Health Plan Requirements
* * * * * * *
Subpart B--Other Requirements
* * * * * * *
[SEC. 712. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS.]
SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.
(a) In General.--
(1) Aggregate lifetime limits.--In the case of a
group health plan (or health insurance coverage offered
in connection with such a plan) that provides both
medical and surgical benefits and [mental health
benefits] mental health and substance-related disorder
benefits--
(A) No lifetime limit.--If the plan or
coverage does not include an aggregate lifetime
limit on substantially all medical and surgical
benefits, the plan or coverage may not impose
any aggregate lifetime limit on [mental health
benefits] mental health and substance-related
disorder benefits.
(B) Lifetime limit.--If the plan or coverage
includes an aggregate lifetime limit on
substantially all medical and surgical benefits
(in this paragraph referred to as the
``applicable lifetime limit''), the plan or
coverage shall either--
(i) apply the applicable lifetime
limit both to the medical and surgical
benefits to which it otherwise would
apply and to [mental health benefits]
mental health and substance-related
disorder benefits and not distinguish
in the application of such limit
between such medical and surgical
benefits and [mental health benefits]
mental health and substance-related
disorder benefits; or
(ii) not include any aggregate
lifetime limit on [mental health
benefits] mental health and substance-
related disorder benefits that is less
than the applicable lifetime limit.
(C) Rule in case of different limits.--In the
case of a plan or coverage that is not
described in subparagraph (A) or (B) and that
includes no or different aggregate lifetime
limits on different categories of medical and
surgical benefits, the Secretary shall
establish rules under which subparagraph (B) is
applied to such plan or coverage with respect
to [mental health benefits] mental health and
substance-related disorder benefits by
substituting for the applicable lifetime limit
an average aggregate lifetime limit that is
computed taking into account the weighted
average of the aggregate lifetime limits
applicable to such categories.
(2) Annual limits.--In the case of a group health
plan (or health insurance coverage offered in
connection with such a plan) that provides both medical
and surgical benefits and [mental health benefits]
mental health and substance-related disorder benefits--
(A) No annual limit.--If the plan or coverage
does not include an annual limit on
substantially all medical and surgical
benefits, the plan or coverage may not impose
any annual limit on [mental health benefits]
mental health and substance-related disorder
benefits.
(B) Annual limit.--If the plan or coverage
includes an annual limit on substantially all
medical and surgical benefits (in this
paragraph referred to as the ``applicable
annual limit''), the plan or coverage shall
either--
(i) apply the applicable annual limit
both to medical and surgical benefits
to which it otherwise would apply and
to [mental health benefits] mental
health and substance-related disorder
benefits and not distinguish in the
application of such limit between such
medical and surgical benefits and
[mental health benefits] mental health
and substance-related disorder
benefits; or
(ii) not include any annual limit on
[mental health benefits] mental health
and substance-related disorder benefits
that is less than the applicable annual
limit.
(C) Rule in case of different limits.--In the
case of a plan or coverage that is not
described in subparagraph (A) or (B) and that
includes no or different annual limits on
different categories of medical and surgical
benefits, the Secretary shall establish rules
under which subparagraph (B) is applied to such
plan or coverage with respect to [mental health
benefits] mental health and substance-related
disorder benefits by substituting for the
applicable annual limit an average annual limit
that is computed taking into account the
weighted average of the annual limits
applicable to such categories.
(3) Treatment limits.--
(A) No treatment limit.--If the plan or
coverage does not include a treatment limit (as
defined in subparagraph (D)) on substantially
all medical and surgical benefits in any
category of items or services, the plan or
coverage may not impose any treatment limit on
mental health and substance-related disorder
benefits that are classified in the same
category of items or services.
(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all
medical and surgical benefits in any category
of items or services, the plan or coverage may
not impose such a treatment limit on mental
health and substance-related disorder benefits
for items and services within such category
that are more restrictive than the predominant
treatment limit that is applicable to medical
and surgical benefits for items and services
within such category.
(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this
paragraph and paragraph (4), there shall be the
following four categories of items and services
for benefits, whether medical and surgical
benefits or mental health and substance-related
disorder benefits, and all medical and surgical
benefits and all mental health and substance
related benefits shall be classified into one
of the following categories:
(i) Inpatient, in-network.--Items and
services furnished on an inpatient
basis and within a network of providers
established or recognized under such
plan or coverage.
(ii) Inpatient, out-of-network.--
Items and services furnished on an
inpatient basis and outside any network
of providers established or recognized
under such plan or coverage.
(iii) Outpatient, in-network.--Items
and services furnished on an outpatient
basis and within a network of providers
established or recognized under such
plan or coverage.
(iv) Outpatient, out-of-network.--
Items and services furnished on an
outpatient basis and outside any
network of providers established or
recognized under such plan or coverage.
(D) Treatment limit defined.--For purposes of
this paragraph, the term ``treatment limit''
means, with respect to a plan or coverage,
limitation on the frequency of treatment,
number of visits or days of coverage, or other
similar limit on the duration or scope of
treatment under the plan or coverage.
(E) Predominance.--For purposes of this
subsection, a treatment limit or financial
requirement with respect to a category of items
and services is considered to be predominant if
it is the most common or frequent of such type
of limit or requirement with respect to such
category of items and services.
(4) Beneficiary financial requirements.--
(A) No beneficiary financial requirement.--If
the plan or coverage does not include a
beneficiary financial requirement (as defined
in subparagraph (C)) on substantially all
medical and surgical benefits within a category
of items and services (specified under
paragraph (3)(C)), the plan or coverage may not
impose such a beneficiary financial requirement
on mental health and substance-related disorder
benefits for items and services within such
category.
(B) Beneficiary financial requirement.--
(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage
includes a deductible, a limitation on
out-of-pocket expenses, or similar
beneficiary financial requirement that
does not apply separately to individual
items and services on substantially all
medical and surgical benefits within a
category of items and services (as
specified in paragraph (3)(C)), the
plan or coverage shall apply such
requirement (or, if there is more than
one such requirement for such category
of items and services, the predominant
requirement for such category) both to
medical and surgical benefits within
such category and to mental health and
substance-related disorder benefits
within such category and shall not
distinguish in the application of such
requirement between such medical and
surgical benefits and such mental
health and substance-related disorder
benefits.
(ii) Other financial requirements.--
If the plan or coverage includes a
beneficiary financial requirement not
described in clause (i) on
substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not
impose such financial requirement on
mental health and substance-related
disorder benefits for items and
services within such category in a way
that is more costly to the participant
or beneficiary than the predominant
beneficiary financial requirement
applicable to medical and surgical
benefits for items and services within
such category.
(C) Beneficiary financial requirement
defined.--For purposes of this paragraph, the
term ``beneficiary financial requirement''
includes, with respect to a plan or coverage,
any deductible, coinsurance, co-payment, other
cost sharing, and limitation on the total
amount that may be paid by a participant or
beneficiary with respect to benefits under the
plan or coverage, but does not include the
application of any aggregate lifetime limit or
annual limit.
(5) Availability of plan information.--The criteria
for medical necessity determinations made under the
plan with respect to mental health and substance-
related disorder benefits (or the health insurance
coverage offered in connection with the plan with
respect to such benefits) shall be made available by
the plan administrator (or the health insurance issuer
offering such coverage) to any current or potential
participant, beneficiary, or contracting provider upon
request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with
respect to mental health and substance-related disorder
benefits in the case of any participant or beneficiary
shall, upon request, be made available by the plan
administrator (or the health insurance issuer offering
such coverage) to the participant or beneficiary.
(6) Minimum scope of coverage and equity in out-of-
network benefits.--
(A) Minimum scope of mental health and
substance-related disorder benefits.--In the
case of a group health plan (or health
insurance coverage offered in connection with
such a plan) that provides any mental health
and substance-related disorder benefits, the
plan or coverage shall include benefits for any
mental health condition or substance-related
disorder for which benefits are provided under
the benefit plan option offered under chapter
89 of title 5, United States Code, with the
highest average enrollment as of the beginning
of the most recent year beginning on or before
the beginning of the plan year involved.
(B) Equity in coverage of out-of-network
benefits.--
(i) In general.--In the case of a
plan or coverage that provides both
medical and surgical benefits and
mental health and substance-related
disorder benefits, if medical and
surgical benefits are provided for
substantially all items and services in
a category specified in clause (ii)
furnished outside any network of
providers established or recognized
under such plan or coverage, the mental
health and substance-related disorder
benefits shall also be provided for
items and services in such category
furnished outside any network of
providers established or recognized
under such plan or coverage in
accordance with the requirements of
this section.
(ii) Categories of items and
services.--For purposes of clause (i),
there shall be the following three
categories of items and services for
benefits, whether medical and surgical
benefits or mental health and
substance-related disorder benefits,
and all medical and surgical benefits
and all mental health and substance-
related disorder benefits shall be
classified into one of the following
categories:
(I) Emergency.--Items and
services, whether furnished on
an inpatient or outpatient
basis, required for the
treatment of an emergency
medical condition (including an
emergency condition relating to
mental health and substance-
related disorders).
(II) Inpatient.--Items and
services not described in
subclause (I) furnished on an
inpatient basis.
(III) Outpatient.--Items and
services not described in
subclause (I) furnished on an
outpatient basis.
(b) Construction.--Nothing in this section shall be
[construed--
[(1) as requiring] construed as requiring a group
health plan (or health insurance coverage offered in
connection with such a plan) to provide any [mental
health benefits; or] mental health and substance-
related disorder benefits.
[(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a
plan) that provides mental health benefits, as
affecting the terms and conditions (including cost
sharing, limits on numbers of visits or days of
coverage, and requirements relating to medical
necessity) relating to the amount, duration, or scope
of mental health benefits under the plan or coverage,
except as specifically provided in subsection (a) (in
regard to parity in the imposition of aggregate
lifetime limits and annual limits for mental health
benefits).]
(c) Exemptions.--
(1) Small employer exemption.--
(A) * * *
(B) Small employer.--For purposes of
subparagraph (A), the term ``small employer''
means, in connection with a group health plan
with respect to a calendar year and a plan
year, an employer who employed an average of at
least 2 (or 1 in the case of an employer
residing in a State that permits small groups
to include a single individual) but not more
than 50 employees on business days during the
preceding calendar year [and who employs at
least 2 employees on the first day of the plan
year].
* * * * * * *
[(2) Increased cost exemption.--This section shall
not apply with respect to a group health plan (or
health insurance coverage offered in connection with a
group health plan) if the application of this section
to such plan (or to such coverage) results in an
increase in the cost under the plan (or for such
coverage) of at least 1 percent.]
(2) Increased cost exemption.--
(A) In general.--With respect to a group
health plan (or health insurance coverage
offered in connection with such a plan), if the
application of this section to such plan (or
coverage) results in an increase for the plan
year involved of the actual total costs of
coverage with respect to medical and surgical
benefits and mental health and substance-
related disorder benefits under the plan (as
determined and certified under subparagraph
(C)) by an amount that exceeds the applicable
percentage described in subparagraph (B) of the
actual total plan costs, the provisions of this
section shall not apply to such plan (or
coverage) during the following plan year, and
such exemption shall apply to the plan (or
coverage) for 1 plan year.
(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage
described in this paragraph shall be--
(i) 2 percent in the case of the
first plan year which begins after the
date of the enactment of the Paul
Wellstone Mental Health and Addiction
Equity Act of 2007; and
(ii) 1 percent in the case of each
subsequent plan year.
(C) Determinations by actuaries.--
Determinations as to increases in actual costs
under a plan (or coverage) for purposes of this
subsection shall be made by a qualified actuary
who is a member in good standing of the
American Academy of Actuaries. Such
determinations shall be certified by the
actuary and be made available to the general
public.
(D) 6-month determinations.--If a group
health plan (or a health insurance issuer
offering coverage in connection with such a
plan) seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be
made after such plan (or coverage) has complied
with this section for the first 6 months of the
plan year involved.
(E) Notification.--An election to modify
coverage of mental health and substance-related
disorder benefits as permitted under this
paragraph shall be treated as a material
modification in the terms of the plan as
described in section 102(a)(1) and shall be
subject to the applicable notice requirements
under section 104(b)(1).
* * * * * * *
(e) Definitions.--For purposes of this section--
(1) * * *
* * * * * * *
(3) Medical or surgical benefits.--The term ``medical
or surgical benefits'' means benefits with respect to
medical or surgical services, as defined under the
terms of the plan or coverage (as the case may be), but
does not include [mental health benefits] mental health
and substance-related disorder benefits.
(4) [Mental health benefits] Mental health and
substance-related disorder benefits.--The term
``[mental health benefits] mental health and substance-
related disorder benefits'' means [benefits with
respect to mental health services] benefits with
respect to services for mental health conditions or
substance-related disorders, as defined under the terms
of the plan or coverage (as the case may be)[, but does
not include benefits with respect to treatment of
substance abuse or chemical dependency].
[(f) Sunset.--This section shall not apply to benefits for
services furnished after December 31, 2007.]
(f) Preemption, Relation to State Laws.--
(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides
greater consumer protections, benefits, methods of
access to benefits, rights or remedies that are greater
than the protections, benefits, methods of access to
benefits, rights or remedies provided under this
section.
(2) ERISA.--Nothing in this section shall be
construed to affect or modify the provisions of section
514 with respect to group health plans.
* * * * * * *
----------
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
Part A--Group Market Reforms
* * * * * * *
Subpart 2--Other Requirements
* * * * * * *
[SEC. 2705. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL
HEALTH BENEFITS.]
SEC. 2705.
(a) In General.--
(1) Aggregate lifetime limits.--In the case of a
group health plan (or health insurance coverage offered
in connection with such a plan) that provides both
medical and surgical benefits and [mental health
benefits] mental health and substance-related disorder
benefits--
(A) No lifetime limit.--If the plan or
coverage does not include an aggregate lifetime
limit on substantially all medical and surgical
benefits, the plan or coverage may not impose
any aggregate lifetime limit on [mental health
benefits] mental health and substance-related
disorder benefits.
(B) Lifetime limit.--If the plan or coverage
includes an aggregate lifetime limit on
substantially all medical and surgical benefits
(in this paragraph referred to as the
``applicable lifetime limit''), the plan or
coverage shall either--
(i) apply the applicable lifetime
limit both to the medical and surgical
benefits to which it otherwise would
apply and to [mental health benefits]
mental health and substance-related
disorder benefits and not distinguish
in the application of such limit
between such medical and surgical
benefits and [mental health benefits]
mental health and substance-related
disorder benefits; or
(ii) not include any aggregate
lifetime limit on [mental health
benefits] mental health and substance-
related disorder benefits that is less
than the applicable lifetime limit.
(C) Rule in case of different limits.--In the
case of a plan or coverage that is not
described in subparagraph (A) or (B) and that
includes no or different aggregate lifetime
limits on different categories of medical and
surgical benefits, the Secretary shall
establish rules under which subparagraph (B) is
applied to such plan or coverage with respect
to [mental health benefits] mental health and
substance-related disorder benefits by
substituting for the applicable lifetime limit
an average aggregate lifetime limit that is
computed taking into account the weighted
average of the aggregate lifetime limits
applicable to such categories.
(2) Annual limits.--In the case of a group health
plan (or health insurance coverage offered in
connection with such a plan) that provides both medical
and surgical benefits and [mental health benefits]
mental health and substance-related disorder benefits--
(A) No annual limit.--If the plan or coverage
does not include an annual limit on
substantially all medical and surgical
benefits, the plan or coverage may not impose
any annual limit on [mental health benefits]
mental health and substance-related disorder
benefits.
(B) Annual limit.--If the plan or coverage
includes an annual limit on substantially all
medical and surgical benefits (in this
paragraph referred to as the ``applicable
annual limit''), the plan or coverage shall
either--
(i) apply the applicable annual limit
both to medical and surgical benefits
to which it otherwise would apply and
to [mental health benefits] mental
health and substance-related disorder
benefits and not distinguish in the
application of such limit between such
medical and surgical benefits and
[mental health benefits] mental health
and substance-related disorder
benefits; or
(ii) not include any annual limit on
[mental health benefits] mental health
and substance-related disorder benefits
that is less than the applicable annual
limit.
(C) Rule in case of different limits.--In the
case of a plan or coverage that is not
described in subparagraph (A) or (B) and that
includes no or different annual limits on
different categories of medical and surgical
benefits, the Secretary shall establish rules
under which subparagraph (B) is applied to such
plan or coverage with respect to [mental health
benefits] mental health and substance-related
disorder benefits by substituting for the
applicable annual limit an average annual limit
that is computed taking into account the
weighted average of the annual limits
applicable to such categories.
(3) Treatment limits.--
(A) No treatment limit.--If the plan or
coverage does not include a treatment limit (as
defined in subparagraph (D)) on substantially
all medical and surgical benefits in any
category of items or services (specified in
subparagraph (C)), the plan or coverage may not
impose any treatment limit on mental health and
substance-related disorder benefits that are
classified in the same category of items or
services.
(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all
medical and surgical benefits in any category
of items or services, the plan or coverage may
not impose such a treatment limit on mental
health and substance-related disorder benefits
for items and services within such category
that are more restrictive than the predominant
treatment limit that is applicable to medical
and surgical benefits for items and services
within such category.
(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this
paragraph and paragraph (4), there shall be the
following four categories of items and services
for benefits, whether medical and surgical
benefits or mental health and substance-related
disorder benefits, and all medical and surgical
benefits and all mental health and substance
related benefits shall be classified into one
of the following categories:
(i) Inpatient, in-network.--Items and
services furnished on an inpatient
basis and within a network of providers
established or recognized under such
plan or coverage.
(ii) Inpatient, out-of-network.--
Items and services furnished on an
inpatient basis and outside any network
of providers established or recognized
under such plan or coverage.
(iii) Outpatient, in-network.--Items
and services furnished on an outpatient
basis and within a network of providers
established or recognized under such
plan or coverage.
(iv) Outpatient, out-of-network.--
Items and services furnished on an
outpatient basis and outside any
network of providers established or
recognized under such plan or coverage.
(D) Treatment limit defined.--For purposes of
this paragraph, the term ``treatment limit''
means, with respect to a plan or coverage,
limitation on the frequency of treatment,
number of visits or days of coverage, or other
similar limit on the duration or scope of
treatment under the plan or coverage.
(E) Predominance.--For purposes of this
subsection, a treatment limit or financial
requirement with respect to a category of items
and services is considered to be predominant if
it is the most common or frequent of such type
of limit or requirement with respect to such
category of items and services.
(4) Beneficiary financial requirements.--
(A) No beneficiary financial requirement.--If
the plan or coverage does not include a
beneficiary financial requirement (as defined
in subparagraph (C)) on substantially all
medical and surgical benefits within a category
of items and services (specified in paragraph
(3)(C)), the plan or coverage may not impose
such a beneficiary financial requirement on
mental health and substance-related disorder
benefits for items and services within such
category.
(B) Beneficiary financial requirement.--
(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage
includes a deductible, a limitation on
out-of-pocket expenses, or similar
beneficiary financial requirement that
does not apply separately to individual
items and services on substantially all
medical and surgical benefits within a
category of items and services, the
plan or coverage shall apply such
requirement (or, if there is more than
one such requirement for such category
of items and services, the predominant
requirement for such category) both to
medical and surgical benefits within
such category and to mental health and
substance-related disorder benefits
within such category and shall not
distinguish in the application of such
requirement between such medical and
surgical benefits and such mental
health and substance-related disorder
benefits.
(ii) Other financial requirements.--
If the plan or coverage includes a
beneficiary financial requirement not
described in clause (i) on
substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not
impose such financial requirement on
mental health and substance-related
disorder benefits for items and
services within such category in a way
that is more costly to the participant
or beneficiary than the predominant
beneficiary financial requirement
applicable to medical and surgical
benefits for items and services within
such category.
(C) Beneficiary financial requirement
defined.--For purposes of this paragraph, the
term ``beneficiary financial requirement''
includes, with respect to a plan or coverage,
any deductible, coinsurance, co-payment, other
cost sharing, and limitation on the total
amount that may be paid by a participant or
beneficiary with respect to benefits under the
plan or coverage, but does not include the
application of any aggregate lifetime limit or
annual limit.
(5) Availability of plan information.--The criteria
for medical necessity determinations made under the
plan with respect to mental health and substance-
related disorder benefits (or the health insurance
coverage offered in connection with the plan with
respect to such benefits) shall be made available by
the plan administrator (or the health insurance issuer
offering such coverage) to any current or potential
participant, beneficiary, or contracting provider upon
request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with
respect to mental health and substance-related disorder
benefits in the case of any participant or beneficiary
shall, upon request, be made available by the plan
administrator (or the health insurance issuer offering
such coverage) to the participant or beneficiary.
(6) Minimum scope of coverage and equity in out-of-
network benefits.--
(A) Minimum scope of mental health and
substance-related disorder benefits.--In the
case of a group health plan (or health
insurance coverage offered in connection with
such a plan) that provides any mental health
and substance-related disorder benefits, the
plan or coverage shall include benefits for any
mental health condition or substance-related
disorder for which benefits are provided under
the benefit plan option offered under chapter
89 of title 5, United States Code, with the
highest average enrollment as of the beginning
of the most recent year beginning on or before
the beginning of the plan year involved.
(B) Equity in coverage of out-of-network
benefits.--
(i) In general.--In the case of a
plan or coverage that provides both
medical and surgical benefits and
mental health and substance-related
disorder benefits, if medical and
surgical benefits are provided for
substantially all items and services in
a category specified in clause (ii)
furnished outside any network of
providers established or recognized
under such plan or coverage, the mental
health and substance-related disorder
benefits shall also be provided for
items and services in such category
furnished outside any network of
providers established or recognized
under such plan or coverage in
accordance with the requirements of
this section.
(ii) Categories of items and
services.--For purposes of clause (i),
there shall be the following three
categories of items and services for
benefits, whether medical and surgical
benefits or mental health and
substance-related disorder benefits,
and all medical and surgical benefits
and all mental health and substance-
related disorder benefits shall be
classified into one of the following
categories:
(I) Emergency.--Items and
services, whether furnished on
an inpatient or outpatient
basis, required for the
treatment of an emergency
medical condition (including an
emergency condition relating to
mental health and substance-
related disorders).
(II) Inpatient.--Items and
services not described in
subclause (I) furnished on an
inpatient basis.
(III) Outpatient.--Items and
services not described in
subclause (I) furnished on an
outpatient basis.
(b) Construction.--Nothing in this section shall be
[construed--
[(1) as requiring] construed as requiring a group
health plan (or health insurance coverage offered in
connection with such a plan) to provide any [mental
health benefits; or] mental health and substance-
related disorder benefits.
[(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a
plan) that provides mental health benefits, as
affecting the terms and conditions (including cost
sharing, limits on numbers of visits or days of
coverage, and requirements relating to medical
necessity) relating to the amount, duration, or scope
of mental health benefits under the plan or coverage,
except as specifically provided in subsection (a) (in
regard to parity in the imposition of aggregate
lifetime limits and annual limits for mental health
benefits).]
(c) Exemptions.--
(1) Small employer exemption.--This section shall not
apply to any group health plan (and group health
insurance coverage offered in connection with a group
health plan) for any plan year of a small employer.
[(2) Increased cost exemption.--This section shall
not apply with respect to a group health plan (or
health insurance coverage offered in connection with a
group health plan) if the application of this section
to such plan (or to such coverage) results in an
increase in the cost under the plan (or for such
coverage) of at least 1 percent.]
(2) Increased cost exemption.--
(A) In general.--With respect to a group
health plan (or health insurance coverage
offered in connection with such a plan), if the
application of this section to such plan (or
coverage) results in an increase for the plan
year involved of the actual total costs of
coverage with respect to medical and surgical
benefits and mental health and substance-
related disorder benefits under the plan (as
determined and certified under subparagraph
(C)) by an amount that exceeds the applicable
percentage described in subparagraph (B) of the
actual total plan costs, the provisions of this
section shall not apply to such plan (or
coverage) during the following plan year, and
such exemption shall apply to the plan (or
coverage) for 1 plan year.
(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage
described in this paragraph shall be--
(i) 2 percent in the case of the
first plan year which begins after the
date of the enactment of the Paul
Wellstone Mental Health and Addiction
Equity Act of 2007; and
(ii) 1 percent in the case of each
subsequent plan year.
(C) Determinations by actuaries.--
Determinations as to increases in actual costs
under a plan (or coverage) for purposes of this
subsection shall be made by a qualified actuary
who is a member in good standing of the
American Academy of Actuaries. Such
determinations shall be certified by the
actuary and be made available to the general
public.
(D) 6-month determinations.--If a group
health plan (or a health insurance issuer
offering coverage in connection with such a
plan) seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be
made after such plan (or coverage) has complied
with this section for the first 6 months of the
plan year involved.
(E) Notification.--A group health plan under
this part shall comply with the notice
requirement under section 712(c)(2)(E) of the
Employee Retirement Income Security Act of 1974
with respect to the a modification of mental
health and substance-related disorder benefits
as permitted under this paragraph as if such
section applied to such plan.
(d) Separate Application to Each Option Offered.--In the case
of a group health plan that offers a participant or beneficiary
two or more benefit package options under the plan, the
requirements of this section shall be applied separately with
respect to each such option.
(e) Definitions.--For purposes of this section--
(1) * * *
* * * * * * *
(3) Medical or surgical benefits.--The term ``medical
or surgical benefits'' means benefits with respect to
medical or surgical services, as defined under the
terms of the plan or coverage (as the case may be), but
does not include [mental health benefits] mental health
and substance-related disorder benefits.
(4) [Mental health benefits] Mental health and
substance-related disorder benefits.--The term
``[mental health benefits] mental health and substance-
related disorder benefits'' means [benefits with
respect to mental health services] benefits with
respect to services for mental health conditions or
substance-related disorders, as defined under the terms
of the plan or coverage (as the case may be)[, but does
not include benefits with respect to treatment of
substance abuse or chemical dependency].
[(f) Sunset.--This section shall not apply to benefits for
services furnished after December 31, 2007.]
(f) Preemption, Relation to State Laws.--
(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides
greater consumer protections, benefits, methods of
access to benefits, rights or remedies that are greater
than the protections, benefits, methods of access to
benefits, rights or remedies provided under this
section.
(2) Construction.--Nothing in this section shall be
construed to affect or modify the provisions of section
2723 with respect to group health plans.
* * * * * * *
----------
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle K--Group Health Plan Requirements
* * * * * * *
CHAPTER 100 GROUP HEALTH PLAN REQUIREMENTS
* * * * * * *
Subchapter B--Other Requirements
* * * * * * *
Sec. 9811. Standards relating to benefits for mothers and newborns.
[Sec. 9812. Parity in the application of certain limits to mental health
benefits.]
Sec. 9812. Equity in mental health and substance-related disorder
benefits.
* * * * * * *
[SEC. 9812. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL
HEALTH BENEFITS.]
SEC. 9812. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.
(a) In General.--
(1) Aggregate lifetime limits.--In the case of a
group health plan that provides both medical and
surgical benefits and [mental health benefits] mental
health or substance-related disorder benefits--
(A) No lifetime limit.--If the plan does not
include an aggregate lifetime limit on
substantially all medical and surgical
benefits, the plan may not impose any aggregate
lifetime limit on [mental health benefits]
mental health or substance-related disorder
benefits.
(B) Lifetime limit.--If the plan includes an
aggregate lifetime limit on substantially all
medical and surgical benefits (in this
paragraph referred to as the ``applicable
lifetime limit''), the plan shall either--
(i) apply the applicable lifetime
limit both to the medical and surgical
benefits to which it otherwise would
apply and to [mental health benefits]
mental health and substance-related
disorder benefits and not distinguish
in the application of such limit
between such medical and surgical
benefits and [mental health benefits]
mental health and substance-related
disorder benefits; or
(ii) not include any aggregate
lifetime limit on [mental health
benefits] mental health or substance-
related disorder benefits that is less
than the applicable lifetime limit.
(C) Rule in case of different limits.--In the
case of a plan that is not described in
subparagraph (A) or (B) and that includes no or
different aggregate lifetime limits on
different categories of medical and surgical
benefits, the Secretary shall establish rules
under which subparagraph (B) is applied to such
plan with respect to [mental health benefits]
mental health and substance-related disorder
benefits by substituting for the applicable
lifetime limit an average aggregate lifetime
limit that is computed taking into account the
weighted average of the aggregate lifetime
limits applicable to such categories.
(2) Annual limits.--In the case of a group health
plan that provides both medical and surgical benefits
and [mental health benefits] mental health or
substance-related disorder benefits--
(A) No annual limit.--If the plan does not
include an annual limit on substantially all
medical and surgical benefits, the plan may not
impose any annual limit on [mental health
benefits] mental health or substance-related
disorder benefits.
(B) Annual limit.--If the plan includes an
annual limit on substantially all medical and
surgical benefits (in this paragraph referred
to as the ``applicable annual limit''), the
plan shall either--
(i) apply the applicable annual limit
both to medical and surgical benefits
to which it otherwise would apply and
to [mental health benefits] mental
health and substance-related disorder
benefits and not distinguish in the
application of such limit between such
medical and surgical benefits and
[mental health benefits] mental health
and substance-related disorder
benefits; or
(ii) not include any annual limit on
[mental health benefits] mental health
or substance-related disorder benefits
that is less than the applicable annual
limit.
(C) Rule in case of different limits.--In the
case of a plan that is not described in
subparagraph (A) or (B) and that includes no or
different annual limits on different categories
of medical and surgical benefits, the Secretary
shall establish rules under which subparagraph
(B) is applied to such plan with respect to
[mental health benefits] mental health and
substance-related disorder benefits by
substituting for the applicable annual limit an
average annual limit that is computed taking
into account the weighted average of the annual
limits applicable to such categories.
(3) Treatment limits.--In the case of a group health
plan that provides both medical and surgical benefits
and mental health or substance-related disorder
benefits--
(A) No treatment limit.--If the plan does not
include a treatment limit (as defined in
subparagraph (D)) on substantially all medical
and surgical benefits in any category of items
or services (specified in subparagraph (C)),
the plan may not impose any treatment limit on
mental health or substance-related disorder
benefits that are classified in the same
category of items or services.
(B) Treatment limit.--If the plan includes a
treatment limit on substantially all medical
and surgical benefits in any category of items
or services, the plan may not impose such a
treatment limit on mental health or substance-
related disorder benefits for items and
services within such category that is more
restrictive than the predominant treatment
limit that is applicable to medical and
surgical benefits for items and services within
such category.
(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this
paragraph and paragraph (4), there shall be the
following five categories of items and services
for benefits, whether medical and surgical
benefits or mental health and substance-related
disorder benefits, and all medical and surgical
benefits and all mental health and substance
related benefits shall be classified into one
of the following categories:
(i) Inpatient, in-network.--Items and
services not described in clause (v)
furnished on an inpatient basis and
within a network of providers
established or recognized under such
plan.
(ii) Inpatient, out-of-network.--
Items and services not described in
clause (v) furnished on an inpatient
basis and outside any network of
providers established or recognized
under such plan.
(iii) Outpatient, in-network.--Items
and services not described in clause
(v) furnished on an outpatient basis
and within a network of providers
established or recognized under such
plan.
(iv) Outpatient, out-of-network.--
Items and services not described in
clause (v) furnished on an outpatient
basis and outside any network of
providers established or recognized
under such plan.
(v) Emergency care.--Items and
services, whether furnished on an
inpatient or outpatient basis or within
or outside any network of providers,
required for the treatment of an
emergency medical condition (including
an emergency condition relating to
mental health or substance-related
disorders).
(D) Treatment limit defined.--For purposes of
this paragraph, the term ``treatment limit''
means, with respect to a plan, limitation on
the frequency of treatment, number of visits or
days of coverage, or other similar limit on the
duration or scope of treatment under the plan.
(E) Predominance.--For purposes of this
subsection, a treatment limit or financial
requirement with respect to a category of items
and services is considered to be predominant if
it is the most common or frequent of such type
of limit or requirement with respect to such
category of items and services.
(4) Beneficiary financial requirements.--In the case
of a group health plan that provides both medical and
surgical benefits and mental health or substance-
related disorder benefits--
(A) No beneficiary financial requirement.--If
the plan does not include a beneficiary
financial requirement (as defined in
subparagraph (C)) on substantially all medical
and surgical benefits within a category of
items and services (specified in paragraph
(3)(C)), the plan may not impose such a
beneficiary financial requirement on mental
health or substance-related disorder benefits
for items and services within such category.
(B) Beneficiary financial requirement.--
(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan includes a
deductible, a limitation on out-of-
pocket expenses, or similar beneficiary
financial requirement that does not
apply separately to individual items
and services on substantially all
medical and surgical benefits within a
category of items and services, the
plan shall apply such requirement (or,
if there is more than one such
requirement for such category of items
and services, the predominant
requirement for such category) both to
medical and surgical benefits within
such category and to mental health and
substance-related disorder benefits
within such category and shall not
distinguish in the application of such
requirement between such medical and
surgical benefits and such mental
health and substance-related disorder
benefits.
(ii) Other financial requirements.--
If the plan includes a beneficiary
financial requirement not described in
clause (i) on substantially all medical
and surgical benefits within a category
of items and services, the plan may not
impose such financial requirement on
mental health or substance-related
disorder benefits for items and
services within such category in a way
that results in greater out-of-pocket
expenses to the participant or
beneficiary than the predominant
beneficiary financial requirement
applicable to medical and surgical
benefits for items and services within
such category.
(iii) Construction.--Nothing in this
subparagraph shall be construed as
prohibiting the plan from waiving the
application of any deductible for
mental health benefits or substance-
related disorder benefits or both.
(C) Beneficiary financial requirement
defined.--For purposes of this paragraph, the
term ``beneficiary financial requirement''
includes, with respect to a plan, any
deductible, coinsurance, co-payment, other cost
sharing, and limitation on the total amount
that may be paid by a participant or
beneficiary with respect to benefits under the
plan, but does not include the application of
any aggregate lifetime limit or annual limit.
(5) Availability of plan information.--The criteria
for medical necessity determinations made under the
plan with respect to mental health and substance-
related disorder benefits shall be made available by
the plan administrator to any current or potential
participant, beneficiary, or contracting provider upon
request. The reason for any denial under the plan of
reimbursement or payment for services with respect to
mental health and substance-related disorder benefits
in the case of any participant or beneficiary shall,
upon request, be made available by the plan
administrator to the participant or beneficiary.
(6) Minimum scope of coverage and equity in out-of-
network benefits.--
(A) Minimum scope of mental health and
substance-related disorder benefits.--In the
case of a group health plan that provides any
mental health or substance-related disorder
benefits, the plan shall include benefits for
any mental health condition or substance-
related disorder included in the most recent
edition of the Diagnostic and Statistical
Manual of Mental Disorders published by the
American Psychiatric Association.
(B) Equity in coverage of out-of-network
benefits.--
(i) In general.--In the case of a
group health plan that provides both
medical and surgical benefits and
mental health or substance-related
disorder benefits, if medical and
surgical benefits are provided for
substantially all items and services in
a category specified in clause (ii)
furnished outside any network of
providers established or recognized
under such plan, the mental health and
substance-related disorder benefits
shall also be provided for items and
services in such category furnished
outside any network of providers
established or recognized under such
plan in accordance with the
requirements of this section.
(ii) Categories of items and
services.--For purposes of clause (i),
there shall be the following three
categories of items and services for
benefits, whether medical and surgical
benefits or mental health and
substance-related disorder benefits,
and all medical and surgical benefits
and all mental health and substance-
related disorder benefits shall be
classified into one of the following
categories:
(I) Emergency.--Items and
services, whether furnished on
an inpatient or outpatient
basis, required for the
treatment of an emergency
medical condition (including an
emergency condition relating to
mental health or substance-
related disorders).
(II) Inpatient.--Items and
services not described in
subclause (I) furnished on an
inpatient basis.
(III) Outpatient.--Items and
services not described in
subclause (I) furnished on an
outpatient basis.
(b) Construction.--Nothing in this section shall be
[construed--
[(1) as requiring] construed as requiring a group
health plan to provide any [mental health benefits; or]
mental health or substance-related disorder benefits.
[(2) in the case of a group health plan that provides
mental health benefits, as affecting the terms and
conditions (including cost sharing, limits on numbers
of visits or days of coverage, and requirements
relating to medical necessity) relating to the amount,
duration, or scope of mental health benefits under the
plan, except as specifically provided in subsection (a)
(in regard to parity in the imposition of aggregate
lifetime limits and annual limits for mental health
benefits).]
(c) Exemptions.--
[(1) Small employer exemption.--This section shall
not apply to any group health plan for any plan year of
a small employer (as defined in section 4980D(d)(2)).
[(2) Increased cost exemption.--This section shall
not apply with respect to a group health plan if the
application of this section to such plan results in an
increase in the cost under the plan of at least 1
percent.]
(1) Small employer exemption.--
(A) In general.--This section shall not apply
to any group health plan for any plan year of a
small employer.
(B) Small employer.--For purposes of
subparagraph (A), the term ``small employer''
means, with respect to a calendar year and a
plan year, an employer who employed an average
of at least 2 (or 1 in the case of an employer
residing in a State that permits small groups
to include a single individual) but not more
than 50 employees on business days during the
preceding calendar year. For purposes of the
preceding sentence, all persons treated as a
single employer under subsection (b), (c), (m),
or (o) of section 414 shall be treated as 1
employer and rules similar to rules of
subparagraphs (B) and (C) of section
4980D(d)(2) shall apply.
(2) Increased cost exemption.--
(A) In general.--With respect to a group
health plan, if the application of this section
to such plan results in an increase for the
plan year involved of the actual total costs of
coverage with respect to medical and surgical
benefits and mental health and substance-
related disorder benefits under the plan (as
determined and certified under subparagraph
(C)) by an amount that exceeds the applicable
percentage described in subparagraph (B) of the
actual total plan costs, the provisions of this
section shall not apply to such plan during the
following plan year, and such exemption shall
apply to the plan for 1 plan year.
(B) Applicable percentage.--With respect to a
plan, the applicable percentage described in
this paragraph shall be--
(i) 2 percent in the case of the
first plan year to which this paragraph
applies, and
(ii) 1 percent in the case of each
subsequent plan year.
(C) Determinations by actuaries.--
Determinations as to increases in actual costs
under a plan for purposes of this subsection
shall be made by a qualified and licensed
actuary who is a member in good standing of the
American Academy of Actuaries. Such
determinations shall be certified by the
actuary and be made available to the general
public.
(D) 6-month determinations.--If a group
health plan seeks an exemption under this
paragraph, determinations under subparagraph
(A) shall be made after such plan has complied
with this section for the first 6 months of the
plan year involved.
* * * * * * *
(e) Definitions.--For purposes of this section:
(1) * * *
* * * * * * *
(3) Medical or surgical benefits.--The term ``medical
or surgical benefits'' means benefits with respect to
medical or surgical services, as defined under the
terms of the plan, but does not include [mental health
benefits] mental health or substance-related disorder
benefits.
[(4) Mental health benefits.--The term ``mental
health benefits'' means benefits with respect to mental
health services, as defined under the terms of the
plan, but does not include benefits with respect to
treatment of substance abuse or chemical dependency.]
(4) Mental health benefits.--The term ``mental health
benefits'' means benefits with respect to services for
mental health conditions, as defined under the terms of
the plan, but does not include substance-related
disorder benefits.
(5) Substance-related disorder benefits.--The term
``substance-related disorder benefits'' means benefits
with respect to services for substance-related
disorders, as defined under the terms of the plan.
[(f) Application of Section.--This section shall not apply to
benefits for services furnished--
[(1) on or after September 30, 2001, and before
January 10, 2002,
[(2) on or after January 1, 2004, and before the date
of the enactment of the Working Families Tax Relief Act
of 2004, and
[(3) after December 31, 2007.]
* * * * * * *
VII. DISSENTING VIEWS
MINORITY VIEWS ON H.R. 1424, THE ``PAUL WELLSTONE MENTAL HEALTH AND
ADDICTION EQUITY ACT OF 2007''
INTRODUCTION
Republican members of the Committee support providing
parity between mental health benefits and other medical
benefits provided under employer-sponsored health coverage. In
the 110th Congress, the House and Senate are offering two
different approaches in addressing this issue. The proposal
advancing in the Senate achieves the goal of parity and also
has the support of both the business and mental health
communities. Accordingly, we set forth these views to express
our concerns with the House bill, and urge that as the
legislative process moves forward, the House brings its efforts
in line with that of the other body.
Mental health parity bills have been introduced in prior
Congresses, but have not been enacted into law in part because
of serious concerns associated with these proposals and the
opposition to additional federal coverage mandates on
employers. Employers continue to struggle to provide
affordable, high-quality coverage to their employees. According
to the Congressional Budget Office (CBO), the House bill
``would result in higher premiums for employer-sponsored health
benefits.'' CBO also notes that this bill will lead to
reductions in the number of employers offering health insurance
and could cause health plans to eliminate coverage for mental
health benefits andlor substance benefits.
The current parity bills, H.R. 1424 in the House and S. 558
in the Senate, represent two different approaches to the issue
of achieving mental health parity. H.R. 1424, as reported by
the Committee, reflects prior legislative efforts and does not
address the concerns raised by those parties who will be
required to comply with the new mandates. In contrast, the
Senate bill reflects a carefully negotiated consensus of all
major stakeholders on all sides of the mental health parity
debate.
FEDERAL LEGISLATIVE ACTIVITY
Senate legislation
In the 110th Congress, the Mental Health Parity Act of
2007, S. 558, was introduced by Senators Pete Domenici (R-NM),
Ted Kennedy (D-MA), and Mike Enzi (R-WY) on February 12, 2007.
The Senate Health, Education, Labor, and Pensions (``HELP'')
Committee approved the measure, as amended, on February 14,
2007. On September 18, 2007 the Senate passed S. 558 by
Unanimous Consent. The Senate bill was the product of
negotiations between patient advocates, behavioral health
providers, insurers, and business groups.
S. 558 requires health insurance plans that offer mental
health coverage to provide that coverage on par with other
physical illnesses. The Senate bill would not mandate that
plans provide specific mental health benefits, but rather only
require that plans still comply with state-specific benefit
requirements where applicable. S. 558 also would specifically
ensure that medical management of mental health benefits and
negotiation of separate reimbursement or provider payment rates
is not prohibited, meaning that employers and health plans
could maintain flexibility in forming behavioral health care
provider networks.
CBO scored S. 558 and concluded that it would result in a
0.4 percent increase in employer-sponsored premiums. This was
estimated to amount to $1.5 billion in 2009 and $3.4 billion in
2013. Also, for the five-year period, 2008-2012, CBO estimated
a $1 billion decrease in direct revenues (resulting from
increased premium deductions), $280 million in increased direct
spending, and $150 million in increased appropriations.
House legislation
H.R. 1424 attempts to achieve mental health parity by
prohibiting group health plans from imposing treatment limits
or financial requirements on mental health and substance-
related disorder benefits, if those requirements and
limitations are not similarly imposed on medical and surgical
benefits under such plans. The bill would also require that
where a plan covers any behavioral health disorder, it must
cover all currently recognized conditions listed in the DSM-IV.
This mandate would potentially require coverage for certain
disorders, such as ``caffeine intoxication'' and ``circadian
rhythm sleep disorder (jet lag),'' and eliminate a plan's
flexibility to determine its covered benefits. Under the bill,
plans would not be specifically permitted to engage in medical
management practices and negotiate separate reimbursement or
provider payment rates. Given the number of states that have
already taken action, this ambiguity raises concerns that other
states may limit medical management. H.R. 1424 would mandate
out-of-network coverage for mental health and substance-related
disorders, if such coverage is provided for emergency,
inpatient or outpatient services.
Finally, H.R. 1424 would give states the authority to enact
greater rights or remedies than those contained under current
federal statute. The bill, if enacted, would establish a
benefit ``floor'' while permitting states to impose broader
mental health coverage mandates, creating inconsistent and
confusing regulatory schemes. At the same time, this provision
allows state enforcement action and remedies to be established,
which would apply to mental health benefits but not other
medical benefits. Under current law, plans have operated under
the rights and remedies set forth under ERISA for over three
decades.
CBO scored H.R. 1424 and concluded that it would result in
a 0.4 percent increase in employer-sponsored premiums. This
bill will increase mandatory spending by $310 million and
further reduce federal revenues by $1.1 billion. These amounts
are not offset, and will raise a budget point of order if this
bill is brought to the House floor. We believe that any mental
health parity bill should be fully paid for, and any offsets
should be fully vetted through the Committee process.
LEGISLATIVE HEARING ON H.R. 1424
On March 27, 2007, the Committee on Ways and Means,
Subcommittee on Health, held a legislative hearing on H.R.
1424. The hearing featured the testimony of Representatives
Kennedy and Ramstad, along with mental health advocates,
including Dr. Michael Quirk and Dr. Henry Harbin, who is a
former director of the State of Maryland Mental Health
Authority. The hearing focused on the specific provisions of
the House bill, but also included discussion of the Senate
proposal.
Dr. Quirk, who is the director of Behavioral Health
Services at Group Health Cooperative, testified about specific
concerns with the House bill. Other witnesses, including Mr.
Breyfogle, testified that national mental health parity policy
will work best if it allows carriers the flexibility to design
coverage and services that will benefit both individual
patients and whole populations of people with similar problems.
He also said that federal legislation should allow carriers
like Group Health the flexibility to make reasonable
determinations of medical necessity in order to determine who
will benefit from care. Dr. Quirk stressed the importance of
medical management, citing this as the tool that allows
providers to make appropriate clinical decisions about
patients.
FULL COMMITTEE MARKUP
On Wednesday, September 26, 2007, the full Committee on
Ways and Means met to consider and mark up H.R. 1424. The
following amendments were voted on during mark up.
Hulshof Amendment:
Mr. Hulshof offered an amendment that struck the
requirement that plans must cover all conditions specified in
the DSM-IV. His amendment instead would allow health plans and
state laws to determine what mental health benefits are
covered. This amendment would have aligned the House version of
the bill to that of the Senate. The amendment was defeated by a
rollcall vote of 12-26.
Johnson Amendment:
Mr. Johnson offered an amendment that would have
incorporated the Senate's effective date, moving it from
January 1, 2008 to January 1st of the year following the date
of enactment. The amendment was withdrawn.
Camp Amendment:
Mr. Camp offered an amendment that struck the language
requiring plans to provide out-of-network mental health
benefits if the plan also provides out-of-network medical and
surgical benefits. This would have brought the bill in line
with the Senate bill and current FEHBP requirements. The
amendment was defeated by a rollcall vote with a final tally of
15-25.
Weller Amendment:
Mr. Weller offered an amendment that would change the title
of the bill to add Mr. Ramstad's name. At Mr. Ramstad's
request, Mr. Weller withdrew the amendment.
Hulshof #2 Amendment:
Mr. Hulshof's second amendment would have clarified health
plans' ability to offer medical management of mental health
benefits. The ability to effectively manage mental health
benefits is essential to provide high quality care and
appropriately manage costs. This amendment wouldbring the House
bill in line with the Senate bill and current FEHBP coverage. The
amendment was defeated by a rollcall vote of 15-25.
Lewis Amendment:
Mr. Lewis offered an amendment that would protect patients
from substantial premium increases. The amendment would provide
patients with the same protections that this bill provides to
health plans. Under the amendment, the amount that beneficiary
premiums increased could not exceed the cap on allowable cost
increases for plans. The amendment was defeated by a rollcall
vote of 15-25.
Camp #2 Amendment:
Finally, Mr. Camp offered an amendment that would strike
Section 4 and replace it with language from the Senate bill.
This amendment would essentially replace the House version of
the bill with the Senate version. The amendment was defeated by
a rollcall vote of 13-26.
REPUBLICAN VIEWS
H.R. 1424 would require group health plans to provide
significantly greater mental health and substance abuse
benefits, as compared to other medical benefits. This raises a
question of fundamental fairness. Parity equalizes care between
mental health and medical benefits, yet H.R. 1424 goes beyond
parity by imposing federal mandates on coverage.
As set forth below, there are several concerns with
provisions of H.R. 1424. As such, it should be rejected by the
House.
H.R. 1424 IMPOSES A BENEFIT MANDATE THAT DEFINES COVERED ILLNESSES TOO
BROADLY
Under H.R. 1424, every mental illness identified in the
DSM-IV would be required to be covered by health plans. Current
federal law generally does not apply any similar requirement
that group health plans cover broad categories of medical
benefits, such as hospital services, physician services, or
drug benefits.
H.R. 1424 SIGNIFICANTLY WEAKENS ERISA PREEMPTION
Under H.R. 1424, states would be authorized to enact
``greater consumer protections, benefits, and methods of access
to benefits, rights or remedies'' than the provisions set in
the legislation. This change would create a new legal basis to
allow states to take actions against ERISA plans. The Supreme
Court has consistently concluded that states may not establish
their own rights or remedies for enrollees under ERISA plans.
Instead, federal rights and remedies exclusively apply to ERISA
health plan participants and their benefits. If states can
apply their own remedies to mental health benefits (but not
other categories of benefits), ERISA health plan participants
would have different rights and remedies depending on the type
of benefits.
H.R. 1424 DOES NOT ADEQUATELY ADDRESS MEDICAL MANAGEMENT OF CLAIMS
H.R. 1424 does not make clear that group health plans are
not prohibited from negotiating separate reimbursement or
provider payment rates and service delivery systems for
different benefits. This provision, combined with the specific
authorization of medical management practices, would serve to
provide group health plans with the tools necessary to
appropriately manage and deliver mental and behavioral health
care benefits. In fact, FEHBP uses these practices to control
the cost and quality of their benefits.
H.R. 1424 MANDATES OUT-OF-NETWORK COVERAGE
H.R. 1424 mandates out-of-network coverage if a plan
provides coverage for substantially all medical and surgical
services in either emergency, inpatient or outpatient services.
It exceeds the FEHBP requirement to provide parity only for in-
network services. Although the Majority references the FEHBP
program as the standard by which private plans should operate,
this bill ignores significant portions of the FEHBP program.
CONCLUSION
We agree that there have been significant advances in
diagnosis and treatment of mental, behavioral and substance
abuse disorders. We believe that mental health benefits should
be provided on the same terms as medical and surgical benefits.
We also recognize the two current legislative proposals, H.R.
1424 and S. 558, offer substantially different approaches
toward achieving parity.
However, only the Senate bill achieves true parity and
represents the product of two years of negotiation and
agreement among a diverse group of interested stakeholders.
Although attempts were made at the full Committee markup to
improve the bill, H.R. 1424 continues to have significant
concerns. For this reason, we oppose passage of H.R. 1424.
Jim McCrery.
Wally Herger.
Dave Camp.
Sam Johnson.
Kenny Hulshof.
Ron Lewis.
Kevin Brady.
Tom Reynolds.
Devin Nunes.
Jon Porter.
