[House Report 110-374]
[From the U.S. Government Publishing Office]
110th Congress Rept. 110-374
HOUSE OF REPRESENTATIVES
2d Session Part 3
======================================================================
PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF 2007
_______
March 4, 2008.--Ordered to be printed
_______
Mr. Dingell, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1424]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, 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.
CONTENTS
Page
Amendment........................................................ 1
Purpose and Summary.............................................. 12
Background and Need for Legislation.............................. 12
Hearings......................................................... 14
Committee Consideration.......................................... 15
Committee Votes.................................................. 15
Committee Oversight Findings..................................... 23
Statement of General Performance Goals and Objectives............ 23
New Budget Authority, Entitlement Authority, and Tax Expenditures 23
Earmarks and Tax and Tariff Benefits............................. 23
Committee Cost Estimate.......................................... 23
Congressional Budget Office Estimate............................. 23
Federal Mandates Statement....................................... 31
Advisory Committee Statement..................................... 31
Constitutional Authority Statement............................... 31
Applicability to Legislative Branch.............................. 31
Section-by-Section Analysis of the Legislation................... 32
Changes in Existing Law Made by the Bill, as Reported............ 35
Dissenting Views................................................. 56
Amendment
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. 5. 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 or
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 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 or coverage.
``(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 or coverage.
``(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 or coverage.
``(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 or coverage.
``(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 (as defined in
section 1867(e) of the Social Security Act,
including an emergency condition relating to
mental health and substance-related disorders).
``(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 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 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 or
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 or 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 substance 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 or substance-related disorder benefits, the plan
or coverage 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 (or health insurance coverage
offered in connection with such 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 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 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
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 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 (or coverage)
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
(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 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. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.''.
(j) 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 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.
(k) Construction Regarding Use of Medical Management Tools.--Nothing
in this Act shall be construed to prohibit a group health plan or
health insurance issuer from using medical management tools as long as
such management tools are based on valid medical evidence and are
relevant to the patient whose medical treatment is under review.
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.--
``(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 and 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 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, 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.--
``(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 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 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 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, 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.--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'' in the
heading 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 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 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 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 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, 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 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 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
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.--Subsection (c)(1) of
such section 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.--Such section is amended by
striking subsection (f).
(h) Conforming Amendments to Heading.--
(1) In general.--The heading of such section 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 the Internal Revenue Code of 1986 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.--The amendments made by this section shall apply
with respect to plan years beginning on or after January 1, 2008.
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 criteria. If such criteria do
not exist, the report shall include recommendations on a process for
developing such criteria.
Purpose and Summary
The purpose of H.R. 1424, the ``Paul Wellstone Mental
Health and Addiction Equity Act of 2007'' is to have fairness
and equity in the coverage of mental health and substance-
related disorders vis-a-vis coverage for medical and surgical
disorders. This bill expands the Mental Health Parity Act of
1996 (Public Law 104-204) by requiring group health plans that
offer benefits for mental health and substance-related
disorders to do so on similar terms as care for other medical
and surgical diseases. The legislation ensures that plans do
not charge higher copayments, coinsurance, deductibles, and
impose maximum out-of-pocket limits and lower day and visit
limits on mental health and addiction care than the plan has
for medical and surgical benefits. After years of
discriminatory practices in plan design, health plans will be
required to offer parity in treatment of mental illness and
medical illness or face penalties by the Department of Health
and Human Services, the Department of Labor, and the Internal
Revenue Service.
Background and Need for Legislation
More than 50 million adults, at least 22 percent of the
U.S. population, suffer from mental disorders or substance
abuse disorders on an annual basis.\1\ In addition, 1 out of
every 10 children or adolescents has a serious mental health
problem, and another 10 percent have mild to moderate
problems.\2\
---------------------------------------------------------------------------
\1\Health Care Reform for Americans with Severe Mental Illnesses:
Report of the National Advisory Mental Health Council, produced in
response to a request by the Senate Committee on Appropriations,
American Journal of Psychiatry 150:10, October 1993. The World Health
Organization. The World Health Report 2004: Changing History; Annex
Table 3: Burden of disease in Disability-Adjusted-Life-Years (DALY) by
cause, sex, and mortality stratum in WHO regions, estimates for 2002.
Geneva (2004).
\2\American Psychological Association.
---------------------------------------------------------------------------
The results of untreated mental illness and substance
related disorders include, but are not limited to, emotionally
and financially unstable families and children, higher costs
for businesses, and more criminal activity. Mental disorders
are the leading cause of disability for individuals ages 15 to
44 in the United States.\3\ A study sponsored by the National
Institute of Mental Health revealed that mental and addictive
disorders cost more than $300 billion annually. This includes
productivity losses of $150 billion, healthcare costs of $70
billion, and $80 billion from other costs such as criminal
justice.\4\ More specifically, mental illnesses cause direct
business costs of at least $70 billion per year, mostly in the
form of lost productivity.\5\ For those who suffer from mental
illness, ``mental disorders are treatable * * * there is
generally not just one but a range of treatments of proven
efficacy.''\6\ Unfortunately, less than one-third of people
with a mental disorder who seek help receive minimally adequate
care.\7\
---------------------------------------------------------------------------
\3\The World Health Organization. The World Health Report 2004:
Changing History; Annex Table 3: Burden of disease in Disability-
Adjusted-Life-Years (DALY) by cause, sex, and mortality stratum in WHO
regions, estimates for 2002. Geneva (2004).
\4\The Numbers Count: Mental Disorders in America, NIH Publication
No. 01-4584, dated 2006 available at http://www.nimh.nih.gov/health/
publications/the-numbers-count-mental-disorders-in-america.shtml.
\5\Mental Health: A Report of the Surgeon General, 1999.
\6\U.S. Dept. of Health and Human Services, Mental Health: A Report
of the Surgeon General 46, 179 (1999) [hereinafter SGRMH].
\7\Wang PS, et.al., 12-month use of mental health services in the
United States: results from the National Comorbidity Survey
Replication, Archives of General Psychiatry, June 2005.
---------------------------------------------------------------------------
Despite the losses suffered in our society as a result of
mental illness, national employer survey data indicate that
mental health coverage is still not offered at a level
comparable to coverage for other medical conditions.\8\ Even
after the passage of the 1996 Mental Health Parity Act and
given parity laws in numerous States, the Government
Accountability Office found that 87 percent of plans had more
restrictive design features for mental health benefits than for
medical and surgical benefits.\9\ In addition, many employers
had adopted newly restrictive mental health benefit design
features such as limiting the number of covered outpatient
office visits for mental illness specifically to offset the
parity they were required to provide in aggregate and lifetime
limits.\10\ A former Surgeon General of the United States, Dr.
David Satcher, found that health insurance plans have unevenly
imposed higher cost controls for mental health services such as
placing a 50 percent copayment on outpatient psychotherapy
visits.\11\ Such inequity results in not only the reduction of
inappropriate use of services, but also on the appropriate use
of services. Overall, Surgeon General Satcher stated it is an
``issue of fairness in coverage policy.''\12\ Similarly, a more
recent study found that deductibles and outpatient cost-sharing
for substance abuse were much higher for substance abuse than
for general medical care in 2006.\13\
---------------------------------------------------------------------------
\8\Congressional Research Service, Mental Health Parity: Federal
and State Action and Economic Impact, Updated January 25, 2007.
\9\Government Accountability Office, Mental Health Parity Act,
Despite New Federal Standards, Mental Health Benefits Remain Limited,
GAO/HEHS-00-95, May 2000.
\10\Government Accountability Office, Mental Health Parity Act,
Despite New Federal Standards, Mental Health Benefits Remain Limited,
GAO/HEHS-00-95, May 2000.
\11\Mental Health: A Report of the Surgeon General, 1999.
\12\Mental Health: A Report of the Surgeon General, 1999.
\13\Colleen L. Barry and Jody L. Sindelar, Equity In Private
Insurance Coverage For Substance Abuse: A Perspective On Parity,
October 23, 2007.
---------------------------------------------------------------------------
States began addressing inequities in mental health
coverage in the 1970s. Currently, most all States have mandated
some level of parity. State parity laws, however, will have
limited effect because they do not cover self-insured
plans.\14\ H.R. 1424 seeks fairness in coverage of mental
health and substance-related disorders. The bill aims to
increase access to mental health treatment by prohibiting group
health plans (or health insurance coverage offered in
connection with a group health plan) from imposing financial
requirements (including deductibles, co-payments, coinsurance,
out-of-pocket expenses, and annual and lifetime limits) or
treatment limitations (including limitations on the number of
visits, days of coverage, or frequency of treatment) on mental
health and substance-related benefits that are more restrictive
than those restrictions applied to medical and surgical
benefits. This legislation provides a cost-effective way of
promoting increased access to mental health care. Such
conclusions are supported by the implementation and studies of
parity within the Federal Employee Health Benefits Program.
Studies found that parity between medical and surgical benefits
and mental health and substance-related disorders resulted in a
significant decline in out-of-pocket spending indicating that
parity protection resulted in improved insurance protection
against financial risks.\15\ Another study found, ``[t]he more
generous a state's mental health parity coverage, the greater
the number of people in the population that receive mental
health services'' and suggests that addressing discrimination
in private health insurance by legislating parity could reduce
depression and its negative consequences.\16\
---------------------------------------------------------------------------
\14\Ramya Sundararaman, C. Stephen Redhead, Mental Health Parity:
Federal and State Action and Economic Impact, October 19, 2007.
\15\Howard H. Goldman, et. al., Behavioral Health Insurance Parity
for Federal Employees, The New England Journal of Medicine, 354:13,
March 30, 2006.
\16\Government Accountability Office, Mental Health Parity Act,
Despite New Federal Standards, Mental Health Benefits Remain Limited,
GAO/HEHS-00-95, May 2000.
---------------------------------------------------------------------------
Hearings
On June 15, 2007, the Subcommittee on Health of the
Committee on Energy and Commerce held a hearing entitled ``H.R.
1424, the Paul Wellstone Mental Health and Addiction Equity Act
of 2007''. The witnesses included: Representative Patrick
Kennedy and Representative Jim Ramstad, chief sponsors of the
legislation; James Purcell, President and Chief Executive
Officer of BlueCross & BlueShield of Rhode Island; Marley
Prunty-Lara; Howard Goldman, Professor of Psychiatry of the
University of Maryland; Edwina Rogers, Vice President of Health
Policy for the ERISA Industry Committee; and James Klein,
President of the American Benefits Council.
There were also hearings held by the two House Committees
that received secondary referral of H.R. 1417. The Subcommittee
on Health of the Ways and Means Committee held a hearing
entitled ``Mental Health and Substance Abuse Parity'' on March
27, 2007. On July 10 2007, the Subcommittee on Health,
Employment, Labor, and Pensions of the Committee on Education
and Labor held a hearing entitled ``The Paul Wellstone Mental
Health and Addiction Equity Act of 2007 (H.R. 1424).''
Committee Consideration
On Wednesday, October 10, 2007, the Subcommittee on Health
met in open markup session and favorably forwarded H.R. 1424,
amended, to the full Committee for consideration, by a voice
vote. On Tuesday, October 16, 2007, the full Committee on
Energy and Commerce met in open markup session and ordered H.R.
1424 favorably reported to the House, as amended by the
Subcommittee, by a record vote of 32 yeas and 13 nays. No
amendments were approved during full Committee consideration.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were six amendments offered during full Committee
consideration that were defeated by a recorded vote. A motion
by Mr. Dingell to order H.R. 1424 favorably reported to the
House, as amended by the Subcommittee on Health, was agreed to
by a record vote of 32 yeas and 13 nays. The following are the
recorded votes taken on the amendments and the Dingell motion,
including the names of those Members voting for and against:
Committee Oversight Findings
Regarding clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the oversight findings of the
Committee regarding H.R. 1424 are reflected in this report.
Statement of General Performance Goals and Objectives
The purpose of H.R. 1424 is to achieve equity in the
treatment limits or the imposition of financial requirements on
mental health and substance-related disorder benefits with
medical and surgical benefits in group health plans or health
insurance coverage offered in connection with a group health
plan. The purpose is to counter a history of discrimination and
stigma against mental illness and substance-related disorders
that has resulted in much less access to care.
New Budget Authority, Entitlement Authority, and Tax Expenditures
Regarding compliance with clause 3(c)(2) of rule XIII of
the Rules of the House of Representatives, the Committee finds
that, over the 2008-2012 period, H.R. 1424 would result in an
increase of $310 million in direct spending and a decrease of
$1.1 billion in payroll tax revenue; and over the period of
2008-2017, an increase of $820 million in direct spending and a
decrease of $3.1 billion in payroll tax revenue.
Earmarks and Tax and Tariff Benefits
Regarding compliance with clause 9 of rule XXI of the
Rules of the House of Representatives, H.R. 1424 does not
contain any congressional earmarks, limited tax benefits, or
limited tariff benefits as defined in clause 9(d), 9(e), or
9(f) of rule XXI.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives, the following is the cost
estimate provided by the Congressional Budget Office pursuant
to section 402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 21, 2007.
Hon. John D. Dingell,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1424, the Paul
Wellstone Mental Health and Addiction Equity Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Shinobu
Suzuki.
Sincerely,
Peter R. Orszag,
Director.
Enclosure.
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- -20 -120 -170 -190 -210 -230 -250 -260 -280 -300 -710 -2,030
budget).............................
Social Security Payroll Taxes (off- -10 -70 -100 -100 -110 -120 -130 -140 -150 -160 -390 -1,090
budget).............................
------------------------------------------------------------------------------------------------------------------
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 Internal Revenue
Code (IRC) 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 Public Health Service
Act (PHSA) to require that the mental health benefits of plans
that choose to offer such benefits cover treatments 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). Finally, the bill would limit
plans' methods for managing utilization of mental health and
substance abuse services to those that are based on valid
medical evidence and relevant to the patient whose medical
treatment is under review.
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 the requirement to cover all conditions
contained in the DSM combined with the limitation on plans' use
of utilization management would probably result in an increase
in employer-sponsored health insurance premiums that would be
larger than if the requirement was for a minimum scope of
benefits alone. However, because the provision only applies to
those plans that would be affected by the PHSA, its impact on
costs would likely be small. 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.
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--about 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 by $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.
The bill further amends the PHSA by limiting plans' methods
for managing utilization of mental health and substance abuse
services to those that are based on valid medical evidence and
relevant to the patient whose medical treatment is under
review. Because the provision applies only to those plans who
would be affected by the PHSA, its impact on costs would likely
be small.
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. On October 4, 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 Ways and Means on September
26, 2007.
All three 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 for 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.
The Ways and Means and Energy and Commerce Committees'
versions differ from the Education and Labor Committee's
version in that they would not include a mechanism for auditing
group health plans or for providing assistance to beneficiaries
of such plans. In addition, the Ways and Means and Energy and
Commerce Committees' versions would amend the PHSA 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 alone 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 the estimated budgetary effects of the Ways and Means
Committee's version would be identical to those of the
Education and Labor Committee's version.
The Energy and Commerce Committee's version differs from
the other two versions in that it would impose a restriction on
plans' methods for managing utilization of mental health and
substance abuse services to those that are based on valid
medical evidence and are relevant to the patient whose medical
treatment is under review. However, because the provision
applies only to those plans that would be affected by the
changes to the Public Health Service Act, its impact on costs
would probably be small.
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.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
TITLE OF THE BILL
Section 1. Short title; table of contents
Section 1 establishes the short title of H.R. 1424 as the
``Paul Wellstone Mental Health and Addiction Equity Act of
2007'' and provides the table of contents of this Act.
Section 2. Amendments to the Employee Retirement Income Security Act of
1974
Section 2 amends the Employee Retirement Income Security
Act of 1974 relating to the group market. This section is not
within the jurisdiction of the Committee.
Section 3. Amendments to the Public Health Service Act relating to the
group market
Section 3(a) is entitled ``Extension of Parity to Treatment
Limits and Beneficiary Financial Requirements.'' This bill does
not require group health plans or health insurance coverage
offered in connection with such plans to offer mental health or
substance related benefits. If a plan or coverage offers such
benefits, however, Section 3(a) requires that it must comply
with parity requirements with regard to treatment limitations
and beneficiary financial requirements in the plan.
Section 3(a) amends the Public Health Service Act to
prohibit group health plans or health insurance coverage
offered in connection with such plans to have more restrictive
treatment limitations and beneficiary financial requirements
for mental health and substance-related disorders than the
predominant limitation or requirement on medical and surgical
disorders in specified categories. This parity requirement is
only applicable in situations where substantially all medical
and surgical benefits within a category have a treatment
limitation or beneficiary financial requirement. The categories
include (1) inpatient, in-network; (2) inpatient, out-of-
network; (3) outpatient, in-network; (4) outpatient, out of
network; and (5) emergency care.
In addition, Section 3(a) prohibits group health plans or
health insurance coverage offered in connection with such plans
from imposing treatment limits or beneficiary financial
requirements on mental health services if substantially all of
the medical and surgical benefits do not include any limit.
Section 3(a) defines ``treatment limit'' under a health
plan as a limitation on the number of visits or days of
coverage, or other similar limit on the duration or scope of
treatment.
Section 3(b) is entitled ``Expansion to Substance-Related
Disorder Benefits and Revision of Definition.'' It includes
substance-related disorder benefits in the parity requirements
and definitions used in the Mental Health Parity Act under
current law.
Section 3(c) is entitled ``Availability of Plan Information
About Criteria for Medical Necessity.'' It codifies that
criteria for determining whether a treatment is medically
necessary under the plan with respect to mental health and
substance-related disorder benefits shall be available to
beneficiaries.
Section 3(d) is entitled ``Minimum Benefit Requirements.''
It requires that group health plans or health insurance
coverage offered in connection with such plans that provide
mental health or substance-related disorder benefits shall
provide coverage of any disorder or condition listed in the
Diagnostic and Statistical Manual of Mental Disorders (DSM)
published by the American Psychiatric Association. Insurance
plans retain the authority in current law to define treatment
benefits that are covered under the plan and the scope of those
treatments for the disorders that are defined by the DSM. A
``mental health benefit'' as defined under current section
2705(e)(4) of the Public Health Service Act and incorporating
amendments made under H.R. 1424 means ``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).'' This provision permits a plan to define
what benefits are available for the disorders listed under the
DSM that are required.
In addition, this requirement does not change the current
ability of an insurer or provider to determine medically
necessary and appropriate care and treatment for their
patients. It merely ensures that patients are not denied mental
health coverage based on the specific disorder they have. For
example, a person cannot be denied coverage by their health
plan merely because they have autism. A plan may determine,
however, whether a treatment is medically necessary or
appropriate for a given person at a given time based on their
individual situation.
This section is limited to whether an insurer covers a
mental health or substance-related disorder. This bill,
including the minimum scope of mental health and substance-
related disorder benefits in section (d) ``6(A)'', should not
be construed to change the question of admissibility of
documents or other evidence for the purpose of proving or
disproving mental illness in establishing a defense of a crime.
The rules of the courts or statutes of the State or the common
law of the place in which the court sits and which is a part of
the jurisprudence of the particular place determine the rules
on admissibility of evidence for the purposes of establishing a
defense to a crime. Furthermore, this bill should not change
any requirements for reporting criminal conduct or create a new
privilege for not reporting criminal conduct.
This bill, including the minimum scope of mental health and
substance-related disorder benefits in section (d) ``6(A)'',
should not be construed to change how determinations of
disability are made under the Americans with Disabilities Act
of 1990, or other Federal or State law, or an employee
substance abuse policy.
Section 3(d) requires group health plans or health
insurance coverage offered in connection with such plans that
provide out-of-network items and services for substantially all
their medical and surgical benefits within a category to also
offer mental health and substance related disorder benefits for
items and services in such categories furnished outside the
network. The categories include (1) inpatient, (2) outpatient;
and (3) emergency care.
Section 3(e) is entitled ``Revision of Increased Cost
Exemption.'' It permits group health plans or health insurance
coverage offered in connection with such a plan to be exempt
from the parity requirements of the bill under certain
situations. Plans are exempt if there is an increase as a
result of the mental health parity act requirements in actual
total costs of coverage for medical and surgical benefits and
mental health and substance-related disorder benefits for one
year under the plan of 2 percent or more in the first year
where the parity requirements apply or 1 percent or more in
subsequent years. A determination of the increase in actual
total costs of coverage shall be made by a qualified and
licensed actuary in good standing with the American Academy of
Actuaries. Such determinations shall be made based on six
months of actual cost data while the parity requirements are in
place. A group health plan shall notify beneficiaries if the
plan will be exempt from parity requirements.
Section 3(f) is entitled ``Change in Exclusion for Smallest
Employers.'' It excludes group health plans or health insurance
issuers that serve employers with 1 to 50 employees from the
treatment limitation and beneficiary financial requirement
parity requirements under this bill and annual and lifetime
limit parity requirements from the Mental Health Parity Act of
1996.
Section 3(g) is entitled ``Elimination of Sunset
Provision.'' It eliminates the sunset date under this bill and,
thus, makes the parity requirements permanent.
Section 3(h) is entitled ``Clarification Regarding
Preemption.'' It clarifies current law, that nothing in this
section preempts any State law that provides greater consumer
protections, benefits, methods of access to benefits, or rights
or remedies.
Section 3(i) is entitled ``Conforming Amendment to
Heading.'' It conforms section 2705 heading to be ``Equity in
Mental Health and Substance-Related Disorder Benefits.''
Section 3(j) is entitled ``Effective Date.'' It makes the
effective date of the parity requirements in section 2705 of
the Public Health Service Act the plan years beginning on or
after January 1, 2008. This section also ensures that the
annual and lifetime parity requirements from the Mental Health
Parity Act of 1996 continue in effect even when the new parity
requirements on treatment limitations and beneficiary financial
requirements are not yet in effect.
Section 3(j) permits a later implementation of the parity
requirements with regard to treatment limitations and
beneficiary financial requirements on plans that have a
collectively bargained agreement in place. Parity requirements
will not be effective until the later of the dates on which the
last of the collective bargaining agreements relating to the
plan terminates or January 1, 2010. This later implementation
date is in recognition of the sensitive nature of collective
bargaining agreements.
Section 3(k) is entitled ``Construction Regarding Use of
Medical Management Tools.'' It clarifies that the Mental Health
Parity Act does not alter or prohibit a health plan or health
insurance issuer from using medical management tools to manage
the benefit as long as such management tools are based on valid
medical evidence and are relevant to the patient whose medical
treatment is under review. So for example, the parity
requirements do not prohibit the application of a treatment
guideline that is based on valid evidence regarding the
effectiveness and quality of care and is used on a patient
whose condition fundamentally is the same as the condition
addressed by the guideline being applied.
This construction clause applies equally to medical or
surgical benefits and mental health or substance-related
disorders. This construction clause should not be construed to
change the burden of proof on beneficiaries, providers, or
insurance plans as they exist under current law.
Section 4. Amendments to the Internal Revenue Code of 1986
Sections 4 amends the Internal Revenue Code of 1986. This
section is not within the jurisdiction of the Committee.
Section 5. Government Accountability Office studies and reports
Section 5 directs the Comptroller General to study the
effect of the implementation of this Act on various aspects of
the healthcare system, including (1) access to health insurance
coverage; (2) the quality of such coverage, Medicare, Medicaid,
and State and local mental health and substance abuse treatment
spending; (3) the number of individuals with private insurance
receiving publicly-funded health care for mental health and
substance-related disorders; (4) spending on public services
such as the criminal justice system, special education, and
income assistance programs; (5) the use of medical management
of mental health and substance-related disorder benefits and
medical necessity determinations by group health plans; (6) and
any other matters the Comptroller General believes appropriate.
The report must be submitted to Congress two years after the
enactment of H.R. 1424.
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.
* * * * * * *
Part 7--Group Health Plan Requirements
Subpart A--Requirements Relating to Portability, Access, and
Renewability
Sec. 701. Increased portability through limitation on preexisting
condition exclusions.
* * * * * * *
Subpart B--Other Requirements
Sec. 711. Standards relating to benefits for mothers and newborns.
[Sec. 712. Parity in the application of certain limits to mental health
benefits.]
Sec. 712. Equity in mental health and substance-related disorder
benefits.
* * * * * * *
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.
(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.
(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.
(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.
* * * * * * *
----------
SECTION 2705 OF THE PUBLIC HEALTH SERVICE ACT
[SEC. 2705. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL
HEALTH BENEFITS.]
SEC. 2705. 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 or 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 or 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 or 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 or 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 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 or
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 or 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 or 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 or 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
or 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 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 or 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 or
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 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 or coverage.
(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 or coverage.
(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 or coverage.
(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 or coverage.
(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 (as defined
in section 1867(e) of the Social
Security Act, including an emergency
condition relating to mental health and
substance-related disorders).
(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 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 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 or 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 or
substance-related disorder benefits, the plan
or coverage 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 (or health insurance
coverage offered in connection with
such 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 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 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 (or health insurance coverage offered in
connection with such a plan) to provide any [mental
health benefits; or] mental health or 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 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 (or coverage) 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 (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 a modification of mental health
and substance-related disorder benefits as
permitted under this paragraph as if such
section applied to such plan.
* * * * * * *
(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
or substance-related disorder benefits.
(4) [Mental health benefits] Mental health and
substance-related disorder benefits.--The term
``[mental health benefits] mental health or 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. 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 and 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 and 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 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 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 and
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 and 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
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 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.--
(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 and 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 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, 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.--
(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 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 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 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, 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 (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 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 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 to provide any [mental health benefits; or]
mental health and 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 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 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 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 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[, but does not include benefits with
respect to treatment of substance abuse or chemical
dependency].
[(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.]
* * * * * * *
DISSENTING VIEWS
We could not support H.R. 1424 as passed by the Committee
because it is a seriously flawed bill. If enacted, the bill
will likely result in fewer employers providing any mental
health benefits and overly prescriptive rules governing what
benefits may be provided. Congress should not impose
complicated decision rules that govern the relationship between
various categories of items or services in private sector
health insurance. Micromanaging private sector health insurance
will result in mediocrity in mental health services, increased
costs, and more uninsured individuals.
The free market is capable of forming appropriate financial
requirements and other limitations in health insurance that
produce the best combination of price structure and value for
consumers in an ever-changing medical world. The practice of
psychology and psychiatry and its relationship to physical
health is very different today than a decade ago; this will
undoubtedly be true a decade from now as well. The lines
between mental health and physical health often blur. The lines
between behavior that is criminal, social, medical, and non-
medical will change over time. For insurance companies to
effect quality control, proper pricing, and the best value,
insurance policies must also adjust with these shifting lines.
The more we restrict the marketplace from adjusting
accordingly, the more we replace common sense and market
expertise with political judgment.
Health benefits, including mental health benefits, fall
into different categories for purposes of insurance coverage.
These categories may have different financial requirements,
treatment limitations, or exclusions from coverage. Even
outside of mental health benefits, health plans do not treat
all categories of health benefits alike. For example,
outpatient physical therapy, emergency care, specialty care,
speech therapy, occupational care, chiropractic care, and
preventive care often have different limitations than other
services. Prescription drugs may also have different categories
of co-payments. The fact that there are requirements tailored
by category is not a civil rights issue. Micromanaging these
categories into columns and applying complicated rules to such
categories has no rational basis. And yet that is exactly what
this bill will do. Will Congress turn next to oncology parity,
dental parity, physical therapy parity, laboratory parity,
payment parity, training parity, or medical evidence parity?
One need only look at the extraordinarily complicated rules of
the 1996 Mental Health Parity Act to understand that their
application to each and every financial requirement and each
and every treatment limit makes little sense. It is hard to see
why Congressional intervention in such a complicated and
dynamic area as mental health coverage is helpful or wise.
The Majority Has Provided No Budget Offset and the Congressional Budget
Office States That Some Employers Will Drop Insurance and Reduce
Benefits
The Congressional Budget Office (CBO) currently scores the
bill as increasing direct spending by $310 million over the
2008-2012 period and $820 million over the 2008-2017 period.
There would also be a reduction in federal tax revenues of $3.1
billion over the 2008-2017 period. The Majority has not
proposed an offset. Before we vote on items that have budget
impacts, we would like to know from where the money will come.
The last time the Majority searched for an offset, they
proposed to cut seniors' Medicare coverage by $193 billion.
The CBO projects this bill will result in people losing
health insurance benefits and some employers terminating mental
health benefits altogether. The CBO also estimates that H.R.
1424 will 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. These responses would include ``reductions 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 benefits, such as increased deductibles or
higher co-payments''.
Protagonists Have Made Little Attempt To Address the Concerns of
Employers, Insurers, or the Administration
Setting aside the question of the wisdom of this approach,
it is hard to imagine a more poorly drafted piece of
legislation than H.R. 1424 as reported out of the Committee. We
offered many amendments that would have improved this piece of
legislation. The Democrat majority rejected each of these
amendments. This approach is in marked contrast to the Senate,
which went through a long process of negotiations that included
employers, insurers, the National Alliance for the Mentally
Ill, the Fairness Coalition, and many other groups to achieve a
balanced and more workable proposal. We are unaware of any
attempt to work with employers and insurers to address their
concerns. The House bill is simply a way for the Democrat
Majority to challenge the more balanced Senate agreement.
Employers, insurers, and human resource groups oppose H.R.
1424. For example, the National Retail Federation, Aetna, the
American Benefits Council, the U.S. Chamber of Commerce, the
Blue Cross Blue Shield Association, the National Association of
Health Underwriters, the National Association of Wholesaler-
Distributors, the Society for Human Resource Management, the
National Association of Manufacturers, the Retail Industry
Leaders Association, the National Business Group on Health, the
National Restaurant Association, and the Corporate Health Care
Coalition have all signed a letter in opposition to H.R. 1424.
Many members of these groups voluntarily provide health
insurance benefits as a form of compensation. They do not have
to provide mental health benefits if the costs are
unreasonable, the regulations too onerous, or the liabilities
too great. They stated:
We write in joint and strong opposition to H.R. 1424,
the Paul Wellstone Mental Health and Addiction Equity
Act of 2007. We urge you to adopt the language of the
Senate passed parity bill, S. 558, the Mental Health
Parity Act, in its stead. We strongly oppose H.R. 1424,
principally because of its broad benefit mandate
(DSMIV), its lack of adequate protection for the
medical management of benefits, provisions allowing the
states to enact more extensive provisions including an
alternative remedy structure, and provisions mandating
out-of-network coverage. The substitute amendment
adopted during the Health Subcommittee markup on
October 10, 2007 has made this legislation
significantly worse. Protecting only medical management
techniques which ``are based on valid medical
evidence'' establishes a vague standard which is
certain to invite litigation. In addition, the
substitute amendment explicitly confirms the DSM-IV
mandate and applies the mandate to emergency services.
Further, the subcommittee substitute amendment failed
to eliminate the bill's out-of-network mandate or the
authority for states to establish new remedies, both of
which remain key concerns for employers and health
plans. The undersigned organizations supported the
bipartisan Senate negotiations which resulted in a more
balanced compromise proposal. We cannot support and
will continue to work to defeat H.R. 1424 as introduced
and subsequently amended. Again, we strongly oppose the
House bill, H.R. 1424, and urge its defeat in the full
House Energy and Commerce Committee. We urge your
support instead for individual or substitute amendments
containing the language of the parity bill passed by a
unanimous Senate: S. 558, the Mental Health Parity Act.
The ERISA Industry Committee, also composed of groups who
provide voluntary coverage, testified:
ERIC members are broadly in favor of expanding
coverage, but the approach contained within H.R. 1424
is fundamentally flawed. The bill fails to incentivize
better coverage options, instead injecting government
into the world of voluntary benefits, creating
mandates, micromanaging the distribution of benefits,
failing to protect plan sponsors from burdensome and
costly administrative quagmires, and failing to keep up
with innovations and demands already widely accepted in
the private health benefits marketplace.
In a letter dated September 26, 2007, Department of Labor
Secretary Chao and Department of Health and Human Services
Secretary Leavitt, the heads of the two Departments charged
with administering the parity program, wrote:
We are concerned that competing proposals, such H.R.
1424, could have a negative effect on the accessibility
and affordability of employer-provided health benefits.
These proposals would mandate coverage of a broad range
of diseases and conditions and undermine current law
that provides for the uniform administration of
employee benefit plans.
The Senate worked with the Administration to craft its
policy. We should do the same. In both the subcommittee and
full committee markups, Ms. Wilson offered an amendment to
replace the parity rule in H.R. 1424 pertaining to plans that
fall under both the Public Health Service Act and the
jurisdiction of this committee with the parity rule from S.
558. Her amendments were defeated, largely along party lines.
Delegating the Power To Expand Coverage Mandates to the American
Psychiatric Association Is a Fundamental Conflict of Interest and
Probably Unconstitutional
H.R. 1424 as reported delegates the potential expansion of
coverage requirements in the private sector to the American
Psychiatric Association (APA). Under the bill, no Executive or
Congressional action would intercede between the decisions of
the American Psychiatric Association and future legal
requirements with which employers and insurers must comply
under penalty of Federal law. Not only does the Committee
amendment reflect a failure to recognize a basic conflict of
interest, it also likely presents a Constitutional conflict
under the Delegations doctrine. The bill appears to leave any
update of what qualifies as conditions and, therefore, coverage
to the APA. There are no criteria for judicial review. There
are no opportunities for notice and comment required. There are
no Federal restrictions on conflict of interest. There are no
requirements to distinguish between mental disorders and
conditions of clinical focus. The Committee amendment is an
abrogation of both Legislative branch and Executive branch
roles to a group lobbying for this bill.
The Majority Amendment Fails To Reflect That Conditions of Clinical
Focus Are Not Mental Disorders Per Se and Are Not Based on Diagnostic
Criteria
The adoption of an over 880-page manual produces numerous
problems. The Majority fails to understand or recognize the
difference between a mental disorder and a condition of
clinical focus. Then Chairman Bilirakis of the Health
Subcommittee asked about this issue in a 2002 hearing. The APA
witness answered, among other things that:
This question focuses on a section of the DSM-IV that
is called ``Other Conditions That May be a Focus of
Clinical Attention.'' Only a general description of
these conditions is provided because these conditions
are not mental disorders per se and thus do not have
specific criteria governing their inclusion or
exclusion. . . . [I]nclusion of the V Codes is provided
as a courtesy to facilitate coding and crosswalking
between ICD and DSM and allows clinicians an
opportunity to identify the types of ``non-diagnostic''
problems that are brought to their attention . . .
. . . While it is true that no specific scientific
evidence is provided in DSM-IV or ICD-9-CM for
conditions that are the focus of clinical attention,
the V-code conditions are simply lists that have been
accumulated over the years to describe the reasons why
patients might come to a physician or other health care
provider's office. They are coded and given a number so
that statistical analyses can be made for research that
is intended to improve the organization and
effectiveness of meeting patient needs and requests.
[emphasis added].
So exactly what is the mandate for ``non-diagnostic
problems'' that are not mental disorders? The Majority's
approach places conditions of focus at the same level as mental
disorders. This is not supported by science or medical
evidence. Mr. Burgess offered an amendment to address this
issue which the Majority defeated. To be clear, the purpose of
the amendment is not to enable insurers' denial of claims
because a provider also cites a condition of clinical focus;
rather, it would clarify that a condition of clinical focus
should not itself be the basis of a Congressional coverage
mandate.
The Majority fails to understand that mental disorders
under DSM IV are essentially defined by diagnostic criteria.
That means Congress is incorporating by reference actual mental
health diagnostic criteria as a provision of Federal law. Even
within each diagnostic criterion for the disorders there are
statements about what represents clinical significance. We are
unaware of a precedent for Congress defining diagnostic
criteria.
The Majority's Blanket Inclusion of DSM-IV Conditions May Expand
Criminal Defenses and Affect Criminal Reporting Requirements,
Disabilities Laws, and Employee Substance Abuse Policies
The Majority would have Congress codify DSM-IV in three
separate Federal statutes. It is true these statutes are not
themselves general criminal statutes, disabilities laws, or
substance abuse policies. However, make no mistake about it,
criminal defense lawyers and disabilities lawyers will cite the
codification of DSM-IV as Congressional intention that all DSM-
IV conditions have a legal status under Federal law, lending
additional weight to their pleadings. Other lawyers will claim
the inclusion of these categories in statute means certain
information is restricted under medial privacy laws, or that
DSM-IV conditions are all disabilities requiring coverage.
For instance, criminal conduct forms the basis of the
category ``V 71.01 Adult Antisocial Behavior'':
This category can be used when the focus of clinical
attention is adult antisocial behavior that is not due
to a mental disorder (e.g., Conduct Disorder,
Antisocial Personality Disorder, or Impulse-Control
Disorder). Examples include the behavior of
professional thieves, racketeers, or dealers in illegal
substances.
``V. 61.21, Physical Abuse of Children and Sexual Abuse of
Children'' is a similar example. Again, these categories
include criminal behavior and no further diagnostic criterion
remains necessary.
What is a court to conclude? That Congress appears to
expand or lend support to the frequent claim that criminal
behavior is essentially a mental health condition requiring
treatment. Why would a court conclude this? Because of the rule
of construction on which courts sometimes rely, called in pari
materia, which means ``upon the same matter or subject.'' When
a statute is ambiguous, its meaning may be determined in light
of other statutes on the same subject matter. We do not want a
defense lawyer citing the Congressional decision to codify DSM
conditions as an element of the defense to a crime, but that
will be an inevitable result of H.R. 1424.
Mr. Stearns offered a common sense amendment, which
provided that the act of codification of DSM would not create a
defense in a criminal case, including cases of child abuse. The
amendment also provided the act of codification of DSM would
not override any requirements for reporting criminal conduct,
including child abuse, nor create any new privilege against
disclosure. Unfortunately, the Majority voted down this
important amendment as well.
Mr. Rogers of Michigan offered a similar rule of
construction as an amendment to ensure that no provision of the
Act would restrict a plan from denying a claim for any person
convicted of child abuse or other criminal activity who cites
that conviction as the basis of a mental health condition
claim. The Majority voted down this amendment, too.
In addition to codes based on criminal conduct, the DSM-IV
contains codes based on other non-medical issues:
V62.3 ACADEMIC PROBLEM
This category can be used when the focus of clinical
attention is an academic problem that is not due to a
mental disorder or, if due to a mental disorder, is
sufficiently severe to warrant independent clinical
attention. An example is a pattern of failing grades or
of significant underachievement in a person with
adequate intellectual capacity in the absence of a
Learning or Communication Disorder or any other mental
disorder that would account for this problem.
V62.89 RELIGIOUS OR SPIRITUAL PROBLEM
This category can be used when the focus of clinical
attention is a religious or spiritual problem. Examples
include distressing experiences that involve loss or
questioning of problems associated with conversion to a
new faith, or questioning of spiritual values that may
not necessarily be related to an organized church or
religious institution.
V. 62.4 ACCULTURATION PROBLEM
This category can be used when the focus of clinical
attention is a problem involving adjustment to a
different culture (e.g., following migration).
Under the Majority's formulation, H.R. 1424 would require
an insurance policy cover these non-medical problems. There are
no diagnostic criteria in these conditions. Part of why the
private sector and public sector have developed financial
requirements and treatment limits by categories is to provide
value and ensure quality. Employers negotiate on behalf of
beneficiaries for a balanced package of health care coverage.
Insurers negotiate under free market competition to get the
best packages. The cornerstone of this approach is to focus on
serious medical conditions. Less serious or mild versions of
items listed in the DSM are just not the same as serious
medical conditions such as heart attacks, cancer, or severe
mental illnesses. If companies are forced to spend more money
on items like spiritual problems, academic problems, or a wide
range of other items that may not be medically-based, we will
undermine this system.
If by passing H.R. 1424, Congress is mandating coverage for
these non-medical problems, are we also saying the same non-
medical problems could constitute disabilities for other
purposes? There are plenty of creative disabilities lawyers.
These lawyers could say ``my client has serious religious
problem or a serious acculturation problem and accommodations
under the law must be made accordingly.'' We need to make
absolutely sure that we are not expanding the universe of
claims under disabilities law. A clear savings clause in the
text would accomplish that goal. Mr. Burgess offered such an
amendment. That language should be included in the bill before
this measure reaches the House floor.
Turning to the concern about employee substance abuse
policies, is it the position of the Majority that an employee
can continue to violate a company's substance abuse policy and
be rewarded for it merely because the DSM-IV cites substance
abuse as a condition? Explain this to the small business owner
or his employees when he or she is forced to increase premiums,
or drop health insurance coverage altogether, because Federal
law forces him or her to pay for people in violation of the
company substance abuse policy. All of these clarifications
need to be addressed in the text of the legislation, not simply
legislative history.
The Complicated Decision Rules Under H.R. 1424 Do Not Match the Parity
Guidance Under the Federal Employee Benefits Plan and Will Produce
Irrational Results
Despite the claims of protagonists, it is clear from the
text as well as the answers to questions during the markup that
H.R. 1424 is not a set of parity rules at all. The provisions
do not operate like the parity guidance from the Federal
Employees Health Benefit Plans (FEHBP). Under the FEHBP parity
guidance, a plan can satisfy parity if a subcategory of items
or services does not make a distinction in its application
between mental health benefits or non-mental health benefits,
or where subcategories of mental health benefits have the same
requirements as comparable subcategories of non-mental health
benefits. We read the rules proposed by H.R. 1424 as
potentially trumping this common sense FEHBP rule. As we review
proposed paragraphs 2705(a)(3)(A) and (4)(A) of the Public
Health Service Act, we find situations where a plan may not
impose ANY financial requirement or treatment limitation unless
such requirement or limitation is imposed on substantially all
items in distinct super categories defined by the bill. This
means even if a subcategory of mental health benefits has the
same requirements as a comparable category of non-mental health
benefits, a plan may still be in violation of (3)(A) and
(4)(A). What is the policy rationale for this rule? We are not
aware of any.
A similar problem exists under proposed 2105(a)(3)(B) and
(4)(B). For example under (4)(B) a mental health benefit cannot
have a more costly requirement than what applies to the
predominant requirement for items or services within the
specified super categories. Since the predominant requirement
is not necessarily from a comparable subcategory this means
identical requirements from similar subcategories may fail to
satisfy the tests of (3)(B) and (4)(B).
We understand that under (3)(A) and (4)(A) a plan may then
not be able to apply any financial requirements or treatment
limitations to mental health benefits if the frequency of items
or services is not sufficiently large to meet a certain level.
So how would that apply here? Such a rule would seem to suggest
that even if there are identical requirements for similar
subcategories a plan may still be in violation of (3)(A) and
(4)(A).
We also asked if a psychiatrist is generally considered a
specialist, but the $15 co-pay is the most frequent in out-
patient in-network coverage and it is considered predominant,
would this bill end up saying the $15 co-pay or the $50 co-pay
applies? We had hoped the answer would be that similar
subcategories, like co-pays for specialist could be treated
similarly. However, H.R. 1424 would ensure the predominance
rule would trump the rule about similar categories. This is not
parity.
We specifically queried the Office of Personnel Management
regarding this issue. They responded with the following
technical comments:
H.R. 1424 lists 5 major (predominant) categories of
items and services where treatment limits and financial
requirements for mental health and substance disorder
benefits can be no more restrictive for patients than
the predominant benefit categories. These predominant
categories are not used to describe benefits in FEHB
plans and do not take into consideration sub-categories
of benefits where treatment limits and financial
requirements typically vary. OPM has not estimated the
financial impact that the ``predominant'' provision
would have on FEHB premiums, because we do not know how
the legislation would be implemented in practice.
However, we believe premium costs would increase as a
result.
Under the FEHB Program, the common categories of
items and services for the purpose of applying
treatment limits and financial requirements of medical
and surgical benefits to mental health and substance
abuse benefits are: Inpatient hospital, Outpatient
hospital, Outpatient specialist physician
(professional), Laboratory and X-ray tests, Surgical
services, Prescription drugs, and Emergency services.
Generally, benefits are provided based on type of
provider and place of service. Type of provider
includes the contractual relationship the provider has
with the health plan (e.g. preferred provider).
Under the FEHB Program, health plans may use managed
care techniques, such as authorizing treatment plans,
to ensure the most cost-efficient delivery of benefits
for mental health and substance abuse services. Patient
treatment plans are developed by providers and are
subject to review and approval by the health plan.
H.R. 1424, as passed by the House Committee on Energy
& Commerce on October 16th, would impact the FEHB
Program in one key area, the addition of parity out-of-
network mental health and substance abuse benefits for
those health plans that offer out-of-network benefits.
Under FEHB, health plans are not required to provide
parity for out-of-network mental health and substance
abuse benefits. OPM estimates that requiring out-of-
network parity will increase costs to the FEHB Program
by $50 million. We believe we have successfully met the
needs of the Federal population through our approach to
offering parity on an in-network basis.
Mr. Deal offered a simple amendment, which ensured a plan
following the current FEHBP guidelines would satisfy the parity
requirements under the bill. The Majority rejected the
amendment. Apparently, the program available to Members of
Congress was not good enough.
Arguments Regarding the Discretion of Plans To Manage Treatment Plans
and the Burden of Producing Medical Evidence Will Be the Source of
Endless Litigation
Under FEHBP, plan benefits are payable only when the plan
determines the care is clinically appropriate and approved in a
treatment plan. Insurers may limit parity benefits when
patients do not substantially follow their treatment plans.
Providers need to show that a medical diagnosis is supported by
medical evidence and that a proposed treatment is medically
necessary and appropriate. That is a proper obligation. Payors
and insurers should not be forced to disprove the negative. It
is not the job of insurers to show by medical evidence that a
patient does not have mental health problem. It is not the job
of insurers to show by medical evidence that a treatment is not
medically necessary. Switching this presumption from providers
to insurers is no small matter and is not good policy.
The Cost Exemption Under H.R. 1424 Is Not a Realistic Option
Under the language of the bill, once it is proven through
actual cost increases that plan costs are above a certain
percentage, an employer could have a waiver of the parity
requirement. But that would only be available for 1 year. After
1 year, the employer or insurer must go back to the parity rule
and suffer the cost increase for another period of time. After
that second period of time, the employer or insurer could then
get a waiver for the following year. The employer's or
insurer's eligibility for a waiver would continue to alternate
every other year.
This is a policy that works like a yo-yo: 1 year in, 1 year
out, followed by another year in. It is very difficult to
imagine any business exercising this option, with all of its
attendant administrative burdens, in the real world. It seems
far more likely employers will either absorb elevated costs on
a permanent basis or drop mental health coverage altogether.
That will hurt both businesses and beneficiaries who lose
mental health coverage.
A Lot of Work Is Needed on This Bill
We submit a substantial list of dissenting views in order
to prompt Members to think about the drafting of this
legislation and its potential unintended consequences. There
are other problems we have not discussed in these views. For
instance, if Congress is serious about addressing treatment
disparities for Americans with severe mental illnesses such as
bipolar disorder, schizophrenia, and depression, we should
focus on legislation that would bolster this coverage rather
than insisting on full coverage of the DSM-IV, which will drive
some employers to drop benefits. It would be smarter to craft a
policy that would address the most severe mental illnesses with
sufficient support from employers to counter CBO's projections
about lost coverage and benefits. We think the best approach is
to engage stakeholders--employers, insurers, the
Administration, and other parties--to solve the problems of the
H.R. 1424 text before the bill reaches the House floor. We know
the House and the Committee can do a much better job.
Joe Barton.
Nathan Deal.
Cliff Stearns.
Joseph R. Pitts.
Michael Burgess.
Mike Rogers (MI).