[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1424 Reported in House (RH)]
Union Calendar No. 328
110th CONGRESS
2d Session
H. R. 1424
[Report No. 110-374, Parts I, II, and III]
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 9, 2007
Mr. Kennedy (for himself, Mr. Ramstad, Mr. Abercrombie, Mr. Ackerman,
Mr. Alexander, Mr. Allen, Mr. Andrews, Mr. Arcuri, Mr. Baca, Mr.
Bachus, Mr. Baird, Ms. Baldwin, Mr. Barrow, Ms. Bean, Mr. Becerra, Ms.
Berkley, Mr. Berman, Mr. Berry, Mr. Bishop of Georgia, Mr. Bishop of
New York, Mr. Blumenauer, Ms. Bordallo, Mr. Boren, Mr. Boswell, Mr.
Boucher, Mr. Boyd of Florida, Mr. Brady of Pennsylvania, Mr. Braley of
Iowa, Ms. Corrine Brown of Florida, Mr. Butterfield, Mrs. Capps, Mr.
Capuano, Mr. Cardoza, Mr. Carnahan, Mr. Carney, Ms. Carson, Ms. Castor,
Mr. Chandler, Mrs. Christensen, Ms. Clarke, Mr. Clay, Mr. Cleaver, Mr.
Clyburn, Mr. Cohen, Mr. Conyers, Mr. Cooper, Mr. Costa, Mr. Costello,
Mr. Courtney, Mr. Crowley, Mrs. Cubin, Mr. Cuellar, Mr. Cummings, Mr.
Davis of Alabama, Mr. Davis of Illinois, Mrs. Davis of California, Mr.
Lincoln Davis of Tennessee, Mr. DeFazio, Ms. DeGette, Mr. Delahunt, Ms.
DeLauro, Mr. Dicks, Mr. Doggett, Mr. Donnelly, Mr. Doyle, Mr. Edwards,
Mr. Ellison, Mr. Ellsworth, Mr. Emanuel, Mrs. Emerson, Mr. Engel, Mr.
English of Pennsylvania, Ms. Eshoo, Mr. Etheridge, Mr. Faleomavaega,
Mr. Farr, Mr. Fattah, Mr. Ferguson, Mr. Filner, Mr. Frank of
Massachusetts, Mr. Frelinghuysen, Ms. Giffords, Mr. Gilchrest, Mrs.
Gillibrand, Mr. Gonzalez, Mr. Gordon of Tennessee, Mr. Al Green of
Texas, Mr. Gene Green of Texas, Mr. Grijalva, Mr. Gutierrez, Mr. Hall
of New York, Mr. Hare, Ms. Harman, Mr. Hastings of Florida, Ms.
Herseth, Mr. Higgins, Mr. Hinchey, Mr. Hinojosa, Ms. Hirono, Mr. Hodes,
Mr. Holden, Mr. Holt, Mr. Honda, Ms. Hooley, Mr. Hoyer, Mr. Inslee, Mr.
Israel, Mr. Jackson of Illinois, Ms. Jackson-Lee of Texas, Mr.
Jefferson, Ms. Eddie Bernice Johnson of Texas, Mr. Johnson of Georgia,
Mrs. Jones of Ohio, Mr. Kagen, Mr. Kanjorski, Ms. Kaptur, Mr. Keller of
Florida, Mr. Kildee, Ms. Kilpatrick, Mr. Kind, Mr. King of New York,
Mr. Kirk, Mr. Klein of Florida, Mr. Kucinich, Mr. LaHood, Mr. Lampson,
Mr. Langevin, Mr. Lantos, Mr. Larsen of Washington, Mr. Larson of
Connecticut, Mr. LaTourette, Ms. Lee, Mr. Levin, Mr. Lewis of Georgia,
Mr. Lipinski, Mr. LoBiondo, Mr. Loebsack, Ms. Zoe Lofgren of
California, Mrs. Lowey, Mr. Lynch, Mrs. Maloney of New York, Mr.
Markey, Mr. Marshall, Mr. Matheson, Ms. Matsui, Mrs. McCarthy of New
York, Ms. McCollum of Minnesota, Mr. McDermott, Mr. McGovern, Mr.
McHugh, Mr. McIntyre, Mr. McNerney, Mr. McNulty, Mr. Meehan, Mr. Meek
of Florida, Mr. Meeks of New York, Mr. Mica, Mr. Michaud, Ms.
Millender-McDonald, Mr. George Miller of California, Mr. Mollohan, Mr.
Moore of Kansas, Ms. Moore of Wisconsin, Mr. Moran of Virginia, Mr.
Murphy of Connecticut, Mr. Tim Murphy of Pennsylvania, Mr. Murtha, Mr.
Nadler, Mrs. Napolitano, Mr. Neal of Massachusetts, Ms. Norton, Mr.
Oberstar, Mr. Obey, Mr. Olver, Mr. Ortiz, Mr. Pallone, Mr. Pascrell,
Mr. Pastor, Mr. Payne, Mr. Perlmutter, Mr. Peterson of Minnesota, Mr.
Pickering, Mr. Platts, Mr. Pomeroy, Mr. Price of North Carolina, Mr.
Rahall, Mr. Rangel, Mr. Renzi, Mr. Reyes, Mr. Rodriguez, Ms. Ros-
Lehtinen, Mr. Ross, Mr. Rothman, Ms. Roybal-Allard, Mr. Ruppersberger,
Mr. Rush, Mr. Ryan of Ohio, Mr. Salazar, Ms. Linda T. Sanchez of
California, Ms. Loretta Sanchez of California, Mr. Sarbanes, Mr.
Saxton, Ms. Schakowsky, Mr. Schiff, Mrs. Schmidt, Ms. Wasserman
Schultz, Ms. Schwartz, Mr. Scott of Georgia, Mr. Scott of Virginia, Mr.
Serrano, Mr. Sestak, Mr. Shays, Ms. Shea-Porter, Mr. Sherman, Mr.
Sires, Mr. Skelton, Ms. Slaughter, Mr. Smith of Washington, Mr. Smith
of New Jersey, Mr. Snyder, Ms. Solis, Mr. Space, Mr. Spratt, Mr. Stark,
Mr. Stupak, Mr. Sullivan, Ms. Sutton, Mr. Tanner, Mrs. Tauscher, Mr.
Thompson of Mississippi, Mr. Thompson of California, Mr. Tierney, Mr.
Towns, Mr. Udall of Colorado, Mr. Udall of New Mexico, Mr. Upton, Mr.
Van Hollen, Ms. Velazquez, Mr. Visclosky, Mr. Walsh of New York, Mr.
Walz of Minnesota, Mr. Wamp, Ms. Waters, Ms. Watson, Mr. Watt, Mr.
Waxman, Mr. Weiner, Mr. Welch of Vermont, Mr. Wexler, Mr. Wilson of
Ohio, Mr. Wilson of South Carolina, Ms. Woolsey, Mr. Wu, Mr. Wynn, Mr.
Yarmuth, and Mr. Young of Alaska) introduced the following bill; which
was referred to the Committee on Energy and Commerce, and in addition
to the Committees on Education and Labor and Ways and Means, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
October 15, 2007
Reported from the Committee on Education and Labor with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
October 15, 2007
Reported from the Committee on Ways and Means with an amendment
[Stike out all after the enacting clause and insert the part printed in
boldface roman]
March 4, 2008
Additional sponsors: Mrs. Bono Mack, Mr. Dingell, Mr. Altmire, Mr.
Gerlach, Mr. Ehlers, Mr. Gillmor, Mr. Dent, Mr. Patrick Murphy of
Pennsylvania, Mrs. Boyda of Kansas, Mr. Mitchell, Mrs. Capito, Mr.
Miller of North Carolina, Mr. Cramer, Mr. Bonner, Mr. Wolf, Mr. Hill,
Mr. Melancon, Mr. Shuler, and Mr. Smith of Texas
March 4, 2008
Reported from the Committee on Energy and Commerce with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in boldface italic]
[For text of introduced bill, see copy of bill as introduced on March
9, 2007]
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Paul Wellstone
Mental Health and Addiction Equity Act of 2007''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 3. Amendments to the Public Health Service Act relating to the
group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.
SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 712 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185a) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services,
the plan or coverage may not impose any treatment limit
on mental health 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 (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
under 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 (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 or
substance-related disorder benefits for items
and services within such category in a way that
results in greater out-of-pocket expenses to
the participant or beneficiary than the
predominant beneficiary financial requirement
applicable to medical and surgical benefits for
items and services within such category.
``(iii) Construction.--Nothing in this
subparagraph shall be construed as prohibiting
the plan or coverage from waiving the
application of any deductible for mental health
benefits or substance-related disorder benefits
or both.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
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 in accordance with regulations 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 in accordance with
regulations 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 and 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 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) Construction.--Subsection (a) of such section is further
amended by adding at the end the following new paragraph:
``(7) Construction.--Nothing in this section shall be
construed to limit a group health plan (or health insurance
offered in connection with such a plan) from managing the
provision of medical, surgical, mental health or substance-
related disorder benefits through any of the following methods:
``(A) the application of utilization review;
``(B) the application of authorization or
management practices;
``(C) the application of medical necessity and
appropriateness criteria; or
``(D) other processes intended to ensure that
beneficiaries receive appropriate care and medically
necessary services for covered benefits;
to the extent such methods are recognized both by industry and
by providers and are not prohibited under applicable State
laws.''.
(f) 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 effective date
of the amendments made by section 101 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
and certified by a qualified and licensed actuary who
is a member in good standing of the American Academy of
Actuaries.
``(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) and notice of which
shall be provided a reasonable period in advance of the
change.
``(F) Notification of appropriate agency.--
``(i) In general.--A group health plan
that, based on upon a certification described
under subparagraph (C), qualifies for an
exemption under this paragraph, and elects to
implement the exemption, shall notify the
Department of Labor of such election.
``(ii) Requirement.--A notification under
clause (i) shall include--
``(I) a description of the number
of covered lives under the plan (or
coverage) involved at the time of the
notification, and as applicable, at the
time of any prior election of the cost-
exemption under this paragraph by such
plan (or coverage);
``(II) for both the plan year upon
which a cost exemption is sought and
the year prior, a description 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; and
``(III) for both the plan year upon
which a cost exemption is sought and
the year prior, the actual total costs
of coverage with respect to mental
health and substance-related disorder
benefits under the plan.
``(iii) Confidentiality.--A notification
under clause (i) shall be confidential. The
Department of Labor shall make available, upon
request to the appropriate committees of
Congress and on not more than an annual basis,
an anonymous itemization of such notifications,
that includes--
``(I) a breakdown of States by the
size and any type of employers
submitting such notification; and
``(II) a summary of the data
received under clause (ii).
``(G) No impact on application of state law.--The
fact that a plan or coverage is exempt from the
provisions of this section under subparagraph (A) shall
not affect the application of State law to such plan or
coverage.''.
(g) 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''.
(h) Elimination of Sunset Provision.--Such section is amended by
striking subsection (f).
(i) 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.--This part shall not be construed to
supersede any provision of State law which establishes,
implements, or continues in effect any consumer protections,
benefits, methods of access to benefits, rights, external
review programs, or remedies solely relating to health
insurance issuers in connection with group health insurance
coverage (including benefit mandates or regulation of group
health plans of 50 or fewer employees) except to the extent
that such provision prevents the application of a requirement
of this part.
``(2) Continued preemption with respect to group health
plans.--Nothing in this section shall be construed to affect or
modify the provisions of section 514 with respect to group
health plans.
``(3) Other state laws.--Nothing in this section shall be
construed to exempt or relieve any person from any laws of any
State not solely related to health insurance issuers in
connection with group health coverage insofar as they may now
or hereafter relate to insurance, health plans, or health
coverage.'''.
(j) 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.''.
(k) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning on or after January
1, 2008.
(2) 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.
(l) DOL Annual Sample Compliance.--The Secretary of Labor shall
annually sample and conduct random audits of group health plans (and
health insurance coverage offered in connection with such plans) in
order to determine their compliance with the amendments made by this
Act and shall submit to the appropriate committees of Congress an
annual report on such compliance with such amendments.
(m) Assistance to Participants and Beneficiaries.--The Secretary of
Labor shall provide assistance to participants and beneficiaries of
group health plans with any questions or problems with compliance with
the requirements of this Act. The Secretary shall notify participants
and beneficiaries when they can obtain assistance from State consumer
and insurance agencies and the Secretary shall coordinate with State
agencies to ensure that participants and beneficiaries are protected
and afforded the rights provided under this Act.
SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE
GROUP MARKET.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 2705 of the Public Health Service Act
(42 U.S.C. 300gg-5) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services
(specified in subparagraph (C)), the plan or coverage
may not impose any treatment limit on mental health and
substance-related disorder benefits that are classified
in the same category of items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items
and services furnished on an inpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items
and services furnished on an outpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(D) Treatment limit defined.--For purposes of
this paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this
subsection, a treatment limit or financial requirement
with respect to a category of items and services is
considered to be predominant if it is the most common
or frequent of such type of limit or requirement with
respect to such category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified in
paragraph (3)(C)), the plan or coverage may not impose
such a beneficiary financial requirement on mental
health and substance-related disorder benefits for
items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage includes
a deductible, a limitation on out-of-pocket
expenses, or similar beneficiary financial
requirement that does not apply separately to
individual items and services on substantially
all medical and surgical benefits within a
category of items and services, the plan or
coverage shall apply such requirement (or, if
there is more than one such requirement for
such category of items and services, the
predominant requirement for such category) both
to medical and surgical benefits within such
category and to mental health and substance-
related disorder benefits within such category
and shall not distinguish in the application of
such requirement between such medical and
surgical benefits and such mental health and
substance-related disorder benefits.
``(ii) Other financial requirements.--If
the plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that
follows through ``(1) as requiring'' and inserting
``construed as requiring'';
(B) by striking ``; or'' and inserting a period;
and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision
of Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section
is further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-
network benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--
For purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and
services, whether furnished on an
inpatient or outpatient basis, required
for the treatment of an emergency
medical condition (including an
emergency condition relating to mental
health and substance-related
disorders).
``(II) Inpatient.--Items and
services not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this paragraph shall be--
``(i) 2 percent in the case of the first
plan year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this subsection shall be made
by a qualified actuary who is a member in good standing
of the American Academy of Actuaries. Such
determinations shall be certified by the actuary and be
made available to the general public.
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--A group health plan under this
part shall comply with the notice requirement under
section 712(c)(2)(E) of the Employee Retirement Income
Security Act of 1974 with respect to the a modification
of mental health and substance-related disorder
benefits as permitted under this paragraph as if such
section applied to such plan.''.
(f) Change in Exclusion for Smallest Employers.--Subsection
(c)(1)(B) of such section is amended--
(1) by inserting ``(or 1 in the case of an employer
residing in a State that permits small groups to include a
single individual)'' after ``at least 2'' the first place it
appears; and
(2) by striking ``and who employs at least 2 employees on
the first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides greater
consumer protections, benefits, methods of access to benefits,
rights or remedies that are greater than the protections,
benefits, methods of access to benefits, rights or remedies
provided under this section.
``(2) Construction.--Nothing in this section shall be
construed to affect or modify the provisions of section 2723
with respect to group health plans.''.
(i) Conforming Amendment to Heading.--The heading of such section
is amended to read as follows:
``SEC. 2705.''.
(j) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning on or after January 1, 2008.
SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 9812 of the Internal Revenue Code of
1986 is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(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.''.
(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. STUDIES AND REPORTS.
(a) Implementation of Act.--
(1) GAO 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) GAO Report on Uniform Patient Placement Criteria.--Not later
than 18 months after the date of the enactment of this Act, the
Comptroller General shall submit to the appropriate committees of 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.
(c) DOL Biannual Report on Obstacles in Obtaining Coverage.--Every
two years, the Secretary of Labor, in consultation with the Secretaries
of Health and Human Services and the Treasury, shall submit to the
appropriate committees of 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.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Paul Wellstone
Mental Health and Addiction Equity Act of 2007''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 3. Amendments to the Public Health Service Act relating to the
group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.
SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 712 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185a) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services,
the plan or coverage may not impose any treatment limit
on mental health and substance-related disorder
benefits that are classified in the same category of
items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items
and services furnished on an inpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items
and services furnished on an outpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(D) Treatment limit defined.--For purposes of
this paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this
subsection, a treatment limit or financial requirement
with respect to a category of items and services is
considered to be predominant if it is the most common
or frequent of such type of limit or requirement with
respect to such category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified
under paragraph (3)(C)), the plan or coverage may not
impose such a beneficiary financial requirement on
mental health and substance-related disorder benefits
for items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage includes
a deductible, a limitation on out-of-pocket
expenses, or similar beneficiary financial
requirement that does not apply separately to
individual items and services on substantially
all medical and surgical benefits within a
category of items and services (as specified in
paragraph (3)(C)), the plan or coverage shall
apply such requirement (or, if there is more
than one such requirement for such category of
items and services, the predominant requirement
for such category) both to medical and surgical
benefits within such category and to mental
health and substance-related disorder benefits
within such category and shall not distinguish
in the application of such requirement between
such medical and surgical benefits and such
mental health and substance-related disorder
benefits.
``(ii) Other financial requirements.--If
the plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that
follows through ``(1) as requiring'' and inserting
``construed as requiring'';
(B) by striking ``; or'' and inserting a period;
and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision
of Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section
is further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-
network benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--
For purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and
services, whether furnished on an
inpatient or outpatient basis, required
for the treatment of an emergency
medical condition (including an
emergency condition relating to mental
health and substance-related
disorders).
``(II) Inpatient.--Items and
services not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this paragraph shall be--
``(i) 2 percent in the case of the first
plan year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this subsection shall be made
by a qualified actuary who is a member in good standing
of the American Academy of Actuaries. Such
determinations shall be certified by the actuary and be
made available to the general public.
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--An election to modify coverage
of mental health and substance-related disorder
benefits as permitted under this paragraph shall be
treated as a material modification in the terms of the
plan as described in section 102(a)(1) and shall be
subject to the applicable notice requirements under
section 104(b)(1).''.
(f) Change in Exclusion for Smallest Employers.--Subsection
(c)(1)(B) of such section is amended--
(1) by inserting ``(or 1 in the case of an employer
residing in a State that permits small groups to include a
single individual)'' after ``at least 2'' the first place it
appears; and
(2) by striking ``and who employs at least 2 employees on
the first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides greater
consumer protections, benefits, methods of access to benefits,
rights or remedies that are greater than the protections,
benefits, methods of access to benefits, rights or remedies
provided under this section.
``(2) ERISA.--Nothing in this section shall be construed to
affect or modify the provisions of section 514 with respect to
group health plans.''.
(i) Conforming Amendments to Heading.--
(1) In general.--The heading of such section is amended to
read as follows:
``SEC. 712.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act is amended by striking the item relating to section
712 and inserting the following new item:
``Sec. 712. Equity in mental health and substance-related disorder
benefits.''.
(j) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning on or after January 1, 2008.
SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE
GROUP MARKET.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 2705 of the Public Health Service Act
(42 U.S.C. 300gg-5) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services
(specified in subparagraph (C)), the plan or coverage
may not impose any treatment limit on mental health and
substance-related disorder benefits that are classified
in the same category of items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items
and services furnished on an inpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items
and services furnished on an outpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(D) Treatment limit defined.--For purposes of
this paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this
subsection, a treatment limit or financial requirement
with respect to a category of items and services is
considered to be predominant if it is the most common
or frequent of such type of limit or requirement with
respect to such category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified in
paragraph (3)(C)), the plan or coverage may not impose
such a beneficiary financial requirement on mental
health and substance-related disorder benefits for
items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage includes
a deductible, a limitation on out-of-pocket
expenses, or similar beneficiary financial
requirement that does not apply separately to
individual items and services on substantially
all medical and surgical benefits within a
category of items and services, the plan or
coverage shall apply such requirement (or, if
there is more than one such requirement for
such category of items and services, the
predominant requirement for such category) both
to medical and surgical benefits within such
category and to mental health and substance-
related disorder benefits within such category
and shall not distinguish in the application of
such requirement between such medical and
surgical benefits and such mental health and
substance-related disorder benefits.
``(ii) Other financial requirements.--If
the plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that
follows through ``(1) as requiring'' and inserting
``construed as requiring'';
(B) by striking ``; or'' and inserting a period;
and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision
of Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section
is further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-
network benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--
For purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and
services, whether furnished on an
inpatient or outpatient basis, required
for the treatment of an emergency
medical condition (including an
emergency condition relating to mental
health and substance-related
disorders).
``(II) Inpatient.--Items and
services not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this paragraph shall be--
``(i) 2 percent in the case of the first
plan year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this subsection shall be made
by a qualified actuary who is a member in good standing
of the American Academy of Actuaries. Such
determinations shall be certified by the actuary and be
made available to the general public.
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--A group health plan under this
part shall comply with the notice requirement under
section 712(c)(2)(E) of the Employee Retirement Income
Security Act of 1974 with respect to the a modification
of mental health and substance-related disorder
benefits as permitted under this paragraph as if such
section applied to such plan.''.
(f) Change in Exclusion for Smallest Employers.--Subsection
(c)(1)(B) of such section is amended--
(1) by inserting ``(or 1 in the case of an employer
residing in a State that permits small groups to include a
single individual)'' after ``at least 2'' the first place it
appears; and
(2) by striking ``and who employs at least 2 employees on
the first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides greater
consumer protections, benefits, methods of access to benefits,
rights or remedies that are greater than the protections,
benefits, methods of access to benefits, rights or remedies
provided under this section.
``(2) Construction.--Nothing in this section shall be
construed to affect or modify the provisions of section 2723
with respect to group health plans.''.
(i) Conforming Amendment to Heading.--The heading of such section
is amended to read as follows:
``SEC. 2705.''.
(j) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning on or after January 1, 2008.
SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 9812 of the Internal Revenue Code of
1986 is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--In the case of a group health plan
that provides both medical and surgical benefits and mental
health or substance-related disorder benefits--
``(A) No treatment limit.--If the plan does not
include a treatment limit (as defined in subparagraph
(D)) on substantially all medical and surgical benefits
in any category of items or services (specified in
subparagraph (C)), the plan may not impose any
treatment limit on mental health or substance-related
disorder benefits that are classified in the same
category of items or services.
``(B) Treatment limit.--If the plan includes a
treatment limit on substantially all medical and
surgical benefits in any category of items or services,
the plan may not impose such a treatment limit on
mental health or substance-related disorder benefits
for items and services within such category that is
more restrictive than the predominant treatment limit
that is applicable to medical and surgical benefits for
items and services within such category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following five
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services not described in clause (v) furnished
on an inpatient basis and within a network of
providers established or recognized under such
plan.
``(ii) Inpatient, out-of-network.--Items
and services not described in clause (v)
furnished on an inpatient basis and outside any
network of providers established or recognized
under such plan.
``(iii) Outpatient, in-network.--Items and
services not described in clause (v) furnished
on an outpatient basis and within a network of
providers established or recognized under such
plan.
``(iv) Outpatient, out-of-network.--Items
and services not described in clause (v)
furnished on an outpatient basis and outside
any network of providers established or
recognized under such plan.
``(v) Emergency care.--Items and services,
whether furnished on an inpatient or outpatient
basis or within or outside any network of
providers, required for the treatment of an
emergency medical condition (including an
emergency condition relating to mental health
or substance-related disorders).
``(D) Treatment limit defined.--For purposes of
this paragraph, the term `treatment limit' means, with
respect to a plan, limitation on the frequency of
treatment, number of visits or days of coverage, or
other similar limit on the duration or scope of
treatment under the plan.
``(E) Predominance.--For purposes of this
subsection, a treatment limit or financial requirement
with respect to a category of items and services is
considered to be predominant if it is the most common
or frequent of such type of limit or requirement with
respect to such category of items and services.
``(4) Beneficiary financial requirements.--In the case of a
group health plan that provides both medical and surgical
benefits and mental health or substance-related disorder
benefits--
``(A) No beneficiary financial requirement.--If the
plan does not include a beneficiary financial
requirement (as defined in subparagraph (C)) on
substantially all medical and surgical benefits within
a category of items and services (specified in
paragraph (3)(C)), the plan may not impose such a
beneficiary financial requirement on mental health or
substance-related disorder benefits for items and
services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan includes a
deductible, a limitation on out-of-pocket
expenses, or similar beneficiary financial
requirement that does not apply separately to
individual items and services on substantially
all medical and surgical benefits within a
category of items and services, the plan shall
apply such requirement (or, if there is more
than one such requirement for such category of
items and services, the predominant requirement
for such category) both to medical and surgical
benefits within such category and to mental
health and substance-related disorder benefits
within such category and shall not distinguish
in the application of such requirement between
such medical and surgical benefits and such
mental health and substance-related disorder
benefits.
``(ii) Other financial requirements.--If
the plan includes a beneficiary financial
requirement not described in clause (i) on
substantially all medical and surgical benefits
within a category of items and services, the
plan may not impose such financial requirement
on mental health or substance-related disorder
benefits for items and services within such
category in a way that results in greater out-
of-pocket expenses to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(iii) Construction.--Nothing in this
subparagraph shall be construed as prohibiting
the plan from waiving the application of any
deductible for mental health benefits or
substance-related disorder benefits or both.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a
plan, any deductible, coinsurance, co-payment, other
cost sharing, and limitation on the total amount that
may be paid by a participant or beneficiary with
respect to benefits under the plan, but does not
include the application of any aggregate lifetime limit
or annual limit.'', and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that
follows through ``(1) as requiring'' and inserting
``construed as requiring'',
(B) by striking ``; or'' and inserting a period,
and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision
of Definition.--Section 9812 of such Code is further amended--
(1) by striking ``mental health benefits'' each place it
appears (other than in any provision amended by paragraph (2))
and inserting ``mental health or substance-related disorder
benefits'',
(2) by striking ``mental health benefits'' each place it
appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i),
and (a)(2)(C) and inserting ``mental health and substance-
related disorder benefits'', and
(3) in subsection (e), by striking paragraph (4) and
inserting the following new paragraphs:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan, but
does not include substance-related disorder benefits.
``(5) Substance-related disorder benefits.--The term
`substance-related disorder benefits' means benefits with
respect to services for substance-related disorders, as defined
under the terms of the plan.''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of section 9812 of such Code, as amended by
subsection (a)(1), is further amended by adding at the end the
following new paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits shall be made available by the plan administrator to
any current or potential participant, beneficiary, or
contracting provider upon request. The reason for any denial
under the plan of reimbursement or payment for services with
respect to mental health and substance-related disorder
benefits in the case of any participant or beneficiary shall,
upon request, be made available by the plan administrator to
the participant or beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of section 9812
of such Code is further amended by adding at the end the following new
paragraph:
``(6) Minimum scope of coverage and equity in out-of-
network benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan that provides any mental health or
substance-related disorder benefits, the plan shall
include benefits for any mental health condition or
substance-related disorder included in the most recent
edition of the Diagnostic and Statistical Manual of
Mental Disorders published by the American Psychiatric
Association.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a group
health plan that provides both medical and
surgical benefits and mental health or
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan, the mental health
and substance-related disorder benefits shall
also be provided for items and services in such
category furnished outside any network of
providers established or recognized under such
plan in accordance with the requirements of
this section.
``(ii) Categories of items and services.--
For purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and
services, whether furnished on an
inpatient or outpatient basis, required
for the treatment of an emergency
medical condition (including an
emergency condition relating to mental
health or substance-related disorders).
``(II) Inpatient.--Items and
services not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of section
9812(c) of such Code is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan, if the application of this section to such plan
results in an increase for the plan year involved of
the actual total costs of coverage with respect to
medical and surgical benefits and mental health and
substance-related disorder benefits under the plan (as
determined and certified under subparagraph (C)) by an
amount that exceeds the applicable percentage described
in subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
during the following plan year, and such exemption
shall apply to the plan for 1 plan year.
``(B) Applicable percentage.--With respect to a
plan, the applicable percentage described in this
paragraph shall be--
``(i) 2 percent in the case of the first
plan year to which this paragraph applies, and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan for
purposes of this subsection shall be made by a
qualified and licensed actuary who is a member in good
standing of the American Academy of Actuaries. Such
determinations shall be certified by the actuary and be
made available to the general public.
``(D) 6-month determinations.--If a group health
plan seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be made
after such plan has complied with this section for the
first 6 months of the plan year involved.''.
(f) Change in Exclusion for Smallest Employers.--Paragraph (1) of
section 9812(c) of such Code is amended to read as follows:
``(1) Small employer exemption.--
``(A) In general.--This section shall not apply to
any group health plan for any plan year of a small
employer.
``(B) Small employer.--For purposes of subparagraph
(A), the term `small employer' means, with respect to a
calendar year and a plan year, an employer who employed
an average of at least 2 (or 1 in the case of an
employer residing in a State that permits small groups
to include a single individual) but not more than 50
employees on business days during the preceding
calendar year. For purposes of the preceding sentence,
all persons treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 shall
be treated as 1 employer and rules similar to rules of
subparagraphs (B) and (C) of section 4980D(d)(2) shall
apply.''.
(g) Elimination of Sunset Provision.--Section 9812 of such Code is
amended by striking subsection (f).
(h) Conforming Amendments to Heading.--
(1) In general.--The heading of section 9812 of such Code
is amended to read as follows:
``SEC. 9812. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.''.
(2) Clerical amendment.--The table of sections for
subchapter B of chapter 100 of such Code is amended by striking
the item relating to section 9812 and inserting the following
new item:
``Sec. 9812. Equity in mental health and substance-related disorder
benefits.''.
(i) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
with respect to plan years beginning on or after January 1,
2008.
(2) Elimination of sunset.--The amendment made by
subsection (g) shall apply to benefits for services furnished
after December 31, 2007.
(3) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to one or
more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of the enactment of this Act, the amendments made by this
section (other than subsection (g)) shall not apply to plan
years beginning before the later of--
(A) the date on which the last of the collective
bargaining agreements relating to the plan terminates
(determined without regard to any extension thereof
agreed to after the date of the enactment of this Act),
or
(B) January 1, 2010.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
imposed under an amendment under this section shall not be
treated as a termination of such collective bargaining
agreement.
SEC. 5. GOVERNMENT ACCOUNTABILITY OFFICE STUDIES AND REPORTS.
(a) Implementation of Act.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that evaluates the effect of the
implementation of the amendments made by this Act on--
(A) the cost of health insurance coverage;
(B) access to health insurance coverage (including
the availability of in-network providers);
(C) the quality of health care;
(D) Medicare, Medicaid, and State and local mental
health and substance abuse treatment spending;
(E) the number of individuals with private
insurance who received publicly funded health care for
mental health and substance-related disorders;
(F) spending on public services, such as the
criminal justice system, special education, and income
assistance programs;
(G) the use of medical management of mental health
and substance-related disorder benefits and medical
necessity determinations by group health plans (and
health insurance issuers offering health insurance
coverage in connection with such plans) and timely
access by participants and beneficiaries to clinically-
indicated care for mental health and substance-use
disorders; and
(H) other matters as determined appropriate by the
Comptroller General.
(2) Report.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General shall prepare
and submit to the appropriate committees of the Congress a
report containing the results of the study conducted under
paragraph (1).
(b) Biannual Report on Obstacles in Obtaining Coverage.--Every two
years, the Comptroller General shall submit to each House of the
Congress a report on obstacles that individuals face in obtaining
mental health and substance-related disorder care under their health
plans.
(c) Uniform Patient Placement Criteria.--Not later than 18 months
after the date of the enactment of this Act, the Comptroller General
shall submit to each House of the Congress a report on availability of
uniform patient placement criteria for mental health and substance-
related disorders that could be used by group health plans and health
insurance issuers to guide determinations of medical necessity and the
extent to which health plans utilize such critiera. If such criteria do
not exist, the report shall include recommendations on a process for
developing such criteria.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Paul Wellstone
Mental Health and Addiction Equity Act of 2007''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 3. Amendments to the Public Health Service Act relating to the
group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.
SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 712 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185a) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services,
the plan or coverage may not impose any treatment limit
on mental health and substance-related disorder
benefits that are classified in the same category of
items or services.
``(B) Treatment limit.--If the plan or coverage
includes a treatment limit on substantially all medical
and surgical benefits in any category of items or
services, the plan or coverage may not impose such a
treatment limit on mental health and substance-related
disorder benefits for items and services within such
category that are more restrictive than the predominant
treatment limit that is applicable to medical and
surgical benefits for items and services within such
category.
``(C) Categories of items and services for
application of treatment limits and beneficiary
financial requirements.--For purposes of this paragraph
and paragraph (4), there shall be the following four
categories of items and services for benefits, whether
medical and surgical benefits or mental health and
substance-related disorder benefits, and all medical
and surgical benefits and all mental health and
substance related benefits shall be classified into one
of the following categories:
``(i) Inpatient, in-network.--Items and
services furnished on an inpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(ii) Inpatient, out-of-network.--Items
and services furnished on an inpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(iii) Outpatient, in-network.--Items and
services furnished on an outpatient basis and
within a network of providers established or
recognized under such plan or coverage.
``(iv) Outpatient, out-of-network.--Items
and services furnished on an outpatient basis
and outside any network of providers
established or recognized under such plan or
coverage.
``(D) Treatment limit defined.--For purposes of
this paragraph, the term `treatment limit' means, with
respect to a plan or coverage, limitation on the
frequency of treatment, number of visits or days of
coverage, or other similar limit on the duration or
scope of treatment under the plan or coverage.
``(E) Predominance.--For purposes of this
subsection, a treatment limit or financial requirement
with respect to a category of items and services is
considered to be predominant if it is the most common
or frequent of such type of limit or requirement with
respect to such category of items and services.
``(4) Beneficiary financial requirements.--
``(A) No beneficiary financial requirement.--If the
plan or coverage does not include a beneficiary
financial requirement (as defined in subparagraph (C))
on substantially all medical and surgical benefits
within a category of items and services (specified
under paragraph (3)(C)), the plan or coverage may not
impose such a beneficiary financial requirement on
mental health and substance-related disorder benefits
for items and services within such category.
``(B) Beneficiary financial requirement.--
``(i) Treatment of deductibles, out-of-
pocket limits, and similar financial
requirements.--If the plan or coverage includes
a deductible, a limitation on out-of-pocket
expenses, or similar beneficiary financial
requirement that does not apply separately to
individual items and services on substantially
all medical and surgical benefits within a
category of items and services (as specified in
paragraph (3)(C)), the plan or coverage shall
apply such requirement (or, if there is more
than one such requirement for such category of
items and services, the predominant requirement
for such category) both to medical and surgical
benefits within such category and to mental
health and substance-related disorder benefits
within such category and shall not distinguish
in the application of such requirement between
such medical and surgical benefits and such
mental health and substance-related disorder
benefits.
``(ii) Other financial requirements.--If
the plan or coverage includes a beneficiary
financial requirement not described in clause
(i) on substantially all medical and surgical
benefits within a category of items and
services, the plan or coverage may not impose
such financial requirement on mental health and
substance-related disorder benefits for items
and services within such category in a way that
is more costly to the participant or
beneficiary than the predominant beneficiary
financial requirement applicable to medical and
surgical benefits for items and services within
such category.
``(C) Beneficiary financial requirement defined.--
For purposes of this paragraph, the term `beneficiary
financial requirement' includes, with respect to a plan
or coverage, any deductible, coinsurance, co-payment,
other cost sharing, and limitation on the total amount
that may be paid by a participant or beneficiary with
respect to benefits under the plan or coverage, but
does not include the application of any aggregate
lifetime limit or annual limit.''; and
(2) in subsection (b)--
(A) by striking ``construed--'' and all that
follows through ``(1) as requiring'' and inserting
``construed as requiring'';
(B) by striking ``; or'' and inserting a period;
and
(C) by striking paragraph (2).
(b) Expansion to Substance-Related Disorder Benefits and Revision
of Definition.--Such section is further amended--
(1) by striking ``mental health benefits'' and inserting
``mental health and substance-related disorder benefits'' each
place it appears; and
(2) in paragraph (4) of subsection (e)--
(A) by striking ``Mental health benefits'' and
inserting ``Mental health and substance-related
disorder benefits'';
(B) by striking ``benefits with respect to mental
health services'' and inserting ``benefits with respect
to services for mental health conditions or substance-
related disorders''; and
(C) by striking ``, but does not include benefits
with respect to treatment of substances abuse or
chemical dependency''.
(c) Availability of Plan Information About Criteria for Medical
Necessity.--Subsection (a) of such section, as amended by subsection
(a)(1), is further amended by adding at the end the following new
paragraph:
``(5) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health and substance-related disorder
benefits (or the health insurance coverage offered in
connection with the plan with respect to such benefits) shall
be made available by the plan administrator (or the health
insurance issuer offering such coverage) to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health and substance-related disorder benefits in the
case of any participant or beneficiary shall, upon request, be
made available by the plan administrator (or the health
insurance issuer offering such coverage) to the participant or
beneficiary.''.
(d) Minimum Benefit Requirements.--Subsection (a) of such section
is further amended by adding at the end the following new paragraph:
``(6) Minimum scope of coverage and equity in out-of-
network benefits.--
``(A) Minimum scope of mental health and substance-
related disorder benefits.--In the case of a group
health plan (or health insurance coverage offered in
connection with such a plan) that provides any mental
health and substance-related disorder benefits, the
plan or coverage shall include benefits for any mental
health condition or substance-related disorder for
which benefits are provided under the benefit plan
option offered under chapter 89 of title 5, United
States Code, with the highest average enrollment as of
the beginning of the most recent year beginning on or
before the beginning of the plan year involved.
``(B) Equity in coverage of out-of-network
benefits.--
``(i) In general.--In the case of a plan or
coverage that provides both medical and
surgical benefits and mental health and
substance-related disorder benefits, if medical
and surgical benefits are provided for
substantially all items and services in a
category specified in clause (ii) furnished
outside any network of providers established or
recognized under such plan or coverage, the
mental health and substance-related disorder
benefits shall also be provided for items and
services in such category furnished outside any
network of providers established or recognized
under such plan or coverage in accordance with
the requirements of this section.
``(ii) Categories of items and services.--
For purposes of clause (i), there shall be the
following three categories of items and
services for benefits, whether medical and
surgical benefits or mental health and
substance-related disorder benefits, and all
medical and surgical benefits and all mental
health and substance-related disorder benefits
shall be classified into one of the following
categories:
``(I) Emergency.--Items and
services, whether furnished on an
inpatient or outpatient basis, required
for the treatment of an emergency
medical condition (including an
emergency condition relating to mental
health and substance-related
disorders).
``(II) Inpatient.--Items and
services not described in subclause (I)
furnished on an inpatient basis.
``(III) Outpatient.--Items and
services not described in subclause (I)
furnished on an outpatient basis.''.
(e) Revision of Increased Cost Exemption.--Paragraph (2) of
subsection (c) of such section is amended to read as follows:
``(2) Increased cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance-related
disorder benefits under the plan (as determined and
certified under subparagraph (C)) by an amount that
exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
(or coverage) during the following plan year, and such
exemption shall apply to the plan (or coverage) for 1
plan year.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this paragraph shall be--
``(i) 2 percent in the case of the first
plan year which begins after the date of the
enactment of the Paul Wellstone Mental Health
and Addiction Equity Act of 2007; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this subsection shall be made
by a qualified actuary who is a member in good standing
of the American Academy of Actuaries. Such
determinations shall be certified by the actuary and be
made available to the general public.
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with such a plan) seeks an exemption under
this paragraph, determinations under subparagraph (A)
shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--An election to modify coverage
of mental health and substance-related disorder
benefits as permitted under this paragraph shall be
treated as a material modification in the terms of the
plan as described in section 102(a)(1) and shall be
subject to the applicable notice requirements under
section 104(b)(1).''.
(f) Change in Exclusion for Smallest Employers.--Subsection
(c)(1)(B) of such section is amended--
(1) by inserting ``(or 1 in the case of an employer
residing in a State that permits small groups to include a
single individual)'' after ``at least 2'' the first place it
appears; and
(2) by striking ``and who employs at least 2 employees on
the first day of the plan year''.
(g) Elimination of Sunset Provision.--Such section is amended by
striking out subsection (f).
(h) Clarification Regarding Preemption.--Such section is further
amended by inserting after subsection (e) the following new subsection:
``(f) Preemption, Relation to State Laws.--
``(1) In general.--Nothing in this section shall be
construed to preempt any State law that provides greater
consumer protections, benefits, methods of access to benefits,
rights or remedies that are greater than the protections,
benefits, methods of access to benefits, rights or remedies
provided under this section.
``(2) ERISA.--Nothing in this section shall be construed to
affect or modify the provisions of section 514 with respect to
group health plans.''.
(i) Conforming Amendments to Heading.--
(1) In general.--The heading of such section is amended to
read as follows:
``SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER
BENEFITS.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act is amended by striking the item relating to section
712 and inserting the following new item:
``Sec. 712. Equity in mental health and substance-related disorder
benefits.''.
(j) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning on or after January 1, 2008.
SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE
GROUP MARKET.
(a) Extension of Parity to Treatment Limits and Beneficiary
Financial Requirements.--Section 2705 of the Public Health Service Act
(42 U.S.C. 300gg-5) is amended--
(1) in subsection (a), by adding at the end the following
new paragraphs:
``(3) Treatment limits.--
``(A) No treatment limit.--If the plan or coverage
does not include a treatment limit (as defined in
subparagraph (D)) on substantially all medical and
surgical benefits in any category of items or services
(specified in subparagraph (C)), the plan or coverage
may not impose any treatment limit on mental health 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.
Union Calendar No. 328
110th CONGRESS
2d Session
H. R. 1424
[Report No. 110-374, Parts I, II, and III]
_______________________________________________________________________
A BILL
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.
_______________________________________________________________________
March 4, 2008
Reported from the Committee on Energy and Commerce with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed