[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 558 Reported in Senate (RS)]






                                                        Calendar No. 93
110th CONGRESS
  1st Session
                                 S. 558

 To provide parity between health insurance coverage of mental health 
        benefits and benefits for medical and surgical services.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 12, 2007

Mr. Domenici (for himself, Mr. Kennedy, Mr. Enzi, Mr. Brown, Mr. Smith, 
Mr. Feingold, Mr. Coleman, Mr. Lautenberg, Mr. Warner, Mrs. Boxer, Ms. 
Murkowski, Mr. Akaka, Mr. Roberts, Mr. Cardin, Mr. Hatch, Ms. Cantwell, 
Ms. Collins, Ms. Stabenow, Ms. Snowe, Mr. Biden, Mr. Graham, Mr. Nelson 
  of Nebraska, Mrs. Clinton, Mr. Durbin, Mr. Conrad, Mr. Inouye, Ms. 
 Klobuchar, Mr. Harkin, Mr. Alexander, Mr. Bennett, Mr. Bingaman, Mr. 
Carper, Mr. Cochran, Mr. Johnson, Mr. Kerry, Mr. Levin, Mr. Lieberman, 
  Mr. Lugar, Mrs. McCaskill, Mr. Salazar, Mr. Schumer, Mr. Nelson of 
 Florida, and Mr. Whitehouse) introduced the following bill; which was 
 read twice and referred to the Committee on Health, Education, Labor, 
                              and Pensions

                             March 27, 2007

               Reported by Mr. Kennedy, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
 To provide parity between health insurance coverage of mental health 
        benefits and benefits for medical and surgical services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Mental Health Parity Act of 
2007''.</DELETED>

<DELETED>SEC. 2. MENTAL HEALTH PARITY.</DELETED>

<DELETED>    (a) Amendments of ERISA.--Subpart B of part 7 of title I 
of the Employee Retirement Income Security Act of 1974 is amended by 
inserting after section 712 (29 U.S.C. 1185a) the following:</DELETED>

<DELETED>``SEC. 712A. MENTAL HEALTH PARITY.</DELETED>

<DELETED>    ``(a) 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 benefits, 
such plan or coverage shall ensure that--</DELETED>
        <DELETED>    ``(1) the financial requirements applicable to 
        such mental health benefits are no more restrictive than the 
        financial requirements applied to substantially all medical and 
        surgical benefits covered by the plan (or coverage), including 
        deductibles, copayments, coinsurance, out-of-pocket expenses, 
        and annual and lifetime limits, except that the plan (or 
        coverage) may not establish separate cost sharing requirements 
        that are applicable only with respect to mental health 
        benefits; and</DELETED>
        <DELETED>    ``(2) the treatment limitations applicable to such 
        mental health benefits are no more restrictive than the 
        treatment limitations applied to substantially all medical and 
        surgical benefits covered by the plan (or coverage), including 
        limits on the frequency of treatment, number of visits, days of 
        coverage, or other similar limits on the scope or duration of 
        treatment.</DELETED>
<DELETED>    ``(b) Clarifications.--In the case of a group health plan 
(or health insurance coverage offered in connection with such a plan) 
that provides both medical and surgical benefits and mental health 
benefits, such plan or coverage shall not be prohibited from--
</DELETED>
        <DELETED>    ``(1) negotiating separate reimbursement or 
        provider payment rates and service delivery systems for 
        different benefits consistent with subsection (a);</DELETED>
        <DELETED>    ``(2) managing the provision of mental health 
        benefits in order to provide medically necessary services for 
        covered benefits, including through the use of any utilization 
        review, authorization or management practices, the application 
        of medical necessity and appropriateness criteria applicable to 
        behavioral health, and the contracting with and use of a 
        network of providers; or</DELETED>
        <DELETED>    ``(3) applying the provisions of this section in a 
        manner that takes into consideration similar treatment settings 
        or similar treatments.</DELETED>
<DELETED>    ``(c) In- and Out-of-Network.--</DELETED>
        <DELETED>    ``(1) 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 benefits, and that provides such benefits on 
        both an in- and out-of-network basis pursuant to the terms of 
        the plan (or coverage), such plan (or coverage) shall ensure 
        that the requirements of this section are applied to both in- 
        and out-of-network services by comparing in-network medical and 
        surgical benefits to in-network mental health benefits and out-
        of-network medical and surgical benefits to out-of-network 
        mental health benefits, except that in no event shall this 
        subsection require the provision of out-of-network coverage for 
        mental health benefits even in the case where out-of-network 
        coverage is provided for medical and surgical 
        benefits.</DELETED>
        <DELETED>    ``(2) Clarification.--Nothing in paragraph (1) 
        shall be construed as requiring that a group health plan (or 
        coverage in connection with such a plan) eliminate an out-of-
        network provider option from such plan (or coverage) pursuant 
        to the terms of the plan (or coverage).</DELETED>
<DELETED>    ``(d) Small Employer Exemption.--</DELETED>
        <DELETED>    ``(1) In general.--This section shall not apply to 
        any group health plan (and group health insurance coverage 
        offered in connection with a group health plan) for any plan 
        year of any 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.</DELETED>
        <DELETED>    ``(2) Application of certain rules in 
        determination of employer size.--For purposes of this 
        subsection:</DELETED>
                <DELETED>    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single 
                employer.</DELETED>
                <DELETED>    ``(B) Employers not in existence in 
                preceding year.--In the case of an employer which was 
                not in existence throughout the preceding calendar 
                year, the determination of whether such employer is a 
                small employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.</DELETED>
                <DELETED>    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.</DELETED>
<DELETED>    ``(e) Cost Exemption.--</DELETED>
        <DELETED>    ``(1) In general.--With respect to a group health 
        plan (or health insurance coverage offered in connections 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 benefits under the plan 
        (as determined and certified under paragraph (3)) by an amount 
        that exceeds the applicable percentage described in paragraph 
        (2) 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. An employer may elect to 
        continue to apply mental health parity pursuant to this section 
        with respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.</DELETED>
        <DELETED>    ``(2) Applicable percentage.--With respect to a 
        plan (or coverage), the applicable percentage described in this 
        paragraph shall be--</DELETED>
                <DELETED>    ``(A) 2 percent in the case of the first 
                plan year in which this section is applied; 
                and</DELETED>
                <DELETED>    ``(B) 1 percent in the case of each 
                subsequent plan year.</DELETED>
        <DELETED>    ``(3) Determinations by actuaries.--Determinations 
        as to increases in actual costs under a plan (or coverage) for 
        purposes of this section 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.</DELETED>
        <DELETED>    ``(4) 6-month determinations.--If a group health 
        plan (or a health insurance issuer offering coverage in 
        connections with a group health plan) seeks an exemption under 
        this subsection, determinations under paragraph (1) shall be 
        made after such plan (or coverage) has complied with this 
        section for the first 6 months of the plan year 
        involved.</DELETED>
        <DELETED>    ``(5) Notification.--An election to modify 
        coverage of mental health benefits as permitted under this 
        subsection 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).</DELETED>
<DELETED>    ``(f) Rule of Construction.--Nothing in this section shall 
be construed to require a group health plan (or health insurance 
coverage offered in connection with such a plan) to provide any mental 
health benefits.</DELETED>
<DELETED>    ``(g) Mental Health Benefits.--In this section, the term 
`mental health benefits' means benefits with respect to mental health 
services (including substance abuse treatment) as defined under the 
terms of the group health plan or coverage.''.</DELETED>
<DELETED>    (b) Public Health Service Act.--Subpart 1 of part A of 
title XXVII of the Public Health Service Act is amended by inserting 
after section 2705 (42 U.S.C. 300gg-5) the following:</DELETED>

<DELETED>``SEC. 2705A. MENTAL HEALTH PARITY.</DELETED>

<DELETED>    ``(a) 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 benefits, 
such plan or coverage shall ensure that--</DELETED>
        <DELETED>    ``(1) the financial requirements applicable to 
        such mental health benefits are no more restrictive than the 
        financial requirements applied to substantially all medical and 
        surgical benefits covered by the plan (or coverage), including 
        deductibles, copayments, coinsurance, out-of-pocket expenses, 
        and annual and lifetime limits, except that the plan (or 
        coverage) may not establish separate cost sharing requirements 
        that are applicable only with respect to mental health 
        benefits; and</DELETED>
        <DELETED>    ``(2) the treatment limitations applicable to such 
        mental health benefits are no more restrictive than the 
        treatment limitations applied to substantially all medical and 
        surgical benefits covered by the plan (or coverage), including 
        limits on the frequency of treatment, number of visits, days of 
        coverage, or other similar limits on the scope or duration of 
        treatment.</DELETED>
<DELETED>    ``(b) Clarifications.--In the case of a group health plan 
(or health insurance coverage offered in connection with such a plan) 
that provides both medical and surgical benefits and mental health 
benefits, such plan or coverage shall not be prohibited from--
</DELETED>
        <DELETED>    ``(1) negotiating separate reimbursement or 
        provider payment rates and service delivery systems for 
        different benefits consistent with subsection (a);</DELETED>
        <DELETED>    ``(2) managing the provision of mental health 
        benefits in order to provide medically necessary services for 
        covered benefits, including through the use of any utilization 
        review, authorization or management practices, the application 
        of medical necessity and appropriateness criteria applicable to 
        behavioral health, and the contracting with and use of a 
        network of providers; or</DELETED>
        <DELETED>    ``(3) be prohibited from applying the provisions 
        of this section in a manner that takes into consideration 
        similar treatment settings or similar treatments.</DELETED>
<DELETED>    ``(c) In- and Out-of-Network.--</DELETED>
        <DELETED>    ``(1) 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 benefits, and that provides such benefits on 
        both an in- and out-of-network basis pursuant to the terms of 
        the plan (or coverage), such plan (or coverage) shall ensure 
        that the requirements of this section are applied to both in- 
        and out-of-network services by comparing in-network medical and 
        surgical benefits to in-network mental health benefits and out-
        of-network medical and surgical benefits to out-of-network 
        mental health benefits, except that in no event shall this 
        subsection require the provision of out-of-network coverage for 
        mental health benefits even in the case where out-of-network 
        coverage is provided for medical and surgical 
        benefits.</DELETED>
        <DELETED>    ``(2) Clarification.--Nothing in paragraph (1) 
        shall be construed as requiring that a group health plan (or 
        coverage in connection with such a plan) eliminate an out-of-
        network provider option from such plan (or coverage) pursuant 
        to the terms of the plan (or coverage).</DELETED>
<DELETED>    ``(d) Small Employer Exemption.--</DELETED>
        <DELETED>    ``(1) In general.--This section shall not apply to 
        any group health plan (and group health insurance coverage 
        offered in connection with a group health plan) for any plan 
        year of any 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.</DELETED>
        <DELETED>    ``(2) Application of certain rules in 
        determination of employer size.--For purposes of this 
        subsection:</DELETED>
                <DELETED>    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single 
                employer.</DELETED>
                <DELETED>    ``(B) Employers not in existence in 
                preceding year.--In the case of an employer which was 
                not in existence throughout the preceding calendar 
                year, the determination of whether such employer is a 
                small employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.</DELETED>
                <DELETED>    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.</DELETED>
<DELETED>    ``(e) Cost Exemption.--</DELETED>
        <DELETED>    ``(1) In general.--With respect to a group health 
        plan (or health insurance coverage offered in connections 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 benefits under the plan 
        (as determined and certified under paragraph (3)) by an amount 
        that exceeds the applicable percentage described in paragraph 
        (2) 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. An employer may elect to 
        continue to apply mental health parity pursuant to this section 
        with respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.</DELETED>
        <DELETED>    ``(2) Applicable percentage.--With respect to a 
        plan (or coverage), the applicable percentage described in this 
        paragraph shall be--</DELETED>
                <DELETED>    ``(A) 2 percent in the case of the first 
                plan year in which this section is applied; 
                and</DELETED>
                <DELETED>    ``(B) 1 percent in the case of each 
                subsequent plan year.</DELETED>
        <DELETED>    ``(3) Determinations by actuaries.--Determinations 
        as to increases in actual costs under a plan (or coverage) for 
        purposes of this section 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.</DELETED>
        <DELETED>    ``(4) 6-month determinations.--If a group health 
        plan (or a health insurance issuer offering coverage in 
        connections with a group health plan) seeks an exemption under 
        this subsection, determinations under paragraph (1) shall be 
        made after such plan (or coverage) has complied with this 
        section for the first 6 months of the plan year 
        involved.</DELETED>
        <DELETED>    ``(5) Notification.--An election to modify 
        coverage of mental health benefits as permitted under this 
        subsection 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).</DELETED>
<DELETED>    ``(f) Rule of Construction.--Nothing in this section shall 
be construed to require a group health plan (or health insurance 
coverage offered in connection with such a plan) to provide any mental 
health benefits.</DELETED>
<DELETED>    ``(g) Mental Health Benefits.--In this section, the term 
`mental health benefits' means benefits with respect to mental health 
services (including substance abuse treatment) as defined under the 
terms of the group health plan or coverage, and when applicable as may 
be defined under State law when applicable to health insurance coverage 
offered in connection with a group health plan.''.</DELETED>

<DELETED>SEC. 3. EFFECTIVE DATE.</DELETED>

<DELETED>    (a) In General.--The provisions of this Act shall apply to 
group health plans (or health insurance coverage offered in connection 
with such plans) beginning in the first plan year that begins on or 
after January 1 of the first calendar year that begins more than 1 year 
after the date of the enactment of this Act.</DELETED>
<DELETED>    (b) Termination of Certain Provisions.--</DELETED>
        <DELETED>    (1) ERISA.--Section 712 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1185a) is amended by 
        striking subsection (f) and inserting the following:</DELETED>
<DELETED>    ``(f) Sunset.--This section shall not apply to benefits 
for services furnished after the effective date described in section 
3(a) of the Mental Health Parity Act of 2007.''.</DELETED>
        <DELETED>    (2) PHSA.--Section 2705 of the Public Health 
        Service Act (42 U.S.C. 300gg-5) is amended by striking 
        subsection (f) and inserting the following:</DELETED>
<DELETED>    ``(f) Sunset.--This section shall not apply to benefits 
for services furnished after the effective date described in section 
3(a) of the Mental Health Parity Act of 2007.''.</DELETED>

<DELETED>SEC. 4. SPECIAL PREEMPTION RULE.</DELETED>

<DELETED>    (a) ERISA Preemption.--Section 731 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1191) is amended--
</DELETED>
        <DELETED>    (1) by redesignating subsections (c) and (d) as 
        subsections (e) and (f), respectively; and</DELETED>
        <DELETED>    (2) by inserting after subsection (b), the 
        following:</DELETED>
<DELETED>    ``(c) Special Rule in Case of Mental Health Parity 
Requirements.--</DELETED>
        <DELETED>    ``(1) In general.--Notwithstanding any provision 
        of section 514 to the contrary, the provisions of this part 
        relating to a group health plan or a health insurance issuer 
        offering coverage in connection with a group health plan shall 
        supercede any provision of State law that establishes, 
        implements, or continues in effect any standard or requirement 
        which differs from the specific standards or requirements 
        contained in subsections (a), (b), (c), or (e) of section 
        712A.</DELETED>
        <DELETED>    ``(2) Clarifications.--Nothing in this subsection 
        shall be construed to preempt State insurance laws relating to 
        the individual insurance market or to small employers (as such 
        term is defined for purposes of section 712A(d)).''.</DELETED>
<DELETED>    (b) PHSA Preemption.--Section 2723 of the Public Health 
Service Act (42 U.S.C. 300gg-23) is amended--</DELETED>
        <DELETED>    (1) by redesignating subsections (c) and (d) as 
        subsections (e) and (f), respectively; and</DELETED>
        <DELETED>    (2) by inserting after subsection (b), the 
        following:</DELETED>
<DELETED>    ``(c) Special Rule in Case of Mental Health Parity 
Requirements.--</DELETED>
        <DELETED>    ``(1) In general.--Notwithstanding any provision 
        of section 514 of the Employee Retirement Income Security Act 
        of 1974 to the contrary, the provisions of this part relating 
        to a group health plan or a health insurance issuer offering 
        coverage in connection with a group health plan shall supercede 
        any provisions of State law that establishes, implements, or 
        continues in effect any standard or requirement which differs 
        from the specific standards or requirements contained in 
        subsections (a), (b), (c), or (e) of section 2705A.</DELETED>
        <DELETED>    ``(2) Clarifications.--Nothing in this subsection 
        shall be construed to preempt State insurance laws relating to 
        the individual insurance market or to small employers (as such 
        term is defined for purposes of section 2705A(d)).''.</DELETED>
<DELETED>    (c) Effective Date.--The provisions of this section shall 
take effect with respect to a State, on the date on which the 
provisions of section 2 apply with respect to group health plans and 
health insurance coverage offered in connection with group health 
plans.</DELETED>

<DELETED>SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES.</DELETED>

<DELETED>    (a) Group Health Plan Ombudsman.--</DELETED>
        <DELETED>    (1) Department of labor.--The Secretary of Labor 
        shall designate an individual within the Department of Labor to 
        serve as the group health plan ombudsman for the Department. 
        Such ombudsman shall serve as an initial point of contact to 
        permit individuals to obtain information and provide assistance 
        concerning coverage of mental health services under group 
        health plans in accordance with this Act.</DELETED>
        <DELETED>    (2) Department of health and human services.--The 
        Secretary of Health and Human Services shall designate an 
        individual within the Department of Health and Human Services 
        to serve as the group health plan ombudsman for the Department. 
        Such ombudsman shall serve as an initial point of contact to 
        permit individuals to obtain information and provide assistance 
        concerning coverage of mental health services under health 
        insurance coverage issued in connection with group health plans 
        in accordance with this Act.</DELETED>
<DELETED>    (b) Audits.--The Secretary of Labor and the Secretary of 
Health and Human Services shall each provide for the conduct of random 
audits of group health plans (and health insurance coverage offered in 
connection with such plans) to ensure that such plans are in compliance 
with this Act (and the amendments made by this Act).</DELETED>
<DELETED>    (c) Government Accountability Office Study.--</DELETED>
        <DELETED>    (1) Study.--The Comptroller General shall conduct 
        a study that evaluates the effect of the implementation of the 
        amendments made by this Act on the cost of health insurance 
        coverage, access to health insurance coverage (including the 
        availability of in-network providers), the quality of health 
        care, the impact on benefits and coverage for mental health and 
        substance abuse, the impact of any additional cost or savings 
        to the plan, the impact on State mental health benefit mandate 
        laws, other impact on the business community and the Federal 
        Government, and other issues as determined appropriate by the 
        Comptroller General.</DELETED>
        <DELETED>    (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 Congress a report 
        containing the results of the study conducted under paragraph 
        (1).</DELETED>
<DELETED>    (d) Regulations.--Not later than 1 year after the date of 
enactment of this Act, the Secretary of Labor and the Secretary of 
Health and Human Services shall jointly promulgate final regulations to 
carry out this Act.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mental Health Parity Act of 2007''.

SEC. 2. MENTAL HEALTH PARITY.

    (a) Amendments of ERISA.--Subpart B of part 7 of title I of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after section 712 (29 U.S.C. 1185a) the following:

``SEC. 712A. MENTAL HEALTH PARITY.

    ``(a) 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 benefits, 
such plan or coverage shall ensure that--
            ``(1) the financial requirements applicable to such mental 
        health benefits are no more restrictive than the financial 
        requirements applied to substantially all medical and surgical 
        benefits covered by the plan (or coverage), including 
        deductibles, copayments, coinsurance, out-of-pocket expenses, 
        and annual and lifetime limits, except that the plan (or 
        coverage) may not establish separate cost sharing requirements 
        that are applicable only with respect to mental health 
        benefits; and
            ``(2) the treatment limitations applicable to such mental 
        health benefits are no more restrictive than the treatment 
        limitations applied to substantially all medical and surgical 
        benefits covered by the plan (or coverage), including limits on 
        the frequency of treatment, number of visits, days of coverage, 
        or other similar limits on the scope or duration of treatment.
    ``(b) Clarifications.--In the case of a group health plan (or 
health insurance coverage offered in connection with such a plan) that 
provides both medical and surgical benefits and mental health benefits, 
such plan or coverage shall not be prohibited from--
            ``(1) negotiating separate reimbursement or provider 
        payment rates and service delivery systems for different 
        benefits consistent with subsection (a);
            ``(2) managing the provision of mental health benefits in 
        order to provide medically necessary services for covered 
        benefits, including through the use of any utilization review, 
        authorization or management practices, the application of 
        medical necessity and appropriateness criteria applicable to 
        behavioral health, and the contracting with and use of a 
        network of providers; or
            ``(3) applying the provisions of this section in a manner 
        that takes into consideration similar treatment settings or 
        similar treatments.
    ``(c) In- and Out-of-Network.--
            ``(1) 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 benefits, and that provides such benefits on both 
        an in- and out-of-network basis pursuant to the terms of the 
        plan (or coverage), such plan (or coverage) shall ensure that 
        the requirements of this section are applied to both in- and 
        out-of-network services by comparing in-network medical and 
        surgical benefits to in-network mental health benefits and out-
        of-network medical and surgical benefits to out-of-network 
        mental health benefits.
            ``(2) Clarification.--Nothing in paragraph (1) shall be 
        construed as requiring that a group health plan (or coverage in 
        connection with such a plan) eliminate, reduce, or provide out-
        of-network coverage with respect to such plan (or coverage).
    ``(d) Small Employer Exemption.--
            ``(1) In general.--This section shall not apply to any 
        group health plan (and group health insurance coverage offered 
        in connection with a group health plan) for any plan year of 
        any 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.
            ``(2) Application of certain rules in determination of 
        employer size.--For purposes of this subsection:
                    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single employer.
                    ``(B) Employers not in existence in preceding 
                year.--In the case of an employer which was not in 
                existence throughout the preceding calendar year, the 
                determination of whether such employer is a small 
                employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.
    ``(e) Cost Exemption.--
            ``(1) In general.--With respect to a group health plan (or 
        health insurance coverage offered in connections 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 benefits under the plan (as 
        determined and certified under paragraph (3)) by an amount that 
        exceeds the applicable percentage described in paragraph (2) 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. An employer may elect to continue to 
        apply mental health parity pursuant to this section with 
        respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.
            ``(2) Applicable percentage.--With respect to a plan (or 
        coverage), the applicable percentage described in this 
        paragraph shall be--
                    ``(A) 2 percent in the case of the first plan year 
                in which this section is applied; and
                    ``(B) 1 percent in the case of each subsequent plan 
                year.
            ``(3) Determinations by actuaries.--Determinations as to 
        increases in actual costs under a plan (or coverage) for 
        purposes of this section 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.
            ``(4) 6-month determinations.--If a group health plan (or a 
        health insurance issuer offering coverage in connections with a 
        group health plan) seeks an exemption under this subsection, 
        determinations under paragraph (1) shall be made after such 
        plan (or coverage) has complied with this section for the first 
        6 months of the plan year involved.
            ``(5) Notification.--An election to modify coverage of 
        mental health benefits as permitted under this subsection 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) Rule of Construction.--Nothing in this section shall be 
construed to require a group health plan (or health insurance coverage 
offered in connection with such a plan) to provide any mental health 
benefits.
    ``(g) Mental Health Benefits.--In this section, the term `mental 
health benefits' means benefits with respect to mental health services 
(including substance abuse treatment) as defined under the terms of the 
group health plan or coverage.''.
    (b) Public Health Service Act.--Subpart 2 of part A of title XXVII 
of the Public Health Service Act is amended by inserting after section 
2705 (42 U.S.C. 300gg-5) the following:

``SEC. 2705A. MENTAL HEALTH PARITY.

    ``(a) 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 benefits, 
such plan or coverage shall ensure that--
            ``(1) the financial requirements applicable to such mental 
        health benefits are no more restrictive than the financial 
        requirements applied to substantially all medical and surgical 
        benefits covered by the plan (or coverage), including 
        deductibles, copayments, coinsurance, out-of-pocket expenses, 
        and annual and lifetime limits, except that the plan (or 
        coverage) may not establish separate cost sharing requirements 
        that are applicable only with respect to mental health 
        benefits; and
            ``(2) the treatment limitations applicable to such mental 
        health benefits are no more restrictive than the treatment 
        limitations applied to substantially all medical and surgical 
        benefits covered by the plan (or coverage), including limits on 
        the frequency of treatment, number of visits, days of coverage, 
        or other similar limits on the scope or duration of treatment.
    ``(b) Clarifications.--In the case of a group health plan (or 
health insurance coverage offered in connection with such a plan) that 
provides both medical and surgical benefits and mental health benefits, 
such plan or coverage shall not be prohibited from--
            ``(1) negotiating separate reimbursement or provider 
        payment rates and service delivery systems for different 
        benefits consistent with subsection (a);
            ``(2) managing the provision of mental health benefits in 
        order to provide medically necessary services for covered 
        benefits, including through the use of any utilization review, 
        authorization or management practices, the application of 
        medical necessity and appropriateness criteria applicable to 
        behavioral health, and the contracting with and use of a 
        network of providers; or
            ``(3) be prohibited from applying the provisions of this 
        section in a manner that takes into consideration similar 
        treatment settings or similar treatments.
    ``(c) In- and Out-of-Network.--
            ``(1) 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 benefits, and that provides such benefits on both 
        an in- and out-of-network basis pursuant to the terms of the 
        plan (or coverage), such plan (or coverage) shall ensure that 
        the requirements of this section are applied to both in- and 
        out-of-network services by comparing in-network medical and 
        surgical benefits to in-network mental health benefits and out-
        of-network medical and surgical benefits to out-of-network 
        mental health benefits.
            ``(2) Clarification.--Nothing in paragraph (1) shall be 
        construed as requiring that a group health plan (or coverage in 
        connection with such a plan) eliminate, reduce, or provide out-
        of-network coverage with respect to such plan (or coverage).
    ``(d) Small Employer Exemption.--
            ``(1) In general.--This section shall not apply to any 
        group health plan (and group health insurance coverage offered 
        in connection with a group health plan) for any plan year of 
        any 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.
            ``(2) Application of certain rules in determination of 
        employer size.--For purposes of this subsection:
                    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single employer.
                    ``(B) Employers not in existence in preceding 
                year.--In the case of an employer which was not in 
                existence throughout the preceding calendar year, the 
                determination of whether such employer is a small 
                employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.
    ``(e) Cost Exemption.--
            ``(1) In general.--With respect to a group health plan (or 
        health insurance coverage offered in connections 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 benefits under the plan (as 
        determined and certified under paragraph (3)) by an amount that 
        exceeds the applicable percentage described in paragraph (2) 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. An employer may elect to continue to 
        apply mental health parity pursuant to this section with 
        respect to the group health plan (or coverage) involved 
        regardless of any increase in total costs.
            ``(2) Applicable percentage.--With respect to a plan (or 
        coverage), the applicable percentage described in this 
        paragraph shall be--
                    ``(A) 2 percent in the case of the first plan year 
                in which this section is applied; and
                    ``(B) 1 percent in the case of each subsequent plan 
                year.
            ``(3) Determinations by actuaries.--Determinations as to 
        increases in actual costs under a plan (or coverage) for 
        purposes of this section 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.
            ``(4) 6-month determinations.--If a group health plan (or a 
        health insurance issuer offering coverage in connections with a 
        group health plan) seeks an exemption under this subsection, 
        determinations under paragraph (1) shall be made after such 
        plan (or coverage) has complied with this section for the first 
        6 months of the plan year involved.
            ``(5) Notification.--An election to modify coverage of 
        mental health benefits as permitted under this subsection 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) Rule of Construction.--Nothing in this section shall be 
construed to require a group health plan (or health insurance coverage 
offered in connection with such a plan) to provide any mental health 
benefits.
    ``(g) Mental Health Benefits.--In this section, the term `mental 
health benefits' means benefits with respect to mental health services 
(including substance abuse treatment) as defined under the terms of the 
group health plan or coverage, and when applicable as may be defined 
under State law when applicable to health insurance coverage offered in 
connection with a group health plan.''.

SEC. 3. EFFECTIVE DATE.

    (a) In General.--The provisions of this Act shall apply to group 
health plans (or health insurance coverage offered in connection with 
such plans) beginning in the first plan year that begins on or after 
January 1 of the first calendar year that begins more than 1 year after 
the date of the enactment of this Act.
    (b) Termination of Certain Provisions.--
            (1) ERISA.--Section 712 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1185a) is amended by striking 
        subsection (f) and inserting the following:
    ``(f) Sunset.--This section shall not apply to benefits for 
services furnished after the effective date described in section 3(a) 
of the Mental Health Parity Act of 2007.''.
            (2) PHSA.--Section 2705 of the Public Health Service Act 
        (42 U.S.C. 300gg-5) is amended by striking subsection (f) and 
        inserting the following:
    ``(f) Sunset.--This section shall not apply to benefits for 
services furnished after the effective date described in section 3(a) 
of the Mental Health Parity Act of 2007.''.

SEC. 4. SPECIAL PREEMPTION RULE.

    (a) ERISA Preemption.--Section 731 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1191) is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (e) and (f), respectively; and
            (2) by inserting after subsection (b), the following:
    ``(c) Special Rule in Case of Mental Health Parity Requirements.--
            ``(1) In general.--Notwithstanding any provision of section 
        514 to the contrary, the provisions of this part relating to a 
        group health plan or a health insurance issuer offering 
        coverage in connection with a group health plan shall supercede 
        any provision of State law that establishes, implements, or 
        continues in effect any standard or requirement which differs 
        from the specific standards or requirements contained in 
        subsections (a), (b), (c), or (e) of section 712A.
            ``(2) Clarifications.--Nothing in this subsection shall be 
        construed to preempt State insurance laws relating to the 
        individual insurance market or to small employers (as such term 
        is defined for purposes of section 712A(d)).''.
    (b) PHSA Preemption.--Section 2723 of the Public Health Service Act 
(42 U.S.C. 300gg-23) is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (e) and (f), respectively; and
            (2) by inserting after subsection (b), the following:
    ``(c) Special Rule in Case of Mental Health Parity Requirements.--
            ``(1) In general.--Notwithstanding any provision of section 
        514 of the Employee Retirement Income Security Act of 1974 to 
        the contrary, the provisions of this part relating to a group 
        health plan or a health insurance issuer offering coverage in 
        connection with a group health plan shall supercede any 
        provisions of State law that establishes, implements, or 
        continues in effect any standard or requirement which differs 
        from the specific standards or requirements contained in 
        subsections (a), (b), (c), or (e) of section 2705A.
            ``(2) Clarifications.--Nothing in this subsection shall be 
        construed to preempt State insurance laws relating to the 
        individual insurance market or to small employers (as such term 
        is defined for purposes of section 2705A(d)).''.
    (c) Effective Date.--The provisions of this section shall take 
effect with respect to a State, on the date on which the provisions of 
section 2 apply with respect to group health plans and health insurance 
coverage offered in connection with group health plans.

SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES.

    (a) Group Health Plan Ombudsman.--
            (1) Department of labor.--The Secretary of Labor shall 
        designate an individual within the Department of Labor to serve 
        as the group health plan ombudsman for the Department. Such 
        ombudsman shall serve as an initial point of contact to permit 
        individuals to obtain information and provide assistance 
        concerning coverage of mental health services under group 
        health plans in accordance with this Act.
            (2) Department of health and human services.--The Secretary 
        of Health and Human Services shall designate an individual 
        within the Department of Health and Human Services to serve as 
        the group health plan ombudsman for the Department. Such 
        ombudsman shall serve as an initial point of contact to permit 
        individuals to obtain information and provide assistance 
        concerning coverage of mental health services under health 
        insurance coverage issued in connection with group health plans 
        in accordance with this Act.
    (b) Audits.--The Secretary of Labor and the Secretary of Health and 
Human Services shall each provide for the conduct of random audits of 
group health plans (and health insurance coverage offered in connection 
with such plans) to ensure that such plans are in compliance with this 
Act (and the amendments made by this Act).
    (c) Government Accountability Office Study.--
            (1) Study.--The Comptroller General shall conduct a study 
        that evaluates the effect of the implementation of the 
        amendments made by this Act on the cost of health insurance 
        coverage, access to health insurance coverage (including the 
        availability of in-network providers), the quality of health 
        care, the impact on benefits and coverage for mental health and 
        substance abuse, the impact of any additional cost or savings 
        to the plan, the impact on out-of-network coverage for mental 
        health benefits (including substance abuse treatment), the 
        impact on State mental health benefit mandate laws, other 
        impact on the business community and the Federal Government, 
        and other issues 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 Congress a report 
        containing the results of the study conducted under paragraph 
        (1).
    (d) Regulations.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Labor and the Secretary of Health and 
Human Services shall jointly promulgate final regulations to carry out 
this Act.
                                                        Calendar No. 93

110th CONGRESS

  1st Session

                                 S. 558

_______________________________________________________________________

                                 A BILL

 To provide parity between health insurance coverage of mental health 
        benefits and benefits for medical and surgical services.

_______________________________________________________________________

                             March 27, 2007

                       Reported with an amendment