[Federal Register Volume 69, Number 141 (Friday, July 23, 2004)]
[Rules and Regulations]
[Pages 43924-43926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16826]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

45 CFR Part 146

[CMS-2152-F2]
RIN 0938-AL42


Amendment to the Interim Final Regulation for Mental Health 
Parity

AGENCY: Centers for Medicare & Medicaid Services (CMS), DHHS.

ACTION: Amendment to interim final regulation.

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SUMMARY: This document contains an amendment to the interim final 
regulation that implements the Mental Health Parity Act (MHPA) to 
conform the sunset date of the regulation to the sunset date of the 
statute under legislation passed by the 108th Congress.

DATES: Effective date: The amendment to the regulation is effective 
August 23, 2004.
    Applicability dates: Under the amendment, the requirements of the

[[Page 43925]]

MHPA interim final regulation apply to group health plans and health 
insurance issuers offering health insurance coverage in connection with 
a group health plan during the period commencing August 23, 2004, 
through December 30, 2004. Under the extended sunset date, MHPA 
requirements do not apply to benefits for services furnished on or 
after December 31, 2004.

FOR FURTHER INFORMATION CONTACT: Dave Mlawsky, Centers for Medicare & 
Medicaid Services (CMS), Department of Health and Human Services, at 1-
877-267-2323, ext. 61565.

SUPPLEMENTARY INFORMATION:

I. Background

    The Mental Health Parity Act of 1996 (MHPA) was enacted on 
September 26, 1996 (Pub. L. 104-204). MHPA amended the Public Health 
Service Act (PHS Act) and the Employee Retirement Income Security Act 
of 1974 (ERISA) to provide for parity in the application of annual and 
lifetime dollar limits on mental health benefits with dollar limits on 
medical/surgical benefits. Provisions implementing MHPA were later 
added to the Internal Revenue Code of 1986 (Code) under the Taxpayer 
Relief Act of 1997 (Pub. L. 105-34).
    The provisions of MHPA are set forth in Title XXVII of the PHS Act, 
Part 7 of Subtitle B of Title I of ERISA, and Chapter 100 of Subtitle K 
of the Code. The Secretaries of Health and Human Services, Labor, and 
the Treasury share jurisdiction over the MHPA provisions. These 
provisions are substantially similar, except as follows:
     The MHPA provisions in the PHS Act generally apply to 
health insurance issuers that offer health insurance coverage in 
connection with group health plans and to certain State and local 
governmental plans. States, in the first instance, enforce the PHS Act 
for issuers. Only if a State does not substantially enforce the MHPA 
provisions under its insurance laws will the Department of Health and 
Human Services enforce the provisions, through the imposition of civil 
money penalties. Moreover, no enforcement action may be taken by the 
Secretary of Health and Human Services against any group health plan 
except certain State and local governmental plans.
     The MHPA provisions in ERISA generally apply to all group 
health plans other than governmental plans, church plans, and certain 
other plans. These provisions also apply to health insurance issuers 
that offer health insurance coverage in connection with those group 
health plans. Generally, the Secretary of Labor enforces the MHPA 
provisions in ERISA, except that no enforcement action may be taken by 
the Secretary against issuers. However, individuals may generally 
pursue actions against issuers under ERISA and, in some circumstances, 
under State law.
     The MHPA provisions in the Code generally apply to all 
group health plans other than governmental plans, but they do not apply 
to health insurance issuers. A taxpayer that fails to comply with these 
provisions may be subject to an excise tax under section 4980D of the 
Code.

II. Overview of MHPA

    The MHPA provisions are set forth in section 2705 of the PHS Act, 
section 712 of ERISA, and section 9812 of the Code. MHPA applies to a 
group health plan (or health insurance coverage offered by issuers in 
connection with a group health plan) that provides both medical/
surgical benefits and mental health benefits. MHPA's original text 
included a sunset provision specifying that MHPA's provisions would not 
apply to benefits for services furnished on or after September 30, 
2001. On December 22, 1997, the Departments of Health and Human 
Services, Labor, and the Treasury issued interim final regulations 
under MHPA in the Federal Register (62 FR 66931). The interim final 
regulations included this statutory sunset date.
    On January 10, 2002, President Bush signed H.R. 3061 (Pub. L. 107-
116), the 2002 Appropriations Act for the Departments of Labor, Health 
and Human Services, and Education (``Appropriations Act''). (During the 
107th Congress, legislation was passed by the Senate to amend and 
expand the substantive provisions of MHPA. This legislation was offered 
as an amendment to the provisions of H.R. 3061. The Conference Report 
accompanying the underlying provisions of H.R. 3061 states that instead 
of the amendment proposed by the Senate, the amendment to MHPA 
contained in H.R. 3061 extends the original sunset date of MHPA, so 
that MHPA's provisions will not apply to benefits for services 
furnished on or after December 31, 2002, H.R. Rep. 107-342, at 170 
(2001)). This legislation extended MHPA's original sunset date under 
the PHS Act, ERISA, and the Code, so that MHPA's provisions in all 
three statutes would not sunset until December 31, 2002.
    On March 9, 2002, President Bush signed H.R. 3090 (Pub. L. 107-
147), the Job Creation and Worker Assistance Act of 2002 (``Job 
Creation Act''). That legislation amended section 9812 of the Code (the 
mental health parity provisions), but did not amend the corresponding 
MHPA provisions in the PHS Act or ERISA. The Job Creation Act extended 
the sunset date under the Code to December 31, 2003.
    On December 2, 2002, President Bush signed H.R. 5716 (Pub. L. 107-
313), the Mental Health Parity Reauthorization Act of 2002. This 
legislation further extended MHPA's sunset date under the PHS Act and 
ERISA so that MHPA's provisions would apply to any services furnished 
before December 31, 2003.
    As a result of those pieces of legislation, the Department 
published conforming changes to the interim final mental health parity 
regulations, conforming the regulatory sunset date to the new statutory 
sunset date. The Department also made conforming changes extending the 
duration of the increased cost exemption to be consistent with the new 
sunset date (68 FR 38206, June 27, 2003).
    On December 19, 2003, President Bush signed S. 1929 (Pub. L. 108-
197), the Mental Health Parity Reauthorization Act of 2003. That 
legislation further extends MHPA's sunset date under the PHS Act and 
ERISA so that MHPA's provisions apply to any services furnished before 
December 31, 2004. This statutory amendment has not altered MHPA's 
scope. It continues to apply to a group health plan (or health 
insurance coverage offered by issuers in connection with a group health 
plan) that provides both medical/surgical benefits and mental health 
benefits. (The parity requirements under MHPA, the interim regulations, 
and the amendment to the interim regulations do not apply to any group 
health plan (or health insurance coverage offered in connection with a 
group health plan) for any plan year of a small employer. The term 
``small employer'' is defined as an employer who employed an average of 
at least 2 but not more than 50 employees on business days during the 
preceding calendar year and who employs at least 2 employees on the 
first day of the plan year.) As a result of this statutory amendment, 
and to assist employers, plan sponsors, health insurance issuers, and 
workers, the Department is publishing this amendment to the interim 
final regulations, conforming the regulatory sunset date to the new 
statutory sunset date. The Department is making the effective date of 
this amendment to the interim final regulations effective as of August 
23, 2004. Since the extension of this sunset date is essentially self-
implementing, this amendment to the MHPA regulations is published on an

[[Page 43926]]

interim final basis under section 2792 of the PHS Act.
    This amendment to the interim final regulations is adopted under 
the authority contained in sections 2701 through 2763, 2791, and 2792 
of the PHS Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-
92), as added by HIPAA (Pub. L. 104-191), and amended by MHPA (Pub. L. 
104-204, as amended by Pub. L. 107-116, Pub. L. 107-313, and Pub. L. 
108-197).

III. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

IV. Regulatory Impact Statement

Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
According to the terms of the Executive Order, it has been determined 
that this action is not a ``significant regulatory action'' within the 
meaning of the Executive Order. Rather, it is an amendment to the 1997 
interim final regulations that makes no substantive changes to those 
regulations, and merely extends the regulatory sunset date to conform 
to the new statutory sunset date added by Public Law 108-197. Because 
it is not a major rule, we are not required to perform an assessment of 
the costs and savings.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined, and we certify, that 
this rule will not have a significant economic impact on a substantial 
number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined, and 
we certify, that this rule will not have a significant impact on the 
operations of a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This rule will have no consequential effect on 
the governments mentioned or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it publishes a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this final rule and have determined that 
it will not have a substantial effect on State or local governments.
    We have reviewed this rule and determined that, under the 
provisions of Public Law 104-121, the Contract with America Act, it is 
not a major rule.

List of Subjects in 45 CFR Part 146

    Health care, Health insurance, Reporting and recordkeeping 
requirements, State regulation of health insurance.


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For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 45 CFR part 146 as follows:

PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET

0
1. The authority citation for part 146 is revised to read as follows:

    Authority: Secs. 2701 through 2763, 2791, and 2792 of the PHS 
Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92), as 
added by HIPAA (Pub. L. 104-191), and amended by MHPA (Pub. L. 104-
204, as amended by Pub. L. 107-116, Pub. L. 107-313, and Pub. L. 
108-197), NMHPA (Pub. L. 104-204), and WHCRA (Pub. L. 105-277), sec. 
102(c) of HIPAA.


Sec.  146.136  [Amended]

0
2. In Sec.  146.136, the following amendments are made:
0
a. The last sentence of paragraph (f)(1) is amended by removing the 
date ``December 31, 2003'' and adding in its place the date ``December 
31, 2004.''
0
b. Paragraph (g)(2) is amended by removing the date ``December 31, 
2003'' and adding in its place the date ``December 31, 2004.''
0
c. Paragraph (i) is revised to read as follows:


Sec.  146.136  Parity in the application of certain limits to mental 
health benefits.

* * * * *
    (i) Sunset. This section does not apply to benefits for services 
furnished on or after December 31, 2004.

    Dated: April 2, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 20, 2004.
Tommy G. Thompson,
Secretary, Department of Health and Human Services.
[FR Doc. 04-16826 Filed 7-22-04; 8:45 am]
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