SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mental Health and Substance Abuse 
Parity Amendments of 1998''.

SEC. 2. REVISION IN LIMITS APPLIED TO MENTAL HEALTH BENEFITS.

    (a) Application to Group Health Plans and Group Health Insurance 
Under ERISA.--
            (1) Expansion to cover treatment limitations and financial 
        requirements generally.--Section 712 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1185a) is amended--
                    (A) in the heading, by striking ``certain'';
                    (B) by amending subsections (a) and (b) to read as 
                follows:
    ``(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 not impose treatment limitations or 
financial requirements on the coverage of mental health benefits if 
similar limitations or requirements are not imposed on coverage of 
medical and surgical benefits in comparable settings (including 
inpatient and outpatient settings).
    ``(b) Construction.--Nothing in this section shall be construed--
            ``(1) as prohibiting a group health plan (or health 
        insurance coverage offered in connection with such a plan) 
        from--
                    ``(A) negotiating separate reimbursement rates and 
                service delivery systems for different benefits; or
                    ``(B) managing the provision of benefits through 
                the use of pre-admission screening, prior authorization 
                of services, and other mechanisms designed to limit 
                coverage of items and services to those deemed to be 
                medically necessary;
            ``(2) as requiring a group health plan (or health insurance 
        coverage offered in connection with such a plan) to provide any 
        specific mental health benefits; or
            ``(3) as preventing a group health plan or health insurance 
        issuer applying subsection (a) without regard to benefits for 
        preventive care.''; and
                    (C) in subsection (e), by striking paragraphs (1) 
                and (2) and inserting the following:
            ``(1) Treatment limits.--The term `treatment limits' means 
        limits on the frequency of treatment, number of visits, or 
        other limits on the scope and duration of treatment, as covered 
        by a group health plan (or health insurance coverage offered in 
        connection with such a plan). Such term does not include limits 
        on benefits or coverage based solely on medical necessity.
            ``(2) Financial limits.--The term `financial requirements' 
        means copayments, deductibles, out-of-network charges, out-of-
        pocket contributions or fees, annual limits, and lifetime 
        aggregate limits imposed on covered individuals.''.
            (2) Elimination of cost exemption.--Such section is further 
        amended by striking paragraph (2) of subsection (c).
            (3) Elimination of sunset.--Such section is further amended 
        by striking subsection (f).
    (c) Application to Group Health Plans Under the Internal Revenue 
Code of 1986.--
            (1) Expansion to cover treatment limitations and financial 
        requirements generally.--Section 9812 of the Internal Revenue 
        Code of 1986 (relating to parity in the application of certain 
        limits to mental health benefits) is amended--
                    (A) in the heading, by striking ``certain'';
                    (B) by amending subsections (a) and (b) to read as 
                follows:
    ``(a) In General.--In the case of a group health plan that provides 
both medical and surgical benefits and mental health benefits, such 
plan shall not impose treatment limitations or financial requirements 
on the coverage of mental health benefits if similar limitations or 
requirements are not imposed on coverage of medical and surgical 
benefits in comparable settings (including inpatient and outpatient 
settings).
    ``(b) Construction.--Nothing in this section shall be construed--
            ``(1) as prohibiting a group health plan from--
                    ``(A) negotiating separate reimbursement rates and 
                service delivery systems for different benefits; or
                    ``(B) managing the provision of benefits through 
                the use of pre-admission screening, prior authorization 
                of services, and other mechanisms designed to limit 
                coverage of items and services to those deemed to be 
                medically necessary;
            ``(2) as requiring a group health plan to provide any 
        specific mental health benefits; or
            ``(3) as preventing a group health plan applying subsection 
        (a) without regard to benefits for preventive care.''; and
                    (C) in subsection (e), by striking paragraphs (1) 
                and (2) and inserting the following:
            ``(1) Treatment limits.--The term `treatment limits' means 
        limits on the frequency of treatment, number of visits, or 
        other limits on the scope and duration of treatment, as covered 
        by a group health plan. Such term does not include limits on 
        benefits or coverage based solely on medical necessity.
            ``(2) Financial limits.--The term `financial requirements' 
        means copayments, deductibles, out-of-network charges, out-of-
        pocket contributions or fees, annual limits, and lifetime 
        aggregate limits imposed on covered individuals.''.
            (2) Elimination of cost exemptions.--Such section is 
        further amended by striking paragraph (2) of subsection (c).
            (3) Elimination of sunset.--Such section is further amended 
        by striking subsection (f).
            (4) Clerical amendment.--The item relating to section 9812 
        in the table of sections of subchapter B of chapter 100 of the 
        Internal Revenue Code of 1986 is amended by striking 
        ``certain''.
    (d) Application to Individual Health Insurance.--Part B of title 
XXVII of the Public Health Service Act, as amended by section 605(a) of 
Public Law 104-204, is amended by inserting after section 2751 the 
following new section:

``SEC. 2752. PARITY IN THE APPLICATION OF LIMITS TO MENTAL HEALTH 
              BENEFITS.

    ``The provisions of section 2705 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as they apply to health insurance coverage offered 
by a health insurance issuer in connection with a group health plan.''.
    (e) Effective Dates.--
            (1) Group health plans.--
                    (A) In general.--Subject to subparagraph (B), the 
                amendments made by subsections (a), (b), and (c) shall 
                apply with respect to group health plans for plan years 
                beginning on or after July 1, 1999.
                    (B) In the case of a group health plan maintained 
                pursuant to 1 or more collective bargaining agreements 
                between employee representatives and 1 or more 
                employers ratified before the date of enactment of this 
                Act, the amendments made by subsections (a), (b), and 
                (c) shall not apply to plan years beginning before the 
                later of--
                            (i) the date on which the last 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
                            (ii) July 1, 1999.
                For purposes of clause (i), any plan amendment made 
                pursuant to a collective bargaining agreement relating 
                to the plan which amends the plan solely to conform to 
                any requirement added by subsection (a), (b), or (c) 
                shall not be treated as a termination of such 
                collective bargaining agreement.
            (2) Individual health insurance coverage.--The amendment 
        made by subsection (d) shall apply with respect to health 
        insurance coverage offered, sold, issued, renewed, in effect, 
        or operated in the individual market on or after July 1, 1999.
    (f) Coordination in Implementation.--Effective on the date of the 
enactment of this Act, section 104(1) of the Health Insurance 
Portability and Accountability Act of 1996 is amended by striking 
``this subtitle (and the amendments made by this subtitle and section 
401)'' and inserting ``the provisions of part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act of 1974, the 
provisions of parts A and C of title XXVII of the Public Health Service 
Act, and chapter 1000 of the Internal Revenue Code of 1986''.

SEC. 3. PARITY IN THE APPLICATION OF LIMITS TO SUBSTANCE ABUSE AND 
              CHEMICAL DEPENDENCY BENEFITS.

    (a) Application to Group Health Plans Under ERISA.--
            (1) In general.--Part 7 of subtitle B of title II of the 
        Employee Retirement Income Security Act of 1974 is amended by 
        inserting after section 712 the following new section:

``SEC. 713. PARITY IN THE APPLICATION OF LIMITS TO SUBSTANCE ABUSE AND 
              CHEMICAL DEPENDENCY BENEFITS.

    ``The provisions of section 712 shall apply to benefits with 
respect to treatment of substance abuse or chemical dependency in the 
same manner as they apply to mental health benefits.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by inserting after the item relating to 
        section 712 the following new item:

``Sec. 713. Parity in the application of limits to substance abuse and 
                            chemical dependency benefits.''.
    (b) Application to Group Health Plans and Health Insurance Issuers 
Under the Public Health Service Act.--Title XXVII of the Public Health 
Service Act is amended by inserting after section 2705 the following 
new section:

``SEC. 2706. PARITY IN THE APPLICATION OF LIMITS TO SUBSTANCE ABUSE AND 
              CHEMICAL DEPENDENCY BENEFITS.

    ``The provisions of section 2705 shall apply to benefits with 
respect to treatment of substance abuse or chemical dependency in the 
same manner as they apply to mental health benefits.''.
    (c) Application to Group Health Plans Under the Internal Revenue 
Code of 1986.--
            (1) In general.--Subchapter B of chapter 100 of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new section:

``SEC. 9813. PARITY IN THE APPLICATION OF LIMITS TO SUBSTANCE ABUSE AND 
              CHEMICAL DEPENDENCY BENEFITS.

    ``The provisions of section 9812 shall apply to benefits with 
respect to treatment of substance abuse or chemical dependency in the 
same manner as they apply to mental health benefits.''.
            (2) Clerical amendment.--The table of sections for such 
        subchapter is amended by adding at the end the following new 
        item:

                              ``Sec. 9813. Parity in the application of 
                                        limits to substance abuse and 
                                        chemical dependency 
                                        benefits.''.
    (d) Application to Individual Health Insurance Coverage Under the 
Public Health Service Act.--Part B of title XXVII of the Public Health 
Service Act, as amended by section 2(d), is amended by inserting after 
section 2751 the following new section:

``SEC. 2753. PARITY IN THE APPLICATION OF LIMITS TO MENTAL HEALTH 
              BENEFITS.

    ``The provisions of section 2752 shall apply to benefits with 
respect to treatment of substance abuse or chemical dependency in the 
same manner as they apply to mental health benefits.''.
    (e) Effective Dates.--
            (1) Group health plans.--
                    (A) In general.--Subject to subparagraph (B), the 
                amendments made by subsections (a), (b), and (c) shall 
                apply with respect to group health plans for plan years 
                beginning on or after July 1, 1999.
                    (B) In the case of a group health plan maintained 
                pursuant to 1 or more collective bargaining agreements 
                between employee representatives and 1 or more 
                employers ratified before the date of enactment of this 
                Act, the amendments made by subsections (a), (b), and 
                (c) shall not apply to plan years beginning before the 
                later of--
                            (i) the date on which the last 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
                            (ii) July 1, 1999.
                For purposes of clause (i), any plan amendment made 
                pursuant to a collective bargaining agreement relating 
                to the plan which amends the plan solely to conform to 
                any requirement added by subsection (a), (b), or (c) 
                shall not be treated as a termination of such 
                collective bargaining agreement.
            (2) Individual health insurance coverage.--The amendment 
        made by subsection (d) shall apply with respect to health 
        insurance coverage offered, sold, issued, renewed, in effect, 
        or operated in the individual market on or after July 1, 1999.
Mental Health and Substance Abuse Parity Amendments of 1998 - Amends the Employee Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code, and the Public Health Service Act to prohibit group and individual health plans from imposing treatment limitations or financial requirements on the coverage of mental health benefits, or substance abuse and chemical dependency benefits, if similar limitations or requirements are not imposed on medical and surgical benefits. 
Amends the Health Insurance Portability and Accountability Act of 1986 to provide for coordination in implementation of such amendments.
Mental Health and Substance Abuse Parity Amendments of 1998