Docket: CMS-2009-0040 

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 

Comment On: CMS-2009-0040-0048 

Interim Final Rules under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 

Equity Act of 2008 

Document: CMS-2009-0040-DRAFT-0104 

WI 

Submitter Information 

Name: Debra Kraft 

Address: 

Milwaukee, WI, 53203 

Organization: Community Advocates Public Policy Institute 

General Comment 

Please see the attached letter dated May 3, 2010 from Debra J. Kraft, Deputy Director and Counsel 

for Community Advocates Public Policy Institute, Milwaukee, Wisconsin, to Adam Shaw, Centers 

for Medicare and Medicaid Services, Department of Health and Human Services, in which Ms. Kraft 

makes the following requests and recommendations: 

1. CMS should provide a specific formal response to the question of the applicability of the 

MHPAEA to Medicaid managed care organizations (MCOs) providing services under Medicaid 

waiver programs. 

2. The Final Rules should explicitly state that Medicaid MCOs, including waiver programs, are 

subject to the provisions of the MHPAEA. 

4. CMS should provide clear direction, including a contact person, regarding the process and 

timetable that Medicaid will follow in promulgating regulations that implement the MHPAEA by 

Medicaid MCOs. 

5. The Final Rules should adopt a standard of care that include treatment by non-physician providers 

and treatment programs. 

Attachments 

PUBLIC SUBMISSION 

As of: May 04, 2010 

Received: May 03, 2010 

Status: Draft 

Category: Other - OT001 

Tracking No. 80ae5ddb 

Comments Due: May 03, 2010

Submission Type: Web

CMS-2009-0040-DRAFT-0104.1: WI

Page 1 of 1

file://C:\Documents and Settings\baum.beth.EBSADOL\Local Settings\Temp\Temporary Di... 5/5/2010
 

May 03, 2010 Direct Dial: 414.270.2944 

 Email: dkraft@communityadvocates.net

Mr. Adam Shaw 

Centers for Medicare & Medicaid Services 

Department of Health and Human Services 

7500 Security Boulevard 

Baltimore, MD 21244-1850 

RE: Comment to Interim Final Rules Under the Paul Wellstone and Pete Domenici Mental 

Health Parity and Addiction Equity Act of 2008; Final Rule 

Dear Mr. Shaw: 

As you know from our previous discussions, Community Advocates Public Policy Institute had 

requested a formal response from the Centers for Medicare and Medicaid Services (CMS) to the 

question of whether the provisions of the Paul Wellstone and Pete Domenici Mental Health 

Parity and Addiction Equity Act of 2008 (Division C, Title V, Subtitle B, Secs. 511-512 of the 

Emergency Economic Stabilization Act, H.R. 1424, P.L. 110-343) (the MHPAEA) apply to 

Medicaid managed care organizations, including those entities that provide services under 

Medicaid managed care waiver programs such as the State of Wisconsin BadgerCare Plus Core 

Plan.1

 

We have become aware for a multiple of reasons that it is the position of CMS that the 

MHPAEA does apply to Medicaid managed care organizations. First, Clarke Cagey, Acting 

Director for the Center for Medicaid and State Operations, Family and Children’s Health 

Programs Group wrote in his November 24, 2009, response to our initial inquiry that: 

 

“MHPAEA applies to group health plans as cited in the Public Health Services Act (cited as 42 

U.S.C.S. Section 300gg-5 ‘Parity in application of certain limits to mental health benefits’ in 

Medicaid this application would apply to managed care entities. The answer to your inquiry 

about the MHPAEA provisions being applicable to Medicaid managed care organizations is yes, 

under Medicaid, this application would apply to managed care entities.” 2

 

                                                           

1

 Letter from David R. Riemer to Charlene Frizzera, Acting Administrator, Centers for Medicare and Medicaid 

Services dated April 24, 2009, attached hereto as Exhibit 1.

2 Letter from Clarke Cagey, Acting Director, Center for Medicaid and State Operations, Family and Children’s 

Health Programs Group, to David R. Riemer, dated November 24, 2009, attached hereto as Exhibit 2.

www.ca-ppi.org 

P 414.270.2970 F 414.270.2971 

744 N. 4th St. #200 Milwaukee, WI 53203 
 

Mr. Adam Shaw 

Centers for Medicare and Medicaid Services 

May 3, 2010 

Page 2 

However, Mr. Cagey did not specifically address the question of applicability of the MHPAEA 

to the Medicaid managed care organizations that are providing benefits in accordance with 

waiver programs. We are left to speculate if the lack of this direct reference may have resulted 

because CMS does not view a distinction between the programs. In order to eliminate any 

confusion over this issue, we request that CMS provide a specific formal response to our 

waiver program inquiry. 

Second, the CMS website for the Mental Health Parity and Addiction Equity Act now states that 

the “Medicaid Managed Care plans, however, are subject to the MHPAEA statute”.3

 Finally, you 

have verbally affirmed this position both to me personally and in an early February conference 

call regarding the Interim Final Rules for the MHPAEA. Despite these acknowledgements of this 

critical conclusion, the applicability of the MHPAEA to Medicaid managed care organizations 

has still not been formally recognized in the Interim Final Rules. 

If you recall, David R. Riemer, Director for the Public Policy Institute, made the following 

request in his May 19, 2009, public comment addressed to you for the Request for Information 

Regarding the MHPAEA: 

“In order to eliminate and avoid any doubt or confusion regarding this issue, the regulations to be 

developed should clearly state that Medicaid managed care organizations are subject to 

compliance with the parity provisions of Subpart 2 of Part A of Section 2705 of the Public 

Health Service Act as amended by the ... MHPAEA.”4

We are writing to again ask that the Final Rules under the MHPAEA explicitly state, with 

direct references to the applicable federal citations, that Medicaid managed care 

organizations, including waiver programs such as the BadgerCare Plus Core Plan, are 

subject to the provisions of the MHPAEA.

5

 

We have been informed that the Interim Final Rules do not apply to Medicaid managed care 

organizations. If it is CMS’s conclusion that our requested clarification of applicability as noted 

herein is more appropriately included in formal regulations to be issued by Medicaid, then we 

would ask that such specific statement be included in the Medicaid final rules. Unfortunately, 

Medicaid has not provided any information regarding whether or how Medicaid managed care 

organizations will implement the MHPAEA. Accordingly, we request that CMS provide 

clear direction, including a contact person, regarding the process and 

                                                           

3

 See: http://www.cms.hhs.gov/HealthInsReformfor Consume/04_TheMentalHealthParityAct.asp 4 Letter from David R. Riemer to Adam Shaw, Centers for Medicare and Medicaid Services, dated May 19, 2009, 

attached hereto as Exhibit 3.

5 Section 1932(b)8 of Title XIX of the Social Security Act (42 U.S.C.S. Section 1396u-2(b)(8) applies the full parity 

provisions of the Public Health Service Act (PHSA) (Title XXVII, Part A, Subpart 2, Section 2705 of the PHSA, 

cited as 42 U.S.C.S. Sec. 300gg-4 et seq., and specifically Sec. 300gg-5 (Parity in the application of certain limits to 

mental health benefits) ) – including the expanded parity amendments to the PHSA added by the MHPAEA – to 

Medicaid managed care organizations. 
 

Mr. Adam Shaw 

Centers for Medicare and Medicaid Services 

May 3, 2010 

Page 3 

timetable that Medicaid will follow in promulgating regulations for the implementation of 

the MHPAEA by Medicaid managed care organizations. 

Last Friday, April 30, Wisconsin Governor Jim Doyle signed the Wisconsin Parity Act into law 

(Senate Substitute Amendment 1 to SB362).6

 This historic legislation, which will become 

effective at the end of this year, requires that commercial group health plans for large and small 

employers, as well as for self-insured non-federal governmental entities, provide mental health 

and substance use disorder insurance benefit coverage at parity levels with physical condition 

coverage. The law also provides for individual plans that choose to offer mental health or 

substance use disorder insurance benefit coverage to do so at parity levels. In many respects, the 

Wisconsin Parity Act closely parallels the provisions of the MHPAEA. In one key area, that of 

standard of care, this legislation went even farther than the federal law. The Wisconsin 

Legislature and Governor Doyle expanded the scope of the standard of care for which parity 

coverage will be provided to include referrals to non-physician providers and treatment programs 

for the treatment of mental health conditions and substance use disorders. 

The scope of treatment for accident victims, asthma patients, diabetes patients or cancer patients 

not only includes treatment by their physicians but also incorporates treatment by non-physician 

providers such as physical therapists or rehabilitation therapists and from programs. These 

services are considered covered benefits under the patient’s health insurance plan. We believe 

that mental health and substance use disorder parity must also mean that the patient has to be 

able to obtain – and the group health insurance plans have to pay for – treatment from treatment 

programs and non-physician providers, including but not limited to social workers, clinical 

psychologists, therapists, peer specialists and professional counselors, among others, with or 

without physician referral. We therefore recommend that the Final Rules adopt this 

standard to include treatment by non-physician providers and treatment programs.

We appreciate the opportunity to comment on this most important rule-making process. 

Very truly yours, 

Debra J. Kraft 

Deputy Director and Counsel 

DJK/ser 

Attachment 

                                                           

6 See: www.parityforwisconsin.org for a full text of the Wisconsin Parity Act.
Exhibit 1 

Letter from David R. Riemer, 

Community Advocates Public Policy Institute, 

to Charlene Frizzera, 

Centers for Medicare & Medicaid Services, 

Dated April 24, 2009 
April 24, 2009 Direct Dial: 414.475.6253, ext. 301 

 Email: DRiemerMil@yahoo.com 

Ms. Charlene Frizzera 

Acting Administrator 

Centers for Medicare and Medicaid Services 

7500 Security Boulevard 

Baltimore, MD 21244 

Re: Request for Confirmation of the Applicability of the Wellstone-Domenici Mental 

Health Parity and Addiction Equity Act of 2008 to Medicaid Managed Care Organizations 

 

Dear Ms. Frizzera: 

My name is David Riemer and I am Director of Policy and Planning at the Public Policy 

Institute of Community Advocates, an organization in Milwaukee that provides basicneeds advocacy and services to low-income and at-risk individuals. The Institute works

to create and implement sound public policy that will dramatically reduce poverty and its

effects in Milwaukee and Wisconsin. Chief among these effects are negative health 

outcomes --including lower life expectancy, higher rates of chronic illness, and untreated 

mental illness and addiction - and the imposition of barriers to accessing medical care. 

Of fundamental importance to the Institute, then, is the formation of a rational health care 

delivery system that improves access and benefit coverage for the poor and near-poor 

through Medicaid managed care programs. We believe such coverage must include parity 

for mental health and addiction services. 

As you are aware, the State of Wisconsin offers health care services to eligible 

individuals through the ForwardHealth Medicaid program called BadgerCare Plus. 

BadgerCare Plus offers three benefit plans --- Standard, Benchmark and Core. The 

Standard Plan covers children and their parents or caretakers at income levels up to 200% 

of the Federal Poverty Level (FPL), young adults who are leaving foster care when they 

turn 18 regardless of income, parents with incomes up to 200% of the FPL who have 

children in foster care, and certain farm families and self-employed families (the 

“Standard Plan”). The Benchmark Plan offers coverage for children 

Community Advocates Public Policy Institute • 1430 Underwood Ave. • Wauwatosa, WI 53213 • (414) 475-6253 • www.ca-ppi.org 
Ms. Charlene Frizzera 

Acting Administrator 

Centers for Medicare and Medicaid Services 

Page 2 

April 24, 2009 

under 19 whose family’s income exceeds 200% of the FPL, pregnant women with 

income greater than 200% but less than 300% of the FPL, and self-employed parents and 

caretaker relatives of children under age 19 whose income is greater than 200% of the 

FPL (the “Benchmark Plan”). Finally, the Core Plan provides health care for adults from 

ages 19-64 who do not have children, or do not have dependent children under 19 living 

with them, and who have incomes up to 200% of the FPL (the “Core Plan”). Most 

BadgerCare Plus enrollees in all three plans (Standard, Benchmark and Core) receive 

health insurance coverage through Medicaid managed care organizations. In late 

December of last year, CMS granted waiver authority to Wisconsin with respect to the 

Core Plan for a section 1115 Medicaid demonstration project. A copy of the CMS waiver 

is attached as Attachment A. 

As you know, on October 3, 2008, President George W. Bush signed into law H.R. 1424, 

the Emergency Economic Stabilization Act, P.L. 110-343, that included the Paul 

Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 

(Division C, Title V, Subtitle B, Secs. 511-512 of H.R. 1424 of the Emergency Economic 

Stabilization Act, P.L. 110-343) (the “Wellstone-Domenici Act”). A copy of the entire 

Wellstone Domenici Act is attached as Attachment B. Senator Herb Kohl’s staff has 

advised us that the Congressional Research Service (CRS) believes that the parity 

provisions of the Wellstone-Domenici Act apply to Medicaid managed care 

organizations. 

We have been told that the statutory authority for CRS’s conclusion is Sec. 1932(b) 8 of 

title XIX of the Social Security Act (cited as 42 U.S.C.S. Sec. 1396u-2(b)(8)). CRS 

indicates that this law requires Medicaid managed care organizations to comply with 

subpart 2 of part A of title XXVII of the Public Health Service Act (cited as 42 U.S.C.S. 

Sec. 300gg-4 et seq., specifically 300gg-5 “Parity in the application of certain limits to 

mental health benefits”), including the application by no later than January 1, 2010, of the 

Wellstone-Domenici Act’s expanded mental health and addiction treatment parity 

requirements. The text of the federal statutes cited above, i.e., 42 U.S.C.S. Sec. 300gg-5 

(both before and after its amendment by the Wellstone-Domenici Act) and 42 U.S.C.S. 

Sec. 1396u-2(b)(8), are included as Attachment C. 

At the suggestion of Senator Kohl’s office, we are writing to request your written 

confirmation of CRS’s conclusion, which we share. In particular, we would appreciate 

your written response to the following two questions: 

1. Do the provisions of the Wellstone-Domenici Act apply to Medicaid managed care 

organizations? If so, upon what basis, including a statutory analysis that references

U.S.C.S. citations? 
Ms. Charlene Frizzera 

Acting Administrator 

Centers for Medicare and Medicaid Services 

Page 3 

April 24, 2009 

2. If the answer to Question 1 is yes, is there any reason why this requirement would not 

apply to Medicaid managed care waiver programs, in particular the Wisconsin 

BadgerCarePlus Core Plan? Again, if yes, upon what basis, including a statutory analysis 

that references U.S.C.S. citations. 

Your timely response to these questions is critical to providing improved mental health 

and addiction treatment coverage on a parity basis to the Medicaid population in 

Wisconsin. If we can provide you with any additional information, please let me know. 

We greatly appreciate your assistance. Thank you. 

Very truly yours, 

David R. Riemer 

Director of Policy and Planning 

DRR: djk 

cc: Senator Herb Kohl 

 
ATTACHMENT A 

CENTERS FOR MEDICARE & MEDICAID SERVICES WAIVER AUTHORITY 

FOR 

WISCONSIN BADGERCARE PLUS 

HEALTH INSURANCE FOR CHILDLESS ADULTS 

SECTION 1115 DEMONSTRATION 
Mr. Jasor~ :j. Hclgcr sou 

.4dn1inistrntor 

Division of I lc~~ltli C'a1.c Financing 

r)epnrtnient of Ileal th atld Fa~t~i lq Sct viccs 

1 Urest Wilson Street 

P.0. BUL 309 

Madisi311. W1 53701 -0300 

Drar Mr. I Islgerson: 

Centers inr Medicare & Medra:d Servir~s 

Wu arc pleased to inlir~i~ tliat Wisconsin's sectioil 1 1 15 Mcclicatcl Jc~~~ot~\(ra~ioll prc!ject. entitlcd 

BaJgerC'art. I'lus IIealth It~surnnce for ('hi ldlcss Ad111 ts (P1+qicut No. 1 I -U'-00342iS) has bcc~ 

appl+oi ed f'or a 5-4 crlr period, Jall~ua1-y 1 . 2009. tl~l-i~ugh ncce~i~her 3 1 , .?( r 1 3, i 11 r~c.c.nrdnncc cvi th 

scction 1 1 1 5(a) of 11~ Social Sccurily .Act ( thc: Act). 

Our apprwal of tl~c Radgcl-(:are P~IIS flcalth I,\st~rnncc for C't~ilcllcss Adulls section I 1 15(a) 

deinon~Lr;~tic~n prtliect is limited to the ckxli.nt nf 111e wai !.err; and cxpcnclitu~~c ault~or'ilics in the 

accvlnpa~tyi~lg l is[. and is condi tio11t.d upon coinpli;lucs wit11 t IIC ciicl~se~l Special Tc1-1n5 ~uld 

Co~iciitions (S7C:s). Thc STCs sct fbrth in dctail the niilur-c*. chi~racter: and the cxlenl of Fedel-al 

invol~emenl in ifle dt.milnst r:~tiori. The S1'C's arc ctfccri~,~ .Iiinil:~i-> I. 3009, l~nless otl~cwise 

speci lied. All thc rt.quircn~cn(:; (1 t' thc 4,ledicaid program cxpl.cssc.cI ir~ law. rcg~lI;~tic)n. and policy 

statcr~lc~ii. r~ol expressly \wi\-cd or i~1t.11tifit.d ;IS not applicable in thc c~~closc.cl c~pencliluri: 

:u~thnr,i ty lisl. shall apply lo t11c dtmo~~stratior~. 

L\'rittell uotitication to o~ic offlcc of your acccpt;rllct. 01' this ;I\\ al-d IIIUS~ be l~ccuii~cd within 30 

cla) s al'ler yuur rcccipt o1'1 his lutter. Ynw pn)i~.c.t 1diic.cr. 1s Ms. U'~inda Pig;iLt-Ca~~l!.. She is 

avai lab1c to ~s\~cI. any cl ucslic~ns concerning illis Jcmnmtrat iov 171 u jcc t. hl5. I'igntl-( ';in t! ' r cont;ic~ 

info~m~ntion is r-15 follo~\ $: 

Ucn tcrs li>r Mvledil:;irc & hledicaid Scr~,ices 

C'crltcr. fir Mcdicai~l iu~d Sl,~lt. Opcrr~tions 

7500 Sr'zul-i ty Hnulevaril 

h4aiIr;lop 52-01 -I b 

Hnlli!tltir-c, Lf2?ln :! 1244-1 830 

I~lcpho~~c: (4 10) 78h-(i 1 77 

I-;icsimilc: (41 0) 786-53R1 

G-121ail: \I :~tlii..~.pi~i~ t i -L-~~~.~~~{~;~~~l~.lil~~.g~~\~ 

Ollizial con~munications I.C~~II.L~ iry program rnattcrs >houId bc sc.11 t si~nuIt;inco~~siy lo hls. I'igaltC'LII~~~ and to Ms. Verlon S~IIIISOIT, ASSPCI~I~C Kcyit 11 s11 lldr~~ir~isll-alor in our I'llicnp) I<~gio~iaI 0 flict' 
Page 2 - Mr. Jason A. Helgcrsor~ 

Ms. Johnson's contact information is as follows: 

Centers lor Medjcarc & Mcdicaid Senices 

233 N. Michigan Avenue, Suite 600 

Chicago, 11, 6060 1 -55 19 

If you have questions regarding this correspondel-lce, please contact Ms. Dianne 1-leffion, Acting 

Director, Family and Cl~ildren's Health Programs Group, Center for Medicaid and Stale Operations, at 

(4 I 0) 786-5647. 

We look fo~~v~~l to co~lti~llliilg to work with YOU and your staff 

Acting Administrator 
l'agc 3 - hlr. lason A. Helgerson 

cc: James Jones - Wisconsin, Departn~ent of Health mll Family Scniccs 

Verlon Johnson - CMS : Region V 

C'liwles Friedlich-CMS, Region V 
CENTERS FOR MEDICARE & MEDICAID SERVICES 

WAIVER AUTHORITY 

NUMBER: 11-W-00242/5

 

TITLE: Wisconsin BadgerCare Plus Health Insurance for Childless Adults 

Section 1115 Demonstration 

 

AWARDEE: Wisconsin Department of Health Services 

All requirements of the Medicaid program expressed in law, regulation, and policy 

statement, not expressly waived in this list, shall apply to the Demonstration project 

beginning January 1, 2009, through December 31, 2013. 

The following waiver shall enable Wisconsin to operate its Childless Adults Section 1115 

Demonstration. 

1. Disproportionate Share Hospital (DSH) Payments Section 1902(a)(13)(A), 

 insofar as it incorporates 

 1923(c) 

To the extent necessary to allow Wisconsin reduce the amount of payments to 

disproportionate share hospitals beneath the levels specified in the approved State plan, to 

the extent necessary to fund expenditures under this demonstration. 

Demonstration Approval Period: January 1,2009 through December 31,2013 
CENTERS FOR MEDICARE & MEDICAID SERVICES 

EXPENDITURE AUTHORITY 

NUMBER: 11-W-00242/5 

 

TITLE: Wisconsin BadgerCare Plus Health Insurance for Childless Adults Section 

1115 Demonstration 

 

AWARDEE: Wisconsin Department of Health Services

Under the authority of section 1115(a)(2) of the Social Security Act (the Act), expenditures made 

by the State for the items identified below, which are not otherwise included as expenditures 

under section 1903 of the Act, incurred during the period of this Demonstration, shall be 

regarded as expenditures under the State’s title XIX plan. 

The following expenditure authority shall enable the State to operate its section 1115 Medicaid 

Childless Adults Demonstration. 

1. Childless Adult Demonstration Population. Expenditures for health care-related costs for 

childless, non-pregnant, adults ages 19 through 64 years who have family incomes that do 

not exceed 200 percent of the Federal poverty level (FPL), who are not otherwise eligible 

under the Medicaid State plan, and who do not have other health insurance coverage. 

All requirements of the Medicaid program expressed in law, regulation, and policy statement, not 

expressly identified as not applicable in the list below, shall apply to the Demonstration 

Population beginning January 1, 2009, through December 31, 2013. 

Title XIX Requirements Not Applicable to the Demonstration Population:

1. Reasonable Promptness Section 1902(a)(3) and 1902(a)(8) 

To the extent necessary to enable the State to cap enrollment for the Demonstration-Eligible 

Population, and to delay provision of medical assistance until 15 days after the date when the 

individual is determined eligible for coverage, or the date of enrollment into the Health 

Maintenance Organization (HMO), whichever is sooner. 

2. Application Procedures Section 1902(a)(4) as implemented 

 by 42 CFR Part 435, Subpart J 

To the extent necessary to permit the State to limit the application methods to online and 

telephonic methods, using electronic or audio signatures to comply with applicable signature 

requirements. 

3. Amount, Duration, and Scope Section 1902(a)(10)(B) 

To the extent necessary to enable the State to offer a different benefit package to the 

Demonstration-Eligible Population that varies in amount, duration, and scope from the 

benefits offered under the State Plan. 

Demonstration Approval Period: January 1, 2009 through December 31, 2013 

 

1
4. Freedom of Choice Section 1902(a)(23) 

To the extent necessary to enable the State to restrict freedom-of-choice of provider for the 

Demonstration-Eligible Population. 

5. Retroactive Eligibility Section 1902(a)(34)

To the extent necessary to enable the State to not provide coverage for the DemonstrationEligible Population for any time prior to the date of enrollment into an HMO, or within 15 

days after the date in which the individual is determined eligible for coverage, whichever is 

sooner. 

6. Eligibility Standards Section 1902(a)(17) 

To the extent necessary to enable the State to apply different eligibility methodologies and 

standards to the Demonstration-Eligible Population than are applied under the State plan. 

7. Cost Sharing Section 1902(a)(14) 

To the extent necessary to enable the State to impose an annual non-refundable application 

fee and cost sharing that are above the limits that would apply under the State plan. 

8. Methods of Administration: Transportation Section 1902(a)(4), insofar as it 

 incorporates 42 CFR 431.53 

To the extent necessary to enable the State to not assure transportation to and from providers 

for the Demonstration-Eligible Population. 

9. Early and Periodic Screening, Diagnostic, Section 1902(a)(43) 

and Treatment Services 

To the extent necessary to enable the State to not provide coverage of early and periodic 

screening, diagnostic and treatment services to 19- and 20-year-old individuals in the 

Demonstration-Eligible Population. 

10. Income and Eligibility Verification Section 1902(a)(46) 

To the extent necessary to enable the State to forgo use of the Internal Revenue Services data 

exchange for income verification for the Demonstration-Eligible Population. 

Demonstration Approval Period: January 1, 2009 through December 31, 2013 

 

2




























ATTACHMENT B 

PAUL WELLSTONE AND PETE DOMENICI MENTAL HEALTH PARITY AND 

ADDICTION EQUITY ACT OF 2008 (DIVISION C, TITLE V, SUBTITLE B, SECS. 

511-512 OF H.R. 1424 OF THE EMERGENCY ECONOMIC STABILIZATION ACT, 

P.L. 110-343) 

Certified by Superintendent of Documents, U.S. Government Printing Office, Certificate 

Issued by GeoTrust CA for Adobe 

PUBLIC LAW 110–343—OCT. 3, 2008 122 STAT. 3765 

Public Law 110–343 

110th Congress 

An Act 

To provide authority for the Federal Government to purchase and insure certain 

types of troubled assets for the purposes of providing stability to and preventing 

disruption in the economy and financial system and protecting taxpayers, to 

amend the Internal Revenue Code of 1986 to provide incentives for energy production 

and conservation, to extend certain expiring provisions, to provide individual 

income tax relief, and for other purposes. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

.... 

DIVISION C—TAX EXTENDERS AND 

ALTERNATIVE MINIMUM TAX RELIEF 

SEC. 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 

CONTENTS. 

(a) SHORT TITLE.—This division may be cited as the ‘‘Tax 

Extenders and Alternative Minimum Tax Relief Act of 2008’’. 

(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 

provided, whenever in this division an amendment or repeal is 

expressed in terms of an amendment to, or repeal of, a section 

or other provision, the reference shall be considered to be made 

to a section or other provision of the Internal Revenue Code of 

1986. 

(c) TABLE OF CONTENTS.—The table of contents of this division 

is as follows: 

Sec. 1. Short title; amendment of 1986 Code; table of contents. 

...... 

TITLE V – ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS 

... 
2

Subtitle B—Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 

Equity Act of 2008 

Sec. 511. Short title. 

Sec. 512. Mental health parity. 

Subtitle B—Paul Wellstone and Pete 

Domenici Mental Health Parity and Addiction 

Equity Act of 2008 

SEC. 511. SHORT TITLE. 

This subtitle may be cited as the ‘‘Paul Wellstone and Pete 

Domenici Mental Health Parity and Addiction Equity Act of 2008’’. 

SEC. 512. MENTAL HEALTH PARITY. 

(a) AMENDMENTS TO ERISA.—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: 

‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.— 

‘‘(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 or substance use disorder benefits, 

such plan or coverage shall ensure that— 

‘‘(i) the financial requirements applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant financial 

requirements applied to substantially all medical and 

surgical benefits covered by the plan (or coverage), 

and there are no separate cost sharing requirements 

that are applicable only with respect to mental health 

or substance use disorder benefits; and 

‘‘(ii) the treatment limitations applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant treatment 

limitations applied to substantially all medical and 

surgical benefits covered by the plan (or coverage) and 

there are no separate treatment limitations that are 

applicable only with respect to mental health or substance 

use disorder benefits. 

‘‘(B) DEFINITIONS.—In this paragraph: 

‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial 

requirement’ includes deductibles, copayments, 

coinsurance, and out-of-pocket expenses, but excludes 

an aggregate lifetime limit and an annual limit subject 

to paragraphs (1) and (2), 
3

‘‘(ii) PREDOMINANT.—A financial requirement or 

treatment limit is considered to be predominant if it 

is the most common or frequent of such type of limit 

or requirement. 

‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment 

limitation’ includes limits on the frequency of 

treatment, number of visits, days of coverage, or other 

similar limits on the scope or duration of treatment. 

‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for 

medical necessity determinations made under the plan with 

respect to mental health or substance use disorder benefits 

(or the health insurance coverage offered in connection with 

the plan with respect to such benefits) shall be made available2005 14:38 Nov 10, 2008 

by the plan administrator (or the health insurance issuer 

offering such coverage) in accordance with regulations 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 or substance use disorder benefits 

in the case of any participant or beneficiary shall, on request 

or as otherwise required, be made available by the plan 

administrator (or the health insurance issuer offering such 

coverage) to the participant or beneficiary in accordance with 

regulations. 

‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan 

or coverage that provides both medical and surgical benefits 

and mental health or substance use disorder benefits, if the 

plan or coverage provides coverage for medical or surgical benefits 

provided by out-of-network providers, the plan or coverage 

shall provide coverage for mental health or substance use disorder 

benefits provided by out-of-network providers in a manner 

that is consistent with the requirements of this section.’’; 

(2) in subsection (b), by amending paragraph (2) to read 

as follows: 

‘‘(2) in the case of a group health plan (or health insurance 

coverage offered in connection with such a plan) that provides 

mental health or substance use disorder benefits, as affecting 

the terms and conditions of the plan or coverage relating to 

such benefits under the plan or coverage, except as provided 

in subsection (a).’’; 

(3) in subsection (c)— 

(A) in paragraph (1)(B)— 

(i) 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 

that such appears; and 
4

(ii) by striking ‘‘and who employs at least 2 

employees on the first day of the plan year’’; and 

(B) by striking paragraph (2) and inserting the following: 

‘‘(2) 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 use 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. An 

employer may elect to continue to apply mental health 

and substance use disorder parity pursuant to this section 

with respect to the group health plan (or coverage) involved 

regardless of any increase in total costs. 

 ‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan 

(or coverage), the applicable percentage described in this 

subparagraph shall be— 

‘‘(i) 2 percent in the case of the first plan year 

in which this section is applied; 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 section shall be made and certified 

by a qualified and licensed actuary who is a member in 

good standing of the American Academy of Actuaries. All 

such determinations shall be in a written report prepared 

by the actuary. The report, and all underlying documentation 

relied upon by the actuary, shall be maintained by 

the group health plan or health insurance issuer for a 

period of 6 years following the notification made under 

subparagraph (E). 

‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan 

(or a health insurance issuer offering coverage in connection 

with a group health 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.— 
5

‘‘(i) IN GENERAL.—A group health plan (or a health 

insurance issuer offering coverage in connection with 

a group health plan) that, based upon a certification 

described under subparagraph (C), qualifies for an 

exemption under this paragraph, and elects to implement 

the exemption, shall promptly notify the Secretary, 

the appropriate State agencies, and participants 

and beneficiaries in the plan of such election. 

‘‘(ii) REQUIREMENT.—A notification to the Secretary 

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 use 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 use disorder benefits 

under the plan. 

‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary 

under clause (i) shall be confidential. The Secretary 

shall make available, upon request 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 

type of employers submitting such notification; and 

‘‘(II) a summary of the data received under 

clause (ii). 

‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine 

compliance with this paragraph, the Secretary may audit 

the books and records of a group health plan or health 

insurance issuer relating to an exemption, including any 

actuarial reports prepared pursuant to subparagraph (C), 

during the 6 year period following the notification of such 

exemption under subparagraph (E). A State agency 

receiving a notification under subparagraph (E) may also 

conduct such an audit with respect to an exemption covered 

by such notification.’’; 

(4) in subsection (e), by striking paragraph (4) and inserting 
6

the following: 

‘‘(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 and 

in accordance with applicable Federal and State law. 

‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance 

use disorder benefits’ means benefits with respect to 

services for substance use disorders, as defined under the terms 

of the plan and in accordance with applicable Federal and 

State law.’’; 

(5) by striking subsection (f); 

(6) by inserting after subsection (e) the following: 

‘‘(f) SECRETARY REPORT.—The Secretary shall, by January 1, 

2012, and every two years thereafter, submit to the appropriate 

committees of Congress a report on compliance of group health 

plans (and health insurance coverage offered in connection with 

such plans) with the requirements of this section. Such report 

shall include the results of any surveys or audits on compliance 

of group health plans (and health insurance coverage offered in 

connection with such plans) with such requirements and an analysis 

of the reasons for any failures to comply. 

‘‘(g) NOTICE AND ASSISTANCE.—The Secretary, in cooperation 

with the Secretaries of Health and Human Services and Treasury, 

as appropriate, shall publish and widely disseminate guidance and 

information for group health plans, participants and beneficiaries, 

applicable State and local regulatory bodies, and the National 

Association of Insurance Commissioners concerning the requirements 

of this section and shall provide assistance concerning such 

requirements and the continued operation of applicable State law. 

Such guidance and information shall inform participants and beneficiaries 

of how they may obtain assistance under this section, 

including, where appropriate, assistance from State consumer and 

insurance agencies.’’; 

(7) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health and substance use disorder benefits’’ each place 

it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 

(a)(2)(C); and 

(8) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health or substance use disorder benefits’’ each place 

it appears (other than in any provision amended by the previous 

paragraph). 

(b) AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.—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: 

‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.— 
7

‘‘(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 or substance use disorder benefits, 

such plan or coverage shall ensure that— 

‘‘(i) the financial requirements applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant financial 

requirements applied to substantially all medical and 

surgical benefits covered by the plan (or coverage), 

and there are no separate cost sharing requirements 

that are applicable only with respect to mental health 

or substance use disorder benefits; and 

‘‘(ii) the treatment limitations applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant treatment 

limitations applied to substantially all medical and 

surgical benefits covered by the plan (or coverage) and 

there are no separate treatment limitations that are 

applicable only with respect to mental health or substance 

use disorder benefits. 

‘‘(B) DEFINITIONS.—In this paragraph: 

‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial 

requirement’ includes deductibles, copayments, 

coinsurance, and out-of-pocket expenses, but excludes 

an aggregate lifetime limit and an annual limit subject 

to paragraphs (1) and (2). 

‘‘(ii) PREDOMINANT.—A financial requirement or 

treatment limit is considered to be predominant if it 

is the most common or frequent of such type of limit 

or requirement. 

‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment 

limitation’ includes limits on the frequency of 

treatment, number of visits, days of coverage, or other 

similar limits on the scope or duration of treatment. 

‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for 

medical necessity determinations made under the plan with 

respect to mental health or substance use 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) in accordance with regulations 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 or substance use disorder benefits 
8

in the case of any participant or beneficiary shall, on request 

or as otherwise required, be made available by the plan 

administrator (or the health insurance issuer offering such 

coverage) to the participant or beneficiary in accordance with 

regulations. 

 ‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan 

or coverage that provides both medical and surgical benefits 

and mental health or substance use disorder benefits, if the 

plan or coverage provides coverage for medical or surgical benefits 

provided by out-of-network providers, the plan or coverage 

shall provide coverage for mental health or substance use disorder 

benefits provided by out-of-network providers in a manner 

that is consistent with the requirements of this section.’’; 

(2) in subsection (b), by amending paragraph (2) to read 

as follows: 

‘‘(2) in the case of a group health plan (or health insurance 

coverage offered in connection with such a plan) that provides 

mental health or substance use disorder benefits, as affecting 

the terms and conditions of the plan or coverage relating to 

such benefits under the plan or coverage, except as provided 

in subsection (a).’’; 

(3) in subsection (c)— 

(A) in paragraph (1), by inserting before the period 

the following: ‘‘(as defined in section 2791(e)(4), except that 

for purposes of this paragraph such term shall include 

employers with 1 employee in the case of an employer 

residing in a State that permits small groups to include 

a single individual)’’; and 

(B) by striking paragraph (2) and inserting the following: 

‘‘(2) 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 use 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. An 

employer may elect to continue to apply mental health 

and substance use disorder parity pursuant to this section 

with respect to the group health plan (or coverage) involved 
9

regardless of any increase in total costs. 

‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan 

(or coverage), the applicable percentage described in this 

subparagraph shall be— 

‘‘(i) 2 percent in the case of the first plan year 

in which this section is applied; 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 section shall be made and certified 

by a qualified and licensed actuary who is a member in 

good standing of the American Academy of Actuaries. All 

such determinations shall be in a written report prepared 

by the actuary. The report, and all underlying documentation 

relied upon by the actuary, shall be maintained by 

the group health plan or health insurance issuer for a 

period of 6 years following the notification made under 

subparagraph (E). 

‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan 

(or a health insurance issuer offering coverage in connection 

with a group health 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.— 

‘‘(i) IN GENERAL.—A group health plan (or a health 

insurance issuer offering coverage in connection with 

a group health plan) that, based upon a certification 

described under subparagraph (C), qualifies for an 

exemption under this paragraph, and elects to implement 

the exemption, shall promptly notify the Secretary, 

the appropriate State agencies, and participants 

and beneficiaries in the plan of such election. 

‘‘(ii) REQUIREMENT.—A notification to the Secretary 

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 use disorder benefits 
10

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 use disorder benefits 

under the plan. 

‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary 

under clause (i) shall be confidential. The Secretary 

shall make available, upon request 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 

type of employers submitting such notification; and 

‘‘(II) a summary of the data received under 

clause (ii). 

‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine 

compliance with this paragraph, the Secretary may audit 

the books and records of a group health plan or health 

insurance issuer relating to an exemption, including any 

actuarial reports prepared pursuant to subparagraph (C), 

during the 6 year period following the notification of such 

exemption under subparagraph (E). A State agency 

receiving a notification under subparagraph (E) may also 

conduct such an audit with respect to an exemption covered 

by such notification.’’; 

 (4) in subsection (e), by striking paragraph (4) and inserting 

the following: 

‘‘(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 and 

in accordance with applicable Federal and State law. 

‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance 

use disorder benefits’ means benefits with respect to 

services for substance use disorders, as defined under the terms 

of the plan and in accordance with applicable Federal and 

State law.’’; 

(5) by striking subsection (f); 

(6) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health and substance use disorder benefits’’ each place 

it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 

(a)(2)(C); and 

(7) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health or substance use disorder benefits’’ each place 

it appears (other than in any provision amended by the previous 

paragraph). 

(c) AMENDMENTS TO INTERNAL REVENUE CODE.—Section 9812 
11

of the Internal Revenue Code of 1986 is amended— 

(1) in subsection (a), by adding at the end the following: 

‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.— 

‘‘(A) IN GENERAL.—In the case of a group health plan 

that provides both medical and surgical benefits and mental 

health or substance use disorder benefits, such plan shall 

ensure that— 

‘‘(i) the financial requirements applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant financial 

requirements applied to substantially all medical and 

surgical benefits covered by the plan, and there are 

no separate cost sharing requirements that are 

applicable only with respect to mental health or substance 

use disorder benefits; and 

‘‘(ii) the treatment limitations applicable to such 

mental health or substance use disorder benefits are 

no more restrictive than the predominant treatment 

limitations applied to substantially all medical and 

surgical benefits covered by the plan and there are 

no separate treatment limitations that are applicable 

only with respect to mental health or substance use 

disorder benefits. 

‘‘(B) DEFINITIONS.—In this paragraph: 

‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial 

requirement’ includes deductibles, copayments, 

coinsurance, and out-of-pocket expenses, but excludes 

an aggregate lifetime limit and an annual limit subject 

to paragraphs (1) and (2), 

‘‘(ii) PREDOMINANT.—A financial requirement or 

treatment limit is considered to be predominant if it 

is the most common or frequent of such type of limit 

or requirement. 

‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment 

limitation’ includes limits on the frequency of 

treatment, number of visits, days of coverage, or other 

similar limits on the scope or duration of treatment. 

‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for 

medical necessity determinations made under the plan with 

respect to mental health or substance use disorder benefits 

shall be made available by the plan administrator in accordance 

with regulations 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 or substance use disorder 

benefits in the case of any participant or beneficiary shall, 
12

on request or as otherwise required, be made available by 

the plan administrator to the participant or beneficiary in 

accordance with regulations. 

‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan 

that provides both medical and surgical benefits and mental 

health or substance use disorder benefits, if the plan provides 

coverage for medical or surgical benefits provided by out-of-network 

providers, the plan shall provide coverage for mental 

health or substance use disorder benefits provided by out-of-network 

providers in a manner that is consistent with the 

requirements of this section.’’; 

(2) in subsection (b), by amending paragraph (2) to read 

as follows: 

‘‘(2) in the case of a group health plan that provides mental 

health or substance use disorder benefits, as affecting the terms 

and conditions of the plan relating to such benefits under 

the plan, except as provided in subsection (a).’’; 

(3) in subsection (c)— 

(A) by amending paragraph (1) 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.’’; and 

(B) by striking paragraph (2) and inserting the following: 

‘‘(2) 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 use 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 
13

such exemption shall apply to the plan for 1 plan year. 

An employer may elect to continue to apply mental health 

and substance use disorder parity pursuant to this section 

with respect to the group health plan involved regardless 

of any increase in total costs. 

‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan, 

the applicable percentage described in this subparagraph 

shall be— 

‘‘(i) 2 percent in the case of the first plan year 

in which this section is applied; 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 section shall be made and certified by a qualified 

and licensed actuary who is a member in good standing 

of the American Academy of Actuaries. All such determinations 

shall be in a written report prepared by the actuary. 

The report, and all underlying documentation relied upon 

by the actuary, shall be maintained by the group health 

plan for a period of 6 years following the notification made 

under subparagraph (E). 

‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan 

seeks an exemption under this paragraph, determinations 

under subparagraph (A) shall be made after such plan 

has complied with this section for the first 6 months of 

the plan year involved. 

‘‘(E) NOTIFICATION.— 

‘‘(i) IN GENERAL.—A group health plan that, based 

upon a certification described under subparagraph (C), 

qualifies for an exemption under this paragraph, and 

elects to implement the exemption, shall promptly 

notify the Secretary, the appropriate State agencies, 

and participants and beneficiaries in the plan of such 

election. 

‘‘(ii) REQUIREMENT.—A notification to the Secretary 

under clause (i) shall include— 

‘‘(I) a description of the number of covered 

lives under the plan 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; 

‘‘(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 
14

mental health and substance use 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 use disorder benefits 

under the plan. 

‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary 

under clause (i) shall be confidential. The Secretary 

shall make available, upon request 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 

type of employers submitting such notification; and 

‘‘(II) a summary of the data received under 

clause (ii). 

‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine 

compliance with this paragraph, the Secretary may audit 

the books and records of a group health plan relating 

to an exemption, including any actuarial reports prepared 

pursuant to subparagraph (C), during the 6 year period 

following the notification of such exemption under subparagraph 

(E). A State agency receiving a notification under 

subparagraph (E) may also conduct such an audit with 

respect to an exemption covered by such notification.’’; 

(4) in subsection (e), by striking paragraph (4) and inserting 

the following: 

‘‘(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 and 

in accordance with applicable Federal and State law. 

‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance 

use disorder benefits’ means benefits with respect to 

services for substance use disorders, as defined under the terms 

of the plan and in accordance with applicable Federal and 

State law.’’; 

(5) by striking subsection (f); 

(6) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health and substance use disorder benefits’’ each place 

it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and 

(a)(2)(C); and 

(7) by striking ‘‘mental health benefits’’ and inserting 

‘‘mental health or substance use disorder benefits’’ each place 

it appears (other than in any provision amended by the previous 

paragraph). 

(d) REGULATIONS.—Not later than 1 year after the date of 
15

enactment of this Act, the Secretaries of Labor, Health and Human 

Services, and the Treasury shall issue regulations to carry out 

the amendments made by subsections (a), (b), and (c), respectively. 

(e) EFFECTIVE DATE.— 

(1) IN GENERAL.—The amendments made by this section 

shall apply with respect to group health plans for plan years 

beginning after the date that is 1 year after the date of enactment 

of this Act, regardless of whether regulations have been 

issued to carry out such amendments by such effective date, 

except that the amendments made by subsections (a)(5), (b)(5), 

and (c)(5), relating to striking of certain sunset provisions, 

shall take effect on January 1, 2009. 

(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, 2009. 

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 

added by this section shall not be treated as a termination 

of such collective bargaining agreement. 

(f) ASSURING COORDINATION.—The Secretary of Health and 

Human Services, the Secretary of Labor, and the Secretary of 

the Treasury may ensure, through the execution or revision of 

an interagency memorandum of understanding among such Secretaries, 

that— 

(1) regulations, rulings, and interpretations issued by such 

Secretaries relating to the same matter over which two or 

more such Secretaries have responsibility under this section 

(and the amendments made by this section) are administered 

so as to have the same effect at all times; and 

(2) coordination of policies relating to enforcing the same 

requirements through such Secretaries in order to have a 

coordinated enforcement strategy that avoids duplication of 

enforcement efforts and assigns priorities in enforcement. 

(g) CONFORMING CLERICAL AMENDMENTS.— 

(1) ERISA HEADING.— 

(A) IN GENERAL.—The heading of section 712 of the 
16

Employee Retirement Income Security Act of 1974 is 

amended to read as follows: 

‘‘SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER 

BENEFITS.’’. 

(B) 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. Parity in mental health and substance use disorder benefits.’’. 

(2) PHSA HEADING.—The heading of section 2705 of the 

Public Health Service Act is amended to read as follows: 

‘‘SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE 

DISORDER 

BENEFITS.’’. 

(3) IRC HEADING.— 

(A) IN GENERAL.—The heading of section 9812 of the 

Internal Revenue Code of 1986 is amended to read as 

follows: 

‘‘SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE 

DISORDER 

BENEFITS.’’. 

(B) 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. Parity in mental health and substance use disorder benefits.’’. 

(h) GAO STUDY ON COVERAGE AND EXCLUSION OF MENTAL 

HEALTH AND SUBSTANCE USE DISORDER DIAGNOSES.— 

 (1) IN GENERAL.—The Comptroller General of the United 

States shall conduct a study that analyzes the specific rates, 

patterns, and trends in coverage and exclusion of specific 

mental health and substance use disorder diagnoses by health 

plans and health insurance. The study shall include an analysis 

of— 

(A) specific coverage rates for all mental health conditions 

and substance use disorders; 

(B) which diagnoses are most commonly covered or 

excluded; 

(C) whether implementation of this Act has affected 

trends in coverage or exclusion of such diagnoses; and 

(D) the impact of covering or excluding specific 

diagnoses on participants’ and enrollees’ health, their 

health care coverage, and the costs of delivering health 

care. 

(2) REPORTS.—Not later than 3 years after the date of 

the enactment of this Act, and 2 years after the date of submission 
17

the first report under this paragraph, the Comptroller 

General shall submit to Congress a report on the results of 

the study conducted under paragraph (1). 

.... 

PUBLIC LAW 110–343—OCT. 3, 2008 122 STAT. 3933 

LEGISLATIVE HISTORY—H.R. 1424: 

HOUSE REPORTS: No. 110–374, Pt. 1 (Comm. on Education and Labor), Pt. 2 

(Comm. on Ways and Means), and Pt. 3 (Comm. on Energy 

and Commerce). 

CONGRESSIONAL RECORD, Vol. 154 (2008): 

Mar. 5, considered and passed House. 

Oct. 1, considered and passed Senate, amended. 

Oct. 3, House concurred in Senate amendments. 

Æ 

arrangement for purposes of section 409A of the Internal Revenue 

Code of 1986. 

Approved October 3, 2008. 

PUBLIC LAW 110–460—DEC. 23, 2008 122 STAT. 5123 

LEGISLATIVE HISTORY—S. 3712: 

CONGRESSIONAL RECORD, Vol. 154 (2008): 

Nov. 20, considered and passed Senate. 

Dec. 10, considered and passed House. 

Æ 

Public Law 110–460 

110th Congress 

An Act 

To make a technical correction in the Paul Wellstone and Pete Domenici Mental 

Health Parity and Addiction Equity Act of 2008. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. TECHNICAL CORRECTION IN MENTAL HEALTH PARITY 

EFFECTIVE DATE. 

Section 512(e)(2)(B) of the Paul Wellstone and Pete Domenici 

Mental Health Parity and Addiction Equity Act of 2008 (subtitle 

B of title V of division C of Public Law 110–343) is amended 

by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’. 

Approved December 23, 2008. 

Ante, p. 3891. 

Dec. 23, 2008 

[S. 3712] 
ATTACHMENT C 

42 U.S.C.S. SEC. 300GG-5. PARITY IN THE APPLICATION OF CERTAIN LIMITS 

TO MENTAL HEALTH BENEFITS 

& 

42 U.S.C.S.SEC 1396u-2(b)(8). COMPLIANCE WITH CERTAIN MATERNITY AND 

MENTAL HEALTH REQUIREMENTS 

I. 42 U.S.C.S Sec. 300gg-5: Title XXVII – Requirements Relating to Health 

Insurance Coverage, Part A, Subpart 2 – Other Requirements, Sec. 2705 – Parity 

in the Application of Certain Limits to Mental Health Benefits, of the Public 

Health Service Act

 A. Current Law Prior to Application of the Wellstone Domenici Act 

42 U.S.C.S Sec. 300gg-5. Parity in the application of certain limits to mental health 

benefits [Caution: See prospective amendment note below.] 

(a) In general. 

 (1) Aggregate lifetime limits. In the case of a group health plan (or health 

insurance coverage offered in connection with such a plan) that provides both 

medical and surgical benefits and mental health benefits-- 

 (A) No lifetime limit. If the plan or coverage does not include an aggregate 

lifetime limit on substantially all medical and surgical benefits, the plan or coverage 

may not impose any aggregate lifetime limit on mental health benefits. 

 (B) Lifetime limit. If the plan or coverage includes an aggregate lifetime limit 

on substantially all medical and surgical benefits (in this paragraph referred to as 

the "applicable lifetime limit"), the plan or coverage shall either-- 

 (i) apply the applicable lifetime limit both to the medical and surgical benefits 

to which it otherwise would apply and to mental health benefits and not distinguish 

in the application of such limit between such medical and surgical benefits and 

mental health benefits; or 

 (ii) not include any aggregate lifetime limit on mental health benefits that is 

less than the applicable lifetime limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is not 

described in subparagraph (A) or (B) and that includes no or different aggregate 

lifetime limits on different categories of medical and surgical benefits, the Secretary 

shall establish rules under which subparagraph (B) is applied to such plan or 

coverage with respect to mental health benefits by substituting for the applicable 

lifetime limit an average aggregate lifetime limit that is computed taking into 

account the weighted average of the aggregate lifetime limits applicable to such 

categories. 

 (2) Annual limits. In the case of a group health plan (or health insurance coverage 

offered in connection with such a plan) that provides both medical and surgical 

benefits and mental health benefits-- 

 (A) No annual limit. If the plan or coverage does not include an annual limit on 
2

substantially all medical and surgical benefits, the plan or coverage may not impose 

any annual limit on mental health benefits. 

 (B) Annual limit. If the plan or coverage includes an annual limit on 

substantially all medical and surgical benefits (in this paragraph referred to as the 

"applicable annual limit"), the plan or coverage shall either-- 

 (i) apply the applicable annual limit both to medical and surgical benefits to 

which it otherwise would apply and to mental health benefits and not distinguish in 

the application of such limit between such medical and surgical benefits and mental 

health benefits; or 

 (ii) not include any annual limit on mental health benefits that is less than the 

applicable annual limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is not 

described in subparagraph (A) or (B) and that includes no or different annual limits 

on different categories of medical and surgical benefits, the Secretary shall establish 

rules under which subparagraph (B) is applied to such plan or coverage with respect 

to mental health benefits by substituting for the applicable annual limit an average 

annual limit that is computed taking into account the weighted average of the 

annual limits applicable to such categories. 

 

(b) Construction. Nothing in this section shall be construed-- 

 (1) as requiring a group health plan (or health insurance coverage offered in 

connection with such a plan) to provide any mental health benefits; or 

 (2) in the case of a group health plan (or health insurance coverage offered in 

connection with such a plan) that provides mental health benefits, as affecting the 

terms and conditions (including cost sharing, limits on numbers of visits or days of 

coverage, and requirements relating to medical necessity) relating to the amount, 

duration, or scope of mental health benefits under the plan or coverage, except as 

specifically provided in subsection (a) (in regard to parity in the imposition of 

aggregate lifetime limits and annual limits for mental health benefits). 

 

(c) Exemptions. 

 (1) Small employer exemption. This section shall not apply to any group health 

plan (and group health insurance coverage offered in connection with a group 

health plan) for any plan year of a small employer. 

 (2) Increased cost exemption. This section shall not apply with respect to a group 

health plan (or health insurance coverage offered in connection with a group health 

plan) if the application of this section to such plan (or to such coverage) results in 

an increase in the cost under the plan (or for such coverage) of at least 1 percent. 

 

(d) Separate application to each option offered. In the case of a group health plan 

that offers a participant or beneficiary two or more benefit package options under 

the plan, the requirements of this section shall be applied separately with respect to 

each such option. 

 

(e) Definitions. For purposes of this section-- 

 (1) Aggregate lifetime limit. The term "aggregate lifetime limit" means, with 
3

respect to benefits under a group health plan or health insurance coverage, a dollar 

limitation on the total amount that may be paid with respect to such benefits under 

the plan or health insurance coverage with respect to an individual or other 

coverage unit. 

 (2) Annual limit. The term "annual limit" means, with respect to benefits under a 

group health plan or health insurance coverage, a dollar limitation on the total 

amount of benefits that may be paid with respect to such benefits in a 12-month 

period under the plan or health insurance coverage with respect to an individual or 

other coverage unit. 

 (3) Medical or surgical benefits. The term "medical or surgical benefits" means 

benefits with respect to medical or surgical services, as defined under the terms of 

the plan or coverage (as the case may be), but does not include mental health 

benefits. 

 (4) Mental health benefits. The term "mental health benefits" means benefits with 

respect to mental health services, as defined under the terms of the plan or coverage 

(as the case may be), but does not include benefits with respect to treatment of 

substance abuse or chemical dependency. 

 

(f) [Deleted] 

History (Applicable to Sections A (Current Law) and B (Revised Law): 

 (July 1, 1944, ch 373, Title XXVII, Part A, Subpart 2, § 2705, as added Sept. 26, 

1996, P.L. 104-204, Title VII, § 703(a), 110 Stat. 2947; Jan. 10, 2002, P.L. 107-

116, Title VII, § 701(b), 115 Stat. 2228; Dec. 2, 2002, P.L. 107-313, § 2(b), 116 

Stat. 2457; Dec. 19, 2003, P.L. 108-197, § 2(b), 117 Stat. 2898; Oct. 4, 2004, P.L. 

108-311, Title III, § 302(c), 118 Stat. 1179; Dec. 30, 2005, P.L. 109-151, § 1(b), 

119 Stat. 2886; Dec. 20, 2006, P.L. 109-432, Div A, Title I, § 115(c), 120 Stat. 

2941; June 17, 2008, P.L. 110-245, Title IV, § 401(c), 122 Stat. 1650; Oct. 3, 2008, 

P.L. 110-343, Div C, Title V, Subtitle B, § 512(b), (g)(2), 122 Stat. 3885, 3892.) 

History; Ancillary Laws and Directives: 

 1. Prospective amendment 

 2. Amendments 

 3. Other provisions 

(Emphasis added. Lexis Nexis) 

B. Amendment to Title XXVII, Part A, Subpart 2, Sec. 2705 of the Public 

Health Service Act included in the Wellstone-Domenici Act (Note: These 

amendments will take effect no later than January 1, 2010.) 

1. Prospective amendment: 
4

Amendment of section, applicable with respect to group health plans for plan years 

beginning after the date that is 1 year after enactment. Act Oct. 3, 2008, P.L. 110-343, 

Div C, Title V, Subtitle B, § 512(b)(1)-(4), (6), (7), 122 Stat. 3885, 3888 (applicable 

with respect to group health plans for plan years beginning after the date that is 1 year 

after enactment, as provided by § 512(e) of such Act, which appears as a note to this 

section), provides: 

 "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: 

 " '(3) Financial requirements and treatment limitations. 

 (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 or substance use disorder benefits, such plan or coverage 

shall ensure that-- 

 " '(i) the financial requirements applicable to such mental health or substance 

use disorder benefits are no more restrictive than the predominant financial 

requirements applied to substantially all medical and surgical benefits covered by the 

plan (or coverage), and there are no separate cost sharing requirements that are 

applicable only with respect to mental health or substance use disorder benefits; and 

 " '(iii) the treatment limitations applicable to such mental health or substance 

use disorder benefits are no more restrictive than the predominant treatment 

limitations applied to substantially all medical and surgical benefits covered by the 

plan (or coverage) and there are no separate treatment limitations that are applicable 

only with respect to mental health or substance use disorder benefits. 

 " '(B) Definitions. In this paragraph: 

 " '(i) Financial requirement. The term "financial requirement" includes 

deductibles, copayments, coinsurance, and out-of-pocket expenses, but excludes an 

aggregate lifetime limit and an annual limit subject to paragraphs (1) and (2). 

 " '(ii) Predominant. A financial requirement or treatment limit is considered to 

be predominant if it is the most common or frequent of such type of limit or 

requirement. 

 " '(iii) Treatment limitation. The term "treatment limitation" includes limits on 

the frequency of treatment, number of visits, days of coverage, or other similar limits 

on the scope or duration of treatment. 

 " '(4) Availability of plan information. The criteria for medical necessity 

determinations made under the plan with respect to mental health or substance use 

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) in accordance with regulations 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 or substance use disorder benefits in the case of 

any participant or beneficiary shall, on request or as otherwise required, be made 

available by the plan administrator (or the health insurance issuer offering such 

coverage) to the participant or beneficiary in accordance with regulations. 

 " '(5) Out-of-network providers. In the case of a plan or coverage that provides 
5

both medical and surgical benefits and mental health or substance use disorder 

benefits, if the plan or coverage provides coverage for medical or surgical benefits 

provided by out-of-network providers, the plan or coverage shall provide coverage for 

mental health or substance use disorder benefits provided by out-of-network 

providers in a manner that is consistent with the requirements of this section.'; 

 "(2) in subsection (b), by amending paragraph (2) to read as follows: 

 " '(2) in the case of a group health plan (or health insurance coverage offered in 

connection with such a plan) that provides mental health or substance use disorder 

benefits, as affecting the terms and conditions of the plan or coverage relating to such 

benefits under the plan or coverage, except as provided in subsection (a).'; 

 "(3) in subsection (c)-- 

 "(A) in paragraph (1), by inserting before the period the following: "(as defined 

in section 2791(e)(4), except that for purposes of this paragraph such term shall 

include employers with 1 employee in the case of an employer residing in a State that 

permits small groups to include a single individual)"; and 

 "(B) by striking paragraph (2) and inserting the following: 

 " '(2) 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 use 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. An employer may elect to 

continue to apply mental health and substance use disorder parity pursuant to this 

section with respect to the group health plan (or coverage) involved regardless of any 

increase in total costs. 

 " '(B) Applicable percentage. With respect to a plan (or coverage), the 

applicable percentage described in this subparagraph shall be-- 

 " '(i) 2 percent in the case of the first plan year in which this section is applied; 

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 section shall be made and certified by 

a qualified and licensed actuary who is a member in good standing of the American 

Academy of Actuaries. All such determinations shall be in a written report prepared 

by the actuary. The report, and all underlying documentation relied upon by the 

actuary, shall be maintained by the group health plan or health insurance issuer for a 

period of 6 years following the notification made under subparagraph (E). 

 " '(D) 6-month determinations. If a group health plan (or a health insurance 

issuer offering coverage in connection with a group health 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. 
6

 " '(E) Notification. 

 (i) In general. A group health plan (or a health insurance issuer offering 

coverage in connection with a group health plan) that, based upon a certification 

described under subparagraph (C), qualifies for an exemption under this paragraph, 

and elects to implement the exemption, shall promptly notify the Secretary, the 

appropriate State agencies, and participants and beneficiaries in the plan of such 

election. 

 " '(ii) Requirement. A notification to the Secretary 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 use 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 use disorder benefits under the plan. 

 " '(iii) Confidentiality. A notification to the Secretary under clause (i) shall be 

confidential. The Secretary shall make available, upon request 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 type of employers submitting 

such notification; and 

 " '(II) a summary of the data received under clause (ii). 

 " '(F) Audits by appropriate agencies. To determine compliance with this 

paragraph, the Secretary may audit the books and records of a group health plan or 

health insurance issuer relating to an exemption, including any actuarial reports 

prepared pursuant to subparagraph (C), during the 6 year period following the 

notification of such exemption under subparagraph (E). A State agency receiving a 

notification under subparagraph (E) may also conduct such an audit with respect to an 

exemption covered by such notification."; 

 "(4) in subsection (e), by striking paragraph (4) and inserting the following: 

 " '(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 and in accordance with applicable Federal and State law. 

 " '(5) Substance use disorder benefits. The term "substance use disorder benefits" 

means benefits with respect to services for substance use disorders, as defined under 

the terms of the plan and in accordance with applicable Federal and State law.'; 

 "(6) by striking "mental health benefits" and inserting "mental health and 

substance use disorder benefits" each place it appears in subsections (a)(1)(B)(i), 

(a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); and 

 "(7) by striking "mental health benefits" and inserting "mental health or substance 

use disorder benefits" each place it appears (other than in any provision amended by 

the previous paragraph).". 

 Amendment of section heading, applicable with respect to group health plans for 
7

plan years beginning after the date that is 1 year after enactment. Act Oct. 3, 2008, 

P.L. 110-343, Div C, Title V, Subtitle B, § 512(g)(2), 122 Stat. 3892 (applicable with 

respect to group health plans for plan years beginning after the date that is 1 year after 

enactment, as provided by § 512(e) of such Act, which appears as 42 USCS § 300gg5 note), provides: 

 "The heading of section 2705 of the Public Health Service Act is amended to read 

as follows: 

 "Sec. 2705. Parity in mental health and substance use disorder benefits.". 

 2. Amendments (Applicable to Sections I. A (Current Law) and I. B (Revised 

Law): 

 

2002. Act Jan. 10, 2002, in subsec. (f), substituted "December 31, 2002" for 

"September 30, 2001". 

 Act Dec. 2, 2002, in subsec. (f), substituted "December 31, 2003" for "December 

31, 2002". 

 

2003. Act Dec. 19, 2003, in subsec. (f), substituted "December 31, 2004" for 

"December 31, 2003". 

 

2004. Act Oct. 4, 2004 (effective on enactment, as provided by § 302(d) of such Act, 

which appears as 26 USCS § 9812 note), in subsec. (f), substituted "after December 

31, 2005" for "on or after December 31, 2004". 

 

2005. Act Dec. 30, 2005, in subsec. (f), substituted "December 31, 2006" for 

"December 31, 2005". 

 

2006. Act Dec. 20, 2006, in subsec. (f), substituted "2007" for "2006". 

 

2008. Act June 17, 2008, in subsec. (f), substituted "services furnished--" and paras. 

(1) and (2) for "services furnished after December 31, 2007". 

 Act Oct. 3, 2008 (effective on 1/1/2009, as provided by § 512(e) of such Act, which 

appears as a note to this section), deleted subsec. (f), which read: 

 "(f) Sunset. This section shall not apply to benefits for services furnished-- 

 "(1) on or after January 1, 2008, and before the date of the enactment of the 

Heroes Earnings Assistance and Relief Tax Act of 2008, and 

 "(2) after December 31, 2008.[.]". 

 3. Other provisions (Applicable to Sections A (Current Law) and B (Revised Law): 

 Applicability of section. Act Sept. 26, 1996, P.L. 104-204, Title VII, § 703(b), 110 

Stat. 2950, provides: "The amendments made by this section [adding this section] 

shall apply with respect to group health plans for plan years beginning on or after 

January 1, 1998.". 

 Act Oct. 3, 2008; regulations. Act Oct. 3, 2008, P.L. 110-343, Div C, Title V, 

Subtitle B, § 512(d), 122 Stat. 3891, provides: "Not later than 1 year after the date of 

enactment of this Act, the Secretaries of Labor, Health and Human Services, and the 
8

Treasury shall issue regulations to carry out the amendments made by subsections (a), 

(b), and (c) [amending 26 USCS § 9812, 29 USCS § 1185a, and 42 USCS § 300gg5], respectively.". 

 Application of Oct. 3, 2008 amendments. Act Oct. 3, 2008, P.L. 110-343, Div C, 

Title V, Subtitle B, § 512(e), 122 Stat. 3891; Dec. 23, 2008, P.L. 110-460, § 1, 122 

Stat. 5123, provides: 

 "(1) In general. The amendments made by this section [for full classification, 

consult USCS Tables volumes] shall apply with respect to group health plans for plan 

years beginning after the date that is 1 year after the date of enactment of this Act, 

regardless of whether regulations have been issued to carry out such amendments by 

such effective date, except that the amendments made by subsections (a)(5), (b)(5), 

and (c)(5) [deleting 26 USCS § 9812(f), 29 USCS § 1185a(f), and 42 USCS § 300gg5(f)], relating to striking of certain sunset provisions, shall take effect on January 1, 

2009. 

 "(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 [for full classification, 

consult USCS Tables volumes] 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 added by this section shall not be treated as a termination 

of such collective bargaining agreement.". 

 Assuring coordination. Act Oct. 3, 2008, P.L. 110-343, Div C, Title V, Subtitle B, § 

512(f), 122 Stat. 3892, provides: 

 "The Secretary of Health and Human Services, the Secretary of Labor, and the 

Secretary of the Treasury may ensure, through the execution or revision of an 

interagency memorandum of understanding among such Secretaries, that-- 

 "(1) regulations, rulings, and interpretations issued by such Secretaries relating to 

the same matter over which two or more such Secretaries have responsibility under 

this section (and the amendments made by this section [for full classification, consult 

USCS Tables volumes]) are administered so as to have the same effect at all times; 

and 

 "(2) coordination of policies relating to enforcing the same requirements through 

such Secretaries in order to have a coordinated enforcement strategy that avoids 

duplication of enforcement efforts and assigns priorities in enforcement.". 

 (Emphasis added. LexisNexis) 

 C. Mental Health and Addiction Treatment Requirements of the Public Health 

Service Act After the Effective Date of the Wellstone Domenici Act 
9

 1. Mark-Up of Text 

[NOTE: Deleted language shown with strike-throughs. New language shown 

with underlining]

42 U.S.C.S Sec. 300gg-5. Parity in the application of certain limits to mental 

health benefits mental health and substance use disorder benefits. 

(a) In general. 

 (1) Aggregate lifetime limits. In the case of a group health plan (or health 

insurance coverage offered in connection with such a plan) that provides both 

medical and surgical benefits and mental health benefits mental health or 

substance use disorder benefits-- 

 (A) No lifetime limit. If the plan or coverage does not include an 

aggregate lifetime limit on substantially all medical and surgical benefits, the 

plan or coverage may not impose any aggregate lifetime limit on mental 

health benefits mental health or substance use disorder benefits. 

 (B) Lifetime limit. If the plan or coverage includes an aggregate lifetime 

limit on substantially all medical and surgical benefits (in this paragraph 

referred to as the "applicable lifetime limit"), the plan or coverage shall either-

- 

 (i) apply the applicable lifetime limit both to the medical and surgical 

benefits to which it otherwise would apply and to mental health benefits

mental health and substance use disorder benefits and not distinguish in the 

application of such limit between such medical and surgical benefits and 

mental health benefits mental health and substance use disorder benefits; or 

 (ii) not include any aggregate lifetime limit on mental health benefits

mental health or substance use disorder benefits that is less than the applicable 

lifetime limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is 

not described in subparagraph (A) or (B) and that includes no or different 

aggregate lifetime limits on different categories of medical and surgical 

benefits, the Secretary shall establish rules under which subparagraph (B) is 

applied to such plan or coverage with respect to mental health benefits mental 

health and substance use disorder benefits by substituting for the applicable 

lifetime limit an average aggregate lifetime limit that is computed taking into 

account the weighted average of the aggregate lifetime limits applicable to 

such categories. 

 (2) Annual limits. In the case of a group health plan (or health insurance 

coverage offered in connection with such a plan) that provides both medical 

and surgical benefits and mental health benefits mental health or substance 

use disorder benefits-- 

 (A) No annual limit. If the plan or coverage does not include an annual 

limit on substantially all medical and surgical benefits, the plan or coverage 

may not impose any annual limit on mental health benefits mental health or 

substance use disorder benefits. 

 (B) Annual limit. If the plan or coverage includes an annual limit on 
10

substantially all medical and surgical benefits (in this paragraph referred to as 

the "applicable annual limit"), the plan or coverage shall either-- 

 (i) apply the applicable annual limit both to medical and surgical 

benefits to which it otherwise would apply and to mental health benefits

mental health and substance use disorder benefits and not distinguish in the 

application of such limit between such medical and surgical benefits and 

mental health benefits mental health and substance use disorder benefits; or 

 (ii) not include any annual limit on mental health benefits mental health 

or substance use disorder benefits that is less than the applicable annual limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is 

not described in subparagraph (A) or (B) and that includes no or different 

annual limits on different categories of medical and surgical benefits, the 

Secretary shall establish rules under which subparagraph (B) is applied to 

such plan or coverage with respect to mental health benefits mental health and 

substance use disorder benefits by substituting for the applicable annual limit 

an average annual limit that is computed taking into account the weighted 

average of the annual limits applicable to such categories. 

 '(3) Financial requirements and treatment limitations.

 (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 or substance use disorder benefits, 

such plan or coverage shall ensure that--

 " '(i) the financial requirements applicable to such mental health or 

substance use disorder benefits are no more restrictive than the predominant 

financial requirements applied to substantially all medical and surgical 

benefits covered by the plan (or coverage), and there are no separate cost 

sharing requirements that are applicable only with respect to mental health or 

substance use disorder benefits; and

 " '(iii) the treatment limitations applicable to such mental health or 

substance use disorder benefits are no more restrictive than the predominant 

treatment limitations applied to substantially all medical and surgical benefits 

covered by the plan (or coverage) and there are no separate treatment 

limitations that are applicable only with respect to mental health or substance 

use disorder benefits.

 " '(B) Definitions. In this paragraph:

 " '(i) Financial requirement. The term "financial requirement" includes 

deductibles, copayments, coinsurance, and out-of-pocket expenses, but 

excludes an aggregate lifetime limit and an annual limit subject to paragraphs 

(1) and (2).

 " '(ii) Predominant. A financial requirement or treatment limit is 

considered to be predominant if it is the most common or frequent of such 

type of limit or requirement.

 " '(iii) Treatment limitation. The term "treatment limitation" includes 

limits on the frequency of treatment, number of visits, days of coverage, or 

other similar limits on the scope or duration of treatment.

 " '(4) Availability of plan information. The criteria for medical necessity 
11

determinations made under the plan with respect to mental health or substance 

use 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) in 

accordance with regulations 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 or substance use disorder benefits in the case of any 

participant or beneficiary shall, on request or as otherwise required, be made 

available by the plan administrator (or the health insurance issuer offering 

such coverage) to the participant or beneficiary in accordance with 

regulations.

 " '(5) Out-of-network providers. In the case of a plan or coverage that 

provides both medical and surgical benefits and mental health or substance 

use disorder benefits, if the plan or coverage provides coverage for medical or 

surgical benefits provided by out-of-network providers, the plan or coverage 

shall provide coverage for mental health or substance use disorder benefits 

provided by out-of-network providers in a manner that is consistent with the 

requirements of this section.'; 

(b) Construction. Nothing in this section shall be construed-- 

 (1) as requiring a group health plan (or health insurance coverage offered in 

connection with such a plan) to provide any mental health benefits mental 

health or substance use disorder benefits; or 

 (2) in the case of a group health plan (or health insurance coverage offered 

in connection with such a plan) that provides mental health benefits, as 

affecting the terms and conditions (including cost sharing, limits on numbers 

of visits or days of coverage, and requirements relating to medical necessity) 

relating to the amount, duration, or scope of mental health benefits under the 

plan or coverage, except as specifically provided in subsection (a) (in regard 

to parity in the imposition of aggregate lifetime limits and annual limits for 

mental health benefits).

" '(2) in the case of a group health plan (or health insurance coverage offered 

in connection with such a plan) that provides mental health or substance use 

disorder benefits, as affecting the terms and conditions of the plan or coverage 

relating to such benefits under the plan or coverage, except as provided in 

subsection (a).';

(c) Exemptions. 

 (1) Small employer exemption. This section shall not apply to any group 

health plan (and group health insurance coverage offered in connection with a 

group health plan) for any plan year of a small employer (as defined in section 

2791(e)(4), except that for purposes of this paragraph such term shall include 

employers with 1 employee in the case of an employer residing in a State that 

permits small groups to include a single individual).
12

 (2) Increased cost exemption. This section shall not apply with respect to a 

group health plan (or health insurance coverage offered in connection with a 

group health plan) if the application of this section to such plan (or to such 

coverage) results in an increase in the cost under the plan (or for such 

coverage) of at least 1 percent.: 

 " '(2) 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 use 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. An employer may elect to 

continue to apply mental health and substance use disorder parity pursuant to 

this section with respect to the group health plan (or coverage) involved 

regardless of any increase in total costs.

 " '(B) Applicable percentage. With respect to a plan (or coverage), the 

applicable percentage described in this subparagraph shall be--

 " '(i) 2 percent in the case of the first plan year in which this section is 

applied; 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 section shall be 

made and certified by a qualified and licensed actuary who is a member in 

good standing of the American Academy of Actuaries. All such 

determinations shall be in a written report prepared by the actuary. The report, 

and all underlying documentation relied upon by the actuary, shall be 

maintained by the group health plan or health insurance issuer for a period of 

6 years following the notification made under subparagraph (E).

 " '(D) 6-month determinations. If a group health plan (or a health 

insurance issuer offering coverage in connection with a group health 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.

 (i) In general. A group health plan (or a health insurance issuer 

offering coverage in connection with a group health plan) that, based upon a 

certification described under subparagraph (C), qualifies for an exemption 

under this paragraph, and elects to implement the exemption, shall promptly 

notify the Secretary, the appropriate State agencies, and participants and 

beneficiaries in the plan of such election.

 " '(ii) Requirement. A notification to the Secretary under clause (i) 

shall include--
13

 " '(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 use 

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 use disorder benefits under the plan.

 " '(iii) Confidentiality. A notification to the Secretary under clause (i) 

shall be confidential. The Secretary shall make available, upon request 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 type of employers 

submitting such notification; and

 " '(II) a summary of the data received under clause (ii).

 " '(F) Audits by appropriate agencies. To determine compliance with this 

paragraph, the Secretary may audit the books and records of a group health 

plan or health insurance issuer relating to an exemption, including any 

actuarial reports prepared pursuant to subparagraph (C), during the 6 year 

period following the notification of such exemption under subparagraph (E). 

A State agency receiving a notification under subparagraph (E) may also 

conduct such an audit with respect to an exemption covered by such 

notification."

 (d) Separate application to each option offered. In the case of a group health 

plan that offers a participant or beneficiary two or more benefit package 

options under the plan, the requirements of this section shall be applied 

separately with respect to each such option. 

 

(e) Definitions. For purposes of this section-- 

 (1) Aggregate lifetime limit. The term "aggregate lifetime limit" means, 

with respect to benefits under a group health plan or health insurance 

coverage, a dollar limitation on the total amount that may be paid with respect 

to such benefits under the plan or health insurance coverage with respect to an 

individual or other coverage unit. 

 (2) Annual limit. The term "annual limit" means, with respect to benefits 

under a group health plan or health insurance coverage, a dollar limitation on 

the total amount of benefits that may be paid with respect to such benefits in a 

12-month period under the plan or health insurance coverage with respect to 

an individual or other coverage unit. 

 (3) Medical or surgical benefits. The term "medical or surgical benefits" 

means benefits with respect to medical or surgical services, as defined under 

the terms of the plan or coverage (as the case may be), but does not include 
14

mental health benefits. 

 (4) Mental health benefits. The term "mental health benefits" means benefits 

with respect to mental health services, as defined under the terms of the plan 

or coverage (as the case may be), but does not include benefits with respect to 

treatment of substance abuse or chemical dependency.

 " '(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 and in accordance with applicable Federal and State law.

 " '(5) Substance use disorder benefits. The term "substance use disorder 

benefits" means benefits with respect to services for substance use disorders, 

as defined under the terms of the plan and in accordance with applicable 

Federal and State law.';

(f) [Deleted]” 

2. Final Text 

42 U.S.C.S Sec. 300gg-5. Parity in the application of certain limits to mental 

health and substance use disorder benefits. 

(a) In general. 

 (1) Aggregate lifetime limits. In the case of a group health plan (or health 

insurance coverage offered in connection with such a plan) that provides both 

medical and surgical benefits and mental health or substance use disorder 

benefits-- 

 (A) No lifetime limit. If the plan or coverage does not include an 

aggregate lifetime limit on substantially all medical and surgical benefits, the 

plan or coverage may not impose any aggregate lifetime limit on mental 

health or substance use disorder benefits. 

 (B) Lifetime limit. If the plan or coverage includes an aggregate lifetime 

limit on substantially all medical and surgical benefits (in this paragraph 

referred to as the "applicable lifetime limit"), the plan or coverage shall either-

- 

 (i) apply the applicable lifetime limit both to the medical and surgical 

benefits to which it otherwise would apply and to mental health and substance 

use disorder benefits and not distinguish in the application of such limit 

between such medical and surgical benefits and mental health and substance 

use disorder benefits; or 

 (ii) not include any aggregate lifetime limit on mental health or 

substance use disorder benefits that is less than the applicable lifetime limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is 

not described in subparagraph (A) or (B) and that includes no or different 

aggregate lifetime limits on different categories of medical and surgical 

benefits, the Secretary shall establish rules under which subparagraph (B) is 
15

applied to such plan or coverage with respect to mental health and substance 

use disorder benefits by substituting for the applicable lifetime limit an 

average aggregate lifetime limit that is computed taking into account the 

weighted average of the aggregate lifetime limits applicable to such 

categories. 

 (2) Annual limits. In the case of a group health plan (or health insurance 

coverage offered in connection with such a plan) that provides both medical 

and surgical benefits and mental health or substance use disorder benefits-- 

 (A) No annual limit. If the plan or coverage does not include an annual 

limit on substantially all medical and surgical benefits, the plan or coverage 

may not impose any annual limit on mental health or substance use disorder 

benefits. 

 (B) Annual limit. If the plan or coverage includes an annual limit on 

substantially all medical and surgical benefits (in this paragraph referred to as 

the "applicable annual limit"), the plan or coverage shall either-- 

 (i) apply the applicable annual limit both to medical and surgical 

benefits to which it otherwise would apply and to mental health and substance 

use disorder benefits and not distinguish in the application of such limit 

between such medical and surgical benefits and mental health and substance 

use disorder benefits; or 

 (ii) not include any annual limit on mental health or substance use 

disorder benefits that is less than the applicable annual limit. 

 (C) Rule in case of different limits. In the case of a plan or coverage that is 

not described in subparagraph (A) or (B) and that includes no or different 

annual limits on different categories of medical and surgical benefits, the 

Secretary shall establish rules under which subparagraph (B) is applied to 

such plan or coverage with respect to mental health and substance use disorder 

benefits by substituting for the applicable annual limit an average annual limit 

that is computed taking into account the weighted average of the annual limits 

applicable to such categories. 

 (3) Financial requirements and treatment limitations. 

 (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 or substance use disorder benefits, 

such plan or coverage shall ensure that-- 

 (i) the financial requirements applicable to such mental health or 

substance use disorder benefits are no more restrictive than the predominant 

financial requirements applied to substantially all medical and surgical 

benefits covered by the plan (or coverage), and there are no separate cost 

sharing requirements that are applicable only with respect to mental health or 

substance use disorder benefits; and 

 (iii) the treatment limitations applicable to such mental health or 

substance use disorder benefits are no more restrictive than the predominant 

treatment limitations applied to substantially all medical and surgical benefits 

covered by the plan (or coverage) and there are no separate treatment 

limitations that are applicable only with respect to mental health or substance 
16

use disorder benefits. 

 (B) Definitions. In this paragraph: 

 (i) Financial requirement. The term "financial requirement" includes 

deductibles, copayments, coinsurance, and out-of-pocket expenses, but 

excludes an aggregate lifetime limit and an annual limit subject to paragraphs 

(1) and (2). 

 (ii) Predominant. A financial requirement or treatment limit is 

considered to be predominant if it is the most common or frequent of such 

type of limit or requirement. 

 (iii) Treatment limitation. The term "treatment limitation" includes 

limits on the frequency of treatment, number of visits, days of coverage, or 

other similar limits on the scope or duration of treatment. 

 (4) Availability of plan information. The criteria for medical necessity 

determinations made under the plan with respect to mental health or substance 

use 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) in 

accordance with regulations 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 or substance use disorder benefits in the case of any 

participant or beneficiary shall, on request or as otherwise required, be made 

available by the plan administrator (or the health insurance issuer offering 

such coverage) to the participant or beneficiary in accordance with 

regulations. 

 (5) Out-of-network providers. In the case of a plan or coverage that 

provides both medical and surgical benefits and mental health or substance 

use disorder benefits, if the plan or coverage provides coverage for medical or 

surgical benefits provided by out-of-network providers, the plan or coverage 

shall provide coverage for mental health or substance use disorder benefits 

provided by out-of-network providers in a manner that is consistent with the 

requirements of this section. 

 

(b) Construction. Nothing in this section shall be construed-- 

 (1) as requiring a group health plan (or health insurance coverage offered in 

connection with such a plan) to provide any mental health or substance use 

disorder benefits; or 

 (2) in the case of a group health plan (or health insurance coverage offered in 

connection with such a plan) that provides mental health or substance use 

disorder benefits, as affecting the terms and conditions of the plan or coverage 

relating to such benefits under the plan or coverage, except as provided in 

subsection (a). 

(c) Exemptions. 

 (1) Small employer exemption. This section shall not apply to any group 
17

health plan (and group health insurance coverage offered in connection with a 

group health plan) for any plan year of a small employer (as defined in section 

2791(e)(4), except that for purposes of this paragraph such term shall include 

employers with 1 employee in the case of an employer residing in a State that 

permits small groups to include a single individual). 

 (2) 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 use 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. An employer may elect to 

continue to apply mental health and substance use disorder parity pursuant to 

this section with respect to the group health plan (or coverage) involved 

regardless of any increase in total costs.

 (B) Applicable percentage. With respect to a plan (or coverage), the 

applicable percentage described in this subparagraph shall be-- 

 (i) 2 percent in the case of the first plan year in which this section is 

applied; 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 section shall be made and 

certified by a qualified and licensed actuary who is a member in good 

standing of the American Academy of Actuaries. All such determinations 

shall be in a written report prepared by the actuary. The report, and all 

underlying documentation relied upon by the actuary, shall be maintained by 

the group health plan or health insurance issuer for a period of 6 years 

following the notification made under subparagraph (E). 

 (D) 6-month determinations. If a group health plan (or a health insurance 

issuer offering coverage in connection with a group health 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. 

 (i) In general. A group health plan (or a health insurance issuer 

offering coverage in connection with a group health plan) that, based upon a 

certification described under subparagraph (C), qualifies for an exemption 

under this paragraph, and elects to implement the exemption, shall promptly 

notify the Secretary, the appropriate State agencies, and participants and 

beneficiaries in the plan of such election. 

 (ii) Requirement. A notification to the Secretary under clause (i) shall 
18

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 use 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 use disorder benefits under the plan. 

 (iii) Confidentiality. A notification to the Secretary under clause (i) 

shall be confidential. The Secretary shall make available, upon request 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 type of employers 

submitting such notification; and 

 (II) a summary of the data received under clause (ii). 

 (F) Audits by appropriate agencies. To determine compliance with this 

paragraph, the Secretary may audit the books and records of a group health 

plan or health insurance issuer relating to an exemption, including any 

actuarial reports prepared pursuant to subparagraph (C), during the 6 year 

period following the notification of such exemption under subparagraph (E). 

A State agency receiving a notification under subparagraph (E) may also 

conduct such an audit with respect to an exemption covered by such 

notification. 

(d) Separate application to each option offered. In the case of a group health 

plan that offers a participant or beneficiary two or more benefit package 

options under the plan, the requirements of this section shall be applied 

separately with respect to each such option. 

 

(e) Definitions. For purposes of this section-- 

 (1) Aggregate lifetime limit. The term "aggregate lifetime limit" means, 

with respect to benefits under a group health plan or health insurance 

coverage, a dollar limitation on the total amount that may be paid with respect 

to such benefits under the plan or health insurance coverage with respect to an 

individual or other coverage unit. 

 (2) Annual limit. The term "annual limit" means, with respect to benefits 

under a group health plan or health insurance coverage, a dollar limitation on 

the total amount of benefits that may be paid with respect to such benefits in a 

12-month period under the plan or health insurance coverage with respect to 

an individual or other coverage unit. 

 (3) Medical or surgical benefits. The term "medical or surgical benefits" 
19

means benefits with respect to medical or surgical services, as defined under 

the terms of the plan or coverage (as the case may be), but does not include 

mental health benefits. 

 (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 and in accordance with applicable Federal and State law. 

 (5) Substance use disorder benefits. The term "substance use disorder 

benefits" means benefits with respect to services for substance use disorders, 

as defined under the terms of the plan and in accordance with applicable 

Federal and State law. 

(f) [Deleted] 

II. 42 U.S.C.S. Sec. 1396u-2(b)(8): Title 42 – The Public Health and Welfare, 

Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical 

Assistance Programs, Sec. 1396u-2, Provisions relating to managed care, (b) 

Beneficiary protections, (8) Compliance with certain maternity and mental 

health requirements. 

42 U.S.C.S. 1396u-2(b)(8). 

(b) Beneficiary Protections. 

..... 

(8) Compliance with certain maternity and mental health requirements.-- Each 

medicaid managed care organization shall comply with the requirements of subpart 2 

of part A of title XXVII of the Public Health Service Act insofar as such requirements 

apply and are effective with respect to a health insurance issuer that offers group 

health insurance coverage. 

(Lexis Nexis) 
Exhibit 2 

Letter from Clarke Cagey, 

Centers for Medicare & Medicaid Services, 

to David R. Riemer, 

Community Advocates Public Policy Institute, 

Dated November 24, 2009 






Exhibit 3 

Letter from David R. Riemer, 

Community Advocates Public Policy Institute, 

to Adam Shaw, 

Centers for Medicare & Medicaid Services, 

Dated May 19, 2009
May 19, 2009 Direct Dial: 414.475.6253, ext. 301 

Email: driemermil@yahoo.com 

Mr. Adam Shaw 

Centers for Medicare & Medicaid Services 

Department of Health and Human Services 

7500 Security Boulevard 

Baltimore, MD 21244-1850 

RE: Request for Information Regarding the Paul Wellstone and Pete Domenici Mental 

 Health Parity and Addiction Equity Act of 2008 

Dear Mr. Shaw: 

My name is David Riemer and I am Director of Policy and Planning at the Public Policy 

Institute of Community Advocates, an organization in Milwaukee that provides basic 

needs advocacy and services to low-income and at-risk individuals. As head of the 

Community Advocates Public Policy Institute, I lead an effort to create and implement 

sound public policy that will dramatically reduce poverty and its effects in both 

Milwaukee and Wisconsin. Chief among these poverty effects are negative 

health outcomes -- including lower life expectancy, higher rates of chronic illness, and 

untreated mental illness and addiction -- and the imposition of barriers to accessing 

medical care. 

Of fundamental importance to the Institute, then, is the formation of a rational health care 

delivery system that improves access and benefit coverage for the poor and near-poor 

through Medicaid managed care programs that provide health insurance coverage for 

their enrollees by Medicaid managed care organizations. We believe federal law requires 

such coverage to include parity for addiction and mental health services. Yet, the 

applicability of parity coverage to such organizations is not generally known. 

In order to eliminate and avoid any doubt or confusion regarding this issue, the 

regulations to be developed should clearly state that Medicaid managed care 

organizations are subject to compliance with the parity provisions of Subpart 2 of Part A 

of Section 2705 of the Public Health Service Act as amended by the Paul Wellstone and 

Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Division C, Title 

V, Subtitle B, Secs. 511-512 of the Emergency Economic Stabilization Act, H.R. 1424, 

P.L. 110-343) (the MHPAEA). 

Community Advocates Public Policy Institute • 1430 Underwood Ave. • Wauwatosa, WI 53213 • (414) 475-6253 • www.ca-ppi.org
Mr. Adam Shaw 

May 19, 2009 

Page 2 

We have conducted an extensive legal analysis regarding the applicability of the 

MHPAEA to Medicaid managed care organizations. This research has resulted in our 

conclusion that federal law compels compliance with the parity provisions of the 

MHPAEA by Medicaid managed care organizations. We would briefly like to share the 

key results of the analysis with you. 

As noted in the Request for Information, the Mental Health Parity Act of 1996 (MHPA) 

was the first federal mental health parity law which was enacted on September 26, 1996, 

as P.L. 104-204, Title VII, Section 703(a), 110 Stat. 2947. According to the 

Congressional Research Service Report for Congress dated November 19, 2008, the 

MHPA requires partial parity “by mandating that annual and lifetime dollar 

limits on coverage for mental health treatment under group health plans offering mental 

health coverage be no less than for physical illnesses.” This law amended the Public 

Health Service Act (PHSA), the Employee Retirement Income Security Act of 1974 

(ERISA), and the Internal Revenue Code of 1986 (IRC). The MHPA’s amendments to 

the PHSA are the provisions of the Act that, in conjunction with Section 1932(b)8 of 

Title XIX of the Social Security Act, require Medicaid managed care organizations to 

provide this limited parity coverage for mental health benefits.1 The MHPA added to 

Title XXVII, Part A, Subpart 2, Section 2705 of the PHSA, which is codified as 42 

U.S.C.S. Section 300gg-5 (Parity in the application of certain limits to mental health 

benefits). 

On October 3, 2008, President George W. Bush signed into law P.L. 110-343, H.R. 1424, 

the Emergency Economic Stabilization Act which included the MHPAEA. The 

MHPAEA further expands and amends Section 2705 of the PHSA (42 U.S.C.S. Section 

300gg-5) to “...require group health plans for employers larger than 50 employees that 

provide both medical and surgical benefits and mental health or substance use disorder 

benefits to ensure that: (1) the financial requirements, such as deductibles and 

copayments, applicable to such mental health or substance use disorder benefits are no 

more restrictive than the predominant financial requirements applied to substantially all 

medical and surgical benefits covered by the plan; (2) there are no separate cost sharing 

requirements that are applicable only with respect to mental health or substance use 

disorder benefits; (3) the treatment limitations applicable to such mental health or 

substance use disorder benefits are no more restrictive than the predominant treatment 

limitations applied to substantially all medical and surgical benefits covered under the 

plan; and (4) there are no separate treatment limitations that are applicable only with 

respect to mental health or substance use disorder benefits.” (2008 Bill Tracking Report, 

H.R. 1424; 110 Bill Tracking H.R. 1424, LexisNexis, 04/01/09) 

 

1 The MHPA’s other provisions relating to Section 712 of ERISA apply only to employers, requiring 

employers of a certain size to include mental health parity in the annual and lifetime dollar limits of 

employer-sponsored health care plans. The MHPA’s changes to Section 9812 of the IRC apply to a slightly 

broader definition of group health plans than ERISA, and impose excise taxes on such plans which fail to 

meet the parity requirements. 
Mr. Adam Shaw 

May 19, 2009 

Page 3 

In addition, the MHPAEA modifies the PHSA definition of “mental health 

benefits” and adds a definition for “substance use disorder benefits”. Mental health 

benefits are defined to mean “benefits with respect to services for mental health 

conditions, as defined under the terms of the plan, and in accordance with applicable 

Federal and State law”. Substance use disorder benefits will mean “benefits with respect 

to services for substance use disorders, as defined under the terms of the plan, and in 

accordance with applicable Federal and State law.” 

The PHSA’s original parity requirements for annual and lifetime dollar limits, created by 

the MHPA, will remain the same once the MHPAEA takes effect. All of the amendments 

to the PHSA resulting from the MHPAEA should become effective either one year after 

the Act’s October 3, 2008, enactment or no later than January 1, 2010. 

Like the original MHPA itself, the MHPAEA amends the same three distinct federal 

laws: the PHSA, ERISA and the IRC. Again, only the amendments to the PHSA are 

relevant to an analysis about the applicability of the MHPAEA’s parity requirements to 

Medicaid managed care organizations. The PHSA–amending provisions of the MHPAEA 

are found in Division C, Title V, Subtitle B, Sec. 512(b) of the Emergency Economic 

Stabilization Act, H.R. 1424, P.L. 110-343.2

 

Section 1932(b) 8 of Title XIX of the Social Security Act (cited as 42 U.S.C.S. Section 

1396u-2(b)(8)) applies the full parity provisions of the PHSA (Title XXVII, Part A, 

Subpart 2, Section 2705 of the Public Health Service Act, i.e., 42 U.S.C.S. Sec. 300gg-4 

et seq., and specifically Sec. 300gg-5 (Parity in the application of certain limits to mental 

health benefits)) -- including the expanded parity amendments to the PHSA added by the 

MHPAEA -- to Medicaid managed care organizations. The text of the Social Security Act 

statute that requires the application of the full parity provisions of the PHSA -- including 

the new provisions added by the MHPAEA -- to Medicaid managed care organizations is 

as follows: 

“Title 42 – The Public Health and Welfare, Chapter 7 – Social Security, 

Subchapter XIX – Grants to States for Medical Assistance Programs, 

Section 1396u-2, Provisions relating to managed care, (b) Beneficiary 

protections, (8) Compliance with certain maternity and mental health 

requirements (cited as 42 U.S.C.S. Section 1396u-2(b)(8)3

): 

(b) Beneficiary Protections. 

... 

 

2

 Attachment A shows the PHSA before its amendment by the MHPAEA (Column 1), indicates how the 

PHSA was altered by the MHPAEA (Column 2) with strike-throughs showing deletions and underlining 

showing additions, and finally provides a “clean” version of the PHSA after its amendment by the 

MHPAEA (Column 3). 

3

 This amendment to the Social Security Act was added on August 5, 1997 as P.L. 105-33. 
Mr. Adam Shaw 

May 19, 2009 

Page 4 

 (8) Compliance with certain maternity and mental health requirements. 

Each medicaid managed care organization shall comply with the 

requirements of subpart 2 of part A of title XXVII of the Public Health 

Service Act insofar as such requirements apply and are effective with 

respect to a health insurance issuer that offers group health insurance 

coverage.” (LexisNexis) 

In other words, all Medicaid managed care organizations that provide any addiction or 

mental health benefit -- whether (1) the Medicaid agencies with which they contract. 

require them to provide such a benefit, or (2) they unilaterally choose to provide such a 

benefit -- are required by the Social Security Act to provide the addiction or mental 

health benefit in a manner that complies with the parity provisions of Section 2705 of the 

PHSA. The interaction between the Social Security Act and the PHSA does not 

technically compel a Medicaid agency to deliver parity, but, rather, compels Medicaid 

managed care organizations to include parity in their benefit packages if they are 

contractually obligated or otherwise elect to provide an addiction or mental health service 

in the first place. Either way, however, the practical effect is the same. If a 

Medicaid agency includes an addiction or mental health benefit in its overall health 

benefit package and delivers that benefit package through a Medicaid managed care 

organization, the addiction or mental health benefit must be provided on a parity basis 

because the Medicaid managed care organization under Section 1932(b)(8) of Title XIX 

of the Social Security Act -- and its link to Section 2705 of the PHSA -- has no legal 

option to do otherwise. 

We have participated in numerous discussions with federal congressional and agency 

staff, as well as with national and local health care advocacy organizations, regarding this 

issue of applicability of coverage. We have been advised by the Congressional Research 

Service (CRS) as well as by staff at the Center for Medicare and Medicaid Services 

(CMS) that the parity provisions of the PHSA -- which now incorporate the new and 

expanded parity language from the MHPAEA-- are fully applicable to Medicaid managed 

care organizations. In fact, a State Medicaid Director Letter dated January 20, 1998, 

signed by Sally Richardson, Director, and posted on the CMS Medicaid website at 

www.cms.hhs.gov, unequivocally states that Medicaid managed care organizations must 

comply with the requirements of the MHPA (See Attachment B). By extension, the 

provisions of the MHPAEA are similarly applicable to Medicaid managed care 

organizations as this Act further amends and expands the parity provisions of the MHPA. 

The Congressional Budget Office (CBO) has also concluded that the parity provisions of 

the MHPAEA apply to Medicaid managed care organizations. The CBO fiscal estimates 

for the MHPAEA prepared for Congress in 2007 all state: “The bill’s requirements for 

issuers of group health insurance would apply to managed care plans in the Medicaid 

program...”.4 (Emphasis added). Our own legal research has confirmed this conclusion. 

 

4 CBO prepared Congressional Budget Office Cost Estimates for H.R. 1424, the Paul Wellstone Mental 

Health and Addiction Equity Act of 2007 and for S. 558, the Mental Health Parity Act of 2007, (the 

provisions of which were substantially the same as those of the Wellstone-Domenici Act) for the U.S. 
Mr. Adam Shaw 

May 19, 2009 

Page 5 

Unfortunately, the applicability of the PHSA parity provisions to Medicaid managed care 

organizations in accordance with federal law is barely understood. Our discussions with 

the health care advocacy organizations, businesses, and, most significantly, the State of 

Wisconsin have revealed that there remains great uncertainty surrounding the question of 

whether the parity provisions of the PHSA apply to Medicaid managed care 

organizations. 

Federal law requires that Medicaid managed care organizations comply with the parity 

provisions of Section 2705 of the PHSA – as further amended by the MHPAEA. To 

ensure that there is no further question concerning the applicability of the MHPAEA to 

Medicaid managed care organizations, the federal rules should state that the provisions of 

Section 2705 of the PHSA cited as 42 U.S.C.S. Section 300gg-5 apply to Medicaid 

managed care organizations in accordance with the authority found in Section 1932(b)8 

of Title XIX of the Social Security Act cited as 42 U.S.C.S. Section 1396u-2(b)(8). 

Thank you for the opportunity to comment on this most important of rulemaking 

processes. 

Very truly yours, 

David R. Riemer 

Director of Policy and Planning 

DJK/ser 

Attachment 

P

 House Committee on Education and Labor (dated October 15, 2007), the U.S. House Committee on Ways 

and Means (dated October 15, 2007), the U.S. House Committee on Energy and Commerce (dated 

November 21, 2007) and the U.S. Senate Committee on Health, Education, Labor and Pensions (dated 

March 20, 2007). 
ATTACHMENT A 

THE PUBLIC HEALTH SERVICE ACT PARITY REQUIREMENTS: 

APPLICABLE TO 

MEDICAID MANAGED CARE ORGANIZATIONS 

42 U.S.C.S. SECTION 1396u-2(b)(8). COMPLIANCE WITH CERTAIN MATERNITY 

AND MENTAL HEALTH REQUIREMENTS. 

42 U.S.C.S. SECTION 300gg-5. PARITY IN THE APPLICATION OF CERTAIN 

LIMITS TO MENTAL HEALTH BENEFITS. 
The Public Health Service Act Parity Requ

Applicable to Medicaid Managed Care 

1 Title XXVII, Part A, Subpart 2, Sec. 2705 of the Public Health Service Act, cited as 42 U.S.C.S. Section 300gg-5 (Parity in the application of cert

benefits); as amended by the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Division C, Title V, Subt

Emergency Economic Stabilization Act, H.R. 1424, P.L. 110-343 enacted October 3, 2008 (the Wellstone-Domenici Act)). The amendments added 

take effect one year after the date of the Act’s enactment or no later than January 1, 2010.

2 Section 1932(b)(8) of Title XIX of the Social Security Act, enacted on August 5, 1997, cited as 42 U.S.C.S. Section 1396u-2(b)(8).

Title 42 – The Public Health and Welfare, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Med

Programs, Sec. 1396u-2 – Provisions relating to managed care, (b)- Beneficiary protections, (8) – Compliance wit

and mental health requirements.

Cite as: 42 U.S.C.S. Sec. 1396u-2(b)(8)

(b) Beneficiary Protections.

.....

(8) Compliance with certain maternity and mental health requirements.-- Each medicaid managed care organizatio

requirements of subpart 2 of part A of title XXVII of the Public Health Service Act insofar as such requirements a

with respect to a health insurance issuer that offers group health insurance coverage.

I. The addiction and mental health benefits parity provisions of the Public Health Service 

Section 300gg-5)1 apply to Medicaid managed care organizations under the authority of 42 

1396u-2(b)(8)2.
42 U.S.C.S. Sec. 300gg-5. Parity in the application of certain limits to mental health 

benefits 

(a) In general.

 (1) Aggregate lifetime limits. In the case 

of a group health plan (or health insurance 

coverage offered in connection with such a 

plan) that provides both medical and surgical benefits and mental health benefits--

 

 (A) No lifetime limit. If the plan or coverage does not include an aggregate lifetime 

limit on substantially all medical and surgical benefits, the plan or coverage may 

not impose any aggregate lifetime limit on 

mental health benefits.

 

 (B) Lifetime limit. If the plan or cover42 U.S.C.S Sec. 300gg-5. Parity in the application of certain limits to mental health 

benefits mental health and substance use 

disorder benefits.

(a) In general.

 (1) Aggregate lifetime limits. In the case 

of a group health plan (or health insurance 

coverage offered in connection with such a 

plan) that provides both medical and surgical 

benefits and mental health benefits mental 

health or substance use disorder benefits--

 (A) No lifetime limit. If the plan or coverage does not include an aggregate lifetime 

limit on substantially all medical and surgical benefits, the plan or coverage may not 

impose any aggregate lifetime limit on mental health benefits mental health or substance 

use disorder benefits.

 (B) Lifetime limit. If the plan or cover2

42 U.S.C.S Sec

plication of cer

and substance u

(a) In general.

 (1) Aggregate 

of a group heal

coverage offere

plan) that prov

cal benefits and 

use disorder be

 (A) No life

coverage does 

lifetime limit o

and surgical be

may not impos

on mental healt

benefits.

 (B) Lifetim

3 Title XXVII, Part A, Subpart 2, Section 2705 of the Public Health Service Act, cited as 42 U.S.C.S. Section 300gg-5 (Parity in the application of c

benefits); as added September 26, 1996, P.L. 104-204, Title VII, Section 703(a), 110 Stat. 2947 (MHPA).

4 The Wellstone-Domenici Act was enacted on October 3, 2008, and will take effect one year after the date of the Act’s enactment or no later 

II. The Public Health Service Act: A Comparison of Current Law, Amended Law and Final 

Current Law Prior to Application 

of the Wellstone-Domenici Act3 

Amended Law After the

Wellstone-Domenici Act Takes 

Effect4

[NOTE: Deleted language shown with 

strike-throughs. New language shown with 

underlining]

Final Tex

After the 

Ac
age includes an aggregate lifetime limit 

on substantially all medical and surgical 

benefits (in this paragraph referred to as 

the “applicable lifetime limit”), the plan or 

coverage shall either--

 (i) apply the applicable lifetime limit 

both to the medical and surgical benefits 

to which it otherwise would apply and to 

mental health benefits and not distinguish in 

the application of such limit between such 

medical and surgical benefits and mental 

health benefits; or

 

 (ii) not include any aggregate lifetime 

limit on mental health benefits that is less 

than the applicable lifetime limit.

 

 (C) Rule in case of different limits. In 

the case of a plan or coverage that is not described in subparagraph (A) or (B) and that 

includes no or different aggregate lifetime 

limits on different categories of medical and 

surgical benefits, the Secretary shall establish rules under which subparagraph (B) is 

applied to such plan or coverage with respect to mental health benefits by substituting for the applicable lifetime limit an average aggregate lifetime limit that is computed 

taking into account the weighted average of 

the aggregate lifetime limits applicable to 

such categories.

 (2) Annual limits. In the case of a group 

health plan (or health insurance coverage 

offered in connection with such a plan) that 

age includes an aggregate lifetime limit 

on substantially all medical and surgical 

benefits (in this paragraph referred to as 

the “applicable lifetime limit”), the plan or 

coverage shall either--

 (i) apply the applicable lifetime limit 

both to the medical and surgical benefits 

to which it otherwise would apply and to 

mental health benefits mental health and 

substance use disorder benefits and not 

distinguish in the application of such limit 

between such medical and surgical benefits 

and mental health benefits mental health and 

substance use disorder benefits; or

 (ii) not include any aggregate lifetime 

limit on mental health benefits mental health 

or substance use disorder benefits that is less 

than the applicable lifetime limit.

 

 (C) Rule in case of different limits. In 

the case of a plan or coverage that is not described in subparagraph (A) or (B) and that 

includes no or different aggregate lifetime 

limits on different categories of medical 

and surgical benefits, the Secretary shall 

establish rules under which subparagraph 

(B) is applied to such plan or coverage with 

respect to mental health benefits mental 

health and substance use disorder benefits by 

substituting for the applicable lifetime limit 

an average aggregate lifetime limit that is 

computed taking into account the weighted 

average of the aggregate lifetime limits applicable to such categories.

 (2) Annual limits. In the case of a group 

health plan (or health insurance coverage 

offered in connection with such a plan) that 

age includes an 

on substantially 

benefits (in this 

the “applicable 

coverage shall 

 (i) apply 

both to the med

which it otherw

tal health and s

efits and not di

such limit betw

cal benefits and 

use disorder be

 (ii) not in

limit on mental 

order benefits t

lifetime limit.

 (C) Rule in 

the case of a pl

scribed in subp

includes no or 

limits on differ

and surgical be

establish rules 

(B) is applied t

respect to ment

disorder benefi

plicable lifetim

lifetime limit th

account the we

gregate lifetime 

categories.

 (2) Annual lim

health plan (or 

offered in conn

3
provides both medical and surgical benefits 

and mental health benefits--

 (A) No annual limit. If the plan or coverage does not include an annual limit on substantially all medical and surgical benefits, 

the plan or coverage may not impose any 

annual limit on mental health benefits.

 (B) Annual limit. If the plan or coverage 

includes an annual limit on substantially all 

medical and surgical benefits (in this paragraph referred to as the “applicable annual 

limit”), the plan or coverage shall either--

 (i) apply the applicable annual limit 

both to medical and surgical benefits to 

which it otherwise would apply and to mental health benefits and not distinguish in the 

application of such limit between such medical and surgical benefits and mental health 

benefits; or

 (ii) not include any annual limit on 

mental health benefits that is less than the 

applicable annual limit.

 (C) Rule in case of different limits. In 

the case of a plan or coverage that is not 

described in subparagraph (A) or (B) and 

that includes no or different annual limits on 

different categories of medical and surgical 

benefits, the Secretary shall establish rules 

under which subparagraph (B) is applied to 

such plan or coverage with respect to mental 

health benefits by substituting for the applicable annual limit an average annual limit 

provides both medical and surgical benefits 

and mental health benefits mental health or 

substance use disorder benefits--

 (A) No annual limit. If the plan or coverage does not include an annual limit on substantially all medical and surgical benefits, 

the plan or coverage may not impose any annual limit on mental health benefits mental 

health or substance use disorder benefits.

 (B) Annual limit. If the plan or coverage 

includes an annual limit on substantially all 

medical and surgical benefits (in this paragraph referred to as the “applicable annual 

limit”), the plan or coverage shall either--

 (i) apply the applicable annual limit 

both to medical and surgical benefits to 

which it otherwise would apply and to 

mental health benefits mental health and 

substance use disorder benefits and not 

distinguish in the application of such limit 

between such medical and surgical benefits 

and mental health benefits mental health and 

substance use disorder benefits; or

 (ii) not include any annual limit on 

mental health benefits mental health or substance use disorder benefits that is less than 

the applicable annual limit.

 (C) Rule in case of different limits. In 

the case of a plan or coverage that is not 

described in subparagraph (A) or (B) and 

that includes no or different annual limits on 

different categories of medical and surgical 

benefits, the Secretary shall establish rules 

under which subparagraph (B) is applied to 

such plan or coverage with respect to mental 

health benefits mental health and substance 

use disorder benefits by substituting for the 

provides both m

and mental hea

benefits--

 (A) No ann

age does not in

stantially all m

the plan or cov

annual limit on 

use disorder be

 (B) Annual 

includes an ann

medical and su

graph referred 

limit”), the plan 

 (i) apply 

both to medica

which it otherw

tal health and s

efits and not di

such limit betw

cal benefits and 

use disorder be

 (ii) not in

mental health o

efits that is less 

limit.

 (C) Rule in 

the case of a pl

described in su

that includes no 

different catego

benefits, the Se

under which su

such plan or cov

health and subs

by substituting 

4
that is computed taking into account the 

weighted average of the annual limits applicable to such categories.

applicable annual limit an average annual 

limit that is computed taking into account 

the weighted average of the annual limits 

applicable to such categories.

‘(3) Financial requirements and treatment limitations.

 (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 or substance use disorder 

benefits, such plan or coverage shall ensure 

that--

 “ ‘(i) the financial requirements applicable to such mental health or substance 

use disorder benefits are no more restrictive 

than the predominant financial requirements 

applied to substantially all medical and surgical benefits covered by the plan (or coverage), and there are no separate cost sharing 

requirements that are applicable only with 

respect to mental health or substance use 

disorder benefits; and

 “ ‘(iii) the treatment limitations applicable to such mental health or substance 

use disorder benefits are no more restrictive 

than the predominant treatment limitations 

applied to substantially all medical and 

surgical benefits covered by the plan (or 

coverage) and there are no separate treatment limitations that are applicable only 

with respect to mental health or substance 

use disorder benefits.

 “ ‘(B) Definitions. In this paragraph:

 “ ‘(i) Financial requirement. The 

term “financial requirement” includes 

limit an averag

puted taking in

age of the annu

categories.

(3) Fina

ment limitation

 (A) In ge

health plan (or 

offered in conn

provides both m

and mental hea

benefits, such p

that--

 (i) the fi

plicable to such 

use disorder be

than the predom

applied to subs

gical benefits c

age), and there 

requirements th

respect to ment

disorder benefi

 (iii) the 

plicable to such 

use disorder be

than the predom

applied to subs

surgical benefit

coverage) and t

ment limitation

with respect to 

use disorder be

 (B) Defin

 (i) Fina

“financial requ

5
deductibles, copayments, coinsurance, and 

out-of-pocket expenses, but excludes an 

aggregate lifetime limit and an annual limit 

subject to paragraphs (1) and (2).

 “ ‘(ii) Predominant. A financial 

requirement or treatment limit is considered 

to be predominant if it is the most common 

or frequent of such type of limit or requirement.

 “ ‘(iii) Treatment limitation. The 

term “treatment limitation” includes limits 

on the frequency of treatment, number of 

visits, days of coverage, or other similar limits on the scope or duration of treatment.

 “ ‘(4) Availability of plan information. 

The criteria for medical necessity determinations made under the plan with respect 

to mental health or substance use 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) in 

accordance with regulations 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 or substance 

use disorder benefits in the case of any 

participant or beneficiary shall, on request or 

as otherwise required, be made available by 

the plan administrator (or the health insurance issuer offering such coverage) to the 

participant or beneficiary in accordance with 

regulations.

 “ ‘(5) Out-of-network providers. In the 

deductibles, co

out-of-pocket e

aggregate lifeti

subject to parag

 (ii) Pred

ment or treatm

predominant if 

quent of such t

 (iii) Tre

“treatment limi

frequency of tr

days of coverag

the scope or du

 (4) Availab

criteria for med

made under the 

health or substa

(or the health in

in connection w

such benefits) s

plan administra

issuer offering 

with regulation

tial participant, 

ing provider up

any denial und

reimbursement 

respect to ment

disorder benefi

pant or benefic

otherwise requ

the plan admin

ance issuer offe

participant or b

regulations.

 (5) Out-of-

6
(b) Construction. Nothing in this section 

shall be construed--

 (1) as requiring a group health plan (or 

health insurance coverage offered in connection with such a plan) to provide any mental 

health benefits; or

 (2) in the case of a group health plan (or 

health insurance coverage offered in connection with such a plan) that provides mental 

health benefits, as affecting the terms and 

conditions (including cost sharing, limits on 

numbers of visits or days of coverage, and 

requirements relating to medical necessity) 

relating to the amount, duration, or scope 

of mental health benefits under the plan or 

coverage, except as specifically provided 

in subsection (a) (in regard to parity in the 

imposition of aggregate lifetime limits and 

annual limits for mental health benefits).

case of a plan or coverage that provides both 

medical and surgical benefits and mental 

health or substance use disorder benefits, if 

the plan or coverage provides coverage for 

medical or surgical benefits provided by outof-network providers, the plan or coverage 

shall provide coverage for mental health or 

substance use disorder benefits provided by 

out-of-network providers in a manner that 

is consistent with the requirements of this 

section.’;

(b) Construction. Nothing in this section 

shall be construed--

 (1) as requiring a group health plan (or 

health insurance coverage offered in connection with such a plan) to provide any mental 

health benefits mental health or substance 

use disorder benefits; or

 (2) in the case of a group health plan (or 

health insurance coverage offered in connection with such a plan) that provides mental 

health benefits, as affecting the terms and 

conditions (including cost sharing, limits on 

numbers of visits or days of coverage, and 

requirements relating to medical necessity) 

relating to the amount, duration, or scope 

of mental health benefits under the plan or 

coverage, except as specifically provided 

in subsection (a) (in regard to parity in the 

imposition of aggregate lifetime limits and 

annual limits for mental health benefits).

“ ‘(2) in the case of a group health plan (or 

health insurance coverage offered in connection with such a plan) that provides mental 

health or substance use disorder benefits, 

as affecting the terms and conditions of the 

case of a plan o

medical and su

health or substa

the plan or cov

medical or surg

of-network pro

shall provide c

substance use d

out-of-network 

is consistent w

section.

(b) Constructio

shall be constru

 (1) as requiri

health insuranc

tion with such 

health or substa

 

(2) in the case 

health insuranc

nection with su

tal health or sub

as affecting the 

plan or coverag

under the plan 

vided in subsec

7
(c) Exemptions.

 (1) Small employer exemption. This section shall not apply to any group health plan 

(and group health insurance coverage offered in connection with a group health plan) 

for any plan year of a small employer.

 (2) Increased cost exemption. This section 

shall not apply with respect to a group health 

plan (or health insurance coverage offered in 

connection with a group health plan) if the 

application of this section to such plan (or to 

such coverage) results in an increase in the 

cost under the plan (or for such coverage) of 

at least 1 percent.

plan or coverage relating to such benefits 

under the plan or coverage, except as provided in subsection (a).’;

(c) Exemptions.

 (1) Small employer exemption. This section shall not apply to any group health 

plan (and group health insurance coverage 

offered in connection with a group health 

plan) for any plan year of a small employer 

(as defined in section 2791(e)(4), except that 

for purposes of this paragraph such term 

shall include employers with 1 employee in 

the case of an employer residing in a State 

that permits small groups to include a single 

individual).

 (2) Increased cost exemption. This section 

shall not apply with respect to a group health 

plan (or health insurance coverage offered in 

connection with a group health plan) if the 

application of this section to such plan (or to 

such coverage) results in an increase in the 

cost under the plan (or for such coverage) of 

at least 1 percent.:

 “ ‘(2) 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 

use disorder benefits under the plan (as 

determined and certified under subparagraph 

(C)) by an amount that exceeds the applicable 

(c) Exemptions

 (1) Small em

section shall no

plan (and group 

offered in conn

plan) for any p

(as defined in s

for purposes of 

shall include em

the case of an e

that permits sm

individual).

 

 (2) Cost exem

 (A) In ge

health plan (or 

fered in connec

application of t

coverage) resul

year involved o

coverage with r

cal benefits and 

use disorder be

determined and 

(C)) by an amo

8
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. An employer 

may elect to continue to apply mental health 

and substance use disorder parity pursuant to 

this section with respect to the group health 

plan (or coverage) involved regardless of 

any increase in total costs.

 “ ‘(B) Applicable percentage. With respect to a plan (or coverage), the applicable 

percentage described in this subparagraph 

shall be--

 “ ‘(i) 2 percent in the case of the first 

plan year in which this section is applied; 

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 section shall be made and certified 

by a qualified and licensed actuary who is a 

member in good standing of the American 

Academy of Actuaries. All such determinations shall be in a written report prepared by 

the actuary. The report, and all underlying 

documentation relied upon by the actuary, 

shall be maintained by the group health plan 

or health insurance issuer for a period of 6 

years following the notification made under 

subparagraph (E).

 “ ‘(D) 6-month determinations. If a group

health plan (or a health insurance issuer offering coverage in connection with a group 

percentage des

the actual total 

this section sha

coverage) durin

and such exem

(or coverage) f

may elect to co

and substance u

ant to this secti

health plan (or 

less of any incr

 (B) Appli

spect to a plan 

percentage des

shall be--

 (i) 2 per

plan year in wh

and

 (ii) 1 pe

sequent plan ye

 (C) Deter

terminations as 

under a plan (o

this section sha

a qualified and 

member in goo

Academy of Ac

tions shall be in 

the actuary. Th

documentation 

shall be mainta

or health insura

years following 

subparagraph (

 (D) 6-mo

health plan (or 

fering coverage 

9
health 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.

 (i) In general. A group health plan (or 

a health insurance issuer offering coverage 

in connection with a group health plan) that, 

based upon a certification described under 

subparagraph (C), qualifies for an exemption 

under this paragraph, and elects to implement the exemption, shall promptly notify 

the Secretary, the appropriate State agencies, 

and participants and beneficiaries in the plan 

of such election.

 “ ‘(ii) Requirement. A notification to 

the Secretary 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 use 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 

use disorder benefits under the plan.

 “ ‘(iii) Confidentiality. A notification

health plan) see

paragraph, dete

graph (A) shall 

coverage) has c

the first 6 mont

 (E) Notifi

 (i) In ge

(or a health ins

age in connecti

that, based upo

under subparag

exemption und

to implement th

notify the Secr

agencies, and p

in the plan of s

 (ii) Req

the Secretary u

 (I) a d

covered lives u

involved at the 

as applicable, a

tion of the cost

graph by such p

 (II) fo

which a cost ex

year prior, a de

costs of covera

and surgical be

substance use d

plan; and

 (III) f

which a cost ex

year prior, the a

with respect to 

use disorder be

 (iii) Co

10
(d) Separate application to each option offered. In the case of a group health plan that 

offers a participant or beneficiary two or 

more benefit package options under the plan, 

the requirements of this section shall be 

applied separately with respect to each such 

option.

 (e) Definitions. For purposes of this section--

 (1) Aggregate lifetime limit. The term “aggregate lifetime limit” means, with respect 

to benefits under a group health plan or 

health insurance coverage, a dollar

to the Secretary under clause (i) shall be 

confidential. The Secretary shall make available, upon request 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 type of employers submitting such 

notification; and

 “ ‘(II) a summary of the data received under clause (ii).

 “ ‘(F) Audits by appropriate agencies. 

To determine compliance with this paragraph, the Secretary may audit the books 

and records of a group health plan or health 

insurance issuer relating to an exemption, 

including any actuarial reports prepared 

pursuant to subparagraph (C), during the 

6 year period following the notification of 

such exemption under subparagraph (E). A 

State agency receiving a notification under 

subparagraph (E) may also conduct such an 

audit with respect to an exemption covered 

by such notification.”

 (d) Separate application to each option 

offered. In the case of a group health plan 

that offers a participant or beneficiary two 

or more benefit package options under the 

plan, the requirements of this section shall 

be applied separately with respect to each 

such option.

 (e) Definitions. For purposes of this section--

 (1) Aggregate lifetime limit. The term “aggregate lifetime limit” means, with respect 

to benefits under a group health plan or 

health insurance coverage, a dollar

to the Secretary 

confidential. Th

able, upon requ

annual basis, an 

such notificatio

 (I) a b

size and type o

notification; an

 (II) a 

under clause (ii

 (F) Audit

To determine c

graph, the Secr

and records of 

insurance issue

including any a

pursuant to sub

6 year period fo

such exemption 

State agency re

subparagraph (

audit with resp

by such notific

(d) Separate ap

offered. In the 

that offers a pa

or more benefit 

plan, the requir

be applied sepa

such option.

(e) Definitions. 

tion--

 (1) Aggregate 

gregate lifetime 

to benefits und

health insuranc

11
limitation on the total amount that may be 

paid with respect to such benefits under the 

plan or health insurance coverage with respect to an individual or other coverage unit.

 (2) Annual limit. The term “annual limit” 

means, with respect to benefits under a 

group health plan or health insurance coverage, a dollar limitation on the total amount 

of benefits that may be paid with respect to 

such benefits in a 12-month period under the 

plan or health insurance coverage with respect to an individual or other coverage unit.

 (3) Medical or surgical benefits. The term 

“medical or surgical benefits” means benefits with respect to medical or surgical services, as defined under the terms of the plan 

or coverage (as the case may be), but does 

not include mental health benefits.

 (4) Mental health benefits. The term 

“mental health benefits” means benefits with 

respect to mental health services, as defined 

under the terms of the plan or coverage (as 

the case may be), but does not include benefits with respect to treatment of substance 

abuse or chemical dependency.

limitation on the total amount that may be 

paid with respect to such benefits under the 

plan or health insurance coverage with respect to an individual or other coverage unit.

 (2) Annual limit. The term “annual limit” 

means, with respect to benefits under a 

group health plan or health insurance coverage, a dollar limitation on the total amount 

of benefits that may be paid with respect to 

such benefits in a 12-month period under the 

plan or health insurance coverage with respect to an individual or other coverage unit.

 (3) Medical or surgical benefits. The term 

“medical or surgical benefits” means benefits with respect to medical or surgical services, as defined under the terms of the plan 

or coverage (as the case may be), but does 

not include mental health benefits.

 (4) Mental health benefits. The term 

“mental health benefits” means benefits with 

respect to mental health services, as defined 

under the terms of the plan or coverage (as 

the case may be), but does not include benefits with respect to treatment of substance 

abuse or chemical dependency.

 “ ‘(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 

and in accordance with applicable Federal 

and State law.

 “ ‘(5) Substance use disorder benefits. 

The term “substance use disorder benefits” 

means benefits with respect to services for 

substance use disorders, as defined under the 

terms of the plan and in accordance with applicable Federal and State law.’;

limitation on th

paid with respe

plan or health i

spect to an indi

 (2) Annual lim

means, with res

group health pl

age, a dollar lim

of benefits that 

such benefits in 

plan or health i

spect to an indi

 (3) Medical o

“medical or sur

efits with respe

vices, as define

or coverage (as 

not include me

 (4) Mental he

“mental health 

respect to servi

tions, as define

and in accordan

and State law.

 (5) Substance 

term “substanc

means benefits 

substance use d

the terms of the 

applicable Fede

12
(f) [Deleted] (f) [Deleted]”

History (Applicable to Current Law and 

Amended Law): 

 (July 1, 1944, ch 373, Title XXVII, Part 

A, Subpart 2, § 2705, as added Sept. 26, 

1996, P.L. 104-204, Title VII, § 703(a), 110 

Stat. 2947; Jan. 10, 2002, P.L. 107-116, Title 

VII, § 701(b), 115 Stat. 2228; Dec. 2, 2002, 

P.L. 107-313, § 2(b), 116 Stat. 2457; Dec. 

19, 2003, P.L. 108-197, § 2(b), 117 Stat. 

2898; Oct. 4, 2004, P.L. 108-311, Title III, § 

302(c), 118 Stat. 1179; Dec. 30, 2005, P.L. 

109-151, § 1(b), 119 Stat. 2886; Dec. 20, 

2006, P.L. 109-432, Div A, Title I, § 115(c), 

120 Stat. 2941; June 17, 2008, P.L. 110-245, 

Title IV, § 401(c), 122 Stat. 1650; Oct. 3, 

2008, P.L. 110-343, Div C, Title V, Subtitle 

B, § 512(b), (g)(2), 122 Stat. 3885, 3892.)

History; Ancillary Laws and Directives:

 1. Prospective amendment

 2. Amendments

 3. Other provisions

 1. Prospective amendment (See text of 

Amended Law)

 2. Amendments (Applicable to Current 

Law and Amended Law): 

 

2002. Act Jan. 10, 2002, in subsec. (f), sub-

stituted “December 31, 2002” for “Septem-

ber 30, 2001”.

 Act Dec. 2, 2002, in subsec. (f), substi-

tuted “December 31, 2003” for “December 

31, 2002”.

(f) [Deleted]

13
2003. Act Dec. 19, 2003, in subsec. (f), 

substituted “December 31, 2004” for “December 31, 2003”.

 

2004. Act Oct. 4, 2004 (effective on enactment, as provided by § 302(d) of such Act, 

which appears as 26 USCS § 9812 note), in 

subsec. (f), substituted “after December 31, 

2005” for “on or after December 31, 2004”.

 

2005. Act Dec. 30, 2005, in subsec. (f), 

substituted “December 31, 2006” for “December 31, 2005”.

 

2006. Act Dec. 20, 2006, in subsec. (f), substituted “2007” for “2006”.

 

2008. Act June 17, 2008, in subsec. (f), substituted “services furnished--” and paras. (1) 

and (2) for “services furnished after December 31, 2007”.

 Act Oct. 3, 2008 (effective on 1/1/2009, 

as provided by § 512(e) of such Act, which 

appears as a note to this section), deleted 

subsec. (f), which read:

 “(f) Sunset. This section shall not apply to 

benefits for services furnished--

 “(1) on or after January 1, 2008, and before the date of the enactment of the Heroes 

Earnings Assistance and Relief Tax Act of 

2008, and

 “(2) after December 31, 2008.[.]”.

 3. Other provisions (Applicable to Current Law and Amended Law)

Applicability of section. Act Sept. 26, 1996, 

P.L. 104-204, Title VII, § 703(b), 110 Stat. 

14
2950, provides: “The amendments made 

by this section [adding this section] shall 

apply with respect to group health plans for 

plan years beginning on or after January 1, 

1998.”.

 Act Oct. 3, 2008; regulations. Act Oct. 3, 

2008, P.L. 110-343, Div C, Title V, Subtitle 

B, § 512(d), 122 Stat. 3891, provides: “Not 

later than 1 year after the date of enactment 

of this Act, the Secretaries of Labor, Health 

and Human Services, and the Treasury shall 

issue regulations to carry out the amendments made by subsections (a), (b), and (c) 

[amending 26 USCS § 9812, 29 USCS § 

1185a, and 42 USCS § 300gg-5], respectively.”.

 Application of Oct. 3, 2008 amendments. 

Act Oct. 3, 2008, P.L. 110-343, Div C, Title 

V, Subtitle B, § 512(e), 122 Stat. 3891; Dec. 

23, 2008, P.L. 110-460, § 1, 122 Stat. 5123, 

provides:

 “(1) In general. The amendments made by 

this section [for full classification, consult 

USCS Tables volumes] shall apply with 

respect to group health plans for plan years 

beginning after the date that is 1 year after 

the date of enactment of this Act, regardless 

of whether regulations have been issued to 

carry out such amendments by such effective date, except that the amendments made 

by subsections (a)(5), (b)(5), and (c)(5) 

[deleting 26 USCS § 9812(f), 29 USCS § 

1185a(f), and 42 USCS § 300gg-5(f)], relating to striking of certain sunset provisions, 

shall take effect on January 1, 2009.

 “(2) Special rule for collective bargaining 

agreements. In the case of a group health 

15
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 [for full classification, consult USCS Tables volumes] 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 added by this 

section shall not be treated as a termination 

of such collective bargaining agreement.”.

 Assuring coordination. Act Oct. 3, 2008, 

P.L. 110-343, Div C, Title V, Subtitle B, § 

512(f), 122 Stat. 3892, provides:

 “The Secretary of Health and Human Services, the Secretary of Labor, and the Secretary of the Treasury may ensure, through 

the execution or revision of an interagency 

memorandum of understanding among such 

Secretaries, that--

 “(1) regulations, rulings, and interpretations issued by such Secretaries relating to 

the same matter over which two or more 

such Secretaries have responsibility under 

this section (and the amendments made by 

this section [for full classification, consult 

USCS Tables volumes]) are administered so 

16
as to have the same effect at all times; and

 “(2) coordination of policies relating to 

enforcing the same requirements through 

such Secretaries in order to have a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns 

priorities in enforcement.”. 

(Emphasis added. LexisNexis)

17
ATTACHMENT B 

STATE MEDICAID DIRECTOR LETTER DATED JANUARY 20, 1998, SIGNED BY 

SALLY RICHARDSON, DIRECTOR 
January 20, 1998 

Dear State Medicaid Director: 

This letter is one in a series of letters that provides guidance on the implementation of the Balanced 

Budget Act of 1997(BBA). The BBA contains numerous provisions relating specifically to 

managed care. In order to provide guidance as quickly as possible, we are issuing a number of 

managed care State letters (list of those already issued is attached). This letter is the seventh in this 

managed care series. 

The purpose of this letter is to alert you to Federal requirements affecting limits on mental health 

benefits and to clarify their applicability to State Medicaid programs. Section 4704(a) of the BBA 

creates a new section in the Social Security Act (1932(b)(8)) that requires each Medicaid managed 

care organization to comply with certain requirements added to the Public Health Service Act by 

the Mental Health Parity Act (MHPA), Public Law 104-204. MHPA provides for parity in the 

application of certain dollar limits on mental health benefits when limits are placed on medical and 

surgical benefits. 

Requirements 

MHPA was enacted on September 26, 1996 and provides that a group health plan, or health insurance coverage 

offered in connection with a group health plan (as those terms are defined in the Health Insurance Portability and 

Accountability Act of 1996 (HIPAA)), providing both medical and surgical benefits and mental health benefits 

may not impose an aggregate lifetime dollar limit or annual dollar limit on mental health benefits if it does not also 

impose such a dollar limit on substantially all of the medical and surgical benefits. If the plan does impose an 

aggregate lifetime limit or annual limit on substantially all medical and surgical benefits, the plan cannot impose a 

comparable limit on mental health benefits that is less than that applied to the medical and surgical benefits. If a 

group health plan offers two or more benefit package options under the plan, the requirements of MHPA apply 

separately to each option. MHPA makes clear that the requirements of the law apply to group health plans and 

health insurance issuers offering coverage under such plans regardless of whether the mental health benefits are 

separately administered under the plan. 

Group health plans and health insurance coverage offered in connection with group health plans are not required by 

MHPA to provide mental health benefits. In addition, the law does not affect the terms and conditions (including 

cost sharing, limits on numbers of visits or days of coverage, and requirements relating to medical necessity) 

relating to the amount, duration, or scope of mental health benefits under a plan or coverage except as specifically 

provided in regard to parity of aggregate lifetime limits and annual limits. Finally, MHPA requirements do not 

apply to benefits for substance abuse or chemical dependency. 

MHPA provides two exemptions from the parity requirements. The first exemption is for small 

employers (defined as an employer with at least 2 but not more than 50 employees). The second 

exemption is for group health plans if the application of these provisions results in an increase in 

the cost under the plan or coverage of at least 1 percent. 

MHPA provisions are effective for plan years beginning on or after January 1, 1998. MHPA 

includes a sunset provision under which the MHPA requirements do not apply to benefits for 
services furnished on or after September 30, 2001. 

Many States have passed legislation or adopted regulations to address parity for mental health 

benefits. A State law that requires more favorable treatment of mental health benefits under 

health insurance coverage offered by issuers would not be preempted by the provisions of MHPA 

and the interim rules. In the absence of such laws, the provisions of MHPA apply. 

Interim Rules 

HHS, the Department of Labor, and the Department of the Treasury developed interim rules to 

implement MHPA. These interim rules were published in the Federal Register on December 22, 

1997 at 62 FR 66932. Please see these rules for a detailed discussion of the parity provisions. 

Impact on Medicaid 

If mental health benefits are covered by the Medicaid contract, then all Medicaid managed care 

organizations with prepaid contracts must comply with the requirements of MHPA and provide for 

parity in the application of annual and lifetime dollar limits on mental health benefits when limits 

are placed on medical and surgical benefits. MHPA does not apply to fee-for-service arrangements 

because the State Medicaid Agency does not meet the definition of a "group health plan" as defined 

in HIPAA. Section 1932(b)(8) of the Social Security Act, as added by section 4704(a) of the BBA, 

specifically requires Medicaid managed care organizations to comply with MHPA by treating 

them, for that purpose, like health insurance issuers offering group health insurance coverage (as 

those terms are defined in HIPAA). However, the exemptions from the parity provisions in MHPA 

apply only to group health plans and to insurance products sold to those plans. Therefore, the 

exemptions are not available to Medicaid managed care plans because they are furnishing services 

in connection with a State Medicaid program, which is not a group health plan. Thus, the parity 

requirements of MHPA apply to Medicaid managed care organizations without exemptions. 

It is the responsibility of the State Medicaid Agency to ensure that each managed care organization with which it 

contracts meets the requirements of MHPA with regard to its Medicaid services. 

MHPA is effective for managed care plans beginning on or after January 1, 1998

If you or your staff have any questions, you may contact Terese Klitenic of the Center for Medicaid and 

State Operations, Insurance Standards Team. Ms. Klitenic can be reached at (410) 786-5942. We hope you 

find this information useful as you implement the provisions of MHPA. 

Sincerely, 

Sally Richardson 
Director 

Attachment 

cc: HCFA Regional Administrators HCFA Associate Regional Administrators for Medicaid & State 

Operations HIPAA Regional Office Contacts Lee Partridge - American Public Welfare Association Joy 

Wilson - National Council of State Legislatures Jennifer Baxendell - National Governors Association 

HCFA Press Office 

BBA MANAGED CARE STATE LETTERS 

Section Subject Date Issued 

4701 SPA Option for Managed Care 12/17/97 

4704(a) Specification of Benefits 12/17/97 

4707(a) Marketing Restrictions 12/30/97 

4704(e) Miscellaneous Managed Care Provisions 12/30/97 

4704(h) 

4707(a) 

4707(c) 

4708(b) 

4708(c) 

4708(d) 

4701 Choice, MCE Definition, Repeal of 75/25, and Approval Threshold 1/14/98 

4708(a) 

4705 External Quality Review 1/20/98