I

106TH CONGRESS

1ST SESSION H. R. 1977

To amend the Employee Retirement Income Security Act of 1974, Public

Health Service Act, and the Internal Revenue Code of 1986 to provide

parity with respect to substance abuse treatment benefits under group

health plans and health insurance coverage.

IN THE HOUSE OF REPRESENTATIVES

MAY 27, 1999

Mr. RAMSTAD (for himself, Mr. GILMAN, Mr. ENGLISH, Mr. SESSIONS, Mr.

LUTHER, Mr. NEAL of Massachusetts, Mr. PORTMAN, Mrs. BONO, Mr.

STARK, Mr. PAYNE, Mr. KLECZKA, Mr. FROST, and Mr. UPTON) introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committees on Education and the Workforce, and Ways and Means, for a period to be subsequently determined

by the Speaker, in each case for consideration of such provisions as fall

within the jurisdiction of the committee concerned

A BILL

To amend the Employee Retirement Income Security Act

of 1974, Public Health Service Act, and the Internal

Revenue Code of 1986 to provide parity with respect

to substance abuse treatment benefits under group health

plans and health insurance coverage.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Harold Hughes-Bill

3 Emerson Substance Abuse Treatment Parity Act of

4 1999’’.

5 SEC. 2. FINDINGS.

6 Congress finds the following:

7 (1) Substance abuse, if left untreated, is a med8 ical emergency.

9 (2) Parity should apply to benefits for treat10 ment sought voluntarily, including treatment for

11 substance abuse.

12 (3) Nothing in this Act should be construed as

13 prohibiting application of the concept of parity to

14 substance abuse treatment provided by faith-based

15 treatment providers.

16 SEC. 3. PARITY IN SUBSTANCE ABUSE TREATMENT BENE17 FITS.

18 (a) GROUP HEALTH PLANS.—

19 (1) PUBLIC HEALTH SERVICE ACT AMEND20 MENTS.—

21 (A) IN GENERAL.—Subpart 2 of part A of

22 title XXVII of the Public Health Service Act is

23 amended by adding at the end the following

24 new section:
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1 ‘‘SEC. 2707. PARITY IN THE APPLICATION OF TREATMENT

2 LIMITATIONS AND FINANCIAL REQUIRE3 MENTS TO SUBSTANCE ABUSE TREATMENT

4 BENEFITS.

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

6 plan (or health insurance coverage offered in connection

7 with such a plan) that provides both medical and surgical

8 benefits and substance abuse treatment benefits, the plan

9 or coverage shall not impose treatment limitations or fi10 nancial requirements on the substance abuse treatment

11 benefits unless similar limitations or requirements are im12 posed for medical and surgical benefits.

13 ‘‘(b) CONSTRUCTION.—Nothing in this section shall

14 be construed—

15 ‘‘(1) as requiring a group health plan (or health

16 insurance coverage offered in connection with such a

17 plan) to provide any substance abuse treatment ben18 efits; or

19 ‘‘(2) to prevent a group health plan or a health

20 insurance issuer offering group health insurance cov21 erage from negotiating the level and type of reim22 bursement with a provider for care provided in ac23 cordance with this section.

24 ‘‘(c) EXEMPTIONS.—

25 ‘‘(1) SMALL EMPLOYER EXEMPTION.—
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1 ‘‘(A) IN GENERAL.—This section shall not

2 apply to any group health plan (and group

3 health insurance coverage offered in connection

4 with a group health plan) for any plan year of

5 a small employer.

6 ‘‘(B) SMALL EMPLOYER.—For purposes of

7 subparagraph (A), the term ‘small employer’

8 means, in connection with a group health plan

9 with respect to a calendar year and a plan year,

10 an employer who employed an average of at

11 least 2 but not more than 50 employees on

12 business days during the preceding calendar

13 year and who employs at least 2 employees on

14 the first day of the plan year.

15 ‘‘(C) APPLICATION OF CERTAIN RULES IN

16 DETERMINATION OF EMPLOYER SIZE.—For

17 purposes of this paragraph—

18 ‘‘(i) APPLICATION OF AGGREGATION

19 RULE FOR EMPLOYERS.—Rules similar to

20 the rules under subsections (b), (c), (m),

21 and (o) of section 414 of the Internal Rev22 enue Code of 1986 shall apply for purposes

23 of treating persons as a single employer.

24 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

25 IN PRECEDING YEAR.—In the case of an
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1 employer which was not in existence

2 throughout the preceding calendar year,

3 the determination of whether such em4 ployer is a small employer shall be based

5 on the average number of employees that

6 it is reasonably expected such employer

7 will employ on business days in the current

8 calendar year.

9 ‘‘(iii) PREDECESSORS.—Any reference

10 in this paragraph to an employer shall in11 clude a reference to any predecessor of

12 such employer.

13 ‘‘(2) INCREASED COST EXEMPTION.—This sec14 tion shall not apply with respect to a group health

15 plan (or health insurance coverage offered in connec16 tion with a group health plan) if the application of

17 this section to such plan (or to such coverage) re18 sults in an increase in the cost under the plan (or

19 for such coverage) of at least 1 percent.

20 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF21 FERED.—In the case of a group health plan that offers

22 a participant or beneficiary two or more benefit package

23 options under the plan, the requirements of this section

24 shall be applied separately with respect to each such op25 tion.
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1 ‘‘(e) DEFINITIONS.—For purposes of this section—

2 ‘‘(1) TREATMENT LIMITATION.—The term

3 ‘treatment limitation’ means, with respect to benefits

4 under a group health plan or health insurance cov5 erage, any day or visit limits imposed on coverage of

6 benefits under the plan or coverage during a period

7 of time.

8 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi9 nancial requirement’ means, with respect to benefits

10 under a group health plan or health insurance cov11 erage, any deductible, coinsurance, or cost-sharing

12 or an annual or lifetime dollar limit imposed with re13 spect to the benefits under the plan or coverage.

14 ‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The

15 term ‘medical or surgical benefits’ means benefits

16 with respect to medical or surgical services, as de17 fined under the terms of the plan or coverage (as the

18 case may be), but does not include substance abuse

19 treatment benefits.

20 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE21 FITS.—The term ‘substance abuse treatment bene22 fits’ means benefits with respect to substance abuse

23 treatment services but only insofar as such treat24 ment services are abstinence-based. Such term in-
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1 cludes non-narcotic medication-based therapy and

2 appropriate transitional medication-based therapy.

3 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV4 ICES.—The term ‘substance abuse services’ means

5 any of the following items and services provided for

6 the treatment of substance abuse:

7 ‘‘(A) Inpatient treatment, including detoxi8 fication.

9 ‘‘(B) Non-hospital residential treatment.

10 ‘‘(C) Outpatient treatment, including

11 screening and assessment, medication manage12 ment, individual, group, and family counseling,

13 and relapse prevention.

14 ‘‘(D) Prevention services, including health

15 education and individual and group counseling

16 to encourage the reduction of risk factors for

17 substance abuse.

18 ‘‘(6) SUBSTANCE ABUSE.—The term ‘substance

19 abuse’ includes chemical dependency.

20 ‘‘(f) NOTICE.—A group health plan under this part

21 shall comply with the notice requirement under section

22 714(f) of the Employee Retirement Income Security Act

23 of 1974 with respect to the requirements of this section

24 as if such section applied to such plan.
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1 ‘‘(g) SUNSET.—This section shall not apply to bene2 fits for services furnished in plan years beginning on or

3 after January 1, 2005.’’.

4 (B) CONFORMING AMENDMENT.—Section

5 2723(c) of such Act (42 U.S.C. 300gg–23(c)) is

6 amended by striking ‘‘section 2704’’ and insert7 ing ‘‘sections 2704 and 2707’’.

8 (2) ERISA AMENDMENTS.—

9 (A) IN GENERAL.—Subpart B of part 7 of

10 subtitle B of title I of the Employee Retirement

11 Income Security Act of 1974 is amended by

12 adding at the end the following new section:

13 ‘‘SEC. 714. PARITY IN THE APPLICATION OF TREATMENT

14 LIMITATIONS AND FINANCIAL REQUIRE15 MENTS TO SUBSTANCE ABUSE TREATMENT

16 BENEFITS.

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

18 plan (or health insurance coverage offered in connection

19 with such a plan) that provides both medical and surgical

20 benefits and substance abuse treatment benefits, the plan

21 or coverage shall not impose treatment limitations or fi22 nancial requirements on the substance abuse treatment

23 benefits unless similar limitations or requirements are im24 posed for medical and surgical benefits.
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1 ‘‘(b) CONSTRUCTION.—Nothing in this section shall

2 be construed—

3 ‘‘(1) as requiring a group health plan (or health

4 insurance coverage offered in connection with such a

5 plan) to provide any substance abuse treatment ben6 efits; or

7 ‘‘(2) to prevent a group health plan or a health

8 insurance issuer offering group health insurance cov9 erage from negotiating the level and type of reim10 bursement with a provider for care provided in ac11 cordance with this section.

12 ‘‘(c) EXEMPTIONS.—

13 ‘‘(1) SMALL EMPLOYER EXEMPTION.—

14 ‘‘(A) IN GENERAL.—This section shall not

15 apply to any group health plan (and group

16 health insurance coverage offered in connection

17 with a group health plan) for any plan year of

18 a small employer.

19 ‘‘(B) SMALL EMPLOYER.—For purposes of

20 subparagraph (A), the term ‘small employer’

21 means, in connection with a group health plan

22 with respect to a calendar year and a plan year,

23 an employer who employed an average of at

24 least 2 but not more than 50 employees on

25 business days during the preceding calendar
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1 year and who employs at least 2 employees on

2 the first day of the plan year.

3 ‘‘(C) APPLICATION OF CERTAIN RULES IN

4 DETERMINATION OF EMPLOYER SIZE.—For

5 purposes of this paragraph—

6 ‘‘(i) APPLICATION OF AGGREGATION

7 RULE FOR EMPLOYERS.—Rules similar to

8 the rules under subsections (b), (c), (m),

9 and (o) of section 414 of the Internal Rev10 enue Code of 1986 shall apply for purposes

11 of treating persons as a single employer.

12 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

13 IN PRECEDING YEAR.—In the case of an

14 employer which was not in existence

15 throughout the preceding calendar year,

16 the determination of whether such em17 ployer is a small employer shall be based

18 on the average number of employees that

19 it is reasonably expected such employer

20 will employ on business days in the current

21 calendar year.

22 ‘‘(iii) PREDECESSORS.—Any reference

23 in this paragraph to an employer shall in24 clude a reference to any predecessor of

25 such employer.
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1 ‘‘(2) INCREASED COST EXEMPTION.—This sec2 tion shall not apply with respect to a group health

3 plan (or health insurance coverage offered in connec4 tion with a group health plan) if the application of

5 this section to such plan (or to such coverage) re6 sults in an increase in the cost under the plan (or

7 for such coverage) of at least 1 percent.

8 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF9 FERED.—In the case of a group health plan that offers

10 a participant or beneficiary two or more benefit package

11 options under the plan, the requirements of this section

12 shall be applied separately with respect to each such op13 tion.

14 ‘‘(e) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) TREATMENT LIMITATION.—The term

16 ‘treatment limitation’ means, with respect to benefits

17 under a group health plan or health insurance cov18 erage, any day or visit limits imposed on coverage of

19 benefits under the plan or coverage during a period

20 of time.

21 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi22 nancial requirement’ means, with respect to benefits

23 under a group health plan or health insurance cov24 erage, any deductible, coinsurance, or cost-sharing
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1 or an annual or lifetime dollar limit imposed with re2 spect to the benefits under the plan or coverage.

3 ‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The

4 term ‘medical or surgical benefits’ means benefits

5 with respect to medical or surgical services, as de6 fined under the terms of the plan or coverage (as the

7 case may be), but does not include substance abuse

8 treatment benefits.

9 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE10 FITS.—The term ‘substance abuse treatment bene11 fits’ means benefits with respect to substance abuse

12 treatment services but only insofar as such treat13 ment services are abstinence-based. Such term in14 cludes non-narcotic medication-based therapy and

15 appropriate transitional medication-based therapy.

16 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV17 ICES.—The term ‘substance abuse services’ means

18 any of the following items and services provided for

19 the treatment of substance abuse:

20 ‘‘(A) Inpatient treatment, including detoxi21 fication.

22 ‘‘(B) Non-hospital residential treatment.

23 ‘‘(C) Outpatient treatment, including

24 screening and assessment, medication manage-
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1 ment, individual, group, and family counseling,

2 and relapse prevention.

3 ‘‘(D) Prevention services, including health

4 education and individual and group counseling

5 to encourage the reduction of risk factors for

6 substance abuse.

7 ‘‘(6) SUBSTANCE ABUSE.—The term ‘substance

8 abuse’ includes chemical dependency.

9 ‘‘(f) NOTICE UNDER GROUP HEALTH PLAN.—The

10 imposition of the requirements of this section shall be

11 treated as a material modification in the terms of the plan

12 described in section 102(a)(1), for purposes of assuring

13 notice of such requirements under the plan; except that

14 the summary description required to be provided under the

15 last sentence of section 104(b)(1) with respect to such

16 modification shall be provided by not later than 60 days

17 after the first day of the first plan year in which such

18 requirements apply.

19 ‘‘(g) SUNSET.—This section shall not apply to bene20 fits for services furnished in plan years beginning on or

21 after January 1, 2005.’’.

22 (B) Section 731(c) of such Act (29 U.S.C.

23 1191(c)) is amended by striking ‘‘section 711’’ and

24 inserting ‘‘sections 711 and 714’’.
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1 (C) Section 732(a) of such Act (29 U.S.C.

2 1191a(a)) is amended by striking ‘‘section 711’’ and

3 inserting ‘‘sections 711 and 714’’.

4 (D) The table of contents in section 1 of such

5 Act is amended by inserting after the item relating

6 to section 713 the following new item:

‘‘Sec. 714. Parity in the application of treatment limitations and financial requirements to substance abuse treatment benefits.’’.

7 (3) INTERNAL REVENUE CODE AMEND8 MENTS.—(A) Subchapter B of chapter 100 of the

9 Internal Revenue Code of 1986 (relating to other re10 quirements) is amended by adding at the end the

11 following new section:

12 ‘‘SEC. 9813. PARITY IN THE APPLICATION OF TREATMENT

13 LIMITATIONS AND FINANCIAL REQUIRE14 MENTS TO SUBSTANCE ABUSE TREATMENT

15 BENEFITS.

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

17 plan that provides both medical and surgical benefits and

18 substance abuse treatment benefits, the plan shall not im19 pose treatment limitations or financial requirements on

20 the substance abuse treatment benefits unless similar limi21 tations or requirements are imposed for medical and sur22 gical benefits.

23 ‘‘(b) CONSTRUCTION.—Nothing in this section shall

24 be construed—
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1 ‘‘(1) as requiring a group health plan to provide

2 any substance abuse treatment benefits; or

3 ‘‘(2) to prevent a group health plan from nego4 tiating the level and type of reimbursement with a

5 provider for care provided in accordance with this

6 section.

7 ‘‘(c) EXEMPTIONS.—

8 ‘‘(1) SMALL EMPLOYER EXEMPTION.—

9 ‘‘(A) IN GENERAL.—This section shall not

10 apply to any group health plan for any plan

11 year of a small employer.

12 ‘‘(B) SMALL EMPLOYER.—For purposes of

13 subparagraph (A), the term ‘small employer’

14 means, in connection with a group health plan

15 with respect to a calendar year and a plan year,

16 an employer who employed an average of at

17 least 2 but not more than 50 employees on

18 business days during the preceding calendar

19 year and who employs at least 2 employees on

20 the first day of the plan year.

21 ‘‘(C) APPLICATION OF CERTAIN RULES IN

22 DETERMINATION OF EMPLOYER SIZE.—For

23 purposes of this paragraph—

24 ‘‘(i) APPLICATION OF AGGREGATION

25 RULE FOR EMPLOYERS.—Rules similar to
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1 the rules under subsections (b), (c), (m),

2 and (o) of section 414 shall apply for pur3 poses of treating persons as a single em4 ployer.

5 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

6 IN PRECEDING YEAR.—In the case of an

7 employer which was not in existence

8 throughout the preceding calendar year,

9 the determination of whether such em10 ployer is a small employer shall be based

11 on the average number of employees that

12 it is reasonably expected such employer

13 will employ on business days in the current

14 calendar year.

15 ‘‘(iii) PREDECESSORS.—Any reference

16 in this paragraph to an employer shall in17 clude a reference to any predecessor of

18 such employer.

19 ‘‘(2) INCREASED COST EXEMPTION.—This sec20 tion shall not apply with respect to a group health

21 plan if the application of this section to such plan

22 results in an increase in the cost under the plan of

23 at least 1 percent.

24 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF25 FERED.—In the case of a group health plan that offers
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1 a participant or beneficiary two or more benefit package

2 options under the plan, the requirements of this section

3 shall be applied separately with respect to each such op4 tion.

5 ‘‘(e) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) TREATMENT LIMITATION.—The term

7 ‘treatment limitation’ means, with respect to benefits

8 under a group health plan, any day or visit limits

9 imposed on coverage of benefits under the plan dur10 ing a period of time.

11 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi12 nancial requirement’ means, with respect to benefits

13 under a group health plan, any deductible, coinsur14 ance, or cost-sharing or an annual or lifetime dollar

15 limit imposed with respect to the benefits under the

16 plan.

17 ‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The

18 term ‘medical or surgical benefits’ means benefits

19 with respect to medical or surgical services, as de20 fined under the terms of the plan, but does not in21 clude substance abuse treatment benefits.

22 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE23 FITS.—The term ‘substance abuse treatment bene24 fits’ means benefits with respect to substance abuse

25 treatment services but only insofar as such treat-
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1 ment services are abstinence-based. Such term in2 cludes non-narcotic medication-based therapy and

3 appropriate transitional medication-based therapy.

4 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV5 ICES.—The term ‘substance abuse services’ means

6 any of the following items and services provided for

7 the treatment of substance abuse:

8 ‘‘(A) Inpatient treatment, including detoxi9 fication.

10 ‘‘(B) Non-hospital residential treatment.

11 ‘‘(C) Outpatient treatment, including

12 screening and assessment, medication manage13 ment, individual, group, and family counseling,

14 and relapse prevention.

15 ‘‘(D) Prevention services, including health

16 education and individual and group counseling

17 to encourage the reduction of risk factors for

18 substance abuse.

19 ‘‘(6) SUBSTANCE ABUSE.—The term ‘substance

20 abuse’ includes chemical dependency.

21 ‘‘(f) SUNSET.—This section shall not apply to bene22 fits for services furnished in plan years beginning on or

23 after January 1, 2005.’’

24 (B) Section 4980D(d)(1) of such Code is

25 amended by inserting ‘‘(other than a failure at-
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1 tributable to section 9813)’’ after ‘‘on any fail2 ure’’.

3 (C) The table of sections of subchapter B

4 of chapter 100 of such Code is amended by

5 adding at the end the following new item:

‘‘Sec. 9813. Parity in the application of treatment limitations

and financial requirements to substance abuse

treatment benefits.’’

6 (b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B

7 of title XXVII of the Public Health Service Act is amend8 ed by inserting after section 2752 the following new sec9 tion:

10 ‘‘SEC. 2753. PARITY IN THE APPLICATION OF TREATMENT

11 LIMITATIONS AND FINANCIAL REQUIRE12 MENTS TO SUBSTANCE ABUSE BENEFITS.

13 ‘‘(a) IN GENERAL.—The provisions of section 2707

14 (other than subsections (e) and (g)) shall apply to health

15 insurance coverage offered by a health insurance issuer

16 in the individual market in the same manner as it applies

17 to health insurance coverage offered by a health insurance

18 issuer in connection with a group health plan in the small

19 or large group market.

20 ‘‘(b) NOTICE.—A health insurance issuer under this

21 part shall comply with the notice requirement under sec22 tion 714(f) of the Employee Retirement Income Security

23 Act of 1974 with respect to the requirements referred to
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1 in subsection (a) as if such section applied to such issuer

2 and such issuer were a group health plan.

3 ‘‘(c) SUNSET.—This section shall not apply to bene4 fits for services furnished on or after January 1, 2005.’’.

5 (2) Section 2762(b)(2) of such Act (42 U.S.C.

6 300gg–62(b)(2)) is amended by striking ‘‘section 2751’’

7 and inserting ‘‘sections 2751 and 2753’’.

8 (c) EFFECTIVE DATES.—(1) Subject to paragraph

9 (3), the amendments made by subsection (a) apply with

10 respect to group health plans for plan years beginning on

11 or after January 1, 2000.

12 (2) The amendments made by subsection (b) apply

13 with respect to health insurance coverage offered, sold,

14 issued, renewed, in effect, or operated in the individual

15 market on or after January 1, 2000.

16 (3) In the case of a group health plan maintained

17 pursuant to 1 or more collective bargaining agreements

18 between employee representatives and 1 or more employ19 ers ratified before the date of enactment of this Act, the

20 amendments made subsection (a) shall not apply to plan

21 years beginning before the later of—

22 (A) the date on which the last collective bar23 gaining agreements relating to the plan terminates

24 (determined without regard to any extension thereof
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1 agreed to after the date of enactment of this Act),

2 or

3 (B) January 1, 2000.

4 For purposes of subparagraph (A), any plan amendment

5 made pursuant to a collective bargaining agreement relat6 ing to the plan which amends the plan solely to conform

7 to any requirement added by subsection (a) shall not be

8 treated as a termination of such collective bargaining

9 agreement.

10 (d) COORDINATED REGULATIONS.—Section 104(1)

11 of Health Insurance Portability and Accountability Act of

12 1996 is amended by striking ‘‘this subtitle (and the

13 amendments made by this subtitle and section 401)’’ and

14 inserting ‘‘the provisions of part 7 of subtitle B of title

15 I of the Employee Retirement Income Security Act of

16 1974, and the provisions of parts A and C of title XXVII

17 of the Public Health Service Act, and chapter 1000 of the

18 Internal Revenue Code of 1986’’.

Æ