II 

110TH CONGRESS 

1ST SESSION S. 558 

To provide parity between health insurance coverage of mental health benefits 

and benefits for medical and surgical services. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 12, 2007 

Mr. DOMENICI (for himself, Mr. KENNEDY, Mr. ENZI, Mr. BROWN, Mr. 

SMITH, Mr. FEINGOLD, Mr. COLEMAN, Mr. LAUTENBERG, Mr. WARNER, 

Mrs. BOXER, Ms. MURKOWSKI, Mr. AKAKA, Mr. ROBERTS, Mr. CARDIN, 

Mr. HATCH, Ms. CANTWELL, Ms. COLLINS, Ms. STABENOW, Ms. SNOWE, 

Mr. BIDEN, Mr. GRAHAM, and Mr. NELSON of Nebraska) introduced the 

following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

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

services. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Mental Health Parity 

5 Act of 2007’’. 


jcorcoran on PROD1PC62 with BILLS
2 

•S 558 IS

1 SEC. 2. MENTAL HEALTH PARITY. 

2 (a) AMENDMENTS OF ERISA.—Subpart B of part 7 

3 of title I of the Employee Retirement Income Security Act 

4 of 1974 is amended by inserting after section 712 (29 

5 U.S.C. 1185a) the following: 

6 ‘‘SEC. 712A. MENTAL HEALTH PARITY. 

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

8 plan (or health insurance coverage offered in connection 

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

10 benefits and mental health benefits, such plan or coverage 

11 shall ensure that— 

12 ‘‘(1) the financial requirements applicable to 

13 such mental health benefits are no more restrictive 

14 than the financial requirements applied to substan15 tially all medical and surgical benefits covered by the 

16 plan (or coverage), including deductibles, copay17 ments, coinsurance, out-of-pocket expenses, and an18 nual and lifetime limits, except that the plan (or cov19 erage) may not establish separate cost sharing re20 quirements that are applicable only with respect to 

21 mental health benefits; and 

22 ‘‘(2) the treatment limitations applicable to 

23 such mental health benefits are no more restrictive 

24 than the treatment limitations applied to substan25 tially all medical and surgical benefits covered by the 

26 plan (or coverage), including limits on the frequency 


jcorcoran on PROD1PC62 with BILLS
3 

•S 558 IS

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

2 other similar limits on the scope or duration of 

3 treatment. 

4 ‘‘(b) CLARIFICATIONS.—In the case of a group health 

5 plan (or health insurance coverage offered in connection 

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

7 benefits and mental health benefits, such plan or coverage 

8 shall not be prohibited from— 

9 ‘‘(1) negotiating separate reimbursement or 

10 provider payment rates and service delivery systems 

11 for different benefits consistent with subsection (a); 

12 ‘‘(2) managing the provision of mental health 

13 benefits in order to provide medically necessary serv14 ices for covered benefits, including through the use 

15 of any utilization review, authorization or manage16 ment practices, the application of medical necessity 

17 and appropriateness criteria applicable to behavioral 

18 health, and the contracting with and use of a net19 work of providers; or 

20 ‘‘(3) applying the provisions of this section in a 

21 manner that takes into consideration similar treat22 ment settings or similar treatments. 

23 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

24 ‘‘(1) IN GENERAL.—In the case of a group 

25 health plan (or health insurance coverage offered in 


jcorcoran on PROD1PC62 with BILLS
4 

•S 558 IS

1 connection with such a plan) that provides both 

2 medical and surgical benefits and mental health ben3 efits, and that provides such benefits on both an in4 and out-of-network basis pursuant to the terms of 

5 the plan (or coverage), such plan (or coverage) shall 

6 ensure that the requirements of this section are ap7 plied to both in- and out-of-network services by com8 paring in-network medical and surgical benefits to 

9 in-network mental health benefits and out-of-net10 work medical and surgical benefits to out-of-network 

11 mental health benefits, except that in no event shall 

12 this subsection require the provision of out-of-net13 work coverage for mental health benefits even in the 

14 case where out-of-network coverage is provided for 

15 medical and surgical benefits. 

16 ‘‘(2) CLARIFICATION.—Nothing in paragraph 

17 (1) shall be construed as requiring that a group 

18 health plan (or coverage in connection with such a 

19 plan) eliminate an out-of-network provider option 

20 from such plan (or coverage) pursuant to the terms 

21 of the plan (or coverage). 

22 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

23 ‘‘(1) IN GENERAL.—This section shall not apply 

24 to any group health plan (and group health insur25 ance coverage offered in connection with a group 


jcorcoran on PROD1PC62 with BILLS
5 

•S 558 IS

1 health plan) for any plan year of any employer who 

2 employed an average of at least 2 (or 1 in the case 

3 of an employer residing in a State that permits 

4 small groups to include a single individual) but not 

5 more than 50 employees on business days during the 

6 preceding calendar year. 

7 ‘‘(2) APPLICATION OF CERTAIN RULES IN DE8 TERMINATION OF EMPLOYER SIZE.—For purposes of 

9 this subsection: 

10 ‘‘(A) APPLICATION OF AGGREGATION RULE

11 FOR EMPLOYERS.—Rules similar to the rules 

12 under subsections (b), (c), (m), and (o) of sec13 tion 414 of the Internal Revenue Code of 1986 

14 shall apply for purposes of treating persons as 

15 a single employer. 

16 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

17 PRECEDING YEAR.—In the case of an employer 

18 which was not in existence throughout the pre19 ceding calendar year, the determination of 

20 whether such employer is a small employer shall 

21 be based on the average number of employees 

22 that it is reasonably expected such employer 

23 will employ on business days in the current cal24 endar year. 


jcorcoran on PROD1PC62 with BILLS
6 

•S 558 IS

1 ‘‘(C) PREDECESSORS.—Any reference in 

2 this paragraph to an employer shall include a 

3 reference to any predecessor of such employer. 

4 ‘‘(e) COST EXEMPTION.— 

5 ‘‘(1) IN GENERAL.—With respect to a group 

6 health plan (or health insurance coverage offered in 

7 connections with such a plan), if the application of 

8 this section to such plan (or coverage) results in an 

9 increase for the plan year involved of the actual total 

10 costs of coverage with respect to medical and sur11 gical benefits and mental health benefits under the 

12 plan (as determined and certified under paragraph 

13 (3)) by an amount that exceeds the applicable per14 centage described in paragraph (2) of the actual 

15 total plan costs, the provisions of this section shall 

16 not apply to such plan (or coverage) during the fol17 lowing plan year, and such exemption shall apply to 

18 the plan (or coverage) for 1 plan year. An employer 

19 may elect to continue to apply mental health parity 

20 pursuant to this section with respect to the group 

21 health plan (or coverage) involved regardless of any 

22 increase in total costs. 

23 ‘‘(2) APPLICABLE PERCENTAGE.—With respect 

24 to a plan (or coverage), the applicable percentage de25 scribed in this paragraph shall be— 


jcorcoran on PROD1PC62 with BILLS
7 

•S 558 IS

1 ‘‘(A) 2 percent in the case of the first plan 

2 year in which this section is applied; and 

3 ‘‘(B) 1 percent in the case of each subse4 quent plan year. 

5 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter6 minations as to increases in actual costs under a 

7 plan (or coverage) for purposes of this section shall 

8 be made by a qualified actuary who is a member in 

9 good standing of the American Academy of Actu10 aries. Such determinations shall be certified by the 

11 actuary and be made available to the general public. 

12 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

13 health plan (or a health insurance issuer offering 

14 coverage in connections with a group health plan) 

15 seeks an exemption under this subsection, deter16 minations under paragraph (1) shall be made after 

17 such plan (or coverage) has complied with this sec18 tion for the first 6 months of the plan year involved. 

19 ‘‘(5) NOTIFICATION.—An election to modify 

20 coverage of mental health benefits as permitted 

21 under this subsection shall be treated as a material 

22 modification in the terms of the plan as described in 

23 section 102(a)(1) and shall be subject to the applica24 ble notice requirements under section 104(b)(1). 


jcorcoran on PROD1PC62 with BILLS
8 

•S 558 IS

1 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec2 tion shall be construed to require a group health plan (or 

3 health insurance coverage offered in connection with such 

4 a plan) to provide any mental health benefits. 

5 ‘‘(g) MENTAL HEALTH BENEFITS.—In this section, 

6 the term ‘mental health benefits’ means benefits with re7 spect to mental health services (including substance abuse 

8 treatment) as defined under the terms of the group health 

9 plan or coverage.’’. 

10 (b) PUBLIC HEALTH SERVICE ACT.—Subpart 1 of 

11 part A of title XXVII of the Public Health Service Act 

12 is amended by inserting after section 2705 (42 U.S.C. 

13 300gg–5) the following: 

14 ‘‘SEC. 2705A. MENTAL HEALTH PARITY. 

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

16 plan (or health insurance coverage offered in connection 

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

18 benefits and mental health benefits, such plan or coverage 

19 shall ensure that— 

20 ‘‘(1) the financial requirements applicable to 

21 such mental health benefits are no more restrictive 

22 than the financial requirements applied to substan23 tially all medical and surgical benefits covered by the 

24 plan (or coverage), including deductibles, copay25 ments, coinsurance, out-of-pocket expenses, and anVerDate Aug 31 2005 03:11 Feb 14, 2007 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S558.IS S558

jcorcoran on PROD1PC62 with BILLS
9 

•S 558 IS

1 nual and lifetime limits, except that the plan (or cov2 erage) may not establish separate cost sharing re3 quirements that are applicable only with respect to 

4 mental health benefits; and 

5 ‘‘(2) the treatment limitations applicable to 

6 such mental health benefits are no more restrictive 

7 than the treatment limitations applied to substan8 tially all medical and surgical benefits covered by the 

9 plan (or coverage), including limits on the frequency 

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

11 other similar limits on the scope or duration of 

12 treatment. 

13 ‘‘(b) CLARIFICATIONS.—In the case of a group health 

14 plan (or health insurance coverage offered in connection 

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

16 benefits and mental health benefits, such plan or coverage 

17 shall not be prohibited from— 

18 ‘‘(1) negotiating separate reimbursement or 

19 provider payment rates and service delivery systems 

20 for different benefits consistent with subsection (a); 

21 ‘‘(2) managing the provision of mental health 

22 benefits in order to provide medically necessary serv23 ices for covered benefits, including through the use 

24 of any utilization review, authorization or manage25 ment practices, the application of medical necessity 


jcorcoran on PROD1PC62 with BILLS
10 

•S 558 IS

1 and appropriateness criteria applicable to behavioral 

2 health, and the contracting with and use of a net3 work of providers; or 

4 ‘‘(3) be prohibited from applying the provisions 

5 of this section in a manner that takes into consider6 ation similar treatment settings or similar treat7 ments. 

8 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

9 ‘‘(1) IN GENERAL.—In the case of a group 

10 health plan (or health insurance coverage offered in 

11 connection with such a plan) that provides both 

12 medical and surgical benefits and mental health ben13 efits, and that provides such benefits on both an in14 and out-of-network basis pursuant to the terms of 

15 the plan (or coverage), such plan (or coverage) shall 

16 ensure that the requirements of this section are ap17 plied to both in- and out-of-network services by com18 paring in-network medical and surgical benefits to 

19 in-network mental health benefits and out-of-net20 work medical and surgical benefits to out-of-network 

21 mental health benefits, except that in no event shall 

22 this subsection require the provision of out-of-net23 work coverage for mental health benefits even in the 

24 case where out-of-network coverage is provided for 

25 medical and surgical benefits. 


jcorcoran on PROD1PC62 with BILLS
11 

•S 558 IS

1 ‘‘(2) CLARIFICATION.—Nothing in paragraph 

2 (1) shall be construed as requiring that a group 

3 health plan (or coverage in connection with such a 

4 plan) eliminate an out-of-network provider option 

5 from such plan (or coverage) pursuant to the terms 

6 of the plan (or coverage). 

7 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

8 ‘‘(1) IN GENERAL.—This section shall not apply 

9 to any group health plan (and group health insur10 ance coverage offered in connection with a group 

11 health plan) for any plan year of any employer who 

12 employed an average of at least 2 (or 1 in the case 

13 of an employer residing in a State that permits 

14 small groups to include a single individual) but not 

15 more than 50 employees on business days during the 

16 preceding calendar year. 

17 ‘‘(2) APPLICATION OF CERTAIN RULES IN DE18 TERMINATION OF EMPLOYER SIZE.—For purposes of 

19 this subsection: 

20 ‘‘(A) APPLICATION OF AGGREGATION RULE

21 FOR EMPLOYERS.—Rules similar to the rules 

22 under subsections (b), (c), (m), and (o) of sec23 tion 414 of the Internal Revenue Code of 1986 

24 shall apply for purposes of treating persons as 

25 a single employer. 


jcorcoran on PROD1PC62 with BILLS
12 

•S 558 IS

1 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

2 PRECEDING YEAR.—In the case of an employer 

3 which was not in existence throughout the pre4 ceding calendar year, the determination of 

5 whether such employer is a small employer shall 

6 be based on the average number of employees 

7 that it is reasonably expected such employer 

8 will employ on business days in the current cal9 endar year. 

10 ‘‘(C) PREDECESSORS.—Any reference in 

11 this paragraph to an employer shall include a 

12 reference to any predecessor of such employer. 

13 ‘‘(e) COST EXEMPTION.— 

14 ‘‘(1) IN GENERAL.—With respect to a group 

15 health plan (or health insurance coverage offered in 

16 connections with such a plan), if the application of 

17 this section to such plan (or coverage) results in an 

18 increase for the plan year involved of the actual total 

19 costs of coverage with respect to medical and sur20 gical benefits and mental health benefits under the 

21 plan (as determined and certified under paragraph 

22 (3)) by an amount that exceeds the applicable per23 centage described in paragraph (2) of the actual 

24 total plan costs, the provisions of this section shall 

25 not apply to such plan (or coverage) during the folVerDate Aug 31 2005 03:11 Feb 14, 2007 Jkt 059200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S558.IS S558

jcorcoran on PROD1PC62 with BILLS
13 

•S 558 IS

1 lowing plan year, and such exemption shall apply to 

2 the plan (or coverage) for 1 plan year. An employer 

3 may elect to continue to apply mental health parity 

4 pursuant to this section with respect to the group 

5 health plan (or coverage) involved regardless of any 

6 increase in total costs. 

7 ‘‘(2) APPLICABLE PERCENTAGE.—With respect 

8 to a plan (or coverage), the applicable percentage de9 scribed in this paragraph shall be— 

10 ‘‘(A) 2 percent in the case of the first plan 

11 year in which this section is applied; and 

12 ‘‘(B) 1 percent in the case of each subse13 quent plan year. 

14 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter15 minations as to increases in actual costs under a 

16 plan (or coverage) for purposes of this section shall 

17 be made by a qualified actuary who is a member in 

18 good standing of the American Academy of Actu19 aries. Such determinations shall be certified by the 

20 actuary and be made available to the general public. 

21 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

22 health plan (or a health insurance issuer offering 

23 coverage in connections with a group health plan) 

24 seeks an exemption under this subsection, deter25 minations under paragraph (1) shall be made after 


jcorcoran on PROD1PC62 with BILLS
14 

•S 558 IS

1 such plan (or coverage) has complied with this sec2 tion for the first 6 months of the plan year involved. 

3 ‘‘(5) NOTIFICATION.—An election to modify 

4 coverage of mental health benefits as permitted 

5 under this subsection shall be treated as a material 

6 modification in the terms of the plan as described in 

7 section 102(a)(1) and shall be subject to the applica8 ble notice requirements under section 104(b)(1). 

9 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec10 tion shall be construed to require a group health plan (or 

11 health insurance coverage offered in connection with such 

12 a plan) to provide any mental health benefits. 

13 ‘‘(g) MENTAL HEALTH BENEFITS.—In this section, 

14 the term ‘mental health benefits’ means benefits with re15 spect to mental health services (including substance abuse 

16 treatment) as defined under the terms of the group health 

17 plan or coverage, and when applicable as may be defined 

18 under State law when applicable to health insurance cov19 erage offered in connection with a group health plan.’’. 

20 SEC. 3. EFFECTIVE DATE. 

21 (a) IN GENERAL.—The provisions of this Act shall 

22 apply to group health plans (or health insurance coverage 

23 offered in connection with such plans) beginning in the 

24 first plan year that begins on or after January 1 of the 


jcorcoran on PROD1PC62 with BILLS
15 

•S 558 IS

1 first calendar year that begins more than 1 year after the 

2 date of the enactment of this Act. 

3 (b) TERMINATION OF CERTAIN PROVISIONS.— 

4 (1) ERISA.—Section 712 of the Employee Re5 tirement Income Security Act of 1974 (29 U.S.C. 

6 1185a) is amended by striking subsection (f) and in7 serting the following: 

8 ‘‘(f) SUNSET.—This section shall not apply to bene9 fits for services furnished after the effective date described 

10 in section 3(a) of the Mental Health Parity Act of 2007.’’. 

11 (2) PHSA.—Section 2705 of the Public Health 

12 Service Act (42 U.S.C. 300gg–5) is amended by 

13 striking subsection (f) and inserting the following: 

14 ‘‘(f) SUNSET.—This section shall not apply to bene15 fits for services furnished after the effective date described 

16 in section 3(a) of the Mental Health Parity Act of 2007.’’. 

17 SEC. 4. SPECIAL PREEMPTION RULE. 

18 (a) ERISA PREEMPTION.—Section 731 of the Em19 ployee Retirement Income Security Act of 1974 (29 

20 U.S.C. 1191) is amended— 

21 (1) by redesignating subsections (c) and (d) as 

22 subsections (e) and (f), respectively; and 

23 (2) by inserting after subsection (b), the fol24 lowing: 


jcorcoran on PROD1PC62 with BILLS
16 

•S 558 IS

1 ‘‘(c) SPECIAL RULE IN CASE OF MENTAL HEALTH

2 PARITY REQUIREMENTS.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding any provi4 sion of section 514 to the contrary, the provisions of 

5 this part relating to a group health plan or a health 

6 insurance issuer offering coverage in connection with 

7 a group health plan shall supercede any provision of 

8 State law that establishes, implements, or continues 

9 in effect any standard or requirement which differs 

10 from the specific standards or requirements con11 tained in subsections (a), (b), (c), or (e) of section 

12 712A. 

13 ‘‘(2) CLARIFICATIONS.—Nothing in this sub14 section shall be construed to preempt State insur15 ance laws relating to the individual insurance mar16 ket or to small employers (as such term is defined 

17 for purposes of section 712A(d)).’’. 

18 (b) PHSA PREEMPTION.—Section 2723 of the Public 

19 Health Service Act (42 U.S.C. 300gg–23) is amended— 

20 (1) by redesignating subsections (c) and (d) as 

21 subsections (e) and (f), respectively; and 

22 (2) by inserting after subsection (b), the fol23 lowing: 

24 ‘‘(c) SPECIAL RULE IN CASE OF MENTAL HEALTH

25 PARITY REQUIREMENTS.— 


jcorcoran on PROD1PC62 with BILLS
17 

•S 558 IS

1 ‘‘(1) IN GENERAL.—Notwithstanding any provi2 sion of section 514 of the Employee Retirement In3 come Security Act of 1974 to the contrary, the pro4 visions of this part relating to a group health plan 

5 or a health insurance issuer offering coverage in 

6 connection with a group health plan shall supercede 

7 any provisions of State law that establishes, imple8 ments, or continues in effect any standard or re9 quirement which differs from the specific standards 

10 or requirements contained in subsections (a), (b), 

11 (c), or (e) of section 2705A. 

12 ‘‘(2) CLARIFICATIONS.—Nothing in this sub13 section shall be construed to preempt State insur14 ance laws relating to the individual insurance mar15 ket or to small employers (as such term is defined 

16 for purposes of section 2705A(d)).’’. 

17 (c) EFFECTIVE DATE.—The provisions of this section 

18 shall take effect with respect to a State, on the date on 

19 which the provisions of section 2 apply with respect to 

20 group health plans and health insurance coverage offered 

21 in connection with group health plans. 

22 SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES. 

23 (a) GROUP HEALTH PLAN OMBUDSMAN.— 

24 (1) DEPARTMENT OF LABOR.—The Secretary 

25 of Labor shall designate an individual within the DeVerDate Aug 31 2005 03:11 Feb 14, 2007 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S558.IS S558

jcorcoran on PROD1PC62 with BILLS
18 

•S 558 IS

1 partment of Labor to serve as the group health plan 

2 ombudsman for the Department. Such ombudsman 

3 shall serve as an initial point of contact to permit 

4 individuals to obtain information and provide assist5 ance concerning coverage of mental health services 

6 under group health plans in accordance with this 

7 Act. 

8 (2) DEPARTMENT OF HEALTH AND HUMAN

9 SERVICES.—The Secretary of Health and Human 

10 Services shall designate an individual within the De11 partment of Health and Human Services to serve as 

12 the group health plan ombudsman for the Depart13 ment. Such ombudsman shall serve as an initial 

14 point of contact to permit individuals to obtain in15 formation and provide assistance concerning cov16 erage of mental health services under health insur17 ance coverage issued in connection with group health 

18 plans in accordance with this Act. 

19 (b) AUDITS.—The Secretary of Labor and the Sec20 retary of Health and Human Services shall each provide 

21 for the conduct of random audits of group health plans 

22 (and health insurance coverage offered in connection with 

23 such plans) to ensure that such plans are in compliance 

24 with this Act (and the amendments made by this Act). 


jcorcoran on PROD1PC62 with BILLS
19 

•S 558 IS

1 (c) GOVERNMENT ACCOUNTABILITY OFFICE

2 STUDY.— 

3 (1) STUDY.—The Comptroller General shall 

4 conduct a study that evaluates the effect of the im5 plementation of the amendments made by this Act 

6 on the cost of health insurance coverage, access to 

7 health insurance coverage (including the availability 

8 of in-network providers), the quality of health care, 

9 the impact on benefits and coverage for mental 

10 health and substance abuse, the impact of any addi11 tional cost or savings to the plan, the impact on 

12 State mental health benefit mandate laws, other im13 pact on the business community and the Federal 

14 Government, and other issues as determined appro15 priate by the Comptroller General. 

16 (2) REPORT.—Not later than 2 years after the 

17 date of enactment of this Act, the Comptroller Gen18 eral shall prepare and submit to the appropriate 

19 committees of Congress a report containing the re20 sults of the study conducted under paragraph (1). 

21 (d) REGULATIONS.—Not later than 1 year after the 

22 date of enactment of this Act, the Secretary of Labor and 

23 the Secretary of Health and Human Services shall jointly 

24 promulgate final regulations to carry out this Act. 

Æ 


jcorcoran on PROD1PC62 with BILLS