II 

Calendar No. 93 

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, Mr. NELSON of Nebraska, Mrs. CLINTON, Mr. 

DURBIN, Mr. CONRAD, Mr. INOUYE, Ms. KLOBUCHAR, Mr. HARKIN, Mr. 

ALEXANDER, Mr. BENNETT, Mr. BINGAMAN, Mr. CARPER, Mr. COCHRAN, Mr. JOHNSON, Mr. KERRY, Mr. LEVIN, Mr. LIEBERMAN, Mr. 

LUGAR, Mrs. MCCASKILL, Mr. SALAZAR, Mr. SCHUMER, Mr. NELSON of 

Florida, and Mr. WHITEHOUSE) introduced the following bill; which was 

read twice and referred to the Committee on Health, Education, Labor, 

and Pensions 

MARCH 27, 2007 

Reported by Mr. KENNEDY, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

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

services. 


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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’’. 

6 SEC. 2. MENTAL HEALTH PARITY. 

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

8 of title I of the Employee Retirement Income Security Act 

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

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

11 ‘‘SEC. 712A. MENTAL HEALTH PARITY. 

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

13 plan (or health insurance coverage offered in connection 

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

15 benefits and mental health benefits, such plan or coverage 

16 shall ensure that— 

17 ‘‘(1) the financial requirements applicable to 

18 such mental health benefits are no more restrictive 

19 than the financial requirements applied to substan20 tially all medical and surgical benefits covered by the 

21 plan (or coverage), including deductibles, copay22 ments, coinsurance, out-of-pocket expenses, and an23 nual and lifetime limits, except that the plan (or cov24 erage) may not establish separate cost sharing reVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6401 E:\BILLS\S558.RS S558

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1 quirements that are applicable only with respect to 

2 mental health benefits; and 

3 ‘‘(2) the treatment limitations applicable to 

4 such mental health benefits are no more restrictive 

5 than the treatment limitations applied to substan6 tially all medical and surgical benefits covered by the 

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

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

9 other similar limits on the scope or duration of 

10 treatment. 

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

12 plan (or health insurance coverage offered in connection 

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

14 benefits and mental health benefits, such plan or coverage 

15 shall not be prohibited from— 

16 ‘‘(1) negotiating separate reimbursement or 

17 provider payment rates and service delivery systems 

18 for different benefits consistent with subsection (a); 

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

20 benefits in order to provide medically necessary serv21 ices for covered benefits, including through the use 

22 of any utilization review, authorization or manage23 ment practices, the application of medical necessity 

24 and appropriateness criteria applicable to behavioral 


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1 health, and the contracting with and use of a net2 work of providers; or 

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

4 manner that takes into consideration similar treat5 ment settings or similar treatments. 

6 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

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

8 health plan (or health insurance coverage offered in 

9 connection with such a plan) that provides both 

10 medical and surgical benefits and mental health ben11 efits, and that provides such benefits on both an in12 and out-of-network basis pursuant to the terms of 

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

14 ensure that the requirements of this section are ap15 plied to both in- and out-of-network services by com16 paring in-network medical and surgical benefits to 

17 in-network mental health benefits and out-of-net18 work medical and surgical benefits to out-of-network 

19 mental health benefits, except that in no event shall 

20 this subsection require the provision of out-of-net21 work coverage for mental health benefits even in the 

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

23 medical and surgical benefits. 

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

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


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1 health plan (or coverage in connection with such a 

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

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

4 of the plan (or coverage). 

5 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

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

7 to any group health plan (and group health insur8 ance coverage offered in connection with a group 

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

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

11 of an employer residing in a State that permits 

12 small groups to include a single individual) but not 

13 more than 50 employees on business days during the 

14 preceding calendar year. 

15 ‘‘(2) APPLICATION OF CERTAIN RULES IN DE16 TERMINATION OF EMPLOYER SIZE.—For purposes of 

17 this subsection: 

18 ‘‘(A) APPLICATION OF AGGREGATION RULE

19 FOR EMPLOYERS.—Rules similar to the rules 

20 under subsections (b), (c), (m), and (o) of sec21 tion 414 of the Internal Revenue Code of 1986 

22 shall apply for purposes of treating persons as 

23 a single employer. 

24 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

25 PRECEDING YEAR.—In the case of an employer 


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1 which was not in existence throughout the pre2 ceding calendar year, the determination of 

3 whether such employer is a small employer shall 

4 be based on the average number of employees 

5 that it is reasonably expected such employer 

6 will employ on business days in the current cal7 endar year. 

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

9 this paragraph to an employer shall include a 

10 reference to any predecessor of such employer. 

11 ‘‘(e) COST EXEMPTION.— 

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

13 health plan (or health insurance coverage offered in 

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

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

16 increase for the plan year involved of the actual total 

17 costs of coverage with respect to medical and sur18 gical benefits and mental health benefits under the 

19 plan (as determined and certified under paragraph 

20 (3)) by an amount that exceeds the applicable per21 centage described in paragraph (2) of the actual 

22 total plan costs, the provisions of this section shall 

23 not apply to such plan (or coverage) during the fol24 lowing plan year, and such exemption shall apply to 

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


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1 may elect to continue to apply mental health parity 

2 pursuant to this section with respect to the group 

3 health plan (or coverage) involved regardless of any 

4 increase in total costs. 

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

6 to a plan (or coverage), the applicable percentage de7 scribed in this paragraph shall be— 

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

9 year in which this section is applied; and 

10 ‘‘(B) 1 percent in the case of each subse11 quent plan year. 

12 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter13 minations as to increases in actual costs under a 

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

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

16 good standing of the American Academy of Actu17 aries. Such determinations shall be certified by the 

18 actuary and be made available to the general public. 

19 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

20 health plan (or a health insurance issuer offering 

21 coverage in connections with a group health plan) 

22 seeks an exemption under this subsection, deter23 minations under paragraph (1) shall be made after 

24 such plan (or coverage) has complied with this sec25 tion for the first 6 months of the plan year involved. 


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

2 coverage of mental health benefits as permitted 

3 under this subsection shall be treated as a material 

4 modification in the terms of the plan as described in 

5 section 102(a)(1) and shall be subject to the applica6 ble notice requirements under section 104(b)(1). 

7 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec8 tion shall be construed to require a group health plan (or 

9 health insurance coverage offered in connection with such 

10 a plan) to provide any mental health benefits. 

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

12 the term ‘mental health benefits’ means benefits with re13 spect to mental health services (including substance abuse 

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

15 plan or coverage.’’. 

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

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

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

19 300gg–5) the following: 

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

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

22 plan (or health insurance coverage offered in connection 

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

24 benefits and mental health benefits, such plan or coverage 

25 shall ensure that— 


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1 ‘‘(1) the financial requirements applicable to 

2 such mental health benefits are no more restrictive 

3 than the financial requirements applied to substan4 tially all medical and surgical benefits covered by the 

5 plan (or coverage), including deductibles, copay6 ments, coinsurance, out-of-pocket expenses, and an7 nual and lifetime limits, except that the plan (or cov8 erage) may not establish separate cost sharing re9 quirements that are applicable only with respect to 

10 mental health benefits; and 

11 ‘‘(2) the treatment limitations applicable to 

12 such mental health benefits are no more restrictive 

13 than the treatment limitations applied to substan14 tially all medical and surgical benefits covered by the 

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

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

17 other similar limits on the scope or duration of 

18 treatment. 

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

20 plan (or health insurance coverage offered in connection 

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

22 benefits and mental health benefits, such plan or coverage 

23 shall not be prohibited from— 


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1 ‘‘(1) negotiating separate reimbursement or 

2 provider payment rates and service delivery systems 

3 for different benefits consistent with subsection (a); 

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

5 benefits in order to provide medically necessary serv6 ices for covered benefits, including through the use 

7 of any utilization review, authorization or manage8 ment practices, the application of medical necessity 

9 and appropriateness criteria applicable to behavioral 

10 health, and the contracting with and use of a net11 work of providers; or 

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

13 of this section in a manner that takes into consider14 ation similar treatment settings or similar treat15 ments. 

16 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

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

18 health plan (or health insurance coverage offered in 

19 connection with such a plan) that provides both 

20 medical and surgical benefits and mental health ben21 efits, and that provides such benefits on both an in22 and out-of-network basis pursuant to the terms of 

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

24 ensure that the requirements of this section are ap25 plied to both in- and out-of-network services by comVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6401 E:\BILLS\S558.RS S558

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1 paring in-network medical and surgical benefits to 

2 in-network mental health benefits and out-of-net3 work medical and surgical benefits to out-of-network 

4 mental health benefits, except that in no event shall 

5 this subsection require the provision of out-of-net6 work coverage for mental health benefits even in the 

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

8 medical and surgical benefits. 

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

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

11 health plan (or coverage in connection with such a 

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

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

14 of the plan (or coverage). 

15 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

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

17 to any group health plan (and group health insur18 ance coverage offered in connection with a group 

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

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

21 of an employer residing in a State that permits 

22 small groups to include a single individual) but not 

23 more than 50 employees on business days during the 

24 preceding calendar year. 


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1 ‘‘(2) APPLICATION OF CERTAIN RULES IN DE2 TERMINATION OF EMPLOYER SIZE.—For purposes of 

3 this subsection: 

4 ‘‘(A) APPLICATION OF AGGREGATION RULE

5 FOR EMPLOYERS.—Rules similar to the rules 

6 under subsections (b), (c), (m), and (o) of sec7 tion 414 of the Internal Revenue Code of 1986 

8 shall apply for purposes of treating persons as 

9 a single employer. 

10 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

11 PRECEDING YEAR.—In the case of an employer 

12 which was not in existence throughout the pre13 ceding calendar year, the determination of 

14 whether such employer is a small employer shall 

15 be based on the average number of employees 

16 that it is reasonably expected such employer 

17 will employ on business days in the current cal18 endar year. 

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

20 this paragraph to an employer shall include a 

21 reference to any predecessor of such employer. 

22 ‘‘(e) COST EXEMPTION.— 

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

24 health plan (or health insurance coverage offered in 

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


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

2 increase for the plan year involved of the actual total 

3 costs of coverage with respect to medical and sur4 gical benefits and mental health benefits under the 

5 plan (as determined and certified under paragraph 

6 (3)) by an amount that exceeds the applicable per7 centage described in paragraph (2) of the actual 

8 total plan costs, the provisions of this section shall 

9 not apply to such plan (or coverage) during the fol10 lowing plan year, and such exemption shall apply to 

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

12 may elect to continue to apply mental health parity 

13 pursuant to this section with respect to the group 

14 health plan (or coverage) involved regardless of any 

15 increase in total costs. 

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

17 to a plan (or coverage), the applicable percentage de18 scribed in this paragraph shall be— 

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

20 year in which this section is applied; and 

21 ‘‘(B) 1 percent in the case of each subse22 quent plan year. 

23 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter24 minations as to increases in actual costs under a 

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


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

2 good standing of the American Academy of Actu3 aries. Such determinations shall be certified by the 

4 actuary and be made available to the general public. 

5 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

6 health plan (or a health insurance issuer offering 

7 coverage in connections with a group health plan) 

8 seeks an exemption under this subsection, deter9 minations under paragraph (1) shall be made after 

10 such plan (or coverage) has complied with this sec11 tion for the first 6 months of the plan year involved. 

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

13 coverage of mental health benefits as permitted 

14 under this subsection shall be treated as a material 

15 modification in the terms of the plan as described in 

16 section 102(a)(1) and shall be subject to the applica17 ble notice requirements under section 104(b)(1). 

18 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec19 tion shall be construed to require a group health plan (or 

20 health insurance coverage offered in connection with such 

21 a plan) to provide any mental health benefits. 

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

23 the term ‘mental health benefits’ means benefits with re24 spect to mental health services (including substance abuse 

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


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

2 under State law when applicable to health insurance cov3 erage offered in connection with a group health plan.’’. 

4 SEC. 3. EFFECTIVE DATE. 

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

6 apply to group health plans (or health insurance coverage 

7 offered in connection with such plans) beginning in the 

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

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

10 date of the enactment of this Act. 

11 (b) TERMINATION OF CERTAIN PROVISIONS.— 

12 (1) ERISA.—Section 712 of the Employee Re13 tirement Income Security Act of 1974 (29 U.S.C. 

14 1185a) is amended by striking subsection (f) and in15 serting the following: 

16 ‘‘(f) SUNSET.—This section shall not apply to bene17 fits for services furnished after the effective date described 

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

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

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

21 striking subsection (f) and inserting the following: 

22 ‘‘(f) SUNSET.—This section shall not apply to bene23 fits for services furnished after the effective date described 

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


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1 SEC. 4. SPECIAL PREEMPTION RULE. 

2 (a) ERISA PREEMPTION.—Section 731 of the Em3 ployee Retirement Income Security Act of 1974 (29 

4 U.S.C. 1191) is amended— 

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

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

7 (2) by inserting after subsection (b), the fol8 lowing: 

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

10 PARITY REQUIREMENTS.— 

11 ‘‘(1) IN GENERAL.—Notwithstanding any provi12 sion of section 514 to the contrary, the provisions of 

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

14 insurance issuer offering coverage in connection with 

15 a group health plan shall supercede any provision of 

16 State law that establishes, implements, or continues 

17 in effect any standard or requirement which differs 

18 from the specific standards or requirements con19 tained in subsections (a), (b), (c), or (e) of section 

20 712A. 

21 ‘‘(2) CLARIFICATIONS.—Nothing in this sub22 section shall be construed to preempt State insur23 ance laws relating to the individual insurance mar24 ket or to small employers (as such term is defined 

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


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

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

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

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

5 (2) by inserting after subsection (b), the fol6 lowing: 

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

8 PARITY REQUIREMENTS.— 

9 ‘‘(1) IN GENERAL.—Notwithstanding any provi10 sion of section 514 of the Employee Retirement In11 come Security Act of 1974 to the contrary, the pro12 visions of this part relating to a group health plan 

13 or a health insurance issuer offering coverage in 

14 connection with a group health plan shall supercede 

15 any provisions of State law that establishes, imple16 ments, or continues in effect any standard or re17 quirement which differs from the specific standards 

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

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

20 ‘‘(2) CLARIFICATIONS.—Nothing in this sub21 section shall be construed to preempt State insur22 ance laws relating to the individual insurance mar23 ket or to small employers (as such term is defined 

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


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

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

3 which the provisions of section 2 apply with respect to 

4 group health plans and health insurance coverage offered 

5 in connection with group health plans. 

6 SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES. 

7 (a) GROUP HEALTH PLAN OMBUDSMAN.— 

8 (1) DEPARTMENT OF LABOR.—The Secretary 

9 of Labor shall designate an individual within the De10 partment of Labor to serve as the group health plan 

11 ombudsman for the Department. Such ombudsman 

12 shall serve as an initial point of contact to permit 

13 individuals to obtain information and provide assist14 ance concerning coverage of mental health services 

15 under group health plans in accordance with this 

16 Act. 

17 (2) DEPARTMENT OF HEALTH AND HUMAN

18 SERVICES.—The Secretary of Health and Human 

19 Services shall designate an individual within the De20 partment of Health and Human Services to serve as 

21 the group health plan ombudsman for the Depart22 ment. Such ombudsman shall serve as an initial 

23 point of contact to permit individuals to obtain in24 formation and provide assistance concerning cov25 erage of mental health services under health insurVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6401 E:\BILLS\S558.RS S558

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1 ance coverage issued in connection with group health 

2 plans in accordance with this Act. 

3 (b) AUDITS.—The Secretary of Labor and the Sec4 retary of Health and Human Services shall each provide 

5 for the conduct of random audits of group health plans 

6 (and health insurance coverage offered in connection with 

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

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

9 (c) GOVERNMENT ACCOUNTABILITY OFFICE

10 STUDY.— 

11 (1) STUDY.—The Comptroller General shall 

12 conduct a study that evaluates the effect of the im13 plementation of the amendments made by this Act 

14 on the cost of health insurance coverage, access to 

15 health insurance coverage (including the availability 

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

17 the impact on benefits and coverage for mental 

18 health and substance abuse, the impact of any addi19 tional cost or savings to the plan, the impact on 

20 State mental health benefit mandate laws, other im21 pact on the business community and the Federal 

22 Government, and other issues as determined appro23 priate by the Comptroller General. 

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

25 date of enactment of this Act, the Comptroller GenVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6401 E:\BILLS\S558.RS S558

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1 eral shall prepare and submit to the appropriate 

2 committees of Congress a report containing the re3 sults of the study conducted under paragraph (1). 

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

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

6 the Secretary of Health and Human Services shall jointly 

7 promulgate final regulations to carry out this Act. 

8 SECTION 1. SHORT TITLE. 

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

10 Act of 2007’’. 

11 SEC. 2. MENTAL HEALTH PARITY. 

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

13 of title I of the Employee Retirement Income Security Act 

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

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

16 ‘‘SEC. 712A. MENTAL HEALTH PARITY. 

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

18 (or health insurance coverage offered in connection with 

19 such a plan) that provides both medical and surgical bene20 fits and mental health benefits, such plan or coverage shall 

21 ensure that— 

22 ‘‘(1) the financial requirements applicable to 

23 such mental health benefits are no more restrictive 

24 than the financial requirements applied to substan25 tially all medical and surgical benefits covered by the 


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1 plan (or coverage), including deductibles, copayments, 

2 coinsurance, out-of-pocket expenses, and annual and 

3 lifetime limits, except that the plan (or coverage) may 

4 not establish separate cost sharing requirements that 

5 are applicable only with respect to mental health ben6 efits; and 

7 ‘‘(2) the treatment limitations applicable to such 

8 mental health benefits are no more restrictive than the 

9 treatment limitations applied to substantially all 

10 medical and surgical benefits covered by the plan (or 

11 coverage), including limits on the frequency of treat12 ment, number of visits, days of coverage, or other 

13 similar limits on the scope or duration of treatment. 

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

15 plan (or health insurance coverage offered in connection 

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

17 benefits and mental health benefits, such plan or coverage 

18 shall not be prohibited from— 

19 ‘‘(1) negotiating separate reimbursement or pro20 vider payment rates and service delivery systems for 

21 different benefits consistent with subsection (a); 

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

23 benefits in order to provide medically necessary serv24 ices for covered benefits, including through the use of 

25 any utilization review, authorization or management 


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1 practices, the application of medical necessity and 

2 appropriateness criteria applicable to behavioral 

3 health, and the contracting with and use of a network 

4 of providers; or 

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

6 manner that takes into consideration similar treat7 ment settings or similar treatments. 

8 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

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

10 plan (or health insurance coverage offered in connec11 tion with such a plan) that provides both medical and 

12 surgical benefits and mental health benefits, and that 

13 provides such benefits on both an in- and out-of-net14 work basis pursuant to the terms of the plan (or cov15 erage), such plan (or coverage) shall ensure that the 

16 requirements of this section are applied to both in17 and out-of-network services by comparing in-network 

18 medical and surgical benefits to in-network mental 

19 health benefits and out-of-network medical and sur20 gical benefits to out-of-network mental health benefits. 

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

22 shall be construed as requiring that a group health 

23 plan (or coverage in connection with such a plan) 

24 eliminate, reduce, or provide out-of-network coverage 

25 with respect to such plan (or coverage). 


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1 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

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

3 to any group health plan (and group health insurance 

4 coverage offered in connection with a group health 

5 plan) for any plan year of any employer who em6 ployed an average of at least 2 (or 1 in the case of 

7 an employer residing in a State that permits small 

8 groups to include a single individual) but not more 

9 than 50 employees on business days during the pre10 ceding calendar year. 

11 ‘‘(2) APPLICATION OF CERTAIN RULES IN DETER12 MINATION OF EMPLOYER SIZE.—For purposes of this 

13 subsection: 

14 ‘‘(A) APPLICATION OF AGGREGATION RULE

15 FOR EMPLOYERS.—Rules similar to the rules 

16 under subsections (b), (c), (m), and (o) of section 

17 414 of the Internal Revenue Code of 1986 shall 

18 apply for purposes of treating persons as a single 

19 employer. 

20 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

21 PRECEDING YEAR.—In the case of an employer 

22 which was not in existence throughout the pre23 ceding calendar year, the determination of 

24 whether such employer is a small employer shall 

25 be based on the average number of employees 


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•S 558 RS

1 that it is reasonably expected such employer will 

2 employ on business days in the current calendar 

3 year. 

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

5 this paragraph to an employer shall include a 

6 reference to any predecessor of such employer. 

7 ‘‘(e) COST EXEMPTION.— 

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

9 health plan (or health insurance coverage offered in 

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

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

12 increase for the plan year involved of the actual total 

13 costs of coverage with respect to medical and surgical 

14 benefits and mental health benefits under the plan (as 

15 determined and certified under paragraph (3)) by an 

16 amount that exceeds the applicable percentage de17 scribed in paragraph (2) of the actual total plan 

18 costs, the provisions of this section shall not apply to 

19 such plan (or coverage) during the following plan 

20 year, and such exemption shall apply to the plan (or 

21 coverage) for 1 plan year. An employer may elect to 

22 continue to apply mental health parity pursuant to 

23 this section with respect to the group health plan (or 

24 coverage) involved regardless of any increase in total 

25 costs. 


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•S 558 RS

1 ‘‘(2) APPLICABLE PERCENTAGE.—With respect to 

2 a plan (or coverage), the applicable percentage de3 scribed in this paragraph shall be— 

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

5 year in which this section is applied; and 

6 ‘‘(B) 1 percent in the case of each subse7 quent plan year. 

8 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter9 minations as to increases in actual costs under a 

10 plan (or coverage) for purposes of this section shall be 

11 made by a qualified actuary who is a member in good 

12 standing of the American Academy of Actuaries. Such 

13 determinations shall be certified by the actuary and 

14 be made available to the general public. 

15 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

16 health plan (or a health insurance issuer offering cov17 erage in connections with a group health plan) seeks 

18 an exemption under this subsection, determinations 

19 under paragraph (1) shall be made after such plan 

20 (or coverage) has complied with this section for the 

21 first 6 months of the plan year involved. 

22 ‘‘(5) NOTIFICATION.—An election to modify cov23 erage of mental health benefits as permitted under 

24 this subsection shall be treated as a material modi25 fication in the terms of the plan as described in secVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6203 E:\BILLS\S558.RS S558

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1 tion 102(a)(1) and shall be subject to the applicable 

2 notice requirements under section 104(b)(1). 

3 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec4 tion shall be construed to require a group health plan (or 

5 health insurance coverage offered in connection with such 

6 a plan) to provide any mental health benefits. 

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

8 term ‘mental health benefits’ means benefits with respect to 

9 mental health services (including substance abuse treat10 ment) as defined under the terms of the group health plan 

11 or coverage.’’. 

12 (b) PUBLIC HEALTH SERVICE ACT.—Subpart 2 of 

13 part A of title XXVII of the Public Health Service Act is 

14 amended by inserting after section 2705 (42 U.S.C. 300gg15 5) the following: 

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

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

18 (or health insurance coverage offered in connection with 

19 such a plan) that provides both medical and surgical bene20 fits and mental health benefits, such plan or coverage shall 

21 ensure that— 

22 ‘‘(1) the financial requirements applicable to 

23 such mental health benefits are no more restrictive 

24 than the financial requirements applied to substan25 tially all medical and surgical benefits covered by the 


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•S 558 RS

1 plan (or coverage), including deductibles, copayments, 

2 coinsurance, out-of-pocket expenses, and annual and 

3 lifetime limits, except that the plan (or coverage) may 

4 not establish separate cost sharing requirements that 

5 are applicable only with respect to mental health ben6 efits; and 

7 ‘‘(2) the treatment limitations applicable to such 

8 mental health benefits are no more restrictive than the 

9 treatment limitations applied to substantially all 

10 medical and surgical benefits covered by the plan (or 

11 coverage), including limits on the frequency of treat12 ment, number of visits, days of coverage, or other 

13 similar limits on the scope or duration of treatment. 

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

15 plan (or health insurance coverage offered in connection 

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

17 benefits and mental health benefits, such plan or coverage 

18 shall not be prohibited from— 

19 ‘‘(1) negotiating separate reimbursement or pro20 vider payment rates and service delivery systems for 

21 different benefits consistent with subsection (a); 

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

23 benefits in order to provide medically necessary serv24 ices for covered benefits, including through the use of 

25 any utilization review, authorization or management 


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•S 558 RS

1 practices, the application of medical necessity and 

2 appropriateness criteria applicable to behavioral 

3 health, and the contracting with and use of a network 

4 of providers; or 

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

6 of this section in a manner that takes into consider7 ation similar treatment settings or similar treat8 ments. 

9 ‘‘(c) IN- AND OUT-OF-NETWORK.— 

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

11 plan (or health insurance coverage offered in connec12 tion with such a plan) that provides both medical and 

13 surgical benefits and mental health benefits, and that 

14 provides such benefits on both an in- and out-of-net15 work basis pursuant to the terms of the plan (or cov16 erage), such plan (or coverage) shall ensure that the 

17 requirements of this section are applied to both in18 and out-of-network services by comparing in-network 

19 medical and surgical benefits to in-network mental 

20 health benefits and out-of-network medical and sur21 gical benefits to out-of-network mental health benefits. 

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

23 shall be construed as requiring that a group health 

24 plan (or coverage in connection with such a plan) 


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•S 558 RS

1 eliminate, reduce, or provide out-of-network coverage 

2 with respect to such plan (or coverage). 

3 ‘‘(d) SMALL EMPLOYER EXEMPTION.— 

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

5 to any group health plan (and group health insurance 

6 coverage offered in connection with a group health 

7 plan) for any plan year of any employer who em8 ployed an average of at least 2 (or 1 in the case of 

9 an employer residing in a State that permits small 

10 groups to include a single individual) but not more 

11 than 50 employees on business days during the pre12 ceding calendar year. 

13 ‘‘(2) APPLICATION OF CERTAIN RULES IN DETER14 MINATION OF EMPLOYER SIZE.—For purposes of this 

15 subsection: 

16 ‘‘(A) APPLICATION OF AGGREGATION RULE

17 FOR EMPLOYERS.—Rules similar to the rules 

18 under subsections (b), (c), (m), and (o) of section 

19 414 of the Internal Revenue Code of 1986 shall 

20 apply for purposes of treating persons as a single 

21 employer. 

22 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

23 PRECEDING YEAR.—In the case of an employer 

24 which was not in existence throughout the pre25 ceding calendar year, the determination of 


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•S 558 RS

1 whether such employer is a small employer shall 

2 be based on the average number of employees 

3 that it is reasonably expected such employer will 

4 employ on business days in the current calendar 

5 year. 

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

7 this paragraph to an employer shall include a 

8 reference to any predecessor of such employer. 

9 ‘‘(e) COST EXEMPTION.— 

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

11 health plan (or health insurance coverage offered in 

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

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

14 increase for the plan year involved of the actual total 

15 costs of coverage with respect to medical and surgical 

16 benefits and mental health benefits under the plan (as 

17 determined and certified under paragraph (3)) by an 

18 amount that exceeds the applicable percentage de19 scribed in paragraph (2) of the actual total plan 

20 costs, the provisions of this section shall not apply to 

21 such plan (or coverage) during the following plan 

22 year, and such exemption shall apply to the plan (or 

23 coverage) for 1 plan year. An employer may elect to 

24 continue to apply mental health parity pursuant to 

25 this section with respect to the group health plan (or 


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•S 558 RS

1 coverage) involved regardless of any increase in total 

2 costs. 

3 ‘‘(2) APPLICABLE PERCENTAGE.—With respect to 

4 a plan (or coverage), the applicable percentage de5 scribed in this paragraph shall be— 

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

7 year in which this section is applied; and 

8 ‘‘(B) 1 percent in the case of each subse9 quent plan year. 

10 ‘‘(3) DETERMINATIONS BY ACTUARIES.—Deter11 minations as to increases in actual costs under a 

12 plan (or coverage) for purposes of this section shall be 

13 made by a qualified actuary who is a member in good 

14 standing of the American Academy of Actuaries. Such 

15 determinations shall be certified by the actuary and 

16 be made available to the general public. 

17 ‘‘(4) 6-MONTH DETERMINATIONS.—If a group 

18 health plan (or a health insurance issuer offering cov19 erage in connections with a group health plan) seeks 

20 an exemption under this subsection, determinations 

21 under paragraph (1) shall be made after such plan 

22 (or coverage) has complied with this section for the 

23 first 6 months of the plan year involved. 

24 ‘‘(5) NOTIFICATION.—An election to modify cov25 erage of mental health benefits as permitted under 


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•S 558 RS

1 this subsection shall be treated as a material modi2 fication in the terms of the plan as described in sec3 tion 102(a)(1) and shall be subject to the applicable 

4 notice requirements under section 104(b)(1). 

5 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec6 tion shall be construed to require a group health plan (or 

7 health insurance coverage offered in connection with such 

8 a plan) to provide any mental health benefits. 

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

10 term ‘mental health benefits’ means benefits with respect to 

11 mental health services (including substance abuse treat12 ment) as defined under the terms of the group health plan 

13 or coverage, and when applicable as may be defined under 

14 State law when applicable to health insurance coverage of15 fered in connection with a group health plan.’’. 

16 SEC. 3. EFFECTIVE DATE. 

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

18 apply to group health plans (or health insurance coverage 

19 offered in connection with such plans) beginning in the first 

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

21 calendar year that begins more than 1 year after the date 

22 of the enactment of this Act. 

23 (b) TERMINATION OF CERTAIN PROVISIONS.— 

24 (1) ERISA.—Section 712 of the Employee Re25 tirement Income Security Act of 1974 (29 U.S.C. 


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•S 558 RS

1 1185a) is amended by striking subsection (f) and in2 serting the following: 

3 ‘‘(f) SUNSET.—This section shall not apply to benefits 

4 for services furnished after the effective date described in 

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

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

7 Service Act (42 U.S.C. 300gg-5) is amended by strik8 ing subsection (f) and inserting the following: 

9 ‘‘(f) SUNSET.—This section shall not apply to benefits 

10 for services furnished after the effective date described in 

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

12 SEC. 4. SPECIAL PREEMPTION RULE. 

13 (a) ERISA PREEMPTION.—Section 731 of the Em14 ployee Retirement Income Security Act of 1974 (29 U.S.C. 

15 1191) is amended— 

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

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

18 (2) by inserting after subsection (b), the fol19 lowing: 

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

21 PARITY REQUIREMENTS.— 

22 ‘‘(1) IN GENERAL.—Notwithstanding any provi23 sion of section 514 to the contrary, the provisions of 

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

25 insurance issuer offering coverage in connection with 


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•S 558 RS

1 a group health plan shall supercede any provision of 

2 State law that establishes, implements, or continues 

3 in effect any standard or requirement which differs 

4 from the specific standards or requirements contained 

5 in subsections (a), (b), (c), or (e) of section 712A. 

6 ‘‘(2) CLARIFICATIONS.—Nothing in this sub7 section shall be construed to preempt State insurance 

8 laws relating to the individual insurance market or 

9 to small employers (as such term is defined for pur10 poses of section 712A(d)).’’. 

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

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

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

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

15 (2) by inserting after subsection (b), the fol16 lowing: 

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

18 PARITY REQUIREMENTS.— 

19 ‘‘(1) IN GENERAL.—Notwithstanding any provi20 sion of section 514 of the Employee Retirement In21 come Security Act of 1974 to the contrary, the provi22 sions of this part relating to a group health plan or 

23 a health insurance issuer offering coverage in connec24 tion with a group health plan shall supercede any 

25 provisions of State law that establishes, implements, 


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•S 558 RS

1 or continues in effect any standard or requirement 

2 which differs from the specific standards or require3 ments contained in subsections (a), (b), (c), or (e) of 

4 section 2705A. 

5 ‘‘(2) CLARIFICATIONS.—Nothing in this sub6 section shall be construed to preempt State insurance 

7 laws relating to the individual insurance market or 

8 to small employers (as such term is defined for pur9 poses of section 2705A(d)).’’. 

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

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

12 the provisions of section 2 apply with respect to group 

13 health plans and health insurance coverage offered in con14 nection with group health plans. 

15 SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES. 

16 (a) GROUP HEALTH PLAN OMBUDSMAN.— 

17 (1) DEPARTMENT OF LABOR.—The Secretary of 

18 Labor shall designate an individual within the De19 partment of Labor to serve as the group health plan 

20 ombudsman for the Department. Such ombudsman 

21 shall serve as an initial point of contact to permit in22 dividuals to obtain information and provide assist23 ance concerning coverage of mental health services 

24 under group health plans in accordance with this Act. 


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1 (2) DEPARTMENT OF HEALTH AND HUMAN SERV2 ICES.—The Secretary of Health and Human Services 

3 shall designate an individual within the Department 

4 of Health and Human Services to serve as the group 

5 health plan ombudsman for the Department. Such 

6 ombudsman shall serve as an initial point of contact 

7 to permit individuals to obtain information and pro8 vide assistance concerning coverage of mental health 

9 services under health insurance coverage issued in 

10 connection with group health plans in accordance 

11 with this Act. 

12 (b) AUDITS.—The Secretary of Labor and the Sec13 retary of Health and Human Services shall each provide 

14 for the conduct of random audits of group health plans (and 

15 health insurance coverage offered in connection with such 

16 plans) to ensure that such plans are in compliance with 

17 this Act (and the amendments made by this Act). 

18 (c) GOVERNMENT ACCOUNTABILITY OFFICE STUDY.— 

19 (1) STUDY.—The Comptroller General shall con20 duct a study that evaluates the effect of the implemen21 tation of the amendments made by this Act on the 

22 cost of health insurance coverage, access to health in23 surance coverage (including the availability of in-net24 work providers), the quality of health care, the impact 

25 on benefits and coverage for mental health and subVerDate Aug 31 2005 03:14 Mar 28, 2007 Jkt 059200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6203 E:\BILLS\S558.RS S558

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1 stance abuse, the impact of any additional cost or 

2 savings to the plan, the impact on out-of-network cov3 erage for mental health benefits (including substance 

4 abuse treatment), the impact on State mental health 

5 benefit mandate laws, other impact on the business 

6 community and the Federal Government, and other 

7 issues as determined appropriate by the Comptroller 

8 General. 

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

10 date of enactment of this Act, the Comptroller General 

11 shall prepare and submit to the appropriate commit12 tees of Congress a report containing the results of the 

13 study conducted under paragraph (1). 

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

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

16 the Secretary of Health and Human Services shall jointly 

17 promulgate final regulations to carry out this Act. 


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Calendar No. 93 

110TH CONGRESS 

1ST SESSION S. 558 

A BILL 

To provide parity between health insurance covmedical and surgical services. erage of mental health benefits and benefits for 

MARCH 27, 2007 

Reported with an amendment 


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