II

106TH CONGRESS

1ST SESSION S. 1447

To amend the Public Health Service Act, Employee Retirement Income Security Act of 1974, and the Internal Revenue Code of 1986 to provide

for nondiscriminatory coverage for substance abuse treatment services

under private group and individual health coverage.

IN THE SENATE OF THE UNITED STATES

JULY 28, 1999

Mr. WELLSTONE (for himself, Mr. KENNEDY, Mr. INOUYE, Mr. DASCHLE,

and Mr. MOYNIHAN) introduced the following bill; which was read twice

and referred to the Committee on Health, Education, Labor, and Pensions

A BILL

To amend the Public Health Service Act, Employee Retirement Income Security Act of 1974, and the Internal

Revenue Code of 1986 to provide for nondiscriminatory

coverage for substance abuse treatment services under

private group and individual health coverage.

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 ‘‘Fairness in Treatment:

5 The Drug and Alcohol Addiction Recovery Act of 1999’’.
2

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1 SEC. 2. PARITY IN SUBSTANCE ABUSE TREATMENT BENE2 FITS.

3 (a) GROUP HEALTH PLANS.—

4 (1) PUBLIC HEALTH SERVICE ACT AMEND5 MENTS.—

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

7 title XXVII of the Public Health Service Act

8 (42 U.S.C. 300gg–4 et seq.) is amended by

9 adding at the end the following:

10 ‘‘SEC. 2707. PARITY IN THE APPLICATION OF TREATMENT

11 LIMITATIONS AND FINANCIAL REQUIRE12 MENTS TO SUBSTANCE ABUSE TREATMENT

13 BENEFITS.

14 ‘‘(a) IN GENERAL.—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 substance abuse treatment benefits, the plan

18 or coverage shall not impose treatment limitations or fi19 nancial requirements on the substance abuse treatment

20 benefits unless similar limitations or requirements are im21 posed for medical and surgical benefits.

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

23 be construed—

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

25 insurance coverage offered in connection with such a
3

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1 plan) to provide any substance abuse treatment ben2 efits; or

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

4 insurance issuer offering group health insurance cov5 erage from negotiating the level and type of reim6 bursement with a provider for care provided in ac7 cordance with this section.

8 ‘‘(c) SMALL EMPLOYER EXEMPTION.—

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

10 to any group health plan (and group health insur11 ance coverage offered in connection with a group

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

13 ‘‘(2) SMALL EMPLOYER.—For purposes of

14 paragraph (1), the term ‘small employer’ means, in

15 connection with a group health plan with respect to

16 a calendar year and a plan year, an employer who

17 employed an average of at least 2 but not more than

18 25 employees on business days during the preceding

19 calendar year and who employs at least 2 employees

20 on the first day of the plan year.

21 ‘‘(3) APPLICATION OF CERTAIN RULES IN DE22 TERMINATION OF EMPLOYER SIZE.—For purposes of

23 this subsection:

24 ‘‘(A) APPLICATION OF AGGREGATION RULE

25 FOR EMPLOYERS.—Rules similar to the rules
4

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1 under subsections (b), (c), (m), and (o) of sec2 tion 414 of the Internal Revenue Code of 1986

3 shall apply for purposes of treating persons as

4 a single employer.

5 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

6 PRECEDING YEAR.—In the case of an employer

7 which was not in existence throughout the pre8 ceding calendar year, the determination of

9 whether such employer is a small employer shall

10 be based on the average number of employees

11 that it is reasonably expected such employer

12 will employ on business days in the current cal13 endar year.

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

15 this subsection to an employer shall include a

16 reference to any predecessor of such employer.

17 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF18 FERED.—In the case of a group health plan that offers

19 a participant or beneficiary two or more benefit package

20 options under the plan, the requirements of this section

21 shall be applied separately with respect to each such op22 tion.

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

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

25 ‘treatment limitation’ means, with respect to benefits
5

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1 under a group health plan or health insurance cov2 erage, any day or visit limits imposed on coverage of

3 benefits under the plan or coverage during a period

4 of time.

5 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi6 nancial requirement’ means, with respect to benefits

7 under a group health plan or health insurance cov8 erage, any deductible, coinsurance, or cost-sharing

9 or an annual or lifetime dollar limit imposed with re10 spect to the benefits under the plan or coverage.

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

12 term ‘medical or surgical benefits’ means benefits

13 with respect to medical or surgical services, as de14 fined under the terms of the plan or coverage (as the

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

16 treatment benefits.

17 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE18 FITS.—The term ‘substance abuse treatment bene19 fits’ means benefits with respect to substance abuse

20 treatment services.

21 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV22 ICES.—The term ‘substance abuse services’ means

23 any of the following items and services provided for

24 the treatment of substance abuse:
6

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1 ‘‘(A) Inpatient treatment, including detoxi2 fication.

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

4 ‘‘(C) Outpatient treatment, including

5 screening and assessment, medication manage6 ment, individual, group, and family counseling,

7 and relapse prevention.

8 ‘‘(D) Prevention services, including health

9 education and individual and group counseling

10 to encourage the reduction of risk factors for

11 substance abuse.

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

13 abuse’ includes chemical dependency.

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

15 shall comply with the notice requirement under section

16 713(f) of the Employee Retirement Income Security Act

17 of 1974 with respect to the requirements of this section

18 as if such section applied to such plan.’’.

19 (B) CONFORMING AMENDMENT.—Section

20 2723(c) of the Public Health Service Act (42

21 U.S.C. 300gg–23(c)) is amended by striking

22 ‘‘section 2704’’ and inserting ‘‘sections 2704

23 and 2707’’.

24 (2) ERISA AMENDMENTS.—
7

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

2 subtitle B of title I of the Employee Retirement

3 Income Security Act of 1974 (29 U.S.C. 1185

4 et seq.) is amended by adding at the end the

5 following:

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

7 LIMITATIONS AND FINANCIAL REQUIRE8 MENTS TO SUBSTANCE ABUSE TREATMENT

9 BENEFITS.

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

11 plan (or health insurance coverage offered in connection

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

13 benefits and substance abuse treatment benefits, the plan

14 or coverage shall not impose treatment limitations or fi15 nancial requirements on the substance abuse treatment

16 benefits unless similar limitations or requirements are im17 posed for medical and surgical benefits.

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

19 be construed—

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

21 insurance coverage offered in connection with such a

22 plan) to provide any substance abuse treatment ben23 efits; or

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

25 insurance issuer offering group health insurance cov-
8

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1 erage from negotiating the level and type of reim2 bursement with a provider for care provided in ac3 cordance with this section.

4 ‘‘(c) SMALL EMPLOYER EXEMPTION.—

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

6 to any group health plan (and group health insur7 ance coverage offered in connection with a group

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

9 ‘‘(2) SMALL EMPLOYER.—For purposes of

10 paragraph (1), the term ‘small employer’ means, in

11 connection with a group health plan with respect to

12 a calendar year and a plan year, an employer who

13 employed an average of at least 2 but not more than

14 25 employees on business days during the preceding

15 calendar year and who employs at least 2 employees

16 on the first day of the plan year.

17 ‘‘(3) 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.
9

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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 subsection to an employer shall include a

12 reference to any predecessor of such employer.

13 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF14 FERED.—In the case of a group health plan that offers

15 a participant or beneficiary two or more benefit package

16 options under the plan, the requirements of this section

17 shall be applied separately with respect to each such op18 tion.

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

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

21 ‘treatment limitation’ means, with respect to benefits

22 under a group health plan or health insurance cov23 erage, any day or visit limits imposed on coverage of

24 benefits under the plan or coverage during a period

25 of time.
10

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1 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi2 nancial requirement’ means, with respect to benefits

3 under a group health plan or health insurance cov4 erage, any deductible, coinsurance, or cost-sharing

5 or an annual or lifetime dollar limit imposed with re6 spect to the benefits under the plan or coverage.

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

8 term ‘medical or surgical benefits’ means benefits

9 with respect to medical or surgical services, as de10 fined under the terms of the plan or coverage (as the

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

12 treatment benefits.

13 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE14 FITS.—The term ‘substance abuse treatment bene15 fits’ means benefits with respect to substance abuse

16 treatment services.

17 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV18 ICES.—The term ‘substance abuse services’ means

19 any of the following items and services provided for

20 the treatment of substance abuse:

21 ‘‘(A) Inpatient treatment, including detoxi22 fication.

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

24 ‘‘(C) Outpatient treatment, including

25 screening and assessment, medication manage-
11

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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 (B) CONFORMING AMENDMENTS.—

20 (i) Section 731(c) of the Employee

21 Retirement Income Security Act of 1974

22 (29 U.S.C. 1191(c)) is amended by strik23 ing ‘‘section 711’’ and inserting ‘‘sections

24 711 and 714’’.
12

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1 (ii) Section 732(a) of the Employee

2 Retirement Income Security Act of 1974

3 (29 U.S.C. 1191a(a)) is amended by strik4 ing ‘‘section 711’’ and inserting ‘‘sections

5 711 and 714’’.

6 (iii) The table of contents in section 1

7 of the Employee Retirement Income Secu8 rity Act of 1974 is amended by inserting

9 after the item relating to section 713 the

10 following new item:

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

11 (3) INTERNAL REVENUE CODE AMEND12 MENTS.—

13 (A) IN GENERAL.—Subchapter B of chap14 ter 100 of the Internal Revenue Code of 1986

15 is amended by inserting after section 9812, the

16 following:

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

18 LIMITATIONS AND FINANCIAL REQUIRE19 MENTS TO SUBSTANCE ABUSE TREATMENT

20 BENEFITS.

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 substance abuse treatment benefits, the plan
13

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1 or coverage shall not impose treatment limitations or fi2 nancial requirements on the substance abuse treatment

3 benefits unless similar limitations or requirements are im4 posed for medical and surgical benefits.

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

6 be construed—

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

8 insurance coverage offered in connection with such a

9 plan) to provide any substance abuse treatment ben10 efits; or

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

12 insurance issuer offering group health insurance cov13 erage from negotiating the level and type of reim14 bursement with a provider for care provided in ac15 cordance with this section.

16 ‘‘(c) SMALL EMPLOYER EXEMPTION.—

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

18 to any group health plan (and group health insur19 ance coverage offered in connection with a group

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

21 ‘‘(2) SMALL EMPLOYER.—For purposes of

22 paragraph (1), the term ‘small employer’ means, in

23 connection with a group health plan with respect to

24 a calendar year and a plan year, an employer who

25 employed an average of at least 2 but not more than
14

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1 25 employees on business days during the preceding

2 calendar year and who employs at least 2 employees

3 on the first day of the plan year.

4 ‘‘(3) APPLICATION OF CERTAIN RULES IN DE5 TERMINATION OF EMPLOYER SIZE.—For purposes of

6 this subsection:

7 ‘‘(A) APPLICATION OF AGGREGATION RULE

8 FOR EMPLOYERS.—Rules similar to the rules

9 under subsections (b), (c), (m), and (o) of sec10 tion 414 of the Internal Revenue Code of 1986

11 shall apply for purposes of treating persons as

12 a single employer.

13 ‘‘(B) EMPLOYERS NOT IN EXISTENCE IN

14 PRECEDING YEAR.—In the case of an employer

15 which was not in existence throughout the pre16 ceding calendar year, the determination of

17 whether such employer is a small employer shall

18 be based on the average number of employees

19 that it is reasonably expected such employer

20 will employ on business days in the current cal21 endar year.

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

23 this subsection to an employer shall include a

24 reference to any predecessor of such employer.
15

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1 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF2 FERED.—In the case of a group health plan that offers

3 a participant or beneficiary two or more benefit package

4 options under the plan, the requirements of this section

5 shall be applied separately with respect to each such op6 tion.

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

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

9 ‘treatment limitation’ means, with respect to benefits

10 under a group health plan or health insurance cov11 erage, any day or visit limits imposed on coverage of

12 benefits under the plan or coverage during a period

13 of time.

14 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi15 nancial requirement’ means, with respect to benefits

16 under a group health plan or health insurance cov17 erage, any deductible, coinsurance, or cost-sharing

18 or an annual or lifetime dollar limit imposed with re19 spect to the benefits under the plan or coverage.

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

21 term ‘medical or surgical benefits’ means benefits

22 with respect to medical or surgical services, as de23 fined under the terms of the plan or coverage (as the

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

25 treatment benefits.
16

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1 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE2 FITS.—The term ‘substance abuse treatment bene3 fits’ means benefits with respect to substance abuse

4 treatment services.

5 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV6 ICES.—The term ‘substance abuse services’ means

7 any of the following items and services provided for

8 the treatment of substance abuse:

9 ‘‘(A) Inpatient treatment, including detoxi10 fication.

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

12 ‘‘(C) Outpatient treatment, including

13 screening and assessment, medication manage14 ment, individual, group, and family counseling,

15 and relapse prevention.

16 ‘‘(D) Prevention services, including health

17 education and individual and group counseling

18 to encourage the reduction of risk factors for

19 substance abuse.

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

21 abuse’ includes chemical dependency.’’.

22 (B) CONFORMING AMENDMENT.—The

23 table of contents for chapter 100 of the Inter24 nal Revenue Code of 1986 is amended by in-
17

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1 serting after the item relating to section 9812

2 the following new item:

‘‘Sec. 9813. Parity in the application of treatment limitations and financial requirements to substance abuse treatment benefits.’’.

3 (b) INDIVIDUAL HEALTH INSURANCE.—

4 (1) IN GENERAL.—Part B of title XXVII of the

5 Public Health Service Act (42 U.S.C. 300gg–41 et

6 seq.) is amended by inserting after section 2752 the

7 following:

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

9 LIMITATIONS AND FINANCIAL REQUIRE10 MENTS TO SUBSTANCE ABUSE BENEFITS.

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

12 (other than subsection (e)) shall apply to health insurance

13 coverage offered by a health insurance issuer in the indi14 vidual market in the same manner as it applies to health

15 insurance coverage offered by a health insurance issuer

16 in connection with a group health plan in the small or

17 large group market.

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

19 part shall comply with the notice requirement under sec20 tion 713(f) of the Employee Retirement Income Security

21 Act of 1974 with respect to the requirements referred to

22 in subsection (a) as if such section applied to such issuer

23 and such issuer were a group health plan.’’.
18

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1 (2) CONFORMING AMENDMENT.—Section

2 2762(b)(2) of the Public Health Service Act (42

3 U.S.C. 300gg–62(b)(2)) is amended by striking

4 ‘‘section 2751’’ and inserting ‘‘sections 2751 and

5 2753’’.

6 (c) EFFECTIVE DATES.—

7 (1) IN GENERAL.—Subject to paragraph (3),

8 the amendments made by subsection (a) shall apply

9 with respect to group health plans for plan years be10 ginning on or after January 1, 2000.

11 (2) INDIVIDUAL MARKET.—The amendments

12 made by subsection (b) shall apply with respect to

13 health insurance coverage offered, sold, issued, re14 newed, in effect, or operated in the individual mar15 ket on or after January 1, 2000.

16 (3) COLLECTIVE BARGAINING AGREEMENTS.—

17 In the case of a group health plan maintained pur18 suant to 1 or more collective bargaining agreements

19 between employee representatives and 1 or more em20 ployers ratified before the date of enactment of this

21 Act, the amendments made subsection (a) shall not

22 apply to plan years beginning before the later of—

23 (A) the date on which the last collective

24 bargaining agreements relating to the plan ter25 minates (determined without regard to any ex-
19

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1 tension thereof agreed to after the date of en2 actment of this Act), or

3 (B) January 1, 2000.

4 For purposes of subparagraph (A), any plan amend5 ment made pursuant to a collective bargaining

6 agreement relating to the plan which amends the

7 plan solely to conform to any requirement added by

8 subsection (a) shall not be treated as a termination

9 of such collective bargaining 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’’.

19 SEC. 3. PREEMPTION.

20 Nothing in the amendments made by this Act shall

21 be construed to preempt any provision of State law that

22 provides protections to enrollees that are greater than the

23 protections provided under such amendments.

Æ