I

104TH CONGRESS

2D SESSION H. R. 4135

To amend the Internal Revenue Code of 1986 to fully implement the

Newborns’ and Mothers’ Health Protection Act of 1996 and the Mental

Health Parity Act of 1996.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 24, 1996

Mr. THOMAS (for himself and Mr. STARK) introduced the following bill; which

was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to fully implement the Newborns’ and Mothers’ Health Protection Act

of 1996 and the Mental Health Parity Act of 1996.

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 ‘‘Newborns’ and Moth5 ers’ Health Protection and Mental Health Parity Imple6 mentation Amendments of 1996’’.
2

•HR 4135 IH

1 SEC. 2. AMENDMENTS TO THE INTERNAL REVENUE CODE

2 OF 1986 TO IMPLEMENT THE NEWBORNS’ AND

3 MOTHERS’ HEALTH PROTECTION ACT OF 1996

4 AND THE MENTAL HEALTH PARITY ACT OF

5 1996.

6 (a) IN GENERAL.—Subtitle K of the Internal Reve7 nue Code of 1986 (as added by section 401(a) of the

8 Health Insurance Portability and Accountability Act of

9 1996) is amended—

10 (1) by striking all that precedes section 9801

11 and inserting the following:

12 ‘‘Subtitle K—Group Health Plan

13 Requirements

‘‘CHAPTER 100. Group health plan requirements.

14 ‘‘CHAPTER 100—GROUP HEALTH PLAN

15 REQUIREMENTS

‘‘Subchapter A. Requirements relating to portability, access, and

renewability.

‘‘Subchapter B. Other requirements.

‘‘Subchapter C. General provisions.

16 ‘‘Subchapter A—Requirements Relating to

17 Portability, Access, and Renewability

‘‘Sec. 9801. Increased portability through limitation on preexisting condition exclusions.

‘‘Sec. 9802. Prohibiting discrimination against individual participants and beneficiaries based on health status.

‘‘Sec. 9803. Guaranteed renewability in multiemployer plans and

certain multiple employer welfare arrangements.’’,

18 (2) by redesignating sections 9804, 9805, and

19 9806 as sections 9831, 9832, and 9833, respectively,
3

•HR 4135 IH

1 (3) by inserting before section 9831 (as so re2 designated) the following:

3 ‘‘Subchapter C—General Provisions

‘‘Sec. 9831. General exceptions.

‘‘Sec. 9832. Definitions.

‘‘Sec. 9833. Regulations.’’, and

4 (4) by inserting after section 9803 the follow5 ing:

6 ‘‘Subchapter B—Other Requirements

‘‘Sec. 9811. Standards relating to benefits for mothers and

newborns.

‘‘Sec. 9812. Parity in the application of certain limits to mental

health benefits.

7 ‘‘SEC. 9811. STANDARDS RELATING TO BENEFITS FOR

8 MOTHERS AND NEWBORNS.

9 ‘‘(a) REQUIREMENTS FOR MINIMUM HOSPITAL STAY

10 FOLLOWING BIRTH.—

11 ‘‘(1) IN GENERAL.—A group health plan may

12 not—

13 ‘‘(A) except as provided in paragraph

14 (2)—

15 ‘‘(i) restrict benefits for any hospital

16 length of stay in connection with childbirth

17 for the mother or newborn child, following

18 a normal vaginal delivery, to less than 48

19 hours, or

20 ‘‘(ii) restrict benefits for any hospital

21 length of stay in connection with childbirth
4

•HR 4135 IH

1 for the mother or newborn child, following

2 a cesarean section, to less than 96 hours;

3 or

4 ‘‘(B) require that a provider obtain author5 ization from the plan or the issuer for prescrib6 ing any length of stay required under subpara7 graph (A) (without regard to paragraph (2)).

8 ‘‘(2) EXCEPTION.—Paragraph (1)(A) shall not

9 apply in connection with any group health plan in

10 any case in which the decision to discharge the

11 mother or her newborn child prior to the expiration

12 of the minimum length of stay otherwise required

13 under paragraph (1)(A) is made by an attending

14 provider in consultation with the mother.

15 ‘‘(b) PROHIBITIONS.—A group health plan may not—

16 ‘‘(1) deny to the mother or her newborn child

17 eligibility, or continued eligibility, to enroll or to

18 renew coverage under the terms of the plan, solely

19 for the purpose of avoiding the requirements of this

20 section;

21 ‘‘(2) provide monetary payments or rebates to

22 mothers to encourage such mothers to accept less

23 than the minimum protections available under this

24 section;
5

•HR 4135 IH

1 ‘‘(3) penalize or otherwise reduce or limit the

2 reimbursement of an attending provider because

3 such provider provided care to an individual partici4 pant or beneficiary in accordance with this section;

5 ‘‘(4) provide incentives (monetary or otherwise)

6 to an attending provider to induce such provider to

7 provide care to an individual participant or bene8 ficiary in a manner inconsistent with this section; or

9 ‘‘(5) subject to subsection (c)(3), restrict bene10 fits for any portion of a period within a hospital

11 length of stay required under subsection (a) in a

12 manner which is less favorable than the benefits pro13 vided for any preceding portion of such stay.

14 ‘‘(c) RULES OF CONSTRUCTION.—

15 ‘‘(1) Nothing in this section shall be construed

16 to require a mother who is a participant or bene17 ficiary—

18 ‘‘(A) to give birth in a hospital; or

19 ‘‘(B) to stay in the hospital for a fixed pe20 riod of time following the birth of her child.

21 ‘‘(2) This section shall not apply with respect to

22 any group health plan which does not provide bene23 fits for hospital lengths of stay in connection with

24 childbirth for a mother or her newborn child.
6

•HR 4135 IH

1 ‘‘(3) Nothing in this section shall be construed

2 as preventing a group health plan from imposing

3 deductibles, coinsurance, or other cost-sharing in re4 lation to benefits for hospital lengths of stay in con5 nection with childbirth for a mother or newborn

6 child under the plan, except that such coinsurance or

7 other cost-sharing for any portion of a period within

8 a hospital length of stay required under subsection

9 (a) may not be greater than such coinsurance or

10 cost-sharing for any preceding portion of such stay.

11 ‘‘(d) LEVEL AND TYPE OF REIMBURSEMENTS.—

12 Nothing in this section shall be construed to prevent a

13 group health plan from negotiating the level and type of

14 reimbursement with a provider for care provided in ac15 cordance with this section.

16 ‘‘(f) PREEMPTION; EXCEPTION FOR HEALTH INSUR17 ANCE COVERAGE IN CERTAIN STATES.—The require18 ments of this section shall not apply with respect to health

19 insurance coverage if there is a State law (including a de20 cision, rule, regulation, or other State action having the

21 effect of law) for a State that regulates such coverage that

22 is described in any of the following paragraphs:

23 ‘‘(1) Such State law requires such coverage to

24 provide for at least a 48-hour hospital length of stay

25 following a normal vaginal delivery and at least a
7

•HR 4135 IH

1 96-hour hospital length of stay following a cesarean

2 section.

3 ‘‘(2) Such State law requires such coverage to

4 provide for maternity and pediatric care in accord5 ance with guidelines established by the American

6 College of Obstetricians and Gynecologists, the

7 American Academy of Pediatrics, or other estab8 lished professional medical associations.

9 ‘‘(3) Such State law requires, in connection

10 with such coverage for maternity care, that the hos11 pital length of stay for such care is left to the deci12 sion of (or required to be made by) the attending

13 provider in consultation with the mother.

14 ‘‘SEC. 9812. PARITY IN THE APPLICATION OF CERTAIN LIM15 ITS TO MENTAL HEALTH BENEFITS.

16 ‘‘(a) IN GENERAL.—

17 ‘‘(1) AGGREGATE LIFETIME LIMITS.—In the

18 case of a group health plan that provides both medi19 cal and surgical benefits and mental health bene20 fits—

21 ‘‘(A) NO LIFETIME LIMIT.—If the plan

22 does not include an aggregate lifetime limit on

23 substantially all medical and surgical benefits,

24 the plan or coverage may not impose any aggre25 gate lifetime limit on mental health benefits.
8

•HR 4135 IH

1 ‘‘(B) LIFETIME LIMIT.—If the plan in2 cludes an aggregate lifetime limit on substan3 tially all medical and surgical benefits (in this

4 paragraph referred to as the ‘applicable lifetime

5 limit’), the plan shall either—

6 ‘‘(i) apply the applicable lifetime limit

7 both to the medical and surgical benefits to

8 which it otherwise would apply and to

9 mental health benefits and not distinguish

10 in the application of such limit between

11 such medical and surgical benefits and

12 mental health benefits; or

13 ‘‘(ii) not include any aggregate life14 time limit on mental health benefits that is

15 less than the applicable lifetime limit.

16 ‘‘(C) RULE IN CASE OF DIFFERENT LIM17 ITS.—In the case of a plan that is not described

18 in subparagraph (A) or (B) and that includes

19 no or different aggregate lifetime limits on dif20 ferent categories of medical and surgical bene21 fits, the Secretary shall establish rules under

22 which subparagraph (B) is applied to such plan

23 with respect to mental health benefits by sub24 stituting for the applicable lifetime limit an av25 erage aggregate lifetime limit that is computed
9

•HR 4135 IH

1 taking into account the weighted average of the

2 aggregate lifetime limits applicable to such cat3 egories.

4 ‘‘(2) ANNUAL LIMITS.—In the case of a group

5 health plan that provides both medical and surgical

6 benefits and mental health benefits—

7 ‘‘(A) NO ANNUAL LIMIT.—If the plan does

8 not include an annual limit on substantially all

9 medical and surgical benefits, the plan or cov10 erage may not impose any annual limit on men11 tal health benefits.

12 ‘‘(B) ANNUAL LIMIT.—If the plan includes

13 an annual limit on substantially all medical and

14 surgical benefits (in this paragraph referred to

15 as the ‘applicable annual limit’), the plan shall

16 either—

17 ‘‘(i) apply the applicable annual limit

18 both to medical and surgical benefits to

19 which it otherwise would apply and to

20 mental health benefits and not distinguish

21 in the application of such limit between

22 such medical and surgical benefits and

23 mental health benefits; or
10

•HR 4135 IH

1 ‘‘(ii) not include any annual limit on

2 mental health benefits that is less than the

3 applicable annual limit.

4 ‘‘(C) RULE IN CASE OF DIFFERENT LIM5 ITS.—In the case of a plan that is not described

6 in subparagraph (A) or (B) and that includes

7 no or different annual limits on different cat8 egories of medical and surgical benefits, the

9 Secretary shall establish rules under which sub10 paragraph (B) is applied to such plan with re11 spect to mental health benefits by substituting

12 for the applicable annual limit an average an13 nual limit that is computed taking into account

14 the weighted average of the annual limits appli15 cable to such categories.

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

17 be construed—

18 ‘‘(1) as requiring a group health plan to provide

19 any mental health benefits; or

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

21 provides mental health benefits, as affecting the

22 terms and conditions (including cost sharing, limits

23 on numbers of visits or days of coverage, and re24 quirements relating to medical necessity) relating to

25 the amount, duration, or scope of mental health ben-
11

•HR 4135 IH

1 efits under the plan, except as specifically provided

2 in subsection (a) (in regard to parity in the imposi3 tion of aggregate lifetime limits and annual limits

4 for mental health benefits).

5 ‘‘(c) EXEMPTIONS.—

6 ‘‘(1) SMALL EMPLOYER EXEMPTION.—This sec7 tion shall not apply to any group health plan for any

8 plan year of a small employer (as defined in section

9 4980D(d)(2)).

10 ‘‘(2) INCREASED COST EXEMPTION.—This sec11 tion shall not apply with respect to a group health

12 plan if the application of this section to such plan

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

14 at least 1 percent.

15 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF16 FERED.—In the case of a group health plan that offers

17 a participant or beneficiary two or more benefit package

18 options under the plan, the requirements of this section

19 shall be applied separately with respect to each such op20 tion.

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

22 ‘‘(1) AGGREGATE LIFETIME LIMIT.—The term

23 ‘aggregate lifetime limit’ means, with respect to ben24 efits under a group health plan, a dollar limitation

25 on the total amount that may be paid with respect
12

•HR 4135 IH

1 to such benefits under the plan with respect to an

2 individual or other coverage unit.

3 ‘‘(2) ANNUAL LIMIT.—The term ‘annual limit’

4 means, with respect to benefits under a group health

5 plan, a dollar limitation on the total amount of bene6 fits that may be paid with respect to such benefits

7 in a 12-month period under the plan with respect to

8 an individual or other coverage unit.

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

10 term ‘medical or surgical benefits’ means benefits

11 with respect to medical or surgical services, as de12 fined under the terms of the plan, but does not in13 clude mental health benefits.

14 ‘‘(4) MENTAL HEALTH BENEFITS.—The term

15 ‘mental health benefits’ means benefits with respect

16 to mental health services, as defined under the terms

17 of the plan, but does not include benefits with re18 spect to treatment of substance abuse or chemical

19 dependency.

20 ‘‘(f) SUNSET.—This section shall not apply to bene21 fits for services furnished on or after September 30,

22 2001.’’

23 (b) CONFORMING AMENDMENTS.—

24 (1) Chapter 100 of such Code (as added by sec25 tion 401 of the Health Insurance Portability and Ac-
13

•HR 4135 IH

1 countability Act of 1996 and as previously amended

2 by this section) is further amended—

3 (A) in the last sentence of section

4 9801(c)(1), by striking ‘‘section 9805(c)’’ and

5 inserting ‘‘section 9832(c)’’;

6 (B) in section 9831(b), by striking

7 ‘‘9805(c)(1)’’ and inserting ‘‘9832(c)(1)’’;

8 (C) in section 9831(c)(1), by striking

9 ‘‘9805(c)(2)’’ and inserting ‘‘9832(c)(2)’’;

10 (D) in section 9831(c)(2), by striking

11 ‘‘9805(c)(3)’’ and inserting ‘‘9832(c)(3)’’; and

12 (E) in section 9831(c)(3), by striking

13 ‘‘9805(c)(4)’’ and inserting ‘‘9832(c)(4)’’.

14 (2) Section 4980D of such Code (as added by

15 section 402 of the Health Insurance Portability and

16 Accountability Act of 1996) is amended—

17 (A) in subsection (c)(3)(B)(i)(I), by strik18 ing ‘‘9805(d)(3)’’ and inserting ‘‘9832(d)(3)’’;

19 (B) in subsection (d)(1), by inserting

20 ‘‘(other than a failure attributable to section

21 9811)’’ after ‘‘on any failure’’;

22 (C) in subsection (d)(3), by striking

23 ‘‘9805’’ and inserting ‘‘9832’’;

24 (D) in subsection (f)(1), by striking

25 ‘‘9805(a)’’ and inserting ‘‘9832(a)’’.
14

•HR 4135 IH

1 (3) The table of subtitles for such Code is

2 amended by striking the item relating to subtitle K

3 (as added by section 401(b) of the Health Insurance

4 Portability and Accountability Act of 1996) and in5 serting the following new item:

‘‘SUBTITLE K. Group health plan requirements.’’

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply with respect to group health plans

8 for plan years beginning on or after January 1, 1998.

Æ