I

104TH CONGRESS

2D SESSION H. R. 4045

To provide for parity in the treatment of mental illness.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 10, 1996

Mr. STARK introduced the following bill; which was referred to the Committee

on Ways and Means, and in addition to the Committee on Commerce,

for a period to be subsequently determined by the Speaker, in each case

for consideration of such provisions as fall within the jurisdiction of the

committee concerned

A BILL

To provide for parity in the treatment of mental illness.

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 ‘‘National Mental

5 Health Parity Act of 1996’’.

6 TITLE I—PARITY FOR TREAT7 MENT OF MENTAL ILLNESS

8 SEC. 101. PARITY FOR TREATMENT OF MENTAL ILLNESS.

9 (a) IN GENERAL.—The Internal Revenue Code of

10 1986, as amended by section 401 of the Health Care Port-
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1 ability and Accountability Act of 1996 (Public Law 104–

2 191), is amended by adding at the end the following:

3 ‘‘Subtitle L—Parity For Treatment

4 Of Mental Illness

5 ‘‘SEC. 9901. PARITY FOR TREATMENT OF MENTAL ILLNESS.

6 ‘‘(a) IMPOSITION OF TAX.—

7 ‘‘(1) HEALTH INSURANCE COVERAGE.—

8 ‘‘(A) IN GENERAL.—In the case of any

9 health insurance coverage offered by a health

10 insurance issuer that fails to meet the standard

11 under subsection (c) at any time during a cal12 endar year, there is hereby imposed a tax equal

13 to 25 percent of the premiums received under

14 such plan during the calendar year.

15 ‘‘(B) LIABILITY FOR TAX.—The tax im16 posed under subparagraph (A) shall be paid by

17 the health insurance issuer.

18 ‘‘(2) GROUP HEALTH PLAN.—

19 ‘‘(A) IN GENERAL.—In the case of a group

20 health plan that fails to meet the standard

21 under subsection (c) at any time during a cal22 endar year, there is hereby imposed a tax equal

23 to 25 percent of the health coverage expendi24 tures for such calendar year under such plan.
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1 ‘‘(B) LIABILITY FOR TAX.—The tax im2 posed under subparagraph (A) shall be paid by

3 the group health plan.

4 ‘‘(C) HEALTH COVERAGE EXPENDI5 TURES.—For purposes of this paragraph, the

6 health coverage expenditures of any group

7 health plan for any calendar year are the aggre8 gate expenditures for such year for health cov9 erage provided under such plan.

10 ‘‘(b) LIMITATION ON IMPOSITION OF TAX.—

11 ‘‘(1) FAILURE NOT DISCOVERED EXERCISING

12 REASONABLE DILIGENCE.—No tax shall be imposed

13 under this section on any failure to meet the stand14 ard under subsection (c) for which it is established

15 to the satisfaction of the Secretary that none of the

16 persons liable for the tax knew, or exercising reason17 able diligence would have known, that such failure

18 existed.

19 ‘‘(2) CERTAIN FAILURES CORRECTED WITHIN

20 30 DAYS.—No tax shall be imposed under subsection

21 (a) on any failure to meet the standard under sub22 section (c) if—

23 ‘‘(A) such failure was due to reasonable

24 cause and not to willful neglect, and
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1 ‘‘(B) such failure is corrected during the

2 30–day period beginning on the first date any

3 person liable for the tax knew, or exercising

4 reasonable diligence would have known, that

5 such failure existed.

6 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

7 failure to meet the standard under subsection (c)

8 that is due to reasonable cause and not to willful ne9 glect, the Secretary may waive part or all of the tax

10 imposed by this section to the extent that the pay11 ment of such tax would be excessive relative to the

12 failure involved.

13 ‘‘(c) STANDARD FOR PARITY FOR TREATMENT OF

14 MENTAL ILLNESS.—

15 ‘‘(1) IN GENERAL.—A health insurance issuer

16 with respect to health insurance coverage that it of17 fers or a group health plan may not impose limita18 tions or financial requirements on the coverage of

19 benefits provided with respect to mental illness if

20 similar limitations or requirements are not imposed

21 on coverage for benefits with respect to other condi22 tions.

23 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in

24 paragraph (1) shall be construed as prohibiting a

25 health insurance issuer with respect to health insur-
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1 ance coverage that it offers or a group health plan

2 from requiring preadmission screening prior to the

3 authorization of services covered under the plan or

4 from applying other limitations that restrict cov5 erage for mental illness to those services that are

6 medically necessary.

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

8 ‘‘(1) MENTAL ILLNESS.—The term ‘mental ill9 ness’ means any of the specific psychiatric conditions

10 described in the American Psychiatric Association’s

11 ‘‘Diagnostic and Statistical Manual—Mental Dis12 orders.’’

13 ‘‘(2) HEALTH INSURANCE COVERAGE.—The

14 term ‘health insurance coverage’ has the meaning

15 given such term by section 9805(b)(1).

16 ‘‘(3) HEALTH INSURANCE ISSUER.—The term

17 ‘health insurance issuer’ has the meaning given such

18 term by section 9805(b)(2).

19 ‘‘(4) GROUP HEALTH PLAN.—The term ‘group

20 health plan’ has the meaning given such term by

21 section 5000(b)(1).’’.

22 (b) CLERICAL AMENDMENT.—The table of subtitles

23 of such Code is amended by adding at the end the follow24 ing new item:

‘‘Subtitle L. Parity for treatment of mental illness.’’
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1 SEC. 102. EFFECTIVE DATE.

2 The amendment made by section 101 applies—

3 (1) with respect to health insurance coverage,

4 to a contract, policy, or certificate initiated or re5 newed after December 31, 1997; and

6 (2) with respect to group health plans, to plan

7 years beginning after December 31, 1997.

8 TITLE II—MEDICARE MENTAL

9 HEALTH IMPROVEMENT

10 SEC. 201. REFERENCES IN TITLE.

11 Whenever in this title an amendment is expressed in

12 terms of an amendment to or repeal of a section or other

13 provision, the reference shall be considered to be made to

14 that section or other provision of the Social Security Act.

15 SEC. 202. INPATIENT PSYCHIATRIC HOSPITAL SERVICES.

16 (a) SERVICES COVERED.—Section 1812(a) (42

17 U.S.C. 1395d(a)) is amended—

18 (1) by striking ‘‘and’’ at the end of paragraph

19 (3);

20 (2) by striking the period at the end of para21 graph (4) and inserting ‘‘; and’’; and

22 (3) by adding at the end the following new

23 paragraph:

24 ‘‘(5) inpatient hospital services furnished pri25 marily for the diagnosis or treatment of mental ill-
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1 ness or substance abuse for up to 60 days during a

2 year.’’.

3 (b) LIMITATION ON COVERAGE.—Section 1812(b)(3)

4 (42 U.S.C. 1395d(b)) is amended to read as follows:

5 ‘‘(3) inpatient hospital services furnished pri6 marily for the diagnosis or treatment of mental ill7 ness or substance abuse that are furnished to the in8 dividual during a year after such services have been

9 furnished to the individual for a total of 60 days

10 during the year.’’.

11 (c) CONFORMING AMENDMENTS.—(1) Section

12 1812(a)(1) (42 U.S.C. 1395d(a)(1)) is amended by insert13 ing ‘‘(other than services described in paragraph (5))’’

14 after ‘‘inpatient hospital services’’ the first place it ap15 pears.

16 (2) Section 1812(b)(1) (42 U.S.C. 1395d(b)(1)) is

17 amended by inserting ‘‘(other than services described in

18 paragraph (3))’’ after ‘‘inpatient hospital services’’ the

19 first place it appears.

20 (3) Section 1812 (42 U.S.C. 1395d) is amended by

21 striking subsection (c).

22 (4) Section 1814(a) (42 U.S.C. 1395f(a)) is amend23 ed—

24 (A) in paragraph (2), by striking subparagraph

25 (A);
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1 (B) in paragraph (3), by striking ‘‘(other than

2 inpatient psychiatric hospital services)’’; and

3 (C) by striking paragraph (4).

4 (5) Section 1861 (42 U.S.C. 1395x) is amended by

5 striking subsection (c).

6 (d) EFFECTIVE DATE; TRANSITION.—The amend7 ments made by this section shall take effect January 1,

8 1996, except that—

9 (1) an individual who at any time prior to such

10 date has been furnished inpatient psychiatric hos11 pital services (as defined for purposes of title XVIII

12 of the Social Security Act as of the date of the en13 actment of this Act) for 190 consecutive days is not

14 entitled to any services under section 1812(a)(5) (as

15 added by subsection (a)(3)); and

16 (2) in the case of an individual who is not de17 scribed in paragraph (1) and is receiving inpatient

18 psychiatric hospital services (as defined for purposes

19 of title XVIII of the Social Security Act as of the

20 date of the enactment of this Act) on December 31,

21 1995, for which payment may be made under section

22 1812 of such Act, the number of days of services for

23 which the individual is entitled under section

24 1812(a)(5) (and the number of days applicable

25 under section 1812(b)(3)) shall be equal to the
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1 greater of 60 or the difference between 190 days

2 and the number of days of such inpatient psychiatric

3 hospital services furnished to the individual prior to

4 January 1, 1996.

5 SEC. 203. INTENSIVE RESIDENTIAL SERVICES.

6 (a) COVERAGE UNDER PART A.—Section 1812(a)

7 (42 U.S.C. 1395d(a)), as amended by section 202(a), is

8 amended—

9 (1) by striking ‘‘and’’ at the end of paragraph

10 (4);

11 (2) by striking the period at the end of para12 graph (5) and inserting ‘‘; and’’; and

13 (3) by adding at the end the following new

14 paragraph:

15 ‘‘(6) intensive residential services (as described

16 in section 1861(qq)) furnished to an individual for

17 up to 120 days during any calendar year, except

18 that such services may be furnished to the individual

19 for additional days during the year if necessary for

20 the individual to complete a course of treatment to

21 the extent that the number of days of inpatient hos22 pital services described in paragraph (5) that may be

23 furnished to the individual during the year (as re24 duced under such paragraph) is not less than 15.’’.
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1 (b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.

2 1395x), as amended by section 146(a) of the Social Secu3 rity Act Amendments of 1994, is amended by adding at

4 the end the following new subsection:

5 ‘‘Intensive Residential Services

6 ‘‘(mm)(1) Subject to paragraph (2), the term ‘inten7 sive residential services’ means inpatient services provided

8 in any of the following facilities:

9 ‘‘(A) Residential detoxification centers.

10 ‘‘(B) Crisis residential programs or mental ill11 ness residential treatment programs.

12 ‘‘(C) Therapeutic family or group treatment

13 homes.

14 ‘‘(D) Residential centers for substance abuse

15 treatment.

16 ‘‘(2) No service may be treated as an intensive resi17 dential service under paragraph (1) unless the facility at

18 which the service is provided—

19 ‘‘(A) is legally authorized to provide such serv20 ice under the law of the State (or under a State reg21 ulatory mechanism provided by State law) in which

22 the facility is located or is certified to provide such

23 service by an appropriate accreditation entity ap24 proved by the State in consultation with the Sec25 retary; and
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1 ‘‘(B) meets such other requirements as the Sec2 retary may impose to assure the quality of the inten3 sive residential services provided.

4 ‘‘(3) No service may be treated as an intensive resi5 dential service under paragraph (1) unless the service is

6 furnished in accordance with standards established by the

7 Secretary for the management of such services.’’.

8 (3) REDUCTION IN DAYS OF COVERAGE FOR IN9 PATIENT SERVICES.—Section 1812(a)(5) and section

10 1812(b)(3), as amended by section 202, are each

11 amended by striking the period at the end and in12 serting the following: ‘‘, reduced by a number of

13 days determined by the Secretary so that the actuar14 ial value of providing such number of days of serv15 ices under this paragraph to the individual is equal

16 to the actuarial value of the days of inpatient resi17 dential services furnished to the individual under

18 paragraph (6) during the year after such services

19 have been furnished to the individual for 120 days

20 during the year (rounded to the nearest day).’’.

21 (4) AMOUNT OF PAYMENT.—Section 1814 (42

22 U.S.C. 1395f) is amended—

23 (A) in subsection (b) in the matter preced24 ing paragraph (1), by inserting ‘‘other than in-
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1 tensive residential services,’’ after ‘‘hospice

2 care,’’; and

3 (B) by adding at the end the following new

4 subsection:

5 ‘‘Payment for Intensive Residential Services

6 ‘‘(m) The amount of payment under this part for in7 tensive residential services under section 1812(a)(6) shall

8 be equal to—

9 ‘‘(1) the lesser of—

10 ‘‘(A) the reasonable cost of such services,

11 as determined under section 1861(v), or

12 ‘‘(B) the customary charges with respect to

13 such services,

14 less the amount a provider may charge as described

15 in clause (ii) of section 1866(a)(2)(A):

16 ‘‘(2) if such services are furnished by a public

17 provider of services or by another provider which

18 demonstrates to the satisfaction of the Secretary

19 that a significant portion of its patients are low-in20 come (and requests that payment be made under

21 this clause), free of charge or at nominal charges to

22 the public, the amount determined in accordance

23 with subsection (b)(2); and

24 ‘‘(3) if (and for so long as) the conditions de25 scribed in subsection (b)(3) are met, the amounts
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1 determined under the reimbursement system de2 scribed in such section.’’.

3 SEC. 204. LOWERING COINSURANCE FOR CERTAIN OUT4 PATIENT MENTAL HEALTH AND SUBSTANCE

5 ABUSE SERVICES.

6 (a) IN GENERAL.—Section 1833(c) (42 U.S.C.

7 1395l(c)) is amended by striking ‘‘mental, psychoneurotic,

8 and personality disorders’’ and all that follows through

9 ‘‘are incurred’’ and inserting the following: ‘‘mental illness

10 or substance abuse of an individual who, at the time such

11 expenses are incurred, is over 18 years of age, is not an

12 inpatient of a hospital, and has received 5 or more sessions

13 of such treatment during the calendar year,’’.

14 (b) REQUIRING SERVICES TO BE FURNISHED IN AC15 CORDANCE WITH MANAGEMENT STANDARDS.—Section

16 1862(a) (42 U.S.C. 1395y(a)), as amended by section

17 156(a)(2)(D) of the Social Security Act Amendments of

18 1994, is amended—

19 (1) by striking ‘‘or’’ at the end of paragraph

20 (14);

21 (2) by striking the period at the end of para22 graph (15) and inserting ‘‘; or’’; and

23 (3) by inserting after paragraph (15) the fol24 lowing new paragraph:
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1 ‘‘(16) in the case of any items or services fur2 nished under part B for the treatment of mental ill3 ness or emotional disturbance (including substance

4 abuse), if the services are not furnished in accord5 ance with standards established by the Secretary for

6 the management of such services.’’.

7 SEC. 205. INTENSIVE COMMUNITY-BASED SERVICES.

8 (a) COVERAGE.—

9 (1) IN GENERAL.—Section 1832(a)(2)(J) (42

10 U.S.C. 1395k(a)(2)(J)) is amended to read as fol11 lows:

12 ‘‘(J) intensive community-based services

13 (as described in section 1861(ff))—

14 ‘‘(i) for an unlimited number of days

15 during any calendar year, in the case of

16 services described in section 1861(ff)(2)(E)

17 that are furnished to an individual who is

18 a seriously mentally ill adult, a seriously

19 emotionally disturbed child, or an adult or

20 child with serious substance abuse disorder

21 (as determined in accordance with criteria

22 established by the Secretary),

23 ‘‘(ii) in the case of services described

24 in section 1861(ff)(2)(C), for up to 180

25 days during any calendar year, except that
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1 such services may be furnished to the indi2 vidual for a number of additional days dur3 ing the year equal to the difference be4 tween the total number of days of intensive

5 residential services which the individual

6 may receive during the year under part A

7 (as determined under section 1812(a)(6))

8 and the number of days of such services

9 which the individual has received during

10 the year, or

11 ‘‘(iii) in the case of any other such

12 services, for up to 90 days during any cal13 endar year, except that such services may

14 be furnished to the individual for the num15 ber of additional days during the year de16 scribed in clause (ii).’’.

17 (2) REDUCTION IN NUMBER OF DAYS OF IN18 TENSIVE RESIDENTIAL SERVICES.—Section

19 1812(a)(6) (42 U.S.C. 1395d(a)(6)), as added by

20 section 203(a), is amended—

21 (A) by inserting ‘‘(A)’’ before ‘‘such serv22 ices’’; and

23 (B) by striking the period at the end and

24 inserting the following: ‘‘, and (B) reduced by

25 a number of days determined by the Secretary
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1 so that the actuarial value of providing such

2 number of days of services under this para3 graph to the individual is equal to the actuarial

4 value of the days of intensive community-based

5 services furnished to the individual under sec6 tion 1832(a)(2)(J) during the year after such

7 services have been furnished to the individual

8 for 90 days (or, in the case of services described

9 in section 1832(a)(2)(J)(ii), for 180 days) dur10 ing the year (rounded to the nearest day).’’.

11 (b) SERVICES DESCRIBED.—Section 1861(ff)(2) (42

12 U.S.C. 1395x(ff)(2)) is amended—

13 (1) in the matter preceding subparagraph (A),

14 by striking ‘‘are—’’ and inserting ‘‘are as follows:’’;

15 (2) in subparagraph (C)—

16 (A) by inserting ‘‘behavioral aide services,’’

17 after ‘‘nurses’’, and

18 (B) by adding at the end the following:

19 ‘‘(to the extent authorized under State law)’’;

20 (3) by adding ‘‘and’’ at the end of subpara21 graph (G);

22 (4) in subparagraph (H), by striking ‘‘, and’’

23 and inserting a period;
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1 (5) by redesignating subparagraphs (A) through

2 (H) as clauses (i) through (viii) and moving such

3 subparagraphs 2 ems to the right;

4 (6) by inserting before clause (i) (as so redesig5 nated) the following:

6 ‘‘(A) Partial hospitalization services con7 sisting of—’’;

8 (7) by inserting after clause (viii) (as so redes9 ignated) the following new subparagraphs:

10 ‘‘(B) Psychiatric rehabilitation services.

11 ‘‘(C) Day treatment services for substance

12 abuse treatment for individuals of any age and for

13 other mental health services for individuals under 19

14 years of age.

15 ‘‘(D) In-home services.

16 ‘‘(E) Case management services, including col17 lateral services designated as such case management

18 services by the Secretary.

19 ‘‘(F) Ambulatory detoxification services.’’; and

20 (8) in subparagraph (I)—

21 (A) by striking ‘‘such’’ and inserting

22 ‘‘Such’’, and

23 (B) by redesignating such subparagraph as

24 subparagraph (G).
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1 (c) PERMITTING NON-PHYSICIAN PROVIDERS TO SU2 PERVISE INDIVIDUAL PROGRAM OF TREATMENT.—Sec3 tion 1861(ff)(1) (42 U.S.C. 1395x(ff)(1)) is amended by

4 inserting after ‘‘supervision of a physician’’ the following:

5 ‘‘(or, to the extent permitted under the law of the State

6 in which the services are furnished, a non-physician men7 tal health or substance abuse treatment professional)’’.

8 (d) REQUIRING SERVICES TO MEET MANAGEMENT

9 STANDARDS.—Section 1861(ff)(1) (42 U.S.C.

10 1395x(ff)(1)) is amended by striking the period at the end

11 and inserting the following: ‘‘, but does not include any

12 item or service that is not furnished in accordance with

13 standards established by the Secretary for the manage14 ment of such services.’’.

15 (e) PROGRAMS ELIGIBLE TO PROVIDE SERVICES.—

16 Section 1861(ff)(3) (42 U.S.C. 1395x(ff)(3)) is amended

17 to read as follows:

18 ‘‘(3) A program described in this paragraph is a pro19 gram (whether facility-based or freestanding) which is fur20 nished by an entity—

21 ‘‘(A) legally authorized to furnish such a pro22 gram under State law (or the State regulatory mech23 anism provided by State law) or certified to furnish

24 such a program by an appropriate accreditation en-
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1 tity approved by the State in consultation with the

2 Secretary; and

3 ‘‘(B) meeting such other requirements as the

4 Secretary may impose to assure the quality of the

5 intensive community-based services provided.’’.

6 (f) WAIVER OF COPAYMENT FOR CASE MANAGE7 MENT SERVICES FURNISHED TO CERTAIN INDIVID8 UALS.—Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)), as

9 amended by section 147(f)(6)(C) of the Social Security

10 Act Amendments of 1994, is amended—

11 (1) in subparagraph (B), by striking ‘‘or (E)’’

12 and inserting ‘‘(E), or (F)’’;

13 (2) by striking ‘‘and’’ at the end of subpara14 graph (E);

15 (3) by adding ‘‘and’’ at the end of subpara16 graph (F); and

17 (4) by adding at the end the following new sub18 paragraph:

19 ‘‘(G) with respect to services described in

20 section 1832(a)(2)(J)(i), the amount deter21 mined under subparagraph (B), except that

22 ‘100 percent’ shall be substituted for any ref23 erence in such subparagraph to ‘80 percent’;’’.

24 (g) CONFORMING AMENDMENTS.—(1) Section

25 1835(a)(2)(F) (42 U.S.C. 1395n(a)(2)(F)) is amended—
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1 (A) by striking ‘‘partial hospitalization’’ and in2 serting ‘‘intensive community-based’’; and

3 (B) in clause (ii), by striking ‘‘physician’’ and

4 inserting ‘‘physician (or, to the extent permitted

5 under the law of the State in which the services are

6 furnished, a non-physician mental health profes7 sional)’’.

8 (2) Section 1861(s)(2)(B) (42 U.S.C.

9 1395x(s)(2)(B)) is amended by striking ‘‘partial hos10 pitalization’’ and inserting ‘‘intensive community-based’’.

11 (3) Section 1861(ff) (42 U.S.C. 1395x(ff)) is amend12 ed—

13 (A) in the heading, by striking ‘‘Partial Hos14 pitalization’’ and inserting ‘‘Intensive Community15 Based’’; and

16 (B) in paragraph (1), by striking ‘‘partial hos17 pitalization’’ and inserting ‘‘intensive community18 based’’.

19 (4) Section 1866(e)(2) (42 U.S.C. 1395cc(e)(2)) is

20 amended by striking ‘‘partial hospitalization’’ and insert21 ing ‘‘intensive community-based’’.

22 SEC. 206. EFFECTIVE DATE.

23 The amendments made by this title shall apply to

24 items and services furnished on or after January 1, 1998.

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