I

107TH CONGRESS

1ST SESSION H. R. 1194

To amend the Employee Retirement Income Security Act of 1974, Public

Health Service Act, and the Internal Revenue Code of 1986 to provide

parity with respect to substance abuse treatment benefits under group

health plans and health insurance coverage.

IN THE HOUSE OF REPRESENTATIVES

MARCH 22, 2001

Mr. RAMSTAD (for himself, Mr. CUMMINGS, Mr. FRANK, Mr. HILLIARD, Mr.

HINCHEY, Mr. LANTOS, Mr. LUTHER, Mr. MCNULTY, Mrs. MINK of Hawaii, Mrs. MORELLA, Mrs. ROUKEMA, Mr. UPTON, and Mr. WOLF) introduced the following bill; which was referred to the Committee on Energy

and Commerce, and in addition to the Committees on Education and the

Workforce, and Ways and Means, 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 amend the Employee Retirement Income Security Act

of 1974, Public Health Service Act, and the Internal

Revenue Code of 1986 to provide parity with respect

to substance abuse treatment benefits under group health

plans and health insurance coverage.

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

2 This Act may be cited as the ‘‘Harold Hughes-Bill

3 Emerson Substance Abuse Treatment Parity Act of

4 2001’’.

5 SEC. 2. FINDINGS.

6 Congress finds the following:

7 (1) Substance abuse, if left untreated, is a med8 ical emergency.

9 (2) Parity should apply to benefits for treat10 ment sought voluntarily, including treatment for

11 substance abuse.

12 (3) Nothing in this Act should be construed as

13 prohibiting application of the concept of parity to

14 substance abuse treatment provided by faith-based

15 treatment providers.

16 SEC. 3. PARITY IN SUBSTANCE ABUSE TREATMENT BENE17 FITS.

18 (a) GROUP HEALTH PLANS.—

19 (1) PUBLIC HEALTH SERVICE ACT AMEND20 MENTS.—

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

22 title XXVII of the Public Health Service Act is

23 amended by adding at the end the following

24 new section:
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1 ‘‘SEC. 2707. PARITY IN THE APPLICATION OF TREATMENT

2 LIMITATIONS AND FINANCIAL REQUIRE3 MENTS TO SUBSTANCE ABUSE TREATMENT

4 BENEFITS.

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

6 plan (or health insurance coverage offered in connection

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

8 benefits and substance abuse treatment benefits, the plan

9 or coverage shall not impose treatment limitations or fi10 nancial requirements on the substance abuse treatment

11 benefits unless similar limitations or requirements are im12 posed for medical and surgical benefits.

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

14 be construed—

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

16 insurance coverage offered in connection with such a

17 plan) to provide any substance abuse treatment ben18 efits; or

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

20 insurance issuer offering group health insurance cov21 erage from negotiating the level and type of reim22 bursement with a provider for care provided in ac23 cordance with this section.

24 ‘‘(c) EXEMPTIONS.—

25 ‘‘(1) SMALL EMPLOYER EXEMPTION.—
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1 ‘‘(A) IN GENERAL.—This section shall not

2 apply to any group health plan (and group

3 health insurance coverage offered in connection

4 with a group health plan) for any plan year of

5 a small employer.

6 ‘‘(B) SMALL EMPLOYER.—For purposes of

7 subparagraph (A), the term ‘small employer’

8 means, in connection with a group health plan

9 with respect to a calendar year and a plan year,

10 an employer who employed an average of at

11 least 2 but not more than 50 employees on

12 business days during the preceding calendar

13 year and who employs at least 2 employees on

14 the first day of the plan year.

15 ‘‘(C) APPLICATION OF CERTAIN RULES IN

16 DETERMINATION OF EMPLOYER SIZE.—For

17 purposes of this paragraph—

18 ‘‘(i) APPLICATION OF AGGREGATION

19 RULE FOR EMPLOYERS.—Rules similar to

20 the rules under subsections (b), (c), (m),

21 and (o) of section 414 of the Internal Rev22 enue Code of 1986 shall apply for purposes

23 of treating persons as a single employer.

24 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

25 IN PRECEDING YEAR.—In the case of an
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1 employer which was not in existence

2 throughout the preceding calendar year,

3 the determination of whether such em4 ployer is a small employer shall be based

5 on the average number of employees that

6 it is reasonably expected such employer

7 will employ on business days in the current

8 calendar year.

9 ‘‘(iii) PREDECESSORS.—Any reference

10 in this paragraph to an employer shall in11 clude a reference to any predecessor of

12 such employer.

13 ‘‘(2) INCREASED COST EXEMPTION.—This sec14 tion shall not apply with respect to a group health

15 plan (or health insurance coverage offered in connec16 tion with a group health plan) if the application of

17 this section to such plan (or to such coverage) re18 sults in an increase in the cost under the plan (or

19 for such coverage) of at least 1 percent.

20 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF21 FERED.—In the case of a group health plan that offers

22 a participant or beneficiary two or more benefit package

23 options under the plan, the requirements of this section

24 shall be applied separately with respect to each such op25 tion.
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1 ‘‘(e) DEFINITIONS.—For purposes of this section—

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

3 ‘treatment limitation’ means, with respect to benefits

4 under a group health plan or health insurance cov5 erage, any day or visit limits imposed on coverage of

6 benefits under the plan or coverage during a period

7 of time.

8 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi9 nancial requirement’ means, with respect to benefits

10 under a group health plan or health insurance cov11 erage, any deductible, coinsurance, or cost-sharing

12 or an annual or lifetime dollar limit imposed with re13 spect to the benefits under the plan or coverage.

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

15 term ‘medical or surgical benefits’ means benefits

16 with respect to medical or surgical services, as de17 fined under the terms of the plan or coverage (as the

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

19 treatment benefits.

20 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE21 FITS.—The term ‘substance abuse treatment bene22 fits’ means benefits with respect to substance abuse

23 treatment services.

24 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV25 ICES.—The term ‘substance abuse services’ means
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1 any of the following items and services provided for

2 the treatment of substance abuse:

3 ‘‘(A) Inpatient treatment, including detoxi4 fication.

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

6 ‘‘(C) Outpatient treatment, including

7 screening and assessment, medication manage8 ment, individual, group, and family counseling,

9 and relapse prevention.

10 ‘‘(D) Prevention services, including health

11 education and individual and group counseling

12 to encourage the reduction of risk factors for

13 substance abuse.

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

15 abuse’ includes chemical dependency.

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

17 shall comply with the notice requirement under section

18 714(f) of the Employee Retirement Income Security Act

19 of 1974 with respect to the requirements of this section

20 as if such section applied to such plan.

21 ‘‘(g) SUNSET.—This section shall not apply to bene22 fits for services furnished in plan years beginning on or

23 after January 1, 2007.’’.

24 (B) CONFORMING AMENDMENT.—Section

25 2723(c) of such Act (42 U.S.C. 300gg–23(c)) is
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1 amended by striking ‘‘section 2704’’ and insert2 ing ‘‘sections 2704 and 2707’’.

3 (2) ERISA AMENDMENTS.—

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

5 subtitle B of title I of the Employee Retirement

6 Income Security Act of 1974 is amended by

7 adding at the end the following new section:

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

9 LIMITATIONS AND FINANCIAL REQUIRE10 MENTS TO SUBSTANCE ABUSE TREATMENT

11 BENEFITS.

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 substance abuse treatment benefits, the plan

16 or coverage shall not impose treatment limitations or fi17 nancial requirements on the substance abuse treatment

18 benefits unless similar limitations or requirements are im19 posed for medical and surgical benefits.

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

21 be construed—

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

23 insurance coverage offered in connection with such a

24 plan) to provide any substance abuse treatment ben25 efits; or
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1 ‘‘(2) to prevent a group health plan or a health

2 insurance issuer offering group health insurance cov3 erage from negotiating the level and type of reim4 bursement with a provider for care provided in ac5 cordance with this section.

6 ‘‘(c) EXEMPTIONS.—

7 ‘‘(1) SMALL EMPLOYER EXEMPTION.—

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

9 apply to any group health plan (and group

10 health insurance coverage offered in connection

11 with a group health plan) for any plan year of

12 a small employer.

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

14 subparagraph (A), the term ‘small employer’

15 means, in connection with a group health plan

16 with respect to a calendar year and a plan year,

17 an employer who employed an average of at

18 least 2 but not more than 50 employees on

19 business days during the preceding calendar

20 year and who employs at least 2 employees on

21 the first day of the plan year.

22 ‘‘(C) APPLICATION OF CERTAIN RULES IN

23 DETERMINATION OF EMPLOYER SIZE.—For

24 purposes of this paragraph—
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1 ‘‘(i) APPLICATION OF AGGREGATION

2 RULE FOR EMPLOYERS.—Rules similar to

3 the rules under subsections (b), (c), (m),

4 and (o) of section 414 of the Internal Rev5 enue Code of 1986 shall apply for purposes

6 of treating persons as a single employer.

7 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

8 IN PRECEDING YEAR.—In the case of an

9 employer which was not in existence

10 throughout the preceding calendar year,

11 the determination of whether such em12 ployer is a small employer shall be based

13 on the average number of employees that

14 it is reasonably expected such employer

15 will employ on business days in the current

16 calendar year.

17 ‘‘(iii) PREDECESSORS.—Any reference

18 in this paragraph to an employer shall in19 clude a reference to any predecessor of

20 such employer.

21 ‘‘(2) INCREASED COST EXEMPTION.—This sec22 tion shall not apply with respect to a group health

23 plan (or health insurance coverage offered in connec24 tion with a group health plan) if the application of

25 this section to such plan (or to such coverage) re-
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1 sults in an increase in the cost under the plan (or

2 for such coverage) of at least 1 percent.

3 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF4 FERED.—In the case of a group health plan that offers

5 a participant or beneficiary two or more benefit package

6 options under the plan, the requirements of this section

7 shall be applied separately with respect to each such op8 tion.

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

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

11 ‘treatment limitation’ means, with respect to benefits

12 under a group health plan or health insurance cov13 erage, any day or visit limits imposed on coverage of

14 benefits under the plan or coverage during a period

15 of time.

16 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi17 nancial requirement’ means, with respect to benefits

18 under a group health plan or health insurance cov19 erage, any deductible, coinsurance, or cost-sharing

20 or an annual or lifetime dollar limit imposed with re21 spect to the benefits under the plan or coverage.

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

23 term ‘medical or surgical benefits’ means benefits

24 with respect to medical or surgical services, as de25 fined under the terms of the plan or coverage (as the
12

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

2 treatment benefits.

3 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE4 FITS.—The term ‘substance abuse treatment bene5 fits’ means benefits with respect to substance abuse

6 treatment services.

7 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV8 ICES.—The term ‘substance abuse services’ means

9 any of the following items and services provided for

10 the treatment of substance abuse:

11 ‘‘(A) Inpatient treatment, including detoxi12 fication.

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

14 ‘‘(C) Outpatient treatment, including

15 screening and assessment, medication manage16 ment, individual, group, and family counseling,

17 and relapse prevention.

18 ‘‘(D) Prevention services, including health

19 education and individual and group counseling

20 to encourage the reduction of risk factors for

21 substance abuse.

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

23 abuse’ includes chemical dependency.

24 ‘‘(f) NOTICE UNDER GROUP HEALTH PLAN.—The

25 imposition of the requirements of this section shall be
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1 treated as a material modification in the terms of the plan

2 described in section 102(a)(1), for purposes of assuring

3 notice of such requirements under the plan; except that

4 the summary description required to be provided under the

5 last sentence of section 104(b)(1) with respect to such

6 modification shall be provided by not later than 60 days

7 after the first day of the first plan year in which such

8 requirements apply.

9 ‘‘(g) SUNSET.—This section shall not apply to bene10 fits for services furnished in plan years beginning on or

11 after January 1, 2007.’’.

12 (B) Section 731(c) of such Act (29 U.S.C.

13 1191(c)) is amended by striking ‘‘section 711’’ and

14 inserting ‘‘sections 711 and 714’’.

15 (C) Section 732(a) of such Act (29 U.S.C.

16 1191a(a)) is amended by striking ‘‘section 711’’ and

17 inserting ‘‘sections 711 and 714’’.

18 (D) The table of contents in section 1 of such

19 Act is amended by inserting after the item relating

20 to section 713 the following new item:

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

21 (3) INTERNAL REVENUE CODE AMEND22 MENTS.—(A) Subchapter B of chapter 100 of the

23 Internal Revenue Code of 1986 (relating to other re-
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1 quirements) is amended by adding at the end the

2 following new section:

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

4 LIMITATIONS AND FINANCIAL REQUIRE5 MENTS TO SUBSTANCE ABUSE TREATMENT

6 BENEFITS.

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

8 plan that provides both medical and surgical benefits and

9 substance abuse treatment benefits, the plan shall not im10 pose treatment limitations or financial requirements on

11 the substance abuse treatment benefits unless similar limi12 tations or requirements are imposed for medical and sur13 gical benefits.

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

15 be construed—

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

17 any substance abuse treatment benefits; or

18 ‘‘(2) to prevent a group health plan from nego19 tiating the level and type of reimbursement with a

20 provider for care provided in accordance with this

21 section.

22 ‘‘(c) EXEMPTIONS.—

23 ‘‘(1) SMALL EMPLOYER EXEMPTION.—
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1 ‘‘(A) IN GENERAL.—This section shall not

2 apply to any group health plan for any plan

3 year of a small employer.

4 ‘‘(B) SMALL EMPLOYER.—For purposes of

5 subparagraph (A), the term ‘small employer’

6 means, in connection with a group health plan

7 with respect to a calendar year and a plan year,

8 an employer who employed an average of at

9 least 2 but not more than 50 employees on

10 business days during the preceding calendar

11 year and who employs at least 2 employees on

12 the first day of the plan year.

13 ‘‘(C) APPLICATION OF CERTAIN RULES IN

14 DETERMINATION OF EMPLOYER SIZE.—For

15 purposes of this paragraph—

16 ‘‘(i) APPLICATION OF AGGREGATION

17 RULE FOR EMPLOYERS.—Rules similar to

18 the rules under subsections (b), (c), (m),

19 and (o) of section 414 shall apply for pur20 poses of treating persons as a single em21 ployer.

22 ‘‘(ii) EMPLOYERS NOT IN EXISTENCE

23 IN PRECEDING YEAR.—In the case of an

24 employer which was not in existence

25 throughout the preceding calendar year,
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1 the determination of whether such em2 ployer is a small employer shall be based

3 on the average number of employees that

4 it is reasonably expected such employer

5 will employ on business days in the current

6 calendar year.

7 ‘‘(iii) PREDECESSORS.—Any reference

8 in this paragraph to an employer shall in9 clude a reference to any predecessor of

10 such employer.

11 ‘‘(2) INCREASED COST EXEMPTION.—This sec12 tion shall not apply with respect to a group health

13 plan if the application of this section to such plan

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

15 at least 1 percent.

16 ‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF17 FERED.—In the case of a group health plan that offers

18 a participant or beneficiary two or more benefit package

19 options under the plan, the requirements of this section

20 shall be applied separately with respect to each such op21 tion.

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

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

24 ‘treatment limitation’ means, with respect to benefits

25 under a group health plan, any day or visit limits
17

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1 imposed on coverage of benefits under the plan dur2 ing a period of time.

3 ‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi4 nancial requirement’ means, with respect to benefits

5 under a group health plan, any deductible, coinsur6 ance, or cost-sharing or an annual or lifetime dollar

7 limit imposed with respect to the benefits under the

8 plan.

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 substance abuse treatment benefits.

14 ‘‘(4) SUBSTANCE ABUSE TREATMENT BENE15 FITS.—The term ‘substance abuse treatment bene16 fits’ means benefits with respect to substance abuse

17 treatment services.

18 ‘‘(5) SUBSTANCE ABUSE TREATMENT SERV19 ICES.—The term ‘substance abuse services’ means

20 any of the following items and services provided for

21 the treatment of substance abuse:

22 ‘‘(A) Inpatient treatment, including detoxi23 fication.

24 ‘‘(B) Non-hospital residential treatment.
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1 ‘‘(C) Outpatient treatment, including

2 screening and assessment, medication manage3 ment, individual, group, and family counseling,

4 and relapse prevention.

5 ‘‘(D) Prevention services, including health

6 education and individual and group counseling

7 to encourage the reduction of risk factors for

8 substance abuse.

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

10 abuse’ includes chemical dependency.

11 ‘‘(f) SUNSET.—This section shall not apply to bene12 fits for services furnished in plan years beginning on or

13 after January 1, 2007.’’

14 (B) Section 4980D(d)(1) of such Code is

15 amended by inserting ‘‘(other than a failure at16 tributable to section 9813)’’ after ‘‘on any fail17 ure’’.

18 (C) The table of sections of subchapter B

19 of chapter 100 of such Code is amended by

20 adding at the end the following new item:

‘‘Sec. 9813. Parity in the application of treatment limitations

and financial requirements to substance abuse

treatment benefits.’’

21 (b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B

22 of title XXVII of the Public Health Service Act is amend23 ed by inserting after section 2752 the following new sec24 tion:
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1 ‘‘SEC. 2753. PARITY IN THE APPLICATION OF TREATMENT

2 LIMITATIONS AND FINANCIAL REQUIRE3 MENTS TO SUBSTANCE ABUSE BENEFITS.

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

5 (other than subsections (e) and (g)) shall apply to health

6 insurance coverage offered by a health insurance issuer

7 in the individual market in the same manner as it applies

8 to health insurance coverage offered by a health insurance

9 issuer in connection with a group health plan in the small

10 or large group market.

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

12 part shall comply with the notice requirement under sec13 tion 714(f) of the Employee Retirement Income Security

14 Act of 1974 with respect to the requirements referred to

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

16 and such issuer were a group health plan.

17 ‘‘(c) SUNSET.—This section shall not apply to bene18 fits for services furnished on or after January 1, 2007.’’.

19 (2) Section 2762(b)(2) of such Act (42 U.S.C.

20 300gg–62(b)(2)) is amended by striking ‘‘section 2751’’

21 and inserting ‘‘sections 2751 and 2753’’.

22 (c) EFFECTIVE DATES.—(1) Subject to paragraph

23 (3), the amendments made by subsection (a) apply with

24 respect to group health plans for plan years beginning on

25 or after January 1, 2002.
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1 (2) The amendments made by subsection (b) apply

2 with respect to health insurance coverage offered, sold,

3 issued, renewed, in effect, or operated in the individual

4 market on or after January 1, 2002.

5 (3) In the case of a group health plan maintained

6 pursuant to 1 or more collective bargaining agreements

7 between employee representatives and 1 or more employ8 ers ratified before the date of enactment of this Act, the

9 amendments made subsection (a) shall not apply to plan

10 years beginning before the later of—

11 (A) the date on which the last collective bar12 gaining agreements relating to the plan terminates

13 (determined without regard to any extension thereof

14 agreed to after the date of enactment of this Act),

15 or

16 (B) January 1, 2002.

17 For purposes of subparagraph (A), any plan amendment

18 made pursuant to a collective bargaining agreement relat19 ing to the plan which amends the plan solely to conform

20 to any requirement added by subsection (a) shall not be

21 treated as a termination of such collective bargaining

22 agreement.

23 (d) COORDINATED REGULATIONS.—Section 104(1)

24 of Health Insurance Portability and Accountability Act of

25 1996 is amended by striking ‘‘this subtitle (and the
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1 amendments made by this subtitle and section 401)’’ and

2 inserting ‘‘the provisions of part 7 of subtitle B of title

3 I of the Employee Retirement Income Security Act of

4 1974, and the provisions of parts A and C of title XXVII

5 of the Public Health Service Act, and chapter 1000 of the

6 Internal Revenue Code of 1986’’.

Æ