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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1424 Reported in House (RH)]

                                                 Union Calendar No. 328
110th CONGRESS
  2d Session
                                H. R. 1424

               [Report No. 110-374, Parts I, II, and III]

To amend section 712 of the Employee Retirement Income Security Act of 
 1974, section 2705 of the Public Health Service Act, and section 9812 
of the Internal Revenue Code of 1986 to require equity in the provision 
 of mental health and substance-related disorder benefits under group 
                             health plans.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 2007

 Mr. Kennedy (for himself, Mr. Ramstad, Mr. Abercrombie, Mr. Ackerman, 
   Mr. Alexander, Mr. Allen, Mr. Andrews, Mr. Arcuri, Mr. Baca, Mr. 
Bachus, Mr. Baird, Ms. Baldwin, Mr. Barrow, Ms. Bean, Mr. Becerra, Ms. 
 Berkley, Mr. Berman, Mr. Berry, Mr. Bishop of Georgia, Mr. Bishop of 
  New York, Mr. Blumenauer, Ms. Bordallo, Mr. Boren, Mr. Boswell, Mr. 
Boucher, Mr. Boyd of Florida, Mr. Brady of Pennsylvania, Mr. Braley of 
 Iowa, Ms. Corrine Brown of Florida, Mr. Butterfield, Mrs. Capps, Mr. 
Capuano, Mr. Cardoza, Mr. Carnahan, Mr. Carney, Ms. Carson, Ms. Castor, 
Mr. Chandler, Mrs. Christensen, Ms. Clarke, Mr. Clay, Mr. Cleaver, Mr. 
 Clyburn, Mr. Cohen, Mr. Conyers, Mr. Cooper, Mr. Costa, Mr. Costello, 
 Mr. Courtney, Mr. Crowley, Mrs. Cubin, Mr. Cuellar, Mr. Cummings, Mr. 
Davis of Alabama, Mr. Davis of Illinois, Mrs. Davis of California, Mr. 
Lincoln Davis of Tennessee, Mr. DeFazio, Ms. DeGette, Mr. Delahunt, Ms. 
DeLauro, Mr. Dicks, Mr. Doggett, Mr. Donnelly, Mr. Doyle, Mr. Edwards, 
 Mr. Ellison, Mr. Ellsworth, Mr. Emanuel, Mrs. Emerson, Mr. Engel, Mr. 
 English of Pennsylvania, Ms. Eshoo, Mr. Etheridge, Mr. Faleomavaega, 
     Mr. Farr, Mr. Fattah, Mr. Ferguson, Mr. Filner, Mr. Frank of 
  Massachusetts, Mr. Frelinghuysen, Ms. Giffords, Mr. Gilchrest, Mrs. 
  Gillibrand, Mr. Gonzalez, Mr. Gordon of Tennessee, Mr. Al Green of 
 Texas, Mr. Gene Green of Texas, Mr. Grijalva, Mr. Gutierrez, Mr. Hall 
    of New York, Mr. Hare, Ms. Harman, Mr. Hastings of Florida, Ms. 
Herseth, Mr. Higgins, Mr. Hinchey, Mr. Hinojosa, Ms. Hirono, Mr. Hodes, 
Mr. Holden, Mr. Holt, Mr. Honda, Ms. Hooley, Mr. Hoyer, Mr. Inslee, Mr. 
    Israel, Mr. Jackson of Illinois, Ms. Jackson-Lee of Texas, Mr. 
Jefferson, Ms. Eddie Bernice Johnson of Texas, Mr. Johnson of Georgia, 
Mrs. Jones of Ohio, Mr. Kagen, Mr. Kanjorski, Ms. Kaptur, Mr. Keller of 
 Florida, Mr. Kildee, Ms. Kilpatrick, Mr. Kind, Mr. King of New York, 
Mr. Kirk, Mr. Klein of Florida, Mr. Kucinich, Mr. LaHood, Mr. Lampson, 
   Mr. Langevin, Mr. Lantos, Mr. Larsen of Washington, Mr. Larson of 
Connecticut, Mr. LaTourette, Ms. Lee, Mr. Levin, Mr. Lewis of Georgia, 
     Mr. Lipinski, Mr. LoBiondo, Mr. Loebsack, Ms. Zoe Lofgren of 
   California, Mrs. Lowey, Mr. Lynch, Mrs. Maloney of New York, Mr. 
 Markey, Mr. Marshall, Mr. Matheson, Ms. Matsui, Mrs. McCarthy of New 
   York, Ms. McCollum of Minnesota, Mr. McDermott, Mr. McGovern, Mr. 
 McHugh, Mr. McIntyre, Mr. McNerney, Mr. McNulty, Mr. Meehan, Mr. Meek 
     of Florida, Mr. Meeks of New York, Mr. Mica, Mr. Michaud, Ms. 
Millender-McDonald, Mr. George Miller of California, Mr. Mollohan, Mr. 
  Moore of Kansas, Ms. Moore of Wisconsin, Mr. Moran of Virginia, Mr. 
Murphy of Connecticut, Mr. Tim Murphy of Pennsylvania, Mr. Murtha, Mr. 
  Nadler, Mrs. Napolitano, Mr. Neal of Massachusetts, Ms. Norton, Mr. 
 Oberstar, Mr. Obey, Mr. Olver, Mr. Ortiz, Mr. Pallone, Mr. Pascrell, 
 Mr. Pastor, Mr. Payne, Mr. Perlmutter, Mr. Peterson of Minnesota, Mr. 
 Pickering, Mr. Platts, Mr. Pomeroy, Mr. Price of North Carolina, Mr. 
   Rahall, Mr. Rangel, Mr. Renzi, Mr. Reyes, Mr. Rodriguez, Ms. Ros-
Lehtinen, Mr. Ross, Mr. Rothman, Ms. Roybal-Allard, Mr. Ruppersberger, 
   Mr. Rush, Mr. Ryan of Ohio, Mr. Salazar, Ms. Linda T. Sanchez of 
   California, Ms. Loretta Sanchez of California, Mr. Sarbanes, Mr. 
    Saxton, Ms. Schakowsky, Mr. Schiff, Mrs. Schmidt, Ms. Wasserman 
Schultz, Ms. Schwartz, Mr. Scott of Georgia, Mr. Scott of Virginia, Mr. 
   Serrano, Mr. Sestak, Mr. Shays, Ms. Shea-Porter, Mr. Sherman, Mr. 
 Sires, Mr. Skelton, Ms. Slaughter, Mr. Smith of Washington, Mr. Smith 
of New Jersey, Mr. Snyder, Ms. Solis, Mr. Space, Mr. Spratt, Mr. Stark, 
 Mr. Stupak, Mr. Sullivan, Ms. Sutton, Mr. Tanner, Mrs. Tauscher, Mr. 
 Thompson of Mississippi, Mr. Thompson of California, Mr. Tierney, Mr. 
 Towns, Mr. Udall of Colorado, Mr. Udall of New Mexico, Mr. Upton, Mr. 
 Van Hollen, Ms. Velazquez, Mr. Visclosky, Mr. Walsh of New York, Mr. 
  Walz of Minnesota, Mr. Wamp, Ms. Waters, Ms. Watson, Mr. Watt, Mr. 
  Waxman, Mr. Weiner, Mr. Welch of Vermont, Mr. Wexler, Mr. Wilson of 
Ohio, Mr. Wilson of South Carolina, Ms. Woolsey, Mr. Wu, Mr. Wynn, Mr. 
Yarmuth, and Mr. Young of Alaska) introduced the following bill; which 
 was referred to the Committee on Energy and Commerce, and in addition 
  to the Committees on Education and Labor 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

                            October 15, 2007

  Reported from the Committee on Education and Labor with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                            October 15, 2007

    Reported from the Committee on Ways and Means with an amendment
[Stike out all after the enacting clause and insert the part printed in 
                            boldface roman]

                             March 4, 2008

  Additional sponsors: Mrs. Bono Mack, Mr. Dingell, Mr. Altmire, Mr. 
   Gerlach, Mr. Ehlers, Mr. Gillmor, Mr. Dent, Mr. Patrick Murphy of 
  Pennsylvania, Mrs. Boyda of Kansas, Mr. Mitchell, Mrs. Capito, Mr. 
 Miller of North Carolina, Mr. Cramer, Mr. Bonner, Mr. Wolf, Mr. Hill, 
            Mr. Melancon, Mr. Shuler, and Mr. Smith of Texas

                             March 4, 2008

 Reported from the Committee on Energy and Commerce with an amendment; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                          in boldface italic]
 [For text of introduced bill, see copy of bill as introduced on March 
                                9, 2007]

_______________________________________________________________________

                                 A BILL

 
To amend section 712 of the Employee Retirement Income Security Act of 
 1974, section 2705 of the Public Health Service Act, and section 9812 
of the Internal Revenue Code of 1986 to require equity in the provision 
 of mental health and substance-related disorder benefits under group 
                             health plans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Paul Wellstone 
Mental Health and Addiction Equity Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of 
                            1974.
Sec. 3. Amendments to the Public Health Service Act relating to the 
                            group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.

SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 712 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185a) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan or coverage may not impose any treatment limit 
                on mental health or substance-related disorder benefits 
                that are classified in the same category of items or 
                services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health or substance-related 
                disorder benefits for items and services within such 
                category that is more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following five 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an inpatient basis and within a network of 
                        providers established or recognized under such 
                        plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an inpatient basis and outside any 
                        network of providers established or recognized 
                        under such plan or coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an outpatient basis and within a network of 
                        providers established or recognized under such 
                        plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an outpatient basis and outside 
                        any network of providers established or 
                        recognized under such plan or coverage.
                            ``(v) Emergency care.--Items and services, 
                        whether furnished on an inpatient or outpatient 
                        basis or within or outside any network of 
                        providers, required for the treatment of an 
                        emergency medical condition (including an 
                        emergency condition relating to mental health 
                        and substance-related disorders).
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified 
                under paragraph (3)(C)), the plan or coverage may not 
                impose such a beneficiary financial requirement on 
                mental health or substance-related disorder benefits 
                for items and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services (as specified in 
                        paragraph (3)(C)), the plan or coverage shall 
                        apply such requirement (or, if there is more 
                        than one such requirement for such category of 
                        items and services, the predominant requirement 
                        for such category) both to medical and surgical 
                        benefits within such category and to mental 
                        health and substance-related disorder benefits 
                        within such category and shall not distinguish 
                        in the application of such requirement between 
                        such medical and surgical benefits and such 
                        mental health and substance-related disorder 
                        benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health or 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        results in greater out-of-pocket expenses to 
                        the participant or beneficiary than the 
                        predominant beneficiary financial requirement 
                        applicable to medical and surgical benefits for 
                        items and services within such category.
                            ``(iii) Construction.--Nothing in this 
                        subparagraph shall be construed as prohibiting 
                        the plan or coverage from waiving the 
                        application of any deductible for mental health 
                        benefits or substance-related disorder benefits 
                        or both.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health or substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substance abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available in accordance with regulations by the plan 
        administrator (or the health insurance issuer offering such 
        coverage) to any current or potential participant, beneficiary, 
        or contracting provider upon request. The reason for any denial 
        under the plan (or coverage) of reimbursement or payment for 
        services with respect to mental health and substance-related 
        disorder benefits in the case of any participant or beneficiary 
        shall, upon request, be made available in accordance with 
        regulations by the plan administrator (or the health insurance 
        issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health or substance-related disorder benefits, the plan 
                or coverage shall include benefits for any mental 
                health condition and substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan or 
                        coverage that provides both medical and 
                        surgical benefits and mental health or 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan or coverage in accordance with 
                        the requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health or substance-related disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Construction.--Subsection (a) of such section is further 
amended by adding at the end the following new paragraph:
            ``(7) Construction.--Nothing in this section shall be 
        construed to limit a group health plan (or health insurance 
        offered in connection with such a plan) from managing the 
        provision of medical, surgical, mental health or substance-
        related disorder benefits through any of the following methods:
                    ``(A) the application of utilization review;
                    ``(B) the application of authorization or 
                management practices;
                    ``(C) the application of medical necessity and 
                appropriateness criteria; or
                    ``(D) other processes intended to ensure that 
                beneficiaries receive appropriate care and medically 
                necessary services for covered benefits;
        to the extent such methods are recognized both by industry and 
        by providers and are not prohibited under applicable State 
        laws.''.
    (f) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the effective date 
                        of the amendments made by section 101 of the 
                        Paul Wellstone Mental Health and Addiction 
                        Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                and certified by a qualified and licensed actuary who 
                is a member in good standing of the American Academy of 
                Actuaries.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--An election to modify coverage 
                of mental health and substance-related disorder 
                benefits as permitted under this paragraph shall be 
                treated as a material modification in the terms of the 
                plan as described in section 102(a) and notice of which 
                shall be provided a reasonable period in advance of the 
                change.
                    ``(F) Notification of appropriate agency.--
                            ``(i) In general.--A group health plan 
                        that, based on upon a certification described 
                        under subparagraph (C), qualifies for an 
                        exemption under this paragraph, and elects to 
                        implement the exemption, shall notify the 
                        Department of Labor of such election.
                            ``(ii) Requirement.--A notification under 
                        clause (i) shall include--
                                    ``(I) a description of the number 
                                of covered lives under the plan (or 
                                coverage) involved at the time of the 
                                notification, and as applicable, at the 
                                time of any prior election of the cost-
                                exemption under this paragraph by such 
                                plan (or coverage);
                                    ``(II) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, a description of the 
                                actual total costs of coverage with 
                                respect to medical and surgical 
                                benefits and mental health and 
                                substance-related disorder benefits 
                                under the plan; and
                                    ``(III) for both the plan year upon 
                                which a cost exemption is sought and 
                                the year prior, the actual total costs 
                                of coverage with respect to mental 
                                health and substance-related disorder 
                                benefits under the plan.
                            ``(iii) Confidentiality.--A notification 
                        under clause (i) shall be confidential. The 
                        Department of Labor shall make available, upon 
                        request to the appropriate committees of 
                        Congress and on not more than an annual basis, 
                        an anonymous itemization of such notifications, 
                        that includes--
                                    ``(I) a breakdown of States by the 
                                size and any type of employers 
                                submitting such notification; and
                                    ``(II) a summary of the data 
                                received under clause (ii).
                    ``(G) No impact on application of state law.--The 
                fact that a plan or coverage is exempt from the 
                provisions of this section under subparagraph (A) shall 
                not affect the application of State law to such plan or 
                coverage.''.
    (g) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (h) Elimination of Sunset Provision.--Such section is amended by 
striking subsection (f).
    (i) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--This part shall not be construed to 
        supersede any provision of State law which establishes, 
        implements, or continues in effect any consumer protections, 
        benefits, methods of access to benefits, rights, external 
        review programs, or remedies solely relating to health 
        insurance issuers in connection with group health insurance 
        coverage (including benefit mandates or regulation of group 
        health plans of 50 or fewer employees) except to the extent 
        that such provision prevents the application of a requirement 
        of this part.
            ``(2) Continued preemption with respect to group health 
        plans.--Nothing in this section shall be construed to affect or 
        modify the provisions of section 514 with respect to group 
        health plans.
            ``(3) Other state laws.--Nothing in this section shall be 
        construed to exempt or relieve any person from any laws of any 
        State not solely related to health insurance issuers in 
        connection with group health coverage insofar as they may now 
        or hereafter relate to insurance, health plans, or health 
        coverage.'''.
    (j) Conforming Amendments to Heading.--
            (1) In general.--The heading of such section is amended to 
        read as follows:

``SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER 
              BENEFITS.''.

            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by striking the item relating to section 
        712 and inserting the following new item:

``Sec. 712. Equity in mental health and substance-related disorder 
                            benefits.''.
    (k) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to plan years beginning on or after January 
        1, 2008.
            (2) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to one or 
        more collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by this 
        section shall not apply to plan years beginning before the 
        later of--
                    (A) the date on which the last of the collective 
                bargaining agreements relating to the plan terminates 
                (determined without regard to any extension thereof 
                agreed to after the date of the enactment of this Act), 
                or
                    (B) January 1, 2010.
        For purposes of subparagraph (A), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        imposed under an amendment under this section shall not be 
        treated as a termination of such collective bargaining 
        agreement.
    (l) DOL Annual Sample Compliance.--The Secretary of Labor shall 
annually sample and conduct random audits of group health plans (and 
health insurance coverage offered in connection with such plans) in 
order to determine their compliance with the amendments made by this 
Act and shall submit to the appropriate committees of Congress an 
annual report on such compliance with such amendments.
    (m) Assistance to Participants and Beneficiaries.--The Secretary of 
Labor shall provide assistance to participants and beneficiaries of 
group health plans with any questions or problems with compliance with 
the requirements of this Act. The Secretary shall notify participants 
and beneficiaries when they can obtain assistance from State consumer 
and insurance agencies and the Secretary shall coordinate with State 
agencies to ensure that participants and beneficiaries are protected 
and afforded the rights provided under this Act.

SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              GROUP MARKET.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 2705 of the Public Health Service Act 
(42 U.S.C. 300gg-5) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services 
                (specified in subparagraph (C)), the plan or coverage 
                may not impose any treatment limit on mental health and 
                substance-related disorder benefits that are classified 
                in the same category of items or services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health and substance-related 
                disorder benefits for items and services within such 
                category that are more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified in 
                paragraph (3)(C)), the plan or coverage may not impose 
                such a beneficiary financial requirement on mental 
                health and substance-related disorder benefits for 
                items and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan or 
                        coverage shall apply such requirement (or, if 
                        there is more than one such requirement for 
                        such category of items and services, the 
                        predominant requirement for such category) both 
                        to medical and surgical benefits within such 
                        category and to mental health and substance-
                        related disorder benefits within such category 
                        and shall not distinguish in the application of 
                        such requirement between such medical and 
                        surgical benefits and such mental health and 
                        substance-related disorder benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health and 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        is more costly to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health and substance-related disorder benefits in the 
        case of any participant or beneficiary shall, upon request, be 
        made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan or 
                        coverage that provides both medical and 
                        surgical benefits and mental health and 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan or coverage in accordance with 
                        the requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                by a qualified actuary who is a member in good standing 
                of the American Academy of Actuaries. Such 
                determinations shall be certified by the actuary and be 
                made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--A group health plan under this 
                part shall comply with the notice requirement under 
                section 712(c)(2)(E) of the Employee Retirement Income 
                Security Act of 1974 with respect to the a modification 
                of mental health and substance-related disorder 
                benefits as permitted under this paragraph as if such 
                section applied to such plan.''.
    (f) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking out subsection (f).
    (h) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that provides greater 
        consumer protections, benefits, methods of access to benefits, 
        rights or remedies that are greater than the protections, 
        benefits, methods of access to benefits, rights or remedies 
        provided under this section.
            ``(2) Construction.--Nothing in this section shall be 
        construed to affect or modify the provisions of section 2723 
        with respect to group health plans.''.
    (i) Conforming Amendment to Heading.--The heading of such section 
is amended to read as follows:

``SEC. 2705.''.

    (j) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 9812 of the Internal Revenue Code of 
1986 is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan does not 
                include a treatment limit (as defined in subparagraph 
                (D)) on substantially all medical and surgical benefits 
                in any category of items or services (specified in 
                subparagraph (C)), the plan may not impose any 
                treatment limit on mental health and substance-related 
                disorder benefits that are classified in the same 
                category of items or services.
                    ``(B) Treatment limit.--If the plan includes a 
                treatment limit on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan may not impose such a treatment limit on 
                mental health and substance-related disorder benefits 
                for items and services within such category that are 
                more restrictive than the predominant treatment limit 
                that is applicable to medical and surgical benefits for 
                items and services within such category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan, limitation on the frequency of 
                treatment, number of visits or days of coverage, or 
                other similar limit on the duration or scope of 
                treatment under the plan.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan does not include a beneficiary financial 
                requirement (as defined in subparagraph (C)) on 
                substantially all medical and surgical benefits within 
                a category of items and services (specified in 
                paragraph (3)(C)), the plan may not impose such a 
                beneficiary financial requirement on mental health and 
                substance-related disorder benefits for items and 
                services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan or 
                        coverage shall apply such requirement (or, if 
                        there is more than one such requirement for 
                        such category of items and services, the 
                        predominant requirement for such category) both 
                        to medical and surgical benefits within such 
                        category and to mental health and substance-
                        related disorder benefits within such category 
                        and shall not distinguish in the application of 
                        such requirement between such medical and 
                        surgical benefits and such mental health and 
                        substance-related disorder benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan includes a beneficiary financial 
                        requirement not described in clause (i) on 
                        substantially all medical and surgical benefits 
                        within a category of items and services, the 
                        plan may not impose such financial requirement 
                        on mental health and substance-related disorder 
                        benefits for items and services within such 
                        category in a way that is more costly to the 
                        participant or beneficiary than the predominant 
                        beneficiary financial requirement applicable to 
                        medical and surgical benefits for items and 
                        services within such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a 
                plan, any deductible, coinsurance, co-payment, other 
                cost sharing, and limitation on the total amount that 
                may be paid by a participant or beneficiary with 
                respect to benefits under the plan, but does not 
                include the application of any aggregate lifetime limit 
                or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' in the 
                heading and inserting ``Mental health and substance-
                related disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits shall be made available by the plan administrator to 
        any current or potential participant, beneficiary, or 
        contracting provider upon request. The reason for any denial 
        under the plan of reimbursement or payment for services with 
        respect to mental health and substance-related disorder 
        benefits in the case of any participant or beneficiary shall, 
        upon request, be made available by the plan administrator to 
        the participant or beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan 
                        that provides both medical and surgical 
                        benefits and mental health and substance-
                        related disorder benefits, if medical and 
                        surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan in accordance with the 
                        requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan, if the application of this section to such plan 
                results in an increase for the plan year involved of 
                the actual total costs of coverage with respect to 
                medical and surgical benefits and mental health and 
                substance-related disorder benefits under the plan (as 
                determined and certified under subparagraph (C)) by an 
                amount that exceeds the applicable percentage described 
                in subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                during the following plan year, and such exemption 
                shall apply to the plan for 1 plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan, the applicable percentage described in this 
                paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan for 
                purposes of this subsection shall be made by a 
                qualified actuary who is a member in good standing of 
                the American Academy of Actuaries. Such determinations 
                shall be certified by the actuary and be made available 
                to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan seeks an exemption under this paragraph, 
                determinations under subparagraph (A) shall be made 
                after such plan has complied with this section for the 
                first 6 months of the plan year involved.''.
    (f) Change in Exclusion for Smallest Employers.--Subsection (c)(1) 
of such section is amended to read as follows:
            ``(1) Small employer exemption.--
                    ``(A) In general.--This section shall not apply to 
                any group health plan for any plan year of a small 
                employer.
                    ``(B) Small employer.--For purposes of subparagraph 
                (A), the term `small employer' means, with respect to a 
                calendar year and a plan year, an employer who employed 
                an average of at least 2 (or 1 in the case of an 
                employer residing in a State that permits small groups 
                to include a single individual) but not more than 50 
                employees on business days during the preceding 
                calendar year. For purposes of the preceding sentence, 
                all persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 shall 
                be treated as 1 employer and rules similar to rules of 
                subparagraphs (B) and (C) of section 4980D(d)(2) shall 
                apply.''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking subsection (f).
    (h) Conforming Amendments to Heading.--
            (1) In general.--The heading of such section is amended to 
        read as follows:

``SEC. 9812.''.

            (2) Clerical amendment.--The table of sections for 
        subchapter B of chapter 100 of the Internal Revenue Code of 
        1986 is amended by striking the item relating to section 9812 
        and inserting the following new item:

``Sec. 9812. Equity in mental health and substance-related disorder 
                            benefits.''.
    (i) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 5. STUDIES AND REPORTS.

    (a) Implementation of Act.--
            (1) GAO study.--The Comptroller General of the United 
        States shall conduct a study that evaluates the effect of the 
        implementation of the amendments made by this Act on--
                    (A) the cost of health insurance coverage;
                    (B) access to health insurance coverage (including 
                the availability of in-network providers);
                    (C) the quality of health care;
                    (D) Medicare, Medicaid, and State and local mental 
                health and substance abuse treatment spending;
                    (E) the number of individuals with private 
                insurance who received publicly funded health care for 
                mental health and substance-related disorders;
                    (F) spending on public services, such as the 
                criminal justice system, special education, and income 
                assistance programs;
                    (G) the use of medical management of mental health 
                and substance-related disorder benefits and medical 
                necessity determinations by group health plans (and 
                health insurance issuers offering health insurance 
                coverage in connection with such plans) and timely 
                access by participants and beneficiaries to clinically-
                indicated care for mental health and substance-use 
                disorders; and
                    (H) other matters as determined appropriate by the 
                Comptroller General.
            (2) Report.--Not later than 2 years after the date of 
        enactment of this Act, the Comptroller General shall prepare 
        and submit to the appropriate committees of the Congress a 
        report containing the results of the study conducted under 
        paragraph (1).
    (b) GAO Report on Uniform Patient Placement Criteria.--Not later 
than 18 months after the date of the enactment of this Act, the 
Comptroller General shall submit to the appropriate committees of each 
House of the Congress a report on availability of uniform patient 
placement criteria for mental health and substance-related disorders 
that could be used by group health plans and health insurance issuers 
to guide determinations of medical necessity and the extent to which 
health plans utilize such criteria. If such criteria do not exist, the 
report shall include recommendations on a process for developing such 
criteria.
    (c) DOL Biannual Report on Obstacles in Obtaining Coverage.--Every 
two years, the Secretary of Labor, in consultation with the Secretaries 
of Health and Human Services and the Treasury, shall submit to the 
appropriate committees of each House of the Congress a report on 
obstacles that individuals face in obtaining mental health and 
substance-related disorder care under their health plans.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Paul Wellstone 
Mental Health and Addiction Equity Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of 
                            1974.
Sec. 3. Amendments to the Public Health Service Act relating to the 
                            group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.

SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 712 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185a) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan or coverage may not impose any treatment limit 
                on mental health and substance-related disorder 
                benefits that are classified in the same category of 
                items or services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health and substance-related 
                disorder benefits for items and services within such 
                category that are more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified 
                under paragraph (3)(C)), the plan or coverage may not 
                impose such a beneficiary financial requirement on 
                mental health and substance-related disorder benefits 
                for items and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services (as specified in 
                        paragraph (3)(C)), the plan or coverage shall 
                        apply such requirement (or, if there is more 
                        than one such requirement for such category of 
                        items and services, the predominant requirement 
                        for such category) both to medical and surgical 
                        benefits within such category and to mental 
                        health and substance-related disorder benefits 
                        within such category and shall not distinguish 
                        in the application of such requirement between 
                        such medical and surgical benefits and such 
                        mental health and substance-related disorder 
                        benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health and 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        is more costly to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health and substance-related disorder benefits in the 
        case of any participant or beneficiary shall, upon request, be 
        made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan or 
                        coverage that provides both medical and 
                        surgical benefits and mental health and 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan or coverage in accordance with 
                        the requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                by a qualified actuary who is a member in good standing 
                of the American Academy of Actuaries. Such 
                determinations shall be certified by the actuary and be 
                made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--An election to modify coverage 
                of mental health and substance-related disorder 
                benefits as permitted under this paragraph shall be 
                treated as a material modification in the terms of the 
                plan as described in section 102(a)(1) and shall be 
                subject to the applicable notice requirements under 
                section 104(b)(1).''.
    (f) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking out subsection (f).
    (h) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that provides greater 
        consumer protections, benefits, methods of access to benefits, 
        rights or remedies that are greater than the protections, 
        benefits, methods of access to benefits, rights or remedies 
        provided under this section.
            ``(2) ERISA.--Nothing in this section shall be construed to 
        affect or modify the provisions of section 514 with respect to 
        group health plans.''.
    (i) Conforming Amendments to Heading.--
            (1) In general.--The heading of such section is amended to 
        read as follows:

``SEC. 712.''.

            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by striking the item relating to section 
        712 and inserting the following new item:

``Sec. 712. Equity in mental health and substance-related disorder 
                            benefits.''.
    (j) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              GROUP MARKET.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 2705 of the Public Health Service Act 
(42 U.S.C. 300gg-5) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services 
                (specified in subparagraph (C)), the plan or coverage 
                may not impose any treatment limit on mental health and 
                substance-related disorder benefits that are classified 
                in the same category of items or services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health and substance-related 
                disorder benefits for items and services within such 
                category that are more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified in 
                paragraph (3)(C)), the plan or coverage may not impose 
                such a beneficiary financial requirement on mental 
                health and substance-related disorder benefits for 
                items and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan or 
                        coverage shall apply such requirement (or, if 
                        there is more than one such requirement for 
                        such category of items and services, the 
                        predominant requirement for such category) both 
                        to medical and surgical benefits within such 
                        category and to mental health and substance-
                        related disorder benefits within such category 
                        and shall not distinguish in the application of 
                        such requirement between such medical and 
                        surgical benefits and such mental health and 
                        substance-related disorder benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health and 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        is more costly to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health and substance-related disorder benefits in the 
        case of any participant or beneficiary shall, upon request, be 
        made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan or 
                        coverage that provides both medical and 
                        surgical benefits and mental health and 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan or coverage in accordance with 
                        the requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                by a qualified actuary who is a member in good standing 
                of the American Academy of Actuaries. Such 
                determinations shall be certified by the actuary and be 
                made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--A group health plan under this 
                part shall comply with the notice requirement under 
                section 712(c)(2)(E) of the Employee Retirement Income 
                Security Act of 1974 with respect to the a modification 
                of mental health and substance-related disorder 
                benefits as permitted under this paragraph as if such 
                section applied to such plan.''.
    (f) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking out subsection (f).
    (h) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that provides greater 
        consumer protections, benefits, methods of access to benefits, 
        rights or remedies that are greater than the protections, 
        benefits, methods of access to benefits, rights or remedies 
        provided under this section.
            ``(2) Construction.--Nothing in this section shall be 
        construed to affect or modify the provisions of section 2723 
        with respect to group health plans.''.
    (i) Conforming Amendment to Heading.--The heading of such section 
is amended to read as follows:

``SEC. 2705.''.

    (j) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 9812 of the Internal Revenue Code of 
1986 is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--In the case of a group health plan 
        that provides both medical and surgical benefits and mental 
        health or substance-related disorder benefits--
                    ``(A) No treatment limit.--If the plan does not 
                include a treatment limit (as defined in subparagraph 
                (D)) on substantially all medical and surgical benefits 
                in any category of items or services (specified in 
                subparagraph (C)), the plan may not impose any 
                treatment limit on mental health or substance-related 
                disorder benefits that are classified in the same 
                category of items or services.
                    ``(B) Treatment limit.--If the plan includes a 
                treatment limit on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan may not impose such a treatment limit on 
                mental health or substance-related disorder benefits 
                for items and services within such category that is 
                more restrictive than the predominant treatment limit 
                that is applicable to medical and surgical benefits for 
                items and services within such category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following five 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an inpatient basis and within a network of 
                        providers established or recognized under such 
                        plan.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an inpatient basis and outside any 
                        network of providers established or recognized 
                        under such plan.
                            ``(iii) Outpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an outpatient basis and within a network of 
                        providers established or recognized under such 
                        plan.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an outpatient basis and outside 
                        any network of providers established or 
                        recognized under such plan.
                            ``(v) Emergency care.--Items and services, 
                        whether furnished on an inpatient or outpatient 
                        basis or within or outside any network of 
                        providers, required for the treatment of an 
                        emergency medical condition (including an 
                        emergency condition relating to mental health 
                        or substance-related disorders).
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan, limitation on the frequency of 
                treatment, number of visits or days of coverage, or 
                other similar limit on the duration or scope of 
                treatment under the plan.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--In the case of a 
        group health plan that provides both medical and surgical 
        benefits and mental health or substance-related disorder 
        benefits--
                    ``(A) No beneficiary financial requirement.--If the 
                plan does not include a beneficiary financial 
                requirement (as defined in subparagraph (C)) on 
                substantially all medical and surgical benefits within 
                a category of items and services (specified in 
                paragraph (3)(C)), the plan may not impose such a 
                beneficiary financial requirement on mental health or 
                substance-related disorder benefits for items and 
                services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan includes a 
                        deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan shall 
                        apply such requirement (or, if there is more 
                        than one such requirement for such category of 
                        items and services, the predominant requirement 
                        for such category) both to medical and surgical 
                        benefits within such category and to mental 
                        health and substance-related disorder benefits 
                        within such category and shall not distinguish 
                        in the application of such requirement between 
                        such medical and surgical benefits and such 
                        mental health and substance-related disorder 
                        benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan includes a beneficiary financial 
                        requirement not described in clause (i) on 
                        substantially all medical and surgical benefits 
                        within a category of items and services, the 
                        plan may not impose such financial requirement 
                        on mental health or substance-related disorder 
                        benefits for items and services within such 
                        category in a way that results in greater out-
                        of-pocket expenses to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                            ``(iii) Construction.--Nothing in this 
                        subparagraph shall be construed as prohibiting 
                        the plan from waiving the application of any 
                        deductible for mental health benefits or 
                        substance-related disorder benefits or both.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a 
                plan, any deductible, coinsurance, co-payment, other 
                cost sharing, and limitation on the total amount that 
                may be paid by a participant or beneficiary with 
                respect to benefits under the plan, but does not 
                include the application of any aggregate lifetime limit 
                or annual limit.'', and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'',
                    (B) by striking ``; or'' and inserting a period, 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Section 9812 of such Code is further amended--
            (1) by striking ``mental health benefits'' each place it 
        appears (other than in any provision amended by paragraph (2)) 
        and inserting ``mental health or substance-related disorder 
        benefits'',
            (2) by striking ``mental health benefits'' each place it 
        appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), 
        and (a)(2)(C) and inserting ``mental health and substance-
        related disorder benefits'', and
            (3) in subsection (e), by striking paragraph (4) and 
        inserting the following new paragraphs:
            ``(4) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services for mental 
        health conditions, as defined under the terms of the plan, but 
        does not include substance-related disorder benefits.
            ``(5) Substance-related disorder benefits.--The term 
        `substance-related disorder benefits' means benefits with 
        respect to services for substance-related disorders, as defined 
        under the terms of the plan.''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of section 9812 of such Code, as amended by 
subsection (a)(1), is further amended by adding at the end the 
following new paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits shall be made available by the plan administrator to 
        any current or potential participant, beneficiary, or 
        contracting provider upon request. The reason for any denial 
        under the plan of reimbursement or payment for services with 
        respect to mental health and substance-related disorder 
        benefits in the case of any participant or beneficiary shall, 
        upon request, be made available by the plan administrator to 
        the participant or beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of section 9812 
of such Code is further amended by adding at the end the following new 
paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan that provides any mental health or 
                substance-related disorder benefits, the plan shall 
                include benefits for any mental health condition or 
                substance-related disorder included in the most recent 
                edition of the Diagnostic and Statistical Manual of 
                Mental Disorders published by the American Psychiatric 
                Association.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a group 
                        health plan that provides both medical and 
                        surgical benefits and mental health or 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan, the mental health 
                        and substance-related disorder benefits shall 
                        also be provided for items and services in such 
                        category furnished outside any network of 
                        providers established or recognized under such 
                        plan in accordance with the requirements of 
                        this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health or substance-related disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of section 
9812(c) of such Code is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan, if the application of this section to such plan 
                results in an increase for the plan year involved of 
                the actual total costs of coverage with respect to 
                medical and surgical benefits and mental health and 
                substance-related disorder benefits under the plan (as 
                determined and certified under subparagraph (C)) by an 
                amount that exceeds the applicable percentage described 
                in subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                during the following plan year, and such exemption 
                shall apply to the plan for 1 plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan, the applicable percentage described in this 
                paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year to which this paragraph applies, and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan for 
                purposes of this subsection shall be made by a 
                qualified and licensed actuary who is a member in good 
                standing of the American Academy of Actuaries. Such 
                determinations shall be certified by the actuary and be 
                made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan seeks an exemption under this paragraph, 
                determinations under subparagraph (A) shall be made 
                after such plan has complied with this section for the 
                first 6 months of the plan year involved.''.
    (f) Change in Exclusion for Smallest Employers.--Paragraph (1) of 
section 9812(c) of such Code is amended to read as follows:
            ``(1) Small employer exemption.--
                    ``(A) In general.--This section shall not apply to 
                any group health plan for any plan year of a small 
                employer.
                    ``(B) Small employer.--For purposes of subparagraph 
                (A), the term `small employer' means, with respect to a 
                calendar year and a plan year, an employer who employed 
                an average of at least 2 (or 1 in the case of an 
                employer residing in a State that permits small groups 
                to include a single individual) but not more than 50 
                employees on business days during the preceding 
                calendar year. For purposes of the preceding sentence, 
                all persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 shall 
                be treated as 1 employer and rules similar to rules of 
                subparagraphs (B) and (C) of section 4980D(d)(2) shall 
                apply.''.
    (g) Elimination of Sunset Provision.--Section 9812 of such Code is 
amended by striking subsection (f).
    (h) Conforming Amendments to Heading.--
            (1) In general.--The heading of section 9812 of such Code 
        is amended to read as follows:

``SEC. 9812. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER 
              BENEFITS.''.

            (2) Clerical amendment.--The table of sections for 
        subchapter B of chapter 100 of such Code is amended by striking 
        the item relating to section 9812 and inserting the following 
        new item:

``Sec. 9812. Equity in mental health and substance-related disorder 
                            benefits.''.
    (i) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply 
        with respect to plan years beginning on or after January 1, 
        2008.
            (2) Elimination of sunset.--The amendment made by 
        subsection (g) shall apply to benefits for services furnished 
        after December 31, 2007.
            (3) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to one or 
        more collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by this 
        section (other than subsection (g)) shall not apply to plan 
        years beginning before the later of--
                    (A) the date on which the last of the collective 
                bargaining agreements relating to the plan terminates 
                (determined without regard to any extension thereof 
                agreed to after the date of the enactment of this Act), 
                or
                    (B) January 1, 2010.
        For purposes of subparagraph (A), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        imposed under an amendment under this section shall not be 
        treated as a termination of such collective bargaining 
        agreement.

SEC. 5. GOVERNMENT ACCOUNTABILITY OFFICE STUDIES AND REPORTS.

    (a) Implementation of Act.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study that evaluates the effect of the 
        implementation of the amendments made by this Act on--
                    (A) the cost of health insurance coverage;
                    (B) access to health insurance coverage (including 
                the availability of in-network providers);
                    (C) the quality of health care;
                    (D) Medicare, Medicaid, and State and local mental 
                health and substance abuse treatment spending;
                    (E) the number of individuals with private 
                insurance who received publicly funded health care for 
                mental health and substance-related disorders;
                    (F) spending on public services, such as the 
                criminal justice system, special education, and income 
                assistance programs;
                    (G) the use of medical management of mental health 
                and substance-related disorder benefits and medical 
                necessity determinations by group health plans (and 
                health insurance issuers offering health insurance 
                coverage in connection with such plans) and timely 
                access by participants and beneficiaries to clinically-
                indicated care for mental health and substance-use 
                disorders; and
                    (H) other matters as determined appropriate by the 
                Comptroller General.
            (2) Report.--Not later than 2 years after the date of 
        enactment of this Act, the Comptroller General shall prepare 
        and submit to the appropriate committees of the Congress a 
        report containing the results of the study conducted under 
        paragraph (1).
    (b) Biannual Report on Obstacles in Obtaining Coverage.--Every two 
years, the Comptroller General shall submit to each House of the 
Congress a report on obstacles that individuals face in obtaining 
mental health and substance-related disorder care under their health 
plans.
    (c) Uniform Patient Placement Criteria.--Not later than 18 months 
after the date of the enactment of this Act, the Comptroller General 
shall submit to each House of the Congress a report on availability of 
uniform patient placement criteria for mental health and substance-
related disorders that could be used by group health plans and health 
insurance issuers to guide determinations of medical necessity and the 
extent to which health plans utilize such critiera. If such criteria do 
not exist, the report shall include recommendations on a process for 
developing such criteria.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Paul Wellstone 
Mental Health and Addiction Equity Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Amendments to the Employee Retirement Income Security Act of 
                            1974.
Sec. 3. Amendments to the Public Health Service Act relating to the 
                            group market.
Sec. 4. Amendments to the Internal Revenue Code of 1986.
Sec. 5. Government Accountability Office studies and reports.

SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 712 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185a) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan or coverage may not impose any treatment limit 
                on mental health and substance-related disorder 
                benefits that are classified in the same category of 
                items or services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health and substance-related 
                disorder benefits for items and services within such 
                category that are more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified 
                under paragraph (3)(C)), the plan or coverage may not 
                impose such a beneficiary financial requirement on 
                mental health and substance-related disorder benefits 
                for items and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services (as specified in 
                        paragraph (3)(C)), the plan or coverage shall 
                        apply such requirement (or, if there is more 
                        than one such requirement for such category of 
                        items and services, the predominant requirement 
                        for such category) both to medical and surgical 
                        benefits within such category and to mental 
                        health and substance-related disorder benefits 
                        within such category and shall not distinguish 
                        in the application of such requirement between 
                        such medical and surgical benefits and such 
                        mental health and substance-related disorder 
                        benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health and 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        is more costly to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health and substance-related disorder benefits in the 
        case of any participant or beneficiary shall, upon request, be 
        made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan or 
                        coverage that provides both medical and 
                        surgical benefits and mental health and 
                        substance-related disorder benefits, if medical 
                        and surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan or coverage in accordance with 
                        the requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                by a qualified actuary who is a member in good standing 
                of the American Academy of Actuaries. Such 
                determinations shall be certified by the actuary and be 
                made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--An election to modify coverage 
                of mental health and substance-related disorder 
                benefits as permitted under this paragraph shall be 
                treated as a material modification in the terms of the 
                plan as described in section 102(a)(1) and shall be 
                subject to the applicable notice requirements under 
                section 104(b)(1).''.
    (f) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking out subsection (f).
    (h) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that provides greater 
        consumer protections, benefits, methods of access to benefits, 
        rights or remedies that are greater than the protections, 
        benefits, methods of access to benefits, rights or remedies 
        provided under this section.
            ``(2) ERISA.--Nothing in this section shall be construed to 
        affect or modify the provisions of section 514 with respect to 
        group health plans.''.
    (i) Conforming Amendments to Heading.--
            (1) In general.--The heading of such section is amended to 
        read as follows:

``SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER 
              BENEFITS.''.

            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by striking the item relating to section 
        712 and inserting the following new item:

``Sec. 712. Equity in mental health and substance-related disorder 
                            benefits.''.
    (j) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              GROUP MARKET.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 2705 of the Public Health Service Act 
(42 U.S.C. 300gg-5) is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan or coverage 
                does not include a treatment limit (as defined in 
                subparagraph (D)) on substantially all medical and 
                surgical benefits in any category of items or services 
                (specified in subparagraph (C)), the plan or coverage 
                may not impose any treatment limit on mental health or 
                substance-related disorder benefits that are classified 
                in the same category of items or services.
                    ``(B) Treatment limit.--If the plan or coverage 
                includes a treatment limit on substantially all medical 
                and surgical benefits in any category of items or 
                services, the plan or coverage may not impose such a 
                treatment limit on mental health or substance-related 
                disorder benefits for items and services within such 
                category that is more restrictive than the predominant 
                treatment limit that is applicable to medical and 
                surgical benefits for items and services within such 
                category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following five 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an inpatient basis and within a network of 
                        providers established or recognized under such 
                        plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an inpatient basis and outside any 
                        network of providers established or recognized 
                        under such plan or coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services not described in clause (v) furnished 
                        on an outpatient basis and within a network of 
                        providers established or recognized under such 
                        plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services not described in clause (v) 
                        furnished on an outpatient basis and outside 
                        any network of providers established or 
                        recognized under such plan or coverage.
                            ``(v) Emergency care.--Items and services, 
                        whether furnished on an inpatient or outpatient 
                        basis or within or outside any network of 
                        providers, required for the treatment of an 
                        emergency medical condition (as defined in 
                        section 1867(e) of the Social Security Act, 
                        including an emergency condition relating to 
                        mental health and substance-related disorders).
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan or coverage, limitation on the 
                frequency of treatment, number of visits or days of 
                coverage, or other similar limit on the duration or 
                scope of treatment under the plan or coverage.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan or coverage does not include a beneficiary 
                financial requirement (as defined in subparagraph (C)) 
                on substantially all medical and surgical benefits 
                within a category of items and services (specified in 
                paragraph (3)(C)), the plan or coverage may not impose 
                such a beneficiary financial requirement on mental 
                health or substance-related disorder benefits for items 
                and services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan or 
                        coverage shall apply such requirement (or, if 
                        there is more than one such requirement for 
                        such category of items and services, the 
                        predominant requirement for such category) both 
                        to medical and surgical benefits within such 
                        category and to mental health and substance-
                        related disorder benefits within such category 
                        and shall not distinguish in the application of 
                        such requirement between such medical and 
                        surgical benefits and such mental health and 
                        substance-related disorder benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan or coverage includes a beneficiary 
                        financial requirement not described in clause 
                        (i) on substantially all medical and surgical 
                        benefits within a category of items and 
                        services, the plan or coverage may not impose 
                        such financial requirement on mental health or 
                        substance-related disorder benefits for items 
                        and services within such category in a way that 
                        is more costly to the participant or 
                        beneficiary than the predominant beneficiary 
                        financial requirement applicable to medical and 
                        surgical benefits for items and services within 
                        such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a plan 
                or coverage, any deductible, coinsurance, co-payment, 
                other cost sharing, and limitation on the total amount 
                that may be paid by a participant or beneficiary with 
                respect to benefits under the plan or coverage, but 
                does not include the application of any aggregate 
                lifetime limit or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health or substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' and 
                inserting ``Mental health and substance-related 
                disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substance abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits (or the health insurance coverage offered in 
        connection with the plan with respect to such benefits) shall 
        be made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to any current or 
        potential participant, beneficiary, or contracting provider 
        upon request. The reason for any denial under the plan (or 
        coverage) of reimbursement or payment for services with respect 
        to mental health and substance-related disorder benefits in the 
        case of any participant or beneficiary shall, upon request, be 
        made available by the plan administrator (or the health 
        insurance issuer offering such coverage) to the participant or 
        beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health or substance-related disorder benefits, the plan 
                or coverage shall include benefits for any mental 
                health condition or substance-related disorder included 
                in the most recent edition of the Diagnostic and 
                Statistical Manual of Mental Disorders published by the 
                American Psychiatric Association.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a group 
                        health plan (or health insurance coverage 
                        offered in connection with such a plan) that 
                        provides both medical and surgical benefits and 
                        mental health or substance-related disorder 
                        benefits, if medical and surgical benefits are 
                        provided for substantially all items and 
                        services in a category specified in clause (ii) 
                        furnished outside any network of providers 
                        established or recognized under such plan or 
                        coverage, the mental health and substance-
                        related disorder benefits shall also be 
                        provided for items and services in such 
                        category furnished outside any network of 
                        providers established or recognized under such 
                        plan or coverage in accordance with the 
                        requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health or substance-related disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan (or health insurance coverage offered in 
                connection with such a plan), if the application of 
                this section to such plan (or coverage) results in an 
                increase for the plan year involved of the actual total 
                costs of coverage with respect to medical and surgical 
                benefits and mental health and substance-related 
                disorder benefits under the plan (as determined and 
                certified under subparagraph (C)) by an amount that 
                exceeds the applicable percentage described in 
                subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                (or coverage) during the following plan year, and such 
                exemption shall apply to the plan (or coverage) for 1 
                plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan (or coverage), the applicable percentage described 
                in this paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year to which this paragraph applies; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan (or 
                coverage) for purposes of this subsection shall be made 
                by a qualified and licensed actuary who is a member in 
                good standing of the American Academy of Actuaries. 
                Such determinations shall be certified by the actuary 
                and be made available to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan (or a health insurance issuer offering coverage in 
                connection with such a plan) seeks an exemption under 
                this paragraph, determinations under subparagraph (A) 
                shall be made after such plan (or coverage) has 
                complied with this section for the first 6 months of 
                the plan year involved.
                    ``(E) Notification.--A group health plan under this 
                part shall comply with the notice requirement under 
                section 712(c)(2)(E) of the Employee Retirement Income 
                Security Act of 1974 with respect to a modification of 
                mental health and substance-related disorder benefits 
                as permitted under this paragraph as if such section 
                applied to such plan.''.
    (f) Change in Exclusion for Smallest Employers.--Subsection 
(c)(1)(B) of such section is amended--
            (1) by inserting ``(or 1 in the case of an employer 
        residing in a State that permits small groups to include a 
        single individual)'' after ``at least 2'' the first place it 
        appears; and
            (2) by striking ``and who employs at least 2 employees on 
        the first day of the plan year''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking out subsection (f).
    (h) Clarification Regarding Preemption.--Such section is further 
amended by inserting after subsection (e) the following new subsection:
    ``(f) Preemption, Relation to State Laws.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that provides greater 
        consumer protections, benefits, methods of access to benefits, 
        rights or remedies that are greater than the protections, 
        benefits, methods of access to benefits, rights or remedies 
        provided under this section.
            ``(2) Construction.--Nothing in this section shall be 
        construed to affect or modify the provisions of section 2723 
        with respect to group health plans.''.
    (i) Conforming Amendment to Heading.--The heading of such section 
is amended to read as follows:

``SEC. 2705. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER 
              BENEFITS.''.

    (j) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply 
        with respect to plan years beginning on or after January 1, 
        2008.
            (2) Elimination of sunset.--The amendment made by 
        subsection (g) shall apply to benefits for services furnished 
        after December 31, 2007.
            (3) Special rule for collective bargaining agreements.--In 
        the case of a group health plan maintained pursuant to one or 
        more collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by this 
        section shall not apply to plan years beginning before the 
        later of--
                    (A) the date on which the last of the collective 
                bargaining agreements relating to the plan terminates 
                (determined without regard to any extension thereof 
                agreed to after the date of the enactment of this Act), 
                or
                    (B) January 1, 2010.
        For purposes of subparagraph (A), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        imposed under an amendment under this section shall not be 
        treated as a termination of such collective bargaining 
        agreement.
    (k) Construction Regarding Use of Medical Management Tools.--
Nothing in this Act shall be construed to prohibit a group health plan 
or health insurance issuer from using medical management tools as long 
as such management tools are based on valid medical evidence and are 
relevant to the patient whose medical treatment is under review.

SEC. 4. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    (a) Extension of Parity to Treatment Limits and Beneficiary 
Financial Requirements.--Section 9812 of the Internal Revenue Code of 
1986 is amended--
            (1) in subsection (a), by adding at the end the following 
        new paragraphs:
            ``(3) Treatment limits.--
                    ``(A) No treatment limit.--If the plan does not 
                include a treatment limit (as defined in subparagraph 
                (D)) on substantially all medical and surgical benefits 
                in any category of items or services (specified in 
                subparagraph (C)), the plan may not impose any 
                treatment limit on mental health and substance-related 
                disorder benefits that are classified in the same 
                category of items or services.
                    ``(B) Treatment limit.--If the plan includes a 
                treatment limit on substantially all medical and 
                surgical benefits in any category of items or services, 
                the plan may not impose such a treatment limit on 
                mental health and substance-related disorder benefits 
                for items and services within such category that are 
                more restrictive than the predominant treatment limit 
                that is applicable to medical and surgical benefits for 
                items and services within such category.
                    ``(C) Categories of items and services for 
                application of treatment limits and beneficiary 
                financial requirements.--For purposes of this paragraph 
                and paragraph (4), there shall be the following four 
                categories of items and services for benefits, whether 
                medical and surgical benefits or mental health and 
                substance-related disorder benefits, and all medical 
                and surgical benefits and all mental health and 
                substance related benefits shall be classified into one 
                of the following categories:
                            ``(i) Inpatient, in-network.--Items and 
                        services furnished on an inpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(ii) Inpatient, out-of-network.--Items 
                        and services furnished on an inpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                            ``(iii) Outpatient, in-network.--Items and 
                        services furnished on an outpatient basis and 
                        within a network of providers established or 
                        recognized under such plan or coverage.
                            ``(iv) Outpatient, out-of-network.--Items 
                        and services furnished on an outpatient basis 
                        and outside any network of providers 
                        established or recognized under such plan or 
                        coverage.
                    ``(D) Treatment limit defined.--For purposes of 
                this paragraph, the term `treatment limit' means, with 
                respect to a plan, limitation on the frequency of 
                treatment, number of visits or days of coverage, or 
                other similar limit on the duration or scope of 
                treatment under the plan.
                    ``(E) Predominance.--For purposes of this 
                subsection, a treatment limit or financial requirement 
                with respect to a category of items and services is 
                considered to be predominant if it is the most common 
                or frequent of such type of limit or requirement with 
                respect to such category of items and services.
            ``(4) Beneficiary financial requirements.--
                    ``(A) No beneficiary financial requirement.--If the 
                plan does not include a beneficiary financial 
                requirement (as defined in subparagraph (C)) on 
                substantially all medical and surgical benefits within 
                a category of items and services (specified in 
                paragraph (3)(C)), the plan may not impose such a 
                beneficiary financial requirement on mental health and 
                substance-related disorder benefits for items and 
                services within such category.
                    ``(B) Beneficiary financial requirement.--
                            ``(i) Treatment of deductibles, out-of-
                        pocket limits, and similar financial 
                        requirements.--If the plan or coverage includes 
                        a deductible, a limitation on out-of-pocket 
                        expenses, or similar beneficiary financial 
                        requirement that does not apply separately to 
                        individual items and services on substantially 
                        all medical and surgical benefits within a 
                        category of items and services, the plan or 
                        coverage shall apply such requirement (or, if 
                        there is more than one such requirement for 
                        such category of items and services, the 
                        predominant requirement for such category) both 
                        to medical and surgical benefits within such 
                        category and to mental health and substance-
                        related disorder benefits within such category 
                        and shall not distinguish in the application of 
                        such requirement between such medical and 
                        surgical benefits and such mental health and 
                        substance-related disorder benefits.
                            ``(ii) Other financial requirements.--If 
                        the plan includes a beneficiary financial 
                        requirement not described in clause (i) on 
                        substantially all medical and surgical benefits 
                        within a category of items and services, the 
                        plan may not impose such financial requirement 
                        on mental health and substance-related disorder 
                        benefits for items and services within such 
                        category in a way that is more costly to the 
                        participant or beneficiary than the predominant 
                        beneficiary financial requirement applicable to 
                        medical and surgical benefits for items and 
                        services within such category.
                    ``(C) Beneficiary financial requirement defined.--
                For purposes of this paragraph, the term `beneficiary 
                financial requirement' includes, with respect to a 
                plan, any deductible, coinsurance, co-payment, other 
                cost sharing, and limitation on the total amount that 
                may be paid by a participant or beneficiary with 
                respect to benefits under the plan, but does not 
                include the application of any aggregate lifetime limit 
                or annual limit.''; and
            (2) in subsection (b)--
                    (A) by striking ``construed--'' and all that 
                follows through ``(1) as requiring'' and inserting 
                ``construed as requiring'';
                    (B) by striking ``; or'' and inserting a period; 
                and
                    (C) by striking paragraph (2).
    (b) Expansion to Substance-Related Disorder Benefits and Revision 
of Definition.--Such section is further amended--
            (1) by striking ``mental health benefits'' and inserting 
        ``mental health and substance-related disorder benefits'' each 
        place it appears; and
            (2) in paragraph (4) of subsection (e)--
                    (A) by striking ``Mental health benefits'' in the 
                heading and inserting ``Mental health and substance-
                related disorder benefits'';
                    (B) by striking ``benefits with respect to mental 
                health services'' and inserting ``benefits with respect 
                to services for mental health conditions or substance-
                related disorders''; and
                    (C) by striking ``, but does not include benefits 
                with respect to treatment of substances abuse or 
                chemical dependency''.
    (c) Availability of Plan Information About Criteria for Medical 
Necessity.--Subsection (a) of such section, as amended by subsection 
(a)(1), is further amended by adding at the end the following new 
paragraph:
            ``(5) Availability of plan information.--The criteria for 
        medical necessity determinations made under the plan with 
        respect to mental health and substance-related disorder 
        benefits shall be made available by the plan administrator to 
        any current or potential participant, beneficiary, or 
        contracting provider upon request. The reason for any denial 
        under the plan of reimbursement or payment for services with 
        respect to mental health and substance-related disorder 
        benefits in the case of any participant or beneficiary shall, 
        upon request, be made available by the plan administrator to 
        the participant or beneficiary.''.
    (d) Minimum Benefit Requirements.--Subsection (a) of such section 
is further amended by adding at the end the following new paragraph:
            ``(6) Minimum scope of coverage and equity in out-of-
        network benefits.--
                    ``(A) Minimum scope of mental health and substance-
                related disorder benefits.--In the case of a group 
                health plan (or health insurance coverage offered in 
                connection with such a plan) that provides any mental 
                health and substance-related disorder benefits, the 
                plan or coverage shall include benefits for any mental 
                health condition or substance-related disorder for 
                which benefits are provided under the benefit plan 
                option offered under chapter 89 of title 5, United 
                States Code, with the highest average enrollment as of 
                the beginning of the most recent year beginning on or 
                before the beginning of the plan year involved.
                    ``(B) Equity in coverage of out-of-network 
                benefits.--
                            ``(i) In general.--In the case of a plan 
                        that provides both medical and surgical 
                        benefits and mental health and substance-
                        related disorder benefits, if medical and 
                        surgical benefits are provided for 
                        substantially all items and services in a 
                        category specified in clause (ii) furnished 
                        outside any network of providers established or 
                        recognized under such plan or coverage, the 
                        mental health and substance-related disorder 
                        benefits shall also be provided for items and 
                        services in such category furnished outside any 
                        network of providers established or recognized 
                        under such plan in accordance with the 
                        requirements of this section.
                            ``(ii) Categories of items and services.--
                        For purposes of clause (i), there shall be the 
                        following three categories of items and 
                        services for benefits, whether medical and 
                        surgical benefits or mental health and 
                        substance-related disorder benefits, and all 
                        medical and surgical benefits and all mental 
                        health and substance-related disorder benefits 
                        shall be classified into one of the following 
                        categories:
                                    ``(I) Emergency.--Items and 
                                services, whether furnished on an 
                                inpatient or outpatient basis, required 
                                for the treatment of an emergency 
                                medical condition (including an 
                                emergency condition relating to mental 
                                health and substance-related 
                                disorders).
                                    ``(II) Inpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an inpatient basis.
                                    ``(III) Outpatient.--Items and 
                                services not described in subclause (I) 
                                furnished on an outpatient basis.''.
    (e) Revision of Increased Cost Exemption.--Paragraph (2) of 
subsection (c) of such section is amended to read as follows:
            ``(2) Increased cost exemption.--
                    ``(A) In general.--With respect to a group health 
                plan, if the application of this section to such plan 
                results in an increase for the plan year involved of 
                the actual total costs of coverage with respect to 
                medical and surgical benefits and mental health and 
                substance-related disorder benefits under the plan (as 
                determined and certified under subparagraph (C)) by an 
                amount that exceeds the applicable percentage described 
                in subparagraph (B) of the actual total plan costs, the 
                provisions of this section shall not apply to such plan 
                during the following plan year, and such exemption 
                shall apply to the plan for 1 plan year.
                    ``(B) Applicable percentage.--With respect to a 
                plan, the applicable percentage described in this 
                paragraph shall be--
                            ``(i) 2 percent in the case of the first 
                        plan year which begins after the date of the 
                        enactment of the Paul Wellstone Mental Health 
                        and Addiction Equity Act of 2007; and
                            ``(ii) 1 percent in the case of each 
                        subsequent plan year.
                    ``(C) Determinations by actuaries.--Determinations 
                as to increases in actual costs under a plan for 
                purposes of this subsection shall be made by a 
                qualified actuary who is a member in good standing of 
                the American Academy of Actuaries. Such determinations 
                shall be certified by the actuary and be made available 
                to the general public.
                    ``(D) 6-month determinations.--If a group health 
                plan seeks an exemption under this paragraph, 
                determinations under subparagraph (A) shall be made 
                after such plan has complied with this section for the 
                first 6 months of the plan year involved.''.
    (f) Change in Exclusion for Smallest Employers.--Subsection (c)(1) 
of such section is amended to read as follows:
            ``(1) Small employer exemption.--
                    ``(A) In general.--This section shall not apply to 
                any group health plan for any plan year of a small 
                employer.
                    ``(B) Small employer.--For purposes of subparagraph 
                (A), the term `small employer' means, with respect to a 
                calendar year and a plan year, an employer who employed 
                an average of at least 2 (or 1 in the case of an 
                employer residing in a State that permits small groups 
                to include a single individual) but not more than 50 
                employees on business days during the preceding 
                calendar year. For purposes of the preceding sentence, 
                all persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 shall 
                be treated as 1 employer and rules similar to rules of 
                subparagraphs (B) and (C) of section 4980D(d)(2) shall 
                apply.''.
    (g) Elimination of Sunset Provision.--Such section is amended by 
striking subsection (f).
    (h) Conforming Amendments to Heading.--
            (1) In general.--The heading of such section is amended to 
        read as follows:

``SEC. 9812. EQUITY IN MENTAL HEALTH AND SUBSTANCE-RELATED DISORDER 
              BENEFITS.''.

            (2) Clerical amendment.--The table of sections for 
        subchapter B of chapter 100 of the Internal Revenue Code of 
        1986 is amended by striking the item relating to section 9812 
        and inserting the following new item:

``Sec. 9812. Equity in mental health and substance-related disorder 
                            benefits.''.
    (i) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning on or after January 1, 2008.

SEC. 5. GOVERNMENT ACCOUNTABILITY OFFICE STUDIES AND REPORTS.

    (a) Implementation of Act.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study that evaluates the effect of the 
        implementation of the amendments made by this Act on--
                    (A) the cost of health insurance coverage;
                    (B) access to health insurance coverage (including 
                the availability of in-network providers);
                    (C) the quality of health care;
                    (D) Medicare, Medicaid, and State and local mental 
                health and substance abuse treatment spending;
                    (E) the number of individuals with private 
                insurance who received publicly funded health care for 
                mental health and substance-related disorders;
                    (F) spending on public services, such as the 
                criminal justice system, special education, and income 
                assistance programs;
                    (G) the use of medical management of mental health 
                and substance-related disorder benefits and medical 
                necessity determinations by group health plans (and 
                health insurance issuers offering health insurance 
                coverage in connection with such plans) and timely 
                access by participants and beneficiaries to clinically-
                indicated care for mental health and substance-use 
                disorders; and
                    (H) other matters as determined appropriate by the 
                Comptroller General.
            (2) Report.--Not later than 2 years after the date of 
        enactment of this Act, the Comptroller General shall prepare 
        and submit to the appropriate committees of the Congress a 
        report containing the results of the study conducted under 
        paragraph (1).
    (b) Biannual Report on Obstacles in Obtaining Coverage.--Every two 
years, the Comptroller General shall submit to each House of the 
Congress a report on obstacles that individuals face in obtaining 
mental health and substance-related disorder care under their health 
plans.
    (c) Uniform Patient Placement Criteria.--Not later than 18 months 
after the date of the enactment of this Act, the Comptroller General 
shall submit to each House of the Congress a report on availability of 
uniform patient placement criteria for mental health and substance-
related disorders that could be used by group health plans and health 
insurance issuers to guide determinations of medical necessity and the 
extent to which health plans utilize such criteria. If such criteria do 
not exist, the report shall include recommendations on a process for 
developing such criteria.
                                                 Union Calendar No. 328

110th CONGRESS

  2d Session

                               H. R. 1424

               [Report No. 110-374, Parts I, II, and III]

_______________________________________________________________________

                                 A BILL

To amend section 712 of the Employee Retirement Income Security Act of 
 1974, section 2705 of the Public Health Service Act, and section 9812 
of the Internal Revenue Code of 1986 to require equity in the provision 
 of mental health and substance-related disorder benefits under group 
                             health plans.

_______________________________________________________________________

                             March 4, 2008

 Reported from the Committee on Energy and Commerce with an amendment; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed
```