I

105TH CONGRESS

1ST SESSION H. R. 621

To provide for parity in the treatment of mental illness.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 5, 1997

Mr. STARK (for himself, Mr. MCDERMOTT, and Mr. FRANK of Massachusetts)

introduced the following bill; which was referred to the Committee on

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

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

consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide for parity in the treatment of mental illness.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘National Mental

5 Health Parity Act of 1997’’.
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1 TITLE I—PARITY FOR TREAT2 MENT OF MENTAL ILLNESS

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

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

5 1986, as amended by section 401 of the Health Care Port6 ability and Accountability Act of 1996 (Public Law 104–

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

8 ‘‘Subtitle L—Parity For Treatment

9 Of Mental Illness

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

11 ‘‘(a) IMPOSITION OF TAX.—

12 ‘‘(1) HEALTH INSURANCE COVERAGE.—

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

14 health insurance coverage offered by a health

15 insurance issuer that fails to meet the standard

16 under subsection (c) at any time during a cal17 endar year, there is hereby imposed a tax equal

18 to 25 percent of the premiums received under

19 such plan during the calendar year.

20 ‘‘(B) LIABILITY FOR TAX.—The tax im21 posed under subparagraph (A) shall be paid by

22 the health insurance issuer.

23 ‘‘(2) GROUP HEALTH PLAN.—

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

25 health plan that fails to meet the standard
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1 under subsection (c) at any time during a cal2 endar year, there is hereby imposed a tax equal

3 to 25 percent of the health coverage expendi4 tures for such calendar year under such plan.

5 ‘‘(B) LIABILITY FOR TAX.—The tax im6 posed under subparagraph (A) shall be paid by

7 the group health plan.

8 ‘‘(C) HEALTH COVERAGE EXPENDI9 TURES.—For purposes of this paragraph, the

10 health coverage expenditures of any group

11 health plan for any calendar year are the aggre12 gate expenditures for such year for health cov13 erage provided under such plan.

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

15 ‘‘(1) FAILURE NOT DISCOVERED EXERCISING

16 REASONABLE DILIGENCE.—No tax shall be imposed

17 under this section on any failure to meet the stand18 ard under subsection (c) for which it is established

19 to the satisfaction of the Secretary that none of the

20 persons liable for the tax knew, or exercising reason21 able diligence would have known, that such failure

22 existed.

23 ‘‘(2) CERTAIN FAILURES CORRECTED WITHIN

24 30 DAYS.—No tax shall be imposed under subsection
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1 (a) on any failure to meet the standard under sub2 section (c) if—

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

4 cause and not to willful neglect, and

5 ‘‘(B) such failure is corrected during the

6 30–day period beginning on the first date any

7 person liable for the tax knew, or exercising

8 reasonable diligence would have known, that

9 such failure existed.

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

11 failure to meet the standard under subsection (c)

12 that is due to reasonable cause and not to willful ne13 glect, the Secretary may waive part or all of the tax

14 imposed by this section to the extent that the pay15 ment of such tax would be excessive relative to the

16 failure involved.

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

18 MENTAL ILLNESS.—

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

20 with respect to health insurance coverage that it of21 fers or a group health plan may not impose limita22 tions or financial requirements on the coverage of

23 benefits provided with respect to mental illness if

24 similar limitations or requirements are not imposed
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1 on coverage for benefits with respect to other condi2 tions.

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

4 paragraph (1) shall be construed as prohibiting a

5 health insurance issuer with respect to health insur6 ance coverage that it offers or a group health plan

7 from requiring preadmission screening prior to the

8 authorization of services covered under the plan or

9 from applying other limitations that restrict cov10 erage for mental illness to those services that are

11 medically necessary.

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

13 ‘‘(1) MENTAL ILLNESS.—The term ‘mental ill14 ness’ means any of the specific psychiatric conditions

15 described in the American Psychiatric Association’s

16 ‘Diagnostic and Statistical Manual—Mental Dis17 orders.’

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

19 term ‘health insurance coverage’ has the meaning

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

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

22 ‘health insurance issuer’ has the meaning given such

23 term by section 9805(b)(2).
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1 ‘‘(4) GROUP HEALTH PLAN.—The term ‘group

2 health plan’ has the meaning given such term by

3 section 5000(b)(1).’’.

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

5 of such Code is amended by adding at the end the follow6 ing new item:

‘‘Subtitle L. Parity for treatment of mental illness.’’

7 SEC. 102. EFFECTIVE DATE.

8 The amendment made by section 101 applies—

9 (1) with respect to health insurance coverage,

10 to a contract, policy, or certificate initiated or re11 newed after December 31, 1998; and

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

13 years beginning after December 31, 1998.

14 TITLE II—MEDICARE MENTAL

15 HEALTH IMPROVEMENT

16 SEC. 201. REFERENCES IN TITLE.

17 Whenever in this title an amendment is expressed in

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

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

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

21 SEC. 202. INPATIENT PSYCHIATRIC HOSPITAL SERVICES.

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

23 U.S.C. 1395d(a)) is amended—

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

25 (3);
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1 (2) by striking the period at the end of para2 graph (4) and inserting ‘‘; and’’; and

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

4 paragraph:

5 ‘‘(5) inpatient hospital services furnished pri6 marily for the diagnosis or treatment of mental ill7 ness or substance abuse for up to 60 days during a

8 year.’’.

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

10 (42 U.S.C. 1395d(b)) is amended to read as follows:

11 ‘‘(3) inpatient hospital services furnished pri12 marily for the diagnosis or treatment of mental ill13 ness or substance abuse that are furnished to the in14 dividual during a year after such services have been

15 furnished to the individual for a total of 60 days

16 during the year.’’.

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

18 1812(a)(1) (42 U.S.C. 1395d(a)(1)) is amended by insert19 ing ‘‘(other than services described in paragraph (5))’’

20 after ‘‘inpatient hospital services’’ the first place it ap21 pears.

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

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

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

25 first place it appears.
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1 (3) Section 1812 (42 U.S.C. 1395d) is amended by

2 striking subsection (c).

3 (4) Section 1814(a) (42 U.S.C. 1395f(a)) is amend4 ed—

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

6 (A);

7 (B) in paragraph (3), by striking ‘‘(other than

8 inpatient psychiatric hospital services)’’; and

9 (C) by striking paragraph (4).

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

11 striking subsection (c).

12 (d) EFFECTIVE DATE; TRANSITION.—The amend13 ments made by this section shall take effect January 1,

14 1998, except that—

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

16 date has been furnished inpatient psychiatric hos17 pital services (as defined for purposes of title XVIII

18 of the Social Security Act as of the date of the en19 actment of this Act) for 190 consecutive days is not

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

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

22 (2) in the case of an individual who is not de23 scribed in paragraph (1) and is receiving inpatient

24 psychiatric hospital services (as defined for purposes

25 of title XVIII of the Social Security Act as of the
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1 date of the enactment of this Act) on December 31,

2 1997, for which payment may be made under section

3 1812 of such Act, the number of days of services for

4 which the individual is entitled under section

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

6 under section 1812(b)(3)) shall be equal to the

7 greater of 60 or the difference between 190 days

8 and the number of days of such inpatient psychiatric

9 hospital services furnished to the individual prior to

10 January 1, 1998.

11 SEC. 203. INTENSIVE RESIDENTIAL SERVICES.

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

13 (42 U.S.C. 1395d(a)), as amended by section 202(a), is

14 amended—

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

16 (4);

17 (2) by striking the period at the end of para18 graph (5) and inserting ‘‘; and’’; and

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

20 paragraph:

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

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

23 up to 120 days during any calendar year, except

24 that such services may be furnished to the individual

25 for additional days during the year if necessary for
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1 the individual to complete a course of treatment to

2 the extent that the number of days of inpatient hos3 pital services described in paragraph (5) that may be

4 furnished to the individual during the year (as re5 duced under such paragraph) is not less than 15.’’.

6 (b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.

7 1395x), as amended by section 146(a) of the Social Secu8 rity Act Amendments of 1994, is amended by adding at

9 the end the following new subsection:

10 ‘‘Intensive Residential Services

11 ‘‘(mm)(1) Subject to paragraph (2), the term ‘inten12 sive residential services’ means inpatient services provided

13 in any of the following facilities:

14 ‘‘(A) Residential detoxification centers.

15 ‘‘(B) Crisis residential programs or mental ill16 ness residential treatment programs.

17 ‘‘(C) Therapeutic family or group treatment

18 homes.

19 ‘‘(D) Residential centers for substance abuse

20 treatment.

21 ‘‘(2) No service may be treated as an intensive resi22 dential service under paragraph (1) unless the facility at

23 which the service is provided—
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1 ‘‘(A) is legally authorized to provide such serv2 ice under the law of the State (or under a State reg3 ulatory mechanism provided by State law) in which

4 the facility is located or is certified to provide such

5 service by an appropriate accreditation entity ap6 proved by the State in consultation with the Sec7 retary; and

8 ‘‘(B) meets such other requirements as the Sec9 retary may impose to assure the quality of the inten10 sive residential services provided.

11 ‘‘(3) No service may be treated as an intensive resi12 dential service under paragraph (1) unless the service is

13 furnished in accordance with standards established by the

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

15 (3) REDUCTION IN DAYS OF COVERAGE FOR IN16 PATIENT SERVICES.—Section 1812(a)(5) and section

17 1812(b)(3), as amended by section 202, are each

18 amended by striking the period at the end and in19 serting the following: ‘‘, reduced by a number of

20 days determined by the Secretary so that the actuar21 ial value of providing such number of days of serv22 ices under this paragraph to the individual is equal

23 to the actuarial value of the days of inpatient resi24 dential services furnished to the individual under

25 paragraph (6) during the year after such services
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1 have been furnished to the individual for 120 days

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

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

4 U.S.C. 1395f) is amended—

5 (A) in subsection (b) in the matter preced6 ing paragraph (1), by inserting ‘‘other than in7 tensive residential services,’’ after ‘‘hospice

8 care,’’; and

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

10 subsection:

11 ‘‘Payment for Intensive Residential Services

12 ‘‘(m) The amount of payment under this part for in13 tensive residential services under section 1812(a)(6) shall

14 be equal to—

15 ‘‘(1) the lesser of—

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

17 as determined under section 1861(v), or

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

19 such services,

20 less the amount a provider may charge as described

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

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

23 provider of services or by another provider which

24 demonstrates to the satisfaction of the Secretary
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1 that a significant portion of its patients are low-in2 come (and requests that payment be made under

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

4 the public, the amount determined in accordance

5 with subsection (b)(2); and

6 ‘‘(3) if (and for so long as) the conditions de7 scribed in subsection (b)(3) are met, the amounts

8 determined under the reimbursement system de9 scribed in such section.’’.

10 SEC. 204. LOWERING COINSURANCE FOR CERTAIN OUT11 PATIENT MENTAL HEALTH AND SUBSTANCE

12 ABUSE SERVICES.

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

14 1395l(c)) is amended by striking ‘‘mental, psychoneurotic,

15 and personality disorders’’ and all that follows through

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

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

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

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

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

21 (b) REQUIRING SERVICES TO BE FURNISHED IN AC22 CORDANCE WITH MANAGEMENT STANDARDS.—Section

23 1862(a) (42 U.S.C. 1395y(a)), as amended by section

24 156(a)(2)(D) of the Social Security Act Amendments of

25 1994, is amended—
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1 (1) by striking ‘‘or’’ at the end of paragraph

2 (14);

3 (2) by striking the period at the end of para4 graph (15) and inserting ‘‘; or’’; and

5 (3) by inserting after paragraph (15) the fol6 lowing new paragraph:

7 ‘‘(16) in the case of any items or services fur8 nished under part B for the treatment of mental ill9 ness or emotional disturbance (including substance

10 abuse), if the services are not furnished in accord11 ance with standards established by the Secretary for

12 the management of such services.’’.

13 SEC. 205. INTENSIVE COMMUNITY-BASED SERVICES.

14 (a) COVERAGE.—

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

16 U.S.C. 1395k(a)(2)(J)) is amended to read as fol17 lows:

18 ‘‘(J) intensive community-based services

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

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

21 during any calendar year, in the case of

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

23 that are furnished to an individual who is

24 a seriously mentally ill adult, a seriously

25 emotionally disturbed child, or an adult or
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1 child with serious substance abuse disorder

2 (as determined in accordance with criteria

3 established by the Secretary),

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

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

6 days during any calendar year, except that

7 such services may be furnished to the indi8 vidual for a number of additional days dur9 ing the year equal to the difference be10 tween the total number of days of intensive

11 residential services which the individual

12 may receive during the year under part A

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

14 and the number of days of such services

15 which the individual has received during

16 the year, or

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

18 services, for up to 90 days during any cal19 endar year, except that such services may

20 be furnished to the individual for the num21 ber of additional days during the year de22 scribed in clause (ii).’’.

23 (2) REDUCTION IN NUMBER OF DAYS OF IN24 TENSIVE RESIDENTIAL SERVICES.—Section
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1 1812(a)(6) (42 U.S.C. 1395d(a)(6)), as added by

2 section 203(a), is amended—

3 (A) by inserting ‘‘(A)’’ before ‘‘such serv4 ices’’; and

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

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

7 a number of days determined by the Secretary

8 so that the actuarial value of providing such

9 number of days of services under this para10 graph to the individual is equal to the actuarial

11 value of the days of intensive community-based

12 services furnished to the individual under sec13 tion 1832(a)(2)(J) during the year after such

14 services have been furnished to the individual

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

16 in section 1832(a)(2)(J)(ii), for 180 days) dur17 ing the year (rounded to the nearest day).’’.

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

19 U.S.C. 1395x(ff)(2)) is amended—

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

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

22 (2) in subparagraph (C)—

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

24 after ‘‘nurses’’, and
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1 (B) by adding at the end the following:

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

3 (3) by adding ‘‘and’’ at the end of subpara4 graph (G);

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

6 and inserting a period;

7 (5) by redesignating subparagraphs (A) through

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

9 subparagraphs 2 ems to the right;

10 (6) by inserting before clause (i) (as so redesig11 nated) the following:

12 ‘‘(A) Partial hospitalization services con13 sisting of—’’;

14 (7) by inserting after clause (viii) (as so redes15 ignated) the following new subparagraphs:

16 ‘‘(B) Psychiatric rehabilitation services.

17 ‘‘(C) Day treatment services for substance

18 abuse treatment for individuals of any age and for

19 other mental health services for individuals under 19

20 years of age.

21 ‘‘(D) In-home services.

22 ‘‘(E) Case management services, including col23 lateral services designated as such case management

24 services by the Secretary.

25 ‘‘(F) Ambulatory detoxification services.’’; and
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1 (8) in subparagraph (I)—

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

3 ‘‘Such’’, and

4 (B) by redesignating such subparagraph as

5 subparagraph (G).

6 (c) PERMITTING NON-PHYSICIAN PROVIDERS TO SU7 PERVISE INDIVIDUAL PROGRAM OF TREATMENT.—Sec8 tion 1861(ff)(1) (42 U.S.C. 1395x(ff)(1)) is amended by

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

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

11 in which the services are furnished, a non-physician men12 tal health or substance abuse treatment professional)’’.

13 (d) REQUIRING SERVICES TO MEET MANAGEMENT

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

15 1395x(ff)(1)) is amended by striking the period at the end

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

17 item or service that is not furnished in accordance with

18 standards established by the Secretary for the manage19 ment of such services.’’.

20 (e) PROGRAMS ELIGIBLE TO PROVIDE SERVICES.—

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

22 to read as follows:

23 ‘‘(3) A program described in this paragraph is a pro24 gram (whether facility-based or freestanding) which is fur25 nished by an entity—
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1 ‘‘(A) legally authorized to furnish such a pro2 gram under State law (or the State regulatory mech3 anism provided by State law) or certified to furnish

4 such a program by an appropriate accreditation en5 tity approved by the State in consultation with the

6 Secretary; and

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

8 Secretary may impose to assure the quality of the

9 intensive community-based services provided.’’.

10 (f) WAIVER OF COPAYMENT FOR CASE MANAGE11 MENT SERVICES FURNISHED TO CERTAIN INDIVID12 UALS.—Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)), as

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

14 Act Amendments of 1994, is amended—

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

16 and inserting ‘‘(E), or (F)’’;

17 (2) by striking ‘‘and’’ at the end of subpara18 graph (E);

19 (3) by adding ‘‘and’’ at the end of subpara20 graph (F); and

21 (4) by adding at the end the following new sub22 paragraph:

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

24 section 1832(a)(2)(J)(i), the amount deter25 mined under subparagraph (B), except that
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1 ‘100 percent’ shall be substituted for any ref2 erence in such subparagraph to ‘80 percent’;’’.

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

4 1835(a)(2)(F) (42 U.S.C. 1395n(a)(2)(F)) is amended—

5 (A) by striking ‘‘partial hospitalization’’ and in6 serting ‘‘intensive community-based’’; and

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

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

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

10 furnished, a non-physician mental health profes11 sional)’’.

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

13 1395x(s)(2)(B)) is amended by striking ‘‘partial hos14 pitalization’’ and inserting ‘‘intensive community-based’’.

15 (3) Section 1861(ff) (42 U.S.C. 1395x(ff)) is amend16 ed—

17 (A) in the heading, by striking ‘‘Partial Hos18 pitalization’’ and inserting ‘‘Intensive Community19 Based’’; and

20 (B) in paragraph (1), by striking ‘‘partial hos21 pitalization’’ and inserting ‘‘intensive community22 based’’.

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

24 amended by striking ‘‘partial hospitalization’’ and insert25 ing ‘‘intensive community-based’’.
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1 SEC. 206. EFFECTIVE DATE.

2 The amendments made by this title shall apply to

3 items and services furnished on or after January 1, 1999.

Æ