anonymous itemization of such notifica-
tions, 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 re-
ceived under clause (ii). 
‘‘(G) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as preventing a 
group health plan (or health insurance coverage 
offered in connection with such a plan) from 
complying with the provisions of this section 
notwithstanding that the plan or coverage is not 
required to comply with such provisions due to 
the application of subparagraph (A).’’. 
(f) CHANGE IN EXCLUSION FOR SMALLEST EMPLOY-
ERS.—Subsection (c)(1)(B) of such section is amended— 
(1) by inserting ‘‘(or 1 in the case of an em-
ployer 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 em-
ployees on the first day of the plan year’’. 
(g) ELIMINATION OF SUNSET PROVISION.—Such sec-
tion is amended by striking out subsection (f).
(h) CLARIFICATION
REGARDING
PREEMPTION.— 
Such section is further amended by inserting after sub-
section (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, meth-
ods 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 pro-
vided in this subsection, the amendments made by 
this section shall apply with respect to plan years be-
ginning on or after January 1, 2009.
(2) ELIMINATION
OF
SUNSET.—The amend-
ment made by subsection (g) shall apply to benefits 
for services furnished after December 31, 2007. 
(3) SPECIAL
RULE
FOR
COLLECTIVE
BAR-
GAINING
AGREEMENTS.—In the case of a group 
health plan maintained pursuant to one or more col-
lective bargaining agreements between employee rep-
resentatives and one or more employers ratified be-
fore 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 col-
lective 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, 2009. 
For purposes of subparagraph (A), any plan amend-
ment made pursuant to a collective bargaining 
agreement relating to the plan which amends the 
plan solely to conform to any requirement added by 
this section shall not be treated as a termination of 
such collective bargaining agreement.
SEC. 104. 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-re-
lated disorder benefits— 
‘‘(A) NO TREATMENT LIMIT.—If the plan 
does not include a treatment limit (as defined 
in subparagraph (D)) on substantially all med-
ical 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 dis-
order benefits that are classified in the same 
category of items or services. 
‘‘(B) TREATMENT LIMIT.—If the plan in-
cludes 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 sub-
stance-related disorder benefits for items and
services within such category that is more re-
strictive than the predominant treatment limit 
that is applicable to medical and surgical bene-
fits for items and services within such category. 
‘‘(C) CATEGORIES
OF
ITEMS
AND
SERV-
ICES FOR APPLICATION OF TREATMENT LIMITS 
AND
BENEFICIARY
FINANCIAL
REQUIRE-
MENTS.—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 cat-
egories: 
‘‘(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 rec-
ognized 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 estab-
lished 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-NET-
WORK.—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 condi-
tion (as defined in section 1867(e) of the 
Social Security Act, including an emer-
gency 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 cat-
egory of items and services. 
‘‘(4) 
BENEFICIARY
FINANCIAL
REQUIRE-
MENTS.—In the case of a group health plan that 
provides both medical and surgical benefits and 
mental health or substance-related disorder bene-
fits— 
‘‘(A) NO
BENEFICIARY
FINANCIAL
RE-
QUIREMENT.—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 fi-
nancial requirement on mental health or sub-
stance-related disorder benefits for items and 
services within such category.
‘‘(B) BENEFICIARY
FINANCIAL
REQUIRE-
MENT.— 
‘‘(i) TREATMENT
OF
DEDUCTIBLES, 
OUT-OF-POCKET LIMITS, AND SIMILAR FI-
NANCIAL REQUIREMENTS.—If the plan in-
cludes a deductible, a limitation on out-of- 
pocket expenses, or similar beneficiary fi-
nancial 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 require-
ment (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 sur-
gical benefits within such category and to 
mental health and substance-related dis-
order 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 bene-
fits.
‘‘(ii) OTHER
FINANCIAL
REQUIRE-
MENTS.—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 sur-
gical benefits for items and services within 
such category. 
‘‘(C) BENEFICIARY
FINANCIAL
REQUIRE-
MENT DEFINED.—For purposes of this para-
graph, the term ‘beneficiary financial require-
ment’ includes, with respect to a plan, any de-
ductible, 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 aggre-
gate lifetime limit or annual limit.’’, and
(2) in subsection (b)— 
(A) by striking ‘‘construed—’’ and all that 
follows through ‘‘(1) as requiring’’ and insert-
ing ‘‘construed as requiring’’, 
(B) by striking ‘‘; or’’ and inserting a pe-
riod, 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 amend-
ed 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 bene-
fits’’, 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 and in accordance with
applicable law, but does not include substance-re-
lated disorder benefits. 
‘‘(5) SUBSTANCE-RELATED
DISORDER
BENE-
FITS.—The term ‘substance-related disorder bene-
fits’ means benefits with respect to services for sub-
stance-related disorders, as defined under the terms 
of the plan and in accordance with applicable law.’’. 
(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 fol-
lowing 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 in accord-
ance with regulations 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 ben-
efits in the case of any participant or beneficiary 
shall, on request or as otherwise required, be made
available by the plan administrator to the partici-
pant or beneficiary in accordance with regulations.’’. 
(d) 
MINIMUM
BENEFIT
REQUIREMENTS.—Sub-
section (a) of section 9812 of such Code is further amend-
ed by adding at the end the following new paragraph: 
‘‘(6) MINIMUM SCOPE OF COVERAGE AND EQ-
UITY 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 sub-
stance-related disorder included in the most re-
cent 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 med-
ical and surgical benefits and mental 
health or substance-related disorder bene-
fits, 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 pro-
viders established or recognized under such 
plan, the mental health and substance-re-
lated disorder benefits shall also be pro-
vided for items and services in such cat-
egory furnished outside any network of 
providers established or recognized under 
such plan in accordance with the require-
ments 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 bene-
fits, and all medical and surgical benefits 
and all mental health and substance-re-
lated disorder benefits shall be classified 
into one of the following categories: 
‘‘(I) EMERGENCY.—Items and 
services, whether furnished on an in-
patient or outpatient basis, required 
for the treatment of an emergency 
medical condition (as defined in sec-
tion 1867(e) of the Social Security 
Act, including an emergency condition 
relating to mental health or sub-
stance-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 sec-
tion 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-re-
lated disorder benefits under the plan (as deter-
mined and certified under subparagraph (C)) by 
an amount that exceeds the applicable percent-
age described in subparagraph (B) of the actual 
total plan costs, the provisions of this section
shall not apply to such plan during the fol-
lowing plan year, and such exemption shall 
apply to the plan for 1 plan year. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan, the applicable percentage de-
scribed 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 in writing and prepared and cer-
tified by a qualified and licensed actuary who is 
a member in good standing of the American 
Academy of Actuaries. Such determinations 
shall be made available by the plan adminis-
trator to the general public. 
‘‘(D) 6-MONTH
DETERMINATIONS.—If a 
group health plan seeks an exemption under 
this paragraph, determinations under subpara-
graph (A) shall be made after such plan has
complied with this section for the first 6 
months of the plan year involved. 
‘‘(E) 
NOTIFICATION
OF
APPROPRIATE 
AGENCY.— 
‘‘(i) IN
GENERAL.—A group health 
plan that, based on a certification de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, 
shall notify the Secretary of the Treasury 
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 ac-
tual total costs of coverage with re-
spect to medical and surgical benefits
and mental health and substance-re-
lated 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 men-
tal health and substance-related dis-
order benefits under the plan. 
‘‘(iii) CONFIDENTIALITY.—A notifica-
tion under clause (i) shall be confidential. 
The Secretary of the Treasury 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 in-
cludes— 
‘‘(I) a breakdown of States by 
the size and any type of employers 
submitting such notification; and 
‘‘(II) a summary of the data re-
ceived under clause (ii). 
‘‘(F) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as preventing a 
group health plan from complying with the pro-
visions of this section notwithstanding that the 
plan is not required to comply with such provi-
sions due to the application of subparagraph 
(A).’’. 
(f) CHANGE IN EXCLUSION FOR SMALLEST EMPLOY-
ERS.—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 aver-
age of at least 2 (or 1 in the case of an em-
ployer residing in a State that permits small 
groups to include a single individual) but not 
more than 50 employees on business days dur-
ing 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 subpara-
graphs (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 sec-
tions 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 pro-
vided in this subsection, the amendments made by 
this section shall apply with respect to plan years be-
ginning on or after January 1, 2009. 
(2) ELIMINATION
OF
SUNSET.—The amend-
ment made by subsection (g) shall apply to benefits 
for services furnished after December 31, 2007. 
(3) SPECIAL
RULE
FOR
COLLECTIVE
BAR-
GAINING
AGREEMENTS.—In the case of a group 
health plan maintained pursuant to one or more col-
lective bargaining agreements between employee rep-
resentatives and one or more employers ratified be-
fore the date of the enactment of this Act, the 
amendments made by this section (other than sub-
section (g)) shall not apply to plan years beginning 
before the later of— 
(A) the date on which the last of the col-
lective 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, 2009. 
For purposes of subparagraph (A), any plan amend-
ment made pursuant to a collective bargaining 
agreement relating to the plan which amends the 
plan solely to conform to any requirement added by 
this section shall not be treated as a termination of 
such collective bargaining agreement. 
SEC. 105. MEDICAID DRUG REBATE. 
Paragraph (1)(B)(i) of section 1927(c) of the Social 
Security Act (42 U.S.C. 1396r–8(c)) is amended— 
(1) by striking ‘‘and’’ at the end of subclause 
(IV); 
(2) in subclause (V)—
(A) by inserting ‘‘and before January 1, 
2009, and after December 31, 2014,’’ after 
‘‘December 31, 1995,’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
clause: 
‘‘(VI) after December 31, 2008, 
and before January 1, 2015, is 20.1 
percent.’’. 
SEC. 106. LIMITATION ON MEDICARE EXCEPTION TO THE 
PROHIBITION ON CERTAIN PHYSICIAN RE-
FERRALS FOR HOSPITALS. 
(a) IN GENERAL.—Section 1877 of the Social Secu-
rity Act (42 U.S.C. 1395nn) is amended— 
(1) in subsection (d)(2)— 
(A) in subparagraph (A), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(C) in the case where the entity is a hos-
pital, the hospital meets the requirements of 
paragraph (3)(D).’’;
(2) in subsection (d)(3)— 
(A) in subparagraph (B), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (C), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(D) the hospital meets the requirements 
described in subsection (i)(1) not later than 18 
months after the date of the enactment of this 
subparagraph.’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(i) REQUIREMENTS FOR HOSPITALS TO QUALIFY 
FOR HOSPITAL EXCEPTION TO OWNERSHIP OR INVEST-
MENT PROHIBITION.— 
‘‘(1) REQUIREMENTS
DESCRIBED.—For pur-
poses of subsection (d)(3)(D), the requirements de-
scribed in this paragraph for a hospital are as fol-
lows: 
‘‘(A) PROVIDER
AGREEMENT.—The hos-
pital had— 
‘‘(i) physician ownership on the date 
of enactment of this subsection; and
‘‘(ii) a provider agreement under sec-
tion 1866 in effect on such date of enact-
ment. 
‘‘(B) LIMITATION ON EXPANSION OF FA-
CILITY CAPACITY.—Except as provided in para-
graph (3), the number of operating rooms and 
beds of the hospital at any time on or after the 
date of the enactment of this subsection are no 
greater than the number of operating rooms 
and beds as of such date. 
‘‘(C) PREVENTING CONFLICTS OF INTER-
EST.— 
‘‘(i) The hospital submits to the Sec-
retary an annual report containing a de-
tailed description of— 
‘‘(I) the identity of each physi-
cian owner and any other owners of 
the hospital; and 
‘‘(II) the nature and extent of all 
ownership interests in the hospital. 
‘‘(ii) The hospital has procedures in 
place to require that any referring physi-
cian owner discloses to the patient being 
referred, by a time that permits the pa-
tient to make a meaningful decision re-
garding the receipt of care, as determined 
by the Secretary— 
‘‘(I) the ownership interest of 
such referring physician in the hos-
pital; and 
‘‘(II) if applicable, any such own-
ership interest of the treating physi-
cian. 
‘‘(iii) The hospital does not condition 
any physician ownership interests either di-
rectly or indirectly on the physician owner 
making or influencing referrals to the hos-
pital or otherwise generating business for 
the hospital. 
‘‘(iv) The hospital discloses the fact 
that the hospital is partially owned by phy-
sicians— 
‘‘(I) on any public website for the 
hospital; and 
‘‘(II) in any public advertising 
for the hospital. 
‘‘(D) ENSURING
BONA
FIDE
INVEST-
MENT.— 
‘‘(i) Physician owners in the aggregate 
do not own more than 40 percent of the
total value of the investment interests held 
in the hospital or in an entity whose assets 
include the hospital. 
‘‘(ii) The investment interest of any 
individual physician owner does not exceed 
2 percent of the total value of the invest-
ment interests held in the hospital or in an 
entity whose assets include the hospital. 
‘‘(iii) Any ownership or investment in-
terests that the hospital offers to a physi-
cian owner are not offered on more favor-
able terms than the terms offered to a per-
son who is not a physician owner. 
‘‘(iv) The hospital (or any investors in 
the hospital) does not directly or indirectly 
provide loans or financing for any physi-
cian owner investments in the hospital. 
‘‘(v) The hospital (or any investors in 
the hospital) does not directly or indirectly 
guarantee a loan, make a payment toward 
a loan, or otherwise subsidize a loan, for 
any individual physician owner or group of 
physician owners that is related to acquir-
ing any ownership interest in the hospital.
‘‘(vi) Investment returns are distrib-
uted to each investor in the hospital in an 
amount that is directly proportional to the 
investment of capital by such investor in 
the hospital. 
‘‘(vii) Physician owners do not receive, 
directly or indirectly, any guaranteed re-
ceipt of or right to purchase other business 
interests related to the hospital, including 
the purchase or lease of any property 
under the control of other investors in the 
hospital or located near the premises of the 
hospital. 
‘‘(viii) The hospital does not offer a 
physician owner the opportunity to pur-
chase or lease any property under the con-
trol of the hospital or any other investor in 
the hospital on more favorable terms than 
the terms offered to an individual who is 
not a physician owner. 
‘‘(E) PATIENT SAFETY.— 
‘‘(i) Insofar as the hospital admits a 
patient and does not have any physician 
available on the premises to provide serv-
ices during all hours in which the hospital
is providing services to such patient, before 
admitting the patient— 
‘‘(I) the hospital discloses such 
fact to a patient; and 
‘‘(II) following such disclosure, 
the hospital receives from the patient 
a signed acknowledgment that the pa-
tient understands such fact. 
‘‘(ii) The hospital has the capacity 
to— 
‘‘(I) provide assessment and ini-
tial treatment for patients; and 
‘‘(II) refer and transfer patients 
to hospitals with the capability to 
treat the needs of the patient in-
volved. 
‘‘(2) 
PUBLICATION
OF
INFORMATION
RE-
PORTED.—The Secretary shall publish, and update 
on an annual basis, the information submitted by 
hospitals under paragraph (1)(C)(i) on the public 
Internet website of the Centers for Medicare & Med-
icaid Services. 
‘‘(3) EXCEPTION TO PROHIBITION ON EXPAN-
SION OF FACILITY CAPACITY.— 
‘‘(A) PROCESS.—
‘‘(i) ESTABLISHMENT.—The Secretary 
shall establish and implement a process 
under which an applicable hospital (as de-
fined in subparagraph (E)) may apply for 
an exception from the requirement under 
paragraph (1)(B). 
‘‘(ii) OPPORTUNITY FOR COMMUNITY 
INPUT.—The process under clause (i) shall 
provide individuals and entities in the com-
munity that the applicable hospital apply-
ing for an exception is located with the op-
portunity to provide input with respect to 
the application. 
‘‘(iii) 
TIMING
FOR
IMPLEMENTA-
TION.—The Secretary shall implement the 
process under clause (i) on the date that is 
18 months after the date of enactment of 
this subsection. 
‘‘(iv) REGULATIONS.—Not later than 
the date that is 18 months after the date 
of enactment of this subsection, the Sec-
retary shall promulgate regulations to 
carry out the process under clause (i). 
‘‘(B) FREQUENCY.—The process described 
in subparagraph (A) shall permit an applicable
hospital to apply for an exception up to once 
every 2 years. 
‘‘(C) PERMITTED INCREASE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii) and subparagraph (D), an applicable 
hospital granted an exception under the 
process described in subparagraph (A) may 
increase the number of operating rooms 
and beds of the applicable hospital above 
the baseline number of operating rooms 
and beds of the applicable hospital (or, if 
the applicable hospital has been granted a 
previous exception under this paragraph, 
above the number of operating rooms and 
beds of the hospital after the application of 
the most recent increase under such an ex-
ception) by an amount determined appro-
priate by the Secretary. 
‘‘(ii) LIFETIME 50 PERCENT INCREASE 
LIMITATION.—The Secretary shall not per-
mit an increase in the number of operating 
rooms and beds of an applicable hospital 
under clause (i) to the extent such increase 
would result in the number of operating 
rooms and beds of the applicable hospital
exceeding 150 percent of the baseline num-
ber of operating rooms and beds of the ap-
plicable hospital. 
‘‘(iii) BASELINE
NUMBER
OF
OPER-
ATING ROOMS AND BEDS.—In this para-
graph, the term ‘baseline number of oper-
ating rooms and beds’ means the number 
of operating rooms and beds of the appli-
cable hospital as of the date of enactment 
of this subsection. 
‘‘(D) INCREASE
LIMITED
TO
FACILITIES 
ON THE MAIN CAMPUS OF THE HOSPITAL.— 
Any increase in the number of operating rooms 
and beds of an applicable hospital pursuant to 
this paragraph may only occur in facilities on 
the main campus of the applicable hospital. 
‘‘(E) APPLICABLE
HOSPITAL.—In this 
paragraph, the term ‘applicable hospital’ means 
a hospital— 
‘‘(i) that is located in a county in 
which the percentage increase in the popu-
lation during the most recent 5-year period 
(as of the date of the application under 
subparagraph (A)) is at least 200 percent 
of the percentage increase in the popu-
lation growth of the United States during 
that period, as estimated by Bureau of the 
Census; 
‘‘(ii) whose annual percent of total in-
patient admissions and outpatient visits 
that represent inpatient admissions and 
outpatient visits under the program under 
title XIX is equal to or greater than the 
average percent with respect to such ad-
missions and visits for all hospitals located 
in the State; 
‘‘(iii) that does not discriminate 
against beneficiaries of Federal health care 
programs and does not permit physicians 
practicing at the hospital to discriminate 
against such beneficiaries; 
‘‘(iv) that is located in a State in 
which the average bed capacity in the 
State is less than the national average bed 
capacity; and 
‘‘(v) in the case of a hospital lo-
cated— 
‘‘(I) in a core-based statistical 
area, that is located in such an area 
in which the average bed occupancy
rate in such area is greater than 80 
percent; or 
‘‘(II) outside of a core-based sta-
tistical area, that is located in a State 
in which the average bed occupancy 
rate is greater than 80 percent. 
‘‘(F) 
PUBLICATION
OF
FINAL
DECI-
SIONS.—The Secretary shall publish final deci-
sions with respect to applications under this 
paragraph in the Federal Register. 
‘‘(G) LIMITATION
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise 
of the process under this paragraph (including 
the establishment of such process). 
‘‘(4) COLLECTION OF OWNERSHIP AND INVEST-
MENT INFORMATION.—For purposes of clauses (i) 
and (ii) of paragraph (1)(D), the Secretary shall col-
lect physician ownership and investment information 
for each hospital as it existed on the date of the en-
actment of this subsection. 
‘‘(5) PHYSICIAN OWNER DEFINED.—For pur-
poses of this subsection, the term ‘physician owner’ 
means a physician (or an immediate family member
of such physician) with a direct or an indirect own-
ership interest in the hospital.’’. 
(b) ENFORCEMENT.— 
(1) ENSURING COMPLIANCE.—The Secretary of 
Health and Human Services shall establish policies 
and procedures to ensure compliance with the re-
quirements described in subsection (i)(1) of section 
1877 of the Social Security Act, as added by sub-
section (a)(3), beginning on the date such require-
ments first apply. Such policies and procedures may 
include unannounced site reviews of hospitals. 
(2) AUDITS.—Beginning not later than 18 
months after the date of the enactment of this Act, 
the Secretary of Health and Human Services shall 
conduct audits to determine if hospitals violate the 
requirements referred to in paragraph (1). 
(c) 
ADJUSTMENT
TO
PAQI 
FUND.—Section 
1848(l)(2)(A)(i)(III) of the Social Security Act (42 U.S.C. 
1395w–4(l)(2)(A)(i)(III)), 
as 
amended 
by 
section 
101(a)(2) of the Medicare, Medicaid, and SCHIP Exten-
sion Act of 2007 (Public Law 110–173), is amended by 
striking 
‘‘$4,960,000,000’’ 
and 
inserting 
‘‘$5,120,000,000’’. 
SEC. 107. STUDIES AND REPORTS. 
(a) IMPLEMENTATION OF ACT.—
(1) GAO STUDY.—The Comptroller General of 
the United States shall conduct a study that evalu-
ates the effect of the implementation of the amend-
ments made by this division on— 
(A) the cost of health insurance coverage; 
(B) access to health insurance coverage 
(including the availability of in-network pro-
viders); 
(C) the quality of health care; 
(D) Medicare, Medicaid, and State and 
local mental health and substance abuse treat-
ment 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-in-
dicated care for mental health and substance- 
use disorders; and 
(H) other matters as determined appro-
priate by the Comptroller General. 
(2) REPORT.—Not later than 2 years after the 
date of enactment of this Act, the Comptroller Gen-
eral 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 PLACE-
MENT 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 men-
tal 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 ex-
tent to which health plans utilize such criteria. If such 
criteria do not exist, the report shall include recommenda-
tions on a process for developing such criteria. 
(c) DOL BIANNUAL REPORT ON ANY OBSTACLES IN 
OBTAINING COVERAGE.—Every 2 years, the Secretary of 
Labor, in consultation with the Secretaries of Health and 
Human Services and the Treasury, shall submit to the ap-
propriate committees of each House of the Congress a re-
port on obstacles, if any, that individuals face in obtaining 
mental health and substance-related disorder care under 
their health plans. 
DIVISION B—GENETIC INFORMA-
TION 
NONDISCRIMINATION 
ACT OF 2008 
SEC. 100. SHORT TITLE; FINDINGS. 
(a) SHORT TITLE.—This division may be cited as the 
‘‘Genetic Information Nondiscrimination Act of 2008’’. 
(b) FINDINGS.—Congress makes the following find-
ings: 
(1) Deciphering the sequence of the human ge-
nome and other advances in genetics open major 
new opportunities for medical progress. New knowl-
edge about the genetic basis of illness will allow for 
earlier detection of illnesses, often before symptoms 
have begun. Genetic testing can allow individuals to 
take steps to reduce the likelihood that they will con-
tract a particular disorder. New knowledge about ge-
netics may allow for the development of better thera-
pies that are more effective against disease or have 
fewer side effects than current treatments. These 
advances give rise to the potential misuse of genetic
information to discriminate in health insurance and 
employment. 
(2) The early science of genetics became the 
basis of State laws that provided for the sterilization 
of persons having presumed genetic ‘‘defects’’ such 
as mental retardation, mental disease, epilepsy, 
blindness, and hearing loss, among other conditions. 
The first sterilization law was enacted in the State 
of Indiana in 1907. By 1981, a majority of States 
adopted sterilization laws to ‘‘correct’’ apparent ge-
netic traits or tendencies. Many of these State laws 
have since been repealed, and many have been modi-
fied to include essential constitutional requirements 
of due process and equal protection. However, the 
current explosion in the science of genetics, and the 
history of sterilization laws by the States based on 
early genetic science, compels Congressional action 
in this area. 
(3) Although genes are facially neutral markers, 
many genetic conditions and disorders are associated 
with particular racial and ethnic groups and gender. 
Because some genetic traits are most prevalent in 
particular groups, members of a particular group 
may be stigmatized or discriminated against as a re-
sult of that genetic information. This form of dis-
crimination was evident in the 1970s, which saw the 
advent of programs to screen and identify carriers of 
sickle cell anemia, a disease which afflicts African- 
Americans. Once again, State legislatures began to 
enact discriminatory laws in the area, and in the 
early 1970s began mandating genetic screening of 
all African Americans for sickle cell anemia, leading 
to discrimination and unnecessary fear. To alleviate 
some of this stigma, Congress in 1972 passed the 
National Sickle Cell Anemia Control Act, which 
withholds Federal funding from States unless sickle 
cell testing is voluntary. 
(4) Congress has been informed of examples of 
genetic discrimination in the workplace. These in-
clude the use of pre-employment genetic screening at 
Lawrence Berkeley Laboratory, which led to a court 
decision in favor of the employees in that case Nor-
man-Bloodsaw v. Lawrence Berkeley Laboratory 
(135 F.3d 1260, 1269 (9th Cir. 1998)). Congress 
clearly has a compelling public interest in relieving 
the fear of discrimination and in prohibiting its ac-
tual practice in employment and health insurance. 
(5) Federal law addressing genetic discrimina-
tion in health insurance and employment is incom-
plete in both the scope and depth of its protections.
Moreover, while many States have enacted some type 
of genetic non-discrimination law, these laws vary 
widely with respect to their approach, application, 
and level of protection. Congress has collected sub-
stantial evidence that the American public and the 
medical community find the existing patchwork of 
State and Federal laws to be confusing and inad-
equate to protect them from discrimination. There-
fore Federal legislation establishing a national and 
uniform basic standard is necessary to fully protect 
the public from discrimination and allay their con-
cerns about the potential for discrimination, thereby 
allowing individuals to take advantage of genetic 
testing, technologies, research, and new therapies. 
TITLE 
I—GENETIC 
NON-
DISCRIMINATION IN HEALTH 
INSURANCE 
SEC. 101. AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974. 
(a) NO
DISCRIMINATION
IN
GROUP
PREMIUMS 
BASED ON GENETIC INFORMATION.—Section 702(b) of 
the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1182(b)) is amended—
(1) in paragraph (2)(A), by inserting before the 
semicolon the following: ‘‘except as provided in para-
graph (3)’’; and 
(2) by adding at the end the following: 
‘‘(3) NO
GROUP-BASED
DISCRIMINATION
ON 
BASIS OF GENETIC INFORMATION.—For purposes of 
this section, a group health plan, and a health insur-
ance issuer offering group health insurance coverage 
in connection with a group health plan, may not ad-
just premium or contribution amounts for the group 
covered under such plan on the basis of genetic in-
formation.’’. 
(b) LIMITATIONS ON GENETIC TESTING; PROHIBI-
TION ON COLLECTION OF GENETIC INFORMATION; APPLI-
CATION TO ALL PLANS.—Section 702 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1182) 
is amended by adding at the end the following: 
‘‘(c) GENETIC TESTING.— 
‘‘(1) LIMITATION ON REQUESTING OR REQUIR-
ING GENETIC TESTING.—A group health plan, and a 
health insurance issuer offering health insurance 
coverage in connection with a group health plan, 
shall not request or require an individual or a family 
member of such individual to undergo a genetic test.
‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1) 
shall not be construed to limit the authority of a 
health care professional who is providing health care 
services to an individual to request that such indi-
vidual undergo a genetic test. 
‘‘(3) RULE OF CONSTRUCTION REGARDING PAY-
MENT.— 
‘‘(A) IN GENERAL.—Nothing in paragraph 
(1) shall be construed to preclude a group 
health plan, or a health insurance issuer offer-
ing health insurance coverage in connection 
with a group health plan, from obtaining and 
using the results of a genetic test in making a 
determination regarding payment (as such term 
is defined for the purposes of applying the regu-
lations promulgated by the Secretary of Health 
and Human Services under part C of title XI 
of the Social Security Act and section 264 of 
the Health Insurance Portability and Account-
ability Act of 1996, as may be revised from 
time to time) consistent with subsection (a). 
‘‘(B) LIMITATION.—For purposes of sub-
paragraph (A), a group health plan, or a health 
insurance issuer offering health insurance cov-
erage in connection with a group health plan,
may request only the minimum amount of in-
formation necessary to accomplish the intended 
purpose. 
‘‘(4) RESEARCH EXCEPTION.—Notwithstanding 
paragraph (1), a group health plan, or a health in-
surance issuer offering health insurance coverage in 
connection with a group health plan, may request, 
but not require, that a participant or beneficiary un-
dergo a genetic test if each of the following condi-
tions is met: 
‘‘(A) The request is made, in writing, pur-
suant to research that complies with part 46 of 
title 45, Code of Federal Regulations, or equiv-
alent Federal regulations, and any applicable 
State or local law or regulations for the protec-
tion of human subjects in research. 
‘‘(B) The plan or issuer clearly indicates to 
each participant or beneficiary, or in the case of 
a minor child, to the legal guardian of such 
beneficiary, to whom the request is made that— 
‘‘(i) compliance with the request is 
voluntary; and 
‘‘(ii) non-compliance will have no ef-
fect on enrollment status or premium or 
contribution amounts.
‘‘(C) No genetic information collected or 
acquired under this paragraph shall be used for 
underwriting purposes. 
‘‘(D) The plan or issuer notifies the Sec-
retary in writing that the plan or issuer is con-
ducting activities pursuant to the exception pro-
vided for under this paragraph, including a de-
scription of the activities conducted. 
‘‘(E) The plan or issuer complies with such 
other conditions as the Secretary may by regu-
lation require for activities conducted under this 
paragraph. 
‘‘(d) PROHIBITION ON COLLECTION OF GENETIC IN-
FORMATION.— 
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering health insurance 
coverage in connection with a group health plan, 
shall not request, require, or purchase genetic infor-
mation for underwriting purposes (as defined in sec-
tion 733). 
‘‘(2) PROHIBITION
ON
COLLECTION
OF
GE-
NETIC
INFORMATION
PRIOR
TO
ENROLLMENT.—A 
group health plan, and a health insurance issuer of-
fering health insurance coverage in connection with 
a group health plan, shall not request, require, or
purchase genetic information with respect to any in-
dividual prior to such individual’s enrollment under 
the plan or coverage in connection with such enroll-
ment. 
‘‘(3) INCIDENTAL
COLLECTION.—If a group 
health plan, or a health insurance issuer offering 
health insurance coverage in connection with a group 
health plan, obtains genetic information incidental to 
the requesting, requiring, or purchasing of other in-
formation concerning any individual, such request, 
requirement, or purchase shall not be considered a 
violation of paragraph (2) if such request, require-
ment, or purchase is not in violation of paragraph 
(1). 
‘‘(e) APPLICATION TO ALL PLANS.—The provisions 
of subsections (a)(1)(F), (b)(3), (c), and (d), and sub-
section (b)(1) and section 701 with respect to genetic in-
formation, shall apply to group health plans and health 
insurance issuers without regard to section 732(a).’’. 
(c) APPLICATION TO GENETIC INFORMATION OF A 
FETUS OR EMBRYO.—Such section is further amended by 
adding at the end the following: 
‘‘(f) GENETIC INFORMATION OF A FETUS OR EM-
BRYO.—Any reference in this part to genetic information
concerning an individual or family member of an indi-
vidual shall— 
‘‘(1) with respect to such an individual or fam-
ily member of an individual who is a pregnant 
woman, include genetic information of any fetus car-
ried by such pregnant woman; and 
‘‘(2) with respect to an individual or family 
member utilizing an assisted reproductive tech-
nology, include genetic information of any embryo le-
gally held by the individual or family member.’’. 
(d) DEFINITIONS.—Section 733(d) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1191b(d)) is amended by adding at the end the following: 
‘‘(5) FAMILY
MEMBER.—The term ‘family 
member’ means, with respect to an individual— 
‘‘(A) a dependent (as such term is used for 
purposes of section 701(f)(2)) of such indi-
vidual, and 
‘‘(B) any other individual who is a first-de-
gree, second-degree, third-degree, or fourth-de-
gree relative of such individual or of an indi-
vidual described in subparagraph (A). 
‘‘(6) GENETIC INFORMATION.—
‘‘(A) IN GENERAL.—The term ‘genetic in-
formation’ means, with respect to any indi-
vidual, information about— 
‘‘(i) such individual’s genetic tests, 
‘‘(ii) the genetic tests of family mem-
bers of such individual, and 
‘‘(iii) subject to subparagraph (D), 
the manifestation of a disease or disorder 
in family members of such individual. 
‘‘(B) INCLUSION OF GENETIC SERVICES.— 
Such term includes, with respect to any indi-
vidual, any request for, or receipt of, genetic 
services (including genetic services received pur-
suant to participation in clinical research) by 
such individual or any family member of such 
individual. 
‘‘(C) EXCLUSIONS.—The term ‘genetic in-
formation’ shall not include information about 
the sex or age of any individual. 
‘‘(D) APPLICATION TO FAMILY MEMBERS 
COVERED UNDER SAME PLAN.—Information de-
scribed in clause (iii) of subparagraph (A) shall 
not be treated as genetic information to the ex-
tent that such information is taken into account 
only with respect to the individual in which
such disease or disorder is manifested and not 
as genetic information with respect to any other 
individual. 
‘‘(7) GENETIC TEST.— 
‘‘(A) IN
GENERAL.—The term ‘genetic 
test’ means an analysis of human DNA, RNA, 
chromosomes, proteins, or metabolites, that de-
tects genotypes, mutations, or chromosomal 
changes. 
‘‘(B) EXCEPTIONS.—The term ‘genetic 
test’ does not mean— 
‘‘(i) an analysis of proteins or metabo-
lites that does not detect genotypes, 
mutations, or chromosomal changes; or 
‘‘(ii) an analysis of proteins or me-
tabolites that is directly related to a mani-
fested disease, disorder, or pathological 
condition that could reasonably be detected 
by a health care professional with appro-
priate training and expertise in the field of 
medicine involved. 
‘‘(8) GENETIC
SERVICES.—The term ‘genetic 
services’ means— 
‘‘(A) a genetic test;
‘‘(B) genetic counseling (including obtain-
ing, interpreting, or assessing genetic informa-
tion); or 
‘‘(C) genetic education. 
‘‘(9) UNDERWRITING
PURPOSES.—The term 
‘underwriting purposes’ means, with respect to any 
group health plan, or health insurance coverage of-
fered in connection with a group health plan— 
‘‘(A) rules for, or determination of, eligi-
bility (including enrollment and continued eligi-
bility) for benefits under the plan or coverage; 
‘‘(B) the computation of premium or con-
tribution amounts under the plan or coverage; 
‘‘(C) the application of any pre-existing 
condition exclusion under the plan or coverage; 
and 
‘‘(D) other activities related to the cre-
ation, renewal, or replacement of a contract of 
health insurance or health benefits.’’. 
(e) ERISA ENFORCEMENT.—Section 502 of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1132) is amended— 
(1) in subsection (a)(6), by striking ‘‘(7), or 
(8)’’ and inserting ‘‘(7), (8), or (9)’’; and
(2) in subsection (c), by redesignating para-
graph (9) as paragraph (10), and by inserting after 
paragraph (8) the following new paragraph: 
‘‘(9) SECRETARIAL ENFORCEMENT AUTHORITY 
RELATING TO USE OF GENETIC INFORMATION.— 
‘‘(A) GENERAL RULE.—The Secretary may 
impose a penalty against any plan sponsor of a 
group health plan, or any health insurance 
issuer offering health insurance coverage in 
connection with the plan, for any failure by 
such sponsor or issuer to meet the requirements 
of subsection (a)(1)(F), (b)(3), (c), or (d) of 
section 702 or section 701 or 702(b)(1) with re-
spect to genetic information, in connection with 
the plan. 
‘‘(B) AMOUNT.— 
‘‘(i) IN
GENERAL.—The amount of 
the penalty imposed by subparagraph (A) 
shall be $100 for each day in the non-
compliance period with respect to each par-
ticipant or beneficiary to whom such fail-
ure relates. 
‘‘(ii) NONCOMPLIANCE PERIOD.—For 
purposes of this paragraph, the term ‘non-
compliance period’ means, with respect to 
any failure, the period— 
‘‘(I) beginning on the date such 
failure first occurs; and 
‘‘(II) ending on the date the fail-
ure is corrected. 
‘‘(C) MINIMUM PENALTIES WHERE FAIL-
URE DISCOVERED.—Notwithstanding clauses (i) 
and (ii) of subparagraph (D): 
‘‘(i) IN GENERAL.—In the case of 1 or 
more failures with respect to a participant 
or beneficiary— 
‘‘(I) which are not corrected be-
fore the date on which the plan re-
ceives a notice from the Secretary of 
such violation; and 
‘‘(II) which occurred or continued 
during the period involved; 
the amount of penalty imposed by subpara-
graph (A) by reason of such failures with 
respect to such participant or beneficiary 
shall not be less than $2,500. 
‘‘(ii) 
HIGHER
MINIMUM
PENALTY 
WHERE VIOLATIONS ARE MORE THAN DE 
MINIMIS.—To the extent violations for
which any person is liable under this para-
graph for any year are more than de mini-
mis, clause (i) shall be applied by sub-
stituting ‘$15,000’ for ‘$2,500’ with re-
spect to such person. 
‘‘(D) LIMITATIONS.— 
‘‘(i) PENALTY NOT TO APPLY WHERE 
FAILURE
NOT
DISCOVERED
EXERCISING 
REASONABLE
DILIGENCE.—No 
penalty 
shall be imposed by subparagraph (A) on 
any failure during any period for which it 
is established to the satisfaction of the 
Secretary that the person otherwise liable 
for such penalty did not know, and exer-
cising reasonable diligence would not have 
known, that such failure existed. 
‘‘(ii) PENALTY
NOT
TO
APPLY
TO 
FAILURES
CORRECTED
WITHIN
CERTAIN 
PERIODS.—No penalty shall be imposed by 
subparagraph (A) on any failure if— 
‘‘(I) such failure was due to rea-
sonable cause and not to willful ne-
glect; and 
‘‘(II) such failure is corrected 
during the 30-day period beginning on
the first date the person otherwise lia-
ble for such penalty knew, or exer-
cising reasonable diligence would have 
known, that such failure existed. 
‘‘(iii) OVERALL LIMITATION FOR UN-
INTENTIONAL FAILURES.—In the case of 
failures which are due to reasonable cause 
and not to willful neglect, the penalty im-
posed by subparagraph (A) for failures 
shall not exceed the amount equal to the 
lesser of— 
‘‘(I) 10 percent of the aggregate 
amount paid or incurred by the plan 
sponsor (or predecessor plan sponsor) 
during the preceding taxable year for 
group health plans; or 
‘‘(II) $500,000. 
‘‘(E) WAIVER BY SECRETARY.—In the case 
of a failure which is due to reasonable cause 
and not to willful neglect, the Secretary may 
waive part or all of the penalty imposed by sub-
paragraph (A) to the extent that the payment 
of such penalty would be excessive relative to 
the failure involved.
‘‘(F) DEFINITIONS.—Terms used in this 
paragraph which are defined in section 733 
shall have the meanings provided such terms in 
such section.’’. 
(f) REGULATIONS AND EFFECTIVE DATE.— 
(1) REGULATIONS.—The Secretary of Labor 
shall issue final regulations not later than 1 year 
after the date of enactment of this Act to carry out 
the amendments made by this section. 
(2) EFFECTIVE DATE.—The amendments made 
by this section shall apply with respect to group 
health plans for plan years beginning after the date 
that is 18 months after the date of enactment of 
this Act. 
SEC. 102. AMENDMENTS TO THE PUBLIC HEALTH SERVICE 
ACT. 
(a) AMENDMENTS RELATING TO THE GROUP MAR-
KET.— 
(1) NO DISCRIMINATION IN GROUP PREMIUMS 
BASED
ON
GENETIC
INFORMATION.—Section 
2702(b) of the Public Health Service Act (42 U.S.C. 
300gg–1(b)) is amended— 
(A) in paragraph (2)(A), by inserting be-
fore the semicolon the following: ‘‘except as pro-
vided in paragraph (3)’’; and
(B) by adding at the end the following: 
‘‘(3) NO
GROUP-BASED
DISCRIMINATION
ON 
BASIS OF GENETIC INFORMATION.—For purposes of 
this section, a group health plan, and health insur-
ance issuer offering group health insurance coverage 
in connection with a group health plan, may not ad-
just premium or contribution amounts for the group 
covered under such plan on the basis of genetic in-
formation.’’. 
(2) LIMITATIONS ON GENETIC TESTING; PROHI-
BITION ON COLLECTION OF GENETIC INFORMATION; 
APPLICATION TO ALL PLANS.—Section 2702 of the 
Public Health Service Act (42 U.S.C. 300gg–1) is 
amended by adding at the end the following: 
‘‘(c) GENETIC TESTING.— 
‘‘(1) LIMITATION ON REQUESTING OR REQUIR-
ING GENETIC TESTING.—A group health plan, and a 
health insurance issuer offering health insurance 
coverage in connection with a group health plan, 
shall not request or require an individual or a family 
member of such individual to undergo a genetic test. 
‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1) 
shall not be construed to limit the authority of a 
health care professional who is providing health care
services to an individual to request that such indi-
vidual undergo a genetic test. 
‘‘(3) RULE OF CONSTRUCTION REGARDING PAY-
MENT.— 
‘‘(A) IN GENERAL.—Nothing in paragraph 
(1) shall be construed to preclude a group 
health plan, or a health insurance issuer offer-
ing health insurance coverage in connection 
with a group health plan, from obtaining and 
using the results of a genetic test in making a 
determination regarding payment (as such term 
is defined for the purposes of applying the regu-
lations promulgated by the Secretary under 
part C of title XI of the Social Security Act and 
section 264 of the Health Insurance Portability 
and Accountability Act of 1996, as may be re-
vised from time to time) consistent with sub-
section (a). 
‘‘(B) LIMITATION.—For purposes of sub-
paragraph (A), a group health plan, or a health 
insurance issuer offering health insurance cov-
erage in connection with a group health plan, 
may request only the minimum amount of in-
formation necessary to accomplish the intended 
purpose.