I
105TH CONGRESS
1ST SESSION
H. R. 2409
To amend the Public Health Service Act, Employee Retirement Income Secu-
rity Act of 1974, and the Internal Revenue Code of 1986 to provide
for nondiscriminatory coverage for substance abuse treatment services
under private group and individual health coverage.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 4, 1997
Mr. RAMSTAD introduced the following bill; which was referred to the Commit-
tee on Commerce, and in addition to the Committees on Education and
the Workforce, and Ways and Means, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Public Health Service Act, Employee Retire-
ment Income Security Act of 1974, and the Internal
Revenue Code of 1986 to provide for nondiscriminatory
coverage for substance abuse treatment services under
private group and individual health coverage.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Substance Abuse
Treatment Parity Act of 1997’’.
SEC. 2. PARITY IN SUBSTANCE ABUSE TREATMENT BENE-
FITS.
(a) GROUP HEALTH PLANS.—
(1) PUBLIC
HEALTH
SERVICE
ACT
AMEND-
MENTS.—(A) Subpart 2 of part A of title XXVII of
the Public Health Service Act (as added by section
604(a) of the Newborns’ and Mothers’ Health Pro-
tection Act of 1996 and amended by section 703(a)
of the Mental Health Parity Act of 1996) is amend-
ed by adding at the end the following new section:
‘‘SEC. 2706. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE TREATMENT
BENEFITS.
‘‘(a) 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 substance abuse treatment benefits, the plan
or coverage shall not impose treatment limitations or fi-
nancial requirements on the substance abuse treatment
benefits unless similar limitations or requirements are im-
posed for medical and surgical benefits.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any substance abuse treatment ben-
efits; or
‘‘(2) to prevent a group health plan or a health
insurance issuer offering group health insurance cov-
erage from negotiating the level and type of reim-
bursement with a provider for care provided in ac-
cordance with this section.
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan (and group
health insurance coverage offered in connection
with a group health plan) for any plan year of
a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 of the Internal Rev-
enue Code of 1986 shall apply for purposes
of treating persons as a single employer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion shall not apply with respect to a group health
plan (or health insurance coverage offered in connec-
tion with a group health plan) if the application of
this section to such plan (or to such coverage) re-
sults in an increase in the cost under the plan (or
for such coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—In the case of a group health plan that offers
a participant or beneficiary two or more benefit package
options under the plan, the requirements of this section
shall be applied separately with respect to each such op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any day or visit limits imposed on coverage of
benefits under the plan or coverage during a period
of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any deductible, coinsurance, or cost-sharing
or an annual or lifetime dollar limit imposed with re-
spect to the benefits under the plan or coverage.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan or coverage (as the
case may be), but does not include substance abuse
treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) NOTICE.—A group health plan under this part
shall comply with the notice requirement under section
713(f) of the Employee Retirement Income Security Act
of 1974 with respect to the requirements of this section
as if such section applied to such plan.
‘‘(g) SUNSET.—This section shall not apply to bene-
fits for services furnished on or after September 30,
2002.’’.
(B) Section 2723(c) of such Act (42 U.S.C.
300gg–23(c)), as amended by section 604(b)(2) of
Public Law 104–204, is amended by striking ‘‘sec-
tion 2704’’ and inserting ‘‘sections 2704 and 2706’’.
(2) ERISA AMENDMENTS.—(A) Subpart B of
part 7 of subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 (as added by
section 603(a) of the Newborns’ and Mothers’
Health Protection Act of 1996 and amended by sec-
tion 702(a) of the Mental Health Parity Act of
1996) is amended by adding at the end the following
new section:
‘‘SEC. 713. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE TREATMENT
BENEFITS.
‘‘(a) 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 substance abuse treatment benefits, the plan
or coverage shall not impose treatment limitations or fi-
nancial requirements on the substance abuse treatment
benefits unless similar limitations or requirements are im-
posed for medical and surgical benefits.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any substance abuse treatment ben-
efits; or
‘‘(2) to prevent a group health plan or a health
insurance issuer offering group health insurance cov-
erage from negotiating the level and type of reim-
bursement with a provider for care provided in ac-
cordance with this section.
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan (and group
health insurance coverage offered in connection
with a group health plan) for any plan year of
a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 of the Internal Rev-
enue Code of 1986 shall apply for purposes
of treating persons as a single employer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion shall not apply with respect to a group health
plan (or health insurance coverage offered in connec-
tion with a group health plan) if the application of
this section to such plan (or to such coverage) re-
sults in an increase in the cost under the plan (or
for such coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—In the case of a group health plan that offers
a participant or beneficiary two or more benefit package
options under the plan, the requirements of this section
shall be applied separately with respect to each such op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any day or visit limits imposed on coverage of
benefits under the plan or coverage during a period
of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any deductible, coinsurance, or cost-sharing
or an annual or lifetime dollar limit imposed with re-
spect to the benefits under the plan or coverage.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan or coverage (as the
case may be), but does not include substance abuse
treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) NOTICE UNDER GROUP HEALTH PLAN.—The
imposition of the requirements of this section shall be
treated as a material modification in the terms of the plan
described in section 102(a)(1), for purposes of assuring
notice of such requirements under the plan; except that
the summary description required to be provided under the
last sentence of section 104(b)(1) with respect to such
modification shall be provided by not later than 60 days
after the first day of the first plan year in which such
requirements apply.
‘‘(g) SUNSET.—This section shall not apply to bene-
fits for services furnished on or after September 30,
2002.’’.
(B) Section 731(c) of such Act (29 U.S.C.
1191(c)), as amended by section 603(b)(1) of Public
Law 104–204, is amended by striking ‘‘section 711’’
and inserting ‘‘sections 711 and 713’’.
(C) Section 732(a) of such Act (29 U.S.C.
1191a(a)), as amended by section 603(b)(2) of Pub-
lic Law 104–204, is amended by striking ‘‘section
711’’ and inserting ‘‘sections 711 and 713’’.
(D) The table of contents in section 1 of such
Act is amended by inserting after the item relating
to section 712 the following new item:
‘‘Sec. 713. Parity in the application of treatment limitations and financial re-
quirements to substance abuse treatment benefits.’’.
(3) 
INTERNAL
REVENUE
CODE
AMEND-
MENTS.—(A) Subtitle K of the Internal Revenue
Code of 1986 (as added by section 401(a) of the
Health Insurance Portability and Accountability Act
of 1996) is amended—
(i) by striking all that precedes section
9801 and inserting the following:
‘‘Subtitle K—Group Health Plan
Requirements
‘‘CHAPTER 100. Group health plan requirements.
‘‘CHAPTER 100—GROUP HEALTH PLAN
REQUIREMENTS
‘‘Subchapter A. Requirements relating to portability, access, and
renewability.
‘‘Subchapter B. Other requirements.
‘‘Subchapter C. General provisions.
‘‘Subchapter A—Requirements Relating to
Portability, Access, and Renewability
‘‘Sec. 9801. Increased portability through limitation on preexist-
ing condition exclusions.
‘‘Sec. 9802. Prohibiting discrimination against individual partici-
pants and beneficiaries based on health status.
‘‘Sec. 9803. Guaranteed renewability in multiemployer plans and
certain multiple employer welfare arrangements.’’,
(ii) by redesignating sections 9804, 9805,
and 9806 as sections 9831, 9832, and 9833, re-
spectively,
(iii) by inserting before section 9831 (as so
redesignated) the following:
‘‘Subchapter C—General Provisions
‘‘Sec. 9831. General exceptions.
‘‘Sec. 9832. Definitions.
‘‘Sec. 9833. Regulations.’’, and
(iv) by inserting after section 9803 the fol-
lowing:
‘‘Subchapter B—Other Requirements
‘‘Sec. 9811. Parity in the application of treatment limitations
and financial requirements to substance abuse
treatment benefits.
‘‘SEC. 9811. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE TREATMENT
BENEFITS.
‘‘(a) 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 substance abuse treatment benefits, the plan
or coverage shall not impose treatment limitations or fi-
nancial requirements on the substance abuse treatment
benefits unless similar limitations or requirements are im-
posed for medical and surgical benefits.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any substance abuse treatment ben-
efits; or
‘‘(2) to prevent a group health plan or a health
insurance issuer offering group health insurance cov-
erage from negotiating the level and type of reim-
bursement with a provider for care provided in ac-
cordance with this section.
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan (and group
health insurance coverage offered in connection
with a group health plan) for any plan year of
a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 of the Internal Rev-
enue Code of 1986 shall apply for purposes
of treating persons as a single employer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion shall not apply with respect to a group health
plan (or health insurance coverage offered in connec-
tion with a group health plan) if the application of
this section to such plan (or to such coverage) re-
sults in an increase in the cost under the plan (or
for such coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—In the case of a group health plan that offers
a participant or beneficiary two or more benefit package
options under the plan, the requirements of this section
shall be applied separately with respect to each such op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any day or visit limits imposed on coverage of
benefits under the plan or coverage during a period
of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any deductible, coinsurance, or cost-sharing
or an annual or lifetime dollar limit imposed with re-
spect to the benefits under the plan or coverage.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan or coverage (as the
case may be), but does not include substance abuse
treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) SUNSET.—This section shall not apply to bene-
fits for services furnished on or after September 30,
2002.’’.
(B) CONFORMING AMENDMENTS.—
(i) Chapter 100 of such Code (as added by
section 401 of the Health Insurance Portability
and Accountability Act of 1996 and as pre-
viously amended by this section) is further
amended—
(I) in the last sentence of section
9801(c)(1), by striking ‘‘section 9805(c)’’
and inserting ‘‘section 9832(c)’’;
(II) in section 9831(b), by striking
‘‘9805(c)(1)’’ and inserting ‘‘9832(c)(1)’’;
(III) in section 9831(c)(1), by striking
‘‘9805(c)(2)’’ and inserting ‘‘9832(c)(2)’’;
(IV) in section 9831(c)(2), by striking
‘‘9805(c)(3)’’ and inserting ‘‘9832(c)(3)’’;
and
(V) in section 9831(c)(3), by striking
‘‘9805(c)(4)’’ and inserting ‘‘9832(c)(4)’’.
(ii) Section 4980D of such Code (as added
by section 402 of the Health Insurance Port-
ability and Accountability Act of 1996) is
amended—
(I) in subsection (c)(3)(B)(i)(I), by
striking 
‘‘9805(d)(3)’’ 
and 
inserting
‘‘9832(d)(3)’’;
(II) in subsection (d)(1), by inserting
‘‘(other than a failure attributable to sec-
tion 9811)’’ after ‘‘on any failure’’;
(III) in subsection (d)(3), by striking
‘‘9805’’ and inserting ‘‘9832’’;
(IV) in subsection (f)(1), by striking
‘‘9805(a)’’ and inserting ‘‘9832(a)’’.
(iii) The table of subtitles for such Code is
amended by striking the item relating to sub-
title K (as added by section 401(b) of the
Health Insurance Portability and Accountability
Act of 1996) and inserting the following new
item:
‘‘SUBTITLE K. Group health plan requirements.’’
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B
of title XXVII of the Public Health Service Act (as added
by section 605(a) of the Newborn’s and Mother’s Health
Protection Act of 1996) is amended by inserting after sec-
tion 2751 the following new section:
‘‘SEC. 2752. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE BENEFITS.
‘‘(a) IN GENERAL.—The provisions of section 2706
(other than subsection (e)) shall apply to health insurance
coverage offered by a health insurance issuer in the indi-
vidual market in the same manner as it applies to health
insurance coverage offered by a health insurance issuer
in connection with a group health plan in the small or
large group market.
‘‘(b) NOTICE.—A health insurance issuer under this
part shall comply with the notice requirement under sec-
tion 713(f) of the Employee Retirement Income Security
Act of 1974 with respect to the requirements referred to
in subsection (a) as if such section applied to such issuer
and such issuer were a group health plan.’’.
(2) Section 2762(b)(2) of such Act (42 U.S.C.
300gg–62(b)(2)), as added by section 605(b)(3)(B) of
Public Law 104–204, is amended by striking ‘‘section
2751’’ and inserting ‘‘sections 2751 and 2752’’.
(c) EFFECTIVE DATES.—(1) Subject to paragraph
(3), the amendments made by subsection (a) shall apply
with respect to group health plans for plan years begin-
ning on or after January 1, 1999.
(2) The amendment made by subsection (b) shall
apply with respect to health insurance coverage offered,
sold, issued, renewed, in effect, or operated in the individ-
ual market on or after such date.
(3) In the case of a group health plan maintained
pursuant to 1 or more collective bargaining agreements
between employee representatives and 1 or more employ-
ers ratified before the date of enactment of this Act, the
amendments made subsection (a) shall not apply to plan
years beginning before the later of—
(A) the date on which the last collective bar-
gaining agreements relating to the plan terminates
(determined without regard to any extension thereof
agreed to after the date of enactment of this Act),
or
(B) January 1, 1999.
For purposes of subparagraph (A), any plan amendment
made pursuant to a collective bargaining agreement relat-
ing to the plan which amends the plan solely to conform
to any requirement added by subsection (a) shall not be
treated as a termination of such collective bargaining
agreement.
(d) COORDINATED REGULATIONS.—Section 104(1)
of Health Insurance Portability and Accountability Act of
1996 is amended by striking ‘‘this subtitle (and the
amendments made by this subtitle and section 401)’’ and
inserting ‘‘the provisions of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of
1974, and the provisions of parts A and C of title XXVII
of the Public Health Service Act, and chapter 1000 of the
Internal Revenue Code of 1986’’.
Æ