H. R. 3666—63
‘‘(1) IN GENERAL.—A group health plan, and a health insur-
ance issuer offering group health insurance coverage, may not—
‘‘(A) except as provided in paragraph (2)—
‘‘(i) restrict benefits for any hospital length of stay
in connection with childbirth for the mother or newborn
child, following a normal vaginal delivery, to less than
48 hours, or
‘‘(ii) restrict benefits for any hospital length of
stay in connection with childbirth for the mother or
newborn child, following a cesarean section, to less
than 96 hours; or
‘‘(B) require that a provider obtain authorization from
the plan or the issuer for prescribing any length of stay
required under subparagraph (A) (without regard to para-
graph (2)).
‘‘(2) EXCEPTION.—Paragraph (1)(A) shall not apply in
connection with any group health plan or health insurance
issuer in any case in which the decision to discharge the mother
or her newborn child prior to the expiration of the minimum
length of stay otherwise required under paragraph (1)(A) is
made by an attending provider in consultation with the mother.
‘‘(b) PROHIBITIONS.—A group health plan, and a health insur-
ance issuer offering group health insurance coverage in connection
with a group health plan, may not—
‘‘(1) deny to the mother or her newborn child eligibility,
or continued eligibility, to enroll or to renew coverage under
the terms of the plan, solely for the purpose of avoiding the
requirements of this section;
‘‘(2) provide monetary payments or rebates to mothers to
encourage such mothers to accept less than the minimum
protections available under this section;
‘‘(3) penalize or otherwise reduce or limit the reimburse-
ment of an attending provider because such provider provided
care to an individual participant or beneficiary in accordance
with this section;
‘‘(4) provide incentives (monetary or otherwise) to an
attending provider to induce such provider to provide care
to an individual participant or beneficiary in a manner
inconsistent with this section; or
‘‘(5) subject to subsection (c)(3), restrict benefits for any
portion of a period within a hospital length of stay required
under subsection (a) in a manner which is less favorable than
the benefits provided for any preceding portion of such stay.
‘‘(c) RULES OF CONSTRUCTION.—
‘‘(1) Nothing in this section shall be construed to require
a mother who is a participant or beneficiary—
‘‘(A) to give birth in a hospital; or
‘‘(B) to stay in the hospital for a fixed period of time
following the birth of her child.
‘‘(2) This section shall not apply with respect to any group
health plan, or any group health insurance coverage offered
by a health insurance issuer, which does not provide benefits
for hospital lengths of stay in connection with childbirth for
a mother or her newborn child.
‘‘(3) Nothing in this section shall be construed as preventing
a group health plan or issuer from imposing deductibles,
coinsurance, or other cost-sharing in relation to benefits for
H. R. 3666—64
hospital lengths of stay in connection with childbirth for a
mother or newborn child under the plan (or under health insur-
ance coverage offered in connection with a group health plan),
except that such coinsurance or other cost-sharing for any
portion of a period within a hospital length of stay required
under subsection (a) may not be greater than such coinsurance
or cost-sharing for any preceding portion of such stay.
‘‘(d) 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.
‘‘(e) LEVEL AND TYPE OF REIMBURSEMENTS.—Nothing in this
section shall be construed to prevent a group health plan or a
health insurance issuer offering group health insurance coverage
from negotiating the level and type of reimbursement with a pro-
vider for care provided in accordance with this section.
‘‘(f) PREEMPTION; EXCEPTION FOR HEALTH INSURANCE COVERAGE
IN CERTAIN STATES.—
‘‘(1) IN GENERAL.—The requirements of this section shall
not apply with respect to health insurance coverage if there
is a State law (as defined in section 731(d)(1)) for a State
that regulates such coverage that is described in any of the
following subparagraphs:
‘‘(A) Such State law requires such coverage to provide
for at least a 48-hour hospital length of stay following
a normal vaginal delivery and at least a 96-hour hospital
length of stay following a cesarean section.
‘‘(B) Such State law requires such coverage to provide
for maternity and pediatric care in accordance with guide-
lines established by the American College of Obstetricians
and Gynecologists, the American Academy of Pediatrics,
or other established professional medical associations.
‘‘(C) Such State law requires, in connection with such
coverage for maternity care, that the hospital length of
stay for such care is left to the decision of (or required
to be made by) the attending provider in consultation with
the mother.
‘‘(2) CONSTRUCTION.—Section 731(a)(1) shall not be con-
strued as superseding a State law described in paragraph (1).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 731(c) of such Act (as added by section 101
of the Health Insurance Portability and Accountability Act of
1996 and redesignated by the preceding provisions of this sec-
tion) is amended by striking ‘‘Nothing’’ and inserting ‘‘Except
as provided in section 711, nothing’’.
(2) Section 732(a) of such Act (as added by section 101
of the Health Insurance Portability and Accountability Act of
1996 and redesignated by the preceding provisions of this sec-
tion) is amended by inserting ‘‘(other than section 711)’’ after
‘‘part’’.
(3) Title I of such Act (as amended by section 101 of
the Health Insurance Portability and Accountability Act of 1996
H. R. 3666—65
and the preceding provisions of this section) is further
amended—
(A) in the last sentence of section 4(b), by striking
‘‘section 
706(b)(2)’’, 
‘‘section 
706(b)(1)’’, 
and 
‘‘section
706(a)(1)’’ and inserting ‘‘section 733(b)(2)’’, ‘‘section
733(b)(1)’’, and ‘‘section 733(a)(1)’’, respectively;
(B) in section 101(g), by striking ‘‘section 706(a)(2)’’
and inserting ‘‘section 733(a)(2)’’;
(C) in section 102(b), by striking ‘‘section 706(a)(1)’’
each place it appears and inserting ‘‘section 733(a)(1), and
by striking ‘‘section 706(b)(2)’’ and inserting ‘‘section
733(b)(2)’’;
(D) in section 104(b)(1), by striking ‘‘section 706(a)(1)’’
each place it appears and inserting ‘‘section 733(a)(1)’’;
(E) in section 502(b)(3), by striking ‘‘section 706(a)(1)’’
and inserting ‘‘section 733(a)(1)’’;
(F) in section 506(c), by striking ‘‘section 706(a)(2)’’
and inserting ‘‘section 733(a)(2)’’;
(G) in section 514(b)(9), by striking ‘‘section 704’’ and
inserting ‘‘section 731’’;
(H) in the last sentence of section 701(c)(1), by striking
‘‘section 706(c)’’ and inserting ‘‘section 733(c)’’;
(I) in section 732(b), by striking ‘‘section 706(c)(1)’’
and inserting ‘‘section 733(c)(1)’’;
(J) in section 732(c)(1), by striking ‘‘section 706(c)(2)’’
and inserting ‘‘section 733(c)(2)’’;
(K) in section 732(c)(2), by striking ‘‘section 706(c)(3)’’
and inserting ‘‘section 733(c)(3)’’; and
(L) in section 732(c)(3), by striking ‘‘section 706(c)(4)’’
and inserting ‘‘section 733(c)(4)’’.
(4) The table of contents in section 1 of such Act is amended
by striking the items relating to part 7 and inserting the
following:
‘‘PART 7—GROUP HEALTH PLAN REQUIREMENTS
‘‘SUBPART A—REQUIREMENTS RELATING TO PORTABILITY, ACCESS, AND
RENEWABILITY
‘‘Sec. 701. Increased portability through limitation on preexisting condition exclu-
sions.
‘‘Sec. 702. Prohibiting discrimination against individual participants and bene-
ficiaries based on health status.
‘‘Sec. 703. Guaranteed renewability in multiemployer plans and multiple employer
welfare arrangements.
‘‘SUBPART B—OTHER REQUIREMENTS
‘‘Sec. 711. Standards relating to benefits for mothers and newborns.
‘‘SUBPART C—GENERAL PROVISIONS
‘‘Sec. 731. Preemption; State flexibility; construction.
‘‘Sec. 732. Special rules relating to group health plans.
‘‘Sec. 733. Definitions.
‘‘Sec. 734. Regulations.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to group health plans for plan years begin-
ning on or after January 1, 1998.
SEC. 604. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT
RELATING TO THE GROUP MARKET.—(a) IN GENERAL.—Title XXVII
of the Public Health Service Act (as added by section 102 of the
Health Insurance Portability and Accountability Act of 1996) is
amended—
H. R. 3666—66
(1) by amending the title heading to read as follows:
‘‘TITLE XXVII—REQUIREMENTS RELATING TO HEALTH
INSURANCE COVERAGE’’;
(2) by redesignating subparts 2 and 3 of part A as subparts
3 and 4 of such part;
(3) by inserting after subpart 1 of part A the following
new subpart:
‘‘Subpart 2—Other Requirements
‘‘SEC. 2704. STANDARDS RELATING TO BENEFITS FOR MOTHERS AND
NEWBORNS.
‘‘(a) REQUIREMENTS FOR MINIMUM HOSPITAL STAY FOLLOWING
BIRTH.—
‘‘(1) IN GENERAL.—A group health plan, and a health insur-
ance issuer offering group health insurance coverage, may not—
‘‘(A) except as provided in paragraph (2)—
‘‘(i) restrict benefits for any hospital length of stay
in connection with childbirth for the mother or newborn
child, following a normal vaginal delivery, to less than
48 hours, or
‘‘(ii) restrict benefits for any hospital length of
stay in connection with childbirth for the mother or
newborn child, following a cesarean section, to less
than 96 hours, or
‘‘(B) require that a provider obtain authorization from
the plan or the issuer for prescribing any length of stay
required under subparagraph (A) (without regard to para-
graph (2)).
‘‘(2) EXCEPTION.—Paragraph (1)(A) shall not apply in
connection with any group health plan or health insurance
issuer in any case in which the decision to discharge the mother
or her newborn child prior to the expiration of the minimum
length of stay otherwise required under paragraph (1)(A) is
made by an attending provider in consultation with the mother.
‘‘(b) PROHIBITIONS.—A group health plan, and a health insur-
ance issuer offering group health insurance coverage in connection
with a group health plan, may not—
‘‘(1) deny to the mother or her newborn child eligibility,
or continued eligibility, to enroll or to renew coverage under
the terms of the plan, solely for the purpose of avoiding the
requirements of this section;
‘‘(2) provide monetary payments or rebates to mothers to
encourage such mothers to accept less than the minimum
protections available under this section;
‘‘(3) penalize or otherwise reduce or limit the reimburse-
ment of an attending provider because such provider provided
care to an individual participant or beneficiary in accordance
with this section;
‘‘(4) provide incentives (monetary or otherwise) to an
attending provider to induce such provider to provide care
to an individual participant or beneficiary in a manner
inconsistent with this section; or
‘‘(5) subject to subsection (c)(3), restrict benefits for any
portion of a period within a hospital length of stay required
H. R. 3666—67
under subsection (a) in a manner which is less favorable than
the benefits provided for any preceding portion of such stay.
‘‘(c) RULES OF CONSTRUCTION.—
‘‘(1) Nothing in this section shall be construed to require
a mother who is a participant or beneficiary—
‘‘(A) to give birth in a hospital; or
‘‘(B) to stay in the hospital for a fixed period of time
following the birth of her child.
‘‘(2) This section shall not apply with respect to any group
health plan, or any group health insurance coverage offered
by a health insurance issuer, which does not provide benefits
for hospital lengths of stay in connection with childbirth for
a mother or her newborn child.
‘‘(3) Nothing in this section shall be construed as preventing
a group health plan or issuer from imposing deductibles,
coinsurance, or other cost-sharing in relation to benefits for
hospital lengths of stay in connection with childbirth for a
mother or newborn child under the plan (or under health insur-
ance coverage offered in connection with a group health plan),
except that such coinsurance or other cost-sharing for any
portion of a period within a hospital length of stay required
under subsection (a) may not be greater than such coinsurance
or cost-sharing for any preceding portion of such stay.
‘‘(d) NOTICE.—A group health plan under this part shall comply
with the notice requirement under section 711(d) of the Employee
Retirement Income Security Act of 1974 with respect to the require-
ments of this section as if such section applied to such plan.
‘‘(e) LEVEL AND TYPE OF REIMBURSEMENTS.—Nothing in this
section shall be construed to prevent a group health plan or a
health insurance issuer offering group health insurance coverage
from negotiating the level and type of reimbursement with a pro-
vider for care provided in accordance with this section.
‘‘(f) PREEMPTION; EXCEPTION FOR HEALTH INSURANCE COVERAGE
IN CERTAIN STATES.—
‘‘(1) IN GENERAL.—The requirements of this section shall
not apply with respect to health insurance coverage if there
is a State law (as defined in section 2723(d)(1)) for a State
that regulates such coverage that is described in any of the
following subparagraphs:
‘‘(A) Such State law requires such coverage to provide
for at least a 48-hour hospital length of stay following
a normal vaginal delivery and at least a 96-hour hospital
length of stay following a cesarean section.
‘‘(B) Such State law requires such coverage to provide
for maternity and pediatric care in accordance with guide-
lines established by the American College of Obstetricians
and Gynecologists, the American Academy of Pediatrics,
or other established professional medical associations.
‘‘(C) Such State law requires, in connection with such
coverage for maternity care, that the hospital length of
stay for such care is left to the decision of (or required
to be made by) the attending provider in consultation with
the mother.
‘‘(2) CONSTRUCTION.—Section 2723(a)(1) shall not be con-
strued as superseding a State law described in paragraph (1).’’.
(b) CONFORMING AMENDMENTS.—
H. R. 3666—69
‘‘(A) Such State law requires such coverage to provide
for at least a 48-hour hospital length of stay following
a normal vaginal delivery and at least a 96-hour hospital
length of stay following a cesarean section.
‘‘(B) Such State law requires such coverage to provide
for maternity and pediatric care in accordance with guide-
lines established by the American College of Obstetricians
and Gynecologists, the American Academy of Pediatrics,
or other established professional medical associations.
‘‘(C) Such State law requires, in connection with such
coverage for maternity care, that the hospital length of
stay for such care is left to the decision of (or required
to be made by) the attending provider in consultation with
the mother.
‘‘(2) CONSTRUCTION.—Section 2762(a) shall not be construed
as superseding a State law described in paragraph (1).’’.
(b) CONFORMING AMENDMENTS.—Such part (as so added) is
further amended as follows:
(1) In section 2744(a)(1), strike ‘‘2746(b)’’ and insert
‘‘2762(b)’’.
(2) In section 2745(a)(1) (before redesignation under sub-
section (a)(1)), strike ‘‘2746’’ and insert ‘‘2762’’.
(3) In section 2746(b) (before redesignation under sub-
section (a)(1))—
(A) by inserting ‘‘(1)’’ after the dash, and
(B) by adding at the end the following:
‘‘(2) Nothing in this part (other than section 2751) shall be
construed as requiring health insurance coverage offered in the
individual market to provide specific benefits under the terms of
such coverage.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to health insurance coverage offered, sold,
issued, renewed, in effect, or operated in the individual market
on or after January 1, 1998.
SEC. 606. REPORTS TO CONGRESS CONCERNING CHILDBIRTH.—
(a) FINDINGS.—Congress finds that—
(1) childbirth is one part of a continuum of experience
that includes prepregnancy, pregnancy and prenatal care, labor
and delivery, the immediate postpartum period, and a longer
period of adjustment for the newborn, the mother, and the
family;
(2) health care practices across this continuum are chang-
ing in response to health care financing and delivery system
changes, science and clinical research, and patient preferences;
and
(3) there is a need—
(A) to examine the issues and consequences associated
with the length of hospital stays following childbirth;
(B) to examine the follow-up practices for mothers and
newborns used in conjunction with shorter hospital stays;
(C) to identify appropriate health care practices and
procedures with regard to the hospital discharge of
newborns and mothers;
(D) to examine the extent to which such care is affected
by family and environmental factors; and
(E) to examine the content of care during hospital
stays following childbirth.
H. R. 3666—70
(b) ADVISORY PANEL.—
(1) IN GENERAL.—Not later than 90 days after the date
of enactment of this Act, the Secretary of Health and Human
Services (in this section referred to as the ‘‘Secretary’’) shall
establish an advisory panel (referred to in this section as the
‘‘advisory panel’’)—
(A) to guide and review methods, procedures, and data
collection necessary to conduct the study described in sub-
section (c) in a manner that is intended to enhance the
quality, safety, and effectiveness of health care services
provided to mothers and newborns;
(B) to develop a consensus among the members of
the advisory panel regarding the appropriateness of the
specific requirements of this title; and
(C) to prepare and submit to the Secretary, as part
of the report of the Secretary submitted under subsection
(d), a report summarizing the consensus (if any) developed
under subparagraph (B) or the reasons for not reaching
such a consensus.
(2) PARTICIPATION.—
(A) DEPARTMENT
REPRESENTATIVES.—The Secretary
shall ensure that representatives from within the Depart-
ment of Health and Human Services that have expertise
in the area of maternal and child health or in outcomes
research are appointed to the advisory panel.
(B) REPRESENTATIVES OF PUBLIC AND PRIVATE SECTOR
ENTITIES.—
(i) IN GENERAL.—The Secretary shall ensure that
members of the advisory panel include representatives
of public and private sector entities having knowledge
or experience in one or more of the following areas:
(I) Patient care.
(II) Patient education.
(III) Quality assurance.
(IV) Outcomes research.
(V) Consumer issues.
(ii) REQUIREMENT.—The panel shall include rep-
resentatives of each of the following categories:
(I) Health care practitioners.
(II) Health plans.
(III) Hospitals.
(IV) Employers.
(V) States.
(VI) Consumers.
(c) STUDIES.—
(1) IN GENERAL.—The Secretary shall conduct a study of—
(A) the factors affecting the continuum of care with
respect to maternal and child health care, including out-
comes following childbirth;
(B) the factors determining the length of hospital stay
following childbirth;
(C) the diversity of negative or positive outcomes affect-
ing mothers, infants, and families;
(D) the manner in which post natal care has changed
over time and the manner in which that care has adapted
or related to changes in the length of hospital stay, taking
into account—
H. R. 3666—71
(i) the types of post natal care available and the
extent to which such care is accessed; and
(ii) the challenges associated with providing post
natal care to all populations, including vulnerable
populations, and solutions for overcoming these chal-
lenges; and
(E) the financial incentives that may—
(i) 
impact 
the 
health 
of 
newborns 
and
mothers; and
(ii) influence the clinical decisionmaking of health
care providers.
(2) RESOURCES.—The Secretary shall provide to the
advisory panel the resources necessary to carry out the duties
of the advisory panel.
(d) REPORTS.—
(1) IN GENERAL.—The Secretary shall prepare and submit
to the Committee on Labor and Human Resources of the Senate
and the Committee on Commerce of the House of Representa-
tives a report that contains—
(A) a summary of the study conducted under sub-
section (c);
(B) a summary of the best practices used in the public
and private sectors for the care of newborns and mothers;
(C) recommendations for improvements in prenatal
care, post natal care, delivery and follow-up care, and
whether the implementation of such improvements should
be accomplished by the private health care sector, Federal
or State governments, or any combination thereof; and
(D) limitations on the databases in existence on the
date of the enactment of this Act.
(2) DEADLINES.—The Secretary shall prepare and submit
to the Committees referred to in paragraph (1)—
(A) an initial report concerning the study conducted
under subsection (c) and elements described in paragraph
(1), not later than 18 months after the date of the enact-
ment of this Act;
(B) an interim report concerning such study and ele-
ments not later than 3 years after the date of the enactment
of this Act; and
(C) a final report concerning such study and elements
not later than 5 years after the date of the enactment
of this Act.
(e) TERMINATION OF PANEL.—The advisory panel shall termi-
nate on the date that occurs 60 days after the date on which
the last report is submitted under subsection (d).
TITLE VII—PARITY IN THE APPLICATION OF CERTAIN
LIMITS TO MENTAL HEALTH BENEFITS
SEC. 701. SHORT TITLE.—This title may be cited as the ‘‘Mental
Health Parity Act of 1996’’.
SEC. 702. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974.—(a) IN GENERAL.—Subpart B of part 7
of subtitle B of title I of the Employee Retirement Income Security
Act of 1974 (as added by section 603(a)) is amended by adding
at the end the following new section:
H. R. 3666—72
‘‘SEC. 712. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.
‘‘(a) IN GENERAL.—
‘‘(1) AGGREGATE LIFETIME LIMITS.—In the case of a group
health plan (or health insurance coverage offered in connection
with such a plan) that provides both medical and surgical
benefits and mental health benefits—
‘‘(A) NO LIFETIME LIMIT.—If the plan or coverage does
not include an aggregate lifetime limit on substantially
all medical and surgical benefits, the plan or coverage
may not impose any aggregate lifetime limit on mental
health benefits.
‘‘(B) LIFETIME LIMIT.—If the plan or coverage includes
an aggregate lifetime limit on substantially all medical
and surgical benefits (in this paragraph referred to as
the ‘applicable lifetime limit’), the plan or coverage shall
either—
‘‘(i) apply the applicable lifetime limit both to the
medical and surgical benefits to which it otherwise
would apply and to mental health benefits and not
distinguish in the application of such limit between
such medical and surgical benefits and mental health
benefits; or
‘‘(ii) not include any aggregate lifetime limit on
mental health benefits that is less than the applicable
lifetime limit.
‘‘(C) RULE IN CASE OF DIFFERENT LIMITS.—In the case
of a plan or coverage that is not described in subparagraph
(A) or (B) and that includes no or different aggregate life-
time limits on different categories of medical and surgical
benefits, the Secretary shall establish rules under which
subparagraph (B) is applied to such plan or coverage with
respect to mental health benefits by substituting for the
applicable lifetime limit an average aggregate lifetime limit
that is computed taking into account the weighted average
of the aggregate lifetime limits applicable to such cat-
egories.
‘‘(2) ANNUAL LIMITS.—In the case of a group health plan
(or health insurance coverage offered in connection with such
a plan) that provides both medical and surgical benefits and
mental health benefits—
‘‘(A) NO ANNUAL LIMIT.—If the plan or coverage does
not include an annual limit on substantially all medical
and surgical benefits, the plan or coverage may not impose
any annual limit on mental health benefits.
‘‘(B) ANNUAL LIMIT.—If the plan or coverage includes
an annual limit on substantially all medical and surgical
benefits (in this paragraph referred to as the ‘applicable
annual limit’), the plan or coverage shall either—
‘‘(i) apply the applicable annual limit both to medi-
cal and surgical benefits to which it otherwise would
apply and to mental health benefits and not distinguish
in the application of such limit between such medical
and surgical benefits and mental health benefits; or
‘‘(ii) not include any annual limit on mental health
benefits that is less than the applicable annual limit.
H. R. 3666—73
‘‘(C) RULE IN CASE OF DIFFERENT LIMITS.—In the case
of a plan or coverage that is not described in subparagraph
(A) or (B) and that includes no or different annual limits
on different categories of medical and surgical benefits,
the Secretary shall establish rules under which subpara-
graph (B) is applied to such plan or coverage with respect
to mental health benefits by substituting for the applicable
annual limit an average annual limit that is computed
taking into account the weighted average of the annual
limits applicable to such categories.
‘‘(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 mental health benefits; or
‘‘(2) in the case of a group health plan (or health insurance
coverage offered in connection with such a plan) that provides
mental health benefits, as affecting the terms and conditions
(including cost sharing, limits on numbers of visits or days
of coverage, and requirements relating to medical necessity)
relating to the amount, duration, or scope of mental health
benefits under the plan or coverage, except as specifically pro-
vided in subsection (a) (in regard to parity in the imposition
of aggregate lifetime limits and annual limits for mental health
benefits).
‘‘(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 sub-
sections (b), (c), (m), and (o) of section 414 of the
Internal Revenue 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 employer 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 para-
graph to an employer shall include a reference to any
predecessor of such employer.
H. R. 3666—74
‘‘(2) INCREASED COST EXEMPTION.—This section shall not
apply with respect to a group health plan (or health insurance
coverage offered in connection with a group health plan) if
the application of this section to such plan (or to such coverage)
results in an increase in the cost under the plan (or for such
coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OFFERED.—In the
case of a group health plan that offers a participant or beneficiary
two or more benefit package options under the plan, the require-
ments of this section shall be applied separately with respect to
each such option.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) AGGREGATE LIFETIME LIMIT.—The term ‘aggregate life-
time limit’ means, with respect to benefits under a group health
plan or health insurance coverage, a dollar limitation on the
total amount that may be paid with respect to such benefits
under the plan or health insurance coverage with respect to
an individual or other coverage unit.
‘‘(2) ANNUAL LIMIT.—The term ‘annual limit’ means, with
respect to benefits under a group health plan or health insur-
ance coverage, a dollar limitation on the total amount of
benefits that may be paid with respect to such benefits in
a 12-month period under the plan or health insurance coverage
with respect to an individual or other coverage unit.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The term ‘medical
or 
surgical 
benefits’ 
means 
benefits 
with 
respect 
to
medical or surgical services, as defined under the terms of
the plan or coverage (as the case may be), but does not include
mental health benefits.
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health
benefits’ means benefits with respect to mental health services,
as defined under the terms of the plan or coverage (as the
case may be), but does not include benefits with respect to
treatment of substance abuse or chemical dependency.
‘‘(f) SUNSET.—This section shall not apply to benefits for services
furnished on or after September 30, 2001.’’.
(b) CLERICAL AMENDMENT.—The table of contents in section
1 of such Act, as amended by section 603 of this Act, is amended
by inserting after the item relating to section 711 the following
new item:
‘‘Sec. 712. Parity in the application of certain limits to mental health benefits.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to group health plans for plan years begin-
ning on or after January 1, 1998.
SEC. 703. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT
RELATING TO THE GROUP MARKET.—(a) IN GENERAL.—Subpart 2
of part A of title XXVII of the Public Health Service Act (as
added by section 604(a)) is amended by adding at the end the
following new section:
‘‘SEC. 2705. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.
‘‘(a) IN GENERAL.—
‘‘(1) AGGREGATE LIFETIME LIMITS.—In the case of a group
health plan (or health insurance coverage offered in connection
with such a plan) that provides both medical and surgical
benefits and mental health benefits—
H. R. 3666—75
‘‘(A) NO LIFETIME LIMIT.—If the plan or coverage does
not include an aggregate lifetime limit on substantially
all medical and surgical benefits, the plan or coverage
may not impose any aggregate lifetime limit on mental
health benefits.
‘‘(B) LIFETIME LIMIT.—If the plan or coverage includes
an aggregate lifetime limit on substantially all medical
and surgical benefits (in this paragraph referred to as
the ‘applicable lifetime limit’), the plan or coverage shall
either—
‘‘(i) apply the applicable lifetime limit both to the
medical and surgical benefits to which it otherwise
would apply and to mental health benefits and not
distinguish in the application of such limit between
such medical and surgical benefits and mental health
benefits; or
‘‘(ii) not include any aggregate lifetime limit on
mental health benefits that is less than the applicable
lifetime limit.
‘‘(C) RULE IN CASE OF DIFFERENT LIMITS.—In the case
of a plan or coverage that is not described in subparagraph
(A) or (B) and that includes no or different aggregate life-
time limits on different categories of medical and surgical
benefits, the Secretary shall establish rules under which
subparagraph (B) is applied to such plan or coverage with
respect to mental health benefits by substituting for the
applicable lifetime limit an average aggregate lifetime
limit that is computed taking into account the weighted
average of the aggregate lifetime limits applicable to such
categories.
‘‘(2) ANNUAL LIMITS.—In the case of a group health plan
(or health insurance coverage offered in connection with such
a plan) that provides both medical and surgical benefits and
mental health benefits—
‘‘(A) NO ANNUAL LIMIT.—If the plan or coverage does
not include an annual limit on substantially all medical
and surgical benefits, the plan or coverage may not impose
any annual limit on mental health benefits.
‘‘(B) ANNUAL LIMIT.—If the plan or coverage includes
an annual limit on substantially all medical and surgical
benefits (in this paragraph referred to as the ‘applicable
annual limit’), the plan or coverage shall either—
‘‘(i) apply the applicable annual limit both to medi-
cal and surgical benefits to which it otherwise would
apply and to mental health benefits and not distinguish
in the application of such limit between such medical
and surgical benefits and mental health benefits; or
‘‘(ii) not include any annual limit on mental health
benefits that is less than the applicable annual limit.
‘‘(C) RULE IN CASE OF DIFFERENT LIMITS.—In the case
of a plan or coverage that is not described in subparagraph
(A) or (B) and that includes no or different annual limits
on different categories of medical and surgical benefits,
the Secretary shall establish rules under which subpara-
graph (B) is applied to such plan or coverage with respect
to mental health benefits by substituting for the applicable
annual limit an average annual limit that is computed
H. R. 3666—76
taking into account the weighted average of the annual
limits applicable to such categories.
‘‘(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 mental health benefits; or
‘‘(2) in the case of a group health plan (or health insurance
coverage offered in connection with such a plan) that provides
mental health benefits, as affecting the terms and conditions
(including cost sharing, limits on numbers of visits or days
of coverage, and requirements relating to medical necessity)
relating to the amount, duration, or scope of mental health
benefits under the plan or coverage, except as specifically pro-
vided in subsection (a) (in regard to parity in the imposition
of aggregate lifetime limits and annual limits for mental health
benefits).
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—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.
‘‘(2) INCREASED COST EXEMPTION.—This section shall not
apply with respect to a group health plan (or health insurance
coverage offered in connection with a group health plan) if
the application of this section to such plan (or to such coverage)
results in an increase in the cost under the plan (or for such
coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OFFERED.—In the
case of a group health plan that offers a participant or beneficiary
two or more benefit package options under the plan, the require-
ments of this section shall be applied separately with respect to
each such option.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) AGGREGATE LIFETIME LIMIT.—The term ‘aggregate life-
time limit’ means, with respect to benefits under a group health
plan or health insurance coverage, a dollar limitation on the
total amount that may be paid with respect to such benefits
under the plan or health insurance coverage with respect to
an individual or other coverage unit.
‘‘(2) ANNUAL LIMIT.—The term ‘annual limit’ means, with
respect to benefits under a group health plan or health
insurance coverage, a dollar limitation on the total amount
of benefits that may be paid with respect to such benefits
in a 12-month period under the plan or health insurance cov-
erage with respect to an individual or other coverage unit.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The term ‘medical
or 
surgical 
benefits’ 
means 
benefits 
with 
respect 
to
medical or surgical services, as defined under the terms of
the plan or coverage (as the case may be), but does not include
mental health benefits.
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health
benefits’ means benefits with respect to mental health services,
as defined under the terms of the plan or coverage (as the
case may be), but does not include benefits with respect to
treatment of substance abuse or chemical dependency.
H. R. 3666—77
‘‘(f) SUNSET.—This section shall not apply to benefits for services
furnished on or after September 30, 2001.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to group health plans for plan years begin-
ning on or after January 1, 1998.
This Act may be cited as the ‘‘Departments of Veterans Affairs
and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1997’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.