I 
108TH CONGRESS 
1ST SESSION H. R. 1340
To amend title XVIII of the Social Security Act to expand and improve 
coverage of mental health services under the Medicare Program. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 18, 2003
Mr. STARK (for himself, Mr. KENNEDY of Rhode Island, Mr. RANGEL, Ms. 
SCHAKOWSKY, Mr. FRANK of Massachusetts, Mr. ABERCROMBIE, Ms. 
BERKLEY, Mr. STRICKLAND, Mr. HOLDEN, Mr. SERRANO, Ms. JACKSON-
LEE of Texas, Mrs. JONES of Ohio, Mr. CARDIN, Mr. GREEN of Texas, 
Mr. CARSON of Oklahoma, and Mr. MCDERMOTT) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend title XVIII of the Social Security Act to expand 
and improve coverage of mental health services under 
the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) IN GENERAL.—This Act may be cited as the 
‘‘Medicare Mental Health Modernization Act of 2003’’.
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
Sec. 2. Findings. 
TITLE I—ESTABLISHING PARITY FOR MENTAL HEALTH 
SERVICES 
Sec. 101. Elimination of lifetime limit on inpatient mental health services. 
Sec. 102. Parity in treatment for outpatient mental health services. 
TITLE II—EXPANDING COVERAGE OF COMMUNITY-BASED 
MENTAL HEALTH SERVICES 
Sec. 201. Coverage of intensive residential services. 
Sec. 202. Coverage of intensive outpatient services. 
TITLE III—IMPROVING BENEFICIARY ACCESS TO MEDICARE-
COVERED SERVICES 
Sec. 301. Excluding clinical social worker services from coverage under the 
medicare skilled nursing facility prospective payment system 
and consolidated payment. 
Sec. 302. Coverage of marriage and family therapist services. 
Sec. 303. Coverage of mental health counselor services. 
Sec. 304. Study of coverage criteria for Alzheimer’s disease and related mental 
illnesses.
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) Older people have the highest rate of suicide 
of any population in the United States, and the sui-
cide rate of that population increases with age, with 
individuals 65 and older accounting for 20 percent 
of all suicide deaths in the United States, while com-
prising only 13 percent of the population of the 
United States. 
(2) Disability due to mental illness in individ-
uals over 65 years old will become a major public 
health problem in the near future because of demo-
graphic changes. In particular, dementia, depression, 
schizophrenia, among other conditions, will all 
present special problems for this age group. 
(3) Major depression is strikingly prevalent 
among older people, with between 8 and 20 percent 
of older people in community studies and up to 37 
percent of those seen in primary care settings expe-
riencing symptoms of depression. 
(4) Almost 20 percent of the population of indi-
viduals age 55 and older, experience specific mental 
disorders that are not part of normal aging. 
(5) Unrecognized and untreated depression, 
Alzheimer’s disease, anxiety, late-life schizophrenia, 
and other mental conditions can be severely impair-
ing and may even be fatal. 
(6) Substance abuse, particularly the abuse of 
alcohol and prescription drugs, among adults 65 and 
older is one of the fastest growing health problems 
in the United States, with 17 percent of this age 
group suffering from addiction or substance abuse. 
While addiction often goes undetected and untreated 
among older adults, aging and disability makes the 
body more vulnerable to the effects of alcohol and 
drugs, further exacerbating other age-related health 
problems. Medicare coverage for addiction treatment
of the elderly needs to recognize these special 
vulnerabilities. 
(7) The disabled are another population receiv-
ing inadequate mental health care through medicare. 
According to the Health Care Financing Administra-
tion, medicare is the primary health care coverage 
for the 6,000,000 nonelderly, disabled people on So-
cial Security Disability Insurance. Up to 40 percent 
of these individuals have a diagnosis of mental ill-
ness. 
(8) The current medicare benefit structure dis-
criminates against the millions of Americans who 
suffer from mental illness and maintains an out-
dated bias toward institutionally based service deliv-
ery. According to the report of the Surgeon General 
on mental health for 1999, intensive outpatient serv-
ices, such as psychiatric rehabilitation and assertive 
community treatment, represent state-of-the-art 
mental health services. These evidence-based com-
munity support services help people with psychiatric 
disabilities improve their ability to function in the 
community and reduce hospitalization rates by 30 to 
60 percent, even for people with the most severe 
mental illnesses.
TITLE I—ESTABLISHING PARITY 
FOR MENTAL HEALTH SERVICES 
SEC. 101. ELIMINATION OF LIFETIME LIMIT ON INPATIENT 
MENTAL HEALTH SERVICES. 
(a) IN GENERAL.—Section 1812 of the Social Secu-
rity Act (42 U.S.C. 1395d) is amended—
(1) in subsection (b)—
(A) in paragraph (1), by adding ‘‘and’’ at 
the end; 
(B) in paragraph (2), by striking ‘‘; and’’ 
at the end; and 
(C) by striking paragraph (3); and 
(2) by striking subsection (c). 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to items and services furnished 
on or after January 1, 2004. 
SEC. 102. PARITY IN TREATMENT FOR OUTPATIENT MEN-
TAL HEALTH SERVICES. 
(a) IN GENERAL.—Section 1833 of the Social Secu-
rity Act (42 U.S.C. 1395l) is amended by striking sub-
section (c). 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to items and services furnished 
on or after January 1, 2004.
TITLE 
II—EXPANDING 
COV-
ERAGE 
OF 
COMMUNITY-
BASED 
MENTAL 
HEALTH 
SERVICES 
SEC. 201. COVERAGE OF INTENSIVE RESIDENTIAL SERV-
ICES. 
(a) COVERAGE UNDER PART A.—Section 1812(a) of 
the Social Security Act (42 U.S.C. 1395d(a)) is amend-
ed—
(1) in paragraph (3), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (4), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(5) intensive residential services (as defined in 
section 1861(ww)) furnished to an individual for up 
to 120 days during any calendar year, except that 
such services may be furnished to the individual for 
additional days (not to exceed 20 days) during the 
year if necessary for the individual to complete a 
course of treatment.’’. 
(b) SERVICES DESCRIBED.—Section 1861 of the So-
cial Security Act (42 U.S.C. 1395x) is amended by adding 
at the end the following new subsection:
‘‘Intensive Residential Services 
‘‘(ww)(1) Subject to paragraphs (3) and (4), the term 
‘intensive residential services’ means a program of residen-
tial services (described in paragraph (2)) that is—
‘‘(A) prescribed by a physician for an individual 
entitled to, or enrolled for, benefits under part A 
who is under the care of the physician; and 
‘‘(B) furnished under the supervision of a phy-
sician pursuant to an individualized, written plan of 
treatment established and periodically reviewed by a 
physician (in consultation with appropriate staff par-
ticipating in such services), which plan sets forth—
‘‘(i) the individual’s diagnosis, 
‘‘(ii) the type, amount, frequency, and du-
ration of the items and services provided under 
the plan, and 
‘‘(iii) the goals for treatment under the 
plan. 
In the case of such an individual who is receiving 
qualified psychologist services (as defined in sub-
section (ii)), the individual may be under the care of 
the clinical psychologist with respect to such services 
under this subsection to the extent permitted under 
State law.
‘‘(2) The program of residential services described in 
this paragraph is a nonhospital-based community residen-
tial program that furnishes acute mental health services 
or substance abuse services, or both, on a 24-hour basis. 
Such services shall include treatment planning and devel-
opment, medication management, case management, crisis 
intervention, individual therapy, group therapy, and de-
toxification services. Such services shall be furnished in 
any of the following facilities: 
‘‘(A) Crisis residential programs or mental ill-
ness residential treatment programs. 
‘‘(B) Therapeutic family or group treatment 
homes. 
‘‘(C) Residential detoxification centers. 
‘‘(D) Residential centers for substance abuse 
treatment. 
‘‘(3) No service may be treated as an intensive resi-
dential service under paragraph (1) unless the facility at 
which the service is provided—
‘‘(A) is legally authorized to provide such serv-
ice under the law of the State (or under a State reg-
ulatory mechanism provided by State law) in which 
the facility is located or meets such certification re-
quirements that the Secretary may impose; and
‘‘(2) Prior to the date on which the Secretary imple-
ments the prospective payment system established under 
paragraph (1), the amount of payment under this part for 
such intensive residential services is the reasonable costs 
of providing such services.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after January 1, 2004. 
SEC. 202. COVERAGE OF INTENSIVE OUTPATIENT SERV-
ICES. 
(a) COVERAGE.—Section 1832(a)(2) of the Social Se-
curity Act (42 U.S.C. 1395k(a)(2)) is amended—
(1) in subparagraph (I), by striking ‘‘and’’ at 
the end; 
(2) in subparagraph (J), by striking the period 
at the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(K) intensive outpatient services (as de-
scribed in section 1861(xx)).’’. 
(b) SERVICES DESCRIBED.—Section 1861 of the So-
cial Security Act (42 U.S.C. 1395x), as amended by sec-
tion 201(b), is amended by adding at the end the following 
new subsection:
‘‘Intensive Outpatient Services 
‘‘(xx)(1) The term ‘intensive outpatient services’ 
means the items and services described in paragraph (2) 
prescribed by a physician and provided within the context 
described in paragraph (3) under the supervision of a phy-
sician (or, to the extent permitted under the law of the 
State in which the services are furnished, a non-physician 
mental health professional) pursuant to an individualized, 
written plan of treatment that is established by a physi-
cian and periodically reviewed by a physician or, to the 
extent permitted under the laws of the State in which the 
services are furnished, a non-physician mental health pro-
fessional (in consultation with appropriate staff partici-
pating in such services), which plan sets forth the patient’s 
diagnosis, the type, amount, frequency, and duration of 
the items and services provided under the plan, and the 
goals for treatment under the plan. 
‘‘(2)(A) The items and services described in this 
paragraph are the items and services described in sub-
paragraph (B) that are reasonable and necessary for the 
diagnosis or treatment of the individual’s condition, rea-
sonably expected to improve or maintain the individual’s 
condition and functional level and to prevent relapse or 
hospitalization, and furnished pursuant to such guidelines 
relating to frequency and duration of services as the Sec-
retary shall by regulation establish (taking into account 
accepted norms of clinical practice). 
‘‘(B) For purposes of subparagraph (A), the items 
and services described in this paragraph are as follows: 
‘‘(i) Psychiatric rehabilitation. 
‘‘(ii) Assertive community treatment. 
‘‘(iii) Intensive case management. 
‘‘(iv) Day treatment for individuals under 21 
years of age. 
‘‘(v) Ambulatory detoxification. 
‘‘(vi) Such other items and services as the Sec-
retary may provide (but in no event to include meals 
and transportation). 
‘‘(3) The context described in this paragraph for the 
provision of intensive outpatient services is as follows: 
‘‘(A) Such services are furnished in a facility, 
home, or community setting. 
‘‘(B) Such services are furnished— 
‘‘(i) to assist the individual to compensate 
for, or eliminate, functional deficits and inter-
personal and environmental barriers created by 
the disability; and 
‘‘(ii) to restore skills to the individual for 
independent living, socialization, and effective 
life management.
‘‘(C) Such services are furnished by an indi-
vidual or entity that—
‘‘(i) is legally authorized to furnish such 
services under State law (or the State regu-
latory mechanism provided by State law) or 
meets such certification requirements that the 
Secretary may impose; and 
‘‘(ii) meets such other requirements as the 
Secretary may impose to assure the quality of 
the intensive outpatient services provided.’’. 
(c) PAYMENT.—
(1) IN
GENERAL.—With respect to intensive 
outpatient 
services 
(as 
defined 
in 
section 
1861(xx)(1) of the Social Security Act (as added by 
subsection (b)) furnished under the medicare pro-
gram, the amount of payment under such Act for 
such services shall be 80 percent of—
(A) during 2004 and 2005, the reasonable 
costs of furnishing such services; and 
(B) on or after January 1, 2006, the 
amount of payment established for such serv-
ices under the prospective payment system es-
tablished by the Secretary under paragraph (2) 
for such services. 
(2) ESTABLISHMENT OF PPS.—
(A) IN GENERAL.—With respect to inten-
sive outpatient services (as defined in section 
1861(xx)(1) of the Social Security Act (as 
added by subsection (b)) furnished under the 
medicare program on or after January 1, 2006, 
the Secretary of Health and Human Services 
(in this paragraph referred to as the ‘‘Sec-
retary’’) shall establish a prospective payment 
system for payment for such services. Such sys-
tem shall include an adequate patient classifica-
tion system that reflects the differences in pa-
tient resource use and costs and shall provide 
for an annual update to the rates of payment 
established under the system. 
(B) ADJUSTMENTS.—In establishing the 
system under subparagraph (A), the Secretary 
shall provide for adjustments in the prospective 
payment amount for variations in wage and 
wage-related costs, case mix, and such other 
factors as the Secretary determines appropriate. 
(C) COLLECTION OF DATA AND EVALUA-
TION.—In developing the system described in 
subparagraph (A), the Secretary may require
providers of services under the medicare pro-
gram to submit such information to the Sec-
retary as the Secretary may require to develop 
the system, including the most recently avail-
able data. 
(D) REPORTS
TO
CONGRESS.—Not later 
than October 1 of each of 2004 and 2005, the 
Secretary shall submit to Congress a report on 
the progress of the Secretary in establishing the 
prospective payment system under this para-
graph. 
(d) 
CONFORMING
AMENDMENTS.—(1) 
Section 
1835(a)(2) of the Social Security Act (42 U.S.C. 
1395n(a)(2)) is amended—
(A) in subparagraph (E), by striking ‘‘and’’ at 
the end; 
(B) in subparagraph (F), by striking the period 
at the end and inserting ‘‘; and’’; and 
(C) by inserting after subparagraph (F) the fol-
lowing new subparagraph: 
‘‘(G) in the case of intensive outpatient 
services, (i) that those services are reasonably 
expected to improve or maintain the individual’s 
condition and functional level and to prevent re-
lapse or hospitalization, (ii) an individualized, 
written plan for furnishing such services has 
been established by a physician and is reviewed
(e) EXCLUSION OF MARRIAGE AND FAMILY THERA-
PIST SERVICES FROM SKILLED NURSING FACILITY PRO-
SPECTIVE PAYMENT SYSTEM.—Section 1888(e)(2)(A)(ii) 
of the Social Security Act (42 U.S.C. 1395yy(e)(2)(A)(ii)), 
as amended in section 301(a), is amended by inserting 
‘‘marriage and family therapist services (as defined in sub-
section (yy)(1)),’’ after ‘‘clinical social worker services,’’. 
(f) COVERAGE OF MARRIAGE AND FAMILY THERA-
PIST SERVICES PROVIDED IN RURAL HEALTH CLINICS 
AND FEDERALLY QUALIFIED HEALTH CENTERS.—Sec-
tion 1861(aa)(1)(B) of the Social Security Act (42 U.S.C. 
1395x(aa)(1)(B)) is amended by striking ‘‘or by a clinical 
social worker (as defined in subsection (hh)(1)),,’’ and in-
serting ‘‘, by a clinical social worker (as defined in sub-
section (hh)(1)), or by a marriage and family therapist 
(as defined in subsection (yy)(2)),’’. 
(g) INCLUSION OF MARRIAGE AND FAMILY THERA-
PISTS
AS
PRACTITIONERS
FOR
ASSIGNMENT
OF 
CLAIMS.—Section 1842(b)(18)(C) of the Social Security 
Act (42 U.S.C. 1395u(b)(18)(C)) is amended by adding 
at the end the following new clause: 
‘‘(vii) A marriage and family therapist (as de-
fined in section 1861(yy)(2)).’’.