nished outside any network of providers es-
tablished or recognized under such plan or 
coverage 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 subsection (c) of such section is amended 
to read as follows: 
‘‘(2) INCREASED COST EXEMPTION.— 
‘‘(A) IN
GENERAL.—With respect to a 
group health plan (or health insurance coverage 
offered in connection with such a plan), if the 
application of this section to such plan (or cov-
erage) 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-related dis-
order benefits under the plan (as determined 
and certified under subparagraph (C)) by an 
amount that exceeds the applicable percentage 
described in subparagraph (B) of the actual 
total plan costs, the provisions of this section 
shall not apply to such plan (or coverage) dur-
ing the following plan year, and such exemption
shall apply to the plan (or coverage) for 1 plan 
year. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan (or coverage), the applicable 
percentage described 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 (or coverage) for purposes of this 
subsection shall be made in writing and pre-
pared and certified by a qualified and licensed 
actuary who is a member in good standing of 
the American Academy of Actuaries. Such de-
terminations shall be made available by the 
plan administrator (or health insurance issuer, 
as the case may be) to the general public. 
‘‘(D) 6-MONTH
DETERMINATIONS.—If a 
group health plan (or a health insurance issuer 
offering coverage in connection with such a 
plan) seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be 
made after such plan (or coverage) has com-
plied with this section for the first 6 months of 
the plan year involved. 
‘‘(E) NOTIFICATION.—A group health plan 
under this part shall comply with the notice re-
quirement under section 712(c)(2)(E) of the 
Employee Retirement Income Security Act of 
1974 with respect to a modification of mental 
health and substance-related disorder benefits 
as permitted under this paragraph as if such 
section applied to such plan. 
‘‘(F) 
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 Health and 
Human Services 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 Health and Human Serv-
ices shall make available, upon request to 
the appropriate committees of Congress 
and on not more than an annual basis, an