National Mental Health Parity Act of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Mental Health Parity Act of 
1999''.

            TITLE I--PARITY FOR TREATMENT OF MENTAL ILLNESS

SEC. 101. PARITY FOR TREATMENT OF MENTAL ILLNESS.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
adding at the end the following:

          ``Subtitle L--Parity for Treatment of Mental Illness

``SEC. 9901. PARITY FOR TREATMENT OF MENTAL ILLNESS.

    ``(a) Imposition of Tax.--
            ``(1) Health insurance coverage.--
                    ``(A) In general.--In the case of any health 
                insurance coverage offered by a health insurance issuer 
                that fails to meet the standard under subsection (c) at 
                any time during a calendar year, there is hereby 
                imposed a tax equal to 25 percent of the premiums 
                received under such plan during the calendar year.
                    ``(B) Liability for tax.--The tax imposed under 
                subparagraph (A) shall be paid by the health insurance 
                issuer.
            ``(2) Group health plan.--
                    ``(A) In general.--In the case of a group health 
                plan that fails to meet the standard under subsection 
                (c) at any time during a calendar year, there is hereby 
                imposed a tax equal to 25 percent of the health 
                coverage expenditures for such calendar year under such 
                plan.
                    ``(B) Liability for tax.--The tax imposed under 
                subparagraph (A) shall be paid by the group health 
                plan.
                    ``(C) Health coverage expenditures.--For purposes 
                of this paragraph, the health coverage expenditures of 
                any group health plan for any calendar year are the 
                aggregate expenditures for such year for health 
                coverage provided under such plan.
    ``(b) Limitation on Imposition of Tax.--
            ``(1) Failure not discovered exercising reasonable 
        diligence.--No tax shall be imposed under this section on any 
        failure to meet the standard under subsection (c) for which it 
        is established to the satisfaction of the Secretary that none 
        of the persons liable for the tax knew, or exercising 
        reasonable diligence would have known, that such failure 
        existed.
            ``(2) Certain failures corrected within 30 days.--No tax 
        shall be imposed under subsection (a) on any failure to meet 
        the standard under subsection (c) if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period beginning on the first date any person liable 
                for the tax knew, or exercising reasonable diligence 
                would have known, that such failure existed.
            ``(3) Waiver by secretary.--In the case of a failure to 
        meet the standard under subsection (c) that is due to 
        reasonable cause and not to willful neglect, the Secretary may 
        waive part or all of the tax imposed by this section to the 
        extent that the payment of such tax would be excessive relative 
        to the failure involved.
    ``(c) Standard for Parity for Treatment of Mental Illness.--
            ``(1) In general.--A health insurance issuer with respect 
        to health insurance coverage that it offers or a group health 
        plan may not impose additional applications, preadmission 
        screenings, or other procedural restrictions for services, nor 
        impose treatment limitations or financial requirements on the 
        coverage of benefits provided with respect to mental illness if 
        similar limitations or requirements are not imposed on coverage 
        for benefits with respect to other conditions.
            ``(2) Rule of construction.--Nothing in paragraph (1) shall 
        be construed as prohibiting a health insurance issuer with 
        respect to health insurance coverage that it offers or a group 
        health plan from requiring preadmission screening prior to the 
        authorization of services covered under the plan or from 
        applying other limitations that restrict coverage for mental 
        illness to those services that are medically necessary to the 
        extent that such preadmission screening and authorization are 
        required for access to other services covered by the issuer or 
        plan.
    ``(d) Definitions.--For purposes of this section:
            ``(1) Mental illness.--The term `mental illness' means all 
        of the clinical disorders and personality disorders, except for 
        mental retardation, diagnosed on Axis I or Axis II of the most 
        recent edition of the American Psychiatric Association's 
        `Diagnostic and Statistical Manual of Mental Disorders'.
            ``(2) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning given such term by section 
        9805(b)(1).
            ``(3) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term by section 9805(b)(2).
            ``(4) Group health plan.--The term `group health plan' has 
        the meaning given such term by section 5000(b)(1).''.
    (b) Clerical Amendment.--The table of subtitles of such Code is 
amended by adding at the end the following new item:

                              ``Subtitle L. Parity for treatment of 
                                        mental illness.''

SEC. 102. EFFECTIVE DATE.

    The amendment made by section 101 applies--
            (1) with respect to health insurance coverage, to a 
        contract, policy, or certificate initiated or renewed after 
        December 31, 1999; and
            (2) with respect to group health plans, to plan years 
        beginning after December 31, 1999.

              TITLE II--MEDICARE MENTAL HEALTH IMPROVEMENT

SEC. 201. REFERENCES IN TITLE.

    Whenever in this title an amendment is expressed in terms of an 
amendment to or repeal of a section or other provision, the reference 
shall be considered to be made to that section or other provision of 
the Social Security Act.

SEC. 202. INPATIENT PSYCHIATRIC HOSPITAL SERVICES.

    (a) Services Covered.--Section 1812(a) (42 U.S.C. 1395d(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (3);
            (2) by striking the period at the end of paragraph (4) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(5) inpatient hospital services furnished primarily for 
        the diagnosis or treatment of mental illness or substance abuse 
        for up to 60 days during a year.''.
    (b) Limitation on Coverage.--Section 1812(b)(3) (42 U.S.C. 
1395d(b)) is amended to read as follows:
            ``(3) inpatient hospital services furnished primarily for 
        the diagnosis or treatment of mental illness or substance abuse 
        that are furnished to the individual during a year after such 
        services have been furnished to the individual for a total of 
        60 days during the year.''.
    (c) Conforming Amendments.--(1) Section 1812(a)(1) (42 U.S.C. 
1395d(a)(1)) is amended by inserting ``(other than services described 
in paragraph (5))'' after ``inpatient hospital services'' the first 
place it appears.
    (2) Section 1812(b)(1) (42 U.S.C. 1395d(b)(1)) is amended by 
inserting ``(other than services described in paragraph (3))'' after 
``inpatient hospital services'' the first place it appears.
    (3) Section 1812 (42 U.S.C. 1395d) is amended by striking 
subsection (c).
    (4) Section 1814(a) (42 U.S.C. 1395f(a)) is amended--
            (A) in paragraph (2), by striking subparagraph (A);
            (B) in paragraph (3), by striking ``(other than inpatient 
        psychiatric hospital services)''; and
            (C) by striking paragraph (4).
    (5) Section 1861 (42 U.S.C. 1395x) is amended by striking 
subsection (c).
    (d) Effective Date; Transition.--The amendments made by this 
section shall take effect January 1, 2000, except that--
            (1) an individual who at any time prior to such date has 
        been furnished inpatient psychiatric hospital services (as 
        defined for purposes of title XVIII of the Social Security Act 
        as of the date of the enactment of this Act) for 190 
        consecutive days is not entitled to any services under section 
        1812(a)(5) of such Act (as added by subsection (a)(3)); and
            (2) in the case of an individual who is not described in 
        paragraph (1) and is receiving inpatient psychiatric hospital 
        services (as defined for purposes of title XVIII of the Social 
        Security Act as of the date of the enactment of this Act) on 
        December 31, 1999, for which payment may be made under 
section 1812 of such Act, the number of days of services for which the 
individual is entitled under section 1812(a)(5) of such Act (and the 
number of days applicable under section 1812(b)(3) of such Act) shall 
be equal to the greater of 60 or the difference between 190 days and 
the number of days of such inpatient psychiatric hospital services 
furnished to the individual prior to January 1, 2000.

SEC. 203. INTENSIVE RESIDENTIAL SERVICES.

    (a) Coverage Under Part A.--Section 1812(a) (42 U.S.C. 1395d(a)), 
as amended by section 202(a), is amended--
            (1) by striking ``and'' at the end of paragraph (4);
            (2) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(6) intensive residential services (as described in 
        section 1861(uu)) 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 during the year 
        if necessary for the individual to complete a course of 
        treatment to the extent that the number of days of inpatient 
        hospital services described in paragraph (5) that may be 
        furnished to the individual during the year (as reduced under 
        such paragraph) is not less than 15.''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended 
by adding at the end the following new subsection:

                    ``Intensive Residential Services

    ``(uu)(1) Subject to paragraph (2), the term `intensive residential 
services' means inpatient services provided in any of the following 
facilities:
            ``(A) Residential detoxification centers.
            ``(B) Crisis residential programs or mental illness 
        residential treatment programs.
            ``(C) Therapeutic family or group treatment homes.
            ``(D) Residential centers for substance abuse treatment.
    ``(2) No service may be treated as an intensive residential service 
under paragraph (1) unless the facility at which the service is 
provided--
            ``(A) is legally authorized to provide such service under 
        the law of the State (or under a State regulatory mechanism 
        provided by State law) in which the facility is located or is 
        certified to provide such service by an appropriate 
        accreditation entity approved by the State in consultation with 
        the Secretary; and
            ``(B) meets such other requirements as the Secretary may 
        impose to assure the quality of the intensive residential 
        services provided.
    ``(3) No service may be treated as an intensive residential service 
under paragraph (1) unless the service is furnished in accordance with 
standards established by the Secretary for the management of such 
services.''.
            (3) Reduction in days of coverage for inpatient services.--
        Section 1812(a)(5) and section 1812(b)(3), as amended by 
        section 202, are each amended by striking the period at the end 
        and inserting the following: ``, reduced by a number of days 
        determined by the Secretary so that the actuarial value of 
        providing such number of days of services under this paragraph 
        to the individual is equal to the actuarial value of the days 
        of inpatient residential services furnished to the individual 
        under paragraph (6) during the year after such services have 
        been furnished to the individual for 120 days during the year 
        (rounded to the nearest day).''.
            (4) Amount of payment.--Section 1814 (42 U.S.C. 1395f) is 
        amended--
                    (A) in subsection (b) in the matter preceding 
                paragraph (1), by inserting ``other than intensive 
                residential services,'' after ``hospice care,''; and
                    (B) by adding at the end the following new 
                subsection:

              ``Payment for Intensive Residential Services

    ``(m) The amount of payment under this part for intensive 
residential services under section 1812(a)(6) shall be equal to--
            ``(1) the lesser of--
                    ``(A) the reasonable cost of such services, as 
                determined under section 1861(v), or
                    ``(B) the customary charges with respect to such 
                services,
        less the amount a provider may charge as described in clause 
        (ii) of section 1866(a)(2)(A):
            ``(2) if such services are furnished by a public provider 
        of services or by another provider which demonstrates to the 
        satisfaction of the Secretary that a significant portion of its 
        patients are low-income (and requests that payment be made 
        under this clause), free of charge or at nominal charges to the 
        public, the amount determined in accordance with subsection 
        (b)(2); and
            ``(3) if (and for so long as) the conditions described in 
        subsection (b)(3) are met, the amounts determined under the 
        reimbursement system described in such section.''.

SEC. 204. LOWERING COINSURANCE FOR CERTAIN OUTPATIENT MENTAL HEALTH AND 
              SUBSTANCE ABUSE SERVICES.

    (a) In General.--Section 1833(c) (42 U.S.C. 1395l(c)) is amended by 
striking ``mental, psychoneurotic, and personality disorders'' and all 
that follows through ``are incurred'' and inserting the following: 
``mental illness or substance abuse of an individual who, at the time 
such expenses are incurred, is over 18 years of age, is not an 
inpatient of a hospital, and has received 5 or more sessions of such 
treatment during the calendar year,''.
    (b) Requiring Services To Be Furnished in Accordance With 
Management Standards.--Section 1862(a) (42 U.S.C. 1395y(a)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (20);
            (2) by striking the period at the end of paragraph (21) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (21) the following new 
        paragraph:
            ``(22) in the case of any items or services furnished under 
        part B for the treatment of mental illness or emotional 
        disturbance (including substance abuse), if the services are 
        not furnished in accordance with standards established by the 
        Secretary for the management of such services.''.

SEC. 205. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall apply to items and services furnished on or after 
January 1, 2000.

Summary: Title II: Medicare Mental Health Improvement
 - Amends title XVIII (Medicare) of the Social Security Act to restructure the mental health benefit, including: (1) coverage under Medicare part A (Hospital Insurance) of inpatient hospital services furnished primarily for the diagnosis or treatment of mental illness or substance abuse for up to 60 days during a year, as well as coverage of intensive residential services furnished to an individual for up to 120 days during a year; (2) lower co-payments for certain outpatient mental health and substance abuse services; (3) waiver of co-payment for case management services furnished to a seriously mentally ill adult, a seriously emotionally disturbed child, or an adult or child with serious substance abuse disorder; (4) case management services for an unlimited duration for such individuals; and (5) provision of items and services furnished under Medicare part B (Supplementary Medical Insurance) for the treatment of mental illness or emotional disturbances according to standards established by the Secretary of Health and Human Services.