PRIOR PRINTER'S NO. 1283 PRINTER'S NO. 2586
No. 1137 Session of 1997
INTRODUCED BY MICOZZIE, COLAFELLA, SATHER, COLAIZZO, MELIO,
M. N. WRIGHT, FICHTER, TANGRETTI, ROONEY, O'BRIEN, OLASZ,
TULLI, MARKOSEK, STURLA, SHANER, BAKER, MUNDY, SEMMEL, TIGUE,
ITKIN, TRUE, PLATTS, BUNT, KENNEY, VAN HORNE, SURRA, BOSCOLA,
L. I. COHEN, GRUPPO, TRELLO, YOUNGBLOOD, STEELMAN, WAUGH,
FLEAGLE, RUBLEY, COY, TRICH, E. Z. TAYLOR, SERAFINI, DeLUCA,
BROWNE, CURRY, C. WILLIAMS, JAMES, TRAVAGLIO AND SEYFERT,
APRIL 2, 1997
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, NOVEMBER 24, 1997
AN ACT
1 Requiring all health insurance policies to have certain minimum
2 protections.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Mental Health
7 Parity Act.
8 Section 2. Statement of purpose. <--
9 It is the intent of the General Assembly to extend to all
10 health policies issued in this Commonwealth the protections
11 established in the Health Insurance Portability and
12 Accountability Act of 1996 (Public Law 104-191, 110 Stat. 1936).
13 Section 3. Definitions.
14 The following words and phrases when used in this act shall
1 have the meanings given to them in this section unless the
2 context clearly indicates otherwise:
3 "Insurer." Any insurance company, association or reciprocal,
4 nonprofit hospital plan corporation; a nonprofit professional
5 health service plan; or any of the following:
6 (1) A preferred provider with a health management
7 gatekeeper role for primary care physicians organized and
8 regulated as a health services corporation or preferred
9 provider organization subject to section 630 of the act of
10 May 17, 1921 (P.L.682, No.284), known as The Insurance
11 Company Law of 1921.
12 (2) A risk-assuming preferred provider organization
13 organized and regulated under The Insurance Company Law of
14 1921.
15 (3) A health maintenance organization organized and
16 regulated under the act of December 29, 1972 (P.L.1701,
17 No.364), known as the Health Maintenance Organization Act.
18 (4) A fraternal benefit society subject to the act of
19 December 14, 1992 (P.L.835, No.134), known as the Fraternal
20 Benefit Societies Code.
21 "Commissioner." The Insurance Commissioner of the
22 Commonwealth.
23 "Small employer." A person, firm, corporation, partnership
24 or association that is actively engaged in business, that on at
25 least 50% of its working days during the preceding calendar
26 quarter, employed at least three but no more than 50 full-time
27 employees, the majority of whom were employed within this
28 Commonwealth. In determining the number of full-time employees,
29 companies which are affiliated companies or which are eligible
30 to file a combined tax return for purposes of State taxation
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1 shall be considered one employer.
2 Section 4. Parity in application of certain limits to mental
3 health benefits.
4 (a) Aggregate lifetime limits.--In the case of any policy
5 issued by an insurer that provides both medical and surgical
6 benefits and mental health benefits, the following shall apply:
7 (1) If the policy does not include an aggregate lifetime
8 dollar limit on substantially all medical and surgical
9 benefits, the policy shall not impose any aggregate limit on
10 mental health benefits.
11 (2) If the policy does include an aggregate lifetime
12 dollar limit on substantially all medical and surgical
13 benefits, the policy shall either apply the applicable
14 lifetime limit both to medical and surgical benefits to which
15 it otherwise would apply and to mental health benefits and
16 not distinguish in the application of such limit between
17 medical and surgical benefits; or not include any aggregate
18 lifetime limit on mental health benefits that is less than
19 the applicable lifetime limit.
20 (3) If the policy is not one described in paragraphs (1)
21 and (2) and includes no or different aggregate lifetime
22 dollar limits on different categories of medical and surgical
23 benefits, the commissioner shall establish rules under which
24 this section shall apply to such a policy with respect to
25 mental health benefits by substituting for the applicable
26 lifetime limit an average aggregate lifetime limit that is
27 computed, taking into account the weighted average of the
28 aggregate lifetime limits applicable to such categories.
29 (b) Annual limits.--In the case of any policy issued by an
30 insurer that provides both medical and surgical benefits and
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1 mental health benefits, the following shall apply:
2 (1) If the policy does not include an annual dollar
3 limit on substantially all medical and surgical benefits, the
4 policy shall not impose any annual limit on mental health
5 benefits.
6 (2) If the policy does include an annual dollar limit on
7 substantially all medical and surgical benefits, the policy
8 shall either apply the applicable annual limit both to
9 medical and surgical benefits to which it otherwise would
10 apply and to mental health benefits and not distinguish in
11 the application of such limit between medical and surgical
12 benefits; or not include any annual limit on mental health
13 benefits that is less than the applicable annual limit.
14 (3) If the policy is not one described in paragraphs (1)
15 and (2) and includes no or different annual dollar limits on
16 different categories of medical and surgical benefits, the
17 commissioner shall establish rules under which this section
18 shall apply to such a policy with respect to mental health
19 benefits by substituting for the applicable annual limit an
20 average annual limit that is computed, taking into account
21 the weighted average of the annual limit applicable to such
22 categories.
23 Section 5. Exemptions.
24 (a) Individuals and small employers.--This act shall not
25 apply to any policy issued to an individual or to a small
26 employer.
27 (b) Increased cost exemption.--This act shall not apply to a
28 policy if the application of the act under the policy would
29 result in an increase in the cost under the policy of at least
30 1%.
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1 Section 6. Construction.
2 Nothing in this act shall be construed as requiring a policy
3 to provide any mental health benefits or, in the case of a
4 policy providing such benefits, as affecting the terms and
5 conditions, including cost-sharing, limits on number of visits
6 or days of coverage and requirements relating to medical
7 necessity, relating to the amount, duration or scope of mental
8 health benefits under the policy, except as specifically
9 provided in this act.
10 Section 7. Applicability.
11 This act shall apply to any health insurance policy,
12 contract, certificate or plan that is issued or renewed on or
13 after the effective date of this act.
14 Section 8. Effective date.
15 This act shall take effect in 180 days.
16 SECTION 2. STATEMENT OF PURPOSE. <--
17 IT IS THE INTENT OF THE GENERAL ASSEMBLY TO EXTEND TO ALL
18 HEALTH POLICIES ISSUED IN THIS COMMONWEALTH ADDITIONAL
19 PROTECTIONS TO THOSE ESTABLISHED IN THE HEALTH INSURANCE
20 PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW 104-191,
21 110 STAT. 1936).
22 SECTION 3. DEFINITIONS.
23 (A) GENERAL RULE.--THE FOLLOWING WORDS AND PHRASES WHEN USED
24 IN THIS ACT SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
25 SECTION UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE:
26 "ASSOCIATION." AN "ASSOCIATION," AS DEFINED IN SECTION 101
27 OF THE ACT OF MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE
28 INSURANCE COMPANY LAW OF 1921, WHICH HOLDS A CURRENT CERTIFICATE
29 OF AUTHORITY.
30 "COMMISSIONER." THE INSURANCE COMMISSIONER OF THE
19970H1137B2586 - 5 -
1 COMMONWEALTH.
2 "COMPANY." A "COMPANY," AS DEFINED IN SECTION 101 OF THE ACT
3 OF MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE INSURANCE
4 COMPANY LAW OF 1921, WHICH HOLDS A CURRENT CERTIFICATE OF
5 AUTHORITY.
6 "DEPARTMENT." THE INSURANCE DEPARTMENT OF THE COMMONWEALTH.
7 "EXCHANGE." AN "EXCHANGE," AS DEFINED IN SECTION 101 OF THE
8 ACT OF MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE INSURANCE
9 COMPANY LAW OF 1921, WHICH HOLDS A CURRENT CERTIFICATE OF
10 AUTHORITY.
11 "FEDERAL ACT." THE HEALTH INSURANCE PORTABILITY AND
12 ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW 104-191, 110 STAT. 1936).
13 "FRATERNAL BENEFIT SOCIETY." AN ENTITY HOLDING A CURRENT
14 CERTIFICATE OF AUTHORITY UNDER THE ACT OF DECEMBER 14, 1992
15 (P.L.835, NO.134), KNOWN AS THE FRATERNAL BENEFIT SOCIETIES
16 CODE.
17 "HEALTH INSURANCE ISSUER." AN INSURER.
18 "HEALTH MAINTENANCE ORGANIZATION." AN ENTITY HOLDING A
19 CURRENT CERTIFICATE OF AUTHORITY UNDER THE ACT OF DECEMBER 29,
20 1972 (P.L.1701, NO.364), KNOWN AS THE HEALTH MAINTENANCE
21 ORGANIZATION ACT.
22 "HOSPITAL PLAN CORPORATION." AN ENTITY HOLDING A CURRENT
23 CERTIFICATE OF AUTHORITY ORGANIZED AND OPERATED UNDER 40 PA.C.S.
24 CH. 61 (RELATING TO HOSPITAL PLAN CORPORATIONS).
25 "INSURER." A FOREIGN OR DOMESTIC INSURANCE COMPANY,
26 ASSOCIATION OR EXCHANGE, HEALTH MAINTENANCE ORGANIZATION,
27 HOSPITAL PLAN CORPORATION, PROFESSIONAL HEALTH SERVICES PLAN
28 CORPORATION, FRATERNAL BENEFIT SOCIETY OR RISK-ASSUMING
29 PREFERRED PROVIDER ORGANIZATION. THIS TERM DOES NOT INCLUDE A
30 "GROUP HEALTH PLAN" AS DEFINED IN SECTION 2791 OF THE PUBLIC
19970H1137B2586 - 6 -
1 HEALTH SERVICE ACT (58 STAT. 682, 42 U.S.C. § 300GG-91).
2 "PREFERRED PROVIDER ORGANIZATION." AN ENTITY HOLDING A
3 CURRENT CERTIFICATE OF AUTHORITY UNDER SECTION 630 OF THE ACT OF
4 MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE INSURANCE COMPANY
5 LAW OF 1921.
6 "PROFESSIONAL HEALTH SERVICES PLAN CORPORATION." AN ENTITY
7 HOLDING A CURRENT CERTIFICATE OF AUTHORITY UNDER 40 PA.C.S. CH.
8 63 (RELATING TO PROFESSIONAL HEALTH SERVICES PLAN CORPORATIONS).
9 THE TERM DOES NOT INCLUDE A "DENTAL SERVICE CORPORATION" OR AN
10 "OPTOMETRIC SERVICE CORPORATION," AS DEFINED IN 40 PA.C.S. §
11 6302(A) (RELATING TO DEFINITIONS).
12 (B) FEDERAL ACT.--IF A TERM IS DEFINED IN THE FEDERAL ACT,
13 THAT DEFINITION SHALL APPLY IN THIS ACT UNLESS THE TERM IS
14 DEFINED IN SUBSECTION (A).
15 SECTION 4. ADOPTION OF FEDERAL ACT FOR MENTAL HEALTH PARITY FOR
16 ALL GROUP POLICIES.
17 (A) INSURERS.--
18 (1) EXCEPT AS SET FORTH IN PARAGRAPH (2), INSURERS SHALL
19 COMPLY WITH SECTION 2705 OF THE PUBLIC HEALTH SERVICE ACT (58
20 STAT. 682, 42 U.S.C. § 300GG-5) IN ANY OFFERING OR ISSUING OF
21 GROUP POLICIES IN THIS COMMONWEALTH.
22 (2) THE SMALL EMPLOYER AND THE INCREASED COST EXEMPTIONS
23 IN SECTION 2705(C) OF THE PUBLIC HEALTH SERVICE ACT (42
24 U.S.C. § 00GG-5CC) SHALL NOT APPLY FOR GROUP POLICIES OFFERED
25 OR ISSUED IN THIS COMMONWEALTH.
26 (B) HEALTH MAINTENANCE ORGANIZATIONS.--LICENSED HEALTH
27 MAINTENANCE ORGANIZATIONS MAY OFFER POLICIES IN CONFORMITY WITH
28 SECTION 1301(B)(6) OF THE PUBLIC HEALTH SERVICE ACT (42 U.S.C. §
29 300 E(B)(6)).
30 SECTION 5. EXCEPTIONS.
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1 (A) POLICIES.--THIS ACT DOES NOT INCLUDE THE FOLLOWING
2 POLICIES: ACCIDENT ONLY, FIXED INDEMNITY, LIMITED BENEFIT,
3 CREDIT, DENTAL, VISION, SPECIFIED DISEASE, MEDICARE SUPPLEMENT,
4 CHAMPUS (CIVILIAN HEALTH AND MEDICAL PROGRAMS FOR THE UNIFORM
5 SERVICES) SUPPLEMENT, LONG-TERM CARE, DISABILITY INCOME,
6 WORKERS' COMPENSATION OR AUTOMOBILE MEDICAL PAYMENT.
7 (B) CONSTRUCTION.--NOTWITHSTANDING SECTIONS 4, 7 AND 10,
8 THIS ACT SHALL NOT BE CONSTRUED TO REQUIRE A HEALTH INSURANCE
9 POLICY TO COMPLY WITH THE PROVISIONS OF THIS ACT IF ALL OF THE
10 FOLLOWING APPLY:
11 (1) THE INDIVIDUAL'S EMPLOYER MAINTAINS THE HEALTH
12 INSURANCE POLICY FOR THE INDIVIDUAL AS AN EMPLOYMENT BENEFIT.
13 (2) THE INDIVIDUAL IS EMPLOYED OUTSIDE THIS
14 COMMONWEALTH.
15 SECTION 6. PENALTIES.
16 (A) GENERAL RULE.--UPON SATISFACTORY EVIDENCE OF A VIOLATION
17 OF THIS ACT BY ANY INSURER OR OTHER PERSON, THE COMMISSIONER MAY
18 PURSUE ANY ONE OF THE FOLLOWING COURSES OF ACTION:
19 (1) SUSPEND, REVOKE OR REFUSE TO RENEW THE LICENSE OF
20 THE OFFENDING PERSON.
21 (2) ENTER A CEASE AND DESIST ORDER.
22 (3) IMPOSE A CIVIL PENALTY OF NOT MORE THAN $5,000 FOR
23 EACH ACTION IN RECKLESS OR NEGLIGENT VIOLATION OF THIS ACT.
24 (4) IMPOSE A CIVIL PENALTY OF NOT MORE THAN $10,000 FOR
25 EACH ACTION IN INTENTIONAL VIOLATION OF THIS ACT.
26 (B) LIMITATION.--PENALTIES IMPOSED AGAINST A PERSON UNDER
27 THIS ACT SHALL NOT EXCEED $500,000 IN THE AGGREGATE DURING A
28 SINGLE CALENDAR YEAR.
29 SECTION 7. MANDATORY OFFERING.
30 (A) REQUIREMENT.--ANY HEALTH INSURER OFFERING GROUP POLICIES
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1 SHALL OFFER AT LEAST ONE POLICY OR AMENDMENT, ENDORSEMENT OR
2 RIDER TO AT LEAST ONE EXISTING POLICY WHICH PROVIDES COVERAGE
3 FOR THE TREATMENT OF MENTAL ILLNESS UNDER THE SAME TERMS AND
4 CONDITIONS AS THE INSURER PROVIDES FOR PHYSICAL ILLNESSES AND
5 CONDITIONS.
6 (B) COVERAGE.--THE COVERAGE FOR MENTAL ILLNESS OFFERED UNDER
7 THIS SECTION MUST BE AT LEAST AS FAVORABLE AS THE COVERAGE
8 PROVIDED FOR OTHER PHYSICAL ILLNESSES AND CONDITIONS AND MUST
9 PROVIDE FOR THE SAME TERMS AND CONDITIONS OF COVERAGE, INCLUDING
10 DURATIONAL LIMITS, DOLLAR LIMITS, VISIT LIMITS, OUT-OF-POCKET
11 LIMITS, COST-SHARING REQUIREMENTS, COPAYMENT AMOUNTS,
12 DEDUCTIBLES AND COINSURANCE FACTORS.
13 (C) SCOPE.--POLICIES OFFERED UNDER THIS SECTION MUST PROVIDE
14 FOR ALL HEALTH COVERAGE MANDATES AFFECTING ALL INSURERS AS
15 DEFINED IN THIS ACT.
16 (D) PREMIUMS.--THE PREMIUM DIFFERENTIAL BETWEEN A POLICY
17 PROVIDING MENTAL ILLNESS COVERAGE REQUIRED UNDER THIS SECTION
18 AND A COMPARABLE POLICY OFFERED BY AN INSURER SHALL NOT EXCEED
19 3%.
20 (E) DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
21 WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
22 SUBSECTION:
23 "COMPARABLE POLICY." THE HEALTH INSURANCE POLICY PURCHASED
24 MOST FREQUENTLY FROM THE INSURER.
25 "MENTAL HEALTH BENEFITS." BENEFITS WITH RESPECT TO MENTAL
26 HEALTH SERVICES, AS DEFINED UNDER THE HEALTH INSURANCE POLICY.
27 THE TERM DOES NOT INCLUDE SUBSTANCE TREATMENT OR CHEMICAL
28 DEPENDENCY TREATMENT.
29 SECTION 8. NOTICE.
30 ANY POLICY, AMENDMENT, ENDORSEMENT OR RIDER WHICH DOES NOT
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1 PROVIDE MENTAL ILLNESS COVERAGE AS REQUIRED UNDER SECTION 7 MUST
2 PROVIDE A CLEAR NOTICE THAT THE COVERAGE FOR THE TREATMENT OF
3 MENTAL ILLNESS IS LESS THAN THE COVERAGE FOR THE TREATMENT OF
4 OTHER ILLNESSES.
5 SECTION 9. APPLICABILITY.
6 THIS ACT SHALL APPLY AS FOLLOWS:
7 (1) SECTIONS 1, 2, 3, 4, 5, 6, 8, 9, 10, 11 AND 12 SHALL
8 APPLY TO ALL GROUP HEALTH INSURANCE POLICIES, CONTRACTS,
9 CERTIFICATES OR PLANS, WHICH ARE ISSUED OR RENEWED AFTER
10 DECEMBER 31, 1997.
11 (2) SECTIONS 7 AND 4(A)(2) SHALL APPLY TO ALL HEALTH
12 INSURERS OFFERING, ISSUING, OR RENEWING GROUP POLICIES,
13 CONTRACTS, CERTIFICATES OR PLANS AFTER JUNE 30, 1998.
14 SECTION 10. REPORT.
15 THE LEGISLATIVE BUDGET AND FINANCE COMMITTEE SHALL CONDUCT A
16 STUDY ON THE EFFECTS OF THIS ACT, INCLUDING THE COSTS OF
17 PROVIDING THE MENTAL HEALTH SERVICES UNDER SECTION 7, THE EFFECT
18 ON POLICY PREMIUMS, COST SAVINGS DERIVED FROM INCREASED MENTAL
19 HEALTH COVERAGE, THE EFFECTS OF ADVERSE SELECTION RESULTING
20 FROM THE OPTIONAL NATURE OF NONDISCRIMINATORY COVERAGE AND THE
21 LIKELY EFFECT OF REMOVING THE OPTION. THE COMMITTEE SHALL SUBMIT
22 ITS FINDINGS TO THE SECRETARY OF THE SENATE AND THE CHIEF CLERK
23 OF THE HOUSE OF REPRESENTATIVES BY JULY 1, 2001.
24 SECTION 11. EXPIRATION.
25 THIS ACT SHALL EXPIRE SEPTEMBER 30, 2001.
26 SECTION 12. EFFECTIVE DATE.
27 THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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