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Recovery in the News
Bill Sponsors Devise an Offset for Mental Health Parity Legislation
Drew Armstrong
Congressional Quarterly
March 3, 2008
House Democrats will try to push two health care priorities Wednesday, bringing a mental health parity bill to the floor that would be paid for with a ban on physician-owned “specialty” hospitals.
The mental health parity bill (HR 1424) has been championed by sponsor Patrick J. Kennedy, D-R.I., and the lead GOP cosponsor, Jim Ramstad of Minnesota. The pair carefully shepherded the bill through the committee process last year, but floor action had been delayed — until now — as the two lawmakers sought an offset of $4 billion over 10 years.
The bill would require health insurers to offer mental health benefits equal in cost and scope to medical and surgical benefits. The legislation would prohibit insurers from requiring larger co-payments or imposing lower reimbursement ceilings for mental health conditions. It also would require insurers to cover a wide variety of mental health conditions.
The bill has 273 cosponsors and is expected to easily pass the House.
Because it would raise insurance premium costs, however, it increases the deduction employers would write off as non-taxable employee compensation, reducing federal tax revenue and incurring the $4 billion price tag for the bill.
To pay for the bill, Democrats would bar doctors from referring patients to hospitals in which they have an ownership interest.
That proposal would essentially ban the growth of so-called specialty hospitals, which often are for-profit operations owned at least in part by physician-investors. They typically specialize in one or more surgical procedures, such as heart surgery or orthopedics. Critics say the physicians’ ownership interest gives them an incentive to refer patients to the facility and to increase volume unnecessarily. Those critics believe a ban on referrals to specialty hospitals would reduce the number of medical procedures being performed, and thus result in savings.
It has long been expected that the specialty hospital provision, which appeared first in a House children’s health bill last year, would be revived at some point. Thirty-three freshman Democrats sent a letter in support of the provision to Speaker Nancy Pelosi, D-Calif., on Feb. 28.
An additional offset would increase the rebate that drug companies are required to give state Medicaid programs. The bill’s cost and the two offsets were confirmed by a House Democratic aide.
Conservative Republicans were preparing to oppose the bill. A Republican Study Committee memo issued Monday criticized it, saying the offsets could “cause conservatives concern.” According to the memo, the specialty hospital ban would hinder “the development of a new source of consumer choice and medical innovation.”
It was unclear whether conservative Republicans would use procedural tactics in an effort to slow or block the bill.
The bill would include a “grandfather” clause protecting existing specialty hospitals. A previous moratorium on the development of new specialty hospitals lapsed in 2006. Although the exact number of the hospitals is unknown, the total has grown since the ban lapsed.
The Rules Committee is scheduled to consider the bill Tuesday evening. The panel will combine earlier versions of the legislation that were separately approved by three different committees — Education and Labor on July 18; Ways and Means on Sept. 26; and Energy and Commerce on Oct. 15 — and will add the offsets as well.
A related Senate bill (S 558) by Kennedy’s father, Edward M. Kennedy, D-Mass., passed on Sept. 18. Although less prescriptive in terms of requirements on insurers, the Senate bill has the support of business and insurance lobbies, which oppose the House bill as too far-reaching.
The two Kennedys have been trying to negotiate a compromise between the two bills, even as the House moves forward to stake out its own position with passage of its legislation.
© 2008 Congressional Quarterly Inc. All Rights Reserved.