GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

S	1 

SENATE BILL 1254*

Short Title:  Mental Health/Chem. Dep. Parity.	(Public)

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Sponsors: Senators Martin of Guilford, Martin of Pitt; Albertson, Carpenter, Clodfelter, Dannelly, Horton, Lucas, Phillips, Plyler, Purcell, Warren, and Weinstein.

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Referred to:  Health Care.

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May 16, 2000

A BILL TO BE ENTITLED
AN ACT TO REQUIRE PARITY IN HEALTH INSURANCE COVERAGE FOR MENTAL ILLNESS AND CHEMICAL DEPENDENCY TREATMENT.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-51-50 reads as rewritten:
"§ 58-51-50.  Coverage for chemical dependency treatment.
(a)	Definitions. – As used in this section, the term:
(1)	'Chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(2)	'Health benefit plan' has the same meaning as in G.S. 58-3-220.
(3)	'Insurer' has the same meaning as in G.S. 58-3-220.
(b)	Chemical Dependency Parity Requirement for Health Insurance Contracts Covering Ten or More Employees. –Every health insurer shall provide in each group health benefit plan covering 10 or more employees benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits for physical illness generally. Benefits for treatment of chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
(c)	Chemical Dependency Parity Requirement for Health Insurance Contracts Covering Less Than Ten Employees. – Every health insurer shall provide, in each group health benefit plan covering less than 10 employees, benefits for the necessary care and treatment of chemical dependency.  Benefits for treatment of chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, maximum out-of-pocket limits, and annual and lifetime dollar limits.  'Limits' does not include deductibles, co-payments, coinsurance factors, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
	(d) Case Management. – An insurer may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally.
(e)	Medical Necessity. – Nothing in this section prohibits a group health benefit plan from managing the provision of benefits through common methods, including, but not limited to, preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection.
			(g)	 Provisions for benefits for necessary care and treatment of chemical dependency in group policies or group contracts of insurance shall provide benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities;
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes: 
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification or programs; and
(3)	Duly licensed physicians and duly licensed practicing psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed under Article 2 of Chapter 122C of the General Statutes.
This subsection does not prohibit any policy or contract of insurance from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency.
	."
Section 2. Effective January 1, 2004, G.S. 58-51-50, as amended by Section 1 of this act, reads as rewritten:
"§ 58-51-50.  Coverage for chemical dependency treatment.
(a)	Definitions. – As used in this section, the term:
(1)	'Chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(2)	'Health benefit plan' has the same meaning as in G.S. 58-3-220.
(3)	'Insurer' has the same meaning as in G.S. 58-3-220.
(b)	Chemical Dependency Parity Requirement. –  Every health insurer shall provide in each group health benefit plan benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits for physical illness generally.  Benefits for treatment of chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
		(d) Case Management. – An insurer may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally. 
(e)	Medical Necessity. – Nothing in this section prohibits a group health benefit plan from managing the provision of benefits through common methods, including, but not limited, to preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection.
(g)	Provisions for benefits for necessary care and treatment of chemical dependency in group policies or group contracts of insurance shall provide benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities;
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes:
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification or programs; and
(3)	Duly licensed physicians and duly licensed practicing psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed under Article 2 of Chapter 122C of the General Statutes.
This subsection does not prohibit any policy or contract of insurance from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency."
Section 3. G.S. 58-51-55 reads as rewritten:
"§ 58-51-55.  No discrimination against mentally ill and chemically dependent individuals.
(a)	Definitions. – As used in this section, the term:
(1)	'Mental illness' has the same meaning as defined in G.S. 122C-3(21), with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or a subsequent edition published by the American Psychiatric Association, except those mental disorders coded in the DSM-IV or subsequent edition as substance-related disorders (291.0 through 292.9 and 303.0 through 305.9) and those coded as 'V' codes.
(2)	'Chemical dependency' has the same meaning as defined in G.S. 58-51-50, with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or subsequent editions of this manual.
(b)	Coverage of Physical Illness. – No insurance company licensed in this State under this Chapter shall, solely because an individual to be insured has or had a mental illness or chemical dependency:
(1)	Refuse to issue or deliver to that individual any policy that affords benefits or coverages for any medical treatment or service for physical illness or injury;
(2)	Have a higher premium rate or charge for physical illness or injury coverages or benefits for that individual; or
(3)	Reduce physical illness or injury coverages or benefits for that individual.
										")."
Section 4. Article 3 of Chapter 58 of the General Statutes is amended by adding the following new section to read:
"§ 58-3-220.  Mental illness benefits coverage.
(a)	Mental Illness Parity Requirement for Health Benefit Plans Covering Ten or More Employees. – A health insurer shall provide, in each group health benefit plan covering 10 or more employees, benefits for the necessary care and treatment of mental illness that are no less favorable than benefits for physical illness generally.  Benefits for treatment of mental illness shall be subject to the same limits as benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
(b)	Mental Illness Parity Requirement for Health Benefit Plans Covering Less Than Ten Employees. – Every health insurer shall provide, in each group health benefit plan covering less than 10 employees, benefits for the necessary care and treatment of mental illness.  Benefits for treatment of mental illness shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, maximum out-of-pocket limits, and annual and lifetime dollar limits.  'Limits' does not include deductibles, co-payments, coinsurance factors, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
	(c) Case Management. – An insurer may use a case management program for mental illness benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner.   These rules may only ensure that case management programs are not designed to avoid the requirements of this section for parity between the benefits for mental illness and those for physical illness generally.
	(d) Medical Necessity. – Nothing in this section prohibits a group health benefit plan from managing the provision of benefits through common methods, including, but not limited to, preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for mental illness only to those that are deemed medically necessary.
(e)	Definitions. – As used in this section:
(1)	'Health benefit plan' means an accident and health insurance policy or certificate; a nonprofit hospital or medical service corporation contract; a health maintenance organization subscriber contract; a plan provided by a multiple employer welfare arrangement; or a plan provided by another benefit arrangement, to the extent permitted by the Employee Retirement Income Security Act of 1974, as amended, or by any waiver of or other exception to that Act provided under federal law or regulation. 'Health benefit plan' includes a blanket health policy or blanket accident and health policy. 'Health benefit plan' does not mean any of the following kinds of insurance:
a.	Accident.
b.	Credit.
c.	Disability income.
d.	Long-term or nursing home care.
e.	Medicare supplement.
f.	Specified disease.
g.	Dental or vision.
h.	Coverage issued as a supplement to liability insurance.
i.	Workers' compensation.
j.	Medical payments under automobile or homeowners.
k.	Insurance under which benefits are payable with or without regard to fault and that are statutorily required to be contained in any liability policy or equivalent self-insurance.
l.	Hospital income or indemnity.
m.	Short-term limited duration health insurance policies as defined in Part 144 of Title 45 of the Code of Federal Regulations.
(2)	'Insurer' means an insurance company subject to this Chapter, a service corporation organized under Article 65 of this Chapter, a health maintenance organization organized under Article 67 of this Chapter, and a multiple employer welfare arrangement subject to Article 49 of this Chapter.
(3)	'Mental illness' has the same meaning as in G.S. 122C-3(21), with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or a subsequent edition published by the American Psychiatric Association, except those mental disorders coded in the DSM-IV or subsequent edition as substance-related disorders (291.0 through 292.9 and 303.0 through 305.9) and those coded as 'V' codes."
Section 5. Effective January 1, 2004, G.S. 58-3-220, as enacted by this act, reads as rewritten:
"§ 58-3-220.  Mental illness benefits coverage.
(a)	Mental Illness Parity Requirement. – A health insurer shall provide in each group health benefit plan benefits for the necessary care and treatment of mental illness that are no less favorable than benefits for physical illness generally.  Benefits for treatment of mental illness shall be subject to the same limits as benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
	(c)	Case Management. – An insurer may use a case management program for mental illness benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner.   These rules may only ensure that case management programs are not designed to avoid the requirements of this section for parity between the benefits for mental illness and those for physical illness generally.
(d)	Medical Necessity. – Nothing in this section prohibits a group health benefit plan from managing the provision of benefits through common methods, including, but not limited to, preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for mental illness only to those that are deemed medically necessary.
(e)	Definitions. – As used in this section:
(1)	'Health benefit plan' means an accident and health insurance policy or certificate; a nonprofit hospital or medical service corporation contract; a health maintenance organization subscriber contract; a plan provided by a multiple employer welfare arrangement; or a plan provided by another benefit arrangement, to the extent permitted by the Employee Retirement Income Security Act of 1974, as amended, or by any waiver of or other exception to that Act provided under federal law or regulation. 'Health benefit plan' includes a blanket health policy or blanket accident and health policy. 'Health benefit plan' does not mean any of the following kinds of insurance:
a.	Accident.
b.	Credit.
c.	Disability income.
d.	Long-term or nursing home care.
e.	Medicare supplement.
f.	Specified disease.
g.	Dental or vision.
h.	Coverage issued as a supplement to liability insurance.
i.	Workers' compensation.
j.	Medical payments under automobile or homeowners.
k.	Insurance under which benefits are payable with or without regard to fault and that are statutorily required to be contained in any liability policy or equivalent self-insurance.
l.	Hospital income or indemnity.
m.	Short-term limited duration health insurance policies as defined in Part 144 of Title 45 of the Code of Federal Regulations.
(2)	'Insurer' means an insurance company subject to this Chapter, a service corporation organized under Article 65 of this Chapter, a health maintenance organization organized under Article 67 of this Chapter, and a multiple employer welfare arrangement subject to Article 49 of this Chapter.
(3)	'Mental illness' has the same meaning as in G.S. 122C-3(21), with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or a subsequent edition published by the American Psychiatric Association, except those mental disorders coded in the DSM-IV or subsequent edition as substance-related disorders (291.0 through 292.9 and 303.0 through 305.9) and those coded as 'V' codes."
Section 6. G.S. 58-65-75 reads as rewritten:
"§ 58-65-75.  Coverage for chemical dependency treatment.
(a)	Definition. – As used in this section, the term 'chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social, or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(b)	Chemical Dependency Parity Requirement for Group Insurance Certificate or Group Subscriber Contracts Covering Ten or More Employees. – Every group insurance certificate or group subscriber contract covering 10 or more employees under any hospital or medical plan governed by this Article and Article 66 of this Chapter shall provide to its insureds benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits for physical illness generally. Benefits for chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
(c)	Chemical Dependency Parity Requirement for Group Insurance Certificate or Group Subscriber Contracts Covering Less Than Ten Employees. – Every group insurance certificate or group subscriber contract covering less than 10 employees under any hospital or medical plan governed by this Article and Article 66 of this Chapter shall provide to its insureds benefits for the necessary care and treatment of chemical dependency benefits for the necessary care and treatment of chemical dependency.  Benefits for treatment of chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, maximum out-of-pocket limits, and annual and lifetime dollar limits.  'Limits' does not include deductibles, co-payments, coinsurance factors, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
(d)	Case Management. – A group insurance certificate or group subscriber contract may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient; provided, that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally.
(e)	Medical Necessity. – Nothing in this section prohibits a group hospital or medical plan governed by this Article from managing the provision of benefits through common methods, including, but not limited to, preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection.
			(g)	Provisions for benefits for necessary care and treatment of chemical dependency in group certificates or group contracts shall provide for benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities; 
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes:
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification facilities or programs; and
(3)	Duly licensed physicians and duly licensed psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed under Article 2 of Chapter 122C of the General Statutes.  'Duly licensed psychologists' are defined as licensed psychologists who hold permanent licensure and certification as health services provider psychologist issued by the North Carolina Psychology Board.
This section does not prohibit any certificate or contract from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency.
	."
Section 7. Effective January 1, 2004, G.S. 58-65-75, as amended by Section 6 of this act, reads as rewritten:
"§ 58-65-75.  Coverage for chemical dependency treatment.
(a)	Definition. – As used in this section, the term 'chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social, or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(b)	Chemical Dependency Parity Requirement. – Every group insurance certificate or group subscriber contract under any hospital or medical plan governed by this Article and Article 66 of this Chapter shall provide to its insureds benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits for physical illness generally. Benefits for chemical dependency shall be subject to the same limits as are benefits for physical illness generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
		(d) Case Management. – A group insurance certificate or group subscriber contract may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally. 
(e)	Medical Necessity. – Nothing in this section prohibits a hospital or medical plan governed by this Article from managing the provision of benefits through common methods, including, but not limited, to preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection. 
(g)	Provisions for benefits for necessary care and treatment of chemical dependency in group certificates or group contracts shall provide for benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities; 
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes:
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification facilities or programs; and
(3)	Duly licensed physicians and duly licensed psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed  under Article 2 of Chapter 122C of the General Statutes.  'Duly licensed psychologists' are defined as licensed psychologists who hold permanent licensure and certification as health services provider psychologist issued by the North Carolina Psychology Board.
This subsection does not prohibit any certificate or contract from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency."
Section 8. G.S. 58-65-90 reads as rewritten:
"§ 58-65-90.  No discrimination against mentally ill and chemically dependent individuals.
(a)	Definitions. – As used in this section, the term:
(1)	'Mental illness' has the same meaning as defined in G.S. 122C-3(21), with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or a subsequent edition published by the American Psychiatric Association, except those mental disorders coded in the DSM-IV or subsequent edition as substance-related disorders (291.0 through 292.9 and 303.0 through 305.9) and those coded as 'V' codes.
(2)	'Chemical dependency' has the same meaning as defined in G.S. 58-65-75, with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or subsequent editions of this manual.
(b)	Coverage of Physical Illness. – No service corporation governed by this Chapter shall, solely because an individual to be insured has or had a mental illness or chemical dependency:
(1)	Refuse to issue or deliver to that individual any individual or group subscriber contract in this State that affords benefits or coverage for medical treatment or service for physical illness or injury;
(2)	Have a higher premium rate or charge for physical illness or injury coverages or benefits for that individual; or
(3)	Reduce physical illness or injury coverages or benefits for that individual.
										."
Section 9. G.S. 58-67-70 reads as rewritten:
"§ 58-67-70.  Coverage for chemical dependency treatment.
(a)	Definition. – As used in this section, the term 'chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(b)	Chemical Dependency Parity Requirement For Health Care Plans Covering Ten or More Employees. – Every health maintenance organization that writes a health care plan on a group basis covering 10 or more employees and that is subject to this Article shall provide benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits under the health care plan generally. Benefits for chemical dependency shall be subject to the same limits as are benefits under the health care plan generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
(c)	Chemical Dependency Parity Requirement For Health Care Plans Covering Less Than Ten Employees. – Every health maintenance organization that writes a health care plan on a group basis covering less than 10 employees and that is subject to this Article shall provide benefits for the necessary care and treatment of chemical dependency.  Benefits for chemical dependency shall be subject to the same limits as are benefits under the health care plan generally.  For purposes of this subsection, 'limits' includes day and visit limits, maximum out-of-pocket limits, and annual and lifetime dollar limits.  'Limits' does not include deductibles, co-payments, coinsurance factors, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness, and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
	(d) Case Management. – A health maintenance organization may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally. 
(e)	Medical Necessity. – Nothing in this section prohibits a health maintenance organization from managing the provision of benefits through common methods, including, but not limited, to preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection.
			(g)	 Provisions for benefits for necessary care and treatment of chemical dependency in group policies or group contracts of insurance shall provide benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities;
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes: 
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification or programs; and
(3)	Duly licensed physicians and duly licensed practicing psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed under Article 2 of Chapter 122C of the General Statutes.
This subsection does not prohibit any policy or contract of insurance from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency.
	(h)	 Notwithstanding any other provision of this section or Article, any health maintenance organization subject to this Article that becomes a qualified health maintenance organization under Title XIII of the United States Public Health Service Act shall provide the benefits required under that federal Act, which shall be deemed to constitute compliance with the provisions of this section; and any health maintenance organization may provide that the benefits provided under this section must be obtained through providers affiliated with the health maintenance organization."
Section 10. Effective January 1, 2004, G.S. 58-67-70, as amended by Section 9 of this act, reads as rewritten:
"§ 58-67-70.  Coverage for chemical dependency treatment.
(a)	Definition. – As used in this section, the term 'chemical dependency' means the pathological use or abuse of alcohol or other drugs in a manner or to a degree that produces an impairment in personal, social or occupational functioning and which may, but need not, include a pattern of tolerance and withdrawal.
(b)	Chemical Dependency Parity Requirement. – Every health maintenance organization that writes a health care plan on a group basis and that is subject to this Article shall provide benefits for the necessary care and treatment of chemical dependency that are not less favorable than benefits under the health care plan generally.  Benefits for chemical dependency shall be subject to the same limits as are benefits under the health care plan generally.  For purposes of this subsection, 'limits' includes day and visit limits, deductibles, coinsurance factors, co-payments, maximum out-of-pocket limits, annual and lifetime dollar limits, and any other dollar limits or fees for covered services prior to reaching any maximum out-of-pocket limit.  Any out-of-pocket limit under a policy shall be comprehensive for coverage of chemical dependency, mental illness and physical health conditions.  A health benefit plan shall be construed to be in compliance with this subsection if at least one of the patient's choice of treatment options within the patient's policy meets the requirements of this subsection.
		(d) Case Management. – A health maintenance organization may use a case management program for chemical dependency treatment benefits to evaluate and determine medically necessary and medically appropriate care and treatment for each patient, provided that the program complies with rules adopted by the Commissioner of Insurance. These rules shall ensure that case management programs are not designed to avoid the requirements of this section concerning parity between the benefits for chemical dependency treatment and those for physical illness generally. 
(e)	Medical Necessity. – Nothing in this section prohibits a health maintenance organization from managing the provision of benefits through common methods, including, but not limited, to preadmission screening, prior authorization of services, or other mechanisms designed to limit coverage to services for chemical dependency treatment only to those that are deemed medically necessary.
(f)	Utilization Review Criteria. – Notwithstanding any other provision in this section, the criteria for determining when a patient needs to be placed in a substance abuse treatment program shall be either (i) the diagnostic criteria contained in the most recent revision of the American Society of Addiction Medicine Patient Placement Criteria for the Treatment of Substance-Related Disorders or (ii) criteria adopted by the insurer or its utilization review organization.  The Department, in consultation with the Department of Health and Human Services, may require a health plan or utilization review organization to show compliance with this subsection.
(g)	Provisions for benefits for necessary care and treatment of chemical dependency in group policies or group contracts of insurance shall provide benefit payments for the following providers of necessary care and treatment of chemical dependency:
(1)	The following units of a general hospital licensed under Article 5 of Chapter 131E of the General Statutes:
a.	Chemical dependency units in licensed facilities;
b.	Medical units;
c.	Psychiatric units; and
(2)	The following facilities or programs licensed under Article 2 of Chapter 122C of the General Statutes: 
a.	Chemical dependency units in psychiatric hospitals;
b.	Chemical dependency hospitals;
c.	Residential chemical dependency treatment facilities;
d.	Social setting detoxification facilities or programs;
e.	Medical detoxification or programs; and
(3)	Duly licensed physicians and duly licensed practicing psychologists and certified professionals working under the direct supervision of such physicians or psychologists in facilities described in (1) and (2) above and in day/night programs or outpatient treatment facilities licensed under Article 2 of Chapter 122C of the General Statutes.
This subsection does not prohibit any policy or contract of insurance from requiring the most cost effective treatment setting to be utilized by the person undergoing necessary care and treatment for chemical dependency.
(h)	Notwithstanding any other provision of this section or Article, any health maintenance organization subject to this Article that becomes a qualified health maintenance organization under Title XIII of the United States Public Health Service Act shall provide the benefits required under that federal Act, which shall be deemed to constitute compliance with the provisions of this section; and any health maintenance organization may provide that the benefits provided under this section must be obtained through providers affiliated with the health maintenance organization."
Section 11. G.S. 58-67-75 reads as rewritten:
"§ 58-67-75.  No discrimination against mentally ill and chemically dependent individuals.
(a)	Definitions. – As used in this section, the term:
(1)	'Mental illness' has the same meaning as defined in G.S. 122C-3(21), with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or a subsequent edition published by the American Psychiatric Association, except those mental disorders coded in the DSM-IV or subsequent edition as substance-related disorders (291.0 through 292.9 and 303.0 through 305.9) and those coded as 'V' codes.
(2)	'Chemical dependency' has the same meaning as defined in G.S. 58-67-70, with a mental disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV, or subsequent editions of this manual.
(b)	Coverage of Physical Illness. – No health maintenance organization governed by this Chapter shall, solely because an individual has or had a mental illness or chemical dependency:
(1)	Refuse to enroll that individual in any health care plan covering physical illness or injury;
(2)	Have a higher premium rate or charge for physical illness or injury coverages or benefits for that individual; or
(3)	Reduce physical illness or injury coverages or benefits for that individual.
										."
Section 12. G.S. 58-50-155 reads as rewritten:
"§ 58-50-155. Standard and basic health care plan coverages.
(a)	Notwithstanding G.S. 58-50-125(c), the standard health plan developed and approved under G.S. 58-50-125 shall provide coverage for all of the following:
(1)	Mammograms and pap smears at least equal to the coverage required by G.S. 58-51-57.
(2)	Prostate-specific antigen (PSA) tests or equivalent tests for the presence of prostate cancer at least equal to the coverage required by G.S. 58-51-58.
(3)	Reconstructive breast surgery resulting from a mastectomy at least equal to the coverage required by G.S. 58-51-62.
(4)	For a qualified individual, scientifically proven bone mass measurement for the diagnosis and evaluation of osteoporosis or low bone mass at least equal to the coverage required by G.S. 58-3-174.
(5)	Prescribed contraceptive drugs or devices that prevent pregnancy and that are approved by the United States Food and Drug Administration for use as contraceptives, or outpatient contraceptive services at least equal to the coverage required by G.S. 58-3-178, if the plan covers prescription drugs or devices, or outpatient services, as applicable. The same exceptions and exclusions as are provided under G.S. 58-3-178 apply to standard plans developed and approved under G.S. 58-50-125.
(6)	Treatment of chemical dependency and mental illness in accordance with G.S. 58-51-50 and G.S. 58-3-220, respectively.
(b)	Notwithstanding G.S. 58-50-125(c), in developing and approving the plans under G.S. 58-50-125, the Committee and Commissioner shall give due consideration to cost-effective and life-saving health care services and to cost-effective health care providers."
Section 13.  The Legislative Commission on Mental Health, Developmental Disabilities, and Substance Abuse Services shall study the issue of requiring mental illness and chemical dependency benefits in health benefit plans for groups with less than 10 employees in parity to physical illness benefits to the extent required under this act.  The study may review the health benefits and the cost effectiveness of the parity requirements provided for in this act for these plans.  In conducting the study, the Commission shall consult with the North Carolina Institute of Medicine and other interested entities.  The Commission shall report its recommendations to the General Assembly upon the convening of the 2003 Regular Session.  
Section 14.  Sections 2, 5, 7, and 10 of this act are effective January 1, 2004, and apply to health benefit plans that are delivered, issued for delivery, or renewed on and after that date.  The remainder of this act is effective when it becomes law and applies to health benefit plans that are delivered, issued for delivery, or renewed on and after January 1, 2001.  For purposes of this act, renewal of a health benefit policy, contract, or plan is presumed to occur on each anniversary of the date on which coverage was first effective on the person or persons covered by the health benefit plan.