Mental health parity legislation that was on deck to pass the Senate before the August recess has been stalled by a hold from Sen. Jim DeMint, R-S.C.

Just before the Senate went on break for the summer, the office of Sen. Edward M. Kennedy, D-Mass., announced that insurers, businesses and mental health advocates had reached a compromise and that Kennedy would try to amend and pass the bill (S 558) by voice vote.

With only days left in the session, Democrats and Republicans attempted to “hotline,” or quickly consider the legislation by unanimous consent. But according to a Senate aide familiar with the legislation, the attempt to pass the bill failed when lawmakers were informed that DeMint and Sen. Tom Coburn, R-Okla., had placed holds on the bill.

The aide says that while Coburn’s concerns were addressed and his hold quickly lifted, DeMint maintained his, preventing passage.

A DeMint spokesman said the senator merely wanted a chance to discuss the bill on the floor.

“Sen. DeMint isn’t holding this bill, he is simply objecting to passing it without a chance for debate or amendments,” said DeMint spokesman Wesley Denton. “Nothing is stopping Sen. Reid from considering the bill on the floor if it is a priority for him. But this is a very large and costly mandate that could price a lot of Americans out of health insurance and it needs to be considered carefully,” Denton said.

The bill is sponsored by New Mexico Republican Pete V. Domenici and championed by Kennedy. It would require insurers that offer mental health coverage as part of health insurance packages to provide equal benefits for physical and mental illnesses.

Under Senate rules, a senator can, without being identified, place a hold on legislation by signifying their intent to block its consideration. This effectively halts the legislation’s progress, though holds are often dropped once the senator has been identified or a compromise on the bill has been reached.

The deal reached just before recess would make several changes to the measure, largely in the areas of state and federal preemption of existing mental health parity laws. According to Kennedy’s office, the compromise legislation would preempt any minimums on state coverage that were lower than the federal law, but would not preempt higher levels of coverage demanded in some states.

“I believe this package will be acceptable to a broad spectrum of interests, from those who suffer from mental illnesses, to care givers, to insurance companies and the businesses that provide coverage for their employees,” Domenici said.

According to the National Conference of State Legislatures, 46 states have some form of mental health parity law. But the laws vary widely in scope; 32 states have what is known as “full parity,” which treats mental illnesses as similar or equal to physical ones, for insurance purposes.

The House has a companion bill (HR 1424) sponsored by Rep. Patrick J. Kennedy, D-R.I., the senator’s son. When the House bill was considered by the Energy and Commerce Committee on July 18, John Kline, R-Minn., offered the original Kennedy-Domenici bill as a substitute amendment to the House version. The move was rejected, 16-27, on a mostly party-line vote.

Many businesses and insurance representatives prefer the Senate version. It would create one set of parity rules, rather than 50 state laws, and make it easier for insurance companies to come into compliance.

Alex Wayne and Rebecca Kimitch contributed to this story.

First posted Aug. 7, 2007 12:41 p.m.