Despite bipartisan support, Senate legislation to provide equal coverage for mental health care could fall apart if a broad coalition of business, insurance and patient-rights groups fails to find common ground on state pre-emption, Congressional sources say.

Senate bill S.558 would require insurers that provide mental health coverage to do so with the same scope of coverage as offered for physical ailments. Sen. Pete Domenici (R-N.M.) sponsored the bill, the Mental Health Parity Act of 2007, which has the support of several powerful lawmakers, including Sen. Edward Kennedy (D-Mass.), who chairs the Health, Education, Labor and Pensions Committee.

The bill passed from of the HELP Committee on Feb. 14 by a vote of 18-3 and is now awaiting introduction on the floor. Senate Majority Leader Harry Reid (D-Nev.) is working to “try to get to this bill as quickly as possible,” a Reid staffer said.

The key difference between the Senate bill and a companion measure in the House – due to be introduced in early March by Reps. Patrick Kennedy (D-R.I.) and Jim Ramstad (R-Minn.) — has to do with the extent to which state rules over mental health coverage are superseded by federal law. The question of how to structure pre-emption language in the legislation became an issue during the HELP Committee markup, with some panel members asking for further study of the issue.

The Senate bill would specifically pre-empt certain state rules governing mental health coverage, with the new federal standard serving as a floor for insurance coverage.

By contrast, the House bill would continue to allow states to set standards for mental health coverage without being pre-empted by the new federal requirements.

Outside groups are being consulted every step of the way, said a staffer for Sen. Kennedy. There currently is a “very tenuous agreement” that could be undone by the pre-emption issue, the source added.

The House measure would allow certain state standards, such as those mandating health coverage for certain disorders, to remain in force. The states are simply better able to determine the needs of their citizens, a Ramstad aide said. The bill already has over 100 co-sponsors, an aide to Rep. Kennedy added. The bill is expected to be introduced in three committees: Energy and Commerce; Education and Labor; and Ways and Means.

Pre-emption is “a concern of ours” the Ramstad aide said. The Congressman wants to ensure that state authority over these issues continue, the aide said.

The Coalition for Fairness in Mental Illness Coverage — a broad alliance that includes patient-advocacy groups and business and insurance interests such as America’s Health Insurance Plans and the National Association of Health Underwriters — favors the Senate bill because it offers greater predictability and less variability in the rules from state to state.

If the Senate were to adopt the House approach, it could undermine industry’s support, said Pamela Greenberg, who chairs the coalition.

Senators are still fine-tuning the language to ensure continued state authority in certain circumstances. Sen. Kennedy and other sponsors are confident that they will soon finalize that language.

“We’re going to work it out,” the Massachusetts Democrat told CongressNow. An agreement should come in the next few weeks, a Kennedy staffer added.

Ramstad and other House lawmakers are willing to be flexible on the issue of pre-emption, a Ramstad aide said. “We share their goal” of greater parity in healthcare and want the best bill that is possible given the politics and policy of the issue, the aide said.