103d CONGRESS 1st Session H. R. 3600 To ensure individual and family security through health care coverage for all Americans in a manner that contains the rate of growth in health care costs and promotes responsible health insurance practices, to promote choice in health care, and to ensure and protect the health care of all Americans. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES November 20, 1993 Mr. Gephardt (for himself, Mr. Bonior, Mr. Hoyer, Mr. Fazio, Mrs. Kennelly, Mr. Lewis of Georgia, Mr. Richardson, Mr. Dingell, Mr. Rostenkowski, Mr. Ford of Michigan, Mr. Waxman, Mrs. Collins of Illinois, Mr. Stark, Mr. Williams, Mr. Clay, Mr. Brooks, Mr. Moakley, Mr. Abercrombie, Mr. Ackerman, Mr. Andrews of Maine, Mr. Barrett of Wisconsin, Mr. Berman, Mr. Bilbray, Mr. Blackwell, Mr. Borski, Mr. Brown of California, Ms. Brown of Florida, Mr. Cardin, Mr. Clyburn, Mr. Coyne, Mr. de Lugo, Ms. DeLauro, Mr. Deutsch, Mr. Dicks, Mr. Dixon, Mr. Durbin, Mr. Edwards of California, Mr. Engel, Ms. English of Arizona, Ms. Eshoo, Mr. Faleomavaega, Mr. Filner, Mr. Flake, Mr. Foglietta, Mr. Frank of Massachusetts, Mr. Gejdenson, Mr. Gibbons, Mr. Hastings, Mr. Hilliard, Mr. Hinchey, Ms. Eddie Bernice Johnson of Texas, Mr. Johnston of Florida, Mr. Kanjorski, Mr. Kreidler, Mr. LaFalce, Mr. Lantos, Mr. Levin, Ms. Long, Mr. Martinez, Mr. Matsui, Ms. McKinney, Mrs. Meek, Mr. Minge, Mrs. Mink, Mr. Murphy, Mr. Murtha, Ms. Norton, Mr. Oberstar, Mr. Obey, Mr. Owens, Mr. Pastor, Mr. Payne of New Jersey, Mr. Rahall, Mr. Rangel, Mr. Reynolds, Mr. Romero-Barcelo, Mr. Rush, Mr. Sabo, Mr. Sawyer, Mr. Scott, Mr. Serrano, Ms. Shepherd, Mr. Skaggs, Ms. Slaughter, Mr. Smith of Iowa, Mr. Stokes, Mr. Strickland, Mr. Studds, Mr. Swift, Mr. Synar, Mr. Thornton, Mrs. Thurman, Mr. Traficant, Mr. Underwood, Mrs. Unsoeld, Mr. Vento, Mr. Watt, Mr. Wheat, Mr. Wise, and Mr. Yates) introduced the following bill; which was referred jointly to the Committee on Energy and Commerce, to the Committee on Ways and Means, and to the Committee on Education and Labor for consideration of such provisions in titles I, III, VI, VIII, X, and XI as fall within its jurisdiction pursuant to clause 1(g) of rule X; and concurrently, for a period ending not later than two weeks after all three committees of joint referral report to the House (or a later time if the Speaker so designates), to the Committee on Armed Services for consideration of subtitle A of title VIII and such provisions of title I as fall within its jurisdiction pursuant to clause 1(c) of rule X, to the Committee on Veterans' Affairs for consideration of subtitle B of title VIII and such provisions of title I as fall within its jurisdiction pursuant to clause 1(u) of rule X, to the Committee on Post Office and Civil Service for consideration of subtitle C of title VIII and such provisions of title I as fall within its jurisdiction pursuant to clause 1(o) of rule X, to the Committee on Natural Resources for consideration of subtitle D of title VIII and such provisions of title I as fall within its jurisdiction pursuant to clause 1(n) of rule X, to the Committee on the Judiciary for consideration of subtitles C through F of title V and such other provisions as fall within its jurisdiction pursuant to clause 1(l) of rule X, to the Committee on Rules for consideration of sections 1432(d), 6006(f), and 9102(e)(5), and to the Committee on Government Operations for consideration of subtitle B of title V and section 5401 February 4, 1994 Additional sponsors: Mr. Carr of Michigan and Mr. Swett _______________________________________________________________________ A BILL To ensure individual and family security through health care coverage for all Americans in a manner that contains the rate of growth in health care costs and promotes responsible health insurance practices, to promote choice in health care, and to ensure and protect the health care of all Americans. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Table SECTION 1. SHORT TITLE; TABLE OF TITLES AND SUBTITLES. (a) Short Title.--This Act may be cited as the ``Health Security Act''. (b) Table of Titles and Subtitles in Act.--The following are the titles and subtitles contained in this Act: Page TITLE I--HEALTH CARE SECURITY Subtitle A--Universal Coverage and Individual Responsibility 8 Subtitle B--Benefits........................................ 32 Subtitle C--State Responsibilities.......................... 95 Subtitle D--Health Alliances................................ 118 Subtitle E--Health Plans.................................... 224 Subtitle F--Federal Responsibilities........................ 256 Subtitle G--Employer Responsiblities........................ 303 Subtitle J--General Definitions; Miscellaneous Provisions... 323 TITLE II--NEW BENEFITS Subtitle A--Medicare Outpatient Prescription Drug Benefit... 343 Subtitle B--Long-Term Care.................................. 389 TITLE III--PUBLIC HEALTH INITIATIVES Subtitle A--Workforce Priorities Under Federal Payments..... 504 Subtitle B--Academic Health Centers......................... 548 Subtitle C--Health Research Initiatives..................... 560 Subtitle D--Core Functions of Public Health Programs; 564 National Initiatives Regarding Preventive Health. Subtitle E--Health Services for Medically Underserved 578 Populations. Subtitle F--Mental Health; Substance Abuse.................. 615 Subtitle G--Comprehensive School Health Education; School- 627 Related Health Services. Subtitle H--Public Health Service Initiative................ 667 Subtitle I--Coordination With COBRA Continuation Coverage... 668 TITLE IV--MEDICARE AND MEDICAID Subtitle A--Medicare and the Alliance System................ 674 Subtitle B--Savings in Medicare Program..................... 752 Subtitle C--Medicaid........................................ 807 Subtitle D--Increase in SSI Personal Needs Allowance........ 832 TITLE V--QUALITY AND CONSUMER PROTECTION Subtitle A--Quality Management and Improvement.............. 835 Subtitle B--Information Systems, Privacy, and Administrative 859 Simplification. Subtitle C--Remedies and Enforcement........................ 887 Subtitle D--Medical Malpractice............................. 933 Subtitle E--Fraud and Abuse................................. 948 Subtitle F--McCarran-Ferguson Reform........................ 979 TITLE VI--PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS Subtitle A--Premium Caps.................................... 984 Subtitle B--Premium-Related Financing....................... 1025 Subtitle C--Payments to Regional Alliance Health Plans...... 1086 TITLE VII--REVENUE PROVISIONS Subtitle A--Financing Provisions............................ 1094 Subtitle B--Tax Treatment of Employer-Provided Health Care.. 1133 Subtitle C--Employment Status Provisions.................... 1143 Subtitle D--Tax Treatment of Funding of Retiree Health 1153 Benefits. Subtitle E--Coordination With COBRA Continuing Care 1157 Provisions. Subtitle F--Tax Treatment of Organizations Providing Health 1159 Care Services and Related Organizations. Subtitle G--Tax Treatment of Long-term Care Insurance and 1171 Services. Subtitle H--Tax Incentives for Health Services Providers.... 1192 Subtitle I--Miscellaneous Provisions........................ 1199 TITLE VIII--HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL GOVERNMENT Subtitle A--Military Health Care Reform..................... 1207 Subtitle B--Department of Veterans Affairs.................. 1218 Subtitle C--Federal Employees Health Benefits Program....... 1233 Subtitle D--Indian Health Service........................... 1249 Subtitle E--Amendments to the Employee Retirement Income 1262 Security Act of 1974. Subtitle F--Special Fund for WIC Program.................... 1274 TITLE IX--AGGREGATE GOVERNMENT PAYMENTS TO REGIONAL ALLIANCES Subtitle A--Aggregate State Payments........................ 1277 Subtitle B--Aggregate Federal Alliance Payments............. 1296 Subtitle C--Borrowing Authority to Cover Cash-Flow 1308 Shortfalls. TITLE X--COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION AND AUTOMOBILE INSURANCE Subtitle A--Workers Compensation Insurance.................. 1314 Subtitle B--Automobile Insurance............................ 1326 Subtitle C--Commission on Integration of Health Benefits.... 1331 Subtitle D--Federal Employees' Compensation Act............. 1333 Subtitle E--Davis-Bacon Act and Service Contract Act........ 1333 Subtitle F--Effective Dates................................. 1334 TITLE XI--TRANSITIONAL INSURANCE REFORM Findings SEC. 2. FINDINGS. The Congress finds as follows: (1) Under the current health care system in the United States-- (A) individuals risk losing their health care coverage when they move, when they lose or change jobs, when they become seriously ill, or when the coverage becomes unaffordable; (B) continued escalation of health care costs threatens the economy of the United States, undermines the international competitiveness of the Nation, and strains Federal, State, and local budgets; (C) an excessive burden of forms, paperwork, and bureaucratic procedures confuses consumers and overwhelms health care providers; (D) fraud and abuse sap the strength of the health care system; and (E) health care is a critical part of the economy of the United States and interstate commerce, consumes a significant percentage of public and private spending, and affects all industries and individuals in the United States. (2) Under any reform of the health care system-- (A) health insurance and high quality health care should be secure, uninterrupted, and affordable for all individuals in the United States; (B) comprehensive health care benefits that meet the full range of health needs, including primary, preventive, and specialized care, should be available to all individuals in the United States; (C) the current high quality of health care in the United States should be maintained; (D) individuals in the United States should be afforded a meaningful opportunity to choose among a range of health plans, health care providers, and treatments; (E) regulatory and administrative burdens should be reduced; (F) the rapidly escalating costs of health care should be contained without sacrificing high quality or impeding technological improvements; (G) competition in the health care industry should ensure that health plans and health care providers are efficient and charge reasonable prices; (H) a partnership between the Federal Government and each State should allow the State and its local communities to design an effective, high-quality system of care that serves the residents of the State; (I) all individuals should have a responsibility to pay their fair share of the costs of health care coverage; (J) a health care system should build on the strength of the employment-based coverage arrangements that now exist in the United States; (K) the penalties for fraud and abuse should be swift and severe; and (L) an individual's medical information should remain confidential and should be protected from unauthorized disclosure and use. Purposes SEC. 3. PURPOSES. The purposes of this Act are as follows: (1) To guarantee comprehensive and secure health care coverage. (2) To simplify the health care system for consumers and health care professionals. (3) To control the cost of health care for employers, employees, and others who pay for health care coverage. (4) To promote individual choice among health plans and health care providers. (5) To ensure high quality health care. (6) To encourage all individuals to take responsibility for their health care coverage. TITLE I--HEALTH CARE SECURITY table of contents of title Page Subtitle A--Universal Coverage and Individual Responsibility Part 1--Universal Coverage Sec. 1001. Entitlement to health benefits................... 14 Sec. 1002. Individual responsibilities...................... 15 Sec. 1003. Protection of consumer choice.................... 15 Sec. 1004. Applicable health plan providing coverage........ 16 Sec. 1005. Treatment of other nonimmigrants................. 17 Sec. 1006. Effective date of entitlement.................... 18 Part 2--Treatment of Families and Special Rules Sec. 1011. General rule of enrollment of family in same 21 health plan. Sec. 1012. Treatment of certain families.................... 25 Sec. 1013. Multiple employment situations................... 30 Sec. 1014. Treatment of residents of States with statewide 32 single-payer systems. Subtitle B--Benefits Part 1--Comprehensive Benefit Package Sec. 1101. Provision of comprehensive benefits by plans..... 32 Part 2--Description of Items and Services Covered Sec. 1111. Hospital services................................ 34 Sec. 1112. Services of health professionals................. 36 Sec. 1113. Emergency and ambulatory medical and surgical 38 services. Sec. 1114. Clinical preventive services..................... 38 Sec. 1115. Mental illness and substance abuse services...... 46 Sec. 1116. Family planning services and services for 63 pregnant women. Sec. 1117. Hospice care..................................... 63 Sec. 1118. Home health care................................. 64 Sec. 1119. Extended care services........................... 64 Sec. 1120. Ambulance services............................... 66 Sec. 1121. Outpatient laboratory, radiology, and diagnostic 67 services. Sec. 1122. Outpatient prescription drugs and biologicals.... 67 Sec. 1123. Outpatient rehabilitation services............... 69 Sec. 1124. Durable medical equipment and prosthetic and 70 orthotic devices. Sec. 1125. Vision care...................................... 71 Sec. 1126. Dental care...................................... 71 Sec. 1127. Health education classes......................... 73 Sec. 1128. Investigational treatments....................... 74 Part 3--Cost Sharing Sec. 1131. Cost sharing..................................... 76 Sec. 1132. Lower cost sharing............................... 80 Sec. 1133. Higher cost sharing.............................. 82 Sec. 1134. Combination cost sharing......................... 85 Sec. 1135. Table of copayments and coinsurance.............. 86 Sec. 1136. Indexing dollar amounts relating to cost sharing. 89 Part 4--Exclusions Sec. 1141. Exclusions....................................... 90 Part 5--Role of the National Health Board Sec. 1151. Definition of benefits........................... 92 Sec. 1152. Acceleration of expanded benefits................ 92 Sec. 1153. Authority with respect to clinical preventive 93 services. Sec. 1154. Establishment of standards regarding medical 94 necessity. Part 6--Additional Provisions Relating to Health Care Providers Sec. 1161. Override of restrictive State practice laws...... 95 Sec. 1162. Provision of items or services contrary to 95 religious belief or moral conviction. Subtitle C--State Responsibilities Sec. 1200. Participating State.............................. 95 Part 1--General State Responsibilities Sec. 1201. General State responsibilities................... 97 Sec. 1202. State responsibilities with respect to alliances. 98 Sec. 1203. State responsibilities relating to health plans.. 101 Sec. 1204. Financial solvency; fiscal oversight; guaranty 106 fund. Sec. 1205. Restrictions on funding of additional benefits... 108 Part 2--Requirements for State Single-payer Systems Sec. 1221. Single-payer system described.................... 109 Sec. 1222. General requirements for single-payer systems.... 109 Sec. 1223. Special rules for States operating statewide 114 single-payer system. Sec. 1224. Special rules for alliance-specific single-payer 117 systems. Subtitle D--Health Alliances Sec. 1300. Health alliance defined.......................... 118 Part 1--Establsubpart a--regional alliancesrate Alliances Sec. 1301. Regional alliance defined........................ 118 Sec. 1302. Board of directors............................... 119 Sec. 1303. Provider asubpart b--corporate alliancesliances.. 120 Sec. 1311. Corporate alliance defined; individuals eligible 121 for coverage through corporate alliances; additional definitions. Sec. 1312. Timing of elections.............................. 127 Sec. 1313. Termination of alliance election................. 129 Part 2--General Responsibilities and Authorities of Regional Alliances Sec. 1321. Contracts with health plans...................... 131 Sec. 1322. Offering choice of health plans for enrollment; 132 establishment of fee-for-service schedule. Sec. 1323. Enrollment rules and procedures.................. 138 Sec. 1324. Issuance of health security cards................ 148 Sec. 1325. Consumer information and marketing............... 148 Sec. 1326. Ombudsman........................................ 150 Sec. 1327. Data collection; quality......................... 150 Sec. 1328. Additional duties................................ 150 Sec. 1329. Additional authorities for regional alliances to 151 address needs in areas with inadequate health services; prohibition of insurance role. Sec. 1330. Prohibition against self-dealing and conflicts of 152 interest. Part 3--Authorities and Responsibilities of Regional Alliances Relating to Fsubpart a--collection of fundsions Sec. 1341. Information and negotiation and acceptance of 153 bids. Sec. 1342. Calculation and publication of general family 156 share and general employer premium amounts. Sec. 1343. Determination of family share for families....... 158 Sec. 1344. Notice of family payments due.................... 163 Sec. 1345. Collections...................................... 168 Sec. 1346. Coordination amsubpart b--paymentsces............ 171 Sec. 1351. Payment to regional alliance health plans........ 174 Sec. 1352. Alliance administrative allowance percentage..... 178 Sec. 1353. Payments subpart c--financial managementcademic 179 health centers and graduate medical education. Sec. 1subpart d--reductions in cost sharing; income determinations 180 Sec. 1371. Reduction in cost sharing for low-income families 183 Sec. 1372. Application process for cost sharing reductions.. 186 Sec. 1373. Application for premium discounts and reduction 191 in liabilities to alliances. Sec. 1374. General provisions relating to application 193 process. Sec. 1375. End-of-year reconciliation for premium discount 196 and repayment reduction with actual income. Part 4--Responsibilities and Authorities of Corporate Alliances Sec. 1381. Contracts with health plans...................... 199 Sec. 1382. Offering choice of health plans for enrollment... 200 Sec. 1383. Enrollment; issuance of health security card..... 201 Sec. 1384. Community-rated premiums within premium areas.... 203 Sec. 1385. Assistance for low-wage families................. 205 Sec. 1386. Consumer information and marketing; data 206 collection and quality; additional duties. Sec. 1387. Plan and information requirements................ 206 Sec. 1388. Management of funds; relations with employees.... 207 Sec. 1389. Cost control..................................... 207 Sec. 1390. Payments by corporate alliance employers to 208 corporate alliances. Sec. 1391. Coordination of payments......................... 208 Sec. 1392. Applicability of ERISA enforcement mechanisms for 209 enforcement of certain requirements. Sec. 1393. Applicability of certain ERISA protections to 209 enrolled individuals. Sec. 1394. Disclosure and reserve requirements.............. 210 Sec. 1395. Trusteeship by the Secretary of insolvent 211 corporate alliance health plans. Sec. 1396. Guaranteed benefits under trusteeship of the 216 Secretary. Sec. 1397. Imposition and collection of periodic assessments 220 on self-insured corporate alliance plans. Sec. 1398. Payments to Federal government by multiemployer 224 corporate alliances for academic health centers and graduate medical education. Subtitle E--Health Plans Sec. 1400. Health plan defined.............................. 224 Part 1--Requirements Relating to Comprehensive Benefit Package Sec. 1401. Application of requirements...................... 226 Sec. 1402. Requirements relating to enrollment and coverage. 226 Sec. 1403. Community rating................................. 231 Sec. 1404. Marketing of health plans; information........... 231 Sec. 1405. Grievance procedure.............................. 233 Sec. 1406. Health plan arrangements with providers.......... 234 Sec. 1407. Preemption of certain State laws relating to 237 health plans. Sec. 1408. Financial solvency............................... 239 Sec. 1409. Requirement for offering cost sharing policy..... 239 Sec. 1410. Quality assurance................................ 239 Sec. 1411. Provider verification............................ 239 Sec. 1412. Consumer disclosures of utilization management 240 protocols. Sec. 1413. Confidentiality, data management, and reporting.. 240 Sec. 1414. Participation in reinsurance system.............. 241 Part 2--Requirements Relating to Supplemental Insurance Sec. 1421. Imposition of requirements on supplemental 241 insurance. Sec. 1422. Standards for supplemental health benefit 243 policies. Sec. 1423. Standards for cost sharing policies.............. 246 Part 3--Requirements Relating to Essential Community Providers Sec. 1431. Health plan requirement.......................... 249 Sec. 1432. Sunset of requirement............................ 252 Part 4--Requirements Relating to Workers' Compensation and Automobile Medical Liability Coverage Sec. 1441. Reference to requirements relating to workers 256 compensation services. Sec. 1442. Reference to requirements relating to automobile 256 medical liability services. Subtitle F--Federal Responsibilities subpart a--establishment of national health board Sec. 1501. Creation of National Health Board; membership.... 256 Sec. 1502. Qualifications of board members.................. 258 Sec. 1503. General duties and responsibilities.............. 259 Sec. 1504. Annual report.................................... 262 Sec. 1505. Powers........................................... 263 Ssubpart b--responsibilities relating to review and approval of state 4 systems Sec. 1511. Federal review and action on State systems....... 264 Sec. 1512. Failure of participating States to meet 270 conditions for compliance. Sec. 1513. Reduction in payments for health programs by 272 Secretary of Health and Human Services. Sec. 1514. Review of Federal determinations................. 273 Sec. 151subpart c--responsibilities in absence of state systems 273 Sec. 1521. Application of subpart........................... 275 Sec. 1522. Federal assumption of responsibilities in non- 275 participating States. Sec. 1523. Imposition of surcharge on premiums under 277 federally-operated system. Sec.subpart d--establishment of class factors for charging premiums 278 Ssubpart e--risk adjustment and reinsurance methodology for payment of plans Sec. 1541. Development of a risk adjustment and reinsurance 279 methodology. Sec. 1542. Incentives to enroll disadvantaged groups........ 285 Sec. 1543. Advisory committee............................... 285 Sec. 1544. Research and demonstrations...................... 286 Sec. 1545subpart f--responsibilities for financial requirements 286 Sec. 1551. Capital standards for regional alliance health 286 plan. Sec. 1552. Standard for guaranty funds...................... 287 Part 2--Responsisubpart a--general responsibilitiesd Human Services Sec. 1571. General responsibilities of Secretary of Health 289 and Human Services. Sec. 15subpart b--certification of essential community providers 290 Sec. 1581. Certification.................................... 293 Sec. 1582. Categories of providers automatically certified.. 293 Sec. 1583. Standards for additional providers............... 296 Sec. 1584. Certification process; review; termination of 297 certifications. Sec. 1585. Notification of health alliances and 299 participating States. Part 3--Specific Responsibilities of Secretary of Labor Sec. 1591. Responsibilities of Secretary of Labor........... 300 Subtitle G--Employer Responsibilities Sec. 1601. Payment requirement.............................. 303 Sec. 1602. Requirement for information reporting............ 303 Sec. 1603. Requirements relating to new employees........... 314 Sec. 1604. Auditing of records.............................. 315 Sec. 1605. Prohibition of certain employer discrimination... 316 Sec. 1606. Prohibition on self-funding of cost sharing 316 benefits by regional alliance employers. Sec. 1607. Equal voluntary contribution requirement......... 317 Sec. 1608. Employer retiree obligation...................... 321 Sec. 1609. Enforcement...................................... 323 Subtitle J--General Definitions; Miscellaneous Provisions Part 1--General Definitions Sec. 1901. Definitions relating to employment and income.... 323 Sec. 1902. Other general definitions........................ 331 Subtitle B--Miscellaneous Provisions Sec. 1911. Use of interim, final regulations................ 341 Sec. 1912. Social Security Act references................... 341 Title I, Subtitle A TITLE I--HEALTH CARE SECURITY Subtitle A--Universal Coverage and Individual Responsibility PART 1--UNIVERSAL COVERAGE SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS. (a) In General.--In accordance with this part, each eligible individual is entitled to the comprehensive benefit package under subtitle B through the applicable health plan in which the individual is enrolled consistent with this title. (b) Health Security Card.--Each eligible individual is entitled to a health security card to be issued by the alliance or other entity that offers the applicable health plan in which the individual is enrolled. (c) Eligible Individual Defined.--In this Act, the term ``eligible individual'' means an individual who is residing in the United States and who is-- (1) a citizen or national of the United States; (2) an alien permanently residing in the United States under color of law (as defined in section 1902(1)); or (3) a long-term nonimmigrant (as defined in section 1902(19)). (d) Treatment of Medicare-Eligible Individuals.--Subject to section 1012(a), a medicare-eligible individual is entitled to health benefits under the medicare program instead of the entitlement under subsection (a). (e) Treatment of Prisoners.--A prisoner (as defined in section 1902(26)) is entitled to health care services provided by the authority responsible for the prisoner instead of the entitlement under subsection (a). SEC. 1002. INDIVIDUAL RESPONSIBILITIES. (a) In General.--In accordance with this Act, each eligible individual (other than a medicare-eligible individual)-- (1) must enroll in an applicable health plan for the individual, and (2) must pay any premium required, consistent with this Act, with respect to such enrollment. (b) Limitation on Disenrollment.--No eligible individual shall be disenrolled from an applicable health plan until the individual-- (1) is enrolled under another applicable health plan, or (2) becomes a medicare-eligible individual. SEC. 1003. PROTECTION OF CONSUMER CHOICE. Nothing in this Act shall be construed as prohibiting the following: (1) An individual from purchasing any health care services. (2) An individual from purchasing supplemental insurance (offered consistent with this Act) to cover health care services not included within the comprehensive benefit package. (3) An individual who is not an eligible individual from purchasing health insurance (other than through a regional alliance). (4) Employers from providing coverage for benefits in addition to the comprehensive benefit package (subject to part 2 of subtitle E). SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COVERAGE. (a) Specification of Applicable Health Plan.--Except as otherwise provided: (1) General rule: regional alliance health plans.--The applicable health plan for a family is a regional alliance health plan for the alliance area in which the family resides. (2) Corporate alliance health plans.--In the case of a family member that is eligible to enroll in a corporate alliance health plan under section 1311(c), the applicable health plan for the family is such a corporate alliance health plan. (b) Choice of Plans for Certain Groups.-- (1) Military personnel and families.--For military personnel and families who elect a Uniformed Services Health Plan of the Department of Defense under section 1073a(d) of title 10, United States Code, as inserted by section 8001(a) of this Act, that plan shall be the applicable health plan. (2) Veterans.--For veterans and families who elect to enroll in a veterans health plan under section 1801 of title 38, United States Code, as inserted by section 8101(a) of this Act, that plan shall be the applicable health plan. (3) Indians.--For those individuals who are eligible to enroll, and who elect to enroll, in a health program of the Indian Health Service under section 8302(b) or 8306(b), that program shall be the applicable health plan. SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS. (a) Undocumented Aliens Ineligible for Benefits.--An undocumented alien is not eligible to obtain the comprehensive benefit package through enrollment in a health plan pursuant to this Act. (b) Diplomats and Other Foreign Government Officials.--Subject to conditions established by the National Health Board in consultation with the Secretary of State, a nonimmigrant under subparagraph (A) or (G) of section 101(a)(15) of the Immigration and Nationality Act may obtain the comprehensive benefit package through enrollment in the regional alliance health plan for the alliance area in which the nonimmigrant resides. (c) Reciprocal Treatment of Other Nonimmigrants.--With respect to those classes of individuals who are lawful nonimmigrants but who are not long-term nonimmigrants (as defined in section 1902(19)) or described in subsection (b), such individuals may obtain such benefits through enrollment with regional alliance health plans only in accordance with such reciprocal agreements between the United States and foreign states as may be entered into. SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT. (a) Regional Alliance Eligible Individuals.-- (1) In general.--In the case of regional alliance eligible individuals residing in a State, the entitlement under this part (and requirements under section 1002) shall not take effect until the State becomes a participating State (as defined in section 1200). (2) Transitional rule for corporate alliances.-- (A) In general.--In the case of a State that becomes a participating State before the general effective date (as defined in subsection (c)) and for periods before such date, under rules established by the Board, an individual who is covered under a plan (described in subparagraph (C)) based on the individual (or the individual's spouse) being a qualifying employee of a qualifying employer, the individual shall not be treated under this Act as a regional alliance eligible individual. (B) Qualifying employer defined.--In subparagraph (A), the term ``qualifying employer'' means an employer that-- (i) is described in section 1311(b)(1)(A), or is participating in a multiemployer plan described in section 1311(b)(1)(B) or plan described in section 1311(b)(1)(C), and (ii) provides such notice to the regional alliance involved as the Board specifies. (C) Benefits plan described.--A plan described in this subparagraph is an employee benefit plan that-- (i) provides (through insurance or otherwise) the comprehensive benefit package, and (ii) provides an employer contribution of at least 80 percent of the premium (or premium equivalent) for coverage. (b) Corporate Alliance Eligible Individuals.-- (1) In general.--In the case of corporate alliance eligible individuals, the entitlement under this part shall not take effect until the general effective date. (2) Transition.--For purposes of this Act and before the general effective date, in the case of an eligible individual who resides in a participating State, the individual is deemed a regional alliance eligible individual until the individual becomes a corporate alliance eligible individual, unless subsection (a)(2)(A) applies to the individual. (c) General Effective Date Defined.--In this Act, the term ``general effective date'' means January 1, 1998. PART 2--TREATMENT OF FAMILIES AND SPECIAL RULES SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN. (a) In General.--Except as provided in this part or otherwise, all members of the same family (as defined in subsection (b)) shall be enrolled in the same applicable health plan. (b) Family Defined.--In this Act, unless otherwise provided, the term ``family''-- (1) means, with respect to an eligible individual who is not a child (as defined in subsection (c)), the individual; and (2) includes the following persons (if any): (A) The individual's spouse if the spouse is an eligible individual. (B) The individual's children (and, if applicable, the children of the individual's spouse) if they are eligible individuals. (c) Classes of Family Enrollment; Terminology.-- (1) In general.--In this Act, each of the following is a separate class of family enrollment: (A) Coverage only of an individual (referred to in this Act as the ``individual'' enrollment or class of enrollment). (B) Coverage of a married couple without children (referred to in this Act as the ``couple-only'' enrollment or class of enrollment). (C) Coverage of an unmarried individual and one or more children (referred to in this Act as the ``single parent'' enrollment or class of enrollment). (D) Coverage of a married couple and one or more children (referred to in this Act as the ``dual parent'' enrollment or class of enrollment). (2) References to family and couple classes of enrollment.--In this Act: (A) Family.--The terms ``family enrollment'' and ``family class of enrollment'', refer to enrollment in a class of enrollment described in subparagraph (B), (C), or (D) of paragraph (1). (B) Couple.--The term ``couple class of enrollment'' refers to enrollment in a class of enrollment described in subparagraph (B) or (D) of paragraph (1). (d) Spouse; Married; Couple.-- (1) In general.--In this Act, the terms ``spouse'' and ``married'' mean, with respect to a person, another individual who is the spouse of the person or married to the person, as determined under applicable State law. (2) Couple.--The term ``couple'' means an individual and the individual's spouse. (e) Child Defined.-- (1) In general.--In this Act, except as otherwise provided, the term ``child'' means an eligible individual who (consistent with paragraph (3))-- (A) is under 18 years of age (or under 24 years of age in the case of a full-time student), and (B) is a dependent of an eligible individual. (2) Application of state law.--Subject to paragraph (3), determinations of whether a person is the child of another person shall be made in accordance with applicable State law. (3) National rules.--The National Health Board may establish such national rules respecting individuals who will be treated as children under this Act as the Board determines to be necessary. Such rules shall be consistent with the following principles: (A) Step and foster child.--A child includes a step child or foster child who is an eligible individual living with an adult in a regular parent-child relationship. (B) Disabled child.--A child includes an unmarried dependent eligible individual regardless of age who is incapable of self-support because of mental or physical disability which existed before age 21. (C) Certain 3-generation families.--A child includes the grandchild of an individual, if the parent of the grandchild is a child and the parent and grandchild are living with the grandparent. (D) Treatment of emancipated minors and married individuals.--An emancipated minor or married individual shall not be treated as a child. (E) Children placed for adoption.--A child includes a child who is placed for adoption with an eligible individual. (f) Additional Rules.--The Board shall provide for such additional exceptions and special rules, including rules relating to-- (1) families in which members are not residing in the same area or in which children are not residing with their parents, (2) the treatment of eligible individuals who are under 19 years of age and who are not a dependent of an eligible individual, (3) changes in family composition occurring during a year, and (4) treatment of children of parents who are separated or divorced, as the Board finds appropriate. SEC. 1012. TREATMENT OF CERTAIN FAMILIES. (a) Treatment of Medicare-Eligible Individuals Who are Qualifying Employees or Spouses of Qualifying Employees.-- (1) In general.--Except as specifically provided, in the case of an individual who is an individual described in paragraph (2) with respect to 2 consecutive months in a year (and it is anticipated would be in the following month and in such following month would be a medicare-eligible individual but for this paragraph), the individual shall not be treated as a medicare-eligible individual under this Act during such following month and the remainder of the year. (2) Individual described.--An individual described in this paragraph with respect to a month is an individual who is a qualifying employee or the spouse or family member of a qualifying employee in the month. (b) Separate Treatment for Certain Groups of Individuals.--In the case of a family that includes one or more individuals in a group described in subsection (c)-- (1) all the individuals in each such group within the family shall be treated collectively as a separate family, and (2) all the individuals not described in any such group shall be treated collectively as a separate family. (c) Groups of Individuals Described.--Each of the following is a group of individuals described in this subsection: (1) AFDC recipients (as defined in section 1902(3)). (2) Disabled SSI recipients (as defined in section 1902(13)) . (3) SSI recipients (as defined in section 1902(33)) who are not disabled SSI recipients. (4) Electing veterans (as defined in subsection (d)(1)). (5) Active duty military personnel (as defined in subsection (d)(2)). (6) Electing Indians (as defined in subsection (d)(3)). (7) Prisoners (as defined in section 1902(26)). (d) Special Rules.--In this Act: (1) Electing veterans.-- (A) Defined.--Subject to subparagraph (B), the term ``electing veteran'' means a veteran who makes an election to enroll with a health plan of the Department of Veterans Affairs under chapter 18 of title 38, United States Code, as added by section 8101(a)(1). (B) Family exception.--Subparagraph (A) shall not apply with respect to coverage under a health plan referred to in such subparagraph if, for the area in which the electing veteran resides, such health plan offers coverage to family members of an electing veteran and the veteran elects family enrollment under such plan (instead of individual enrollment). (2) Active duty military personnel.-- (A) In general.--Subject to subparagraph (B), the term ``active duty military personnel'' means an individual on active duty in the Uniformed Services of the United States. (B) Exception.--If an individual described in subparagraph (A) elects family coverage under section 1073a(e)(2)(A) of title 10, United States Code (as added by section 8001(a)), then paragraph (5) of subsection (c) shall not apply with respect to such coverage. (3) Electing indians.-- (A) In general.--Subject to subparagraph (B), the term ``electing Indian'' means an eligible individual who makes an election under section 8302(b) of this Act. (B) Family election for all individuals eligible to elect.--No such election shall be made with respect to an individual in a family (as defined without regard to this section) unless such election is made for all eligible individuals (described in section 8302(a)) who are family members of the family. (4) Multiple choice.--Eligible individuals who are permitted to elect coverage under more than one health plan or program referred to in this subsection may elect which of such plans or programs will be the applicable health plan under this Act. (e) Qualifying Students.-- (1) In general.--In the case of a qualifying student (described in paragraph (2)), the student may elect to enroll in a regional alliance health plan offered by the regional alliance for the area in which the school is located. (2) Qualifying student.--In paragraph (1), the term ``qualifying student'' means an individual who-- (A) but for this subsection would receive coverage under a health plan as a child of another person, and (B) is a full-time student at a school in an alliance area that is different from the alliance area (or, in the case of a corporate alliance, such coverage area as the Board may specify) providing the coverage described in subparagraph (A). (3) Payment rules.-- (A) Continued treatment as family.--Except as provided in subparagraph (B), nothing in this subsection shall be construed as affecting the payment liabilities between families and health alliances or between health alliances and health plans. (B) Transfer payment.--In the case of an election under paragraph (1), for transfer payments see section 1346(e). (f) Spouses Living in Different Alliance Areas.--The Board shall provide for such special rules in applying this Act in the case of a couple in which the spouses reside in different alliance areas as the Board finds appropriate. SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS. (a) Multiple Employment of an Individual.--In the case of an individual who-- (1)(A) is not married or (B) is married and whose spouse is not a qualifying employee (as defined in section 1901(b)(1)), (2) is not a child, and (3) who is a qualifying employee both of a regional alliance employer and of a corporate alliance employer (or of 2 corporate alliance employers), the individual may elect the applicable health plan to be either a regional alliance health plan (for the alliance area in which the individual resides) or a corporate alliance health plan (for an employer employing the individual). (b) Multiple Employment Within a Family.-- (1) Married couple with employment with a regional alliance employer and with a corporate alliance employer.--In the case of a married individual-- (A) who is a qualifying employee of a regional alliance employer and whose spouse is a qualifying employee of a corporate alliance employer, or (B) who is a qualifying employee of a corporate alliance employer and whose spouse is a qualifying employee of a regional alliance employer, the individual and the individual's spouse may elect the applicable health plan to be either a regional alliance health plan (for the alliance area in which the couple resides) or a corporate alliance health plan (for an employer employing the individual or the spouse). (2) Married couple with different corporate alliance employers.--In the case of a married individual-- (A) who is a qualifying employee of a corporate alliance employer, and (B) whose spouse is a qualifying employee of a different corporate alliance employer, the individual and the individual's spouse may elect the applicable health plan to be a corporate alliance health plan for an employer employing either the individual or the spouse. SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER SYSTEMS. (a) Universal Coverage.--Notwithstanding the previous provisions of this title, except as provided in part 2 of subtitle C, in the case of an individual who resides in a State that has a Statewide single-payer system under section 1223, universal coverage shall be provided consistent with section 1222(3). (b) Individual Responsibilities.--In the case of an individual who resides in a single-payer State, the responsibilities of such individual under such system shall supersede the obligations of the individual under section 1002. Title I, Subtitle B Subtitle B--Benefits PART 1--COMPREHENSIVE BENEFIT PACKAGE SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS. (a) In General.--The comprehensive benefit package shall consist of the following items and services (as described in part 2), subject to the cost sharing requirements described in part 3, the exclusions described in part 4, and the duties and authority of the National Health Board described in part 5: (1) Hospital services (described in section 1111). (2) Services of health professionals (described in section 1112). (3) Emergency and ambulatory medical and surgical services (described in section 1113). (4) Clinical preventive services (described in section 1114). (5) Mental illness and substance abuse services (described in section 1115). (6) Family planning services and services for pregnant women (described in section 1116). (7) Hospice care (described in section 1117). (8) Home health care (described in section 1118). (9) Extended care services (described in section 1119). (10) Ambulance services (described in section 1120). (11) Outpatient laboratory, radiology, and diagnostic services (described in section 1121). (12) Outpatient prescription drugs and biologicals (described in section 1122). (13) Outpatient rehabilitation services (described in section 1123). (14) Durable medical equipment and prosthetic and orthotic devices (described in section 1124). (15) Vision care (described in section 1125). (16) Dental care (described in section 1126). (17) Health education classes (described in section 1127). (18) Investigational treatments (described in section 1128). (b) No Other Limitations or Cost Sharing.--The items and services in the comprehensive benefit package shall not be subject to any duration or scope limitation or any deductible, copayment, or coinsurance amount that is not required or authorized under this Act. (c) Health Plan.--Unless otherwise provided in this subtitle, for purposes of this subtitle, the term ``health plan'' has the meaning given such term in section 1400. PART 2--DESCRIPTION OF ITEMS AND SERVICES COVERED SEC. 1111. HOSPITAL SERVICES. (a) Coverage.--The hospital services described in this section are the following items and services: (1) Inpatient hospital services. (2) Outpatient hospital services. (3) 24-hour a day hospital emergency services. (b) Limitation.--The hospital services described in this section do not include hospital services provided for the treatment of a mental or substance abuse disorder (which are subject to section 1115), except for medical detoxification as required for the management of medical conditions associated with withdrawal from alcohol or drugs (which is not covered under such section). (c) Definitions.--For purposes of this subtitle: (1) Hospital.--The term ``hospital'' has the meaning given such term in section 1861(e) of the Social Security Act, except that such term shall include-- (A) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(1), a facility of the uniformed services under title 10, United States Code, that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in such section 1861(e); (B) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(2), a facility operated by the Department of Veterans Affairs that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in such section 1861(e); and (C) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(3), a facility operated by the Indian Health Service that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in such section 1861(e). (2) Inpatient hospital services.--The term ``inpatient hospital services'' means items and services described in paragraphs (1) through (3) of section 1861(b) of the Social Security Act when provided to an inpatient of a hospital. The National Health Board shall specify those health professional services described in section 1112 that shall be treated as inpatient hospital services when provided to an inpatient of a hospital. SEC. 1112. SERVICES OF HEALTH PROFESSIONALS. (a) Coverage.--The items and services described in this section are-- (1) inpatient and outpatient health professional services, including consultations, that are provided in-- (A) a home, office, or other ambulatory care setting; or (B) an institutional setting; and (2) services and supplies (including drugs and biologicals which cannot be self-administered) furnished as an incident to such health professional services, of kinds which are commonly furnished in the office of a health professional and are commonly either rendered without charge or included in the bill of such professional. (b) Limitation.--The items and services described in this section do not include items or services that are described in any other section of this part. An item or service that is described in section 1114 but is not provided consistent with a periodicity schedule for such item or service specified in such section or under section 1153 may be covered under this section if the item or service otherwise meets the requirements of this section. (c) Definitions.--Unless otherwise provided in this Act, for purposes of this Act: (1) Health professional.--The term ``health professional'' means an individual who provides health professional services. (2) Health professional services.--The term ``health professional services'' means professional services that-- (A) are lawfully provided by a physician; or (B) would be described in subparagraph (A) if provided by a physician, but are provided by another person who is legally authorized to provide such services in the State in which the services are provided. SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES. The emergency and ambulatory medical and surgical services described in this section are the following items and services provided by a health facility that is not a hospital and that is legally authorized to provide the services in the State in which they are provided: (1) 24-hour a day emergency services. (2) Ambulatory medical and surgical services. SEC. 1114. CLINICAL PREVENTIVE SERVICES. (a) Coverage.--The clinical preventive services described in this section are-- (1) an item or service for high risk populations (as defined by the National Health Board) that is specified and defined by the Board under section 1153, but only when the item or service is provided consistent with any periodicity schedule for the item or service promulgated by the Board; (2) except as modified by the National Health Board under section 1153, an age-appropriate immunization, test, or clinician visit specified in one of subsections (b) through (h) that is provided consistent with any periodicity schedule for the item or service specified in the applicable subsection or by the National Health Board under section 1153; and (3) an immunization, test, or clinician visit that is provided to an individual during an age range other than the age range for such immunization, test, or clinician visit that is specified in one of subsections (b) through (h), but only when provided consistent with any requirements for such immunizations, tests, and clinician visits established by the National Health Board under section 1153. (b) Individuals Under 3.--For an individual under 3 years of age: (1) Immunizations.--The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses: (A) Diphtheria. (B) Tetanus. (C) Pertussis. (D) Polio. (E) Haemophilus influenzae type B. (F) Measles. (G) Mumps. (H) Rubella. (I) Hepatitis B. (2) Tests.--The tests specified in this subsection are as follows: (A) 1 hematocrit. (B) 2 blood tests to screen for blood lead levels for individuals who are at risk for lead exposure. (3) Clinician visits.--The clinician visits specified in this subsection are 1 clinician visit for an individual who is newborn and 7 other clinician visits. (c) Individuals Age 3 to 5.--For an individual at least 3 years of age, but less than 6 years of age: (1) Immunizations.--The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses: (A) Diphtheria. (B) Tetanus. (C) Pertussis. (D) Polio. (E) Measles. (F) Mumps. (G) Rubella. (2) Tests.--The tests specified in this subsection are 1 urinalysis. (3) Clinician visits.--The clinician visits specified in this subsection are 3 clinician visits. (d) Individuals Age 6 to 12.--For an individual at least 6 years of age, but less than 13 years of age, the clinician visits specified in this subsection are 3 clinician visits. (e) Individuals Age 13 to 19.--For an individual at least 13 years of age, but less than 20 years of age: (1) Immunizations.--The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses: (A) Tetanus. (B) Diphtheria. (2) Tests.--The tests specified in this subsection are as follows: (A) Papanicolaou smears and pelvic exams, for females who have reached childbearing age and are at risk for cervical cancer, every 3 years, but-- (i) annually until 3 consecutive negative smears have been obtained, if medically necessary; and (ii) annually for females who are at risk for fertility related infectious illnesses. (B) Annual screening for chlamydia and gonorrhea for females who have reached childbearing age and are at risk for fertility related infectious illnesses. (3) Clinician visits.--The clinician visits specified in this subsection are 3 clinician visits. (f) Individuals Age 20 to 39.--For an individual at least 20 years of age, but less than 40 years of age: (1) Immunizations.--The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years. (2) Tests.--The tests specified in this subsection are as follows: (A) Papanicolaou smears and pelvic exams for females every 3 years, but-- (i) annually if an abnormal smear has been obtained, until 3 consecutive negative smears have been obtained; and (ii) annually for females who are at risk for fertility related infectious illnesses. (B) Annual screening for chlamydia and gonorrhea for females who are at risk for fertility related infectious illnesses. (C) Cholesterol every 5 years. (3) Clinician visits.--The clinician visits specified in this subsection are 1 clinician visit every 3 years. (g) Individuals Age 40 to 49.--For an individual at least 40 years of age, but less than 50 years of age: (1) Immunizations.--The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years. (2) Tests.--The tests specified in this subsection are as follows: (A) Papanicolaou smears and pelvic exams for females every 2 years, but-- (i) annually if an abnormal smear has been obtained, until 3 consecutive negative smears have been obtained; and (ii) annually for females who are at risk for fertility related infectious illnesses. (B) Annual screening for chlamydia and gonorrhea for females who are at risk for fertility related infectious illnesses. (C) Cholesterol every 5 years. (3) Clinician visits.--The clinician visits specified in this subsection are 1 clinician visit every 2 years. (h) Individuals Age 50 to 65.--For an individual at least 50 years of age, but less than 65 years of age: (1) Immunizations.--The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years. (2) Tests.--The tests specified in this subsection are as follows: (A) Papanicolaou smears and pelvic exams for females every 2 years. (B) Mammograms for females every 2 years. (C) Cholesterol every 5 years. (3) Clinician visits.--The clinician visits specified in this subsection are 1 clinician visit every 2 years. (i) Individuals Age 65 or Older.--For an individual at least 65 years of age who is enrolled under a health plan: (1) Immunizations.--The immunizations specified in this subsection are as follows: (A) Booster immunizations against tetanus and diphtheria every 10 years. (B) Age-appropriate immunizations for the following illnesses: (i) Influenza. (ii) Pneumococcal invasive disease. (2) Tests.--The tests specified in this subsection are as follows: (A) Papanicolaou smears and pelvic exams for females who are at risk for cervical cancer every 2 years. (B) Mammograms for females every 2 years. (C) Cholesterol every 5 years. (3) Clinician visits.--The clinician visits specified in this subsection are 1 clinician visit every year. (j) Clinician Visit.--For purposes of this section, the term ``clinician visit'' includes the following health professional services (as defined in section 1112(c)): (1) A complete medical history. (2) An appropriate physical examination. (3) Risk assessment. (4) Targeted health advice and counseling, including nutrition counseling. (5) The administration of age-appropriate immunizations and tests specified in subsections (b) through (h). (k) Immunizations and Tests Not Administered During Clinician Visit.--Notwithstanding subsection (i)(5), the clinical preventive services described in this section include an immunization or test described in this section that is administered to an individual consistent with any periodicity schedule for the immunization or test during the age range specified for the immunization or test, and any administration fee for such immunization or test, even if the immunization or test is not administered during a clinician visit. SEC. 1115. MENTAL ILLNESS AND SUBSTANCE ABUSE SERVICES. (a) Coverage.--The mental illness and substance abuse services that are described in this section are the following items and services for eligible individuals, as defined in section 1001(c), who satisfy the eligibility requirements in subsection (b): (1) Inpatient and residential mental illness and substance abuse treatment (described in subsection (c)). (2) Intensive nonresidential mental illness and substance abuse treatment (described in subsection (d)). (3) Outpatient mental illness and substance abuse treatment (described in subsection (e)), including case management, screening and assessment, crisis services, and collateral services. (b) Eligibility.--The eligibility requirements referred to in subsection (a) are as follows: (1) Inpatient, residential, nonresidential, and outpatient treatment.--An eligible individual is eligible to receive coverage for inpatient and residential mental illness and substance abuse treatment, intensive nonresidential mental illness and substance abuse treatment, or outpatient mental illness and substance abuse treatment (except case management and collateral services) if the individual-- (A) has, or has had during the 1-year period preceding the date of such treatment, a diagnosable mental disorder or a diagnosable substance abuse disorder; and (B) is experiencing, or is at significant risk of experiencing, functional impairment in family, work, school, or community activities. For purposes of this paragraph, an individual who has a diagnosable mental disorder or a diagnosable substance abuse disorder, is receiving treatment for such disorder, but does not satisfy the functional impairment criterion in subparagraph (B) shall be treated as satisfying such criterion if the individual would satisfy such criterion without such treatment. (2) Case management.--An eligible individual is eligible to receive coverage for case management if-- (A) a health professional designated by the health plan in which the individual is enrolled determines that the individual should receive such services; and (B) the individual is eligible to receive coverage for, and is receiving, outpatient mental illness and substance abuse treatment with respect to a diagnosable mental disorder or a diagnosable substance abuse disorder. (3) Screening and assessment and crisis services.--All eligible individuals enrolled under a health plan are eligible to receive coverage for outpatient mental illness and substance abuse treatment consisting of screening and assessment and crisis services. (4) Collateral services.--An eligible individual is eligible to receive coverage for outpatient mental illness and substance abuse treatment consisting of collateral services if the individual is a family member (described in section 1011(b)) of an individual who is receiving inpatient and residential mental illness and substance abuse treatment, intensive nonresidential mental illness and substance abuse treatment, or outpatient mental illness and substance abuse treatment. (c) Inpatient and Residential Treatment.-- (1) Definition.--For purposes of this subtitle, the term ``inpatient and residential mental illness and substance abuse treatment'' means the items and services described in paragraphs (1) through (3) of section 1861(b) of the Social Security Act when provided with respect to a diagnosable mental disorder or a diagnosable substance abuse disorder to-- (A) an inpatient of a hospital, psychiatric hospital, residential treatment center, residential detoxification center, crisis residential program, or mental illness residential treatment program; or (B) a resident of a therapeutic family or group treatment home or community residential treatment and recovery center for substance abuse. The National Health Board shall specify those health professional services described in section 1112 that shall be treated as inpatient and residential mental illness and substance abuse treatment when provided to such an inpatient or resident. (2) Limitations.--Coverage for inpatient and residential mental illness and substance abuse treatment is subject to the following limitations: (A) Residential mental illness treatment.--Such treatment, when provided with respect to a diagnosable mental disorder in a setting that is not a hospital or a psychiatric hospital, is covered only to avert the need for, or as an alternative to, treatment in a hospital or a psychiatric hospital, as determined by a health professional designated by the health plan in which the individual receiving such treatment is enrolled. (B) Residential substance abuse treatment.--Such treatment, when provided with respect to a diagnosable substance abuse disorder in a setting that is not a hospital or a psychiatric hospital, is covered only if a health professional designated by the health plan in which the individual receiving such treatment is enrolled determines (based on criteria that the plan may choose to employ) that the individual should receive such treatment. (C) Least restrictive setting.--Such treatment is covered only when-- (i) provided to an individual in the least restrictive inpatient or residential setting that is effective and appropriate for the individual; and (ii) less restrictive intensive nonresidential or outpatient treatment would be ineffective or inappropriate. (D) Annual limit.--Prior to January 1, 2001, such treatment is subject to an aggregate annual limit of 30 days. A maximum of 30 additional days of such treatment shall be covered for an individual if a health professional designated by the health plan in which the individual is enrolled determines in advance that-- (i) the individual poses a threat to his or her own life or the life of another individual; or (ii) the medical condition of the individual requires inpatient treatment in a hospital or a psychiatric hospital in order to initiate, change, or adjust pharmacological or somatic therapy. (E) Inpatient hospital treatment for substance abuse.--Such treatment, when provided in a hospital or a psychiatric hospital with respect to a diagnosable substance abuse disorder, is covered under this section only for detoxification requiring the management of psychiatric conditions associated with withdrawal from alcohol or drugs. The items and services described in this section do not include medical detoxification as required for the management of medical conditions associated with withdrawal from alcohol or drugs (which is covered under section 1111). (d) Intensive Nonresidential Treatment.-- (1) Definition.--For purposes of this subtitle, the term ``intensive nonresidential mental illness and substance abuse treatment'' means diagnostic or therapeutic items or services provided with respect to a diagnosable mental disorder or a diagnosable substance abuse disorder to an individual-- (A) participating in a partial hospitalization program, a day treatment program, a psychiatric rehabilitation program, or an ambulatory detoxification program; or (B) receiving home-based mental illness services or behavioral aide mental illness services. The National Health Board shall specify those health professional services described in section 1112 that shall be treated as intensive nonresidential mental illness and substance abuse treatment when provided to such an individual. (2) Limitations.--Coverage for intensive nonresidential mental illness and substance abuse treatment is subject to the following limitations: (A) Discretion of plan.--An individual shall receive coverage for such treatment if a health professional designated by the health plan in which the individual is enrolled determines (based on criteria that the plan may choose to employ) that the individual should receive such treatment. (B) Treatment purposes.--Such treatment is covered only when provided-- (i) to avert the need for, or as an alternative to, treatment in residential or inpatient settings; (ii) to facilitate the earlier discharge of an individual receiving inpatient or residential care; (iii) to restore the functioning of an individual with a diagnosable mental disorder or a diagnosable substance abuse disorder; or (iv) to assist such an individual to develop the skills and gain access to the support services the individual needs to achieve the maximum level of functioning of the individual within the community. (C) Annual limit.-- (i) In general.--Prior to January 1, 2001, the number of covered days of inpatient and residential mental illness and substance abuse treatment that are available to an individual under the 30-day limit described in the first sentence of subsection (c)(2)(D) shall be reduced by 1 day for each 2 covered days of intensive nonresidential mental illness and substance abuse treatment that are provided to the individual, until such number is reduced to zero. (ii) Additional days.--After the number of covered days referred to in clause (i) has been reduced to zero with respect to an individual, the individual shall receive coverage for a maximum of 60 days of intensive nonresidential mental illness and substance abuse treatment if a health professional designated by the health plan in which the individual is enrolled determines that the individual should receive such treatment. (D) Detoxification.--Intensive nonresidential mental illness and substance abuse treatment consisting of detoxification is covered only if it is provided in the context of a treatment program. (E) Out-of-pocket maximum.--Prior to January 1, 2001, expenses for intensive nonresidential mental illness and substance abuse treatment that an individual incurs prior to satisfying a deductible applicable to such treatment, and copayments and coinsurance paid by or on behalf of the individual for such treatment, may not be applied toward any annual out-of-pocket limit on cost sharing under any cost sharing schedule described in part 3 of this subtitle if such treatment is provided-- (i) with respect to a diagnosable substance abuse disorder; or (ii) pursuant to subparagraph (C)(ii). (e) Outpatient Treatment.-- (1) Definition.--For purposes of this subtitle, the term ``outpatient mental illness and substance abuse treatment'' means the following services provided with respect to a diagnosable mental disorder or a diagnosable substance abuse disorder in an outpatient setting: (A) Screening and assessment. (B) Diagnosis. (C) Medical management. (D) Substance abuse counseling and relapse prevention. (E) Crisis services. (F) Somatic treatment services. (G) Psychotherapy. (H) Case management. (I) Collateral services. (2) Limitations.--Coverage for outpatient mental illness and substance abuse treatment is subject to the following limitations: (A) Health professional services.--Such treatment is covered only when it constitutes health professional services (as defined in section 1112(c)(2)). (B) Discretion of plan.--An individual shall receive coverage for outpatient mental illness and substance abuse treatment consisting of substance abuse counseling and relapse prevention if a health professional designated by the health plan in which the individual is enrolled determines (based on criteria that the plan may choose to employ) that the individual should receive such treatment. This subparagraph does not apply to group therapy covered pursuant to subparagraph (C)(ii)(II). (C) Annual limits.-- (i) Psychotherapy and collateral services.--Prior to January 1, 2001, psychotherapy and collateral services are subject to an aggregate annual limit of 30 visits per individual. Additional visits may be covered, at the discretion of the health plan in which the individual receiving treatment is enrolled, to prevent hospitalization or to facilitate earlier hospital release, for which the number of covered days of inpatient and residential mental illness and substance abuse treatment that are available to an individual under the 30-day limit described in the first sentence of subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits. After such number has been reduced to zero, no additional visits under the preceding sentence may be covered. (ii) Substance abuse counseling and relapse prevention.-- (I) In general.--Except as provided in subclause (II), the number of covered days of inpatient and residential mental illness and substance abuse treatment that are available to an individual under the 30-day limit described in the first sentence of subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits for substance abuse counseling and relapse prevention that are covered for the individual under subparagraph (B). After such number has been reduced to zero, no visits for substance abuse counseling and relapse prevention may be covered, except as provided in subclause (II). (II) Group therapy.--Prior to January 1, 2001, substance abuse counseling and relapse prevention consisting of group therapy is subject to a separate aggregate annual limit of 30 visits, if such therapy occurs within 12 months after the individual has received, with respect to a diagnosable substance abuse disorder, inpatient and residential mental illness and substance abuse treatment or intensive nonresidential mental illness and substance abuse treatment. The provisions of clause (i) and subclause (I) do not apply to therapy that is described in the preceding sentence. (D) Detoxification.--Outpatient mental illness and substance abuse treatment consisting of detoxification is covered only if it is provided in the context of a treatment program. (E) Out-of-pocket maximum.--Prior to January 1, 2001, expenses for outpatient mental illness and substance abuse treatment that an individual incurs prior to satisfying a deductible applicable to such treatment, and copayments and coinsurance paid by or on behalf of the individual for such treatment, may not be applied toward any annual out-of-pocket limit on cost sharing under any cost sharing schedule described in part 3 of this subtitle. (f) Other Definitions.--For purposes of this subtitle: (1) Case management.--The term ``case management'' means services that assist individuals in gaining access to needed medical, social, educational, and other services. (2) Diagnosable mental disorder and diagnosable substance abuse disorder.--The terms ``diagnosable mental disorder'' and ``diagnosable substance abuse disorder'' mean a disorder that-- (A) is listed in the Diagnostic and Statistical Manual of Mental Disorders, Third Edition, Revised or a revised version of such manual (except V Codes for Conditions Not Attributable to a Mental Disorder That Are a Focus of Attention or Treatment); (B) is the equivalent of a disorder described in subparagraph (A), but is listed in the International Classification of Diseases, 9th Revision, Clinical Modification, Third Edition or a revised version of such text; or (C) is listed in any authoritative text specifying diagnostic criteria for mental disorders or substance abuse disorders that is identified by the National Health Board. (3) Psychiatric hospital.--The term ``psychiatric hospital'' has the meaning given such term in section 1861(f) of the Social Security Act, except that such term shall include-- (A) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(1), a facility of the uniformed services under title 10, United States Code, that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital; (B) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(2), a facility operated by the Department of Veterans Affairs that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital; and (C) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(3), a facility operated by the Indian Health Service that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital. SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN. The services described in this section are the following items and services: (1) Voluntary family planning services. (2) Contraceptive devices that-- (A) may only be dispensed upon prescription; and (B) are subject to approval by the Secretary of Health and Human Services under the Federal Food, Drug, and Cosmetic Act. (3) Services for pregnant women. SEC. 1117. HOSPICE CARE. The hospice care described in this section is the items and services described in paragraph (1) of section 1861(dd) of the Social Security Act, as defined in paragraphs (2), (3), and (4)(A) of such section (with the exception of paragraph (2)(A)(iii)), except that all references to the Secretary of Health and Human Services in such paragraphs shall be treated as references to the National Health Board. SEC. 1118. HOME HEALTH CARE. (a) Coverage.--The home health care described in this section is-- (1) the items and services described in section 1861(m) of the Social Security Act; and (2) home infusion drug therapy services described in section 1861(ll) of the Social Security Act (as inserted by section 2005). (b) Limitations.--Coverage for home health care is subject to the following limitations: (1) Inpatient treatment alternative.--Such care is covered only as an alternative to inpatient treatment in a hospital, skilled nursing facility, or rehabilitation facility after an illness or injury. (2) Reevaluation.--At the end of each 60-day period of home health care, the need for continued care shall be reevaluated by the person who is primarily responsible for providing the home health care. Additional periods of care are covered only if such person determines that the requirement in paragraph (1) is satisfied. SEC. 1119. EXTENDED CARE SERVICES. (a) Coverage.--The extended care services described in this section are the items and services described in section 1861(h) of the Social Security Act when provided to an inpatient of a skilled nursing facility or a rehabilitation facility. (b) Limitations.--Coverage for extended care services is subject to the following limitations: (1) Hospital alternative.--Such services are covered only as an alternative to inpatient treatment in a hospital after an illness or injury. (2) Annual limit.--Such services are subject to an aggregate annual limit of 100 days. (c) Definitions.--For purposes of this subtitle: (1) Rehabilitation facility.--The term ``rehabilitation facility'' means an institution (or a distinct part of an institution) which is established and operated for the purpose of providing diagnostic, therapeutic, and rehabilitation services to individuals for rehabilitation from illness or injury. (2) Skilled nursing facility.--The term ``skilled nursing facility'' means an institution (or a distinct part of an institution) which is primarily engaged in providing to residents-- (A) skilled nursing care and related services for residents who require medical or nursing care; or (B) rehabilitation services to residents for rehabilitation from illness or injury. SEC. 1120. AMBULANCE SERVICES. (a) Coverage.--The ambulance services described in this section are the following items and services: (1) Ground transportation by ambulance. (2) Air transportation by an aircraft equipped for transporting an injured or sick individual. (3) Water transportation by a vessel equipped for transporting an injured or sick individual. (b) Limitations.--Coverage for ambulance services is subject to the following limitations: (1) Medical indication.--Ambulance services are covered only in cases in which the use of an ambulance is indicated by the medical condition of the individual concerned. (2) Air transport.--Air transportation is covered only in cases in which there is no other method of transportation or where the use of another method of transportation is contra- indicated by the medical condition of the individual concerned. (3) Water transport.--Water transportation is covered only in cases in which there is no other method of transportation or where the use of another method of transportation is contra- indicated by the medical condition of the individual concerned. SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES. The items and services described in this section are laboratory, radiology, and diagnostic services provided upon prescription to individuals who are not inpatients of a hospital, hospice, skilled nursing facility, or rehabilitation facility. SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS. (a) Coverage.--The items described in this section are the following: (1) Covered outpatient drugs described in section 1861(t) of the Social Security Act (as amended by section 2001(b))-- (A) except that, for purposes of this section, a medically accepted indication with respect to the use of a covered outpatient drug includes any use which has been approved by the Food and Drug Administration for the drug, and includes another use of the drug if-- (i) the drug has been approved by the Food and Drug Administration; and (ii) such use is supported by one or more citations which are included (or approved for inclusion) in one or more of the following compendia: the American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluations, the United States Pharmacopoeia-Drug Information, and other authoritative compendia as identified by the Secretary, unless the Secretary has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia; or (iii) such use is medically accepted based on supportive clinical evidence in peer reviewed medical literature appearing in publications which have been identified for purposes of this clause by the Secretary; and (B) notwithstanding any exclusion from coverage that may be made with respect to such a drug under title XVIII of such Act pursuant to section 1862(a)(18) of such Act. (2) Blood clotting factors when provided on an outpatient basis. (b) Revision of Compendia List.--The Secretary may revise the list of compendia in subsection (a)(1)(A)(ii) designated as appropriate for identifying medically accepted indications for drugs. (c) Blood Clotting Factors.--For purposes of this subtitle, the term ``blood clotting factors'' has the meaning given such term in section 1861(s)(2)(I) of the Social Security Act. SEC. 1123. OUTPATIENT REHABILITATION SERVICES. (a) Coverage.--The outpatient rehabilitation services described in this section are-- (1) outpatient occupational therapy; (2) outpatient physical therapy; and (3) outpatient speech pathology services for the purpose of attaining or restoring speech. (b) Limitations.--Coverage for outpatient rehabilitation services is subject to the following limitations: (1) Restoration of capacity or minimization of limitations.--Such services include only items or services used to restore functional capacity or minimize limitations on physical and cognitive functions as a result of an illness or injury. (2) Reevaluation.--At the end of each 60-day period of outpatient rehabilitation services, the need for continued services shall be reevaluated by the person who is primarily responsible for providing the services. Additional periods of services are covered only if such person determines that functioning is improving. SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROSTHETIC AND ORTHOTIC DEVICES. (a) Coverage.--The items and services described in this section are-- (1) durable medical equipment, including accessories and supplies necessary for repair, function, and maintenance of such equipment; (2) prosthetic devices (other than dental devices) which replace all or part of the function of an internal body organ (including colostomy bags and supplies directly related to colostomy care), including replacement of such devices; (3) accessories and supplies which are used directly with a prosthetic device to achieve the therapeutic benefits of the prosthesis or to assure the proper functioning of the device; (4) leg, arm, back, and neck braces; (5) artificial legs, arms, and eyes, including replacements if required because of a change in the patient's physical condition; and (6) fitting and training for use of the items described in paragraphs (1) through (5). (b) Limitation.--An item or service described in this section is covered only if it improves functional ability or prevents further deterioration in function. (c) Durable Medical Equipment.--For purposes of this subtitle, the term ``durable medical equipment'' has the meaning given such term in section 1861(n) of the Social Security Act. SEC. 1125. VISION CARE. (a) Coverage.--The vision care described in this section is diagnosis and treatment for defects in vision. (b) Limitation.--Eyeglasses and contact lenses are covered only for individuals less than 18 years of age. SEC. 1126. DENTAL CARE. (a) Coverage.--The dental care described in this section is the following: (1) Emergency dental treatment, including simple extractions, for acute infections, bleeding, and injuries to natural teeth and oral structures for conditions requiring immediate attention to prevent risks to life or significant medical complications, as specified by the National Health Board. (2) Prevention and diagnosis of dental disease, including oral dental examinations, radiographs, dental sealants, fluoride application, and dental prophylaxis. (3) Treatment of dental disease, including routine fillings, prosthetics for genetic defects, periodontal maintenance, and endodontic services. (4) Space maintenance procedures to prevent orthodontic complications. (5) Interceptive orthodontic treatment to prevent severe malocclusion. (b) Limitations.--Coverage for dental care is subject to the following limitations: (1) Prevention and diagnosis.--Prior to January 1, 2001, the items and services described in subsection (a)(2) are covered only for individuals less than 18 years of age. On or after such date, such items and services are covered for all eligible individuals enrolled under a health plan, except that dental sealants are not covered for individuals 18 years of age or older. (2) Treatment of dental disease.--Prior to January 1, 2001, the items and services described in subsection (a)(3) are covered only for individuals less than 18 years of age. On or after such date, such items and services are covered for all eligible individuals enrolled under a health plan, except that endodontic services are not covered for individuals 18 years of age or older. (3) Space maintenance.--The items and services described in subsection (a)(4) are covered only for individuals at least 3 years of age, but less than 13 years of age and-- (A) are limited to posterior teeth; (B) involve maintenance of a space or spaces for permanent posterior teeth that would otherwise be prevented from normal eruption if the space were not maintained; and (C) do not include a space maintainer that is placed within 6 months of the expected eruption of the permanent posterior tooth concerned. (4) Interceptive orthodontic treatment.--Prior to January 1, 2001, the items and services described in subsection (a)(5) are not covered. On or after such date, such items and services are covered only for individuals at least 6 years of age, but less than 12 years of age. SEC. 1127. HEALTH EDUCATION CLASSES. (a) Coverage.--Subject to subsection (b), the items and services described in this section are health education and training classes to encourage the reduction of behavioral risk factors and to promote healthy activities. Such education and training classes may include smoking cessation, nutrition counseling, stress management, support groups, and physical training classes. (b) Discretion of Plan.--A health plan may offer education and training classes at its discretion. (c) Construction.--This section shall not be construed to include or limit education or training that is provided in the course of the delivery of health professional services (as defined in section 1112(c)). SEC. 1128. INVESTIGATIONAL TREATMENTS. (a) Coverage.--Subject to subsection (b), the items and services described in this subsection are qualifying investigational treatments that are administered for a life-threatening disease, disorder, or other health condition (as defined by the National Health Board). (b) Discretion of Plan.--A health plan may cover an investigational treatment described in subsection (a) at its discretion. (c) Routine Care During Investigational Treatments.--The comprehensive benefit package includes an item or service described in any other section of this part, subject to the limitations and cost sharing requirements applicable to the item or service, when the item or service is provided to an individual in the course of an investigational treatment, if-- (1) the treatment is a qualifying investigational treatment; and (2) the item or service would have been provided to the individual even if the individual were not receiving the investigational treatment. (d) Definitions.--For purposes of this subtitle: (1) Qualifying investigational treatment.--The term ``qualifying investigational treatment'' means a treatment-- (A) the effectiveness of which has not been determined; and (B) that is under clinical investigation as part of an approved research trial. (2) Approved research trial.--The term ``approved research trial'' means-- (A) a research trial approved by the Secretary of Health and Human Services, the Director of the National Institutes of Health, the Commissioner of the Food and Drug Administration, the Secretary of Veterans Affairs, the Secretary of Defense, or a qualified nongovernmental research entity as defined in guidelines of the National Institutes of Health; or (B) a peer-reviewed and approved research program, as defined by the Secretary of Health and Human Services, conducted for the primary purpose of determining whether or not a treatment is safe, efficacious, or having any other characteristic of a treatment which must be demonstrated in order for the treatment to be medically necessary or appropriate. PART 3--COST SHARING SEC. 1131. COST SHARING. (a) In General.--Each health plan shall offer to individuals enrolled under the plan one, but not more than one, of the following cost sharing schedules, which schedule shall be offered to all such enrollees: (1) Lower cost sharing (described in section 1132). (2) Higher cost sharing (described in section 1133). (3) Combination cost sharing (described in section 1134). (b) Cost Sharing for Low-Income Families.--For provisions relating to reducing cost sharing for certain low-income families, see section 1371. (c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost Sharing.-- (1) Application on an annual basis.--The deductibles and out-of-pocket limits on cost sharing for a year under the schedules referred to in subsection (a) shall be applied based upon expenses incurred for items and services furnished in the year. (2) Individual and family general deductibles.-- (A) Individual.--Subject to subparagraph (B), with respect to an individual enrolled under a health plan (regardless of the class of enrollment), any individual general deductible in the cost sharing schedule offered by the plan represents the amount of countable expenses (as defined in subparagraph (C)) that the individual may be required to incur in a year before the plan incurs liability for expenses for such items and services furnished to the individual. (B) Family.--In the case of an individual enrolled under a health plan under a family class of enrollment (as defined in section 1011(c)(2)(A)), the individual general deductible under subparagraph (A) shall not apply to countable expenses incurred by any member of the individual's family in a year at such time as the family has incurred, in the aggregate, countable expenses in the amount of the family general deductible for the year. (C) Countable expense.--In this paragraph, the term ``countable expense'' means, with respect to an individual for a year, an expense for an item or service covered by the comprehensive benefit package that is subject to the general deductible and for which, but for such deductible and any other cost sharing under this subtitle, a health plan is liable for payment. The amount of countable expenses for an individual for a year under this paragraph shall not exceed the individual general deductible for the year. (3) Coinsurance and copayments.--After a general or separate deductible that applies to an item or service covered by the comprehensive benefit package has been satisfied for a year, subject to paragraph (4), coinsurance and copayments are amounts (expressed as a percentage of an amount otherwise payable or as a dollar amount, respectively) that an individual may be required to pay with respect to the item or service. (4) Individual and family limits on cost sharing.-- (A) Individual.--Subject to subparagraph (B), with respect to an individual enrolled under a health plan (regardless of the class of enrollment), the individual out-of-pocket limit on cost sharing in the cost sharing schedule offered by the plan represents the amount of expenses that the individual may be required to incur under the plan in a year because of a general deductible, separate deductibles, copayments, and coinsurance before the plan may no longer impose any cost sharing with respect to items or services covered by the comprehensive benefit package that are provided to the individual, except as provided in subsections (d)(2)(E) and (e)(2)(E) of section 1115. (B) Family.--In the case of an individual enrolled under a health plan under a family class of enrollment (as defined in section 1011(c)(2)(A)), the family out- of-pocket limit on cost sharing in the cost sharing schedule offered by the plan represents the amount of expenses that members of the individual's family, in the aggregate, may be required to incur under the plan in a year because of a general deductible, separate deductibles, copayments, and coinsurance before the plan may no longer impose any cost sharing with respect to items or services covered by the comprehensive benefit package that are provided to any member of the individual's family, except as provided in subsections (d)(2)(E) and (e)(2)(E) of section 1115. SEC. 1132. LOWER COST SHARING. (a) In General.--The lower cost sharing schedule referred to in section 1131 that is offered by a health plan-- (1) may not include a deductible; (2) shall have-- (A) an annual individual out-of-pocket limit on cost sharing of $1500; and (B) an annual family out-of-pocket limit on cost sharing of $3000; (3) except as provided in paragraph (4)-- (A) shall prohibit payment of any coinsurance; and (B) subject to section 1152, shall require payment of the copayment for an item or service (if any) that is specified for the item or service in the table under section 1135; and (4) shall require payment of coinsurance for an out-of- network item or service (as defined in section 1402(f)) in an amount that is a percentage (determined under subsection (b)) of the applicable payment rate for the item or service established under section 1322(c), but only if the item or service is subject to coinsurance under the higher cost sharing schedule described in section 1133. (b) Out-of-Network Coinsurance Percentage.-- (1) In general.--The National Health Board shall determine a percentage referred to in subsection (a)(4). The percentage-- (A) may not be less than 20 percent; and (B) shall be the same with respect to all out-of- network items and services that are subject to coinsurance, except as provided in paragraph (2). (2) Exception.--The National Health Board may provide for a percentage that is greater than a percentage determined under paragraph (1) in the case of an out-of-network item or service for which, under the higher cost sharing schedule described in section 1133, the coinsurance is greater than 20 percent of the applicable payment rate. SEC. 1133. HIGHER COST SHARING. (a) In General.--The higher cost sharing schedule referred to in section 1131 that is offered by a health plan-- (1) shall have an annual individual general deductible of $200 and an annual family general deductible of $400 that apply with respect to expenses incurred for all items and services in the comprehensive benefit package except-- (A) an item or service with respect to which a separate individual deductible applies under paragraph (2), (3), or (4); or (B) an item or service described in paragraph (5), (6), or (7) with respect to which a deductible does not apply; (2) shall require an individual to incur expenses during each episode of inpatient and residential mental illness and substance abuse treatment (described in section 1115(c)) equal to the cost of one day of such treatment before the plan provides benefits for such treatment to the individual; (3) shall require an individual to incur expenses during each episode of intensive nonresidential mental illness and substance abuse treatment (described in section 1115(d)) equal to the cost of one day of such treatment before the plan provides benefits for such treatment to the individual; (4) shall require an individual to incur expenses in a year for outpatient prescription drugs and biologicals (described in section 1122) equal to $250 before the plan provides benefits for such items to the individual; (5) shall require an individual to incur expenses in a year for dental care described in section 1126, except the items and services for prevention and diagnosis of dental disease described in section 1126(a)(2), equal to $50 before the plan provides benefits for such care to the individual; (6) may not require any deductible for clinical preventive services (described in section 1114); (7) may not require any deductible for clinician visits and associated services related to prenatal care or 1 post-partum visit under section 1116; (8) may not require any deductible for the items and services for prevention and diagnosis of dental disease described in section 1126(a)(2); (9) shall have-- (A) an annual individual out-of-pocket limit on cost sharing of $1500; and (B) an annual family out-of-pocket limit on cost sharing of $3000; (10) shall prohibit payment of any copayment; and (11) subject to section 1152, shall require payment of the coinsurance for an item or service (if any) that is specified for the item or service in the table under section 1135. (b) Episodes of Treatment.-- (1) Inpatient and residential treatment.--For purposes of subsection (a)(2), an episode of inpatient and residential mental illness and substance abuse treatment shall be considered to begin on the date an individual is admitted to a facility for such treatment and to end on the date the individual is discharged from the facility. (2) Intensive nonresidential treatment.--For purposes of subsection (a)(3), an episode of intensive nonresidential mental illness and substance abuse treatment-- (A) shall be considered to begin on the date an individual begins participating in a program described in section 1115(d)(1)(A) and to end on the date the individual ceases such participation; or (B) shall be considered to begin on the date an individual begins receiving home-based or behavioral aide services described in section 1115(d)(1)(B) and to end on the date the individual ceases to receive such services. SEC. 1134. COMBINATION COST SHARING. (a) In General.--The combination cost sharing schedule referred to in section 1131 that is offered by a health plan-- (1) shall have-- (A) an annual individual out-of-pocket limit on cost sharing of $1500; and (B) an annual family out-of-pocket limit on cost sharing of $3000; and (2) otherwise shall require different cost sharing for in- network items and services than for out-of-network items and services. (b) In-Network Items and Services.--With respect to an in-network item or service (as defined in section 1402(f)(1)), the combination cost sharing schedule that is offered by a health plan-- (1) may not apply a deductible; (2) shall prohibit payment of any coinsurance; and (3) shall require payment of a copayment in accordance with the lower cost sharing schedule described in section 1132. (c) Out-of-Network Items and Services.--With respect to an out-of- network item or service (as defined in section 1402(f)(2)), the combination cost sharing schedule that is offered by a health plan-- (1) shall require an individual and a family to incur expenses before the plan provides benefits for the item or service in accordance with the deductibles under the higher cost sharing schedule described in section 1133; (2) shall prohibit payment of any copayment; and (3) shall require payment of coinsurance in accordance with such schedule. SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE. (a) In General.--The following table specifies, for different items and services, the copayments and coinsurance referred to in sections 1132 and 1133: Copayments and Coinsurance for Items and Services ---------------------------------------------------------------------------------------------------------------- Benefit Section Lower Cost Sharing Schedule Higher Cost Sharing Schedule ---------------------------------------------------------------------------------------------------------------- Inpatient hospital services...... 1111 No copayment 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Outpatient hospital services..... 1111 $10 per visit 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Hospital emergency room services. 1111 $25 per visit (unless patient has 20 percent of applicable payment an emergency medical condition rate as defined in section 1867(e)(1) of the Social Security Act) ---------------------------------------------------------------------------------------------------------------- Services of health professionals. 1112 $10 per visit 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Emergency services other than $25 per visit (unless patient has 20 percent of applicable payment hospital emergency room services 1113 an emergency medical condition rate as defined in section 1867(e)(1) of the Social Security Act) ---------------------------------------------------------------------------------------------------------------- Ambulatory medical and surgical $10 per visit 20 percent of applicable payment services........................ 1113 rate ---------------------------------------------------------------------------------------------------------------- Clinical preventive services..... 1114 No copayment No coinsurance ---------------------------------------------------------------------------------------------------------------- Inpatient and residential mental No copayment 20 percent of applicable payment illness and substance abuse rate treatment....................... 1115 ---------------------------------------------------------------------------------------------------------------- Intensive nonresidential mental No copayment 20 percent of applicable payment illness and substance abuse rate treatment (except treatment provided pursuant to section 1115(d)(2)(C)(ii)).............. 1115 ---------------------------------------------------------------------------------------------------------------- Intensive nonresidential mental $25 per visit 50 percent of applicable payment illness and substance abuse rate treatment provided pursuant to section 1115(d)(2)(C)(ii)....... 1115 ---------------------------------------------------------------------------------------------------------------- Outpatient mental illness and $10 per visit 20 percent of applicable payment substance abuse treatment rate (except psychotherapy, collateral services, and case management)..................... 1115 ---------------------------------------------------------------------------------------------------------------- Outpatient psychotherapy and $25 per visit until January 1, 50 percent of applicable payment collateral services............. 1115 2001, and $10 per visit rate until January 1, 2001, and thereafter 20 percent thereafter ---------------------------------------------------------------------------------------------------------------- Case management.................. 1115 No copayment No coinsurance ---------------------------------------------------------------------------------------------------------------- Family planning and services for $10 per visit 20 percent of applicable payment pregnant women (except clinician rate visits and associated services related to prenatal care and 1 post-partum visit).............. 1116 ---------------------------------------------------------------------------------------------------------------- Clinician visits and associated No copayment No coinsurance services related to prenatal care and 1 post-partum visit.... 1116 ---------------------------------------------------------------------------------------------------------------- Hospice care..................... 1117 No copayment 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Home health care................. 1118 No copayment 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Extended care services........... 1119 No copayment 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Ambulance services............... 1120 No copayment 20 percent of applicable payment rate ---------------------------------------------------------------------------------------------------------------- Outpatient laboratory, radiology, No copayment 20 percent of applicable payment and diagnostic services......... 1121 rate ---------------------------------------------------------------------------------------------------------------- Outpatient prescription drugs and $5 per prescription 20 percent of applicable payment biologicals..................... 1122 rate ---------------------------------------------------------------------------------------------------------------- Outpatient rehabilitation $10 per visit 20 percent of applicable payment services........................ 1123 rate ---------------------------------------------------------------------------------------------------------------- Durable medical equipment and No copayment 20 percent of applicable payment prosthetic and orthotic devices. 1124 rate ---------------------------------------------------------------------------------------------------------------- Vision care...................... 1125 $10 per visit (No additional 20 percent of applicable payment charge for 1 set of necessary rate eyeglasses for an individual less than 18 years of age) ---------------------------------------------------------------------------------------------------------------- Dental care (except space $10 per visit 20 percent of applicable payment maintenance procedures and rate interceptive orthodontic treatment)...................... 1126 ---------------------------------------------------------------------------------------------------------------- Space maintenance procedures and $20 per visit 40 percent of applicable payment interceptive orthodontic rate treatment....................... 1126 ---------------------------------------------------------------------------------------------------------------- Health education classes......... 1127 All cost sharing rules determined All cost sharing rules determined by plans by plans ---------------------------------------------------------------------------------------------------------------- Investigational treatment for All cost sharing rules determined All cost sharing rules determined life-threatening condition...... 1128 by plans by plans ---------------------------------------------------------------------------------------------------------------- (b) Applicable Payment Rate.--For purposes of this section, the term ``applicable payment rate'', when used with respect to an item or service, means the applicable payment rate for the item or service established under section 1322(c). SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING. (a) In General.--Any deductible, copayment, out-of-pocket limit on cost sharing, or other amount expressed in dollars in this subtitle for items or services provided in a year after 1994 shall be such amount increased by the percentage specified in subsection (b) for the year. (b) Percentage.--The percentage specified in this subsection for a year is equal to the product of the factors described in subsection (d) for the year and for each previous year after 1994, minus 1. (c) Rounding.--Any increase (or decrease) under subsection (a) shall be rounded, in the case of an amount specified in this subtitle of-- (1) $200 or less, to the nearest multiple of $1, (2) more than $200, but less than $500, to the nearest multiple of $5, or (3) $500 or more, to the nearest multiple of $10. (d) Factor.-- (1) In general.--The factor described in this subsection for a year is 1 plus the general health care inflation factor (as specified in section 6001(a)(3) and determined under paragraph (2)) for the year. (2) Determination.--In computing such factor for a year, the percentage increase in the CPI for a year (referred to in section 6001(b)) shall be determined based upon the percentage increase in the average of the CPI for the 12-month period ending with August 31 of the previous year over such average for the preceding 12-month period. PART 4--EXCLUSIONS SEC. 1141. EXCLUSIONS. (a) Medical Necessity.--The comprehensive benefit package does not include-- (1) an item or service that is not medically necessary or appropriate; or (2) an item or service that the National Health Board may determine is not medically necessary or appropriate in a regulation promulgated under section 1154. (b) Additional Exclusions.--The comprehensive benefit package does not include the following items and services: (1) Custodial care, except in the case of hospice care under section 1117. (2) Surgery and other procedures performed solely for cosmetic purposes and hospital or other services incident thereto, unless-- (A) required to correct a congenital anomaly; or (B) required to restore or correct a part of the body that has been altered as a result of-- (i) accidental injury; (ii) disease; or (iii) surgery that is otherwise covered under this subtitle. (3) Hearing aids. (4) Eyeglasses and contact lenses for individuals at least 18 years of age. (5) In vitro fertilization services. (6) Sex change surgery and related services. (7) Private duty nursing. (8) Personal comfort items, except in the case of hospice care under section 1117. (9) Any dental procedures involving orthodontic care, inlays, gold or platinum fillings, bridges, crowns, pin/post retention, dental implants, surgical periodontal procedures, or the preparation of the mouth for the fitting or continued use of dentures, except as specifically described in section 1126. PART 5--ROLE OF THE NATIONAL HEALTH BOARD SEC. 1151. DEFINITION OF BENEFITS. (a) In General.--The National Health Board may promulgate such regulations or establish such guidelines as may be necessary to assure uniformity in the application of the comprehensive benefit package across all health plans. (b) Flexibility in Delivery.--The regulations or guidelines under subsection (a) shall permit a health plan to deliver covered items and services to individuals enrolled under the plan using the providers and methods that the plan determines to be appropriate. SEC. 1152. ACCELERATION OF EXPANDED BENEFITS. (a) In General.--Subject to subsection (b), at any time prior to January 1, 2001, the National Health Board, in its discretion, may by regulation expand the comprehensive benefit package by-- (1) adding any item or service that is added to the package as of January 1, 2001; and (2) requiring that a cost sharing schedule described in part 3 of this subtitle reflect (wholly or in part) any of the cost sharing requirements that apply to the schedule as of January 1, 2001. No such expansion shall be effective except as of January 1 of a year. (b) Condition.--The Board may not expand the benefit package under subsection (a) which is to become effective with respect to a year, by adding any item or service or altering any cost sharing schedule, unless the Board estimates that the additional increase in per capita health care expenditures resulting from the addition or alteration, for each regional alliance for the year, will not cause any regional alliance to exceed its per capita target (as determined under section 6003). SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES. (a) In General.--With respect to clinical preventive services described in section 1114, the National Health Board-- (1) shall specify and define specific items and services as clinical preventive services for high risk populations and shall establish and update a periodicity schedule for such items and services; (2) shall update the periodicity schedules for the age- appropriate immunizations, tests, and clinician visits specified in subsections (b) through (h) of such section; (3) shall establish rules with respect to coverage for an immunization, test, or clinician visit that is not provided to an individual during the age range for such immunization, test, or clinician visit that is specified in one of subsections (b) through (h) of such section; and (4) may otherwise modify the items and services described in such section, taking into account age and other risk factors, but may not modify the cost sharing for any such item or service. (b) Consultation.--In performing the functions described in subsection (a), the National Health Board shall consult with experts in clinical preventive services. SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY. The National Health Board may promulgate such regulations as may be necessary to carry out section 1141(a)(2) (relating to the exclusion of certain services that are not medically necessary or appropriate). PART 6--ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS. No State may, through licensure or otherwise, restrict the practice of any class of health professionals beyond what is justified by the skills and training of such professionals. SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF OR MORAL CONVICTION. A health professional or a health facility may not be required to provide an item or service in the comprehensive benefit package if the professional or facility objects to doing so on the basis of a religious belief or moral conviction. Title I, Subtitle C Subtitle C--State Responsibilities SEC. 1200. PARTICIPATING STATE. (a) In General.--For purposes of the approval of a State health care system by the Board under section 1511, a State is a ``participating State'' if the State meets the applicable requirements of this subtitle. (b) Submission of System Document.-- (1) In general.--In order to be approved as a participating State under section 1511, a State shall submit to the National Health Board a document (in a form and manner specified by the Board) that describes the State health care system that the State is establishing (or has established). (2) Deadline.--If a State is not a participating State with a State health care system in operation by January 1, 1998, the provisions of subpart C of part 1 of subtitle F (relating to responsibilities in absence of State systems) shall take effect. (3) Submission of information subsequent to approval.--A State approved as a participating State under section 1511 shall submit to the Board an annual update to the State health care system not later than February 15 of each year following the first year for which the State is a participating State. The update shall contain-- (A) such information as the Board may require to determine that the system shall meet the applicable requirements of this Act for the succeeding year; and (B) such information as the Board may require to determine that the State operated the system during the previous year in accordance with the Board's approval of the system for such previous year. PART 1--GENERAL STATE RESPONSIBILITIES SEC. 1201. GENERAL STATE RESPONSIBILITIES. The responsibilities for a participating State are as follows: (1) Regional alliances.--Establishing one or more regional alliances (in accordance with section 1202). (2) Health plans.--Certifying health plans (in accordance with section 1203). (3) Financial solvency of plans.--Assuring the financial solvency of health plans (in accordance with section 1204). (4) Administration.--Designating an agency or official charged with coordinating the State responsibilities under this Act. (5) Workers compensation and automobile insurance.-- Conforming State laws to meet the requirements of subtitles A and B of title X (relating to medical benefits under workers compensation and automobile insurance). (6) Other responsibilities.--Carrying out other responsibilities of participating States specified under this Act. SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO ALLIANCES. (a) Establishment of Alliances.-- (1) In general.--A participating State shall-- (A) establish and maintain one or more regional alliances in accordance with this section and subtitle D, and ensure that such alliances meet the requirements of this Act; and (B) designate alliance areas in accordance with subsection (b). (2) Deadline.--A State may not be a participating State for a year unless the State has established such alliances by March 1 of the previous year. (b) Alliance Areas.-- (1) In general.--In accordance with this subsection, each State shall designate a geographic area assigned to each regional alliance. Each such area is referred to in this Act as an ``alliance area''. (2) Population required.-- (A) In general.--Each alliance area shall encompass a population large enough to ensure that the alliance has adequate market share to negotiate effectively with health plans providing the comprehensive benefit package to eligible individuals who reside in the area. (B) Treatment of consolidated metropolitan statistical areas.--An alliance area that includes a Consolidated Metropolitan Statistical Area within a State is presumed to meet the requirement of subparagraph (A). (3) Single alliance in each area.--No geographic area may be assigned to more than one regional alliance. (4) Boundaries.--In establishing boundaries for alliance areas, the State may not discriminate on the basis of or otherwise take into account race, age, language, religion, national origin, socio-economic status, disability, or perceived health status. (5) Treatment of metropolitan areas.--The entire portion of a metropolitan statistical area located in a State shall be included in the same alliance area. (6) No portions of State permitted to be outside alliance area.--Each portion of the State shall be assigned to a regional alliance under this subsection. (c) State Coordination of Regional Alliances.--One or more States may allow or require two or more regional alliances to coordinate their operations, whether such alliances are in the same or different States. Such coordination may include adoption of joint operating rules, contracting with health plans, enforcement activities, and establishment of fee schedules for health providers. (d) Assistance in Collection of Amounts Owed to Alliances.--Each State shall assure that the amounts owed to regional alliances in the State are collected and paid to such alliances. (e) Assistance in Eligibility Verifications.-- (1) In general.--Each State shall assure that the determinations of eligibility for cost sharing assistance (and premium discounts and cost sharing reductions for families) are made by regional alliances in the State on the basis of the best information available to the alliances and the State. (2) Provision of information.--Each State shall use the information available to the State under section 6103(l)(7)(D)(x) of the Internal Revenue Code of 1986 to assist regional alliances in verifying such eligibility status. (f) Special Requirements for Alliances With Single-Payer System.-- If the State operates an alliance-specific single-payer system (as described in part 2), the State shall assure that the regional alliance in which the system is operated meets the requirements for such an alliance described in section 1224(b). (g) Payment of Shortfalls for Certain Administrative Errors.--Each participating State is financially responsible, under section 9201(c)(2), for administrative errors described in section 9201(e)(2). SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH PLANS. (a) Criteria for Certification.-- (1) In general.--For purposes of this section, a participating State shall establish and publish the criteria that are used in the certification of health plans under this section. (2) Requirements.--Such criteria shall be established with respect to-- (A) the quality of the plan, (B) the financial stability of the plan, (C) the plan's capacity to deliver the comprehensive benefit package in the designated service area, (D) other applicable requirements for health plans under parts 1, 3, and 4 of subtitle E, and (E) other requirements imposed by the State consistent with this part. (b) Certification of Health Plans.--A participating State shall certify each plan as a regional alliance health plan that it determines meets the criteria for certification established and published under subsection (a). (c) Monitoring.--A participating State shall monitor the performance of each State-certified regional alliance health plan to ensure that it continues to meet the criteria for certification. (d) Limitations on Authority.--A participating State may not-- (1) discriminate against a plan based on the domicile of the entity offering of the plan; and (2) regulate premium rates charged by health plans, except as may be required under title VI (relating to the enforcement of cost containment rules for plans in the State) or as may be necessary to ensure that plans meet financial solvency requirements under section 1408. (e) Assuring Adequate Access to a Choice of Health Plans.-- (1) General access.-- (A) In general.--Each participating State shall ensure that-- (i) each regional alliance eligible family has adequate access to enroll in a choice of regional alliance health plans providing services in the area in which the individual resides, including (to the maximum extent practicable) adequate access to a plan whose premium is at or below the weighted average premium for plans in the regional alliance, and (ii) each such family that is eligible for a premium discount under section 6104(b) is provided a discount in accordance with such section (including an increase in such discount described in section 6104(b)(2)). (B) Authority.--In order to carry out its responsibility under subparagraph (A), a participating State may require, as a condition of entering into a contract with a regional alliance under section 1321, that one or more certified regional alliance health plans cover all (or selected portions) of the alliance area. (2) Access to plans using centers of excellence.--Each participating State may require, as a condition of entering into a contract with a regional alliance under section 1321, that one or more certified health plans provide access (through reimbursement, contracts, or otherwise) of enrolled individuals to services of centers of excellence (as designated by the State in accordance with rules promulgated by the Secretary). (3) Use of incentives to enroll and serve disadvantaged groups.--A State may provide-- (A) for an adjustment to the risk-adjustment methodology under section 1541(b) and other financial incentives to regional alliance health plans to ensure that such plans enroll individuals who are members of disadvantaged groups, and (B) for appropriate extra services, such as outreach to encourage enrollment and transportation and interpreting services to ensure access to care, for certain population groups that face barriers to access because of geographic location, income levels, or racial or cultural differences. (f) Coordination of Workers' Compensation Services and Automobile Insurance.--Each participating State shall comply with the responsibilities regarding workers' compensation and automobile insurance specified in subtitles A and B of title X. (g) Implementation of Mandatory Reinsurance System.--If the risk adjustment and reinsurance methodology developed under section 1541 includes a mandatory reinsurance system, each participating State shall establish a reinsurance program consistent with such methodology and any additional standards established by the Board. (h) Requirements for Plans Offering Supplemental Insurance.-- Notwithstanding any other provision of this Act a State may not certify a regional alliance health plan under this section if-- (1) the plan (or any entity with which the plan is affiliated under such rules as the Board may establish) offers a supplemental health benefit policy (as defined in section 1421(b)(1)) that fails to meet the applicable requirements for such a policy under part 2 of subtitle E (without regard to the State in which the policy is offered); or (2) the plan offers a cost sharing policy (as defined in section 1421(b)(2)) that fails to meet the applicable requirements for such a policy under part 2 of subtitle E. SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT; GUARANTY FUND. (a) Capital Standards.--A participating State shall establish capital standards for health plans that meet minimum Federal requirements established by the National Health Board under sections 1503(i) and 1551(a). (b) Reporting and Auditing Requirements.--Each participating State shall define financial reporting and auditing requirements and requirements for fund reserves adequate to monitor the financial status of plans. (c) Guaranty Fund.-- (1) Establishment.--Each participating State shall ensure that there is a guaranty fund that meets the requirements established by the Board under sections 1503(i) and 1552, in order to provide financial protection to health care providers and others in the case of a failure of a regional alliance health plan. (2) Assessments to provide funds.--In the case of a failure of one or more regional alliance health plans, the State may require each regional alliance health plan within the State to pay an assessment to the State in an amount not to exceed 2 percent of the premiums of such plans paid by or on behalf of regional alliance eligible individuals during a year for so long as necessary to generate sufficient revenue to cover any outstanding claims against the failed plan. (d) Procedures in Event of Plan Failure.-- (1) In general.--A participating State shall assure that, in the event of the failure of a regional alliance health plan in the State, eligible individuals enrolled in the plan will be assured continuity of coverage for the comprehensive benefit package. (2) Designation of state agency.--A participating State shall designate an agency of State government that supervises or assumes control of the operation of a regional alliance health plan in the case of the failure of the plan. (3) Protections for health care providers and enrollees.-- Each participating State shall assure that in the case of a plan failure-- (A) the guaranty fund shall pay health care providers for items and services covered under the comprehensive benefit package for enrollees of the plan for which the plan is otherwise obligated to make payment; (B) after making all payments required to be made to providers under subparagraph (A), the guaranty fund shall make payments for the operational, administrative, and other costs and debts of the plan (in accordance with requirements imposed by the State based on rules promulgated by the Board); (C) such health care providers have no legal right to seek payment from eligible individuals enrolled in the plan for any such covered items or services (other than the enrollees' obligations under cost sharing arrangements); and (D) health care providers are required to continue caring for such eligible individuals until such individuals are enrolled in a new health plan. (4) Plan failure.--For purposes of this section, the failure of a health plan means the current or imminent inability of the plan to pay claims. SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS. If a participating State provides benefits (either directly or through regional alliance health plans or otherwise) in addition to those covered under the comprehensive benefit package, the State may not provide for payment for such benefits through funds provided under this Act. PART 2--REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED. The Board shall approve the application of a State to operate a single-payer system if the Board finds that the system-- (1) meets the requirements of section 1222; (2)(A) meets the requirements for a Statewide single-payer system under section 1223, in the case of a system offered throughout a State; or (B) meets the requirements for an alliance-specific single- payer system under section 1224, in the case of a system offered in a single alliance of a State. SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS. Each single-payer system shall meet the following requirements: (1) Establishment by state.--The system is established under State law, and State law provides for mechanisms to enforce the requirements of the system. (2) Operation by state.--The system is operated by the State or a designated agency of the State. (3) Enrollment of eligible individuals.-- (A) Mandatory enrollment of all regional alliance individuals.--The system provides for the enrollment of all eligible individuals residing in the State (or, in the case of an alliance-specific single-payer system, in the alliance area) for whom the applicable health plan would otherwise be a regional alliance health plan. (B) Optional enrollment of medicare-eligible individuals.--At the option of the State, the system may provide for the enrollment of medicare-individuals residing in the State (or, in the case of an alliance- specific single-payer system, in the alliance area) if the Secretary of Health and Human Services has approved an application submitted by the State under section 1893 of the Social Security Act (as added by section 4001(a)) for the integration of medicare beneficiaries into plans of the State. Nothing in this subparagraph shall be construed as requiring that a State have a single-payer system in order to provide for such integration. (C) Optional enrollment of corporate alliance individuals in statewide plans.--At the option of the State, a Statewide single-payer system may provide for the enrollment of individuals residing in the State who are otherwise eligible to enroll in a corporate alliance health plan under section 1311. (D) Options included in state system document.--A State may not exercise any of the options described in subparagraphs (A) or (B) for a year unless the State included a description of the option in the submission of its system document to the Board for the year under section 1200(b). (E) Exclusion of certain individuals.--A single- payer system may not require the enrollment of electing veterans, active duty military personnel, and electing Indians (as defined in 1012(d)). (4) Direct payment to providers.-- (A) In general.--With respect to providers who furnish items and services included in the comprehensive benefit package to individuals enrolled in the system, the State shall make payments directly to such providers and assume (subject to subparagraph (B)) all financial risk associated with making such payments. (B) Capitated payments permitted.--Nothing in subparagraph (A) shall be construed to prohibit providers furnishing items and services under the system from receiving payments from the plan on a capitated, at-risk basis based on prospectively determined rates. (5) Provision of comprehensive benefit package.-- (A) In general.--The system shall provide for coverage of the comprehensive benefit package, including the cost sharing provided under the package (subject to subparagraph (B)), to all individuals enrolled in the system. (B) Imposition of reduced cost sharing.--The system may decrease the cost sharing otherwise provided in the comprehensive benefit package with respect to any class of individuals enrolled in the system or any class of services included in the package, so long as the system does not increase the cost sharing otherwise imposed with respect to any other class of individuals or services. (6) Cost containment.--The system shall provide for mechanisms to ensure, in a manner satisfactory to the Board, that-- (A) per capita expenditures for items and services in the comprehensive benefit package under the system for a year (beginning with the first year) do not exceed an amount equivalent to the regional alliance per capita premium target that is determined under section 6003 (based on the State being a single regional alliance) for the year; (B) the per capita expenditures described in subparagraph (A) are computed and effectively monitored; and (C) automatic, mandatory, nondiscretionary reductions in payments to health care providers will be imposed to the extent required to assure that such per capita expenditures do not exceed the applicable target referred to in subparagraph (A). (7) Requirements generally applicable to health plans.--The system shall meet the requirements applicable to a health plan under section 1400(a), except that-- (A) the system does not have the authority provided to health plans under section 1402(a)(2) (relating to permissible limitations on the enrollment of eligible individuals on the basis of limits on the plan's capacity); (B) the system is not required to meet the requirements of section 1404(a) (relating to restrictions on the marketing of plan materials); and (C) the system is not required to meet the requirements of section 1408 (relating to plan solvency). SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER SYSTEM. (a) In General.--In the case of a State operating a Statewide single-payer system-- (1) the State shall operate the system throughout the State through a single alliance; (2) except as provided in subsection (b), the State shall meet the requirements for participating States under part 1; and (3) the State shall assume the functions described in subsection (c) that are otherwise required to be performed by regional alliances in participating States that do not operate a Statewide single-payer system. (b) Exceptions to Certain Requirements for Participating States.-- In the case of a State operating a Statewide single-payer system, the State is not required to meet the following requirements otherwise applicable to participating States under part 1: (1) Establishment of alliances.--The requirements of section 1202 (relating to the establishment of alliances). (2) Health plans.--The requirements of section 1203 (relating to health plans), other than the requirement of subsection (f) of such section (relating to coordination of workers' compensation services and automobile liability insurance). (3) Financial solvency.--The requirements of section 1204 (relating to the financial solvency of health plans in the State). (c) Assumption by State of Certain Requirements Applicable to Regional Alliances.--A State operating a Statewide single-payer system shall be subject to the following requirements otherwise applicable to regional alliances in other participating States: (1) Enrollment; issuance of health security cards.--The requirements of subsections (a) and (c) of section 1323 and section 1324 shall apply to the State, eligible individuals residing in the State, and the single-payer system operated by the State in the same manner as such requirements apply to a regional alliance, alliance eligible individuals, and regional alliance health plans. (2) Reductions in cost sharing for low-income individuals.--The requirement of section 1371 shall apply to the State in the same manner as such requirement applies to a regional alliance. (3) Data collection; quality.--The requirements of section 1327 shall apply to the State and the single-payer system operated by the State in the same manner as such requirement applies to a regional alliance and health plans offered through a regional alliance. (4) Anti-discrimination; coordination.--The requirements of section 1328 shall apply to the State in the same manner as such requirements apply with respect to a regional alliance. (d) Financing.-- (1) In general.--A State operating a Statewide single-payer system shall provide for the financing of the system using, at least in part, a payroll-based financing system that requires employers to pay at least the amount that the employers would be required to pay if the employers were subject to the requirements of subtitle B of title VI. (2) Use of financing methods.--Such a State may use, consistent with paragraph (1), any other method of financing. (e) Single-Payer State Defined.--In this Act, the term ``single- payer State'' means a State with a Statewide single-payer system in effect that has been approved by the Board in accordance with this part. SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SINGLE-PAYER SYSTEMS. (a) In General.--In the case of a State operating an alliance- specific single-payer system-- (1) the State shall meet the requirements for participating States under part 1; and (2) the regional alliance in which the system is operated shall meet the requirements of subsection (b). (b) Requirements for Alliance in Which System Operates.--A regional alliance in which an alliance-specific single payer system is operated shall meet the requirements applicable to regional alliances under subtitle D, except that the alliance is not required to meet the following requirements of such subtitle: (1) Contracts with health plans.--The requirements of section 1321 (relating to contracts with health plans). (2) Choice of health plans offered.--The requirements of subsections (a) or (b) of section 1322 (relating to offering a choice of health plans to eligible enrollees). (3) Establishment of ombudsman office.--The requirements of section 1326(a) (relating to the establishment of an office of ombudsman). (4) Addressing needs of areas with inadequate health services.--The regional alliance does not have any of the authorities described in subsections (a) and (b) of section 1329 (relating to adjusting payments to plans and encouraging the establishment of new plans). Title I, Subtitle D Subtitle D--Health Alliances SEC. 1300. HEALTH ALLIANCE DEFINED. In this Act, the term ``health alliance'' means a regional alliance (as defined in section 1301) and a corporate alliance (as defined in section 1311). PART 1--ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES Subpart A--Regional Alliances SEC. 1301. REGIONAL ALLIANCE DEFINED. In this Act, the term ``regional alliance'' means a non-profit organization, an independent state agency, or an agency of the State which-- (1) meets the applicable organizational requirements of this subpart, and (2) is carrying out activities consistent with part 2. SEC. 1302. BOARD OF DIRECTORS. (a) In General.--A regional alliance must be governed by a Board of Directors appointed consistent with the provisions of this subpart. All powers vested in a regional alliance under this Act shall be vested in the Board of Directors. (b) Membership.-- (1) In general.--Such a Board of Directors shall consist of-- (A) members who represent employers whose employees purchase health coverage through the alliance, including self-employed individuals who purchase such coverage; and (B) members who represent individuals who purchase such coverage, including employees who purchase such coverage. (2) Equal representation of employers and consumers.--The number of members of the Board described under subparagraph (A) of paragraph (1) shall be the same as the number of members described in subparagraph (B) of such paragraph. (c) No Conflict of Interest Permitted.--An individual may not serve as a member of the Board of Directors if the individual is one of the following (or an immediate family member of one of the following): (1) A health care provider. (2) An individual who is an employee or member of the Board of Directors of, has a substantial ownership in, or derives substantial income from, a health care provider, health plan, pharmaceutical company, or a supplier of medical equipment, devices, or services. (3) A person who derives substantial income from the provision of health care. (4)(A) A member or employee of an association, law firm, or other institution or organization that represents the interests of one or more health care providers, health plans or others involved in the health care field, or (B) an individual who practices as a professional in an area involving health care. SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL ALLIANCES. Each regional alliance must establish a provider advisory board consisting of representatives of health care providers and professionals who provide covered services through health plans offered by the alliance. Subpart B--Corporate Alliances SEC. 1311. CORPORATE ALLIANCE DEFINED; INDIVIDUALS ELIGIBLE FOR COVERAGE THROUGH CORPORATE ALLIANCES; ADDITIONAL DEFINITIONS. (a) Corporate Alliance Defined.--In this Act, the term ``corporate alliance'' means an eligible sponsor (as defined in subsection (b)) if-- (1) the sponsor elects, in a form and manner specified by the Secretary of Labor consistent with this subpart, to be treated as a corporate alliance under this title and such election has not been terminated under section 1313; and (2) the sponsor has filed with the Secretary of Labor a document describing how the sponsor shall carry out activities as such an alliance consistent with part 4. (b) Eligible Sponsors.-- (1) In general.--In this subpart, each of the following is an eligible sponsor: (A) Large employer.--An employer that-- (i) is a large employer (as defined in subsection (e)(2)) as of the date of an election under subsection (a)(1), and (ii) is not an excluded employer described in paragraph (2). (B) Plan sponsor of a multiemployer plan.--A plan sponsor described in section 3(16)(B)(iii) of Employee Retirement Income Security Act of 1974, but only with respect to a group health plan that is a multiemployer plan (as defined in subsection (e)(3)) maintained by the sponsor and only if-- (i) such plan offered health benefits as of September 1, 1993, and (ii) as of both September 1, 1993, and January 1, 1996, such plan has more than 5,000 active participants in the United States, or the plan is maintained by one or more affiliates of the same labor organization, or one or more affiliates of labor organizations representing employees in the same industry, covering more than 5,000 employees. (C) Rural electric cooperative and rural telephone cooperative association.--A rural electric cooperative or a rural telephone cooperative association, but only with respect to a group health plan that is maintained by such cooperative or association (or members of such cooperative or association) and only if such plan-- (i) offered health benefits as of September 1, 1993, and (ii) as of both September 1, 1993, and January 1, 1996, has more than 5,000 full-time employees in the United States entitled to health benefits under the plan. (2) Excluded employers.--For purposes of paragraph (1)(A), any of the following are excluded employers described in this paragraph: (A) An employer whose primary business is employee leasing. (B) The Federal government (other than the United States Postal Service). (C) A State government, a unit of local government, and an agency or instrumentality of government, including any special purpose unit of government. (c) Individuals Eligible To Enroll in Corporate Alliance Health Plans.--For purposes of part 1 of subtitle A, subject to subsection (d)-- (1) Full-time employees of large employers.--Each eligible individual who is a full-time employee (as defined in section 1901(b)(2)(C)) of a large employer that has an election in effect as a corporate alliance is eligible to enroll in a corporate alliance health plan offered by such corporate alliance. (2) Multiemployer alliances.-- (A) Participants.--Each participant and beneficiary (as defined in subparagraph (B)) under a multiemployer plan, with respect to which an eligible sponsor of the plan described in subsection (b)(1)(B) has an election in effect as a corporate alliance, is eligible to enroll in a corporate alliance health plan offered by such corporate alliance. (B) Participant and beneficiary defined.--In subparagraph (A), the terms ``participant'' and ``beneficiary'' have the meaning given such terms in section 3 of the Employee Retirement Income Security Act of 1974. (3) Full-time employees of rural cooperative alliances.-- Each full-time employee of a member of a rural electric cooperative or rural telephone cooperative association which has an election in effect as a corporate alliance (and each full-time employee of such a cooperative or association) is eligible to enroll in a corporate alliance health plan offered by such corporate alliance. (4) Ineligible to enroll in regional alliance health plan.--Except as provided in section 1013, a corporate alliance eligible individual is not eligible to enroll under a regional alliance health plan. (d) Exclusion of Certain Individuals.--In accordance with rules of the Board, the following individuals shall not be treated as corporate alliance eligible individuals: (1) AFDC recipients. (2) SSI recipients. (3) Individuals who are described in section 1004(b) (relating to veterans, military personnel, and Indians) and who elect an applicable health plan described in such section. (4) Employees who are seasonal or temporary workers (as defined by the Board), other than such workers who are treated as corporate alliance eligible individuals pursuant to a collective bargaining agreement (as defined by the Secretary of Labor). (e) Definitions Relating to Corporate Alliances.--In this subtitle, except as otherwise provided: (1) Group health plan.--The term ``group health plan'' means an employee welfare benefit plan (as defined in section 3(1) of the Employee Retirement Income Security Act of 1974) providing medical care (as defined in section 213(d) of the Internal Revenue Code of 1986) to participants or beneficiaries (as defined in section 3 of the Employee Retirement Income Security Act of 1974) directly or through insurance, reimbursement, or otherwise. (2) Large employer.--The term ``large employer'' means an employer that has more than 5,000 full-time employees in the United States. Such term includes the United States Postal Service. (3) Multiemployer plan.--The term ``multiemployer plan'' has the meaning given such term in section 3(37) of the Employee Retirement Income Security Act of 1974, and includes any plan that is treated as such a plan under title I of such Act. (4) Rural electric cooperative.--The term ``rural electric cooperative'' has the meaning given such term in section 3(40)(A)(iv) of the Employee Retirement Income Security Act of 1974. (5) Rural telephone cooperative associations.--The term ``rural telephone cooperative association'' has the meaning given such term in section 3(40)(A)(v) of the Employee Retirement Income Security Act of 1974. SEC. 1312. TIMING OF ELECTIONS. (a) For Large Employers.-- (1) Current large employers.-- (A) In general.--In the case of an employer that is an eligible sponsor described in section 1311(b)(1)(A) as of the most recent January 1 prior to the general effective date, the sponsor's election to be a corporate alliance under such section must be made and filed with the Secretary of Labor not later than the date specified in subparagraph (B). (B) Deadline for notice.--The date specified in this subparagraph is January 1 of the second year preceding the general effective date or, in the case of a State that elects to become a participating State before the general effective date, not later than one month later than the date specified for States under section 1202(a)(2). (2) New large employers.--In the case of an employer that is not an eligible sponsor described in section 1311(b)(1)(A) as of the most recent January 1 prior to the general effective date, but first becomes such a sponsor as of a subsequent date, the election to be a corporate alliance under such section must be made and filed with the Secretary of Labor not later than March 1 of the year following the year in which the employer first becomes such a sponsor. (3) Application of option.--The Secretary of Labor shall promulgate rules regarding how the option described in section 1311(c)(1)(B) will be applied to the determination of whether an employer is a large employer before an election is made under section 1311. (b) For Multiemployer Plans and Rural Cooperatives.--In the case of an eligible sponsor described in section 1311(b)(1) (B) or (C), the sponsor's election to be a corporate alliance under such section must be made and filed with the Secretary of Labor not later than March 1, 1996. (c) Effective Date of Election.--An election made under subsection (a) or (b) shall be effective for coverage provided under health plans on and after January 1 of the year following the year in which the election is made. (d) One-time Election.--If an eligible sponsor fails to make the election on a timely manner under subsection (a) or (b), the sponsor may not make such election at any other time. SEC. 1313. TERMINATION OF ALLIANCE ELECTION. (a) Termination for Insufficient Number of Full-Time Employees or Participants.--If a corporate alliance reports under section 1387(c), that there were fewer than 4,800 full-time employees (or, active participants, in the case of one or more plans offered by a corporate alliance which is an eligible sponsor described in section 1311(b)(1)(B)) who are enrolled in a health plan through the alliance, the election under this part with respect to the alliance shall terminate. (b) Termination for Failure to Meet Requirements.-- (1) In general.--If the Secretary of Labor finds that a corporate alliance has failed substantially to meet the applicable requirements of this subtitle, the Secretary shall terminate the election under this part with respect to the alliance (2) Excess increase in premium equivalent.--If the Secretary of Labor finds that the alliance is in violation of the requirements of section 6022 (relating to prohibition against excess increase in premium expenditures), the Secretary shall terminate the alliance in accordance with such section. (c) Elective Termination.--A corporate alliance may terminate an election under this part by filing with the National Health Board and the Secretary of Labor a notice of intent to terminate. (d) Effective Date of Termination.--In the case of a termination of an election under this section, in accordance with rules established by the Secretary of Labor-- (1) subject to section 6022(a)(1), the termination shall take effect as of the effective date of enrollments in regional alliance health plans made during the next open enrollment period (as provided in section 1323(d)), and (2) the enrollment of eligible individuals in corporate alliance health plans of the corporate alliance shall be terminated as of such date and such individuals shall be enrolled in other applicable health plans effective on such date. (e) Notice to Board.--If an election with respect to a corporate alliance is terminated pursuant to subsection (a) or subsection (b), the Secretary of Labor shall notify the National Health Board of the termination of the election. PART 2--GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL ALLIANCES SEC. 1321. CONTRACTS WITH HEALTH PLANS. (a) Contracts with Plans.-- (1) In general.--In order to assure the availability of the comprehensive benefit package to eligible individuals residing in the alliance area in a cost-effective manner, except as provided in this section, each regional alliance shall negotiate with any willing State-certified health plan to enter into a contract with the alliance for the enrollment under the plan of eligible individuals in the alliance area. Subject to paragraph (2), a regional alliance shall not enter into any such contract with a health plan that is not a State-certified health plan. (2) Treatment of certain plans.--Each regional alliance shall enter into a contract under this section with any veterans health plan of the Department of Veterans Affairs and with a Uniformed Services Health Plan of the Department of Defense, that offers the comprehensive benefit package to eligible individuals residing in the alliance area if the appropriate official requests to enter into such a contract. (b) General Conditions for Denial of Contract by a Regional Alliance.--A regional alliance is not required under this section to offer a contract with a health plan if-- (1) the alliance finds that the proposed bid exceeds 120 percent of the regional alliance per capita prremium target (as determined under section 6003); or (2) the plan has failed to comply with requirements under prior contracts with the alliance, including failing to offer coverage for all the services in the comprehensive benefit package in the entire service area of the plan. SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT; ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE. (a) In General.--Each regional alliance must provide to each eligible enrollee (as defined in section 1902(14)) with respect to the alliance a choice of health plans among the plans which have contracts in effect with the alliance under section 1321 (in the case of a regional alliance) or section 1341 (in the case of a corporate alliance). (b) Offering of Plans by Regional Alliances.-- (1) In general.--Each regional alliance shall include among its health plan offerings at least one fee-for-service plan (as defined in paragraph (2)). (2) Fee-for-service plan defined.-- (A) In general.--For purposes of this Act, the term ``fee-for-service plan'' means a health plan that-- (i) provides coverage for all items and services included in the comprehensive benefit package that are furnished by any lawful health care provider of the enrollee's choice, subject to reasonable restrictions (described in subparagraph (B)), and (ii) makes payment to such a provider without regard to whether or not there is a contractual arrangement between the plan and the provider. (B) Reasonable restrictions described.--The reasonable restrictions on coverage permitted under a fee-for-service plan (as specified by the National Health Board) are as follows: (i) Utilization review. (ii) Prior approval for specified services. (iii) Exclusion of providers on the basis of poor quality of care, based on evidence obtainable by the plan. Clause (ii) shall not be construed as permitting a plan to require prior approval for non-primary health care services through a gatekeeper or other process. (c) Establishment of Fee-for-Service Schedule.-- (1) In general.--Except in the case of regional alliances of a State that has established a Statewide fee schedule under paragraph (3), each regional alliance shall establish a fee schedule setting forth the payment rates applicable to services furnished during a year to individuals enrolled in fee-for- service plans (or to services furnished under the fee-for- service component of any regional alliance health plan) for use by regional alliance health plans under section 1406(c) and corporate alliance health plans providing services subject to the schedule in the regional alliance area. (2) Negotiation with providers.--The fee schedule under paragraph (1) shall be established after negotiations with providers, and (subject to paragraphs (5) and (6)) providers may collectively negotiate the fee schedule with the regional alliance. (3) Use of statewide schedule.--At the option of a State, the State may establish its own statewide fee schedule which shall apply to all fee-for-service plans offered by regional alliances and corporate alliances in the State instead of alliance-specific schedules established under paragraph (1). (4) Annual revision.--A regional alliance or State (as the case may be) shall annually update the payment rates provided under the fee schedule established pursuant to paragraph (1) or paragraph (3). (5) Activities treated as State action or efforts intended to influence government action.--The establishment of a fee schedule under this subsection by a regional alliance of a State shall be considered to be pursuant to a clearly articulated and affirmatively expressed State policy to displace competition and to be actively supervised by the State, and conduct by providers respecting the establishment of the fee schedule, including collective negotiations by providers with the regional alliance (or the State) pursuant to paragraph (2), shall be considered as efforts intended to influence governmental action. (6) No boycott permitted.--Nothing in this subsection shall be construed to permit providers to threaten or engage in any boycott. (7) Negotiations defined.--In this subsection, ``negotiations'' are the process by which providers collectively and jointly meet, confer, consult, discuss, share information, among and between themselves in order to agree on information to be provided, presentations to be made, and other such activities with respect to regional alliances (or States) relating to the establishment of the fee schedule (but not including any activity that constitutes engaging in or threatening to engage in a boycott), as well as any and all collective and joint meetings, discussions, presentations, conferences, and consultations between or among providers and any regional alliance (or State) for the purpose of establishing the fee schedule described in this subsection. (d) Prospective Budgeting of Fee-for-Service.-- (1) In general.--The fee schedule established by a regional alliance or a State under subsection (c) may be based on prospective budgeting described in paragraph (2). (2) Prospective budgeting described.--Under prospective budgeting-- (A) the regional alliance or State (as the case may be) shall negotiate with health providers annually to develop a budget for the designated fee-for-service plan; (B) the negotiated budget shall establish spending targets for each sector of health expenditures made by the plan; and (C) if the regional alliance or State (as the case may be) determines that the utilization of services under the plan is at a level that will result in expenditures under the plan exceeding the negotiated budget, the plan shall reduce the amount of payments otherwise made to providers (through a withhold or delay in payments or adjustments) in such a manner and by such amounts as necessary to assure that expenditures will not exceed the budget. (3) Use of prospective budgeting exclusive.--If a regional alliance or State establishes the fee schedule for fee-for- service plans on the basis of prospective budgeting under this subsection, payment for all services provided by fee-for- service plans in the alliance or State shall be determined on such basis. SEC. 1323. ENROLLMENT RULES AND PROCEDURES. (a) In General.--Each regional alliance shall assure that each regional alliance eligible individual who resides in the alliance area is enrolled in a regional alliance health plan and shall establish and maintain methods and procedures, consistent with this section, sufficient to assure such enrollment. Such methods and procedures shall assure the enrollment of alliance eligible individuals at the time they first become eligible enrollees in the alliance area, including individuals at the time of birth, at the time they move into the alliance area, and at the time of reaching the age of individual eligibility as an eligible enrollee (and not merely as a family member). Each regional alliance shall establish procedures, consistent with subtitle A, for the selection of a single health plan in which all members of a family are enrolled. (b) Point of Service Enrollment Mechanism.-- (1) In general.--Each regional alliance shall establish a point-of-service enrollment mechanism (meeting the requirements of this subsection) for enrolling eligible individuals who are not enrolled in a health plan of the alliance when the individual seeks health services. (2) Requirements of mechanism.--Under such a mechanism, if an eligible individual seeks to receive services (included in the comprehensive benefit package) from a provider in an alliance area and does not present evidence of enrollment under any applicable health plan, or if the provider has no evidence of the individual's enrollment under any such plan, the following rules shall apply: (A) Notice to alliance.--Consistent with part 2 of subtitle B of title V, the provider-- (i) shall provide the regional alliance with information relating to the identity of the eligible individual, and (ii) may request payment from the regional alliance for the furnishing of such services. (B) Initial determination of eligibility and enrollment status.--The regional alliance shall determine-- (i) if the individual is an alliance eligible individual for the alliance, and (ii) if the individual is enrolled under an applicable health plan (including a corporate alliance health plan). (C) Treatment of alliance eligible individuals.--If the regional alliance determines that the individual is an alliance eligible individual with respect to the alliance and-- (i) is enrolled under a regional alliance health plan of the alliance, the alliance shall forward the claim to the health plan involved and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C)); (ii) is not enrolled under a regional alliance health plan of the alliance but is required to be so enrolled in a specific health plan as a family member under section 1011, the alliance shall record the individual's enrollment under such specific plan, shall forward the claim to such plan, and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C)); or (iii) is not enrolled under such a plan and is not described in clause (ii), the point-of- service enrollment procedures described in paragraph (3) shall apply. (D) Treatment of individuals enrolled under health plans of other alliances.--If the regional alliance determines that the individual is not an alliance eligible individual with respect to the alliance but the individual is enrolled-- (i) under a regional alliance health plan of another alliance, the alliance shall forward the claim to the other regional alliance and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C)); or (ii) under a corporate alliance health plan, the alliance shall forward the claim to the corporate alliance involved and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in section 1383(b)(2)(B)). (E) Treatment of other alliance eligible individuals not enrolled in health plan.--If the regional alliance determines that the individual is not an alliance eligible individual with respect to the alliance and the individual is an alliance eligible individual with respect to another health alliance but is not enrolled in a health plan of such alliance, the regional alliance shall forward the claim to the other alliance involved and shall notify the provider (and the individual) of the forwarding of such claim and the requirement for prompt enrollment of the individual under an applicable health plan of such alliance pursuant to the procedures described in paragraph (3) (in the case of a regional alliance) or in section 1383(b) (in the case of a corporate alliance). (F) Treatment of all other individuals.--The National Board shall promulgate rules regarding the responsibilities of regional alliances relating to individuals whose applicable health plan is not an alliance plan and other individuals the alliance is unable to identify as eligible individuals. (3) Point-of-service enrollment procedures described.--The point-of-service enrollment procedures under this paragraph are as follows: (A) Not later than 10 days after the date an alliance is notified of the receipt of services by an unenrolled eligible individual, the alliance provides the individual with materials describing health plans offered through the alliance. (B) The individual shall be provided a period of 30 days in which to enroll in a health plan of the individual's choice. If the individual fails to so enroll during such period, the alliance shall enroll the individual in a health plan of the alliance selected on a random basis. (C) Using the fee-for-service schedule adopted by the alliance under section 1322(c), the health plan in which the individual is enrolled under this subparagraph shall reimburse the provider who provided the services referred to in subparagraph (A) to the same extent as if the individual had been enrolled under the plan at the time of provision of the services. (c) Enrollment of New Residents.-- (1) In general.--Each regional alliance shall establish procedures for enrolling regional alliance eligible individuals who move into the alliance area. (2) Long-term residents.--Such procedures shall assure that regional alliance eligible individuals who intend to reside in the alliance area for longer than 6 months shall register with the regional alliance for the area and shall enroll in a regional alliance health plan offered by the alliance. (3) Short-term residents.--Such procedures shall permit eligible individuals who intend to reside in the alliance area for more than 3 months but less than 6 months to choose among the following options: (A) To continue coverage through the health plan in which such individual is previously enrolled, in which case coverage for care in the area of temporary residence may be limited to emergency services and urgent care. (B) To register with the regional alliance and enroll in a regional alliance health plan offered by the alliance. (C) To change enrollment in the previous alliance area to enrollment in a health plan of such alliance that provides for coverage on a fee-for-service basis of services provided outside the area of that alliance. (d) Changes in Enrollment.-- (1) Annual open enrollment period to change plan enrollment.--Each regional alliance shall hold an annual open enrollment period during which each eligible enrollee in the alliance has the opportunity to choose among health plans offered through the alliance, according to rules to be promulgated by the National Health Board. (2) Disenrollment for cause.--In addition to the annual open enrollment period held under paragraph (1), each regional alliance shall establish procedures under which alliance eligible individuals enrolled in a plan may disenroll from the plan for good cause at any time during a year and enroll in another plan of the alliance. Such procedures shall be implemented in a manner that ensures continuity of coverage for the comprehensive benefit package for such individuals during the year. (e) Enrollment of Family Members.--Each regional alliance shall provide for the enrollment of all family members in the same plan, consistent with part 2 of subtitle A. (f) Oversubscription of Plans.-- (1) In general.--Each regional alliance shall establish a method for establishing enrollment priorities in the case of a health plan that does not have sufficient capacity to enroll all eligible individuals seeking enrollment. (2) Preference for current members.--Such method shall provide that in the case of such an oversubscribed plan-- (A) individuals already enrolled in the plan are given priority in continuing enrollment in the plan, and (B) other individuals who seek enrollment during an applicable enrollment period are permitted to enroll in accordance with a random selection method, up to the enrollment capacity of the plan. (g) Termination of Enrollment.-- (1) In general.--Each regional alliance shall establish special enrollment procedures to permit alliance eligible individuals to change the plan in which they are enrolled in the case of the termination of coverage under a plan, in a manner that ensures the individuals' continuation of coverage for the comprehensive benefit package. (2) Failure of a corporate alliance.--Each regional alliance shall establish special enrollment procedures to permit individuals, who become alliance eligible individuals as a result of the failure of a corporate alliance, to enroll promptly in regional alliance health plans in a manner that ensures the individuals' continuation of coverage for the comprehensive benefit package. (h) Limitation on Offering of Coverage to Ineligible Individuals.-- A regional alliance may not knowingly offer coverage under a regional alliance health plan or other health insurance or health benefits to an individual who is not an eligible individual. Nothing in this section shall be construed as affecting the ability of a regional alliance health plan or other health plan to offer coverage to such individuals without any financial payment or participation by a regional alliance. (i) Enforcement of Enrollment Requirement.--In the case of a regional alliance eligible individual who fails to enroll in an applicable health plan as required under section 1002(a)-- (1) the applicable regional alliance shall enroll the individual in a regional alliance health plan (selected by the alliance consistent with this Act and with any rules established by the Board), and (2) such alliance shall require the payment of twice the amount of the family share of premiums that would have been payable under subtitle B of title VI if the individual had enrolled on a timely basis in the plan, unless the individual has established to the satisfaction of the alliance good cause for the failure to enroll on a timely basis. SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS. A regional alliance is responsible for the issuance of health security cards to regional alliance eligible individuals under section 1001(b). SEC. 1325. CONSUMER INFORMATION AND MARKETING. (a) Consumer Information.-- (1) In general.--Before each open enrollment period, each regional alliance shall make available to eligible enrollees information, in an easily understood and useful form, that allows such enrollees (and other alliance eligible individuals) to make valid comparisons among health plans offered by the alliance. (2) Information to be included.--Such information must include, in the same format for each plan, such information as the National Health Board shall require, including at least the following: (A) The cost of the plan, including premiums and average out-of-pocket expenses. (B) The characteristics and availability of health care professionals and institutions participating in the plan. (C) Any restrictions on access to providers and services under the plan. (D) A summary of the annual quality performance report, established pursuant to section 5005(c)(1), which contains measures of quality presented in a standard format. (b) Marketing.--Each regional alliance shall, consistent with section 1404, review and approve or disapprove the distribution of any materials used to market health plans offered through the alliance. SEC. 1326. OMBUDSMAN. (a) Establishment.--Each regional alliance must establish and maintain an office of an ombudsman to assist consumers in dealing with problems that arise with health plans and the alliance. (b) Optional Financing Through Voluntary Contribution.--At the option of the State in which a regional alliance is located, the alliance-- (1) shall permit alliance eligible individuals to designate that one dollar of the premium paid for enrollment in the individual's regional alliance health plan for the operation of the office of the alliance's ombudsman; and (2) shall apply any such amounts towards the establishment and operation of such office. SEC. 1327. DATA COLLECTION; QUALITY. Each regional alliance shall comply with requirements of subtitles A and B of title V (relating to quality, information systems, and privacy), and shall take appropriate steps to ensure that health plans offered through the alliance comply with such requirements. SEC. 1328. ADDITIONAL DUTIES. (a) Anti-Discrimination.--In carrying out its activities under this part, a regional alliance may not discriminate against health plans on the basis of race, sex, national origin, religion, mix of health professionals, location of the plan's headquarters, or (except as specifically provided in this part) organizational arrangement. (b) Coordination of Enrollment Activities.--Each regional alliance shall coordinate, in a manner specified by the National Health Board, with other health alliances its activities, including enrollment and disenrollment activities, in a manner that ensures continuous, nonduplicative coverage of alliance eligible individuals in health plans and that minimizes administrative procedures and paperwork. SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLIANCES TO ADDRESS NEEDS IN AREAS WITH INADEQUATE HEALTH SERVICES; PROHIBITION OF INSURANCE ROLE. (a) Payment Adjustment.--In order to ensure that plans are available to all eligible individuals residing in all portions of the alliance area, a regional alliance may adjust payments to plans or use other financial incentives to encourage health plans to expand into areas that have inadequate health services. (b) Encouraging New Plans.--Subject to subsection (c), in order to encourage the establishment of a new health plan in an area that has inadequate health services, an alliance may-- (1) organize health providers to create such a plan in such an area a new health plan targeted at such an area, (2) provide assistance with setting up and administering such a plan, and (3) arrange favorable financing for such a plan. (c) Prohibition of Regional Alliances Bearing Risk.--A regional alliance may not bear insurance risk. SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF INTEREST. (a) Promulgation of Standards.--The Board shall promulgate standards of conduct in accordance with subsection (b) for any administrator, officer, trustee, fiduciary, custodian, counsel, agent, or employee of any regional alliance. (b) Requirements for Standards.--The standards of conduct referred to in subsection (a) shall set forth-- (1) the types of investment interests, ownership interests, affiliations or other employment that would be improper for an individual described in subsection (a) to hold during the time of the individual's service or employment with an alliance; and (2) the circumstances that will constitute impermissible conflicts of interest or self-dealing by such employees in performing their official duties and functions for any regional alliance. (c) Civil Monetary Penalty.--Any individual who engages in an activity that the individual knows or has reason to know is in violation of the regulations and standards promulgated by the Board pursuant to subsections (a) and (b) shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $10,000 for each such violation. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to civil money penalties under this subsection in the same manner as they apply to a penalty or proceeding under section 1128A(a) of such Act. PART 3--AUTHORITIES AND RESPONSIBILITIES OF REGIONAL ALLIANCES RELATING TO FINANCING AND INCOME DETERMINATIONS Subpart A--Collection of Funds SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPTANCE OF BIDS. (a) Information Provided to Plans Before Soliciting Bids.-- (1) In general.--Each regional alliance shall make available, by April 1 of each year, to each plan that indicates an interest in submitting a premium bid under section 6004 in the year, information (including information described in paragraph (2)) that the Board specifies as being necessary to enable a plan to estimate, based upon an accepted bid, the amounts payable to such a plan under section 1351. (2) Information to be included.--Such information shall include the following: (A) The demographic and other characteristics of regional alliance eligible individuals for the regional alliance. (B) The uniform per capita conversion factor for the regional alliance (established under subsection (b)). (C) The premium class factors (established by the Board under section 1531). (D) The regional alliance inflation factor (determined under section 6001(a)). (E) The risk-adjustment factors and reinsurance methodology and payment amounts (published under subsection (c)) to be used by the regional alliance in computing blended plan per capita rates (in accordance with section 6201). (F) The plan bid proportion, the AFDC proportion, the SSI proportion, the AFDC per capita premium amount, and the SSI per capita premium amount, for the year, as computed under subtitle D of title VI. (G) The alliance administrative allowance percentage, computed under section 1352(b). (b) Determination of Uniform Per Capita Conversion Factor.--Each regional alliance shall specify, not later than April 1 of each year (beginning with the year before the first year) a uniform per capita conversion factor to be used under section 6102(a)(2) in converting the accepted bid for each plan for the year into the premium for an individual enrollment for such plan for the year. SSI or AFDC recipients shall not be included for purposes of computing the conversion factor. (c) Determination of Risk-Adjustment Factors and Reinsurance Payment Amounts.--Each regional alliance shall compute and publish the risk-adjustment factors and reinsurance payment amounts to be used by the regional alliance in computing blended plan per capita rates under section 6201. (d) Solicitation of Bids.--Each regional alliance shall solicit and negotiate, consistent with section 6004, with each regional alliance health plan a bid for the payment rate on a per capita basis for the comprehensive benefit package for all alliance eligible individuals in the alliance area. SEC. 1342. CALCULATION AND PUBLICATION OF GENERAL FAMILY SHARE AND GENERAL EMPLOYER PREMIUM AMOUNTS. (a) Calculation of Components in General Family Share and General Employer Premiums.-- (1) Family share.--Each regional alliance shall compute the following components of the general family share of premiums (as defined in subsection (b)(1)(B)): (A) Plan premiums.--For each plan offered, the premium for the plan for each class of family enrollment (including the amount of any family collection shortfall). (B) Alliance credit.--The alliance credit amount for each class of family enrollment, under section 6103. (C) Excess premium credit.--The amount of any excess premium credit provided under section 6105 for each class of family enrollment. (D) Corporate alliance opt-in credit.--The amount of any corporate alliance opt-in credit provided under section 6106 for each class of family enrollment. (2) Employer premiums.--Each regional alliance shall compute the following components of the general employer premium payment amount (as defined in subsection (b)(2)(B)): (A) Base employer monthly premium per worker.--The base employer monthly premium determined under section 6122 for each class of family enrollment. (B) Employer collection shortfall add-on.--The employer collection shortfall add-on computed under section 6125(b). (b) Publication.-- (1) Family share.-- (A) In general.--Each regional alliance shall publish, before the open enrollment period in each year, the general family share of the premium (as defined in subparagraph (B)) for each class of family enrollment for each regional alliance health plan to be offered by the alliance in the following year. (B) General family share of premium defined.--In this subpart, the term ``general family share of premium'' means the family share of premium under section 6101 computed without regard to section 6104 and without regard to section 6101(b)(2)(C)(v). (2) Employer premium.-- (A) In general.--Each regional alliance shall publish, in December before each year (beginning with December before the first year) the general employer premium payment amount (as defined in subparagraph (B)) for each class of family enrollment for the following year. (B) General employer premium payment amount defined.--In this subpart, the term ``general employer premium payment amount'' means the employer premium payment under section 6121 computed, as an amount per full-time equivalent worker, without regard to sections 6124 through 6126. SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMILIES. (a) Amount of Family Share.--The amount charged by a regional alliance to a family for a class of family enrollment (specified under section 1011(c)) under a regional alliance health plan is equal to the family share of premium established under section 6101(a) for the family. Based upon the information described in this section, each regional alliance shall determine the amount required to be paid under section 6101 and under section 6111 for each year for families enrolling in regional alliance health plans. (b) Family Share Amount.--The amount required to be paid under section 6101, with respect to each family, takes into account-- (1) the general family share of premium (as defined in section 1342(b)(1)(B)) for the class of enrollment involved; (2) any income-related discount provided under section 6104(a)(1) for the family; and (3) whether or not the family is an SSI or AFDC family. (c) Alliance Credit Repayment Amount.--The amount of the alliance credit repayment amount under section 6111, with respect to each family, takes into account the following: (1) The number of months of enrollment, and class of enrollment, in regional alliance health plans, used in determining the amount of the alliance credit under section 6103 for the family. (2) Reductions in liability under section 6111(b) based on employer premium payments based on net earnings from self- employment for the family. (3) Reductions in liability under section 6112 based on months of employment for the family. (4) Limitations in liability under section 6113 on the basis of the adjusted family income for the family. (5) The elimination of liability in the case of certain retirees and qualified spouses and children under section 6114. (6) The elimination of liability in the case of certain working medicare beneficiaries under section 6115. (d) Access to Necessary Information to Make Determination.-- Information required for an alliance to make the determination under subsection (a) shall be based on information obtained or maintained by the alliance in the conduct of its business, including the following: (1) Information required for income-related determinations shall be obtained under subpart B. (2) Information on SSI and AFDC recipients under subsection (e). (3) Information submitted on a monthly and annual basis by employers under section 1602. (4) Information submitted by self-employed individuals on net earnings from self-employment under section 1602(d). (5) Applications for premium reductions under section 6114. (6) Information concerning medicare-eligible individuals under subsection (f). (7) Any income-related discount provided under section 6104(a)(1) for the family. (8) Whether or not the family is an SSI or AFDC family. (e) Information Concerning Cash Assistance Status.--Each participating State and the Secretary shall make available (in a time and manner specified by the Secretary) to each regional alliance such information as may be necessary to determine and verify whether an individual is an AFDC or SSI recipient for a month in a year. (f) Information Concerning Medicare-Eligible Individuals.-- (1) Information to regional alliances.--The Secretary shall make available to regional alliances (through regional information centers or otherwise) information necessary to determine-- (A) whether an individual is a medicare-eligible individual, (B) the eligibility of individuals for the special treatment under section 6115, (C) if medicare-eligible individuals are described in section 1012(a), and (D) the amounts of payments owed the alliance under section 1894 of the Social Security Act, added by section 4003. (2) Information to secretary.--Each regional alliance shall make available to the Secretary (through the national information system under section 5101 or otherwise) information relating to the enrollment of individuals who would be medicare-eligible individuals but for section 1012(a). (g) Alliance Accounting System.-- (1) In general.--Each regional alliance shall establish an accounting system that meets standards established by the Secretary. (2) Specifics.--Such system shall collect information, on a timely basis for each individual enrolled (and, to the extent required by the Secretary, identified and required to be enrolled) in a regional alliance health plan regarding-- (A) the applicable premium for such enrollment, (B) family members covered under such enrollment, (C) the premium payments made by (or on behalf of) the individual for such enrollment, (D) employer premium payments made respecting the employment of the individual and other employer contributions made respecting such enrollment, and (E) any government contributions made with respect to such enrollment (including contributions for electing veterans and active duty military personnel). (3) End-of-year reporting.--Such system shall provide for a report, at the end of each year, regarding the total premiums imposed, and total amounts collected, for individuals enrolled under regional health alliance plans, in such manner as identifies net amounts that may be owed to the regional alliance. SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE. (a) Family Statements.-- (1) Notice of no amount owed.--If the regional alliance determines under section 1343 that a family has paid any family share required under section 6101 and is not required to repay any amount under section 6111 for a year, the alliance shall provide notice of such determination to the family. Such notice shall include a prominent statement that the family is not required to make any additional payment and is not required to file any additional information with the regional alliance. (2) Notice of amount owed.-- (A) In general.--If the regional alliance determines that a family has not paid the entire family share required under section 6101 or is required to repay an amount under section 6111 for a year, the alliance shall provide to the family a notice of such determination. (B) Information on amount due.--Such notice shall include detailed information regarding the amount owed, the basis for the computation (including the amount of any reductions that have been made in the family's liability under subtitle B of title VI), and the date the amount is due and the manner in which such amount is payable. (C) Information on discounts and reductions available.--Such notice shall include-- (i) information regarding the discounts and reductions available (under sections 6104, 6112, 6113, 6114, and 6115) to reduce or eliminate any liability, and (ii) a worksheet which may be used to calculate reductions in liability based on income under sections 6104 and 6113. (3) Inclusion of income reconciliation form for families provided premium discounts.-- (A) In general.--A notice under this subsection shall include, in the case of a family that has been provided a premium discount under section 6104 (or section 6113) for the previous year, an income reconciliation statement (for use under section 1375) to be completed and returned to the regional alliance (along with any additional amounts owed) by the deadline specified in subsection (b). Such form shall require the submission of such information as the Secretary specifies to establish or verify eligibility for such premium discount. (B) Other families.--Any family which has not been provided such a discount but may be eligible for such a discount may submit such an income reconciliation statement and, if eligible, receive a rebate of the amount of excess family share paid for the previous year. (C) Additional information.--The alliance shall permit a family to provide additional information relating to the amount of such reductions or the income of the family (insofar as it may relate to a premium discount or reduction in liability under section 6104 or 6113). (4) Timing of notice.--Notices under this subsection shall be mailed to each family at least 45 days before the deadline specified in subsection (b). (b) Deadline for Payment.--The deadline specified in this subsection for amounts owed for a year is such date as the Secretary may specify, taking into account the dates when the information specified in section 1343 becomes available to compute the amounts owed and to file income reconciliation statements under section 1375. Amounts not paid by such deadline are subject to interest and penalty. (c) Change in Regional Alliance.--In the case of a family that during a year changes the regional alliance through which the family obtains coverage under a regional alliance health plan, the Secretary shall establish rules which provide that the regional alliance in which the family last obtained such coverage in a year-- (1) is responsible for recovering amounts due under this subpart for the year (whether or not attributable to periods of coverage obtained through that alliance); (2) shall obtain such information, through the health information system implemented under section 5101, as the alliance may require in order to compute the amount of any liability owed under this subpart (taking into account any reduction in such amount under this section), and (3) shall provide for the payment to other regional alliances of such amounts collected as may be attributable to amounts owed for periods of coverage obtained through such alliances. (d) No Loss of Coverage.--In no case shall the failure to pay amounts owed under this subsection result in an individual's or family's loss of coverage under this Act. (e) Dispute Resolution.--Each regional alliance shall establish a fair hearing mechanism for the resolution of disputes concerning amounts owed the alliance under this subpart. SEC. 1345. COLLECTIONS. (a) In General.--Each regional alliance is responsible for the collection of all amounts owed the alliance (whether by individuals, employers, or others and whether on the basis of premiums owed, incorrect amounts of discounts or premium, cost sharing, or other reductions made, or otherwise). No amounts are payable by the Federal Government under this Act (including section 9102) with respect to the failure to collect any such amounts. Each regional alliance shall use credit and collection procedures, including the imposition of interest charges and late fees for failure to make timely payment, as may be necessary to collect amounts owed to the alliance. States assist regional alliances in such collection process under section 1202(d). (b) Collection of Family Share.-- (1) Withholding.-- (A) in general.--In the case of a family that includes a qualifying employee of an employer, the employer shall deduct from the wages of the qualifying employee (in a manner consistent with any rules of the Secretary of Labor) the amount of the family share of the premium for the plan in which the family is enrolled. (B) Multiple employment.--In the case of a family that includes more than one qualifying employee, the family shall choose the employer to which subparagraph (A) will apply. (C) Payment.--Amounts withheld under this paragraph shall be maintained in a manner consistent with standards established by the Secretary of Labor and paid to the regional alliance involved in a manner consistent with the payment of employer premiums under subsection (c). (D) Satisfaction of liability.--An amount deducted from wages of a qualifying employee by an employer is deemed to have been paid by the employee and to have satisfied the employee's obligation under subsection (a) to the extent of such amount. (2) Other methods.--In the case of a family that does not include a qualifying employee, the regional alliance shall require payment to be made prospectively. Such payment may be required to be made not less frequently than monthly. The Secretary may issue regulations in order to assure the timely and accurate collection of the family share due. (c) Timing and Method of Payment of Employer Premiums.-- (1) Frequency of payment.--Payment of employer premiums under section 6121 for a month shall be made not less frequently than monthly (or quarterly in the case of such payments made by virtue of section 6126). The Secretary of Labor may establish a method under which employers that pay wages on a weekly or biweekly basis are permitted to make such employer payments on such a weekly or biweekly basis. (2) Electronic transfer.--A regional alliance may require those employers that have the capacity to make payments by electronic transfer to make payments under this subsection by electronic transfer. (d) Assistance.-- (1) Employer collections.--The Secretary of Labor shall provide regional alliances with such technical and other assistance as may promote the efficient collection of all amounts owed such alliances under this Act by employers. Such assistance may include the assessment of civil monetary penalties, not to exceed $5,000 or three times the amount of the liability owed, whichever is greater, in the case of repeated failure to pay (as specified in rules of the Secretary of Labor). (2) Family collections.--Except as provided in paragraph (1), the Secretary shall provide regional alliances with such technical and other assistance as may promote the efficient collection of other amounts owed such alliances under this Act. Such assistance may include the assessment of civil monetary penalties, not to exceed $5,000 or three times the amount of the liability owed, whichever is greater, in the case of repeated failure to pay (as specified in rules of the Secretary). (e) Receipt of Miscellaneous Amounts.--For payments to regional alliances by-- (1) States, see subtitle A of title IX, and (2) the Federal Government, see subtitle B of such title and section 1894 of the Social Security Act (as added by section 4003). SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES. (a) In General.--The regional alliance which offers the regional alliance health plan in which a family is enrolled in December of each year (in this section referred to as the ``final alliance'') is responsible for the collection of any amounts owed by the family under this subpart, without regard to whether the family resided in the alliance area during the entire year. (b) Provision of Information in the Case of Change of Residence.-- In the case of a family that moves from one alliance area to another alliance area during a year, each regional alliance (other than the final alliance) is responsible for providing to the final alliance (through the national information system under section 5101 or otherwise) such information as the final alliance may require in order to determine the liability (and reductions in liability under section 6112) attributable to alliance credits provided by such regional alliance. (c) Distribution of Proceeds.--In accordance with rules established by the Secretary, in consultation with the Secretary of Labor, the final alliance shall provide for the distribution of amounts collected under this subpart with respect to families in a year in an equitable manner among the regional alliances that provided health plan coverage to the families in the year. (d) Expediting Process.--In order to reduce paperwork and promote efficiency in the collection of amounts owed regional alliances under this subpart, the Secretary may require or permit regional alliances to share such information (through the national information system under section 5101 or otherwise) as the Secretary determines to be cost- effective, subject to such confidentiality restrictions as may otherwise apply. (e) Students.--In the case of a qualifying student who makes an election described in section 1012(e)(1) (relating to certain full-time students who are covered under the plan of a parent but enrolled in a health plan offered by a different regional alliance from the one in which the parent is enrolled), the regional alliance that offered the plan to the parent shall provide for transfers of an appropriate portion of the premium (determined in accordance with procedures specified by the Board) to the other regional alliance in order to compensate that alliance for the provision of such coverage. (f) Payments of Certain Amounts to Corporate Alliances.--In the case of a married couple in which one spouse is a qualifying employee of a regional alliance employer and the other spouse is a qualifying employee of a corporate alliance employer, if the couple is enrolled with a corporate alliance health plan the regional alliance (which receives employer premium payments from such regional alliance employer with respect to such employee) shall pay to the corporate alliance the amounts so paid (or would be payable by the employer if section 6123 did not apply). Subpart B--Payments SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH PLANS. (a) Computation of Blended Plan Per Capita Payment Amount.--For purposes of making payments to plans under this section, each regional alliance shall compute, under section 6201(a), a blended plan per capita payment amount for each regional alliance health plan for enrollment in the alliance for a year. (b) Amount of Payment to Plans.-- (1) In general.--Subject to subsection (e) and section 6121(b)(5)(B), each regional alliance shall provide for payment to each regional alliance health plan, in which an alliance eligible individual is enrolled, an amount equal to the net blended rate (described in paragraph (2)) adjusted (consistent with subsection (c)) to take into account the relative actuarial risk associated with the coverage with respect to the individual. (2) Net blended rate.--The net blended rate described in this paragraph is the blended plan per capita payment amount (determined under section 6201(a)), reduced by-- (A) such amount multiplied by the sum of-- (i) the administrative allowance percentage for the regional alliance, computed by the alliance under section 1352(b), and (ii) 1.5 percentage points; and (B) any plan payment reduction imposed under section 6011 for the plan for the year. (c) Application of Risk Adjustment and Reinsurance Methodology.-- Each regional alliance shall use the risk adjustment methodology developed under section 1541 in making payments to regional alliance health plans under this section, except as provided in section 1542. (d) Application of Portion of Set Aside.--Amounts attributable to subsection (b)(2)(A)(ii) are paid to the Federal Government (for academic health centers and graduate medical education) under section 1353. (e) Treatment of Veterans, Military, and Indian Health Plans and Programs.-- (1) Veterans health plan.--In applying this subtitle (and title VI) in the case of a regional alliance health plan that is a veterans health plan of the Department of Veterans Affairs, the following rules apply: (A) For purposes of applying subtitle A of title VI, families enrolled under the plan shall not be taken into account. (B) The provisions of subtitle A of title VI shall not apply to the plan, other than such provisions as require the plan to submit a per capita amount for each regional alliance area on a timely basis, which amount shall be treated as the final accepted bid of the plan for the area for purposes of subtitle B of such title and this subtitle. This amount shall not be subject to negotiation and not subject to reduction under section 6011. (C) For purposes of computing the blended plan per capita payment amount under section 6201(a), the AFDC and SSI proportions (under section 6202(a)) are deemed to be 0 percent. (2) Uniformed services health plan.--In applying this subtitle (and title VI) in the case of a regional alliance health plan that is a Uniformed Services Health Plan of the Department of Defense, the following rules apply: (A) For purposes of applying subtitle A of title VI, families enrolled under the plan shall not be taken into account. (B) The provisions of subtitle A of title VI shall not apply to the plan, other than such provisions as require the plan to submit a per capita amount on a timely basis, which amount shall be treated as the final accepted bid of the plan for the area involved for purposes of subtitle B of such title and this subtitle. This amount shall not be subject to negotiation and not subject to reduction under section 6011. The Board, in consultation with the Secretary of Defense, shall establish rules relating to the area (or areas) in which such a bid shall apply. (C) For purposes of computing the blended plan per capita payment amount under section 6201(a), the AFDC and SSI proportions (under section 6202(a)) are deemed to be 0 percent. (3) Indian health programs.--In applying this subtitle (and title VI) in the case of a health program of the Indian Health Service, the following rules apply: (A) Except as provided in this paragraph, the plan shall not be considered or treated to be a regional alliance health plan and for purposes of applying title VI, families enrolled under the program shall not be taken into account. (B) In accordance with rules established by the Secretary, regional alliances shall act as agents for the collection of employer premium payments (including payments of corporate alliance employers) required under subtitle B of title VI with respect to qualifying employees who are enrolled under a health program of the Indian Health Service. The Secretary shall permit such alliances to retain a nominal fee to compensate them for such collection activities. In applying this subparagraph, the family share of premium for such employees is deemed to be zero for electing Indians (as defined in section 1012(d)(3)) and for other employees is the amount of the premium established under section 8306(b)(4)(A), employees are deemed to be residing in the area of residence (or area of employment), as specified under rules of the Secretary, and the class of enrollment shall be such class (or classes) as specified under rules of the Secretary. SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PERCENTAGE. (a) Specification by Alliance.--Before obtaining bids under section 6004 from health plans for a year, each regional alliance shall establish the administrative allowance for the operation of the regional alliance in the year. (b) Administrative Allowance Percentage.--Subject to subsection (c), the regional alliance shall compute an administrative allowance percentage for each year equal to-- (1) the administrative allowance determined under subsection (a) for the year, divided by (2) the total of the amounts payable to regional alliance health plans under subpart A (as estimated by the alliance and determined without regard to section 1345(d)). (c) Limitation to 2\1/2\ percent.--In no case shall an administrative allowance percentage exceed 2.5 percent. SEC. 1353. PAYMENTS TO THE FEDERAL GOVERNMENT FOR ACADEMIC HEALTH CENTERS AND GRADUATE MEDICAL EDUCATION. Each regional alliance shall make payment to the Secretary of an amount equal to the reduction in payments by the alliance to regional alliance health plans attributable to section 1351(b)(2)(A)(ii). Subpart C--Financial Management SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS. (a) In General.--Each regional alliance shall comply with standards established under section 1571(b) (relating to the management of finances, maintenance of records, accounting practices, auditing procedures, and financial reporting) and under section 1591(d) (relating to employer payments). (b) Specific Provisions.--In accordance with such standards-- (1) Financial statements.-- (A) In general.--Each regional alliance shall publish periodic audited financial statements. (B) Annual financial audit.-- (i) In general.--Each regional alliance shall have an annual financial audit conducted by an independent auditor in accordance with generally accepted auditing standards. (ii) Publication.--A report on each such audit shall be made available to the public at nominal cost. (iii) Required actions for deficiencies.-- If the report from such an audit does not bear an unqualified opinion, the alliance shall take such steps on a timely basis as may be necessary to correct any material deficiency identified in the report. (C) Eligibility error rates.--Each regional alliance shall make eligibility determinations for premium discounts, liability reductions, and cost sharing reductions under sections 6104 and 6123, section 6113, and section 1371, respectively, in a manner that maintains the error rates below an applicable maximum permissible error rate specified by the Secretary (or the Secretary of Labor with respect to section 6123). In specifying such a rate, the Secretary shall take into account maximum permissible error rates recognized by the Federal Government under comparable State-administered programs. (2) Safeguarding of funds.--Each regional alliance shall safeguard family, employer, State, and Federal government payments to the alliance in accordance with fiduciary standards and shall hold such payments in financial institutions and instruments that meet standards recognized or established by the Secretary, in consultation with the Secretaries of Labor and the Treasury and taking into account current Federal laws and regulations relating to fiduciary responsibilities and financial management of public funds. (3) Contingencies.--Each regional alliance shall provide that any surplus of funds resulting from an estimation discrepancy described in section 9201(e)(1), up to a reasonable amount specified by the Secretary, shall be held in a contingency fund established by the alliance and used to fund any future shortfalls resulting from such a discrepancy. (4) Auditing of employer payments.-- (A) In general.--Each regional alliance is responsible for auditing the records of regional alliance employers to assure that employer payments (including the payment of amounts withheld) were made in the appropriate amount as provided under subpart A of part 2 of subtitle B of title VI. (B) Employers with employees residing in different alliance areas.--In the case of a regional alliance employer which has employees who reside in more than one alliance area, the Secretary of Labor, in consultation with the Secretary, shall establish a process for the coordination of regional alliance auditing activities among the regional alliances involved. (C) Appeal.--In the case of an audit conducted by a regional alliance on an employer under this paragraph, an employer or other regional alliance that is aggrieved by the determination in the audit is entitled to review of such audit by the Secretary of Labor in a manner to be provided by such Secretary. Subpart D--Reductions in Cost Sharing; Income Determinations SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES. (a) Reduction.-- (1) In general.--Subject to subsection (b), in the case of a family that is enrolled in a regional alliance health plan and that is either (A) an AFDC or SSI family or (B) is determined under this subpart to have family adjusted income below 150 percent of the applicable poverty level, the family is entitled to a reduction in cost sharing in accordance with this section. (2) Timing of reduction.--The reduction in cost sharing shall only apply to items and services furnished after the date the application for such reduction is approved under section 1372(c) and before the date of termination of the reduction under this subpart, or, in the case of an AFDC or SSI family, during the period in which the family is such a family. (3) Information to providers and plans.--Each regional alliance shall provide, through electronic means and otherwise, health care providers and regional alliance health plans with access to such information as may be necessary in order to provide for the cost sharing reductions under this section. (b) Limitation.--No reduction in cost sharing under subsection (c)(1) shall be available for families residing in an alliance area if the regional alliance for the area determines that there are sufficient low-cost plans (as defined in section 6104(b)(3)) that are lower or combination cost sharing plans available in the alliance area to enroll AFDC and SSI families and families with family adjusted income below 150 percent of the applicable poverty level. (c) Amount of Cost Sharing Reduction.-- (1) In general.--Subject to paragraph (2), the reduction in cost sharing under this section shall be such reduction as will reduce cost sharing to the level of a lower or combination cost sharing plan. (2) Special treatment of certain afdc and ssi families.--In the case of an AFDC or SSI family enrolled in a lower or combination cost sharing plan or receiving a reduction in cost sharing under paragraph (1), the amount of copayment applied with respect to an item or service (other than with respect to hospital emergency room services for which there is no emergency medical condition, as defined in section 1867(e)(1) of the Social Security Act) shall be an amount equal to 20 percent of the copayment amount otherwise applicable under sections 1135 and 1136, rounded to the nearest dollar. (d) Administration.-- (1) In general.--In the case of an approved family (as defined in section 1372(b)(3)) enrolled in a regional alliance health plan, the regional alliance shall pay the plan for cost sharing reductions (other than cost sharing reductions under subsection (c)(2)) provided under this section and included in payments made by the plan to its providers. (2) Estimated payments, subject to reconciliation.--Such payment shall be made initially on the basis of reasonable estimates of cost sharing reductions incurred by such a plan with respect to approved families and shall be reconciled not less often than quarterly based on actual claims for items and services provided. (e) No Cost Sharing for Indians and Certain Veterans and Military Personnel.--The provisions of section 6104(a)(3) shall apply to cost sharing reductions under this section in the same manner as such provisions apply to premium discounts under section 6104. SEC. 1372. APPLICATION PROCESS FOR COST SHARING REDUCTIONS. (a) Application.-- (1) In general.--A regional alliance eligible family may apply for a determination of the family adjusted income of the family, for the purpose of establishing eligibility for cost sharing reductions under section 1371. (2) Form.--An application under this section shall include such information as may be determined by the regional alliance (consistent with rules developed by the Secretary) and shall include at least information about the family's employment status and income. (b) Timing.-- (1) In general.--An application under this section may be filed at such times as the Secretary may provide, including during any open enrollment period, at the time of a move, or after a change in life circumstances (such as unemployment or divorce) affecting class of enrollment or amount of family share or repayment amount. (2) Consideration.--Each regional alliance shall approve or disapprove an application under this section, and notify the applicant of such decision, within such period (specified by the Secretary) after the date of the filing of the application. (3) Approved family defined.--In this section and section 1371, the term ``approved family'' means a family for which an application under this section is approved, until the date of termination of such approval under this section. (c) Approval of Application.-- (1) In general.--A regional alliance shall approve an application of a family under this section filed in a month if the application demonstrates that the family adjusted income of the family (as defined in subsection (d) and determined under paragraph (2)) is (or is expected to be) less than 150 percent of the applicable poverty level. (2) Use of current income.--In making the determination under paragraph (1), a regional alliance shall take into account the income for the previous 3-month period and current wages from employment (if any), consistent with rules specified by the Secretary. (d) Family Adjusted Income.-- (1) In general.--Except as provided in paragraph (4), in this Act the term ``family adjusted income'' means, with respect to a family, the sum of the adjusted incomes (as defined in paragraph (2)) for all members of the family (determined without regard to section 1012). (2) Adjusted income.--In paragraph (1), the term ``adjusted income'' means, with respect to an individual, adjusted gross income (as defined in section 62(a) of the Internal Revenue Code of 1986)-- (A) determined without regard to sections 135, 162(l), 911, 931, and 933 of such Code, and (B) increased by the amount of interest received or accrued by the individual which is exempt from tax. (3) Presence of additional dependents.--At the option of an individual, a family may include (and not be required to separate out) the income of other individuals who are claimed as dependents of the family for income tax purposes, but such individuals shall not be counted as part of the family for purposes of determining the size of the family. (e) Requirement for Periodic Confirmation and Verification and Notices.-- (1) Confirmation and verification requirement.--The continued eligibility of a family for cost sharing reductions under this section is conditioned upon the family's eligibility being-- (A) confirmed periodically by the regional alliance, and (B) verified (through the filing of a new application under this section) by the regional alliance at the time income reconciliation statements are required to be filed under section 1375. (2) Rules.--The Secretary shall issue rules related to the manner in which alliances confirm and verify eligibility under this section. (3) Notices of changes in income and employment status.-- (A) In general.--Each approved family shall promptly notify the regional alliance of any material increase (as defined by the Secretary) in the family adjusted income. (B) Response.--If a regional alliance receives notice under subparagraph (A) (or from an employer under section 1602(b)(3)(A)(i)) or otherwise receives information indicating a potential significant change in the family's employment status or increase in adjusted family income, the regional alliance shall promptly take steps necessary to reconfirm the family's eligibility. (f) Termination of Cost Sharing Reduction.--The regional alliance shall, after notice to the family, terminate the reduction of cost sharing under this subpart for an approved family if the family fails to provide for confirmation or verification or notice required under subsection (c) on a timely basis or the alliance otherwise determines that the family is no longer eligible for such reduction. The previous sentence shall not prevent the family from subsequently reapplying for cost sharing reduction under this section. (g) Treatment of AFDC and SSI Recipients.-- (1) No application required.--AFDC and SSI families are not required to make an application under this section. (2) Notice requirement.--Each State (and the Secretary) shall notify each regional alliance, in a manner specified by the Secretary, of the identity (and period of eligibility under the AFDC or SSI programs) of each AFDC and SSI recipient, unless such a recipient elects (in a manner specified by the Secretary) not to accept the reduction of cost sharing under this section. SEC. 1373. APPLICATION FOR PREMIUM DISCOUNTS AND REDUCTION IN LIABILITIES TO ALLIANCES. (a) In General.--Any regional alliance eligible family may apply for a determination of the family adjusted income of the family, for the purpose of establishing eligibility for a premium discount under section 6104 or a reduction in liability under section 6113. (b) Timing.--Such an application may be filed at such times as an application for a cost sharing reduction may be filed under section 1372(b) and also may be filed after the end of the year to obtain a rebate for excess premium payments made during a year. (c) Approval of Application.-- (1) In general.--A regional alliance shall approve an application of a family under this section filed in a month-- (A) for a premium discount under section 6104, if the application demonstrates that family adjusted income of the family (as determined under paragraph (2)) is (or is expected to be) less than 150 percent of the applicable poverty level, or (B) for a reduction in liability under section 6113, if the application demonstrates that the wage- adjusted income (as defined in subsection 6113(d)) of the family (as determined under paragraph (2)) is (or is expected to be) less than 250 percent of the applicable poverty level. (2) Use of current income.--In making the determination under paragraph (1), a regional alliance shall take into account the income for the previous 3-month period and current wages from employment (if any) and the statement of estimated income for the year (filed under section 1374(c)), consistent with rules specified by the Secretary. (d) Requirement for Periodic Confirmation and Verification and Notices.--The provisions of subsection (e) of section 1372 shall apply under this section in the same manner as it applies under such section, except that any reference to family adjusted income is deemed a reference to wage-adjusted income. SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICATION PROCESS. (a) Distribution of Applications.--Each regional alliance shall distribute applications under this subpart directly to consumers and through employers, banks, and designated public agencies. (b) To Whom Application Made.--Applications under this subpart shall be filed, by person or mail, with a regional alliance or an agency designated by the State for this purpose. The application may be submitted with an application to enroll with a health plan under this subtitle or separately. (c) Income Statement.--Each application shall include a declaration of estimated annual income for the year involved. (d) Form and Contents.--An application for a discount or reduction under this subpart shall be in a form and manner specified by the Secretary and shall require the provision of information necessary to make the determinations required under this subpart. (e) Frequency of Applications.-- (1) In general.--An application under this subpart may be filed at any time during the year (including, in the case of section 1373, during the reconciliation process). (2) Correction of income.--Nothing in paragraph (1) shall be construed as preventing an individual or family from, at any time, submitting an application to reduce the amount of premium discount or reduction of liability under this subpart based upon an increase in income from that stated in the previous application. (f) Timing of Reductions and Discounts.-- (1) In general.--Subject to reconciliation under section 1375, premium discounts and cost sharing reductions under this subpart shall be applied to premium payments required (and for expenses incurred) after the date of approval of the application under this subpart. (2) AFDC and ssi recipients.--In the case of an AFDC or SSI family, in applying paragraph (1), the date of approval of benefits under the AFDC or SSI program shall be considered the date of approval of an application under this subpart. (g) Verification.--The Secretary shall provide for verification, on a sample basis or other basis, of the information supplied in applications under this part. This verification shall be separate from the reconciliation provided under section 1375. (h) Help in Completing Applications.--Each regional alliance shall assist individuals in the filing of applications and income reconciliation statements under this subpart. (i) Penalties for Inaccurate Information.-- (1) Interest for understatements.--Each individual who knowingly understates income reported in an application to a regional alliance under this subpart or otherwise makes a material misrepresentation of information in such an application shall be liable to the alliance for excess payments made based on such understatement or misrepresentation, and for interest on such excess payments at a rate specified by the Secretary. (2) Penalties for misrepresentation.--In addition to the liability established under paragraph (1), each individual who knowingly misrepresents material information in an application under this subpart to a regional alliance shall be liable to the State in which the alliance is located for $2,000 or, if greater, three times the excess payments made based on such misrepresentation. The State shall provide for the transfer of a significant portion of such amount to the regional alliance involved. SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM DISCOUNT AND REPAYMENT REDUCTION WITH ACTUAL INCOME. (a) In General.--In the case of a family whose application for a premium discount or reduction of liability for a year has been approved before the end of the year under this subpart, the family shall, subject to subsection (c) and by the deadline specified in section 1344(b) file with the regional alliance an income reconciliation statement to verify the family's adjusted income or wage-adjusted income, as the case may be, for the previous year. Such a statement shall contain such information as the Secretary may specify. Each regional alliance shall coordinate the submission of such statements with the notice and payment of family payments due under section 1344. (b) Reconciliation of Premium Discount and Liability Assistance Based on Actual Income.--Based on and using the income reported in the reconciliation statement filed under subsection (a) with respect to a family, the regional alliance shall compute the amount of premium discount or reduction in liability that should have been provided under section 6104 or section 6113 with respect for the family for the year involved. If the amount of such discount or liability reduction computed is-- (1) greater than the amount that has been provided, the family is liable to the regional alliance to pay (directly or through an increase in future family share of premiums or other payments) a total amount equal to the amount of the excess payment, or (2) less than the amount that has been provided, the regional alliance shall pay to the family (directly or through a reduction in future family share of premiums or other payments) a total amount equal to the amount of the deficit. (c) No Reconciliation for AFDC and SSI Families; No Reconciliation for Cost Sharing Reductions.--No reconciliation statement is required under this section-- (1) with respect to cost sharing reductions provided under section 1372, or (2) for a family that only claims a premium discount or liability reduction under this subpart on the basis of being an AFDC or SSI family. (d) Disqualification for Failure to File.--In the case of any family that is required to file a statement under this section in a year and that fails to file such a statement by the deadline specified, members of the family shall not be eligible for premium reductions under section 6104 or reductions in liability under section 6113 until such statement is filed. A regional alliance, using rules established by the Secretary, shall waive the application of this subsection if the family establishes, to the satisfaction of the alliance under such rules, good cause for the failure to file the statement on a timely basis. (e) Penalties for False Information.--Any individual that provides false information in a statement under subsection (a) is subject to the same liabilities as are provided under section 1374(h) for a misrepresentation of material fact described in such section. (f) Notice of Requirement.--Each regional alliance (directly or in coordination with other regional alliances) shall provide for written notice, at the end of each year, of the requirement of this section to each family which had received premium discount or reduction in liability under this subpart in any month during the preceding year and to which such requirement applies. (g) Transmittal of Information; Verification.-- (1) In general.--Each participating State shall transmit annually to the Secretary such information relating to the income of families for the previous year as the Secretary may require to verify such income under this subpart. (2) Verification.--Each participating State may use such information as it has available to it to assist regional alliances in verifying income of families with applications filed under this subpart. The Secretary of the Treasury may, consistent with section 6103 of the Internal Revenue Code of 1986, permit return information to be disclosed and used by a participating State in verifying such income but only in accordance with such section and only if the information is not directly disclosed to a regional alliance. (h) Construction.--Nothing in this section shall be construed as authorizing reconciliation of any cost sharing reduction provided under this subpart. PART 4--RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES SEC. 1381. CONTRACTS WITH HEALTH PLANS. (a) Contracts with Plans.--Subject to section 1382, each corporate alliance may-- (1) offer to individuals eligible to enroll under section 1311(c) coverage under an appropriate self-insured health plan (as defined in section 1400(b)), or (2) negotiate with a State-certified health plan to enter into a contract with the plan for the enrollment of such individuals under the plan, or do both. (b) Terms of Contracts with State-Certified Health Plans.-- Contracts under this section between a corporate alliance and a State- certified health plan may contain such provisions (not inconsistent with the requirements of this title) as the alliance and plan may provide, except that in no case does such contract remove the obligation of the sponsor of the corporate alliance to provide for health benefits to corporate alliance eligible individuals consistent with this part. SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT. (a) In General.--Each corporate alliance must provide to each eligible enrollee with respect to the alliance a choice of health plans among the plans which have contracts with the alliance under section 1381. (b) Offering of Plans by Alliances.--A corporate alliance shall include among its health plan offerings for any eligible enrollee at least 3 health plans to enrollees, of which the alliance must offer-- (1) at least one fee-for-service plan (as defined in section 1322(b)(2)); and (2) at least two health plans that are not fee-for-service plans. SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY CARD. (a) In General.-- (1) Enrollment of alliance eligible individuals.--Each corporate alliance shall assure that each alliance eligible individual with respect to the alliance is enrolled in a corporate alliance health plan offered by the alliance, and shall establish and maintain methods and procedures consistent with this section sufficient to assure such enrollment. Such methods and procedures shall assure the enrollment of such individuals at the time they first become alliance eligible individuals with respect to the alliance. (2) Issuance of health security cards.--A corporate alliance is responsible for the issuance of health security cards to corporate alliance eligible individuals under section 1001(b). (b) Response to Point-of-Service Notices.--If a corporate alliance is notified under section 1323(b)(2) regarding an individual who has received services and appears to be a corporate alliance eligible individual-- (1) the alliance shall promptly ascertain the individual's eligibility as a corporate alliance eligible individual; and (2) if the alliance determines that the individual is a corporate alliance eligible individual-- (A) the alliance shall promptly provide for the enrollment of the individual in a health plan offered by the alliance (and notify the Secretary of Labor of such enrollment), and (B) the alliance shall forward the claim for payment for the services to the health plan in which the individual is so enrolled and the plan shall make payment to the provider for such claim (in a manner consistent with requirements of the Secretary of Labor). (c) Annual Open Enrollment; Enrollment of Family Members; Oversubscription of Plans.--The provisions of subsections (d) through (f) of section 1323 shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance. (d) Termination.-- (1) In general.--The provisions of section 1323(g)(1) shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance. (2) Failure to pay premiums.--If a corporate alliance fails to make premium payments to a health plan, the plan, after reasonable written notice to the alliance and the Secretary of Labor, may terminate coverage (and any contract with the alliance under this part). If such coverage is terminated the corporate alliance is responsible for the prompt enrollment of alliance eligible individuals whose coverage is terminated in another corporate alliance health plan. (e) Corporate Alliance Transition.--Each corporate alliance must provide coverage-- (1) as of the first day of any month in which an individual first becomes a corporate alliance eligible individual, and (2) through the end of the month in the case of a corporate alliance eligible individual who loses such eligibility during the month. SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PREMIUM AREAS. (a) Application of Community-Rated Premiums.--The premiums charged by a corporate alliance for enrollment in a corporate alliance health plan (not taking into account any employer premium payment required under section 6131) shall vary only by class of family enrollment (specified in section 1011(c)) and by premium area. (b) Designation of Premium Areas.-- (1) Designation.--Each corporate alliance shall designate premium areas to be used for the imposition of premiums (and calculation of employer premium payments) under this Act. (2) Conditions.--The boundaries of such areas shall reasonably reflect labor market areas or health care delivery areas and shall be consistent with rules the Secretary of Labor establishes (consistent with paragraph (3)) so that within such areas there are not substantial differences in average per capita health care expenditures. (3) Anti-redlining.--The provisions of paragraphs (4) and (5) of section 1202(b) (relating to redlining and metropolitan statistical areas) shall apply to the establishment of premium areas in the same manner as they apply to the establishment of the boundaries of regional alliance areas. (c) Applications of Classes of Enrollment.-- (1) In general.--The premiums shall be applied under this section based on class of family enrollment and shall vary based on such class in accordance with factors specified by the corporate alliance. (2) Basis for factors.--Such factors shall be the same in each premium area and shall take into account such appropriate considerations (including the considerations the Board takes into account in the establishment of premium class factors under section 1531 and the costs of regional alliance health plans providing the comprehensive benefit package for families enrolled in the different classes) as the alliance considers appropriate, consistent with rules the Secretary of Labor establishes. (d) Special Treatment of Multiemployer Alliances.--The Secretary of Labor shall provide for such exceptions to the requirements of this section in the case of a corporate alliance with a sponsor described in section 1311(b)(1)(B) as may be appropriate to reflect the unique and historical relationship between the employers and employees under such alliances. SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES. Each corporate alliance shall make an additional contribution towards the enrollment in health plans of the alliance by certain low- wage families in accordance with section 6131(b)(2). SEC. 1386. CONSUMER INFORMATION AND MARKETING; DATA COLLECTION AND QUALITY; ADDITIONAL DUTIES. The provisions of sections 1325(a), 1327, and 1328 shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance. SEC. 1387. PLAN AND INFORMATION REQUIREMENTS. (a) In General.--A corporate alliance shall provide a written submission to the Secretary of Labor (in such form as the Secretary may require) detailing how the corporate alliance will carry out its activities under this part. (b) Annual Information.--A corporate alliance shall provide to the Secretary of Labor each year, in such form and manner as the Secretary may require, such information as the Secretary may require in order to monitor the compliance of the alliance with the requirements of this part. (c) Annual Notice of Employees or Participants.-- (1) Corporate alliance.--Each corporate alliance shall submit to the Secretary of Labor, by not later than March 1 of each year, information on the number of full-time employees or participants obtaining coverage through the alliance as of January 1 of that year. (2) Employers that become large employers.--Each employer that is not a corporate alliance but employs 5,000 full-time employees as of January 1 of a year, shall submit to the Secretary of Labor, by not later than March 1 of the year, information on the number of such employees. SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EMPLOYEES. (a) Management of Funds.--The management of funds by a corporate alliance shall be subject to the applicable fiduciary requirements of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, together with the applicable enforcement provisions of part 5 of subtitle B of title I of such Act. (b) Management of Finances and Records; Accounting System.--Each corporate alliance shall comply with standards relating to the management of finances and records and accounting systems as the Secretary of Labor shall specify. SEC. 1389. COST CONTROL. Each corporate alliance shall control covered expenditures in a manner that meets the requirements of part 2 of subtitle A of title VI. SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOYERS TO CORPORATE ALLIANCES. (a) Large Employer Alliances.--In the case of a corporate alliance with a sponsor described in section 1311(b)(1)(A), the sponsor shall provide for the funding of benefits, through insurance or otherwise, consistent with section 6131, the applicable solvency requirements of sections 1394, 1395, and 1396, and any rules established by the Secretary of Labor. (b) Other Alliances.--In the case of a corporate alliance with a sponsor described in subparagraph (B) or (C) of section 1311(b)(1), a corporate alliance employer shall make payment of the employer premiums required under section 6131 under rules established by the corporate alliance, which rules shall be consistent with rules established by the Secretary of Labor. SEC. 1391. COORDINATION OF PAYMENTS. (a) Payments of Certain Amounts to Regional Alliances.--In the case of a married couple in which one spouse is a qualifying employee of a regional alliance employer and the other spouse is a qualifying employee of a corporate alliance employer, if the couple is enrolled with a regional alliance health plan, the corporate alliance (which receives employer premium payments from such corporate alliance employer with respect to such employee) shall pay to the regional alliance the amounts so paid. (b) Payments of Certain Amounts to Corporate Alliances.--In the case of a married couple in which one spouse is a qualifying employee of a corporate alliance employer and the other spouse is a qualifying employee of another corporate alliance employer, the corporate alliance of the corporate alliance health plan in which the couple is not enrolled shall pay to the corporate alliance of the plan in which the couple is enrolled any employer premium payments received from such corporate alliance employer with respect to such employee. SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR ENFORCEMENT OF CERTAIN REQUIREMENTS. The provisions of sections 502 (relating to civil enforcement) and 504 (relating to investigative authority) of the Employee Retirement Income Security Act of 1974 shall apply to enforcement by the Secretary of Labor of this part in the same manner and to same extent as such provisions apply to enforcement of title I of such Act. SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTECTIONS TO ENROLLED INDIVIDUALS. The provisions of sections 510 (relating to interference with rights protected under Act) and 511 (relating to coercive interference) of the Employee Retirement Income Security Act of 1974 shall apply, in relation to the provisions of this Act, with respect to individuals enrolled under corporate alliance health plans in the same manner and to the same extent as such provisions apply, in relation to the provisions of the Employee Retirement Income Security Act of 1974, with respect to participants and beneficiaries under employee welfare benefit plans covered by title I of such Act. SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS. (a) In General.--The Secretary of Labor shall ensure that each corporate alliance health plan which is a self-insured plan maintains plan assets in trust as provided in section 403 of the Employee Retirement Income Security Act of 1974-- (1) without any exemption under section 403(b)(4) of such Act, and (2) in amounts which the Secretary determines are sufficient to provide at any time for payment to health care providers of all outstanding balances owed by the plan at such time. The requirements of the preceding sentence may be met through letters of credit, bonds, or other appropriate security to the extent provided in regulations of the Secretary. (b) Disclosure.--Each self-insured corporate alliance health plan shall notify the Secretary at such time as the financial reserve requirements of this section are not being met. The Secretary may assess a civil money penalty of not more than $100,000 against any corporate alliance for any failure to provide such notification in such form and manner and within such time periods as the Secretary may prescribe by regulation. SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT CORPORATE ALLIANCE HEALTH PLANS. (a) Appointment of Secretary as Trustee for Insolvent Plans.-- Whenever the Secretary of Labor determines that a corporate alliance health plan which is a self-insured plan will be unable to provide benefits when due or is otherwise in a financially hazardous condition as defined in regulations of the Secretary, the Secretary shall, upon notice to the plan, apply to the appropriate United States district court for appointment of the Secretary as trustee to administer the plan for the duration of the insolvency. The plan may appear as a party and other interested persons may intervene in the proceedings at the discretion of the court. The court shall appoint the Secretary trustee if the court determines that the trusteeship is necessary to protect the interests of the enrolled individuals or health care providers or to avoid any unreasonable deterioration of the financial condition of the plan or any unreasonable increase in the liability of the Corporate Alliance Health Plan Insolvency Fund. The trusteeship of the Secretary shall continue until the conditions described in the first sentence of this subsection are remedied or the plan is terminated. (b) Powers as Trustee.--The Secretary of Labor, upon appointment as trustee under subsection (a), shall have the power-- (1) to do any act authorized by the plan, this Act, or other applicable provisions of law to be done by the plan administrator or any trustee of the plan, (2) to require the transfer of all (or any part) of the assets and records of the plan to the Secretary as trustee, (3) to invest any assets of the plan which the Secretary holds in accordance with the provisions of the plan, regulations of the Secretary, and applicable provisions of law, (4) to do such other acts as the Secretary deems necessary to continue operation of the plan without increasing the potential liability of the Corporate Alliance Health Plan Insolvency Fund, if such acts may be done under the provisions of the plan, (5) to require the corporate alliance, the plan administrator, any contributing employer, and any employee organization representing covered individuals to furnish any information with respect to the plan which the Secretary as trustee may reasonably need in order to administer the plan, (6) to collect for the plan any amounts due the plan and to recover reasonable expenses of the trusteeship, (7) to commence, prosecute, or defend on behalf of the plan any suit or proceeding involving the plan, (8) to issue, publish, or file such notices, statements, and reports as may be required under regulations of the Secretary or by any order of the court, (9) to terminate the plan and liquidate the plan assets in accordance with applicable provisions of this Act and other provisions of law, to restore the plan to the responsibility of the corporate alliance, or to continue the trusteeship, (10) to provide for the enrollment of individuals covered under the plan in an appropriate regional alliance health plan, and (11) to do such other acts as may be necessary to comply with this Act or any order of the court and to protect the interests of enrolled individuals and health care providers. (c) Notice of Appointment.--As soon as practicable after the Secretary's appointment as trustee, the Secretary shall give notice of such appointment to-- (1) the plan administrator, (2) each enrolled individual, (3) each employer who may be liable for contributions to the plan, and (4) each employee organization which, for purposes of collective bargaining, represents enrolled individuals. (d) Additional Duties.--Except to the extent inconsistent with the provisions of this Act or part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or as may be otherwise ordered by the court, the Secretary of Labor, upon appointment as trustee under this section, shall be subject to the same duties as those of a trustee under section 704 of title 11, United States Code, and shall have the duties of a fiduciary for purposes of such part 4. (e) Other Proceedings.--An application by the Secretary of Labor under this subsection may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding, or any proceeding to reorganize, conserve, or liquidate such plan or its property, or any proceeding to enforce a lien against property of the plan. (f) Jurisdiction of Court.-- (1) In general.--Upon the filing of an application for the appointment as trustee or the issuance of a decree under this subsection, the court to which the application is made shall have exclusive jurisdiction of the plan involved and its property wherever located with the powers, to the extent consistent with the purposes of this subsection, of a court of the United States having jurisdiction over cases under chapter 11 of title 11, United States Code. Pending an adjudication under this section such court shall stay, and upon appointment by it of the Secretary of Labor as trustee, such court shall continue the stay of, any pending mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the plan, the sponsoring alliance, or property of such plan or alliance, and any other suit against any receiver, conservator, or trustee of the plan, the sponsoring alliance, or property of the plan or alliance. Pending such adjudication and upon the appointment by it of the Secretary as trustee, the court may stay any proceeding to enforce a lien against property of the plan or the sponsoring alliance or any other suit against the plan or the alliance. (2) Venue.--An action under this subsection may be brought in the judicial district where the plan administrator resides or does business or where any asset of the plan is situated. A district court in which such action is brought may issue process with respect to such action in any other judicial district. (g) Personnel.--In accordance with regulations of the Secretary of Labor, the Secretary shall appoint, retain, and compensate accountants, actuaries, and other professional service personnel as may be necessary in connection with the Secretary's service as trustee under this section. SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE SECRETARY. (a) In General.--Subject to subsection (b), the Secretary of Labor shall guarantee the payment of all benefits under a corporate alliance health plan which is a self-insured plan while such plan is under the Secretary's trusteeship under section 1395. (b) Limitations.--Any increase in the amount of benefits under the plan resulting from a plan amendment which was made, or became effective, whichever is later, within 180 days (or such other reasonable time as may be prescribed in regulations of the Secretary of Labor) before the date of the Secretary's appointment as trustee of the plan shall be disregarded for purposes of determining the guarantee under this section. (c) Corporate Alliance Health Plan Insolvency Fund.-- (1) Establishment.--The Secretary of Labor shall establish a Corporate Alliance Health Plan Insolvency Fund (hereinafter in this part referred to as the ``Fund'') from which the Secretary shall authorize payment of all guaranteed benefits under this section. (2) Receipts and disbursements.-- (A) Receipts.--The Fund shall be credited with-- (i) funds borrowed under paragraph (3), (ii) assessments collected under section 1397, and (iii) earnings on investment of the Fund. (B) Disbursements.--The Fund shall be available-- (i) for making such payments as the Secretary of Labor determines are necessary to pay benefits guaranteed under this section, (ii) to repay the Secretary of the Treasury such sums as may be borrowed (together with interest thereon) under paragraph (3), and (iii) to pay the operational and administrative expenses of the Fund. (3) Borrowing authority.--At the direction of the Secretary of Labor, the Fund may, to the extent necessary to carry out the purposes of paragraph (1), issue to the Secretary of the Treasury notes or other obligations, in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Secretary of the Treasury. The total balance of the Fund obligations outstanding at any time shall not exceed $500,000,000. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations by the Fund. The Secretary of the Treasury shall purchase any notes or other obligations issued by the Fund under this paragraph, and for that purpose the Secretary of the Treasury may use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, United States Code and the purposes for which securities may be issued under such chapter are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by such Secretary under this paragraph. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. (4) Investment authority.--Whenever the Secretary of Labor determines that the moneys of the Fund are in excess of current needs, such Secretary may request the investment of such amounts as such Secretary determines advisable by the Secretary of the Treasury in obligations issued or guaranteed by the United States, but, until all borrowings under paragraph (3) have been repaid, the obligations in which such excess moneys are invested may not yield a rate of return in excess of the rate of interest payable on such borrowings. SEC. 1397. IMPOSITION AND COLLECTION OF PERIODIC ASSESSMENTS ON SELF- INSURED CORPORATE ALLIANCE PLANS. (a) Imposition of Assessments.--Upon a determination that additional receipts to the Fund are necessary in order to enable the Fund to repay amounts borrowed by the Fund under section 1396(c)(3) while maintaining a balance sufficient to ensure the solvency of the Fund, the Secretary of Labor may impose assessments under this section. The Secretary shall prescribe from time to time such schedules of assessment rates and bases for the application of such rates as may be necessary to provide for such repayments. (b) Uniformity of Assessments.--The assessment rates so prescribed by the Secretary for any period shall be uniform for all plans, except that the Secretary may vary the amount of such assessments by category, or waive the application of such assessments by category, taking into account differences in the financial solvency of, and financial reserves maintained by, plans in each category. (c) Limitation on Amount of Assessment.--The total amount assessed against a corporate alliance health plan under this section during a year may not exceed 2 percent of the total premiums paid to the plan with respect to corporate alliance eligible individuals enrolled with the plan during the year. (d) Payment of Assessments.-- (1) Obligation to pay.--The designated payor of each plan shall pay the assessments imposed by the Secretary of Labor under this section with respect to that plan when they are due. Assessments under this section are payable at the time, and on an estimated, advance, or other basis, as determined by the Secretary. Assessments shall continue to accrue until the plan's assets are distributed pursuant to a termination procedure or the Secretary is appointed to serve as trustee of the plan under section 1395. (2) Late payment charges and interest.-- (A) Late payment charges.--If any assessment is not paid when it is due, the Secretary of Labor may assess a late payment charge of not more than 100 percent of the assessment payment which was not timely paid. (B) Waivers.--Subparagraph (A) shall not apply to any assessment payment made within 60 days after the date on which payment is due, if before such date, the designated payor obtains a waiver from the Secretary of Labor based upon a showing of substantial hardship arising from the timely payment of the assessment. The Secretary may grant a waiver under this subparagraph upon application made by the designated payor, but the Secretary may not grant a waiver if it appears that the designated payor will be unable to pay the assessment within 60 days after the date on which it is due. (C) Interest.--If any assessment is not paid by the last date prescribed for a payment, interest on the amount of such assessment at the rate imposed under section 6601(a) of the Internal Revenue Code of 1986 shall be paid for the period from such last date to the date paid. (e) Civil Action upon Nonpayment.--If any designated payor fails to pay an assessment when due, the Secretary of Labor may bring a civil action in any district court of the United States within the jurisdiction of which the plan assets are located, the plan is administered, or in which a defendant resides or is found, for the recovery of the amount of the unpaid assessment, any late payment charge, and interest, and process may be served in any other district. The district courts of the United States shall have jurisdiction over actions brought under this subsection by the Secretary without regard to the amount in controversy. (f) Guarantee Held Harmless.--The Secretary of Labor shall not cease to guarantee benefits on account of the failure of a designated payor to pay any assessment when due. (g) Designated Payor Defined.-- (1) In general.--For purposes of this section, the term ``designated payor'' means-- (A) the employer or plan administrator in any case in which the eligible sponsor of the corporate alliance health plan is described in subparagraph (A) of section 1311(b)(1); and (B) the contributing employers or the plan administrator in any case in which the eligible sponsor of the corporate alliance is described in subparagraph (B) or (C) of section 1311(b)(1). (2) Controlled groups.--If an employer is a member of a controlled group, each member of such group shall be jointly and severally liable for any assessments required to be paid by such employer. For purposes of the preceding sentence, the term ``controlled group'' means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986. SEC. 1398. PAYMENTS TO FEDERAL GOVERNMENT BY MULTIEMPLOYER CORPORATE ALLIANCES FOR ACADEMIC HEALTH CENTERS AND GRADUATE MEDICAL EDUCATION. (a) In General.--A corporate alliance with an eligible sponsor described in section 1311(b)(1)(B) shall make payment to the Secretary of an amount equivalent to the amount (as estimated based on rules established by the Secretary and based on the annual per capita expenditure equivalent calculated under section 6021) that would have been payable by the alliance under section 1353 if the alliance were a regional alliance. (b) Reference to Exemption from Assessment.--For provision exempting certain corporate alliance employers participating in an alliance described in subsection (a) from an assessment under section 3461 of the Internal Revenue Code of 1986, as added by section 7121 of this Act, see section 3461(c)(1) of such Code. Title I, Subtitle E Subtitle E--Health Plans SEC. 1400. HEALTH PLAN DEFINED. (a) In General.--In this Act, the term ``health plan'' means a plan that provides the comprehensive benefit package and meets the requirements of parts 1, 3, and 4 applicable to health plans. (b) Appropriate Self-Insured Health Plan.--In this Act, the term ``appropriate self-insured health plan'' means a group health plan (as defined in section 3(42) of the Employee Retirement Income Security Act of 1974) which is a self-insured health plan and with respect to which the applicable requirements of title I of the Employee Retirement Income Security Act of 1974 are met. (c) State-Certified Health Plan.--In this Act, the term ``State- certified health plan'' means a health plan that has been certified by a State under section 1203(a) (or, in the case in which the Board is exercising certification authority under section 1522(b), that has been certified by the Board). (d) Applicable Regulatory Authority Defined.--In this subtitle, the term ``applicable regulatory authority'' means-- (1) with respect to a self-insured health plan, the Secretary of Labor, or (2) with respect to a State-certified health plan, the State authority responsible for certification of the plan. PART 1--REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE SEC. 1401. APPLICATION OF REQUIREMENTS. No plan shall be treated under this Act as a health plan-- (1) unless the plan is a self-insured plan or a State- certified plan; or (2) on and after the effective date of a finding by the applicable regulatory authority that the plan has failed to comply with such applicable requirements. SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT AND COVERAGE. (a) No Underwriting.-- (1) In general.--Subject to paragraph (2), each health plan offered by a regional alliance or a corporate alliance must accept for enrollment every alliance eligible individual who seeks such enrollment. No plan may engage in any practice that has the effect of attracting or limiting enrollees on the basis of personal characteristics, such as health status, anticipated need for health care, age, occupation, or affiliation with any person or entity. (2) Capacity limitations.--With the approval of the applicable regulatory authority, a health plan may limit enrollment because of the plan's capacity to deliver services or to maintain financial stability. If such a limitation is imposed, the limitation may not be imposed on a basis referred to in paragraph (1). (b) No Limits on Coverage; No Pre-Existing Condition Limits.--A health plan may not-- (1) terminate, restrict, or limit coverage for the comprehensive benefit package in any portion of the plan's service area for any reason, including nonpayment of premiums; (2) cancel coverage for any alliance eligible individual until that individual is enrolled in another applicable health plan; (3) exclude coverage of an alliance eligible individual because of existing medical conditions; (4) impose waiting periods before coverage begins; or (5) impose a rider that serves to exclude coverage of particular eligible individuals. (c) Antidiscrimination.-- (1) In general.--No health plan may discriminate, or engage (directly or through contractual arrangements) in any activity, including the selection of a service area, that has the effect of discriminating, against an individual on the basis of race, national origin, sex, language, socio-economic status, age, disability, health status, or anticipated need for health services. (2) Selection of providers for plan network.--In selecting among providers of health services for membership in a provider network, or in establishing the terms and conditions of such membership, a health plan may not engage in any practice that has the effect of discriminating against a provider-- (A) based on the race, national origin, sex, language, age, or disability of the provider; or (B) based on the socio-economic status, disability, health status, or anticipated need for health services of a patient of the provider. (3) Business necessity.--Except in the case of intentional discrimination, it shall not be a violation of this subsection, or of any regulation issued under this subsection, for any person to take any action otherwise prohibited under this subsection, if the action is required by business necessity. (4) Regulations.--Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall issue regulations to carry out this subsection. (d) Requirements for Plans Offering Lower Cost Sharing.--Each health plan that offers enrollees the lower cost sharing schedule referred to in section 1131-- (1) shall apply such schedule to all items and services in the comprehensive benefit package; (2) shall offer enrollees the opportunity to obtain coverage for out-of-network items and services (as described in subsection (f)(2)); and (3) notwithstanding section 1403, in the case of an enrollee who obtains coverage for such items and services, may charge an alternative premium to take into account such coverage. (e) Treatment of Cost Sharing.--Each health plan, in providing benefits in the comprehensive benefit package-- (1) shall include in its payments to providers, such additional reimbursement as may be necessary to reflect cost sharing reductions to which individuals are entitled under section 1371, and (2) shall maintain such claims or encounter records as may be necessary to audit the amount of such additional reimbursements and the individuals for which such reimbursement is provided. (f) In-Network and Out-of-Network Items and Services Defined.-- (1) In-network items and services.--For purposes of this Act, the term ``in-network'', when used with respect to items or services described in this subtitle, means items or services provided to an individual enrolled under a health plan by a health care provider who is a member of a provider network of the plan (as defined in paragraph (3)). (2) Out-of-network items and services.--For purposes of this Act, the term ``out-of network'', when used with respect to items or services described in this subtitle, means items or services provided to an individual enrolled under a health plan by a health care provider who is not a member of a provider network of the plan (as defined in paragraph (3)). (3) Provider network defined.--A ``provider network'' means, with respect to a health plan, providers who have entered into an agreement with the plan under which such providers are obligated to provide items and services in the comprehensive benefit package to individuals enrolled in the plan, or have an agreement to provide services on a fee-for- service basis. (g) Relation to Detention.--A health plan is not required to provide any reimbursement to any detention facility for services performed in that facility for detainees in the facility. SEC. 1403. COMMUNITY RATING. (a) Regional Alliance Health Plans.--Each regional alliance health plan may not vary the premium imposed with respect to residents of an alliance area, except as may be required under section 6102(a) with respect to different types of individual and family coverage under the plan. (b) Corporate Alliance Health Plans.--Each corporate alliance health plan may not vary the premium imposed with respect to individuals enrolled in the plan, except as may be required under section 1384 with respect to different types of individual and family coverage under the plan. SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION. (a) Regional Alliance Marketing Restrictions.-- (1) In general.--The contract entered into between a regional alliance and a regional alliance health plan shall prohibit the distribution by the health plan of marketing materials within the regional alliance that contain false or materially misleading information and shall provide for prior approval by the regional alliance of any marketing materials to be distributed by the plan. (2) Entire market.--A health plan offered by a regional alliance may not distribute marketing materials to an area smaller than the entire area served by the plan. (3) Prohibition of tie-ins.--A regional alliance health plan, and any agency of such a plan, may not seek to influence an individual's choice of plans in conjunction with the sale of any other insurance. (b) Information Available.-- (1) In general.--Each regional alliance health plan must provide to the regional alliance and make available to alliance eligible individuals and health care professionals complete and timely information concerning the following: (A) Costs. (B) The identity, locations, qualifications, and availability of participating providers. (C) Procedures used to control utilization of services and expenditures. (D) Procedures for assuring and improving the quality of care. (E) Rights and responsibilities of enrollees. (F) Information on the number of plan members who disenroll from the plan. (2) Prohibition against certification of plans providing inaccurate information.--No regional alliance health plan may be a State-certified health plan under this title if the State determines that the plan submitted materially inaccurate information under paragraph (1). (c) Advance Directives.--Each self-insured health plan and each State-certified health plan shall meet the requirement of section 1866(f) of the Social Security Act (relating to maintaining written policies and procedures respecting advance directives) in the same manner as such requirement relates to organizations with contracts under section 1876 of such Act. SEC. 1405. GRIEVANCE PROCEDURE. (a) In General.--Each health plan must establish a grievance procedure for enrollees to use in pursuing complaints. Such procedure shall be consistent with subtitle C of title V. (b) Additional Remedies.--If the grievance procedure fails to resolve an enrollee's complaint-- (1) in the case of an enrollee of a regional alliance health plan, the enrollee has the option of seeking assistance from the office of the ombudsman for the regional alliance established under section 1326(a), and (2) the enrollee may pursue additional legal remedies, including those provided under subtitle C of title V. SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS. (a) Requirement.--Each health plan must enter into such agreements with health care providers or have such other arrangements as may be necessary to assure the provision of all services covered by the comprehensive benefit package to eligible individuals enrolled with the plan. (b) Emergency and Urgent Care Services.-- (1) In general.--Each health plan must cover emergency and urgent care services provided to enrollees, without regard to whether or not the provider furnishing such services has a contractual (or other) arrangement with the plan to provide items or services to enrollees of the plan and in the case of emergency services without regard to prior authorization. (2) Payment amounts.--In the case of emergency and urgent care provided to an enrollee outside of a health plan's service area, the payment amounts of the plan shall be based on the fee for service rate schedule established by the regional alliance for the alliance area where the services were provided. (c) Application of Fee Schedule.-- (1) In general.--Subject to paragraph (2), each regional alliance health plan or corporate alliance health plan that provides for payment for services on a fee-for-service basis shall make such payment in the amounts provided under the fee schedule established by the regional alliance under section 1322(c) (or, in the case of a plan offered in a State that has established a Statewide fee schedule under section 1322(c)(3), under such Statewide fee schedule). (2) Reduction for providers voluntarily reducing charges.-- If a provider under a health plan voluntarily agrees to reduce the amount charged to an individual enrolled under the plan, the plan shall reduce the amount otherwise determined under the fee schedule applicable under paragraph (1) by the proportion of the reduction in such amount charged. (3) Reduction for noncomplying plan.--Each regional alliance health plan that is a noncomplying plan shall provide for reductions in payments under the fee schedule to providers that are not participating providers in accordance with section 6012(b). (d) Prohibition Against Balance Billing; Requirement of Direct Billing.-- (1) Prohibition of balance billing.--A provider may not charge or collect from an enrollee a fee in excess of the applicable payment amount under the applicable fee schedule under subsection (c), and the health plan and its enrollees are not legally responsible for payment of any amount in excess of such applicable payment amount for items and services covered under the comprehensive benefits package. (2) Direct billing.--A provider may not charge or collect from an enrollee amounts that are payable by the health plan (including any cost sharing reduction assistance payable by the plan) and shall submit charges to such plan in accordance with any applicable requirements of part 1 of subtitle B of title V (relating to health information systems). (3) Coverage under agreements with plans.--The agreements or other arrangements entered into under subsection (a) between a health plan and the health care providers providing the comprehensive benefit package to individuals enrolled with the plan shall prohibit a provider from engaging in balance billing described in paragraph (1). (e) Imposition of Participating Provider Assessment in Case of a Noncomplying Plan.--Each regional alliance health plan shall provide that if the plan is a noncomplying plan for a year under section 6012, payments to participating providers shall be reduced by the applicable network reduction percentage under such section. SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS. (a) Laws Restricting Plans Other Than Fee-for-Service Plans.-- Except as may otherwise be provided in this section, no State law shall apply to any services provided under a health plan that is not a fee- for-service plan (or a fee-for-service component of a plan) if such law has the effect of prohibiting or otherwise restricting plans from-- (1) except as provided in section 1203, limiting the number and type of health care providers who participate in the plan; (2) requiring enrollees to obtain health services (other than emergency services) from participating providers or from providers authorized by the plan; (3) requiring enrollees to obtain a referral for treatment by a specialized physician or health institution; (4) establishing different payment rates for participating providers and providers outside the plan; (5) creating incentives to encourage the use of participating providers; or (6) requiring the use of single-source suppliers for pharmacy, medical equipment, and other health products and services. (b) Preemption of State Corporate Practice Acts.--Any State law related to the corporate practice of medicine and to provider ownership of health plans or other providers shall not apply to arrangements between health plans that are not fee-for-service plans and their participating providers. (c) Participating Provider Defined.--In this title, a ``participating provider'' means, with respect to a health plan, a provider of health care services who is a member of a provider network of the plan (as described in section 1402(f)(3)). SEC. 1408. FINANCIAL SOLVENCY. Each regional alliance health plan must-- (1) meet or exceed minimum capital requirements established by States under section 1204(a); (2) in the case of a plan operating in a State, must participate in the guaranty fund established by the State under section 1204(c); and (3) meet such other requirements relating to fiscal soundness as the State may establish (subject to the establishment of any alternative standards by the Board). SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING POLICY. Each regional alliance health plan shall offer a cost sharing policy (as defined in section 1421(b)(2)) to each eligible family enrolled under the plan. SEC. 1410. QUALITY ASSURANCE. Each health plan shall comply with such quality assurance requirements as are imposed under subtitle A of title V with respect to such a plan. SEC. 1411. PROVIDER VERIFICATION. Each health plan shall-- (1) verify the credentials of practitioners and facilities; (2) ensure that all providers participating in the plan meet applicable State licensing and certification standards; (3) oversee the quality and performance of participating providers, consistent with section 1410; and (4) investigate and resolve consumer complaints against participating providers. SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MANAGEMENT PROTOCOLS. Each health plan shall disclose to enrollees (and prospective enrollees) the protocols used by the plan for controlling utilization and costs. SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND REPORTING. (a) In General.--Each health plan shall comply with the confidentiality, data management, and reporting requirements imposed under subtitle B of title V. (b) Treatment of Electronic Information.-- (1) Accuracy and reliability.--Each health plan shall take such measures as may be necessary to ensure that health care information in electronic form that the plan, or a member of a provider network of the plan, collects for or transmits to the Board under subtitle B of title V is accurate and reliable. (2) Privacy and security.--Each health plan shall take such measures as may be necessary to ensure that health care information described in paragraph (1) is not distributed to any individual or entity in violation of a standard promulgated by the Board under part 2 of subtitle B of title V. SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM. Each regional alliance health plan of a State that has established a reinsurance system under section 1203(g) shall participate in the system in the manner specified by the State. PART 2--REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL INSURANCE. (a) In General.--An entity may offer a supplemental insurance policy but only if-- (1) in the case of a supplemental health benefit policy (as defined in subsection (b)(1)), the entity and the policy meet the requirements of section 1422; and (2) in the case of a cost sharing policy (as defined in subsection (b)(2)), the entity and the policy meet the requirements of section 1423. (b) Policies Defined.-- (1) Supplemental health benefit policy.-- (A) In general.--In this part, the term ``supplemental health benefit policy'' means a health insurance policy or health benefit plan offered to an alliance eligible individual which provides-- (i) coverage for services and items not included in the comprehensive benefit package, or (ii) coverage for items and services included in such package but not covered because of a limitation in amount, duration, or scope provided under this title, or both. (B) Exclusions.--Such term does not include the following: (i) A cost sharing policy (as defined in paragraph (2)). (ii) A long-term care insurance policy (as defined in section 2304(10)). (iii) Insurance that limits benefits with respect to specific diseases (or conditions). (iv) Hospital or nursing home indemnity insurance. (v) A medicare supplemental policy (as defined in section 1882(g) of the Social Security Act). (vi) Insurance with respect to accidents. (2) Cost sharing policy.--In this part, the term ``cost sharing policy'' means a health insurance policy or health benefit plan offered to an alliance eligible individual which provides coverage for deductibles, coinsurance, and copayments imposed as part of the comprehensive benefit package under subtitle B, whether imposed under a higher cost sharing plan or with respect to out-of-network providers. SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BENEFIT POLICIES. (a) Prohibiting Duplication of Coverage.-- (1) In general.--No health plan, insurer, or any other person may offer-- (A) to any eligible individual a supplemental health benefit policy that duplicates any coverage provided in the comprehensive benefit package; or (B) to any medicare-eligible individual a supplemental health benefit policy that duplicates any coverage provided under the medicare program. (2) Exception for medicare-eligible individuals.--For purposes of this subsection, for the period in which an individual is a medicare-eligible individual and also is an alliance eligible individual (and is enrolled under a regional alliance or corporate alliance health plan), paragraph (1)(A) (and not paragraph (1)(B)) shall apply. (b) No Limitation on Individuals Offered Policy.-- (1) In general.--Except as provided in paragraph (2), each entity offering a supplemental health benefit policy must accept for enrollment every individual who seeks such enrollment, subject to capacity and financial limits. (2) Exception for certain offerors.--Paragraph (1) shall not apply to any supplemental health benefit policy offered to an individual only on the basis of-- (A) the individual's employment (in the case of a policy offered by the individual's employer); or (B) the individual's membership or enrollment in a fraternal, religious, professional, educational, or other similar organization. (c) Restrictions on Marketing Abuses.--Not later than January 1, 1996, the Board shall develop (in consultation with the States) minimum standards that prohibit marketing practices by entities offering supplemental health benefit policies that involve: (1) Providing monetary incentives for or tying or otherwise conditioning the sale of the policy to enrollment in a regional alliance health plan of the entity. (2) Using or disclosing to any party information about the health status or claims experience of participants in a regional alliance health plan for the purpose of marketing such a policy. (d) Civil Monetary Penalty.--An entity that knowingly and willfully violates any provision of this section with respect to the offering of a supplemental health benefit policy to any individual shall be subject to a civil monetary penalty (not to exceed $10,000) for each such violation. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to civil money penalties under this subsection in the same manner as they apply to a penalty or proceeding under section 1128A(a) of such Act. SEC. 1423. STANDARDS FOR COST SHARING POLICIES. (a) Rules for Offering of Policies.--Subject to subsection (f), a cost sharing policy may be offered to an individual only if-- (1) the policy is offered by the regional alliance health plan in which the individual is enrolled; (2) the regional alliance health plan offers the policy to all individuals enrolled in the plan; (3) the plan offers each such individual a choice of a policy that provides standard coverage and a policy that provides maximum coverage (in accordance with standards established by the Board); and (4) the policy is offered only during the annual open enrollment period for regional alliance health plans (described in section 1323(d)(1)). (b) Prohibition of Coverage of Copayments.--Each cost sharing policy may not provide any benefits relating to any copayments established under the table of copayments and coinsurance under section 1135. (c) Equivalent Coverage for All Services.--Each cost sharing policy must provide coverage for items and services in the comprehensive benefit package to the same extent as the policy provides coverage for all items and services in the package. (d) Requirements for Pricing.-- (1) In general.--The price of any cost sharing policy shall-- (A) be the same for each individual to whom the policy is offered; (B) take into account any expected increase in utilization resulting from the purchase of the policy by individuals enrolled in the regional alliance health plan; and (C) not result in a loss-ratio of less than 90 percent. (2) Loss-ratio defined.--In paragraph (1)(C), a ``loss- ratio'' is the ratio of the premium returned to the consumer in payout relative to the total premium collected. (e) Loss of State Certification for Regional Alliance Health Plans Failing to Meet Standards.--A State may not certify a regional alliance health plan that offers a cost sharing policy unless the plan and the policy meet the standards described in this section. (f) Special Rules for FEHBP Supplemental Plans.--Subsection (a) shall not apply to an FEHBP supplemental plan described in section 8203(f)(1), but only if the plan meets the following requirements: (1) The plan must be offered to all individuals to whom such a plan is required to be offered under section 8203. (2) The plan must offer each such individual a choice of a policy that provides standard coverage and a policy that provides maximum coverage (in accordance with standards established by the Board under subsection (a)(3)). (3) The plan is offered only during the annual open enrollment period for regional alliance health plans (described in section 1323(d)(1)). (4)(A) The price of the plan shall include an amount, established in accordance with rules established by the Board in consultation with the Office of Personnel Management, that takes into account any expected increase in utilization of the items and services in the comprehensive benefit package resulting from the purchase of the plan by individuals enrolled in a regional alliance health plan. (B) The plan provides for payment, in a manner specified by the Board in the case of an individual enrolled in the plan and in a regional alliance health plan, to the regional alliance health plan of an amount equivalent to the additional amount described in subparagraph (A). PART 3--REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS SEC. 1431. HEALTH PLAN REQUIREMENT. (a) In General.--Subject to section 1432, each health plan shall, with respect to each electing essential community provider (as defined in subsection (d), other than a provider of school health services) located within the plan's service area, either-- (1) enter into a written provider participation agreement (described in subsection (b)) with the provider, or (2) enter into a written agreement under which the plan shall make payment to the provider in accordance with subsection (c). (b) Participation Agreement.--A participation agreement between a health plan and an electing essential community provider under this subsection shall provide that the health plan agrees to treat the provider in accordance with terms and conditions at least as favorable as those that are applicable to other providers participating in the health plan with respect to each of the following: (1) The scope of services for which payment is made by the plan to the provider. (2) The rate of payment for covered care and services. (3) The availability of financial incentives to participating providers. (4) Limitations on financial risk provided to other participating providers. (5) Assignment of enrollees to participating providers. (6) Access by the provider's patients to providers in medical specialties or subspecialties participating in the plan. (c) Payments for Providers Without Participation Agreements.-- (1) In general.--Payment in accordance with this subsection is payment based, as elected by the electing essential community provider, either-- (A) on the fee schedule developed by the applicable regional alliance (or the State) under section 1322(c), or (B) on payment methodologies and rates used under the applicable Medicare payment methodology and rates (or the most closely applicable methodology under such program as the Secretary of Health and Human Services specifies in regulations). (2) No application of gate-keeper limitations.--Payment in accordance with this subsection may be subject to utilization review, but may not be subject to otherwise applicable gate- keeper requirements under the plan. (d) Election.-- (1) In general.--In this part, the term ``electing essential community provider'' means, with respect to a health plan, an essential community provider that elects this subpart to apply to the health plan. (2) Form of election.--An election under this subsection shall be made in a form and manner specified by the Secretary, and shall include notice to the health plan involved. Such an election may be made annually with respect to a health plan, except that the plan and provider may agree to make such an election on a more frequent basis. (e) Special Rule for Providers of School Health Services.--A health plan shall pay, to each provider of school health services located in the plan's service area an amount determined by the Secretary for such services furnished to enrollees of the plan. SEC. 1432. SUNSET OF REQUIREMENT. (a) In General.--Subject to subsection (d), the requirement of section 1431 shall only apply to health plans offered by a health alliance during the 5-year period beginning with the first year in which any health plan is offered by the alliance. (b) Studies.--In order to prepare recommendations under subsection (c), the Secretary shall conduct studies regarding essential community providers, including studies that assess-- (1) the definition of essential community provider, (2) the sufficiency of the funding levels for providers, for both covered and uncovered benefits under this Act, (3) the effects of contracting requirements relating to such providers on such providers, health plans, and enrollees, (4) the impact of the payment rules for such providers, and (5) the impact of national health reform on such providers. (c) Recommendations to Congress.--The Secretary shall submit to Congress, by not later than March 1, 2001, specific recommendations respecting whether, and to what extent, section 1431 should continue to apply to some or all essential community providers. Such recommendations may include a description of the particular types of such providers and circumstances under which such section should continue to apply. (d) Congressional Consideration.-- (1) In general.--Recommendations submitted under subsection (c) shall apply under this part (and may supersede the provisions of subsection (a)) unless a joint resolution (described in paragraph (2)) disapproving such recommendations is enacted, in accordance with the provisions of paragraph (3), before the end of the 60-day period beginning on the date on which such recommendations were submitted. For purposes of applying the preceding sentence and paragraphs (2) and (3), the days on which either House of Congress is not in session because of an adjournment of more than three days to a day certain shall be excluded in the computation of a period. (2) Joint resolution of disapproval.--A joint resolution described in this paragraph means only a joint resolution which is introduced within the 10-day period beginning on the date on which the Secretary submits recommendations under subsection (c) and-- (A) which does not have a preamble; (B) the matter after the resolving clause of which is as follows: ``That Congress disapproves the recommendations of the Secretary of Health and Human Services concerning the continued application of certain essential community provider requirements under section 1431 of the Health Security Act, as submitted by the Secretary on ______________.'', the blank space being filled in with the appropriate date; and (C) the title of which is as follows: ``Joint resolution disapproving recommendations of the Secretary of Health and Human Services concerning the continued application of certain essential community provider requirements under section 1431 of the Health Security Act, as submitted by the Secretary on ______________.'', the blank space being filled in with the appropriate date. (3) Procedures for consideration of resolution of disapproval.--Subject to paragraph (4), the provisions of section 2908 (other than subsection (a)) of the Defense Base Closure and Realignment Act of 1990 shall apply to the consideration of a joint resolution described in paragraph (2) in the same manner as such provisions apply to a joint resolution described in section 2908(a) of such Act. (4) Special rules.--For purposes of applying paragraph (3) with respect to such provisions-- (A) any reference to the Committee on Armed Services of the House of Representatives shall be deemed a reference to an appropriate Committee of the House of Representatives (specified by the Speaker of the House of Representatives at the time of submission of recommendations under subsection (c)) and any reference to the Committee on Armed Services of the Senate shall be deemed a reference to an appropriate Committee of the Senate (specified by the Majority Leader of the Senate at the time of submission of recommendations under subsection (c)); and (B) any reference to the date on which the President transmits a report shall be deemed a reference to the date on which the Secretary submits recommendations under subsection (c). PART 4--REQUIREMENTS RELATING TO WORKERS' COMPENSATION AND AUTOMOBILE MEDICAL LIABILITY COVERAGE SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO WORKERS COMPENSATION SERVICES. Each health plan shall meet the applicable requirements of part 2 of subtitle A of title X (relating to provision of workers compensation services to enrollees). SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO AUTOMOBILE MEDICAL LIABILITY SERVICES. Each health plan shall meet the applicable requirements of part 2 of subtitle B of title X (relating to provision of automobile medical liability services to enrollees). Title I, Subtitle F Subtitle F--Federal Responsibilities PART 1--NATIONAL HEALTH BOARD Subpart A--Establishment of National Health Board SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP. (a) In General.--There is hereby created in the Executive Branch a National Health Board. (b) Composition.--The Board is composed of 7 members appointed by the President, by and with the advice and consent of the Senate. (c) Chair.--The President shall designate one of the members as chair. The chair serves a term concurrent with that of the President. The chair may serve a maximum of 3 terms. The chair shall serve as the chief executive officer of the Board. (d) Terms.-- (1) In general.--Except as provided in paragraphs (2) and (4), the term of each member of the Board, except the chair, is 4 years and begins when the term of the predecessor of that member ends. (2) Initial terms.--The initial terms of the members of the Board (other than the chair) first taking office after the date of the enactment of this Act, shall expire as designated by the President, two at the end of one year, two at the end of two years, and two at the end of three years. (3) Reappointment.--A member (other than the chair) may be reappointed for one additional term. (4) Continuation in office.--Upon the expiration of a term of office, a member shall continue to serve until a successor is appointed and qualified. (e) Vacancies.-- (1) In general.--Whenever a vacancy shall occur, other than by expiration of term, a successor shall be appointed by the President, by and with the consent of the Senate, to fill such vacancy, and is appointed for the remainder of the term of the predecessor. (2) No impairment of function.--A vacancy in the membership of the Board does not impair the authority of the remaining members to exercise all of the powers of the Board. (3) Acting chair.--The Board may designate a Member to act as chair during any period in which there is no chair designated by the President. (f) Meetings; Quorum.-- (1) Meetings.--At meetings of the Board the chair shall preside, and in the absence of the chair, the Board shall elect a member to act as chair pro tempore. (2) Quorum.--Four members of the Board shall constitute a quorum thereof. SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS. (a) Citizenship.--Each member of the Board shall be a citizen of the United States. (b) Basis of Selection.--Board members will be selected on the basis of their experience and expertise in relevant subjects, including the practice of medicine, nursing, or other clinical practices, health care financing and delivery, state health systems, consumer protection, business, law, and delivery of care to vulnerable populations. (c) Exclusive Employment.--During the term of appointment, Board members shall serve as employees of the Federal Government and shall hold no other employment. (d) Prohibition of Conflict of Interest.--A member of the Board may not have a pecuniary interest in or hold an official relation to any health care plan, health care provider, insurance company, pharmaceutical company, medical equipment company, or other affected industry. Before entering upon the duties as a member of the Board, the member shall certify under oath compliance with this requirement. (e) Post-Employment Restrictions.--After leaving the Board, former members are subject to post-employment restrictions applicable to comparable Federal employees. (f) Compensation of Board Members.--Each member of the Board (other than the chair) shall receive an annual salary at the annual rate payable from time to time for level IV of the Executive Schedule. The chair of the Board, during the period of service as chair, shall receive an annual salary at the annual rate payable from time to time for level III of the Executive Schedule. SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES. (a) Comprehensive Benefit Package.-- (1) Interpretation.--The Board shall interpret the comprehensive benefit package, adjust the delivery of preventive services under section 1153, and take such steps as may be necessary to assure that the comprehensive benefit package is available on a uniform national basis to all eligible individuals. (2) Recommendations.--The Board may recommend to the President and the Congress appropriate revisions to such package. Such recommendations may reflect changes in technology, health care needs, health care costs, and methods of service delivery. (b) Administration of Cost Containment Provisions.--The Board shall oversee the cost containment requirements of subtitle A of title VI and certify compliance with such requirements. (c) Coverage and Families.--The Board shall develop and implement standards relating to the eligibility of individuals for coverage in applicable health plans under subtitle A of title I and may provide such additional exceptions and special rules relating to the treatment of family members under section 1012 as the Board finds appropriate. (d) Quality Management and Improvement.--The Board shall establish and have ultimate responsibility for a performance-based system of quality management and improvement as required by section 5001. (e) Information Standards.--The Board shall develop and implement standards to establish national health information system to measure quality as required by section 5101. (f) Participating State Requirements.--Consistent with the provisions of subtitle C, the Board shall-- (1) establish requirements for participating States, (2) monitor State compliance with those requirements, (3) provide technical assistance, and in a manner that ensures access to the comprehensive benefit package for all eligible individuals. (g) Development of Premium Class Factors.--The Board shall establish premium class factors under subpart D of this part. (h) Development of Risk-Adjustment Methodology.--The Board shall develop a methodology for the risk-adjustment of premium payments to regional alliance health plans in accordance with subpart E of this part. (i) Financial Requirements.--The Board shall establish minimum capital requirements and requirements for guaranty funds under subpart F of this part. (j) Standards for Health Plan Grievance Procedures.--The Board shall establish standards for health plan grievance procedures that are used by enrollees in pursuing complaints. SEC. 1504. ANNUAL REPORT. (a) In General.--The Board shall prepare and send to the President and Congress an annual report addressing the overall implementation of the new health care system. (b) Matters To Be Included.--The Board shall include in each annual report under this section the following: (1) Information on Federal and State implementation. (2) Data related to quality improvement. (3) Recommendations or changes in the administration, regulation and laws related to health care and coverage. (4) A full account of all actions taken during the previous year. SEC. 1505. POWERS. (a) Staff; Contract Authority.--The Board shall have authority, subject to the provisions of the civil-service laws and chapter 51 and subchapter III of chapter 53 of title 5, United States Code, to appoint such officers and employees as are necessary to carry out its functions. To the extent provided in advance in appropriations Acts, the Board may contract with any person (including an agency of the Federal Government) for studies and analysis as required to execute its functions. Any employee of the Executive Branch may be detailed to the Board to assist the Board in carrying out its duties. (b) Establishment of Advisory Committees.--The Board may establish advisory committees. (c) Access to Information.--The Board may secure directly from any department or agency of the United States information necessary to enable it to carry out its functions, to the extent such information is otherwise available to a department or agency of the United States. Upon request of the chair, the head of that department or agency shall furnish that information to the Board. (d) Delegation of Authority.--Except as otherwise provided in this Act, the Board may delegate any function to such officers and employees as the Board may designate and may authorize such successive redelegations of such functions with the Board as the Board deems to be necessary or appropriate. No delegation of functions by the Board shall relieve the Board of responsibility for the administration of such functions. (e) Rulemaking.--The National Health Board is authorized to establish such rules as may be necessary to carry out this Act. SEC. 1506. FUNDING. (a) Authorization of Appropriations.--There are authorized to be appropriated to the Board such sums as may be necessary for fiscal years 1994, 1995, 1996, 1997, and 1998. (b) Submission of Budget.--Under the procedures of chapter 11 of title 31, United States Code, the budget for the Board for a fiscal year shall be reviewed by the Director of the Office of Management and Budget and submitted to the Congress as part of the President's submission of the Budget of the United States for the fiscal year. Subpart B--Responsibilities Relating to Review and Approval of State Systems SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS. (a) Approval of State Systems by National Board.-- (1) In general.--The National Health Board shall approve a State health care system for which a document is submitted under section 1200(b) unless the Board finds that the system (as set forth in the document) does not (or will not) provide for the State meeting the responsibilities for participating States under this Act. (2) Regulations.--The Board shall issue regulations, not later than July 1, 1995, prescribing the requirements for State health care systems under parts 2 and 3 of subtitle C, except that in the case of a document submitted under section 1200(b) before the date of issuance of such regulations, the Board shall take action on such document notwithstanding the fact that such regulations have not been issued. (3) No approval permitted for years prior to 1996.--The Board may not approve a State health care system under this subpart for any year prior to 1996. (b) Review of Completeness of Documents.-- (1) In general.--If a State submits a document under subsection (a)(1), the Board shall notify the State, not later than 7 working days after the date of submission, whether or not the document is complete and provides the Board with sufficient information to approve or disapprove the document. (2) Additional information on incomplete document.--If the Board notifies a State that the State's document is not complete, the State shall be provided such additional period (not to exceed 45 days) as the Board may by regulation establish in which to submit such additional information as the Board may require. Not later than 7 working days after the State submits the additional information, the Board shall notify the State respecting the completeness of the document. (c) Action on Completed Documents.-- (1) In general.--The Board shall make a determination (and notify the State) on whether the State's document provides for implementation of a State system that meets the applicable requirements of subtitle C-- (A) in the case of a State that did not require the additional period described in subsection (b)(2) to file a complete document, not later than 90 days after notifying a State under subsection (b) that the State's document is complete, or (B) in the case of a State that required the additional period described in subsection (b)(2) to file a complete document, not later than 90 days after notifying a State under subsection (b) that the State's document is complete. (2) Plans deemed approved.--If the Board does not meet the applicable deadline for making a determination and providing notice under paragraph (1) with respect to a State's document, the Board shall be deemed to have approved the State's document for purposes of this Act. (d) Opportunity to Respond to Rejected Document.-- (1) In general.--If (within the applicable deadline under subsection (c)(1)) the Board notifies a State that its document does not provide for implementation of a State system that meets the applicable requirements of subtitle C, the Board shall provide the State with a period of 30 days in which to submit such additional information and assurances as the Board may require. (2) Deadline for response.--Not later than 30 days after receiving such additional information and assurances, the Board shall make a determination (and notify the State) on whether the State's document provides for implementation of a State system that meets the applicable requirements of subtitle C. (3) Plan deemed approved.--If the Board does not meet the deadline established under paragraph (2) with respect to a State, the Board shall be deemed to have approved the State's document for purposes of this Act. (e) Approval of Previously Terminated States.--If the Board has approved a State system under this part for a year but subsequently terminated the approval of the system under section 1512(b)(2), the Board shall approve the system for a succeeding year if the State-- (1) demonstrates to the satisfaction of the Board that the failure that formed the basis for the termination no longer exists, and (2) provides reasonable assurances that the types of actions (or inactions) which formed the basis for such termination will not recur. (f) Revisions to State System.-- (1) Submission.--A State may revise a system approved for a year under this section, except that such revision shall not take effect unless the State has submitted to the Board a document describing such revision and the Board has approved such revision. (2) Actions on amendments.--Not later than 60 days after a document is submitted under paragraph (1), the Board shall make a determination (and notify the State) on whether the implementation of the State system, as proposed to be revised, meets the applicable requirements of subtitle C. If the Board fails to meet the requirement of the preceding sentence, the Board shall be deemed to have approved the implementation of the State system as proposed to be revised. (3) Rejection of amendments.--Subsection (d) shall apply to an amendment submitted under this subsection in the same manner as it applies to a completed document submitted under subsection (b). (g) Notification of Non-Participating States.--If a State fails to submit a document for a State system by the deadline referred to in section 1200, or such a document is not approved under subsection (c), the Board shall immediately notify the Secretary of Health and Human Services of the State's failure for purposes of applying subpart C in that State. SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR COMPLIANCE. (a) In General.--In the case of a participating State, if the Board determines that the operation of the State system under subtitle C fails to meet the applicable requirements of this Act, sanctions shall apply against the State in accordance with subsection (b). (b) Type of Sanction Applicable.--The sanctions applicable under this part are as follows: (1) If the Board determines that the State's failure does not substantially jeopardize the ability of eligible individuals in the State to obtain coverage for the comprehensive benefit package-- (A) the Board may order a regional alliance in the State to comply with applicable requirements of this Act and take such additional measures to assure compliance with such requirements as the Board may impose, if the Board determines that the State's failure relates to a requirement applicable to a regional alliance in the State, or (B) if the Board does not take the action described in subparagraph (A) (or if the Board takes the action and determines that the action has not remedied the violation that led to the imposition of the sanction), the Board shall notify the Secretary of Health and Human Services, who shall reduce payments with respect to the State in accordance with section 1513. (2) If the Board determines that the failure substantially jeopardizes the ability of eligible individuals in the State to obtain coverage for the comprehensive benefit package-- (A) the Board shall terminate its approval of the State system; and (B) the Board shall notify the Secretary of Health and Human Services, who shall assume the responsibilities described in section 1522. (c) Termination of Sanction.-- (1) Compliance by State.--A State against which a sanction is imposed may submit information at any time to the Board to demonstrate that the failure that led to the imposition of the sanction has been corrected. (2) Termination of sanction.--If the Board determines that the failure that led to the imposition of a sanction has been corrected-- (A) in the case of the sanction described in subsection (b)(1)(A), the Board shall notify the regional alliance against which the sanction is imposed; or (B) in the case of any other sanction described in subsection (b), the Board shall notify the Secretary of Health and Human Services. (d) Protection of Access to Benefits.--The Board and the Secretary of Health and Human Services shall exercise authority to take actions under this section with respect to a State only in a manner that assures the continuous coverage of eligible individuals under regional alliance health plans. SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF HEALTH AND HUMAN SERVICES. (a) In General.--Upon receiving notice from the Board under section 1512(b)(1)(B), the Secretary of Health and Human Services shall reduce the amount of any of the payments described in subsection (b) that would otherwise be made to individuals and entities in the State by such amount as the Secretary determines to be appropriate. (b) Payments Described.--The payments described in this subsection are as follows: (1) Payments to academic health centers in the State under subtitle B of title III. (2) Payments to individuals and entities in the State for health research activities under section 301 and title IV of the Public Health Service Act. (3) Payments to hospitals in the State under part 4 of subtitle E of title III (relating to payments to hospitals serving vulnerable populations) SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS. Any State or alliance affected by a determination by the Board under this subpart may appeal such determination in accordance with section 5231. SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTATION. (a) Planning Grants.-- (1) In general.--Not later than 90 days after the date of the enactment of this Act, the Secretary shall make available to each State a planning grant to assist a State in the development of a health care system to become a participating State under subtitle C. (2) Formula.--The Secretary shall establish a formula for the distribution of funds made available under this subsection. (3) Authorization of appropriations.--There are authorized to be appropriated $50,000,000 in each of fiscal years 1995 and 1996 for grants under this subsection. (b) Grants for Start-up Support.-- (1) In general.--The Secretary shall make available to States, upon their enacting enabling legislation to become participating States, grants to assist in the establishment of regional alliances. (2) Formula.--The Secretary shall establish a formula for the distribution of funds made available under this subsection. (3) State matching funds required.--Funds are payable to a State under this subsection only if the State provides assurances, satisfactory to the Secretary, that amounts of State funds (at least equal to the amount made available under this subsection) are expended for the purposes described in paragraph (1). (4) Authorization of appropriations.--There are authorized to be appropriated $313,000,000 for fiscal year 1996, $625,000,000 for fiscal year 1997, and $313,000,000 for fiscal year 1998 for grants under this subsection. Subpart C--Responsibilities in Absence of State Systems SEC. 1521. APPLICATION OF SUBPART. (a) Initial Application.--This subpart shall apply with respect to a State as of January 1, 1998, unless-- (1) the State submits a document for a State system under section 1511(a)(1) by July 1, 1997, and (2) the Board determines under section 1511 that such system meets the requirements of part 1 of subtitle C. (b) Termination of Approval of System of Participating State.--In the case of a participating State for which the Board terminates approval of the State system under section 1512(b)(2), this subpart shall apply with respect to the State as of such date as is appropriate to assure the continuity of coverage for the comprehensive benefit package for eligible individuals in the State. SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING STATES. (a) Notice.--When the Board determines that this subpart will apply to a State for a calendar year, the Board shall notify the Secretary of Health and Human Services. (b) Establishment of Regional Alliance System.--Upon receiving notice under subsection (a), the Secretary shall take such steps, including the establishment of regional alliances, and compliance with other requirements applicable to participating States under subtitle C, as are necessary to ensure that the comprehensive benefit package is provided to eligible individuals in the State during the year. (c) Requirements for Alliances.--Subject to section 1523, any regional alliance established by the Secretary pursuant to this section must meet all the requirements applicable under subtitle D to a regional alliance established and operated by a participating State, and the Secretary shall have the authority to fulfill all the functions of such an alliance. (d) Establishment of Guaranty Fund.-- (1) Establishment.--The Secretary must ensure that there is a guaranty fund that meets the requirements established by the Board under section 1552, in order to provide financial protection to health care providers and others in the case of a failure of a regional alliance health plan under a regional alliance established and operated by the Secretary under this section. (2) Assessments to provide guaranty funds.--In the case of a failure of one or more regional alliance health plans under a regional alliance established and operated by the Secretary under this section, the Secretary may require each regional alliance health plan under the alliance to pay an assessment to the Secretary in an amount not to exceed 2 percent of the premiums of such plans paid by or on behalf of regional alliance eligible individuals during a year for so long as necessary to generate sufficient revenue to cover any outstanding claims against the failed plan. SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED SYSTEM. (a) In General.--If this subpart applies to a State for a calendar year, the premiums charged under the regional alliance established and operated by the Secretary in the State shall be equal to premiums that would otherwise be charged under a regional alliance established and operated by the State, increased by 15 percent. Such 15 percent increase shall be used to reimburse the Secretary for any administrative or other expenses incurred as a result of establishing and operating the system. (b) Treatment of Surcharge as Part of Premium.--For purposes of determining the compliance of a State for which this subpart applies in a year with the requirements for budgeting under subtitle A of title VI for the year, the 15 percent increase described in subsection (a) shall be treated as part of the premium for payment to a regional alliance. SEC. 1524. RETURN TO STATE OPERATION. (a) Application Process.--After the establishment and operation of an alliance system by the Secretary in a State under section 1522, the State may at any time apply to the Board for the approval of a State system in accordance with the procedures described in section 1511. (b) Timing.--If the Board approves the system of a State for which the Secretary has operated an alliance system during a year, the Secretary shall terminate the operation of the system, and the State shall establish and operate its approved system, as of January 1 of the first year beginning after the Board approves the State system. The termination of the Secretary's system and the operation of the State's system shall be conducted in a manner that assures the continuous coverage of eligible individuals in the State under regional alliance health plans. Subpart D--Establishment of Class Factors for Charging Premiums SEC. 1531. PREMIUM CLASS FACTORS. (a) In General.--For each class of family enrollment (as specified in section 1011(c)), for purposes of title VI, the Board shall establish a premium class factor that reflects, subject to subsection (b), the relative actuarial value of the comprehensive benefit package of the class of family enrollment compared to such value of such package for individual enrollment. (b) Conditions.--In establishing such factors, the factor for the class of individual enrollment shall be 1 and the factor for the couple-only class of family enrollment shall be 2. Subpart E--Risk Adjustment and Reinsurance Methodology for Payment of Plans SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE METHODOLOGY. (a) Development.-- (1) Initial development.--Not later than April 1, 1995, the Board shall develop a risk adjustment and reinsurance methodology in accordance with this subpart. (2) Improvements.--The Board shall make such improvements in such methodology as may be appropriate to achieve the purposes described in subsection (b)(1). (b) Methodology.-- (1) Purposes.--Such methodology shall provide for the adjustment of payments to regional alliance health plans for the purposes of-- (A) assuring that payments to such plans reflect the expected relative utilization and expenditures for such services by each plan's enrollees compared to the average utilization and expenditures for regional alliance eligible individuals, and (B) protecting health plans that enroll a disproportionate share of regional alliance eligible individuals with respect to whom expected utilization of health care services (included in the comprehensive benefit package) and expected health care expenditures for such services are greater than the average level of such utilization and expenditures for regional alliance eligible individuals. (2) Factors to be considered.--In developing such methodology, the Board shall take into account the following factors: (A) Demographic characteristics. (B) Health status. (C) Geographic area of residence. (D) Socio-economic status. (E) Subject to paragraph (5), (i) the proportion of enrollees who are SSI recipients and (ii) the proportion of enrollees who are AFDC recipients. (F) Any other factors determined by the Board to be material to the purposes described in paragraph (1). (3) Zero sum.--The methodology shall assure that the total payments to health plans by the regional alliance after application of the methodology are the same as the amount of payments that would have been made without application of the methodology. (4) Prospective adjustment of payments.--The methodology, to the extent possible and except in the case of a mandatory reinsurance system described in subsection (c), shall be applied in a manner that provides for the prospective adjustment of payments to health plans. (5) Treatment of ssi/afdc adjustment.--The Board is not required to apply the factor described in clause (i) or (ii) of paragraph (2)(E) if the Board determines that the application of the other risk adjustment factors described in paragraph (2) is sufficient to adjust premiums to take into account the enrollment in plans of AFDC recipients and SSI recipients. (6) Special consideration for mental illness.--In developing the methodology under this section, the Board shall give consideration to the unique problems of adjusting payments to health plans with respect to individuals with mental illness. (7) Special consideration for veterans, military, and indian health plans.--In developing the methodology under this section, the Board shall give consideration to the special enrollment and funding provisions relating to plans described in section 1004(b). (8) Adjustment to account for use of estimates.--Subject to section 1361(b)(3) (relating to establishment of regional alliance reserve funds), if the total payments made by a regional alliance to all regional alliance health plans in a year under section 1351(b) exceeds, or is less than, the total of such payments estimated by the alliance in the application of the methodology under this subsection, because of a difference between-- (A) the alliance's estimate of the distribution of enrolled families in different risk categories (assumed in the application of risk factors under this subsection in making payments to regional alliance health plans), and (B) the actual distribution of such enrolled families in such categories, the methodology under this subsection shall provide for an adjustment in the application of such methodology in the second succeeding year in a manner that would reduce, or increase, respectively, by the amount of such excess (or deficit) the total of such payments made by the alliance to all such plans. (c) Mandatory Reinsurance.-- (1) In general.--The methodology developed under this section may include a system of mandatory reinsurance, but may not include a system of voluntary reinsurance. (2) Requirement in certain cases.--If the Board determines that an adequate system of prospective adjustment of payments to health plans to account for the health status of individuals enrolled by regional alliance health plans cannot be developed (and ready for implementation) by the date specified in subsection (a)(1), the Board shall include a mandatory reinsurance system as a component of the methodology. The Board may thereafter reduce or eliminate such a system at such time as the Board determines that an adequate prospective payment adjustment for health status has been developed and is ready for implementation. (3) Reinsurance system.--The Board, in developing the methodology for a mandatory reinsurance system under this subsection, shall-- (A) provide for health plans to make payments to state-established reinsurance programs for the purpose of reinsuring part or all of the health care expenses for items and services included in the comprehensive benefit package for specified classes of high-cost enrollees or specified high-cost treatments or diagnoses; and (B) specify the manner of creation, structure, and operation of the system in each State, including-- (i) the manner (which may be prospective or retrospective) in which health plans make payments to the system, and (ii) the type and level of reinsurance coverage provided by the system. (d) Confidentiality of Information.--The methodology shall be developed in a manner consistent with privacy standards promulgated under section 5120(a). In developing such standards, the Board shall take into account any potential need of alliances for certain individually identifiable health information in order to carry out risk-adjustment and reinsurance activities under this Act, but only to the minimum extent necessary to carry out such activities and with protections provided to minimize the identification of the individuals to whom the information relates. SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED GROUPS. The Board shall establish standards under which States may provide (under section 1203(e)(3)) for an adjustment in the risk-adjustment methodology developed under section 1541 in order to provide a financial incentive for regional alliance health plans to enroll individuals who are members of disadvantaged groups. SEC. 1543. ADVISORY COMMITTEE. (a) In General.--The Board shall establish an advisory committee to provide technical advice and recommendations regarding the development and modification of the risk adjustment and reinsurance methodology developed under this subpart. (b) Composition.--Such advisory committee shall consist of 15 individuals and shall include individuals who are representative of health plans, regional alliances, consumers, experts, employers, and health providers. SEC. 1544. RESEARCH AND DEMONSTRATIONS. The Secretary shall conduct and support research and demonstration projects to develop and improve, on a continuing basis, the risk adjustment and reinsurance methodology under this subpart. SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLIANCES. The Board shall provide technical assistance to States and regional alliances in implementing the methodology developed under this subpart. Subpart F--Responsibilities for Financial Requirements SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE HEALTH PLAN. (a) In General.--The Board shall establish, in consultation with the States, minimum capital requirements for regional alliance health plans, for purposes of section 1204(a). (b) $500,000 Minimum.--Subject to subsection (c), under such requirements there shall be not less than $500,000 of capital maintained for each plan offered in each alliance area, regardless of whether or not the same sponsor offered more than one of such plans. (c) Additional Capital Requirements.--The Board may require additional capital for factors likely to affect the financial stability of health plans, including the following: (1) Projected plan enrollment and number of providers participating in the plan. (2) Market share and strength of competition. (3) Extent and nature of risk-sharing with participating providers and the financial stability of risk-sharing providers. (4) Prior performance of the plan, risk history, and liquidity of assets. (d) Development of Standards by NAIC.--The Board may request the National Association of Insurance Commissioners to develop model standards for the additional capital requirements described in subsection (c) and to present such standards to the Board not later than July 1, 1995. The Board may accept such standards as the standards to be applied under subsection (c) or modify the standards in any manner it finds appropriate. SEC. 1552. STANDARD FOR GUARANTY FUNDS. (a) In General.--In consultation with the States, the Board shall establish standards for guaranty funds established by States under section 1204(c). (b) Guaranty Fund Standards.--The standards established under subsection (a) for a guaranty fund shall include the following: (1) Each fund must have a method to generate sufficient resources to pay health providers and others in the case of a failure of a health plan (as described in section 1204(d)(4)) in order to meet obligations with respect to-- (A) services rendered by the health plan for the comprehensive benefit package, including any supplemental coverage for cost sharing provided by the health plan, and (B) services rendered prior to health plan insolvency and services to patients after the insolvency but prior to their enrollment in other health plans. (2) The fund is liable for all claims against the plan by health care providers with respect to their provision of items and services covered under the comprehensive benefit package to enrollees of the failed plan. Such claims, in full, shall take priority over all other claims. The fund also is liable, to the extent and in the manner provided in accordance with rules established by the Board, for other claims, including other claims of such providers and the claims of contractors, employees, governments, or any other claimants. (3) The fund stands as a creditor for any payments owed the plan to the extent of the payments made by the fund for obligations of the plan. (4) The fund has authority to borrow against future assessments (payable under section 1204(c)(2)) in order to meet the obligations of failed plans participating in the fund. PART 2--RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES Subpart A--General Responsibilities SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN SERVICES. (a) In General.--Except as otherwise specifically provided under this Act (or with respect to administration of provisions in the Internal Revenue Code of 1986 or in the Employee Retirement Income Security Act of 1974), the Secretary of Health and Human Services shall administer and implement all of the provisions of this Act, except those duties delegated to the National Health Board, any other executive agency, or to any State. (b) Financial Management Standards.--The Secretary, in consultation with the Secretaries of Labor and the Treasury, shall establish, for purposes of section 1361, standards relating to the management of finances, maintenance of records, accounting practices, auditing procedures, and financial reporting for health alliances. Such standards shall take into account current Federal laws and regulations relating to fiduciary responsibilities and financial management of funds. (c) Auditing Regional Alliance Performance.--The Secretary shall perform periodic financial and other audits of regional alliances to assure that such alliances are carrying out their responsibilities under this Act consistent with this Act. Such audits shall include audits of alliance performance in the areas of-- (1) assuring enrollment of all regional alliance eligible individuals in health plans, (2) management of premium and cost sharing discounts and reductions provided; and (3) financial management of the alliance, including allocation of collection shortfalls. SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH DRUGS. (a) In General.--The Secretary shall appoint an Advisory Council on Breakthrough Drugs (in this section referred to as the ``Council'') that will examine the reasonableness of launch prices of new drugs that represent a breakthrough or significant advance over existing therapies. (b) Duties.--(1) At the request of the Secretary, or a member of the Council, the Council shall make a determination regarding the reasonableness of launch prices of a breakthrough drug. Such a determination shall be based on-- (A) prices of other drugs in the same therapeutic class; (B) cost information supplied by the manufacturer; (C) prices of the drug in countries specified in section 802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act; (D) projected prescription volume, economies of scale, product stability, special manufacturing requirements and research costs; (E) cost effectiveness relative to the cost of alternative course of treatment options, including non-pharmacological medical interventions; and (F) improvements in quality of life offered by the new product, including ability to return to work, ability to perform activities of daily living, freedom from attached medical devices, and other appropriate measurements of quality of life improvements. (2) The Secretary shall review the determinations of the Council and publish the results of such review along with the Council's determination (including minority opinions) as a notice in the Federal Register. (c) Membership.--The Council shall consist of a chair and 12 other persons, appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service. The Council shall include a representative from the pharmaceutical industry, consumer organizations, physician organizations, the hospital industry, and the managed care industry. Other individuals appointed by the Secretary shall be recognized experts in the fields of health care economics, pharmacology, pharmacy, and prescription drug reimbursement. Only one member of the Council may have direct or indirect financial ties to the pharmaceutical industry. (d) Term of Appointments.--Appointments shall be for a term of 3 years, except that the Secretary may provide initially for such shorter terms as will ensure that the terms of not more than 5 members expire in any one year. (e) Compensation.--Members of the Council shall be entitled to receive reimbursement of expenses and per diem in lieu of subsistence in the same manner as other members of advisory councils appointed by the Secretary are provided such reimbursements under the Social Security Act. (f) No Termination.--Notwithstanding the provisions of the Federal Advisory Committee Act, the Council shall continue in existence until otherwise specified in law. Subpart B--Certification of Essential Community Providers SEC. 1581. CERTIFICATION. (a) In General.--For purposes of this Act, the Secretary shall certify as an ``essential community provider'' any health care provider or organization that-- (1) is within any of the categories of providers and organizations specified in section 1582(a), or (2) meets the standards for certification under section 1583(a). (b) Timely Establishment of Process.--The Secretary shall take such actions as may be necessary to permit health care providers and organizations to be certified as essential community providers in a State before the beginning of the first year for the State. SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED. (a) In General.--The categories of providers and organizations specified in this subsection are as follows: (1) Migrant health centers.--A recipient or subrecipient of a grant under section 329 of the Public Health Service Act. (2) Community health centers.--A recipient or subrecipient of a grant under section 330 of the Public Health Service Act. (3) Homeless program providers.--A recipient or subrecipient of a grant under section 340 of the Public Health Service Act. (4) Public housing providers.--A recipient or subrecipient of a grant under section 340A of the Public Health Service Act. (5) Family planning clinics.--A recipient or subrecipient of a grant under title X of the Public Health Service Act. (6) Indian health programs.--A service unit of the Indian Health Service, a tribal organization, or an urban Indian program, as defined in the Indian Health Care Improvement Act. (7) AIDS providers under ryan white act.--A public or private nonprofit health care provider that is a recipient or subrecipient of a grant under title XXVI of the Public Health Service Act. (8) Maternal and child health providers.--A public or private nonprofit entity that provides prenatal care, pediatric care, or ambulatory services to children, including children with special health care needs, and that receives funding for such care or services under title V of the Social Security Act. (9) Federally qualified health center; rural health clinic.--A Federally-qualified health center or a rural health clinic (as such terms are defined in section 1861(aa) of the Social Security Act). (10) Provider of school health services.--A provider of school health services that receives funding for such services under subtitle G of title III. (11) Community practice network.--A qualified community practice network receiving development funds under subtitle E of title III. (b) Subrecipient Defined.--In this subpart, the term ``subrecipient'' means, with respect to a recipient of a grant under a particular authority, an entity that-- (1) is receiving funding from such a grant under a contract with the principal recipient of such a grant, and (2) meets the requirements established to be a recipient of such a grant. (c) Health Professional Defined.--In this subpart, the term ``health professional'' means a physician, nurse, nurse practitioner, certified nurse midwife, physician assistant, psychologist, dentist, pharmacist, and other health care professional recognized by the Secretary. SEC. 1583. STANDARDS FOR ADDITIONAL PROVIDERS. (a) Standards.--The Secretary shall publish standards for the certification of additional categories of health care providers and organizations as essential community providers, including the categories described in subsection (b). Such a health care provider or organization shall not be certified unless the Secretary determines, under such standards, that health plans operating in the area served by the applicant would not otherwise be able to assure adequate access to items and services included in the comprehensive benefit package if such a provider was not so certified. (b) Categories To Be Included.--The categories described in this subsection are as follows: (1) Health professionals.--Health professionals-- (A) located in an area designated as a health professional shortage area (under section 332 of the Public Health Service Act), or (B) providing a substantial amount of health services (as determined in accordance with standards established by the Secretary) to a medically underserved population (as designated under section 330 of such Act). (2) Institutional providers.--Public and private nonprofit hospitals and other institutional health care providers located in such an area or providing health services to such a population. (3) Other providers.--Other public and private nonprofit agencies and organizations that-- (A) are located in such an area or providing health services to such a population, and (B) provide health care and services essential to residents of such an area or such populations. SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMINATION OF CERTIFICATIONS. (a) Certification Process.-- (1) Publication of procedures.--The Secretary shall publish, not later than 6 months after the date of the enactment of this Act, the procedures to be used by health care professionals, providers, agencies, and organizations seeking certification under this subpart, including the form and manner in which an application for such certification is to be made. (2) Timely determination.--The Secretary shall make a determination upon such an application not later than 60 days (or 15 days in the case of a certification for an entity described in section 1582) after the date the complete application has been submitted. The determination on an application for certification of an entity described in section 1582 shall only involve the verification that the entity is an entity described in such section. (b) Review of Certifications.--The Secretary shall periodically review whether professionals, providers, agencies, and organizations certified under this subpart continue to meet the requirements for such certification. (c) Termination or Denial of Certification.-- (1) Preliminary finding.--If the Secretary preliminarily finds that an entity seeking certification under this section does not meet the requirements for such certification or such an entity certified under this subpart fails to continue to meet the requirements for such certification, the Secretary shall notify the entity of such preliminary finding and permit the entity an opportunity, under subtitle C of title V, to rebut such findings. (2) Final determination.--If, after such opportunity, the Secretary continues to find that such an entity continues to fail to meet such requirements, the Secretary shall terminate the certification and shall notify the entity, regional alliances, and corporate alliances of such termination and the effective date of the termination. SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PARTICIPATING STATES. (a) In General.--Not less often than annually the Secretary shall notify each participating State and each health alliance of essential community providers that have been certified under this subpart. (b) Contents.--Such notice shall include sufficient information to permit each health alliance to notify health plans of the identify of each entity certified as an essential community provider, including-- (1) the location of the provider within each plan's service area, (2) the health services furnished by the provider, and (3) other information necessary for health plans to carry out part 3 of subtitle E. PART 3--SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR. SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR. (a) In General.--The Secretary of Labor is responsible-- (1) under subtitle G, for the enforcement of requirements applicable to employers under regional alliances (including requirements relating to payment of premiums) and the administration of corporate alliances; (2) under subtitle D, with respect to elections by eligible sponsors to become corporate alliances and the termination of such elections; (3) under section 1395, for the temporary assumption of the operation of self-insured corporate alliance health plans that are insolvent; (4) under section 1396, for the establishment and administration of Corporate Alliance Health Plan Insolvency Fund; (5) for carrying out any other responsibilities assigned to the Secretary under this Act; and (6) for administering title I of the Employee Retirement Income Security Act of 1974 as it relates to group health plans maintained by corporate alliances. (b) Agreements with States.--The Secretary of Labor may enter into agreements with States in order to enforce responsibilities of employers and corporate alliances, and requirements of corporate alliance health plans, under subtitle B of title I of the Employee Retirement Income Security Act of 1974. (c) Consultation with Board.--In carrying out activities under this Act with respect to corporate alliances, corporate alliance health plans, and employers, the Secretary of Labor shall consult with the National Health Board. (d) Employer-Related Requirements.-- (1) In general.--The Secretary of Labor, in consultation with the Secretary, shall be responsible for assuring that employers-- (A) make payments of any employer premiums (and withhold and make payment of the family share of premiums with respect to qualifying employees) as required under this Act, including auditing of regional alliance collection activities with respect to such payments, (B) submit timely reports as required under this Act, and (C) otherwise comply with requirements imposed on employers under this Act. (2) Audit and similar authorities.--The Secretary