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Health Security Act
Title I
TITLE I_HEALTH CARE SECURITY


table of contents of title


Subtitle A_Universal Coverage and Individual Responsibility
PART 1 UNIVERSAL COVERAGE
Sec._1001._Entitlement to health benefits.
Sec._1002._Individual responsibilities.
Sec._1003._Protection of consumer choice.
Sec._1004._Applicable health plan providing coverage.
Sec._1005._Treatment of other nonimmigrants.
Sec._1006._Effective date of entitlement.
PART 2TREATMENT OF FAMILIES AND SPECIAL RULES
Sec._1011._General rule of enrollment of family in same health
plan.
Sec._1012._Treatment of certain families.
Sec._1013._Multiple employment situations.
Sec._1014._Treatment of residents of States with Statewide
single-payer systems.
Subtitle B_Benefits
Part 1_Comprehensive Benefit Package
Sec._1101._Provision of comprehensive benefits by plans.
Part 2 escription of Items and Services Covered
Sec._1111._Hospital services.
Sec._1112._Services of health professionals.
Sec._1113._Emergency and ambulatory medical and surgical
services.
Sec._1114._Clinical preventive services.
Sec._1115._Mental health and substance abuse services.
Sec._1116._Family planning services and services for pregnant
women.
Sec._1117._Hospice care.
Sec._1118._Home health care.
Sec._1119._Extended care services.
Sec._1120._Ambulance services.
Sec._1121._Outpatient laboratory, radiology, and diagnostic
services.
Sec._1122._Outpatient prescription drugs and biologicals.
Sec._1123._Outpatient rehabilitation services.
Sec._1124. urable medical equipment and prosthetic and orthotic
devices.
Sec._1125._Vision care.
Sec._1126. ental care.
Sec._1127._Health education classes.
Sec._1128._Investigational treatments.
Part 3_Cost Sharing
Sec._1131._Cost sharing.
Sec._1132._Lower cost sharing.
Sec._1133._Higher cost sharing.
Sec._1134._Combination cost sharing.
Sec._1135._Table of copayments and coinsurance.
Sec._1136._Indexing dollar amounts relating to cost sharing.
Part 4_Exclusions
Sec._1141._Exclusions.
Part 5_Role of the National Health Board
Sec._1151. efinition of benefits.
Sec._1152._Acceleration of expanded benefits.
Sec._1153._Authority with respect to clinical preventive
services.
Sec._1154._Establishment of standards regarding medical
necessity.
Part 6_Additional Provisions Relating to Health Care Providers
Sec._1161._Override of restrictive State practice laws.
Sec._1162._Provision of items or services contrary to religious
belief or moral conviction.
Subtitle C_State Responsibilities
Sec._1200._Participating State.
Part 1_General State Responsibilities
Sec._1201._General State responsibilities.
Sec._1202._State responsibilities with respect to alliances.
Sec._1203._State responsibilities relating to health plans.
Sec._1204._Financial solvency; fiscal oversight; guaranty fund.
Sec._1205._Restrictions on funding of additional benefits.
Part 2_Requirements for State Single-payer Systems
Sec._1221._Single-payer system described.
Sec._1222._General requirements for single-payer systems.
Sec._1223._Special rules for States operating Statewide
single-payer system.
Sec._1224._Special rules for alliance-specific single-payer
systems.
Subtitle D_Health Alliances
Sec._1300._Health alliance defined.
Part 1_Establishment of Regional and Corporate Alliances
Subpart A_Regional Alliances
Sec._1301._Regional alliance defined.
Sec._1302._Board of directors.
Sec._1303._Provider advisory boards for regional alliances.
Subpart B_Corporate Alliances
Sec._1311._Corporate alliance defined; individuals eligible for
coverage through corporate alliances; additional definitions.
Sec._1312._Timing of elections.
Sec._1313._Termination of alliance election.
Part 2_General Responsibilities and Authorities of Regional
Alliances
Sec._1321._Contracts with health plans.
Sec._1322._Offering choice of health plans for enrollment;
establishment of fee-for-service schedule.
Sec._1323._Enrollment rules and procedures.
Sec._1324._Issuance of health security cards.
Sec._1325._Consumer information and marketing.
Sec._1326._Ombudsman.
Sec._1327. ata collection; quality.
Sec._1328._Additional duties.
Sec._1329._Additional authorities for regional alliances to
address needs in areas with inadequate health services;
prohibition of insurance role.
Sec._1330._Prohibition against self-dealing and conflicts of
interest.
Part 3_Authorities and Responsibilities Relating to Financing and
Income Determinations
SUBPART A_COLLECTION OF FUNDS
Sec._1341._Information and negotiation and acceptance of bids.
Sec._1342._Amount of premiums charged.
Sec._1343. etermination of family obligation for family share and
alliance credit amount.
Sec._1344._Notice of family payments due.
Sec._1345._Collection of premium payments.
Sec._1346._Coordination among regional alliances.
SUBPART B_PAYMENTS
Sec._1351._Payment to regional alliance health plans.
Sec._1352._Alliance administrative allowance percentage.
Sec._1353._Payments for graduate medical education and academic
health centers.
SUBPART C_FINANCIAL MANAGEMENT
Sec._1361._Management of finances and records.
SUBPART D_REDUCTIONS IN COST SHARING; INCOME DETERMINATIONS
Sec._1371._Reduction in cost sharing for low-income families.
Sec._1372._Application process for cost sharing reductions.
Sec._1373._Application for premium reductions and reduction in
liability to alliance.
Sec._1374._General provisions relating to application process.
Sec._1375._End-of-year reconciliation for premium discount and
repayment reduction with actual income.
Part 4_Responsibilities and Authorities of Corporate Alliances
Sec._1381._Contracts with health plans.
Sec._1382._Offering choice of health plans for enrollment.
Sec._1383._Enrollment; issuance of health security card.
Sec._1384._Community-rated premiums within premium areas.
Sec._1385._Assistance for low-wage families.
Sec._1386._Consumer information and marketing; consumer
assistance; data collection and quality; additional duties.
Sec._1387._Plan and information requirements.
Sec._1388._Management of funds; relations with employees.
Sec._1389._Cost control.
Sec._1390._Payments by corporate alliance employers to corporate
alliances.
Sec._1391._Coordination of payments.
Sec._1392._Applicability of ERISA enforcement mechanisms for
enforcement of certain requirements.
Sec._1393._Applicability of certain ERISA protections to covered
individuals.
Sec._1394. isclosure and reserve requirements.
Sec._1395._Trusteeship by the Secretary of insolvent corporate
alliance health plans.
Sec._1396._Guaranteed benefits under trusteeship of the
secretary.
Sec._1397._Imposition and collection of periodic assessments on
self-insured corporate alliance plans.
Subtitle E_Health Plans
Sec._1400._Health plan defined.
Part 1_Requirements Relating to Comprehensive Benefit Package
Sec._1401._Application of requirements.
Sec._1402._Requirements relating to enrollment and coverage.
Sec._1403._Community rating.
Sec._1404._Marketing of health plans; information.
Sec._1405._Grievance procedure.
Sec._1406._Health plan arrangements with providers.
Sec._1407._Preemption of certain State laws relating to health
plans.
Sec._1408._Financial solvency.
Sec._1409._Requirement for offering cost sharing policy.
Sec._1410._Quality assurance.
Sec._1411._Provider verification.
Sec._1412._Consumer disclosures of utilization management
protocols.
Sec._1413._Confidentiality, data management, and reporting.
Sec._1414._Participation in reinsurance system.
Part 2_Requirements Relating to Supplemental Insurance
Sec._1421._Imposition of requirements on supplemental insurance.
Sec._1422._Standards for supplemental health benefit policies.
Sec._1423._Standards for cost sharing policies.
Part 3_Requirements Relating to Essential Community Providers
Sec._1431._Health plan requirement.
Sec._1432._Sunset of requirement.
Part 4_Requirements Relating to Workers' Compensation and
Automobile Medical Liability Coverage
Sec._1441._Reference to requirements relating to workers
compensation services.
Sec._1442._Reference to requirements relating to automobile
medical liability services.
Subtitle F_Federal Responsibilities
Part 1_National Health Board
SUBPART A_ESTABLISHMENT OF NATIONAL HEALTH BOARD
Sec._1501._Creation of National Health Board; membership.
Sec._1502._Qualifications of board members.
Sec._1503._General duties and responsibilities.
Sec._1504._Annual report.
Sec._1505._Powers.
Sec._1506._Funding.
SUBPART B_RESPONSIBILITIES RELATING TO REVIEW AND APPROVAL OF
STATE SYSTEMS
Sec._1511._Federal review and action on State systems.
Sec._1512._Failure of participating States to meet conditions for
compliance.
Sec._1513._Reduction in payments for health programs by secretary
of health and human services.
Sec._1514._Review of Federal determinations.
Sec._1515._Federal support for State implementation.
SUBPART C_RESPONSIBILITIES IN ABSENCE OF STATE SYSTEMS
Sec._1521._Application of subpart.
Sec._1522._Federal assumption of responsibilities in
non-participating States.
Sec._1523._Imposition of surcharge on premiums under
federally-operated system.
Sec._1524._Return to State operation.
SUBPART D_ESTABLISHMENT OF CLASS FACTORS FOR CHARGING PREMIUMS
Sec._1531._Premium class factors.
SUBPART E_RISK ADJUSTMENT AND REINSURANCE METHODOLOGY FOR PAYMENT
OF PLANS
Sec._1541. evelopment of a risk adjustment and reinsurance
methodology.
Sec._1542._Incentives to enroll disadvantaged groups.
Sec._1543._Advisory committee.
Sec._1544._Research and demonstrations.
Sec._1545._Technical assistance to States and alliances.
SUBPART F_RESPONSIBILITIES FOR FINANCIAL REQUIREMENTS
Sec._1551._Capital standards for regional alliance health plan.
Sec._1552._Standard for guaranty funds.
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.
Sec._1572._Establishment of breakthrough drug committee.
SUBPART B_CERTIFICATION OF ESSENTIAL COMMUNITY PROVIDERS
Sec._1581._Certification.
Sec._1582._Categories of providers automatically certified.
Sec._1583._Standards for additional providers.
Sec._1584._Certification process; review; termination of
certifications.
Sec._1585._Notification of health alliances and participating
States.
Part 3_Specific Responsibilities of Secretary of Labor.
Sec._1591._Responsibilities of Secretary of Labor.
Subtitle G_Employer Responsiblities
Sec._1601._Payment requirement.
Sec._1602._Requirement for information reporting.
Sec._1603._Requirements relating to new employees.
Sec._1604._Auditing of records.
Sec._1605._Prohibition of certain employer discrimination.
Sec._1606._Obligation relating to retiree health benefits.
Sec._1607._Prohibition on self-funding of cost sharing benefits
by regional alliance employers.
[Subtitle H_Reserved]
[Subtitle I_Reserved]
Subtitle J_General Definitions; Miscellaneous Provisions
Part 1_General Definitions
Sec._1901. efinitions relating to employment and income.
Sec._1902._Other general definitions.
Part 2_Miscellaneous Provisions
Sec._1911._Use of interim, final regulations.



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), 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 an
employee benefit 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
arrangement 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 paragraph (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 under this Act:
__(A) Coverage only of an individual (referred to in this Act as
the ``individual'' class of enrollment).
__(B) Coverage of a married couple without children (referred to
in this Act as the ``couple-only'' class of enrollment).
__(C) Coverage of an unmarried individual and one or more
children (referred to in this Act as the ``single parent'' class
of enrollment).
__(D) Coverage of a married couple and one or more children
(referred to in this Act as the ``dual parent'' class of
enrollment).
__(2) References to family and couple classes of enrollment._In
this Act:
__(A) Family._The term ``family'', with respect to a class of
enrollment, refers to enrollment in a class of enrollment
described in subparagraph (B), (C), or (D) of paragraph (1).
__(B) Couple._The term ``couple'', with respect to a 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 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.
__(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,
__(2) the treatment of individuals who are under 19 years of age
and who are not a dependent of an eligible individual, and
__(3) changes in family composition occurring during a year,
as the Board finds appropriate.
SEC. 1012. TREATMENT OF CERTAIN FAMILIES.
__(a) Treatment of Medicare-Eligible Individuals Who are
Qualified Employees or Spouses of Qualified 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), the individual
shall not be treated as a medicare-eligible individual under this
Act during the following month and the remainder of the year.
__(2) Individual described._An individual described in this
paragraph with respect to a month is a medicare-eligible
individual (determined without regard to paragraph (1)) who is a
qualifying employee or the spouse or family member of a
qualifying employee in the month.
__(3) Exception._Paragraph (1) shall not apply, in the case of an
individual, if the individual described in paragraph (2)
terminates qualifying employment in the month preceding the first
month in which paragraph (1) applies. The previous sentence shall
apply until with respect to qualifying employment occurring
before such first 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 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 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.
__(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(d)(1) of title 10,
United States Code, 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 individual 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), the health plan described in paragraph (2)(A)
shall make payment to the health plan referred to in paragraph
(1) in accordance with rules specified by the Board.
__(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 6121(c)(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 an qualifying employee of a
corporate alliance employer, or
__(B) who is a qualifying employee of a corporate alliance
employer and whose spouse is an 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 health 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 ESCRIPTION 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 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 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
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 19._For an individual at least 6 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; 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 5 clinician visits.
__(e) 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.
__(f) 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.
__(g) 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.
__(h) 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.
__(i) 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).
__(j) 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 HEALTH AND SUBSTANCE ABUSE SERVICES.
__(a) Coverage._The mental health 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 health and substance abuse
treatment.
__(2) Intensive nonresidential mental health and substance abuse
treatment.
__(3) Outpatient mental health and substance abuse treatment,
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 health and substance abuse
treatment, intensive nonresidential mental health and substance
abuse treatment, or outpatient mental health 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 or 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 or 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) the health plan in which the individual is enrolled has
elected to offer case management and determines that the
individual should receive such services; and
__(B) the individual is eligible to receive coverage for, and is
receiving, outpatient mental health and substance abuse
treatment.
__(3) Screening and assessment and crisis services._All eligible
individuals enrolled under a health plan are eligible to receive
coverage for outpatient mental health 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 health and substance abuse
treatment consisting of collateral services if the individual is
a family member (as defined in section 1011(b)) of an individual
who is receiving inpatient and residential mental health and
substance abuse treatment, intensive nonresidential mental health
and substance abuse treatment, or outpatient mental health and
substance abuse treatment.
__(c) Inpatient and Residential Treatment._
__(1) Definition._For purposes of this subtitle, the term
``inpatient and residential mental health 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 or substance
abuse disorder to_
__(A) an inpatient of a hospital, psychiatric hospital,
residential treatment center, residential detoxification center,
crisis residential program, or mental health 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 health and substance abuse
treatment when provided to such an inpatient or resident.
__(2) Limitations._Coverage for inpatient and residential mental
health and substance abuse treatment is subject to the following
limitations:
__(A) 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.
__(B) Licensed facility._Such treatment is only covered when
provided by a facility described in paragraph (1) that is legally
authorized to provide the treatment in the State in which the
facility is located.
__(C) Day limits._Subject to subparagraph (D), such treatment is
covered for each period beginning on the date an episode of
inpatient or residential treatment begins and ending on the date
the episode ends, except that, prior to January 1, 2001, such
treatment is not covered after such an episode exceeds 30 days
unless the individual receiving treatment poses a threat to their
own life or the life of another individual. Whether such a threat
exists shall be determined by a health professional designated by
the health plan in which the individual receiving treatment is
enrolled. For purposes of this subtitle, an episode of inpatient
and residential mental health 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.
__(D) Annual limit._Prior to January 1, 2001, such treatment in
all settings is subject to an aggregate annual limit of 60 days.
__(E) Inpatient hospital treatment for substance abuse._Substance
abuse treatment, when provided to an inpatient of a hospital or
psychiatric hospital, is covered under this section only for
medical detoxification associated with withdrawal from alcohol or
drugs.
__(d) Intensive Nonresidential Treatment._
__(1) Definition._For purposes of this subtitle, the term
``intensive nonresidential mental health and substance abuse
treatment'' means diagnostic or therapeutic items or services
provided with respect to a diagnosable mental or 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 health services or behavioral
aide mental health services.
The National Health Board shall specify those health professional
services described in section 1112 that shall be treated as
intensive nonresidential mental health and substance abuse
treatment when provided to such an individual.
__(2) Limitations._Coverage for intensive nonresidential mental
health and substance abuse treatment is subject to the following
limitations:
__(A) Discretion of plan._A health plan may cover intensive
nonresidential mental health and substance abuse treatment at its
discretion.
__(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 health or substance abuse disorder; or
__(iv) to assist the 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, such treatment in all
settings is subject to an aggregate annual limit of 120 days.
__(ii) Relationship to other annual limits._For each 2 days of
intensive nonresidential mental health and substance abuse
treatment provided to an individual, the number of treatment days
available to the individual before the annual aggregate limit on
inpatient and residential mental health and substance abuse
treatment described in subsection (c)(2)(D) is exceeded shall be
reduced by 1 day. The preceding sentence shall not apply after an
individual has received 60 days of intensive nonresidential
mental health and substance abuse treatment in a year.
__(iii) Additional days._A maximum of 60 additional days of
intensive nonresidential mental health and substance abuse
treatment may be provided to an individual if a health
professional designated by the health plan in which the
individual receiving treatment is enrolled determines that such
additional treatment is medically necessary or appropriate.
__(D) Out-of-pocket maximum._Prior to January 1, 2001, expenses
for intensive nonresidential mental health 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, that substitute for inpatient and residential mental
health and substance abuse treatment (up to 60 days) may be
applied toward the annual out-of-pocket limit on cost sharing
under any cost sharing schedule described in part 3 of this
subtitle.
__(e) Outpatient Treatment._
__(1) Definition._For purposes of this subtitle, the term
``outpatient mental health and substance abuse treatment'' means
the following services provided with respect to a diagnosable
mental or 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 health 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) Substance abuse counseling._Substance abuse counseling and
relapse prevention is covered only when provided by a substance
abuse treatment provider who_
__(i) is legally authorized to provide such services in the State
in which the services are provided; and
__(ii) provides no items or services other than substance abuse
counseling and relapse prevention, medical management, or
laboratory and diagnostic tests for individuals with substance
abuse disorders.
__(C) Annual limits._
__(i) Pychotherapy and collateral services._Prior to January 1,
2001, psychotherapy and collateral services are subject to annual
limits of 30 visits for each type of service. 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 annual aggregate limit on inpatient and residential
mental health and substance abuse treatment described in
subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits.
__(ii) Substance abuse._At the discretion of the health plan in
which an individual receiving outpatient substance abuse
treatment is enrolled, the annual aggregate limit on inpatient
and residential mental health and substance abuse treatment
described in subsection (c)(2)(D) may be reduced by 1 day for
each 4 outpatient visits. Within 12 months after inpatient and
residential treatment or intensive nonresidential treatment, 30
visits in group therapy shall be covered for substance abuse
counseling and relapse prevention. For individuals who were not
initially treated in an inpatient, residential, or intensive
nonresidential setting, additional visits shall be covered for
which the annual aggregate limit on inpatient and residential
mental health and substance abuse treatment described in
subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits.
__(D) Out-of-pocket maximum._Prior to January 1, 2001, expenses
for outpatient mental health 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.
__(E) Detoxification._Outpatient detoxification shall be provided
only in the context of a treatment program. If the first
detoxification treatment is unsuccessful, subsequent treatments
are covered if a health professional designated by the health
plan in which the individual receiving treatment is enrolled
determines that there is a substantial chance of success.
__(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 or substance abuse disorder._The term
``diagnosable mental or substance abuse disorder'' means a
disorder that is listed in any authoritative text specifying
diagnostic criteria for mental 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 added by section 2006).
__(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 National Health
Board, unless the Board 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 Board; 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 National Health Board 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 and maintenance of such equipment;
__(2) prosthetic devices (other than dental) 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 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); or
__(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 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
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)(D) and (e)(2)(D) 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)(D) and (e)(2)(D) 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 the coinsurance is greater than 20 percent of the
applicable payment rate under the higher cost sharing schedule
described in section 1133.
SEC. 1133. HIGHER COST SHARING.
__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 health and substance
abuse treatment (described in section 1115) 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 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;
__(4) 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;
__(5) may not require any deductible for clinical preventive
services (described in section 1114);
__(6) may not require any deductible for clinician visits and
associated services related to prenatal care or 1 post-partum
visit under section 1116;
__(7) may not require any deductible for the items and services
for prevention and diagnosis of dental disease described in
section 1126(a)(2);
__(8) 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;
__(9) shall prohibit payment of any copayment; and
__(10) 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.
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 No copayment 20 percent of applicable
payment rate

Outpatient hospital services $10 per visit 20 percent of
applicable payment rate

Hospital emergency room services

$25 per visit (unless patient has an emergency medical condition
as defined in section 1867(e)(1) of the Social Security Act) 20
percent of applicable payment rate

Services of health professionals  $10 per visit 20 percent of
applicable payment rate

Emergency services other than hospital emergency room services

$25 per visit (unless patient has an emergency medical condition
as defined in section 1867(e)(1) of the Social Security Act) 20
percent of applicable payment rate

Ambulatory medical and surgical services  $10 per visit 20
percent of applicable payment rate

Clinical preventive services  No copayment No coinsurance

Inpatient and residential mental health and substance abuse
treatment No copayment 20 percent of applicable payment rate

Intensive nonresidential mental health and substance abuse
treatment No copayment 20 percent of applicable payment rate

Outpatient mental health and substance abuse treatment (except
psychotherapy, collateral services, and case management) $10 per
visit 20 percent of applicable payment rate

Outpatient psychotherapy and collateral services $25 per visit
until January 1, 2001, and $10 per visit thereafter 50 percent of
applicable payment rate until January 1, 2001, and 20 percent
thereafter

Case management No copayment No coinsurance

Family planning and services for pregnant women (except clinician
visits and associated services related to prenatal care and 1
post-partum visit) $10 per visit 20 percent of applicable payment
rate

Clinician visits and associated services related to prenatal care
and 1 post-partum visit No copayment No coinsurance

Hospice care No copayment 20 percent of applicable payment rate

Home health care No copayment 20 percent of applicable payment
rate

Extended care services No copayment 20 percent of applicable
payment rate

Ambulance services No copayment 20 percent of applicable payment
rate

Outpatient laboratory, radiology, and diagnostic services No
copayment 20 percent of applicable payment rate

Outpatient prescription drugs and biologicals $5 per prescription
20 percent of applicable payment rate

Outpatient rehabilitation services $10 per visit 20 percent of
applicable payment rate

Durable medical equipment and prosthetic and orthotic devices No
copayment 20 percent of applicable payment rate

Vision care $10 per visit (No additional charge for 1 set of
necessary eyeglasses for an individual less than 18 years of age)
20 percent of applicable payment rate

Dental care (except space maintenance procedures and interceptive
orthodontic treatment) $10 per visit 20 percent of applicable
payment rate

Space maintenance procedures and interceptive orthodontic
treatment $20 per visit 40 percent of applicable payment rate

Health education classes All cost sharing rules determined by
plans cost sharing rules determined by plans

Investigational treatment for life-threatening condition All cost
sharing rules determined by plans cost sharing rules determined
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.
__(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 $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 (other than services referred to in
paragraph (2)) 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(a)).
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 B of part 2 of subtitle F (relating to
Federal operation of a State health care system) 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 that contains_
__(A) such information as the Board may require to determine that
the system shall meet the applicable requirements of subtitle C
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. esignating an agency or official charged
with coordinating the State responsibilities under Federal law.
__(5) Workers compensation and automobile insurance._Conforming
State laws to meet the requirements 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
requirements 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, ethnicity, 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 meet 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 1542(c) 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 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(a)(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(a)(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
section 1505(i).
__(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 section 1505(j)(2), 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 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) meets the requirements for a Statewide single-payer system
under section 1223, in the case of a system offered throughout a
State; and
__(3) 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 plan.
__(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 in 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 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(a) 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, except that in establishing the regional
alliance through which the system is offered, the requirement of
section 1202(a)(1)(A) shall not apply to the extent necessary for
the alliance to meet the requirements of section 1242; 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).

__(4) Establishment of process for consumer complaints._The
requirements of section 1326(a) (relating to the establishment of
a process for the hearing and resolution of consumer complaints
against plans offered through the alliance).
__(5) 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
title. 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 3.
__(b) Eligible Sponsors._
__(1) In general._In this subpart, each of the following is an
eligible sponsor of a corporate alliance:
__(A) Large employer._An employer that_
__(i) is a large employer (as defined in subsection (e)(3)) 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)(4)) 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 affiliated with a national labor agreement
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) Large employer alliances._
__(A) Full-time employees._Each eligible individual who is a
full-time employee 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.




__(B) One-time option to exempt employees in small
establishments._At the time of making an election to become a
corporate alliance under this subpart, a large employer may
exercise an option to make ineligible for enrollment all
full-time employees of the employer employed in any establishment
of the employer which has (at the time of the election) fewer
than 100 full-time employees. The option under this subparagraph
may be exercised separately with respect to each establishment of
the employer.
__(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 rural electric cooperative or rural
telephone cooperative association (or of a member of such a
cooperative or association) which has an election in effect as a
corporate alliance 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(b), 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) Establishment._The term ``establishment'' shall be defined
by the Secretary of Labor.
__(2) 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.
__(3) Large employer._The term ``large employer'' means an
employer that has more than 5,000 full-time employees in the
United States, not including (subject to section 1312(a)(3)) any
employee located at an establishment for which the option
described in subsection (c)(1)(B) is in effect. Such term
includes the United States Postal Service.
__(4) 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.
__(5) 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.
__(6) 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
to provide notice of their intent 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 such report is submitted.
__(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 the second most recent March 1 prior to the general
effective date.
__(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) 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 premium exceeds 120
percent of the weighted-average premium within the alliance; 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 health alliance must provide to each
eligible enrollee 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 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
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._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 1021, 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 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, 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 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._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. Such information shall be made
available in a brochure, published not less often than annually.
__(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(d)(1), which contains
measures of quality presented in a standard format.
__(b) Marketing._Each regional alliance shall 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 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 health alliance may not discriminate against health
plans  on the basis of race, gender, ethnicity, 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 shall
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 paragraphs (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.

PART 3_AUTHORITIES AND RESPONSIBILITIES 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:
__(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:
__(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, 6125, 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 Amount._The amount of the alliance credit
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
1895 of the Social Security Act.
__(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 mail
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 mail 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 6103 (or section 6113) for the previous year, an
income verification statement (described in 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 Secretary specifies to establish or verify eligiblility 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 verification form 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 the information required to file
income reconcilation 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 5201, 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), and 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 and 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 section 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 1895 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 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)(2)) (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) the consolidated set aside percentage specified under
subsection (d), 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) Consolidated Set Aside Percentage._The consolidated set
aside percentage, for a regional alliance for a year, is the sum
of_
__(1) the administrative allowance percentage for the regional
alliance, computed by the alliance under section 1352(b); and
__(2) 1.5 percentage points.
Amounts attributable to paragraph (2) 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 section. 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 this section, 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
section. 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 this section, 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 6004
from health plans for a year, each regional alliance shall
establish the administrative allowance for the operation of
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 section 1343 (as estimated by the alliance and
determined without regard to section 1343(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 each
year of an amount equal to the reduction in payments by the
alliance to regional alliance health plans resulting from the
consolidated set aside percentage under section 1351(d) including
the 1.5 percentage points under paragraph (2) of such section.
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(b)(1)(D), 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 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) Additional reduction for afdc and ssi families._In the case
of an AFDC or SSI family, in applying paragraph (1) (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) there shall be
substituted, for $5, $10, $20, and $25 in the table in section
1135(a), 20 percent of such respective amounts. The dollar
amounts substituted by the previous sentence shall be subject to
adjustment in the same manner under section 1136 as the dollar
amounts otherwise specified in such section.
__(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 that 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 in the family adjusted
income (as defined by the Secretary).
__(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 REDUCTIONS 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 section   (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
reduction or reduction of liability under this subpart based upon
an increase in income from that stated in the previous
application.
__(e) 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 an application under this subpart.

__(f) 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.
__(g) Help in Completing Applications._Each regional alliance
shall assist individuals in the filing of applications and income
reconciliation statements under this subpart.
__(h) 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 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)(3)); 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 an
alliance eligible individual_
__(1)  the alliance shall promptly ascertain the individual's
eligibility as an alliance eligible individual; and
__(2) if the alliance determines that the individual is an
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 subpart). 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 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(a), 1328(a), and
1328(b) 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 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.
__(d) 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 covered 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 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 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.
__(b) 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 subsection, 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 paragraph (1)
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 subsection.
SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE
SECRETARY.
__(a) In General._Subject to subsection (b), the Secretary 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 1396.
__(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 section referred to as the ``Fund'') from which the
Secretary shall make 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 (4),
__(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 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 (4),
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. 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, the Secretary may request the investment of such amounts
as the Secretary determines advisable by the Secretary of the
Treasury in obligations issued or guaranteed by the United
States, but, until all borrowings under paragraph (4) 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 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 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 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) or (D) 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
health plan 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.

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.
__(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) with respect to which the applicable
requirements of title I of the Employee Retirement Income
Security Act of 1974 are met and which is a self-insured plan.
__(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(e), 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) Anti-Discrimination._
__(1) In general._No health plan may 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, gender, income, 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, or gender of the
provider; or
__(B) based on the income, health status, or anticipated need for
health services of a patient of the provider.
__(3) Normal Operation of Health Plan._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 necessary to the normal operation of
the health plan.
__(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 in an accessible form 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 1364 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 health 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.
__(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 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 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 such 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 title II, 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 part B
of 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.
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 schedule 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 8204.
__(2) The plan must 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 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 health
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 regional alliance 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 _G7XXXXXXX.'', 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
_G7XXXXXXX.'', the blank space being filled in with the
appropriate date.
__(3) Procedures for consideration of resolution of
approval._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 House of
Representatives (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 VIII (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 VIII (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 as provided above, 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 right 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, health care financing and
delivery, state health systems, consumer protection, business,
law, and delivery of care to vulnerable populations.
__(c) Exclusive Employment. uring 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,
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 part 3 of
this subtitle.
__(i) Encouraging the Reasonable Pricing of Breakthrough
Drugs._The Board shall establish the Breakthrough Drug Committee
in accordance with subpart F of this part.

__(j) Financial Requirements._The Board shall establish minimum
capital requirements and requirements for guaranty funds under
subpart G of this part.

__(k) 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(a) 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 1201(a) 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 part 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 established 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
1513, 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 and the Secretary of the Treasury of
the State's failure for purposes of applying subpart B 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 for medical education training programs
funds.
__(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.
__(b) Grants for Start-up Support._
__(1) In general._The Secretary shall make available to States,
upon their enacting of 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.


__(c) Formula._
__(1) In general._The Board shall develop a formula for the
distribution of



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(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 1562, 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 of the classes 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 class of family enrollment of coverage of a married couple
without children 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 (b), shall be applied
in 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 1346(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 1324(c) 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.




__(b) 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.


__(c) Confidentiality of Information._The methodology shall be
developed in a manner consistent with privacy standards
promulgated under section 5102(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 part.
__(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 1203(c).
__(b) $500,000 Minimum._Subject to paragraph (3), 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
302(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act; and
__(D) projected prescription volume, economies of scale, product
stability, special manufacturing requirements and research costs.
__(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
described 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 XXIII 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 community practice
networking 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 be able
to assure adequate access to items and services included in the
comprehensive benefit package.
__(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 E 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 D of title I, for the enforcement of
requirements applicable to employers under regional health
alliances (including requirements relating to payment of
premiums) and the administration of corporate health alliances;
__(2) under subtitle E of title I, 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 of Labor_
__(A) may carry out such audits (directly or through contract)
and such investigations of employers and health alliances,
__(B) may exercise such authorities under section 504 of Employee
Retirement Income Security Act of 1974 (in relation to activities
under this Act),
__(C) may, with the permission of the Board, provide (through
contract or otherwise) for such collection activities (in
relation to amounts owed to regional alliances and for the
benefit of such alliances), and
__(D) may impose such civil penalties under section 1347(c),
as may be necessary to carry out such Secretary's
responsibilities under this section.
__(e) Authority._The Secretary of Labor is authorized to issue
such regulations as may be necessary to carry out
responsibilities of the Secretary under this Act.

Title I, Subtitle G
Subtitle G_Employer Responsibilities
SEC. 1601. PAYMENT REQUIREMENT.
__(a) In General._Each employer shall provide for payments
required under section 6121 or 6131 in accordance with the
applicable provisions of this Act.
__(b) Employers in Single-Payer States._In the case of an
employer with respect to employees who reside in a single-payer
State, the responsibilities of such employer under such system
shall supersede the obligations of the employer under subsection
(a), except as the Board may provide.
SEC. 1602. REQUIREMENT FOR INFORMATION REPORTING.
__(a) Reporting of End-of-Year Information to Qualifying
Employees._
__(1) In general._Each employer shall provide to each individual
who was a qualifying employee of the employer during any month in
the previous year information described in paragraph (2) with
respect to the employee.
__(2) Information to be supplied._The information described in
this paragraph, with respect to a qualifying employee, is the
following (as specified by the Secretary):
__(A) Regional alliance information._With respect to each
regional alliance through which the individual obtained health
coverage:
__(i) The total number of months of full-time equivalent
employment (as determined for purposes of section 6121(d)) for
each class of enrollment.
__(ii) The amount of wages attributable to qualified employment
and the amount of covered wages (as defined in paragraph (4)).
__(iii) The total amount deducted from wages and paid for the
family share of the premium.
__(iv) Such other information as the Secretary of Labor may
specify.
__(B) Corporate alliance information._With respect to a
qualifying employee who obtains coverage through a corporate
alliance health plan:
__(i) The total number of months of full-time equivalent
employees (as determined under section 1901(b)(2)) for each class
of enrollment.
__(ii) Such other information as the Secretary of Labor may
specify.
__(3) Alliance specific information._In the case of a qualifying
employee with respect to whom an employer made employer premium
payments during the year to more than one regional alliance, the
information under this subsection shall be reported separately
with respect to each such alliance.
 __(4) Covered wages defined._In this section, the term ``covered
wages'' means wages paid an employee of an employer during a
month in which the employee was a qualifying employee of the
employer.


__(b) Reporting of Information for Use of Regional Alliances._
__(1) In general._Each employer (including corporate alliance
employers) shall provide under subsection (f) on behalf of each
regional alliance information described in paragraph (2) on an
annual basis, information described in paragraph (3) on a monthly
basis, and information described in paragraph (4) on a one-time
basis, with respect to the employment of qualified employees in
each year, month, or other time, respectively.
__(2) Information to be supplied on an annual basis._The
information described in this paragraph, with respect to an
employer, is the following (as specified by the Secretary of
Labor).
__(A) Regional alliance information._With respect to each
regional alliance to which employer premium payments were payable
in the year:
__(i) For each qualifying employee in the year_
__(I) The total number of months of full-time equivalent
employment (as determined for purposes of section 6121(d)) for
the employee for each class of enrollment.
__(II) The total amount deducted from wages and paid for the
family share of the premium of the qualifying employee.
__(ii) The total employer premium payment made under section 6121
for the year with respect to the employment of all qualifying
employees residing in the alliance area and, in the case of an
employer that has obtained (or seeks to obtain) a premium
discount under section 6123, the total employer premium payment
that would have been owed for such employment for the year but
for such section.
__(iii) The number of full-time equivalent employees (determined
under section 6121(d)) for each class of family enrollment in the
year (and for each month in the year in the case of an employer
that has obtained or is seeking a premium discount under section
6123).
__(iv) In the case of an employer to which section 6124 applies
in a year, such additional information as the Secretary of Labor
may require for purposes of that section.
__(v) The amounts paid (and payable) pursuant to section 6125.
__(vi) The amount of covered wages for each qualified employee.
__(3) Information on a monthly basis._
__(A) In general._The information described in this paragraph for
a month for an employer is such information as the Secretary of
Labor may specify regarding_
__(i) the identity of each eligible individual who changed
qualifying employee status with respect to the employer in the
month; and
__(ii) in the case of such an individual described in
subparagraph (B)(i)_
__(I) the regional alliance for the alliance area in which the
individual resides, and
__(II)  the individual's class of family enrollment.

__(B) Changes in qualifying employee status described._For
purposes of subparagraph (A), an individual is considered to have
changed qualifying employee status in a month if the individual
either (i) is a qualifying employee of the employer in the month
and was not a qualifying employee of the employer in the previous
month, or (ii) is not a qualifying employee of the employer in
the month but was a qualifying employee of the employer in the
previous month.
__(4) Initial information._Each employer, at such time before the
first year in which qualifying employees of the employer are
enrolled in regional alliance health plans as the Board may
specify, shall provide for the reporting of such information
relating to employment of eligible individuals as the Board may
specify.

__(c) Reconciliation of Employer Premium Payments._
__(1) Provision of information._Each employer (whether or not the
employer claimed (or claims) an employer premium discount under
section 6123 for a year) that is liable for employer premium
payments to a regional alliance for any month in a year shall
provide the alliance with such information as the alliance may
require (consistent with rules of the Secretary of Labor) to
determine the appropriate amount of employer premium payments
that should have been made for all months in the year (taking
into account any employer premium discount under section 6123 for
the employer).
__(2) Deadline._Such information shall be provided not later than
the beginning of February of the following year with the payment
to be made for that month.
__(3) Reconciliation._
__(A) Continuing employers._Based on such information, the
employer shall adjust the amount of employer premium payment made
in the month in which the information is provided to reflect the
amount by which the payments in the previous year were greater or
less than the amount of payments that should have been made.
__(B) Discontinuing employers._In the case of a person that
ceases to be an employer in a year, such adjustment shall be made
in the form of a payment to, or from, the alliance involved.
__(4) Special treatment of self-employed individuals._Except as
the Secretary of Labor may provide, individuals who are employers
only be virtue of the operation of section 6126 shall have
employer premium payments attributable to such section reconciled
(in the manner previously described in this subsection) under the
process for the collection of the family share of premiums under
section 1344 rather than under this subsection.
__(d) Special Rules for Self-Employed._
__(1) In general._In the case of an individual who is treated as
an employer under section 6126, the individual shall provide,
under subsection (f) on behalf of each regional alliance,
information described in paragraph (2) with respect to net
earnings from self-employment income of the individual in each
year.
__(2) Information to be supplied._The information described in
this paragraph, with respect to an individual, is such
information as may be necessary to compute the amount payable
under section 6131 by virtue of section 6126.
__(e) Form._Information shall be provided under this subsection
in such electronic or other form as the Secretary specifies. Such
specifications shall be done in a manner that, to the maximum
extent practicable, simplifies administration for small
employers.
__(f) Information Clearinghouse Functions._
__(1) Designation._The Board shall provide for the use of the
regional centers (which are part of the electronic data network
under section 5103) to perform information clearinghouse
functions under this section with respect to employers and
regional and corporate alliances.
__(2) Functions._The functions referred to in paragraph (1) shall
include_
__(A) receipt of information submitted by employers under
subsection (b) on an annual (or one-time) basis,
__(B) from the information received, transmittal of information
required to regional alliances,
__(C) such other functions as the Board specifies.
__(g) Deadline._Information required to be provided by an
employer for a year under this section_
__(1) to a qualifying employee shall be provided not later than
the date the employer is required under law to provide for
statements under section 6051 of the Internal Revenue Code of
1986 for that year, or
__(2) to a health alliance (through a regional center) shall be
provided not later than the date by which information is required
to be filed with the Secretary pursuant to agreements under
section 232 of the Social Security Act for that year.
__(h) Notice to Certain Individuals Who Are Not Employees._
__(1) In general._A person that carries on a trade or business
shall notify in writing each individual described in paragraph
(2) that the person is not obligated to make any employer health
care premium payment (under section 6121) in relation to the
services performed by the individual for the person.
__(2) Individual described._An individual described in this
paragraph, with respect to a person, is an individual who
normally performs services for the person in the person's trade
or business for more than 40 hours per month but who is not an
employee of the person (within the meaning of section 1901(a)).
__(3) Timing; effective date._Such notice shall be provided
within a reasonable time after the individual begins performing
services for the person, except that in no event is such a notice
required to be provided with respect to services performed before
January 1, 1998.
__(4) Exceptions._The Secretary shall issue regulations providing
exceptions to the notice requirement of paragraph (1) with
respect to individuals performing services on an irregular,
incidental, or casual basis.
__(5) Model notice._The Secretary shall publish a model notice
that is easily understood by the average reader and that persons
may use to satisfy the requirements of paragraph (1).
SEC. 1603. REQUIREMENTS RELATING TO NEW EMPLOYEES.
__(a) Completion of Enrollment Information Form._At the time an
individual is hired as a qualifying employee of a regional
alliance employer, the employer shall obtain from the individual
the following information (pursuant to rules established by the
Secretary of Labor):
__(1) The identity of the individual.
__(2) The individual's alliance area of residence and whether the
individual has moved from another alliance area.
__(3) The class of family enrollment applicable to the
individual.
__(4) The health plan (and health alliance) in which the
individual is enrolled at that time.
__(5) If the individual has moved from another alliance area,
whether the individual intends to enroll in a regional alliance
health plan.
__(b) Transmittal of Information to Alliance._
__(1) In general._Each employer shall transmit the information
obtained under subsection (a) to the regional alliance for the
alliance area in which the qualifying employee resides (or will
reside at the time of initial employment).
__(2) Deadline._Such information shall be transmitted within 30
days of the date of hiring of the employee.
__(3) Form._Information under this section may be forwarded in
electronic form to a regional alliance.

__(c) Provision of Enrollment Form and Information._In the case
of an individual described in subsection (a)(5), the employer
shall provide the individual, at the time of hiring, with_
__(1) such information regarding the choice of, and enrollment
in, regional alliance health plans, and
__(2) such enrollment form,
as the regional alliance provides to the employer.

SEC. 1604. AUDITING OF RECORDS.
__Each regional alliance employer shall maintain such records,
and provide the regional alliance for the area in which the
employer maintains the principal place of employment (as
specified by the Secretary of Labor) with access to such records,
as may be necessary to verify and audit the information reported
under this subtitle.
SEC. 1605. PROHIBITION OF CERTAIN EMPLOYER DISCRIMINATION.
__No employer may discriminate with respect to an employee on the
basis of the family status of the employee or on the basis of the
class of family enrollment selected with respect to the employee.
SEC. 1606. PROHIBITION ON SELF-FUNDING OF COST SHARING BENEFITS
BY REGIONAL ALLIANCE EMPLOYERS.
__(a) Prohibition._A regional alliance employer (and a corporate
alliance employer with respect to employees who are regional
alliance eligible individuals) may provide benefits to employees
that consist of the benefits included in a cost sharing policy
(as defined in section 1421(b)(2)) only through a contribution
toward the purchase of a cost sharing policy which is funded
primarily through insurance.
__(b) Individual and Employer Responsibilities._In the case of an
individual who resides in a single-payer State and an employer
with respect to employees who reside in such a State, the
responsibilities of such individual and employer under such
system shall supersede the obligations of the individual and
employer under part 2 of this subtitle.
SEC. 1607. EQUAL VOLUNTARY CONTRIBUTION REQUIREMENT.

__(a) In General._An employer may not discriminate in the wages
or compensation paid, or other terms or conditions of employment,
with respect to an employee based on the health plan (or premium
of such a plan) in which the employee is enrolled.
__(b) Rebate Required in Certain Cases._
__(1) In general._Subject to paragraph (3), if_
__(A) an employer makes available a voluntary premium payment on
behalf of an employee towards the enrollment of the employee in a
health plan,  and
__(B) the premium for the plan selected is less than the sum of
the amounts of the employer premium payment (required under part
3) and the voluntary premium payment,
the employer must rebate to the employee an amount equal to the
difference described in subparagraph (B).
__(2) Rebates._
__(A) In general._Any rebate provided under paragraph (1) shall
be treated, for purposes of the Internal Revenue Code of 1986, as
wages described in section 3121(a) of such Act.
__(B) Treatment of multiple full-time employment in a family._In
the case of_
__(i) an individual who is an employee of more than one employer,
or
__(ii) a couple for which both spouses are employees,
if more than one employer provides for voluntary premium
payments, the individual or couple may elect to have paragraph
(1) applied with respect to all employment.
__(c) Exception for Collective Bargaining Agreement._Subsections
(a) and (b) shall not apply with respect to voluntary employer
contributions made pursuant to a bona fide collective bargaining
agreement.
__(d) Construction._
__(1) Subsection (a) shall not be construed as preventing
variations in net wages of an employee to reflect the family
share of premiums for the health plan selected, so long as any
excess employer payments (as defined in paragraph (2)) are added
to the pay of the employee involved.
__(2) In paragraph (1), the term ``excess employer payments''
means, with respect to an employee, the amount by which the
voluntary employer contribution toward health care expenses
exceeds the family share of premium under section 6101(b) for
such enrollment.
__(e) Voluntary Employer Contribution Defined._In this section,
the term ``voluntary employer contribution'' means any payment
designed to be used exclusively (or primarily) towards the cost
of the family share of premiums for a health plan. Such term does
not include any employer premiums required to be paid under part
3 of subtitle B of title VI.
SEC. 1608. ENFORCEMENT.
__In the case of a person that violates a requirement of this
subtitle, the Secretary of Labor may impose a civil money
penalty, in an amount not to exceed $10,000, for each violation
with respect to each individual.

[Subtitle H_Reserved]
[Subtitle I_Reserved]

Subtitle J_General Definitions; Miscellaneous Provisions
PART 1_GENERAL DEFINITIONS
SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND INCOME.
__(a) In General._Except as otherwise specifically provided, in
this Act the following definitions and rules apply:
__(1) Employer, employee, employment, and wages defined._Except
as provided in this section_
__(A) the terms ``wages'' and ``employment'' have the meanings
given such terms under section 3121 of the Internal Revenue Code
of 1986,
__(B) the term ``employee'' hs the meaning given such term under
subtitle C of such Code, and
__(C) the term ``employer'' has the same meaning as the term
``employer'' as used in such section.
__(2) Exceptions._For purposes of paragraph (1)_
__(A) Employment._
__(i) Employment included._Paragraphs (1), (2), (5), (7) (other
than clauses (i) through (iv) of subparagraph (C) and clauses (i)
through (v) of subparagraph (F)), (8), (9), (10), (11), (13),
(15), (18), and (19) of section 3121(b) of the Internal Revenue
Code of 1986 shall not apply.
__(ii) Exclusion of inmates as employees._Employment shall not
include services performed in a penal institution by an inmate
thereof or in a hospital or other health care institution by a
patient thereof.
__(B) Wages._
__(i) In general._Paragraph (1) of section 3121(a) of the
Internal Revenue Code of 1986 shall not apply.
__(ii) Tips not included._The term ``wages'' does not include
cash tips.



__(C) Exclusion of employees outside the united states._The term
``employee'' does not include an individual who does not reside
in the United States.
__(D) Exclusion of foreign employment._The term ``employee'' does
not include an individual_
__(i) with respect to service, if the individual is not a citizen
or resident of the United States and the service is performed
outside the United States, or
__(ii) with respect to service, if the individual is a citizen or
resident of the United States and the service is performed
outside the United States for an employer other than an American
employer (as defined in section 3121(h) of the Internal Revenue
Code of 1986).


__(3) Aggregation rules for employers._For purposes of this Act_
__(A) all employers treated as a single employer under subsection
(a) or (b) of section 52 of the Internal Revenue Code of 1986
shall be treated as a single employer, and
__(B) under regulations of the Secretary of Labor, all employees
of organizations which are under common control with one or more
organizations which are exempt from income tax under subtitle A
of the Internal Revenue Code of 1986 shall be treated as employed
by a single employer.
The regulations prescribed under subparagraph (B) shall be based
on principles similar to the principles which apply to taxable
organizations under subparagraph (A).



__(4) Employer premium._The term ``employer premium'' refers to
the premium established and imposed under part 2 of subtitle B of
title VI.
__(b) Qualifying Employee; Full-Time Employment._
__(1) Qualifying employee._
__(A) In general._In this Act, the term ``qualifying employee''
means, with respect to an employer for a month, an employee
(other than a covered child, as defined in subparagraph (C)) who
is employed by the employer for at least 40 hours (as determined
under paragraph (3)) in the month.




__(B) No special treatment of medicare beneficiaries, ssi
recipients, afdc recipients, and others._Subparagraph (A) shall
apply regardless of whether or not the qualifying employee is a
medicare-eligible individual, an SSI recipient, an AFDC
recipient, an individual described in section 1004(b), an
eligible individual or is authorized to be so employed.
__(C) Covered child defined._In subparagraph (A), the term
``covered child'' means an eligible individual who is a child and
is enrolled under a health plan as a family member described in
section 1011(b)(2)(B).


__(2) Full-time equivalent employees; part-time employees._
__(A) In general._For purposes of this Act, a qualifying employee
who is employed by an employer_
__(i) for at least 120 hours in a month, is counted as 1
full-time equivalent employee for the month and shall be deemed
to be employed on a full-time basis, or
__(ii) for at least 40 hours, but less than 120 hours, in a
month, is counted as a fraction of a full-time equivalent
employee in the month equal to the full-time employment ratio (as
defined in subparagraph (B)) for the employee and shall be deemed
to be employed on a part-time basis.
__(B) Full-time employment ratio defined._For purposes of this
Act, the term ``full-time employment ratio'' means, with respect
to a qualifying employee of an employer in a month, the lesser of
1 or the ratio of_
__(i) the number of hours of employment such employee is employed
by such employer for the month (as determined under paragraph
(3)), to
__(ii) 120 hours.
__(C) Full-time employee._For purposes of this Act, the term
``full-time employee'' means, with respect to an employer, an
employee who is employed on a full-time basis (as specified in
subparagraph (A)) by the employer.


__(3) Hours of employment._
__(A) In general._For purposes of this Act, the Board shall
specify the method for computing hours of employment for
employees of an employer consistent with this paragraph. The
Board shall take into account rules used for purposes of applying
the Fair Labor Standards Act.
__(B) Hourly wage earners._In the case of an individual who
receives compensation (in the form of hourly wages or
compensation) for the performance of services, the individual is
considered to be ``employed'' by an employer for an hour if
compensation is payable with respect to that hour of employment,
without regard to whether or not the employee is actually
performing services during such hours.
__(4) Treatment of salaried employees and employee paid on
contingent or bonus arrangements._In the case of an employee who
receives compensation on a salaried basis or on the basis of a
commission (or other contigent or bonus basis), rather than an
hourly, the Board shall establish rules for the conversion of the
compensation to hours of employment, taking into account the
minimum monthly compensation levels for workers employed on a
full-time basis under the Fair Labor Standards Act and other
factors the Board considers relevant.
__(c) Definitions Relating to Self-Employment._In this Act:
__(1) Net earnings from self-employment._The term ``net earnings
from self-employment'' has the meaning given such term under
section 1402(a) of the Internal Revenue Code of 1986.
__(2) Self-employed individual._The term ``self-employed
individual'' means, for a year, an individual who has net
earnings from self-employment for the year.
SEC. 1902. OTHER GENERAL DEFINITIONS.
__Except as otherwise specifically provided, in this Act the
following definitions apply:
__(1) Alien permanently residing in the united states under color
of law._The term ``alien permanently residing in the United
States under color of law'' means an alien lawfully admitted for
permanent residence (within the meaning of section 101(a)(19) of
the Immigration and Nationality Act), and includes any of the
following:
__(A) An alien who is admitted as a refugee under section 207 of
the Immigration and Nationality Act.
__(B) An alien who is granted asylum under section 208 of such
Act.
__(C) An alien whose deportation is withheld under section 243(h)
of such Act.
__(D) An alien who is admitted for temporary residence under
section 210, 210A, or 245A of such Act.
__(E) An alien who has been paroled into the United States under
section 212(d)(5) of such Act for an indefinite period or who has
been granted extended voluntary departure as a member of a
nationality group.
__(F) An alien who is the spouse or unmarried child under 21
years of age of a citizen of the United States, or the parent of
such a citizen if the citizen is over 21 years of age, and with
respect to whom an application for adjustment to lawful permanent
residence is pending.
__(G) An alien within such other classification of permanent
resident aliens as the National Health Board may establish by
regulation.
__(2) AFDC family._The term ``AFDC family'' means a family
composed entirely of one or more AFDC recipients.
__(3) AFDC recipient._The term ``AFDC recipient'' means an
individual who is receiving aid or assistance under any plan of
the State approved under title I, X, XIV, or XVI, or part A or
part E of title IV, of the Social Security Act.
__(4) Alliance area._The term ``alliance area'' means the area
served by a regional alliance and specified under section
1202(b).
__(5) Alliance eligible individual._The term ``alliance eligible
individual'' means, with respect to a health alliance, an
eligible individual with respect to whom the applicable health
plan is a health plan offered by or through such alliance and
does not include a prisoner.
__(6) Applicable health plan._The term ``applicable health plan''
means, with respect to an eligible individual, the health plan
specified pursuant to section 1004 and part 2 of subtitle A.
__(7) Combination cost sharing plan._The term ``combination cost
sharing plan'' means a health plan that provides combination cost
sharing schedule (consistent with section 1134).
__(8) Comprehensive benefit package._The term ``comprehensive
benefit package'' means the package of health benefits provided
under subtitle B of title II.
__(9) Consumer price index; cpi._The terms consumer price index''
and ``CPI'' mean the Consumer Price Index for all urban consumers
(U.S. city average), as published by the Bureau of Labor
Statistics.
__(10) Corporate alliance eligible individual._The term
``corporate alliance eligible individual'' means, with respect to
a corporate alliance, an eligible individual with respect to whom
the corporate alliance is the applicable health plan.
__(11) Corporate alliance employer._The term ``corporate alliance
employer'' means, with respect to a corporate alliance, an
employer of an individual who is a participant in a corporate
alliance health plan of that alliance.
__(12) Corporate alliance health plan._The term ``corporate
alliance health plan'' means a health plan offered by a corporate
alliance under part 2 of subtitle E.

__(13) Disabled ssi recipient._The term ``disabled SSI
recipient'' means an individual who_
__(A) is an SSI recipient, and
__(B) has been determined to be disabled for purposes of the
supplemental security income program (under title XVI of the
Social Security Act).


__(14) Eligible enrollee._The term ``eligible enrollee'' means,
with respect to an health plan offered by a health alliance, an
alliance eligible individual, but does not include such an
individual if the individual is enrolled under such a plan as the
family member of another alliance eligible individual.
__(15) Essential community provider._The term ``essential
community provider'' means an entity certified as such a provider
under subpart B of part 2 of subtitle F.
__(16) Fee-for-service plan._The term ``fee-for-service plan''
means a health plan described in section 1322(b)(2)(A).
__(17) First year._The term ``first year'' means, with respect
to_
__(A) a State that is a participating State in a year before
1998, the year in which the State first is a participating State,
or
__(B) any other State, 1998.
__(18) Higher cost sharing plan._The term ``higher cost sharing
plan'' means a health plan that provides a high cost sharing
schedule (consistent with section 1133).

__(19) Long-term nonimmigrant._The term ``long-term
nonimmigrant'' means a nonimmigrant described in subparagraph
(E), (H), (I), (J), (K), (L), (M), (N), (O), (Q), or (R) of
section 101(a)(15) of the Immigration and Nationality Act or an
alien within such other classification of nonimmigrant as the
National Health Board may establish by regulation.
__(20) Lower cost sharing plan._The term ``lower cost sharing
plan'' means a health plan that provides a lower cost sharing
schedule (consistent with section 1132).


__(21) Medicare program._The term ``medicare program'' means the
health insurance program under title XVIII of the Social Security
Act.
__(22) Medicare-eligible individual._The term ``medicare-eligible
individual'' means, subject to section 1012(a), an individual who
is entitled to benefits under part A of the medicare program.
__(23) Move._The term ``move'' means, respect to an individual, a
change of residence of the individual from one alliance area to
another alliance area.
__(24) National health board; board._The terms ``National Health
Board'' and ``Board'' mean the National Health Board established
under part 1 of subtitle F of title I.
__(25) Poverty level._
__(A) In general._The term ``applicable poverty level'' means,
for a family for a year, the official poverty line (as defined by
the Office of Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of the size
involved (as determined under subparagraph (B)) for 1994 adjusted
by the percentage increase or decrease described in subparagraph
(C) for the year involved.
__(B) Family size._In applying the applicable poverty level to_
__(i) an individual enrollment, the family size is deemed to be
one person;
__(ii) a couple-only enrollment, the family size is deemed to be
two persons;
__(iii) a single parent enrollment, the family size is deemed to
be three persons; or
__(iv) a dual parent, the family size is deemed to be four
persons.
__(C) Percentage adjustment._The percentage increase or decrease
described in this subparagraph for a year is the percentage
increase or decrease by which the average CPI for the
12-month-period ending with August 31 of the preceding year
exceeds such average for the 12-month period ending with August
31, 1993.
__(D) Rounding._Any adjustment made under subparagraph (A) for a
year shall be rounded to the nearest multiple of $100.

__(26) Prisoner._The term ``prisoner'' means, as specified by the
Board, an eligible individual during a period of imprisonment
under Federal, State, or local authority after conviction as an
adult.



__(27) Regional alliance eligible individual._The term ``regional
alliance eligible individual'' means an eligible individual with
respect to whom a regional alliance health plan is an applicable
health plan.
__(28) Regional alliance employer._The term ``regional alliance
employer'' means an employer that is meeting the requirement of
section 1003 other than through an agreement with one or more
health alliances.
__(29) Regional alliance health plan._The term ``regional
alliance health plan'' means a health plan offered by a regional
alliance under part 1 of subtitle E of title I.
__(30) Reside._
__(A) An individual is considered to reside in the location in
which the individual maintains a primary residence (as
established under rules of the National Health Board).
__(B) Under such rules and subject to section 1323(c), in the
case of an individual who maintains more than one residence, the
primary residence of the individual shall be determined taking
into account the proportion of time spent at each residence.
__(C) In the case of a couple only one spouse of which is a
qualifying employee, except as the Board may provide, the
residence of the employee shall be the residence of the couple.
__(31) Secretary._The term ``Secretary'' means the Secretary of
Health and Human Services.
__(32) SSI family._The term ``SSI family'' means a family
composed entirely of one or more SSI recipients.
__(33) SSI recipient._The term ``SSI recipient'' means an
individual_
__(A) with respect to whom supplemental security income benefits
are being paid under title XVI of the Social Security Act,
__(B) who receiving a supplementary payment under section 1616 of
such Act or under section 212 of Public Law 93    66, or
__(C) who receiving monthly benefits under section 1619(a) of
such Act (whether or not pursuant to section 1616(c)(3) of such
Act).
__(34) State._The term ``State'' includes the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa,
and the Northern Mariana Islands.
__(35) State medicaid plan._The term ``State medicaid plan''
means a plan of medical assistance of a State approved under
title XIX of the Social Security Act.
__(36) Undocumented alien._The term ``undocumented alien'' means
an alien who is not a long-term nonimmigrant, a diplomat, or
described in section 1004(c).
__(37) United States._The term ``United States'' means the 50
States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and Northern Mariana Islands.
Subtitle B_Miscellaneous Provisions
SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.
__In order to permit the timely implementation of the provisions
of this Act, the National Health Board, the Secretary of Health
and Human Services, the Secretary of Labor are each authorized to
issue regulations under this Act on an interim basis that become
final on the date of publication, subject to change based on
subsequent public comment.
SEC. 1912. SOCIAL SECURITY ACT REFERENCES.
__Except as may otherwise be provided, any reference in this
title, or in title V or VI, to the Social Security Act shall be
to the Social Security Act as in effect on the date of the
enactment of this Act.