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Health Security Act Title VI
TITLE VI_PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS


table of contents of title


Sec._6000._General definitions.
Subtitle A_Premium Caps
Part 1_Regional Alliance Health Expenditures
SUBPART A_COMPUTATION OF TARGETS AND ACCEPTED BIDS
Sec._6001._Computation of regional alliance inflation factors.
Sec._6002._Board determination of national per capita baseline
premium target.
Sec._6003._Determination of alliance per capita premium targets.
Sec._6004._Alliance initial bidding and negotiation process.
Sec._6005._State financial incentives.
Sec._6006._Recommendations to eliminate regional variations in
alliance targets due to variation in practice patterns;
congressional consideration.
Sec._6007._Reference to limitation on administrative and judicial
review of certain determinations.
SUBPART B_PLAN AND PROVIDER PAYMENT REDUCTIONS TO MAINTAIN
EXPENDITURES WITHIN TARGETS
Sec._6011._Plan payment reduction.
Sec._6012._Provider payment reduction.
Part 2_Corporate Alliances Health Expenditures
Sec._6021._Calculation of premium equivalents.
Sec._6022._Termination of corporate alliance for excess increase
in expenditures.
Part 3_Treatment of Single-Payer States
Sec._6031._Special rules for single-payer States.
Part 4_Transition Provisions
Sec._6041._Monitoring prices and expenditures.
Subtitle B_Premium-Related Financing
Part 1_Family Premium Payments
SUBPART A_FAMILY SHARE
Sec._6101._Family share of premium.
Sec._6102._Amount of premium.
Sec._6103._Alliance credit.
Sec._6104._Premium discount based on income.
Sec._6105._Excess premium credit.
Sec._6106._Corporate alliance opt-in credit.
Sec._6107._Family collection shortfall add-on.
SUBPART B_REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES
Sec._6111._Repayment of alliance credit by certain families.
Sec._6112._No liability for families employed full-time;
reduction in liability for part-time employment.
Sec._6113._Limitation of liability based on income.
Sec._6114._Special treatment of certain retirees and qualified
spouses and children.
Sec._6115._Special treatment of certain medicare beneficiaries.
Part 2_Employer Premium Payments
SUBPART A_REGIONAL ALLIANCE EMPLOYERS
Sec._6121._Employer premium payment required.
Sec._6122._Computation of base employment monthly premium.
Sec._6123._Premium discount for certain employers.
Sec._6124._Payment adjustment for large employers electing
coverage in a regional alliance.
Sec._6125._Employer collection shortfall add-on.
Sec._6126._Application to self-employed individuals.
SUBPART B_CORPORATE ALLIANCE EMPLOYERS
Sec._6131._Employer premium payment required.
Subtitle C_Payments to Regional Alliance Health Plans
Sec._6201._Computation of blended plan per capita payment amount.
Sec._6202._Computation of plan bid, AFDC, and SSI proportions.

SEC. 6000. GENERAL DEFINITIONS.
__(a) Definitions Relating to Bids._In this title:
__(1) Accepted bid._The term ``accepted bid'' means the bid which
is agreed to between a regional alliance health plan and a
regional alliance for coverage of the comprehensive benefit
package in the alliance area under part 1.
__(2) Final accepted bid._The term ``final accepted bid'' means
the accepted bid, taking into account any voluntary reduction in
such bid made under section 6004(e).
__(3) Weighted average accepted bid._The term ``weighted average
accepted bid'' means, for a regional alliance for a year, the
average of the accepted bids for all regional alliance health
plans offered by such alliance, weighted to reflect the relative
enrollment of regional alliance eligible individuals among such
plans.
__(4) Reduced weighted average accepted bid._The term ``reduced
weighted average accepted bid'', for a health plan offered by a
regional alliance for a year, is the lesser of_
__(A) the weighted average accepted bid for the regional alliance
for the year (determined using the final accepted bids as the
accepted bids), or
__(B) the regional alliance per capita target for the year.
__(b) Weighted Average Premium._In this title, the term
``weighted average premium'' means, for a class of family
enrollment and with respect to a regional alliance for a year,
the product of_
__(1) reduced weighted average accepted bid (as defined in
subsection (a)(4));
__(2)  the uniform per capita conversion factor (established
under section 1341(b)) for the alliance; and
__(3) the premium class factor established by the Board for that
class under section 1531.
__(c) Incorporation of Other Definitions._Except as otherwise
provided in this title, the definitions of terms in subtitle J of
title I of this Act shall apply to this title.

Title VI, Subtitle A

Subtitle A_Premium Caps
PART 1_REGIONAL ALLIANCE HEALTH EXPENDITURES
Subpart A_Computation of Targets and Accepted Bids
SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLATION FACTORS.
__(a) Computation._
__(1) In general._This section provides for the computation of a
factors that limit the growth of premiums for the comprehensive
benefit package in regional alliance health plans. The Board
shall compute and publish, not later than March 1 of each year
(beginning with 1995) the regional alliance inflation factor (as
defined in paragraph (2)) for each regional alliance for the
following year.
__(2) Regional alliance inflation factor._In this part, the term
``regional alliance inflation factor'' means, for a year for a
regional alliance_
__(A) the general health care inflation factor for the year (as
defined in paragraph (2));
__(B) adjusted under subsection (c) (to take into account
material changes in the demographic and socio-economic
characteristics of the population of alliance eligible
individuals);
__(C) decreased by the percentage adjustment (if any) provided
with respect to the regional alliance under subsection (d)
(relating to adjustment for previous excess expenditures); and
__(D) in the case of the year 2001, increased by a factor that
the Board determines to reflect the ratio of (i) the actuarial
value of the increase in benefits provided in that year under the
comprehensive benefit package to (ii) the actuarial value of the
benefits that would have been in such package in the year without
regard to the increase.
__(3) General health care inflation factor._
__(A) 1996 through 1999his part, the term ``general health care
inflation factor'', for a year, means the percentage increase in
the CPI (as specified under subsection (b)) for the year plus the
following:
__(i) For 1996, 1.5 percentage points.
__(ii) For 1997, 1.0 percentage points.
__(iii) For 1998, 0.5 percentage points.
__(iv) For 1999, 0 percentage points.
__(B) Years after 1999._
__(i) Recommendation to congress._In 1998, the Board shall submit
to Congress recommendations on what the general health care
inflation factor should be for years beginning with 2000.
__(ii) Failure of congress to act._If the Congress fails to enact
a law specifying the general health care inflation factor for a
year after 1999, the Board, in January of the year before the
year involved, shall compute such factor for the year involved.
Such factor shall be the product of the factors described in
subparagraph (C) for that fiscal year.
__(C) Factor._The factor described in this subparagraph for a
year is 1 plus the following:
__(i) CPI._The percentage change in the CPI for the year,
determined based upon the percentage change in the average of the
CPI for the 12-month period ending with August 31 of the previous
fiscal year over such average for the preceding 12-month period.
__(ii) Population._The average annual percentage change in the
population of the United States during the 3-year period ending
in the calendar year, determined by the Board based on data
supplied by the Bureau of the Census.
__(iii) Real gdp per capita._The average annual percentage change
in the real, per capita gross domestic product of the United
States during the 3-year period ending in the preceding calendar
year, determined by the Board based on data supplied by the
Department of Commerce.
__(b) Projection of Increase in CPI._
__(1) In general._For purposes of this section, the Board shall
specify, as of the time of publication, the annual percentage
increase in the CPI (as defined in section 1902(9)) for the
following year.
__(2) Data to be used._Such increase shall be the projection of
the CPI contained in the budget of the United States transmitted
by the President to the Congress in the year.
__(c) Special Adjustment for Material Changes in Demographic
Characteristics of Population._
__(1) Adjustment for corporate alliance opt-in._
__(A) In general._The Board shall develop a method for adjusting
the regional alliance inflator factor for each regional alliance
in order to reflect material changes in the demographic
characteristics of regional alliance eligible individuals
residing in the alliance area (in comparison with such
characteristics for the previous year) as a result of one or more
corporate alliances terminating an election under section 1313.
__(B) Basis for adjustments._Adjustments under this paragraph
(whether an increase or decrease) shall be based on the
characteristics and factors used for making adjustments in
payments under section 6124.
__(2) Adjustment for regional trend compared to national trend._
__(A) In general._The Board shall develop a method for adjusting
the regional alliance inflator factor for each regional alliance
in order to reflect material changes in the demographic
characteristics (including at least age, gender, and
socio-economic status) and health status of regional alliance
eligible individuals residing in the alliance area in comparison
with the average change in such characteristics for such
individuals residing in the United States. The adjustment under
this paragraph shall be for changes not taken into account in the
adjustment under paragraph (1).
__(B) Neutral adjustment._Such method (and any annual adjustment
under this paragraph) shall be designed to result in the
adjustment effected under this paragraph for a year not changing
the weighted average of the regional alliance inflation factors.
__(3) Application._The Board shall provide, on an annual basis,
for an adjustment of regional alliance inflation factors under
this subsection using such method.
__(d) Adjustment for Previous Excess Rate of Increase in
Expenditures._
__(1) In general._If actual weighted average accepted bid for a
regional alliance for a year (as determined by the Board based on
actual enrollment in the first month of the year) exceeds the
regional alliance per capita premium target (determined under
section 6003(a)) for the year, then the regional alliance
inflation factor_
__(A) for the succeeding year shall be reduced by the product of_
__(i) \1/2\ of the excess percentage (described in paragraph (3))
for the previous year, and
__(ii) the adjustment factor (described in paragraph (2)(A)) for
such succeeding year; and
__(B) in the second succeeding year shall be reduced by the
product of_
__(i) \1/2\ of such excess percentage, and
__(ii) the adjustment factor (described in paragraph (2)(B)) for
such second succeeding year.
__(2) Adjustment factors._
__(A) Succeeding year._With respect to a succeeding year, the
adjustment factor described in this subparagraph is 1 plus the
regional alliance inflation factor for such year.
__(B) Second succeeding year._With respect to a second succeeding
year, the adjustment factor described in this subparagraph is the
product of_
__(i) 1 plus the regional alliance inflation factor for such
year, and
__(ii) 1 plus the regional alliance inflation factor for the
previous year.
__(C) No adjustment in factor considered._For purposes of
subparagraphs (A) and (B), the regional alliance inflation factor
for a year shall not take into account any adjustment under this
subsection.
__(3) Excess percentage._The excess percentage described in this
paragraph for a year is the percentage by which_
__(A) actual weighted average accepted bid (referred to in
paragraph (1)) for a regional alliance for the year, exceeds
__(B) the regional alliance per capita premium target (determined
under section 6003(a)) for the year.
__(e) Consultation Process._The Board shall have a process for
consulting with representatives of States and regional alliances
before establishing the regional alliance inflation factors for
each year under this section.
SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAPITA BASELINE
PREMIUM TARGET.
__(a) In General._Not later than January 1, 1995, the Board shall
determine a national per capita baseline premium target. Such
target is equal to_
__(1) the national average per capita current coverage health
expenditures (determined under subsection (b)),
__(2) updated under subsection (c).
__(b) Determination of National Average Per Capita Current
Coverage Health Expenditures._
__(1) In general._The Board shall determine the national average
per capita current coverage health expenditures equal to_
__(A) total covered current health care expenditures (described
in paragraph (2)), divided by
__(B) the estimated population in the United States of regional
alliance eligible individuals (as determined by the Board as of
the 1993 under subsection (c)(3)) for whom such expenditures were
determined.
The population under subparagraph (B) shall not include SSI
recipients or AFDC recipients.
__(2) Current health care expenditures._For purposes of paragraph
(1)(A), the Board shall determine current health care
expenditures as follows:
__(A) Determination of total expenditures._The Board shall first
determine the amount of total payments made for items and
services included in the comprehensive benefit package
(determined without regard to cost sharing) in the United States
in 1993.
__(B) Removal of certain expenditures not to be covered through
regional alliances._The amount so determined shall be decreased
by the proportion of such amount that is attributable to any of
the following:
__(i) Medicare beneficiaries (other than such beneficiaries who
are regional alliance eligible individuals).
__(ii) AFDC recipients or SSI recipients.
__(iii) Expenditures which are paid for through workers'
compensation or automobile or other liability insurance.
__(iv) Expenditures by parties (including the Federal Government)
that the Board determines will not be payable by regional
alliance health plans for coverage of the comprehensive benefit
package under this Act.
__(C) Addition of projected expenditures for uninsured and
underinsured individuals._The amount so determined and adjusted
shall be increased to take into account increased utilization of,
and expenditures for, items and services covered under the
comprehensive benefit package likely to occur, as a result of
coverage under a regional alliance health plan of individuals
who, as of 1993 were uninsured or underinsured with respect to
the comprehensive benefit package. In making such determination,
such expenditures shall be based on the estimated average cost
for such services in 1993 (and not on private payment rates
established for such services). In making such determination, the
estimated amount of uncompensated care in 1993 shall be removed.
__(D) Addition of health plan and alliance costs of
administration._
__(i) In general._The amount so determined and adjusted shall be
increased by an estimated percentage (determined by the Board,
but no more than 15 percent) that reflects the proportion of
premiums that are required for health plan and regional alliance
administration (including regional alliance costs for
administration of income-related premium discounts and cost
sharing reductions) and for State premium taxes (which taxes
shall be limited to such amounts in 1993 as are attributable to
the health benefits to be included in the comprehensive benefit
package).
__(E) Decrease for cost sharing._The amount so determined and
adjusted shall be decreased by a percentage that reflects (i) the
estimated average percentage of total amounts payable for items
and services covered under the comprehensive benefit package that
will be payments in the form of cost sharing under a high cost
sharing plan, and (ii) the percentage reduction in utilization
estimated to result from the application of high cost sharing.
__(3) Special rules._
__(A) Benefits used._The determinations under this section shall
be based on the comprehensive benefit package as in effect in
1996.
__(B) Assuming no change in expenditure pattern._The
determination under paragraph (2) shall be made without regard to
any change in the pattern of expenditures that may result from
the enrollment of AFDC recipients and SSI recipients in regional
alliance health plans.
__(C) Eligible individuals._In this subsection, the determination
of who are regional alliance eligible individuals under this
subsection shall be made as though this Act was fully in effect
in each State as of 1993.
__(c) Updating._
__(1) In general._Subject to paragraph (3), the Board shall
update the amount determined under subsection (b)(1) for each of
1994, 1995, and 1996 by the appropriate update factor described
in paragraph (2) for the year.
__(2) Appropriate update factor._In paragraph (1), the
appropriate update factor for a year is 1 plus the annual
percentage increase for the year (as determined by the
Administrator of the Health Care Financing Administration, based
on actual or projected information) in private sector health care
spending for items and services included in the comprehensive
benefit package (as of 1996).
__(3) Limit._The total, cumulative update under this subsection
shall not exceed 15 percent.
SEC. 6003. DETERMINATION OF ALLIANCE PER CAPITA PREMIUM TARGETS.
__(a) Initial Determination._Not later than January 1, 1995, the
Board shall determine, for each regional alliance for 1996, a
regional alliance per capita premium target. Such target shall
equal_
__(1) the national per capita baseline premium target (determined
by the Board under section 6002),
__(2) updated by the regional alliance inflation factor (as
determined under section 6001(a)(2)) for 1996, and
__(3) adjusted by the adjustment factor for the regional alliance
(determined under subsection (c)).
__(b) Subsequent Determinations._
__(1) Determination._Not later than March 1 of each year
(beginning with 1996) the Board shall determine, for each
regional alliance for the succeeding year a regional alliance per
capita premium target.
__(2) General rule._Subject to paragraph (3), such target shall
equal_
__(A) the regional alliance per capita target determined under
this section for the regional alliance for the previous year, and
__(B) updated by the regional alliance inflation factor (as
determined in section 6001(a)) for the year.
__(c) Adjustment Factors for Regional Alliances for Initial
Determination._
__(1) In general._The Board shall establish an adjustment factor
for each regional alliance in a manner consistent with this
subsection.
__(2) Considerations._In establishing the factor for each
regional alliance, the Board shall consider, using information of
the type described in paragraph (3), the difference between the
national average of the factors taken into account in determining
the national per capita baseline premium target and such factors
for the regional alliance, including variations in health care
expenditures and in rates of uninsurance and underinsurance in
the different alliance areas and including variations in the
proportion of expenditures for services provided by academic
health centers in the different alliance areas.
__(3) Types of information._The type of information described in
this paragraph is_
__(A) information on variations in premiums across States and
across alliance areas within a State (based on surveys and other
data);
__(B) information on variations in per capita health spending by
State, as measured by the Health Care Financing Administration;
__(C) information on variations across States in per capita
spending under the medicare program and in such spending among
alliance areas within a State under such program; and
__(D) area rating factors commonly used by actuaries.
__(4) Application of factors in neutral manner._The application
of the adjustment factors under this subsection for 1996 shall be
done in a manner so that the weighted average of the regional
alliance per capita premium targets for 1996 is equal to the
national per capita baseline premium target determined under
section 6002. Such weighted average shall be based on the Board's
estimate of the expected distribution of alliance eligible
individuals (taken into account under section 6002) among the
regional alliances.
__(5) Consultation process._The Board shall have a process for
consulting with representatives of States and regional alliances
before establishing the adjustment for regional alliances under
this subsection.
__(d) Treatment of Certain States._
__(1) Non-alliance states._In the case of a State that is not a
participating State or otherwise has not established regional
alliances, the entire State shall be treated under the provisions
of this part as composing a single regional alliance.
__(2) Changes in alliance boundaries._In the case of a State that
changes the boundaries of its regional alliances (including the
establishment of such alliances after 1996), the Board shall
provide a method for computing a regional alliance per capita
premium target for each regional alliance affected by such change
in a manner that_
__(A) reflects the factors taken into account in establishing the
adjustment factors for regional alliances under subsection (c),
and
__(B) results in the weighted average of the newly computed
regional targets for the regional alliances affected by the
change equal to the weighted average of the regional targets for
the regional alliances as previously established.
SEC. 6004. ALLIANCE INITIAL BIDDING AND NEGOTIATION PROCESS.
__(a) Bidding Process._
__(1) Obtaining bids._
__(A) In general._Not later than July 1 before the first year,
and not later than August 1 of each succeeding year, the regional
alliance shall have obtained premium bids from each plan seeking
to participate as a regional alliance health plan with respect to
the alliance in the following year.
__(B) Disclosure._In obtaining such bids, a regional alliance may
determine to disclose (or not to disclose) the regional alliance
per capita premium target for the regional alliance (determined
under section 6003) for the year involved.
__(C) Condition._Each bid submitted by a plan under this
subsection shall be conditioned upon the plan's agreement to
accept any premium payment reduction that may be imposed under
section 6011.
__(2) Negotiation process._Following the bidding process under
paragraph (1), a State may provide for negotiations with health
plans relating to the premiums to be charged by such plans. Such
negotiations may result in the resubmission of bids, but in no
case shall a health plan resubmit a bid that exceeds its prior
bid.
__(3) Legally binding bids._All bids submitted under this
subsection must be legally binding with respect to the plans
involved.
__(4) Acceptance._The final bid submitted by a plan under this
subsection shall be considered to be the accepted bid, except as
provided in subsection (e).
__(5) Assistance._The Board shall provide regional alliances with
such information and technical assistance as may assist such
alliances in the bidding process under this subsection.
__(b) Submission of Information to Board._By not later than
September 1 of each year for which bids are obtained under
subsection (a), each regional alliance shall submit to the Board
a report that discloses_
__(1) information regarding the final bids obtained under
subsection (a) by the different plans;
__(2)(A) for the first year, any information the Board may
request concerning an estimation of the enrollment likely in each
such plan of alliance eligible individuals who will be offered
enrollment in a health plan by alliance in the first year, or
__(B) for a succeeding year, the actual distribution of
enrollment of alliance eligible individuals in regional alliance
health plans in the year in which the report is transmitted; and
__(3) limitations on capacity of regional alliance health plans.
__(c) Computation of Weighted Average Accepted Bid._
__(1) In general._For each regional alliance the Board shall
determine a weighted average accepted bid for each year for which
bids are obtained under subsection (a). Such determination shall
be based on information on accepted bids for the year, submitted
under subsection (b)(1), and shall take into account, subject to
paragraph (2), the information on enrollment distribution
submitted under subsection (b)(2).
__(2) Enrollment distribution rules._In making the determination
under paragraph (1) for a regional alliance, the Board shall
establish rules respecting the treatment of enrollment in plans
that are discontinued or are newly offered.
__(d) Notice to Certain Alliances._
__(1) In general._By not later than October 1 of each year for
which bids are obtained, the Board shall notify a regional
alliance_
__(A) if the weighted average accepted bid (determined under
subsection (c)) for the alliance is greater than the regional
alliance per capita premium target for the alliance (determined
under section 6002) for the year, and
__(B) the reduced weighted average accepted bid for the alliance.
__(2) Notice of premium reductions._If notice is provided to a
regional alliance under paragraph (1), the Board shall notify the
regional alliance and each noncomplying plan of any plan payment
reduction computed under section 6011 for such a plan and the
opportunity to voluntarily reduce the accepted bid under
subsection (e) in order to avoid such a reduction.
__(e) Voluntary Reduction of Accepted Bid (Final Accepted
Bid)._After the Board has determined under subsection (c) the
weighted average accepted bid for a regional alliance and the
Board has determined preliminary plan payment reductions, before
such date as the Board may specify (in order to provide for an
open enrollment period), a noncomplying plan has the opportunity
to voluntarily reduce its accepted bid by the amount of the plan
payment reduction that would otherwise apply to the plan. Such
reduction shall not affect the amount of the plan payment
reduction for any other plan for that year.
SEC. 6005. STATE FINANCIAL INCENTIVES.
__(a) Election._Any participating State may elect to assume
responsibility for containment of health care expenditures in the
State consistent with this part. Such responsibility shall
include submitting annual reports to the Board on any activities
undertaken by the State to contain such expenditures.
__(b) Financial Incentive._In the case of a State that has made
an election under subsection (a), if Board determines for a
particular year (beginning with the first year) that the
statewide weighted average of the reduced weighted average
accepted bids (based on actual average enrollment for the year),
for regional alliances in the State, is less than the statewide
weighted average of the regional alliance per capita premium
targets (based upon such enrollment) for such alliances for the
year, then the amount of the State maintenance-of-effort payment
under section 9001(b), for the following year, shall be reduced
by \1/2\ of the product of_
__(1)(A) the amount by which the amount of such target exceeds
the amount of such premium, divided by (B) the amount of such
target; and
__(2) the total of the amount of the Federal payments made in
that particular year to regional alliances in the State under
subtitle B of title IX.
SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL VARIATIONS IN
ALLIANCE TARGETS DUE TO VARIATION IN PRACTICE PATTERNS;
CONGRESSIONAL CONSIDERATION.
__(a) Establishment of Advisory Commission on Regional Variations
in Health Expenditures._The chair of the Board shall establish,
by not later than 60 days after the date of appointment of the
first chair, an advisory commission on regional variations in
health expenditures.
__(b) Composition._The advisory commission shall be composed of
consumers, employers, providers, representatives of health plans,
States, regional alliances, individuals with expertise in the
financing of health care, individuals with expertise in the
economics of health care, and representatives of diverse
geographic areas.
__(c) Regional Variations._
__(1) Information._The advisory commission shall provide the
Board, States, and regional alliances with information about
regional differences in health care costs and practice patterns.
__(2) Methods for elimination of regional variation due to
practice pattern._The advisory commission shall examine methods
of eliminating variation in regional alliance per capita premium
targets due to variation in practice patterns, not due to other
factors (such as health care input prices and demographic
factors), by 2002.
__(3) Methods for reducing regional variation in premium payments
for afdc and ssi recipients due to historical variation in
characteristics of state medicaid plans._The advisory commission
shall examine methods of reducing the variation in Federal and
State payments under sections 9011 and 9101. In addition to the
factors considered in paragraph (2), the commission shall examine
methods of reducing variation due to historical differences in
the rates of reimbursement to providers and in the amount,
duration, and scope of benefits covered under State medicaid
plans.
__(4) Methods for reduction of regional variation in state
maintenance-of-effort payments for non-cash assistance
recipients._The advisory commission shall study the reasons for
variation among State in the level of maintenance of effort
payments for non-cash assistance recipients and shall examine
methods of reducing variation across States in the level of
maintenance of effort payments compared to the population of the
State. The commission shall link consideration of the variation
in premium targets under paragraph (2) with the variation in
State and Federal payments described in this paragraph.
__(5) Other factors._The advisory commission shall examine
methods of reducing variations in spending among States for
health care services that are attributable to historical
differences.
__(d) Recommendations to Board._The advisory commission shall
submit to the Board a report that specifies_
__(1) one or more methods for eliminating the variation described
in subsection (c)(2), and
__(2) one or more methods for reducing variations described in
subsection (c)(4) across States.



__(e) Report to Congress._
__(1) In general._The Board shall submit to Congress, by not
later July 1, 1995, detailed recommendations respecting the
specific method to be used to achieve each of the following:
__(A) The elimination of the variation in the regional alliance
per capita premium (as described in subsection (b)(2)) by 2002.
__(B) Reducing the variation in State payments under sections
9001 and 9011 (taking into account any interaction between these
payments), in a manner that is budget neutral with respect to
total government payments and payments by the Federal Government.
In making recommendations in subparagraph (B), the Board shall
consider the fiscal capacity of the States.
__(2) Subsequent report._If a joint resolution described in
subsection (f) does not become law, the Board shall submit to
Congress revised detailed recommendations respecting the specific
method to be used to achieve the elimination of such variation by
2002. Such recommendations shall be submitted not later than 90
days after the date such resolution is disapproved by either
House (or vetoed by the President) or, if earlier, 150 days after
the date of submission of the recommendations under paragraph
(1).
__(f) Congressional Consideration._
__(1) In general._Detailed recommendations submitted under
paragraph (1)(A) or (1)(B) or (2) of subsection (e) shall apply
under this subtitle only if a joint resolution (described in
paragraph (2)) approving 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 approval._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 Board submits recommendations under paragraph (1)(A),
(1)(B), or (2) of subsection (e) and_
__(A) which does not have a preamble;
__(B) the matter after the resolving clause of which is either of
the following 2 clauses:
__(i) For recommendations under paragraph (1)(A): ``That Congress
approves the recommendations of the National Health Board
concerning elimination of regional variation in regional alliance
per capita premium targets under subtitle A of title VI of the
Health Security Act, as submitted by the Board on _G7XXXXXXX.'',
the blank space being filled in with the appropriate date; or
__(ii) For recommendations under paragraph (1)(B): ``That
Congress approves the recommendations of the National Health
Board concerning reducing the variation in State payments under
sections 9001 and 9011 of the Health Security Act, as submitted
by the Board on _G7XXXXXXX.'', the blank space being filled in
with the appropriate date; and
__(C) the title of which, respectively, is either of the
following:
__(i) For recommendations under paragraph (1)(A): ``Joint
resolution approving recommendations of the National Health Board
concerning elimination of regional variation in regional alliance
per capita premium targets under subtitle A of title VI of the
Health Security Act, as submitted by the Board on _G7XXXXXXX.'',
the blank space being filled in with the appropriate date; or
__(ii) For recommendations under paragraph (1)(B): ``Joint
resolution approving recommendations of the National Health Board
concerning reducing the variation in State payments under
sections 9001 and 9011 of the Health Security Act, as submitted
by the Board 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 (e)) 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
(e)); 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
Board submits a recommendation under paragraph (1)(A), (1)(B), or
(2) of subsection (e).

SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRATIVE AND JUDICIAL
REVIEW OF CERTAIN DETERMINATIONS.
__For limitation on administrative and judicial review of certain
determinations under this part, see section 5232.
Subpart B_Plan and Provider Payment Reductions to Maintain
Expenditures within Targets
SEC. 6011. PLAN PAYMENT REDUCTION.
__(a) Plan Payment Reduction._In order to assure that payments to
regional alliance health plans by a regional alliance are
consistent with the applicable regional alliance per capita
target for the alliance (computed under this subtitle), each
noncomplying plan (as defined in subsection (b)(2)) for a year is
subject to a reduction in plan payment (under section 1351) by
the amount equal to plan payment reduction specified in
subsection (c) for the year.
__(b) Noncomplying Alliance and Noncomplying Plan Defined._In
this part:
__(1) Noncomplying alliance._The term ``noncomplying alliance''
means, for a year, a regional alliance for which the weighted
average accepted bid (computed under section 6004(c)) exceeds the
regional alliance per capita target for the year.
__(2) Noncomplying plan._The term ``noncomplying plan'' means,
for a year, a regional alliance health plan offered through a
noncomplying alliance if the final accepted bid for the year
exceeds the maximum complying bid (as defined in subsection (d))
for the year. No plan shall be a noncomplying plan for a year
before the first year in which the plan is offered by a regional
alliance.

__(c) Amount of Plan Payment Reduction._
__(1) In general._The amount of the plan payment reduction, for a
noncomplying plan offered by an alliance, is the alliance-wide
reduction percentage (as defined in paragraph (2)) of the excess
bid amount (as defined in paragraph (3)).
__(2) Alliance-wide reduction percentage._
__(A) In general._In paragraph (1), the term ``alliance-wide
reduction percentage'' means, for a noncomplying plan offered by
an alliance for a year_
__(i) the amount by which (I) the weighted average accepted bid
(computed under section 6004(c)(1)) for the alliance for the
year, exceeds the regional alliance per capita target for the
alliance for the year; divided by
__(ii) the sum, for noncomplying plans offered by the alliance,
of the plan proportions of alliance excess bid amount (described
in subparagraph (B)(i)) for the year.
__(B) Plan proportion of alliance excess bid amount described._
__(i) In general._The ``plan proportion of alliance excess bid
amount'' described in this clause, for a noncomplying plan, is
the product of_
__(I) the excess bid amount (as defined in paragraph (4)) for the
plan, and
__(II) the plan enrollment proportion (as defined in clause (ii))
for the plan.
__(ii) Plan enrollment proportion._In clause (i)(II), the term
``plan enrollment proportion'' means, with respect to a health
plan offered by a regional alliance, the total enrollment of
alliance eligible individuals enrolled in such plan expressed as
a percentage of the total enrollment of alliance eligible
individuals in all regional alliance plans offered by the
alliance. Such proportion shall be computed based on the
information used in computing the weighted average accepted bid
for the alliance under section 6004(c)(1).
__(3) Excess bid amount._In this subsection, the ``excess bid
amount'', with respect to a noncomplying plan for a year, is the
amount by which_
__(i)  the accepted bid for the year (not taking into account any
voluntary reduction under section 6004(e)), exceeds
__(ii) the maximum complying bid (as defined in subsection (d))
for the plan for the year.

__(d) Maximum Complying Bid._
__(1) First year._In this part, subject to paragraph (3), for the
first year, the ``maximum complying bid'' for each plan offered
by a regional alliance, is the regional alliance per capita
premium target for the alliance (determined under section 6002)
for the year.
__(2) Subsequent years._In this part, subject to paragraph (3),
for a subsequent year, the ``maximum complying bid'', for a plan
offered by an alliance for a year, is the sum of the following:
__(A) Net previous year accepted bid for plan._The accepted bid
for the previous year  (not taking into account any voluntary
reduction under section 6004(e)), minus the amount of any plan
payment reduction for the plan for that year.
__(B) Alliance-wide inflation allowance._The amount by which_
__(i) regional alliance per capita premium target for the year,
exceeds
__(ii) such target for the previous year, or, if less, the
weighted average accepted bid (computed under section 6004(c)(1))
for such year.
__(3) Special rules for new plans._
__(A) In general._Subject to subparagraph (B), in the case of a
plan that is first offered by a regional alliance in a year after
the first year the maximum complying bid shall be the regional
alliance per capita premium target for the year.
__(B) Authority._The Board or a State may establish rules to
modify the application of subparagraph (A) for regional alliance
health plans in the State in order_
__(i) to prevent abusive premium practices by entities previously
offering plans, or
__(ii) to encourage the availability of all types of plans in the
State and to permit establishment of new plans.



SEC. 6012. PROVIDER PAYMENT REDUCTION.
__(a) Participating Providers._
__(1) In general._Each regional alliance health plan, as part of
its contract under section 1406(e) with any participating
provider (as defined in section 1407(c), or group of
participating providers) shall_
__(A) include a provision that provides that if the plan is a
noncomplying plan for a year, payments to the provider (or group)
shall be reduced by the applicable network reduction percentage
(described in paragraph (2)) for the year, and
__(B) not include any provision which the State determines
otherwise varies the payments to such providers (or group)
because of, or in relation to, a plan payment reduction under
section 6011 or otherwise is intended to nullify the effect of
subparagraph (A).
The Board may issue regulations relating to the requirements of
this paragraph.
__(2) Applicable network reduction percentage._
__(A) In general._Subject to subparagraphs (B) and (C), the
``adjusted plan reduction percentage'', with respect to network
providers of a noncomplying plan for a year is_
__(i) the plan payment reduction amount for the plan for the year
(as determined under section 6011(c)), divided by
__(ii) the final accepted bid for the plan for the year,
adjusted under subparagraph (B).
__(B) Induced volume offset._The Board shall provide for an
appropriate increase of the percentage reduction computed under
subparagraph (A) to take into account any estimated increase in
volume of services provided that may reasonably be anticipated as
a consequence of applying a reduction in payment under this
subsection. The Board may compute and apply such increase
differently for different classes of providers or services or
different types of health plans (as the Board may define).
__(b) Other Providers._
__(1) In general._Each regional alliance health plan that is a
noncomplying plan in a year shall provide for a reduction in the
amount of payments to providers (or groups of providers) that are
not participating providers under the applicable alliance fee
schedule under section 1406(c)(3) by the applicable nonnetwork
reduction percentage (described in paragraph (2)) for the year.
__(2) Applicable nonnetwork reduction percentage._
__(A) In general._Subject to subparagraph (B), the ``adjusted
plan reduction percentage'', with respect to nonnetwork providers
of a noncomplying plan for a year is_
__(i) the plan payment reduction amount for the plan for the year
(as determined under section 6011(c)), divided by
__(ii) the final accepted bid for the plan for the year,
adjusted under subparagraph (B).
__(B) Induced volume offset._The Board shall provide for an
appropriate adjustment of the percentage reduction computed under
subparagraph (A) to take into account any estimated increase in
volume of services provided that may reasonably be anticipated as
a consequence of applying a reduction in payment under this
subsection.
__(c) Application to Cost Sharing and to Balance Billing
Restrictions._For purposes of applying section 1406(d) (relating
to balance billing limitations) and part 3 of subtitle B of title
I (relating to computation of cost sharing), the payment basis
otherwise used for computing any limitation on billing or cost
sharing shall be such payment basis as adjusted by any reductions
effected under this section.
PART 2_CORPORATE ALLIANCES HEALTH EXPENDITURES
SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.
__(a) In General._By January 1, 1997, the Board shall develop a
methodology for calculating an annual per capita expenditure
equivalent for amounts paid for coverage for the comprehensive
benefit package within a corporate alliance.
__(b) Adjustment Permitted._Such methodology shall permit a
corporate alliance to petition the Secretary of Labor for an
adjustment of the inflation adjustment that would otherwise apply
to compensate for material changes in the demographic
characteristics of the eligible individuals receiving coverage
through the alliance.
__(c) Reporting._In 2000 and each subsequent year, each corporate
alliance shall report to the Secretary of Labor, in a form and
manner specified by the Secretary, the average of the annual per
capita expenditure equivalent for the previous 3-year period.


SEC. 6022. TERMINATION OF CORPORATE ALLIANCE FOR EXCESS INCREASE
IN EXPENDITURES.
__(a) Termination._
__(1) In general._If a corporate alliance has two excess years
(as defined in subsection (b)) in a 3-year-period, then,
effective beginning with the second year following the second
excess year in such period_
__(A) the Secretary of Labor shall terminate the corporate
alliance, and
__(B) employers that were corporate alliance employers with
respect to such corporate alliance shall become regional alliance
employers (unless, in the case of a corporate alliance with a
plan sponsor described in subparagraph (B) or (C) of section
1311(b)(1), the employers become corporate alliance employers of
another such corporate alliance).
__(2) Initial 3-year-period._Paragraph (1) shall first apply to
the 3-year-period beginning with 1997.
__(3) Special subsequent treatment for large employers._In the
case of corporate alliance employers described in paragraph
(1)(B) that are large employers, the employer premium payments
under section 6121 are subject to adjustment under section 6124.
__(4) No further election._If a corporate alliance of a large
employer is terminated under this subsection, no employer that is
a corporate alliance employer for that alliance is eligible to be
a sponsor of a corporate alliance.
__(b) Excess Year._
__(1) In general._In subsection (a), the term ``excess year''
means, for a corporate alliance, a year (beginning on or after
2000) for which_
__(A) the rate of increase for the corporate alliance (specified
in paragraph (2)) for the year, exceeds
__(B) the national corporate inflation factor (specified in
paragraph (3)) for the year.
__(2) Rate of increase for corporate alliance._The rate of
increase for a corporate alliance for a year, specified in this
paragraph, is the percentage by which_
__(A) the average of the annual per capita expenditure equivalent
for the corporate alliance (reported under section 6021(c)) for
the 3-year period ending with such year, exceeds
__(B) the average of the annual per capita expenditure equivalent
for the corporate alliance (reported under such subsection) for
the 3-year period ending with the previous year.
__(3) National corporate inflation factor._The national corporate
inflation factor for a year, specified in this paragraph, is the
average of the general health care inflation factors (as defined
in section 6001(a)(3)) for each of the 3 years ending with such
year.


PART 3_TREATMENT OF SINGLE-PAYER STATES
SEC. 6031. SPECIAL RULES FOR SINGLE-PAYER STATES.
__In the case of a Statewide single-payer State, for purposes of
section 1222(6), the Board shall compute a Statewide per capita
premium target for each year in the same manner as a regional
alliance per capita premium target is determined under section
6003.

PART 4_TRANSITION PROVISIONS
SEC. 6041. MONITORING PRICES AND EXPENDITURES.

__(a) In General._The Secretary shall establish a program to
monitor prices and expenditures in the health care system in the
Unites States.
__(b) Reports._The Secretary shall periodically report to the
President on_
__(1) the rate of increase in expenditures in each sector of the
health care system, and
__(2) how such rates compare with rate of overall increase in
health care spending and rate of increase in the consumer price
index.
__(c) Access to Information._
__(1) In general._The Secretary may obtain, through surveys or
otherwise, information on prices and expenditures for health care
services. The Secretary may compel health care providers and
third party payers to disclose such information as is necessary
to carry out the program under this section.
__(2) Confidentiality._Non-public information obtained under this
subsection with respect to individual patients is confidential.
__(d) Periodic Reports._The Secretary shall periodically issue
public reports on the matters described in subsection (b).



Title VI, Subtitle B

Subtitle B_Premium-Related Financings
PART 1_FAMILY PREMIUM PAYMENTS
Subpart A_Family Share
SEC. 6101. FAMILY SHARE OF PREMIUM.
__(a) Requirement._Each family enrolled in a regional alliance
health plan or in a corporate alliance health plan in a class of
family enrollment is responsible for payment of the family share
of premium payable respecting such enrollment. Such premium may
be paid by an employer or other person on behalf of such a
family.
__(b) Family Share of Premium Defined._
__(1) In general._In this subtitle, the term ``family share of
premium'' means, with respect to enrollment of a family_
__(A) in a regional alliance health plan, the amount specified in
paragraph (2) for the class, or
__(B) in a corporate alliance health plan, the amount specified
in paragraph (3) for the class.
__(2) Regional alliance._
__(A) In general._The amount specified in this paragraph for a
health plan based on a class of family enrollment is the sum of
the base amounts described in subparagraph (B) reduced (but not
below zero) by the sum of the amounts described in subparagraph
(C).
__(B) Base._The base amounts described in this subparagraph (for
a plan for a class of enrollment) are as follows:
__(i) Regional alliance premium._The premium specified in section
6102(a) with respect to such class of enrollment.
__(ii) Family collection shortfall._20 percent of the family
collection shortfall add-on (computed under section 6107 for such
class).
__(C) Credits and discounts._The amounts described in this
subparagraph (for a plan for a class of enrollment) are as
follows:
__(i) Alliance credit._The amount of the alliance credit under
section 6103(a).
__(ii) Income related discount._The amount of any income-related
discount provided under section 6104(a)(1).
__(iii) Excess premium credit._The amount of any excess premium
credit provided under section 6105.
__(iv) Corporate alliance opt-in credit._The amount of any
corporate alliance opt-in credit provided under section 6106.
__(v) Additional credit for ssi and afdc recipients._In the case
of an SSI or AFDC family or for whom the amount described in
clause (ii) is equal to the amount described in section
6104(b)(1)(A), the amount described in subparagraph (B)(ii).
__(D) Limit on miscellaneous credits._In no case shall the family
share, due to credits under subparagraph (C), be less than zero.
__(3) Corporate alliance._
__(A) In general._The amount specified in this paragraph for a
health plan based on a class of family enrollment is the sum of
the premium described in subparagraph (B) reduced (but not below
zero) by the sum of the amounts described in subparagraph (C).
__(B) Premium._The premium described in this subparagraph (for a
plan for a class of enrollment) is premium specified under
section 1364 with respect to the plan and class of enrollment
involved.
__(C) Credits and discounts._The amounts described in this
subparagraph  (for a plan for a class of enrollment) are as
follows:
__(i) Alliance credit._The amount of the alliance credit under
section 6103(b).
__(ii) Income related discount._The amount of any income-related
discount provided under section 6104(a)(2).
SEC. 6102. AMOUNT OF PREMIUM.
__(a) Regional Alliance._The amount of the premium charged by a
regional alliance for all families in a class of family
enrollment under a regional alliance health plan offered by the
alliance is equal to the product of_
__(1) the final accepted bid for the plan (as defined in section
6000(a)(2)),



__(2) the uniform per capita conversion factor (established under
section 1341(b)) for the alliance; and
__(3) the premium class factor established by the Board for that
class under section 1531.
__(b) Reference to Corporate Alliance Premium Provisions._The
amount of the premium charged by a corporate alliance for all
families in a class of family enrollment under a corporate
alliance health plan offered by the alliance is specified under
section 1364.
__(c) Special Rules for Divided Families._In the case of an
individual who is a qualifying employee of an employer and the
individual has a spouse or child who is not treated as part of
the individual's family because of section 1012_
__(1) the combined premium for both families under this section
shall be computed as though such section had not applied,
__(2) the regional alliance shall divide such premium between the
families proportionally (consistent with rules established by the
Board), and
__(3) credits and other amounts shall be pro-rated in a manner
consistent with rules established by the Board.
SEC. 6103. ALLIANCE CREDIT.
__(a) Regional Alliances._The credit provided under this section
for a family enrolled in a regional alliance health plan through
a regional alliance for a class of family enrollment is equal to
80 percent of the weighted average premium (as defined in section
6000(c)) for health plans offered by the alliance for the class.
__(b) Corporate Alliances._The credit provided under this section
for a family enrolled in a health corporate alliance health plan
for a class of family enrollment is equal to the minimum employer
premium payment required under section 6131 with respect to the
family.
SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.
__(a) In General._
__(1) Enrollees in regional alliance health plans._Each family
enrolled with a regional alliance health plan is entitled to a
premium discount under this section, in the amount specified in
subsection (b), if the family_
__(A) is an AFDC or SSI family,
__(B) is determined, under subpart B of part 2 of subtitle B of
title D of title I, to have family adjusted income below 150
percent of the applicable poverty level, or
__(C) is a family described in subsection (c)(3) for which the
family obligation amount under this subsection for the year would
otherwise exceed a specified percent of family adjusted income
described in such subsection.
__(2) Enrollees in corporate alliance health plans._
__(A) In general._Subject to subparagraph (B), each family
enrolled with a corporate alliance health plan in a class of
family enrollment by virtue of the full-time employment of a
low-wage employee (as defined in subparagraph (B)) is entitled to
a premium discount under this section in the amount (if any) by
which_
__(i) 95 percent of the premium (specified in section 1364) for
the least expensive corporate alliance health plan that is
offered to the employee and that is a low or combination cost
sharing plan (as defined in section 1903(_)) for that class,
exceeds
__(ii) the alliance credit under section 6103 for that class.
__(B) Low-wage employee defined._
__(i) In general._In this paragraph, the term ``low-wage
employee'' means, with respect to an employer, an employee who is
employed on a full-time basis and who is receiving wages (as
defined in section 1902(_)) for employment for the employer, as
determined under clause (ii), at an annual rate of less than
$15,000 (as adjusted under clause (ii)).
__(ii) Indexing._For a year after 1994, the dollar amount
specified in clause (i) shall be increased or decreased by the
same percentage as the percentage increase or decrease by which
the average CPI (described in section 1902(_)) 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.
__(C) Timing of determination._
__(i) In general._The determination of whether or not an employee
is a low-wage employee shall be made, in accordance with rules of
the Secretary of Labor, at the time of initial enrollment and
shall also be made at the time of each subsequent open enrollment
period, on the basis of the wages payable by the employer at that
time.
__(ii) Effective date._Such determination shall apply as of the
effective date of the initial enrollment, or, in the case of an
open enrollment period, as of the effective date of changes in
enrollment during such period.

__(3) No liability for indians and certain veterans and military
personnel._
__(A) In general._In the case of an individual described in
subparagraph (B), because the applicable health plan does not
impose any premium for such an individual, the individual is not
eligible for any premium discount under this section.
__(B) Individuals described._An individual described in this
subparagraph is_
__(i) an electing veteran (as defined in section 1012(d)(1)) who
is enrolled under a health plan of the Department of Veterans
Affairs and who, under the laws and rules as in effect as of
December 31, 1994, has a service-connected disability or who is
unable to defray the expenses of necessary care as determined
under section 1722(a) of title 38, United States Code,
__(ii) active duty military personnel (as defined in section
1012(d)(2)), and
__(iii) an electing Indian (described in section 1012(d)(3)).
__(b) Amount of Premium Discount for Regional Alliance Health
Plans._
__(1) In general._Subject to the succeeding paragraphs of this
subsection, the amount of premium discount under this subsection
for a family enrolled in a regional alliance health plan under a
class of family enrollment is equal to_
__(A) 20 percent of the weighted average premium for regional
alliance health plans offered by the regional alliance for that
class of enrollment, increased by any amount provided under
paragraph (2); reduced (but not below zero) by
__(B) the sum of_
__(i) the family obligation amount described in subsection (c),
and
__(ii) the amount of any employer payment (not required under
part 2) towards the family share of premiums for covered members
of the family.
__(2) Increase to assure enrollment in lower-than-average-cost
plan._If a regional alliance determines that a family eligible
for a discount under this section is unable to enroll in a
lower-than-average-cost plan (as defined in paragraph (3)) that
serves the area in which the family resides, the amount of the
premium discount under this subsection is increased but only to
such amount as will permit the family to enroll in a regional
alliance health plan without the need to pay a family share of
premium under this part in excess of the sum described in
paragraph (1)(B).
__(3) Lower-than-average-cost plan defined._In this section, the
term ``lower-than-average-cost plan'' means a regional alliance
health plan the premium for which does not exceed, for the class
of family enrollment involved, the weighted average premium for
the regional alliance.
__(c) Family Obligation Amount._
__(1) Determination._Subject to paragraphs (2) and (3), the
family obligation amount under this subsection is determined as
follows:
__(A) No obligation if income below income threshold amount or if
afdc or ssi family._If the family adjusted income (as determined
under section 1332(a)) of the family is less than the income
threshold amount (specified in paragraph (4)) or if the family is
an AFDC or SSI family, the family obligation amount is zero.
__(B) Income above income threshold amount._If such income is at
least such income threshold amount and the family is not an AFDC
or SSI family, the family obligation amount is the sum of the
following:
__(i) For income (above income threshold amount) up to the
poverty level._The product of the initial marginal rate
(specified in paragraph (2)(A)) and the amount by which_
__(I) the family adjusted income (not including any portion that
exceeds the applicable poverty level for the class of family
involved), exceeds
__(II) such income threshold amount.
__(ii) Graduated phase out of discount up to 150 percent of
poverty level._The product of the final marginal rate (specified
in paragraph (2)(B)) and the amount by which the family adjusted
income exceeds 100 percent (but is less than 150 percent) of the
applicable poverty level.
__(2) Marginal rates._In paragraph (1)_
__(A) Individual marginal rates._For a year for an individual
class of enrollment_
__(i) Initial marginal rate._The initial marginal rate is the
ratio of_
__(I) 3 percent of the applicable poverty level for the
individual class of enrollment for the year, to
__(II) the amount by which such poverty level exceeds such income
threshold amount.
__(ii) Final marginal rate._The final marginal rate is the ratio
of_
__(I) the amount by which the general family share (as defined in
subparagraph (C)) for an individual class of enrollment exceeds 3
percent of the applicable poverty level (for an individual class
of enrollment for the year); to
__(ii) 50 percent of such poverty level.
__(B) Family marginal rates._For a year for a family class of
enrollment (as defined in section 1011(c)(2)(A))_
__(i) Initial marginal rate._The initial marginal rate is the
ratio of_
__(I) 3 percent of the applicable poverty level for a dual parent
class of enrollment for the year, to
__(II) the amount by which such poverty level exceeds such income
threshold amount.
__(ii) Final marginal rate._The final marginal rate is the ratio
of_
__(I) the amount by which the general family share (as defined in
subparagraph (C)) for a dual parent class of enrollment exceeds 3
percent of the applicable poverty level (for such a class for the
year); to
__(ii) 50 percent of such poverty level.
__(C) General family share._In subparagraphs (A) and (B), the
term ``general family share'' means, for a class, the weighted
average premium for the class minus the alliance credit
(determined without regard to this section).
__(3) Limitation to 3.9 percent for all families._
__(A) In general._In the case of a family with family adjusted
income of less than $40,000 (adjusted under subparagraph (B)) for
a year, in no case shall the family obligation amount under this
subsection for the year exceed 3.9 percent (adjusted under
subparagraph (C)) of the amount of such adjusted income.
__(B) Indexing of dollar amounts._
__(i) In general._For a year after 1994, the dollar amounts
specified in subparagraph (A) and in section 6113(d)(1)(B) shall
be increased or decreased by the same percentage as the
percentage increase or decrease by which the average CPI
(described in section 1902(_)) 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.
__(ii) Rounding._The dollar amounts adjusted under this
subparagraph shall be rounded each year to the nearest multiple
of $100.
__(C) Indexing of percentage._
__(i) In general._The percentage specified in subparagraph (A)
shall be adjusted for any year after 1994 so that the percentage
for the year bears the same ratio to the percentage so specified
as the ratio of_
__(I) 1 plus general health care inflation factor (as defined in
section 6001(a)(3)) for the year, bears to
__(II) 1 plus the percentage increase or decrease specified in
section 1136(b) (relating to indexing of dollar amounts related
to cost sharing) for the year.
__(ii) Rounding._Any adjustment under clause (i) for a year shall
be rounded to the nearest multiple of \1/10\ of 1 percentage
point.
__(4) Income threshold amount._
__(A) In general._For purposes of this subtitle, the income
threshold amount specified in this paragraph is $1,000 (adjusted
under subparagraph (B)) .
__(B) Indexing._For a year after 1994, the income threshold
amount specified in subparagraph (A) shall be increased or
decreased by the same percentage as the percentage increase or
decrease by which the average CPI (described in section 1902(_))
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.
__(C) Rounding._Any increase or decrease under subparagraph (B)
for a year shall be rounded to the nearest multiple of $10.
SEC. 6105. EXCESS PREMIUM CREDIT.
__(a) In General._If plan payment reductions are made for one or
more regional alliance health plans offered by a regional
alliance for plan payments in a year under section 6021, the
alliance shall provide for a credit under this section, in the
amount described in subsection (b), in the case of each family
enrolled in a regional alliance health plan offered by the
alliance for premiums in the year.
__(b) Amount of Credit._
__(1) In general._Subject to paragraph (2), the amount of the
credit under this subsection, for a family enrolled in a class of
family enrollment for a regional alliance for a year, is the
amount that would be the weighted average premium for such
alliance, class, and year, if the per capita excess premium
amount (determined under subsection (c)) for the alliance for the
year were substituted for the reduced weighted average accepted
bid for the regional alliance for the year.
__(2) Adjustment to account for use of estimates._Subject to
section 1361(b)(3), if the total payments made by a regional
alliance to all regional alliance health plans in a year under
section 1351(b) exceeds (or is less than) the total of such
payments estimated by the alliance (based on the reduced weighted
average accepted bid under subsection (c)(1)), because of a
difference between_
__(A) the alliance's estimate of the distribution of enrolled
families between excess premium plans and other plans, and
__(B) the actual distribution of such enrolled families among
such plans,
the amount of the credit under this section in the second
succeeding year shall be reduced (or increased, respectively) by
the amount of such excess (or deficit) in the total of such
payments made by the alliance to all such plans.
__(c) Per Capita Excess Premium Amount._The per capita excess
premium amount, for a regional alliance for a year, is the amount
by which_
__(1) the reduced weighted average accepted bid for the alliance
for the year, exceeds
__(2) the regional alliance per capita target for the alliance
for the year.
SEC. 6106. CORPORATE ALLIANCE OPT-IN CREDIT.
__(a) In General._If a regional alliance is owed a payment
adjustment under section 6124 for a year, then the alliance shall
provide for a credit under this section, equal to 20 percent of
the amount described in subsection (b), in the case of each
family enrolled in a regional alliance plan offered by the
alliance.
__(b) Amount of Credit._The amount described in this subsection,
for a family enrolled in a class of family enrollment for a
regional alliance for a year, is the amount that would be the
weighted average premium for such alliance, class, and year, if
the per capita corporate alliance opt-in amount (determined under
subsection (c)) for the alliance for the year were substituted
for the reduced weighted average accepted bid for the regional
alliance for the year.
__(c) Per Capita Corporate Alliance Opt-in Amount._The per capita
corporate alliance opt-in amount, for a regional alliance for a
year, is_
__(1) the total amount of the payment adjustments owed for the
year under section 6124, divided by
__(2) the estimated average number of regional alliance eligible
individuals in the regional alliance during the year (reduced by
the average number of such individuals whose family share of
premiums, determined without regard to this section and section
6107, is zero).
SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.
__(a) In General._The family collection shortfall add-on, for a
regional alliance for a class of enrollment for a year, is the
amount that would be the weighted average premium for such
alliance, class, and year, if the per capita collection shortfall
amount (determined under subsection (b)) for the alliance for the
year were substituted for the reduced weighted average accepted
bid for the regional alliance for the year.
__(b) Computation of Per Capita Adjustment for Collection
Shortfalls._
__(1) Per capita collection shortfall amount _._The per capita
collection shortfall amount, for a regional alliance for a year,
under this subsection is equal to_
__(A) the amount estimated under paragraph (2)(A) for the year,
divided by
__(B) the estimated average number of regional alliance eligible
individuals in the regional alliance during the year (reduced by
the average number of such individuals whose family share of
premiums, determined without regard to this section and section
6106, is zero).
__(2) Aggregate collection shortfall._
__(A) In general._Each regional alliance shall estimate, for each
year (beginning with the first year) the total amount of payments
which the alliance can reasonably identify as owed to the
alliance under this Act (taking into account any premium
reduction or discount under this subtitle and including amounts
owed under subpart B and not taking into account any penalties)
for the year and not likely to be collected (after making
collection efforts described in section 1345) during a period
specified by the Secretary beginning on the first day of the
year.
__(B) Exclusion of government debts._The amount under
subparagraph (A) shall not include any payments owed to a
regional alliance by the Federal, State, or local governments.
__(C) Adjustment for previous shortfall estimation
discrepancy._Subject to section 1361(b)(3), the amount estimated
under this paragraph for a year shall be adjusted to reflect over
(or under) estimations in the amounts so computed under this
paragraph for previous years (based on actual collections),
taking into account interest payable based upon borrowings (or
savings) attributable to such over or under estimations.
Subpart B_Repayment of Alliance Credit by Certain Families
SEC. 6111. REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES.
__(a) In General._Subject to the succeeding provisions of this
subpart, each family which is provided an alliance credit under
section 6103 for a class of enrollment is liable to the regional
alliance for repayment of the amount of such credit in accordance
with section 1343.
__(b) Reduction for Self-Employment Payments._The liability of a
family under this section for a year shall be reduced (but not
below zero) by the amount of any employer payments made in the
year under section 6126 based on the net earnings from
self-employment of a family member.
SEC. 6112. NO LIABILITY FOR FAMILIES EMPLOYED FULL-TIME;
REDUCTION IN LIABILITY FOR PART-TIME EMPLOYMENT.
__(a) In General._The amount of any liability under section 6111
shall be reduced, in accordance with rules established by the
National Health Board consistent with this section, based on
employer premiums payable, under section 6121, with respect to
the employment of a family member who is a qualifying employee or
with respect to a family member. In no case shall the reduction
under this section result in any payment owing to a family.
__(b) Credit for Full-Time and Part-Time Employment._
__(1) In general._Under such rules, in the case of a family
enrolled under a class of family enrollment, if a family member
is a qualifying employee for a month and the employer is liable
for payment under section 6121 based on such employment_
__(A) Full-time employment credit._If the employment is on a
full-time basis (as defined in section 1902(b)(2)) the liability
under section 6111 shall be reduced by the credit amount
described in subparagraph (C).
__(B) Part-time employment credit._If the employment is on a
part-time basis (as defined in section 6121(d)) the liability
under section 6111 shall be reduced by the employment ratio (as
defined in section 6121(d)) of the credit amount described in
subparagraph (C).
__(C) Full-time monthly credit._The amount of the credit under
this subparagraph, with respect to employment by an employer in a
month, is  \1/12\ (or, if applicable, the fraction described in
paragraph (2)) the amount owed under section 6111, based on the
class of enrollment, for the year.
__(2) Coverage during only part of a year._In the case of a
family that is not enrolled in a regional alliance health plan
for all the months in a year, the fraction described in this
paragraph is 1 divided by the number of months in the year in
which the family was enrolled in such a plan.
__(3) Aggregation of credits._
__(A) Individuals._In the case of an individual who is a
qualifying employee of more than one employer in a month, the
credit for the month shall equal the sum of the credits earned
with respect to employment by each employer. Such sum may exceed
the credit amount described in paragraph (1)(C).
__(B) Couples._In the case of a couple each spouse of which is a
qualifying employee in a month, the credit for the month shall
equal the sum of the credits earned with respect to employment by
each spouse. Such sum may exceed the credit amount described in
paragraph (1)(C).
__(c) Treatment of Change of Enrollment Status._In the case of a
family for which the class of family enrollment changes during a
year, the Board shall establish rules for appropriate conversion
and allocation of the credit amounts under the previous
provisions of this section in a manner that reflects the relative
values of the base employment monthly premiums (as determined
under section 6122) among the different classes of family
enrollment.
SEC. 6113. LIMITATION OF LIABILITY BASED ON INCOME.
__(a) In General._In the case of an eligible family described in
subsection (b), the repayment amount required under this subpart
(after taking into account any work credit earned under section
6112) with respect to a year shall not exceed the amount of
liability described in subsection (c) for the year.
__(b) Eligible Family Described._An eligible family described in
this subsection is a family which is determined, under subpart B
of part 2 of subtitle D of title I by the regional alliance for
the alliance area in which the family resides, to have
wage-adjusted income (as defined in subsection (d)) below 250
percent of the applicable poverty level.
__(c) Amount of Liability._
__(1) Determination._Subject to paragraph (2), in the case of a
family enrolled in a class of enrollment with wage-adjusted
income (as defined in subsection (d)), the amount of liability
under this subsection is determined as follows:
__(A) No obligation if income below income threshold amount or if
afdc or ssi family._If such income is than the income threshold
amount (specified in section 6104(c)(4)) or if the family is an
AFDC or SSI family, the amount of liability is zero.
__(B) Income above income threshold amount._If such income is at
least such income threshold amount and the family is not an AFDC
or SSI family, the amount of liability is the sum of the
following:
__(i) 5.5 percent of income (above income threshold amount) up to
the poverty level._The initial marginal rate (specified in
paragraph (2)(A)) of the amount by which_
__(I) the wage-adjusted income (not including any portion that
exceeds the applicable poverty level for the class of family
involved), exceeds
__(II) such income threshold amount.
__(ii) Graduated phase out of discount up to 250 percent of
poverty level._The final marginal rate (specified in paragraph
(2)(B)) of the amount by which the wage-adjusted income exceeds
100 percent of the applicable poverty level.
__(2) Marginal rates._In paragraph (1)_
__(A) Initial marginal rate._The initial marginal rate, for a
year for a class of enrollment, is the ratio of_
__(i) 5.5 percent of the applicable poverty level for the class
of enrollment for the year, to
__(ii) the amount by which such poverty level exceeds such income
threshold amount.
__(B) Final marginal rate._The final marginal rate, for a year
for a class of enrollment, is the ratio of_
__(i) the amount by which (I) the amount of the alliance credit
exceeds (II) 5.5 percent of the applicable poverty (for the class
and year); to
__(ii) 150 percent of such poverty level.
__(C) Application for family enrollment based on based on dual
parent enrollment._The marginal rates under this paragraph for
any family class of enrollment shall be determined based on the
applicable poverty level for a dual parent class of enrollment.


__(d) Wage-Adjusted Income Defined._In this subtitle, the term
``wage-adjusted income'' means, for a family, family adjusted
income of the family (as defined in section 1372(d)(1)), reduced
by the sum of the following:
__(1)(A) Subject to subparagraph (B), the amount of any wages
included in such family's income that is received for employment
which is taken into account in the computation of the amount of
employer premiums under section 6121 (without consideration of
section 6126).
__(B) The reduction under subparagraph (A) shall not exceed for a
year $5,000 (adjusted under section 6104(c)(3)(B)) multiplied by
the number of months (including portions of months) of employment
with respect to which employer premiums were payable under
section 6121 (determined in a manner consistent with section
6121(e)).
__(2) The amount of net earnings from self employment of the
family taken into account under section 6126).
__(3) The amount of unemployment compensation included in income
under section 85 of the Internal Revenue Code of 1986.
__(e) Determinations._A family's wage-adjusted income and the
amount of liability under subsection (c) shall be determined by
the applicable regional alliance upon application by a family
under under subpart B of part 2 of subtitle D of title I.
__(f) No Liability for Indians and Certain Veterans and Military
Personnel._The provisions of paragraph (3) of section 6104(a)
shall apply to the reduction in liability under this section in
the same manner as such paragraph applies to the premium discount
under section 6104.
SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES AND QUALIFIED
SPOUSES AND CHILDREN.
__(a) Treatment as Full-Time Employee._
__(1) In general._Subject to subsection (d) and paragraph (2), an
individual who is an eligible retiree (as defined in susection
(b)) or a qualified spouse or child (as defined in subsection
(c)) for a month in a year (beginning with 2000) is considered,
for purposes of section 6112, to be a full-time employee
described in such section in such month.
__(2) Phase-in._For months in 2000, the reduction in liability
under section 6111 resulting from paragraph (1) for an individual
(or qualified spouse or child) shall be 62.5 percent of the
reduction in liability that would apply but for this paragraph.
__(b) Eligible Retiree Defined._In subsection (a), the term
``eligible retiree'' means, for a month, an individual who
establishes to the satisfaction of the regional alliance (for the
alliance area in which the individual resides), pursuant to rules
of the Secretary, that the individual, as of the first day of the
month_
__(1) is at least 55, but less than 65, years of age,
__(2) is not employed on a full-time basis (as defined in section
6121(d)(1)(A)),
__(3) would be eligible (under section 226(a) of the Social
Security Act) for hospital insurance benefits under part A of
title XVIII of such Act if the individual were 65 years of age
based only on the employment of the individual, and
__(4) is not a medicare-eligible individual.
__(c) Qualified Spouse or Child Defined._In subsection (a), the
term ``qualified spouse or child'' means, in relation to an
eligible retiree for a month, an individual who establishes to
the satisfaction of the regional alliance (for the alliance area
in which the individual resides) under rules of the Secretary
that the requirements in one of the following paragraphs is met
with respect to the individual:
__(1) The individual (A) is under 65 years of age and is (and has
been for a period of at least one year) married to an eligible
retiree or (B) is a child of the eligible retiree.
__(2) In the case of a person who was an eligible retiree at the
time of the person's death_
__(A) the individual  was (and had for a period of at least one
year been) married to the retiree at the time of the person's
death,
__(B) the individual is under 65 years of age,
__(C) the individual is not employed on a full-time basis (as
defined in section 6121(d)(1)(A)),
__(D) the individual is not remarried, and
__(E) the deceased spouse would still be an eligible retiree in
the month if such spouse had not died.
__(3) The individual is a child of an individual described in
paragraph (2).

__(d) Individuals Disqualified._Subsection (a) shall not apply to
an individual for a month in a year if the individual would be
subject to section 59B of the Internal Revenue Code of 1986 as a
taxpayer in the year if the individual were covered under
Medicare part B for any month during the year.
__(e) Application._An individual may not be determined to be an
eligible retiree or qualified spouse or child unless an
application has been filed with the regional alliance. Such
application shall contain such information as the Secretary may
require to establish such status and verify information in the
application. Any material misrepresentation in the application is
subject to a penalty in the same manner as a misrepresentation
described in section 1374(h)(2).
SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE BENEFICIARIES.
__In the case of an individual who would be a medicare-eligible
individual in a month but for the application of section 1012(a)
on the basis of employment (in the month or a previous month) of
the individual or the individual's spouse, the individual (or
spouse, as the case may be) so employed is considered, for
purposes of section 6112, to be a full-time employee described in
such section in such month.
PART 2_EMPLOYER PREMIUM PAYMENTS
Subpart A_Regional Alliance Employers
SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.
__(a) Requirement._
__(1) In general._Each regional alliance employer described in
paragraph (2) for a month shall pay to the regional alliance that
provides health coverage to a qualifying employee of the employer
an employer premium in a amount at least equal to the amount
specified in subsection (b). Such payments shall be made in
accordance with section 1345.
__(2) Employer described._An employer described in this paragraph
for a month, is an employer that in the month employs one or more
qualifying employees (as defined in section 1902(b)(1)).
__(3) Treatment of certain employment by corporate alliance
employers._A corporate alliance employer shall be deemed, for
purposes of this subpart, to be a regional alliance employer with
respect to qualifying employees who are not corporate alliance
eligible individuals.

__(b) Premium Payment Amount._
__(1) In general._Except as provided in section 6123 (relating to
a discount for certain employers), section 6124 (relating to
large employers electing coverage in a regional alliance), and
section 6125 (relating to the employer collection shortfall
add-on), the amount of the employer premium payment, for a month
for qualifying employees of the employer who reside in an
alliance area, is the sum of the payment amounts computed under
paragraph (2) for each class of family enrollment with respect to
such employees in such area.
__(2) Payment amount for all employees in a class of family
enrollment._Subject to paragraph (3), the payment amount under
this paragraph, for an employer for a class of family enrollment
for a month for qualifying employees residing in an alliance
area, is the product of_
__(A) the base employer monthly premium determined under section
6122 for the class of family enrollment for the previous month
for the regional alliance, and
__(B) the number of full-time equivalent employees (determined
under section 1901(b)(2)) enrolled in that class of family
enrollment for the previous month and residing in the alliance
area.
__(3) Treatment of certain employees._In applying this subpart in
the case of a qualifying employee (other than a medicare-eligible
individual) who is not enrolled in any alliance health plan_
__(A) the employee is deemed enrolled in a regional alliance
health plan (for the alliance area in which the individual
resides) in the dual parent class of enrollment, and
__(B) if the employee's residence is not known, the employee is
deemed to reside in the alliance area in which the employee
principally is employed for the employer.
__(4) Transitional rules for first month in first year for a
State._In the case of an employer for a State in the first month
of the State's first year_
__(A) the premium amount for such month shall be computed by
substituting ``month'' for ``previous month'' in paragraph (2);
__(B) payment for such month shall be made on the first of the
month based on an estimate of the payment for such month;
__(C) an adjustment shall be made to the payment in the following
month to reflect the difference between the payment in the first
month and the payment in the following month (calculated without
regard to the adjustment under this subparagraph); and
__(D) the reconciliation of premiums for such first month under
section 1602(c) shall be included in the reconciliation of
premiums for the following 12 months.
__(5) Special rules for divided families._In the case of an
individual who is a qualifying employee of an employer and the
individual has a spouse or child who is not treated as part of
the individual's family because of section 1012_
__(A) the employer premium payment under this section shall be
computed as though such section had not applied, and
__(B) the regional alliance shall make proportional payments
(consistent with rules established by the Secretary) to the
health plans (if different) of the qualifying employee and of the
employee's spouse and children.
__(c) Application During Transition Period._
__(1) In general._For purposes of applying this subpart in the
case of an employer described in paragraph (3), there shall only
be taken into account qualifying employees (and wages of such
employees) who reside in a participating State.
__(2) Exception._Paragraph (1) shall not apply in determining the
average number of full-time equivalent employees or whether an
employer is a small employer.
__(3) Employer described._An employer described in this paragraph
is an employer that employs one or more qualifying employees in a
participating State and one or more qualifying employees in a
State that is not a participating State.

SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTHLY PREMIUM.
__(a) In General._Each regional alliance shall provide for the
computation for each year (beginning with the first year) of a
base employment monthly premium for each class of family
enrollment equal to \1/12\ of 80 percent of_
__(1) the weighted average premium for such regional alliance and
class of enrollment, reduced by the amount described in section
6106(b), divided by
__(2)(A) in the case of a class of enrollment that does not
include a couple, 1, or
__(B) in the case of a couple class of enrollment, the average
number of premium payments per family, as determined under
subsection (b), for families receiving coverage within such class
from regional alliance health plans offered by the regional
alliance.
__(b) Determination of Average Employer Premium Payments Per
Family for Couples Classes._
__(1) In general._Subject to paragraph (4), the regional alliance
shall determine, for each couple class of family enrollment and
in a manner specified by the Board, an average, annual, estimated
number of premium payments per family equal to_
__(A) the alliance-wide monthly average number of premium
payments (as determined under paragraph (2)) for covered families
(as defined in paragraph (3)) within such class of enrollment,
divided by
__(B) the monthly average number of covered families receiving
coverage through regional alliance health plans within such class
of employment.
__(2) Computation of alliance-wide monthly average number._
__(A) In general._In determining the alliance-wide monthly
average number of premium payments under paragraph (1)(A), a
covered family shall count for a month as 1, or, if greater, the
number computed under subparagraph (B) (but in no case greater
than 2).
__(B) Counting of families in which both spouses are qualifying
employees._The number computed under this subparagraph over all
families within a couple class of enrollment in which both
spouses are qualifying employees, is determined on an
alliance-wide basis based on the following:
__(i) For such a spouse, determine, using the rules under section
1902(b)(2)(A), how many full-time equivalent employees the spouse
is counted as, but not to exceed 1 for either spouse.
__(ii) Add the 2 numbers determined under clause (i) for spouses
in such families.
__(3) Covered family defined._In this subsection, the term
``covered family'' means a family other than_
__(A) an SSI family or AFDC family,
__(B) a family in which a spouse is a medicare-eligible
individual, or
__(C) a family that is enrolled in a health plan other than a
regional alliance health plan.
__(4) Adjustment to account for use of estimates._Subject to
section 1361(b)(3), if the total receipts of a regional alliance
to all regional alliance health plans in a year under this
subpart exceeds, or is less than, the total of such receipts
estimated by the alliance (based on the base employment monthly
premium under subsection (a)), because of a difference between_
__(A) the alliance's estimate of the average, annual, estimated
number of premium payments per family for the alliance, and
__(B) the actual number of premium payments per family for the
alliance,
the average, annual, estimated number of premium payments per
family to be applied under this section in the second succeeding
year shall be reduced, or increased, respectively, in a manner
that results in total receipts of the alliance under this subpart
in such succeeding year being increased or decreased by the
amount of such excess (or deficit).
__(c) Basis for Determinations._
__(1) Premiums._The determinations of premiums and families under
plans under this section shall be made in a manner determined by
the Board and based on the premiums and families used by the
Board in carrying out subtitle A (relating to cost containment)
and shall be based on estimates on an annualized basis.
__(2) Employment._
__(A) For first year._The determinations of employment under this
section for the first year for a State shall be based on
estimates of employment established by the regional alliance in
accordance with standards promulgated by the Secretary of Labor
in consultation with the National Health Board.
__(B) For subsequent years._The determinations of employment
under this section for a year after the first year for a State
shall be based on estimates of employment established by the
regional alliance in accordance with standards promulgated by the
Secretary of Labor in consultation with the National Health
Board.
__(3) Reports._In accordance with rules established by the
Secretary of Labor in consultation with the National Health
Board, a regional alliance may require regional alliance
employers to submit such periodic information on employment as
may be necessary to monitor the determinations made under
subsections (a) and (c), including months and extent of
employment.
__(d) Timing of Determination._Determinations under this section
for a year shall be made by not later than December 1, or such
other date as the Board may specify, before the beginning of the
year.
SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.
__(a) Employer Discount._
__(1) In general._Subject to section 6124(c) (relating to phase
in for certain large corporate alliance employers) and section
6125 (relating to the employer collection shortfall add-on), the
amount of the employer premium payment required under this part
for a regional alliance employer for any year shall not exceed
the limiting percentage (as defined in subsection (b)) of the
employer's wages for that year.
__(2) Exclusion of governmental employers and certain corporate
alliance employers._Paragraph (1) shall not apply to_
__(A) the Federal Government, a State government, or a unit of
local government, or a unit or instrumentality of such
government, before 2002; and
__(B) a corporate alliance employer which is treated as a
regional alliance employer under section 6131(a)(2).


__(b) Limiting Percentage Defined._In subsection (a)_
__(1) Any employer._For an employer that is not a small employer
(as defined in subsection (c)), the limiting percentage is 7.9
percent.
__(2) Small employers._For an employer that is a small employer
and that has an average number of full-time equivalent employees
and average annual wages per full-time equivalent employee (as
determined under subsection (d)), the limiting percentage is the
applicable percentage determined based on following table:




Limiting Percentage
Average number of full-time equivalent employees
Employer's average annual wages per full-time equivalent employee
are:
$0        $12,000
$12,001   $15,000
$15,001   $18,000
$18,001   $21,000
$21,001   $24,000

Fewer than
25  03.5%  04.4%  05.3%  06.2%  07.1%
25 but fewer than 50  04.4%  05.3%  06.2%  07.1%  07.9%
50 but fewer than 75  05.3%  06.2%  07.1%  07.9%  07.9%






__(c) Small Employer Defined._
__(1) In general._In this section_
__(A) the term ``small employer'' means an employer that does not
employ, on average, more than 75 full-time equivalent employees;
and
__(B) subject to subsection (b)(3)(C)(i), the average number of
full-time equivalent employees shall be determined by averaging
the number of full-time equivalent employees employed by the
employer in each countable month during the year.
__(2) Countable month._In paragraph (1), the term ``countable
month'' means, for an employer, a month in which the employer
employs any qualifying employee.
__(3) Determinations._The number of full-time equivalent
employees shall be determined using the rules under section
1902(b)(2).
__(d) Average Annual Wages Defined._
__(1) In general._In this section, the term ``average annual
wages'' means, for an employer for a year_
__(A) the total wages paid in the year to individuals who, at the
time of payment of the wages, are qualifying employees of the
employer; divided by
__(B) the number of full-time equivalent employees of the
employer in the year.
__(2) Determination._The Board may establish rules relating to
the computation of the average annual wages for employers.

__(e) Determinations._For purposes of this section, the number of
employees and average wages shall be determined on an annual
basis.

__(f) Treatment of Certain Self-employed Individuals._In the case
of an individual who is a partner in a partnership, is a
2-percent shareholder in an S corporation (within the meaning of
section 1372 of the Internal Revenue Code of 1986), or is any
other individual who carries on a trade or business as a sole
proprietorship, for purposes of this section_
__(1) the individual is deemed to be an employee of the
partnership, S corporation, or proprietorship, and
__(2) the individual's net earnings from self employment
attributable to the partnership, S corporation, or sole
proprietorship are deemed to be wages from the partnership, S
corporation, or proprietorship.

__(g) Application to Employers._An employer that claims that this
section applies_
__(1) shall provide notice to the regional alliance involved of
the claim at the time of making payments under this part; and
__(2) shall make available such information (and provide access
to such information) as the regional alliance may require (in
accordance with regulations of the Secretary of Labor) to audit
the determination of_
__(A) whether the employer is a small employer, and, if so, the
average number of full-time equivalent employees and average
annual wages of the employer; and
__(B) the total wages paid by the employer for qualifying
employees.

SEC. 6124. PAYMENT ADJUSTMENT FOR LARGE EMPLOYERS ELECTING
COVERAGE IN A REGIONAL ALLIANCE.
__(a) Application of Section._
__(1) In general._Except as otherwise provided in this
subsection, this section shall apply to the employer premium
payments for full-time employees in a State of an employer if_
__(A)(i) the employer is an eligible sponsor described in section
1311(b)(1)(A), (ii) the employer elected to be a corporate
alliance under section 1312(a)(1), and (iii) the election is
terminated under section 1313;
__(B)(i) the employer is such an eligible sponsor as of the first
day of the first year of the State, and (ii) the employer did not
provide the notice required under section 1312(a)(1) (with
respect to an election to become a corporate alliance); or
__(C) the employer is such an eligible sponsor, (ii) the employer
subsequently became a large employer and elected to be a
corporate alliance under section 1312(a)(2), and (iii) the
election was terminated under section 1313.
__(2) Effective date._In the case of an employer described in_
__(A) paragraph (1)(A) or (1)(C), this section shall first apply
on the effective date of the termination of the election under
section 1313, or
__(B) paragraph (1)(B), this section shall first apply as of
January 1, 1996 (or, if later with respect to a State, the first
day of the first year for the State).
__(3) Treatment of employees in small establishments._This
section shall not apply to the payment of premiums for full-time
employees of an employer described in paragraph (1)(A) or (1)(C),
if the employees are employed at an establishment with respect to
which the option described in section 1311(b)(1)(C) was
exercised.
__(4) Sunset._This section shall cease applying to an employer
with respect to employment in a State after the 7th year in which
this section applies to the employer in the State.
__(5) Large employer defined._In this section, the term ``large
employer'' has the meaning given such term in section 1311(d)(3).
__(b) Additional Amount._
__(1) In general._If an employer subject to this section for a
year has an excess risk percentage (as defined in paragraph (3))
of greater than zero with respect to an alliance area, then the
employer shall provide, on a monthly basis, for payment to the
regional alliance for such area of an amount equal to \1/12\ of
the excess amount described in paragraph (2) for the year.
__(2) Excess amount._The excess amount described in this
paragraph, for an employer for a year with respect to an alliance
area, is equal to the product of the following:
__(A) The reduced weighted average accepted bid for the regional
alliance for the area for the year.
__(B) The total average number of alliance eligible individuals
who_
__(i) were full-time employees (or family members of such
employees) of the employer, and
__(ii) residing in the regional alliance area,
in the year before the first year in which this section applies
to the employer.
__(C) The extra risk proportion (specified in paragraph (3)) for
the employer for such area.
__(D) The phase-down percentage (specified in paragraph (4)) for
the year.
__(3) Extra risk proportion._
__(A) In general._The ``extra risk proportion'', specified in
this paragraph, with respect to an employer and an alliance area,
is a percentage that reflects, for the year before the first year
in which this section applies to the employer, the amount by
which_
__(i) the average demographic risk for employees (and family
members) described in paragraph (2)(B) residing in the alliance
area, exceeds
__(ii) the average demographic risk for all regional alliance
eligible individuals residing in the area.
__(B) Measurement of demographic risk._
__(i) In general._Demographic risk under subparagraph (A) shall
be measured, in a manner specified by the Board, based on the
demographic characteristics described in section 6001(c)(1)(A),
that relate to the actuarial value of the comprehensive benefit
package.
__(ii) Provision of information._Each employer to which this
section applies shall submit, to each regional alliance for which
an additional payment is required under this section, such
information (and at such time) as the Board may require in order
to determine the demographic risk referred to in subparagraph
(A)(i).
__(4) Phase-down percentage._The phase down percentage, specified
in this paragraph for an employer for_
__(A) each of the first 4 years to which this section applies to
the employer, is 100 percent,
__(B) the fifth such year, is 75 percent,
__(C) the sixth such year, is 50 percent, and
__(D) the seventh such year, is 25 percent.
__(c) Phase in of Employer Premium Discount._For_
__(1) each of the first 4 years in which this section applies to
such employer, section 6123 shall not apply to the employer;
__(2) the fifth such year, section 6123 shall apply to the
employer but the reduction in premium payment effected by such
section shall be 25 percent of the reduction that would otherwise
apply (but for this subsection);
__(3) the sixth such year, section 6123 shall apply to the
employer but the reduction in premium payment effected by such
section shall be 50 percent of the reduction that would otherwise
apply (but for this subsection);
__(4) the seventh such year, section 6123 shall apply to the
employer but the reduction in premium payment effected by such
section shall be 75 percent of the reduction that would otherwise
apply (but for this subsection); or
__(5) a subsequent year, section 6123 shall apply to the employer
without any reduction under this subsection.


SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.
__(a) In General._The amount payable by an employer under this
subpart shall be increased by the amount computed under
subsection (b).
__(b) Amount._The amount under this subsection for an employer is
equal to the premium payment amount that would be computed under
section 6121(b)(2) if the per capita collection shortfall amount
(computed under section 6107(b)(1)) for the year were substituted
for the reduced weighted average accepted bid for the year.
__(c) Discount Not Applicable._Section 6123 shall not apply to
the increase in the amount payable by virtue of this section.

SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.
__(a) In General._A self-employed individual (as defined in
section 1901(6)) shall be considered, for purposes of this
subpart to be an employer of himself or herself and to pay wages
to himself or herself equal to the amount of net earnings from
self-employment (as defined in section 1901(c)(1)).
__(b) Credit for Employer Premiums._
__(1) In general._In the case of a self-employed individual, the
amount of any employer premium payable by virtue of subsection
(a) in a year shall be reduced (but not below zero) by the sum of
the following:
__(A) Subject to paragraph (2), the amount of any employer
premiums payable under this subpart (determined not taking into
account any adjustment in the premium amounts under section 6123
or 6124) with respect to the employment of that individual in the
year.
__(B) The product of (i) the number of months in the year the
individual was employed on a full-time basis by a corporate
alliance employer, and (ii) the employer premium that would have
been payable for such months under this subpart (determined not
taking into account any adjustment in the premium amounts under
section 6123 or 6124) for the class of enrollment if such
employer had been a regional alliance employer.
__(2) Special rule for certain closely-held businesses._
__(A) In general._In the case of an individual who_
__(i) has wage-adjusted income (as defined in section 6113(d),
determined without regard to paragraphs (1)(B) and (2) thereof)
that exceeds 250 percent (or such higher percentage as the Board
may establish) of the applicable poverty level, and
__(ii) is both a substantial owner and an employee of a closely
held business,
the amount of any reduction under paragraph (1)(A) that is
attributable to the individual's employment by that business
shall be appropriately reduced in accordance with rules
prescribed by the Board, in order to prevent individuals from
avoiding payment of the full amount owed through sham or
secondary employment arrangements.
__(B) Closely held business._For purposes of subparagraph (A), a
business is ``closely held'' if it is an employer that meets the
requirements of section 542(a)(2) of the Internal Revenue Code of
1986 or similar requirements as appropriate in the case of a
partnership or other entity.






Subpart B_Corporate Alliance Employers
SEC. 6131. EMPLOYER PREMIUM PAYMENT REQUIRED.
__(a) Per Employee Premium Payment._Subject to section 6124, each
corporate alliance employer of a corporate alliance that in a
month in a year employs a qualifying employee who is_
__(1) enrolled in a corporate alliance health plan offered by the
alliance, shall provide for a payment toward the premium for the
plan in an amount at least equal to the corporate employer
premium specified in subsection (b); or
__(2) is not so enrolled, shall make employer premium payments
with respect to such employment under subpart A in the same
manner as if the employer were a regional alliance employer
(except as otherwise provided in such subpart).
__(b) Corporate Employer Premium._
__(1) Amount._
__(A) In general._Except as provided in paragraph (2), the amount
of the corporate employer premium for a month in a year for a
class of family enrollment for a family residing in a premium
area (established under section 1364(b)) is 80 percent of the
weighted average monthly premium of the corporate alliance health
plans offered by the corporate alliance for that class of
enrollment for families residing in that area.
__(B) Application to self-insured plans._In applying this
paragraph in the case of one or more corporate alliance health
plans that are self-insured plans_
__(i) the ``premium'' for the plan is the actuarial equivalent of
such premium, based upon the methodology  (or such other
consistent methodology) used under section 6021(a) (relating to
application of cost containment to corporate alliance health
plans), and
__(ii) the premium amount, for different classes and, if
applicable, for different premium areas, shall be computed in a
manner based on such factors as may bear a reasonable
relationship to costs for the provision of the comprehensive
benefit package to the different classes in such areas.
The Secretary of Labor shall establish rules to carry out this
subparagraph.
__(2) Low-wage employees._In the case of a low-wage employee
entitled to a premium discount under section 6104(a)(2), the
amount of the employer premium payment for a month in a year for
a class of family enrollment shall be increased by the amount of
such premium discount.

__(c) Determinations._
__(1) Basis._Determinations under this section shall be made
based on such information as the Secretary of Labor shall
specify.
__(2) Timing._Determinations of the monthly premiums under this
section for months in a year shall be made not later than
December 1 of the previous year.



Title VI, Subtitle C

Subtitle C_Payments to Regional Alliance Health Plans
SEC. 6201. COMPUTATION OF BLENDED PLAN PER CAPITA PAYMENT AMOUNT.
__(a) In General._For purposes of section 1342, the blended plan
per capita payment amount for a regional alliance health plan for
enrollments in an alliance for a year is equal to the sum of the
3 components described in subsection (b), multiplied by any
adjustment factor applied for the year under subsection (d).
__(b) Sum of Products._The 3 components described in this
subsection are:
__(1) Plan bid component for that plan._The product of_
__(A) the final accepted bid for plan (as defined in section
6000(a)(2)) for the year, and
__(B) the plan bid proportion determined under section 6202(a)(1)
for the year.
__(2) AFDC component for alliance._The product of_
__(A) the AFDC per capita premium amount for the regional
alliance for the year (determined under section 9012), and
__(B) the AFDC proportion determined under section 6202(a)(2) for
the year.
__(3) SSI component for alliance._The product of_
__(A) the SSI per capita premium amount for the regional alliance
for the year (determined under section 9013) for the year, and
__(B) the SSI proportion determined under section 6202(a)(3) for
the year.
SEC. 6202. COMPUTATION OF PLAN BID, AFDC, AND SSI PROPORTIONS.
__(a) In General._For purposes of this subtitle:
__(1) Plan bid proportion._The ``plan bid proportion'' is, for a
type of enrollment, 1 minus the sum of (A) the AFDC proportion,
and (B) the SSI proportion.
__(2) AFDC proportion._The ``AFDC proportion'' is, for a class of
family enrollment for a year, the ratio of_
__(A) the average of the number of AFDC recipients (as determined
under subsection (c)) enrolled in regional alliance health plans
in that class of enrollment for the year, to
__(B) the average of the total number of individuals enrolled in
regional alliance health plans in that class of enrollment for
the year.
__(3) SSI proportion._The ``SSI proportion'' is, for a class of
family enrollment for a year, the ratio of_
__(A) the average of the number of SSI recipients (as determined
under subsection (c)) enrolled in regional alliance health plans
in that class of enrollment for the year, to
__(B) the average described in paragraph (2)(B).
__(b) Computation._
__(1) Projections._The proportions described in subsection (a)
shall be determined and applied by the State, based upon the best
available data, at least 1 month before the date bids are
submitted under section 6004 before the beginning of the calendar
year involved.
__(2) Actual._For purposes of making adjustments under subsection
(d), the regional alliance shall determine, after the end of each
year, the actual proportions described in subsection (a).
__(c) Counting of AFDC and SSI Recipients._For purposes of
subsections (a)(2)(A) and (a)(3)(A), the terms ``SSI recipient''
and ``AFDC recipient'' do not include a medicare-eligible
individual.
__(d) Adjustments For Discrepancies In Estimations._
__(1) In general._If the actual AFDC proportion or SSI proportion
(as determined under subsection (a)) for a year (in this
subsection referred to as the ``reference year''), determined
after the end of the year based upon actual number of AFDC
recipients and SSI recipients in the year, is different from the
projected AFDC and SSI proportions (as determined under
subsection (b)(1)) used in computing the blended plan payment
amount for the year, then, subject to section 1361(b)(3), the
regional alliance shall adjust the blended plan payment amount in
the second succeeding year (in this subsection referred to as the
``applicable year'') in the manner described in paragraph (2). By
regulation the Secretary may apply the adjustment, based on
estimated amounts, in the year before the applicable year, with
final adjustment in the applicable year.
__(2) Adjustment described._
__(A) Positive cash flow._If the cash flow difference (as defined
in paragraph (3)(A)) for the reference year is positive, then in
the applicable year the blended plan payment amount shall be
increased by the adjustment percentage described in paragraph
(4).
__(B) Negative cash flow._If the cash flow difference (as defined
in paragraph (3)(A)) for the reference year is negative, then in
the applicable year the blended plan payment amount shall be
reduced by the adjustment percentage described in paragraph (4).
__(3) Cash flow difference defined._In this subsection:
__(A) In general._The term ``cash flow difference'' means, for a
regional alliance for a reference year, the amount by which_
__(i) the actual cash flow (as defined in subparagraph (B)) for
the alliance for the year, exceeds
__(ii) the reconciled cash flow (as defined in subparagraph (C))
for the alliance for the year.
__(B) Actual cash flow._The term ``actual cash flow'' means, for
a regional alliance for a reference year, the total amount paid
by the regional alliance to the regional alliance health plans in
the year based on the blended plan payment amount (computed on
the basis of projected AFDC and SSI proportions determined under
subsection (b)(1).
__(C) Reconciled cash flow._The term ``reconciled cash flow''
means, for a regional alliance for a reference year, the total
amount that would have been paid to regional alliance health
plans in the year if such payments had been made based on the
blended plan payment amount computed on the basis of the actual
AFDC and SSI proportions for the year (determined under
subsection (b)(2), rather than based on such payment amount
computed on the basis of the projected AFDC and SSI proportions
for the year (determined under subsection (b)(1)).
__(4) Percentage adjustment._The percentage adjustment described
in this paragraph for a regional alliance for an applicable year
is the ratio (expressed as a percentage) of_
__(A) the cash flow difference for the reference year, to
__(B) the total payments estimated by the regional alliance to be
paid to regional alliance health plans under this subtitle in the
applicable year (determined without regard to any adjustment
under this subsection).