HIV AIDS Resource Guide/HIV-AIDS Resource Guide.iso/STAT/PROP_FED/HSA01_2.ASC

Text File | 1993-01-14 | 104KB | 2,242 lines

/* Part two of Title I of the Health Security Act follows.
*/

    (f)  Special Requirements for Alliances With Single-
Payer System. If the State operates an alliance-specific
single-payer system (as described in part 2), the State
shall assure that the regional alliance in which the system
is operated meets the requirements for such an alliance
described in section 1224(b).
    (g)  Payment of Shortfalls for Certain Administrative
Errors. Each participating State is financially responsible,
under section 9201(c)(2), for administrative errors
described in section 9201(e)(2).
            Section 1203   STATE RESPONSIBILITIES RELATING
TO HEALTH PLANS.
    (a)  Criteria for Certification.
        (1)  In general. For purposes of this section, a
participating State shall establish and publish the criteria
that are used in the certification of health plans under
this section.
        (2)  Requirements. Such criteria shall be
established with respect to
            (A)  the quality of the plan,
          (B)  the financial stability of the plan,
            (C)  the plan's capacity to deliver the
comprehensive benefit package in the designated service
area,
            (D)  other applicable requirements for health
plans under parts 1, 3, and 4 of subtitle E, and
            (E)  other requirements imposed by the State
consistent with this part.
    (b)  Certification of Health Plans.A participating State
shall certify each plan as a regional alliance health plan
that it determines meets the criteria for certification
established and published under subsection (a).
    (c)  Monitoring. A participating State shall monitor the
performance of each State-certified regional alliance health
plan to ensure that it continues to meet the criteria for
certification.
    (d)  Limitations on Authority. A participating State may
not
        (1)  discriminate against a plan based on the
domicile of the entity offering of the plan; and
        (2)  regulate premium rates charged by health plans,
except as may be required under title VI (relating to the
enforcement of cost containment rules for plans in the
State) or as may be necessary to ensure that plans meet
financial solvency requirements under section     1408.
 (e)  Assuring Adequate Access to a Choice of Health Plans.
        (1)  General access.
            (A)  In general. Each participating State shall
ensure that

    (i)  each regional alliance eligible family has adequate
access to enroll in a choice of regional alliance health
plans providing services in the area in which the individual
resides, including (to the maximum extent practicable)
adequate access to a plan whose premium is at or below the
weighted average premium for plans in the regional alliance,
and
    (ii)  each such family that is eligible for a premium
discount under section 6104(b) is provided a discount in
accordance with such section (including an increase in such
discount described in section 6104(b)(2)).

            (B)  Authority. In order to carry out its
responsibility under subparagraph (A), a participating State
may require, as a condition of entering into a contract with
a regional alliance under section 1321, that one or more
certified regional alliance health plans cover all (or
selected portions) of the alliance area.
        (2)  Access to plans using centers of excellence.
Each participating State may require, as a condition of
entering into a contract with a regional alliance under
section 1321, that one or more certified health plans
provide access (through reimbursement, contracts, or
otherwise) of enrolled individuals to services of centers of
excellence (as designated by the State in accordance with
rules promulgated by the Secretary).
        (3)  Use of incentives to enroll and serve
disadvantaged groups. A State may provide
          (A)  for an adjustment to the risk-adjustment
methodology under section 1541(b) and other financial
incentives to regional alliance health plans to ensure that
such plans enroll individuals who are members of
disadvantaged groups, and
            (B)  for appropriate extra services, such as
outreach to encourage enrollment and transportation and
interpreting services to ensure access to care, for certain
population groups that face barriers to access because of
geographic location, income levels, or racial or cultural
differences.
    (f)  Coordination of Workers' Compensation Services and
Automobile Insurance. Each participating State shall comply
with the responsibilities regarding workers' compensation
and automobile insurance specified in subtitles A and B of
title X.
 (g)  Implementation of Mandatory Reinsurance System. If the
risk adjustment and reinsurance methodology developed under
section 1541 includes a mandatory reinsurance system, each
participating State shall establish a reinsurance program
consistent with such methodology and any additional
standards established by the Board.

    (h)  Requirements for Plans Offering Supplemental
Insurance. Notwithstanding any other provision of this Act a
State may not certify a regional alliance health plan under
this section if

        (1)  the plan (or any entity with which the plan is
affiliated under such rules as the Board may establish)
offers a supplemental health benefit policy (as defined in
section 1421(b)(1)) that fails to meet the applicable
requirements for such a policy under part 2 of subtitle E
(without regard to the State in which the policy is
offered); or

        (2)  the plan offers a cost sharing policy (as
defined in
section 1421(b)(2)) that fails to meet the applicable
requirements for such a policy under part 2 of subtitle E.
            Section 1204   FINANCIAL SOLVENCY; FISCAL
OVERSIGHT; GUARANTY FUND.
    (a)  Capital Standards. A participating State shall
establish capital standards for health plans that meet
minimum Federal requirements established by the National
Health Board under sections 1503(i) and 1551(a).
    (b)  Reporting and Auditing Requirements. Each
participating State shall define financial reporting and
auditing requirements and requirements for fund reserves
adequate to monitor the financial status of plans.
    (c)  Guaranty Fund.
        (1)  Establishment. Each participating State shall
ensure that there is a guaranty fund that meets the
requirements established by the Board under sections 1503(i)
and 1552, in order to provide financial protection to health
care providers and others in the case of a failure of a
regional alliance health plan.
        (2)  Assessments to provide funds. In the case of a
failure of one or more regional alliance health plans, the
State may require each regional alliance health plan within
the State to pay an assessment to the State in an amount not
to exceed 2 percent of the premiums of such plans paid by or
on behalf of regional alliance eligible individuals during a
year for so long as necessary to generate sufficient revenue
to cover any outstanding claims against the failed plan.
    (d)  Procedures in Event of Plan Failure.
        (1)  In general. A participating State shall assure
that, in the event of the failure of a regional alliance
health plan in the State, eligible individuals enrolled in
the plan will be assured continuity of coverage for the
comprehensive benefit package.
        (2)  Designation of state agency.A participating
State shall designate an agency of State government that
supervises or assumes control of the operation of a regional
alliance health plan in the case of the failure of the plan.
        (3)  Protections for health care providers and
enrollees. Each participating State shall assure that in the
case of a plan failure
            (A)  the guaranty fund shall pay health care
providers for items and services covered under the
comprehensive benefit package for enrollees of the plan for
which the plan is otherwise obligated to make payment;
            (B)  after making all payments required to be
made to providers under subparagraph (A), the guaranty fund
shall make payments for the operational, administrative, and
other costs and debts of the plan (in accordance with
requirements imposed by the State based on rules promulgated
by the Board);
            (C)  such health care providers have no legal
right to seek payment from eligible individuals enrolled in
the plan for any such covered items or services (other than
the enrollees' obligations under cost sharing arrangements);
and

            (D)  health care providers are required to
continue caring for such eligible individuals until such
individuals are enrolled in a new health plan.

        (4)  Plan failure. For purposes of this section, the
failure of a health plan means the current or imminent
inability of the plan to pay claims.

            Section 1205   RESTRICTIONS ON FUNDING OF
ADDITIONAL BENEFITS.

 If a participating State provides benefits (either directly
or through regional alliance health plans or otherwise) in
addition to those covered under the comprehensive benefit
package, the State may not provide for payment for such
benefits through funds provided under this Act.

    Part 2   REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

            Section 1221   SINGLE-PAYER SYSTEM DESCRIBED.

    The Board shall approve the application of a State to
operate a single-payer system if the Board finds that the
system

        (1)  meets the requirements of section 1222;

        (2) (A) meets the requirements for a Statewide
singlepayer system under section 1223, in the case of a
system offered throughout a State; or

            (B)  meets the requirements for an alliance-
specific single-payer system under section 1224, in the case
of a system offered in a single alliance of a State.

            Section 1222   GENERAL REQUIREMENTS FOR SINGLE-
PAYER SYSTEMS.

    Each single-payer system shall meet the following
requirements:

        (1)  Establishment by state. The system is
established under State law, and State law provides for
mechanisms to enforce the requirements of the system.

        (2)  Operation by state. The system is operated by
the State or a designated agency of the State.

        (3)  Enrollment of eligible individuals.

            (A)  Mandatory enrollment of all regional
alliance individuals. The system provides for the enrollment
of all eligible individuals residing in the State (or, in
the case of an alliance-specific single-payer system, in the
alliance area) for whom the applicable health plan would
otherwise be a regional alliance health plan.

            (B)  Optional enrollment of medicare-eligible
individuals. At the option of the State, the system may
provide for the enrollment of medicare-individuals residing
in the State (or, in the case of an alliance-specific single-
payer system, in the alliance area) if the Secretary of
Health and Human Services has approved an application
submitted by the State under section 1893 of the Social
Security Act (as added by section 4001(a)) for the
integration of medicare beneficiaries into plans of the
State. Nothing in this subparagraph shall be construed as
requiring that a State have a single-payer system in order to
provide for such integration.
            (C)  Optional enrollment of corporate alliance
individuals in statewide plans. At the option of the State, a
Statewide single-payer system may provide for the enrollment of
individuals residing in the State who are otherwise eligible to
enroll in a corporate alliance health plan under section 1311.
            (D)  Options included in State system document. A
State may not exercise any of the options described in
subparagraphs (A) or (B) for a year unless the State included a
description of the option in the submission of its system
document to the Board or the year under section 1200(b).
            (E)  Exclusion of certain individuals.A single-
payer system may not require the enrollment of electing
veterans, active duty military personnel, and electing Indians
(as defined in 1012(d)).
        (4)  Direct payment to providers.
            (A)  In general. With respect to providers who
furnish items and services included in the comprehensive
benefit package to individuals enrolled in the system, the
State shall make payments directly to such providers and assume
(subject to subparagraph (B)) all financial risk associated
with making such payments.
            (B)  Capitated payments permitted. Nothing in
subparagraph (A) shall be construed to prohibit providers
furnishing items and services under the system from receiving
payments from the plan on a capitated, at-risk basis based on
prospectively determined rates.
       (5)  Provision of comprehensive benefit package.
            (A)  In general. The system shall provide for
coverage of the comprehensive benefit package, including the
cost sharing provided under the package (subject to
subparagraph (B)), to all individuals enrolled in the system.

            (B)  Imposition of reduced cost sharing. The system
may decrease the cost sharing otherwise provided in the
comprehensive benefit package with respect to any class of
individuals enrolled in the system or any class of services
included in the package, so long as the system does not
increase the cost sharing otherwise imposed with respect to any
other class of individuals or services.

        (6)  Cost containment. The system shall provide for
mechanisms to ensure, in a manner satisfactory to the Board,
that

            (A)  per capita expenditures for items and services
in the comprehensive benefit package under the system for a
year (beginning with the first year) do not exceed an amount
equivalent to the regional alliance per capita premium target
that is determined under section 6003 (based on the State being
a single regional alliance) for the year;

            (B)  the per capita expenditures described in
subparagraph (A) are computed and effectively monitored; and

          (C)  automatic, mandatory, nondiscretionary
reductions in payments to health care providers will be imposed
to the extent required to assure that such per capita
expenditures do not exceed the applicable target referred to in
subparagraph (A).
       (7)  Requirements generally applicable to health
plans.The system shall meet the requirements applicable to a
health plan under section 1400(a), except that

            (A)  the system does not have the authority
provided to health plans under section 1402(a)(2) (relating to
permissible limitations on the enrollment of eligible
individuals on the basis of limits on the plan's capacity);
            (B)  the system is not required to meet the
requirements of section 1404(a) (relating to restrictions on
the marketing of plan materials); and
          (C)  the system is not required to meet the
requirements of section 1408 (relating to plan solvency).

            Section 1223   SPECIAL RULES FOR STATES OPERATING
STATEWIDE SINGLE-PAYER SYSTEM.

    (a)  In General. In the case of a State operating a
Statewide single-payer system

        (1)  the State shall operate the system throughout the
State through a single alliance;

        (2)  except as provided in subsection (b), the State
shall meet the requirements for participating States under part
1; and

        (3)  the State shall assume the functions described in
subsection (c) that are otherwise required to be performed by
regional alliances in participating States that do not operate
a Statewide single-payer system.

    (b)  Exceptions to Certain Requirements for Participating
States. In the case of a State operating a Statewide single-
payer system, the State is not required to meet the following
requirements otherwise applicable to participating States under
part 1:

        (1)  Establishment of alliances. The requirements of
section 1202 (relating to the establishment of alliances).

      (2)  Health plans. The requirements of section 1203
(relating to health plans), other than the requirement of
subsection (f) of such section (relating to coordination of
workers' compensation services and automobile liability
insurance).

        (3)  Financial solvency. The requirements of section
1204 (relating to the financial solvency of health plans in the
State).

    (c)  Assumption by State of Certain Requirements Applicable
to Regional Alliances. A State operating a Statewide single-
payer system shall be subject to the following requirements
otherwise applicable to regional to alliances in other
participating States:

        (1)  Enrollment; issuance of health security cards.The
requirements of subsections (a) and (c) of section 1323 and
section 1324 shall apply to the State, eligible individuals
residing in the State, and the single-payer system operated by
the State in the same manner as such requirements apply to a
regional alliance, alliance eligible individuals, and regional
alliance health plans.

        (2)  Reductions in cost sharing for low-income
individuals. The requirement of section 1371 shall apply to the
State in the same manner as such requirement applies to a
regional alliance.

        (3)  Data collection; quality. The requirements of
section 1327 shall apply to the State and the single-payer
system operated by the State in the same manner as such
requirement applies to a regional alliance and health plans
offered through a regional alliance.

        (4)  Anti-discrimination; coordination. The
requirements of section 1328 shall apply to the State in the
same manner as such requirements apply with respect to a
regional alliance.

    (d)  Financing.

        (1)  In general. A State operating a Statewide single
payer system shall provide for the financing of the system
using, at least in part, a payroll-based financing system that
requires employers to pay at least the amount that the
employers would be required to pay if the employers were
subject to the requirements of subtitle B of title VI.

        (2)  Use of financing methods. Such a State may use,
consistent with paragraph (1), any other method of financing.

    (e)  Single-Payer State Defined.In this Act, the term
"singlepayer State" means a State with a Statewide single-payer
system in effect that has been approved by the Board in
accordance with this part.

            Section 1224   SPECIAL RULES FOR ALLIANCE-SPECIFIC
SINGLE-PAYER SYSTEMS.

    (a)  In General. In the case of a State operating an
alliancespecific single-payer system

         (1)  the State shall meet the requirements for
participating States under part 1; and

        (2)  the regional alliance in which the system is
operated shall meet the requirements of subsection (b).

   (b)  Requirements for Alliance in Which System Operates. A
regional alliance in which an alliance-specific single payer
system is operated shall meet the requirements applicable to
regional alliances under subtitle D, except that the alliance is
not required to meet the following requirements of such
subtitle:

      (1)  Contracts with health plans. The requirements of
section 1321 (relating to contracts with health plans).

        (2)  Choice of health plans offered. The requirements of
subsections (a) or (b) of section 1322 (relating to offering a
choice of health plans to eligible enrollees).

        (3)  Establishment of ombudsman office. The requirements
of section 1326(a) (relating to the establishment of an office
of ombudsman).

      (4)  Addressing needs of areas with inadequate health
services. The regional alliance does not have any of the

authorities described in subsections (a) and (b) of section

1329 (relating to adjusting payments to plans and encouraging

the establishment of new plans).

    Title I, Subtitle D

Subtitle D    Health Alliances

            Section 1300   HEALTH ALLIANCE DEFINED.

In this Act, the term "health alliance" means a regional
alliance (as defined in section 1301) and a corporate alliance

(as defined in section 1311).

    Part 1   ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES

        Subpart A    Regional Alliances

           Section 1301   REGIONAL ALLIANCE DEFINED.

    In this Act, the term "regional alliance" means a non-
profit organization, an independent state agency, or an agency
of the State which


        (1)  meets the applicable organizational requirements
of this subpart, and


        (2)  is carrying out activities consistent with part 2.


            Section 1302   BOARD OF DIRECTORS.


  (a)  In General. A regional alliance must be governed by a
Board of Directors appointed consistent with the provisions of
this subpart. All powers vested in a regional alliance under
this Act shall be vested in the Board of Directors.

    (b)  Membership.

        (1)  In general. Such a Board of Directors shall
consist of (A)  members who represent employers whose employees
purchase health coverage through the alliance, including self-
employed individuals who purchase such coverage; and

            (B)  members who represent individuals who purchase
such coverage, including employees who purchase such coverage.

        (2)  Equal representation of employers and consumers.
The number of members of the Board described under subparagraph
(A) of paragraph (1) shall be the same as the number of members
described in subparagraph (B) of such paragraph.

    (c)  No Conflict of Interest Permitted. An individual may
not serve as a member of the Board of Directors if the
individual is one of the following (or an immediate family
member of one of the following):

        (1)  A health care provider.

        (2)  An individual who is an employee or member of the
Board of Directors of, has a substantial ownership in, or
derives substantial income from, a health care provider, health
plan, pharmaceutical company, or a supplier of medical
equipment, devices, or services.

        (3)  A person who derives substantial income from the
provision of health care.

        (4) (A) A member or employee of an association, law
firm, or other institution or organization that represents the
interests of one or more health care providers, health plans or
others involved in the health care field, or (B) an individual
who practices as a professional in an area involving health
care.

            Section 1303   PROVIDER ADVISORY BOARDS FOR
REGIONAL ALLIANCES.

    Each regional alliance must establish a provider advisory
board consisting of  representatives of health care providers
and professionals who provide
covered services through health plans offered by the alliance.

        Subpart B    Corporate Alliances

            Section 1311   CORPORATE ALLIANCE DEFINED;
INDIVIDUALS ELIGIBLE FOR COVERAGE THROUGH CORPORATE ALLIANCES;
ADDITIONAL DEFINITIONS.

    (a)  Corporate Alliance Defined.In this Act, the term
"corporate alliance" means an eligible sponsor (as defined in
subsection (b)) if

        (1)  the sponsor elects, in a form and manner specified
by the Secretary of Labor consistent with this subpart, to be
treated as a corporate alliance under this title and such
election has not been terminated under section 1313; and

        (2)  the sponsor has filed with the Secretary of Labor
a document describing how the sponsor shall carry out
activities as such an alliance consistent with part 4.

    (b)  Eligible Sponsors.

        (1)  In general.In this subpart, each of the following
is an eligible sponsor:

             (A)  Large employer. An employer that

    (i)  is a large employer (as defined in subsection (e)(2))
as of the date of an election under subsection (a)(1), and

    (ii)  is not an excluded employer described in paragraph
(2).

            (B)  Plan sponsor of a multiemployer plan. A plan
sponsor described in section 3(16)(B)(iii) of Employee
Retirement Income Security Act of 1974, but only with respect
to a group health plan that is a multiemployer plan (as defined
in subsection (e)(3)) maintained by the sponsor and only if

   (i)  such plan offered health benefits as of September 1,
1993, and

    (ii)  as of both September 1, 1993, and January 1, 1996,
such plan has more than 5,000 active participants in the United
States, or the plan is maintained by one or more affiliates of
the same labor organization, or one or more affiliates of labor
organizations representing employees in the same industry,
covering more than 5,000 employees.

            (C)  Rural electric cooperative and rural telephone
cooperative association. A rural electric cooperative or a
rural telephone cooperative association, but only with respect
to a
group health plan that is maintained by such cooperative or
association (or members of such cooperative or association) and
only if such plan

   (i)  offered health benefits as of September 1, 1993, and

    (ii)  as of both September 1, 1993, and January 1, 1996,
has more than 5,000 full-time employees in the United States
entitled to health benefits under the plan.

        (2)  Excluded employers. For purposes of paragraph
(1)(A), any of the following are excluded employers described
in this paragraph:

            (A)  An employer whose primary business is employee
leasing.

            (B)  The Federal government (other than the United
States Postal Service).

            (C)  A State government, a unit of local
government, and an agency or instrumentality of government,
including any special purpose unit of government.

    (c)  Individuals Eligible to Enroll in Corporate Alliance
Health Plans. For purposes of part 1 of subtitle A, subject to
subsection (d)

        (1)  Full-time employees of large employers. Each
eligible individual who is a full-time employee (as defined in
section 1901(b)(2)(C)) of a large employer that has an election
in effect as a corporate alliance is eligible to enroll in a
corporate alliance health plan offered by such corporate
alliance.

        (2)  Multiemployer alliances.

            (A)  Participants. Each participant and beneficiary
(as defined in subparagraph (B)) under a multiemployer plan,
with respect to which an eligible sponsor of the plan described
in subsection (b)(1)(B) has an election in effect as a
corporate alliance, is eligible to enroll in a corporate
alliance health plan offered by such corporate alliance.

            (B)  Participant and beneficiary defined. In
subparagraph (A), the terms "participant" and "beneficiary"
have the meaning given such terms in section 3 of the Employee
Retirement Income Security Act of 1974.

        (3)  Full-time employees of rural cooperative
alliances. Each full-time employee of a member of a rural
electric cooperative or rural telephone cooperative association
which has an election in effect as a corporate alliance (and
each full-time employee of such a cooperative or association)
is eligible to enroll in a corporate alliance health plan
offered by such corporate alliance.

        (4)  Ineligible to enroll in regional alliance health
plan. Except as provided in section 1013, a corporate alliance
eligible individual is not eligible to enroll under a regional
alliance health plan.

   (d)  Exclusion of Certain Individuals. In accordance with
rules of the Board, the following individuals shall not be
treated as corporate alliance eligible individuals:

        (1)  AFDC recipients.
        (2)  SSI recipients.
        (3)  Individuals who are described in section 1004(b)
(relating to veterans, military personnel, and Indians) and who
elect an applicable health plan described in such section.
        (4)  Employees who are seasonal or temporary workers
(as defined by the Board), other than such workers who are
treated as corporate alliance eligible individuals pursuant to
a collective bargaining agreement (as defined by the Secretary
of Labor).
   (e)  Definitions Relating to Corporate Alliances.In this
subtitle, except as otherwise provided:

        (1)  Group health plan. The term "group health plan"
means an employee welfare benefit plan (as defined in section
3(1) of the Employee Retirement Income Security Act of 1974)
providing medical care (as defined in section 213(d) of the
Internal Revenue Code of 1986) to participants or beneficiaries
(as defined in section 3 of the Employee Retirement Income
Security Act of 1974) directly or through insurance,
reimbursement, or otherwise.

        (2)  Large employer. The term "large employer" means an
employer that has more than 5,000 full-time employees in the
United States. Such term includes the United States Postal
Service.

        (3)  Multiemployer plan.The term "multiemployer plan"
has the meaning given such term in section 3(37) of the
Employee Retirement Income Security Act of 1974, and includes
any plan that is treated as such a plan under title I of such
Act.

        (4)  Rural electric cooperative.The term "rural
electric cooperative" has the meaning given such term in
section 3(40)(A)(iv) of the Employee Retirement Income Security
Act of 1974.

        (5)  Rural telephone cooperative associations. The term

"rural telephone cooperative association" has the meaning given

such term in section 3(40)(A)(v) of the Employee Retirement

Income Security Act of 1974.

            Section 1312   TIMING OF ELECTIONS.

    (a)  For Large Employers.

        (1)  Current large employers.

            (A)  In general. In the case of an employer that is
an eligible sponsor described in section 1311(b)(1)(A) as of
the most recent January 1 prior to the general effective date,
the sponsor's election to be a corporate alliance under such
section must be made and filed with the Secretary of Labor not
later than the date specified in subparagraph (B).


            (B)  Deadline for notice. The date specified in
this subparagraph is January 1 of the second year preceding the
general effective date or, in the case of a State that elects
to become a participating State before the general effective
date, not later than one month later than the date specified
for States under section 1202(a)(2).


        (2)  New large employers. In the case of an employer
that
is not an eligible sponsor described in section 1311(b)(1)(A)
as of the most recent January 1 prior to the general effective
date, but first becomes such a sponsor as of a subsequent date,
the election to be a corporate alliance under such section must
be made and filed with the Secretary of Labor not later than
March 1 of the year following the year in which the employer
first becomes such a sponsor.
        (3)  Application of option. The Secretary of Labor
shall promulgate rules regarding how the option described in
section 1311(c)(1)(B) will be applied to the determination of
whether an employer is a large employer before an election is
made under section 1311.
    (b)  For Multiemployer Plans and Rural Cooperatives. In the
case of an eligible sponsor described in section 1311(b)(1)(B)
or (C), the sponsor's election to be a corporate alliance under
such section must be made and filed with the Secretary of Labor
not later than March 1, 1996.
    (c)  Effective Date of Election. An election made under
subsection (a) or (b) shall be effective for coverage provided
under health plans on and after January 1 of the year following
the year in which the election is made.
    (d)  One-time Election. If an eligible sponsor fails to
make the election on a timely manner under subsection (a) or
(b), the sponsor may not make such election at any other time.
            Section 1313   TERMINATION OF ALLIANCE ELECTION.
    (a)  Termination for Insufficient Number of Full-Time
Employees or Participants. If a corporate alliance reports
under section 1387(c), that there were fewer than 4,800 full-
time employees (or, active participants, in the case of one or
more plans offered by a corporate alliance which is an eligible
sponsor described in section 1311(b)(1)(B)) who are enrolled in
a health plan through the alliance, the election under this
part with respect to the alliance shall terminate.
    (b)  Termination for Failure to Meet Requirements.
        (1)  In general. If the Secretary of Labor finds that a
corporate alliance has failed substantially to meet the
applicable requirements of this subtitle, the Secretary shall
terminate the election under this part with respect to the
alliance
        (2)  Excess increase in premium equivalent.If the
Secretary of Labor finds that the alliance is in violation of
the requirements of section 6022 (relating to prohibition
against excess increase in premium expenditures), the Secretary
shall terminate the alliance in accordance with such section.
    (c)  Elective Termination. A corporate alliance may
terminate an election under this part by filing with the
National Health Board and the Secretary of Labor a notice of
intent to terminate.
    (d)  Effective Date of Termination. In the case of a
termination of an election under this section, in accordance
with rules established by the Secretary of Labor
        (1)  subject to section 6022(a)(1), the termination
shall take effect as of the effective date of enrollments in
regional alliance health plans made during the next open
enrollment period (as provided in section 1323(d)), and

        (2)   the enrollment of eligible individuals in
corporate alliance health plans of the corporate alliance shall
be terminated as of such date and such individuals shall be
enrolled in other applicable health plans effective on such
date.
    (e)  Notice to Board. If an election with respect to a
corporate alliance is terminated pursuant to subsection (a) or
subsection (b), the Secretary of Labor shall notify the
National Health Board of the termination of the election.
    Part 2   GENERAL RESPONSIBILITIES AND AUTHORITIES OF
REGIONAL ALLIANCES
          Section 1321   CONTRACTS WITH HEALTH PLANS.
    (a)  Contracts with Plans.
        (1)  In general. In order to assure the availability of
the comprehensive benefit package to eligible individuals
residing in the alliance area in a cost-effective manner,
except as provided in this section, each regional alliance
shall negotiate with any willing State-certified health plan to
enter into a contract with the alliance for the enrollment
under the plan of eligible individuals in the alliance area.
Subject to paragraph (2), a regional alliance shall not enter
into any such contract with a health plan that is not a State-
certified health plan.
        (2)  Treatment of certain plans. Each regional alliance
shall enter into a contract under this section with any
veterans health plan of the Department of Veterans Affairs and
with a Uniformed Services Health Plan of the Department of
Defense, that offers the comprehensive benefit package to
eligible individuals residing in the alliance area if the
appropriate official requests to enter into such a contract.
    (b)  General Conditions for Denial of Contract by a
Regional Alliance. A regional alliance is not required under
this section to offer a contract with a health plan if
        (1)  the alliance finds that the proposed bid exceeds
120 percent of the regional alliance per capita prremium target
(as determined under section 6003); or
        (2)  the plan has failed to comply with requirements
under prior contracts with the alliance, including failing to
offer coverage for all the services in the comprehensive
benefit package in the entire service area of the plan.
            Section 1322   OFFERING CHOICE OF HEALTH PLANS FOR
ENROLLMENT; ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE.
    (a)  In General. Each regional alliance must provide to
each eligible enrollee (as defined in section 1902(14)) with
respect to the alliance a choice of health plans among the
plans which have contracts in effect with the alliance under
section 1321 (in the case of a regional alliance) or section
1341 (in the case of a corporate alliance).
    (b)  Offering of Plans by Regional Alliances.
        (1)  In general. Each regional alliance shall include
among its health plan offerings at least one fee-for-service
plan (as defined in paragraph (2)).
        (2)  Fee-for-service plan defined.
            (A)  In general. For purposes of this Act, the term
"fee-for-service plan" means a health plan that--
    (i)  provides coverage for all items and services included
in the comprehensive benefit package that are furnished by any
lawful health care provider of the enrollee's choice, subject
to reasonable restrictions (described in subparagraph (B)), and
    (ii)  makes payment to such a provider without regard to
whether or not there is a contractual arrangement between the
plan and the provider.
          (B)  Reasonable restrictions described. The
reasonable restrictions on coverage permitted under a fee-for
service plan (as specified by the National Health Board) are as
follows:

    (i)  Utilization review.

    (ii)  Prior approval for specified services.

    (iii)  Exclusion of providers on the basis of poor quality
of care, based on evidence obtainable by the plan. Clause (ii)
shall not be construed as permitting a plan to require prior
approval for non-primary health care services through a
gatekeeper or other process.

    (c)  Establishment of Fee-for-Service Schedule.

        (1)  In general. Except in the case of regional
alliances of a State that has established a Statewide fee
schedule under paragraph (3), each regional alliance shall
establish a fee schedule setting forth the payment rates
applicable to services furnished during a year to individuals
enrolled in fee-forservice plans (or to services furnished
under the fee-for-service component of any regional alliance
health plan) for use by regional alliance health plans under
section 1406(c) and corporate alliance health plans providing
services subject to the schedule in the regional alliance area.

        (2)  Negotiation with providers. The fee schedule under
paragraph (1) shall be established after negotiations with
providers, and (subject to paragraphs (5) and (6)) providers
may collectively negotiate the fee schedule with the regional
alliance.

        (3)  Use of statewide schedule. At the option of a
State, the State may establish its own statewide fee schedule
which shall apply to all fee-for-service plans offered by
regional alliances and corporate alliances in the State instead
of alliance-specific schedules established under paragraph (1).

        (4)  Annual revision. A regional alliance or State (as
the case may be) shall annually update the payment rates
provided under the fee schedule established pursuant to
paragraph (1) or paragraph (3).

      (5)  Activities treated as State action or efforts
intended to influence government action.The establishment of a
fee schedule under this subsection by a regional alliance of a
State shall be considered to be pursuant to a clearly
articulated and affirmatively expressed State policy to
displace competition and to be actively supervised by the
State, and conduct by providers respecting the establishment of
the fee schedule,
including collective negotiations by providers with the
regional alliance (or the State) pursuant to paragraph (2),
shall be considered as efforts intended to influence
governmental action.

        (6)  No boycott permitted. Nothing in this subsection
shall be construed to permit providers to threaten or engage in
any boycott.

        (7)  Negotiations defined. In this subsection,
"negotiations" are the process by which providers collectively
and jointly meet, confer, consult, discuss, share information,
among and between themselves in order to agree on information
to be provided, presentations to be made, and other such
activities with respect to regional alliances (or States)
relating to the establishment of the fee schedule (but not
including any activity that constitutes engaging in or
threatening to engage in a boycott), as well as any and all
collective and joint meetings, discussions, presentations,
conferences, and consultations between or among providers and
any regional alliance (or State) for the purpose of
establishing the fee schedule described in this subsection.

    (d)  Prospective Budgeting of Fee-for-Service.

        (1)  In general. The fee schedule established by a
regional alliance or a State under subsection (c) may be based
on prospective budgeting described in paragraph (2).

        (2)  Prospective budgeting described. Under prospective
budgeting (A)  the regional alliance or State (as the case may
be) shall negotiate with health providers annually to develop a
budget for the designated fee-for-service plan;

            (B)  the negotiated budget shall establish spending
targets for each sector of health expenditures made by the
plan; and

            (C)  if the regional alliance or State (as the case
may be) determines that the utilization of services under the
plan is at a level that will result in expenditures under the
plan exceeding the negotiated budget, the plan shall reduce the
amount of payments otherwise made to providers (through a
withhold or delay in payments or adjustments) in such a manner
and by such amounts as necessary to assure that expenditures
will not exceed the budget.

        (3)  Use of prospective budgeting exclusive. If a
regional alliance or State establishes the fee schedule for fee
for-service plans on the basis of prospective budgeting under
this subsection, payment for all services provided by fee-for
service plans in the alliance or State shall be determined on
such basis.

            Section 1323   ENROLLMENT RULES AND PROCEDURES.

    (a)  In General.Each regional alliance shall assure that
each regional alliance eligible individual who resides in the
alliance area is enrolled in a regional alliance health plan
and shall establish and maintain methods and procedures,
consistent with this section, sufficient to assure such
enrollment. Such methods and procedures shall assure the
enrollment of alliance eligible individuals at the time they
first become eligible enrollees in the alliance area, including
individuals at the time of birth, at the time they move into
the alliance area, and at the time of reaching the age of
individual eligibility as an eligible enrollee (and not merely
as a family member). Each regional
alliance shall establish procedures, consistent with subtitle
A, for the selection of a single health plan in which all
members of a family are enrolled.

    (b)  Point of Service Enrollment Mechanism.

        (1)  In general. Each regional alliance shall establish
a point-of-service enrollment mechanism (meeting the
requirements of this subsection) for enrolling eligible
individuals who are not enrolled in a health plan of the
alliance when the individual seeks health services.

        (2)  Requirements of mechanism. Under such a mechanism,
if an eligible individual seeks to receive services (included
in the comprehensive benefit package) from a provider in an
alliance area and does not present evidence of enrollment under
any applicable health plan, or if the provider has no evidence
of the individual's enrollment under any such plan, the
following rules shall apply:

            (A)  Notice to alliance. Consistent with part 2 of
subtitle B of title V, the provider

   (i)  shall provide the regional alliance with information
relating to the identity of the eligible individual, and

    (ii)  may request payment from the regional alliance for
the furnishing of such services.

            (B)  Initial determination of eligibility and
enrollment status. The regional alliance shall determine

    (i)  if the individual is an alliance eligible individual
for the alliance, and

    (ii)  if the individual is enrolled under an applicable
health plan (including a corporate alliance health plan).

            (C)  Treatment of alliance eligible individuals.If
the regional alliance determines that the individual is an
alliance eligible individual with respect to the alliance and

    (i)  is enrolled under a regional alliance health plan of
the alliance, the alliance shall forward the claim to the
health plan involved and shall notify the provider (and the
individual) of the fact of such enrollment and the forwarding
of such claim (and the plan shall make payment to the provider
for the services furnished to the individual as described in
paragraph (3)(C));

    (ii)  is not enrolled under a regional alliance health plan
of the alliance but is required to be so enrolled in a specific
health plan as a family member under section 1011, the alliance
shall record the individual's enrollment under such specific
plan, shall forward the claim to such plan, and shall notify
the provider (and the individual) of the fact of such
enrollment and the forwarding of such claim (and the plan shall
make payment to the provider for the services furnished to the
individual as described in paragraph (3)(C)); or

    (iii)  is not enrolled under such a plan and is not
described in clause (ii), the point-of-service enrollment
procedures described in paragraph (3) shall apply.

            (D)  Treatment of individuals enrolled under health
plans of other alliances. If the regional alliance determines
that the individual is not an alliance eligible individual with
respect to the alliance but the individual is enrolled
    (i)  under a regional alliance health plan of another
alliance, the alliance shall forward the claim to the other
regional alliance and shall notify the provider (and the
individual) of the fact of such enrollment and the forwarding
of such claim (and the plan shall make payment to the provider
for the services furnished to the individual as described in
paragraph (3)(C)); or
   (ii)  under a corporate alliance health plan, the alliance
shall forward the claim to the corporate alliance involved and
shall notify the provider (and the individual) of the fact of
such enrollment and the forwarding of such claim (and the plan
shall make payment to the provider for the services furnished
to the individual as described in section 1383(b)(2)(B)).
            (E)  Treatment of other alliance eligible
individuals not enrolled in health plan. If the regional
alliance determines that the individual is not an alliance
eligible individual with respect to the alliance and the
individual is an alliance eligible individual with respect to
another health alliance but is not enrolled in a health plan of
such alliance, the regional alliance shall forward the claim to
the other alliance involved and shall notify the provider (and
the individual) of the forwarding of such claim and the
requirement for prompt enrollment of the individual under an
applicable health plan of such alliance pursuant to the
procedures described in paragraph
                (3) (in the case of a regional alliance) or in
section 1383(b) (in the case of a corporate alliance).
            (F)  Treatment of all other individuals. The
National Board shall promulgate rules regarding the
responsibilities of regional alliances relating to individuals
whose applicable health plan is not an alliance plan and other
individuals the alliance is unable to identify as eligible
individuals.
        (3)  Point-of-service enrollment procedures described.
The point-of-service enrollment procedures under this paragraph
are as follows:
            (A)  Not later than 10 days after the date an
alliance is notified of the receipt of services by an
unenrolled eligible individual, the alliance provides the
individual with materials describing health plans offered
through the alliance.
            (B)  The individual shall be provided a period of
30 days in which to enroll in a health plan of the individual's
choice. If the individual fails to so enroll during such
period, the alliance shall enroll the individual in a health
plan of the alliance selected on a random basis.
            (C)  Using the fee-for-service schedule adopted by
the alliance under section 1322(c), the health plan in which
the individual is enrolled under this subparagraph shall
reimburse the provider who provided the services referred to in
subparagraph (A) to the same extent as if the individual had
been enrolled under the plan at the time of provision of the
services.
    (c)  Enrollment of New Residents.
        (1)  In general. Each regional alliance shall establish
procedures for enrolling regional alliance eligible individuals
who move into the alliance area.
        (2)  Long-term residents. Such procedures shall assure
that regional alliance eligible individuals who intend to
reside in the alliance area for longer than 6 months shall
register with the regional alliance for the area and shall
enroll in a regional alliance health plan offered by the
alliance.
        (3)  Short-term residents. Such procedures shall permit
eligible individuals who intend to reside in the alliance area
for more than 3 months but less than 6 months to choose among
the following options:
            (A)  To continue coverage through the health plan
in which such individual is previously enrolled, in which case
coverage for care in the area of temporary residence may be
limited to emergency services and urgent care.
            (B)  To register with the regional alliance and
enroll in a regional alliance health plan offered by the
alliance.
            (C)  To change enrollment in the previous alliance
area to enrollment in a health plan of such alliance that
provides for coverage on a fee-for-service basis of services
provided outside the area of that alliance.
    (d)  Changes in Enrollment.
       (1)  Annual open enrollment period to change plan
enrollment. Each regional alliance shall hold an annual open
enrollment period during which each eligible enrollee in the
alliance has the opportunity to choose among health plans
offered through the alliance, according to rules to be
promulgated by the National Health Board.

        (2)  Disenrollment for cause. In addition to the annual
open enrollment period held under paragraph (1), each regional
alliance shall establish procedures under which alliance
eligible individuals enrolled in a plan may disenroll from the
plan for good cause at any time during a year and enroll in
another plan of the alliance. Such procedures shall be
implemented in a manner that ensures continuity of coverage for
the comprehensive benefit package for such individuals during
the year.

   (e)  Enrollment of Family Members. Each regional alliance
shall provide for the enrollment of all family members in the
same plan, consistent with part 2 of subtitle A.

    (f)  Oversubscription of Plans.

        (1)  In general. Each regional alliance shall establish
a method for establishing enrollment priorities in the case of
a health plan that does not have sufficient capacity to enroll
all eligible individuals seeking enrollment.

        (2)  Preference for current members. Such method shall
provide that in the case of such an oversubscribed plan

            (A)  individuals already enrolled in the plan are
given priority in continuing enrollment in the plan, and

            (B)  other individuals who seek enrollment during
an applicable enrollment period are permitted to enroll in
accordance with a random selection method, up to the enrollment
capacity of the plan.

    (g)  Termination of Enrollment.

        (1)  In general. Each regional alliance shall establish
special enrollment procedures to permit alliance eligible
individuals to change the plan in which they are enrolled in
the case of the termination of coverage under a plan, in a
manner that ensures the individuals' continuation of coverage
for the comprehensive benefit package.

        (2)  Failure of a corporate alliance. Each regional
alliance shall establish special enrollment procedures to
permit individuals, who become alliance eligible individuals as
a result of the failure of a corporate alliance, to enroll
promptly in regional alliance health plans in a manner that
ensures the individuals' continuation of coverage for the
comprehensive benefit package.

    (h)  Limitation on Offering of Coverage to Ineligible
Individuals. A regional alliance may not knowingly offer
coverage under a regional alliance health plan or other health
insurance or health benefits to an individual who is not an
eligible individual. Nothing in this section shall be construed
as affecting the ability of a regional alliance health plan or
other health plan to offer coverage to such individuals without
any financial payment or participation by a regional alliance.

    (i)  Enforcement of Enrollment Requirement. In the case of
a regional alliance eligible individual who fails to enroll in
an applicable health plan as required under section 1002(a)

        (1)  the applicable regional alliance shall enroll the
individual in a regional alliance health plan (selected by the
alliance consistent with this Act and with any rules
established by the Board), and

        (2)  such alliance shall require the payment of twice
the amount of the family share of premiums that would have been
payable under subtitle B of title VI if the individual had
enrolled on a timely basis in the plan, unless the individual
has established to the satisfaction of the alliance good cause
for the failure to enroll on a timely basis.

            Section 1324   ISSUANCE OF HEALTH SECURITY CARDS.

    A regional alliance is responsible for the issuance of
health security cards to regional alliance eligible individuals
under section 1001(b).

            Section 1325   CONSUMER INFORMATION AND MARKETING.

    (a)  Consumer Information.

        (1)  In general. Before each open enrollment period,
each regional alliance shall make available to eligible
enrollees information, in an easily understood and useful form,
that allows such enrollees (and other alliance eligible
individuals) to make valid comparisons among health plans
offered by the alliance.

        (2)  Information to be included.Such information must
include, in the same format for each plan, such information as
the National Health Board shall require, including at least the
following:

            (A)  The cost of the plan, including premiums and
average out-of-pocket expenses.

            (B)  The characteristics and availability of health
care professionals and institutions participating in the plan.

            (C)  Any restrictions on access to providers and
services under the plan.

            (D)  A summary of the annual quality performance
report, established pursuant to section 5005(c)(1), which
contains measures of quality presented in a standard format.

    (b)  Marketing. Each regional alliance shall, consistent
with section 1404, review and approve or disapprove the
distribution of any materials used to market health plans
offered through the alliance.

            Section 1326   OMBUDSMAN.

    (a)  Establishment. Each regional alliance must establish
and maintain an office of an ombudsman to assist consumers in
dealing with problems that arise with health plans and the
alliance.

    (b)  Optional Financing Through Voluntary Contribution. At
the option of the State in which a regional alliance is
located, the alliance

        (1)  shall permit alliance eligible individuals to
designate that one dollar of the premium paid for enrollment in
the individual's regional alliance health plan for the
operation of the office of the alliance's ombudsman; and

         (2)  shall apply any such amounts towards the
establishment and operation of such office.

           Section 1327   DATA COLLECTION; QUALITY.

    Each regional alliance shall comply with requirements of
subtitles A and B of title V (relating to quality, information
systems, and privacy), and shall take appropriate steps to
ensure that health plans offered through the alliance comply
with such requirements.

            Section 1328   ADDITIONAL DUTIES.

    (a)  Anti-Discrimination. In carrying out its activities
under this part, a regional alliance may not discriminate
against health plans on the basis of race, sex, national
origin, religion, mix of health professionals, location of the
plan's headquarters, or (except as specifically provided in
this part) organizational arrangement.

    (b)  Coordination of Enrollment Activities. Each regional
alliance shall coordinate, in a manner specified by the
National Health Board, with other health alliances its
activities, including enrollment and disenrollment activities,
in a manner that ensures continuous, nonduplicative coverage of
alliance eligible individuals in health plans and that
minimizes administrative procedures and paperwork.

            Section 1329   ADDITIONAL AUTHORITIES FOR REGIONAL
ALLIANCES TO ADDRESS NEEDS IN AREAS WITH INADEQUATE HEALTH
SERVICES; PROHIBITION OF INSURANCE ROLE.

    (a)  Payment Adjustment. In order to ensure that plans are
available to all eligible individuals residing in all portions
of the alliance area, a regional alliance may adjust payments
to plans or use other financial incentives to encourage health
plans to expand into areas that have inadequate health
services.

    (b)  Encouraging New Plans. Subject to subsection (c), in
order to encourage the establishment of a new health plan in an
area that has inadequate health services, an alliance may
        (1)  organize health providers to create such a plan in
such an area a new health plan targeted at such an area,
        (2)  provide assistance with setting up and
administering such a plan, and
       (3)  arrange favorable financing for such a plan.
    (c)  Prohibition of Regional Alliances Bearing Risk. A
regional alliance may not bear insurance risk.

            Section 1330   PROHIBITION AGAINST SELF-DEALING AND
CONFLICTS OF INTEREST.
  (a)  Promulgation of Standards. The Board shall promulgate
standards of conduct in accordance with subsection (b) for any
administrator, officer, trustee, fiduciary, custodian, counsel,
agent, or employee of any regional alliance.

   (b)  Requirements for Standards. The standards of conduct
referred to in subsection (a) shall set forth

       (1)  the types of investment interests, ownership
interests, affiliations or other employment that would be
improper for an individual described in subsection (a) to hold
during the time of the individual's service or employment with
an alliance; and

        (2)  the circumstances that will constitute
impermissible conflicts of interest or self-dealing by such
employees in performing their official duties and functions for
any regional alliance.

    (c)  Civil Monetary Penalty. Any individual who engages in
an activity that the individual knows or has reason to know is
in violation of the regulations and standards promulgated by
the Board pursuant to subsections (a) and (b) shall be subject,
in addition to any other penalties that may be prescribed by
law, to a civil money penalty of not more than $10,000 for each
such violation. The provisions of section 1128A of the Social
Security Act (other than subsections (a) and (b)) shall apply
to civil money penalties under this subsection in the same
manner as they apply to a penalty or proceeding under section
1128A(a) of such Act.

    Part 3   AUTHORITIES AND RESPONSIBILITIES OF REGIONAL
ALLIANCES RELATING TO FINANCING AND INCOME DETERMINATIONS

        Subpart A    Collection of Funds

            Section 1341   INFORMATION AND NEGOTIATION AND
ACCEPTANCE OF BIDS.

  (a)  Information Provided to Plans Before Soliciting Bids.

        (1)  In general. Each regional alliance shall make
available, by April 1 of each year, to each plan that indicates
an interest in submitting a premium bid under section 6004 in
the year, information (including information described in
paragraph (2)) that the Board specifies as being necessary to
enable a plan to estimate, based upon an accepted bid, the
amounts payable to
such a plan under section 1351.
        (2)  Information to be included. Such information shall
include the following:
            (A)  The demographic and other characteristics of
regional alliance eligible individuals for the regional
alliance.
            (B)  The uniform per capita conversion factor for
the regional alliance (established under subsection (b)).
            (C)  The premium class factors (established by the
Board under section 1531).
          (D)  The regional alliance inflation factor
(determined under section 6001(a)).

            (E)  The risk-adjustment factors and reinsurance
methodology and payment amounts (published under subsection
(c)) to be used by the regional alliance in computing blended
plan per capita rates (in accordance with section 6201).

            (F)  The plan bid proportion, the AFDC proportion,
the SSI proportion, the AFDC per capita premium amount, and the
SSI per capita premium amount, for the year, as computed under
subtitle D of title VI.

          (G)  The alliance administrative allowance
percentage, computed under section 1352(b).

  (b)  Determination of Uniform Per Capita Conversion Factor.
Each regional alliance shall specify, not later than April 1 of
each year (beginning with the year before the first year) a
uniform per capita conversion factor to be used under section
6102(a)(2) in converting the accepted bid for each plan for the
year into the premium for an individual enrollment for such
plan for the year. SSI or AFDC recipients shall not be included
for purposes of computing the conversion factor.

    (c)  Determination of Risk-Adjustment Factors and
Reinsurance Payment
        Amounts. Each regional alliance shall compute and
publish the risk-adjustment factors and reinsurance payment
amounts to be used by the regional alliance in computing
blended plan per capita rates under section 6201.

    (d)  Solicitation of Bids. Each regional alliance shall
solicit and negotiate, consistent with section 6004, with each
regional alliance health plan a bid for the payment rate on a
per capita basis for the comprehensive benefit package for all
alliance eligible individuals in the alliance area.

            Section 1342   CALCULATION AND PUBLICATION OF
GENERAL FAMILY SHARE AND GENERAL EMPLOYER PREMIUM AMOUNTS.

  (a)  Calculation of Components in General Family Share and
General Employer Premiums.

        (1)  Family share. Each regional alliance shall compute
the following components of the general family share of
premiums (as defined in subsection (b)(1)(B)):

            (A)  Plan premiums. For each plan offered, the
premium for the plan for each class of family enrollment
(including the amount of any family collection shortfall).

            (B)  Alliance credit. The alliance credit amount
for each class of family enrollment, under section 6103.

            (C)  Excess premium credit.The amount of any excess
premium credit provided under section 6105 for each class of
family enrollment.

            (D)  Corporate alliance opt-in credit.The amount of
any corporate alliance opt-in credit provided under section
6106 for each class of family enrollment.

        (2)  Employer premiums. Each regional alliance shall
compute the following components of the general employer
premium payment amount (as defined in subsection (b)(2)(B)):

            (A)  Base employer monthly premium per worker.The
base employer monthly premium determined under section 6122 for
each class of family enrollment.

            (B)  Employer collection shortfall add-on. The
employer collection shortfall add-on computed under section
6125(b).

    (b)  Publication.

        (1)  Family share.

            (A)  In general. Each regional alliance shall
publish, before the open enrollment period in each year, the
general family share of the premium (as defined in subparagraph
(B)) for each class of family enrollment for each regional
alliance health plan to be offered by the alliance in the
following year.

            (B)  General family share of premium defined. In
this subpart, the term "general family share of premium" means
the family share of premium under section 6101 computed without
regard to section 6104 and without regard to section
6101(b)(2)(C)(v).

        (2)  Employer premium.

            (A)  In general. Each regional alliance shall
publish, in December before each year (beginning with December
before the first year) the general employer premium payment
amount (as defined in subparagraph (B)) for each class of
family enrollment for the following year.

            (B)  General employer premium payment amount
defined. In this subpart, the term "general employer premium
payment amount" means the employer premium payment under
section 6121 computed, as an amount per full-time equivalent
worker, without regard to sections 6124 through 6126.

            Section 1343   DETERMINATION OF FAMILY SHARE FOR
FAMILIES.

    (a)  Amount of Family Share.The amount charged by a
regional alliance to a family for a class of family enrollment
(specified under section 1011(c)) under a regional alliance
health plan is equal to the family share of premium established
under section 6101(a) for the family. Based upon the
information described in this section, each regional alliance
shall determine the amount required to be paid under section
6101 and under section 6111 for each year for families
enrolling in regional alliance health plans.

   (b)  Family Share Amount. The amount required to be paid
under section 6101, with respect to each family, takes into
account

        (1)  the general family share of premium (as defined in
section 1342(b)(1)(B)) for the class of enrollment involved;
        (2)  any income-related discount provided under section
6104(a)(1) for the family; and
        (3)  whether or not the family is an SSI or AFDC
family.
    (c)  Alliance Credit Repayment Amount. The amount of the
alliance credit repayment amount under section 6111, with
respect to each family, takes into account the following:
        (1)  The number of months of enrollment, and class of
enrollment, in regional alliance health plans, used in
determining the amount of the alliance credit under section
6103 for the family.
        (2)  Reductions in liability under section 6111(b)
based on employer premium payments based on net earnings from
selfemployment for the family.
        (3)  Reductions in liability under section 6112 based
on months of employment for the family.
        (4)  Limitations in liability under section 6113 on the
basis of the adjusted family income for the family.
        (5)  The elimination of liability in the case of
certain retirees and qualified spouses and children under
section 6114.
        (6)  The elimination of liability in the case of
certain working medicare beneficiaries under section 6115.
  (d)  Access to Necessary Information to Make Determination.
Information required for an alliance to make the determination
under subsection (a) shall be based on information obtained or
maintained by the alliance in the conduct of its business,
including the following:

         (1)  Information required for income-related
determinations shall be obtained under subpart B.

       (2)  Information on SSI and AFDC recipients under
subsection (e).

        (3)  Information submitted on a monthly and annual
basis by employers under section 1602.

        (4)  Information submitted by self-employed individuals
on net earnings from self-employment under section 1602(d).

        (5)  Applications for premium reductions under section
6114.

        (6)  Information concerning medicare-eligible
individuals under subsection (f).

        (7)  Any income-related discount provided under section
6104(a)(1) for the family.

        (8)  Whether or not the family is an SSI or AFDC
family.

    (e)  Information Concerning Cash Assistance Status. Each
participating State and the Secretary shall make available (in
a time and manner specified by the Secretary) to each regional
alliance such information as may be necessary to determine and
verify whether an individual is an AFDC or SSI recipient for a
month in a year.
  (f)  Information Concerning Medicare-Eligible Individuals.
        (1)  Information to regional alliances. The Secretary
shall make available to regional alliances (through regional
information centers or otherwise) information necessary to
determine
            (A)  whether an individual is a medicare-eligible
individual,
            (B)  the eligibility of individuals for the special
treatment under section 6115,
            (C)  if medicare-eligible individuals are described
in section 1012(a), and
            (D)  the amounts of payments owed the alliance
under section 1894 of the Social Security Act, added by section
4003.
        (2)  Information to secretary. Each regional alliance
shall make available to the Secretary (through the national
information system under section 5101 or otherwise) information
relating to the enrollment of individuals who would be medicare
eligible individuals but for section 1012(a).
    (g)  Alliance Accounting System.
        (1)  In general. Each regional alliance shall establish
an accounting system that meets standards established by the
Secretary.
        (2)  Specifics. Such system shall collect information,
on a timely basis for each individual enrolled (and, to the
extent required by the Secretary, identified and required to be
enrolled) in a regional alliance health plan regarding
            (A)  the applicable premium for such enrollment,
            (B)  family members covered under such enrollment,
            (C)  the premium payments made by (or on behalf of)
the individual for such enrollment,
            (D)  employer premium payments made respecting the
employment of the individual and other employer contributions
made respecting such enrollment, and
            (E)  any government contributions made with respect
to such enrollment (including contributions for electing
veterans and active duty military personnel).
        (3)  End-of-year reporting. Such system shall provide
for a report, at the end of each year, regarding the total
premiums imposed, and total amounts collected, for individuals
enrolled under regional health alliance plans, in such manner
as identifies net amounts that may be owed to the regional
alliance.
            Section 1344   NOTICE OF FAMILY PAYMENTS DUE.

    (a)  Family Statements.

        (1)  Notice of no amount owed. If the regional alliance
determines under section 1343 that a family has paid any family
share required under section 6101 and is not required to repay
any amount under section 6111 for a year, the alliance shall
provide notice of such determination to the family. Such notice
shall include a prominent statement that the family is not
required to make any additional payment and is not required to
file any additional information with the regional alliance.

        (2)  Notice of amount owed.

            (A)  In general. If the regional alliance
determines that a family has not paid the entire family share
required under section 6101 or is required to repay an amount
under section 6111 for a year, the alliance shall provide to
the family a notice of such determination.

            (B)  Information on amount due. Such notice shall
include detailed information regarding the amount owed, the
basis for the computation (including the amount of any
reductions that have been made in the family's liability under
subtitle B of title VI), and the date the amount is due and the
manner in which such amount is payable.

            (C)  Information on discounts and reductions
available. Such notice shall include

    (i)  information regarding the discounts and reductions
available (under sections 6104, 6112, 6113, 6114, and 6115) to
reduce or eliminate any liability, and

  (ii)  a worksheet which may be used to calculate reductions
in liability based on income under sections 6104 and 6113.

        (3)  Inclusion of income reconciliation form for
families provided premium discounts.

            (A)  In general. A notice under this subsection
shall include, in the case of a family that has been provided a
premium discount under section 6104 (or section 6113) for the
previous year, an income reconciliation statement (for use
under section 1375) to be completed and returned to the
regional alliance (along with any additional amounts owed) by
the deadline specified in subsection (b). Such form shall
require the submission of such information as the Secretary
specifies to establish or verify eligibility for such premium
discount.

            (B)  Other families. Any family which has not been
provided such a discount but may be eligible for such a
discount may submit such an income reconciliation statement
and, if eligible, receive a rebate of the amount of excess
family share paid for the previous year.

            (C)  Additional information.The alliance shall
permit a family to provide additional information relating to
the amount of such reductions or the income of the family
(insofar as it may relate to a premium discount or reduction in
liability under section 6104 or 6113).

        (4)  Timing of notice. Notices under this subsection
shall be mailed to each family at least 45 days before the
deadline specified in subsection (b).

   (b)  Deadline for Payment. The deadline specified in this
subsection for amounts owed for a year is such date as the
Secretary may specify, taking into account the dates when the
information specified in section 1343 becomes available to
compute the amounts owed and to file income reconciliation
statements under section 1375. Amounts not paid by such
deadline are subject to interest and penalty.

    (c)  Change in Regional Alliance. In the case of a family
that during a year changes the regional alliance through which
the family obtains coverage under a regional alliance health
plan, the Secretary shall establish rules which provide that
the regional alliance in which the family last obtained such
coverage in a year

        (1)  is responsible for recovering amounts due under
this subpart for the year (whether or not attributable to
periods of coverage obtained through that alliance);

        (2)  shall obtain such information, through the health
information system implemented under section 5101, as the
alliance may require in order to compute the amount of any
liability owed under this subpart (taking into account any
reduction in such amount under this section), and

        (3)  shall provide for the payment to other regional
alliances of such amounts collected as may be attributable to
amounts owed for periods of coverage obtained through such
alliances.

    (d)  No Loss of Coverage. In no case shall the failure to
pay amounts owed under this subsection result in an
individual's or family's loss of coverage under this Act.

    (e)  Dispute Resolution. Each regional alliance shall
establish a fair hearing mechanism for the resolution of
disputes concerning amounts owed the alliance under this
subpart.

            Section 1345   COLLECTIONS.

  (a)  In General. Each regional alliance is responsible for
the collection of all amounts owed the alliance (whether by
individuals, employers, or others and whether on the basis of
premiums owed, incorrect amounts of discounts or premium, cost
sharing, or other reductions made, or otherwise). No amounts
are payable by the Federal Government under this Act (including
section 9102) with respect to the failure to collect any such
amounts. Each regional alliance shall use credit and collection
procedures, including the imposition of interest charges and
late fees for failure to make timely payment, as may be
necessary to collect amounts owed to the alliance. States
assist regional alliances in such collection process under
section 1202(d).

    (b)  Collection of Family Share.

        (1)  Withholding.

            (A)  In general. In the case of a family that
includes a qualifying employee of an employer, the employer
shall deduct from the wages of the qualifying employee (in a
manner consistent with any rules of the Secretary of Labor) the
amount of the family share of the premium for the plan in which
the family is enrolled.

            (B)  Multiple employment. In the case of a family
that includes more than one qualifying employee, the family
shall
choose the employer to which subparagraph (A) will apply.
            (C)  Payment. Amounts withheld under this paragraph
shall be maintained in a manner consistent with standards
established by the Secretary of Labor and paid to the regional
alliance involved in a manner consistent with the payment of
employer premiums under subsection (c).
            (D)  Satisfaction of liability. An amount deducted
from wages of a qualifying employee by an employer is deemed to
have been paid by the employee and to have satisfied the
employee's obligation under subsection (a) to the extent of
such amount.
        (2)  Other methods. In the case of a family that does
not include a qualifying employee, the regional alliance shall
require payment to be made prospectively. Such payment may be
required to be made not less frequently than monthly. The
Secretary may issue regulations in order to assure the timely
and accurate collection of the family share due.
    (c)  Timing and Method of Payment of Employer Premiums.
        (1)  Frequency of payment. Payment of employer premiums
under section 6121 for a month shall be made not less
frequently than monthly (or quarterly in the case of such
payments made by virtue of section 6126). The Secretary of
Labor may establish a method under which employers that pay
wages on a weekly or biweekly basis are permitted to make such
employer payments on such a weekly or biweekly basis.
        (2)  Electronic transfer. A regional alliance may
require those employers that have the capacity to make payments
by electronic transfer to make payments under this subsection
by electronic transfer.
    (d)  Assistance.
        (1)  Employer collections. The Secretary of Labor shall
provide regional alliances with such technical and other
assistance as may promote the efficient collection of all
amounts owed such alliances under this Act by employers. Such
assistance may include the assessment of civil monetary
penalties, not to exceed $5,000 or three times the amount of
the liability owed, whichever is greater, in the case of
repeated failure to pay (as specified in rules of the Secretary
of Labor).
        (2)  Family collections. Except as provided in
paragraph (1), the Secretary shall provide regional alliances
with such technical and other assistance as may promote the
efficient collection of other amounts owed such alliances under
this Act. Such assistance may include the assessment of civil
monetary penalties, not to exceed $5,000 or three times the
amount of the liability owed, whichever is greater, in the case
of repeated failure to pay (as specified in rules of the
Secretary).
    (e)  Receipt of Miscellaneous Amounts. For payments to
regional alliances by

         (1)  States, see subtitle A of title IX, and

        (2)  the Federal Government, see subtitle B of such
title and section 1894 of the Social Security Act (as added by
section 4003).

            Section 1346   COORDINATION AMONG REGIONAL
ALLIANCES.

    (a)  In General. The regional alliance which offers the
regional alliance health plan in which a family is enrolled in
December of each year (in this section referred to as the
"final alliance") is responsible for the collection of any
amounts owed by the family under this subpart, without regard
to whether the family resided in the alliance area during the
entire year.
    (b)  Provision of Information in the Case of Change of
Residence. In the case of a family that moves from one alliance
area to another alliance area during a year, each regional
alliance (other than the final alliance) is responsible for
providing to the final alliance (through the national
information system under section 5101 or otherwise) such
information as the final alliance may require in order to
determine the liability (and reductions in liability under
section 6112) attributable to alliance credits provided by such
regional alliance.
    (c)  Distribution of Proceeds. In accordance with rules
established by the Secretary, in consultation with the
Secretary of Labor, the final alliance shall provide for the
distribution of amounts collected under this subpart with
respect to families in a year in an equitable manner among the
regional alliances that provided health plan coverage to the
families in the year.
   (d)  Expediting Process. In order to reduce paperwork and
promote efficiency in the collection of amounts owed regional
alliances under this subpart, the Secretary may require or
permit regional alliances to share such information (through
the national information system under Section 5101 or
otherwise) as the Secretary determines to be cost-effective,
subject to such confidentiality restrictions as may otherwise
apply.

    (e)  Students. In the case of a qualifying student who
makes an election described in section 1012(e)(1) (relating to
certain full-time students who are covered under the plan of a
parent but enrolled in a health plan offered by a different
regional alliance from the one in which the parent is
enrolled), the regional alliance that offered the plan to the
parent shall provide for transfers of an appropriate portion of
the premium (determined in accordance with procedures specified
by the Board) to the other regional alliance in order to
compensate that alliance for the provision of such coverage.

    (f)  Payments of Certain Amounts to Corporate Alliances. In
the case of a married couple in which one spouse is a
qualifying employee of a regional alliance employer and the
other spouse is a qualifying employee of a corporate alliance
employer, if the couple is enrolled with a corporate alliance
health plan the regional alliance (which receives employer
premium payments from such regional alliance employer with
respect to such employee) shall pay to the corporate alliance
the amounts so paid (or would be payable by the employer if
section 6123 did not apply).

        Subpart B    Payments
            Section 1351   PAYMENT TO REGIONAL ALLIANCE HEALTH
PLANS.
    (a)  Computation of Blended Plan Per Capita Payment Amount.
For purposes of making payments to plans under this section,
each regional alliance shall compute, under section 6201(a), a
blended plan per capita payment amount for each regional
alliance health plan for enrollment in the alliance for a year.
    (b)  Amount of Payment to Plans.

        (1)  In general. Subject to subsection (e) and section
6121(b)(5)(B), each regional alliance shall provide for payment
to each regional alliance health plan, in which an alliance
eligible individual is enrolled, an amount equal to the net
blended rate (described in paragraph (2)) adjusted (consistent
with subsection (c)) to take into account the relative
actuarial risk associated with the coverage with respect to the
individual.
        (2)  Net blended rate. The net blended rate described
in this paragraph is the blended plan per capita payment amount
(determined under section 6201(a)), reduced by
           (A)  such amount multiplied by the sum of
    (i)  the administrative allowance percentage for the
regional alliance, computed by the alliance under section
1352(b), and
    (ii)  1.5 percentage points; and
            (B)  any plan payment reduction imposed under
section 6011 for the plan for the year.
    (c)  Application of Risk Adjustment and Reinsurance
Methodology. Each regional alliance shall use the risk
adjustment methodology developed under section 1541 in making
payments to regional alliance health plans under this section,
except as provided in section 1542.
    (d)  Application of Portion of Set Aside. Amounts
attributable to subsection (b)(2)(A)(ii) are paid to the
Federal Government (for academic health centers and graduate
medical education) under section 1353.
    (e)  Treatment of Veterans, Military, and Indian Health
Plans and Programs.
        (1)  Veterans health plan. In applying this subtitle
(and title VI) in the case of a regional alliance health plan
that is a veterans health plan of the Department of Veterans
Affairs, the following rules apply:
            (A)  For purposes of applying subtitle A of title
VI, families enrolled under the plan shall not be taken into
account.
            (B)  The provisions of subtitle A of title VI shall
not apply to the plan, other than such provisions as require
the plan to submit a per capita amount for each regional
alliance area on a timely basis, which amount shall be treated
as the final accepted bid of the plan for the area for purposes
of subtitle B of such title and this subtitle. This amount
shall not be subject to negotiation and not subject to
reduction under section 6011.
            (C)  For purposes of computing the blended plan per
capita payment amount under section 6201(a), the AFDC and SSI
proportions (under section 6202(a)) are deemed to be 0 percent.
        (2)  Uniformed services health plan. In applying this
subtitle (and title VI) in the case of a regional alliance
health plan that is a Uniformed Services Health Plan of the
Department of Defense, the following rules apply:
            (A)  For purposes of applying subtitle A of title
VI, families enrolled under the plan shall not be taken into
account.
            (B)  The provisions of subtitle A of title VI shall
not apply to the plan, other than such provisions as require
the plan to submit a per capita amount on a timely basis, which
amount shall be treated as the final accepted bid of the plan
for the area involved for purposes of subtitle B of such title
and this subtitle. This amount shall not be subject to
negotiation and not subject to reduction under section 6011.
The Board, in consultation with the Secretary of Defense, shall
establish rules relating to the area (or areas) in which such a
bid shall apply.
            (C)  For purposes of computing the blended plan per
capita payment amount under section 6201(a), the AFDC and SSI
proportions (under section 6202(a)) are deemed to be 0 percent.
        (3)  Indian health programs. In applying this subtitle
(and title VI) in the case of a health program of the Indian
Health Service, the following rules apply:
            (A)  Except as provided in this paragraph, the plan
shall not be considered or treated to be a regional alliance
health plan and for purposes of applying title VI, families
enrolled under the program shall not be taken into account.
            (B)  In accordance with rules established by the
Secretary, regional alliances shall act as agents for the
collection of employer premium payments (including payments of
corporate alliance employers) required under subtitle B of
title VI with respect to qualifying employees who are enrolled
under a health program of the Indian Health Service. The
Secretary shall permit such alliances to retain a nominal fee
to compensate them for such collection activities. In applying
this subparagraph, the family share of premium for such
employees is deemed to be zero for electing Indians (as defined
in section 1012(d)(3)) and for other employees is the amount of
the premium established under section 8306(b)(4)(A), employees
are deemed to be residing in the area of residence (or area of
employment), as specified under rules of the Secretary, and the
class of enrollment shall be such class (or classes) as
specified under rules of the Secretary.
            Section 1352   ALLIANCE ADMINISTRATIVE ALLOWANCE
PERCENTAGE.
    (a)  Specification by Alliance. Before obtaining bids under
section 6004 from health plans for a year, each regional
alliance shall establish the administrative allowance for the
operation of the regional alliance in the year.
     (b)  Administrative Allowance Percentage. Subject to
subsection (c), the regional alliance shall compute an
administrative allowance percentage for each year equal to

      (1)  the administrative allowance determined under
subsection (a) for the year, divided by

       (2)  the total of the amounts payable to regional
alliance health plans under subpart A (as estimated by the
alliance and determined without regard to section 1345(d)).

     (c)  Limitation to 2\1/2\ percent.In no case shall an
administrative allowance percentage exceed 2.5 percent.

            Section 1353   PAYMENTS TO THE FEDERAL GOVERNMENT
FOR ACADEMIC HEALTH CENTERS AND GRADUATE MEDICAL EDUCATION.

    Each regional alliance shall make payment to the Secretary
of
an amount equal to the reduction in payments by the alliance to
regional alliance health plan attributable to section
1351(b)(2)(A)(ii).

        Subpart C    Financial Management

            Section 1361   MANAGEMENT OF FINANCES AND RECORDS.

   (a)  In General. Each regional alliance shall comply with
standards established under section 1571(b) (relating to the
management of finances, maintenance of records, accounting
practices, auditing procedures, and financial reporting) and
under section 1591(d) (relating to employer payments).

  (b)  Specific Provisions. In accordance with such standards

        (1)  Financial statements.

            (A)  In general. Each regional alliance shall
publish periodic audited financial statements.

            (B)  Annual financial audit.

    (i)  In general. Each regional alliance shall have an
annual financial audit conducted by an independent auditor in
accordance with generally accepted auditing standards.

    (ii)  Publication. A report on each such audit shall be
made available to the public at nominal cost.

    (iii)  Required actions for deficiencies. If the report
from such an audit does not bear an unqualified opinion, the
alliance shall take such steps on a timely basis as may be
necessary to correct any material deficiency identified in the
report.

            (C)  Eligibility error rates. Each regional
alliance shall make eligibility determinations for premium
discounts, liability reductions, and cost sharing reductions
under sections 6104 and 6123, section 6113, and section 1371,
respectively, in a manner that maintains the error rates below
an applicable maximum permissible error rate specified by the
Secretary (or the Secretary of Labor with respect to section
6123). In specifying such a rate, the Secretary shall take into
account maximum permissible error rates recognized by the
Federal Government under comparable State-administered
programs.

        (2)  Safeguarding of funds. Each regional alliance
shall safeguard family, employer, State, and Federal government
payments to the alliance in accordance with fiduciary standards
and shall hold such payments in financial institutions and
instruments that meet standards recognized or established by
the Secretary, in consultation with the Secretaries of Labor
and the Treasury and taking into account current Federal laws
and regulations relating to fiduciary responsibilities and
financial management of public funds.

        (3)  Contingencies. Each regional alliance shall
provide that any surplus of funds resulting from an estimation
discrepancy described in section 9201(e)(1), up to a reasonable
amount specified by the Secretary, shall be held in a
contingency fund established by the alliance and used to fund
any future shortfalls resulting from such a discrepancy.

        (4)  Auditing of employer payments.

            (A)  In general.Each regional alliance is
responsible
for auditing the records of regional alliance employers to
assure that employer payments (including the payment of amounts
withheld) were made in the appropriate amount as provided under
subpart A of part 2 of subtitle B of title VI.

            (B)  Employers with employees residing in different
alliance areas. In the case of a regional alliance employer
which has employees who reside in more than one alliance area,
the Secretary of Labor, in consultation with the Secretary,
shall establish a process for the coordination of regional
alliance auditing activities among the regional alliances
involved.

            (C)  Appeal. In the case of an audit conducted by a
regional alliance on an employer under this paragraph, an
employer or other regional alliance that is aggrieved by the
determination in the audit is entitled to review of such audit
by the Secretary of Labor in a manner to be provided by such
Secretary.

        Subpart D    Reductions in Cost Sharing; Income
Determinations

            Section 1371   REDUCTION IN COST SHARING FOR LOW
INCOME FAMILIES.

    (a)  Reduction.

        (1)  In general. Subject to subsection (b), in the case
of a family that is enrolled in a regional alliance health plan
and that is either (A) an AFDC or SSI family or (B) is
determined under this subpart to have family adjusted income
below 150 percent of the applicable poverty level, the family
is entitled to a reduction in cost sharing in accordance with
this section.

        (2)  Timing of reduction. The reduction in cost sharing
shall only apply to items and services furnished after the date
the application for such reduction is approved under section
1372(c) and before the date of termination of the reduction
under this subpart, or, in the case of an AFDC or SSI family,
during the period in which the family is such a family.

        (3)  Information to providers and plans. Each regional
alliance shall provide, through electronic means and otherwise,
health care providers and regional alliance health plans with
access to such information as may be necessary in order to
provide for the cost sharing reductions under this section.

    (b)  Limitation. No reduction in cost sharing under
subsection (c)(1) shall be available for families residing in
an alliance area if the regional alliance for the area
determines that there are sufficient low-cost plans (as defined
in section 6104(b)(3)) that are lower or combination cost
sharing plans available in the alliance area to enroll AFDC and
SSI families and families with family adjusted income below 150
percent of the applicable poverty level.

    (c)  Amount of Cost Sharing Reduction.

        (1)  In general. Subject to paragraph (2), the
reduction in cost sharing under this section shall be such
reduction as will reduce cost sharing to the level of a lower
or combination cost sharing plan.

        (2)  Special treatment of certain afdc and ssi
families. In the case of an AFDC or SSI family enrolled in a
lower or combination cost sharing plan or receiving a reduction
in cost
sharing under paragraph (1), the amount of copayment applied
with respect to an item or service (other than with respect to
hospital emergency room services for which there is no
emergency medical condition, as defined in section 1867(e)(1)
of the Social Security Act) shall be an amount equal to 20
percent of the copayment amount otherwise applicable under
sections 1135 and 1136, rounded to the nearest dollar.
    (d)  Administration.
        (1)  In general. In the case of an approved family (as
defined in section 1372(b)(3)) enrolled in a regional alliance
health plan, the regional alliance shall pay the plan for cost
sharing reductions (other than cost sharing reductions under
subsection (c)(2)) provided under this section  and included in
payments made by the plan to its providers.
        (2)  Estimated payments, subject to reconciliation.
Such payment shall be made initially on the basis of reasonable
estimates of cost sharing reductions incurred by such a plan
with respect to approved families and shall be reconciled not
less often than quarterly based on actual claims for items and
services provided.
    (e)  No Cost Sharing for Indians and Certain Veterans and
Military Personnel. The provisions of section 6104(a)(3) shall
apply to cost sharing reductions under this section in the same
manner as such provisions apply to premium discounts under
section 6104.
            Section 1372   APPLICATION PROCESS FOR COST SHARING
REDUCTIONS.
    (a)  Application.
        (1)  In general. A regional alliance eligible family
may apply for a determination of the family adjusted income of
the family, for the purpose of establishing eligibility for
cost sharing reductions under section 1371.
      (2)  Form. An application under this section shall
include such information as may be determined by the regional
alliance (consistent with rules developed by the Secretary) and
shall include at least information about the family's
employment status and income.

    (b)  Timing.

        (1)  In general. An application under this section may
be filed at such times as the Secretary may provide, including
during any open enrollment period, at the time of a move, or
after a change in life circumstances (such as unemployment or
divorce) affecting class of enrollment or amount of family
share or repayment amount.

        (2)  Consideration. Each regional alliance shall
approve or disapprove an application under this section, and
notify the applicant of such decision,  within such period
(specified by the Secretary) after the date of the filing of
the application.

        (3)  Approved family defined. In this section and
section 1371, the term "approved family" means a family for
which an application under this section is approved, until the
date of termination of such approval under this section.

    (c)  Approval of Application.

        (1)  In general. A regional alliance shall approve an
application of a family under this section filed in a month if
the application demonstrates that the family adjusted income of
the family (as defined in subsection (d) and determined under
paragraph (2)) is (or is expected to be) less than 150 percent
of the applicable poverty level.

        (2)  Use of current income. In making the determination
under paragraph (1), a regional alliance shall take into
account the income for the previous 3-month period and current
wages from employment (if any), consistent with rules specified
by the Secretary.

    (d)  Family Adjusted Income.

        (1)  In general. Except as provided in paragraph (4),
in this Act the term "family adjusted income" means, with
respect to a family, the sum of the adjusted incomes (as
defined in paragraph (2)) for all members of the family
(determined without regard to section 1012).

        (2)  Adjusted income. In paragraph (1), the term
"adjusted income" means, with respect to an individual,
adjusted gross income (as defined in section 62(a) of the
Internal Revenue Code of 1986)

            (A)  determined without regard to sections  135,
162(l), 911, 931, and 933 of such Code, and

            (B)  increased by the amount of interest received
or accrued by the individual which is exempt from tax.

        (3)  Presence of additional dependents.At the option of
an individual, a family may include (and not be required to
separate out) the income of other individuals who are claimed
as dependents of the family for income tax purposes, but such
individuals shall not be counted as part of the family for
purposes of determining the size of the family.

  (e)  Requirement for Periodic Confirmation and Verification
and Notices.

      (1)  Confirmation and verification requirement. The
continued eligibility of a family for cost sharing reductions
under this section is conditioned upon the family's eligibility
being (A)  confirmed periodically by the regional alliance, and

            (B)  verified (through the filing of a new
application under this section) by the regional alliance at the
time income reconciliation statements are required to be filed
under section 1375.

        (2)  Rules. The Secretary shall issue rules related to
the manner in which alliances confirm and verify eligibility
under this section.

        (3)  Notices of changes in income and employment
status.

            (A)  In general. Each approved family shall
promptly notify the regional alliance of any material increase
(as defined by the Secretary) in the family adjusted income.

            (B)  Response. If a regional alliance receives
notice under subparagraph (A) (or from an employer under
section 1602(b)(3)(A)(i)) or otherwise receives information
indicating a
potential significant change in the family's employment status
or increase in adjusted family income, the regional alliance
shall promptly take steps necessary to reconfirm the family's
eligibility.

   (f)  Termination of Cost Sharing Reduction. The regional
alliance shall, after notice to the family, terminate the
reduction of cost sharing under this subpart for an approved
family if the family fails to provide for confirmation or
verification or notice required under subsection (c) on a
timely basis or the alliance otherwise determines that the
family is no longer eligible for such reduction. The previous
sentence shall not prevent the family from subsequently
reapplying for cost sharing reduction under this section.

    (g)  Treatment of AFDC and SSI Recipients.

        (1)  No application required. AFDC and SSI families are
not required to make an application under this section.

        (2)  Notice requirement. Each State (and the Secretary)
shall notify each regional alliance, in a manner specified by
the Secretary, of the identity (and period of eligibility under
the AFDC or SSI programs) of each AFDC and SSI recipient,
unless such a recipient elects (in a manner specified by the
Secretary) not to accept the reduction of cost sharing under
this section.