Health Security Act

HEALTH SECURITY ACT

103d CONGRESS
1st Session
H. R. / S._
IN THE HOUSE OF REPRESENTATIVES /
IN THE SENATE OF THE UNITED STATES
Mr. ________________ _(for himself, [insert cosponsor list
attached])_ introduced the following bill; which was [read twice
and] referred to the Committee on _XXXXXXXXXXXXXXX
BILL
To ensure individual and family security through health care
coverage for all Americans in a manner that contains the rate of
growth in health care costs and promotes responsible health
insurance practices, to promote choice in health care, and to
ensure and protect the health care of all Americans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

Health Security Act
Table
SECTION 1. SHORT TITLE; TABLE OF TITLES AND SUBTITLES.
(a) Short Title._This Act may be cited as the ``Health Security
Act''.
(b) Table of Titles and Subtitles in Act._The following are the
titles and subtitles contained in this Act:

TITLE I_HEALTH CARE SECURITY
Subtitle A_Universal Coverage and Individual Responsibility
Subtitle B_Benefits
Subtitle C_State Responsibilities
Subtitle D_Health Alliances
Subtitle E_Health Plans
Subtitle F_Federal Responsibilities
Subtitle G_Employer Responsiblities
[Subtitle H_Reserved]
[Subtitle I_Reserved]
Subtitle J_General Definitions; Miscellaneous Provisions
TITLE II_NEW BENEFITS
Subtitle A_Medicare Outpatient Prescription Drug Benefit
Subtitle B_Long-Term Care
TITLE III_PUBLIC HEALTH INITIATIVES
Subtitle A_Workforce Priorities Under Federal Payments
Subtitle B_Academic Health Centers
Subtitle C_Health Research Initiatives
Subtitle D_Core Functions of Public Health Programs; National
Initiatives Regarding Preventive Health
Subtitle E_Health Services for Medically Underserved Populations
Subtitle F_Mental Health; Substance Abuse
Subtitle G_Comprehensive School Health Education; School-Related
Health Services
Subtitle H_Public Health Service Initiatives Fund
Subtitle I_Coordination With COBRA Continuation Coverage
TITLE IV_MEDICARE AND MEDICAID
Subtitle A_Medicare and the Alliance System
Subtitle B_Savings in Medicare Program
Subtitle C_Medicaid
Subtitle D_Increase in SSI Personal Needs Allowance
TITLE V_QUALITY AND CONSUMER PROTECTION
Subtitle A_Quality Management and Improvement
Subtitle B_Information Systems, Privacy, and Administrative
Simplification
Subtitle C_Remedies and Enforcement
Subtitle D_Medical Malpractice
Subtitle E_Fraud and Abuse
Subtitle F_McCarran-Ferguson Reform
TITLE VI_PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS
Subtitle A_Premium Caps
Subtitle B_Premium-Related Financings
Subtitle C_Payments to Regional Alliance Health Plans
TITLE VII_REVENUE PROVISIONS
Subtitle A_Financing Provisions
Subtitle B_Tax Treatment of Employer-Provided Health Care
Subtitle C_Employment Status Provisions
Subtitle D_Tax Treatment of Funding of Retiree Health Benefits
Subtitle E_Coordination With COBRA Continuing Care Provisions
Subtitle F_Tax Treatment of Organizations Providing Health Care
Services and Related Organizations
Subtitle G_Tax Treatment of Long-term Care Insurance and Services
Subtitle H_Tax Incentives for Health Services Providers
Subtitle I_Miscellaneous Provisions
TITLE VIII_HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL
GOVERNMENT
Subtitle A_Military Health Care Reform
Subtitle B_Department of Veterans Affairs
Subtitle C_Federal Employees Health Benefits Program
Subtitle D_Indian Health Service
Subtitle E_Amendments to the Employee Retirement Income Security
Act of 1974
Subtitle F_Special Fund for WIC Program
TITLE IX_AGGREGATE GOVERNMENT PAYMENTS TO REGIONAL ALLIANCES
Subtitle A_Aggregate State Payments
Subtitle B_Aggregate Federal Alliance Payments
Subtitle C_Borrowing Authority to Cover Cash-Flow Shortfalls
TITLE X_COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION
AND AUTOMOBILE INSURANCE
Subtitle A_Workers Compensation Insurance
Subtitle B_Automobile Insurance
Subtitle C_Commission on Integration of Health Benefits
Subtitle D_Federal Employees' Compensation Act
Subtitle E_Davis-Bacon Act and Service Contract Act
Subtitle F_Effective Dates
TITLE XI_TRANSITIONAL INSURANCE REFORM
TITLE XII_TEMPORARY ASSESSMENT ON EMPLOYERS WITH RETIREE HEALTH
BENEFIT COSTS

Findings
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) Under the current health care system in the United States_
(A) individuals risk losing their health care coverage when they
move, when they lose or change jobs, when they become seriously
ill, or when the coverage becomes unaffordable;
(B) continued escalation of health care costs threatens the
economy of the United States, undermines the international
competitiveness of the Nation, and strains Federal, State, and
local budgets;
(C) an excessive burden of forms, paperwork, and bureaucratic
procedures confuses consumers and overwhelms health care
providers;
(D) fraud and abuse sap the strength of the health care system;
and
(E) health care is a critical part of the economy of the United
States and interstate commerce, consumes a significant percentage
of public and private spending, and affects all industries and
individuals in the United States.
(2) Under any reform of the health care system_
(A) health insurance and high quality health care should be
secure, uninterrupted, and affordable for all individuals in the
United States;
(B) comprehensive health care benefits that meet the full range
of health needs, including primary, preventive, and specialized
care, should be available to all individuals in the United
States;
(C) the current high quality of health care in the United States
should be maintained;
(D) individuals in the United States should be afforded a
meaningful opportunity to choose among a range of health plans,
health care providers, and treatments;
(E) regulatory and administrative burdens should be reduced;
(F) the rapidly escalating costs of health care should be
contained without sacrificing high quality or impeding
technological improvements;
(G) competition in the health care industry should ensure that
health plans and health care providers are efficient and charge
reasonable prices;
(H) a partnership between the Federal Government and each State
should allow the State and its local communities to design an
effective, high-quality system of care that serves the residents
of the State;
(I) all individuals should have a responsibility to pay their
fair share of the costs of health care coverage;
(J) a health care system should build on the strength of the
employment-based coverage arrangements that now exist in the
United States;
(K) the penalties for fraud and abuse should be swift and severe;
and
(L) an individual's medical information should remain
confidential and should be protected from unauthorized disclosure
and use.
Purposes
SEC. 3. PURPOSES.
The purposes of this Act are as follows:
(1) To guarantee comprehensive and secure health care coverage.
(2) To simplify the health care system for consumers and health
care professionals.
(3) To control the cost of health care for employers, employees,
and others who pay for health care coverage.
(4) To promote individual choice among health plans and health
care providers.
(5) To ensure high quality health care.
(6) To encourage all individuals to take responsibility for their
health care coverage.
Health Security Act
Title I
TITLE I_HEALTH CARE SECURITY


table of contents of title


Subtitle A_Universal Coverage and Individual Responsibility
PART 1 UNIVERSAL COVERAGE
Sec._1001._Entitlement to health benefits.
Sec._1002._Individual responsibilities.
Sec._1003._Protection of consumer choice.
Sec._1004._Applicable health plan providing coverage.
Sec._1005._Treatment of other nonimmigrants.
Sec._1006._Effective date of entitlement.
PART 2TREATMENT OF FAMILIES AND SPECIAL RULES
Sec._1011._General rule of enrollment of family in same health plan.
Sec._1012._Treatment of certain families.
Sec._1013._Multiple employment situations.
Sec._1014._Treatment of residents of States with Statewide single-payer systems.
Subtitle B_Benefits
Part 1_Comprehensive Benefit Package
Sec._1101._Provision of comprehensive benefits by plans.
Part 2 escription of Items and Services Covered
Sec._1111._Hospital services.
Sec._1112._Services of health professionals.
Sec._1113._Emergency and ambulatory medical and surgical services.
Sec._1114._Clinical preventive services.
Sec._1115._Mental health and substance abuse services.
Sec._1116._Family planning services and services for pregnant women.
Sec._1117._Hospice care.
Sec._1118._Home health care.
Sec._1119._Extended care services.
Sec._1120._Ambulance services.
Sec._1121._Outpatient laboratory, radiology, and diagnostic services.
Sec._1122._Outpatient prescription drugs and biologicals.
Sec._1123._Outpatient rehabilitation services.
Sec._1124. urable medical equipment and prosthetic and orthotic devices.
Sec._1125._Vision care.
Sec._1126. ental care.
Sec._1127._Health education classes.
Sec._1128._Investigational treatments.
Part 3_Cost Sharing
Sec._1131._Cost sharing.
Sec._1132._Lower cost sharing.
Sec._1133._Higher cost sharing.
Sec._1134._Combination cost sharing.
Sec._1135._Table of copayments and coinsurance.
Sec._1136._Indexing dollar amounts relating to cost sharing.
Part 4_Exclusions
Sec._1141._Exclusions.
Part 5_Role of the National Health Board
Sec._1151. efinition of benefits.
Sec._1152._Acceleration of expanded benefits.
Sec._1153._Authority with respect to clinical preventive services.
Sec._1154._Establishment of standards regarding medical necessity.
Part 6_Additional Provisions Relating to Health Care Providers
Sec._1161._Override of restrictive State practice laws.
Sec._1162._Provision of items or services contrary to religious belief or moral conviction.
Subtitle C_State Responsibilities
Sec._1200._Participating State.
Part 1_General State Responsibilities
Sec._1201._General State responsibilities.
Sec._1202._State responsibilities with respect to alliances.
Sec._1203._State responsibilities relating to health plans.
Sec._1204._Financial solvency; fiscal oversight; guaranty fund.
Sec._1205._Restrictions on funding of additional benefits.
Part 2_Requirements for State Single-payer Systems
Sec._1221._Single-payer system described.
Sec._1222._General requirements for single-payer systems.
Sec._1223._Special rules for States operating Statewide single-payer system.
Sec._1224._Special rules for alliance-specific single-payer systems.
Subtitle D_Health Alliances
Sec._1300._Health alliance defined.
Part 1_Establishment of Regional and Corporate Alliances
Subpart A_Regional Alliances
Sec._1301._Regional alliance defined.
Sec._1302._Board of directors.
Sec._1303._Provider advisory boards for regional alliances.
Subpart B_Corporate Alliances
Sec._1311._Corporate alliance defined; individuals eligible for coverage through corporate alliances; additional definitions.
Sec._1312._Timing of elections.
Sec._1313._Termination of alliance election.
Part 2_General Responsibilities and Authorities of Regional Alliances
Sec._1321._Contracts with health plans.
Sec._1322._Offering choice of health plans for enrollment; establishment of fee-for-service schedule.
Sec._1323._Enrollment rules and procedures.
Sec._1324._Issuance of health security cards.
Sec._1325._Consumer information and marketing.
Sec._1326._Ombudsman.
Sec._1327. ata collection; quality.
Sec._1328._Additional duties.
Sec._1329._Additional authorities for regional alliances to address needs in areas with inadequate health services; prohibition of insurance role.
Sec._1330._Prohibition against self-dealing and conflicts of interest.
Part 3_Authorities and Responsibilities Relating to Financing and Income Determinations
SUBPART A_COLLECTION OF FUNDS
Sec._1341._Information and negotiation and acceptance of bids.
Sec._1342._Amount of premiums charged.
Sec._1343. etermination of family obligation for family share and alliance credit amount.
Sec._1344._Notice of family payments due.
Sec._1345._Collection of premium payments.
Sec._1346._Coordination among regional alliances.
SUBPART B_PAYMENTS
Sec._1351._Payment to regional alliance health plans.
Sec._1352._Alliance administrative allowance percentage.
Sec._1353._Payments for graduate medical education and academic health centers.
SUBPART C_FINANCIAL MANAGEMENT
Sec._1361._Management of finances and records.
SUBPART D_REDUCTIONS IN COST SHARING; INCOME DETERMINATIONS
Sec._1371._Reduction in cost sharing for low-income families.
Sec._1372._Application process for cost sharing reductions.
Sec._1373._Application for premium reductions and reduction in liability to alliance.
Sec._1374._General provisions relating to application process.
Sec._1375._End-of-year reconciliation for premium discount and repayment reduction with actual income.
Part 4_Responsibilities and Authorities of Corporate Alliances
Sec._1381._Contracts with health plans.
Sec._1382._Offering choice of health plans for enrollment.
Sec._1383._Enrollment; issuance of health security card.
Sec._1384._Community-rated premiums within premium areas.
Sec._1385._Assistance for low-wage families.
Sec._1386._Consumer information and marketing; consumer assistance; data collection and quality; additional duties.
Sec._1387._Plan and information requirements.
Sec._1388._Management of funds; relations with employees.
Sec._1389._Cost control.
Sec._1390._Payments by corporate alliance employers to corporate alliances.
Sec._1391._Coordination of payments.
Sec._1392._Applicability of ERISA enforcement mechanisms for enforcement of certain requirements.
Sec._1393._Applicability of certain ERISA protections to covered individuals.
Sec._1394. isclosure and reserve requirements.
Sec._1395._Trusteeship by the Secretary of insolvent corporate alliance health plans.
Sec._1396._Guaranteed benefits under trusteeship of the secretary.
Sec._1397._Imposition and collection of periodic assessments on self-insured corporate alliance plans.
Subtitle E_Health Plans
Sec._1400._Health plan defined.
Part 1_Requirements Relating to Comprehensive Benefit Package
Sec._1401._Application of requirements.
Sec._1402._Requirements relating to enrollment and coverage.
Sec._1403._Community rating.
Sec._1404._Marketing of health plans; information.
Sec._1405._Grievance procedure.
Sec._1406._Health plan arrangements with providers.
Sec._1407._Preemption of certain State laws relating to health plans.
Sec._1408._Financial solvency.
Sec._1409._Requirement for offering cost sharing policy.
Sec._1410._Quality assurance.
Sec._1411._Provider verification.
Sec._1412._Consumer disclosures of utilization management protocols.
Sec._1413._Confidentiality, data management, and reporting.
Sec._1414._Participation in reinsurance system.
Part 2_Requirements Relating to Supplemental Insurance
Sec._1421._Imposition of requirements on supplemental insurance.
Sec._1422._Standards for supplemental health benefit policies.
Sec._1423._Standards for cost sharing policies.
Part 3_Requirements Relating to Essential Community Providers
Sec._1431._Health plan requirement.
Sec._1432._Sunset of requirement.
Part 4_Requirements Relating to Workers' Compensation and Automobile Medical Liability Coverage
Sec._1441._Reference to requirements relating to workers compensation services.
Sec._1442._Reference to requirements relating to automobile medical liability services.
Subtitle F_Federal Responsibilities
Part 1_National Health Board
SUBPART A_ESTABLISHMENT OF NATIONAL HEALTH BOARD
Sec._1501._Creation of National Health Board; membership.
Sec._1502._Qualifications of board members.
Sec._1503._General duties and responsibilities.
Sec._1504._Annual report.
Sec._1505._Powers.
Sec._1506._Funding.
SUBPART B_RESPONSIBILITIES RELATING TO REVIEW AND APPROVAL OF STATE SYSTEMS
Sec._1511._Federal review and action on State systems.
Sec._1512._Failure of participating States to meet conditions for compliance.
Sec._1513._Reduction in payments for health programs by secretary of health and human services.
Sec._1514._Review of Federal determinations.
Sec._1515._Federal support for State implementation.
SUBPART C_RESPONSIBILITIES IN ABSENCE OF STATE SYSTEMS
Sec._1521._Application of subpart.
Sec._1522._Federal assumption of responsibilities in non-participating States.
Sec._1523._Imposition of surcharge on premiums under federally-operated system.
Sec._1524._Return to State operation.
SUBPART D_ESTABLISHMENT OF CLASS FACTORS FOR CHARGING PREMIUMS
Sec._1531._Premium class factors.
SUBPART E_RISK ADJUSTMENT AND REINSURANCE METHODOLOGY FOR PAYMENT OF PLANS
Sec._1541. evelopment of a risk adjustment and reinsurance methodology.
Sec._1542._Incentives to enroll disadvantaged groups.
Sec._1543._Advisory committee.
Sec._1544._Research and demonstrations.
Sec._1545._Technical assistance to States and alliances.
SUBPART F_RESPONSIBILITIES FOR FINANCIAL REQUIREMENTS
Sec._1551._Capital standards for regional alliance health plan.
Sec._1552._Standard for guaranty funds.
Part 2_Responsibilities of Department of Health and Human Services
SUBPART A_GENERAL RESPONSIBILITIES
Sec._1571._General responsibilities of Secretary of Health and Human Services.
Sec._1572._Establishment of breakthrough drug committee.
SUBPART B_CERTIFICATION OF ESSENTIAL COMMUNITY PROVIDERS
Sec._1581._Certification.
Sec._1582._Categories of providers automatically certified.
Sec._1583._Standards for additional providers.
Sec._1584._Certification process; review; termination of certifications.
Sec._1585._Notification of health alliances and participating States.
Part 3_Specific Responsibilities of Secretary of Labor.
Sec._1591._Responsibilities of Secretary of Labor.
Subtitle G_Employer Responsiblities
Sec._1601._Payment requirement.
Sec._1602._Requirement for information reporting.
Sec._1603._Requirements relating to new employees.
Sec._1604._Auditing of records.
Sec._1605._Prohibition of certain employer discrimination.
Sec._1606._Obligation relating to retiree health benefits.
Sec._1607._Prohibition on self-funding of cost sharing benefits by regional alliance employers.
[Subtitle H_Reserved]
[Subtitle I_Reserved]
Subtitle J_General Definitions; Miscellaneous Provisions
Part 1_General Definitions
Sec._1901. efinitions relating to employment and income.
Sec._1902._Other general definitions.
Part 2_Miscellaneous Provisions
Sec._1911._Use of interim, final regulations.



Title I, Subtitle A
TITLE I_HEALTH CARE SECURITY
Subtitle A_Universal Coverage and Individual Responsibility
PART 1_UNIVERSAL COVERAGE
SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.
__(a) In General._In accordance with this part, each eligible individual is entitled to the comprehensive benefit package under subtitle B through the applicable health plan in which the individual is enrolled consistent with this title.
__(b) Health Security Card._Each eligible individual is entitled to a health security card to be issued by the alliance or other entity that offers the applicable health plan in which the individual is enrolled.
__(c) Eligible Individual Defined._In this Act, the term ``eligible individual'' means an individual who is residing in the United States  and who is_
__(1) a citizen or national of the United States;
__(2) an alien permanently residing in the United States under color of law (as defined in section 1902(1)); or
__(3) a long-term nonimmigrant (as defined in section 1902(19)).
__(d) Treatment of Medicare-Eligible Individuals._Subject to section 1012(a), a medicare-eligible individual is entitled to health benefits under the medicare program instead of the entitlement under subsection (a).
__(e) Treatment of Prisoners._A prisoner (as defined in section 1902(26)) is entitled to health care services provided by the authority responsible for the prisoner instead of the entitlement under subsection (a).

SEC. 1002. INDIVIDUAL RESPONSIBILITIES.
__(a) In General._In accordance with this Act, each eligible individual (other than a medicare-eligible individual)_
__(1) must enroll in an applicable health plan for the individual, and
__(2) must pay any premium required, consistent with this Act, with respect to such enrollment.
__(b) Limitation on Disenrollment._No eligible individual shall be disenrolled from an applicable health plan until the individual_
__(1) is enrolled under another applicable health plan, or
__(2) becomes a medicare-eligible individual.
SEC. 1003. PROTECTION OF CONSUMER CHOICE.
__Nothing in this Act shall be construed as prohibiting the following:
__(1) An individual from purchasing any health care services.
__(2) An individual from purchasing supplemental insurance (offered consistent with this Act) to cover health care services not included within the comprehensive benefit package.
__(3) An individual who is not an eligible individual from purchasing health insurance (other than through a regional alliance).
__(4) Employers from providing coverage for benefits in addition to the comprehensive benefit package (subject to part 2 of subtitle E).
SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COVERAGE.
__(a) Specification of Applicable Health Plan._Except as otherwise provided:
__(1) General rule: regional alliance health plans._The applicable health plan for a family is a regional alliance health plan for the alliance area in which the family resides.
__(2) Corporate alliance health plans._In the case of a family member that is eligible to enroll in a corporate alliance health plan under section 1311(c), the applicable health plan for the family is such a corporate alliance health plan.
__(b) Choice of Plans for Certain Groups._
__(1) Military personnel and families._For military personnel and families who elect a Uniformed Services Health Plan of the Department of Defense under section 1073a(d) of title 10, United States Code, as inserted by section 8001(a) of this Act, that plan shall be the applicable health plan.
__(2) Veterans._For veterans and families who elect to enroll in a veterans health plan under section 1801 of title 38, United States Code, as inserted by section 8101(a) of this Act, that plan shall be the applicable health plan.
__(3) Indians._For those individuals who are eligible to enroll, and who elect to enroll, in a health program of the Indian Health Service under section 8302(b), that program shall be the applicable health plan.

SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS.
__(a) Undocumented Aliens Ineligible for Benefits._An undocumented alien is not eligible to obtain the comprehensive benefit package through enrollment in a health plan pursuant to this Act.
__(b) Diplomats and Other Foreign Government Officials._Subject to conditions established by the National Health Board in consultation with the Secretary of State, a nonimmigrant under subparagraph (A) or (G) of section 101(a)(15) of the Immigration and Nationality Act may obtain the comprehensive benefit package through enrollment in the regional alliance health plan for the alliance area in which the nonimmigrant resides.
__(c) Reciprocal Treatment of Other Nonimmigrants._With respect to those classes of individuals who are lawful nonimmigrants but who are not long-term nonimmigrants (as defined in section 1902(19)) or described in subsection (b), such individuals may obtain such benefits through enrollment with regional alliance health plans only in accordance with such reciprocal agreements between the United States and foreign states as may be entered into.
SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT.
__(a) Regional Alliance Eligible Individuals._
__(1) In general._In the case of regional alliance eligible individuals residing in a State, the entitlement under this part (and requirements under section 1002) shall not take effect until the State becomes a participating State (as defined in section 1200).
__(2) Transitional rule for corporate alliances._
__(A) In general._In the case of a State that becomes a participating State before the general effective date (as defined in subsection (c)) and for periods before such date, under rules established by the Board, an individual who is covered under an employee benefit plan (described in subparagraph (C)) based on the individual (or the individual's spouse) being a qualifying employee of a qualifying employer, the individual shall not be treated under this Act as a regional alliance eligible individual.
__(B) Qualifying employer defined._In subparagraph (A), the term ``qualifying employer'' means an employer that_
__(i) is described in section 1311(b)(1)(A), or is participating in a multiemployer plan described in section 1311(b)(1)(B) or arrangement described in section 1311(b)(1)(C), and
__(ii) provides such notice to the regional alliance involved as the Board specifies.
__(C) Benefits plan described._A plan described in this subparagraph is an employee benefit plan that_
__(i) provides (through insurance or otherwise) the comprehensive benefit package, and
__(ii) provides an employer contribution of at least 80 percent of the premium (or premium equivalent) for coverage
__(b) Corporate Alliance Eligible Individuals._
__(1) In general._In the case of corporate alliance eligible individuals, the entitlement under this part shall not take effect until the general effective date.
__(2) Transition._For purposes of this Act and before the general effective date, in the case of an eligible individual who resides in a participating State, the individual is deemed a regional alliance eligible individual until the individual becomes a corporate alliance eligible individual, unless paragraph (2)(A) applies to the individual.
__(c) General Effective Date Defined._In this Act, the term ``general effective date'' means January 1, 1998.
PART 2_TREATMENT OF FAMILIES AND SPECIAL RULES
SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN.
__(a) In General._Except as provided in this part or otherwise, all members of the same family (as defined in subsection (b)) shall be enrolled in the same applicable health plan.
__(b) Family Defined._In this Act, unless otherwise provided, the term ``family''_
__(1) means, with respect to an eligible individual who is not a child (as defined in subsection (c)), the individual; and
__(2) includes the following persons (if any):
__(A) The individual's spouse if the spouse is an eligible individual.
__(B) The individual's children (and, if applicable, the children of the individual's spouse) if they are eligible individuals.
__(c) Classes of Family Enrollment; Terminology._
__(1) In general._In this Act, each of the following is a separate class of family enrollment under this Act:
__(A) Coverage only of an individual (referred to in this Act as the ``individual'' class of enrollment).
__(B) Coverage of a married couple without children (referred to in this Act as the ``couple-only'' class of enrollment).
__(C) Coverage of an unmarried individual and one or more children (referred to in this Act as the ``single parent'' class of enrollment).
__(D) Coverage of a married couple and one or more children (referred to in this Act as the ``dual parent'' class of enrollment).
__(2) References to family and couple classes of enrollment._In this Act:
__(A) Family._The term ``family'', with respect to a class of enrollment, refers to enrollment in a class of enrollment described in subparagraph (B), (C), or (D) of paragraph (1).
__(B) Couple._The term ``couple'', with respect to a class of enrollment, refers to enrollment in a class of enrollment described in subparagraph (B) or (D) of paragraph (1).
__(d) Spouse; Married; Couple._
__(1) In general._In this Act, the terms ``spouse'' and ``married'' mean, with respect to a person, another individual who is the spouse of the person or married to the person, as determined under applicable State law.
__(2) Couple._The term ``couple'' means an individual and the individual's spouse.
__(e) Child Defined._
__(1) In general._In this Act, except as otherwise provided, the term ``child'' means an eligible individual who (consistent with paragraph (3))_
__(A) is under 18 years of age (or under 24 years of age in the case of a full-time student), and
__(B) is a dependent of an eligible individual.
__(2) Application of State law._Subject to paragraph (3), determinations of whether a person is the child of another person shall be made in accordance with applicable State law.
__(3) National rules._The National Health Board may establish such national rules respecting individuals who will be treated as children as the Board determines to be necessary. Such rules shall be consistent with the following principles:
__(A) Step and foster child._A child includes a step child or foster child who is an eligible individual living with an adult in a regular parent-child relationship.
__(B) Disabled child._A child includes an unmarried dependent eligible individual regardless of age who is incapable of self-support because of mental or physical disability which existed before age 21.
__(C) Certain 3-generation families._A child includes the grandchild of an individual, if the parent of the grandchild is a child and the parent and grandchild are living with the grandparent.
__(D) Treatment of emancipated minors and married individuals._An emancipated minor or married individual shall not be treated as a child.
__(f) Additional Rules._The Board shall provide for such additional exceptions and special rules, including rules relating to_
__(1) families in which members are not residing in the same area,
__(2) the treatment of individuals who are under 19 years of age and who are not a dependent of an eligible individual, and
__(3) changes in family composition occurring during a year,
as the Board finds appropriate.
SEC. 1012. TREATMENT OF CERTAIN FAMILIES.
__(a) Treatment of Medicare-Eligible Individuals Who are Qualified Employees or Spouses of Qualified Employees._
__(1) In general._Except as specifically provided, in the case of an individual who is an individual described in paragraph (2) with respect to 2 consecutive months in a year (and it is anticipated would be in the following month), the individual shall not be treated as a medicare-eligible individual under this Act during the following month and the remainder of the year.
__(2) Individual described._An individual described in this paragraph with respect to a month is a medicare-eligible individual (determined without regard to paragraph (1)) who is a qualifying employee or the spouse or family member of a qualifying employee in the month.
__(3) Exception._Paragraph (1) shall not apply, in the case of an individual, if the individual described in paragraph (2) terminates qualifying employment in the month preceding the first month in which paragraph (1) applies. The previous sentence shall apply until with respect to qualifying employment occurring before such first month.





__(b) Separate Treatment for Certain Groups of Individuals._In the case of a family that includes one or more individuals in a group described in subsection (c)_
__(1) all the individuals in each such group within the family shall be treated as a separate family, and
__(2) all the individuals not described in any such group shall be treated collectively as a separate family.
__(c) Groups of Individuals Described._Each of the following is a group of individuals described in this subsection:
__(1) AFDC recipients (as defined in section 1902(3)).
__(2) Disabled SSI recipients (as defined in section 1902(13)) .
__(3) SSI recipients who are not disabled SSI recipients.
__(4) Electing veterans (as defined in subsection (d)(1)).
__(5) Active duty military personnel (as defined in subsection (d)(2)).
__(6) Electing Indians (as defined in subsection (d)(3)).
__(7) Prisoners (as defined in section 1902(26)).
__(d) Special Rules._In this Act:
__(1) Electing veterans._
__(A) Defined._Subject to subparagraph (B), the term ``electing veteran'' means a veteran who makes an election to enroll with a health plan of the Department of Veterans Affairs under chapter 18 of title 38, United States Code.
__(B) Family exception._Subparagraph (A) shall not apply with respect to coverage under a health plan referred to in such subparagraph if, for the area in which the electing veteran resides, such health plan offers coverage to family members of an electing veteran and the veteran elects family enrollment under such plan (instead of individual enrollment).
__(2) Active duty military personnel._
__(A) In general._Subject to subparagraph (B), the term ``active duty military personnel'' means an individual on active duty in the Uniformed Services of the United States.
__(B) Exception._If an individual described in subparagraph (A) elects family coverage under section 1073a(d)(1) of title 10, United States Code, then paragraph (5) of subsection (c) shall not apply with respect to such coverage.
__(3) Electing indians._
__(A) In general._Subject to subparagraph (B), the term ``electing Indian'' means an eligible individual who makes an election under section 8302(b) of this Act.
__(B) Family election for all individuals eligible to elect._No such election shall be made with respect to an individual in a family (as defined without regard to this section) unless such election is made for all eligible individuals (described in section 8302(a)) who are family members of the family.
__(4) Multiple choice._Eligible individuals who are permitted to elect coverage under more than one health plan or program referred to in this subsection may elect which of such plans or programs will be the applicable health plan under this Act.


__(e) Qualifying Students._
__(1) In general._In the case of a qualifying student (described in paragraph (2)), the individual may elect to enroll in a regional alliance health plan offered by the regional alliance for the area in which the school is located.
__(2) Qualifying student._In paragraph (1), the term ``qualifying student'' means an individual who_
__(A) but for this subsection would receive coverage under a health plan as a child of another person, and
__(B) is a full-time student at a school in an alliance area that is different from the alliance area (or, in the case of a corporate alliance, such coverage area as the Board may specify) providing the coverage described in subparagraph (A).
_(3) Payment rules._
__(A) Continued treatment as family._Except as provided in subparagraph (B), nothing in this subsection shall be construed as affecting the payment liabilities between families and health alliances or between health alliances and health plans.
__(B) Transfer payment._In the case of an election under paragraph (1), the health plan described in paragraph (2)(A) shall make payment to the health plan referred to in paragraph (1) in accordance with rules specified by the Board.
__(f) Spouses Living in Different Alliance Areas._The Board shall provide for such special rules in applying this Act in the case of a couple in which the spouses reside in different alliance areas as the Board finds appropriate.
SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.
__(a) Multiple Employment of an Individual._In the case of an individual who_
__(1)(A) is not married or (B) is married and whose spouse is not a qualifying employee (as defined in section 6121(c)(1)),
__(2) is not a child, and
__(3) who is a qualifying employee both of a regional alliance employer and of a corporate alliance employer (or of 2 corporate alliance employers),
the individual may elect the applicable health plan to be either a regional alliance health plan (for the alliance area in which the individual resides) or a corporate alliance health plan (for an employer employing the individual).
__(b) Multiple Employment Within a Family._
__(1) Married couple with employment with a regional alliance employer and with a corporate alliance employer._In the case of a married individual_
__(A) who is a qualifying employee of a regional alliance employer and whose spouse is an qualifying employee of a corporate alliance employer, or
__(B) who is a qualifying employee of a corporate alliance employer and whose spouse is an qualifying employee of a regional alliance employer,
the individual and the individual's spouse may elect the applicable health plan to be either a regional alliance health plan (for the alliance area in which the couple resides) or a corporate alliance health plan (for an employer employing the individual or the spouse).
__(2) Married couple with different corporate alliance employers._In the case of a married individual_
__(A) who is a qualifying employee of a corporate alliance employer, and
__(B) whose spouse is a qualifying employee of a different corporate alliance employer,
the individual and the individual's spouse may elect the applicable health plan to be a corporate alliance health plan for an employer employing either the individual or the spouse.
SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER SYSTEMS.
__(a) Universal Coverage._Notwithstanding the previous provisions of this title, except as provided in part 2 of subtitle C, in the case of an individual who resides in a State that has a Statewide single-payer system under section 1223, universal coverage shall be provided consistent with section 1222(3).

__(b) Individual Responsibilities._In the case of an individual who resides in a single-payer State, the responsibilities of such individual under such system shall supersede the obligations of the individual under section 1002.

Title I, Subtitle B
Subtitle B_Benefits
PART 1_COMPREHENSIVE BENEFIT PACKAGE
SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS.
__(a) In General._The comprehensive benefit package shall consist of the following items and services (as described in part 2), subject to the cost sharing requirements described in part 3, the exclusions described in part 4, and the duties and authority of the National Health Board described in part 5:
__(1) Hospital services (described in section 1111).
__(2) Services of health professionals (described in section 1112).
__(3) Emergency and ambulatory medical and surgical services (described in section 1113).
__(4) Clinical preventive services (described in section 1114).
__(5) Mental health and substance abuse services (described in section 1115).
__(6) Family planning services and services for pregnant women (described in section 1116).
__(7) Hospice care (described in section 1117).
__(8) Home health care (described in section 1118).
__(9) Extended care services (described in section 1119).
__(10) Ambulance services (described in section 1120).
__(11) Outpatient laboratory, radiology, and diagnostic services (described in section 1121).
__(12) Outpatient prescription drugs and biologicals (described in section 1122).
__(13) Outpatient rehabilitation services (described in section 1123).
__(14) Durable medical equipment and prosthetic and orthotic devices (described in section 1124).
__(15) Vision care (described in section 1125).
__(16) Dental care (described in section 1126).
__(17) Health education classes (described in section 1127).
__(18) Investigational treatments (described in section 1128).
__(b) No Other Limitations or Cost Sharing._The items and services in the comprehensive benefit package shall not be subject to any duration or scope limitation or any deductible, copayment, or coinsurance amount that is not required or authorized under this Act.
__(c) Health Plan._Unless otherwise provided in this subtitle, for purposes of this subtitle, the term ``health plan'' has the meaning given such term in section 1400.
PART 2 ESCRIPTION OF ITEMS AND SERVICES COVERED
SEC. 1111. HOSPITAL SERVICES.
__(a) Coverage._The hospital services described in this section are the following items and services:
__(1) Inpatient hospital services.
__(2) Outpatient hospital services.
__(3) 24-hour a day hospital emergency services.
__(b) Limitation._The hospital services described in this section do not include hospital services provided for the treatment of a mental or substance abuse disorder (which are subject to section 1115), except for medical detoxification as required for the management of medical conditions associated with withdrawal from alcohol or drugs (which is not covered under such section).
__(c) Definitions._For purposes of this subtitle:
__(1) Hospital._The term ``hospital'' has the meaning given such term in section 1861(e) of the Social Security Act, except that such term shall include_
__(A) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(1), a facility of the uniformed services under title 10, United States Code, that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in section 1861(e);
__(B) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(2), a facility operated by the Department of Veterans Affairs that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in section 1861(e); and
__(C) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(3), a facility operated by the Indian Health Service that is primarily engaged in providing services to inpatients that are equivalent to the services provided by a hospital defined in section 1861(e).
__(2) Inpatient hospital services._The term ``inpatient hospital services'' means items and services described in paragraphs (1) through (3) of section 1861(b) of the Social Security Act when provided to an inpatient of a hospital. The National Health Board shall specify those health professional services described in section 1112 that shall be treated as inpatient hospital services when provided to an inpatient of a hospital.
SEC. 1112. SERVICES OF HEALTH PROFESSIONALS.
__(a) Coverage._The items and services described in this section are_
__(1) inpatient and outpatient health professional services, including consultations, that are provided in_
__(A) a home, office, or other ambulatory care setting; or
__(B) an institutional setting; and
__(2) services and supplies (including drugs and biologicals which cannot be self-administered) furnished as an incident to such health professional services, of kinds which are commonly furnished in the office of a health professional and are commonly either rendered without charge or included in the bill of such professional.
__(b) Limitation._The items and services described in this section do not include items or services that are described in any other section of this part. An item or service that is described in section 1114 but is not provided consistent with a periodicity schedule for such item or service specified in such section or under section 1153 may be covered under this section if the item or service otherwise meets the requirements of this section.
__(c) Definitions._Unless otherwise provided in this Act, for purposes of this Act:
__(1) Health Professional._The term ``health professional'' means an individual who provides health professional services.
__(2) Health Professional Services._The term ``health professional services'' means professional services that_
__(A) are lawfully provided by a physician; or
__(B) would be described in subparagraph (A) if provided by a physician, but are provided by another person who is legally authorized to provide such services in the State in which the services are provided.
SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES.
__The emergency and ambulatory medical and surgical services described in this section are the following items and services provided by a health facility that is not a hospital and that is legally authorized to provide the services in the State in which they are provided:
__(1) 24-hour a day emergency services.
__(2) Ambulatory medical and surgical services.
SEC. 1114. CLINICAL PREVENTIVE SERVICES.
__(a) Coverage._The clinical preventive services described in this section are_
__(1) an item or service for high risk populations (as defined by the National Health Board) that is specified and defined by the Board under section 1153, but only when the item or service is provided consistent with any periodicity schedule for the item or service promulgated by the Board;
__(2) except as modified by the National Health Board under section 1153, an age-appropriate immunization, test, or clinician visit specified in one of subsections (b) through (h) that is provided consistent with any periodicity schedule for the item or service specified in the applicable subsection or by the National Health Board under section 1153; and
__(3) an immunization, test, or clinician visit that is provided to an individual during an age range other than the age range for such immunization, test, or clinician visit that is specified in one of subsections (b) through (h), but only when provided consistent with any requirements for such immunizations, tests, and clinician visits established by the National Health Board under section 1153.
__(b) Individuals Under 3._For an individual under 3 years of age:
__(1) Immunizations._The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses:
__(A) Diphtheria.
__(B) Tetanus.
__(C) Pertussis.
__(D) Polio.
__(E) Haemophilus influenzae type B.
__(F) Measles.
__(G) Mumps.
__(H) Rubella.
__(I) Hepatitis B.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) 1 hematocrit.
__(B) 2 blood tests to screen for blood lead levels for individuals who are at risk for lead exposure.
__(3) Clinician visits._The clinician visits specified in this subsection are 1 clinician visit for an individual who is newborn and 7 other clinician visits.
__(c) Individuals Age 3 to 5._For an individual at least 3 years of age, but less than 6 years of age:
__(1) Immunizations._The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses:
__(A) Diphtheria.
__(B) Tetanus.
__(C) Pertussis.
__(D) Polio.
__(E) Measles.
__(F) Mumps.
__(G) Rubella.
__(2) Tests._The tests specified in this subsection are 1 urinalysis.
__(3) Clinician visits._The clinician visits specified in this subsection are 3 clinician visits.
__(d) Individuals Age 6 to 19._For an individual at least 6 years of age, but less than 20 years of age:
__(1) Immunizations._The immunizations specified in this subsection are age-appropriate immunizations for the following illnesses:
__(A) Tetanus.
__(B) Diphtheria.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) Papanicolaou smears and pelvic exams for females who have reached childbearing age and are at risk for cervical cancer every 3 years, but_
__(i) annually until 3 consecutive negative smears have been obtained; and
__(ii) annually for females who are at risk for fertility related infectious illnesses.
__(B) Annual screening for chlamydia and gonorrhea for females who have reached childbearing age and are at risk for fertility related infectious illnesses.
__(3) Clinician visits._The clinician visits specified in this subsection are 5 clinician visits.
__(e) Individuals Age 20 to 39._For an individual at least 20 years of age, but less than 40 years of age:
__(1) Immunizations._The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) Papanicolaou smears and pelvic exams for females every 3 years, but_
__(i) annually if an abnormal smear has been obtained, until 3 consecutive negative smears have been obtained; and
__(ii) annually for females who are at risk for fertility related infectious illnesses.
__(B) Annual screening for chlamydia and gonorrhea for females who are at risk for fertility related infectious illnesses.
__(C) Cholesterol every 5 years.
__(3) Clinician visits._The clinician visits specified in this subsection are 1 clinician visit every 3 years.
__(f) Individuals Age 40 to 49._For an individual at least 40 years of age, but less than 50 years of age:
__(1) Immunizations._The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) Papanicolaou smears and pelvic exams for females every 2 years, but_
__(i) annually if an abnormal smear has been obtained, until 3 consecutive negative smears have been obtained; and
__(ii) annually for females who are at risk for fertility related infectious illnesses.
__(B) Annual screening for chlamydia and gonorrhea for females who are at risk for fertility related infectious illnesses.
__(C) Cholesterol every 5 years.
__(3) Clinician visits._The clinician visits specified in this subsection are 1 clinician visit every 2 years.
__(g) Individuals Age 50 to 65._For an individual at least 50 years of age, but less than 65 years of age:
__(1) Immunizations._The immunizations specified in this subsection are booster immunizations against tetanus and diphtheria every 10 years.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) Papanicolaou smears and pelvic exams for females every 2 years.
__(B) Mammograms for females every 2 years.
__(C) Cholesterol every 5 years.
__(3) Clinician visits._The clinician visits specified in this subsection are 1 clinician visit every 2 years.
__(h) Individuals Age 65 or Older._For an individual at least 65 years of age who is enrolled under a health plan:
__(1) Immunizations._The immunizations specified in this subsection are as follows:
__(A) Booster immunizations against tetanus and diphtheria every 10 years.
__(B) Age-appropriate immunizations for the following illnesses:
__(i) Influenza.
__(ii) Pneumococcal invasive disease.
__(2) Tests._The tests specified in this subsection are as follows:
__(A) Papanicolaou smears and pelvic exams for females who are at risk for cervical cancer every 2 years.
__(B) Mammograms for females every 2 years.
__(C) Cholesterol every 5 years.
__(3) Clinician visits._The clinician visits specified in this subsection are 1 clinician visit every year.
__(i) Clinician Visit._For purposes of this section, the term ``clinician visit'' includes the following health professional services (as defined in section 1112(c)):
__(1) A complete medical history.
__(2) An appropriate physical examination.
__(3) Risk assessment.
__(4) Targeted health advice and counseling, including nutrition counseling.
__(5) The administration of age-appropriate immunizations and tests specified in subsections (b) through (h).
__(j) Immunizations and Tests Not Administered During Clinician Visit._Notwithstanding subsection (i)(5), the clinical preventive services described in this section include an immunization or test described in this section that is administered to an individual consistent with any periodicity schedule for the immunization or test during the age range specified for the immunization or test, and any administration fee for such immunization or test, even if the immunization or test is not administered during a clinician visit.
SEC. 1115. MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES.
__(a) Coverage._The mental health and substance abuse services that are described in this section are the following items and services for eligible individuals, as defined in section 1001(c), who satisfy the eligibility requirements in subsection (b):
__(1) Inpatient and residential mental health and substance abuse treatment.
__(2) Intensive nonresidential mental health and substance abuse treatment.
__(3) Outpatient mental health and substance abuse treatment, including case management, screening and assessment, crisis services, and collateral services.
__(b) Eligibility._The eligibility requirements referred to in subsection (a) are as follows:
__(1) Inpatient, residential, nonresidential, and outpatient treatment._An eligible individual is eligible to receive coverage for inpatient and residential mental health and substance abuse treatment, intensive nonresidential mental health and substance abuse treatment, or outpatient mental health and substance abuse treatment (except case management and collateral services) if the individual_
__(A) has, or has had during the 1-year period preceding the date of such treatment, a diagnosable mental or substance abuse disorder; and
__(B) is experiencing, or is at significant risk of experiencing, functional impairment in family, work, school, or community activities.
For purposes of this paragraph, an individual who has a diagnosable mental or substance abuse disorder, is receiving treatment for such disorder, but does not satisfy the functional impairment criterion in subparagraph (B) shall be treated as satisfying such criterion if the individual would satisfy such criterion without such treatment.
__(2) Case management._An eligible individual is eligible to receive coverage for case management if_
__(A) the health plan in which the individual is enrolled has elected to offer case management and determines that the individual should receive such services; and
__(B) the individual is eligible to receive coverage for, and is receiving, outpatient mental health and substance abuse treatment.
__(3) Screening and assessment and crisis services._All eligible individuals enrolled under a health plan are eligible to receive coverage for outpatient mental health and substance abuse treatment consisting of screening and assessment and crisis services.
__(4) Collateral services._An eligible individual is eligible to receive coverage for outpatient mental health and substance abuse treatment consisting of collateral services if the individual is a family member (as defined in section 1011(b)) of an individual who is receiving inpatient and residential mental health and substance abuse treatment, intensive nonresidential mental health and substance abuse treatment, or outpatient mental health and substance abuse treatment.
__(c) Inpatient and Residential Treatment._
__(1) Definition._For purposes of this subtitle, the term ``inpatient and residential mental health and substance abuse treatment'' means the items and services described in paragraphs (1) through (3) of section 1861(b) of the Social Security Act when provided with respect to a diagnosable mental or substance abuse disorder to_
__(A) an inpatient of a hospital, psychiatric hospital, residential treatment center, residential detoxification center, crisis residential program, or mental health residential treatment program; or
__(B) a resident of a therapeutic family or group treatment home or community residential treatment and recovery center for substance abuse.
The National Health Board shall specify those health professional services described in section 1112 that shall be treated as inpatient and residential mental health and substance abuse treatment when provided to such an inpatient or resident.
__(2) Limitations._Coverage for inpatient and residential mental health and substance abuse treatment is subject to the following limitations:
__(A) Least restrictive setting._Such treatment is covered only when_
__(i) provided to an individual in the least restrictive inpatient or residential setting that is effective and appropriate for the individual; and
__(ii) less restrictive intensive nonresidential or outpatient treatment would be ineffective or inappropriate.
__(B) Licensed facility._Such treatment is only covered when provided by a facility described in paragraph (1) that is legally authorized to provide the treatment in the State in which the facility is located.
__(C) Day limits._Subject to subparagraph (D), such treatment is covered for each period beginning on the date an episode of inpatient or residential treatment begins and ending on the date the episode ends, except that, prior to January 1, 2001, such treatment is not covered after such an episode exceeds 30 days unless the individual receiving treatment poses a threat to their own life or the life of another individual. Whether such a threat exists shall be determined by a health professional designated by the health plan in which the individual receiving treatment is enrolled. For purposes of this subtitle, an episode of inpatient and residential mental health and substance abuse treatment shall be considered to begin on the date an individual is admitted to a facility for such treatment and to end on the date the individual is discharged from the facility.
__(D) Annual limit._Prior to January 1, 2001, such treatment in all settings is subject to an aggregate annual limit of 60 days.
__(E) Inpatient hospital treatment for substance abuse._Substance abuse treatment, when provided to an inpatient of a hospital or psychiatric hospital, is covered under this section only for medical detoxification associated with withdrawal from alcohol or drugs.
__(d) Intensive Nonresidential Treatment._
__(1) Definition._For purposes of this subtitle, the term ``intensive nonresidential mental health and substance abuse treatment'' means diagnostic or therapeutic items or services provided with respect to a diagnosable mental or substance abuse disorder to an individual_
__(A) participating in a partial hospitalization program, a day treatment program, a psychiatric rehabilitation program, or an ambulatory detoxification program; or
__(B) receiving home-based mental health services or behavioral aide mental health services.
The National Health Board shall specify those health professional services described in section 1112 that shall be treated as intensive nonresidential mental health and substance abuse treatment when provided to such an individual.
__(2) Limitations._Coverage for intensive nonresidential mental health and substance abuse treatment is subject to the following limitations:
__(A) Discretion of plan._A health plan may cover intensive nonresidential mental health and substance abuse treatment at its discretion.
__(B) Treatment purposes._Such treatment is covered only when provided_
__(i) to avert the need for, or as an alternative to, treatment in residential or inpatient settings;
__(ii) to facilitate the earlier discharge of an individual receiving inpatient or residential care;
__(iii) to restore the functioning of an individual with a diagnosable mental health or substance abuse disorder; or
__(iv) to assist the individual to develop the skills and gain access to the support services the individual needs to achieve the maximum level of functioning of the individual within the community.
__(C) Annual limit._
__(i) In general._Prior to January 1, 2001, such treatment in all settings is subject to an aggregate annual limit of 120 days.
__(ii) Relationship to other annual limits._For each 2 days of intensive nonresidential mental health and substance abuse treatment provided to an individual, the number of treatment days available to the individual before the annual aggregate limit on inpatient and residential mental health and substance abuse treatment described in subsection (c)(2)(D) is exceeded shall be reduced by 1 day. The preceding sentence shall not apply after an individual has received 60 days of intensive nonresidential mental health and substance abuse treatment in a year.
__(iii) Additional days._A maximum of 60 additional days of intensive nonresidential mental health and substance abuse treatment may be provided to an individual if a health professional designated by the health plan in which the individual receiving treatment is enrolled determines that such additional treatment is medically necessary or appropriate.
__(D) Out-of-pocket maximum._Prior to January 1, 2001, expenses for intensive nonresidential mental health and substance abuse treatment that an individual incurs prior to satisfying a deductible applicable to such treatment, and copayments and coinsurance paid by or on behalf of the individual for such treatment, that substitute for inpatient and residential mental health and substance abuse treatment (up to 60 days) may be applied toward the annual out-of-pocket limit on cost sharing under any cost sharing schedule described in part 3 of this subtitle.
__(e) Outpatient Treatment._
__(1) Definition._For purposes of this subtitle, the term ``outpatient mental health and substance abuse treatment'' means the following services provided with respect to a diagnosable mental or substance abuse disorder in an outpatient setting:
__(A) Screening and assessment.
__(B) Diagnosis.
__(C) Medical management.
__(D) Substance abuse counseling and relapse prevention.
__(E) Crisis services.
__(F) Somatic treatment services.
__(G) Psychotherapy.
__(H) Case management.
__(I) Collateral services.
__(2) Limitations._Coverage for outpatient mental health and substance abuse treatment is subject to the following limitations:
__(A) Health professional services._Such treatment is covered only when it constitutes health professional services (as defined in section 1112(c)(2)).
__(B) Substance abuse counseling._Substance abuse counseling and relapse prevention is covered only when provided by a substance abuse treatment provider who_
__(i) is legally authorized to provide such services in the State in which the services are provided; and
__(ii) provides no items or services other than substance abuse counseling and relapse prevention, medical management, or laboratory and diagnostic tests for individuals with substance abuse disorders.
__(C) Annual limits._
__(i) Pychotherapy and collateral services._Prior to January 1, 2001, psychotherapy and collateral services are subject to annual limits of 30 visits for each type of service. Additional visits may be covered, at the discretion of the health plan in which the individual receiving treatment is enrolled, to prevent hospitalization or to facilitate earlier hospital release, for which the annual aggregate limit on inpatient and residential mental health and substance abuse treatment described in subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits.
__(ii) Substance abuse._At the discretion of the health plan in which an individual receiving outpatient substance abuse treatment is enrolled, the annual aggregate limit on inpatient and residential mental health and substance abuse treatment described in subsection (c)(2)(D) may be reduced by 1 day for each 4 outpatient visits. Within 12 months after inpatient and residential treatment or intensive nonresidential treatment, 30 visits in group therapy shall be covered for substance abuse counseling and relapse prevention. For individuals who were not initially treated in an inpatient, residential, or intensive nonresidential setting, additional visits shall be covered for which the annual aggregate limit on inpatient and residential mental health and substance abuse treatment described in subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits.
__(D) Out-of-pocket maximum._Prior to January 1, 2001, expenses for outpatient mental health and substance abuse treatment that an individual incurs prior to satisfying a deductible applicable to such treatment, and copayments and coinsurance paid by or on behalf of the individual for such treatment, may not be applied toward any annual out-of-pocket limit on cost sharing under any cost sharing schedule described in part 3 of this subtitle.
__(E) Detoxification._Outpatient detoxification shall be provided only in the context of a treatment program. If the first detoxification treatment is unsuccessful, subsequent treatments are covered if a health professional designated by the health plan in which the individual receiving treatment is enrolled determines that there is a substantial chance of success.
__(f) Other Definitions._For purposes of this subtitle:
__(1) Case management._The term ``case management'' means services that assist individuals in gaining access to needed medical, social, educational, and other services.
__(2) Diagnosable mental or substance abuse disorder._The term ``diagnosable mental or substance abuse disorder'' means a disorder that is listed in any authoritative text specifying diagnostic criteria for mental or substance abuse disorders that is identified by the National Health Board.
__(3) Psychiatric hospital._The term ``psychiatric hospital'' has the meaning given such term in section 1861(f) of the Social Security Act, except that such term shall include_
__(A) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(1), a facility of the uniformed services under title 10, United States Code, that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital;
__(B) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(2), a facility operated by the Department of Veterans Affairs that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital; and
__(C) in the case of an item or service provided to an individual whose applicable health plan is specified pursuant to section 1004(b)(3), a facility operated by the Indian Health Service that is engaged in providing services to inpatients that are equivalent to the services provided by a psychiatric hospital.
SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN.
__The services described in this section are the following items and services:
__(1) Voluntary family planning services.
__(2) Contraceptive devices that_
__(A) may only be dispensed upon prescription; and
__(B) are subject to approval by the Secretary of Health and Human Services under the Federal Food, Drug, and Cosmetic Act.
__(3) Services for pregnant women.
SEC. 1117. HOSPICE CARE.
__The hospice care described in this section is the items and services described in paragraph (1) of section 1861(dd) of the Social Security Act, as defined in paragraphs (2), (3), and (4)(A) of such section (with the exception of paragraph (2)(A)(iii)), except that all references to the Secretary of Health and Human Services in such paragraphs shall be treated as references to the National Health Board.
SEC. 1118. HOME HEALTH CARE.
__(a) Coverage._The home health care described in this section is_
__(1) the items and services described in section 1861(m) of the Social Security Act; and
__(2) home infusion drug therapy services described in section 1861(ll) of the Social Security Act (as added by section 2006).
__(b) Limitations._Coverage for home health care is subject to the following limitations:
__(1) Inpatient treatment alternative._Such care is covered only as an alternative to inpatient treatment in a hospital, skilled nursing facility, or rehabilitation facility after an illness or injury.
__(2) Reevaluation._At the end of each 60-day period of home health care, the need for continued care shall be reevaluated by the person who is primarily responsible for providing the home health care. Additional periods of care are covered only if such person determines that the requirement in paragraph (1) is satisfied.
SEC. 1119. EXTENDED CARE SERVICES.
__(a) Coverage._The extended care services described in this section are the items and services described in section 1861(h) of the Social Security Act when provided to an inpatient of a skilled nursing facility or a rehabilitation facility.
__(b) Limitations._Coverage for extended care services is subject to the following limitations:
__(1) Hospital alternative._Such services are covered only as an alternative to inpatient treatment in a hospital after an illness or injury.
__(2) Annual limit._Such services are subject to an aggregate annual limit of 100 days.
__(c) Definitions._For purposes of this subtitle:
__(1) Rehabilitation facility._The term ``rehabilitation facility'' means an institution (or a distinct part of an institution) which is established and operated for the purpose of providing diagnostic, therapeutic, and rehabilitation services to individuals for rehabilitation from illness or injury.
__(2) Skilled nursing facility._The term ``skilled nursing facility'' means an institution (or a distinct part of an institution) which is primarily engaged in providing to residents_
__(A) skilled nursing care and related services for residents who require medical or nursing care; or
__(B) rehabilitation services to residents for rehabilitation from illness or injury.
SEC. 1120. AMBULANCE SERVICES.
__(a) Coverage._The ambulance services described in this section are the following items and services:
__(1) Ground transportation by ambulance.
__(2) Air transportation by an aircraft equipped for transporting an injured or sick individual.
__(3) Water transportation by a vessel equipped for transporting an injured or sick individual.
__(b) Limitations._Coverage for ambulance services is subject to the following limitations:
__(1) Medical indication._Ambulance services are covered only in cases in which the use of an ambulance is indicated by the medical condition of the individual concerned.
__(2) Air transport._Air transportation is covered only in cases in which there is no other method of transportation or where the use of another method of transportation is contra-indicated by the medical condition of the individual concerned.
__(3) Water transport._Water transportation is covered only in cases in which there is no other method of transportation or where the use of another method of transportation is contra-indicated by the medical condition of the individual concerned.
SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES.
__The items and services described in this section are laboratory, radiology, and diagnostic services provided upon prescription to individuals who are not inpatients of a hospital, hospice, skilled nursing facility, or rehabilitation facility.
SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS.
__(a) Coverage._The items described in this section are the following:
__(1) Covered outpatient drugs described in section 1861(t) of the Social Security Act (as amended by section 2001(b))_
__(A) except that, for purposes of this section, a medically accepted indication with respect to the use of a covered outpatient drug includes any use which has been approved by the Food and Drug Administration for the drug, and includes another use of the drug if_
__(i) the drug has been approved by the Food and Drug Administration; and
__(ii) such use is supported by one or more citations which are included (or approved for inclusion) in one or more of the following compendia: the American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluations, the United States Pharmacopoeia-Drug Information, and other authoritative compendia as identified by the National Health Board, unless the Board has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia; or
__(iii) such use is medically accepted based on supportive clinical evidence in peer reviewed medical literature appearing in publications which have been identified for purposes of this clause by the Board; and
__(B) notwithstanding any exclusion from coverage that may be made with respect to such a drug under title XVIII of such Act pursuant to section 1862(a)(18) of such Act.
__(2) Blood clotting factors when provided on an outpatient basis.
__(b) Revision of Compendia List._The National Health Board may revise the list of compendia in subsection (a)(1)(A)(ii) designated as appropriate for identifying medically accepted indications for drugs.
__(c) Blood clotting factors._For purposes of this subtitle, the term ``blood clotting factors'' has the meaning given such term in section 1861(s)(2)(I) of the Social Security Act.
SEC. 1123. OUTPATIENT REHABILITATION SERVICES.
__(a) Coverage._The outpatient rehabilitation services described in this section are_
__(1) outpatient occupational therapy;
__(2) outpatient physical therapy; and
__(3) outpatient speech pathology services for the purpose of attaining or restoring speech.
__(b) Limitations._Coverage for outpatient rehabilitation services is subject to the following limitations:
__(1) Restoration of capacity or minimization of limitations._Such services include only items or services used to restore functional capacity or minimize limitations on physical and cognitive functions as a result of an illness or injury.
__(2) Reevaluation._At the end of each 60-day period of outpatient rehabilitation services, the need for continued services shall be reevaluated by the person who is primarily responsible for providing the services. Additional periods of services are covered only if such person determines that functioning is improving.
SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROSTHETIC AND ORTHOTIC DEVICES.
__(a) Coverage._The items and services described in this section are_
__(1) durable medical equipment, including accessories and supplies necessary for repair and maintenance of such equipment;
__(2) prosthetic devices (other than dental) which replace all or part of the function of an internal body organ (including colostomy bags and supplies directly related to colostomy care), including replacement of such devices;
__(3) accessories and supplies which are used directly with a prosthetic device to achieve the therapeutic benefits of the prosthesis or to assure the proper functioning of the device;
__(4) leg, arm, back, and neck braces;
__(5) artificial legs, arms, and eyes, including replacements if required because of a change in the patient's physical condition; and
__(6) fitting and training for use of the items described in paragraphs (1) through (5).
__(b) Limitation._An item or service described in this section is covered only if it improves functional ability or prevents further deterioration in function.
__(c) Durable Medical Equipment._For purposes of this subtitle, the term ``durable medical equipment'' has the meaning given such term in section 1861(n) of the Social Security Act.
SEC. 1125. VISION CARE.
__(a) Coverage._The vision care described in this section is diagnosis and treatment for defects in vision.
__(b) Limitation._Eyeglasses and contact lenses are covered only for individuals less than 18 years of age.
SEC. 1126. DENTAL CARE.
__(a) Coverage._The dental care described in this section is the following:
__(1) Emergency dental treatment, including simple extractions, for acute infections, bleeding, and injuries to natural teeth and oral structures for conditions requiring immediate attention to prevent risks to life or significant medical complications, as specified by the National Health Board. __(2) Prevention and diagnosis of dental disease, including oral dental examinations, radiographs, dental sealants, fluoride application, and dental prophylaxis.
__(3) Treatment of dental disease, including routine fillings, prosthetics for genetic defects, periodontal maintenance, and endodontic services.
__(4) Space maintenance procedures to prevent orthodontic complications.
__(5) Interceptive orthodontic treatment to prevent severe malocclusion.
__(b) Limitations._Coverage for dental care is subject to the following limitations:
__(1) Prevention and diagnosis._Prior to January 1, 2001, the items and services described in subsection (a)(2) are covered only for individuals less than 18 years of age. On or after such date, such items and services are covered for all eligible individuals enrolled under a health plan, except that dental sealants are not covered for individuals 18 years of age or older.
__(2) Treatment of dental disease._Prior to January 1, 2001, the items and services described in subsection (a)(3) are covered only for individuals less than 18 years of age. On or after such date, such items and services are covered for all eligible individuals enrolled under a health plan, except that endodontic services are not covered for individuals 18 years of age or older.
__(3) Space maintenance._The items and services described in subsection (a)(4) are covered only for individuals at least 3 years of age, but less than 13 years of age and_
__(A) are limited to posterior teeth;
__(B) involve maintenance of a space or spaces for permanent posterior teeth that would otherwise be prevented from normal eruption if the space were not maintained; and
__(C) do not include a space maintainer that is placed within 6 months of the expected eruption of the permanent posterior tooth concerned.
__(4) Interceptive orthodontic treatment._Prior to January 1, 2001, the items and services described in subsection (a)(5) are not covered. On or after such date, such items and services are covered only for individuals at least 6 years of age, but less than 12 years of age.
SEC. 1127. HEALTH EDUCATION CLASSES.
__(a) Coverage._Subject to subsection (b), the items and services described in this section are health education and training classes to encourage the reduction of behavioral risk factors and to promote healthy activities. Such education and training classes may include smoking cessation, nutrition counseling, stress management, support groups, and physical training classes.
__(b) Discretion of Plan._A health plan may offer education and training classes at its discretion.
__(c) Construction._This section shall not be construed to include or limit education or training that is provided in the course of the delivery of health professional services (as defined in section 1112(c)).
SEC. 1128. INVESTIGATIONAL TREATMENTS.
__(a) Coverage._Subject to subsection (b), the items and services described in this subsection are qualifying investigational treatments that are administered for a life-threatening disease, disorder, or other health condition (as defined by the National Health Board).
__(b) Discretion of Plan._A health plan may cover an investigational treatment described in subsection (a) at its discretion.
__(c) Routine Care During Investigational Treatments._The comprehensive benefit package includes an item or service described in any other section of this part, subject to the limitations and cost sharing requirements applicable to the item or service, when the item or service is provided to an individual in the course of an investigational treatment, if_
__(1) the treatment is a qualifying investigational treatment; and
__(2) the item or service would have been provided to the individual even if the individual were not receiving the investigational treatment.
__(d) Definitions._For purposes of this subtitle:
__(1) Qualifying investigational treatment._The term ``qualifying investigational treatment'' means a treatment_
__(A) the effectiveness of which has not been determined; and
__(B) that is under clinical investigation as part of an approved research trial.
__(2) Approved research trial._The term ``approved research trial'' means_
__(A) a research trial approved by the Secretary of Health and Human Services, the Director of the National Institutes of Health, the Commissioner of the Food and Drug Administration, the Secretary of Veterans Affairs, the Secretary of Defense, or a qualified nongovernmental research entity as defined in guidelines of the National Institutes of Health; or
__(B) a peer-reviewed and approved research program, as defined by the Secretary of Health and Human Services, conducted for the primary purpose of determining whether or not a treatment is safe, efficacious, or having any other characteristic of a treatment which must be demonstrated in order for the treatment to be medically necessary or appropriate.
PART 3_COST SHARING
SEC. 1131. COST SHARING.
__(a) In General._Each health plan shall offer to individuals enrolled under the plan one of the following cost sharing schedules, which schedule shall be offered to all such enrollees:
__(1) lower cost sharing (described in section 1132);
__(2) higher cost sharing (described in section 1133); or
__(3) combination cost sharing (described in section 1134).
__(b) Cost Sharing for Low-Income Families._For provisions relating to reducing cost sharing for certain low-income families, see section 1371.
__(c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost Sharing._
__(1) Application on an annual basis._The deductibles and out-of-pocket limits on cost sharing for a year under the schedules referred to in subsection (a) shall be applied based upon expenses incurred for items and services furnished in the year.
__(2) Individual and family general deductibles._
__(A) Individual._Subject to subparagraph (B), with respect to an individual enrolled under a health plan (regardless of the class of enrollment), any individual general deductible in the cost sharing schedule offered by the plan represents the amount of countable expenses (as defined in subparagraph (C)) that the individual may be required to incur in a year before the plan incurs liability for expenses for such items and services furnished to the individual.
__(B) Family._In the case of an individual enrolled under a health plan under a family class of enrollment (as defined in section 1011(c)(2)(A)), the individual general deductible under subparagraph (A) shall not apply to countable expenses incurred by any member of the individual's family in a year at such time as the family has incurred, in the aggregate, countable expenses in the amount of the family general deductible for the year.
__(C) Countable expense._In this paragraph, the term ``countable expense'' means, with respect to an individual for a year, an expense for an item or service covered by the comprehensive benefit package that is subject to the general deductible and for which, but for such deductible and other cost sharing under this subtitle, a health plan is liable for payment. The amount of countable expenses for an individual for a year under this paragraph shall not exceed the individual general deductible for the year.
__(3) Coinsurance and copayments._After a general or separate deductible that applies to an item or service covered by the comprehensive benefit package has been satisfied for a year, subject to paragraph (4), coinsurance and copayments are amounts that an individual may be required to pay with respect to the item or service.
__(4) Individual and family limits on cost sharing._
__(A) Individual._Subject to subparagraph (B), with respect to an individual enrolled under a health plan (regardless of the class of enrollment), the individual out-of-pocket limit on cost sharing in the cost sharing schedule offered by the plan represents the amount of expenses that the individual may be required to incur under the plan in a year because of a general deductible, separate deductibles, copayments, and coinsurance before the plan may no longer impose any cost sharing with respect to items or services covered by the comprehensive benefit package that are provided to the individual, except as provided in subsections (d)(2)(D) and (e)(2)(D) of section 1115.
__(B) Family._In the case of an individual enrolled under a health plan under a family class of enrollment (as defined in section 1011(c)(2)(A)), the family out-of-pocket limit on cost sharing in the cost sharing schedule offered by the plan represents the amount of expenses that members of the individual's family, in the aggregate, may be required to incur under the plan in a year because of a general deductible, separate deductibles, copayments, and coinsurance before the plan may no longer impose any cost sharing with respect to items or services covered by the comprehensive benefit package that are provided to any member of the individual's family, except as provided in subsections (d)(2)(D) and (e)(2)(D) of section 1115.
SEC. 1132. LOWER COST SHARING.
__(a) In General._The lower cost sharing schedule referred to in section 1131 that is offered by a health plan_
__(1) may not include a deductible;
__(2) shall have_
__(A) an annual individual out-of-pocket limit on cost sharing of $1500; and
__(B) an annual family out-of-pocket limit on cost sharing of $3000;
__(3) except as provided in paragraph (4)_
__(A) shall prohibit payment of any coinsurance; and
__(B) subject to section 1152, shall require payment of the copayment for an item or service (if any) that is specified for the item or service in the table under section 1135; and
__(4) shall require payment of coinsurance for an out-of-network item or service (as defined in section 1402(f)) in an amount that is a percentage (determined under subsection (b)) of the applicable payment rate for the item or service established under section 1322(c), but only if the item or service is subject to coinsurance under the higher cost sharing schedule described in section 1133.
__(b) Out-of-Network Coinsurance Percentage._
__(1) In general._The National Health Board shall determine a percentage referred to in subsection (a)(4). The percentage_
__(A) may not be less than 20 percent; and
__(B) shall be the same with respect to all out-of-network items and services that are subject to coinsurance, except as provided in paragraph (2).
__(2) Exception._The National Health Board may provide for a percentage that is greater than a percentage determined under paragraph (1) in the case of an out-of-network item or service for which the coinsurance is greater than 20 percent of the applicable payment rate under the higher cost sharing schedule described in section 1133.
SEC. 1133. HIGHER COST SHARING.
__The higher cost sharing schedule referred to in section 1131 that is offered by a health plan_
__(1) shall have an annual individual general deductible of $200 and an annual family general deductible of $400 that apply with respect to expenses incurred for all items and services in the comprehensive benefit package except_
__(A) an item or service with respect to which a separate individual deductible applies under paragraph (2), (3), or (4); or
__(B) an item or service described in paragraph (5), (6), or (7) with respect to which a deductible does not apply;
__(2) shall require an individual to incur expenses during each episode of inpatient and residential mental health and substance abuse treatment (described in section 1115) equal to the cost of one day of such treatment before the plan provides benefits for such treatment to the individual;
__(3) shall require an individual to incur expenses in a year for outpatient prescription drugs and biologicals (described in section 1122) equal to $250 before the plan provides benefits for such items to the individual;
__(4) shall require an individual to incur expenses in a year for dental care described in section 1126, except the items and services for prevention and diagnosis of dental disease described in section 1126(a)(2), equal to $50 before the plan provides benefits for such care to the individual;
__(5) may not require any deductible for clinical preventive services (described in section 1114);
__(6) may not require any deductible for clinician visits and associated services related to prenatal care or 1 post-partum visit under section 1116;
__(7) may not require any deductible for the items and services for prevention and diagnosis of dental disease described in section 1126(a)(2);
__(8) shall have_
__(A) an annual individual out-of-pocket limit on cost sharing of $1500; and
__(B) an annual family out-of-pocket limit on cost sharing of $3000;
__(9) shall prohibit payment of any copayment; and
__(10) subject to section 1152, shall require payment of the coinsurance for an item or service (if any) that is specified for the item or service in the table under section 1135.
SEC. 1134. COMBINATION COST SHARING.
__(a) In General._The combination cost sharing schedule referred to in section 1131 that is offered by a health plan_
__(1) shall have_
__(A) an annual individual out-of-pocket limit on cost sharing of $1500; and
__(B) an annual family out-of-pocket limit on cost sharing of $3000; and
__(2) otherwise shall require different cost sharing for in-network items and services than for out-of-network items and services.
__(b) In-Network Items and Services._With respect to an in-network item or service (as defined in section 1402(f)(1)), the combination cost sharing schedule that is offered by a health plan_
__(1) may not apply a deductible;
__(2) shall prohibit payment of any coinsurance; and
__(3) shall require payment of a copayment in accordance with the lower cost sharing schedule described in section 1132.
__(c) Out-of-Network Items and Services._With respect to an out-of-network item or service (as defined in section 1402(f)(2)), the combination cost sharing schedule that is offered by a health plan_
__(1) shall require an individual and a family to incur expenses before the plan provides benefits for the item or service in accordance with the deductibles under the higher cost sharing schedule described in section 1133;
__(2) shall prohibit payment of any copayment; and
__(3) shall require payment of coinsurance in accordance with such schedule.
SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE.
__(a) In General._The following table specifies, for different items and services, the copayments and coinsurance referred to in sections 1132 and 1133:

Copayments and Coinsurance for Items and Services

Benefit
Section
Lower Cost Sharing Schedule
Higher Cost Sharing Schedule

Inpatient hospital services No copayment 20 percent of applicable payment rate

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

Hospital emergency room services

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

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

Emergency services other than hospital emergency room services

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

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

Clinical preventive services  No copayment No coinsurance

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

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

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

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

Case management No copayment No coinsurance

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

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

Hospice care No copayment 20 percent of applicable payment rate

Home health care No copayment 20 percent of applicable payment rate

Extended care services No copayment 20 percent of applicable payment rate

Ambulance services No copayment 20 percent of applicable payment rate

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

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

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

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

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

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

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

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

Investigational treatment for life-threatening condition All cost sharing rules determined by plans cost sharing rules determined by plans

__(b) Applicable Payment Rate._For purposes of this section, the term ``applicable payment rate'', when used with respect to an item or service, means the applicable payment rate for the item or service established under section 1322(c).
SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING.
__(a) In General._Any deductible, copayment, out-of-pocket limit on cost sharing, or other amount expressed in dollars in this subtitle for items or services provided in a year after 1994 shall be such amount increased by the percentage specified in subsection (b) for the year.
__(b) Percentage._The percentage specified in this subsection for a year is equal to the product of the factors described in subsection (d) for the year and for each previous year after 1994.
__(c) Rounding._Any increase (or decrease) under subsection (a) shall be rounded, in the case of an amount specified in this subtitle of_
__(1) $200 or less, to the nearest multiple of $1,
__(2) more than $200, but less $500, to the nearest multiple of $5, or
__(3) $500 or more, to the nearest multiple of $10.
__(d) Factor._
__(1) In general._The factor described in this subsection for a year is 1 plus the general health care inflation factor (as specified in section 6001(a)(3) and determined under paragraph (2)) for the year.
__(2) Determination._In computing such factor for a year, the percentage increase in the CPI for a year (referred to in section 6001(b)) shall be determined based upon the percentage increase in the average of the CPI for the 12-month period ending with August 31 of the previous year over such average for the preceding 12-month period.
PART 4_EXCLUSIONS
SEC. 1141. EXCLUSIONS.
__(a) Medical Necessity._The comprehensive benefit package does not include_
__(1) an item or service (other than services referred to in paragraph (2)) that is not medically necessary or appropriate; or
__(2) an item or service that the National Health Board may determine is not medically necessary or appropriate in a regulation promulgated under section 1154.
__(b) Additional Exclusions._The comprehensive benefit package does not include the following items and services:
__(1) Custodial care, except in the case of hospice care under section 1117.
__(2) Surgery and other procedures performed solely for cosmetic purposes and hospital or other services incident thereto, unless_
__(A) required to correct a congenital anomaly; or
__(B) required to restore or correct a part of the body that has been altered as a result of_
__(i) accidental injury;
__(ii) disease; or
__(iii) surgery that is otherwise covered under this subtitle.
__(3) Hearing aids.
__(4) Eyeglasses and contact lenses for individuals at least 18 years of age.
__(5) In vitro fertilization services.
__(6) Sex change surgery and related services.
__(7) Private duty nursing.
__(8) Personal comfort items, except in the case of hospice care under section 1117.
__(9) Any dental procedures involving orthodontic care, inlays, gold or platinum fillings, bridges, crowns, pin/post retention, dental implants, surgical periodontal procedures, or the preparation of the mouth for the fitting or continued use of dentures, except as specifically described in section 1126.
PART 5_ROLE OF THE NATIONAL HEALTH BOARD
SEC. 1151. DEFINITION OF BENEFITS.
__(a) In General._The National Health Board may promulgate such regulations or establish such guidelines as may be necessary to assure uniformity in the application of the comprehensive benefit package across all health plans.
__(b) Flexibility in Delivery._The regulations or guidelines under subsection (a) shall permit a health plan to deliver covered items and services to individuals enrolled under the plan using the providers and methods that the plan determines to be appropriate.
SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.
__(a) In General._Subject to subsection (b), at any time prior to January 1, 2001, the National Health Board, in its discretion, may by regulation expand the comprehensive benefit package by_
__(1) adding any item or service that is added to the package as of January 1, 2001; and
__(2) requiring that a cost sharing schedule described in part 3 of this subtitle reflect (wholly or in part) any of the cost sharing requirements that apply to the schedule as of January 1, 2001.
No such expansion shall be effective except as of January 1 of a year.
__(b) Condition._The Board may not expand the benefit package under subsection (a) which is to become effective with respect to a year, by adding any item or service or altering any cost sharing schedule, unless the Board estimates that the additional increase in per capita health care expenditures resulting from the addition or alteration, for each regional alliance for the year, will not cause any regional alliance to exceed its per capita target (as determined under section 6003(a)).
SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES.
__(a) In General._With respect to clinical preventive services described in section 1114, the National Health Board_
__(1) shall specify and define specific items and services as clinical preventive services for high risk populations and shall establish and update a periodicity schedule for such items and services;
__(2) shall update the periodicity schedules for the age-appropriate immunizations, tests, and clinician visits specified in subsections (b) through (h) of such section;
__(3) shall establish rules with respect to coverage for an immunization, test, or clinician visit that is not provided to an individual during the age range for such immunization, test, or clinician visit that is specified in one of subsections (b) through (h) of such section; and
__(4) may otherwise modify the items and services described in such section, taking into account age and other risk factors, but may not modify the cost sharing for any such item or service.
__(b) Consultation._In performing the functions described in subsection (a), the National Health Board shall consult with experts in clinical preventive services.
SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY.
__The National Health Board may promulgate such regulations as may be necessary to carry out section 1141(a)(2) (relating to the exclusion of certain services that are not medically necessary or appropriate).
PART 6_ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS
SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.
__No State may, through licensure or otherwise, restrict the practice of any class of health professionals beyond what is justified by the skills and training of such professionals.
SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF OR MORAL CONVICTION.
__A health professional or a health facility may not be required to provide an item or service in the comprehensive benefit package if the professional or facility objects to doing so on the basis of a religious belief or moral conviction.

Title I, Subtitle C
Subtitle C_State Responsibilities
SEC. 1200. PARTICIPATING STATE.
__(a) In General._For purposes of the approval of a State health care system by the Board under section 1511, a State is a ``participating State'' if the State meets the applicable requirements of this subtitle.



__(b) Submission of System Document._
__(1) In general._In order to be approved as a participating State under section 1511, a State shall submit to the National Health Board a document (in a form and manner specified by the Board) that describes the State health care system that the State is establishing (or has established).
__(2) Deadline._If a State is not a participating State with a State health care system in operation by January 1, 1998, the provisions of subpart B of part 2 of subtitle F (relating to Federal operation of a State health care system) shall take effect.

__(3) Submission of information subsequent to approval._A State approved as a participating State under section 1511 shall submit to the Board an annual update to the State health care system not later than February 15 of each year following the first year for which the State is a participating State that contains_
__(A) such information as the Board may require to determine that the system shall meet the applicable requirements of subtitle C for the succeeding year; and
__(B) such information as the Board may require to determine that the State operated the system during the previous year in accordance with the Board's approval of the system for such previous year.

PART 1_GENERAL STATE RESPONSIBILITIES
SEC. 1201. GENERAL STATE RESPONSIBILITIES.
__The responsibilities for a participating State are as follows:
__(1) Regional alliances._Establishing one or more regional alliances (in accordance with section 1202).
__(2) Health plans._Certifying health plans (in accordance with section 1203).

__(3) Financial solvency of plans._Assuring the financial solvency of health plans (in accordance with section 1204).

__(4) Administration. esignating an agency or official charged with coordinating the State responsibilities under Federal law.
__(5) Workers compensation and automobile insurance._Conforming State laws to meet the requirements of title X (relating to medical benefits under workers compensation and automobile insurance).
__(6) Other responsibilities._Carrying out other responsibilities of participating States specified under this Act.
SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO ALLIANCES.
__(a) Establishment of Alliances._
__(1) In general._A participating State shall_
__(A) establish and maintain one or more regional alliances in accordance with this section and subtitle D, and ensure that such alliances meet the requirements of this Act; and
__(B) designate alliance areas in accordance with subsection (b).
__(2) Deadline._A State may not be a participating State for a year unless the State has established such alliances by March 1 of the previous year.
__(b) Alliance Areas._
__(1) In general._In accordance with this subsection, each State shall designate a geographic area assigned to each regional alliance. Each such area is referred to in this Act as an ``alliance area''.
__(2) Population required._
__(A) In general._Each alliance area shall encompass a population large enough to ensure that the alliance has adequate market share to negotiate effectively with health plans providing the comprehensive benefit package to eligible individuals who reside in the area.
__(B) Treatment of consolidated metropolitan statistical areas._An alliance area that includes a Consolidated Metropolitan Statistical Area within a State is presumed to meet the requirements of subparagraph (A).
__(3) Single alliance in each area._No geographic area may be assigned to more than one regional alliance.
__(4) Boundaries._In establishing boundaries for alliance areas, the State may not discriminate on the basis of or otherwise take into account race, ethnicity, language, religion, national origin, socio-economic status, disability, or perceived health status.
__(5) Treatment of metropolitan areas._The entire portion of a metropolitan statistical area located in a State shall be included in the same alliance area.



__(6) No portions of State permitted to be outside alliance area._Each portion of the State shall be assigned to a regional alliance under this subsection.
__(c) State Coordination of Regional Alliances._One or more States may allow or require two or more regional alliances to coordinate their operations, whether such alliances are in the same or different States. Such coordination may include adoption of joint operating rules, contracting with health plans, enforcement activities, and establishment of fee schedules for health providers.
__(d) Assistance in Collection of Amounts Owed to Alliances._Each State shall assure that the amounts owed to regional alliances in the State are collected and paid to such alliances.
__(e) Assistance in Eligibility Verifications._
__(1) In general._Each State shall assure that the determinations of eligibility for cost sharing assistance (and premium discounts and cost sharing reductions for families) are made by regional alliances in the State on the basis of the best information available to the alliances and the State.
__(2) Provision of information._Each State shall use the information available to the State under section 6103(l)(7)(D)(x) of the Internal Revenue Code of 1986 to assist regional alliances in verifying such eligibility status.
__(f) Special Requirements for Alliances With Single-Payer System._If the State operates an alliance-specific single-payer system (as described in part 2), the State shall assure that the regional alliance in which the system is operated meets the requirements for such an alliance described in section 1224(b).
__(g) Payment of Shortfalls for Certain Administrative Errors._Each participating State is financially responsible, under section 9201(c)(2), for administrative errors described in section 9201(e)(2).
SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH PLANS.
__(a) Criteria for Certification._
__(1) In general._For purposes of this section, a participating State shall establish and publish the criteria that are used in the certification of health plans under this section.
__(2) Requirements._Such criteria shall be established with respect to_
__(A) the quality of the plan,
__(B) the financial stability of the plan,
__(C) the plan's capacity to deliver the comprehensive benefit package in the designated service area,
__(D) other applicable requirements for health plans under parts 1, 3, and 4 of subtitle E, and
__(E) other requirements imposed by the State consistent with this part.
__(b) Certification of Health Plans._A participating State shall certify each plan as a regional alliance health plan that it determines meet the criteria for certification established and published under subsection (a).
__(c) Monitoring._A participating State shall monitor the performance of each State-certified regional alliance health plan to ensure that it continues to meet the criteria for certification.


__(d) Limitations on Authority._A participating State may not_
__(1) discriminate against a plan based on the domicile of the entity offering of the plan; and
__(2) regulate premium rates charged by health plans, except as may be required under title VI (relating to the enforcement of cost containment rules for plans in the State) or as may be necessary to ensure that plans meet financial solvency requirements under section 1408.
__(e) Assuring Adequate Access to a Choice of Health Plans._
__(1) General access._
__(A) In general._Each participating State shall ensure that_
__(i) each regional alliance eligible family has adequate access to enroll in a choice of regional alliance health plans providing services in the area in which the individual resides, including (to the maximum extent practicable) adequate access to a plan whose premium is at or below the weighted average premium for plans in the regional alliance, and
__(ii) each such family that is eligible for a premium discount under section 6104(b) is provided a discount in accordance with such section (including an increase in such discount described in section 6104(b)(2)).

__(B) Authority._In order to carry out its responsibility under subparagraph (A), a participating State may require, as a condition of entering into a contract with a regional alliance under section 1321, that one or more certified regional alliance health plans cover all (or selected portions) of the alliance area.
__(2) Access to plans using centers of excellence._Each participating State may require, as a condition of entering into a contract with a regional alliance under section 1321, that one or more certified health plans provide access (through reimbursement, contracts, or otherwise) of enrolled individuals to services of centers of excellence (as designated by the State in accordance with rules promulgated by the Secretary).
__(3) Use of incentives to enroll and serve disadvantaged groups._A State may provide_
__(A) for an adjustment to the risk-adjustment methodology under section 1542(c) and other financial incentives to regional alliance health plans to ensure that such plans enroll individuals who are members of disadvantaged groups, and
__(B) for appropriate extra services, such as outreach to encourage enrollment and transportation and interpreting services to ensure access to care, for certain population groups that face barriers to access because of geographic location, income levels, or racial or cultural differences.

__(f) Coordination of Workers' Compensation Services and Automobile Insurance._Each participating State shall comply with the responsibilities regarding workers' compensation and automobile insurance specified in title X.
__(g) Implementation of Mandatory Reinsurance System._If the risk adjustment and reinsurance methodology developed under section 1541 includes a mandatory reinsurance system, each participating State shall establish a reinsurance program consistent with such methodology and any additional standards established by the Board.
__(h) Requirements for Plans Offering Supplemental Insurance._Notwithstanding any other provision of this Act a State may not certify a regional alliance health plan under this section if_
__(1) the plan (or any entity with which the plan is affiliated under such rules as the Board may establish) offers a supplemental health benefit policy (as defined in section 1421(a)(1)) that fails to meet the applicable requirements for such a policy under part 2 of subtitle E (without regard to the State in which the policy is offered); or
__(2) the plan offers a cost sharing policy (as defined in section 1421(a)(2)) that fails to meet the applicable requirements for such a policy under part 2 of subtitle E.


SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT; GUARANTY FUND.
__(a) Capital Standards._A participating State shall establish capital standards for health plans that meet minimum Federal requirements established by the National Health Board under section 1505(i).
__(b) Reporting and Auditing Requirements._Each participating State shall define financial reporting and auditing requirements and requirements for fund reserves adequate to monitor the financial status of plans.
__(c) Guaranty Fund._
__(1) Establishment._Each participating State shall ensure that there is a guaranty fund that meets the requirements established by the Board under section 1505(j)(2), in order to provide financial protection to health care providers and others in the case of a failure of a regional alliance health plan.
__(2) Assessments to provide funds._In the case of a failure of one or more regional alliance health plans, the State may require each regional alliance health plan within the State to pay an assessment to the State in an amount not to exceed 2 percent of the premiums of such plans paid by or on behalf of regional alliance eligible individuals during a year for so long as necessary to generate sufficient revenue to cover any outstanding claims against the failed plan.
__(d) Procedures in Event of Plan Failure._
__(1) In general._A participating State shall assure that, in the event of the failure of a regional alliance health plan in the State, eligible individuals enrolled in the plan will be assured continuity of coverage for the comprehensive benefit package.
__(2) Designation of state agency._A participating State shall designate an agency of State government that supervises or assumes control of the operation of a regional alliance health plan in the case of the failure of the plan.
__(3) Protections for health care providers and enrollees._Each participating State shall assure that in the case of a plan failure_
__(A) the guaranty fund shall pay health care providers for items and services covered under the comprehensive benefit package for enrollees of the plan for which the plan is otherwise obligated to make payment;
__(B) after making all payments required to be made to providers under subparagraph (A), the guaranty fund shall make payments for the operational, administrative, and other costs and debts of the plan (in accordance with requirements imposed by the State based on rules promulgated by the Board);
__(C) such health care providers have no legal right to seek payment from eligible individuals enrolled in the plan for any such covered items or services (other than the enrollees' obligations under cost sharing arrangements); and
__(D) health care providers are required to continue caring for such eligible individuals until such individuals are enrolled in a new health plan.
__(4) Plan failure._For purposes of this section, the failure of a health plan means the current or imminent inability to pay claims.
SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS.
__If a participating State provides benefits (either directly or through regional alliance health plans or otherwise) in addition to those covered under the comprehensive benefit package, the State may not provide for payment for such benefits through funds provided under this Act.

PART 2_REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.
__The Board shall approve the application of a State to operate a single-payer system if the Board finds that the system_
__(1) meets the requirements of section 1222;
__(2) meets the requirements for a Statewide single-payer system under section 1223, in the case of a system offered throughout a State; and
__(3) meets the requirements for an alliance-specific single-payer system under section 1224, in the case of a system offered in a single alliance of a State.

SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.
__Each single-payer system shall meet the following requirements:
__(1) Establishment by state._The system is established under State law, and State law provides for mechanisms to enforce the requirements of the plan.
__(2) Operation by state._The system is operated by the State or a designated agency of the State.
__(3) Enrollment of eligible individuals._
__(A) Mandatory enrollment of all regional alliance individuals._The system provides for the enrollment of all eligible individuals residing in the State (or, in the case of an alliance-specific single-payer system, in the alliance area) for whom the applicable health plan would otherwise be a regional alliance health plan.
__(B) Optional enrollment of medicare-eligible individuals._At the option of the State, the system may provide for the enrollment of medicare-individuals residing in the State (or, in the case of an alliance-specific single-payer system, in the alliance area) if the Secretary of Health and Human Services has approved an application submitted by the State under section 1893 of the Social Security Act (as added by section 4001(a)) for the integration of medicare beneficiaries into plans of the State. Nothing in this subparagraph shall be construed as requiring that a State have a single-payer system in order to provide for such integration.
__(C) Optional enrollment of corporate alliance individuals in statewide plans._At the option of the State, a Statewide single-payer system may provide for the enrollment of individuals residing in the State who are otherwise eligible to enroll in a corporate alliance health plan under section 1311.
__(D) Options included in State system document._A State may not exercise any of the options described in subparagraphs (A) or (B) for a year unless the State included a description of the option in the submission of its system document to the Board for the year under section 1200(b).
__(E) Exclusion of certain individuals._A single-payer system may not require the enrollment of electing veterans, active duty military personnel, and electing Indians (as defined in 1012(d)).
__(4) Direct payment to providers._
__(A) In general._With respect to providers who furnish items and services included in the comprehensive benefit package to individuals enrolled in the system, the State shall make payments directly to such providers and assume (subject to subparagraph (B)) all financial risk associated with making such payments.
__(B) Capitated payments permitted._Nothing in subparagraph (A) shall be construed to prohibit providers furnishing items and services under the system from receiving payments from the plan on a capitated, at-risk basis based on prospectively determined rates.
__(5) Provision of comprehensive benefit package._
__(A) In general._The system shall provide for coverage of the comprehensive benefit package, including the cost sharing provided under the package (subject to subparagraph (B)), to all individuals enrolled in the system.
__(B) Imposition of reduced cost sharing._The system may decrease the cost sharing otherwise provided in the comprehensive benefit package with respect to any class of individuals enrolled in the system or any class of services included in the package, so long as the system does not increase the cost sharing otherwise imposed with respect to any other class of individuals or services.
__(6) Cost containment._The system shall provide for mechanisms to ensure, in a manner satisfactory to the Board, that_
__(A) per capita expenditures for items and services in the comprehensive benefit package under the system for a year (beginning with the first year) do not exceed an amount equivalent to the regional alliance per capita premium target that is determined under section 6003 (based on the State being a single regional alliance) for the year;
__(B) the per capita expenditures described in subparagraph (A) are computed and effectively monitored; and
__(C) automatic, mandatory, nondiscretionary reductions in payments to health care providers will be imposed to the extent required to assure that such per capita expenditures do not exceed in the applicable target referred to in subparagraph (A).



__(7) Requirements generally applicable to health plans._The system shall meet the requirements applicable to a health plan under section 1400(a), except that_
__(A) the system does not have the authority provided to health plans under section 1402(a)(2) (relating to permissible limitations on the enrollment of eligible individuals on the basis of limits on the plan's capacity);
__(B) the system is not required to meet the requirements of section 1404(a) (relating to restrictions on the marketing of plan materials); and
__(C) the system is not required to meet the requirements of section 1408 (relating to plan solvency).

SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER SYSTEM.
__(a) In General._In the case of a State operating a Statewide single-payer system_
__(1) the State shall operate the system throughout the State through a single alliance;
__(2) except as provided in subsection (b), the State shall meet the requirements for participating States under part 1; and
__(3) the State shall assume the functions described in subsection (c) that are otherwise required to be performed by regional alliances in participating States that do not operate a Statewide single-payer system.
__(b) Exceptions to Certain Requirements for Participating States._In the case of a State operating a Statewide single-payer system, the State is not required to meet the following requirements otherwise applicable to participating States under part 1:
__(1) Establishment of alliances._The requirements of section 1202 (relating to the establishment of alliances).
__(2) Health plans._The requirements of section 1203 (relating to health plans), other than the requirement of subsection (f) of such section (relating to coordination of workers' compensation services and automobile liability insurance).
__(3) Financial solvency._The requirements of section 1204 (relating to the financial solvency of health plans in the State).
__(c) Assumption by State of Certain Requirements Applicable to Regional Alliances._A State operating a Statewide single-payer system shall be subject to the following requirements otherwise applicable to regional alliances in other participating States:
__(1) Enrollment; issuance of health security cards._The requirements of subsections (a) and (c) of section 1323 and section 1324 shall apply to the State, eligible individuals residing in the State, and the single-payer system operated by the State in the same manner as such requirements apply to a regional alliance, alliance eligible individuals, and regional alliance plans.
__(2) Reductions in cost sharing for low-income individuals._The requirement of section 1371 shall apply to the State in the same manner as such requirement applies to a regional alliance.
__(3) Data collection; quality._The requirements of section 1327(a) shall apply to the State and the single-payer system operated by the State in the same manner as such requirement applies to a regional alliance and health plans offered through a regional alliance.
__(4) Anti-discrimination; coordination._The requirements of section 1328 shall apply to the State in the same manner as such requirements apply with respect to a regional alliance.
__(d) Financing._
__(1) In general._A State operating a Statewide single-payer system shall provide for the financing of the system using, at least in part, a payroll-based financing system that requires employers to pay at least the amount that the employers would be required to pay if the employers were subject to the requirements of subtitle B of title VI.
__(2) Use of financing methods._Such a State may use, consistent with paragraph (1), any other method of financing.
__(e) Single-Payer State Defined._In this Act, the term ``single-payer State'' means a State with a Statewide single-payer system in effect that has been approved by the Board in accordance with this part.
SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SINGLE-PAYER SYSTEMS.
__(a) In General._In the case of a State operating an alliance-specific single-payer system_
__(1) the State shall meet the requirements for participating States under part 1, except that in establishing the regional alliance through which the system is offered, the requirement of section 1202(a)(1)(A) shall not apply to the extent necessary for the alliance to meet the requirements of section 1242; and
__(2) the regional alliance in which the system is operated shall meet the requirements of subsection (b).
__(b) Requirements for Alliance in Which System Operates._A regional alliance in which an alliance-specific single payer system is operated shall meet the requirements applicable to regional alliances under subtitle D, except that the alliance is not required to meet the following requirements of such subtitle:
__(1) Contracts with health plans._The requirements of section 1321 (relating to contracts with health plans).
__(2) Choice of health plans offered._The requirements of subsections (a) or (b) of section 1322 (relating to offering a choice of health plans to eligible enrollees).

__(4) Establishment of process for consumer complaints._The requirements of section 1326(a) (relating to the establishment of a process for the hearing and resolution of consumer complaints against plans offered through the alliance).
__(5) Addressing needs of areas with inadequate health services._The regional alliance does not have any of the authorities described in subsections (a) and (b) of section 1329 (relating to adjusting payments to plans and encouraging the establishment of new plans).

Title I, Subtitle D
Subtitle D_Health Alliances
SEC. 1300. HEALTH ALLIANCE DEFINED.
__In this Act, the term ``health alliance'' means a regional alliance (as defined in section 1301) and a corporate alliance (as defined in section 1311).
PART 1_ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES
Subpart A_Regional Alliances
SEC. 1301. REGIONAL ALLIANCE DEFINED.
__In this Act, the term ``regional alliance'' means a non-profit organization, an independent state agency, or an agency of the State which_
__(1) meets the applicable organizational requirements of this subpart, and
__(2) is carrying out activities consistent with part 2.
SEC. 1302. BOARD OF DIRECTORS.
__(a) In General._A regional alliance must be governed by a Board of Directors appointed consistent with the provisions of this title. All powers vested in a regional alliance under this Act shall be vested in the Board of Directors.
__(b) Membership._
__(1) In general._Such a Board of Directors shall consist of_
__(A) members who represent employers whose employees purchase health coverage through the alliance, including self-employed individuals who purchase such coverage; and
__(B) members who represent individuals who purchase such coverage, including employees who purchase such coverage.
__(2) Equal representation of employers and consumers._The number of members of the Board described under subparagraph (A) of paragraph (1) shall be the same as the number of members described in subparagraph (B) of such paragraph.
__(c) No Conflict of Interest Permitted._An individual may not serve as a member of the Board of Directors if the individual is one of the following (or an immediate family member of one of the following):
__(1) A health care provider.
__(2) An individual who is an employee or member of the Board of Directors of, has a substantial ownership in, or derives substantial income from, a health care provider, health plan, pharmaceutical company, or a supplier of medical equipment, devices, or services.
__(3) A person who derives substantial income from the provision of health care.
__(4)(A) A member or employee of an association, law firm, or other institution or organization that represents the interests of one or more health care providers, health plans or others involved in the health care field, or (B) an individual who practices as a professional in an area involving health care.
SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL ALLIANCES.
__Each regional alliance must establish a provider advisory board consisting of representatives of health care providers and professionals who provide covered services through health plans offered by the alliance.
Subpart B_Corporate Alliances
SEC. 1311. CORPORATE ALLIANCE DEFINED; INDIVIDUALS ELIGIBLE FOR COVERAGE THROUGH CORPORATE ALLIANCES; ADDITIONAL DEFINITIONS.
__(a) Corporate Alliance Defined._In this Act, the term ``corporate alliance'' means an eligible sponsor (as defined in subsection (b)) if_
__(1) the sponsor elects, in a form and manner specified by the Secretary of Labor consistent with this subpart, to be treated as a corporate alliance under this title and such election has not been terminated under section 1313; and
__(2) the sponsor has filed with the Secretary of Labor a document describing how the sponsor shall carry out activities as such an alliance consistent with part 3.
__(b) Eligible Sponsors._
__(1) In general._In this subpart, each of the following is an eligible sponsor of a corporate alliance:
__(A) Large employer._An employer that_
__(i) is a large employer (as defined in subsection (e)(3)) as of the date of an election under subsection (a)(1), and
__(ii) is not an excluded employer described in paragraph (2).
__(B) Plan sponsor of a multiemployer plan._A plan sponsor described in section 3(16)(B)(iii) of Employee Retirement Income Security Act of 1974, but only with respect to a group health plan that is a multiemployer plan (as defined in subsection (e)(4)) maintained by the sponsor and only if_
__(i) such plan offered health benefits as of September 1, 1993, and
__(ii) as of both September 1, 1993, and January 1, 1996, such plan has more than 5,000 active participants in the United States, or the plan is affiliated with a national labor agreement covering more than 5,000 employees.
__(C) Rural electric cooperative and rural telephone cooperative association._A rural electric cooperative or a rural telephone cooperative association, but only with respect to a group health plan that is maintained by such cooperative or association (or members of such cooperative or association) and only if such plan_
__(i) offered health benefits as of September 1, 1993, and
__(ii) as of both September 1, 1993, and January 1, 1996, has more than 5,000 full-time employees in the United States entitled to health benefits under the plan.

__(2) Excluded employers._For purposes of paragraph (1)(A), any of the following are excluded employers described in this paragraph:
__(A) An employer whose primary business is employee leasing.
__(B) The Federal government (other than the United States Postal Service).
__(C) A State government, a unit of local government, and an agency or instrumentality of government, including any special purpose unit of government.
__(c) Individuals Eligible to Enroll in Corporate Alliance Health Plans._For purposes of part 1 of subtitle A, subject to subsection (d)_
__(1) Large employer alliances._
__(A) Full-time employees._Each eligible individual who is a full-time employee of a large employer that has an election in effect as a corporate alliance is eligible to enroll in a corporate alliance health plan offered by such corporate alliance.




__(B) One-time option to exempt employees in small establishments._At the time of making an election to become a corporate alliance under this subpart, a large employer may exercise an option to make ineligible for enrollment all full-time employees of the employer employed in any establishment of the employer which has (at the time of the election) fewer than 100 full-time employees. The option under this subparagraph may be exercised separately with respect to each establishment of the employer.
__(2) Multiemployer alliances._
__(A) Participants._Each participant and beneficiary (as defined in subparagraph (B)) under a multiemployer plan, with respect to which an eligible sponsor of the plan described in subsection (b)(1)(B) has an election in effect as a corporate alliance, is eligible to enroll in a corporate alliance health plan offered by such corporate alliance.
__(B) Participant and beneficiary defined._In subparagraph (A), the terms ``participant'' and ``beneficiary'' have the meaning given such terms in section 3 of the Employee Retirement Income Security Act of 1974.

__(3) Full-time employees of rural cooperative alliances._Each full-time employee of a rural electric cooperative or rural telephone cooperative association (or of a member of such a cooperative or association) which has an election in effect as a corporate alliance is eligible to enroll in a corporate alliance health plan offered by such corporate alliance.
__(4) Ineligible to enroll in regional alliance health plan._Except as provided in section 1013(b), a corporate alliance eligible individual is not eligible to enroll under a regional alliance health plan.


__(d) Exclusion of Certain Individuals._In accordance with rules of the Board, the following individuals shall not be treated as corporate alliance eligible individuals:
__(1) AFDC recipients.
__(2) SSI recipients.
__(3) Individuals who are described in section 1004(b) (relating to veterans, military personnel, and Indians) and who elect an applicable health plan described in such section.
__(4) Employees who are seasonal or temporary workers (as defined by the Board), other than such workers who are treated as corporate alliance eligible individuals pursuant to a collective bargaining agreement (as defined by the Secretary of Labor).





__(e) Definitions Relating to Corporate Alliances._In this subtitle, except as otherwise provided:



__(1) Establishment._The term ``establishment'' shall be defined by the Secretary of Labor.
__(2) Group health plan._The term ``group health plan'' means an employee welfare benefit plan (as defined in section 3(1) of the Employee Retirement Income Security Act of 1974) providing medical care (as defined in section 213(d) of the Internal Revenue Code of 1986) to participants or beneficiaries (as defined in section 3 of the Employee Retirement Income Security Act of 1974) directly or through insurance, reimbursement, or otherwise.
__(3) Large employer._The term ``large employer'' means an employer that has more than 5,000 full-time employees in the United States, not including (subject to section 1312(a)(3)) any employee located at an establishment for which the option described in subsection (c)(1)(B) is in effect. Such term includes the United States Postal Service.
__(4) Multiemployer plan._The term ``multiemployer plan'' has the meaning given such term in section 3(37) of the Employee Retirement Income Security Act of 1974, and includes any plan that is treated as such a plan under title I of such Act.
__(5) Rural electric cooperative._The term ``rural electric cooperative'' has the meaning given such term in section 3(40)(A)(iv) of the Employee Retirement Income Security Act of 1974.
__(6) Rural telephone cooperative associations._The term ``rural telephone cooperative association'' has the meaning given such term in section 3(40)(A)(v) of the Employee Retirement Income Security Act of 1974.

SEC. 1312. TIMING OF ELECTIONS.
__(a) For Large Employers._
__(1) Current large employers._
__(A) In general._In the case of an employer that is an eligible sponsor described in section 1311(b)(1)(A) as of the most recent January 1 prior to the general effective date, the sponsor's election to be a corporate alliance under such section must be made and filed with the Secretary of Labor not later than the date specified in subparagraph (B).
__(B) Deadline for notice._The date specified in this subparagraph is January 1 of the second year preceding the general effective date or, in the case of a State that elects to become a participating State before the general effective date, not later than one month later than the date specified for States to provide notice of their intent under section 1202(a)(2).

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

PART 2_GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL ALLIANCES
SEC. 1321. CONTRACTS WITH HEALTH PLANS.
__(a) Contracts with Plans._
__(1) In general._In order to assure the availability of the comprehensive benefit package to eligible individuals residing in the alliance area in a cost-effective manner, except as provided in this section, each regional alliance shall negotiate with any willing State-certified health plan to enter into a contract with the alliance for the enrollment under the plan of eligible individuals in the alliance area. Subject to paragraph (2), a regional alliance shall not enter into any such contract with a health plan that is not a State-certified health plan.
__(2) Treatment of certain plans._Each regional alliance shall enter into a contract under this section with any veterans health plan of the Department of Veterans Affairs and with a Uniformed Services Health Plan of the Department of Defense, that offers the comprehensive benefit package to eligible individuals residing in the alliance area if the appropriate official requests to enter into such a contract.

__(b) General Conditions for Denial of Contract by a Regional Alliance._A regional alliance is not required under this section to offer a contract with a health plan if_
__(1) the alliance finds that the proposed premium exceeds 120 percent of the weighted-average premium within the alliance; or
__(2) the plan has failed to comply with requirements under prior contracts with the alliance, including failing to offer coverage for all the services in the comprehensive benefit package in the entire service area of the plan.







SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT; ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE.
__(a) In General._Each health alliance must provide to each eligible enrollee with respect to the alliance a choice of health plans among the plans which have contracts in effect with the alliance under section 1321 (in the case of a regional alliance) or section 1341 (in the case of a corporate alliance).
__(b) Offering of Plans by Alliances._
__(1) In general._Each regional alliance shall include among its health plan offerings at least one fee-for-service plan (as defined in paragraph (2)).
__(2) Fee-for-service plan defined._
__(A) In general._For purposes of this Act, the term ``fee-for-service plan'' means a health plan that_
__(i) provides coverage for all items and services included in the comprehensive benefit package that are furnished by any lawful health care provider of the enrollee's choice, subject to reasonable restrictions (described in subparagraph (B)), and
__(ii) makes payment to such a provider without regard to whether or not there is a contractual arrangement between the plan and the provider.
__(B) Reasonable restrictions described._The reasonable restrictions on coverage permitted under a fee-for-service plan (as specified by the National Health Board) are as follows:
__(i) Utilization review.
__(ii) Prior approval for specified services.
__(iii) Exclusion of providers on the basis of poor quality of care, based on evidence obtainable by the plan.
Clause (ii) shall not be construed as permitting a plan to require prior approval for non-primary health care services through a gatekeeper or other process.
__(c) Establishment of Fee-for-Service Schedule._
__(1) In general._Except in the case of regional alliances of a State that has established a Statewide fee schedule under paragraph (3), each regional alliance shall establish a fee schedule setting forth the payment rates applicable to services furnished during a year to individuals enrolled in fee-for-service plans (or to services furnished under the fee-for-service component of any regional alliance health plan) for use by regional alliance health plans under section 1406(c) and corporate alliance health plans providing services subject to the schedule in the regional alliance area.
__(2) Negotiation with providers._The fee schedule under paragraph (1) shall be established after negotiations with providers, and (subject to paragraphs (5) and (6)) providers may collectively negotiate the fee schedule with the regional alliance.
__(3) Use of statewide schedule._At the option of a State, the State may establish its own statewide fee schedule which shall apply to all fee-for-service plans offered by regional alliances and corporate alliances in the State instead of alliance-specific schedules established under paragraph (1).
__(4) Annual revision._A regional alliance or State (as the case may be) shall annually update the payment rates provided under the fee schedule established pursuant to paragraph (1) or paragraph (3).

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

__(6) No boycott permitted._Nothing in this subsection shall be construed to permit providers to threaten or engage in any boycott.



__(7) Negotiations defined._In this subsection, ``negotiations'' are the process by which providers collectively and jointly meet, confer, consult, discuss, share information, among and between themselves in order to agree on information to be provided, presentations to be made, and other such activities with respect to regional alliances (or States) relating to the establishment of the fee schedule (but not including any activity that constitutes engaging in or threatening to engage in a boycott), as well as any and all collective and joint meetings, discussions, presentations, conferences, and consultations between or among providers and any regional alliance (or State) for the purpose of establishing the fee schedule described in this subsection.
__(d) Prospective Budgeting of Fee-for-Service._
__(1) In general._The fee schedule established by a regional alliance or a State under subsection (c) may be based on prospective budgeting described in paragraph (2).
__(2) Prospective budgeting described._Under prospective budgeting_
__(A) the regional alliance or State (as the case may be) shall negotiate with health providers annually to develop a budget for the designated fee-for-service plan;
__(B) the negotiated budget shall establish spending targets for each sector of health expenditures made by the plan; and
__(C) if the regional alliance or State (as the case may be) determines that the utilization of services under the plan is at a level that will result in expenditures under the plan exceeding the negotiated budget, the plan shall reduce the amount of payments otherwise made to providers (through a withhold or delay in payments or adjustments) in such a manner and by such amounts as necessary to assure that expenditures will not exceed the budget.
__(3) Use of prospective budgeting exclusive._If a regional alliance or State establishes the fee schedule for fee-for-service plans on the basis of prospective budgeting under this subsection, payment for all services provided by fee-for-service plans in the alliance or State shall be determined on such basis.
SEC. 1323. ENROLLMENT RULES AND PROCEDURES.
__(a) In General._Each regional alliance shall assure that each regional alliance eligible individual who resides in the alliance area is enrolled in a regional alliance health plan and shall establish and maintain methods and procedures, consistent with this section, sufficient to assure such enrollment. Such methods and procedures shall assure the enrollment of alliance eligible individuals at the time they first become eligible enrollees in the alliance area, including individuals at the time of birth, at the time they move into the alliance area, and at the time of reaching the age of individual eligibility as an eligible enrollee (and not merely as a family member). Each regional alliance shall establish procedures, consistent with subtitle A, for the selection of a single health plan in which all members of a family are enrolled.
__(b) Point of Service Enrollment Mechanism._
__(1) In general._Each regional alliance shall establish a point-of-service enrollment mechanism (meeting the requirements of this subsection) for enrolling eligible individuals who are not enrolled in a health plan of the alliance when the individual seeks health services.
__(2) Requirements of mechanism._Under such a mechanism, if an eligible individual seeks to receive services (included in the comprehensive benefit package) from a provider in an alliance area and does not present evidence of enrollment under any applicable health plan, or if the provider has no evidence of the individual's enrollment under any such plan, the following rules shall apply:
__(A) Notice to alliance._The provider_
__(i) shall provide the regional alliance with information relating to the identity of the eligible individual, and
__(ii) may request payment from the regional alliance for the furnishing of such services.
__(B) Initial determination of eligibility and enrollment status._The regional alliance shall determine_
__(i) if the individual is an alliance eligible individual for the alliance, and
__(ii) if the individual is enrolled under an applicable health plan (including a corporate alliance health plan).

__(C) Treatment of alliance eligible individuals._If the regional alliance determines that the individual is an alliance eligible individual with respect to the alliance and_
__(i) is enrolled under a regional alliance health plan of the alliance, the alliance shall forward the claim to the health plan involved and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C));
__(ii) is not enrolled under a regional alliance health plan of the alliance but is required to be so enrolled in a specific health plan as a family member under section 1021, the alliance shall record the individual's enrollment under such specific plan, shall forward the claim to such plan, and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C)); or
__(iii) is not enrolled under such a plan and is not described in clause (ii), the point-of-service enrollment procedures described in paragraph (3) shall apply.
__(D) Treatment of individuals enrolled under health plans of other alliances._If the regional alliance determines that the individual is not an alliance eligible individual with respect to the alliance but the individual is enrolled_
__(i) under a regional alliance health plan of another alliance, the alliance shall forward the claim to the other regional alliance and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in paragraph (3)(C)); or
__(ii) under a corporate alliance health plan, the alliance shall forward the claim to the corporate alliance involved and shall notify the provider (and the individual) of the fact of such enrollment and the forwarding of such claim (and the plan shall make payment to the provider for the services furnished to the individual as described in section 1383(b)(2)(B)).
__(E) Treatment of other alliance eligible individuals not enrolled in health plan._If the regional alliance determines that the individual is not an alliance eligible individual with respect to the alliance and the individual is an alliance eligible individual with respect to another health alliance but is not enrolled in a health plan of such alliance, the regional alliance shall forward the claim to the other alliance involved and shall notify the provider (and the individual) of the forwarding of such claim and the requirement for prompt enrollment of the individual under an applicable health plan of such alliance pursuant to the procedures described in paragraph (3) (in the case of a regional alliance) or in section 1383(b) (in the case of a corporate alliance).
__(F) Treatment of all other individuals._The National Board shall promulgate rules regarding the responsibilities of regional alliances relating to individuals whose applicable health plan is not an alliance plan and other individuals the alliance is unable to identify as eligible individuals.
__(3) Point-of-service enrollment procedures described._The point-of-service enrollment procedures under this paragraph are as follows:
__(A) Not later than 10 days after the date an alliance is notified of the receipt of services by an unenrolled individual, the alliance provides the individual with materials describing health plans offered through the alliance.
__(B) The individual shall be provided a period of 30 days in which to enroll in a health plan of the individual's choice. If the individual fails to so enroll during such period, the alliance shall enroll the individual in a health plan of the alliance selected on a random basis.
__(C) Using the fee-for-service schedule adopted by the alliance under section, the health plan in which the individual is enrolled under this subparagraph shall reimburse the provider who provided the services referred to in subparagraph (A) to the same extent as if the individual had been enrolled under the plan at the time of provision of the services.
__(c) Enrollment of New Residents._
__(1) In general._Each regional alliance shall establish procedures for enrolling regional alliance eligible individuals who move into the alliance area.
__(2) Long-term residents._Such procedures shall assure that regional alliance eligible individuals who intend to reside in the alliance area for longer than 6 months shall register with the regional alliance for the area and shall enroll in a regional alliance health plan offered by the alliance.
__(3) Short-term residents._Such procedures shall permit eligible individuals who intend to reside in the alliance area for more than 3 months but less than 6 months to choose among the following options:
__(A) To continue coverage through the health plan in which such individual is previously enrolled, in which case coverage for care in the area of temporary residence may be limited to emergency services and urgent care.
__(B) To register with the regional alliance and enroll in a regional alliance health plan offered by the alliance.
__(C) To change enrollment in the previous alliance area to enrollment in a health plan of such alliance that provides for coverage on a fee-for-service basis of services provided outside the area of that alliance.
__(d) Changes in Enrollment._
__(1) Annual open enrollment period to change plan enrollment._Each regional alliance shall hold an annual open enrollment period during which each eligible enrollee in the alliance has the opportunity to choose among health plans offered through the alliance, according to rules to be promulgated by the National Health Board.
__(2) Disenrollment for cause._In addition to the annual open enrollment period held under paragraph (1), each regional alliance shall establish procedures under which alliance eligible individuals enrolled in a plan may disenroll from the plan for good cause at any time during a year and enroll in another plan of the alliance. Such procedures shall be implemented in a manner that ensures continuity of coverage for the comprehensive benefit package for such individuals during the year.
__(e) Enrollment of Family Members._Each regional alliance shall provide for the enrollment of all family members in the same plan, consistent with part 2 of subtitle A.
__(f) Oversubscription of Plans._
__(1) In general._Each regional alliance shall establish a method for establishing enrollment priorities in the case of a health plan that does not have sufficient capacity to enroll all eligible individuals seeking enrollment.
__(2) Preference for current members._Such method shall provide that in the case of such an oversubscribed plan_
__(A) individuals already enrolled in the plan are given priority in continuing enrollment in the plan, and
__(B) other individuals who seek enrollment during an applicable enrollment period are permitted to enroll in accordance with a random selection method, up to the enrollment capacity of the plan.
__(g) Termination of Enrollment._
__(1) In general._Each regional alliance shall establish special enrollment procedures to permit alliance eligible individuals to change the plan in which they are enrolled in the case of the termination of coverage under a plan, in a manner that ensures the individuals' continuation of coverage for the comprehensive benefit package.
__(2) Failure of a corporate alliance._Each regional alliance shall establish special enrollment procedures to permit individuals, who become alliance eligible individuals as a result of the failure of a corporate alliance, to enroll promptly in regional alliance health plans in a manner that ensures the individuals' continuation of coverage for the comprehensive benefit package.
__(h) Limitation on Offering of Coverage to Ineligible Individuals._A regional alliance may not knowingly offer coverage under a regional alliance health plan or other health insurance or health benefits to an individual who is not an eligible individual. Nothing in this section shall be construed as affecting the ability of a regional alliance health plan or other health plan to offer coverage to such individuals without any financial payment by a regional alliance.
__(i) Enforcement of Enrollment Requirement._In the case of a regional alliance eligible individual who fails to enroll in an applicable health plan as required under section 1002(a)_
__(1) the applicable regional alliance shall enroll the individual in a regional alliance health plan (selected by the alliance consistent with this Act and with any rules established by the Board), and
__(2) such alliance shall require the payment of twice the amount of the family share of premiums that would have been payable under subtitle B of title VI if the individual had enrolled on a timely basis in the plan, unless the individual has established to the satisfaction of the alliance good cause for the failure to enroll on a timely basis.
SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS.
__A regional alliance is responsible for the issuance of health security cards to regional alliance eligible individuals under section 1001(b).

SEC. 1325. CONSUMER INFORMATION AND MARKETING.
__(a) Consumer Information._
__(1) In general._Each regional alliance shall make available to eligible enrollees information, in an easily understood and useful form, that allows such enrollees (and other alliance eligible individuals) to make valid comparisons among health plans offered by the alliance. Such information shall be made available in a brochure, published not less often than annually.
__(2) Information to be included._Such information must include, in the same format for each plan, such information as the National Health Board shall require, including at least the following:
__(A) The cost of the plan, including premiums and average out-of-pocket expenses.
__(B) The characteristics and availability of health care professionals and institutions participating in the plan.
__(C) Any restrictions on access to providers and services under the plan.
__(D) A summary of the annual quality performance report, established pursuant to section 5005(d)(1), which contains measures of quality presented in a standard format.
__(b) Marketing._Each regional alliance shall review and approve or disapprove the distribution of any materials used to market health plans offered through the alliance.
SEC. 1326. OMBUDSMAN.



__(a) Establishment._Each regional alliance must establish and maintain an office of an ombudsman to assist consumers in dealing with problems that arise with health plans and the alliance.
__(b) Optional Financing Through Voluntary Contribution._At the option of State in which a regional alliance is located, the alliance_
__(1) shall permit alliance eligible individuals to designate that one dollar of the premium paid for enrollment in the individual's regional alliance health plan for the operation of the office of the alliance's ombudsman; and
__(2) shall apply any such amounts towards the establishment and operation of such office.
SEC. 1327. DATA COLLECTION; QUALITY.
__Each regional alliance shall comply with requirements of subtitles A and B of title V (relating to quality, information systems, and privacy), and shall take appropriate steps to ensure that health plans offered through the alliance comply with such requirements.






SEC. 1328. ADDITIONAL DUTIES.
__(a) Anti-Discrimination._In carrying out its activities under this part, a health alliance may not discriminate against health plans  on the basis of race, gender, ethnicity, religion, mix of health professionals, location of the plan's headquarters, or (except as specifically provided in this part) organizational arrangement.
__(b) Coordination of Enrollment Activities._Each regional alliance shall coordinate, in a manner specified by the National Health Board, with other health alliances its activities, including enrollment and disenrollment activities, in a manner that ensures continuous, nonduplicative coverage of alliance eligible individuals in health plans and that minimizes administrative procedures and paperwork.


SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLIANCES TO ADDRESS NEEDS IN AREAS WITH INADEQUATE HEALTH SERVICES; PROHIBITION OF INSURANCE ROLE.
__(a) Payment Adjustment._In order to ensure that plans are available to all eligible individuals residing in all portions of the alliance area, a regional alliance may adjust payments to plans or use other financial incentives to encourage health plans to expand into areas that have inadequate health services.
__(b) Encouraging New Plans._Subject to subsection (c), in order to encourage the establishment of a new health plan in an area that has inadequate health services, an alliance may_
__(1) organize health providers to create such a plan in such an area a new health plan targeted at such an area,
__(2) provide assistance with setting up and administering such a plan, and
__(3) arrange favorable financing for such a plan.
__(c) Prohibition of Regional Alliances Bearing Risk._A regional alliance may not bear insurance risk.
SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF INTEREST.
__(a) Promulgation of Standards._The Board shall promulgate standards of conduct in accordance with subsection (b) for any administrator, officer, trustee, fiduciary, custodian, counsel, agent, or employee of any regional alliance.
__(b) Requirements for Standards._The standards of conduct shall referred to in subsection (a) shall set forth_
__(1) the types of investment interests, ownership interests, affiliations or other employment that would be improper for an individual described in subsection (a) to hold during the time of the individual's service or employment with an alliance; and
__(2) the circumstances that will constitute impermissible conflicts of interest or self-dealing by such employees in performing their official duties and functions for any regional alliance.
__(c) Civil Monetary Penalty._Any individual who engages in an activity that the individual knows or has reason to know is in violation of the regulations and standards promulgated by the Board pursuant to paragraphs (a) and (b) shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $10,000 for each such violation.

PART 3_AUTHORITIES AND RESPONSIBILITIES RELATING TO FINANCING AND INCOME DETERMINATIONS
Subpart A_Collection of Funds
SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPTANCE OF BIDS.
__(a) Information Provided to Plans Before Soliciting Bids._
__(1) In general._Each regional alliance shall make available, by April 1 of each year, to each plan that indicates an interest in submitting a premium bid under section 6004 in the year, information (including information described in paragraph (2)) that the Board specifies as being necessary to enable a plan to estimate, based upon an accepted bid, the amounts payable to such a plan under section 1351.
__(2) Information to be included._Such information shall include the following:
__(A) The demographic and other characteristics of regional alliance eligible individuals for the regional alliance.
__(B) The uniform per capita conversion factor for the regional alliance (established under subsection (b)).
__(C) The premium class factors (established by the Board under section 1531).
__(D) The regional alliance inflation factor (determined under section 6001(a)).
__(E) The risk-adjustment factors and reinsurance methodology and payment amounts (published under subsection (c)) to be used by the regional alliance in computing blended plan per capita rates (in accordance with section 6201).
__(F) The plan bid proportion, the AFDC proportion, the SSI proportion, the AFDC per capita premium amount, and the SSI per capita premium amount, for the year, as computed under subtitle D of title VI.
__(G) The alliance administrative allowance percentage, computed under section 1352(b).
__(b) Determination of Uniform Per Capita Conversion Factor._Each regional alliance shall specify, not later than April 1 of each year (beginning with the year before the first year) a uniform per capita conversion factor to be used under section 6102(a)(2) in converting the accepted bid for each plan for the year into the premium for an individual enrollment for such plan for the year. SSI or AFDC recipients shall not be included for purposes of computing the conversion factor.
__(c) Determination of Risk-Adjustment Factors and Reinsurance Payment Amounts._Each regional alliance shall compute and publish the risk-adjustment factors and reinsurance payment amounts to be used by the regional alliance in computing blended plan per capita rates under section 6201.
__(d) Solicitation of Bids._Each regional alliance shall solicit and negotiate, consistent with section 6004, with each regional alliance health plan a bid for the payment rate on a per capita basis for the comprehensive benefit package for all alliance eligible individuals in the alliance area.
SEC. 1342. CALCULATION AND PUBLICATION OF GENERAL FAMILY SHARE AND GENERAL EMPLOYER PREMIUM AMOUNTS.
__(a) Calculation of Components in General Family Share and General Employer Premiums._
__(1) Family share._Each regional alliance shall compute the following components of the general family share of premiums:
__(A) Plan premiums._For each plan offered, the premium for the plan for each class of family enrollment (including the amount of any family collection shortfall).
__(B) Alliance credit._The alliance credit amount for each class of family enrollment, under section 6103.
__(C) Excess premium credit._The amount of any excess premium credit provided under section 6105 for each class of family enrollment.
__(D) Corporate alliance opt-in credit._The amount of any corporate alliance opt-in credit provided under section 6106 for each class of family enrollment.
__(2) Employer premiums._Each regional alliance shall compute the following components of the general employer premium payment:
__(A) Base employer monthly premium per worker._The base employer monthly premium determined under section 6122 for each class of family enrollment.
__(B) Employer collection shortfall add-on._The employer collection shortfall add-on computed under section 6125(b).
__(b) Publication._
__(1) Family share._
__(A) In general._Each regional alliance shall publish, before the open enrollment period in each year, the general family share of the premium (as defined in subparagraph (B)) for each class of family enrollment for each regional alliance health plan to be offered by the alliance in the following year.
__(B) General family share of premium defined._In this subpart, the term ``general family share of premium'' means the family share of premium under section 6101 computed without regard to section 6104 and without regard to section 6101(b)(2)(C)(v).
__(2) Employer premium._
__(A) In general._Each regional alliance shall publish, in December before each year (beginning with December before the first year) the general employer premium payment amount (as defined in subparagraph (B)) for each class of family enrollment for the following year.
__(B) General employer premium payment amount defined._In this subpart, the term ``general employer premium payment amount'' means the employer premium payment under section 6121 computed, as an amount per full-time equivalent worker, without regard to sections 6124, 6125, 6126.
SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMILIES.
__(a) Amount of Family Share._The amount charged by a regional alliance to a family for a class of family enrollment (specified under section 1011(c)) under a regional alliance health plan is equal to the family share of premium established under section 6101(a) for the family. Based upon the information described in this section, each regional alliance shall determine the amount required to be paid under section 6101 and under section 6111 for each year for families enrolling in regional alliance health plans.
__(b) Family Share Amount._The amount required to be paid under section 6101, with respect to each family, takes into account_
__(1) the general family share of premium (as defined in section 1342(b)(1)(B)) for the class of enrollment involved;
__(2) any income-related discount provided under section 6104(a)(1) for the family; and
__(3) whether or not the family is an SSI or AFDC family.
__(c) Alliance Credit Amount._The amount of the alliance credit under section 6111, with respect to each family, takes into account the following:
__(1) The number of months of enrollment, and class of enrollment, in regional alliance health plans, used in determining the amount of the alliance credit under section 6103 for the family.
__(2) Reductions in liability under section 6111(b) based on employer premium payments based on net earnings from self-employment for the family.
__(3) Reductions in liability under section 6112 based on months of employment for the family.
__(4) Limitations in liability under section 6113 on the basis of the adjusted family income for the family.
__(5) The elimination of liability in the case of certain retirees and qualified spouses and children under section 6114.
__(6) The elimination of liability in the case of certain working medicare beneficiaries under section 6115.
__(d) Access to Necessary Information to Make Determination._Information required for an alliance to make the determination under subsection (a) shall be based on information obtained or maintained by the alliance in the conduct of its business, including the following:
__(1) Information required for income-related determinations shall be obtained under subpart B.
__(2) Information on SSI and AFDC recipients under subsection (e).
__(3) Information submitted on a monthly and annual basis by employers under section 1602.
__(4) Information submitted by self-employed individuals on net earnings from self-employment under section 1602(d).
__(5) Applications for premium reductions under section 6114.
__(6) Information concerning medicare-eligible individuals under subsection (f).
__(7) Any income-related discount provided under section 6104(a)(1) for the family.
__(8) Whether or not the family is an SSI or AFDC family.
__(e) Information Concerning Cash Assistance Status._Each participating State and the Secretary shall make available (in a time and manner specified by the Secretary) to each regional alliance such information as may be necessary to determine and verify whether an individual is an AFDC or SSI recipient for a month in a year.
__(f) Information Concerning Medicare-Eligible Individuals._
__(1) Information to regional alliances._The Secretary shall make available to regional alliances (through regional information centers or otherwise) information necessary to determine_
__(A) whether an individual is a medicare-eligible individual,
__(B) the eligibility of individuals for the special treatment under section 6115,
__(C) if medicare-eligible individuals are described in section 1012(a), and
__(D) the amounts of payments owed the alliance under section 1895 of the Social Security Act.
__(2) Information to secretary._Each regional alliance shall make available to the Secretary (through the national information system under section 5101 or otherwise) information relating to the enrollment of individuals who would be medicare-eligible individuals but for section 1012(a).
__(g) Alliance Accounting System._
__(1) In general._Each regional alliance shall establish an accounting system that meets standards established by the Secretary.
__(2) Specifics._Such system shall collect information, on a timely basis for each individual enrolled (and, to the extent required by the Secretary, identified and required to be enrolled) in a regional alliance health plan regarding_
__(A) the applicable premium for such enrollment,
__(B) family members covered under such enrollment,
__(C) the premium payments made by (or on behalf of) the individual for such enrollment,
__(D) employer premium payments made respecting the employment of the individual and other employer contributions made respecting such enrollment, and
__(E) any government contributions made with respect to such enrollment (including contributions for electing veterans and active duty military personnel).
__(3) End-of-year reporting._Such system shall provide for a report, at the end of each year, regarding the total premiums imposed, and total amounts collected, for individuals enrolled under regional health alliance plans, in such manner as identifies net amounts that may be owed to the regional alliance.
SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE.
__(a) Family Statements._
__(1) Notice of no amount owed._If the regional alliance determines under section 1343 that a family has paid any family share required under section 6101 and is not required to repay any amount under section 6111 for a year, the alliance shall mail notice of such determination to the family. Such notice shall include a prominent statement that the family is not required to make any additional payment and is not required to file any additional information with the regional alliance.
__(2) Notice of amount owed._
__(A) In general._If the regional alliance determines that a family has not paid the entire family share required under section 6101 or is required to repay an amount under section 6111 for a year, the alliance shall mail to the family a notice of such determination.
__(B) Information on amount due._Such notice shall include detailed information regarding the amount owed, the basis for the computation (including the amount of any reductions that have been made in the family's liability under subtitle B of title VI), and the date the amount is due and the manner in which such amount is payable.
__(C) Information on discounts and reductions available._Such notice shall include_
__(i) information regarding the discounts and reductions available (under sections 6104, 6112, 6113, 6114, and 6115) to reduce or eliminate any liability, and
__(ii) a worksheet which may be used to calculate reductions in liability based on income under sections 6104 and 6113.
__(3) Inclusion of income reconciliation form for families provided premium discounts._
__(A) In general._A notice under this subsection shall include, in the case of a family that has been provided a premium discount under section 6103 (or section 6113) for the previous year, an income verification statement (described in section 1375) to be completed and returned to the regional alliance (along with any additional amounts owed) by the deadline specified in subsection (b). Such form shall require the submission of such information as Secretary specifies to establish or verify eligiblility for such premium discount.
__(B) Other families._Any family which has not been provided such a discount but may be eligible for such a discount may submit such an income verification form and, if eligible, receive a rebate of the amount of excess family share paid for the previous year.
__(C) Additional information._The alliance shall permit a family to provide additional information relating to the amount of such reductions or the income of the family (insofar as it may relate to a premium discount or reduction in liability under section 6104 or 6113).
__(4) Timing of notice._Notices under this subsection shall be mailed to each family at least 45 days before the deadline specified in subsection (b).
__(b) Deadline for Payment._The deadline specified in this subsection for amounts owed for a year is such date as the Secretary may specify, taking into account the dates when the information specified in section 1343 becomes available to compute the amounts owed and the information required to file income reconcilation statements under section 1375. Amounts not paid by such deadline are subject to interest and penalty.
__(c) Change in Regional Alliance._In the case of a family that during a year changes the regional alliance through which the family obtains coverage under a regional alliance health plan, the Secretary shall establish rules which provide that the regional alliance in which the family last obtained such coverage in a year_
__(1) is responsible for recovering amounts due under this subpart for the year (whether or not attributable to periods of coverage obtained through that alliance);
__(2) shall obtain such information, through the health information system implemented under section 5201, as the alliance may require in order to compute the amount of any liability owed under this subpart (taking into account any reduction in such amount under this section), and
__(3) shall provide for the payment to other regional alliances of such amounts collected as may be attributable to amounts owed for periods of coverage obtained through such alliances.
__(d) No Loss of Coverage._In no case shall the failure to pay amounts owed under this subsection result in an individual's or family's loss of coverage under this Act.
__(e) Dispute Resolution._Each regional alliance shall establish a fair hearing mechanism for the resolution of disputes concerning amounts owed the alliance under this subpart.
SEC. 1345. COLLECTIONS.
__(a) In General._Each regional alliance is responsible for the collection of all amounts owed the alliance (whether by individuals, employers, or others and whether on the basis of premiums owed, incorrect amounts of discounts or premium, cost sharing, or other reductions made, or otherwise), and no amounts are payable by the Federal Government under this Act (including section 9102) with respect to the failure to collect any such amounts. Each regional alliance shall use credit and collection procedures, including the imposition of interest charges and late fees for failure to make timely payment, as may be necessary to collect amounts owed to the alliance. States assist regional alliances in such collection process under section 1202(d).
__(b) Collection of Family Share._
__(1) Withholding._
__(A) in general._In the case of a family that includes a qualifying employee of an employer, the employer shall deduct from the wages of the qualifying employee (in a manner consistent with any rules of the Secretary of Labor) the amount of the family share of the premium for the plan in which the family is enrolled.
__(B) Multiple employment._In the case of a family that includes more than one qualifying employee, the family shall choose the employer to which subparagraph (A) will apply.
__(C) Payment._Amounts withheld under this paragraph shall be maintained in a manner consistent with standards established by the Secretary of Labor and paid to the regional alliance involved in a manner consistent with the payment of employer premiums under subsection (c).
__(D) Satisfaction of liability._An amount deducted from wages of a qualifying employee by an employer is deemed to have been paid by the employee and to have satisfied the employee's obligation under subsection (a) to the extent of such amount.
__(2) Other methods._In the case of a family that does not include a qualifying employee, the regional alliance shall require payment to be made prospectively and such payment may be required to be made not less frequently than monthly. The Secretary may issue regulations in order to assure the timely and accurate collection of the family share due.
__(c) Timing and Method of Payment of Employer Premiums._
__(1) Frequency of payment._Payment of employer premiums under section 6121 for a month shall be made not less frequently than monthly (or quarterly in the case of such payments made by virtue of section 6126). The Secretary of Labor may establish a method under which employers that pay wages on a weekly or biweekly basis are permitted to make such employer payments on such a weekly or biweekly basis.
__(2) Electronic transfer._A regional alliance may require those employers that have the capacity to make payments by electronic transfer to make payments under this section by electronic transfer.
__(d) Assistance._
__(1) Employer collections._The Secretary of Labor shall provide regional alliances with such technical and other assistance as may promote the efficient collection of all amounts owed such alliances under this Act by employers. Such assistance may include the assessment of civil monetary penalties, not to exceed $5,000 or three times the amount of the liability owed, whichever is greater, in the case of repeated failure to pay (as specified in rules of the Secretary of Labor).
__(2) Family collections._Except as provided in paragraph (1), the Secretary shall provide regional alliances with such technical and other assistance as may promote the efficient collection of other amounts owed such alliances under this Act. Such assistance may include the assessment of civil monetary penalties, not to exceed $5,000 or three times the amount of the liability owed, whichever is greater, in the case of repeated failure to pay (as specified in rules of the Secretary).
__(e) Receipt of Miscellaneous Amounts._For payments to regional alliances by_
__(1) States, see subtitle A of title IX, and
__(2) the Federal Government, see subtitle B of such title and section 1895 of the Social Security Act (as added by section 4003).
SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES.
__(a) In General._The regional alliance which offers the regional alliance health plan in which a family is enrolled in December of each year (in this section referred to as the ``final alliance'') is responsible for the collection of any amounts owed under this subpart, without regard to whether the family resided in the alliance area during the entire year.
__(b) Provision of Information in the Case of Change of Residence._In the case of a family that moves from one alliance area to another alliance area during a year, each regional alliance (other than the final alliance) is responsible for providing to the final alliance (through the national information system under section 5101 or otherwise) such information as the final alliance may require in order to determine the liability (and reductions in liability under section 6112) attributable to alliance credits provided by such regional alliance.
__(c) Distribution of Proceeds._In accordance with rules established by the Secretary, in consultation with the Secretary of Labor, the final alliance shall provide for the distribution of amounts collected under this subpart with respect to families in a year in an equitable manner among the regional alliances that provided health plan coverage to the families in the year.
__(d) Expediting Process._In order to reduce paperwork and promote efficiency in the collection of amounts owed regional alliances under this subpart, the Secretary may require or permit regional alliances to share such information (through the national information system under section 5101 or otherwise) as the Secretary determines to be cost-effective, subject to such confidentiality restrictions as may otherwise apply.

__(e) Students._In the case of a qualifying student who makes an election described in section 1012(e)(2)) (relating to certain full-time students who are covered under the plan of a parent but enrolled in a health plan offered by a different regional alliance from the one in which the parent is enrolled), the regional alliance that offered the plan to the parent shall provide for transfers of an appropriate portion of the premium (determined in accordance with procedures specified by the Board) to the other regional alliance in order to compensate that alliance for the provision of such coverage.
__(f) Payments of Certain Amounts to Corporate Alliances._In the case of a married couple in which one spouse is a qualifying employee of a regional alliance employer and the other spouse is a qualifying employee of a corporate alliance employer, if the couple is enrolled with a corporate alliance health plan the regional alliance (which receives employer premium payments from such regional alliance employer with respect to such employee) shall pay to the corporate alliance the amounts so paid (or would be payable by the employer if section 6123 did not apply).
Subpart B_Payments
SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH PLANS.
__(a) Computation of Blended Plan Per Capita Payment Amount._For purposes of making payments to plans under this section, each regional alliance shall compute, under section 6201(a), a blended plan per capita payment amount for each regional alliance health plan for enrollment in the alliance for a year.
__(b) Amount of Payment to Plans._
__(1) In general._Subject to subsection (e) and section 6121(b)(5)(B), each regional alliance shall provide for payment to each regional alliance health plan, in which an alliance eligible individual is enrolled, an amount equal to the net blended rate (described in paragraph (2)) adjusted (consistent with subsection (c)) to take into account the relative actuarial risk associated with the coverage with respect to the individual.
__(2) Net blended rate._The net blended rate described in this paragraph is the blended plan per capita payment amount (determined under section 6201(a)), reduced by_
__(A) the consolidated set aside percentage specified under subsection (d), and
__(B) any plan payment reduction imposed under section 6011 for the plan for the year.

__(c) Application of Risk Adjustment and Reinsurance Methodology._Each regional alliance shall use the risk adjustment methodology developed under section 1541 in making payments to regional alliance health plans under this section, except as provided in section 1542.

__(d) Consolidated Set Aside Percentage._The consolidated set aside percentage, for a regional alliance for a year, is the sum of_
__(1) the administrative allowance percentage for the regional alliance, computed by the alliance under section 1352(b); and
__(2) 1.5 percentage points.
Amounts attributable to paragraph (2) are paid to the Federal Government (for academic health centers and graduate medical education) under section 1353.
__(e) Treatment of Veterans, Military, and Indian Health Plans and Programs._
__(1) Veterans health plan._In applying this subtitle (and title VI) in the case of a regional alliance health plan that is a veterans health plan of the Department of Veterans Affairs, the following rules apply:
__(A) For purposes of applying subtitle A of title VI, families enrolled under the plan shall not be taken into account.
__(B) The provisions of subtitle A of title VI shall not apply to the plan, other than such provisions as require the plan to submit a per capita amount for each regional alliance area on a timely basis, which amount shall be treated as the final accepted bid of the plan for the area for purposes of subtitle B of such title and this section. This amount shall not be subject to negotiation and not subject to reduction under section 6011.
__(C) For purposes of computing the blended plan per capita payment amount under this section, the AFDC and SSI proportions (under section 6202(a)) are deemed to be 0 percent.

__(2) Uniformed services health plan._In applying this subtitle (and title VI) in the case of a regional alliance health plan that is a Uniformed Services Health Plan of the Department of Defense, the following rules apply:
__(A) For purposes of applying subtitle A of title VI, families enrolled under the plan shall not be taken into account.
__(B) The provisions of subtitle A of title VI shall not apply to the plan, other than such provisions as require the plan to submit a per capita amount on a timely basis, which amount shall be treated as the final accepted bid of the plan for the area involved for purposes of subtitle B of such title and this section. This amount shall not be subject to negotiation and not subject to reduction under section 6011. The Board, in consultation with the Secretary of Defense, shall establish rules relating to the area (or areas) in which such a bid shall apply.
__(C) For purposes of computing the blended plan per capita payment amount under this section, the AFDC and SSI proportions (under section 6202(a)) are deemed to be 0 percent.
__(3) Indian health programs._In applying this subtitle (and title VI) in the case of a health program of the Indian Health Service, the following rules apply:
__(A) Except as provided in this paragraph, the plan shall not be considered or treated to be a regional alliance health plan and for purposes of applying title VI, families enrolled under the program shall not be taken into account.
__(B) In accordance with rules established by the Secretary, regional alliances shall act as agents for the collection of employer premium payments (including payments of corporate alliance employers) required under subtitle B of title VI with respect to qualifying employees who are enrolled under a health program of the Indian Health Service. The Secretary shall permit such alliances to retain a nominal fee to compensate them for such collection activities. In applying this subparagraph, the family share of premium for such employees is deemed to be zero for electing Indians (as defined in section 1012(d)(3)) and for other employees is the amount of the premium established under section 8306(b)(4)(A), employees are deemed to be residing in the area of residence (or area of employment), as specified under rules of the Secretary, and the class of enrollment shall be such class (or classes) as specified under rules of the Secretary.
SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PERCENTAGE.
__(a) Specification by Alliance._Before obtaining bids under 6004 from health plans for a year, each regional alliance shall establish the administrative allowance for the operation of regional alliance in the year.
__(b) Administrative Allowance Percentage._Subject to subsection (c), the regional alliance shall compute an administrative allowance percentage for each year equal to_
__(1) the administrative allowance determined under subsection (a) for the year, divided by
__(2) the total of the amounts payable to regional alliance health plans under section 1343 (as estimated by the alliance and determined without regard to section 1343(d)).
__(c) Limitation to 2\1/2\ percent._In no case shall an administrative allowance percentage exceed 2.5 percent.
SEC. 1353. PAYMENTS TO THE FEDERAL GOVERNMENT FOR ACADEMIC HEALTH CENTERS AND GRADUATE MEDICAL EDUCATION.
__Each regional alliance shall make payment to the Secretary each year of an amount equal to the reduction in payments by the alliance to regional alliance health plans resulting from the consolidated set aside percentage under section 1351(d) including the 1.5 percentage points under paragraph (2) of such section.
Subpart C_Financial Management
SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS.
__(a) In General._Each regional alliance shall comply with standards established under section 1571(b) (relating to the management of finances, maintenance of records, accounting practices, auditing procedures, and financial reporting) and under section 1591(d) (relating to employer payments).
__(b) Specific Provisions._In accordance with such standards_
__(1) Financial statements._
__(A) In general._Each regional alliance shall publish periodic audited financial statements.
__(B) Annual financial audit._
__(i) In general._Each regional alliance shall have an annual financial audit conducted by an independent auditor in accordance with generally accepted auditing standards.
__(ii) Publication._A report on each such audit shall be made available to the public at nominal cost.
__(iii) Required actions for deficiencies._If the report from such an audit does not bear an unqualified opinion, the alliance shall take such steps on a timely basis as may be necessary to correct any material deficiency identified in the report.
__(C) Eligibility error rates._Each regional alliance shall make eligibility determinations for premium discounts, liability reductions, and cost sharing reductions under sections 6104 and 6123, section 6113, and section 1371, respectively, in a manner that maintains the error rates below an applicable maximum permissible error rate specified by the Secretary (or the Secretary of Labor with respect to section 6123). In specifying such a rate, the Secretary shall take into account maximum permissible error rates recognized by the Federal Government under comparable State-administered programs.
__(2) Safeguarding of funds._Each regional alliance shall safeguard family, employer, State, and Federal government payments to the alliance in accordance with fiduciary standards and shall hold such payments in financial institutions and instruments that meet standards recognized or established by the Secretary, in consultation with the Secretaries of Labor and the Treasury and taking into account current Federal laws and regulations relating to fiduciary responsibilities and financial management of public funds.
__(3) Contingencies._Each regional alliance shall provide that any surplus of funds resulting from an estimation discrepancy described in section 9201(b)(1)(D), up to a reasonable amount specified by the Secretary, shall be held in a contingency fund established by the alliance and used to fund any future shortfalls resulting from such a discrepancy.




__(4) Auditing of employer payments._
__(A) In general._Each regional alliance is responsible for auditing the records of regional alliance employers to assure that employer payments (including the payment of amounts withheld) were made in the appropriate amount as provided under subpart A of part 2 of subtitle B of title VI.
__(B) Employers with employees residing in different alliance areas._In the case of a regional alliance employer which has employees who reside in more than one alliance area, the Secretary of Labor, in consultation with the Secretary, shall establish a process for the coordination of regional alliance auditing activities among the regional alliances involved.
__(C) Appeal._In the case of an audit conducted by a regional alliance on an employer under this paragraph, an employer or other regional alliance that is aggrieved by the determination in the audit is entitled to review of such audit by the Secretary of Labor in a manner to be provided by such Secretary.
Subpart D_Reductions in Cost Sharing; Income Determinations
SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES.
__(a) Reduction._
__(1) In general._Subject to subsection (b), in the case of a family that is enrolled in a regional alliance health plan and that is either (A) an AFDC or SSI family or (B) is determined under this subpart to have family adjusted income below 150 percent of the applicable poverty level, the family is entitled to a reduction in cost sharing in accordance with this section.
__(2) Timing of reduction._The reduction in cost sharing shall only apply to items and services furnished after the date the application for such reduction is approved under section 1372(c) and before the date of termination of the reduction under this subpart, or, in the case of an AFDC or SSI family, during the period in which the family is such a family.
__(3) Information to providers and plans._Each regional alliance shall provide, through electronic means and otherwise, health care providers and regional alliance health plans with access to such information as may be necessary in order to provide for the cost sharing reductions under this section.
__(b) Limitation._No reduction in cost sharing shall be available for families residing in an alliance area if the regional alliance for the area determines that there are sufficient low-cost plans (as defined in section 6104(b)(3)) that are lower or combination cost sharing plans available in the alliance area to enroll AFDC and SSI families and families with family adjusted income below 150 percent of the applicable poverty level.
__(c) Amount of Cost Sharing Reduction._
__(1) In general._Subject to paragraph (2), the reduction in cost sharing under this section shall be such reduction as will reduce cost sharing to the level of a lower or combination cost sharing plan.
__(2) Additional reduction for afdc and ssi families._In the case of an AFDC or SSI family, in applying paragraph (1) (other than with respect to hospital emergency room services for which there is no emergency medical condition, as defined in section 1867(e)(1) of the Social Security Act) there shall be substituted, for $5, $10, $20, and $25 in the table in section 1135(a), 20 percent of such respective amounts. The dollar amounts substituted by the previous sentence shall be subject to adjustment in the same manner under section 1136 as the dollar amounts otherwise specified in such section.
__(d) Administration._
__(1) In general._In the case of an approved family (as defined in section 1372(b)(3)) enrolled in a regional alliance health plan, the regional alliance shall pay the plan for cost sharing reductions (other than cost sharing reductions under subsection (c)(2)) provided under this section  and included in payments made by the plan to its providers.
__(2) Estimated payments, subject to reconciliation._Such payment shall be made initially on the basis of reasonable estimates of cost sharing reductions incurred by such a plan with respect to approved families and shall be reconciled not less often than quarterly based on actual claims for items and services provided.
__(e) No Cost Sharing for Indians and Certain Veterans and Military Personnel._The provisions of section 6104(a)(3) shall apply to cost sharing reductions under this section in the same manner as such provisions apply to premium discounts under section 6104.
SEC. 1372. APPLICATION PROCESS FOR COST SHARING REDUCTIONS.
__(a) Application._
__(1) In general._A regional alliance eligible family may apply for a determination of the family adjusted income of the family, for the purpose of establishing eligibility for cost sharing reductions under section 1371.
__(2) Form._An application under this section shall include such information as may be determined by the regional alliance (consistent with rules developed by the Secretary) and shall include at least information about the family's employment status and income.
__(b) Timing._
__(1) In general._An application under this section may be filed at such times as the Secretary may provide, including during any open enrollment period, at the time of a move, or after a change in life circumstances (such as unemployment or divorce) affecting class of enrollment or amount of family share or repayment amount.
__(2) Consideration._Each regional alliance shall approve or disapprove an application under this section, and notify the applicant of such decision,  within such period (specified by the Secretary) after the date of the filing of the application.
__(3) Approved family defined._In this section and section 1371, the term ``approved family'' means a family for which an application under this section is approved, until the date of termination of such approval under this section.
__(c) Approval of Application._
__(1) In general._A regional alliance shall approve an application of a family under this section filed in a month if the application demonstrates that that family adjusted income of the family (as defined in subsection (d) and determined under paragraph (2)) is (or is expected to be) less than 150 percent of the applicable poverty level.
__(2) Use of current income._In making the determination under paragraph (1), a regional alliance shall take into account the income for the previous 3-month period and current wages from employment (if any), consistent with rules specified by the Secretary.
__(d) Family Adjusted Income._
__(1) In general._Except as provided in paragraph (4), in this Act the term ``family adjusted income'' means, with respect to a family, the sum of the adjusted incomes (as defined in paragraph (2)) for all members of the family (determined without regard to section 1012).
__(2) Adjusted income._In paragraph (1), the term ``adjusted income'' means, with respect to an individual, adjusted gross income (as defined in section 62(a) of the Internal Revenue Code of 1986)_
__(A) determined without regard to sections  135, 162(l), 911, 931, and 933 of such Code, and
__(B) increased by the amount of interest received or accrued by the individual which is exempt from tax.
__(3) Presence of additional dependents._At the option of an individual, a family may include (and not be required to separate out) the income of other individuals who are claimed as dependents of the family for income tax purposes, but such individuals shall not be counted as part of the family for purposes of determining the size of the family.
__(e) Requirement for Periodic Confirmation and Verification and Notices._
__(1) Confirmation and verification requirement._The continued eligibility of a family for cost sharing reductions under this section is conditioned upon the family's eligibility being_
__(A) confirmed periodically by the regional alliance, and
__(B) verified (through the filing of a new application under this section) by the regional alliance at the time income reconciliation statements are required to be filed under section 1375.
__(2) Rules._The Secretary shall issue rules related to the manner in which alliances confirm and verify eligibility under this section.
__(3) Notices of changes in income and employment status._
__(A) In general._Each approved family shall promptly notify the regional alliance of any material increase in the family adjusted income (as defined by the Secretary).
__(B) Response._If a regional alliance receives notice under subparagraph (A) (or from an employer under section 1602(b)(3)(A)(i)) or otherwise receives information indicating a potential significant change in the family's employment status or increase in adjusted family income, the regional alliance shall promptly take steps necessary to reconfirm the family's eligibility.
__(f) Termination of Cost Sharing Reduction._The regional alliance shall, after notice to the family, terminate the reduction of cost sharing under this subpart for an approved family if the family fails to provide for confirmation or verification or notice required under subsection (c) on a timely basis or the alliance otherwise determines that the family is no longer eligible for such reduction. The previous sentence shall not prevent the family from subsequently reapplying for cost sharing reduction under this section.
__(g) Treatment of AFDC and SSI Recipients._
__(1) No application required._AFDC and SSI families are not required to make an application under this section.
__(2) Notice requirement._Each State (and the Secretary) shall notify each regional alliance, in a manner specified by the Secretary, of the identity (and period of eligibility under the AFDC or SSI programs) of each AFDC and SSI recipient, unless such a recipient elects (in a manner specified by the Secretary) not to accept the reduction of cost sharing under this section.
SEC. 1373. APPLICATION FOR PREMIUM REDUCTIONS AND REDUCTION IN LIABILITIES TO ALLIANCES.
__(a) In General._Any regional alliance eligible family may apply for a determination of the family adjusted income of the family, for the purpose of establishing eligibility for a premium discount under section 6104 or a reduction in liability under section 6113.
__(b) Timing._Such an application may be filed at such times as an application for a cost sharing reduction may be filed under section 1372(b) and also may be filed after the end of the year to obtain a rebate for excess premium payments made during a year.
__(c) Approval of Application._
__(1) In general._A regional alliance shall approve an application of a family under this section filed in a month_
__(A) for a premium discount under section 6104, if the application demonstrates that family adjusted income of the family (as determined under paragraph (2)) is (or is expected to be) less than 150 percent of the applicable poverty level, or
__(B) for a reduction in liability under section 6113, if the application demonstrates that the wage-adjusted income (as defined in subsection 6113(d)) of the family (as determined under paragraph (2)) is (or is expected to be) less than 250 percent of the applicable poverty level.
__(2) Use of current income._In making the determination under paragraph (1), a regional alliance shall take into account the income for the previous 3-month period and current wages from employment (if any) and the statement of estimated income for the year (filed under section 1374(c)), consistent with rules specified by the Secretary.
__(d) Requirement for Periodic Confirmation and Verification and Notices._The provisions of section   (e) of section 1372 shall apply under this section in the same manner as it applies under such section, except that any reference to family adjusted income is deemed a reference to wage-adjusted income.
SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICATION PROCESS.
__(a) Distribution of Applications._Each regional alliance shall distribute applications under this subpart directly to consumers and through employers, banks, and designated public agencies.
__(b) To Whom Application Made._Applications under this subpart shall be filed, by person or mail, with a regional alliance or an agency designated by the State for this purpose. The application may be submitted with an application to enroll with a health plan under this subtitle or separately.
__(c) Income Statement._Each application shall include a declaration of estimated annual income for the year involved.
__(d) Form and Contents._An application for a discount or reduction under this subpart shall be in a form and manner specified by the Secretary and shall require the provision of information necessary to make the determinations required under this subpart.
__(e) Frequency of Applications._
__(1) In general._An application under this subpart may be filed at any time during the year (including, in the case of section 1373, during the reconciliation process).
__(2) Correction of income._Nothing in paragraph (1) shall be construed as preventing an individual or family from, at any time, submitting an application to reduce the amount of premium reduction or reduction of liability under this subpart based upon an increase in income from that stated in the previous application.
__(e) Timing of Reductions and Discounts._
__(1) In general._Subject to reconciliation under section 1375, premium discounts and cost sharing reductions under this subpart shall be applied to premium payments required (and for expenses incurred) after the date of approval of the application under this subpart.
__(2) AFDC and ssi recipients._In the case of an AFDC or SSI family, in applying paragraph (1), the date of approval of benefits under the AFDC or SSI program shall be considered the date of approval of an an application under this subpart.

__(f) Verification._The Secretary shall provide for verification, on a sample basis or other basis, of the information supplied in applications under this part. This verification shall be separate from the reconciliation provided under section 1375.
__(g) Help in Completing Applications._Each regional alliance shall assist individuals in the filing of applications and income reconciliation statements under this subpart.
__(h) Penalties for Inaccurate Information._
__(1) Interest for understatements._Each individual who knowingly understates income reported in an application to a regional alliance under this subpart or otherwise makes a material misrepresentation of information in such an application shall be liable to the alliance for excess payments made based on such understatement or misrepresentation, and for interest on such excess payments at a rate specified by the Secretary.

__(2) Penalties for misrepresentation._In addition to the liability established under paragraph (1), each individual who knowingly misrepresents material information in an application under this subpart to a regional alliance shall be liable to the State in which the alliance is located for $2,000 or, if greater, three times the excess payments made based on such misrepresentation. The State shall provide for the transfer of a significant portion of such amount to the regional alliance involved.
SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM DISCOUNT AND REPAYMENT REDUCTION WITH ACTUAL INCOME.
__(a) In General._In the case of a family whose application for a premium discount or reduction of liability for a year has been approved before the end of the year under this subpart, the family shall, subject to subsection (c) and by the deadline specified in section 1344(b) file with the regional alliance an income reconciliation statement to verify the family's adjusted income or wage-adjusted income, as the case may be, for the previous year. Such a statement shall contain such information as the Secretary may specify. Each regional alliance shall coordinate the submission of such statements with the notice and payment of family payments due under section 1344.


__(b) Reconciliation of Premium Premium Discount and Liability Assistance Based on Actual Income._Based on and using the income reported in the reconciliation statement filed under subsection (a) with respect to a family, the regional alliance shall compute the amount of premium discount or reduction in liability that should have been provided under section 6104 or section 6113 with respect for the family for the year involved. If the amount of such discount or liability reduction computed is_
__(1) greater than the amount that has been provided, the family is liable to the regional alliance to pay (directly or through an increase in future family share of premiums or other payments) a total amount equal to the amount of the excess payment, or
__(2) less than the amount that has been provided, the regional alliance shall pay to the family (directly or through a reduction in future family share of premiums or other payments) a total amount equal to the amount of the deficit.
__(c) No Reconciliation for AFDC and SSI Families; No Reconciliation for Cost Sharing Reductions._No reconciliation statement is required under this section_
__(1) with respect to cost sharing reductions provided under section 1372, or
__(2) for a family that only claims a premium discount or liability reduction under this subpart on the basis of being an AFDC or SSI family.
__(d) Disqualification for Failure to File._In the case of any family that is required to file a statement under this section in a year and that fails to file such a statement by the deadline specified, members of the family shall not be eligible for premium reductions under section 6104 or reductions in liability under section 6113 until such statement is filed. A regional alliance, using rules established by the Secretary, shall waive the application of this subsection if the family establishes, to the satisfaction of the alliance under such rules, good cause for the failure to file the statement on a timely basis.
__(e) Penalties for False Information._Any individual that provides false information in a statement under subsection (a) is subject to the same liabilities as are provided under section 1374(h) for a misrepresentation of material fact described in such section.
__(f) Notice of Requirement._Each regional alliance (directly or in coordination with other regional alliances) shall provide for written notice, at the end of each year, of the requirement of this section to each family which had received premium discount or reduction in liability under this subpart in any month during the preceding year and to which such requirement applies.
__(g) Transmittal of Information; Verification._
__(1) In general._Each participating State shall transmit annually to the Secretary such information relating to the income of families for the previous year as the Secretary may require to verify such income under this subpart.
__(2) Verification._Each participating State may use such information as it has available to it to assist regional alliances in verifying income of families with applications filed under this subpart. The Secretary of the Treasury may, consistent with section 6103 of the Internal Revenue Code of 1986, permit return information to be disclosed and used by a participating State in verifying such income but only in accordance with such section and only if the information is not directly disclosed to a regional alliance.
__(h) Construction._Nothing in this section shall be construed as authorizing reconciliation of any cost sharing reduction provided under this subpart.

PART 4_RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES
SEC. 1381. CONTRACTS WITH HEALTH PLANS.
__(a) Contracts with Plans._Subject to section 1382, each corporate alliance may_
__(1) offer to individuals eligible to enroll under section 1311(c) coverage under an appropriate self-insured health plan (as defined in section 1400(b)), or
__(2) negotiate with a State-certified health plan to enter into a contract with the plan for the enrollment of such individuals under the plan,
or do both.
__(b) Terms of Contracts with State-Certified Health Plans._Contracts under this section between a corporate alliance and a State-certified health plan may contain such provisions (not inconsistent with the requirements of this title) as the alliance and plan may provide, except that in no case does such contract remove the obligation of the sponsor of the corporate alliance to provide for health benefits to corporate alliance eligible individuals consistent with this part.

SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT.
__(a) In General._Each corporate alliance must provide to each eligible enrollee with respect to the alliance a choice of health plans among the plans which have contracts with the alliance under section 1381.
__(b) Offering of Plans by Alliances._A corporate alliance shall include among its health plan offerings for any eligible enrollee at least 3 health plans to enrollees, of which the alliance must offer_
__(1) at least one fee-for-service plan (as defined in section 1322(b)(3)); and
__(2) at least two health plans that are not fee-for-service plans.

SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY CARD.
__(a) In General._
__(1) Enrollment of alliance eligible individuals._Each corporate alliance shall assure that each alliance eligible individual with respect to the alliance is enrolled in a corporate alliance health plan offered by the alliance, and shall establish and maintain methods and procedures consistent with this section sufficient to assure such enrollment. Such methods and procedures shall assure the enrollment of such individuals at the time they first become alliance eligible individuals with respect to the alliance.
__(2) Issuance of health security cards._A corporate alliance is responsible for the issuance of health security cards to corporate alliance eligible individuals under section 1001(b).
__(b) Response to Point-of-Service Notices._If a corporate alliance is notified under section 1323(b)(2) regarding an individual who has received services and appears to be an alliance eligible individual_
__(1)  the alliance shall promptly ascertain the individual's eligibility as an alliance eligible individual; and
__(2) if the alliance determines that the individual is an alliance eligible individual_
__(A) the alliance shall promptly provide for the enrollment of the individual in a health plan offered by the alliance (and notify the Secretary of Labor of such enrollment), and
__(B) the alliance shall forward the claim for payment for the services to the health plan in which the individual is so enrolled and the plan shall make payment to the provider for such claim (in a manner consistent with requirements of the Secretary of Labor).
__(c) Annual Open Enrollment; Enrollment of Family Members; Oversubscription of Plans._The provisions of subsections (d) through (f) of section 1323 shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance.
__(d) Termination._
__(1) In general._The provisions of section 1323(g)(1) shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance.
__(2) Failure to pay premiums._If a corporate alliance fails to make premium payments to a health plan, the plan, after reasonable written notice to the alliance and the Secretary of Labor, may terminate coverage (and any contract with the alliance under this subpart). If such coverage is terminated the corporate alliance is responsible for the prompt enrollment of alliance eligible individuals whose coverage is terminated in another corporate alliance health plan.
__(e) Corporate Alliance Transition._Each corporate alliance must provide coverage_
__(1) as of the first day of any month in which an individual first becomes a corporate alliance eligible individual, and
__(2) through the end of the month in the case of a corporate alliance eligible individual who loses such eligibility during the month.


SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PREMIUM AREAS.
__(a) Application of Community-Rated Premiums._The premiums charged by a corporate alliance for enrollment in a corporate alliance health plan (not taking into account any employer premium payment required under section 6131) shall vary only by class of family enrollment (specified in section 1011(c)) and by premium area.
__(b) Designation of Premium Areas._
__(1) Designation._Each corporate alliance shall designate premium areas to be used for the imposition of premiums (and calculation of employer premium payments) under this Act.
__(2) Conditions._The boundaries of such areas shall reasonably reflect labor market areas or health care delivery areas and shall be consistent with rules the Secretary of Labor establishes (consistent with paragraph (3)) so that within such areas there are not substantial differences in average per capita health care expenditures.
__(3) Anti-redlining._The provisions of paragraphs (4) and (5) of section 1202(b) (relating to redlining and metropolitan statistical areas) shall apply to the establishment of premium areas in the same manner as they apply to the establishment of the boundaries of regional alliance areas.
__(c) Applications of Classes of Enrollment._
__(1) In general._The premiums shall be applied under this section based on class of family enrollment and shall vary based on such class in accordance with factors specified by the corporate alliance.
__(2) Basis for factors._Such factors shall be the same in each premium and shall take into account such appropriate considerations (including the considerations the Board takes into account in the establishment of premium class factors under section 1531 and the costs of regional alliance health plans providing the comprehensive benefit package for families enrolled in the different classes) as the alliance considers appropriate, consistent with rules the Secretary of Labor establishes.
__(d) Special Treatment of Multiemployer Alliances._The Secretary of Labor shall provide for such exceptions to the requirements of this section in the case of a corporate alliance with a sponsor described in section 1311(b)(1)(B) as may be appropriate to reflect the unique and historical relationship between the employers and employees under such alliances.


SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.
__Each corporate alliance shall make an additional contribution towards the enrollment in health plans of the alliance by certain low-wage families in accordance with section 6131(b)(2).
SEC. 1386. CONSUMER INFORMATION AND MARKETING; DATA COLLECTION AND QUALITY; ADDITIONAL DUTIES.
__The provisions of sections 1325(a), 1327(a), 1328(a), and 1328(b) shall apply to a corporate alliance in the same manner as such provisions apply to a regional alliance.
SEC. 1387. PLAN AND INFORMATION REQUIREMENTS.
__(a) In General._A corporate alliance shall provide a written submission to the Secretary of Labor (in such form as the Secretary may require) detailing how the corporate alliance will carry out its activities under this part.
__(b) Annual Information._A corporate alliance shall provide to the Secretary of Labor each year, in such form and manner as the Secretary may require, such information as the Secretary may require in order to monitor the compliance of the alliance with the requirements of this part.
__(c) Annual Notice of Employees or Participants._
__(1) Corporate alliance._Each corporate alliance shall submit to the Secretary of Labor, by not later than March 1 of each year, information on the number of full-time employees or participants obtaining coverage through the alliance as of January 1 of that year.
__(2) Employers that become large employers._Each employer that is not a corporate alliance but employs 5,000 full-time employees as of January 1 of a year, shall submit to the Secretary of Labor, by not later than March 1 of the year, information on the number of such employees.
SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EMPLOYEES.
__(a) Management of Funds._The management of funds by a corporate alliance shall be subject to the applicable fiduciary requirements of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, together with the applicable enforcement provisions of part 5 of subtitle B of title I of such Act.
__(b) Management of Finances and Records; Accounting System._Each corporate alliance shall comply with standards relating to the management of finances and records and accounting systems as the Secretary of Labor shall specify.
SEC. 1389. COST CONTROL.
__Each corporate alliance shall control covered expenditures in a manner that meets the requirements of part 2 of subtitle A of title VI.

SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOYERS TO CORPORATE ALLIANCES.
__(a) Large Employer Alliances._In the case of a corporate alliance with a sponsor described in section 1311(b)(1)(A), the sponsor shall provide for the funding of benefits, through insurance or otherwise, consistent with section 6131, the applicable solvency requirements of sections 1395 and 1396, and any rules established by the Secretary of Labor.
__(b) Other Alliances._In the case of a corporate alliance with a sponsor described in subparagraph (B) or (C) of section 1311(b)(1), a corporate alliance employer shall make payment of the employer premiums required under section 6131 under rules established by the corporate alliance, which rules shall be consistent with rules established by the Secretary of Labor.

SEC. 1391. COORDINATION OF PAYMENTS.
__(a) Payments of Certain Amounts to Regional Alliances._In the case of a married couple in which one spouse is a qualifying employee of a regional alliance employer and the other spouse is a qualifying employee of a corporate alliance employer, if the couple is enrolled with a regional alliance health plan the corporate alliance (which receives employer premium payments from such corporate alliance employer with respect to such employee) shall pay to the regional alliance the amounts so paid.
__(b) Payments of Certain Amounts to Corporate Alliances._In the case of a married couple in which one spouse is a qualifying employee of a corporate alliance employer and the other spouse is a qualifying employee of another corporate alliance employer, the corporate alliance of the corporate alliance health plan in which the couple is not enrolled shall pay to the corporate alliance of the plan in which the couple is enrolled any employer premium payments received from such corporate alliance employer with respect to such employee.
SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR ENFORCEMENT OF CERTAIN REQUIREMENTS.
__The provisions of sections 502 (relating to civil enforcement) and 504 (relating to investigative authority) of the Employee Retirement Income Security Act of 1974  shall apply to enforcement by the Secretary of Labor of this part in the same manner and to same extent as such provisions apply to enforcement of title I of such Act.
SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTECTIONS TO ENROLLED INDIVIDUALS.
__The provisions of sections 510 (relating to interference with rights protected under Act) and 511 (relating to coercive interference) of the Employee Retirement Income Security Act of 1974 shall apply, in relation to the provisions of this Act, with respect to individuals enrolled under corporate alliance health plans in the same manner and to the same extent as such provisions apply, in relation to the provisions of the Employee Retirement Income Security Act of 1974, with respect to participants and beneficiaries under employee welfare benefit plans covered by title I of such Act.
SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS.
__(a) In General._The Secretary of Labor shall ensure that each corporate alliance health plan which is a self-insured plan maintains plan assets in trust as provided in section 403 of the Employee Retirement Income Security Act of 1974_
__(1) without any exemption under section 403(b)(4) of such Act, and
__(2) in amounts which the Secretary determines are sufficient to provide at any time for payment to health care providers of all outstanding balances owed by the plan at such time.
The requirements of the preceding sentence may be met through letters of credit, bonds, or other appropriate security to the extent provided in regulations of the Secretary.
__(b) Disclosure._Each self-insured corporate alliance health plan shall notify the Secretary at such time as the financial reserve requirements of this section are not being met. The Secretary may assess a civil money penalty of not more than $100,000 against any corporate alliance for any failure to provide such notification in such form and manner and within such time periods as the Secretary may prescribe by regulation.
SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT CORPORATE ALLIANCE HEALTH PLANS.
__(d) Appointment of Secretary as Trustee for Insolvent Plans.Whenever the Secretary of Labor determines that a corporate alliance health plan which is a self-insured plan will be unable to provide benefits when due or is otherwise in a financially hazardous condition as defined in regulations of the Secretary, the Secretary shall, upon notice to the plan, apply to the appropriate United States district court for appointment of the Secretary as trustee to administer the plan for the duration of the insolvency. The plan may appear as a party and other interested persons may intervene in the proceedings at the discretion of the court. The court shall appoint the Secretary trustee if the court determines that the trusteeship is necessary to protect the interests of the covered individuals or health care providers or to avoid any unreasonable deterioration of the financial condition of the plan or any unreasonable increase in the liability of the Corporate Alliance Insolvency Fund. The trusteeship of the Secretary shall continue until the conditions described in the first sentence of this subsection are remedied or the plan is terminated.
__(b) Powers as Trustee._The Secretary of Labor, upon appointment as trustee under subsection (a), shall have the power_
__(1) to do any act authorized by the plan, this Act, or other applicable provisions of law to be done by the plan administrator or any trustee of the plan,
__(2) to require the transfer of all (or any part) of the assets and records of the plan to the Secretary as trustee,
__(3) to invest any assets of the plan which the Secretary holds in accordance with the provisions of the plan, regulations of the Secretary, and applicable provisions of law,
__(4) to do such other acts as the Secretary deems necessary to continue operation of the plan without increasing the potential liability of the Corporate Alliance Insolvency Fund, if such acts may be done under the provisions of the plan,
__(5) to require the corporate alliance, the plan administrator, any contributing employer, and any employee organization representing covered individuals to furnish any information with respect to the plan which the Secretary as trustee may reasonably need in order to administer the plan,
__(6) to collect for the plan any amounts due the plan and to recover reasonable expenses of the trusteeship,
__(7) to commence, prosecute, or defend on behalf of the plan any suit or proceeding involving the plan,
__(8) to issue, publish, or file such notices, statements, and reports as may be required under regulations of the Secretary or by any order of the court,
__(9) to terminate the plan and liquidate the plan assets in accordance with applicable provisions of this Act and other provisions of law, to restore the plan to the responsibility of the corporate alliance, or to continue the trusteeship,
__(10) to provide for the enrollment of individuals covered under the plan in an appropriate regional alliance health plan, and
__(11) to do such other acts as may be necessary to comply with this Act or any order of the court and to protect the interests of enrolled individuals and health care providers.
__(b) Notice of Appointment._As soon as practicable after the Secretary's appointment as trustee, the Secretary shall give notice of such appointment to_
__(1) the plan administrator,
__(2) each enrolled individual,
__(3) each employer who may be liable for contributions to the plan, and
__(4) each employee organization which, for purposes of collective bargaining, represents enrolled individuals.
__(d) Additional Duties._Except to the extent inconsistent with the provisions of this Act or part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or as may be otherwise ordered by the court, the Secretary of Labor, upon appointment as trustee under this subsection, shall be subject to the same duties as those of a trustee under section 704 of title 11, United States Code, and shall have the duties of a fiduciary for purposes of such part 4.
__(e) Other Proceedings._An application by the Secretary of Labor under this subsection may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding, or any proceeding to reorganize, conserve, or liquidate such plan or its property, or any proceeding to enforce a lien against property of the plan.
__(f) Jurisdiction of Court._
__(1) In general._Upon the filing of an application for the appointment as trustee or the issuance of a decree under this subsection, the court to which the application is made shall have exclusive jurisdiction of the plan involved and its property wherever located with the powers, to the extent consistent with the purposes of this subsection, of a court of the United States having jurisdiction over cases under chapter 11 of title 11, United States Code. Pending an adjudication under paragraph (1) such court shall stay, and upon appointment by it of the Secretary of Labor as trustee, such court shall continue the stay of, any pending mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the plan, the sponsoring alliance, or property of such plan or alliance, and any other suit against any receiver, conservator, or trustee of the plan, the sponsoring alliance, or property of the plan or alliance. Pending such adjudication and upon the appointment by it of the Secretary as trustee, the court may stay any proceeding to enforce a lien against property of the plan or the sponsoring alliance or any other suit against the plan or the alliance.
__(2) Venue._An action under this subsection may be brought in the judicial district where the plan administrator resides or does business or where any asset of the plan is situated. A district court in which such action is brought may issue process with respect to such action in any other judicial district.
__(g) Personnel._In accordance with regulations of the Secretary of Labor, the Secretary shall appoint, retain, and compensate accountants, actuaries, and other professional service personnel as may be necessary in connection with the Secretary's service as trustee under this subsection.
SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE SECRETARY.
__(a) In General._Subject to subsection (b), the Secretary shall guarantee the payment of all benefits under a corporate alliance health plan which is a self-insured plan while such plan is under the Secretary's trusteeship under section 1396.
__(b) Limitations._Any increase in the amount of benefits under the plan resulting from a plan amendment which was made, or became effective, whichever is later, within 180 days (or such other reasonable time as may be prescribed in regulations of the Secretary of Labor) before the date of the Secretary's appointment as trustee of the plan shall be disregarded for purposes of determining the guarantee under this section.
__(c) Corporate Alliance Health Plan Insolvency Fund._
__(1) Establishment._The Secretary of Labor shall establish a Corporate Alliance Health Plan Insolvency Fund (hereinafter in this section referred to as the ``Fund'') from which the Secretary shall make payment of all guaranteed benefits under this section.
__(2) Receipts and disbursements._
__(A) Receipts._The Fund shall be credited with_
__(i) funds borrowed under paragraph (4),
__(ii) assessments collected under section 1397, and
__(iii) earnings on investment of the fund.
__(B) Disbursements._The Fund shall be available_
__(i) for making such payments as the Secretary determines are necessary to pay benefits guaranteed under this section,
__(ii) to repay the Secretary of the Treasury such sums as may be borrowed (together with interest thereon) under paragraph (4), and
__(iii) to pay the operational and administrative expenses of the Fund.
__(3) Borrowing authority._At the direction of the Secretary of Labor, the Fund may, to the extent necessary to carry out the purposes of paragraph (1), issue to the Secretary of the Treasury notes or other obligations, in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations by the Fund. The Secretary of the Treasury shall purchase any notes or other obligations issued by the Fund under this paragraph, and for that purpose the Secretary of the Treasury may use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, United States Code and the purposes for which securities may be issued under such chapter are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by such Secretary under this paragraph. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States.
__(4) Investment authority._Whenever the Secretary of Labor determines that the moneys of the Fund are in excess of current needs, the Secretary may request the investment of such amounts as the Secretary determines advisable by the Secretary of the Treasury in obligations issued or guaranteed by the United States, but, until all borrowings under paragraph (4) have been repaid, the obligations in which such excess moneys are invested may not yield a rate of return in excess of the rate of interest payable on such borrowings.
SEC. 1397. IMPOSITION AND COLLECTION OF PERIODIC ASSESSMENTS ON SELF-INSURED CORPORATE ALLIANCE PLANS.
__(a) Imposition of Assessments._Upon a determination that additional receipts to the Fund are necessary in order to enable the Fund to repay amounts borrowed by the Fund under section 1396(c)(3) while maintaining a balance sufficient to ensure the solvency of the Fund, the Secretary may impose assessments under this section. The Secretary shall prescribe from time to time such schedules of assessment rates and bases for the application of such rates as may be necessary to provide for such repayments.
__(b) Uniformity of Assessments._The assessment rates prescribed by the Secretary for any period shall be uniform for all plans, except that the Secretary may vary the amount of such assessments by category, or waive the application of such assessments by category, taking into account differences in the financial solvency of, and financial reserves maintained by, plans in each category.
__(c) Limitation on Amount of Assessment._The total amount assessed against a corporate alliance health plan under this section during a year may not exceed 2 percent of the total premiums paid to the plan with respect to corporate alliance eligible individuals enrolled with the plan during the year.
__(d) Payment of Assessments._
__(1) Obligation to pay._The designated payor of each plan shall pay the assessments imposed by the Secretary of Labor under this section with respect to that plan when they are due. Assessments under this section are payable at the time, and on an estimated, advance, or other basis, as determined by the Secretary. Assessments shall continue to accrue until the plan's assets are distributed pursuant to a termination procedure or the Secretary is appointed to serve as trustee of the plan under section 1395.
__(2) Late payment charges and interest._
__(A) Late payment charges._If any assessment is not paid when it is due, the Secretary may assess a late payment charge of not more than 100 percent of the assessment payment which was not timely paid.
__(B) Waivers._Subparagraph (A) shall not apply to any assessment payment made within 60 days after the date on which payment is due, if before such date, the designated payor obtains a waiver from the Secretary of Labor based upon a showing of substantial hardship arising from the timely payment of the assessment. The Secretary may grant a waiver under this subparagraph upon application made by the designated payor, but the Secretary may not grant a waiver if it appears that the designated payor will be unable to pay the assessment within 60 days after the date on which it is due.
__(C) Interest._If any assessment is not paid by the last date prescribed for a payment, interest on the amount of such assessment at the rate imposed under section 6601(a) of the Internal Revenue Code of 1986 shall be paid for the period from such last date to the date paid.
__(e) Civil Action upon Nonpayment._If any designated payor fails to pay an assessment when due, the Secretary of Labor may bring a civil action in any district court of the United States within the jurisdiction of which the plan assets are located, the plan is administered, or in which a defendant resides or is found, for the recovery of the amount of the unpaid assessment, any late payment charge, and interest, and process may be served in any other district. The district courts of the United States shall have jurisdiction over actions brought under this subsection by the Secretary without regard to the amount in controversy.
__(f) Guarantee Held Harmless._The Secretary of Labor shall not cease to guarantee benefits on account of the failure of a designated payor to pay any assessment when due.
__(g) Designated Payor Defined._
__(1) In general._For purposes of this section, the term ``designated payor'' means_
__(A) the employer or plan administrator in any case in which the eligible sponsor of the corporate alliance health plan is described in subparagraph (A) or (D) of section 1311(b)(1); and
__(B) the contributing employers or the plan administrator in any case in which the eligible sponsor of the corporate alliance health plan is described in subparagraph (B) or (C) of section 1311(b)(1).
__(2) Controlled groups._If an employer is a member of a controlled group, each member of such group shall be jointly and severally liable for any assessments required to be paid by such employer. For purposes of the preceding sentence, the term ``controlled group'' means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.

Title I, Subtitle E
Subtitle E_Health Plans
SEC. 1400. HEALTH PLAN DEFINED.
__(a) In General._In this Act, the term ``health plan'' means a plan that provides the comprehensive benefit package and meets the requirements of parts 1, 3, and 4.
__(b) Appropriate Self-Insured Health Plan._In this Act, the term ``appropriate self-insured health plan'' means a group health plan (as defined in section 3(42) of the Employee Retirement Income Security Act of 1974) with respect to which the applicable requirements of title I of the Employee Retirement Income Security Act of 1974 are met and which is a self-insured plan.
__(c) State-Certified Health Plan._In this Act, the term ``State-certified health plan'' means a health plan that has been certified by a State under section 1203(a) (or, in the case in which the Board is exercising certification authority under section 1522(e), that has been certified by the Board).
__(d) Applicable Regulatory Authority Defined._In this subtitle, the term ``applicable regulatory authority'' means_
__(1) with respect to a self-insured health plan, the Secretary of Labor, or
__(2) with respect to a State-certified health plan, the State authority responsible for certification of the plan.
PART 1_REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE
SEC. 1401. APPLICATION OF REQUIREMENTS.
__No plan shall be treated under this Act as a health plan_
__(1) unless the plan is a self-insured plan or a State-certified plan; or
__(2) on and after the effective date of a finding by the applicable regulatory authority that the plan has failed to comply with such applicable requirements.

SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT AND COVERAGE.
__(a) No Underwriting._
__(1) In general._Subject to paragraph (2), each health plan offered by a regional alliance or a corporate alliance must accept for enrollment every alliance eligible individual who seeks such enrollment. No plan may engage in any practice that has the effect of attracting or limiting enrollees on the basis of personal characteristics, such as health status, anticipated need for health care, age, occupation, or affiliation with any person or entity.
__(2) Capacity limitations._With the approval of the applicable regulatory authority, a health plan may limit enrollment because of the plan's capacity to deliver services or to maintain financial stability. If such a limitation is imposed, the limitation may not be imposed on a basis referred to in paragraph (1).
__(b) No Limits on Coverage; No Pre-Existing Condition Limits._A health plan may not_
__(1) terminate, restrict, or limit coverage for the comprehensive benefit package  in any portion of the plan's service area for any reason, including nonpayment of premiums;
__(2) cancel coverage for any alliance eligible individual until that individual is enrolled in another applicable health plan;
__(3) exclude coverage of an alliance eligible individual because of existing medical conditions;
__(4) impose waiting periods before coverage begins; or
__(5) impose a rider that serves to exclude coverage of particular eligible individuals.
__(c) Anti-Discrimination._
__(1) In general._No health plan may engage (directly or through contractual arrangements) in any activity, including the selection of a service area, that has the effect of discriminating against an individual on the basis of race, national origin, gender, income, health status, or anticipated need for health services.
__(2) Selection of providers for plan network._In selecting among providers of health services for membership in a provider network, or in establishing the terms and conditions of such membership, a health plan may not engage in any practice that has the effect of discriminating against a provider_
__(A) based on the race, national origin, or gender of the provider; or
__(B) based on the income, health status, or anticipated need for health services of a patient of the provider.
__(3) Normal Operation of Health Plan._Except in the case of intentional discrimination, it shall not be a violation of this subsection, or of any regulation issued under this subsection, for any person to take any action otherwise prohibited under this subsection, if the action is necessary to the normal operation of the health plan.
__(4) Regulations._Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall issue regulations in an accessible form to carry out this subsection.
__(d) Requirements for Plans Offering Lower Cost Sharing._Each health plan that offers enrollees the lower cost sharing schedule referred to in section 1131_
__(1) shall apply such schedule to all items and services in the comprehensive benefit package;
__(2) shall offer enrollees the opportunity to obtain coverage for out-of-network items and services (as described in subsection (f)(2)); and
__(3) notwithstanding section 1403, in the case of an enrollee who obtains coverage for such items and services, may charge an alternative premium to take into account such coverage.

__(e) Treatment of Cost Sharing._Each health plan, in providing benefits in the comprehensive benefit package_
__(1) shall include in its payments to providers, such additional reimbursement as may be necessary to reflect cost sharing reductions to which individuals are entitled under section 1371, and
__(2) shall maintain such claims or encounter records as may be necessary to audit the amount of such additional reimbursements and the individuals for which such reimbursement is provided.

__(f) In-Network and Out-of-Network Items and Services Defined._
__(1) In-network items and services._For purposes of this Act, the term ``in-network'', when used with respect to items or services described in this subtitle, means items or services provided to an individual enrolled under a health plan by a health care provider who is a member of a provider network of the plan (as defined in paragraph (3)).
__(2) Out-of-network items and services._For purposes of this Act, the term ``out-of network'', when used with respect to items or services described in this subtitle, means items or services provided to an individual enrolled under a health plan by a health care provider who is not a member of a provider network of the plan (as defined in paragraph (3)).
__(3) Provider network defined._A ``provider network'' means, with respect to a health plan, providers who have entered into an agreement with the plan under which such providers are obligated to provide items and services in the comprehensive benefit package to individuals enrolled in the plan, or have an agreement to provide services on a fee-for-service basis.
__(g) Relation to Detention._A health plan is not required to provide any reimbursement to any detention facility for services performed in that facility for detainees in the facility.


SEC. 1403. COMMUNITY RATING.
__(a) Regional Alliance Health Plans._Each regional alliance health plan may not vary the premium imposed with respect to residents of an alliance area, except as may be required under section 6102(a) with respect to different types of individual and family coverage under the plan.
__(b) Corporate Alliance Health Plans._Each corporate alliance health plan may not vary the premium imposed with respect to individuals enrolled in the plan, except as may be required under section 1364 with respect to different types of individual and family coverage under the plan.




SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION.
__(a) Regional Alliance Marketing Restrictions._
__(1) In general._The contract entered into between a regional alliance and a regional alliance health plan shall prohibit the distribution by the health plan of marketing materials within the regional alliance that contain false or materially misleading information and shall provide for prior approval by the regional alliance of any marketing materials to be distributed by the plan.

__(2) Entire market._A health plan offered by a health alliance may not distribute marketing materials to an area smaller than the entire area served by the plan.
__(3) Prohibition of tie-ins._A regional alliance health plan, and any agency of such a plan, may not seek to influence an individual's choice of plans in conjunction with the sale of any other insurance.
__(b) Information Available._
__(1) In general._Each regional alliance health plan must provide to the regional alliance and make available to alliance eligible individuals and health care professionals complete and timely information concerning the following:
__(A) Costs.
__(B) The identity, locations, qualifications, and availability of participating providers.
__(C) Procedures used to control utilization of services and expenditures.
__(D) Procedures for assuring and improving the quality of care.
__(E) Rights and responsibilities of enrollees.
__(F) Information on the number of plan members who disenroll from the plan.
__(2) Prohibition against certification of plans providing inaccurate information._No regional alliance health plan may be a State-certified health plan under this title if the State determines that the plan submitted materially inaccurate information under paragraph (1).

__(c) Advance Directives._Each self-insured health plan and each State-certified health plan shall meet the requirement of section 1866(f) of the Social Security Act (relating to maintaining written policies and procedures respecting advance directives) in the same manner as such requirement relates to organizations with contracts under section 1876 of such Act.
SEC. 1405. GRIEVANCE PROCEDURE.
__(a) In General._Each health plan must establish a grievance procedure for enrollees to use in pursuing complaints. Such procedure shall be consistent with subtitle C of title V.
__(b) Additional Remedies._If the grievance procedure fails to resolve an enrollee's complaint_
__(1) in the case of an enrollee of a regional alliance health plan, the enrollee has the option of seeking assistance from the office of the ombudsman for the regional alliance established under section 1326(a), and
__(2) the enrollee may pursue additional legal remedies, including those provided under subtitle C of title V.
SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.
__(a) Requirement._Each health plan must enter into such agreements with health care providers or have such other arrangements as may be necessary to assure the provision of all services covered by the comprehensive benefit package to eligible individuals enrolled with the plan.
__(b) Emergency and Urgent Care Services._
__(1) In general._Each health plan must cover emergency and urgent care services provided to enrollees, without regard to whether or not the provider furnishing such services has a contractual (or other) arrangement with the plan to provide items or services to enrollees of the plan.
__(2) Payment amounts._In the case of  emergency and urgent care provided to an enrollee outside of a health plan's service area, the payment amounts of the plan shall be based on the fee for service rate schedule established by the regional alliance for the alliance area where the services were provided.
__(c) Application of Fee Schedule._
__(1) In general._Subject to paragraph (2), each regional alliance health plan or corporate alliance health plan that provides for payment for services on a fee-for-service basis shall make such payment in the amounts provided under the fee schedule established by the regional alliance under section 1322(c) (or, in the case of a plan offered in a State that has established a Statewide fee schedule under section 1322(c)(3), under such Statewide fee schedule).
__(2) Reduction for providers voluntarily reducing charges._If a provider under a health plan voluntarily agrees to reduce the amount charged to an individual enrolled under the plan, the plan shall reduce the amount otherwise determined under the fee schedule applicable under paragraph (1) by the proportion of the reduction in such amount charged.
__(3) Reduction for noncomplying plan._Each regional alliance health plan that is a noncomplying plan shall provide for reductions in payments under the fee schedule to providers that are not participating providers in accordance with section 6012(b).
__(d) Prohibition Against Balance Billing; Requirement of Direct Billing._
__(1) Prohibition of balance billing._A provider may not charge or collect from an enrollee a fee in excess of the applicable payment amount under the applicable fee schedule under subsection (c), and the health plan and its enrollees are not legally responsible for payment of any amount in excess of such applicable payment amount for items and services covered under the comprehensive benefits package.
__(2) Direct billing._A provider may not charge or collect from an enrollee amounts that are payable by the health plan (including any cost sharing reduction assistance payable by the plan) and shall submit charges to such plan in accordance with any applicable requirements of part 1 of subtitle B of title V (relating to health information systems).
__(3) Coverage under agreements with plans._The agreements or other arrangements entered into under subsection (a) between a health plan and the health care providers providing the comprehensive benefit package to individuals enrolled with the plan shall prohibit a provider from engaging in balance billing described in paragraph (1).
__(e) Imposition of Participating Provider Assessment in Case of a Noncomplying Plan._Each health plan shall provide that if the plan is a noncomplying plan for a year under section 6012, payments to participating providers shall be reduced by the applicable network reduction percentage under such section.



SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.
__(a) Laws Restricting Plans Other Than Fee-for-Service Plans._Except as may otherwise be provided in this section, no State law shall apply to any services provided under a health plan that is not a fee-for-service plan (or a fee-for-service component of a plan) if such law has the effect of prohibiting or otherwise restricting plans from_
__(1) except as provided in section 1203, limiting the number and type of health care providers who participate in the plan;
__(2) requiring enrollees to obtain health services (other than emergency services) from participating providers or from providers authorized by the plan;
__(3) requiring enrollees to obtain a referral for treatment by a specialized physician or health institution;
__(4) establishing different payment rates for participating providers and providers outside the plan;
__(5) creating incentives to encourage the use of participating providers; or
__(6) requiring the use single-source suppliers for pharmacy, medical equipment, and other health products and services.
__(b) Preemption of State Corporate Practice Acts._Any State law related to the corporate practice of medicine and to provider ownership of health plans or other providers shall not apply to arrangements between health plans that are not fee-for-service plans and their participating providers.
__(c) Participating Provider Defined._In this title, a ``participating provider'' means, with respect to a health plan, a provider of health care services who is a member of a provider network of the plan (as described in section 1402(f)(3)).
SEC. 1408. FINANCIAL SOLVENCY.
__Each regional alliance health plan must_
__(1) meet or exceed minimum capital requirements established by States under section 1204(a);
__(2) in the case of a plan operating in a State, must participate in the guaranty fund established by the State under section 1204(c); and
__(3) meet such other requirements relating to fiscal soundness as the State may establish (subject to the establishment of any alternative standards by the Board).

SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING POLICY.
__Each regional alliance health plan shall offer a cost sharing policy (as defined in section 1421(b)(2)) to each eligible family enrolled under the plan.
SEC. 1410. QUALITY ASSURANCE.
__Each health plan shall comply with such quality assurance requirements as are imposed under subtitle A of title V with respect to such a plan.
SEC. 1411. PROVIDER VERIFICATION.
__Each health plan shall_
__(1) verify the credentials of practitioners and facilities;
__(2) ensure that all providers participating in the plan meet applicable State licensing and certification standards;
__(3) oversee the quality and performance of participating providers, consistent with section 1410; and
__(4) investigate and resolve consumer complaints against participating providers.
SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MANAGEMENT PROTOCOLS.
__Each health plan shall disclose to enrollees (and prospective enrollees) the protocols used by the plan for controlling utilization and costs.
SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND REPORTING.
__(a) In General._Each health plan shall comply with the confidentiality, data management, and reporting requirements imposed under subtitle B of title V.
__(b) Treatment of Electronic Information._
__(1) Accuracy and reliability._Each health plan shall take such measures as may be necessary to ensure that health care information in electronic form that the plan, or a member of a provider network of the plan, collects for or transmits to the Board under subtitle B of title V is accurate and reliable.
__(2) Privacy and security._Each health plan shall take such measures as may be necessary to ensure that health care information described in paragraph (1) is not distributed to any individual or entity in violation of a standard promulgated by the Board under part 2 of subtitle B of title V.




SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM.
__Each regional alliance health plan of a State that has established a reinsurance system under section 1203(g) shall participate in the system in the manner specified by the State.


PART 2_REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE
SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL INSURANCE.
__(a) In General._An entity may offer a supplemental insurance policy but only if_
__(1) in the case of a supplemental health benefit policy (as defined in subsection (b)(1)), the entity and the policy meet the requirements of section 1422; and
__(2) in the case of a cost sharing policy (as defined in subsection (b)(2)), the entity and the policy meet the requirements of section 1423.



__(b) Policies Defined._
__(1) Supplemental health benefit policy._
__(A) In general._In this part, the term ``supplemental health benefit policy'' means a health insurance policy or health benefit plan offered to an alliance-eligible individual which provides_
__(i) coverage for services and items not included in the comprehensive benefit package, or
__(ii) coverage for items and services included in such package but not covered because of a limitation in amount, duration, or scope provided under such title,
or both.
__(B) Exclusions._Such term does not include the following:
__(i) A cost sharing policy (as defined in paragraph (2)).
__(ii) A long-term care insurance policy (as defined in section 2304(10)).
__(iii) Insurance that limits benefits with respect to specific diseases (or conditions).
__(iv) Hospital or nursing home indemnity insurance.
__(v) A medicare supplemental policy (as defined in section 1882(g) of the Social Security Act).
__(vi) Insurance with respect to accidents.

__(2) Cost sharing policy._In this part, the term ``cost sharing policy'' means a health insurance policy or health benefit plan offered to an alliance-eligible individual which provides coverage for deductibles, coinsurance, and copayments imposed as part of the comprehensive benefit package under title II, whether imposed under a higher cost sharing plan or with respect to out-of-network providers.
SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BENEFIT POLICIES.
__(a) Prohibiting Duplication of Coverage._
__(1) In general._No health plan, insurer, or any other person may offer_
__(A) to any eligible individual a supplemental health benefit policy that duplicates any coverage provided in the comprehensive benefit package; or
__(B) to any medicare-eligible individual a supplemental health benefit policy that duplicates any coverage provided under part B of the medicare program.
__(2) Exception for medicare-eligible individuals._For purposes of this subsection, for the period in which an individual is a medicare-eligible individual and also is an alliance-eligible individual (and is enrolled under a regional alliance or corporate alliance health plan), paragraph (1)(A) (and not paragraph (1)(B)) shall apply.
__(b) No Limitation on Individuals Offered Policy._
__(1) In general._Except as provided in paragraph (2), each entity offering a supplemental health benefit policy must accept for enrollment every individual who seeks such enrollment, subject to capacity and financial limits.
__(2) Exception for certain offerors._Paragraph (1) shall not apply to any supplemental health benefit policy offered to an individual only on the basis of_
__(A) the individual's employment (in the case of a policy offered by the individual's employer); or
__(B) the individual's membership or enrollment in a fraternal, religious, professional, educational, or other similar organization.
__(c) Restrictions on Marketing Abuses._Not later than January 1, 1996, the Board shall develop (in consultation with the States) minimum standards that prohibit marketing practices by entities offering supplemental health benefit policies that involve:
__(1) Providing monetary incentives for or tying or otherwise conditioning the sale of the policy to enrollment in a regional alliance health plan of the entity.
__(2) Using or disclosing to any party information about the health status or claims experience of participants in a regional alliance health plan for the purpose of marketing such a policy.
__(d) Civil Monetary Penalty._An entity that knowingly and willfully violates any provision of this section with respect to the offering of a supplemental health benefit policy to any individual shall be subject to a civil monetary penalty (not to exceed $10,000) for each such violation.
SEC. 1423. STANDARDS FOR COST SHARING POLICIES.
__(a) Rules for Offering of Policies._Subject to subsection (f), a cost sharing policy may be offered to an individual only if_
__(1) the policy is offered by the regional alliance health plan in which the individual is enrolled;
__(2) the regional alliance health plan offers the policy to all individuals enrolled in the plan;
__(3) the plan offers each such individual a choice of a policy that provides standard coverage and a policy that provides maximum coverage (in accordance with standards established by the Board); and
__(4) the policy is offered only during the annual open enrollment period for regional alliance health plans (described in section 1323(d)(1)).
__(b) Prohibition of Coverage of Copayments._Each cost sharing policy may not provide any benefits relating to any copayments established under the schedule of copayments and coinsurance under section 1135.



__(c) Equivalent Coverage for All Services._Each cost sharing policy must provide coverage for items and services in the comprehensive benefit package to the same extent as the policy provides coverage for all items and services in the package.

__(d) Requirements for Pricing._
__(1) In general._The price of any cost sharing policy shall_
__(A) be the same for each individual to whom the policy is offered;
__(B) take into account any expected increase in utilization resulting from the purchase of the policy by individuals enrolled in the regional alliance health plan; and
__(C) not result in a loss-ratio of less than 90 percent.
__(2) Loss-ratio defined._In paragraph (1)(C), a ``loss-ratio'' is the ratio of the premium returned to the consumer in payout relative to the total premium collected.

__(e) Loss of State Certification for Regional Alliance Health Plans Failing to Meet Standards._A State may not certify a regional alliance health plan that offers a cost sharing policy unless the plan and the policy meet the standards described in this section.
__(f) Special Rules for FEHBP Supplemental Plans._Subsection (a) shall not apply to an FEHBP supplemental plan described in section 8203(f)(1), but only if the plan meets the following requirements:
__(1) The plan must be offered to all individuals to whom such a plan is required to be offered under section 8204.
__(2) The plan must offers each such individual a choice of a policy that provides standard coverage and a policy that provides maximum coverage (in accordance with standards established by the Board under subsection (a)(3)).
__(3) The plan is offered only during the annual open enrollment period for regional alliance health plans (described in section 1323(d)(1)).
__(4)(A) The price of the plan shall include an amount, established in accordance with rules established by the Board in consultation with the Office of Personnel Management, that takes into account any expected increase in utilization of the items and services in the comprehensive benefit package resulting from the purchase of the plan by individuals enrolled in a regional alliance health plan.
__(B) The plan provides for payment, in a manner specified by the Board in the case of an individual enrolled in the plan and in a regional alliance health plan, to the regional alliance health plan of an amount equivalent to the additional amount described in subparagraph (A).


PART 3_REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS
SEC. 1431. HEALTH PLAN REQUIREMENT.
__(a) In General._Subject to section 1432, each health plan shall, with respect to each electing essential community provider (as defined in subsection (d), other than a provider of school health services) located within the plan's service area, either_
__(1) enter into a written provider participation agreement (described in subsection (b)) with the provider, or
__(2) enter into a written agreement under which the plan shall make payment to the provider in accordance with subsection (c).
__(b) Participation Agreement._A participation agreement between a health plan and an electing essential community provider under this subsection shall provide that the health plan agrees to treat the provider in accordance with terms and conditions at least as favorable as those that are applicable to other providers participating in the health plan with respect to each of the following:
__(1) The scope of services for which payment is made by the plan to the provider.
__(2) The rate of payment for covered care and services.
__(3) The availability of financial incentives to participating providers.
__(4) Limitations on financial risk provided to other participating providers.
__(5) Assignment of enrollees to participating providers.
__(6) Access by the provider's patients to providers in medical specialties or subspecialties participating in the plan.
__(c) Payments for Providers Without Participation Agreements._
__(1) In general._Payment in accordance with this subsection is payment based, as elected by the electing essential community provider, either_
__(A) on the fee schedule developed by the applicable health alliance (or the State) under section 1322(c), or
__(B) on payment methodologies and rates used under the applicable Medicare payment methodology and rates (or the most closely applicable methodology under such program as the Secretary of Health and Human Services specifies in regulations).
__(2) No application of gate-keeper limitations._Payment in accordance with this subsection may be subject to utilization review, but may not be subject to otherwise applicable gate-keeper requirements under the plan.



__(d) Election._
__(1) In general._In this part, the term ``electing essential community provider'' means, with respect to a health plan, an essential community provider that elects this subpart to apply to the health plan.
__(2) Form of election._An election under this subsection shall be made in a form and manner specified by the Secretary, and shall include notice to the health plan involved. Such an election may be made annually with respect to a health plan, except that the plan and provider may agree to make such an election on a more frequent basis.
__(e) Special Rule for Providers of School Health Services._A health plan shall pay, to each provider of school health services located in the plan's service area an amount determined by the Secretary for such services furnished to enrollees of the plan.
SEC. 1432. SUNSET OF REQUIREMENT.
__(a) In General._Subject to subsection (d), the requirement of section 1431 shall only apply to health plans offered by a health alliance during the 5-year period beginning with the first year in which any regional alliance health plan is offered by the alliance.
__(b) Studies._In order to prepare recommendations under subsection (c), the Secretary shall conduct studies regarding essential community providers, including studies that assess_
__(1) the definition of essential community provider,
__(2) the sufficiency of the funding levels for providers, for both covered and uncovered benefits under this Act,
__(3) the effects of contracting requirements relating to such providers on such providers, health plans, and enrollees,
__(4) the impact of the payment rules for such providers, and
__(5) the impact of national health reform on such providers.
__(c) Recommendations to Congress._The Secretary shall submit to Congress, by not later than March 1, 2001, specific recommendations respecting whether, and to what extent, section 1431 should continue to apply to some or all essential community providers. Such recommendations may include a description of the particular types of such providers and circumstances under which such section should continue to apply.
__(d) Congressional Consideration._
__(1) In general._Recommendations submitted under subsection (c) shall apply under this part (and may supersede the provisions of subsection (a)) unless a joint resolution (described in paragraph (2)) disapproving such recommendations is enacted, in accordance with the provisions of paragraph (3), before the end of the 60-day period beginning on the date on which such recommendations were submitted. For purposes of applying the preceding sentence and paragraphs (2) and (3), the days on which either House of Congress is not in session because of an adjournment of more than three days to a day certain shall be excluded in the computation of a period.
__(2) Joint resolution of disapproval._A joint resolution described in this paragraph means only a joint resolution which is introduced within the 10-day period beginning on the date on which the Secretary submits recommendations under subsection (c) and_
__(A) which does not have a preamble;
__(B) the matter after the resolving clause of which is as follows: ``That Congress disapproves the recommendations of the Secretary of Health and Human Services concerning the continued application of certain essential community provider requirements under section 1431 of the Health Security Act, as submitted by the Secretary on _G7XXXXXXX.'', the blank space being filled in with the appropriate date; and
__(C) the title of which is as follows: ``Joint resolution disapproving recommendations of the Secretary of Health and Human Services concerning the continued application of certain essential community provider requirements under section 1431 of the Health Security Act, as submitted by the Secretary on _G7XXXXXXX.'', the blank space being filled in with the appropriate date.
__(3) Procedures for consideration of resolution of approval._Subject to paragraph (4), the provisions of section 2908 (other than subsection (a)) of the Defense Base Closure and Realignment Act of 1990 shall apply to the consideration of a joint resolution described in paragraph (2) in the same manner as such provisions apply to a joint resolution described in section 2908(a) of such Act.
__(4) Special rules._For purposes of applying paragraph (3) with respect to such provisions_
__(A) any reference to the Committee on Armed Services of the House of Representatives shall be deemed a reference to an appropriate Committee of the House of Representatives (specified by the Speaker of the House of Representatives at the time of submission of recommendations under subsection (c)) and any reference to the Committee on Armed Services of the Senate shall be deemed a reference to an appropriate Committee of the House of Representatives (specified by the Majority Leader of the Senate at the time of submission of recommendations under subsection (c)); and
__(B) any reference to the date on which the President transmits a report shall be deemed a reference to the date on which the Secretary submits recommendations under subsection (c).






PART 4_REQUIREMENTS RELATING TO WORKERS' COMPENSATION AND AUTOMOBILE MEDICAL LIABILITY COVERAGE
SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO WORKERS COMPENSATION SERVICES.
__Each health plan shall meet the applicable requirements of part 2 of subtitle A of title VIII (relating to provision of workers compensation services to enrollees).
SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO AUTOMOBILE MEDICAL LIABILITY SERVICES.
__Each health plan shall meet the applicable requirements of part 2 of subtitle B of title VIII (relating to provision of automobile medical liability services to enrollees).

Title I, Subtitle F
Subtitle F_Federal Responsibilities
PART 1_NATIONAL HEALTH BOARD
Subpart A_Establishment of National Health Board
SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP.
__(a) In General._There is hereby created  in the Executive Branch a National Health Board.
__(b) Composition._The Board is composed of 7 members appointed by the President, by and with the advice and consent of the Senate.
__(c) Chair._The President shall designate one of the members as chair. The chair serves a term concurrent with that of the President. The chair may serve a maximum of 3 terms. The chair shall serve as the chief executive officer of the Board.
__(d) Terms._
__(1) In general._Except as provided in paragraphs (2) and (4), the term of each member of the Board, except the chair, is 4 years and begins when the term of the predecessor of that member ends.
__(2) Initial terms._The initial terms of the members of the Board (other than the chair) first taking office after the date of the enactment of this Act, shall expire as designated by the President, two at the end of one year, two at the end of two years, and two at the end of three years.
__(3) Reappointment._A member (other than the chair) may be reappointed for one additional term.
__(4) Continuation in office._Upon the expiration of a term of office, a member shall continue to serve until a successor is appointed and qualified.


__(e) Vacancies._
__(1) In general._Whenever a vacancy shall occur, other than by expiration of term, a successor shall be appointed by the President as provided above, by and with the consent of the Senate, to fill such vacancy, and is appointed for the remainder of the term of the predecessor.
__(2) No impairment of function._A vacancy in the membership of the Board does not impair the right of the remaining members to exercise all of the powers of the Board.
__(3) Acting chair._The Board may designate a Member to Act as chair during any period in which there is no chair designated by the President.
__(f) Meetings; Quorum._
__(1) Meetings._At meetings of the Board the chair shall preside, and in the absence of the chair, the Board shall elect a member to act as chair pro tempore.
__(2) Quorum._Four members of the Board shall constitute a quorum thereof.
SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS.
__(a) Citizenship._Each member of the Board shall be a citizen of the United States.
__(b) Basis of Selection._Board members will be selected on the basis of their experience and expertise in relevant subjects, including the practice of medicine, health care financing and delivery, state health systems, consumer protection, business, law, and delivery of care to vulnerable populations.
__(c) Exclusive Employment. uring the term of appointment, Board members shall serve as employees of the Federal Government and shall hold no other employment.
__(d) Prohibition of Conflict of Interest._A member of the Board may not have a pecuniary interest in or hold an official relation to any health care plan, health care provider, insurance company, pharmaceutical company, medical equipment company, or other affected industry. Before entering upon the duties as a member of the Board, the member shall certify under oath compliance with this requirement.
__(e) Post-Employment Restrictions._After leaving the Board, former members are subject to post-employment restrictions applicable to comparable Federal employees.
__(f) Compensation of Board Members._Each member of the Board (other than the chair) shall receive an annual salary at the annual rate payable from time to time for level IV of the Executive Schedule. The chair of the Board, during the period of service as chair, shall receive an annual salary at the annual rate payable from time to time for level III of the Executive Schedule.

SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES.
__(a) Comprehensive Benefit Package._
__(1) Interpretation._The Board shall interpret the comprehensive benefit package, adjust the delivery of preventive services under section 1153, and take such steps as may be necessary to assure that the comprehensive benefit package is available on a uniform national basis to all eligible individuals.
__(2) Recommendations._The Board may recommend to the President and the Congress appropriate revisions to such package. Such recommendations may reflect changes in technology, health care needs, health care costs, and methods of service delivery.
__(b) Administration of Cost Containment Provisions._The Board shall oversee the cost containment requirements of subtitle A of title VI and certify compliance with such requirements.
__(c) Coverage and Families._The Board shall develop and implement standards relating to the eligibility of individuals for coverage in applicable health plans under subtitle A of title I and may provide such additional exceptions and special rules relating to the treatment of family members under section 1012 as the Board finds appropriate.
__(d) Quality Management and Improvement._The Board shall establish and have ultimate responsibility for a performance-based system of quality management and improvement as required by section 5001.
__(e) Information Standards._The Board shall develop and implement standards to establish national health information system to measure quality as required by section 5101.
__(f) Participating State Requirements._Consistent with the provisions of subtitle C, the Board shall_
__(1) establish requirements for participating States,
__(2) monitor State compliance with those requirements,
__(3) provide technical assistance,
in a manner that ensures access to the comprehensive benefit package for all eligible individuals.
__(g) Development of Premium Class Factors._The Board shall establish premium class factors under subpart D of this part.
__(h) Development of Risk-Adjustment Methodology._The Board shall develop a methodology for the risk-adjustment of premium payments to regional alliance health plans in accordance with part 3 of this subtitle.
__(i) Encouraging the Reasonable Pricing of Breakthrough Drugs._The Board shall establish the Breakthrough Drug Committee in accordance with subpart F of this part.

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

__(k) Standards for Health Plan Grievance Procedures._The Board shall establish standards for health plan grievance procedures that are used by enrollees in pursuing complaints.
SEC. 1504. ANNUAL REPORT.
__(a) In General._The Board shall prepare and send to the President and Congress an annual report addressing the overall implementation of the new health care system.
__(b) Matters to be Included._The Board shall include in each annual report under this section the following:
__(1) Information on Federal and State implementation.
__(2) Data related to quality improvement.
__(3) Recommendations or changes in the administration, regulation and laws related to health care and coverage.
__(4) A full account of all actions taken during the previous year.
SEC. 1505. POWERS.
__(a) Staff; Contract Authority._The Board shall have authority, subject to the provisions of the civil-service laws and chapter 51 and subchapter III of chapter 53 of title 5, United States Code, to appoint such officers and employees as are necessary to carry out its functions. To the extent provided in advance in appropriations Acts, the Board may contract with any person (including an agency of the Federal Government) for studies and analysis as required to execute its functions. Any employee of the Executive Branch may be detailed to the Board to assist the Board in carrying out its duties.

__(b) Establishment of Advisory Committees._The Board may establish advisory committees.
__(c) Access to Information._The Board may secure directly from any department or agency of the United States information necessary to enable it to carry out its functions, to the extent such information is otherwise available to a department or agency of the United States. Upon request of the chair,  the head of that department or agency shall furnish that information to the Board.
__(d) Delegation of Authority._Except as otherwise provided in this Act, the Board may delegate any function to such officers and employees as the Board may designate and may authorize such successive redelegations of such functions with the Board as the Board deems to be necessary or appropriate. No delegation of functions by the Board shall relieve the Board of responsibility for the administration of such functions.
__(e) Rulemaking._The National Health Board is authorized to establish such rules as may be necessary to carry out this Act.
SEC. 1506. FUNDING.
__(a) Authorization of Appropriations._There are authorized to be appropriated to the Board such sums as may be necessary for fiscal years 1994, 1995, 1996, 1997, and 1998.
__(b) Submission of Budget._Under the procedures of chapter 11 of title 31, United States Code, the budget for the Board for a fiscal year shall be reviewed by the Director of the Office of Management and Budget and submitted to the Congress as part of the President's submission of the Budget of the United States for the fiscal year.


Subpart B_Responsibilities Relating to Review and Approval of State Systems
SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.
__(a) Approval of State Systems by National Board._
__(1) In general._The National Health Board shall approve a State health care system for which a document is submitted under section 1200(a) unless the Board finds that the system (as set forth in the document) does not (or will not) provide for the State meeting the responsibilities for participating States under this Act.
__(2) Regulations._The Board shall issue regulations, not later than July 1, 1995, prescribing the requirements for State health care systems under parts 2 and 3 of subtitle C, except that in the case of a document submitted under section 1201(a) before the date of issuance of such regulations, the Board shall take action on such document notwithstanding the fact that such regulations have not been issued.
__(3) No approval permitted for years prior to 1996._The Board may not approve a State health care system under this part for any year prior to 1996.
__(b) Review of Completeness of Documents._
__(1) In general._If a State submits a document under subsection (a)(1), the Board shall notify the State, not later than 7 working days after the date of submission, whether or not the document is complete and provides the Board with sufficient information to approve or disapprove the document.
__(2) Additional information on incomplete document._If the Board notifies a State that the State's document is not complete, the State shall be provided such additional period (not to exceed 45 days) as the Board may by regulation establish in which to submit such additional information as the Board may require. Not later than 7 working days after the State submits the additional information, the Board shall notify the State respecting the completeness of the document.
__(c) Action on Completed Documents._
__(1) In general._The Board shall make a determination (and notify the State) on whether the State's document provides for implementation of a State system that meets the applicable requirements of subtitle C_
__(A) in the case of a State that did not require the additional period described in subsection (b)(2) to file a complete document, not later than 90 days after notifying a State under subsection (b) that the State's document is complete, or
__(B) in the case of a State that required the additional period described in subsection (b)(2) to file a complete document, not later than 90 days after notifying a State under subsection (b) that the State's document is complete.
__(2) Plans deemed approved._If the Board does not meet the applicable deadline for making a determination and providing notice established under paragraph (1) with respect to a State's document, the Board shall be deemed to have approved the State's document for purposes of this Act.
__(d) Opportunity to Respond to Rejected Document._
__(1) In general._If (within the applicable deadline under subsection (c)(1)) the Board notifies a State that its document does not provide for implementation of a State system that meets the applicable requirements of subtitle C, the Board shall provide the State with a period of 30 days in which to submit such additional information and assurances as the Board may require.
__(2) Deadline for response._Not later than 30 days after receiving such additional information and assurances, the Board shall make a determination (and notify the State) on whether the State's document provides for implementation of a State system that meets the applicable requirements of subtitle C.
__(3) Plan deemed approved._If the Board does not meet the deadline established under paragraph (2) with respect to a State, the Board shall be deemed to have approved the State's document for purposes of this Act.

__(e) Approval of Previously Terminated States._If the Board has approved a State system under this part for a year but subsequently terminated the approval of the system under section 1513, the Board shall approve the system for a succeeding year if the State_
__(1) demonstrates to the satisfaction of the Board that the failure that formed the basis for the termination no longer exists, and
__(2) provides reasonable assurances that the types of actions (or inactions) which formed the basis for such termination will not recur.
__(f) Revisions to State System._
__(1) Submission._A State may revise a system approved for a year under this section, except that such revision shall not take effect unless the State has submitted to the Board a document describing such revision and the Board has approved such revision.
__(2) Actions on amendments._Not later than 60 days after a document is submitted under paragraph (1), the Board shall make a determination (and notify the State) on whether the implementation of the State system, as proposed to be revised, meets the applicable requirements of subtitle C. If the Board fails to meet the requirement of the preceding sentence, the Board shall be deemed to have approved the implementation of the State system as proposed to be revised.
__(3) Rejection of amendments._Subsection (d) shall apply to an amendment submitted under this subsection in the same manner as it applies to a completed document submitted under subsection (b).
__(g) Notification of Non-Participating States._If a State fails to submit a document for a State system by the deadline referred to in section 1200, or such a document is not approved under subsection (c), the Board shall immediately notify the Secretary of Health and Human Services and the Secretary of the Treasury of the State's failure for purposes of applying subpart B in that State.


SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR COMPLIANCE.
__(a) In General._In the case of a participating State, if the Board determines that the operation of the State system under subtitle C fails to meet the applicable requirements of this Act, sanctions shall apply against the State in accordance with subsection (b).
__(b) Type of Sanction Applicable._The sanctions applicable under this part are as follows:
__(1) If the Board determines that the State's failure does not substantially jeopardize the ability of eligible individuals in the State to obtain coverage for the comprehensive benefit package_
__(A) the Board may order a regional alliance in the State to comply with applicable requirements of this Act and take such additional measures to assure compliance with such requirements as the Board may impose, if the Board determines that the State's failure relates to a requirement applicable to a regional alliance in the State, or
__(B) if the Board does not take the action described in subparagraph (A) (or if the Board takes the action and determines that the action has not remedied the violation that led to the imposition of the sanction), the Board shall notify the Secretary of Health and Human Services, who shall reduce payments with respect to the State in accordance with section 1513.
__(2) If the Board determines that the failure substantially jeopardizes the ability of eligible individuals in the State to obtain coverage for the comprehensive benefit package_
__(A) the Board shall terminate its approval of the State system; and
__(B) the Board shall notify the Secretary of Health and Human Services, who shall assume the responsibilities described in section 1522.
__(c) Termination of Sanction._
__(1) Compliance by State._A State against which a sanction is imposed may submit information at any time to the Board to demonstrate that the failure that led to the imposition of the sanction has been corrected.
__(2) Termination of sanction._If the Board determines that the failure that led to the imposition of a sanction has been corrected_
__(A) in the case of the sanction described in subsection (b)(1)(A), the Board shall notify the regional alliance against which the sanction is imposed; or
__(B) in the case of any other sanction described in subsection (b), the Board shall notify the Secretary of Health and Human Services.

__(d) Protection of Access to Benefits._The Board and the Secretary of Health and Human Services shall exercise authority to take actions under this section with respect to a State only in a manner that assures the continuous coverage of eligible individuals under regional alliance health plans.



SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF HEALTH AND HUMAN SERVICES.
__(a) In General._Upon receiving notice from the Board under section 1512(b)(1)(B), the Secretary of Health and Human Services shall reduce the amount of any of the payments described in subsection (b) that would otherwise be made to individuals and entities in the State by such amount as the Secretary determines to be appropriate.
__(b) Payments Described._The payments described in this subsection are as follows:
__(1) Payments to academic health centers in the State under subtitle B of title III for medical education training programs funds.
__(2) Payments to individuals and entities in the State for health research activities under section 301 and title IV of the Public Health Service Act.
__(3) Payments to hospitals in the State under part 4 of subtitle E of title III (relating to payments to hospitals serving vulnerable populations)




SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS.
__Any State or alliance affected by a determination by the Board under this subpart may appeal such determination in accordance with section 5231.
SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.
__(a) Planning Grants._
__(1) In general._Not later than 90 days after the date of the enactment of this Act, the Secretary shall make available to each State a planning grant to assist a State in the development of a health care system to become a participating State under subtitle C.
__(2) Formula._The Secretary shall establish a formula for the distribution of funds made available under this subsection.
__(3) Authorization of appropriations._There are authorized to be appropriated $50,000,000 in each of fiscal years 1995 and 1996.
__(b) Grants for Start-up Support._
__(1) In general._The Secretary shall make available to States, upon their enacting of enabling legislation to become participating States, grants to assist in the establishment of regional alliances.
__(2) Formula._The Secretary shall establish a formula for the distribution of funds made available under this subsection.
__(3) State matching funds required._Funds are payable to a State under this subsection only if the State provides assurances, satisfactory to the Secretary, that amounts of State funds (at least equal to the amount made available under this subsection) are expended for the purposes described in paragraph (1).
__(4) Authorization of appropriations._There are authorized to be appropriated $313,000,000 for fiscal year 1996, $625,000,000 for fiscal year 1997, and $313,000,000 for fiscal year 1998.


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



Subpart C_Responsibilities in Absence of State Systems
SEC. 1521. APPLICATION OF SUBPART.
__(a) Initial Application._This subpart shall apply with respect to a State as of January 1, 1998, unless_
__(1) the State submits a document for a State system under section 1511(a)(1) by July 1, 1997, and
__(2) the Board determines under section 1511 that such system meets the requirements of part 1 of subtitle C.
__(b) Termination of Approval of System of Participating State._In the case of a participating State for which the Board terminates approval of the State system under section 1512(2), this subpart shall apply with respect to the State as of such date as is appropriate to assure the continuity of coverage for the comprehensive benefit package for eligible individuals in the State.
SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING STATES.
__(a) Notice._When the Board determines that this subpart will apply to a State for a calendar year, the Board shall notify the Secretary of Health and Human Services.
__(b) Establishment of Regional Alliance System._Upon receiving notice under subsection (a), the Secretary shall take such steps, including the establishment of regional alliances, and compliance with other requirements applicable to participating States under subtitle C, as are necessary to ensure that the comprehensive benefit package is provided to eligible individuals in the State during the year.
__(c) Requirements for Alliances._Subject to section 1523, any regional alliance established by the Secretary pursuant to this section must meet all the requirements applicable under subtitle D to a regional alliance established and operated by a participating State, and the Secretary shall have the authority to fulfill all the functions of such an alliance.
__(d) Establishment of Guaranty Fund._
__(1) Establishment._The Secretary must ensure that there is a guaranty fund that meets the requirements established by the Board under section 1562, in order to provide financial protection to health care providers and others in the case of a failure of a regional alliance health plan under a regional alliance established and operated by the Secretary under this section.
__(2) Assessments to provide guaranty funds._In the case of a failure of one or more regional alliance health plans under a regional alliance established and operated by the Secretary under this section, the Secretary may require each regional alliance health plan under the alliance to pay an assessment to the Secretary in an amount not to exceed 2 percent of the premiums of such plans paid by or on behalf of regional alliance eligible individuals during a year for so long as necessary to generate sufficient revenue to cover any outstanding claims against the failed plan.


SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED SYSTEM.
__(a) In General._If this subpart applies to a State for a calendar year, the premiums charged under the regional alliance established and operated by the Secretary in the State shall be equal to premiums that would otherwise be charged under a regional alliance established and operated by the State, increased by 15 percent. Such 15 percent increase shall be used to reimburse the Secretary for any administrative or other expenses incurred as a result of establishing and operating the system.
__(b) Treatment of Surcharge as Part of Premium._For purposes of determining the compliance of a State for which this subpart applies in a year with the requirements for budgeting under subtitle A of title VI for the year, the 15 percent increase described in subsection (a) shall be treated as part of the premium for payment to a regional alliance.

SEC. 1524. RETURN TO STATE OPERATION.
__(a) Application Process._After the establishment and operation of an alliance system by the Secretary in a State under section 1522, the State may at any time apply to the Board for the approval of a State system in accordance with the procedures described in section 1511.
__(b) Timing._If the Board approves the system of a State for which the Secretary has operated an alliance system during a year, the Secretary shall terminate the operation of the system, and the State shall establish and operate its approved system, as of January 1 of the first year beginning after the Board approves the State system. The termination of the Secretary's system and the operation of the State's system shall be conducted in a manner that assures the continuous coverage of eligible individuals in the State under regional alliance health plans.


Subpart D_Establishment of Class Factors for Charging Premiums
SEC. 1531. PREMIUM CLASS FACTORS.
__(a) In General._For each of the classes of family enrollment (as specified in section 1011(c)), for purposes of title VI, the Board shall establish a premium class factor that reflects, subject to subsection (b), the relative actuarial value of the comprehensive benefit package of the class of family enrollment compared to such value of such package for individual enrollment.
__(b) Conditions._In establishing such factors, the factor for the class of individual enrollment shall be 1 and the factor for the class of family enrollment of coverage of a married couple without children shall be 2.

Subpart E_Risk Adjustment and Reinsurance Methodology for Payment of Plans
SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE METHODOLOGY.
__(a) Development._
__(1) Initial development._Not later than April 1, 1995, the Board shall develop a risk adjustment and reinsurance methodology in accordance with this subpart.
__(2) Improvements._The Board shall make such improvements in such methodology as may be appropriate to achieve the purposes described in subsection (b)(1).
__(b) Methodology._
__(1) Purposes._Such methodology shall provide for the adjustment of payments to regional alliance health plans for the purposes of_
__(A) assuring that payments to such plans reflect the expected relative utilization and expenditures for such services by each plan's enrollees compared to the average utilization and expenditures for regional alliance eligible individuals, and
__(B) protecting health plans that enroll a disproportionate share of regional alliance eligible individuals with respect to whom expected utilization of health care services (included in the comprehensive benefit package) and expected health care expenditures for such services are greater than the average level of such utilization and expenditures for regional alliance eligible individuals.
__(2) Factors to be considered._In developing such methodology, the Board shall take into account the following factors:
__(A) Demographic characteristics.
__(B) Health status.
__(C) Geographic area of residence.
__(D) Socio-economic status.
__(E) Subject to paragraph (5), (i) the proportion of enrollees who are SSI recipients and (ii) the proportion of enrollees who are AFDC recipients.
__(F) Any other factors determined by the Board to be material to the purposes described in paragraph (1).
__(3) Zero sum._The methodology shall assure that the total payments to health plans by the regional alliance after application of the methodology are the same as the amount of payments that would have been made without application of the methodology.

__(4) Prospective adjustment of payments ._The methodology, to the extent possible and except in the case of a mandatory reinsurance system described in subsection (b), shall be applied in manner that provides for the prospective adjustment of payments to health plans.
__(5) Treatment of ssi/afdc adjustment._The Board is not required to apply the factor described in clause (i) or (ii) of paragraph (2)(E) if the Board determines that the application of the other risk adjustment factors described in paragraph (2) is sufficient to adjust premiums to take into account the enrollment in plans of AFDC recipients and SSI recipients.
__(6) Special consideration for mental illness._In developing the methodology under this section, the Board shall give consideration to the unique problems of adjusting payments to health plans with respect to individuals with mental illness.
__(7) Special consideration for veterans, military, and indian health plans._In developing the methodology under this section, the Board shall give consideration to the special enrollment and funding provisions relating to plans described in section 1004(b).
__(8) Adjustment to account for use of estimates._Subject to section 1346(b)(3) (relating to establishment of regional alliance reserve funds), if the total payments made by a regional alliance to all regional alliance health plans in a year under section 1324(c) exceeds, or is less than, the total of such payments estimated by the alliance in the application of the methodology under this subsection, because of a difference between_
__(A) the alliance's estimate of the distribution of enrolled families in different risk categories (assumed in the application of risk factors under this subsection in making payments to regional alliance health plans), and
__(B) the actual distribution of such enrolled families in such categories,
the methodology under this subsection shall provide for an adjustment in the application of such methodology in the second succeeding year in a manner that would reduce, or increase, respectively, by the amount of such excess (or deficit) the total of such payments made by the alliance to all such plans.




__(b) Mandatory Reinsurance._
__(1) In general._The methodology developed under this section may include a system of mandatory reinsurance, but may not include a system of voluntary reinsurance.
__(2) Requirement in certain cases._If the Board determines that an adequate system of prospective adjustment of payments to health plans to account for the health status of individuals enrolled by regional alliance health plans cannot be developed (and ready for implementation) by the date specified in subsection (a)(1), the Board shall include a mandatory reinsurance system as a component of the methodology. The Board may thereafter reduce or eliminate such a system at such time as the Board determines that an adequate prospective payment adjustment for health status has been developed and is ready for implementation.
__(3) Reinsurance system._The Board, in developing the methodology for a mandatory reinsurance system under this subsection, shall_
__(A) provide for health plans to make payments to state-established reinsurance programs for the purpose of reinsuring part or all of the health care expenses for items and services included in the comprehensive benefit package for specified classes of high-cost enrollees or specified high-cost treatments or diagnoses; and
__(B) specify the manner of creation, structure, and operation of the system in each State, including_
__(i) the manner (which may be prospective or retrospective) in which health plans make payments to the system, and
__(ii) the type and level of reinsurance coverage provided by the system.


__(c) Confidentiality of Information._The methodology shall be developed in a manner consistent with privacy standards promulgated under section 5102(a). In developing such standards, the Board shall take into account any potential need of alliances for certain individually identifiable health information in order to carry out risk-adjustment and reinsurance activities under this Act, but only to the minimum extent necessary to carry out such activities and with protections provided to minimize the identification of the individuals to whom the information relates.




SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED GROUPS.
__The Board shall establish standards under which States may provide (under section 1203(e)(3)) for an adjustment in the risk-adjustment methodology developed under section 1541 in order to provide a financial incentive for regional alliance health plans to enroll individuals who are members of disadvantaged groups.

SEC. 1543. ADVISORY COMMITTEE.
__(a) In General._The Board shall establish an advisory committee to provide technical advice and recommendations regarding the development and modification of the risk adjustment and reinsurance methodology developed under this part.
__(b) Composition._Such advisory committee shall consist of 15 individuals and shall include individuals who are representative of health plans, regional alliances, consumers, experts, employers, and health providers.
SEC. 1544. RESEARCH AND DEMONSTRATIONS.
__The Secretary shall conduct and support research and demonstration projects to develop and improve, on a continuing basis, the risk adjustment and reinsurance methodology under this subpart.

SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLIANCES.
__The Board shall provide technical assistance to States and regional alliances in implementing the methodology developed under this subpart.


Subpart F_Responsibilities for Financial Requirements
SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE HEALTH PLAN.

__(a) In General._The Board shall establish, in consultation with the States, minimum capital requirements for regional alliance health plans, for purposes of section 1203(c).
__(b) $500,000 Minimum._Subject to paragraph (3), under such requirements there shall be not less than $500,000 of capital maintained for each plan offered in each alliance area, regardless of whether or not the same sponsor offered more than one of such plans.
__(c) Additional Capital Requirements._The Board may require additional capital for factors likely to affect the financial stability of health plans, including the following:
__(1) Projected plan enrollment and number of providers participating in the plan.
__(2) Market share and strength of competition.
__(3) Extent and nature of risk-sharing with participating providers and the financial stability of risk-sharing providers.
__(4) Prior performance of the plan, risk history, and liquidity of assets.
__(d) Development of Standards by NAIC._The Board may request the National Association of Insurance Commissioners to develop model standards for the additional capital requirements described in subsection (c) and to present such standards to the Board not later than July 1, 1995. The Board may accept such standards as the standards to be applied under subsection (c) or modify the standards in any manner it finds appropriate.

SEC. 1552. STANDARD FOR GUARANTY FUNDS.

__(a) In General._In consultation with the States, the Board shall establish standards for guaranty funds established by States under section 1204(c).
__(b) Guaranty Fund Standards._The standards established under subsection (a) for a guaranty fund shall include the following:
__(1) Each fund must have a method to generate sufficient resources to pay health providers and others in the case of a failure of a health plan (as described in section 1204(d)(4)) in order to meet obligations with respect to_
__(A) services rendered by the health plan for the comprehensive benefit package, including any supplemental coverage for cost sharing provided by the health plan, and
__(B) services rendered prior to health plan insolvency and services to patients after the insolvency but prior to their enrollment in other health plans.
__(2) The fund is liable for all claims against the plan by health care providers with respect to their provision of items and services covered under the comprehensive benefit package to enrollees of the failed plan. Such claims, in full, shall take priority over all other claims. The fund also is liable, to the extent and in the manner provided in accordance with rules established by the Board, for other claims, including other claims of such providers and the claims of contractors, employees, governments, or any other claimants.
__(3) The fund stands as a creditor for any payments owed the plan to the extent of the payments made by the fund for obligations of the plan.
__(4) The fund has authority to borrow against future assessments (payable under section 1204(c)(2)) in order to meet the obligations of failed plans participating in the fund.


PART 2_RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES
Subpart A_General Responsibilities
SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN SERVICES.
__(a) In General._Except as otherwise specifically provided under this Act (or with respect to administration of provisions in the Internal Revenue Code of 1986 or in the Employee Retirement Income Security Act of 1974), the Secretary of Health and Human Services shall administer and implement all of the provisions of this Act, except those duties delegated to the National Health Board, any other executive agency, or to any State.
__(b) Financial Management Standards._The Secretary, in consultation with the Secretaries of Labor and the Treasury, shall establish, for purposes of section 1361, standards relating to the management of finances, maintenance of records, accounting practices, auditing procedures, and financial reporting for health alliances. Such standards shall take into account current Federal laws and regulations relating to fiduciary responsibilities and financial management of funds.
__(c) Auditing Regional Alliance Performance._The Secretary shall perform periodic financial and other audits of regional alliances to assure that such alliances are carrying out their responsibilities under this Act consistent with this Act. Such audits shall include audits of alliance performance in the areas of_
__(1) assuring enrollment of all regional alliance eligible individuals in health plans,
__(2) management of premium and cost sharing discounts and reductions provided; and
__(3) financial management of the alliance, including allocation of collection shortfalls.
SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH DRUGS.
__(a) In General._The Secretary shall appoint an Advisory Council on Breakthrough Drugs (in this section referred to as the ``Council'') that will examine the reasonableness of launch prices of new drugs that represent a breakthrough or significant advance over existing therapies.
__(b) Duties._(1) At the request of the Secretary, or a member of the Council, the Council shall make a determination regarding the reasonableness of launch prices of a breakthrough drug. Such a determination shall be based on:
__(A) prices of other drugs in the same therapeutic class;
__(B) cost information supplied by the manufacturer;
__(C) prices of the drug in countries specified in section 302(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act; and
__(D) projected prescription volume, economies of scale, product stability, special manufacturing requirements and research costs.
__(2) The Secretary shall review the determinations of the Council and publish the results of such review along with the Council's determination (including minority opinions) as a notice in the Federal Register.
__(c) Membership._The Council shall consist of a chair and 12 other persons, appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service. The Council shall include a representative from the pharmaceutical industry, consumer organizations, physician organizations, the hospital industry, and the managed care industry. Other individuals appointed by the Secretary shall be recognized experts in the fields of health care economics, pharmacology, pharmacy and prescription drug reimbursement. Only one member of the Council may have direct or indirect financial ties to the pharmaceutical industry.
__(d) Term of Appointments._Appointments shall be for a term of 3 years, except that the Secretary may provide initially for such shorter terms as will ensure that the terms of not more than 5 members expire in any one year.
__(e) Compensation._Members of the Council shall be entitled to receive reimbursement of expenses and per diem in lieu of subsistence in the same manner as other members of advisory councils appointed by the Secretary are provided such reimbursements under the Social Security Act.
__(f) No Termination._Notwithstanding the provisions of the Federal Advisory Committee Act, the Council shall continue in existence until otherwise specified in law.


Subpart B_Certification of Essential Community Providers
SEC. 1581. CERTIFICATION.
__(a) In General._For purposes of this Act, the Secretary shall certify as an ``essential community provider'' any health care provider or organization that_
__(1) is within any of the categories of providers and organizations specified in section 1582(a), or
__(2) meets the standards for certification under section 1583(a).
__(b) Timely Establishment of Process._The Secretary shall take such actions as may be necessary to permit health care providers and organizations to be certified as essential community providers in a State before the beginning of the first year for the State.
SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.
__(a) In General._The categories of providers and organizations described in this subsection are as follows:
__(1) Migrant health centers._A recipient or subrecipient of a grant under section 329 of the Public Health Service Act.
__(2) Community health centers._A recipient or subrecipient of a grant under section 330 of the Public Health Service Act.
__(3) Homeless program providers._A recipient or subrecipient of a grant under section 340 of the Public Health Service Act.
__(4) Public housing providers._A recipient or subrecipient of a grant under section 340A of the Public Health Service Act.
__(5) Family planning clinics._A recipient or subrecipient of a grant under title X of the Public Health Service Act.
__(6) Indian health programs._A service unit of the Indian Health Service, a tribal organization, or an urban Indian program, as defined in the Indian Health Care Improvement Act.
__(7) AIDS providers under ryan white act._A public or private nonprofit health care provider that is a recipient or subrecipient of a grant under title XXIII of the Public Health Service Act.
__(8) Maternal and child health providers._A public or private nonprofit entity that provides prenatal care, pediatric care, or ambulatory services to children, including children with special health care needs, and that receives funding for such care or services under title V of the Social Security Act.

__(9) Federally qualified health center; rural health clinic._A Federally-qualified health center or a rural health clinic (as such terms are defined in section 1861(aa) of the Social Security Act.
__(10) Provider of school health services._A provider of school health services that receives funding for such services under subtitle G of title III.
__(11) Community practice network._A community practice networking receiving development funds under subtitle E of title III.
__(b) Subrecipient Defined._In this subpart, the term ``subrecipient'' means, with respect to a recipient of a grant under a particular authority, an entity that_
__(1) is receiving funding from such a grant under a contract with the principal recipient of such a grant, and
__(2) meets the requirements established to be a recipient of such a grant.
__(c) Health Professional Defined._In this subpart, the term ``health professional'' means a physician, nurse, nurse practitioner, certified nurse midwife, physician assistant, psychologist, dentist, pharmacist, and other health care professional recognized by the Secretary.

SEC. 1583._STANDARDS FOR ADDITIONAL PROVIDERS.
__(a) Standards._The Secretary shall publish standards for the certification of additional categories of health care providers and organizations as essential community providers, including the categories described in subsection (b). Such a health care provider or organization shall not be certified unless the Secretary determines, under such standards, that health plans operating in the area served by the applicant would not be able to assure adequate access to items and services included in the comprehensive benefit package.
__(b) Categories To Be Included._The categories described in this subsection are as follows:
__(1) Health professionals._Health professionals_
__(A) located in an area designated as a health professional shortage area (under section 332 of the Public Health Service Act), or
__(B) providing a substantial amount of health services (as determined in accordance with standards established by the Secretary) to a medically underserved population (as designated under section 330 of such Act).
__(2) Institutional providers._Public and private nonprofit hospitals and other institutional health care providers located in such an area or providing health services to such a population.
__(3) Other providers._Other public and private nonprofit agencies and organizations that_
__(A) are located in such an area or providing health services to such a population, and
__(B) provide health care and services essential to residents of such an area or such populations.
SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMINATION OF CERTIFICATIONS.
__(a) Certification Process._
__(1) Publication of procedures._The Secretary shall publish, not later than 6 months after the date of the enactment of this Act, the procedures to be used by health care professionals, providers, agencies, and organizations seeking certification under this subpart, including the form and manner in which an application for such certification is to be made.
__(2) Timely determination._The Secretary shall make a determination upon such an application not later than 60 days (or 15 days in the case of a certification for an entity described in section 1582) after the date the complete application has been submitted. The determination on an application for certification of an entity described in section 1582 shall only involve the verification that the entity is an entity described in such section.


__(b) Review of Certifications._The Secretary shall periodically review whether professionals, providers, agencies, and organizations certified under this subpart continue to meet the requirements for such certification.
__(c) Termination or Denial of Certification._
__(1) Preliminary finding._If the Secretary preliminarily finds that an entity seeking certification under this section does not meet the requirements for such certification or such an entity certified under this subpart fails to continue to meet the requirements for such certification, the Secretary shall notify the entity of such preliminary finding and permit the entity an opportunity, under subtitle E of title V, to rebut such findings.
__(2) Final determination._If, after such opportunity, the Secretary continues to find that such an entity continues to fail to meet such requirements, the Secretary shall terminate the certification and shall notify the entity, regional alliances, and corporate alliances of such termination and the effective date of the termination.
SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PARTICIPATING STATES.
__(a) In General._Not less often than annually the Secretary shall notify each participating State and each health alliance of essential community providers that have been certified under this subpart.
__(b) Contents._Such notice shall include sufficient information to permit each health alliance to notify health plans of the identify of each entity certified as an essential community provider, including_
__(1) the location of the provider within each plan's service area,
__(2) the health services furnished by the provider, and
__(3) other information necessary for health plans to carry out part 3 of subtitle E.







PART 3_SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR.
SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR.
__(a) In General._The Secretary of Labor is responsible_
__(1) under subtitle D of title I, for the enforcement of requirements applicable to employers under regional health alliances (including requirements relating to payment of premiums) and the administration of corporate health alliances;
__(2) under subtitle E of title I, with respect to elections by eligible sponsors to become corporate alliances and the termination of such elections;
__(3) under section 1395, for the temporary assumption of the operation of self-insured corporate alliance health plans that are insolvent;
__(4) under section 1396, for the establishment and administration of Corporate Alliance Health Plan Insolvency Fund;
__(5) for carrying out any other responsibilities assigned to the Secretary under this Act; and
__(6) for administering title I of the Employee Retirement Income Security Act of 1974 as it relates to group health plans maintained by corporate alliances.
__(b) Agreements with States._The Secretary of Labor may enter into agreements with States in order to enforce responsibilities of employers and corporate alliances, and requirements of corporate alliance health plans, under subtitle B of title I of the Employee Retirement Income Security Act of 1974.
__(c) Consultation with Board._In carrying out activities under this Act with respect to corporate alliances, corporate alliance health plans, and employers, the Secretary of Labor shall consult with the National Health Board.
__(d) Employer-Related Requirements._
__(1) In general._The Secretary of Labor, in consultation with the Secretary, shall be responsible for assuring that employers_
__(A) make payments of any employer premiums (and withhold and make payment of the family share of premiums with respect to qualifying employees) as required under this Act, including auditing of regional alliance collection activities with respect to such payments,
__(B) submit timely reports as required under this Act, and
__(C) otherwise comply with requirements imposed on employers under this Act.
__(2) Audit and similar authorities._The Secretary of Labor_
__(A) may carry out such audits (directly or through contract) and such investigations of employers and health alliances,
__(B) may exercise such authorities under section 504 of Employee Retirement Income Security Act of 1974 (in relation to activities under this Act),
__(C) may, with the permission of the Board, provide (through contract or otherwise) for such collection activities (in relation to amounts owed to regional alliances and for the benefit of such alliances), and
__(D) may impose such civil penalties under section 1347(c),
as may be necessary to carry out such Secretary's responsibilities under this section.
__(e) Authority._The Secretary of Labor is authorized to issue such regulations as may be necessary to carry out responsibilities of the Secretary under this Act.

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


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

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

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

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

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

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

[Subtitle H_Reserved]
[Subtitle I_Reserved]

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



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


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



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




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


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


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

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


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

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


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

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



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



Health Security Act
Title II
TITLE II_NEW BENEFITS


table of contents of title


Subtitle A_Medicare Outpatient Prescription Drug Benefit
Sec._2001._Coverage of outpatient prescription drugs.
Sec._2002._Payment rules and related requirements for outpatient drugs.
Sec._2003._Medicare rebates for covered outpatient drugs.
Sec._2004._Counseling by participating pharmacies.
Sec._2005._Extension of 25 percent rule for portion of premium attributable to covered outpatient drugs.
Sec._2006._Coverage of home infusion drug therapy services.
Sec._2007._Civil money penalties for excessive charges.
Sec._2008._Conforming amendments to medicaid program.
Sec._2009._Effective date.
Subtitle B_Long-Term Care
Part 1_State Programs for Home and Community-Based Services for Individuals With Disabilities
Sec._2101._State programs for home and community-based services for individuals with disabilities.
Sec._2102._State plans.
Sec._2103._Individuals with disabilities defined.
Sec._2104._Home and community-based services covered under State plan.
Sec._2105._Cost sharing.
Sec._2106._Quality assurance and safeguards.
Sec._2107._Advisory groups.
Sec._2108._Payments to States.
Sec._2109._Total Federal budget; allotments to States.
Part 2_Medicaid Nursing Home Improvements
Sec._2201._Reference to amendments.
Part 3_Private Long-Term Care Insurance
SUBPART A_GENERAL PROVISIONS
Sec._2301._Federal regulations; prior application or certain requirements.
Sec._2302._National Long-term Care Insurance Advisory Council.
Sec._2303._Relation to State law.
Sec._2304._Definitions.
SUBPART B_FEDERAL STANDARDS AND REQUIREMENTS
Sec._2321._Requirements to facilitate understanding and comparison of benefits.
Sec._2322._Requirements relating to coverage.
Sec._2323._Requirements relating to premiums.
Sec._2324._Requirements relating to sales practices.
Sec._2325._Continuation, renewal, replacement, conversion, and cancellation of policies.
Sec._2326._Requirements relating to payment of benefits.
SUBPART C_ENFORCEMENT
Sec._2342._State programs for enforcement of standards.
Sec._2342._Authorization of appropriations for State programs.
Sec._2343._Allotments to States.
Sec._2344._Payments to States.
Sec._2345._Federal oversight of State enforcement.
Sec._2346._Effect of failure to have approved State program.
SUBPART D_CONSUMER EDUCATION GRANTS
Sec._2361._Grants for consumer education.
Part 4_Tax Treatment of Long-term Care Insurance and Services
Sec._2401._Reference to tax provisions.
Part 5_Tax Incentives for Individuals with Disabilities Who Work
Sec._2501._Reference to tax provision.
Part 6_Demonstration and Evaluation
Sec._2601._Demonstration on acute and long-term care integration.
Sec._2602._Performance review of the long-term care programs.

Title II, Subtitle A

Subtitle A_Medicare Outpatient Prescription Drug Benefit
SEC. 2001. COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
__(a) Covered Outpatient Drugs as Medical and Other Health Services._Section 1861(s)(2)(J) of the Social Security Act (42 U.S.C. 1395x(s)(2)(J)) is amended to read as follows:
__``(J) covered outpatient drugs;''.
__(b) Definition of Covered Outpatient Drug._Section 1861(t) of such Act (42 U.S.C. 1395x(t)), as amended by section 13553(b) of the Omnibus Budget Reconciliation Act of 1993 (hereafter in this subtitle referred to as ``OBRA        1993''), is amended_
__(1) in the heading, by adding at the end the following: ``; Covered Outpatient Drugs'';
__(2) in paragraph (1), by striking ``paragraph (2)'' and inserting ``the succeeding paragraphs of this subsection''; and
__(3) by striking paragraph (2) and inserting the following:
__``(2) Except as otherwise provided in paragraph (3), the term `covered outpatient drug' means any of the following products used for a medically accepted indication (as described in paragraph (4)):
__``(A) A drug which may be dispensed only upon prescription and_
__``(i) which is approved for safety and effectiveness as a prescription drug under section 505 or 507 of the Federal Food, Drug, and Cosmetic Act or which is approved under section 505(j) of such Act;
__``(ii)(I) which was commercially used or sold in the United States before the date of the enactment of the Drug Amendments of 1962 or which is identical, similar, or related (within the meaning of section 310.6(b)(1) of title 21 of the Code of Federal Regulations) to such a drug, and (II) which has not been the subject of a final determination by the Secretary that it is a `new drug' (within the meaning of section 201(p) of the Federal Food, Drug, and Cosmetic Act) or an action brought by the Secretary under section 301, 302(a), or 304(a) of such Act to enforce section 502(f) or 505(a) of such Act; or
__``(iii)(I) which is described in section 107(c)(3) of the Drug Amendments of 1962 and for which the Secretary has determined there is a compelling justification for its medical need, or is identical, similar, or related (within the meaning of section 310.6(b)(1) of title 21 of the Code of Federal Regulations) to such a drug, and (II) for which the Secretary has not issued a notice of an opportunity for a hearing under section 505(e) of the Federal Food, Drug, and Cosmetic Act on a proposed order of the Secretary to withdraw approval of an application for such drug under such section because the Secretary has determined that the drug is less than effective for all conditions of use prescribed, recommended, or suggested in its labeling;
__``(B) A biological product which_
__``(i) may only be dispensed upon prescription,
__``(ii) is licensed under section 351 of the Public Health Service Act, and
__``(iii) is produced at an establishment licensed under such section to produce such product; and
__``(C) Insulin certified under section 506 of the Federal Food, Drug, and Cosmetic Act.
__``(3) The term `covered outpatient drug' does not include any product which is intravenously administered in a home setting unless it is a covered home infusion drug (as described in paragraph (5)).

__``(4) For purposes of paragraph (2), the term `medically accepted indication', with respect to the use of an outpatient drug, includes any use which has been approved by the Food and Drug Administration for the drug, and includes another use of the drug if_
__``(A) the drug has been approved by the Food and Drug Administration; and
__``(B)(i) such use is supported by one or more citations which are included (or approved for inclusion) in one or more of the following compendia: the American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluations, the United States Pharmacopoeia-Drug Information, and other authoritative compendia as identified by the Secretary, unless the Secretary has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia, or
__``(ii) the carrier involved determines, based upon guidance provided by the Secretary to carriers for determining accepted uses of drugs, that such use is medically accepted based on supportive clinical evidence in peer reviewed medical literature appearing in publications which have been identified for purposes of this clause by the Secretary.
The Secretary may revise the list of compendia in paragraph (B)(i) designated as appropriate for identifying medically accepted indications for drugs.
__``(5)(A) For purposes of paragraph (3), the term `covered home infusion drug' means a covered outpatient drug dispensed to an individual that_
__``(i) is administered intravenously, subcutaneously, epidurally, or through other means determined by the Secretary, using an access device that is inserted in to the body and an infusion device to control the rate of flow of the drug,
__``(ii) is administered in the individual's home (including an institution used as his home, other than a hospital under subsection (e) or a skilled nursing facility that meets the requirements of section 1819(a)), and
__``(iii)(I) is an antibiotic drug and the Secretary has not determined, for the specific drug or the indication to which the drug is applied, that the drug cannot generally be administered safely and effectively in a home setting, or
__``(II) is not an antibiotic drug and the Secretary has determined, for the specific drug or the indication to which the drug is applied, that the drug can generally be administered safely and effectively in a home setting.
__``(B) Not later than January 1, 1996, (and periodically thereafter), the Secretary shall publish a list of the drugs, and indications for such drugs, that are covered home infusion drugs, with respect to which home infusion drug therapy may be provided under this title.''.

__(c) Exceptions; Exclusions From Coverage._Section 1862(a) of such Act (42 U.S.C. 1395y(a)), as amended by sections 4034(b)(4) and 4118(b), is amended_
__(1) by striking ``and'' at the end of paragraph (15),
__(2) by striking the period at the end of paragraph (16) and inserting ``; or'', and
__(3) by inserting after paragraph (16) the following new paragraph:
__``(17) A covered outpatient drug (as described in section 1861(t))_
__``(A) when furnished as part of, or as incident to, any other item or service for which payment may be made under this title, or
__``(B) which is listed under paragraph (2) of section 1927(d) (other than subparagraph (I) or (J) of such paragraph) as a drug which may be excluded from coverage under a State plan under title XIX and which the Secretary elects to exclude from coverage under this part.

__(d) Other Conforming Amendments._(1) Section 1861 of such Act (42 U.S.C. 1395x) is amended_

__(A) in subsection (s)(2), as amended by section 13553 of OBRA 1993_
__(i) by striking subparagraphs (O) and (Q),
__(ii) by adding ``and'' at the end of subparagraph (N),
__(iii) by striking ``; and'' at the end of subparagraph (P) and inserting a period, and
__(iv) by redesignating subparagraph (P) as subparagraph (O); and
__(B) by striking the subsection (jj) added by section 4156(a)(2) of the Omnibus Budget Reconciliation Act of 1990.
__(2) Section 1881(b)(1)(C) of such Act (42 U.S.C. 1395rr(b)(1)(C)), as amended by section 13566(a) of OBRA     1993, is amended by striking ``section 1861(s)(2)(P)'' and inserting ``section 1861(s)(2)(O)''.
SEC. 2002. PAYMENT RULES AND RELATED REQUIREMENTS FOR COVERED OUTPATIENT DRUGS.
__(a) In General._Section 1834 of the Social Security Act (42 U.S.C. 1395m) is amended by inserting after subsection (c) the following new subsection:
__``(d) Payment for and Certain Requirements Concerning Covered Outpatient Drugs._
__``(1) Deductible._
__``(A) In general._Payment shall be made under paragraph (2) only for expenses incurred by an individual for a covered outpatient drug during a calendar year after the individual has incurred expenses in the year for such drugs (during a period in which the individual is entitled to benefits under this part) equal to the deductible amount for that year.
__``(B) Deductible amount._
__``(i) For purposes of subparagraph (A), the deductible amount is_
__``(I) for 1996, $250, and
__``(II) for any succeeding year, the amount (rounded to the nearest dollar) that the Secretary estimates will ensure that the percentage of the average number of individuals covered under this part (other than individuals enrolled with an eligible organization under section 1876 or an organization described in section 1833(a)(1)(A)) during the year who will incur expenses for covered outpatient drugs equal to or greater than such amount will be the same as the percentage for the previous year.
__``(ii) The Secretary shall promulgate the deductible amount for 1997 and each succeeding year during September of the previous year.
__``(C) Special rule for determination of expenses incurred._In determining the amount of expenses incurred by an individual for covered outpatient drugs during a year for purposes of subparagraph (A), there shall not be included any expenses incurred with respect to a drug to the extent such expenses exceed the payment basis for such drug under paragraph (3).
__``(2) Payment amount._
__``(A) In general._Subject to the deductible established under paragraph (1), the amount payable under this part for a covered outpatient drug furnished to an individual during a calendar year shall be equal to_
__``(i) 80 percent of the payment basis described in paragraph (3), in the case of an individual who has not incurred expenses for covered outpatient drugs during the year (including the deductible imposed under paragraph (1)) in excess of the out-of-pocket limit for the year under subparagraph (B); and
__``(ii) 100 percent of the payment basis described in paragraph (3), in the case of any other individual.
__``(B) Out-of-pocket limit described._
__``(i) For purposes of subparagraph (A), the out-of-pocket limit for a year is equal to_
__``(I) for 1996, $1000, and
__``(II) for any succeeding year, the amount (rounded to the nearest dollar) that the Secretary estimates will ensure that the percentage of the average number of individuals covered under this part (other than individuals enrolled with an eligible organization under section 1876 or an organization described in section 1833(a)(1)(A)) during the year who will incur expenses for covered outpatient drugs equal to or greater than such amount will be the same as the percentage for the previous year.
__``(ii) The Secretary shall promulgate the out-of-pocket limit for 1997 and each succeeding year during September of the previous year.
__``(C) Special rule for determination of expenses incurred._In determining the amount of expenses incurred by an individual for covered outpatient drugs during a year for purposes of subparagraph (A), there shall not be included any expenses incurred with respect to a drug to the extent such expenses exceed the payment basis for such drug under paragraph (3).
__``(3) Payment basis._For purposes of paragraph (2), the payment basis is the lesser of_
__``(A) the actual charge for a covered outpatient drug, or
__``(B) the applicable payment limit established under paragraph (4).

__``(4) Payment limits._
__``(A) Payment limit for single source drugs and multiple source drugs with restrictive prescriptions._In the case of a covered outpatient drug that is a multiple source drug which has a restrictive prescription, or that is single source drug, the payment limit for a payment calculation period is equal to_
__``(i) for drugs furnished after 1996, the 90th percentile of the actual charges (computed on the geographic basis specified by the Secretary) for the drug product for the second previous payment calculation period, or
__``(ii) the amount of the administrative allowance (established under paragraph (5)) plus the product of the number of dosage units dispensed and the per unit estimated acquisition cost for the drug product (determined under subparagraph (C)) for the period,
whichever is less.
__``(B) Payment limit for multiple source drugs without restrictive prescriptions._In the case of a drug that is a multiple source drug which does not have a restrictive prescription, the payment limit for a payment calculation period is equal to the amount of the administrative allowance (established under paragraph (5)) plus the product of the number of dosage units dispensed and the unweighted median of the unit estimated acquisition cost (determined under subparagraph (C)) for the drug products for the period.
__``(C) Determination of unit price._
__``(i) In general._The Secretary shall determine, for the dispensing of a covered outpatient drug product in a payment calculation period, the estimated acquisition cost for the drug product. With respect to any covered outpatient drug product, such cost may not exceed 93 percent of the average manufacturer non-retail price for the drug (as defined in section 1850(f)(2)) during the period.
__``(ii) Compliance with request for information._If a wholesaler or direct seller of a covered outpatient drug refuses, after being requested by the Secretary, to provide price information requested to carry out clause (i), or deliberately provides information that is false, the Secretary may impose a civil money penalty of not to exceed $10,000 for each such refusal or provision of false information. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to civil money penalties under the previous sentence in the same manner as they apply to a penalty or proceeding under section 1128A(a). Information gathered pursuant to clause (i) shall not be disclosed except as the Secretary determines to be necessary to carry out the purposes of this part.
__``(5) Administrative allowance for purposes of payment limit._
__``(A) In general._Except as provided in subparagraph (B), the administrative allowance under paragraph (4) is_
__``(i) for 1996, $5, and
__``(ii) for each succeeding year, the amount for the previous year adjusted by the percentage change in the consumer price index for all urban consumers (U.S. city average) for the 12-month period ending with June of that previous year.
__``(B) Reduction for mail order pharmacies._The Secretary may, after consulting with representatives of pharmacists, individuals enrolled under this part, and of private insurers, reduce the administrative allowances established under subparagraph (A) for any covered outpatient drug dispensed by a mail order pharmacy, based on differences between such pharmacies and other pharmacies with respect to operating costs and other economies.
__``(6) Assuring appropriate prescribing and dispensing practices._
__``(A) In general._The Secretary shall establish a program to identify (and to educate physicians and pharmacists concerning)_
__``(i) instances or patterns of unnecessary or inappropriate prescribing or dispensing practices for covered outpatient drugs,
__``(ii) instances or patterns of substandard care with respect to such drugs,
__``(iii) potential adverse reactions, and
__``(iv) appropriate use of generic products.
__``(B) Standards._In carrying out the program under subparagraph (A), the Secretary shall establish for each covered outpatient drug standards for the prescribing of the drug which are based on accepted medical practice. In establishing such standards, the Secretary shall incorporate standards from such current authoritative compendia as the Secretary may select, except that the Secretary may modify such a standard by regulation on the basis of scientific and medical information that such standard is not consistent with the safe and effective use of the drug.




__``(C) Drug use review._The Secretary may provide for a drug use review program with respect to covered outpatient drugs dispensed to individuals eligible for benefits under this part. Such program may include such elements as the Secretary determines to be necessary to assure that prescriptions (i) are appropriate, (ii) are medically necessary, and (iii) are not likely to result in adverse medical results, including any elements of the State drug use review programs required under section 1927(g) that the Secretary determines to be appropriate.
__``(7) Administrative improvements._The Secretary shall develop, in consultation with representatives of pharmacies and of other interested persons, a standard claims form for covered outpatient drugs in accordance with title V of the Health Security Act.
__``(8) Definitions._In this subsection:
__``(A) Multiple and single source drugs._The terms `multiple source drug' and `single source drug' have the meanings of those terms under section 1927(k)(7).
__``(B) Restrictive prescription._A drug has a `restrictive prescription' only if_
__``(i) in the case of a written prescription, the prescription for the drug indicates, in the handwriting of the physician or other person prescribing the drug and with an appropriate phrase (such as `brand medically necessary') recognized by the Secretary, that a particular drug product must be dispensed, or
__``(ii) in the case of a prescription issued by telephone_
__``(I) the physician or other person prescribing the drug (through use of such an appropriate phrase) states that a particular drug product must be dispensed, and
__``(II) the physician or other person submits to the pharmacy involved, within 30 days after the date of the telephone prescription, a written confirmation which is in the handwriting of the physician or other person prescribing the drug and which indicates with such appropriate phrase that the particular drug product was required to have been dispensed.
__``(C) Payment Calculation Period._The term `payment calculation period' means the 6-month period beginning with January of each year and the 6-month period beginning with July of each year.''.
__(b) Submission of Claims by Pharmacies._Section 1848(g)(4) of such Act (42 U.S.C. 1395w       4(g)(4)) is amended_
__(1) in the heading_
__(A) by striking ``Physician'', and
__(B) by inserting ``by physicians and suppliers'' after ``claims'',
__(2) in the matter in subparagraph (A) preceding clause (i)_
__(A) by striking ``For services furnished on or after September 1, 1990, within 1 year'' and inserting ``Within 1 year (90 days in the case of covered outpatient drugs)'',
__(B) by striking ``a service'' and inserting ``an item or service'', and
__(C) by inserting ``or of providing a covered outpatient drug,'' after ``basis,'' and
__(3) in subparagraph (A)(i), by inserting ``item or'' before ``service.
__(c) Special Rules for Carriers._
__(1) Use of regional carriers._Section 1842(b)(2) of such Act (42 U.S.C. 1395u(b)(2)) is amended by adding at the end the following:
__``(D) With respect to activities related to covered outpatient drugs, the Secretary may enter into contracts with carriers under this section to perform the activities on a regional basis.''.
__(2) Payment on other than a cost basis._Section 1842(c)(1)(A) of such Act (42 U.S.C. 1395u(c)(1)(A)) is amended_
__(A) by inserting ``(i)'' after ``(c)(1)(A)'',
__(B) in the first sentence, by inserting ``, except as otherwise provided in clause (ii),'' after ``under this part, and'', and
__(C) by adding at the end the following:
__``(ii) To the extent that a contract under this section provides for activities related to covered outpatient drugs, the Secretary may provide for payment for those activities based on any method of payment determined by the Secretary to be appropriate.''.
__(3) Use of other entities for covered outpatient drugs._Section 1842(f) of such Act (42 U.S.C. 1395u(f)) is amended_
__(A) by striking ``and'' at the end of paragraph (1),
__(B) by substituting ``; and'' for the period at the end of paragraph (2), and,
__(C) by adding at the end the following:
__``(3) with respect to activities related to covered outpatient drugs, any other private entity which the Secretary determines is qualified to conduct such activities.''.
__(4) Designated carriers to process claims of railroad retirees._Section 1842(g) of such Act (42 U.S.C. 1395u(g)) is amended by inserting ``(other than functions related to covered outpatient drugs)'' after ``functions''.
__(d) Contracts for Automatic Data Processing Equipment._Actions taken before 1995 that affect contracts related to the processing of claims for covered outpatient drugs (as defined in section 1861(t) of the Social Security Act) shall not be subject to section 111 of the Federal Property and Administrative Services Act of 1949, and shall not be subject to administrative or judicial review.
__(e) Conforming Amendments._
__(1)(A) Section 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)), as amended by section 13544(b)(2) of OBRA      1993, is amended_
__(i) by striking ``and'' at the end of clause (O), and
__(ii) by inserting before the semicolon at the end the following: ``, and (Q) with respect to covered outpatient drugs, the amounts paid shall be as prescribed by section 1834(d)''.
__(B) Section 1833(a)(2) of such Act (42 U.S.C. 1395l(a)(2)) is amended in the matter preceding subparagraph (A) by inserting ``, except for covered outpatient drugs,'' after ``and (I) of such section''.
__(2) Section 1833(b)(2) of such Act (42 U.S.C. 1395l(b)(2)) is amended by inserting ``or with respect to covered outpatient drugs'' before the comma.
__(3) The first sentence of section 1842(h)(2) of such Act (42 U.S.C. 1395u(h)(2)) is amended by inserting ``(other than a carrier described in subsection (f)(3))'' after ``Each carrier''.
__(4) The first sentence of section 1866(a)(2)(A) of such Act (42 U.S.C. 1395cc(a)(2)(A)) is amended_
__(A) in clause (i), by inserting ``section 1834(d), after ``section 1833(b),'', and
__(B) in clause (ii), by inserting ``, other than for covered outpatient drugs,'' after ``provider)''.
SEC. 2003. MEDICARE REBATES FOR COVERED OUTPATIENT DRUGS.
__(a) In General._Part B of title XVIII of the Social Security Act is amended by adding at the end the following new section:
``REBATES FOR COVERED OUTPATIENT DRUGS
__``Sec. 1850. (a) Requirement for Rebate Agreement._In order for payment to be available under this part for covered outpatient drugs of a manufacturer dispensed on or after January 1, 1996, the manufacturer must have entered into and have in effect a rebate agreement with the Secretary meeting the requirements of subsection (b), and an agreement to give equal access to discounts in accordance with subsection (e).
__``(b) Terms, Implementation, and Enforcement of Rebate Agreement._
__``(1) Periodic rebates._
__``(A) In general._A rebate agreement under this section shall require the manufacturer to pay to the Secretary for each calendar quarter, not later than 30 days after the date of receipt of the information described in paragraph (2) for such quarter, a rebate in an amount determined under subsection (c) for all covered outpatient drugs of the manufacturer described in subparagraph (B).
__``(B) Drugs included in quarterly rebate calculation._Drugs subject to rebate with respect to a calendar quarter are drugs which are either_
__``(i) dispensed by participating pharmacies during such quarter to individuals (other than individuals enrolled with an eligible organization with a contract under section 1876) eligible for benefits under this part, as reported by such pharmacies to the Secretary, or
__``(ii) dispensed by nonparticipating pharmacies to such individuals and included in claims for payment of benefits received by the Secretary during such quarter.
__``(2) Information furnished to manufacturers._
__``(A) In general._The Secretary shall report to each manufacturer, not later than 60 days after the end of each calendar quarter, information on the total number, for each covered outpatient drug, of units of each dosage form, strength, and package size dispensed under the plan during the quarter, on the basis of the data reported to the Secretary described in paragraph (1)(B).
__``(B) Audit._The Comptroller General may audit the records of the Secretary to the extent necessary to determine the accuracy of reports by the Secretary pursuant to subparagraph (A). Adjustments to rebates shall be made to the extent determined necessary by the audit to reflect actual units of drugs dispensed.
__``(3) Provision of price information by manufacturer._
__``(A) Quarterly pricing information._Each manufacturer with an agreement in effect under this section shall report to the Secretary, not later than 30 days after the last day of each calendar quarter, on the average manufacturer retail price and the average manufacturer non-retail price for each dosage form and strength of each covered outpatient drug for the quarter.
__``(B) Base quarter prices._Each manufacturer of a covered outpatient drug with an agreement under this section shall report to the Secretary, by not later than 30 days after the effective date of such agreement (or, if later, 30 days after the end of the base quarter), the average manufacturer retail price, for such base quarter, for each dosage form and strength of each such covered drug.
__``(C) Verification of average manufacturer price._The Secretary may inspect the records of manufacturers, and survey wholesalers, pharmacies, and institutional purchasers of drugs, as necessary to verify prices reported under subparagraph (A).
__``(D) Penalties._
__``(i) Civil money penalties._The Secretary may impose a civil money penalty on a manufacturer with an agreement under this section_
__``(I) for failure to provide information required under subparagraph (A) on a timely basis, in an amount up to $10,000 per day of delay;
__``(II) for refusal to provide information about charges or prices requested by the Secretary for purposes of verification pursuant to subparagraph (C), in an amount up to $100,000; and
__``(III) for provision, pursuant to subparagraph (A) or (B), of information that the manufacturer knows or should know is false, in an amount up to $100,000 per item of information.
Such civil money penalties are in addition to any other penalties prescribed by law. The provisions of section 1128A (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).
__``(ii) Termination of agreement._If a manufacturer with an agreement under this section has not provided information required under subparagraph (A) or (B) within 90 days of the deadline imposed, the Secretary may suspend the agreement with respect to covered outpatient drugs dispensed after the end of such 90-day period and until the date such information is reported (but in no case shall a suspension be for less than 30 days).
__``(4) Length of agreement._
__``(A) In general._A rebate agreement shall be effective for an initial period of not less than one year and shall be automatically renewed for a period of not less than one year unless terminated under subparagraph (B).
__``(B) Termination._
__``(i) By the secretary._The Secretary may provide for termination of a rebate agreement for violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 60 days after the date of notice of such termination. The Secretary shall afford a manufacturer an opportunity for a hearing concerning such termination, but such hearing shall not delay the effective date of the termination.
__``(ii) By a manufacturer._A manufacturer may terminate a rebate agreement under this section for any reason. Any such termination shall not be effective until the calendar quarter beginning at least 60 days after the date the manufacturer provides notice to the Secretary.
__``(iii) Effective date of termination._Any termination under this subparagraph shall not affect rebates due under the agreement before the effective date of its termination.
__``(iv) Notice to pharmacies._In the case of a termination under this subparagraph, the Secretary shall notify pharmacies that are participating suppliers under this part and physician organizations not less than 30 days before the effective date of such termination.
__``(c) Amount of Rebate._
__``(1) Basic rebate._Each manufacturer shall remit a basic rebate to the Secretary for each calendar quarter in an amount, with respect to each dosage form and strength of a covered drug (except as provided under paragraph (4)), equal to the product of_
__``(A) the total number of units subject to rebate for such quarter, as described in subsection (b)(1)(B); and
__``(B) the greater of_
__``(i) the difference between the average manufacturer retail price and the average manufacturer non-retail price,
__``(ii) 17 percent of the average manufacturer retail price, or
__``(iii) the amount determined pursuant to paragraph (4).
__``(2) Additional rebate._Each manufacturer shall remit to the Secretary, for each calendar quarter, an additional rebate for each dosage form and strength of a covered drug (except as provided under paragraph (4)), in an amount equal to_
__``(A) the total number of units subject to rebate for such quarter, as described in subsection (b)(1)(B), multiplied by
__``(B) the amount, if any, by which the average manufacturer retail price for covered drugs of the manufacturer exceeds the average manufacturer retail price for the base quarter, increased by the percentage increase in the Consumer Price Index for all urban consumers (U.S. average) from the end of such base quarter to the month before the beginning of such calendar quarter.
__``(3) Negotiated rebate amount for new drugs._
__``(A) In general._The Secretary may negotiate with the manufacturer a per-unit rebate amount, in accordance with this paragraph, for any covered outpatient drug (except as provided under paragraph (4)) first marketed after June 30, 1993_
__``(i) which is not marketed in any country specified in section 802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act and for which the Secretary believes the average manufacturer's retail price may be excessive, or
__``(ii) which is marketed in one or more of such countries, at prices significantly lower than the average manufacturer retail price.
__``(B) Maximum rebate amount for drugs marketed in certain countries._The rebate negotiated pursuant to this paragraph for a drug described in subparagraph (A)(ii) may be an amount up to the difference between the average manufacturer retail price and any price at which the drug is available to wholesalers in a country specified in such section 802(b)(4)(A).
__``(C) Factors to be considered._In making determinations with respect to the prices of a covered drug described in subparagraph (A) and in negotiating a rebate amount pursuant to this paragraph, the Secretary shall take into consideration, as applicable and appropriate, the prices of other drugs in the same therapeutic class, cost information requested by the Secretary and supplied by the manufacturer or estimated by the Secretary, prescription volumes, economies of scale, product stability, special manufacturing requirements, prices of the drug in countries specified in subparagraph (A)(i) (in the case of a drug described in such subparagraph), and other relevant factors.
__``(D) Option to exclude coverage._If the Secretary is unable to negotiate with the manufacturer an acceptable rebate amount with respect to a covered outpatient drug pursuant to this paragraph, the Secretary may exclude such drug from coverage under this part.
__``(E) Effective date of exclusion from coverage._An exclusion of a drug from coverage pursuant to subparagraph (D) shall be effective on and after_
__``(i) the date 6 months after the effective date of marketing approval of such drug by the Food and Drug Administration, or
__``(ii) (if earlier) the date the manufacturer terminates negotiations with the Secretary concerning the rebate amount.
__``(4) No rebate required for generic drugs._Paragraphs (1) through (3) shall not apply with respect to a covered outpatient drug that is not a single source drug or an innovator multiple source drug (as such terms are defined in section 1927(k)).
__``(5) Deposit of rebates._The Secretary shall deposit rebates under this section in the Federal Supplementary Medical Insurance Trust Fund established under section 1841.
__``(d) Confidentiality of Information._Notwithstanding any other provision of law, information disclosed by a manufacturer under this section is confidential and shall not be disclosed by the Secretary, except_
__``(A) as the Secretary determines to be necessary to carry out this section,
__``(B) to permit the Comptroller General to review the information provided, and
__``(C) to permit the Director of the Congressional Budget Office to review the information provided.
__``(e) Agreement to Give Equal Access to Discounts._An agreement under this subsection by a manufacturer of covered outpatient drugs shall guarantee that the manufacturer will offer, to each wholesaler or retailer (or other purchaser representing a group of such wholesalers or retailers) that purchases such drugs on substantially the same terms (including such terms as prompt payment, cash payment, volume purchase, single-site delivery, the use of formularies by purchasers, and any other terms effectively reducing the manufacturer's costs) as any other purchaser (including any institutional purchaser) the same price for such drugs as is offered to such other purchaser. In determining a manufacturer's compliance with the previous sentence, there shall not be taken into account terms offered to the Department of Veterans Affairs, the Department of Defense, or any public program.
__``(f) Definitions._For purposes of this section_
__``(1) Average manufacturer retail price._The term `average manufacturer retail price' means, with respect to a covered outpatient drug of a manufacturer for a calendar quarter, the average price (inclusive of discounts for cash payment, prompt payment, volume purchases, and rebates (other than rebates under this section), but exclusive of nominal prices) paid to the manufacturer for the drug in the United States for drugs distributed to the retail pharmacy class of trade.
__``(2) Average manufacturer non-retail price._The term `average manufacturer non-retail price' means, with respect to a covered outpatient drug of a manufacturer for a calendar quarter, the weighted average price (inclusive of discounts for cash payment, prompt payment, volume purchases, and rebates (other than rebates under this section), but exclusive of nominal prices) paid to the manufacturer for the drug in the United States by hospitals and other institutional purchasers that purchase drugs for institutional use and not for resale.
__``(3) Base quarter._The term `base quarter' means, with respect to a covered outpatient drug of a manufacturer, the calendar quarter beginning April 1, 1993, or (if later) the first full calendar quarter during which the drug was marketed in the United States.
__``(4) Covered drug._The term `covered drug' includes each innovator multiple source drug and single source drug, as those terms are defined in section 1927(k)(7).
__``(5) Manufacturer._The term `manufacturer' means, with respect to a covered outpatient drug_
__``(A) the entity whose National Drug Code number (as issued pursuant to section 510(e) of the Federal Food, Drug, and Cosmetic Act) appears on the labeling of the drug; or
__``(B) if the number described in subparagraph (A) does not appear on the labeling of the drug, the person named as the applicant in a human drug application (in the case of a new drug) or the product license application (in the case of a biological product) for such drug approved by the Food and Drug Administration.''.
__(b) Conforming Amendment Relating to Exclusions From Coverage._Section 1862(a)(18) of such Act (42 U.S.C. 1395y(a)), as added by section 2001(c), is amended_
__(A) by striking ``or'' at the end of subparagraph (A),
__(B) by striking the period at the end of subparagraph (B) and inserting ``, or'', and
__(C) by adding at the end the following new subparagraphs:
__``(C) furnished during a year for which the drug's manufacturer does not have in effect a rebate agreement with the Secretary that meets the requirements of section 1850 for the year, or
__``(D) excluded from coverage during the year by the Secretary pursuant to section 1850(c)(3)(D) (relating to negotiated rebate amounts for certain new drugs).''.

SEC. 2004. COUNSELING BY PARTICIPATING PHARMACIES.
__Section 1842(h) of the Social Security Act (42 U.S.C. 1395u(h)) is amended by adding at the end the following:
__``(8) A pharmacy that is a participating supplier under this part shall agree to answer questions of individuals enrolled under this part who receive a covered outpatient drug from the pharmacy regarding the appropriate use of the drug, potential interactions between the drug and other drugs dispensed to the individual, and other matters relating to the dispensing of such drugs.''.
SEC. 2005. EXTENSION OF 25 PERCENT RULE FOR PORTION OF PREMIUM ATTRIBUTABLE TO COVERED OUTPATIENT DRUGS.
__Section 1839(e) of the Social Security Act (42 U.S.C. 1395r(e)) is amended by adding at the end the following:
__``(3) Notwithstanding the provisions of subsection (a), the portion of the monthly premium for each individual enrolled under this part for each month after December 1998 that is attributable to covered outpatient drugs shall be an amount equal to 50 percent of the portion of the monthly actuarial rate for enrollees age 65 and over, as determined under subsection (a)(1) and applicable to such month, that is attributable to covered outpatient drugs.''.
SEC. 2006. COVERAGE OF HOME INFUSION DRUG THERAPY SERVICES.
__(a) In General._Section 1832(a)(2)(A) of the Social Security Act (42 U.S.C. 1395k(a)(2)(A)) is amended by inserting ``and home infusion drug therapy services'' before the semicolon.
__(b) Home Infusion Drug Therapy Services Defined._Section 1861 of such Act (42 U.S.C. 1395x) is amended_
__(1) by redesignating the subsection (jj) inserted by section 4156(a)(2) of the Omnibus Budget Reconciliation Act of 1990 as subsection (kk); and
__(2) by inserting after such subsection the following new subsection:
``Home Infusion Drug Therapy Services
__``(ll)(1) The term `home infusion drug therapy services' means the items and services described in paragraph (2) furnished to an individual who is under the care of a physician_
__``(A) in a place of residence used as the individual's home,
__``(B) by a qualified home infusion drug therapy provider (as defined in paragraph (3)) or by others under arrangements with them made by that provider, and
__``(C) under a plan established and periodically reviewed by a physician.
__``(2) The items and services described in this paragraph are such nursing, pharmacy, and related services (including medical supplies, intravenous fluids, delivery, and equipment) as are necessary to conduct safely and effectively a drug regimen through use of a covered home infusion drug (as defined in subsection (t)(5)), but do not include such covered outpatient drugs.
__``(3) The term `qualified home infusion drug therapy provider' means any entity that the secretary determines meets the following requirements:
__``(A) The entity is capable of providing or arranging for the items and services described in paragraph (2) and covered home infusion drugs.
__``(B) The entity maintains clinical records on all patients.
__``(C) The entity adheres to written protocols and policies with respect to the provision of items and services.
__``(D) The entity makes services available (as needed) seven days a week on a 24-hour basis.
__``(E) The entity coordinates all service with the patient's physician.
__``(F) The entity conducts a quality assessment and assurance program, including drug regimen review and coordination of patient care.
__``(G) The entity assures that only trained personnel provide covered home infusion drugs (and any other service for which training is required to provide the service safely).
__``(H) The entity assumes responsibility for the quality of services provided by others under arrangements with the entity.
__``(I) In the case of an entity in any State in which State or applicable local law provides for the licensing of entities of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing entities of this nature, as meeting the standards established for such licensing.
__``(J) The entity meets such other requirements as the Secretary may determine are necessary to assure the safe and effective provision of home infusion drug therapy services and the efficient administration of the home infusion drug therapy benefit.''.
__(c) Payment._
__(1) In general._Section 1833 of such Act (42 U.S.C. 1395l) is amended_
__(A) in subsection (a)(2)(B), by striking ``or (E)'' and inserting ``(E), or (F)'',
__(B) in subsection (a)(2)(D), by striking ``and'' at the end,
__(C) in subsection (a)(2)(E), by striking the semicolon and inserting ``; and'',
__(D) by inserting after subsection (a)(2)(E) the following new subparagraph:
__``(F) with resect to home infusion drug therapy services, the amounts described in section 1834(j);'',
__(E) in the first sentence of subsection (b), by striking ``services, (3)'' and inserting ``services and home infusion drug therapy services, (3)''.
__(2) Amount described._Section 1834 of such Act, as amended by section 13544(b)(i) of OBRA     1993, is amended by adding at the end the following new subsection:
__``(j) Home infusion Drug Therapy Services._
__``(1) In general._With respect to home infusion drug therapy services, payment under this part shall be made in an amount equal to the lesser of the actual charges for such services or the fee schedule established under paragraph (2).
__``(2) Establishment of fee schedule._The Secretary shall establish by regulation before the beginning of 1996 and each succeeding year a fee schedule for home infusion drug therapy services for which payment is made under this part. A fee schedule established under this subsection shall be on a per diem basis.''.
__(3) Prohibition on certain referrals._Section 1877(h)(6) of such Act (42 U.S.C. 1395nn(h)(6)), as amended by section 13562(a) of OBRA 1993, is amended by adding at the end the following:
__``(L) Home infusion drug therapy services.''.
__(d) Certification._Section 1835(a)(2) of such Act (42 U.S.C. 1395n(a)(2)) is amended_
__(1) by striking ``and'' at the end of subparagraph (E),
__(2) by striking the period at the end of subparagraph (F) and inserting ``; and'', and
__(3) by inserting after subparagraph (F) the following:
__``(G) in the case of home infusion drug therapy services, (i) such services are or were required because the individual needed such services for the administration of a covered home infusion drug, (ii) a plan for furnishing such services has been established and is reviewed periodically by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician.''.
__(e) Certification of Home infusion Drug Therapy Providers; Intermediate Sanctions for Noncompliance._
__(1) Treatment as provider of services._Section 1861(u) of such Act (42 U.S.C. 1395x(u)) is amended by inserting ``home infusion drug therapy provider,'' after ``hospice program,''.
__(2) Consultation with state agencies and other organizations._Section 1863 of such Act (42 U.S.C. 1395z) is amended by striking ``and (dd)(2)'' and inserting ``(dd)(2), and (ll)(3)''.
__(3) Use of state agencies in determining compliance._Section 1864(a) of such Act (42 U.S.C. 1395aa(a)) is amended_
__(A) in the first sentence, by striking ``an agency is a hospice program'' and inserting ``an agency or entity is a hospice program or a home infusion drug therapy provider,'' after ``home health agency, or whether''; and
__(B) in the second sentence_
__(i) by striking ``institution or agency'' and inserting ``institution, agency, or entity'', and
__(ii) by striking ``or hospice program'' and inserting ``hospice program, or home infusion drug therapy provider''.
__(4) Application of intermediate sanctions._Section 1846 of such Act (42 U.S.C. 1395w  2) is amended_
__(A) in the heading, by adding ``and for qualified home infusion drug therapy providers'' at the end,
__(B) in subsection (a), by inserting ``or that a qualified home infusion drug therapy provider that is certified for participation under this title no longer substantially meets the requirements of section 1861(ll)(3)'' after ``under this part'', and
__(C) in subsection (b)(2)(A)(iv), by inserting ``or home infusion drug therapy services'' after ``clinical diagnostic laboratory tests''.
__(f) Use of Regional Intermediaries in Administration of Benefit._Section 1816 of such Act (42 U.S.C. 1395h) is amended by adding at the end the following new subsection:
__``(k) With respect to carrying out functions relating to payment for home infusion drug therapy services and covered home infusion drugs, the Secretary may enter into contracts with agencies or organizations under this section to perform such functions on a regional basis.''.
SEC. 2007. CIVIL MONEY PENALTIES FOR EXCESSIVE CHARGES.
__Section 1128A(a) of the Social Security Act (42 U.S.C. 1320a  7a(a)), as amended by sections 4041(a)(1), 4043(a)(1), and 4043(c), is amended_
__(1) by striking ``,or'' at the end of paragraph (5) and adding a semicolon,
__(3) by adding ``or'' at the end of paragraph (6), and
__(4) by inserting after paragraph (6) the following:
__``(7) in the case of a pharmacy, presents or causes to be presented to any person a request for payment for covered outpatient drugs (as defined in section 1861(t)) dispensed to an individual enrolled under part B of title XVIII and for which the amount charged by the pharmacy is greater than the amount the pharmacy charges the general public (as determined by the Secretary);''.
SEC. 2008. CONFORMING AMENDMENTS TO MEDICAID PROGRAM.
__(a) In General._
__(1) Requiring medicare rebate as condition of coverage._The first sentence of section 1927(a)(1) of the Social Security Act (42 U.S.C. 1396r  8(a)(1)) is amended_
__(A) in the first sentence of paragraph (1), by striking ``and paragraph (6)'' and inserting ``, paragraph (6), and (for calendar quarters beginning on or after January 1, 1996) paragraph (7)''; and
__(B) by adding at the end the following new paragraph:
__``(7) Requirement relating to rebate agreements for covered outpatient drugs under medicare program._A manufacturer meets the requirements of this paragraph for quarters in a year if the manufacturer has in effect an agreement with the Secretary under section 1850 for providing rebates for covered outpatient drugs furnished to individuals under title XVIII during the year.''.

__(2) Non-duplication of rebates._Section 1927(b)(1) of the Social Security Act (42 U.S.C. 1396r        8(b)(1)) is amended_
__(A) by redesignating subparagraph (B) as subparagraph (C), and
__(B) by inserting after subparagraph (A) the following new subparagraph:
__``(B) Non-duplication of medicare rebate._Covered drugs furnished to an individual eligible for benefits under both part B of title XVIII and a State plan under this title shall not be included in the determination of units of covered outpatient drugs subject to rebate under this section.''.

__(b) Effective Date._The amendments made by subsection (a) shall apply to quarters beginning on or after January 1, 1996.


SEC. 2009. EFFECTIVE DATE.
__The amendments made by this subtitle shall apply to items and services furnished on or after January 1, 1996.

Title II, Subtitle B

Subtitle B_Long-Term Care
PART 1_STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH DISABILITIES
SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH DISABILITIES.
__(a) In General._Each State that has a plan for the home and community-based services to individuals with disabilities submitted to and approved by the Secretary under section 2102(b) is entitled to payment in accordance with section 2108.
__(b) No Individual Entitlement Established._Nothing in this part shall be construed to create an entitlement in individuals or a requirement that a State with such an approved plan expend the entire amount of funds to which it is entitled in any year.
__(c) State Defined._In this subpart, the term ``State'' includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
SEC. 2102. STATE PLANS.
__(a) Plan Requirements._In order to be approved under subsection (b), a State plan for home and community-based services for individuals with disabilities must meet the following requirements (except to the extent provided in subsection (b)(2), relating to phase-in period):
__(1) Eligibility._
__(A) In general._Within the amounts provided by the State (and under section 2108) for such program, the plan shall provide that services under the plan will be available to individuals with disabilities (as defined in section 2103(a)) in the State.
__(B) Initial screening._The plan shall provide a process for the initial screening of individuals who appear to have some reasonable likelihood of being an individual with disabilities.
__(C) Restrictions._The plan may not limit the eligibility of individuals with disabilities based on_
__(i) income,
__(ii) age,
__(iii) geography,
__(iv) nature, severity, or category of disability,
__(v) residential setting (other than an institutional setting), or
__(vi) other grounds specified by the Secretary.
__(D) Maintenance of effort._The plan must provide assurances that, in the case of an individual receiving medical assistance for home and community-based services under the State medicaid plan as of the date of the enactment of this Act, the State will continue to make available (either under this plan, under the State medicaid plan, or otherwise) to such individual an appropriate level of assistance for home and community-based services, taking into account the level of assistance provided as of such date and the individual's need for home and community-based services.
__(2) Services._
__(A) Specification._Consistent with section 2104, the plan shall specify_
__(i) the services made available under the State plan,
__(ii) the extent and manner in which such services are allocated and made available to individuals with disabilities, and
__(iii) the manner in which services under the State plan are coordinated with each other and with health and long-term care services available outside the plan for individuals with disabilities.
Subject to section 2104(e)(1)(B), such services may be delivered in an individual's home, a range of community residential arrangements, or outside the home.
__(B) Allocation._The State plan_
__(i) shall specify how it will allocate services under the plan, during and after the 7-fiscal-year phase-in period beginning with fiscal year 1996, among covered individuals with disabilities, and
__(ii) may not allocate such services based on the income or other financial resources of such individuals.
__(C) Limitation on licensure or certification._The State may not subject consumer-directed providers of personal assistance services to licensure, certification, or other requirements which the Secretary finds not to be necessary for the health and safety of individuals with disabilities.
__(D) Consumer choice._To the extent possible, the choice of an individual with disabilities (and that individual's family) regarding which covered services to receive and the providers who will provide such services shall be followed.
__(E) Requirement to serve low-income individuals._The State plan shall assure that_
__(i) the proportion of the population of low-income individuals with disabilities in the State that represents individuals with disabilities who are provided home and community-based services either under the plan, under the State medicaid plan, or under both, is not less than
__(ii) the proportion of the population of the State that represents individuals who are low-income individuals.
__(3) Cost sharing._The plan shall impose cost sharing with respect to covered services only in accordance with section 2105.

__(4) Types of providers and requirements for participation._The plan shall specify_
__(A) the types of service providers eligible to participate in the program under the plan, which shall include consumer-directed providers, and
__(B) any requirements for participation applicable to each type of service provider.
__(5) Budget._The plan shall specify how the State will manage Federal and State funds available under the plan during each 5-fiscal-year period (with the first such period beginning with fiscal year 1996) to serve all categories of individuals with disabilities and meet the requirements of this subsection.
__(6) Provider reimbursement._
__(A) Payment methods._The plan shall specify the payment methods to be used to reimburse providers for services furnished under the plan. Such methods may include retrospective reimbursement on a fee-for-service basis, prepayment on a capitation basis, payment by cash or vouchers to individuals with disabilities, or any combination of these methods. In the case of the use of cash or vouchers, the plan shall specify how the plan will assure compliance with applicable employment tax provisions.
__(B) Payment rates._The plan shall specify the methods and criteria to be used to set payment rates for services furnished under the plan (including rates for cash payments or vouchers to individuals with disabilities).
__(C) Plan payment as payment in full._The plan shall restrict payment under the plan for covered services to those providers that agree to accept the payment under the plan (at the rates established pursuant to subparagraph (B)) and any cost sharing permitted or provided for under section 2105 as payment in full for services furnished under the plan.
__(7) Quality assurance and safeguards._The State plan shall provide for quality assurance and safeguards for applicants and beneficiaries in accordance with section 2106.
__(8) Advisory group._The State plan shall_
__(A) assure the establishment and maintenance of an advisory group under section 2107(b), and
__(B) include the documentation prepared by the group under section 2107(b)(4)..
__(9) Administration._
__(A) State agency._The plan shall designate a State agency or agencies to administer (or to supervise the administration of) the plan.
__(B) Administrative expenditures._Effective beginning with fiscal year 2003, the plan shall contain assurances that not more than 10 percent of expenditures under the plan for all quarters in any fiscal year shall be for administrative costs.
__(C) Coordination._The plan shall specify how the plan_
__(i) will be integrated with the State medicaid plan, titles V and XX of the Social Security Act, programs under the Older Americans Act of 1965, programs under the Developmental Disabilities Assistance and Bill of Rights Act, the Individuals with Disabilities Education Act, and any other Federal or State programs that provide services or assistance targeted to individuals with disabilities, and
__(ii) will be coordinated with health plans.
__(10) Reports and information to secretary; audits._The plan shall provide that the State will furnish to the Secretary_
__(A) such reports, and will cooperate with such audits, as the Secretary determines are needed concerning the State's administration of its plan under this subpart, including the processing of claims under the plan, and
__(B) such data and information as the Secretary may require in order to carry out the Secretary's responsibilities.
__(11) Use of state funds for matching._
__(A) In general._The plan shall provide assurances that Federal funds will not be used to provide for the State share of expenditures under this subpart.
__(B) Incorporation of disqualification for certain provider-related donations and health related taxes._The Secretary shall apply the provisions of section 1903(w) of the Social Security Act to plans and payment under this title in a manner similar to the manner in which such section applies to plans and payment under title XIX of such Act.
__(b) Approval of Plans._The Secretary shall approve a plan submitted by a State if the Secretary determines that the plan_
__(1) was developed by the State after consultation with individuals with disabilities and representatives of groups of such individuals, and
__(2) meets the requirements of subsection (a).
__(c) Monitoring._The Secretary shall monitor the compliance of State plans with the eligibility requirements of section 2103 and may monitor the compliance of such plans with other requirements of this subpart.
__(d) Regulations._The Secretary shall issue such regulations as may be appropriate to carry out this subpart on a timely basis.
SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.
__(a) In General._In this subpart, the term ``individual with disabilities'' means any individual within one or more of the following 4 categories of individuals:
__(1) Individuals requiring help with activities of daily living._An individual of any age who_
__(A) requires hands-on or standby assistance, supervision, or cueing (as defined in regulations) to perform three or more activities of daily living (as defined in subsection (c)), and
__(B) is expected to require such assistance, supervision, or cueing over a period of at least 100 days.
__(2) Individuals with severe cognitive or mental impairment._An individual of any age_
__(A) whose score, on a standard mental status protocol (or protocols) appropriate for measuring the individual's particular condition specified by the Secretary, indicates either severe cognitive impairment or severe mental impairment, or both;
__(B) who_
__(i) requires hands-on or standby assistance, supervision, or cueing with one or more activities of daily living,
__(ii) requires hands-on or standby assistance, supervision, or cueing with at least such instrumental activity (or activities) of daily living related to cognitive or mental impairment as the Secretary specifies, or
__(iii) displays symptoms of one or more serious behavioral problems (that is on a list of such problems specified by the Secretary) which create a need for supervision to prevent harm to self or others, and
__(C) whose is expected to meet the requirements of subparagraphs (A) and (B) over a period of at least 100 days.
__(3) Individuals with severe or profound mental retardation._An individual of any age who has severe or profound mental retardation (as determined according to a protocol specified by the Secretary).
__(4) Severely disabled children._An individual under 6 years of age who_
__(A) has a severe disability or chronic medical condition,
__(B) but for receiving personal assistance services or any of the services described in section 2104(d)(1), would require institutionalization in a hospital, nursing facility, or intermediate care facility for the mentally retarded, and
__(C) is expected to have such disability or condition and require such services over a period of at least 100 days.
__(b) Determination._
__(1) In general._The determination of whether an individual is an individual with disabilities shall be made, by persons or entities specified under the State plan, using a uniform protocol consisting of an initial screening and assessment specified by the Secretary. A State may collect additional information, at the time of obtaining information to make such determination, in order to provide for the assessment and plan described in section 2104(b) or for other purposes. The State shall establish a fair hearing process for appeals of such determinations.
__(2) Periodic reassessment._The determination that an individual is an individual with disabilities shall be considered to be effective under the State plan for a period of not more than 12 months (or for such longer period in such cases as a significant change in an individual's condition that may affect such determination is unlikely). A reassessment shall be made if there is a significant change in an individual's condition that may affect such determination.
__(c) Activity of Daily Living Defined._In this subpart, the term ``activity of daily living'' means any of the following: eating, toileting, dressing, bathing, and transferring in and out of bed.


SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.
__(a) Specification._
__(1) In general._Subject to the succeeding provisions of this section, the State plan under this subpart shall specify_
__(A) the home and community-based services available under the plan to individuals with disabilities (or to such categories of such individuals), and
__(B) any limits with respect to such services.
__(2) Flexibility in meeting individual needs._The services shall be specified in a manner that permits sufficient flexibility for providers to meet the needs of individuals with disabilities in a cost effective manner. Subject to subsection (e)(1)(B), such services may be delivered in an individual's home, a range of community residential arrangements, or outside the home.
__(b) Requirement for Needs Assessment and Plan of Care._
__(1) In general._The State plan shall provide for home and community-based services to an individual with disabilities only if_
__(A) a comprehensive assessment of the individual's need for home and community-based services (regardless of whether all needed services are available under the plan) has been made,
__(B) an individualized plan of care based on such assessment is developed, and
__(C) such services are provided consistent with such plan of care.
__(2) Involvement of individuals._The individualized plan of care under paragraph (1)(B) for an individual with disabilities shall_
__(A) be developed by qualified individuals (specified under the State plan),
__(B) be developed and implemented in close consultation with the individual and the individual's family,
__(C) be approved by the individual (or the individual's representative), and
__(D) be reviewed and updated not less often than every 6 months.
__(3) Plan of care._The plan of care under paragraph (1)(B) shall_
__(A) specify which services specified under the individual plan will be provided under the State plan under this subpart,
__(B) identify (to the extent possible) how the individual will be provided any services specified under the plan of care and not provided under the State plan, and
__(C) specify how the provision of services to the individual under the plan will be coordinated with the provision of other health care services to the individual.
The State shall make reasonable efforts to identify and arrange for services described in subparagraph (B). Nothing in this subsection shall be construed as requiring a State (under the State plan or otherwise) to provide all the services specified in such a plan.
__(c) Mandatory Coverage of Personal Assistance Services._The State plan shall include, in the array of services made available to each category of individuals with disabilities, both agency-administered and consumer-directed personal assistance services (as defined in subsection (g)).
__(d) Additional Services._
__(1) Types of services._Subject to subsection (e), services available under a State plan under this subpart shall include any (or all) of the following:
__(A) Case management.
__(B) Homemaker and chore assistance.
__(C) Home modifications.
__(D) Respite services.
__(E) Assistive devices.
__(F) Adult day services.
__(G) Habilitation and rehabilitation.
__(H) Supported employment.
__(I) Home health services.
__(J) Any other care or assistive services (approved by the Secretary) that the State determines will help individuals with disabilities to remain in their homes and communities.

__(2) Criteria for selection of services._The State plan shall specify_
__(A) the methods and standards used to select the types, and the amount, duration, and scope, of services to be covered under the plan and to be available to each category of individuals with disabilities, and
__(B) how the types, and the amount, duration, and scope, of services specified meet the needs of individuals within each of the 4 categories of individuals with disabilities.


__(e) Exclusions and Limitations._
__(1) In general._A State plan may not provide for coverage of_
__(A) room and board,
__(B) services furnished in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other institutional setting specified by the Secretary,
__(C) items and services to the extent coverage is provided for the individual under a health plan or the medicare program.
__(2) Taking into account informal care._A State plan may take into account, in determining the amount and array of services made available to covered individuals with disability, the availability of informal care.
__(f) Payment for Services._A State plan may provide for the use of_
__(1) vouchers,
__(2) cash payments directly to individuals with disabilities,
__(3) capitation payments to health plans, and
__(4) payment to providers,
to pay for covered services.
__(g) Personal Assistance Services._
__(1) In general._In this section, the term ``personal assistance services'' means those services specified under the State plan as personal assistance services and shall include at least hands-on and standby assistance, supervision, and cueing with activities of daily living, whether agency-administered or consumer-directed (as defined in paragraph (2)).
__(2) Consumer-directed; agency-administered._In this part:
__(A) The term ``consumer-directed'' means, with reference to personal assistance services or the provider of such services, services that are provided by an individual who is selected and managed (and, at the individual's option, trained) by the individual receiving the services.
__(B) The term ``agency-administered'' means, with respect to such services, services that are not consumer-directed.
SEC. 2105. COST SHARING.
__(a) No or Nominal Cost Sharing for Poorest._The State plan may not impose any cost sharing (other than nominal cost sharing) for individuals with income (as determined under subsection (c)) less than 150 percent of the poverty level (as defined in section 1902(25)) applicable to a family of the size involved.
__(b) Sliding Scale for Remainder._The State plan shall impose cost sharing in the form of coinsurance (based on the amount paid under the State plan for a service)_
__(1) at a rate of 10 percent for individuals with disabilities with income not less than 150 percent, and less than 250 percent, of the poverty level applicable to a family of the size involved;
__(2)  at a rate of 25 percent for such individuals with income not less than 250 percent, and less than 400 percent, of the poverty level applicable to a family of the size involved; and
__(3)  at a rate of 40 percent for such individuals with income equal to at least 400 percent of the poverty level applicable to a family of the size involved.
__(c) Determination of Income for Purposes of Cost Sharing._The State plan shall specify the process to be used to determine the income of an individual with disabilities for purposes of this section. Such process shall be consistent with standards specified by the Secretary.

SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.
__(a) Quality Assurance._The State plan shall specify how the State will ensure and monitor the quality of services, including_
__(1) safeguarding the health and safety of individuals with disabilities,
__(2) the minimum standards for agency providers and how such standards will be enforced,
__(3) the minimum competency requirements for agency provider employees who provide direct services under this subpart and how the competency of such employees will be enforced,
__(4) obtaining meaningful consumer input, including consumer surveys that measure the extent to which participants receive the services described in the plan of care and participant satisfaction with such services,
__(5) participation in quality assurance activities, and
__(6) specifying the role of the long-term care ombudsman (under the Older Americans Act of 1965) and the Protection and Advocacy Agency (under the Developmental Disabilities Assistance and Bill of Rights Act) in assuring quality of services and protecting the rights of individuals with disabilities.
__(b) Safeguards._
__(1) Confidentiality._The State plan shall provide safeguards which restrict the use or disclosure of information concerning applicants and beneficiaries to purposes directly connected with the administration of the plan (including performance reviews under section 2602).
__(2) Safeguards against abuse._The State plans shall provide safeguards against physical, emotional, or financial abuse or exploitation (specifically including appropriate safeguards in cases where payment for program benefits is made by cash payments or vouchers given directly to individuals with disabilities).
SEC. 2107. ADVISORY GROUPS.
__(a) Federal Advisory Group._
__(1) Establishment._The Secretary shall establish an advisory group, to advise the Secretary and States on all aspects of the program under this subpart.
__(2) Composition._The group shall be composed of individuals with disabilities and their representatives, providers, Federal and State officials, and local community implementing agencies and a majority of its members shall be individuals with disabilities and their representatives.
__(b) State Advisory Groups._
__(1) In general._Each State plan shall provide for the establishment and maintenance of an advisory group to advise the State on all aspects of the State plan under this subpart.
__(2) Composition._Members of each advisory group shall be appointed by the Governor (or other chief executive officer of the State) and shall include individuals with disabilities and their representatives, providers, State officials, and local community implementing agencies and a majority of its members shall be individuals with disabilities and their representatives.
__(3) Selection of members._Each State shall establish a process whereby all residents of the State, including individuals with disabilities and their representatives, shall be given the opportunity to nominate members to the advisory group.
__(4) Particular concerns._Each advisory group shall_
__(A) before the State plan is developed, advise the State on guiding principles and values, policy directions, and specific components of the plan,
__(B) meet regularly with State officials involved in developing the plan, during the development phase, to review and comment on all aspects of the plan,
__(C) participate in the public hearings to help assure that public comments are addressed to the extent practicable,
__(D) document any differences between the group's recommendations and the plan,
__(E) document specifically the degree to which the plan is consumer-directed, and
__(F) meet regularly with officials of the designated State agency (or agencies) to provide advice on all aspects of implementation and evaluation of the plan.


SEC. 2108. PAYMENTS TO STATES.
__(a) In General._Subject to section 2102(a)(9)(B) (relating to limitation on payment for administrative costs), the Secretary shall pay to each State with a plan approved under this subpart, for each quarter, from its allotment under section 2109(b), an amount equal to_
__(1) the Federal matching percentage (as defined in subsection (b)) of amount demonstrated by State claims to have been expended during the quarter for home and community-based services under the plan for individuals with disabilities; plus
__(2) an amount equal to 90 percent of amount expended during the quarter under the plan for activities (including preliminary screening) relating to determination of eligibility and performance of needs assessment; plus
__(3) an amount equal to 90 percent (or, beginning with quarters in fiscal year 2003, 75 percent) of the amount expended during the quarter for the design, development, and installation of mechanical claims processing systems and for information retrieval; plus
__(4) an amount equal to 50 percent of the remainder of the amounts expended during the quarter as found necessary by the Secretary for the proper and efficient administration of the State plan.
__(b) Federal Matching Percentage._
__(1) In general._In subsection (a), the term ``Federal matching percentage'' means, with respect to a State, the reference percentage specified in paragraph (2) increased by 28 percentage points, except that the Federal matching percentage shall in no case be less than 75 percent or more than 95 percent.
__(2) Reference percentage._
__(A) In general._The reference percentage specified in this paragraph is 100 percent less the State percentage specified in subparagraph (B), except that_
__(i) the percentage under this paragraph shall in no case be less than 50 percent or more than 83 percent, and
__(ii) the percentage for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa shall be 50 percent.
__(B) State percentage._The State percentage specified in this subparagraph is that percentage which bears the same ratio to 45 percent as the square of the per capita income of such State bears to the square of the per capita income of the continental United States (including Alaska) and Hawaii.
__(c) Payments on Estimates with Retrospective Adjustments._The method of computing and making payments under this section shall be as follows:
__(1) The Secretary shall, prior to the beginning of each quarter, estimate the amount to be paid to the State under subsection (a) for such quarter, based on a report filed by the State containing its estimate of the total sum to be expended in such quarter, and such other information as the Secretary may find necessary.
__(2) From the allotment available therefore, the Secretary shall pay the amount so estimated, reduced or increased, as the case may be, by any sum (not previously adjusted under this section) by which the Secretary finds that the estimate of the amount to be paid the State for any prior period under this section was greater or less than the amount which should have been paid.
__(d) Application of Rules Regarding Limitations on Provider-Related Donations and Health Care Related Taxes._The provisions of section 1903(w) of the Social Security Act shall apply to payments to States under this section in the same manner as they apply to payments to States under section 1903(a) of such Act .
SEC. 2109. TOTAL FEDERAL BUDGET; ALLOTMENTS TO STATES.
__(a) Total Federal Budget._
__(1) Fiscal years 1996 through 2003._For purposes of this subpart, the total Federal budget for State plans under this subpart for each of fiscal years 1996 through 2003 is the following:
__(A) For fiscal year 1996, 4.5 billion.
__(B) For fiscal year 1997, 7.8 billion.
__(C) For fiscal year 1998, 11.0 billion.
__(D) For fiscal year 1999, 14.7 billion.
__(E) For fiscal year 2000, 18.7 billion. [$56 to 2000}
__(F) For fiscal year 2001, 26.7 billion. [48-56 for out years]
__(G) For fiscal year 2002, 35.5 billion.
__(H) For fiscal year 2003, 38.3 billion.
__(2) Subsequent fiscal years._For purposes of this subpart, the total Federal budget for State plans under this subpart for each fiscal year after fiscal year 2003 is the total Federal budget under this subsection for the preceding fiscal year multiplied by_
__(A) a factor (described in paragraph (3)) reflecting the change in the CPI for the fiscal year, and
__(B) a factor (described in paragraph (4)) reflecting the change in the number of individuals with disabilities for the fiscal year.
__(3) CPI increase factor._For purposes of paragraph (2)(A), the factor described in this paragraph for a fiscal year is the ratio of_
__(A) the annual average index of the consumer price index for the preceding fiscal year, to_
__(B) such index, as so measured, for the second preceding fiscal year.
__(4) Disabled population factor._For purposes of paragraph (2)(B), the factor described in this paragraph for a fiscal year is 100 percent plus (or minus) the percentage increase (or decrease) change in the disabled population of the United States (as determined for purposes of the most recent update under subsection (b)(3)(D).
___T3[review:] (5) Additional funds due to medicaid offsets._
__(A) In general._Each participating State must provide the Secretary with information concerning offsets and reductions in the medicaid program resulting from home and community-based services provided under this title, that would have been paid for under the State medicaid plan but for the provision of similar services under the program under this title.
__(B) Reports._Each State with a program under this title shall submit such reports to the Secretary as the Secretary may require in order to monitor compliance with subparagraph (A).
__(C) Compliance._The Secretary shall review such reports. The Secretary shall increase the total Federal budget for State plans under subsection (a)(1) by the amount of any reduction in Federal expenditures for medical assistance under the State medicaid plan for home and community based services.
__(D) No duplicate payment._No paymet may be made to a State under this section for any services to the extent that the State received payment for such services under section 1903(a) of the Social Security Act.
__(b) Allotments to States._
__(1) In general._The Secretary shall allot to each State for each fiscal year an amount that bears the same ratio to the total Federal budget for the fiscal year (specified under paragraph (1) or (2) of subsection (a)) as the State allotment factor (under paragraph (2) for the State for the fiscal year) bears to the sum of such factors for all States for that fiscal year.
__(2) State allotment factor._
__(A) In general._For each State for each fiscal year, the Secretary shall compute a State allotment factor equal to the sum of_
__(i) the base allotment factor (specified in subparagraph (B)), and
__(ii) the low income allotment factor (specified in subparagraph (C)),
for the State for the fiscal year.
__(B) Base allotment factor._The base allotment factor, specified in this subparagraph, for a State for a fiscal year is equal to the product of the following:
__(i) Number of individuals with disabilities._The number of individuals with disabilities in the State (determined under paragraph (3)) for the fiscal year.
__(ii) 80 percent of the national per capita budget._80 percent of the national average per capita budget amount (determined under paragraph (4)) for the fiscal year.
__(iii) Wage adjustment factor._The wage adjustment factor (determined under paragraph (5)) for the State for the fiscal year.
__(iv) Federal matching rate._The Federal matching rate (determined under section 2108(b)) for the fiscal year.
__(C) Low income allotment factor._The low income allotment factor, specified in this subparagraph, for a State for a fiscal year is equal to the product of the following:
__(i) Number of individuals with disabilities._The number of individuals with disabilities in the State (determined under paragraph (3)) for the fiscal year.
__(ii) 10 percent of the national per capita budget._10 percent of the national average per capita budget amount (determined under paragraph (4)) for the fiscal year.
__(iii) Wage adjustment factor._The wage adjustment factor (determined under paragraph (5)) for the State for the fiscal year.
__(iv) Federal matching rate._The Federal matching rate (determined under section 2108(b)) for the fiscal year.
__(v) Low income index._The low income index (determined under paragraph (6)) for the State for the preceding fiscal year.
__(3) Number of individuals with disabilities._The number of individuals with disabilities in a State for a fiscal year shall be determined as follows:
__(A) Base._The Secretary shall determine the number of individuals in the State by age, sex, and income category, based on the 1990 decennial census, adjusted (as appropriate) by the March 1994 current population survey.
__(B) Disability prevalence level by population category._The Secretary shall determine, for each such age, sex, and income category, the national average proportion of the population of such category that represents individuals with disabilities. The Secretary may conduct periodic surveys in order to determine such proportions.
__(C) Base disabled population in a State._The number of individuals with disabilities in a State in 1994 is equal to the sum of the products, for such each age, sex, and income category, of_
__(i) the population of individuals in the State in the category (determined under subparagraph (A)), and
__(ii) the national average proportion for such category (determined under subparagraph (B)).
__(D) Update._The Secretary shall determine the number of individuals with disabilities in a State in a fiscal year equal to the number determined under subparagraph (C) for the State increased (or decreased) by the percentage increase (or decrease) in the disabled population of the State as determined under the current population survey from 1994 to the year before the fiscal year involved.
__(4) National per capita budget amount._The national average per capita budget amount, for a fiscal year, is_
__(A) the total Federal budget specified under subsection (a) for the fiscal year; divided by
__(B) the sum, for the fiscal year, of the numbers of individuals with disabilities (determined under paragraph (3)) for all the States for the fiscal year.
__(5) Wage adjustment factor._The wage adjustment factor, for a State for a fiscal year, is equal to the ratio of_
__(A) the average hourly wages for service workers (other than household or protective services) in the State, to
__(B) the national average hourly wages for service workers (other than household or protective services).
The hourly wages shall be determined under this paragraph based on data from the most recent decennial census for which such data are available.
__(6) Low income index._The low income index for each State for a fiscal year is the ratio, determined for the preceding fiscal year, of_
__(A) the percentage of the State's population that has income below 150 percent of the poverty level, to
__(B) the percentage of the population of the United States that has income below 150 percent of the poverty level.
Such percentages shall be based on data from the most recent decennial census for which such data are available, adjusted by data from the most recent current population survey as determined appropriate by the Secretary.
__(c) State Entitlement._This subpart constitutes budget authority in advance of appropriations Acts, and represents the obligation of the Federal Government to provide for the payment to States of amounts described in section 2109(a).
PART 2_MEDICAID NURSING HOME IMPROVEMENTS
SEC. 2201. REFERENCE TO AMENDMENTS.
__For amendments to the medicaid program under title XIX of the Social Security Act to improvement nursing home benefits under such program, see part 2 of subtitle C of title IV.
PART 3_PRIVATE LONG-TERM CARE INSURANCE
Subpart A_General Provisions
SEC. 2301. FEDERAL REGULATIONS; PRIOR APPLICATION OR CERTAIN REQUIREMENTS.
__(a) In General._The Secretary, with the advice and assistance of the Advisory Council, as appropriate, shall promulgate regulations as necessary to implement the provisions of this part, in accordance with the timetable specified in subsection (b).
__(b) Timetable for Publication of Regulations._
__(1) Federal register notice._Within 120 days after the date a majority of the members are first appointed to the Advisory Council pursuant to section 2302, the Secretary shall publish in the Federal Register a notice setting forth the projected timetable for promulgation of regulations required under this part. Such timetable shall indicate which regulations are proposed to be published by the end of the first, second, and third years after appointment of the Advisory Council.
__(2) Final deadline._All regulations required under this part shall be published by the end of the third year after appointment of the Advisory Council.
__(c) Provisions Effective Without Regard to Promulgation of Regulations._
__(1) In general._Notwithstanding any other provision of this part, insurers shall be required, not later than 6 months after the enactment of this Act, regardless of whether final implementing regulations have been promulgated by the Secretary, to comply with the following provisions of this part:
__(A) Section 2321(c) (standard outline of coverage);
__(B) Section 2321(d) (reporting to State insurance commissioners);
__(C) Section 2322(b) (preexisting condition exclusions);
__(D) Section 2322(c) (limiting conditions on benefits);
__(E) Section 2322(d) (inflation protection);
__(F) Section 2324 (sales practices);
__(G) Section 2325 (continuation, renewal, replacement, conversion, and cancellation of policies); and
__(H) Section 2326 (payment of benefits).
__(2) Interim requirements._Before the effective date of applicable regulations promulgated by the Secretary implementing requirements of this part as specified below, such requirements will be considered to be met_
__(A) in the case of section 2321(c) (requiring a standard outline of coverage), if the long-term care insurance policy meets the requirements of section 6.G.(2) of the NAIC Model Act and of section 24 of the NAIC Model Regulation;
__(B) in the case of section 2321(d) (requiring reporting to the State insurance commissioner), if the insurer meets the requirements of section 14 of the NAIC Model Regulation;
__(C) in the case of section 2322(c)(1) (general requirements concerning limiting conditions on benefits), if such policy meets the requirements of section 6.D. of the NAIC Model Act;
__(D) in the case of section 2322(c)(2) (limiting conditions on home health care or community-based services) if such policy meets the requirements of section 11 of the NAIC Model Regulations;
__(E) in the case of section 2322(d) (concerning inflation protection), if the insurer meets the requirements of section 12 of the NAIC Model Regulation;
__(F) in the case of section 2324(b) (concerning applications for the purchase of insurance), if the insurer meets the requirements of section 10 of the NAIC Model Regulation;
__(G) in the case of section 2324(d) (concerning compensation for the sale of policies), if the insurer meets the requirements of the optional regulation entitled ``Permitted Compensation Arrangements'' included in the NAIC Model Regulation;
__(H) in the case of section 2324(g) (concerning sales through employers or membership organizations), if the insurer and the membership organization meet the requirements of section 21.C. of the NAIC Model Regulation;
__(I) in the case of section 2324(h) (concerning interstate sales of group policies), if the insurer and the policy meet the requirements of section 5 of the NAIC Model Act; and
__(J) in the case of section 2325(f) (concerning continuation, renewal, replacement, and conversion of policies), if the insurer and the policy meet the requirements of section 7 of the NAIC Model Regulation.

SEC. 2302. NATIONAL LONG-TERM CARE INSURANCE ADVISORY COUNCIL.
__(a) Appointment._The Secretary shall appoint an advisory board to be known as the National Long-Term Care Insurance Advisory Council.
__(b) Composition._
__(1) Number and qualifications of members._The Advisory Council shall consist of 5 members, each of whom has substantial expertise in matters relating to the provision and regulation of long-term care insurance. At least one member shall have experience as a State insurance commissioner or legislator with expertise in policy development with respect to, and regulation of, long-term care insurance.
__(2) Terms of Office._
__(A) In general._Except as otherwise provided in this subsection, members shall be appointed for terms of office of 5 years.
__(B) Initial members._Of the initial members of the Council, one shall be appointed for a term of 5 years, one for 4 years, one for 3 years, one for 2 years, and one for 1 year.
__(C) Two-term limit._No member shall be eligible to serve in excess of two consecutive terms, but may continue to serve until such member's successor is appointed.
__(3) Vacancies._Any member appointed to fill a vacancy occurring before the expiration of the term of such member's predecessor shall be appointed for the remainder of such term.
__(4) Removal._No member may be removed during the member's term of office except for just and sufficient cause.
__(c) Chairperson._The Secretary shall appoint a Chairperson from among the members.
__(d) Compensation._
__(1) In general._Except as provided in paragraph (3), members of the Advisory Council, while serving on business of the Advisory Council, shall be entitled to receive compensation at a rate not to exceed the daily equivalent of the rate specified for level V of the Executive Schedule under section 5316 of title 5, United States Code.
__(2) Travel._Except as provided in paragraph (3), members of the Advisory Council, while serving on business of the Advisory Council away from their homes or regular places of business, may be allowed travel expenses (including per diem in lieu of subsistence) as authorized by section 5703(b) of title 5, United States Code, for persons in the Government service employed intermittently.
__(3) Restriction._A member of the Advisory Council may not be compensated under this section if the member is receiving compensation or travel expenses from another source while serving on business of the Advisory Council.
__(e) Meetings._The Advisory Council shall meet not less often than 2 times a year at the direction of the Chairperson.
__(f) Staff and Support._
__(1) In general._The Advisory Council shall have a salaried executive director appointed by the Chairperson, and staff appointed by the executive director with the approval of the Chairperson.
__(2) Federal entities._The head of each Federal department and agency shall make available to the Advisory Council such information and other assistance as it may require to carry out its responsibilities.
__(g) General Responsibilities._The Advisory Council shall_
__(1) provide advice, recommendations, and assistance to the Secretary on matters relating to long-term care insurance as specified in this part and as otherwise required by the Secretary;
__(2) collect, analyze, and disseminate information relating to long-term care insurance in order to increase the understanding of insurers, providers, consumers, and regulatory bodies of the issues relating to, and to facilitate improvements in, such insurance;
__(3) develop for the Secretary's consideration proposed models, standards, requirements, and procedures relating to long-term care insurance, as appropriate, with respect to the content and format of insurance policies, agent and insurer practices concerning the sale and servicing of such policies, and regulatory activities; and
__(4) monitor the development of the long-term care insurance market (including policies, marketing practices, pricing, eligibility and benefit preconditions, and claims payment procedures) and advise the Secretary concerning the need for regulatory changes.
__(h) Specific Matters for Consideration._The Advisory Council shall consider, and provide views and recommendations to the Secretary concerning, the following matters relating to long-term care insurance:
__(1) Uniform terms, definitions, and formats._The Advisory Council shall develop and propose to the Secretary uniform terminology, definitions, and formats for use in long-term care insurance policies.
__(2) Standard outline of coverage._The Advisory Council shall develop and propose to the Secretary a standard format for use by all insurers offering long-term care policies for the outline of coverage required pursuant to section 2321(c).
__(3) Premiums._
__(A) Consideration of federal requirements._The Advisory Council shall consider, and make recommendations to the Secretary concerning_
__(i) whether Federal standards should be established governing the amounts of and rates of increase in premiums in long-term care policies, and
__(ii) if so, what factors should be taken into account (and whether such factors should include the age of the insured, actuarial information, cost of care, lapse rates, financial reserve requirements, insurer solvency, and tax treatment of premiums, and benefits.
__(4) Upgrades of coverage._The Advisory Council shall consider, and make recommendations to the Secretary concerning, whether Federal standards are needed governing the terms and conditions insurers may place on insured individuals' eligibility to obtain improved coverage (including any restrictions considered advisable with respect to premium increases, agent commissions, medical underwriting, and age rating).
__(5) Threshold conditions for payment of benefits._The Advisory Council shall_
__(A) consider, and make recommendations to the Secretary concerning, the advisability of establishing standardized sets of threshold conditions (based on degrees of functional or cognitive impairment or on other conditions) for payment of covered benefits;
__(B) to the extent found appropriate, recommend to the Secretary specific sets of threshold conditions to be used for such purpose;
__(C) develop and propose to the Secretary, with respect to assessments of insured individuals' levels of need for purposes of receipt of covered benefits_
__(i) professional qualification standards applicable to individuals making such determinations; and
__(ii) uniform procedures and formats for use in performing and documenting such assessments.
__(6) Dispute resolution._The Advisory Council shall consider, and make recommendations to the Secretary concerning, procedures that insurers and States should be required to implement to afford insured individuals a reasonable opportunity to dispute denial of benefits under a long-term care insurance policy.
__(7) Sales and servicing of policies._The Advisory Council shall consider, and make recommendations to the Secretary concerning_
__(A) training and certification to be required of agents involved in selling or servicing long-term care insurance policies;
__(B) appropriate limits on commissions or other compensation paid to agents for the sale or servicing of such policies;
__(C) sales practices that should be prohibited or limited with respect to such policies (including any financial limits that should be applied concerning the individuals to whom such policies may be sold); and
__(D) appropriate standards and requirements with respect to sales of such policies by or through employers and other entities, to employees, members, or affiliates of such entities.
__(8) Continuing care retirement communities._The Advisory Council shall consider, and make recommendations to the Secretary concerning, the extent to which the long-term care insurance aspects of continuing care retirement community arrangements should be subject to regulation under this part (and the Secretary, in consultation with the Secretary of the Treasury, shall consider such recommendations and promulgate appropriate regulations).
__(i) Activities._In order to carry out its responsibilities under this part, the Advisory Council is authorized to_
__(1) consult individuals and public and private entities with experience and expertise in matters relating to long-term care insurance (and shall consult the National Association of Insurance Commissioners);
__(2) conduct meetings and hold hearings;
__(3) conduct research (either directly or under grant or contract);
__(4) collect, analyze, publish, and disseminate data and information (either directly or under grant or contract); and
__(5) develop model formats and procedures for insurance policies and marketing materials; and develop proposed standards, rules, and procedures for regulatory programs.
__(j) Authorization of Appropriations._There are authorized to be appropriated, for activities of the Advisory Council, $1,500,000 for fiscal year 1995, and $2,000,000 for each succeeding fiscal year.
SEC. 2303. RELATION TO STATE LAW.
__Nothing in this part shall be construed as preventing a State from applying standards that provide greater protection to insured individuals under long-term care insurance policies than the standards promulgated under this part, except that such State standards may not be inconsistent with any of the requirements of this part or of regulations hereunder.
SEC. 2304. DEFINITIONS.
__For purposes of this part:
__(1) Activity of daily living._The term ``activity of daily living'' means any of the following: eating, toileting, dressing, bathing, and transferring in and out of bed.
__(2) Adult day care._The term ``adult day care'' means a program providing social and health-related services during the day to six or more adults with disabilities (or such smaller number as the Secretary may specify in regulations) in a community group setting outside the home.
__(3) Advisory council._The term ``Advisory Council'' means the National Long-Term Care Insurance Advisory Council established pursuant to section 2302.
__(4) Certificate._The term ``certificate'' means a document issued to an individual as evidence of such individual's coverage under a group insurance policy.
__(5) Continuing care retirement community._The term ``continuing care retirement community'' means a residential community operated by a private entity that enters into contractual agreements with residents under which such entity guarantees, in consideration for residents' purchase of or periodic payment for membership in the community, to provide for such residents' future long-term care needs.
__(6) Designated representative._The term ``designated representative'' means the person designated by an insured individual (or, if such individual is incapacitated, pursuant to an appropriate administrative or judicial procedure) to communicate with the insurer on behalf of such individual in the event of such individual's incapacitation.
__(7) Home health care._The term ``home health care'' means medical and nonmedical services including such services as homemaker services, assistance with activities of daily living, and respite care provided to individuals in their residences.
__(8) Insured individual._The term ``insured individual'' means, with respect to a long-term care insurance policy, any individual who has coverage of benefits under such policy.
__(9) Insurer._The term ``insurer'' means any person that offers or sells an individual or group long-term care insurance policy under which such person is at risk for all or part of the cost of benefits under the policy, and includes any agent of such person.
__(10) Long-term care insurance policy._The term ``long-term care insurance policy'' has the meaning given that term in section 4 of the NAIC Model Act, except that the last sentence of such section shall not apply.
__(11) NAIC model act._The term ``NAIC Model Act'' means the Long-Term Care Insurance Model Act published by the NAIC, as amended through January 1993.
__(12) NAIC model regulation._The term ``NAIC Model Regulation'' means the Long-Term Care Insurance Model Regulation published by the NAIC, as amended through January 1993.
__(13) Nursing facility._The term ``nursing facility'' means a facility licensed by the State to provide to residents_
__(A) skilled nursing care and related services for residents who require medical or nursing care;
__(B) rehabilitation services for the rehabilitation of injured, disabled, or sick individuals, or
__(C) on a regular basis, health-related care and services to individuals who because of their mental or physical condition require care and services (above the level of room and board) which can be made available to them only through institutional facilities.
__(14) Policyholder._The term ``policyholder'' means the entity which is the holder of record of a group long-term care insurance policy.
__(15) Residential care facility._The term ``residential care facility'' means a facility (including a nursing facility) that_
__(A) provides to residents medical or personal care services (including at a minimum assistance with activities of daily living) in a setting other than an individual or single-family home, and
__(B) does not provide services of a higher level than can be provided by a nursing facility.
__(16) Respite care._The term ``respite care'' means the temporary provision of care (including assistance with activities of daily living) to an individual, in the individual's home or another setting in the community, for the purpose of affording such individual's unpaid caregiver a respite from the responsibilities of such care.
__(17) State insurance commissioner._The term ``State  insurance commissioner'' means the State official bearing such title, or, in the case of a jurisdiction where such title is not used, the State official with primary responsibility for the regulation of insurance.

Subpart B_Federal Standards and Requirements
SEC. 2321. REQUIREMENTS TO FACILITATE UNDERSTANDING AND COMPARISON OF BENEFITS.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations designed to standardize formats and terminology used in long-term care insurance policies, to require insurers to provide to customers and beneficiaries information on the range of public and private long-term care coverage available, and to establish such other requirements as may be appropriate to promote consumer understanding and facilitate comparison of benefits, which shall include at a minimum the requirements specified in this section.
__(b) Uniform Terms, Definitions, and Formats._Insurers shall be required to use, in long-term care insurance policies, uniform terminology, definitions of terms, and formats, in accordance with regulations promulgated by the Secretary, after considering recommendations of the Advisory Council.
__(c) Standard Outline of Coverage._
__(1) In general._Insurers shall be required to develop for each long-term care insurance policy offered or sold, to include as a part of each such policy, and to make available to each potential purchaser and furnish to each insured individual and policyholder, an outline of coverage under such policy that_
__(A) includes the elements specified in paragraph (2),
__(B) is in a uniform format (as prescribed by Secretary on the basis of recommendations by the Advisory Council),
__(C) accurately and clearly reflects the contents of the policy, and
__(D) is updated periodically on such timetable as may be required by the Secretary (or more frequently as necessary to reflect significant changes in outlined information).
__(2) Contents of outline._The outline of coverage for each long-term care insurance policy shall include at least the following:
__(A) Benefits._A description of_
__(i) the principal benefits covered, including the extent of_
__(I) benefits for services furnished in residential care facilities, and
__(II) other benefits,
__(ii) the principal exclusions from and limitations on coverage,
__(iii) the terms and conditions, if any, upon which the insured individual may obtain upgraded benefits, and
__(iv) the threshold conditions for entitlement to receive benefits.
__(B) Continuation, renewal, and conversion._A statement of the terms under which a policy may be_
__(i) returned (and premium refunded) during an initial examination period,
__(ii) continued in force or renewed,
__(iii) converted to an individual policy (in the case of coverage under a group policy),
__(C) Cancellation._A statement of the circumstances in which a policy may be terminated, and the refund or nonforfeitures benefits (if any) applicable in each such circumstance, including_
__(i) death of the insured individual,
__(ii) nonpayment of premiums,
__(iii) election by the insured individual not to renew,
__(iv) any other circumstance.
__(D) Premium._A statement of_
__(i) the total annual premium, and the portion of such premium attributable to each covered benefit,
__(ii) any reservation by the insurer of a right to change premiums,
__(iii) any limit on annual premium increases,
__(iv) any expected premium increases associated with automatic or optional benefit increases (including inflation protection), and
__(v) any circumstances under which payment of premium is waived.
__(E) Declaration concerning summary._A statement, in bold face type on the face of the document in language understandable to the average individual, that the outline of coverage is a summary only, not a contract of insurance, and that the policy contains the contractual provisions that govern.
__(F) Cost/value comparison._
__(i) Information on average costs (and variation in such costs) for nursing facility care (and such other care as the Secretary may specify) and information on the value of benefits relative to such costs.
__(ii) A comparison of benefits, over a period of at least 20 years, for policies with and without inflation protection.
__(iii) A declaration as to whether the amount of benefits will increase over time, and, if so, a statement of the type and amount of, any limitations on, and any premium increases for, such benefit increases.
__(G) Tax treatment._A statement of the Federal income tax treatment of premiums and benefits under the policy, as determined by the Secretary of the Treasury.
__(H) Other._Such other information as the Secretary may require.
__(d) Reporting to State Insurance Commissioner._Each insurer shall be required to report at least annually, to the State insurance commissioner of each State in which any long-term care insurance policy of the insurer is sold, such information, in such format, as the Secretary may specify with respect to each such policy, including_
__(1) the standard outline of coverage required pursuant to subsection (c);
__(2) lapse rates and replacement rates for such policies;
__(3) the ratio of premiums collected to benefits paid;
__(4) reserves;
__(5) written materials used in sale or promotion of such policy; and
__(6) any other information the Secretary may require.
__(e) Comparison of Long-Term Care Coverage Alternatives._Each insurer shall be required to furnish to each individual before a long-term care insurance policy of the insurer is sold to the individual information on the conditions of eligibility for, and benefits under, each of the following:
__(1) Policies offered by the insurer._The standard outline of coverage, and such other information as the Secretary may specify, with respect to each long-term care insurance policy offered by the insurer.
__(2) Comparison to other available private insurance._Information, in such format as may be required under this part, on_
__(A) benefits offered under long-term care insurance policies of the insurer (and the threshold conditions for receipt by an insured individual of each such benefit); and
__(B) additional benefits available under policies offered by other private insurers (to the extent such information is made available by the State insurance commissioner).
__(3) Public programs; regional alliances._Information furnished to the insurer, pursuant to section 2342(b)(2), by the State in which such individual resides, on conditions of eligibility for, and long-term care benefits (or the lack of such benefits) under_
__(A) each public long-term care program administered by the State,
__(B) the Medicare programs under title XVIII of the Social Security Act; and
__(C) each regional alliance operating in the State.
SEC. 2322. REQUIREMENTS RELATING TO COVERAGE.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements with respect to the terms of and benefits under long-term care insurance policies, which shall include at a minimum the requirements specified in this section.
__(b) Limitations on Preexisting Condition Exclusions._
__(1) Initial policies._A long-term care insurance policy may not exclude or limit coverage for any service or benefit, the need for which is the result of a medical condition or disability because an insured individual received medical treatment for, or was diagnosed as having, such condition before the issuance of the policy, unless_
__(A) the insurer, prior to issuance of the policy, determines and documents (with evidence including written evidence that such condition has been treated or diagnosed by a qualified health care professional) that the insured individual had such condition during the 6-month period (or such longer period as the Secretary may specify) ending on the effective date of the policy; and
__(B) the need or such service or benefit begins within 6 months (or such longer period as the Secretary may specify) following the effective date of the policy.

__(2) Replacement policies._Solely for purposes of the requirements of paragraph (1), with respect to an insured individual, the effective date of a long-term care insurance policy issued to replace a previous policy, with respect to benefits which are the same as or substantially equivalent to benefits under such previous policy, shall be considered to be the effective date of such previous policy with respect to such individual.
__(c) Limiting Conditions on Benefits._
__(1) In general._A long-term care insurance policy may not_
__(A) condition eligibility for benefits for a type of service on the need for or receipt of any other type of service (such as prior hospitalization or institutionalization, or a higher level of care than the care for which benefits are covered);
__(B) condition eligibility for any benefit (where the need for such benefit has been established by an independent assessment of impairment) on any particular medical diagnosis (including any acute condition) or on one of a group of diagnoses;
__(C) condition eligibility for benefits furnished by licensed or certified providers on compliance by such providers with conditions not required under Federal or State law; or
__(D) condition coverage of any service on provision of such service by a provider, or in a setting, providing a higher level of care than that required by an insured individual.
__(2) Home care or community-based services._A long-term care insurance policy that provides benefits for any home care or community-based services provided in a setting other than a residential care facility_
__(A) may not limit such benefits to services provided by registered nurses or licensed practical nurses;
__(B) may not limit such benefits to services furnished by persons or entities participating in programs under titles XVIII and XIX of the Social Security Act and in part 1 of this subtitle; and
__(C) must provide, at a minimum, benefits for personal assistance with activities of daily living, home health care, adult day care, and respite care.
__(3) Nursing facility services._A long-term care insurance policy that provides benefits for any nursing facility services_
__(A) must provide benefits for such services provided by all types of nursing facilities licensed by the State, and
__(B) may provide benefits for care in other residential facilities.
__(4) Prohibition on discrimination by diagnosis._A long-term care insurance policy may not provide for treatment of_
__(A) Alzheimer's disease or any other progressive degenerative dementia of an organic origin,
__(B) any organic or inorganic mental illness,
__(C) mental retardation or any other cognitive or mental impairment, or
__(D) HIV infection or AIDS,
different from the treatment of any other medical condition for purposes of determining whether threshold conditions for the receipt of benefits have been met, or the amount of benefits under the policy.
__(d) Inflation Protection._
__(1) Requirement to offer._An insurer offering for sale any long-term care insurance policy shall be required to afford the purchaser the option to obtain coverage under such policy (upon payment of increased premiums) of annual increases in benefits at rates in accordance with paragraph (2).
__(2) Rate increase in benefits._For purposes of paragraph (1), the benefits under a policy for each year shall be increased by a percentage of the full value of benefits under the policy for the previous year, which shall be not less than 5 percent of such value (or such other rate of increase as may be determined by the Secretary to be adequate to offset increases in the costs of long-term care services for which coverage is provided under the policy).
__(3) Requirement of written rejection._Inflation protection in accordance with paragraph (1) may be excluded from the coverage under a policy only if the insured individual (or, if different, the person responsible for payment of premiums has rejected in writing the option to obtain such coverage.
SEC. 2323. REQUIREMENTS RELATING TO PREMIUMS.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements applicable to premiums for long-term care insurance policies, which shall include at a minimum the requirements specified in this section.
__(b) Limitations on Rates and Increases._The Secretary, after considering recommendations of the Advisory Council, may establish by regulation such standards and requirements as may be determined appropriate with respect to_
__(1) mandatory or optional State procedures for review and approval of premium rates and rate increases or decreases;
__(2) limitations on the amount of initial premiums, or on the rate or amount of premium increases;
__(3) the factors to be taken into consideration by an insurer in proposing, and by a State in approving or disapproving, premium rates and increases; and
__(4) the extent to which consumers should be entitled to participate or be represented in the rate-setting process and to have access to actuarial and other information relied on in setting rates.
SEC. 2324. REQUIREMENTS RELATING TO SALES PRACTICES.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements applicable to the sale or offering for sale of long-term care insurance policies, which shall include at a minimum the requirements specified in this section.
__(b) Applications._Any insurer that offers any long-term care insurance policy (including any group policy) shall be required to meet such requirements with respect to the content, format, and use of application forms for long-term care insurance as the Secretary may require by regulation.
__(c) Agent Training and Certification._An insurer may not sell or offer for sale a long-term care insurance policy through an agent who does not comply with minimum standards with respect to training and certification established by the Secretary after consideration of recommendations by the Advisory Council.
__(d) Compensation for Sale of Policies._Compensation by an insurer to an agent or agents for the sale of an original long-term care insurance policy, or for servicing or renewing such a policy, may not exceed amounts (or percentage shares of premiums or other reference amounts) specified by the Secretary in regulations, after considering recommendations of the Advisory Council.
__(e) Prohibited Sales Practices._The following practices by insurers shall be prohibited with respect to the sale or offer for sale of long-term care insurance policies:
__(1) False and misleading representations._Making any statement or representation_
__(A) which the insurer knows or should know is false or misleading (including the inaccurate, incomplete, or misleading comparison of long-term care insurance policies or insurers), and
__(B) which is intended, or would be likely, to induce any person to purchase, retain, terminate, forfeit, permit to lapse, pledge, assign, borrow against, convert, or effect a change with respect to, any long-term care insurance policy.
__(2) Inaccurate completion of medical history._Making or causing to be made (by any means including failure to inquire about or to record information relating to preexisting conditions) statements or omissions, in records detailing the medical history of an applicant for insurance, which the insurer knows or should know render such records false, incomplete, or misleading in any way material to such applicant's eligibility for or coverage under a long-term care insurance policy.
__(3) Undue pressure._Employing force, fright, threat, or other undue pressure, whether explicit or implicit, which is intended, or would be likely, to induce the purchase of a long-term care insurance policy.
__(4) Cold lead advertising._Using, directly or indirectly, any method of contacting consumers (including any method designed to induce consumers to contact the insurer or agent) for the purpose of inducing the purchase of long-term care insurance (regardless of whether such purpose is the sole or primary purpose of the contact) without conspicuously disclosing such purpose.
__(f) Prohibition on Sale of Duplicate Benefits._An insurer or agent may not sell or issue to an individual a long-term care insurance policy that the insurer or agent knows or should know provides for coverage that duplicates coverage already provided in another long-term care insurance policy held by such individual (unless the policy is intended to replace such other policy).
__(g) Sales Through Employers or Membership Organizations._
__(1) Requirements concerning such arrangements._In any case where an employer, organization, association, or other entity (referred to as a ``membership entity'') endorses a long-term care insurance policy to, or such policy is marketed or sold through such membership entity to, employees, members, or other individuals affiliated with such membership entity_
__(A) the insurer offering such policy shall not permit its marketing or sale through such entity unless the requirements of this subsection are met; and
__(B) a membership entity that receives any compensation for such sale, marketing, or endorsement of such policy shall be considered the agent of the insurer for purposes of this part.
__(2) Disclosure and information requirements._A membership entity that endorses a long-term care insurance policy, or through which such policy is sold, to individuals affiliated with such entity, shall_
__(A) disclose prominently, in a form and manner designed to ensure that each such individual who receives information concerning any such policy through such entity is aware of and understands such disclosure_
__(i) the manner in which the insurer and policy were selected;
__(ii) the extent (if any) to which a person independent of the insurer with expertise in long-term care insurance analyzed the advantages and disadvantages of such policy from the standpoint of such individuals (including such matters as the merits of the policy compared to other available benefit packages, and the financial stability of the insurer), and the results of any such analysis;
__(iii) any organizational or financial ties between the entity (or a related entity) and the insurer (or a related entity);
__(iv) the nature of compensation arrangements (if any) and the amount of compensation (including all fees, commissions, and other forms of financial support) for the endorsement or sale of such policy; and
__(B) make available to such individuals, either directly or through referrals, appropriate counseling to assist such individuals to make educated and informed decisions concerning the purchase of such policies.
SEC. 2325. CONTINUATION, RENEWAL, REPLACEMENT, CONVERSION, AND CANCELLATION OF POLICIES.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements applicable to the renewal, replacement, conversion, and cancellation of long-term care insurance policies, which shall include at a minimum the requirements specified in this section.
__(b) Insured's Right to Cancel During Examination Period._Each individual insured (or, if different, each individual liable for payment of premiums) under a long-term care insurance policy shall have the unconditional right to return the policy within 30 days after the date of its issuance and delivery, and to obtain a full refund of any premium paid.
__(c) Insurer's Right to Cancel (or Deny Benefits) Based on Fraud or Nondisclosure._An insurer shall have the right to cancel a long-term care insurance policy, or to refuse to pay a claim for benefits, based on evidence that the insured falsely represented or failed to disclose information material to the determination of eligibility to purchase such insurance, but only if_
__(1) the insurer presents written documentation, developed at the time the insured applied for such insurance, of the insurer's request for the information thus withheld or misrepresented, and the insured individual's response to such request;
__(2) the insurer presents medical records or other evidence showing that the insured individual knew or should have known that such response was false, incomplete, or misleading;
__(3) notice of cancellation is furnished to the insured individual before the date 3 years after the effective date of the policy (or such earlier date as the Secretary may specify in regulations); and
__(4) the insured individual is afforded the opportunity to review and refute the evidence presented by the insurer pursuant to paragraphs (1) and (2).
__(d) Insurer's Right to Cancel for Nonpayment of Premiums._
__(1) In general._Insurers shall have the right to cancel long-term care insurance policies for nonpayment of premiums, subject to the provisions of this subsection and subsection (e) (relating to nonforfeiture).
__(2) Notice and acknowledgement._
__(A) In general._The insurer may not cancel coverage of an insured individual until_
__(i) the insurer, not earlier than the date when such payment is 30 days past due, has given written notice to the insured individual (by registered letter or the equivalent) of such intent, and
__(ii) 30 days have elapsed since the insurer obtained written acknowledgment of receipt of such notice from the insured individual (or the designated representative, at the insured individual's option or in the case of an insured individual determined to be incapacitated in accordance with paragraph (4)).
__(B) Additional Requirement for Group Policies._In the case of a group long-term care insurance policy, the notice and acknowledgement requirements of subparagraph (A) apply with respect to the policyholder and to each insured individual.
__(3) Reinstatement of coverage of incapacitated individuals._In any case where the coverage of an individual under a long-term care insurance policy has been canceled pursuant to paragraph (2), the insurer shall be required to reinstate full coverage of such individual under such policy, retroactive to the effective date of cancellation, if the insurer receives from such individual (or the designated representative of such individual), within 5 months after such date_
__(A) evidence of a determination of such individual's incapacitation in accordance with paragraph (4) (whether made before or after such date), and
__(B) payment of all premiums due and past due, and all charges for late payment.
__(4) Determination of incapacitation._For purposes of this subsection, the term ``determination of incapacitation'' means a determination by a qualified health professional (in accordance with such requirements as the Secretary may specify), that an insured individual has suffered a cognitive impairment or loss of functional capacity which could reasonably be expected to render the individual permanently or temporarily unable to deal with business or financial matters. The standard used to make such determination shall not be more stringent than the threshold conditions for the receipt of covered benefits.

__(5) Designation of representative._The insurer shall be required_
__(A) to require the insured individual, at the time of sale or issuance of a long-term care insurance policy_
__(i) to designate a representative for purposes of communication with the insurer concerning premium payments in the event the insured individual cannot be located or is incapacitated, or
__(ii) to complete a signed and dated statement declining to designate a representative, and
__(B) to obtain from the insured individual, at the time of each premium payment (but in no event less often than once in each 12-month period) reconfirmation or revision of such designation or declination.
__(e) Nonforfeiture._
__(1) In general._The Secretary, after consideration of recommendations by the Advisory Council, shall by regulation require appropriate nonforfeiture benefits with respect to each long-term care insurance policy that lapses for any reason (including nonpayment of premiums, cancellation, or failure to renew, but excluding lapses due to death) after remaining in effect beyond a specified minimum period.
__(2) Nonforfeiture benefits._The standards established under this subsection shall require that the amount or percentage of nonforfeiture benefits shall increase proportionally with the amount of premiums paid by a policyholder.
__(f) Continuation, Renewal, Replacement, and Conversion of Policies._
__(1) In general._Insurers shall not be permitted to cancel, or refuse to renew (or replace with a substantial equivalent), any long-term care insurance policy for any reason other than for fraud or material misrepresentation (as provided in subsection (c)) or for nonpayment of premium (as provided in subsection (d)).
__(2) Duration and renewal of policies._Each long-term care insurance policy shall contain a provision that clearly states_
__(A) the duration of the policy,
__(B) the right of the insured individual (or policyholder) to renewal (or to replacement with a substantial equivalent),
__(C) the date by which, and the manner in which, the option to renew must be exercised, and
__(D) any applicable restrictions or limitations (which may not be inconsistent with the requirements of this part).
__(3) Replacement of policies._
__(A) In general._Except as provided in subparagraph (B), an insurer shall not be permitted to sell any long-term care insurance policy as a replacement for another such policy unless coverage under such replacement policy is available to an individual insured for benefits covered under the previous policy to the same extent as under such previous policy (including every individual insured under a group policy) on the date of termination of such previous policy, without exclusions or limitations that did not apply under such previous policy.
__(B) Insured's option to reduce coverage._In any case where an insured individual covered under a long-term care insurance policy knowingly and voluntarily elects to substitute for such policy a policy that provides less coverage, substitute policy shall be considered a replacement policy for purposes of this part.

__(3) Continuation and conversion rights with respect to group policies._
__(A) In general._Insurers shall be required to include in each group long-term care insurance policy, a provision affording to each insured individual, when such policy would otherwise terminate, the opportunity (at the insurer's option, subject to approval of the State insurance commissioner) either to continue or to convert coverage under such policy in accordance with this paragraph.
__(B) Rights of related individuals._In the case of any insured individual whose eligibility for coverage under a group policy is based on relationship to another individual, the insurer shall be required to continue such coverage upon termination of the relationship due to divorce or death.
__(C) Continuation of coverage._A group policy shall be considered to meet the requirements of this paragraph with respect to rights of an insured individual to continuation of coverage if coverage of the same (or substantially equivalent) benefits for such individual under such policy is maintained, subject only to timely payment of premiums.
__(D) Conversion of coverage._A group policy shall be considered to meet the requirements of this paragraph with respect to conversion if it entitles each individual who has been continuously covered under the policy for at least 6 months before the date of the termination to issuance of a replacement policy providing benefits identical to, substantially equivalent to, or in excess of, the benefits under such terminated group policy_
__(i) without requiring evidence of insurability with respect to benefits covered under such previous policy, and
__(ii) at premium rates no higher than would apply if the insured individual had initially obtained coverage under such replacement policy on the date such insured individual initially obtained coverage under such group policy.
__(4) Treatment of substantial equivalence._
__(A) Under secretary's guidelines._The Secretary, after considering recommendations by the Advisory Council, shall develop guidelines for comparing long-term care insurance policies for the purpose of determining whether benefits under such policies are substantially equivalent.

__(B) Before effective date of secretary's guidelines._During the period prior to the effective date of guidelines published by the Secretary under this paragraph, insurers shall comply with standards for determinations of substantial equivalence established by State insurance commissioners.
__(5) Additional requirements._Insurers shall comply with such other requirements relating to continuation, renewal, replacement, and conversion of long-term care insurance policies as the Secretary may establish.
SEC. 2326. REQUIREMENTS RELATING TO PAYMENT OF BENEFITS.
__(a) In General._The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements with respect to claims for and payment of benefits under long-term care insurance policies, which shall include at a minimum the requirements specified in this section.
__(b) Standards Relating to Threshold Conditions for Receipt of Covered Benefits._Each long-term care insurance policy shall meet the following requirements with respect to identification of, and determination of whether an insured individual meets, the threshold conditions for receipt of benefits covered under such policy:
__(1) Declaration of threshold conditions._
__(A) In general._The policy shall specify the level (or levels) of functional or cognitive mental impairment (or combination of impairments) required as a threshold condition of entitlement to receive benefits under the policy (which threshold condition or conditions shall be consistent with any regulations promulgated by the Secretary pursuant to subsection (B)).
__(B) Secretarial responsibility._The Secretary (after considering the views of the Advisory Council on current practices of insurers concerning, and the appropriateness of standardizing, threshold conditions) may promulgate such regulations as the Secretary finds appropriate establishing standardized thresholds to be used under such policies as preconditions for varying levels of benefits.
__(2) Independent professional assessment._The policy shall provide for a procedure for determining whether the threshold conditions specified under paragraph (1) have been met with respect to an insured individual which_
__(A) applies such uniform assessment standards, procedures, and formats as the Secretary may specify, after consideration of recommendations by the Advisory Council;
__(B) permits an initial evaluation (or, if the initial evaluation was performed by a qualified independent assessor selected by the insurer, a reevaluation) to be made by a qualified independent assessor selected by the insured individual (or designated representative) as to whether the threshold conditions for receipt of benefits have been met;
__(C) permits the insurer the option to obtain a reevaluation by a qualified independent assessor selected and reimbursed by the insurer;
__(D) provides that the insurer will consider that the threshold conditions have been met in any case where_
__(i) the assessment under subparagraph (B) concluded that such conditions had been met, and the insurer declined the option under subparagraph (C), or
__(ii) assessments under both subparagraphs (B) and (C) concluded that such conditions had been met; and
__(E) provides for final resolution of the question by a State agency or other impartial third party in any case where assessments under subparagraphs (B) and (C) reach inconsistent conclusions.
__(3) Qualified independent assessor._For purposes of paragraph (2), the term ``qualified independent assessor'' means a licensed or certified professional, as appropriate, who_
__(A) meets such standards with respect to professional qualifications as may be established by the Secretary, after consulting with the Secretary of the Treasury, and
__(B) has no significant or controlling financial interest in, is not an employee of, and does not derive more than 5 percent of gross income from, the insurer (or any provider of services for which benefits are available under the policy and in which the insurer has a significant or controlling financial interest).
__(c) Requirements Relating to Claims for Benefits._Insurers shall be required_
__(1) to promptly pay or deny claims for benefits submitted by (or on behalf of) insured individuals who have been determined pursuant to subsection (b) to meet the threshold conditions for payment of benefits;
__(2) to provide an explanation in writing of the reasons for payment, partial payment, or denial of each such claim; and
__(3) to provide an administrative procedure under which an insured individual may appeal the denial of any claim.
Subpart C_Enforcement
SEC. 2342. STATE PROGRAMS FOR ENFORCEMENT OF STANDARDS.
__(a) Requirement for State Programs Implementing Federal Standards._In order for a State to be eligible for grants under this subpart, the State must have in effect a program (including such laws and procedures as may be necessary) for the regulation of long-term care insurance which the Secretary has determined_
__(1) includes the elements required under this subpart, and
__(2) is designed to ensure the compliance of long-term care insurance policies sold in the State, and insurers offering such policies and their agents, with the requirements established pursuant to subpart B.
__(b) Activities Under State Program._A State program approved under this subpart shall provide for the following procedures and activities:
__(1) Monitoring of insurers and policies._Procedures for ongoing monitoring of the compliance of insurers doing business in the State, and of long-term care insurance policies sold in the State, with requirements under this part, including at least the following:
__(A) Policy review and certification._A program for review and certification (and annual recertification) of each such policy sold in the State.
__(B) Reporting by insurers._Requirements of annual reporting by insurers selling or servicing long-term care insurance policies in the State, in such form and containing such information as the State may require to determine whether the insurer (and policies) are in compliance with requirements under this part.
__(C) Data collection._Procedures for collection, from insurers, service providers, insured individuals, and others, of information required by the State for purposes of carrying out its responsibilities under this part (including authority to compel compliance of insurers with requests for such information).
__(D) Marketing oversight._Procedures for monitoring (through sampling or other appropriate procedures) the sales practices of insurers and agents, including review of marketing literature.
__(E) Oversight of administration of benefits._Procedures for monitoring (through sampling or other appropriate procedures) insurers' administration of benefits, including monitoring of_
__(i) determinations of insured individuals' eligibility to receive benefits, and
__(ii) disposition of claims for payment.
__(2) Information to insurers._Procedures for furnishing, to insurers selling or servicing any long-term care insurance policies in the State, information on conditions of eligibility for, and benefits under, each public long-term care program administered by the State, in order to enable them to comply with the requirement under section 2321(e)(3).
__(3) Consumer complaints and dispute resolution._Administrative procedures for the investigation and resolution of complaints by consumers, and disputes between consumers and insurers, with respect to long-term care insurance, including_
__(A) procedures for the filing, investigation, and adjudication of consumer complaints with respect to the compliance of insurers and policies with requirements under this part, or other requirements under State law; and
__(B) procedures for resolution of disputes between insured individuals and insurers concerning eligibility for, or the amount of, benefits payable under such policies, and other issues with respect to the rights and responsibilities of insurers and insured individuals under such policies.
__(4) Technical assistance to insurers._Provision of technical assistance to insurers to help them to understand and comply with the requirements of this part, and other State laws, concerning long-term care insurance policies and business practices.
__(c) State Enforcement Authorities._A State program meeting the requirements of this subpart shall ensure that the State insurance commissioner (or other appropriate official or agency) has the following authority with respect to long-term care insurers and policies:
__(1) Prohibition of sale._Authority to prohibit the sale, or offering for sale, of any long-term care insurance policy that fails to comply with all applicable requirements under this part.
__(2) Plans of correction._Authority, in cases where the business practices of an insurer are determined not to comply with requirements under this part, to require the insurer to develop, submit for State approval, and implement a plan of correction which must be fulfilled within the shortest period possible (not to exceed a year) as a condition of continuing to do business in the State.
__(3) Corrective action orders._Authority, in cases where an insurer is determined to have failed to comply with requirements of this part, or with the terms of a policy, with respect to a consumer or insured individual, to direct the insurer (subject to appropriate due process) to eliminate such noncompliance within 30 days.
__(4) Civil money penalties._Authority to assess civil money penalties, in amounts for each violative act up to the greater of $10,000 or three times the amount of any commission involved_
__(A) for violations of subsections (d) (concerning compensation or sale of policies), (e) (concerning prohibited sales practices), and (f) (prohibition on sale of duplicate benefits) of section 2324,
__(B) for such other violative acts as the Secretary may specify in regulations, and
__(C) in such other cases as the State finds appropriate.
__(5) Other authorities._Such other authorities as the State finds necessary or appropriate to enforce requirements under this part.
__(d) Records, Reports, and Audits._As a condition of approval of its program under this part, a State must agree to maintain such records, make such reports (including expenditure reports), and cooperate with such audits, as the Secretary finds necessary to determine the compliance of such State program (and insurers and policies regulated under such program) with the requirements of this part.
__(e) Secretarial Responsibilities._
__(1) Approval of state programs._The Secretary shall approve a State program meeting the requirements of this part.
__(2) Information on medicare benefits._The Secretary shall furnish, to the official in each State with chief responsibility for the regulation of long-term care insurance, a description of the Medicare programs under title XVIII of the Social Security Act which makes clear the unavailability of long-term benefits under such programs, for distribution by such State official to insurers selling long-term care insurance in the State, in accordance with subsection (b)(2).
SEC. 2342. AUTHORIZATION OF APPROPRIATIONS FOR STATE PROGRAMS.
__There are authorized to be appropriated $10,000,000 for fiscal year 1996, $10,000,000 for fiscal year 1997, $7,500,000 for fiscal year 1998, and $5,000,000 for fiscal year 1999 and each succeeding fiscal year, for grants to States with programs meeting the requirements of this part, to remain available until expended.
SEC. 2343. ALLOTMENTS TO STATES.
__The allotment for any fiscal year to a State with a program approved under this part shall be an amount determined by the Secretary, taking into account the numbers of long-term care insurance policies sold, and of elderly individuals residing, in the State, and such other factors as the Secretary finds appropriate.
SEC. 2344. PAYMENTS TO STATES.
__(a) In General._Each State with a program approved under this part shall be entitled to payment under this title for each fiscal year in an amount equal to its allotment for such fiscal year, for expenditure by such State for up to 50 percent of the cost of activities under such program.
__(b) State Share of Program Expenditures._No Federal funds from any source may be used as any part of the non-Federal share of expenditures under the State program under this subpart.
__(c) Transfer and Deposit Requirements._The Secretary shall make payments under this section in accordance with section 6503 of title 31, United States Code.
SEC. 2345. FEDERAL OVERSIGHT OF STATE ENFORCEMENT.
__(a) In General._The Secretary shall periodically review State regulatory programs approved under section 2341 to determine whether they continue to comply with the requirements of this part.
__(b) Notice of Determination of Noncompliance._The Secretary shall promptly notify the State of a determination that a State program fails to comply with this part, specifying the requirement or requirements not met and the elements of the State program requiring correction.
__(c) Opportunity for Correction._
__(1) In general._The Secretary shall afford a State notified of noncompliance pursuant to subsection (b) a reasonable opportunity to eliminate such noncompliance.
__(2) Correction plans._In a case where substantial corrections are needed to eliminate noncompliance of a State program, the Secretary may_
__(A) permit the State a reasonable time after the date of the notice pursuant to subsection (b) to develop and obtain the Secretary's approval of a correction plan, and
__(B) permit the State a reasonable time after the date of approval of such plan to eliminate the noncompliance.
__(d) Withdrawal of Program Approval._In the case of a State that fails to eliminate noncompliance with requirements under this part by the date specified by the Secretary pursuant to subsection (c), the Secretary shall withdraw the approval of the State program pursuant to section 2341(e).
SEC. 2346. EFFECT OF FAILURE TO HAVE APPROVED STATE PROGRAM.
__(a) Restriction on Sale of Long-Term Care Insurance._
__(1) In general._No insurer may sell or offer for sale any long-term care insurance policy, on or after the date specified in subsection (c), in a State that does not have in effect a regulatory program approved under section 2341(e).
__(2) Application of prohibition._For purposes of paragraph (1), an insurance policy shall not be considered to be sold or offered for sale in a State solely because it is sold or offered to a resident of such State.
__(b) Civil Money Penalty._
__(1) In general._An insurer shall be subject to a civil money penalty, in an amount up to the greater of $10,000 or three times any commission involved, for each incident in which the insurer sells, or offers to sell, an insurance policy to an individual in violation of subsection (a).
__(2) Enforcement procedure._The Secretary shall enforce the provisions of this subsection in accordance with the procedures provided under section 5412 of this Act.
__(c) Effective Date._
__(1) In general._The date specified in this subsection, for purposes of subsection (a), with respect to any requirement under this part, is the date one year after the date the Secretary first promulgates regulations with respect to such requirement.
__(2) Exception._To the extent that a State demonstrates to the Secretary that State legislation is required to meet any such requirement, the State shall not be regarded as failing to have in effect a program in compliance with this part solely on the basis of its failure to comply with such requirement before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the promulgation of the regulation imposing such requirement. For purposes of the preceding sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.
Subpart D_Consumer Education Grants
SEC. 2361. GRANTS FOR CONSUMER EDUCATION.
__(a) Grant Program Authorized._The Secretary is authorized to make grants_
__(1) to States,
__(2) to regional alliances (at the option of States within which such Alliances are located), and
__(3) to national organizations representing insurance consumers, long-term care providers, and insurers,
for the development and implementation of long-term care information, counseling, and other programs.
__(b) Applications._
__(1) In general._Each State or organization seeking a grant under this section shall submit to the Secretary an application, in such format and containing such information as the Secretary may require.
__(2) Goals._Programs under this section shall be directed at the goals of increasing consumers' understanding and awareness of options available to them with respect to long-term care insurance (and alternatives, such as public long-term care programs), including_
__(A) the risk of needing long-term care;
__(B) the costs associated with long-term care services;
__(C) the lack of long-term care coverage under the Medicare program, Medicare supplemental (Medigap) policies, and standard private health insurance;
__(D) the limitations on (and conditions of eligibility for) long-term care coverage under State programs;
__(E) the availability, and variations in coverage and cost, of private long-term care insurance;
__(F) features common to many private long-term care insurance policies; and
__(G) pitfalls to avoid when purchasing a long-term care insurance policy.
__(3) Activities._An application for a grant under this section shall indicate the activities the State or organization would carry out under such grant, which activities may include_
__(A) coordination of the activities of State agencies and private entities as necessary to carry out the State's program under this section;
__(B) collection, analysis, publication, and dissemination of information,
__(C) conducting or sponsoring of consumer education, outreach, and information programs,
__(D) providing (directly or through referral) counseling and consultation services to consumers to assist them in choosing long-term care insurance coverage appropriate to their circumstances, and
__(E) other appropriate activities.
__(4) Priority for innovation._In awarding grants under this section, the Secretary shall give priority to applications proposing to use innovative approaches to providing information, counseling, and other assistance to individuals who might benefit from, or are considering the purchase of, long-term care insurance.
__(c) Period of Grants._Grants under this section shall be for not longer than 3 years.
__(d) Evaluations and Reports._
__(1) By grantees to the secretary._Each recipient of a grant under this section shall annually evaluate the effectiveness of its program under such grant, and report its conclusions to the Secretary.
__(2) By the secretary to the congress._The Secretary shall annually evaluate, and report to the Congress on, the effectiveness of programs under this section, on the basis of reports received under paragraph (1) and such independent evaluation as the Secretary finds necessary.
__(e) Authorization of Appropriations._There are authorized to be appropriated, for grants under this section_
__(1) $10,000,000 for each of fiscal years 1995 through 1997 for grants to States, and
__(2) $1,000,000 for each of fiscal years 1995 through 1997,
for grants to eligible organizations.
PART 4_TAX TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES
SEC. 2401. REFERENCE TO TAX PROVISIONS.
__For amendments to the Internal Revenue Code of 1986 relating to the treatment of long-term care insurance and services, see subtitle G of title VII.
PART 5_TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO WORK
SEC. 2501. REFERENCE TO TAX PROVISION.
__For amendment to the Internal Revenue Code of 1986 providing for a tax credit for cost of personal assistance services required by employed individuals, see section 7901.
PART 6_DEMONSTRATION AND EVALUATION
SEC. 2601. DEMONSTRATION ON ACUTE AND LONG-TERM CARE INTEGRATION.
__(a) Program Authorized._The Secretary of Health and Human Services shall conduct a demonstration program to test the effectiveness of various approaches to financing and providing integrated acute and long-term care services described in subsection (b) for the chronically ill and disabled who meet eligibility criteria under subsection (c).
__(b) Services and Benefits._
__(1) In general._Except as provided in paragraph (2), the following services and benefits shall be provided under each demonstration approved under this section:
__(A) Comprehensive benefit package._All benefits included in the comprehensive benefit package under title I of this Act.
__(B) Transitional benefits._Specialized benefits relating to the transition from acute to long-term care, including_
__(i) assessment and consultation,
__(ii) inpatient transitional care,
__(iii) medical rehabilitation,
__(iv) home health care and home care,
__(v) caregiver support, and
__(vi) self-help technology.
__(C) Long-term care benefits._Long-term care benefits, including_
__(i) adult day care,
__(ii) personal assistance services,
__(iii) homemaker services and chore services;
__(iv) home-delivered meals;
__(v) respite services;
__(vi) nursing facility services in specialized care units;
__(vii) services in other residential settings including community supported living arrangements and assisted living facilities; and
__(viii) assistive devices and environmental modifications.
__(D) Habilitation services._Specialized habilitation services for participants with developmental disabilities.
__(2) Variations in minimum benefits._
__(A) In general._Subject to the requirement of subparagraph (B), demonstrations may omit specified services listed under subparagraphs (C) and (D) of paragraph (1), or provide additional services, as found appropriate by the Secretary in the case of a particular demonstration, taking into consideration factors such as_
__(i) the needs of a specialized group of eligible beneficiaries;
__(ii) the availability of the omitted benefits under other programs in the service area; and
__(iii) the geographic availability of service providers.
__(B) Breadth requirement._In approving variant demonstrations pursuant to subparagraph (A), the Secretary shall ensure that demonstrations under this section, taken as a group, adequately test financing and delivery models covering the entire array of services and benefits described in paragraph (1).
__(c) Eligibility Criteria._The Secretary shall establish eligibility criteria for individuals who may receive services under demonstrations under this section. Under such criteria, any of the following may be found to be eligible populations for such demonstrations:
__(1) Individuals with disabilities who are entitled to services and benefits under a State program under part 1 of this subtitle.
__(2) Individuals who are entitled to benefits under parts A and B of title XVIII of the Social Security Act.
__(3) Individuals who are entitled to medical assistance under a State plan under title XIX of the Social Security Act, and are also_
__(A) individuals described in paragraph (2), or
__(B) individuals eligible for supplemental security income under title XVI of that Act.
__(d) Application._
__(1) In general._Each entity seeking to participate in a demonstration under this section shall submit an application, in such format and containing such information as the Secretary may require, including the information specified in this subsection.
__(2) Service delivery._The application shall state the services to be provided under the demonstration (either directly by the applicant or under other arrangements approved by the Secretary), which shall include services specified pursuant to subsection (b) and_
__(A) enrollment services;
__(B) client assessment and care planning;
__(C) simplified access to needed services;
__(D) integrated management of acute and chronic care, including measures to ensure continuity of care across settings and services;
__(E) quality assurance, grievance, and appeals mechanisms; and
__(F) such other services as the Secretary may require.
__(3) Consumer protection and participation._The applicant shall provide evidence of consumer participation_
__(A) in the planning of the demonstration (including a showing of support from community agencies or consumer interest groups); and
__(B) in the conduct of the demonstration, including descriptions of methods and procedures to be used_
__(i) to make available to individuals enrolled in the demonstration information on self-help, health promotion and disability prevention practices, and enrollees' contributions to the costs of care;
__(ii) to ensure participation by such enrollees (or their designated representatives, where appropriate) in care planning and in decisions concerning treatment;
__(iii) to handle and resolve client grievances and appeals;
__(iv) to take enrollee views into account in quality assurance and provider contracting procedures; and
__(v) to evaluate enrollee satisfaction with the program.
__(4) Applicant qualifications._Applicants for grants under this section shall meet eligibility criteria established by the Secretary, including requirements relating to_
__(A) adequate financial controls to monitor administrative and service costs,
__(B) demonstrated commitment of the Board of Directors or comparable governing body to the goals of demonstration,
__(C) information systems adequate to pay service providers, to collect required utilization and cost data,  and to provide data adequate to permit evaluation of program performance, and
__(D) compliance with applicable State laws.

__(e) Payments to Participants._An entity conducting a demonstration under this section shall be entitled to receive, with respect to each enrollee, for the period during which it is providing to such enrollee services under a demonstration under this section, such amounts as the Secretary shall provide, which amounts_
__(1) may include risk-based payments and non-risk based payments by governmental programs, by third parties, or by project enrollees, or any combination of such payments, and
__(2) may vary by project and by enrollee.

You are viewing proxied material from infinitelyremote.com. The copyright of proxied material belongs to its original authors. Any comments or complaints in relation to proxied material should be directed to the original authors of the content concerned. Please see the disclaimer for more details.