103d CONGRESS
  1st Session
                                H. R. 3600

 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           November 20, 1993

   Mr. Gephardt (for himself, Mr. Bonior, Mr. Hoyer, Mr. Fazio, Mrs. 
   Kennelly, Mr. Lewis of Georgia, Mr. Richardson, Mr. Dingell, Mr. 
    Rostenkowski, Mr. Ford of Michigan, Mr. Waxman, Mrs. Collins of 
 Illinois, Mr. Stark, Mr. Williams, Mr. Clay, Mr. Brooks, Mr. Moakley, 
  Mr. Abercrombie, Mr. Ackerman, Mr. Andrews of Maine, Mr. Barrett of 
  Wisconsin, Mr. Berman, Mr. Bilbray, Mr. Blackwell, Mr. Borski, Mr. 
Brown of California, Ms. Brown of Florida, Mr. Cardin, Mr. Clyburn, Mr. 
Coyne, Mr. de Lugo, Ms. DeLauro, Mr. Deutsch, Mr. Dicks, Mr. Dixon, Mr. 
 Durbin, Mr. Edwards of California, Mr. Engel, Ms. English of Arizona, 
Ms. Eshoo, Mr. Faleomavaega, Mr. Filner, Mr. Flake, Mr. Foglietta, Mr. 
 Frank of Massachusetts, Mr. Gejdenson, Mr. Gibbons, Mr. Hastings, Mr. 
Hilliard, Mr. Hinchey, Ms. Eddie Bernice Johnson of Texas, Mr. Johnston 
 of Florida, Mr. Kanjorski, Mr. Kreidler, Mr. LaFalce, Mr. Lantos, Mr. 
Levin, Ms. Long, Mr. Martinez, Mr. Matsui, Ms. McKinney, Mrs. Meek, Mr. 
Minge, Mrs. Mink, Mr. Murphy, Mr. Murtha, Ms. Norton, Mr. Oberstar, Mr. 
 Obey, Mr. Owens, Mr. Pastor, Mr. Payne of New Jersey, Mr. Rahall, Mr. 
   Rangel, Mr. Reynolds, Mr. Romero-Barcelo, Mr. Rush, Mr. Sabo, Mr. 
     Sawyer, Mr. Scott, Mr. Serrano, Ms. Shepherd, Mr. Skaggs, Ms. 
 Slaughter, Mr. Smith of Iowa, Mr. Stokes, Mr. Strickland, Mr. Studds, 
 Mr. Swift, Mr. Synar, Mr. Thornton, Mrs. Thurman, Mr. Traficant, Mr. 
Underwood, Mrs. Unsoeld, Mr. Vento, Mr. Watt, Mr. Wheat, Mr. Wise, and 
Mr. Yates) introduced the following bill; which was referred jointly to 
  the Committee on Energy and Commerce, to the Committee on Ways and 
Means, and to the Committee on Education and Labor for consideration of 
 such provisions in titles I, III, VI, VIII, X, and XI as fall within 
 its jurisdiction pursuant to clause 1(g) of rule X; and concurrently, 
for a period ending not later than two weeks after all three committees 
 of joint referral report to the House (or a later time if the Speaker 
so designates), to the Committee on Armed Services for consideration of 
subtitle A of title VIII and such provisions of title I as fall within 
its jurisdiction pursuant to clause 1(c) of rule X, to the Committee on 
  Veterans' Affairs for consideration of subtitle B of title VIII and 
such provisions of title I as fall within its jurisdiction pursuant to 
   clause 1(u) of rule X, to the Committee on Post Office and Civil 
    Service for consideration of subtitle C of title VIII and such 
   provisions of title I as fall within its jurisdiction pursuant to 
   clause 1(o) of rule X, to the Committee on Natural Resources for 
consideration of subtitle D of title VIII and such provisions of title 
I as fall within its jurisdiction pursuant to clause 1(n) of rule X, to 
the Committee on the Judiciary for consideration of subtitles C through 
F of title V and such other provisions as fall within its jurisdiction 
   pursuant to clause 1(l) of rule X, to the Committee on Rules for 
consideration of sections 1432(d), 6006(f), and 9102(e)(5), and to the 
 Committee on Government Operations for consideration of subtitle B of 
                        title V and section 5401

                            February 4, 1994

        Additional sponsors: Mr. Carr of Michigan and Mr. Swett

_______________________________________________________________________

                                 A BILL

 
 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

                                                                  Table

SECTION 1. SHORT TITLE; TABLE OF TITLES AND SUBTITLES.

    (a) Short Title.--This Act may be cited as the ``Health Security 
Act''.
    (b) Table of Titles and Subtitles in Act.--The following are the 
titles and subtitles contained in this Act:

                                                                   Page
                     TITLE I--HEALTH CARE SECURITY

Subtitle A--Universal Coverage and Individual Responsibility          8
Subtitle B--Benefits........................................         32
Subtitle C--State Responsibilities..........................         95
Subtitle D--Health Alliances................................        118
Subtitle E--Health Plans....................................        224
Subtitle F--Federal Responsibilities........................        256
Subtitle G--Employer Responsiblities........................        303
Subtitle J--General Definitions; Miscellaneous Provisions...        323
                         TITLE II--NEW BENEFITS

Subtitle A--Medicare Outpatient Prescription Drug Benefit...        343
Subtitle B--Long-Term Care..................................        389
                  TITLE III--PUBLIC HEALTH INITIATIVES

Subtitle A--Workforce Priorities Under Federal Payments.....        504
Subtitle B--Academic Health Centers.........................        548
Subtitle C--Health Research Initiatives.....................        560
Subtitle D--Core Functions of Public Health Programs;               564
                            National Initiatives Regarding 
                            Preventive Health.
Subtitle E--Health Services for Medically Underserved               578
                            Populations.
Subtitle F--Mental Health; Substance Abuse..................        615
Subtitle G--Comprehensive School Health Education; School-          627
                            Related Health Services.
Subtitle H--Public Health Service Initiative................        667
Subtitle I--Coordination With COBRA Continuation Coverage...        668
                    TITLE IV--MEDICARE AND MEDICAID

Subtitle A--Medicare and the Alliance System................        674
Subtitle B--Savings in Medicare Program.....................        752
Subtitle C--Medicaid........................................        807
Subtitle D--Increase in SSI Personal Needs Allowance........        832
                TITLE V--QUALITY AND CONSUMER PROTECTION

Subtitle A--Quality Management and Improvement..............        835
Subtitle B--Information Systems, Privacy, and Administrative        859
                            Simplification.
Subtitle C--Remedies and Enforcement........................        887
Subtitle D--Medical Malpractice.............................        933
Subtitle E--Fraud and Abuse.................................        948
Subtitle F--McCarran-Ferguson Reform........................        979
   TITLE VI--PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS

Subtitle A--Premium Caps....................................        984
Subtitle B--Premium-Related Financing.......................       1025
Subtitle C--Payments to Regional Alliance Health Plans......       1086
                     TITLE VII--REVENUE PROVISIONS

Subtitle A--Financing Provisions............................       1094
Subtitle B--Tax Treatment of Employer-Provided Health Care..       1133
Subtitle C--Employment Status Provisions....................       1143
Subtitle D--Tax Treatment of Funding of Retiree Health             1153
                            Benefits.
Subtitle E--Coordination With COBRA Continuing Care                1157
                            Provisions.
Subtitle F--Tax Treatment of Organizations Providing Health        1159
                            Care Services and Related 
                            Organizations.
Subtitle G--Tax Treatment of Long-term Care Insurance and          1171
                            Services.
Subtitle H--Tax Incentives for Health Services Providers....       1192
Subtitle I--Miscellaneous Provisions........................       1199
     TITLE VIII--HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL 
                               GOVERNMENT

Subtitle A--Military Health Care Reform.....................       1207
Subtitle B--Department of Veterans Affairs..................       1218
Subtitle C--Federal Employees Health Benefits Program.......       1233
Subtitle D--Indian Health Service...........................       1249
Subtitle E--Amendments to the Employee Retirement Income           1262
                            Security Act of 1974.
Subtitle F--Special Fund for WIC Program....................       1274
     TITLE IX--AGGREGATE GOVERNMENT PAYMENTS TO REGIONAL ALLIANCES

Subtitle A--Aggregate State Payments........................       1277
Subtitle B--Aggregate Federal Alliance Payments.............       1296
Subtitle C--Borrowing Authority to Cover Cash-Flow                 1308
                            Shortfalls.
 TITLE X--COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION AND 
                          AUTOMOBILE INSURANCE

Subtitle A--Workers Compensation Insurance..................       1314
Subtitle B--Automobile Insurance............................       1326
Subtitle C--Commission on Integration of Health Benefits....       1331
Subtitle D--Federal Employees' Compensation Act.............       1333
Subtitle E--Davis-Bacon Act and Service Contract Act........       1333
Subtitle F--Effective Dates.................................       1334
                TITLE XI--TRANSITIONAL INSURANCE REFORM

                                                               Findings

SEC. 2. FINDINGS.

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

                                                               Purposes

SEC. 3. PURPOSES.

    The purposes of this Act are as follows:
            (1) To guarantee comprehensive and secure health care 
        coverage.
            (2) To simplify the health care system for consumers and 
        health care professionals.
            (3) To control the cost of health care for employers, 
        employees, and others who pay for health care coverage.
            (4) To promote individual choice among health plans and 
        health care providers.
            (5) To ensure high quality health care.
            (6) To encourage all individuals to take responsibility for 
        their health care coverage.

                     TITLE I--HEALTH CARE SECURITY

                       table of contents of title

                                                                   Page
      Subtitle A--Universal Coverage and Individual Responsibility

                       Part 1--Universal Coverage

Sec. 1001. Entitlement to health benefits...................         14
Sec. 1002. Individual responsibilities......................         15
Sec. 1003. Protection of consumer choice....................         15
Sec. 1004. Applicable health plan providing coverage........         16
Sec. 1005. Treatment of other nonimmigrants.................         17
Sec. 1006. Effective date of entitlement....................         18
            Part 2--Treatment of Families and Special Rules

Sec. 1011. General rule of enrollment of family in same              21
                            health plan.
Sec. 1012. Treatment of certain families....................         25
Sec. 1013. Multiple employment situations...................         30
Sec. 1014. Treatment of residents of States with statewide           32
                            single-payer systems.
                          Subtitle B--Benefits

                 Part 1--Comprehensive Benefit Package

Sec. 1101. Provision of comprehensive benefits by plans.....         32
           Part 2--Description of Items and Services Covered

Sec. 1111. Hospital services................................         34
Sec. 1112. Services of health professionals.................         36
Sec. 1113. Emergency and ambulatory medical and surgical             38
                            services.
Sec. 1114. Clinical preventive services.....................         38
Sec. 1115. Mental illness and substance abuse services......         46
Sec. 1116. Family planning services and services for                 63
                            pregnant women.
Sec. 1117. Hospice care.....................................         63
Sec. 1118. Home health care.................................         64
Sec. 1119. Extended care services...........................         64
Sec. 1120. Ambulance services...............................         66
Sec. 1121. Outpatient laboratory, radiology, and diagnostic          67
                            services.
Sec. 1122. Outpatient prescription drugs and biologicals....         67
Sec. 1123. Outpatient rehabilitation services...............         69
Sec. 1124. Durable medical equipment and prosthetic and              70
                            orthotic devices.
Sec. 1125. Vision care......................................         71
Sec. 1126. Dental care......................................         71
Sec. 1127. Health education classes.........................         73
Sec. 1128. Investigational treatments.......................         74
                          Part 3--Cost Sharing

Sec. 1131. Cost sharing.....................................         76
Sec. 1132. Lower cost sharing...............................         80
Sec. 1133. Higher cost sharing..............................         82
Sec. 1134. Combination cost sharing.........................         85
Sec. 1135. Table of copayments and coinsurance..............         86
Sec. 1136. Indexing dollar amounts relating to cost sharing.         89
                           Part 4--Exclusions

Sec. 1141. Exclusions.......................................         90
               Part 5--Role of the National Health Board

Sec. 1151. Definition of benefits...........................         92
Sec. 1152. Acceleration of expanded benefits................         92
Sec. 1153. Authority with respect to clinical preventive             93
                            services.
Sec. 1154. Establishment of standards regarding medical              94
                            necessity.
    Part 6--Additional Provisions Relating to Health Care Providers

Sec. 1161. Override of restrictive State practice laws......         95
Sec. 1162. Provision of items or services contrary to                95
                            religious belief or moral 
                            conviction.
                   Subtitle C--State Responsibilities

Sec. 1200. Participating State..............................         95
                 Part 1--General State Responsibilities

Sec. 1201. General State responsibilities...................         97
Sec. 1202. State responsibilities with respect to alliances.         98
Sec. 1203. State responsibilities relating to health plans..        101
Sec. 1204. Financial solvency; fiscal oversight; guaranty           106
                            fund.
Sec. 1205. Restrictions on funding of additional benefits...        108
          Part 2--Requirements for State Single-payer Systems

Sec. 1221. Single-payer system described....................        109
Sec. 1222. General requirements for single-payer systems....        109
Sec. 1223. Special rules for States operating statewide             114
                            single-payer system.
Sec. 1224. Special rules for alliance-specific single-payer         117
                            systems.
                      Subtitle D--Health Alliances

Sec. 1300. Health alliance defined..........................        118
       Part 1--Establsubpart a--regional alliancesrate Alliances
Sec. 1301. Regional alliance defined........................        118
Sec. 1302. Board of directors...............................        119
Sec. 1303. Provider asubpart b--corporate alliancesliances..        120
Sec. 1311. Corporate alliance defined; individuals eligible         121
                            for coverage through corporate 
                            alliances; additional 
                            definitions.
Sec. 1312. Timing of elections..............................        127
Sec. 1313. Termination of alliance election.................        129
 Part 2--General Responsibilities and Authorities of Regional Alliances

Sec. 1321. Contracts with health plans......................        131
Sec. 1322. Offering choice of health plans for enrollment;          132
                            establishment of fee-for-service 
                            schedule.
Sec. 1323. Enrollment rules and procedures..................        138
Sec. 1324. Issuance of health security cards................        148
Sec. 1325. Consumer information and marketing...............        148
Sec. 1326. Ombudsman........................................        150
Sec. 1327. Data collection; quality.........................        150
Sec. 1328. Additional duties................................        150
Sec. 1329. Additional authorities for regional alliances to         151
                            address needs in areas with 
                            inadequate health services; 
                            prohibition of insurance role.
Sec. 1330. Prohibition against self-dealing and conflicts of        152
                            interest.
Part 3--Authorities and Responsibilities of Regional Alliances Relating 
                 to Fsubpart a--collection of fundsions
Sec. 1341. Information and negotiation and acceptance of            153
                            bids.
Sec. 1342. Calculation and publication of general family            156
                            share and general employer 
                            premium amounts.
Sec. 1343. Determination of family share for families.......        158
Sec. 1344. Notice of family payments due....................        163
Sec. 1345. Collections......................................        168
Sec. 1346. Coordination amsubpart b--paymentsces............        171
Sec. 1351. Payment to regional alliance health plans........        174
Sec. 1352. Alliance administrative allowance percentage.....        178
Sec. 1353. Payments subpart c--financial managementcademic          179
                            health centers and graduate 
                            medical education.
Sec. 1subpart d--reductions in cost sharing; income determinations  180
Sec. 1371. Reduction in cost sharing for low-income families        183
Sec. 1372. Application process for cost sharing reductions..        186
Sec. 1373. Application for premium discounts and reduction          191
                            in liabilities to alliances.
Sec. 1374. General provisions relating to application               193
                            process.
Sec. 1375. End-of-year reconciliation for premium discount          196
                            and repayment reduction with 
                            actual income.
    Part 4--Responsibilities and Authorities of Corporate Alliances

Sec. 1381. Contracts with health plans......................        199
Sec. 1382. Offering choice of health plans for enrollment...        200
Sec. 1383. Enrollment; issuance of health security card.....        201
Sec. 1384. Community-rated premiums within premium areas....        203
Sec. 1385. Assistance for low-wage families.................        205
Sec. 1386. Consumer information and marketing; data                 206
                            collection and quality; 
                            additional duties.
Sec. 1387. Plan and information requirements................        206
Sec. 1388. Management of funds; relations with employees....        207
Sec. 1389. Cost control.....................................        207
Sec. 1390. Payments by corporate alliance employers to              208
                            corporate alliances.
Sec. 1391. Coordination of payments.........................        208
Sec. 1392. Applicability of ERISA enforcement mechanisms for        209
                            enforcement of certain 
                            requirements.
Sec. 1393. Applicability of certain ERISA protections to            209
                            enrolled individuals.
Sec. 1394. Disclosure and reserve requirements..............        210
Sec. 1395. Trusteeship by the Secretary of insolvent                211
                            corporate alliance health plans.
Sec. 1396. Guaranteed benefits under trusteeship of the             216
                            Secretary.
Sec. 1397. Imposition and collection of periodic assessments        220
                            on self-insured corporate 
                            alliance plans.
Sec. 1398. Payments to Federal government by multiemployer          224
                            corporate alliances for academic 
                            health centers and graduate 
                            medical education.
                        Subtitle E--Health Plans

Sec. 1400. Health plan defined..............................        224
     Part 1--Requirements Relating to Comprehensive Benefit Package

Sec. 1401. Application of requirements......................        226
Sec. 1402. Requirements relating to enrollment and coverage.        226
Sec. 1403. Community rating.................................        231
Sec. 1404. Marketing of health plans; information...........        231
Sec. 1405. Grievance procedure..............................        233
Sec. 1406. Health plan arrangements with providers..........        234
Sec. 1407. Preemption of certain State laws relating to             237
                            health plans.
Sec. 1408. Financial solvency...............................        239
Sec. 1409. Requirement for offering cost sharing policy.....        239
Sec. 1410. Quality assurance................................        239
Sec. 1411. Provider verification............................        239
Sec. 1412. Consumer disclosures of utilization management           240
                            protocols.
Sec. 1413. Confidentiality, data management, and reporting..        240
Sec. 1414. Participation in reinsurance system..............        241
        Part 2--Requirements Relating to Supplemental Insurance

Sec. 1421. Imposition of requirements on supplemental               241
                            insurance.
Sec. 1422. Standards for supplemental health benefit                243
                            policies.
Sec. 1423. Standards for cost sharing policies..............        246
     Part 3--Requirements Relating to Essential Community Providers

Sec. 1431. Health plan requirement..........................        249
Sec. 1432. Sunset of requirement............................        252
 Part 4--Requirements Relating to Workers' Compensation and Automobile 
                       Medical Liability Coverage

Sec. 1441. Reference to requirements relating to workers            256
                            compensation services.
Sec. 1442. Reference to requirements relating to automobile         256
                            medical liability services.
                  Subtitle F--Federal Responsibilities

           subpart a--establishment of national health board
Sec. 1501. Creation of National Health Board; membership....        256
Sec. 1502. Qualifications of board members..................        258
Sec. 1503. General duties and responsibilities..............        259
Sec. 1504. Annual report....................................        262
Sec. 1505. Powers...........................................        263
Ssubpart b--responsibilities relating to review and approval of state 4
                                systems
Sec. 1511. Federal review and action on State systems.......        264
Sec. 1512. Failure of participating States to meet                  270
                            conditions for compliance.
Sec. 1513. Reduction in payments for health programs by             272
                            Secretary of Health and Human 
                            Services.
Sec. 1514. Review of Federal determinations.................        273
Sec. 151subpart c--responsibilities in absence of state systems     273
Sec. 1521. Application of subpart...........................        275
Sec. 1522. Federal assumption of responsibilities in non-           275
                            participating States.
Sec. 1523. Imposition of surcharge on premiums under                277
                            federally-operated system.
Sec.subpart d--establishment of class factors for charging premiums 278
Ssubpart e--risk adjustment and reinsurance methodology for payment of 
                                 plans
Sec. 1541. Development of a risk adjustment and reinsurance         279
                            methodology.
Sec. 1542. Incentives to enroll disadvantaged groups........        285
Sec. 1543. Advisory committee...............................        285
Sec. 1544. Research and demonstrations......................        286
Sec. 1545subpart f--responsibilities for financial requirements     286
Sec. 1551. Capital standards for regional alliance health           286
                            plan.
Sec. 1552. Standard for guaranty funds......................        287
  Part 2--Responsisubpart a--general responsibilitiesd Human Services
Sec. 1571. General responsibilities of Secretary of Health          289
                            and Human Services.
Sec. 15subpart b--certification of essential community providers    290
Sec. 1581. Certification....................................        293
Sec. 1582. Categories of providers automatically certified..        293
Sec. 1583. Standards for additional providers...............        296
Sec. 1584. Certification process; review; termination of            297
                            certifications.
Sec. 1585. Notification of health alliances and                     299
                            participating States.
        Part 3--Specific Responsibilities of Secretary of Labor

Sec. 1591. Responsibilities of Secretary of Labor...........        300
                 Subtitle G--Employer Responsibilities
Sec. 1601. Payment requirement..............................        303
Sec. 1602. Requirement for information reporting............        303
Sec. 1603. Requirements relating to new employees...........        314
Sec. 1604. Auditing of records..............................        315
Sec. 1605. Prohibition of certain employer discrimination...        316
Sec. 1606. Prohibition on self-funding of cost sharing              316
                            benefits by regional alliance 
                            employers.
Sec. 1607. Equal voluntary contribution requirement.........        317
Sec. 1608. Employer retiree obligation......................        321
Sec. 1609. Enforcement......................................        323
       Subtitle J--General Definitions; Miscellaneous Provisions
                      Part 1--General Definitions
Sec. 1901. Definitions relating to employment and income....        323
Sec. 1902. Other general definitions........................        331
                  Subtitle B--Miscellaneous Provisions

Sec. 1911. Use of interim, final regulations................        341
Sec. 1912. Social Security Act references...................        341

                                                    Title I, Subtitle A

                     TITLE I--HEALTH CARE SECURITY

      Subtitle A--Universal Coverage and Individual Responsibility

                       PART 1--UNIVERSAL COVERAGE

SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.

    (a) In General.--In accordance with this part, each eligible 
individual is entitled to the comprehensive benefit package under 
subtitle B through the applicable health plan in which the individual 
is enrolled consistent with this title.
    (b) Health Security Card.--Each eligible individual is entitled to 
a health security card to be issued by the alliance or other entity 
that offers the applicable health plan in which the individual is 
enrolled.
    (c) Eligible Individual Defined.--In this Act, the term ``eligible 
individual'' means an individual who is residing in the United States 
and who is--
            (1) a citizen or national of the United States;
            (2) an alien permanently residing in the United States 
        under color of law (as defined in section 1902(1)); or
            (3) a long-term nonimmigrant (as defined in section 
        1902(19)).
    (d) Treatment of Medicare-Eligible Individuals.--Subject to section 
1012(a), a medicare-eligible individual is entitled to health benefits 
under the medicare program instead of the entitlement under subsection 
(a).
    (e) Treatment of Prisoners.--A prisoner (as defined in section 
1902(26)) is entitled to health care services provided by the authority 
responsible for the prisoner instead of the entitlement under 
subsection (a).

SEC. 1002. INDIVIDUAL RESPONSIBILITIES.

    (a) In General.--In accordance with this Act, each eligible 
individual (other than a medicare-eligible individual)--
            (1) must enroll in an applicable health plan for the 
        individual, and
            (2) must pay any premium required, consistent with this 
        Act, with respect to such enrollment.
    (b) Limitation on Disenrollment.--No eligible individual shall be 
disenrolled from an applicable health plan until the individual--
            (1) is enrolled under another applicable health plan, or
            (2) becomes a medicare-eligible individual.

SEC. 1003. PROTECTION OF CONSUMER CHOICE.

    Nothing in this Act shall be construed as prohibiting the 
following:
            (1) An individual from purchasing any health care services.
            (2) An individual from purchasing supplemental insurance 
        (offered consistent with this Act) to cover health care 
        services not included within the comprehensive benefit package.
            (3) An individual who is not an eligible individual from 
        purchasing health insurance (other than through a regional 
        alliance).
            (4) Employers from providing coverage for benefits in 
        addition to the comprehensive benefit package (subject to part 
        2 of subtitle E).

SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COVERAGE.

    (a) Specification of Applicable Health Plan.--Except as otherwise 
provided:
            (1) General rule: regional alliance health plans.--The 
        applicable health plan for a family is a regional alliance 
        health plan for the alliance area in which the family resides.
            (2) Corporate alliance health plans.--In the case of a 
        family member that is eligible to enroll in a corporate 
        alliance health plan under section 1311(c), the applicable 
        health plan for the family is such a corporate alliance health 
        plan.
    (b) Choice of Plans for Certain Groups.--
            (1) Military personnel and families.--For military 
        personnel and families who elect a Uniformed Services Health 
        Plan of the Department of Defense under section 1073a(d) of 
        title 10, United States Code, as inserted by section 8001(a) of 
        this Act, that plan shall be the applicable health plan.
            (2) Veterans.--For veterans and families who elect to 
        enroll in a veterans health plan under section 1801 of title 
        38, United States Code, as inserted by section 8101(a) of this 
        Act, that plan shall be the applicable health plan.
            (3) Indians.--For those individuals who are eligible to 
        enroll, and who elect to enroll, in a health program of the 
        Indian Health Service under section 8302(b) or 8306(b), that 
        program shall be the applicable health plan.

SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS.

    (a) Undocumented Aliens Ineligible for Benefits.--An undocumented 
alien is not eligible to obtain the comprehensive benefit package 
through enrollment in a health plan pursuant to this Act.
    (b) Diplomats and Other Foreign Government Officials.--Subject to 
conditions established by the National Health Board in consultation 
with the Secretary of State, a nonimmigrant under subparagraph (A) or 
(G) of section 101(a)(15) of the Immigration and Nationality Act may 
obtain the comprehensive benefit package through enrollment in the 
regional alliance health plan for the alliance area in which the 
nonimmigrant resides.
    (c) Reciprocal Treatment of Other Nonimmigrants.--With respect to 
those classes of individuals who are lawful nonimmigrants but who are 
not long-term nonimmigrants (as defined in section 1902(19)) or 
described in subsection (b), such individuals may obtain such benefits 
through enrollment with regional alliance health plans only in 
accordance with such reciprocal agreements between the United States 
and foreign states as may be entered into.

SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT.

    (a) Regional Alliance Eligible Individuals.--
            (1) In general.--In the case of regional alliance eligible 
        individuals residing in a State, the entitlement under this 
        part (and requirements under section 1002) shall not take 
        effect until the State becomes a participating State (as 
        defined in section 1200).
            (2) Transitional rule for corporate alliances.--
                    (A) In general.--In the case of a State that 
                becomes a participating State before the general 
                effective date (as defined in subsection (c)) and for 
                periods before such date, under rules established by 
                the Board, an individual who is covered under a plan 
                (described in subparagraph (C)) based on the individual 
                (or the individual's spouse) being a qualifying 
                employee of a qualifying employer, the individual shall 
                not be treated under this Act as a regional alliance 
                eligible individual.
                    (B) Qualifying employer defined.--In subparagraph 
                (A), the term ``qualifying employer'' means an employer 
                that--
                            (i) is described in section 1311(b)(1)(A), 
                        or is participating in a multiemployer plan 
                        described in section 1311(b)(1)(B) or plan 
                        described in section 1311(b)(1)(C), and
                            (ii) provides such notice to the regional 
                        alliance involved as the Board specifies.
                    (C) Benefits plan described.--A plan described in 
                this subparagraph is an employee benefit plan that--
                            (i) provides (through insurance or 
                        otherwise) the comprehensive benefit package, 
                        and
                            (ii) provides an employer contribution of 
                        at least 80 percent of the premium (or premium 
                        equivalent) for coverage.
    (b) Corporate Alliance Eligible Individuals.--
            (1) In general.--In the case of corporate alliance eligible 
        individuals, the entitlement under this part shall not take 
        effect until the general effective date.
            (2) Transition.--For purposes of this Act and before the 
        general effective date, in the case of an eligible individual 
        who resides in a participating State, the individual is deemed 
        a regional alliance eligible individual until the individual 
        becomes a corporate alliance eligible individual, unless 
        subsection (a)(2)(A) applies to the individual.
    (c) General Effective Date Defined.--In this Act, the term 
``general effective date'' means January 1, 1998.

            PART 2--TREATMENT OF FAMILIES AND SPECIAL RULES

SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN.

    (a) In General.--Except as provided in this part or otherwise, all 
members of the same family (as defined in subsection (b)) shall be 
enrolled in the same applicable health plan.
    (b) Family Defined.--In this Act, unless otherwise provided, the 
term ``family''--
            (1) means, with respect to an eligible individual who is 
        not a child (as defined in subsection (c)), the individual; and
            (2) includes the following persons (if any):
                    (A) The individual's spouse if the spouse is an 
                eligible individual.
                    (B) The individual's children (and, if applicable, 
                the children of the individual's spouse) if they are 
                eligible individuals.
    (c) Classes of Family Enrollment; Terminology.--
            (1) In general.--In this Act, each of the following is a 
        separate class of family enrollment:
                    (A) Coverage only of an individual (referred to in 
                this Act as the ``individual'' enrollment or class of 
                enrollment).
                    (B) Coverage of a married couple without children 
                (referred to in this Act as the ``couple-only'' 
                enrollment or class of enrollment).
                    (C) Coverage of an unmarried individual and one or 
                more children (referred to in this Act as the ``single 
                parent'' enrollment or class of enrollment).
                    (D) Coverage of a married couple and one or more 
                children (referred to in this Act as the ``dual 
                parent'' enrollment or class of enrollment).
            (2) References to family and couple classes of 
        enrollment.--In this Act:
                    (A) Family.--The terms ``family enrollment'' and 
                ``family class of enrollment'', refer to enrollment in 
                a class of enrollment described in subparagraph (B), 
                (C), or (D) of paragraph (1).
                    (B) Couple.--The term ``couple class of 
                enrollment'' refers to enrollment in a class of 
                enrollment described in subparagraph (B) or (D) of 
                paragraph (1).
    (d) Spouse; Married; Couple.--
            (1) In general.--In this Act, the terms ``spouse'' and 
        ``married'' mean, with respect to a person, another individual 
        who is the spouse of the person or married to the person, as 
        determined under applicable State law.
            (2) Couple.--The term ``couple'' means an individual and 
        the individual's spouse.
    (e) Child Defined.--
            (1) In general.--In this Act, except as otherwise provided, 
        the term ``child'' means an eligible individual who (consistent 
        with paragraph (3))--
                    (A) is under 18 years of age (or under 24 years of 
                age in the case of a full-time student), and
                    (B) is a dependent of an eligible individual.
            (2) Application of state law.--Subject to paragraph (3), 
        determinations of whether a person is the child of another 
        person shall be made in accordance with applicable State law.
            (3) National rules.--The National Health Board may 
        establish such national rules respecting individuals who will 
        be treated as children under this Act as the Board determines 
        to be necessary. Such rules shall be consistent with the 
        following principles:
                    (A) Step and foster child.--A child includes a step 
                child or foster child who is an eligible individual 
                living with an adult in a regular parent-child 
                relationship.
                    (B) Disabled child.--A child includes an unmarried 
                dependent eligible individual regardless of age who is 
                incapable of self-support because of mental or physical 
                disability which existed before age 21.
                    (C) Certain 3-generation families.--A child 
                includes the grandchild of an individual, if the parent 
                of the grandchild is a child and the parent and 
                grandchild are living with the grandparent.
                    (D) Treatment of emancipated minors and married 
                individuals.--An emancipated minor or married 
                individual shall not be treated as a child.
                    (E) Children placed for adoption.--A child includes 
                a child who is placed for adoption with an eligible 
                individual.
    (f) Additional Rules.--The Board shall provide for such additional 
exceptions and special rules, including rules relating to--
            (1) families in which members are not residing in the same 
        area or in which children are not residing with their parents,
            (2) the treatment of eligible individuals who are under 19 
        years of age and who are not a dependent of an eligible 
        individual,
            (3) changes in family composition occurring during a year, 
        and
            (4) treatment of children of parents who are separated or 
        divorced,
as the Board finds appropriate.

SEC. 1012. TREATMENT OF CERTAIN FAMILIES.

    (a) Treatment of Medicare-Eligible Individuals Who are Qualifying 
Employees or Spouses of Qualifying Employees.--
            (1) In general.--Except as specifically provided, in the 
        case of an individual who is an individual described in 
        paragraph (2) with respect to 2 consecutive months in a year 
        (and it is anticipated would be in the following month and in 
        such following month would be a medicare-eligible individual 
        but for this paragraph), the individual shall not be treated as 
        a medicare-eligible individual under this Act during such 
        following month and the remainder of the year.
            (2) Individual described.--An individual described in this 
        paragraph with respect to a month is an individual who is a 
        qualifying employee or the spouse or family member of a 
        qualifying employee in the month.
    (b) Separate Treatment for Certain Groups of Individuals.--In the 
case of a family that includes one or more individuals in a group 
described in subsection (c)--
            (1) all the individuals in each such group within the 
        family shall be treated collectively as a separate family, and
            (2) all the individuals not described in any such group 
        shall be treated collectively as a separate family.
    (c) Groups of Individuals Described.--Each of the following is a 
group of individuals described in this subsection:
            (1) AFDC recipients (as defined in section 1902(3)).
            (2) Disabled SSI recipients (as defined in section 
        1902(13)) .
            (3) SSI recipients (as defined in section 1902(33)) who are 
        not disabled SSI recipients.
            (4) Electing veterans (as defined in subsection (d)(1)).
            (5) Active duty military personnel (as defined in 
        subsection (d)(2)).
            (6) Electing Indians (as defined in subsection (d)(3)).
            (7) Prisoners (as defined in section 1902(26)).
    (d) Special Rules.--In this Act:
            (1) Electing veterans.--
                    (A) Defined.--Subject to subparagraph (B), the term 
                ``electing veteran'' means a veteran who makes an 
                election to enroll with a health plan of the Department 
                of Veterans Affairs under chapter 18 of title 38, 
                United States Code, as added by section 8101(a)(1).
                    (B) Family exception.--Subparagraph (A) shall not 
                apply with respect to coverage under a health plan 
                referred to in such subparagraph if, for the area in 
                which the electing veteran resides, such health plan 
                offers coverage to family members of an electing 
                veteran and the veteran elects family enrollment under 
                such plan (instead of individual enrollment).
            (2) Active duty military personnel.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``active duty military personnel'' means an 
                individual on active duty in the Uniformed Services of 
                the United States.
                    (B) Exception.--If an individual described in 
                subparagraph (A) elects family coverage under section 
                1073a(e)(2)(A) of title 10, United States Code (as 
                added by section 8001(a)), then paragraph (5) of 
                subsection (c) shall not apply with respect to such 
                coverage.
            (3) Electing indians.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``electing Indian'' means an eligible individual 
                who makes an election under section 8302(b) of this 
                Act.
                    (B) Family election for all individuals eligible to 
                elect.--No such election shall be made with respect to 
                an individual in a family (as defined without regard to 
                this section) unless such election is made for all 
                eligible individuals (described in section 8302(a)) who 
                are family members of the family.
            (4) Multiple choice.--Eligible individuals who are 
        permitted to elect coverage under more than one health plan or 
        program referred to in this subsection may elect which of such 
        plans or programs will be the applicable health plan under this 
        Act.
    (e) Qualifying Students.--
            (1) In general.--In the case of a qualifying student 
        (described in paragraph (2)), the student may elect to enroll 
        in a regional alliance health plan offered by the regional 
        alliance for the area in which the school is located.
            (2) Qualifying student.--In paragraph (1), the term 
        ``qualifying student'' means an individual who--
                    (A) but for this subsection would receive coverage 
                under a health plan as a child of another person, and
                    (B) is a full-time student at a school in an 
                alliance area that is different from the alliance area 
                (or, in the case of a corporate alliance, such coverage 
                area as the Board may specify) providing the coverage 
                described in subparagraph (A).
          (3) Payment rules.--
                    (A) Continued treatment as family.--Except as 
                provided in subparagraph (B), nothing in this 
                subsection shall be construed as affecting the payment 
                liabilities between families and health alliances or 
                between health alliances and health plans.
                    (B) Transfer payment.--In the case of an election 
                under paragraph (1), for transfer payments see section 
                1346(e).
    (f) Spouses Living in Different Alliance Areas.--The Board shall 
provide for such special rules in applying this Act in the case of a 
couple in which the spouses reside in different alliance areas as the 
Board finds appropriate.

SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.

    (a) Multiple Employment of an Individual.--In the case of an 
individual who--
            (1)(A) is not married or (B) is married and whose spouse is 
        not a qualifying employee (as defined in section 1901(b)(1)),
            (2) is not a child, and
            (3) who is a qualifying employee both of a regional 
        alliance employer and of a corporate alliance employer (or of 2 
        corporate alliance employers),
the individual may elect the applicable health plan to be either a 
regional alliance health plan (for the alliance area in which the 
individual resides) or a corporate alliance health plan (for an 
employer employing the individual).
    (b) Multiple Employment Within a Family.--
            (1) Married couple with employment with a regional alliance 
        employer and with a corporate alliance employer.--In the case 
        of a married individual--
                    (A) who is a qualifying employee of a regional 
                alliance employer and whose spouse is a qualifying 
                employee of a corporate alliance employer, or
                    (B) who is a qualifying employee of a corporate 
                alliance employer and whose spouse is a qualifying 
                employee of a regional alliance employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be either a regional alliance health 
        plan (for the alliance area in which the couple resides) or a 
        corporate alliance health plan (for an employer employing the 
        individual or the spouse).
            (2) Married couple with different corporate alliance 
        employers.--In the case of a married individual--
                    (A) who is a qualifying employee of a corporate 
                alliance employer, and
                    (B) whose spouse is a qualifying employee of a 
                different corporate alliance employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be a corporate alliance health plan 
        for an employer employing either the individual or the spouse.

SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER 
              SYSTEMS.

    (a) Universal Coverage.--Notwithstanding the previous provisions of 
this title, except as provided in part 2 of subtitle C, in the case of 
an individual who resides in a State that has a Statewide single-payer 
system under section 1223, universal coverage shall be provided 
consistent with section 1222(3).
    (b) Individual Responsibilities.--In the case of an individual who 
resides in a single-payer State, the responsibilities of such 
individual under such system shall supersede the obligations of the 
individual under section 1002.

                                                    Title I, Subtitle B

                          Subtitle B--Benefits

                 PART 1--COMPREHENSIVE BENEFIT PACKAGE

SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS.

    (a) In General.--The comprehensive benefit package shall consist of 
the following items and services (as described in part 2), subject to 
the cost sharing requirements described in part 3, the exclusions 
described in part 4, and the duties and authority of the National 
Health Board described in part 5:
            (1) Hospital services (described in section 1111).
            (2) Services of health professionals (described in section 
        1112).
            (3) Emergency and ambulatory medical and surgical services 
        (described in section 1113).
            (4) Clinical preventive services (described in section 
        1114).
            (5) Mental illness and substance abuse services (described 
        in section 1115).
            (6) Family planning services and services for pregnant 
        women (described in section 1116).
            (7) Hospice care (described in section 1117).
            (8) Home health care (described in section 1118).
            (9) Extended care services (described in section 1119).
            (10) Ambulance services (described in section 1120).
            (11) Outpatient laboratory, radiology, and diagnostic 
        services (described in section 1121).
            (12) Outpatient prescription drugs and biologicals 
        (described in section 1122).
            (13) Outpatient rehabilitation services (described in 
        section 1123).
            (14) Durable medical equipment and prosthetic and orthotic 
        devices (described in section 1124).
            (15) Vision care (described in section 1125).
            (16) Dental care (described in section 1126).
            (17) Health education classes (described in section 1127).
            (18) Investigational treatments (described in section 
        1128).
    (b) No Other Limitations or Cost Sharing.--The items and services 
in the comprehensive benefit package shall not be subject to any 
duration or scope limitation or any deductible, copayment, or 
coinsurance amount that is not required or authorized under this Act.
    (c) Health Plan.--Unless otherwise provided in this subtitle, for 
purposes of this subtitle, the term ``health plan'' has the meaning 
given such term in section 1400.

           PART 2--DESCRIPTION OF ITEMS AND SERVICES COVERED

SEC. 1111. HOSPITAL SERVICES.

    (a) Coverage.--The hospital services described in this section are 
the following items and services:
            (1) Inpatient hospital services.
            (2) Outpatient hospital services.
            (3) 24-hour a day hospital emergency services.
    (b) Limitation.--The hospital services described in this section do 
not include hospital services provided for the treatment of a mental or 
substance abuse disorder (which are subject to section 1115), except 
for medical detoxification as required for the management of medical 
conditions associated with withdrawal from alcohol or drugs (which is 
not covered under such section).
    (c) Definitions.--For purposes of this subtitle:
            (1) Hospital.--The term ``hospital'' has the meaning given 
        such term in section 1861(e) of the Social Security Act, except 
        that such term shall include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is primarily engaged in providing services to 
                inpatients that are equivalent to the services provided 
                by a hospital defined in such section 1861(e);
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(2), a facility operated by 
                the Department of Veterans Affairs that is primarily 
                engaged in providing services to inpatients that are 
                equivalent to the services provided by a hospital 
                defined in such section 1861(e); and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(3), a facility operated by 
                the Indian Health Service that is primarily engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a hospital defined in such 
                section 1861(e).
            (2) Inpatient hospital services.--The term ``inpatient 
        hospital services'' means items and services described in 
        paragraphs (1) through (3) of section 1861(b) of the Social 
        Security Act when provided to an inpatient of a hospital. The 
        National Health Board shall specify those health professional 
        services described in section 1112 that shall be treated as 
        inpatient hospital services when provided to an inpatient of a 
        hospital.

SEC. 1112. SERVICES OF HEALTH PROFESSIONALS.

    (a) Coverage.--The items and services described in this section 
are--
            (1) inpatient and outpatient health professional services, 
        including consultations, that are provided in--
                    (A) a home, office, or other ambulatory care 
                setting; or
                    (B) an institutional setting; and
            (2) services and supplies (including drugs and biologicals 
        which cannot be self-administered) furnished as an incident to 
        such health professional services, of kinds which are commonly 
        furnished in the office of a health professional and are 
        commonly either rendered without charge or included in the bill 
        of such professional.
    (b) Limitation.--The items and services described in this section 
do not include items or services that are described in any other 
section of this part. An item or service that is described in section 
1114 but is not provided consistent with a periodicity schedule for 
such item or service specified in such section or under section 1153 
may be covered under this section if the item or service otherwise 
meets the requirements of this section.
    (c) Definitions.--Unless otherwise provided in this Act, for 
purposes of this Act:
            (1) Health professional.--The term ``health professional'' 
        means an individual who provides health professional services.
            (2) Health professional services.--The term ``health 
        professional services'' means professional services that--
                    (A) are lawfully provided by a physician; or
                    (B) would be described in subparagraph (A) if 
                provided by a physician, but are provided by another 
                person who is legally authorized to provide such 
                services in the State in which the services are 
                provided.

SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES.

    The emergency and ambulatory medical and surgical services 
described in this section are the following items and services provided 
by a health facility that is not a hospital and that is legally 
authorized to provide the services in the State in which they are 
provided:
            (1) 24-hour a day emergency services.
            (2) Ambulatory medical and surgical services.

SEC. 1114. CLINICAL PREVENTIVE SERVICES.

    (a) Coverage.--The clinical preventive services described in this 
section are--
            (1) an item or service for high risk populations (as 
        defined by the National Health Board) that is specified and 
        defined by the Board under section 1153, but only when the item 
        or service is provided consistent with any periodicity schedule 
        for the item or service promulgated by the Board;
            (2) except as modified by the National Health Board under 
        section 1153, an age-appropriate immunization, test, or 
        clinician visit specified in one of subsections (b) through (h) 
        that is provided consistent with any periodicity schedule for 
        the item or service specified in the applicable subsection or 
        by the National Health Board under section 1153; and
            (3) an immunization, test, or clinician visit that is 
        provided to an individual during an age range other than the 
        age range for such immunization, test, or clinician visit that 
        is specified in one of subsections (b) through (h), but only 
        when provided consistent with any requirements for such 
        immunizations, tests, and clinician visits established by the 
        National Health Board under section 1153.
    (b) Individuals Under 3.--For an individual under 3 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Diphtheria.
                    (B) Tetanus.
                    (C) Pertussis.
                    (D) Polio.
                    (E) Haemophilus influenzae type B.
                    (F) Measles.
                    (G) Mumps.
                    (H) Rubella.
                    (I) Hepatitis B.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) 1 hematocrit.
                    (B) 2 blood tests to screen for blood lead levels 
                for individuals who are at risk for lead exposure.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit for an individual who is 
        newborn and 7 other clinician visits.
    (c) Individuals Age 3 to 5.--For an individual at least 3 years of 
age, but less than 6 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Diphtheria.
                    (B) Tetanus.
                    (C) Pertussis.
                    (D) Polio.
                    (E) Measles.
                    (F) Mumps.
                    (G) Rubella.
            (2) Tests.--The tests specified in this subsection are 1 
        urinalysis.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 3 clinician visits.
    (d) Individuals Age 6 to 12.--For an individual at least 6 years of 
age, but less than 13 years of age, the clinician visits specified in 
this subsection are 3 clinician visits.
    (e) Individuals Age 13 to 19.--For an individual at least 13 years 
of age, but less than 20 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Tetanus.
                    (B) Diphtheria.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams, for 
                females who have reached childbearing age and are at 
                risk for cervical cancer, every 3 years, but--
                            (i) annually until 3 consecutive negative 
                        smears have been obtained, if medically 
                        necessary; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who have reached childbearing age and are 
                at risk for fertility related infectious illnesses.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 3 clinician visits.
    (f) Individuals Age 20 to 39.--For an individual at least 20 years 
of age, but less than 40 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 3 years, but--
                            (i) annually if an abnormal smear has been 
                        obtained, until 3 consecutive negative smears 
                        have been obtained; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who are at risk for fertility related 
                infectious illnesses.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 3 years.
    (g) Individuals Age 40 to 49.--For an individual at least 40 years 
of age, but less than 50 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 2 years, but--
                            (i) annually if an abnormal smear has been 
                        obtained, until 3 consecutive negative smears 
                        have been obtained; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who are at risk for fertility related 
                infectious illnesses.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 2 years.
    (h) Individuals Age 50 to 65.--For an individual at least 50 years 
of age, but less than 65 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 2 years.
                    (B) Mammograms for females every 2 years.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 2 years.
    (i) Individuals Age 65 or Older.--For an individual at least 65 
years of age who is enrolled under a health plan:
            (1) Immunizations.--The immunizations specified in this 
        subsection are as follows:
                    (A) Booster immunizations against tetanus and 
                diphtheria every 10 years.
                    (B) Age-appropriate immunizations for the following 
                illnesses:
                            (i) Influenza.
                            (ii) Pneumococcal invasive disease.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females who are at risk for cervical cancer every 2 
                years.
                    (B) Mammograms for females every 2 years.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every year.
    (j) Clinician Visit.--For purposes of this section, the term 
``clinician visit'' includes the following health professional services 
(as defined in section 1112(c)):
            (1) A complete medical history.
            (2) An appropriate physical examination.
            (3) Risk assessment.
            (4) Targeted health advice and counseling, including 
        nutrition counseling.
            (5) The administration of age-appropriate immunizations and 
        tests specified in subsections (b) through (h).
    (k) Immunizations and Tests Not Administered During Clinician 
Visit.--Notwithstanding subsection (i)(5), the clinical preventive 
services described in this section include an immunization or test 
described in this section that is administered to an individual 
consistent with any periodicity schedule for the immunization or test 
during the age range specified for the immunization or test, and any 
administration fee for such immunization or test, even if the 
immunization or test is not administered during a clinician visit.

SEC. 1115. MENTAL ILLNESS AND SUBSTANCE ABUSE SERVICES.

    (a) Coverage.--The mental illness and substance abuse services that 
are described in this section are the following items and services for 
eligible individuals, as defined in section 1001(c), who satisfy the 
eligibility requirements in subsection (b):
            (1) Inpatient and residential mental illness and substance 
        abuse treatment (described in subsection (c)).
            (2) Intensive nonresidential mental illness and substance 
        abuse treatment (described in subsection (d)).
            (3) Outpatient mental illness and substance abuse treatment 
        (described in subsection (e)), including case management, 
        screening and assessment, crisis services, and collateral 
        services.
    (b) Eligibility.--The eligibility requirements referred to in 
subsection (a) are as follows:
            (1) Inpatient, residential, nonresidential, and outpatient 
        treatment.--An eligible individual is eligible to receive 
        coverage for inpatient and residential mental illness and 
        substance abuse treatment, intensive nonresidential mental 
        illness and substance abuse treatment, or outpatient mental 
        illness and substance abuse treatment (except case management 
        and collateral services) if the individual--
                    (A) has, or has had during the 1-year period 
                preceding the date of such treatment, a diagnosable 
                mental disorder or a diagnosable substance abuse 
                disorder; and
                    (B) is experiencing, or is at significant risk of 
                experiencing, functional impairment in family, work, 
                school, or community activities.
        For purposes of this paragraph, an individual who has a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder, is receiving treatment for such disorder, but does 
        not satisfy the functional impairment criterion in subparagraph 
        (B) shall be treated as satisfying such criterion if the 
        individual would satisfy such criterion without such treatment.
            (2) Case management.--An eligible individual is eligible to 
        receive coverage for case management if--
                    (A) a health professional designated by the health 
                plan in which the individual is enrolled determines 
                that the individual should receive such services; and
                    (B) the individual is eligible to receive coverage 
                for, and is receiving, outpatient mental illness and 
                substance abuse treatment with respect to a diagnosable 
                mental disorder or a diagnosable substance abuse 
                disorder.
            (3) Screening and assessment and crisis services.--All 
        eligible individuals enrolled under a health plan are eligible 
        to receive coverage for outpatient mental illness and substance 
        abuse treatment consisting of screening and assessment and 
        crisis services.
            (4) Collateral services.--An eligible individual is 
        eligible to receive coverage for outpatient mental illness and 
        substance abuse treatment consisting of collateral services if 
        the individual is a family member (described in section 
        1011(b)) of an individual who is receiving inpatient and 
        residential mental illness and substance abuse treatment, 
        intensive nonresidential mental illness and substance abuse 
        treatment, or outpatient mental illness and substance abuse 
        treatment.
    (c) Inpatient and Residential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``inpatient and residential mental illness and substance abuse 
        treatment'' means the items and services described in 
        paragraphs (1) through (3) of section 1861(b) of the Social 
        Security Act when provided with respect to a diagnosable mental 
        disorder or a diagnosable substance abuse disorder to--
                    (A) an inpatient of a hospital, psychiatric 
                hospital, residential treatment center, residential 
                detoxification center, crisis residential program, or 
                mental illness residential treatment program; or
                    (B) a resident of a therapeutic family or group 
                treatment home or community residential treatment and 
                recovery center for substance abuse.
        The National Health Board shall specify those health 
        professional services described in section 1112 that shall be 
        treated as inpatient and residential mental illness and 
        substance abuse treatment when provided to such an inpatient or 
        resident.
            (2) Limitations.--Coverage for inpatient and residential 
        mental illness and substance abuse treatment is subject to the 
        following limitations:
                    (A) Residential mental illness treatment.--Such 
                treatment, when provided with respect to a diagnosable 
                mental disorder in a setting that is not a hospital or 
                a psychiatric hospital, is covered only to avert the 
                need for, or as an alternative to, treatment in a 
                hospital or a psychiatric hospital, as determined by a 
                health professional designated by the health plan in 
                which the individual receiving such treatment is 
                enrolled.
                    (B) Residential substance abuse treatment.--Such 
                treatment, when provided with respect to a diagnosable 
                substance abuse disorder in a setting that is not a 
                hospital or a psychiatric hospital, is covered only if 
                a health professional designated by the health plan in 
                which the individual receiving such treatment is 
                enrolled determines (based on criteria that the plan 
                may choose to employ) that the individual should 
                receive such treatment.
                    (C) Least restrictive setting.--Such treatment is 
                covered only when--
                            (i) provided to an individual in the least 
                        restrictive inpatient or residential setting 
                        that is effective and appropriate for the 
                        individual; and
                            (ii) less restrictive intensive 
                        nonresidential or outpatient treatment would be 
                        ineffective or inappropriate.
                    (D) Annual limit.--Prior to January 1, 2001, such 
                treatment is subject to an aggregate annual limit of 30 
                days. A maximum of 30 additional days of such treatment 
                shall be covered for an individual if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines in advance that--
                            (i) the individual poses a threat to his or 
                        her own life or the life of another individual; 
                        or
                            (ii) the medical condition of the 
                        individual requires inpatient treatment in a 
                        hospital or a psychiatric hospital in order to 
                        initiate, change, or adjust pharmacological or 
                        somatic therapy.
                    (E) Inpatient hospital treatment for substance 
                abuse.--Such treatment, when provided in a hospital or 
                a psychiatric hospital with respect to a diagnosable 
                substance abuse disorder, is covered under this section 
                only for detoxification requiring the management of 
                psychiatric conditions associated with withdrawal from 
                alcohol or drugs. The items and services described in 
                this section do not include medical detoxification as 
                required for the management of medical conditions 
                associated with withdrawal from alcohol or drugs (which 
                is covered under section 1111).
    (d) Intensive Nonresidential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``intensive nonresidential mental illness and substance abuse 
        treatment'' means diagnostic or therapeutic items or services 
        provided with respect to a diagnosable mental disorder or a 
        diagnosable substance abuse disorder to an individual--
                    (A) participating in a partial hospitalization 
                program, a day treatment program, a psychiatric 
                rehabilitation program, or an ambulatory detoxification 
                program; or
                    (B) receiving home-based mental illness services or 
                behavioral aide mental illness services.
        The National Health Board shall specify those health 
        professional services described in section 1112 that shall be 
        treated as intensive nonresidential mental illness and 
        substance abuse treatment when provided to such an individual.
            (2) Limitations.--Coverage for intensive nonresidential 
        mental illness and substance abuse treatment is subject to the 
        following limitations:
                    (A) Discretion of plan.--An individual shall 
                receive coverage for such treatment if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines (based on criteria 
                that the plan may choose to employ) that the individual 
                should receive such treatment.
                    (B) Treatment purposes.--Such treatment is covered 
                only when provided--
                            (i) to avert the need for, or as an 
                        alternative to, treatment in residential or 
                        inpatient settings;
                            (ii) to facilitate the earlier discharge of 
                        an individual receiving inpatient or 
                        residential care;
                            (iii) to restore the functioning of an 
                        individual with a diagnosable mental disorder 
                        or a diagnosable substance abuse disorder; or
                            (iv) to assist such an individual to 
                        develop the skills and gain access to the 
                        support services the individual needs to 
                        achieve the maximum level of functioning of the 
                        individual within the community.
                    (C) Annual limit.--
                            (i) In general.--Prior to January 1, 2001, 
                        the number of covered days of inpatient and 
                        residential mental illness and substance abuse 
                        treatment that are available to an individual 
                        under the 30-day limit described in the first 
                        sentence of subsection (c)(2)(D) shall be 
                        reduced by 1 day for each 2 covered days of 
                        intensive nonresidential mental illness and 
                        substance abuse treatment that are provided to 
                        the individual, until such number is reduced to 
                        zero.
                            (ii) Additional days.--After the number of 
                        covered days referred to in clause (i) has been 
                        reduced to zero with respect to an individual, 
                        the individual shall receive coverage for a 
                        maximum of 60 days of intensive nonresidential 
                        mental illness and substance abuse treatment if 
                        a health professional designated by the health 
                        plan in which the individual is enrolled 
                        determines that the individual should receive 
                        such treatment.
                    (D) Detoxification.--Intensive nonresidential 
                mental illness and substance abuse treatment consisting 
                of detoxification is covered only if it is provided in 
                the context of a treatment program.
                    (E) Out-of-pocket maximum.--Prior to January 1, 
                2001, expenses for intensive nonresidential mental 
                illness and substance abuse treatment that an 
                individual incurs prior to satisfying a deductible 
                applicable to such treatment, and copayments and 
                coinsurance paid by or on behalf of the individual for 
                such treatment, may not be applied toward any annual 
                out-of-pocket limit on cost sharing under any cost 
                sharing schedule described in part 3 of this subtitle 
                if such treatment is provided--
                            (i) with respect to a diagnosable substance 
                        abuse disorder; or
                            (ii) pursuant to subparagraph (C)(ii).
    (e) Outpatient Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``outpatient mental illness and substance abuse treatment'' 
        means the following services provided with respect to a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder in an outpatient setting:
                    (A) Screening and assessment.
                    (B) Diagnosis.
                    (C) Medical management.
                    (D) Substance abuse counseling and relapse 
                prevention.
                    (E) Crisis services.
                    (F) Somatic treatment services.
                    (G) Psychotherapy.
                    (H) Case management.
                    (I) Collateral services.
            (2) Limitations.--Coverage for outpatient mental illness 
        and substance abuse treatment is subject to the following 
        limitations:
                    (A) Health professional services.--Such treatment 
                is covered only when it constitutes health professional 
                services (as defined in section 1112(c)(2)).
                    (B) Discretion of plan.--An individual shall 
                receive coverage for outpatient mental illness and 
                substance abuse treatment consisting of substance abuse 
                counseling and relapse prevention if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines (based on criteria 
                that the plan may choose to employ) that the individual 
                should receive such treatment. This subparagraph does 
                not apply to group therapy covered pursuant to 
                subparagraph (C)(ii)(II).
                    (C) Annual limits.--
                            (i) Psychotherapy and collateral 
                        services.--Prior to January 1, 2001, 
                        psychotherapy and collateral services are 
                        subject to an aggregate annual limit of 30 
                        visits per individual. Additional visits may be 
                        covered, at the discretion of the health plan 
                        in which the individual receiving treatment is 
                        enrolled, to prevent hospitalization or to 
                        facilitate earlier hospital release, for which 
                        the number of covered days of inpatient and 
                        residential mental illness and substance abuse 
                        treatment that are available to an individual 
                        under the 30-day limit described in the first 
                        sentence of subsection (c)(2)(D) shall be 
                        reduced by 1 day for each 4 visits. After such 
                        number has been reduced to zero, no additional 
                        visits under the preceding sentence may be 
                        covered.
                            (ii) Substance abuse counseling and relapse 
                        prevention.--
                                    (I) In general.--Except as provided 
                                in subclause (II), the number of 
                                covered days of inpatient and 
                                residential mental illness and 
                                substance abuse treatment that are 
                                available to an individual under the 
                                30-day limit described in the first 
                                sentence of subsection (c)(2)(D) shall 
                                be reduced by 1 day for each 4 visits 
                                for substance abuse counseling and 
                                relapse prevention that are covered for 
                                the individual under subparagraph (B). 
                                After such number has been reduced to 
                                zero, no visits for substance abuse 
                                counseling and relapse prevention may 
                                be covered, except as provided in 
                                subclause (II).
                                    (II) Group therapy.--Prior to 
                                January 1, 2001, substance abuse 
                                counseling and relapse prevention 
                                consisting of group therapy is subject 
                                to a separate aggregate annual limit of 
                                30 visits, if such therapy occurs 
                                within 12 months after the individual 
                                has received, with respect to a 
                                diagnosable substance abuse disorder, 
                                inpatient and residential mental 
                                illness and substance abuse treatment 
                                or intensive nonresidential mental 
                                illness and substance abuse treatment. 
                                The provisions of clause (i) and 
                                subclause (I) do not apply to therapy 
                                that is described in the preceding 
                                sentence.
                    (D) Detoxification.--Outpatient mental illness and 
                substance abuse treatment consisting of detoxification 
                is covered only if it is provided in the context of a 
                treatment program.
                    (E) Out-of-pocket maximum.--Prior to January 1, 
                2001, expenses for outpatient mental illness and 
                substance abuse treatment that an individual incurs 
                prior to satisfying a deductible applicable to such 
                treatment, and copayments and coinsurance paid by or on 
                behalf of the individual for such treatment, may not be 
                applied toward any annual out-of-pocket limit on cost 
                sharing under any cost sharing schedule described in 
                part 3 of this subtitle.
    (f) Other Definitions.--For purposes of this subtitle:
            (1) Case management.--The term ``case management'' means 
        services that assist individuals in gaining access to needed 
        medical, social, educational, and other services.
            (2) Diagnosable mental disorder and diagnosable substance 
        abuse disorder.--The terms ``diagnosable mental disorder'' and 
        ``diagnosable substance abuse disorder'' mean a disorder that--
                    (A) is listed in the Diagnostic and Statistical 
                Manual of Mental Disorders, Third Edition, Revised or a 
                revised version of such manual (except V Codes for 
                Conditions Not Attributable to a Mental Disorder That 
                Are a Focus of Attention or Treatment);
                    (B) is the equivalent of a disorder described in 
                subparagraph (A), but is listed in the International 
                Classification of Diseases, 9th Revision, Clinical 
                Modification, Third Edition or a revised version of 
                such text; or
                    (C) is listed in any authoritative text specifying 
                diagnostic criteria for mental disorders or substance 
                abuse disorders that is identified by the National 
                Health Board.
            (3) Psychiatric hospital.--The term ``psychiatric 
        hospital'' has the meaning given such term in section 1861(f) 
        of the Social Security Act, except that such term shall 
        include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is engaged in providing services to inpatients 
                that are equivalent to the services provided by a 
                psychiatric hospital;
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(2), a facility operated by 
                the Department of Veterans Affairs that is engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a psychiatric hospital; and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(3), a facility operated by 
                the Indian Health Service that is engaged in providing 
                services to inpatients that are equivalent to the 
                services provided by a psychiatric hospital.

SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN.

    The services described in this section are the following items and 
services:
            (1) Voluntary family planning services.
            (2) Contraceptive devices that--
                    (A) may only be dispensed upon prescription; and
                    (B) are subject to approval by the Secretary of 
                Health and Human Services under the Federal Food, Drug, 
                and Cosmetic Act.
            (3) Services for pregnant women.

SEC. 1117. HOSPICE CARE.

    The hospice care described in this section is the items and 
services described in paragraph (1) of section 1861(dd) of the Social 
Security Act, as defined in paragraphs (2), (3), and (4)(A) of such 
section (with the exception of paragraph (2)(A)(iii)), except that all 
references to the Secretary of Health and Human Services in such 
paragraphs shall be treated as references to the National Health Board.

SEC. 1118. HOME HEALTH CARE.

    (a) Coverage.--The home health care described in this section is--
            (1) the items and services described in section 1861(m) of 
        the Social Security Act; and
            (2) home infusion drug therapy services described in 
        section 1861(ll) of the Social Security Act (as inserted by 
        section 2005).
    (b) Limitations.--Coverage for home health care is subject to the 
following limitations:
            (1) Inpatient treatment alternative.--Such care is covered 
        only as an alternative to inpatient treatment in a hospital, 
        skilled nursing facility, or rehabilitation facility after an 
        illness or injury.
            (2) Reevaluation.--At the end of each 60-day period of home 
        health care, the need for continued care shall be reevaluated 
        by the person who is primarily responsible for providing the 
        home health care. Additional periods of care are covered only 
        if such person determines that the requirement in paragraph (1) 
        is satisfied.

SEC. 1119. EXTENDED CARE SERVICES.

    (a) Coverage.--The extended care services described in this section 
are the items and services described in section 1861(h) of the Social 
Security Act when provided to an inpatient of a skilled nursing 
facility or a rehabilitation facility.
    (b) Limitations.--Coverage for extended care services is subject to 
the following limitations:
            (1) Hospital alternative.--Such services are covered only 
        as an alternative to inpatient treatment in a hospital after an 
        illness or injury.
            (2) Annual limit.--Such services are subject to an 
        aggregate annual limit of 100 days.
    (c) Definitions.--For purposes of this subtitle:
            (1) Rehabilitation facility.--The term ``rehabilitation 
        facility'' means an institution (or a distinct part of an 
        institution) which is established and operated for the purpose 
        of providing diagnostic, therapeutic, and rehabilitation 
        services to individuals for rehabilitation from illness or 
        injury.
            (2) Skilled nursing facility.--The term ``skilled nursing 
        facility'' means an institution (or a distinct part of an 
        institution) which is primarily engaged in providing to 
        residents--
                    (A) skilled nursing care and related services for 
                residents who require medical or nursing care; or
                    (B) rehabilitation services to residents for 
                rehabilitation from illness or injury.

SEC. 1120. AMBULANCE SERVICES.

    (a) Coverage.--The ambulance services described in this section are 
the following items and services:
            (1) Ground transportation by ambulance.
            (2) Air transportation by an aircraft equipped for 
        transporting an injured or sick individual.
            (3) Water transportation by a vessel equipped for 
        transporting an injured or sick individual.
    (b) Limitations.--Coverage for ambulance services is subject to the 
following limitations:
            (1) Medical indication.--Ambulance services are covered 
        only in cases in which the use of an ambulance is indicated by 
        the medical condition of the individual concerned.
            (2) Air transport.--Air transportation is covered only in 
        cases in which there is no other method of transportation or 
        where the use of another method of transportation is contra-
        indicated by the medical condition of the individual concerned.
            (3) Water transport.--Water transportation is covered only 
        in cases in which there is no other method of transportation or 
        where the use of another method of transportation is contra-
        indicated by the medical condition of the individual concerned.

SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES.

    The items and services described in this section are laboratory, 
radiology, and diagnostic services provided upon prescription to 
individuals who are not inpatients of a hospital, hospice, skilled 
nursing facility, or rehabilitation facility.

SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS.

    (a) Coverage.--The items described in this section are the 
following:
            (1) Covered outpatient drugs described in section 1861(t) 
        of the Social Security Act (as amended by section 2001(b))--
                    (A) except that, for purposes of this section, a 
                medically accepted indication with respect to the use 
                of a covered outpatient drug includes any use which has 
                been approved by the Food and Drug Administration for 
                the drug, and includes another use of the drug if--
                            (i) the drug has been approved by the Food 
                        and Drug Administration; and
                            (ii) such use is supported by one or more 
                        citations which are included (or approved for 
                        inclusion) in one or more of the following 
                        compendia: the American Hospital Formulary 
                        Service-Drug Information, the American Medical 
                        Association Drug Evaluations, the United States 
                        Pharmacopoeia-Drug Information, and other 
                        authoritative compendia as identified by the 
                        Secretary, unless the Secretary has determined 
                        that the use is not medically appropriate or 
                        the use is identified as not indicated in one 
                        or more such compendia; or
                            (iii) such use is medically accepted based 
                        on supportive clinical evidence in peer 
                        reviewed medical literature appearing in 
                        publications which have been identified for 
                        purposes of this clause by the Secretary; and
                    (B) notwithstanding any exclusion from coverage 
                that may be made with respect to such a drug under 
                title XVIII of such Act pursuant to section 1862(a)(18) 
                of such Act.
            (2) Blood clotting factors when provided on an outpatient 
        basis.
    (b) Revision of Compendia List.--The Secretary may revise the list 
of compendia in subsection (a)(1)(A)(ii) designated as appropriate for 
identifying medically accepted indications for drugs.
    (c) Blood Clotting Factors.--For purposes of this subtitle, the 
term ``blood clotting factors'' has the meaning given such term in 
section 1861(s)(2)(I) of the Social Security Act.

SEC. 1123. OUTPATIENT REHABILITATION SERVICES.

    (a) Coverage.--The outpatient rehabilitation services described in 
this section are--
            (1) outpatient occupational therapy;
            (2) outpatient physical therapy; and
            (3) outpatient speech pathology services for the purpose of 
        attaining or restoring speech.
    (b) Limitations.--Coverage for outpatient rehabilitation services 
is subject to the following limitations:
            (1) Restoration of capacity or minimization of 
        limitations.--Such services include only items or services used 
        to restore functional capacity or minimize limitations on 
        physical and cognitive functions as a result of an illness or 
        injury.
            (2) Reevaluation.--At the end of each 60-day period of 
        outpatient rehabilitation services, the need for continued 
        services shall be reevaluated by the person who is primarily 
        responsible for providing the services. Additional periods of 
        services are covered only if such person determines that 
        functioning is improving.

SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROSTHETIC AND ORTHOTIC 
              DEVICES.

    (a) Coverage.--The items and services described in this section 
are--
            (1) durable medical equipment, including accessories and 
        supplies necessary for repair, function, and maintenance of 
        such equipment;
            (2) prosthetic devices (other than dental devices) which 
        replace all or part of the function of an internal body organ 
        (including colostomy bags and supplies directly related to 
        colostomy care), including replacement of such devices;
            (3) accessories and supplies which are used directly with a 
        prosthetic device to achieve the therapeutic benefits of the 
        prosthesis or to assure the proper functioning of the device;
            (4) leg, arm, back, and neck braces;
            (5) artificial legs, arms, and eyes, including replacements 
        if required because of a change in the patient's physical 
        condition; and
            (6) fitting and training for use of the items described in 
        paragraphs (1) through (5).
    (b) Limitation.--An item or service described in this section is 
covered only if it improves functional ability or prevents further 
deterioration in function.
    (c) Durable Medical Equipment.--For purposes of this subtitle, the 
term ``durable medical equipment'' has the meaning given such term in 
section 1861(n) of the Social Security Act.

SEC. 1125. VISION CARE.

    (a) Coverage.--The vision care described in this section is 
diagnosis and treatment for defects in vision.
    (b) Limitation.--Eyeglasses and contact lenses are covered only for 
individuals less than 18 years of age.

SEC. 1126. DENTAL CARE.

    (a) Coverage.--The dental care described in this section is the 
following:
            (1) Emergency dental treatment, including simple 
        extractions, for acute infections, bleeding, and injuries to 
        natural teeth and oral structures for conditions requiring 
        immediate attention to prevent risks to life or significant 
        medical complications, as specified by the National Health 
        Board.
            (2) Prevention and diagnosis of dental disease, including 
        oral dental examinations, radiographs, dental sealants, 
        fluoride application, and dental prophylaxis.
            (3) Treatment of dental disease, including routine 
        fillings, prosthetics for genetic defects, periodontal 
        maintenance, and endodontic services.
            (4) Space maintenance procedures to prevent orthodontic 
        complications.
            (5) Interceptive orthodontic treatment to prevent severe 
        malocclusion.
    (b) Limitations.--Coverage for dental care is subject to the 
following limitations:
            (1) Prevention and diagnosis.--Prior to January 1, 2001, 
        the items and services described in subsection (a)(2) are 
        covered only for individuals less than 18 years of age. On or 
        after such date, such items and services are covered for all 
        eligible individuals enrolled under a health plan, except that 
        dental sealants are not covered for individuals 18 years of age 
        or older.
            (2) Treatment of dental disease.--Prior to January 1, 2001, 
        the items and services described in subsection (a)(3) are 
        covered only for individuals less than 18 years of age. On or 
        after such date, such items and services are covered for all 
        eligible individuals enrolled under a health plan, except that 
        endodontic services are not covered for individuals 18 years of 
        age or older.
            (3) Space maintenance.--The items and services described in 
        subsection (a)(4) are covered only for individuals at least 3 
        years of age, but less than 13 years of age and--
                    (A) are limited to posterior teeth;
                    (B) involve maintenance of a space or spaces for 
                permanent posterior teeth that would otherwise be 
                prevented from normal eruption if the space were not 
                maintained; and
                    (C) do not include a space maintainer that is 
                placed within 6 months of the expected eruption of the 
                permanent posterior tooth concerned.
            (4) Interceptive orthodontic treatment.--Prior to January 
        1, 2001, the items and services described in subsection (a)(5) 
        are not covered. On or after such date, such items and services 
        are covered only for individuals at least 6 years of age, but 
        less than 12 years of age.

SEC. 1127. HEALTH EDUCATION CLASSES.

    (a) Coverage.--Subject to subsection (b), the items and services 
described in this section are health education and training classes to 
encourage the reduction of behavioral risk factors and to promote 
healthy activities. Such education and training classes may include 
smoking cessation, nutrition counseling, stress management, support 
groups, and physical training classes.
    (b) Discretion of Plan.--A health plan may offer education and 
training classes at its discretion.
    (c) Construction.--This section shall not be construed to include 
or limit education or training that is provided in the course of the 
delivery of health professional services (as defined in section 
1112(c)).

SEC. 1128. INVESTIGATIONAL TREATMENTS.

    (a) Coverage.--Subject to subsection (b), the items and services 
described in this subsection are qualifying investigational treatments 
that are administered for a life-threatening disease, disorder, or 
other health condition (as defined by the National Health Board).
    (b) Discretion of Plan.--A health plan may cover an investigational 
treatment described in subsection (a) at its discretion.
    (c) Routine Care During Investigational Treatments.--The 
comprehensive benefit package includes an item or service described in 
any other section of this part, subject to the limitations and cost 
sharing requirements applicable to the item or service, when the item 
or service is provided to an individual in the course of an 
investigational treatment, if--
            (1) the treatment is a qualifying investigational 
        treatment; and
            (2) the item or service would have been provided to the 
        individual even if the individual were not receiving the 
        investigational treatment.
    (d) Definitions.--For purposes of this subtitle:
            (1) Qualifying investigational treatment.--The term 
        ``qualifying investigational treatment'' means a treatment--
                    (A) the effectiveness of which has not been 
                determined; and
                    (B) that is under clinical investigation as part of 
                an approved research trial.
            (2) Approved research trial.--The term ``approved research 
        trial'' means--
                    (A) a research trial approved by the Secretary of 
                Health and Human Services, the Director of the National 
                Institutes of Health, the Commissioner of the Food and 
                Drug Administration, the Secretary of Veterans Affairs, 
                the Secretary of Defense, or a qualified 
                nongovernmental research entity as defined in 
                guidelines of the National Institutes of Health; or
                    (B) a peer-reviewed and approved research program, 
                as defined by the Secretary of Health and Human 
                Services, conducted for the primary purpose of 
                determining whether or not a treatment is safe, 
                efficacious, or having any other characteristic of a 
                treatment which must be demonstrated in order for the 
                treatment to be medically necessary or appropriate.

                          PART 3--COST SHARING

SEC. 1131. COST SHARING.

    (a) In General.--Each health plan shall offer to individuals 
enrolled under the plan one, but not more than one, of the following 
cost sharing schedules, which schedule shall be offered to all such 
enrollees:
            (1) Lower cost sharing (described in section 1132).
            (2) Higher cost sharing (described in section 1133).
            (3) Combination cost sharing (described in section 1134).
    (b) Cost Sharing for Low-Income Families.--For provisions relating 
to reducing cost sharing for certain low-income families, see section 
1371.
    (c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost 
Sharing.--
            (1) Application on an annual basis.--The deductibles and 
        out-of-pocket limits on cost sharing for a year under the 
        schedules referred to in subsection (a) shall be applied based 
        upon expenses incurred for items and services furnished in the 
        year.
            (2) Individual and family general deductibles.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), any individual 
                general deductible in the cost sharing schedule offered 
                by the plan represents the amount of countable expenses 
                (as defined in subparagraph (C)) that the individual 
                may be required to incur in a year before the plan 
                incurs liability for expenses for such items and 
                services furnished to the individual.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the individual 
                general deductible under subparagraph (A) shall not 
                apply to countable expenses incurred by any member of 
                the individual's family in a year at such time as the 
                family has incurred, in the aggregate, countable 
                expenses in the amount of the family general deductible 
                for the year.
                    (C) Countable expense.--In this paragraph, the term 
                ``countable expense'' means, with respect to an 
                individual for a year, an expense for an item or 
                service covered by the comprehensive benefit package 
                that is subject to the general deductible and for 
                which, but for such deductible and any other cost 
                sharing under this subtitle, a health plan is liable 
                for payment. The amount of countable expenses for an 
                individual for a year under this paragraph shall not 
                exceed the individual general deductible for the year.
            (3) Coinsurance and copayments.--After a general or 
        separate deductible that applies to an item or service covered 
        by the comprehensive benefit package has been satisfied for a 
        year, subject to paragraph (4), coinsurance and copayments are 
        amounts (expressed as a percentage of an amount otherwise 
        payable or as a dollar amount, respectively) that an individual 
        may be required to pay with respect to the item or service.
            (4) Individual and family limits on cost sharing.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), the individual 
                out-of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that the individual may be required to incur 
                under the plan in a year because of a general 
                deductible, separate deductibles, copayments, and 
                coinsurance before the plan may no longer impose any 
                cost sharing with respect to items or services covered 
                by the comprehensive benefit package that are provided 
                to the individual, except as provided in subsections 
                (d)(2)(E) and (e)(2)(E) of section 1115.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the family out-
                of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that members of the individual's family, in 
                the aggregate, may be required to incur under the plan 
                in a year because of a general deductible, separate 
                deductibles, copayments, and coinsurance before the 
                plan may no longer impose any cost sharing with respect 
                to items or services covered by the comprehensive 
                benefit package that are provided to any member of the 
                individual's family, except as provided in subsections 
                (d)(2)(E) and (e)(2)(E) of section 1115.

SEC. 1132. LOWER COST SHARING.

    (a) In General.--The lower cost sharing schedule referred to in 
section 1131 that is offered by a health plan--
            (1) may not include a deductible;
            (2) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000;
            (3) except as provided in paragraph (4)--
                    (A) shall prohibit payment of any coinsurance; and
                    (B) subject to section 1152, shall require payment 
                of the copayment for an item or service (if any) that 
                is specified for the item or service in the table under 
                section 1135; and
            (4) shall require payment of coinsurance for an out-of-
        network item or service (as defined in section 1402(f)) in an 
        amount that is a percentage (determined under subsection (b)) 
        of the applicable payment rate for the item or service 
        established under section 1322(c), but only if the item or 
        service is subject to coinsurance under the higher cost sharing 
        schedule described in section 1133.
    (b) Out-of-Network Coinsurance Percentage.--
            (1) In general.--The National Health Board shall determine 
        a percentage referred to in subsection (a)(4). The percentage--
                    (A) may not be less than 20 percent; and
                    (B) shall be the same with respect to all out-of-
                network items and services that are subject to 
                coinsurance, except as provided in paragraph (2).
            (2) Exception.--The National Health Board may provide for a 
        percentage that is greater than a percentage determined under 
        paragraph (1) in the case of an out-of-network item or service 
        for which, under the higher cost sharing schedule described in 
        section 1133, the coinsurance is greater than 20 percent of the 
        applicable payment rate.

SEC. 1133. HIGHER COST SHARING.

    (a) In General.--The higher cost sharing schedule referred to in 
section 1131 that is offered by a health plan--
            (1) shall have an annual individual general deductible of 
        $200 and an annual family general deductible of $400 that apply 
        with respect to expenses incurred for all items and services in 
        the comprehensive benefit package except--
                    (A) an item or service with respect to which a 
                separate individual deductible applies under paragraph 
                (2), (3), or (4); or
                    (B) an item or service described in paragraph (5), 
                (6), or (7) with respect to which a deductible does not 
                apply;
            (2) shall require an individual to incur expenses during 
        each episode of inpatient and residential mental illness and 
        substance abuse treatment (described in section 1115(c)) equal 
        to the cost of one day of such treatment before the plan 
        provides benefits for such treatment to the individual;
            (3) shall require an individual to incur expenses during 
        each episode of intensive nonresidential mental illness and 
        substance abuse treatment (described in section 1115(d)) equal 
        to the cost of one day of such treatment before the plan 
        provides benefits for such treatment to the individual;
            (4) shall require an individual to incur expenses in a year 
        for outpatient prescription drugs and biologicals (described in 
        section 1122) equal to $250 before the plan provides benefits 
        for such items to the individual;
            (5) shall require an individual to incur expenses in a year 
        for dental care described in section 1126, except the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1126(a)(2), equal to $50 before the plan 
        provides benefits for such care to the individual;
            (6) may not require any deductible for clinical preventive 
        services (described in section 1114);
            (7) may not require any deductible for clinician visits and 
        associated services related to prenatal care or 1 post-partum 
        visit under section 1116;
            (8) may not require any deductible for the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1126(a)(2);
            (9) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000;
            (10) shall prohibit payment of any copayment; and
            (11) subject to section 1152, shall require payment of the 
        coinsurance for an item or service (if any) that is specified 
        for the item or service in the table under section 1135.
    (b) Episodes of Treatment.--
            (1) Inpatient and residential treatment.--For purposes of 
        subsection (a)(2), an episode of inpatient and residential 
        mental illness and substance abuse treatment shall be 
        considered to begin on the date an individual is admitted to a 
        facility for such treatment and to end on the date the 
        individual is discharged from the facility.
            (2) Intensive nonresidential treatment.--For purposes of 
        subsection (a)(3), an episode of intensive nonresidential 
        mental illness and substance abuse treatment--
                    (A) shall be considered to begin on the date an 
                individual begins participating in a program described 
                in section 1115(d)(1)(A) and to end on the date the 
                individual ceases such participation; or
                    (B) shall be considered to begin on the date an 
                individual begins receiving home-based or behavioral 
                aide services described in section 1115(d)(1)(B) and to 
                end on the date the individual ceases to receive such 
                services.

SEC. 1134. COMBINATION COST SHARING.

    (a) In General.--The combination cost sharing schedule referred to 
in section 1131 that is offered by a health plan--
            (1) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000; and
            (2) otherwise shall require different cost sharing for in-
        network items and services than for out-of-network items and 
        services.
    (b) In-Network Items and Services.--With respect to an in-network 
item or service (as defined in section 1402(f)(1)), the combination 
cost sharing schedule that is offered by a health plan--
            (1) may not apply a deductible;
            (2) shall prohibit payment of any coinsurance; and
            (3) shall require payment of a copayment in accordance with 
        the lower cost sharing schedule described in section 1132.
    (c) Out-of-Network Items and Services.--With respect to an out-of-
network item or service (as defined in section 1402(f)(2)), the 
combination cost sharing schedule that is offered by a health plan--
            (1) shall require an individual and a family to incur 
        expenses before the plan provides benefits for the item or 
        service in accordance with the deductibles under the higher 
        cost sharing schedule described in section 1133;
            (2) shall prohibit payment of any copayment; and
            (3) shall require payment of coinsurance in accordance with 
        such schedule.

SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE.

    (a) In General.--The following table specifies, for different items 
and services, the copayments and coinsurance referred to in sections 
1132 and 1133:
  

                                Copayments and Coinsurance for Items and Services                               
----------------------------------------------------------------------------------------------------------------
             Benefit               Section     Lower Cost Sharing Schedule        Higher Cost Sharing Schedule  
----------------------------------------------------------------------------------------------------------------
Inpatient hospital services......     1111  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient hospital services.....     1111  $10 per visit                      20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Hospital emergency room services.     1111  $25 per visit (unless patient has  20 percent of applicable payment 
                                             an emergency medical condition     rate                            
                                             as defined in section 1867(e)(1)                                   
                                             of the Social Security Act)                                        
----------------------------------------------------------------------------------------------------------------
Services of health professionals.     1112  $10 per visit                      20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Emergency services other than               $25 per visit (unless patient has  20 percent of applicable payment 
 hospital emergency room services     1113   an emergency medical condition     rate                            
                                             as defined in section 1867(e)(1)                                   
                                             of the Social Security Act)                                        
----------------------------------------------------------------------------------------------------------------
Ambulatory medical and surgical             $10 per visit                      20 percent of applicable payment 
 services........................     1113                                      rate                            
----------------------------------------------------------------------------------------------------------------
Clinical preventive services.....     1114  No copayment                       No coinsurance                   
----------------------------------------------------------------------------------------------------------------
Inpatient and residential mental            No copayment                       20 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment.......................     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Intensive nonresidential mental             No copayment                       20 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment (except treatment                                                                                    
 provided pursuant to section                                                                                   
 1115(d)(2)(C)(ii))..............     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Intensive nonresidential mental             $25 per visit                      50 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment provided pursuant to                                                                                 
 section 1115(d)(2)(C)(ii).......     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Outpatient mental illness and               $10 per visit                      20 percent of applicable payment 
 substance abuse treatment                                                      rate                            
 (except psychotherapy,                                                                                         
 collateral services, and case                                                                                  
 management).....................     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Outpatient psychotherapy and                $25 per visit until January 1,     50 percent of applicable payment 
 collateral services.............     1115   2001, and $10 per visit            rate until January 1, 2001, and 
                                             thereafter                         20 percent thereafter           
----------------------------------------------------------------------------------------------------------------
Case management..................     1115  No copayment                       No coinsurance                   
----------------------------------------------------------------------------------------------------------------
Family planning and services for            $10 per visit                      20 percent of applicable payment 
 pregnant women (except clinician                                               rate                            
 visits and associated services                                                                                 
 related to prenatal care and 1                                                                                 
 post-partum visit)..............     1116                                                                      
----------------------------------------------------------------------------------------------------------------
Clinician visits and associated             No copayment                       No coinsurance                   
 services related to prenatal                                                                                   
 care and 1 post-partum visit....     1116                                                                      
----------------------------------------------------------------------------------------------------------------
Hospice care.....................     1117  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Home health care.................     1118  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Extended care services...........     1119  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Ambulance services...............     1120  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient laboratory, radiology,           No copayment                       20 percent of applicable payment 
 and diagnostic services.........     1121                                      rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient prescription drugs and           $5 per prescription                20 percent of applicable payment 
 biologicals.....................     1122                                      rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient rehabilitation                   $10 per visit                      20 percent of applicable payment 
 services........................     1123                                      rate                            
----------------------------------------------------------------------------------------------------------------
Durable medical equipment and               No copayment                       20 percent of applicable payment 
 prosthetic and orthotic devices.     1124                                      rate                            
----------------------------------------------------------------------------------------------------------------
Vision care......................     1125  $10 per visit (No additional       20 percent of applicable payment 
                                             charge for 1 set of necessary      rate                            
                                             eyeglasses for an individual                                       
                                             less than 18 years of age)                                         
----------------------------------------------------------------------------------------------------------------
Dental care (except space                   $10 per visit                      20 percent of applicable payment 
 maintenance procedures and                                                     rate                            
 interceptive orthodontic                                                                                       
 treatment)......................     1126                                                                      
----------------------------------------------------------------------------------------------------------------
Space maintenance procedures and            $20 per visit                      40 percent of applicable payment 
 interceptive orthodontic                                                       rate                            
 treatment.......................     1126                                                                      
----------------------------------------------------------------------------------------------------------------
Health education classes.........     1127  All cost sharing rules determined  All cost sharing rules determined
                                             by plans                           by plans                        
----------------------------------------------------------------------------------------------------------------
Investigational treatment for               All cost sharing rules determined  All cost sharing rules determined
 life-threatening condition......     1128   by plans                           by plans                        
----------------------------------------------------------------------------------------------------------------

    (b) Applicable Payment Rate.--For purposes of this section, the 
term ``applicable payment rate'', when used with respect to an item or 
service, means the applicable payment rate for the item or service 
established under section 1322(c).

SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING.

    (a) In General.--Any deductible, copayment, out-of-pocket limit on 
cost sharing, or other amount expressed in dollars in this subtitle for 
items or services provided in a year after 1994 shall be such amount 
increased by the percentage specified in subsection (b) for the year.
    (b) Percentage.--The percentage specified in this subsection for a 
year is equal to the product of the factors described in subsection (d) 
for the year and for each previous year after 1994, minus 1.
    (c) Rounding.--Any increase (or decrease) under subsection (a) 
shall be rounded, in the case of an amount specified in this subtitle 
of--
            (1) $200 or less, to the nearest multiple of $1,
            (2) more than $200, but less than $500, to the nearest 
        multiple of $5, or
            (3) $500 or more, to the nearest multiple of $10.
    (d) Factor.--
            (1) In general.--The factor described in this subsection 
        for a year is 1 plus the general health care inflation factor 
        (as specified in section 6001(a)(3) and determined under 
        paragraph (2)) for the year.
            (2) Determination.--In computing such factor for a year, 
        the percentage increase in the CPI for a year (referred to in 
        section 6001(b)) shall be determined based upon the percentage 
        increase in the average of the CPI for the 12-month period 
        ending with August 31 of the previous year over such average 
        for the preceding 12-month period.

                           PART 4--EXCLUSIONS

SEC. 1141. EXCLUSIONS.

    (a) Medical Necessity.--The comprehensive benefit package does not 
include--
            (1) an item or service that is not medically necessary or 
        appropriate; or
            (2) an item or service that the National Health Board may 
        determine is not medically necessary or appropriate in a 
        regulation promulgated under section 1154.
    (b) Additional Exclusions.--The comprehensive benefit package does 
not include the following items and services:
            (1) Custodial care, except in the case of hospice care 
        under section 1117.
            (2) Surgery and other procedures performed solely for 
        cosmetic purposes and hospital or other services incident 
        thereto, unless--
                    (A) required to correct a congenital anomaly; or
                    (B) required to restore or correct a part of the 
                body that has been altered as a result of--
                            (i) accidental injury;
                            (ii) disease; or
                            (iii) surgery that is otherwise covered 
                        under this subtitle.
            (3) Hearing aids.
            (4) Eyeglasses and contact lenses for individuals at least 
        18 years of age.
            (5) In vitro fertilization services.
            (6) Sex change surgery and related services.
            (7) Private duty nursing.
            (8) Personal comfort items, except in the case of hospice 
        care under section 1117.
            (9) Any dental procedures involving orthodontic care, 
        inlays, gold or platinum fillings, bridges, crowns, pin/post 
        retention, dental implants, surgical periodontal procedures, or 
        the preparation of the mouth for the fitting or continued use 
        of dentures, except as specifically described in section 1126.

               PART 5--ROLE OF THE NATIONAL HEALTH BOARD

SEC. 1151. DEFINITION OF BENEFITS.

    (a) In General.--The National Health Board may promulgate such 
regulations or establish such guidelines as may be necessary to assure 
uniformity in the application of the comprehensive benefit package 
across all health plans.
    (b) Flexibility in Delivery.--The regulations or guidelines under 
subsection (a) shall permit a health plan to deliver covered items and 
services to individuals enrolled under the plan using the providers and 
methods that the plan determines to be appropriate.

SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.

    (a) In General.--Subject to subsection (b), at any time prior to 
January 1, 2001, the National Health Board, in its discretion, may by 
regulation expand the comprehensive benefit package by--
            (1) adding any item or service that is added to the package 
        as of January 1, 2001; and
            (2) requiring that a cost sharing schedule described in 
        part 3 of this subtitle reflect (wholly or in part) any of the 
        cost sharing requirements that apply to the schedule as of 
        January 1, 2001.
No such expansion shall be effective except as of January 1 of a year.
    (b) Condition.--The Board may not expand the benefit package under 
subsection (a) which is to become effective with respect to a year, by 
adding any item or service or altering any cost sharing schedule, 
unless the Board estimates that the additional increase in per capita 
health care expenditures resulting from the addition or alteration, for 
each regional alliance for the year, will not cause any regional 
alliance to exceed its per capita target (as determined under section 
6003).

SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES.

    (a) In General.--With respect to clinical preventive services 
described in section 1114, the National Health Board--
            (1) shall specify and define specific items and services as 
        clinical preventive services for high risk populations and 
        shall establish and update a periodicity schedule for such 
        items and services;
            (2) shall update the periodicity schedules for the age-
        appropriate immunizations, tests, and clinician visits 
        specified in subsections (b) through (h) of such section;
            (3) shall establish rules with respect to coverage for an 
        immunization, test, or clinician visit that is not provided to 
        an individual during the age range for such immunization, test, 
        or clinician visit that is specified in one of subsections (b) 
        through (h) of such section; and
            (4) may otherwise modify the items and services described 
        in such section, taking into account age and other risk 
        factors, but may not modify the cost sharing for any such item 
        or service.
    (b) Consultation.--In performing the functions described in 
subsection (a), the National Health Board shall consult with experts in 
clinical preventive services.

SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY.

    The National Health Board may promulgate such regulations as may be 
necessary to carry out section 1141(a)(2) (relating to the exclusion of 
certain services that are not medically necessary or appropriate).

    PART 6--ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS

SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.

    No State may, through licensure or otherwise, restrict the practice 
of any class of health professionals beyond what is justified by the 
skills and training of such professionals.

SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF 
              OR MORAL CONVICTION.

    A health professional or a health facility may not be required to 
provide an item or service in the comprehensive benefit package if the 
professional or facility objects to doing so on the basis of a 
religious belief or moral conviction.

                                                    Title I, Subtitle C

                   Subtitle C--State Responsibilities

SEC. 1200. PARTICIPATING STATE.

    (a) In General.--For purposes of the approval of a State health 
care system by the Board under section 1511, a State is a 
``participating State'' if the State meets the applicable requirements 
of this subtitle.
    (b) Submission of System Document.--
            (1) In general.--In order to be approved as a participating 
        State under section 1511, a State shall submit to the National 
        Health Board a document (in a form and manner specified by the 
        Board) that describes the State health care system that the 
        State is establishing (or has established).
            (2) Deadline.--If a State is not a participating State with 
        a State health care system in operation by January 1, 1998, the 
        provisions of subpart C of part 1 of subtitle F (relating to 
        responsibilities in absence of State systems) shall take 
        effect.
            (3) Submission of information subsequent to approval.--A 
        State approved as a participating State under section 1511 
        shall submit to the Board an annual update to the State health 
        care system not later than February 15 of each year following 
        the first year for which the State is a participating State. 
        The update shall contain--
                    (A) such information as the Board may require to 
                determine that the system shall meet the applicable 
                requirements of this Act for the succeeding year; and
                    (B) such information as the Board may require to 
                determine that the State operated the system during the 
                previous year in accordance with the Board's approval 
                of the system for such previous year.

                 PART 1--GENERAL STATE RESPONSIBILITIES

SEC. 1201. GENERAL STATE RESPONSIBILITIES.

    The responsibilities for a participating State are as follows:
            (1) Regional alliances.--Establishing one or more regional 
        alliances (in accordance with section 1202).
            (2) Health plans.--Certifying health plans (in accordance 
        with section 1203).
            (3) Financial solvency of plans.--Assuring the financial 
        solvency of health plans (in accordance with section 1204).
            (4) Administration.--Designating an agency or official 
        charged with coordinating the State responsibilities under this 
        Act.
            (5) Workers compensation and automobile insurance.--
        Conforming State laws to meet the requirements of subtitles A 
        and B of title X (relating to medical benefits under workers 
        compensation and automobile insurance).
            (6) Other responsibilities.--Carrying out other 
        responsibilities of participating States specified under this 
        Act.

SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO ALLIANCES.

    (a) Establishment of Alliances.--
            (1) In general.--A participating State shall--
                    (A) establish and maintain one or more regional 
                alliances in accordance with this section and subtitle 
                D, and ensure that such alliances meet the requirements 
                of this Act; and
                    (B) designate alliance areas in accordance with 
                subsection (b).
            (2) Deadline.--A State may not be a participating State for 
        a year unless the State has established such alliances by March 
        1 of the previous year.
    (b) Alliance Areas.--
            (1) In general.--In accordance with this subsection, each 
        State shall designate a geographic area assigned to each 
        regional alliance. Each such area is referred to in this Act as 
        an ``alliance area''.
            (2) Population required.--
                    (A) In general.--Each alliance area shall encompass 
                a population large enough to ensure that the alliance 
                has adequate market share to negotiate effectively with 
                health plans providing the comprehensive benefit 
                package to eligible individuals who reside in the area.
                    (B) Treatment of consolidated metropolitan 
                statistical areas.--An alliance area that includes a 
                Consolidated Metropolitan Statistical Area within a 
                State is presumed to meet the requirement of 
                subparagraph (A).
            (3) Single alliance in each area.--No geographic area may 
        be assigned to more than one regional alliance.
            (4) Boundaries.--In establishing boundaries for alliance 
        areas, the State may not discriminate on the basis of or 
        otherwise take into account race, age, language, religion, 
        national origin, socio-economic status, disability, or 
        perceived health status.
            (5) Treatment of metropolitan areas.--The entire portion of 
        a metropolitan statistical area located in a State shall be 
        included in the same alliance area.
            (6) No portions of State permitted to be outside alliance 
        area.--Each portion of the State shall be assigned to a 
        regional alliance under this subsection.
    (c) State Coordination of Regional Alliances.--One or more States 
may allow or require two or more regional alliances to coordinate their 
operations, whether such alliances are in the same or different States. 
Such coordination may include adoption of joint operating rules, 
contracting with health plans, enforcement activities, and 
establishment of fee schedules for health providers.
    (d) Assistance in Collection of Amounts Owed to Alliances.--Each 
State shall assure that the amounts owed to regional alliances in the 
State are collected and paid to such alliances.
    (e) Assistance in Eligibility Verifications.--
            (1) In general.--Each State shall assure that the 
        determinations of eligibility for cost sharing assistance (and 
        premium discounts and cost sharing reductions for families) are 
        made by regional alliances in the State on the basis of the 
        best information available to the alliances and the State.
            (2) Provision of information.--Each State shall use the 
        information available to the State under section 
        6103(l)(7)(D)(x) of the Internal Revenue Code of 1986 to assist 
        regional alliances in verifying such eligibility status.
    (f) Special Requirements for Alliances With Single-Payer System.--
If the State operates an alliance-specific single-payer system (as 
described in part 2), the State shall assure that the regional alliance 
in which the system is operated meets the requirements for such an 
alliance described in section 1224(b).
    (g) Payment of Shortfalls for Certain Administrative Errors.--Each 
participating State is financially responsible, under section 
9201(c)(2), for administrative errors described in section 9201(e)(2).

SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH PLANS.

    (a) Criteria for Certification.--
            (1) In general.--For purposes of this section, a 
        participating State shall establish and publish the criteria 
        that are used in the certification of health plans under this 
        section.
            (2) Requirements.--Such criteria shall be established with 
        respect to--
                    (A) the quality of the plan,
                    (B) the financial stability of the plan,
                    (C) the plan's capacity to deliver the 
                comprehensive benefit package in the designated service 
                area,
                    (D) other applicable requirements for health plans 
                under parts 1, 3, and 4 of subtitle E, and
                    (E) other requirements imposed by the State 
                consistent with this part.
    (b) Certification of Health Plans.--A participating State shall 
certify each plan as a regional alliance health plan that it determines 
meets the criteria for certification established and published under 
subsection (a).
    (c) Monitoring.--A participating State shall monitor the 
performance of each State-certified regional alliance health plan to 
ensure that it continues to meet the criteria for certification.
    (d) Limitations on Authority.--A participating State may not--
            (1) discriminate against a plan based on the domicile of 
        the entity offering of the plan; and
            (2) regulate premium rates charged by health plans, except 
        as may be required under title VI (relating to the enforcement 
        of cost containment rules for plans in the State) or as may be 
        necessary to ensure that plans meet financial solvency 
        requirements under section 1408.
    (e) Assuring Adequate Access to a Choice of Health Plans.--
            (1) General access.--
                    (A) In general.--Each participating State shall 
                ensure that--
                            (i) each regional alliance eligible family 
                        has adequate access to enroll in a choice of 
                        regional alliance health plans providing 
                        services in the area in which the individual 
                        resides, including (to the maximum extent 
                        practicable) adequate access to a plan whose 
                        premium is at or below the weighted average 
                        premium for plans in the regional alliance, and
                            (ii) each such family that is eligible for 
                        a premium discount under section 6104(b) is 
                        provided a discount in accordance with such 
                        section (including an increase in such discount 
                        described in section 6104(b)(2)).
                    (B) Authority.--In order to carry out its 
                responsibility under subparagraph (A), a participating 
                State may require, as a condition of entering into a 
                contract with a regional alliance under section 1321, 
                that one or more certified regional alliance health 
                plans cover all (or selected portions) of the alliance 
                area.
            (2) Access to plans using centers of excellence.--Each 
        participating State may require, as a condition of entering 
        into a contract with a regional alliance under section 1321, 
        that one or more certified health plans provide access (through 
        reimbursement, contracts, or otherwise) of enrolled individuals 
        to services of centers of excellence (as designated by the 
        State in accordance with rules promulgated by the Secretary).
            (3) Use of incentives to enroll and serve disadvantaged 
        groups.--A State may provide--
                    (A) for an adjustment to the risk-adjustment 
                methodology under section 1541(b) and other financial 
                incentives to regional alliance health plans to ensure 
                that such plans enroll individuals who are members of 
                disadvantaged groups, and
                    (B) for appropriate extra services, such as 
                outreach to encourage enrollment and transportation and 
                interpreting services to ensure access to care, for 
                certain population groups that face barriers to access 
                because of geographic location, income levels, or 
                racial or cultural differences.
    (f) Coordination of Workers' Compensation Services and Automobile 
Insurance.--Each participating State shall comply with the 
responsibilities regarding workers' compensation and automobile 
insurance specified in subtitles A and B of title X.
    (g) Implementation of Mandatory Reinsurance System.--If the risk 
adjustment and reinsurance methodology developed under section 1541 
includes a mandatory reinsurance system, each participating State shall 
establish a reinsurance program consistent with such methodology and 
any additional standards established by the Board.
    (h) Requirements for Plans Offering Supplemental Insurance.--
Notwithstanding any other provision of this Act a State may not certify 
a regional alliance health plan under this section if--
            (1) the plan (or any entity with which the plan is 
        affiliated under such rules as the Board may establish) offers 
        a supplemental health benefit policy (as defined in section 
        1421(b)(1)) that fails to meet the applicable requirements for 
        such a policy under part 2 of subtitle E (without regard to the 
        State in which the policy is offered); or
            (2) the plan offers a cost sharing policy (as defined in 
        section 1421(b)(2)) that fails to meet the applicable 
        requirements for such a policy under part 2 of subtitle E.

SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT; GUARANTY FUND.

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

SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS.

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

          PART 2--REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.

    The Board shall approve the application of a State to operate a 
single-payer system if the Board finds that the system--
            (1) meets the requirements of section 1222;
            (2)(A) meets the requirements for a Statewide single-payer 
        system under section 1223, in the case of a system offered 
        throughout a State; or
            (B) meets the requirements for an alliance-specific single-
        payer system under section 1224, in the case of a system 
        offered in a single alliance of a State.

SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.

    Each single-payer system shall meet the following requirements:
            (1) Establishment by state.--The system is established 
        under State law, and State law provides for mechanisms to 
        enforce the requirements of the system.
            (2) Operation by state.--The system is operated by the 
        State or a designated agency of the State.
            (3) Enrollment of eligible individuals.--
                    (A) Mandatory enrollment of all regional alliance 
                individuals.--The system provides for the enrollment of 
                all eligible individuals residing in the State (or, in 
                the case of an alliance-specific single-payer system, 
                in the alliance area) for whom the applicable health 
                plan would otherwise be a regional alliance health 
                plan.
                    (B) Optional enrollment of medicare-eligible 
                individuals.--At the option of the State, the system 
                may provide for the enrollment of medicare-individuals 
                residing in the State (or, in the case of an alliance-
                specific single-payer system, in the alliance area) if 
                the Secretary of Health and Human Services has approved 
                an application submitted by the State under section 
                1893 of the Social Security Act (as added by section 
                4001(a)) for the integration of medicare beneficiaries 
                into plans of the State. Nothing in this subparagraph 
                shall be construed as requiring that a State have a 
                single-payer system in order to provide for such 
                integration.
                    (C) Optional enrollment of corporate alliance 
                individuals in statewide plans.--At the option of the 
                State, a Statewide single-payer system may provide for 
                the enrollment of individuals residing in the State who 
                are otherwise eligible to enroll in a corporate 
                alliance health plan under section 1311.
                    (D) Options included in state system document.--A 
                State may not exercise any of the options described in 
                subparagraphs (A) or (B) for a year unless the State 
                included a description of the option in the submission 
                of its system document to the Board for the year under 
                section 1200(b).
                    (E) Exclusion of certain individuals.--A single-
                payer system may not require the enrollment of electing 
                veterans, active duty military personnel, and electing 
                Indians (as defined in 1012(d)).
            (4) Direct payment to providers.--
                    (A) In general.--With respect to providers who 
                furnish items and services included in the 
                comprehensive benefit package to individuals enrolled 
                in the system, the State shall make payments directly 
                to such providers and assume (subject to subparagraph 
                (B)) all financial risk associated with making such 
                payments.
                    (B) Capitated payments permitted.--Nothing in 
                subparagraph (A) shall be construed to prohibit 
                providers furnishing items and services under the 
                system from receiving payments from the plan on a 
                capitated, at-risk basis based on prospectively 
                determined rates.
            (5) Provision of comprehensive benefit package.--
                    (A) In general.--The system shall provide for 
                coverage of the comprehensive benefit package, 
                including the cost sharing provided under the package 
                (subject to subparagraph (B)), to all individuals 
                enrolled in the system.
                    (B) Imposition of reduced cost sharing.--The system 
                may decrease the cost sharing otherwise provided in the 
                comprehensive benefit package with respect to any class 
                of individuals enrolled in the system or any class of 
                services included in the package, so long as the system 
                does not increase the cost sharing otherwise imposed 
                with respect to any other class of individuals or 
                services.
            (6) Cost containment.--The system shall provide for 
        mechanisms to ensure, in a manner satisfactory to the Board, 
        that--
                    (A) per capita expenditures for items and services 
                in the comprehensive benefit package under the system 
                for a year (beginning with the first year) do not 
                exceed an amount equivalent to the regional alliance 
                per capita premium target that is determined under 
                section 6003 (based on the State being a single 
                regional alliance) for the year;
                    (B) the per capita expenditures described in 
                subparagraph (A) are computed and effectively 
                monitored; and
                    (C) automatic, mandatory, nondiscretionary 
                reductions in payments to health care providers will be 
                imposed to the extent required to assure that such per 
                capita expenditures do not exceed the applicable target 
                referred to in subparagraph (A).
            (7) Requirements generally applicable to health plans.--The 
        system shall meet the requirements applicable to a health plan 
        under section 1400(a), except that--
                    (A) the system does not have the authority provided 
                to health plans under section 1402(a)(2) (relating to 
                permissible limitations on the enrollment of eligible 
                individuals on the basis of limits on the plan's 
                capacity);
                    (B) the system is not required to meet the 
                requirements of section 1404(a) (relating to 
                restrictions on the marketing of plan materials); and
                    (C) the system is not required to meet the 
                requirements of section 1408 (relating to plan 
                solvency).

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

    (a) In General.--In the case of a State operating a Statewide 
single-payer system--
            (1) the State shall operate the system throughout the State 
        through a single alliance;
            (2) except as provided in subsection (b), the State shall 
        meet the requirements for participating States under part 1; 
        and
            (3) the State shall assume the functions described in 
        subsection (c) that are otherwise required to be performed by 
        regional alliances in participating States that do not operate 
        a Statewide single-payer system.
    (b) Exceptions to Certain Requirements for Participating States.--
In the case of a State operating a Statewide single-payer system, the 
State is not required to meet the following requirements otherwise 
applicable to participating States under part 1:
            (1) Establishment of alliances.--The requirements of 
        section 1202 (relating to the establishment of alliances).
            (2) Health plans.--The requirements of section 1203 
        (relating to health plans), other than the requirement of 
        subsection (f) of such section (relating to coordination of 
        workers' compensation services and automobile liability 
        insurance).
            (3) Financial solvency.--The requirements of section 1204 
        (relating to the financial solvency of health plans in the 
        State).
    (c) Assumption by State of Certain Requirements Applicable to 
Regional Alliances.--A State operating a Statewide single-payer system 
shall be subject to the following requirements otherwise applicable to 
regional alliances in other participating States:
            (1) Enrollment; issuance of health security cards.--The 
        requirements of subsections (a) and (c) of section 1323 and 
        section 1324 shall apply to the State, eligible individuals 
        residing in the State, and the single-payer system operated by 
        the State in the same manner as such requirements apply to a 
        regional alliance, alliance eligible individuals, and regional 
        alliance health plans.
            (2) Reductions in cost sharing for low-income 
        individuals.--The requirement of section 1371 shall apply to 
        the State in the same manner as such requirement applies to a 
        regional alliance.
            (3) Data collection; quality.--The requirements of section 
        1327 shall apply to the State and the single-payer system 
        operated by the State in the same manner as such requirement 
        applies to a regional alliance and health plans offered through 
        a regional alliance.
            (4) Anti-discrimination; coordination.--The requirements of 
        section 1328 shall apply to the State in the same manner as 
        such requirements apply with respect to a regional alliance.
    (d) Financing.--
            (1) In general.--A State operating a Statewide single-payer 
        system shall provide for the financing of the system using, at 
        least in part, a payroll-based financing system that requires 
        employers to pay at least the amount that the employers would 
        be required to pay if the employers were subject to the 
        requirements of subtitle B of title VI.
            (2) Use of financing methods.--Such a State may use, 
        consistent with paragraph (1), any other method of financing.
    (e) Single-Payer State Defined.--In this Act, the term ``single-
payer State'' means a State with a Statewide single-payer system in 
effect that has been approved by the Board in accordance with this 
part.

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

    (a) In General.--In the case of a State operating an alliance-
specific single-payer system--
            (1) the State shall meet the requirements for participating 
        States under part 1; and
            (2) the regional alliance in which the system is operated 
        shall meet the requirements of subsection (b).
    (b) Requirements for Alliance in Which System Operates.--A regional 
alliance in which an alliance-specific single payer system is operated 
shall meet the requirements applicable to regional alliances under 
subtitle D, except that the alliance is not required to meet the 
following requirements of such subtitle:
            (1) Contracts with health plans.--The requirements of 
        section 1321 (relating to contracts with health plans).
            (2) Choice of health plans offered.--The requirements of 
        subsections (a) or (b) of section 1322 (relating to offering a 
        choice of health plans to eligible enrollees).
            (3) Establishment of ombudsman office.--The requirements of 
        section 1326(a) (relating to the establishment of an office of 
        ombudsman).
            (4) Addressing needs of areas with inadequate health 
        services.--The regional alliance does not have any of the 
        authorities described in subsections (a) and (b) of section 
        1329 (relating to adjusting payments to plans and encouraging 
        the establishment of new plans).

                                                    Title I, Subtitle D

                      Subtitle D--Health Alliances

SEC. 1300. HEALTH ALLIANCE DEFINED.

    In this Act, the term ``health alliance'' means a regional alliance 
(as defined in section 1301) and a corporate alliance (as defined in 
section 1311).

       PART 1--ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES

                     Subpart A--Regional Alliances

SEC. 1301. REGIONAL ALLIANCE DEFINED.

    In this Act, the term ``regional alliance'' means a non-profit 
organization, an independent state agency, or an agency of the State 
which--
            (1) meets the applicable organizational requirements of 
        this subpart, and
            (2) is carrying out activities consistent with part 2.

SEC. 1302. BOARD OF DIRECTORS.

    (a) In General.--A regional alliance must be governed by a Board of 
Directors appointed consistent with the provisions of this subpart. All 
powers vested in a regional alliance under this Act shall be vested in 
the Board of Directors.
    (b) Membership.--
            (1) In general.--Such a Board of Directors shall consist 
        of--
                    (A) members who represent employers whose employees 
                purchase health coverage through the alliance, 
                including self-employed individuals who purchase such 
                coverage; and
                    (B) members who represent individuals who purchase 
                such coverage, including employees who purchase such 
                coverage.
            (2) Equal representation of employers and consumers.--The 
        number of members of the Board described under subparagraph (A) 
        of paragraph (1) shall be the same as the number of members 
        described in subparagraph (B) of such paragraph.
    (c) No Conflict of Interest Permitted.--An individual may not serve 
as a member of the Board of Directors if the individual is one of the 
following (or an immediate family member of one of the following):
            (1) A health care provider.
            (2) An individual who is an employee or member of the Board 
        of Directors of, has a substantial ownership in, or derives 
        substantial income from, a health care provider, health plan, 
        pharmaceutical company, or a supplier of medical equipment, 
        devices, or services.
            (3) A person who derives substantial income from the 
        provision of health care.
            (4)(A) A member or employee of an association, law firm, or 
        other institution or organization that represents the interests 
        of one or more health care providers, health plans or others 
        involved in the health care field, or (B) an individual who 
        practices as a professional in an area involving health care.

SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL ALLIANCES.

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

                     Subpart B--Corporate Alliances

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

    (a) Corporate Alliance Defined.--In this Act, the term ``corporate 
alliance'' means an eligible sponsor (as defined in subsection (b)) 
if--
            (1) the sponsor elects, in a form and manner specified by 
        the Secretary of Labor consistent with this subpart, to be 
        treated as a corporate alliance under this title and such 
        election has not been terminated under section 1313; and
            (2) the sponsor has filed with the Secretary of Labor a 
        document describing how the sponsor shall carry out activities 
        as such an alliance consistent with part 4.
    (b) Eligible Sponsors.--
            (1) In general.--In this subpart, each of the following is 
        an eligible sponsor:
                    (A) Large employer.--An employer that--
                            (i) is a large employer (as defined in 
                        subsection (e)(2)) as of the date of an 
                        election under subsection (a)(1), and
                            (ii) is not an excluded employer described 
                        in paragraph (2).
                    (B) Plan sponsor of a multiemployer plan.--A plan 
                sponsor described in section 3(16)(B)(iii) of Employee 
                Retirement Income Security Act of 1974, but only with 
                respect to a group health plan that is a multiemployer 
                plan (as defined in subsection (e)(3)) maintained by 
                the sponsor and only if--
                            (i) such plan offered health benefits as of 
                        September 1, 1993, and
                            (ii) as of both September 1, 1993, and 
                        January 1, 1996, such plan has more than 5,000 
                        active participants in the United States, or 
                        the plan is maintained by one or more 
                        affiliates of the same labor organization, or 
                        one or more affiliates of labor organizations 
                        representing employees in the same industry, 
                        covering more than 5,000 employees.
                    (C) Rural electric cooperative and rural telephone 
                cooperative association.--A rural electric cooperative 
                or a rural telephone cooperative association, but only 
                with respect to a group health plan that is maintained 
                by such cooperative or association (or members of such 
                cooperative or association) and only if such plan--
                            (i) offered health benefits as of September 
                        1, 1993, and
                            (ii) as of both September 1, 1993, and 
                        January 1, 1996, has more than 5,000 full-time 
                        employees in the United States entitled to 
                        health benefits under the plan.
            (2) Excluded employers.--For purposes of paragraph (1)(A), 
        any of the following are excluded employers described in this 
        paragraph:
                    (A) An employer whose primary business is employee 
                leasing.
                    (B) The Federal government (other than the United 
                States Postal Service).
                    (C) A State government, a unit of local government, 
                and an agency or instrumentality of government, 
                including any special purpose unit of government.
    (c) Individuals Eligible To Enroll in Corporate Alliance Health 
Plans.--For purposes of part 1 of subtitle A, subject to subsection 
(d)--
            (1) Full-time employees of large employers.--Each eligible 
        individual who is a full-time employee (as defined in section 
        1901(b)(2)(C)) of a large employer that has an election in 
        effect as a corporate alliance is eligible to enroll in a 
        corporate alliance health plan offered by such corporate 
        alliance.
            (2) Multiemployer alliances.--
                    (A) Participants.--Each participant and beneficiary 
                (as defined in subparagraph (B)) under a multiemployer 
                plan, with respect to which an eligible sponsor of the 
                plan described in subsection (b)(1)(B) has an election 
                in effect as a corporate alliance, is eligible to 
                enroll in a corporate alliance health plan offered by 
                such corporate alliance.
                    (B) Participant and beneficiary defined.--In 
                subparagraph (A), the terms ``participant'' and 
                ``beneficiary'' have the meaning given such terms in 
                section 3 of the Employee Retirement Income Security 
                Act of 1974.
            (3) Full-time employees of rural cooperative alliances.--
        Each full-time employee of a member of a rural electric 
        cooperative or rural telephone cooperative association which 
        has an election in effect as a corporate alliance (and each 
        full-time employee of such a cooperative or association) is 
        eligible to enroll in a corporate alliance health plan offered 
        by such corporate alliance.
            (4) Ineligible to enroll in regional alliance health 
        plan.--Except as provided in section 1013, a corporate alliance 
        eligible individual is not eligible to enroll under a regional 
        alliance health plan.
    (d) Exclusion of Certain Individuals.--In accordance with rules of 
the Board, the following individuals shall not be treated as corporate 
alliance eligible individuals:
            (1) AFDC recipients.
            (2) SSI recipients.
            (3) Individuals who are described in section 1004(b) 
        (relating to veterans, military personnel, and Indians) and who 
        elect an applicable health plan described in such section.
            (4) Employees who are seasonal or temporary workers (as 
        defined by the Board), other than such workers who are treated 
        as corporate alliance eligible individuals pursuant to a 
        collective bargaining agreement (as defined by the Secretary of 
        Labor).
    (e) Definitions Relating to Corporate Alliances.--In this subtitle, 
except as otherwise provided:
            (1) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 1974) 
        providing medical care (as defined in section 213(d) of the 
        Internal Revenue Code of 1986) to participants or beneficiaries 
        (as defined in section 3 of the Employee Retirement Income 
        Security Act of 1974) directly or through insurance, 
        reimbursement, or otherwise.
            (2) Large employer.--The term ``large employer'' means an 
        employer that has more than 5,000 full-time employees in the 
        United States. Such term includes the United States Postal 
        Service.
            (3) Multiemployer plan.--The term ``multiemployer plan'' 
        has the meaning given such term in section 3(37) of the 
        Employee Retirement Income Security Act of 1974, and includes 
        any plan that is treated as such a plan under title I of such 
        Act.
            (4) Rural electric cooperative.--The term ``rural electric 
        cooperative'' has the meaning given such term in section 
        3(40)(A)(iv) of the Employee Retirement Income Security Act of 
        1974.
            (5) Rural telephone cooperative associations.--The term 
        ``rural telephone cooperative association'' has the meaning 
        given such term in section 3(40)(A)(v) of the Employee 
        Retirement Income Security Act of 1974.

SEC. 1312. TIMING OF ELECTIONS.

    (a) For Large Employers.--
            (1) Current large employers.--
                    (A) In general.--In the case of an employer that is 
                an eligible sponsor described in section 1311(b)(1)(A) 
                as of the most recent January 1 prior to the general 
                effective date, the sponsor's election to be a 
                corporate alliance under such section must be made and 
                filed with the Secretary of Labor not later than the 
                date specified in subparagraph (B).
                    (B) Deadline for notice.--The date specified in 
                this subparagraph is January 1 of the second year 
                preceding the general effective date or, in the case of 
                a State that elects to become a participating State 
                before the general effective date, not later than one 
                month later than the date specified for States under 
                section 1202(a)(2).
            (2) New large employers.--In the case of an employer that 
        is not an eligible sponsor described in section 1311(b)(1)(A) 
        as of the most recent January 1 prior to the general effective 
        date, but first becomes such a sponsor as of a subsequent date, 
        the election to be a corporate alliance under such section must 
        be made and filed with the Secretary of Labor not later than 
        March 1 of the year following the year in which the employer 
        first becomes such a sponsor.
            (3) Application of option.--The Secretary of Labor shall 
        promulgate rules regarding how the option described in section 
        1311(c)(1)(B) will be applied to the determination of whether 
        an employer is a large employer before an election is made 
        under section 1311.
    (b) For Multiemployer Plans and Rural Cooperatives.--In the case of 
an eligible sponsor described in section 1311(b)(1) (B) or (C), the 
sponsor's election to be a corporate alliance under such section must 
be made and filed with the Secretary of Labor not later than March 1, 
1996.
    (c) Effective Date of Election.--An election made under subsection 
(a) or (b) shall be effective for coverage provided under health plans 
on and after January 1 of the year following the year in which the 
election is made.
    (d) One-time Election.--If an eligible sponsor fails to make the 
election on a timely manner under subsection (a) or (b), the sponsor 
may not make such election at any other time.

SEC. 1313. TERMINATION OF ALLIANCE ELECTION.

    (a) Termination for Insufficient Number of Full-Time Employees or 
Participants.--If a corporate alliance reports under section 1387(c), 
that there were fewer than 4,800 full-time employees (or, active 
participants, in the case of one or more plans offered by a corporate 
alliance which is an eligible sponsor described in section 
1311(b)(1)(B)) who are enrolled in a health plan through the alliance, 
the election under this part with respect to the alliance shall 
terminate.
    (b) Termination for Failure to Meet Requirements.--
            (1) In general.--If the Secretary of Labor finds that a 
        corporate alliance has failed substantially to meet the 
        applicable requirements of this subtitle, the Secretary shall 
        terminate the election under this part with respect to the 
        alliance
            (2) Excess increase in premium equivalent.--If the 
        Secretary of Labor finds that the alliance is in violation of 
        the requirements of section 6022 (relating to prohibition 
        against excess increase in premium expenditures), the Secretary 
        shall terminate the alliance in accordance with such section.
    (c) Elective Termination.--A corporate alliance may terminate an 
election under this part by filing with the National Health Board and 
the Secretary of Labor a notice of intent to terminate.
    (d) Effective Date of Termination.--In the case of a termination of 
an election under this section, in accordance with rules established by 
the Secretary of Labor--
            (1) subject to section 6022(a)(1), the termination shall 
        take effect as of the effective date of enrollments in regional 
        alliance health plans made during the next open enrollment 
        period (as provided in section 1323(d)), and
            (2) the enrollment of eligible individuals in corporate 
        alliance health plans of the corporate alliance shall be 
        terminated as of such date and such individuals shall be 
        enrolled in other applicable health plans effective on such 
        date.
    (e) Notice to Board.--If an election with respect to a corporate 
alliance is terminated pursuant to subsection (a) or subsection (b), 
the Secretary of Labor shall notify the National Health Board of the 
termination of the election.

 PART 2--GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL ALLIANCES

SEC. 1321. CONTRACTS WITH HEALTH PLANS.

    (a) Contracts with Plans.--
            (1) In general.--In order to assure the availability of the 
        comprehensive benefit package to eligible individuals residing 
        in the alliance area in a cost-effective manner, except as 
        provided in this section, each regional alliance shall 
        negotiate with any willing State-certified health plan to enter 
        into a contract with the alliance for the enrollment under the 
        plan of eligible individuals in the alliance area. Subject to 
        paragraph (2), a regional alliance shall not enter into any 
        such contract with a health plan that is not a State-certified 
        health plan.
            (2) Treatment of certain plans.--Each regional alliance 
        shall enter into a contract under this section with any 
        veterans health plan of the Department of Veterans Affairs and 
        with a Uniformed Services Health Plan of the Department of 
        Defense, that offers the comprehensive benefit package to 
        eligible individuals residing in the alliance area if the 
        appropriate official requests to enter into such a contract.
    (b) General Conditions for Denial of Contract by a Regional 
Alliance.--A regional alliance is not required under this section to 
offer a contract with a health plan if--
            (1) the alliance finds that the proposed bid exceeds 120 
        percent of the regional alliance per capita prremium target (as 
        determined under section 6003); or
            (2) the plan has failed to comply with requirements under 
        prior contracts with the alliance, including failing to offer 
        coverage for all the services in the comprehensive benefit 
        package in the entire service area of the plan.

SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT; 
              ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE.

    (a) In General.--Each regional alliance must provide to each 
eligible enrollee (as defined in section 1902(14)) with respect to the 
alliance a choice of health plans among the plans which have contracts 
in effect with the alliance under section 1321 (in the case of a 
regional alliance) or section 1341 (in the case of a corporate 
alliance).
    (b) Offering of Plans by Regional Alliances.--
            (1) In general.--Each regional alliance shall include among 
        its health plan offerings at least one fee-for-service plan (as 
        defined in paragraph (2)).
            (2) Fee-for-service plan defined.--
                    (A) In general.--For purposes of this Act, the term 
                ``fee-for-service plan'' means a health plan that--
                            (i) provides coverage for all items and 
                        services included in the comprehensive benefit 
                        package that are furnished by any lawful health 
                        care provider of the enrollee's choice, subject 
                        to reasonable restrictions (described in 
                        subparagraph (B)), and
                            (ii) makes payment to such a provider 
                        without regard to whether or not there is a 
                        contractual arrangement between the plan and 
                        the provider.
                    (B) Reasonable restrictions described.--The 
                reasonable restrictions on coverage permitted under a 
                fee-for-service plan (as specified by the National 
                Health Board) are as follows:
                            (i) Utilization review.
                            (ii) Prior approval for specified services.
                            (iii) Exclusion of providers on the basis 
                        of poor quality of care, based on evidence 
                        obtainable by the plan.
                Clause (ii) shall not be construed as permitting a plan 
                to require prior approval for non-primary health care 
                services through a gatekeeper or other process.
    (c) Establishment of Fee-for-Service Schedule.--
            (1) In general.--Except in the case of regional alliances 
        of a State that has established a Statewide fee schedule under 
        paragraph (3), each regional alliance shall establish a fee 
        schedule setting forth the payment rates applicable to services 
        furnished during a year to individuals enrolled in fee-for-
        service plans (or to services furnished under the fee-for-
        service component of any regional alliance health plan) for use 
        by regional alliance health plans under section 1406(c) and 
        corporate alliance health plans providing services subject to 
        the schedule in the regional alliance area.
            (2) Negotiation with providers.--The fee schedule under 
        paragraph (1) shall be established after negotiations with 
        providers, and (subject to paragraphs (5) and (6)) providers 
        may collectively negotiate the fee schedule with the regional 
        alliance.
            (3) Use of statewide schedule.--At the option of a State, 
        the State may establish its own statewide fee schedule which 
        shall apply to all fee-for-service plans offered by regional 
        alliances and corporate alliances in the State instead of 
        alliance-specific schedules established under paragraph (1).
            (4) Annual revision.--A regional alliance or State (as the 
        case may be) shall annually update the payment rates provided 
        under the fee schedule established pursuant to paragraph (1) or 
        paragraph (3).
            (5) Activities treated as State action or efforts intended 
        to influence government action.--The establishment of a fee 
        schedule under this subsection by a regional alliance of a 
        State shall be considered to be pursuant to a clearly 
        articulated and affirmatively expressed State policy to 
        displace competition and to be actively supervised by the 
        State, and conduct by providers respecting the establishment of 
        the fee schedule, including collective negotiations by 
        providers with the regional alliance (or the State) pursuant to 
        paragraph (2), shall be considered as efforts intended to 
        influence governmental action.
            (6) No boycott permitted.--Nothing in this subsection shall 
        be construed to permit providers to threaten or engage in any 
        boycott.
            (7) Negotiations defined.--In this subsection, 
        ``negotiations'' are the process by which providers 
        collectively and jointly meet, confer, consult, discuss, share 
        information, among and between themselves in order to agree on 
        information to be provided, presentations to be made, and other 
        such activities with respect to regional alliances (or States) 
        relating to the establishment of the fee schedule (but not 
        including any activity that constitutes engaging in or 
        threatening to engage in a boycott), as well as any and all 
        collective and joint meetings, discussions, presentations, 
        conferences, and consultations between or among providers and 
        any regional alliance (or State) for the purpose of 
        establishing the fee schedule described in this subsection.
    (d) Prospective Budgeting of Fee-for-Service.--
            (1) In general.--The fee schedule established by a regional 
        alliance or a State under subsection (c) may be based on 
        prospective budgeting described in paragraph (2).
            (2) Prospective budgeting described.--Under prospective 
        budgeting--
                    (A) the regional alliance or State (as the case may 
                be) shall negotiate with health providers annually to 
                develop a budget for the designated fee-for-service 
                plan;
                    (B) the negotiated budget shall establish spending 
                targets for each sector of health expenditures made by 
                the plan; and
                    (C) if the regional alliance or State (as the case 
                may be) determines that the utilization of services 
                under the plan is at a level that will result in 
                expenditures under the plan exceeding the negotiated 
                budget, the plan shall reduce the amount of payments 
                otherwise made to providers (through a withhold or 
                delay in payments or adjustments) in such a manner and 
                by such amounts as necessary to assure that 
                expenditures will not exceed the budget.
            (3) Use of prospective budgeting exclusive.--If a regional 
        alliance or State establishes the fee schedule for fee-for-
        service plans on the basis of prospective budgeting under this 
        subsection, payment for all services provided by fee-for-
        service plans in the alliance or State shall be determined on 
        such basis.

SEC. 1323. ENROLLMENT RULES AND PROCEDURES.

    (a) In General.--Each regional alliance shall assure that each 
regional alliance eligible individual who resides in the alliance area 
is enrolled in a regional alliance health plan and shall establish and 
maintain methods and procedures, consistent with this section, 
sufficient to assure such enrollment. Such methods and procedures shall 
assure the enrollment of alliance eligible individuals at the time they 
first become eligible enrollees in the alliance area, including 
individuals at the time of birth, at the time they move into the 
alliance area, and at the time of reaching the age of individual 
eligibility as an eligible enrollee (and not merely as a family 
member). Each regional alliance shall establish procedures, consistent 
with subtitle A, for the selection of a single health plan in which all 
members of a family are enrolled.
    (b) Point of Service Enrollment Mechanism.--
            (1) In general.--Each regional alliance shall establish a 
        point-of-service enrollment mechanism (meeting the requirements 
        of this subsection) for enrolling eligible individuals who are 
        not enrolled in a health plan of the alliance when the 
        individual seeks health services.
            (2) Requirements of mechanism.--Under such a mechanism, if 
        an eligible individual seeks to receive services (included in 
        the comprehensive benefit package) from a provider in an 
        alliance area and does not present evidence of enrollment under 
        any applicable health plan, or if the provider has no evidence 
        of the individual's enrollment under any such plan, the 
        following rules shall apply:
                    (A) Notice to alliance.--Consistent with part 2 of 
                subtitle B of title V, the provider--
                            (i) shall provide the regional alliance 
                        with information relating to the identity of 
                        the eligible individual, and
                            (ii) may request payment from the regional 
                        alliance for the furnishing of such services.
                    (B) Initial determination of eligibility and 
                enrollment status.--The regional alliance shall 
                determine--
                            (i) if the individual is an alliance 
                        eligible individual for the alliance, and
                            (ii) if the individual is enrolled under an 
                        applicable health plan (including a corporate 
                        alliance health plan).
                    (C) Treatment of alliance eligible individuals.--If 
                the regional alliance determines that the individual is 
                an alliance eligible individual with respect to the 
                alliance and--
                            (i) is enrolled under a regional alliance 
                        health plan of the alliance, the alliance shall 
                        forward the claim to the health plan involved 
                        and shall notify the provider (and the 
                        individual) of the fact of such enrollment and 
                        the forwarding of such claim (and the plan 
                        shall make payment to the provider for the 
                        services furnished to the individual as 
                        described in paragraph (3)(C));
                            (ii) is not enrolled under a regional 
                        alliance health plan of the alliance but is 
                        required to be so enrolled in a specific health 
                        plan as a family member under section 1011, the 
                        alliance shall record the individual's 
                        enrollment under such specific plan, shall 
                        forward the claim to such plan, and shall 
                        notify the provider (and the individual) of the 
                        fact of such enrollment and the forwarding of 
                        such claim (and the plan shall make payment to 
                        the provider for the services furnished to the 
                        individual as described in paragraph (3)(C)); 
                        or
                            (iii) is not enrolled under such a plan and 
                        is not described in clause (ii), the point-of-
                        service enrollment procedures described in 
                        paragraph (3) shall apply.
                    (D) Treatment of individuals enrolled under health 
                plans of other alliances.--If the regional alliance 
                determines that the individual is not an alliance 
                eligible individual with respect to the alliance but 
                the individual is enrolled--
                            (i) under a regional alliance health plan 
                        of another alliance, the alliance shall forward 
                        the claim to the other regional alliance and 
                        shall notify the provider (and the individual) 
                        of the fact of such enrollment and the 
                        forwarding of such claim (and the plan shall 
                        make payment to the provider for the services 
                        furnished to the individual as described in 
                        paragraph (3)(C)); or
                            (ii) under a corporate alliance health 
                        plan, the alliance shall forward the claim to 
                        the corporate alliance involved and shall 
                        notify the provider (and the individual) of the 
                        fact of such enrollment and the forwarding of 
                        such claim (and the plan shall make payment to 
                        the provider for the services furnished to the 
                        individual as described in section 
                        1383(b)(2)(B)).
                    (E) Treatment of other alliance eligible 
                individuals not enrolled in health plan.--If the 
                regional alliance determines that the individual is not 
                an alliance eligible individual with respect to the 
                alliance and the individual is an alliance eligible 
                individual with respect to another health alliance but 
                is not enrolled in a health plan of such alliance, the 
                regional alliance shall forward the claim to the other 
                alliance involved and shall notify the provider (and 
                the individual) of the forwarding of such claim and the 
                requirement for prompt enrollment of the individual 
                under an applicable health plan of such alliance 
                pursuant to the procedures described in paragraph (3) 
                (in the case of a regional alliance) or in section 
                1383(b) (in the case of a corporate alliance).
                    (F) Treatment of all other individuals.--The 
                National Board shall promulgate rules regarding the 
                responsibilities of regional alliances relating to 
                individuals whose applicable health plan is not an 
                alliance plan and other individuals the alliance is 
                unable to identify as eligible individuals.
            (3) Point-of-service enrollment procedures described.--The 
        point-of-service enrollment procedures under this paragraph are 
        as follows:
                    (A) Not later than 10 days after the date an 
                alliance is notified of the receipt of services by an 
                unenrolled eligible individual, the alliance provides 
                the individual with materials describing health plans 
                offered through the alliance.
                    (B) The individual shall be provided a period of 30 
                days in which to enroll in a health plan of the 
                individual's choice. If the individual fails to so 
                enroll during such period, the alliance shall enroll 
                the individual in a health plan of the alliance 
                selected on a random basis.
                    (C) Using the fee-for-service schedule adopted by 
                the alliance under section 1322(c), the health plan in 
                which the individual is enrolled under this 
                subparagraph shall reimburse the provider who provided 
                the services referred to in subparagraph (A) to the 
                same extent as if the individual had been enrolled 
                under the plan at the time of provision of the 
                services.
    (c) Enrollment of New Residents.--
            (1) In general.--Each regional alliance shall establish 
        procedures for enrolling regional alliance eligible individuals 
        who move into the alliance area.
            (2) Long-term residents.--Such procedures shall assure that 
        regional alliance eligible individuals who intend to reside in 
        the alliance area for longer than 6 months shall register with 
        the regional alliance for the area and shall enroll in a 
        regional alliance health plan offered by the alliance.
            (3) Short-term residents.--Such procedures shall permit 
        eligible individuals who intend to reside in the alliance area 
        for more than 3 months but less than 6 months to choose among 
        the following options:
                    (A) To continue coverage through the health plan in 
                which such individual is previously enrolled, in which 
                case coverage for care in the area of temporary 
                residence may be limited to emergency services and 
                urgent care.
                    (B) To register with the regional alliance and 
                enroll in a regional alliance health plan offered by 
                the alliance.
                    (C) To change enrollment in the previous alliance 
                area to enrollment in a health plan of such alliance 
                that provides for coverage on a fee-for-service basis 
                of services provided outside the area of that alliance.
    (d) Changes in Enrollment.--
            (1) Annual open enrollment period to change plan 
        enrollment.--Each regional alliance shall hold an annual open 
        enrollment period during which each eligible enrollee in the 
        alliance has the opportunity to choose among health plans 
        offered through the alliance, according to rules to be 
        promulgated by the National Health Board.
            (2) Disenrollment for cause.--In addition to the annual 
        open enrollment period held under paragraph (1), each regional 
        alliance shall establish procedures under which alliance 
        eligible individuals enrolled in a plan may disenroll from the 
        plan for good cause at any time during a year and enroll in 
        another plan of the alliance. Such procedures shall be 
        implemented in a manner that ensures continuity of coverage for 
        the comprehensive benefit package for such individuals during 
        the year.
    (e) Enrollment of Family Members.--Each regional alliance shall 
provide for the enrollment of all family members in the same plan, 
consistent with part 2 of subtitle A.
    (f) Oversubscription of Plans.--
            (1) In general.--Each regional alliance shall establish a 
        method for establishing enrollment priorities in the case of a 
        health plan that does not have sufficient capacity to enroll 
        all eligible individuals seeking enrollment.
            (2) Preference for current members.--Such method shall 
        provide that in the case of such an oversubscribed plan--
                    (A) individuals already enrolled in the plan are 
                given priority in continuing enrollment in the plan, 
                and
                    (B) other individuals who seek enrollment during an 
                applicable enrollment period are permitted to enroll in 
                accordance with a random selection method, up to the 
                enrollment capacity of the plan.
    (g) Termination of Enrollment.--
            (1) In general.--Each regional alliance shall establish 
        special enrollment procedures to permit alliance eligible 
        individuals to change the plan in which they are enrolled in 
        the case of the termination of coverage under a plan, in a 
        manner that ensures the individuals' continuation of coverage 
        for the comprehensive benefit package.
            (2) Failure of a corporate alliance.--Each regional 
        alliance shall establish special enrollment procedures to 
        permit individuals, who become alliance eligible individuals as 
        a result of the failure of a corporate alliance, to enroll 
        promptly in regional alliance health plans in a manner that 
        ensures the individuals' continuation of coverage for the 
        comprehensive benefit package.
    (h) Limitation on Offering of Coverage to Ineligible Individuals.--
A regional alliance may not knowingly offer coverage under a regional 
alliance health plan or other health insurance or health benefits to an 
individual who is not an eligible individual. Nothing in this section 
shall be construed as affecting the ability of a regional alliance 
health plan or other health plan to offer coverage to such individuals 
without any financial payment or participation by a regional alliance.
    (i) Enforcement of Enrollment Requirement.--In the case of a 
regional alliance eligible individual who fails to enroll in an 
applicable health plan as required under section 1002(a)--
            (1) the applicable regional alliance shall enroll the 
        individual in a regional alliance health plan (selected by the 
        alliance consistent with this Act and with any rules 
        established by the Board), and
            (2) such alliance shall require the payment of twice the 
        amount of the family share of premiums that would have been 
        payable under subtitle B of title VI if the individual had 
        enrolled on a timely basis in the plan, unless the individual 
        has established to the satisfaction of the alliance good cause 
        for the failure to enroll on a timely basis.

SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS.

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

SEC. 1325. CONSUMER INFORMATION AND MARKETING.

    (a) Consumer Information.--
            (1) In general.--Before each open enrollment period, each 
        regional alliance shall make available to eligible enrollees 
        information, in an easily understood and useful form, that 
        allows such enrollees (and other alliance eligible individuals) 
        to make valid comparisons among health plans offered by the 
        alliance.
            (2) Information to be included.--Such information must 
        include, in the same format for each plan, such information as 
        the National Health Board shall require, including at least the 
        following:
                    (A) The cost of the plan, including premiums and 
                average out-of-pocket expenses.
                    (B) The characteristics and availability of health 
                care professionals and institutions participating in 
                the plan.
                    (C) Any restrictions on access to providers and 
                services under the plan.
                    (D) A summary of the annual quality performance 
                report, established pursuant to section 5005(c)(1), 
                which contains measures of quality presented in a 
                standard format.
    (b) Marketing.--Each regional alliance shall, consistent with 
section 1404, review and approve or disapprove the distribution of any 
materials used to market health plans offered through the alliance.

SEC. 1326. OMBUDSMAN.

    (a) Establishment.--Each regional alliance must establish and 
maintain an office of an ombudsman to assist consumers in dealing with 
problems that arise with health plans and the alliance.
    (b) Optional Financing Through Voluntary Contribution.--At the 
option of the State in which a regional alliance is located, the 
alliance--
            (1) shall permit alliance eligible individuals to designate 
        that one dollar of the premium paid for enrollment in the 
        individual's regional alliance health plan for the operation of 
        the office of the alliance's ombudsman; and
            (2) shall apply any such amounts towards the establishment 
        and operation of such office.

SEC. 1327. DATA COLLECTION; QUALITY.

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

SEC. 1328. ADDITIONAL DUTIES.

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

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

    (a) Payment Adjustment.--In order to ensure that plans are 
available to all eligible individuals residing in all portions of the 
alliance area, a regional alliance may adjust payments to plans or use 
other financial incentives to encourage health plans to expand into 
areas that have inadequate health services.
    (b) Encouraging New Plans.--Subject to subsection (c), in order to 
encourage the establishment of a new health plan in an area that has 
inadequate health services, an alliance may--
            (1) organize health providers to create such a plan in such 
        an area a new health plan targeted at such an area,
            (2) provide assistance with setting up and administering 
        such a plan, and
            (3) arrange favorable financing for such a plan.
    (c) Prohibition of Regional Alliances Bearing Risk.--A regional 
alliance may not bear insurance risk.

SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF INTEREST.

    (a) Promulgation of Standards.--The Board shall promulgate 
standards of conduct in accordance with subsection (b) for any 
administrator, officer, trustee, fiduciary, custodian, counsel, agent, 
or employee of any regional alliance.
    (b) Requirements for Standards.--The standards of conduct referred 
to in subsection (a) shall set forth--
            (1) the types of investment interests, ownership interests, 
        affiliations or other employment that would be improper for an 
        individual described in subsection (a) to hold during the time 
        of the individual's service or employment with an alliance; and
            (2) the circumstances that will constitute impermissible 
        conflicts of interest or self-dealing by such employees in 
        performing their official duties and functions for any regional 
        alliance.
    (c) Civil Monetary Penalty.--Any individual who engages in an 
activity that the individual knows or has reason to know is in 
violation of the regulations and standards promulgated by the Board 
pursuant to subsections (a) and (b) shall be subject, in addition to 
any other penalties that may be prescribed by law, to a civil money 
penalty of not more than $10,000 for each such violation. The 
provisions of section 1128A of the Social Security Act (other than 
subsections (a) and (b)) shall apply to civil money penalties under 
this subsection in the same manner as they apply to a penalty or 
proceeding under section 1128A(a) of such Act.

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

                     Subpart A--Collection of Funds

SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPTANCE OF BIDS.

    (a) Information Provided to Plans Before Soliciting Bids.--
            (1) In general.--Each regional alliance shall make 
        available, by April 1 of each year, to each plan that indicates 
        an interest in submitting a premium bid under section 6004 in 
        the year, information (including information described in 
        paragraph (2)) that the Board specifies as being necessary to 
        enable a plan to estimate, based upon an accepted bid, the 
        amounts payable to such a plan under section 1351.
            (2) Information to be included.--Such information shall 
        include the following:
                    (A) The demographic and other characteristics of 
                regional alliance eligible individuals for the regional 
                alliance.
                    (B) The uniform per capita conversion factor for 
                the regional alliance (established under subsection 
                (b)).
                    (C) The premium class factors (established by the 
                Board under section 1531).
                    (D) The regional alliance inflation factor 
                (determined under section 6001(a)).
                    (E) The risk-adjustment factors and reinsurance 
                methodology and payment amounts (published under 
                subsection (c)) to be used by the regional alliance in 
                computing blended plan per capita rates (in accordance 
                with section 6201).
                    (F) The plan bid proportion, the AFDC proportion, 
                the SSI proportion, the AFDC per capita premium amount, 
                and the SSI per capita premium amount, for the year, as 
                computed under subtitle D of title VI.
                    (G) The alliance administrative allowance 
                percentage, computed under section 1352(b).
    (b) Determination of Uniform Per Capita Conversion Factor.--Each 
regional alliance shall specify, not later than April 1 of each year 
(beginning with the year before the first year) a uniform per capita 
conversion factor to be used under section 6102(a)(2) in converting the 
accepted bid for each plan for the year into the premium for an 
individual enrollment for such plan for the year. SSI or AFDC 
recipients shall not be included for purposes of computing the 
conversion factor.
    (c) Determination of Risk-Adjustment Factors and Reinsurance 
Payment Amounts.--Each regional alliance shall compute and publish the 
risk-adjustment factors and reinsurance payment amounts to be used by 
the regional alliance in computing blended plan per capita rates under 
section 6201.
    (d) Solicitation of Bids.--Each regional alliance shall solicit and 
negotiate, consistent with section 6004, with each regional alliance 
health plan a bid for the payment rate on a per capita basis for the 
comprehensive benefit package for all alliance eligible individuals in 
the alliance area.

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

    (a) Calculation of Components in General Family Share and General 
Employer Premiums.--
            (1) Family share.--Each regional alliance shall compute the 
        following components of the general family share of premiums 
        (as defined in subsection (b)(1)(B)):
                    (A) Plan premiums.--For each plan offered, the 
                premium for the plan for each class of family 
                enrollment (including the amount of any family 
                collection shortfall).
                    (B) Alliance credit.--The alliance credit amount 
                for each class of family enrollment, under section 
                6103.
                    (C) Excess premium credit.--The amount of any 
                excess premium credit provided under section 6105 for 
                each class of family enrollment.
                    (D) Corporate alliance opt-in credit.--The amount 
                of any corporate alliance opt-in credit provided under 
                section 6106 for each class of family enrollment.
            (2) Employer premiums.--Each regional alliance shall 
        compute the following components of the general employer 
        premium payment amount (as defined in subsection (b)(2)(B)):
                    (A) Base employer monthly premium per worker.--The 
                base employer monthly premium determined under section 
                6122 for each class of family enrollment.
                    (B) Employer collection shortfall add-on.--The 
                employer collection shortfall add-on computed under 
                section 6125(b).
    (b) Publication.--
            (1) Family share.--
                    (A) In general.--Each regional alliance shall 
                publish, before the open enrollment period in each 
                year, the general family share of the premium (as 
                defined in subparagraph (B)) for each class of family 
                enrollment for each regional alliance health plan to be 
                offered by the alliance in the following year.
                    (B) General family share of premium defined.--In 
                this subpart, the term ``general family share of 
                premium'' means the family share of premium under 
                section 6101 computed without regard to section 6104 
                and without regard to section 6101(b)(2)(C)(v).
            (2) Employer premium.--
                    (A) In general.--Each regional alliance shall 
                publish, in December before each year (beginning with 
                December before the first year) the general employer 
                premium payment amount (as defined in subparagraph (B)) 
                for each class of family enrollment for the following 
                year.
                    (B) General employer premium payment amount 
                defined.--In this subpart, the term ``general employer 
                premium payment amount'' means the employer premium 
                payment under section 6121 computed, as an amount per 
                full-time equivalent worker, without regard to sections 
                6124 through 6126.

SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMILIES.

    (a) Amount of Family Share.--The amount charged by a regional 
alliance to a family for a class of family enrollment (specified under 
section 1011(c)) under a regional alliance health plan is equal to the 
family share of premium established under section 6101(a) for the 
family. Based upon the information described in this section, each 
regional alliance shall determine the amount required to be paid under 
section 6101 and under section 6111 for each year for families 
enrolling in regional alliance health plans.
    (b) Family Share Amount.--The amount required to be paid under 
section 6101, with respect to each family, takes into account--
            (1) the general family share of premium (as defined in 
        section 1342(b)(1)(B)) for the class of enrollment involved;
            (2) any income-related discount provided under section 
        6104(a)(1) for the family; and
            (3) whether or not the family is an SSI or AFDC family.
    (c) Alliance Credit Repayment Amount.--The amount of the alliance 
credit repayment amount under section 6111, with respect to each 
family, takes into account the following:
            (1) The number of months of enrollment, and class of 
        enrollment, in regional alliance health plans, used in 
        determining the amount of the alliance credit under section 
        6103 for the family.
            (2) Reductions in liability under section 6111(b) based on 
        employer premium payments based on net earnings from self-
        employment for the family.
            (3) Reductions in liability under section 6112 based on 
        months of employment for the family.
            (4) Limitations in liability under section 6113 on the 
        basis of the adjusted family income for the family.
            (5) The elimination of liability in the case of certain 
        retirees and qualified spouses and children under section 6114.
            (6) The elimination of liability in the case of certain 
        working medicare beneficiaries under section 6115.
    (d) Access to Necessary Information to Make Determination.--
Information required for an alliance to make the determination under 
subsection (a) shall be based on information obtained or maintained by 
the alliance in the conduct of its business, including the following:
            (1) Information required for income-related determinations 
        shall be obtained under subpart B.
            (2) Information on SSI and AFDC recipients under subsection 
        (e).
            (3) Information submitted on a monthly and annual basis by 
        employers under section 1602.
            (4) Information submitted by self-employed individuals on 
        net earnings from self-employment under section 1602(d).
            (5) Applications for premium reductions under section 6114.
            (6) Information concerning medicare-eligible individuals 
        under subsection (f).
            (7) Any income-related discount provided under section 
        6104(a)(1) for the family.
            (8) Whether or not the family is an SSI or AFDC family.
    (e) Information Concerning Cash Assistance Status.--Each 
participating State and the Secretary shall make available (in a time 
and manner specified by the Secretary) to each regional alliance such 
information as may be necessary to determine and verify whether an 
individual is an AFDC or SSI recipient for a month in a year.
    (f) Information Concerning Medicare-Eligible Individuals.--
            (1) Information to regional alliances.--The Secretary shall 
        make available to regional alliances (through regional 
        information centers or otherwise) information necessary to 
        determine--
                    (A) whether an individual is a medicare-eligible 
                individual,
                    (B) the eligibility of individuals for the special 
                treatment under section 6115,
                    (C) if medicare-eligible individuals are described 
                in section 1012(a), and
                    (D) the amounts of payments owed the alliance under 
                section 1894 of the Social Security Act, added by 
                section 4003.
            (2) Information to secretary.--Each regional alliance shall 
        make available to the Secretary (through the national 
        information system under section 5101 or otherwise) information 
        relating to the enrollment of individuals who would be 
        medicare-eligible individuals but for section 1012(a).
    (g) Alliance Accounting System.--
            (1) In general.--Each regional alliance shall establish an 
        accounting system that meets standards established by the 
        Secretary.
            (2) Specifics.--Such system shall collect information, on a 
        timely basis for each individual enrolled (and, to the extent 
        required by the Secretary, identified and required to be 
        enrolled) in a regional alliance health plan regarding--
                    (A) the applicable premium for such enrollment,
                    (B) family members covered under such enrollment,
                    (C) the premium payments made by (or on behalf of) 
                the individual for such enrollment,
                    (D) employer premium payments made respecting the 
                employment of the individual and other employer 
                contributions made respecting such enrollment, and
                    (E) any government contributions made with respect 
                to such enrollment (including contributions for 
                electing veterans and active duty military personnel).
            (3) End-of-year reporting.--Such system shall provide for a 
        report, at the end of each year, regarding the total premiums 
        imposed, and total amounts collected, for individuals enrolled 
        under regional health alliance plans, in such manner as 
        identifies net amounts that may be owed to the regional 
        alliance.

SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE.

    (a) Family Statements.--
            (1) Notice of no amount owed.--If the regional alliance 
        determines under section 1343 that a family has paid any family 
        share required under section 6101 and is not required to repay 
        any amount under section 6111 for a year, the alliance shall 
        provide notice of such determination to the family. Such notice 
        shall include a prominent statement that the family is not 
        required to make any additional payment and is not required to 
        file any additional information with the regional alliance.
            (2) Notice of amount owed.--
                    (A) In general.--If the regional alliance 
                determines that a family has not paid the entire family 
                share required under section 6101 or is required to 
                repay an amount under section 6111 for a year, the 
                alliance shall provide to the family a notice of such 
                determination.
                    (B) Information on amount due.--Such notice shall 
                include detailed information regarding the amount owed, 
                the basis for the computation (including the amount of 
                any reductions that have been made in the family's 
                liability under subtitle B of title VI), and the date 
                the amount is due and the manner in which such amount 
                is payable.
                    (C) Information on discounts and reductions 
                available.--Such notice shall include--
                            (i) information regarding the discounts and 
                        reductions available (under sections 6104, 
                        6112, 6113, 6114, and 6115) to reduce or 
                        eliminate any liability, and
                            (ii) a worksheet which may be used to 
                        calculate reductions in liability based on 
                        income under sections 6104 and 6113.
            (3) Inclusion of income reconciliation form for families 
        provided premium discounts.--
                    (A) In general.--A notice under this subsection 
                shall include, in the case of a family that has been 
                provided a premium discount under section 6104 (or 
                section 6113) for the previous year, an income 
                reconciliation statement (for use under section 1375) 
                to be completed and returned to the regional alliance 
                (along with any additional amounts owed) by the 
                deadline specified in subsection (b). Such form shall 
                require the submission of such information as the 
                Secretary specifies to establish or verify eligibility 
                for such premium discount.
                    (B) Other families.--Any family which has not been 
                provided such a discount but may be eligible for such a 
                discount may submit such an income reconciliation 
                statement and, if eligible, receive a rebate of the 
                amount of excess family share paid for the previous 
                year.
                    (C) Additional information.--The alliance shall 
                permit a family to provide additional information 
                relating to the amount of such reductions or the income 
                of the family (insofar as it may relate to a premium 
                discount or reduction in liability under section 6104 
                or 6113).
            (4) Timing of notice.--Notices under this subsection shall 
        be mailed to each family at least 45 days before the deadline 
        specified in subsection (b).
    (b) Deadline for Payment.--The deadline specified in this 
subsection for amounts owed for a year is such date as the Secretary 
may specify, taking into account the dates when the information 
specified in section 1343 becomes available to compute the amounts owed 
and to file income reconciliation statements under section 1375. 
Amounts not paid by such deadline are subject to interest and penalty.
    (c) Change in Regional Alliance.--In the case of a family that 
during a year changes the regional alliance through which the family 
obtains coverage under a regional alliance health plan, the Secretary 
shall establish rules which provide that the regional alliance in which 
the family last obtained such coverage in a year--
            (1) is responsible for recovering amounts due under this 
        subpart for the year (whether or not attributable to periods of 
        coverage obtained through that alliance);
            (2) shall obtain such information, through the health 
        information system implemented under section 5101, as the 
        alliance may require in order to compute the amount of any 
        liability owed under this subpart (taking into account any 
        reduction in such amount under this section), and
            (3) shall provide for the payment to other regional 
        alliances of such amounts collected as may be attributable to 
        amounts owed for periods of coverage obtained through such 
        alliances.
    (d) No Loss of Coverage.--In no case shall the failure to pay 
amounts owed under this subsection result in an individual's or 
family's loss of coverage under this Act.
    (e) Dispute Resolution.--Each regional alliance shall establish a 
fair hearing mechanism for the resolution of disputes concerning 
amounts owed the alliance under this subpart.

SEC. 1345. COLLECTIONS.

    (a) In General.--Each regional alliance is responsible for the 
collection of all amounts owed the alliance (whether by individuals, 
employers, or others and whether on the basis of premiums owed, 
incorrect amounts of discounts or premium, cost sharing, or other 
reductions made, or otherwise). No amounts are payable by the Federal 
Government under this Act (including section 9102) with respect to the 
failure to collect any such amounts. Each regional alliance shall use 
credit and collection procedures, including the imposition of interest 
charges and late fees for failure to make timely payment, as may be 
necessary to collect amounts owed to the alliance. States assist 
regional alliances in such collection process under section 1202(d).
    (b) Collection of Family Share.--
            (1) Withholding.--
                    (A) in general.--In the case of a family that 
                includes a qualifying employee of an employer, the 
                employer shall deduct from the wages of the qualifying 
                employee (in a manner consistent with any rules of the 
                Secretary of Labor) the amount of the family share of 
                the premium for the plan in which the family is 
                enrolled.
                    (B) Multiple employment.--In the case of a family 
                that includes more than one qualifying employee, the 
                family shall choose the employer to which subparagraph 
                (A) will apply.
                    (C) Payment.--Amounts withheld under this paragraph 
                shall be maintained in a manner consistent with 
                standards established by the Secretary of Labor and 
                paid to the regional alliance involved in a manner 
                consistent with the payment of employer premiums under 
                subsection (c).
                    (D) Satisfaction of liability.--An amount deducted 
                from wages of a qualifying employee by an employer is 
                deemed to have been paid by the employee and to have 
                satisfied the employee's obligation under subsection 
                (a) to the extent of such amount.
            (2) Other methods.--In the case of a family that does not 
        include a qualifying employee, the regional alliance shall 
        require payment to be made prospectively. Such payment may be 
        required to be made not less frequently than monthly. The 
        Secretary may issue regulations in order to assure the timely 
        and accurate collection of the family share due.
    (c) Timing and Method of Payment of Employer Premiums.--
            (1) Frequency of payment.--Payment of employer premiums 
        under section 6121 for a month shall be made not less 
        frequently than monthly (or quarterly in the case of such 
        payments made by virtue of section 6126). The Secretary of 
        Labor may establish a method under which employers that pay 
        wages on a weekly or biweekly basis are permitted to make such 
        employer payments on such a weekly or biweekly basis.
            (2) Electronic transfer.--A regional alliance may require 
        those employers that have the capacity to make payments by 
        electronic transfer to make payments under this subsection by 
        electronic transfer.
    (d) Assistance.--
            (1) Employer collections.--The Secretary of Labor shall 
        provide regional alliances with such technical and other 
        assistance as may promote the efficient collection of all 
        amounts owed such alliances under this Act by employers. Such 
        assistance may include the assessment of civil monetary 
        penalties, not to exceed $5,000 or three times the amount of 
        the liability owed, whichever is greater, in the case of 
        repeated failure to pay (as specified in rules of the Secretary 
        of Labor).
            (2) Family collections.--Except as provided in paragraph 
        (1), the Secretary shall provide regional alliances with such 
        technical and other assistance as may promote the efficient 
        collection of other amounts owed such alliances under this Act. 
        Such assistance may include the assessment of civil monetary 
        penalties, not to exceed $5,000 or three times the amount of 
        the liability owed, whichever is greater, in the case of 
        repeated failure to pay (as specified in rules of the 
        Secretary).
    (e) Receipt of Miscellaneous Amounts.--For payments to regional 
alliances by--
            (1) States, see subtitle A of title IX, and
            (2) the Federal Government, see subtitle B of such title 
        and section 1894 of the Social Security Act (as added by 
        section 4003).

SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES.

    (a) In General.--The regional alliance which offers the regional 
alliance health plan in which a family is enrolled in December of each 
year (in this section referred to as the ``final alliance'') is 
responsible for the collection of any amounts owed by the family under 
this subpart, without regard to whether the family resided in the 
alliance area during the entire year.
    (b) Provision of Information in the Case of Change of Residence.--
In the case of a family that moves from one alliance area to another 
alliance area during a year, each regional alliance (other than the 
final alliance) is responsible for providing to the final alliance 
(through the national information system under section 5101 or 
otherwise) such information as the final alliance may require in order 
to determine the liability (and reductions in liability under section 
6112) attributable to alliance credits provided by such regional 
alliance.
    (c) Distribution of Proceeds.--In accordance with rules established 
by the Secretary, in consultation with the Secretary of Labor, the 
final alliance shall provide for the distribution of amounts collected 
under this subpart with respect to families in a year in an equitable 
manner among the regional alliances that provided health plan coverage 
to the families in the year.
    (d) Expediting Process.--In order to reduce paperwork and promote 
efficiency in the collection of amounts owed regional alliances under 
this subpart, the Secretary may require or permit regional alliances to 
share such information (through the national information system under 
section 5101 or otherwise) as the Secretary determines to be cost-
effective, subject to such confidentiality restrictions as may 
otherwise apply.
    (e) Students.--In the case of a qualifying student who makes an 
election described in section 1012(e)(1) (relating to certain full-time 
students who are covered under the plan of a parent but enrolled in a 
health plan offered by a different regional alliance from the one in 
which the parent is enrolled), the regional alliance that offered the 
plan to the parent shall provide for transfers of an appropriate 
portion of the premium (determined in accordance with procedures 
specified by the Board) to the other regional alliance in order to 
compensate that alliance for the provision of such coverage.
    (f) Payments of Certain Amounts to Corporate Alliances.--In the 
case of a married couple in which one spouse is a qualifying employee 
of a regional alliance employer and the other spouse is a qualifying 
employee of a corporate alliance employer, if the couple is enrolled 
with a corporate alliance health plan the regional alliance (which 
receives employer premium payments from such regional alliance employer 
with respect to such employee) shall pay to the corporate alliance the 
amounts so paid (or would be payable by the employer if section 6123 
did not apply).

                          Subpart B--Payments

SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH PLANS.

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

SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PERCENTAGE.

    (a) Specification by Alliance.--Before obtaining bids under section 
6004 from health plans for a year, each regional alliance shall 
establish the administrative allowance for the operation of the 
regional alliance in the year.
    (b) Administrative Allowance Percentage.--Subject to subsection 
(c), the regional alliance shall compute an administrative allowance 
percentage for each year equal to--
            (1) the administrative allowance determined under 
        subsection (a) for the year, divided by
            (2) the total of the amounts payable to regional alliance 
        health plans under subpart A (as estimated by the alliance and 
        determined without regard to section 1345(d)).
    (c) Limitation to 2\1/2\ percent.--In no case shall an 
administrative allowance percentage exceed 2.5 percent.

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

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

                    Subpart C--Financial Management

SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS.

    (a) In General.--Each regional alliance shall comply with standards 
established under section 1571(b) (relating to the management of 
finances, maintenance of records, accounting practices, auditing 
procedures, and financial reporting) and under section 1591(d) 
(relating to employer payments).
    (b) Specific Provisions.--In accordance with such standards--
            (1) Financial statements.--
                    (A) In general.--Each regional alliance shall 
                publish periodic audited financial statements.
                    (B) Annual financial audit.--
                            (i) In general.--Each regional alliance 
                        shall have an annual financial audit conducted 
                        by an independent auditor in accordance with 
                        generally accepted auditing standards.
                            (ii) Publication.--A report on each such 
                        audit shall be made available to the public at 
                        nominal cost.
                            (iii) Required actions for deficiencies.--
                        If the report from such an audit does not bear 
                        an unqualified opinion, the alliance shall take 
                        such steps on a timely basis as may be 
                        necessary to correct any material deficiency 
                        identified in the report.
                    (C) Eligibility error rates.--Each regional 
                alliance shall make eligibility determinations for 
                premium discounts, liability reductions, and cost 
                sharing reductions under sections 6104 and 6123, 
                section 6113, and section 1371, respectively, in a 
                manner that maintains the error rates below an 
                applicable maximum permissible error rate specified by 
                the Secretary (or the Secretary of Labor with respect 
                to section 6123). In specifying such a rate, the 
                Secretary shall take into account maximum permissible 
                error rates recognized by the Federal Government under 
                comparable State-administered programs.
            (2) Safeguarding of funds.--Each regional alliance shall 
        safeguard family, employer, State, and Federal government 
        payments to the alliance in accordance with fiduciary standards 
        and shall hold such payments in financial institutions and 
        instruments that meet standards recognized or established by 
        the Secretary, in consultation with the Secretaries of Labor 
        and the Treasury and taking into account current Federal laws 
        and regulations relating to fiduciary responsibilities and 
        financial management of public funds.
            (3) Contingencies.--Each regional alliance shall provide 
        that any surplus of funds resulting from an estimation 
        discrepancy described in section 9201(e)(1), up to a reasonable 
        amount specified by the Secretary, shall be held in a 
        contingency fund established by the alliance and used to fund 
        any future shortfalls resulting from such a discrepancy.
            (4) Auditing of employer payments.--
                    (A) In general.--Each regional alliance is 
                responsible for auditing the records of regional 
                alliance employers to assure that employer payments 
                (including the payment of amounts withheld) were made 
                in the appropriate amount as provided under subpart A 
                of part 2 of subtitle B of title VI.
                    (B) Employers with employees residing in different 
                alliance areas.--In the case of a regional alliance 
                employer which has employees who reside in more than 
                one alliance area, the Secretary of Labor, in 
                consultation with the Secretary, shall establish a 
                process for the coordination of regional alliance 
                auditing activities among the regional alliances 
                involved.
                    (C) Appeal.--In the case of an audit conducted by a 
                regional alliance on an employer under this paragraph, 
                an employer or other regional alliance that is 
                aggrieved by the determination in the audit is entitled 
                to review of such audit by the Secretary of Labor in a 
                manner to be provided by such Secretary.

      Subpart D--Reductions in Cost Sharing; Income Determinations

SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES.

    (a) Reduction.--
            (1) In general.--Subject to subsection (b), in the case of 
        a family that is enrolled in a regional alliance health plan 
        and that is either (A) an AFDC or SSI family or (B) is 
        determined under this subpart to have family adjusted income 
        below 150 percent of the applicable poverty level, the family 
        is entitled to a reduction in cost sharing in accordance with 
        this section.
            (2) Timing of reduction.--The reduction in cost sharing 
        shall only apply to items and services furnished after the date 
        the application for such reduction is approved under section 
        1372(c) and before the date of termination of the reduction 
        under this subpart, or, in the case of an AFDC or SSI family, 
        during the period in which the family is such a family.
            (3) Information to providers and plans.--Each regional 
        alliance shall provide, through electronic means and otherwise, 
        health care providers and regional alliance health plans with 
        access to such information as may be necessary in order to 
        provide for the cost sharing reductions under this section.
    (b) Limitation.--No reduction in cost sharing under subsection 
(c)(1) shall be available for families residing in an alliance area if 
the regional alliance for the area determines that there are sufficient 
low-cost plans (as defined in section 6104(b)(3)) that are lower or 
combination cost sharing plans available in the alliance area to enroll 
AFDC and SSI families and families with family adjusted income below 
150 percent of the applicable poverty level.
    (c) Amount of Cost Sharing Reduction.--
            (1) In general.--Subject to paragraph (2), the reduction in 
        cost sharing under this section shall be such reduction as will 
        reduce cost sharing to the level of a lower or combination cost 
        sharing plan.
            (2) Special treatment of certain afdc and ssi families.--In 
        the case of an AFDC or SSI family enrolled in a lower or 
        combination cost sharing plan or receiving a reduction in cost 
        sharing under paragraph (1), the amount of copayment applied 
        with respect to an item or service (other than with respect to 
        hospital emergency room services for which there is no 
        emergency medical condition, as defined in section 1867(e)(1) 
        of the Social Security Act) shall be an amount equal to 20 
        percent of the copayment amount otherwise applicable under 
        sections 1135 and 1136, rounded to the nearest dollar.
    (d) Administration.--
            (1) In general.--In the case of an approved family (as 
        defined in section 1372(b)(3)) enrolled in a regional alliance 
        health plan, the regional alliance shall pay the plan for cost 
        sharing reductions (other than cost sharing reductions under 
        subsection (c)(2)) provided under this section and included in 
        payments made by the plan to its providers.
            (2) Estimated payments, subject to reconciliation.--Such 
        payment shall be made initially on the basis of reasonable 
        estimates of cost sharing reductions incurred by such a plan 
        with respect to approved families and shall be reconciled not 
        less often than quarterly based on actual claims for items and 
        services provided.
    (e) No Cost Sharing for Indians and Certain Veterans and Military 
Personnel.--The provisions of section 6104(a)(3) shall apply to cost 
sharing reductions under this section in the same manner as such 
provisions apply to premium discounts under section 6104.

SEC. 1372. APPLICATION PROCESS FOR COST SHARING REDUCTIONS.

    (a) Application.--
            (1) In general.--A regional alliance eligible family may 
        apply for a determination of the family adjusted income of the 
        family, for the purpose of establishing eligibility for cost 
        sharing reductions under section 1371.
            (2) Form.--An application under this section shall include 
        such information as may be determined by the regional alliance 
        (consistent with rules developed by the Secretary) and shall 
        include at least information about the family's employment 
        status and income.
    (b) Timing.--
            (1) In general.--An application under this section may be 
        filed at such times as the Secretary may provide, including 
        during any open enrollment period, at the time of a move, or 
        after a change in life circumstances (such as unemployment or 
        divorce) affecting class of enrollment or amount of family 
        share or repayment amount.
            (2) Consideration.--Each regional alliance shall approve or 
        disapprove an application under this section, and notify the 
        applicant of such decision, within such period (specified by 
        the Secretary) after the date of the filing of the application.
            (3) Approved family defined.--In this section and section 
        1371, the term ``approved family'' means a family for which an 
        application under this section is approved, until the date of 
        termination of such approval under this section.
    (c) Approval of Application.--
            (1) In general.--A regional alliance shall approve an 
        application of a family under this section filed in a month if 
        the application demonstrates that the family adjusted income of 
        the family (as defined in subsection (d) and determined under 
        paragraph (2)) is (or is expected to be) less than 150 percent 
        of the applicable poverty level.
            (2) Use of current income.--In making the determination 
        under paragraph (1), a regional alliance shall take into 
        account the income for the previous 3-month period and current 
        wages from employment (if any), consistent with rules specified 
        by the Secretary.
    (d) Family Adjusted Income.--
            (1) In general.--Except as provided in paragraph (4), in 
        this Act the term ``family adjusted income'' means, with 
        respect to a family, the sum of the adjusted incomes (as 
        defined in paragraph (2)) for all members of the family 
        (determined without regard to section 1012).
            (2) Adjusted income.--In paragraph (1), the term ``adjusted 
        income'' means, with respect to an individual, adjusted gross 
        income (as defined in section 62(a) of the Internal Revenue 
        Code of 1986)--
                    (A) determined without regard to sections 135, 
                162(l), 911, 931, and 933 of such Code, and
                    (B) increased by the amount of interest received or 
                accrued by the individual which is exempt from tax.
            (3) Presence of additional dependents.--At the option of an 
        individual, a family may include (and not be required to 
        separate out) the income of other individuals who are claimed 
        as dependents of the family for income tax purposes, but such 
        individuals shall not be counted as part of the family for 
        purposes of determining the size of the family.
    (e) Requirement for Periodic Confirmation and Verification and 
Notices.--
            (1) Confirmation and verification requirement.--The 
        continued eligibility of a family for cost sharing reductions 
        under this section is conditioned upon the family's eligibility 
        being--
                    (A) confirmed periodically by the regional 
                alliance, and
                    (B) verified (through the filing of a new 
                application under this section) by the regional 
                alliance at the time income reconciliation statements 
                are required to be filed under section 1375.
            (2) Rules.--The Secretary shall issue rules related to the 
        manner in which alliances confirm and verify eligibility under 
        this section.
            (3) Notices of changes in income and employment status.--
                    (A) In general.--Each approved family shall 
                promptly notify the regional alliance of any material 
                increase (as defined by the Secretary) in the family 
                adjusted income.
                    (B) Response.--If a regional alliance receives 
                notice under subparagraph (A) (or from an employer 
                under section 1602(b)(3)(A)(i)) or otherwise receives 
                information indicating a potential significant change 
                in the family's employment status or increase in 
                adjusted family income, the regional alliance shall 
                promptly take steps necessary to reconfirm the family's 
                eligibility.
    (f) Termination of Cost Sharing Reduction.--The regional alliance 
shall, after notice to the family, terminate the reduction of cost 
sharing under this subpart for an approved family if the family fails 
to provide for confirmation or verification or notice required under 
subsection (c) on a timely basis or the alliance otherwise determines 
that the family is no longer eligible for such reduction. The previous 
sentence shall not prevent the family from subsequently reapplying for 
cost sharing reduction under this section.
    (g) Treatment of AFDC and SSI Recipients.--
            (1) No application required.--AFDC and SSI families are not 
        required to make an application under this section.
            (2) Notice requirement.--Each State (and the Secretary) 
        shall notify each regional alliance, in a manner specified by 
        the Secretary, of the identity (and period of eligibility under 
        the AFDC or SSI programs) of each AFDC and SSI recipient, 
        unless such a recipient elects (in a manner specified by the 
        Secretary) not to accept the reduction of cost sharing under 
        this section.

SEC. 1373. APPLICATION FOR PREMIUM DISCOUNTS AND REDUCTION IN 
              LIABILITIES TO ALLIANCES.

    (a) In General.--Any regional alliance eligible family may apply 
for a determination of the family adjusted income of the family, for 
the purpose of establishing eligibility for a premium discount under 
section 6104 or a reduction in liability under section 6113.
    (b) Timing.--Such an application may be filed at such times as an 
application for a cost sharing reduction may be filed under section 
1372(b) and also may be filed after the end of the year to obtain a 
rebate for excess premium payments made during a year.
    (c) Approval of Application.--
            (1) In general.--A regional alliance shall approve an 
        application of a family under this section filed in a month--
                    (A) for a premium discount under section 6104, if 
                the application demonstrates that family adjusted 
                income of the family (as determined under paragraph 
                (2)) is (or is expected to be) less than 150 percent of 
                the applicable poverty level, or
                    (B) for a reduction in liability under section 
                6113, if the application demonstrates that the wage-
                adjusted income (as defined in subsection 6113(d)) of 
                the family (as determined under paragraph (2)) is (or 
                is expected to be) less than 250 percent of the 
                applicable poverty level.
            (2) Use of current income.--In making the determination 
        under paragraph (1), a regional alliance shall take into 
        account the income for the previous 3-month period and current 
        wages from employment (if any) and the statement of estimated 
        income for the year (filed under section 1374(c)), consistent 
        with rules specified by the Secretary.
    (d) Requirement for Periodic Confirmation and Verification and 
Notices.--The provisions of subsection (e) of section 1372 shall apply 
under this section in the same manner as it applies under such section, 
except that any reference to family adjusted income is deemed a 
reference to wage-adjusted income.

SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICATION PROCESS.

    (a) Distribution of Applications.--Each regional alliance shall 
distribute applications under this subpart directly to consumers and 
through employers, banks, and designated public agencies.
    (b) To Whom Application Made.--Applications under this subpart 
shall be filed, by person or mail, with a regional alliance or an 
agency designated by the State for this purpose. The application may be 
submitted with an application to enroll with a health plan under this 
subtitle or separately.
    (c) Income Statement.--Each application shall include a declaration 
of estimated annual income for the year involved.
    (d) Form and Contents.--An application for a discount or reduction 
under this subpart shall be in a form and manner specified by the 
Secretary and shall require the provision of information necessary to 
make the determinations required under this subpart.
    (e) Frequency of Applications.--
            (1) In general.--An application under this subpart may be 
        filed at any time during the year (including, in the case of 
        section 1373, during the reconciliation process).
            (2) Correction of income.--Nothing in paragraph (1) shall 
        be construed as preventing an individual or family from, at any 
        time, submitting an application to reduce the amount of premium 
        discount or reduction of liability under this subpart based 
        upon an increase in income from that stated in the previous 
        application.
    (f) Timing of Reductions and Discounts.--
            (1) In general.--Subject to reconciliation under section 
        1375, premium discounts and cost sharing reductions under this 
        subpart shall be applied to premium payments required (and for 
        expenses incurred) after the date of approval of the 
        application under this subpart.
            (2) AFDC and ssi recipients.--In the case of an AFDC or SSI 
        family, in applying paragraph (1), the date of approval of 
        benefits under the AFDC or SSI program shall be considered the 
        date of approval of an application under this subpart.
    (g) Verification.--The Secretary shall provide for verification, on 
a sample basis or other basis, of the information supplied in 
applications under this part. This verification shall be separate from 
the reconciliation provided under section 1375.
    (h) Help in Completing Applications.--Each regional alliance shall 
assist individuals in the filing of applications and income 
reconciliation statements under this subpart.
    (i) Penalties for Inaccurate Information.--
            (1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application to a 
        regional alliance under this subpart or otherwise makes a 
        material misrepresentation of information in such an 
        application shall be liable to the alliance for excess payments 
        made based on such understatement or misrepresentation, and for 
        interest on such excess payments at a rate specified by the 
        Secretary.
            (2) Penalties for misrepresentation.--In addition to the 
        liability established under paragraph (1), each individual who 
        knowingly misrepresents material information in an application 
        under this subpart to a regional alliance shall be liable to 
        the State in which the alliance is located for $2,000 or, if 
        greater, three times the excess payments made based on such 
        misrepresentation. The State shall provide for the transfer of 
        a significant portion of such amount to the regional alliance 
        involved.

SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM DISCOUNT AND 
              REPAYMENT REDUCTION WITH ACTUAL INCOME.

    (a) In General.--In the case of a family whose application for a 
premium discount or reduction of liability for a year has been approved 
before the end of the year under this subpart, the family shall, 
subject to subsection (c) and by the deadline specified in section 
1344(b) file with the regional alliance an income reconciliation 
statement to verify the family's adjusted income or wage-adjusted 
income, as the case may be, for the previous year. Such a statement 
shall contain such information as the Secretary may specify. Each 
regional alliance shall coordinate the submission of such statements 
with the notice and payment of family payments due under section 1344.
    (b) Reconciliation of Premium Discount and Liability Assistance 
Based on Actual Income.--Based on and using the income reported in the 
reconciliation statement filed under subsection (a) with respect to a 
family, the regional alliance shall compute the amount of premium 
discount or reduction in liability that should have been provided under 
section 6104 or section 6113 with respect for the family for the year 
involved. If the amount of such discount or liability reduction 
computed is--
            (1) greater than the amount that has been provided, the 
        family is liable to the regional alliance to pay (directly or 
        through an increase in future family share of premiums or other 
        payments) a total amount equal to the amount of the excess 
        payment, or
            (2) less than the amount that has been provided, the 
        regional alliance shall pay to the family (directly or through 
        a reduction in future family share of premiums or other 
        payments) a total amount equal to the amount of the deficit.
    (c) No Reconciliation for AFDC and SSI Families; No Reconciliation 
for Cost Sharing Reductions.--No reconciliation statement is required 
under this section--
            (1) with respect to cost sharing reductions provided under 
        section 1372, or
            (2) for a family that only claims a premium discount or 
        liability reduction under this subpart on the basis of being an 
        AFDC or SSI family.
    (d) Disqualification for Failure to File.--In the case of any 
family that is required to file a statement under this section in a 
year and that fails to file such a statement by the deadline specified, 
members of the family shall not be eligible for premium reductions 
under section 6104 or reductions in liability under section 6113 until 
such statement is filed. A regional alliance, using rules established 
by the Secretary, shall waive the application of this subsection if the 
family establishes, to the satisfaction of the alliance under such 
rules, good cause for the failure to file the statement on a timely 
basis.
    (e) Penalties for False Information.--Any individual that provides 
false information in a statement under subsection (a) is subject to the 
same liabilities as are provided under section 1374(h) for a 
misrepresentation of material fact described in such section.
    (f) Notice of Requirement.--Each regional alliance (directly or in 
coordination with other regional alliances) shall provide for written 
notice, at the end of each year, of the requirement of this section to 
each family which had received premium discount or reduction in 
liability under this subpart in any month during the preceding year and 
to which such requirement applies.
    (g) Transmittal of Information; Verification.--
            (1) In general.--Each participating State shall transmit 
        annually to the Secretary such information relating to the 
        income of families for the previous year as the Secretary may 
        require to verify such income under this subpart.
            (2) Verification.--Each participating State may use such 
        information as it has available to it to assist regional 
        alliances in verifying income of families with applications 
        filed under this subpart. The Secretary of the Treasury may, 
        consistent with section 6103 of the Internal Revenue Code of 
        1986, permit return information to be disclosed and used by a 
        participating State in verifying such income but only in 
        accordance with such section and only if the information is not 
        directly disclosed to a regional alliance.
    (h) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of any cost sharing reduction provided under 
this subpart.

    PART 4--RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES

SEC. 1381. CONTRACTS WITH HEALTH PLANS.

    (a) Contracts with Plans.--Subject to section 1382, each corporate 
alliance may--
            (1) offer to individuals eligible to enroll under section 
        1311(c) coverage under an appropriate self-insured health plan 
        (as defined in section 1400(b)), or
            (2) negotiate with a State-certified health plan to enter 
        into a contract with the plan for the enrollment of such 
        individuals under the plan,
or do both.
    (b) Terms of Contracts with State-Certified Health Plans.--
Contracts under this section between a corporate alliance and a State-
certified health plan may contain such provisions (not inconsistent 
with the requirements of this title) as the alliance and plan may 
provide, except that in no case does such contract remove the 
obligation of the sponsor of the corporate alliance to provide for 
health benefits to corporate alliance eligible individuals consistent 
with this part.

SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT.

    (a) In General.--Each corporate alliance must provide to each 
eligible enrollee with respect to the alliance a choice of health plans 
among the plans which have contracts with the alliance under section 
1381.
    (b) Offering of Plans by Alliances.--A corporate alliance shall 
include among its health plan offerings for any eligible enrollee at 
least 3 health plans to enrollees, of which the alliance must offer--
            (1) at least one fee-for-service plan (as defined in 
        section 1322(b)(2)); and
            (2) at least two health plans that are not fee-for-service 
        plans.

SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY CARD.

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

SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PREMIUM AREAS.

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

SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.

    Each corporate alliance shall make an additional contribution 
towards the enrollment in health plans of the alliance by certain low-
wage families in accordance with section 6131(b)(2).

SEC. 1386. CONSUMER INFORMATION AND MARKETING; DATA COLLECTION AND 
              QUALITY; ADDITIONAL DUTIES.

    The provisions of sections 1325(a), 1327, and 1328 shall apply to a 
corporate alliance in the same manner as such provisions apply to a 
regional alliance.

SEC. 1387. PLAN AND INFORMATION REQUIREMENTS.

    (a) In General.--A corporate alliance shall provide a written 
submission to the Secretary of Labor (in such form as the Secretary may 
require) detailing how the corporate alliance will carry out its 
activities under this part.
    (b) Annual Information.--A corporate alliance shall provide to the 
Secretary of Labor each year, in such form and manner as the Secretary 
may require, such information as the Secretary may require in order to 
monitor the compliance of the alliance with the requirements of this 
part.
    (c) Annual Notice of Employees or Participants.--
            (1) Corporate alliance.--Each corporate alliance shall 
        submit to the Secretary of Labor, by not later than March 1 of 
        each year, information on the number of full-time employees or 
        participants obtaining coverage through the alliance as of 
        January 1 of that year.
            (2) Employers that become large employers.--Each employer 
        that is not a corporate alliance but employs 5,000 full-time 
        employees as of January 1 of a year, shall submit to the 
        Secretary of Labor, by not later than March 1 of the year, 
        information on the number of such employees.

SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EMPLOYEES.

    (a) Management of Funds.--The management of funds by a corporate 
alliance shall be subject to the applicable fiduciary requirements of 
part 4 of subtitle B of title I of the Employee Retirement Income 
Security Act of 1974, together with the applicable enforcement 
provisions of part 5 of subtitle B of title I of such Act.
    (b) Management of Finances and Records; Accounting System.--Each 
corporate alliance shall comply with standards relating to the 
management of finances and records and accounting systems as the 
Secretary of Labor shall specify.

SEC. 1389. COST CONTROL.

    Each corporate alliance shall control covered expenditures in a 
manner that meets the requirements of part 2 of subtitle A of title VI.

SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOYERS TO CORPORATE 
              ALLIANCES.

    (a) Large Employer Alliances.--In the case of a corporate alliance 
with a sponsor described in section 1311(b)(1)(A), the sponsor shall 
provide for the funding of benefits, through insurance or otherwise, 
consistent with section 6131, the applicable solvency requirements of 
sections 1394, 1395, and 1396, and any rules established by the 
Secretary of Labor.
    (b) Other Alliances.--In the case of a corporate alliance with a 
sponsor described in subparagraph (B) or (C) of section 1311(b)(1), a 
corporate alliance employer shall make payment of the employer premiums 
required under section 6131 under rules established by the corporate 
alliance, which rules shall be consistent with rules established by the 
Secretary of Labor.

SEC. 1391. COORDINATION OF PAYMENTS.

    (a) Payments of Certain Amounts to Regional Alliances.--In the case 
of a married couple in which one spouse is a qualifying employee of a 
regional alliance employer and the other spouse is a qualifying 
employee of a corporate alliance employer, if the couple is enrolled 
with a regional alliance health plan, the corporate alliance (which 
receives employer premium payments from such corporate alliance 
employer with respect to such employee) shall pay to the regional 
alliance the amounts so paid.
    (b) Payments of Certain Amounts to Corporate Alliances.--In the 
case of a married couple in which one spouse is a qualifying employee 
of a corporate alliance employer and the other spouse is a qualifying 
employee of another corporate alliance employer, the corporate alliance 
of the corporate alliance health plan in which the couple is not 
enrolled shall pay to the corporate alliance of the plan in which the 
couple is enrolled any employer premium payments received from such 
corporate alliance employer with respect to such employee.

SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR 
              ENFORCEMENT OF CERTAIN REQUIREMENTS.

    The provisions of sections 502 (relating to civil enforcement) and 
504 (relating to investigative authority) of the Employee Retirement 
Income Security Act of 1974 shall apply to enforcement by the Secretary 
of Labor of this part in the same manner and to same extent as such 
provisions apply to enforcement of title I of such Act.

SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTECTIONS TO ENROLLED 
              INDIVIDUALS.

    The provisions of sections 510 (relating to interference with 
rights protected under Act) and 511 (relating to coercive interference) 
of the Employee Retirement Income Security Act of 1974 shall apply, in 
relation to the provisions of this Act, with respect to individuals 
enrolled under corporate alliance health plans in the same manner and 
to the same extent as such provisions apply, in relation to the 
provisions of the Employee Retirement Income Security Act of 1974, with 
respect to participants and beneficiaries under employee welfare 
benefit plans covered by title I of such Act.

SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS.

    (a) In General.--The Secretary of Labor shall ensure that each 
corporate alliance health plan which is a self-insured plan maintains 
plan assets in trust as provided in section 403 of the Employee 
Retirement Income Security Act of 1974--
            (1) without any exemption under section 403(b)(4) of such 
        Act, and
            (2) in amounts which the Secretary determines are 
        sufficient to provide at any time for payment to health care 
        providers of all outstanding balances owed by the plan at such 
        time.
The requirements of the preceding sentence may be met through letters 
of credit, bonds, or other appropriate security to the extent provided 
in regulations of the Secretary.
    (b) Disclosure.--Each self-insured corporate alliance health plan 
shall notify the Secretary at such time as the financial reserve 
requirements of this section are not being met. The Secretary may 
assess a civil money penalty of not more than $100,000 against any 
corporate alliance for any failure to provide such notification in such 
form and manner and within such time periods as the Secretary may 
prescribe by regulation.

SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT CORPORATE ALLIANCE 
              HEALTH PLANS.

    (a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary of Labor determines that a corporate alliance 
health plan which is a self-insured plan will be unable to provide 
benefits when due or is otherwise in a financially hazardous condition 
as defined in regulations of the Secretary, the Secretary shall, upon 
notice to the plan, apply to the appropriate United States district 
court for appointment of the Secretary as trustee to administer the 
plan for the duration of the insolvency. The plan may appear as a party 
and other interested persons may intervene in the proceedings at the 
discretion of the court. The court shall appoint the Secretary trustee 
if the court determines that the trusteeship is necessary to protect 
the interests of the enrolled individuals or health care providers or 
to avoid any unreasonable deterioration of the financial condition of 
the plan or any unreasonable increase in the liability of the Corporate 
Alliance Health Plan Insolvency Fund. The trusteeship of the Secretary 
shall continue until the conditions described in the first sentence of 
this subsection are remedied or the plan is terminated.
    (b) Powers as Trustee.--The Secretary of Labor, upon appointment as 
trustee under subsection (a), shall have the power--
            (1) to do any act authorized by the plan, this Act, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan,
            (2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee,
            (3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations of the Secretary, and applicable provisions of law,
            (4) to do such other acts as the Secretary deems necessary 
        to continue operation of the plan without increasing the 
        potential liability of the Corporate Alliance Health Plan 
        Insolvency Fund, if such acts may be done under the provisions 
        of the plan,
            (5) to require the corporate alliance, the plan 
        administrator, any contributing employer, and any employee 
        organization representing covered individuals to furnish any 
        information with respect to the plan which the Secretary as 
        trustee may reasonably need in order to administer the plan,
            (6) to collect for the plan any amounts due the plan and to 
        recover reasonable expenses of the trusteeship,
            (7) to commence, prosecute, or defend on behalf of the plan 
        any suit or proceeding involving the plan,
            (8) to issue, publish, or file such notices, statements, 
        and reports as may be required under regulations of the 
        Secretary or by any order of the court,
            (9) to terminate the plan and liquidate the plan assets in 
        accordance with applicable provisions of this Act and other 
        provisions of law, to restore the plan to the responsibility of 
        the corporate alliance, or to continue the trusteeship,
            (10) to provide for the enrollment of individuals covered 
        under the plan in an appropriate regional alliance health plan, 
        and
            (11) to do such other acts as may be necessary to comply 
        with this Act or any order of the court and to protect the 
        interests of enrolled individuals and health care providers.
    (c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            (1) the plan administrator,
            (2) each enrolled individual,
            (3) each employer who may be liable for contributions to 
        the plan, and
            (4) each employee organization which, for purposes of 
        collective bargaining, represents enrolled individuals.
    (d) Additional Duties.--Except to the extent inconsistent with the 
provisions of this Act or part 4 of subtitle B of title I of the 
Employee Retirement Income Security Act of 1974, or as may be otherwise 
ordered by the court, the Secretary of Labor, upon appointment as 
trustee under this section, shall be subject to the same duties as 
those of a trustee under section 704 of title 11, United States Code, 
and shall have the duties of a fiduciary for purposes of such part 4.
    (e) Other Proceedings.--An application by the Secretary of Labor 
under this subsection may be filed notwithstanding the pendency in the 
same or any other court of any bankruptcy, mortgage foreclosure, or 
equity receivership proceeding, or any proceeding to reorganize, 
conserve, or liquidate such plan or its property, or any proceeding to 
enforce a lien against property of the plan.
    (f) Jurisdiction of Court.--
            (1) In general.--Upon the filing of an application for the 
        appointment as trustee or the issuance of a decree under this 
        subsection, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this subsection, of a court of 
        the United States having jurisdiction over cases under chapter 
        11 of title 11, United States Code. Pending an adjudication 
        under this section such court shall stay, and upon appointment 
        by it of the Secretary of Labor as trustee, such court shall 
        continue the stay of, any pending mortgage foreclosure, equity 
        receivership, or other proceeding to reorganize, conserve, or 
        liquidate the plan, the sponsoring alliance, or property of 
        such plan or alliance, and any other suit against any receiver, 
        conservator, or trustee of the plan, the sponsoring alliance, 
        or property of the plan or alliance. Pending such adjudication 
        and upon the appointment by it of the Secretary as trustee, the 
        court may stay any proceeding to enforce a lien against 
        property of the plan or the sponsoring alliance or any other 
        suit against the plan or the alliance.
            (2) Venue.--An action under this subsection may be brought 
        in the judicial district where the plan administrator resides 
        or does business or where any asset of the plan is situated. A 
        district court in which such action is brought may issue 
        process with respect to such action in any other judicial 
        district.
    (g) Personnel.--In accordance with regulations of the Secretary of 
Labor, the Secretary shall appoint, retain, and compensate accountants, 
actuaries, and other professional service personnel as may be necessary 
in connection with the Secretary's service as trustee under this 
section.

SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE SECRETARY.

    (a) In General.--Subject to subsection (b), the Secretary of Labor 
shall guarantee the payment of all benefits under a corporate alliance 
health plan which is a self-insured plan while such plan is under the 
Secretary's trusteeship under section 1395.
    (b) Limitations.--Any increase in the amount of benefits under the 
plan resulting from a plan amendment which was made, or became 
effective, whichever is later, within 180 days (or such other 
reasonable time as may be prescribed in regulations of the Secretary of 
Labor) before the date of the Secretary's appointment as trustee of the 
plan shall be disregarded for purposes of determining the guarantee 
under this section.
    (c) Corporate Alliance Health Plan Insolvency Fund.--
            (1) Establishment.--The Secretary of Labor shall establish 
        a Corporate Alliance Health Plan Insolvency Fund (hereinafter 
        in this part referred to as the ``Fund'') from which the 
        Secretary shall authorize payment of all guaranteed benefits 
        under this section.
            (2) Receipts and disbursements.--
                    (A) Receipts.--The Fund shall be credited with--
                            (i) funds borrowed under paragraph (3),
                            (ii) assessments collected under section 
                        1397, and
                            (iii) earnings on investment of the Fund.
                    (B) Disbursements.--The Fund shall be available--
                            (i) for making such payments as the 
                        Secretary of Labor determines are necessary to 
                        pay benefits guaranteed under this section,
                            (ii) to repay the Secretary of the Treasury 
                        such sums as may be borrowed (together with 
                        interest thereon) under paragraph (3), and
                            (iii) to pay the operational and 
                        administrative expenses of the Fund.
            (3) Borrowing authority.--At the direction of the Secretary 
        of Labor, the Fund may, to the extent necessary to carry out 
        the purposes of paragraph (1), issue to the Secretary of the 
        Treasury notes or other obligations, in such forms and 
        denominations, bearing such maturities, and subject to such 
        terms and conditions as may be prescribed by the Secretary of 
        the Treasury. The total balance of the Fund obligations 
        outstanding at any time shall not exceed $500,000,000. Such 
        notes or other obligations shall bear interest at a rate 
        determined by the Secretary of the Treasury, taking into 
        consideration the current average market yield on outstanding 
        marketable obligations of the United States of comparable 
        maturities during the month preceding the issuance of such 
        notes or other obligations by the Fund. The Secretary of the 
        Treasury shall purchase any notes or other obligations issued 
        by the Fund under this paragraph, and for that purpose the 
        Secretary of the Treasury may use as a public debt transaction 
        the proceeds from the sale of any securities issued under 
        chapter 31 of title 31, United States Code and the purposes for 
        which securities may be issued under such chapter are extended 
        to include any purchase of such notes and obligations. The 
        Secretary of the Treasury may at any time sell any of the notes 
        or other obligations acquired by such Secretary under this 
        paragraph. All redemptions, purchases, and sales by the 
        Secretary of the Treasury of such notes or other obligations 
        shall be treated as public debt transactions of the United 
        States.
            (4) Investment authority.--Whenever the Secretary of Labor 
        determines that the moneys of the Fund are in excess of current 
        needs, such Secretary may request the investment of such 
        amounts as such Secretary determines advisable by the Secretary 
        of the Treasury in obligations issued or guaranteed by the 
        United States, but, until all borrowings under paragraph (3) 
        have been repaid, the obligations in which such excess moneys 
        are invested may not yield a rate of return in excess of the 
        rate of interest payable on such borrowings.

SEC. 1397. IMPOSITION AND COLLECTION OF PERIODIC ASSESSMENTS ON SELF-
              INSURED CORPORATE ALLIANCE PLANS.

    (a) Imposition of Assessments.--Upon a determination that 
additional receipts to the Fund are necessary in order to enable the 
Fund to repay amounts borrowed by the Fund under section 1396(c)(3) 
while maintaining a balance sufficient to ensure the solvency of the 
Fund, the Secretary of Labor may impose assessments under this section. 
The Secretary shall prescribe from time to time such schedules of 
assessment rates and bases for the application of such rates as may be 
necessary to provide for such repayments.
    (b) Uniformity of Assessments.--The assessment rates so prescribed 
by the Secretary for any period shall be uniform for all plans, except 
that the Secretary may vary the amount of such assessments by category, 
or waive the application of such assessments by category, taking into 
account differences in the financial solvency of, and financial 
reserves maintained by, plans in each category.
    (c) Limitation on Amount of Assessment.--The total amount assessed 
against a corporate alliance health plan under this section during a 
year may not exceed 2 percent of the total premiums paid to the plan 
with respect to corporate alliance eligible individuals enrolled with 
the plan during the year.
    (d) Payment of Assessments.--
            (1) Obligation to pay.--The designated payor of each plan 
        shall pay the assessments imposed by the Secretary of Labor 
        under this section with respect to that plan when they are due. 
        Assessments under this section are payable at the time, and on 
        an estimated, advance, or other basis, as determined by the 
        Secretary. Assessments shall continue to accrue until the 
        plan's assets are distributed pursuant to a termination 
        procedure or the Secretary is appointed to serve as trustee of 
        the plan under section 1395.
            (2) Late payment charges and interest.--
                    (A) Late payment charges.--If any assessment is not 
                paid when it is due, the Secretary of Labor may assess 
                a late payment charge of not more than 100 percent of 
                the assessment payment which was not timely paid.
                    (B) Waivers.--Subparagraph (A) shall not apply to 
                any assessment payment made within 60 days after the 
                date on which payment is due, if before such date, the 
                designated payor obtains a waiver from the Secretary of 
                Labor based upon a showing of substantial hardship 
                arising from the timely payment of the assessment. The 
                Secretary may grant a waiver under this subparagraph 
                upon application made by the designated payor, but the 
                Secretary may not grant a waiver if it appears that the 
                designated payor will be unable to pay the assessment 
                within 60 days after the date on which it is due.
                    (C) Interest.--If any assessment is not paid by the 
                last date prescribed for a payment, interest on the 
                amount of such assessment at the rate imposed under 
                section 6601(a) of the Internal Revenue Code of 1986 
                shall be paid for the period from such last date to the 
                date paid.
    (e) Civil Action upon Nonpayment.--If any designated payor fails to 
pay an assessment when due, the Secretary of Labor may bring a civil 
action in any district court of the United States within the 
jurisdiction of which the plan assets are located, the plan is 
administered, or in which a defendant resides or is found, for the 
recovery of the amount of the unpaid assessment, any late payment 
charge, and interest, and process may be served in any other district. 
The district courts of the United States shall have jurisdiction over 
actions brought under this subsection by the Secretary without regard 
to the amount in controversy.
    (f) Guarantee Held Harmless.--The Secretary of Labor shall not 
cease to guarantee benefits on account of the failure of a designated 
payor to pay any assessment when due.
    (g) Designated Payor Defined.--
            (1) In general.--For purposes of this section, the term 
        ``designated payor'' means--
                    (A) the employer or plan administrator in any case 
                in which the eligible sponsor of the corporate alliance 
                health plan is described in subparagraph (A) of section 
                1311(b)(1); and
                    (B) the contributing employers or the plan 
                administrator in any case in which the eligible sponsor 
                of the corporate alliance is described in subparagraph 
                (B) or (C) of section 1311(b)(1).
            (2) Controlled groups.--If an employer is a member of a 
        controlled group, each member of such group shall be jointly 
        and severally liable for any assessments required to be paid by 
        such employer. For purposes of the preceding sentence, the term 
        ``controlled group'' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal Revenue Code of 1986.

SEC. 1398. PAYMENTS TO FEDERAL GOVERNMENT BY MULTIEMPLOYER CORPORATE 
              ALLIANCES FOR ACADEMIC HEALTH CENTERS AND GRADUATE 
              MEDICAL EDUCATION.

    (a) In General.--A corporate alliance with an eligible sponsor 
described in section 1311(b)(1)(B) shall make payment to the Secretary 
of an amount equivalent to the amount (as estimated based on rules 
established by the Secretary and based on the annual per capita 
expenditure equivalent calculated under section 6021) that would have 
been payable by the alliance under section 1353 if the alliance were a 
regional alliance.
    (b) Reference to Exemption from Assessment.--For provision 
exempting certain corporate alliance employers participating in an 
alliance described in subsection (a) from an assessment under section 
3461 of the Internal Revenue Code of 1986, as added by section 7121 of 
this Act, see section 3461(c)(1) of such Code.

                                                    Title I, Subtitle E

                        Subtitle E--Health Plans

SEC. 1400. HEALTH PLAN DEFINED.

    (a) In General.--In this Act, the term ``health plan'' means a plan 
that provides the comprehensive benefit package and meets the 
requirements of parts 1, 3, and 4 applicable to health plans.
    (b) Appropriate Self-Insured Health Plan.--In this Act, the term 
``appropriate self-insured health plan'' means a group health plan (as 
defined in section 3(42) of the Employee Retirement Income Security Act 
of 1974) which is a self-insured health plan and with respect to which 
the applicable requirements of title I of the Employee Retirement 
Income Security Act of 1974 are met.
    (c) State-Certified Health Plan.--In this Act, the term ``State-
certified health plan'' means a health plan that has been certified by 
a State under section 1203(a) (or, in the case in which the Board is 
exercising certification authority under section 1522(b), that has been 
certified by the Board).
    (d) Applicable Regulatory Authority Defined.--In this subtitle, the 
term ``applicable regulatory authority'' means--
            (1) with respect to a self-insured health plan, the 
        Secretary of Labor, or
            (2) with respect to a State-certified health plan, the 
        State authority responsible for certification of the plan.

     PART 1--REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE

SEC. 1401. APPLICATION OF REQUIREMENTS.

    No plan shall be treated under this Act as a health plan--
            (1) unless the plan is a self-insured plan or a State-
        certified plan; or
            (2) on and after the effective date of a finding by the 
        applicable regulatory authority that the plan has failed to 
        comply with such applicable requirements.

SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT AND COVERAGE.

    (a) No Underwriting.--
            (1) In general.--Subject to paragraph (2), each health plan 
        offered by a regional alliance or a corporate alliance must 
        accept for enrollment every alliance eligible individual who 
        seeks such enrollment. No plan may engage in any practice that 
        has the effect of attracting or limiting enrollees on the basis 
        of personal characteristics, such as health status, anticipated 
        need for health care, age, occupation, or affiliation with any 
        person or entity.
            (2) Capacity limitations.--With the approval of the 
        applicable regulatory authority, a health plan may limit 
        enrollment because of the plan's capacity to deliver services 
        or to maintain financial stability. If such a limitation is 
        imposed, the limitation may not be imposed on a basis referred 
        to in paragraph (1).
    (b) No Limits on Coverage; No Pre-Existing Condition Limits.--A 
health plan may not--
            (1) terminate, restrict, or limit coverage for the 
        comprehensive benefit package in any portion of the plan's 
        service area for any reason, including nonpayment of premiums;
            (2) cancel coverage for any alliance eligible individual 
        until that individual is enrolled in another applicable health 
        plan;
            (3) exclude coverage of an alliance eligible individual 
        because of existing medical conditions;
            (4) impose waiting periods before coverage begins; or
            (5) impose a rider that serves to exclude coverage of 
        particular eligible individuals.
    (c) Antidiscrimination.--
            (1) In general.--No health plan may discriminate, or engage 
        (directly or through contractual arrangements) in any activity, 
        including the selection of a service area, that has the effect 
        of discriminating, against an individual on the basis of race, 
        national origin, sex, language, socio-economic status, age, 
        disability, health status, or anticipated need for health 
        services.
            (2) Selection of providers for plan network.--In selecting 
        among providers of health services for membership in a provider 
        network, or in establishing the terms and conditions of such 
        membership, a health plan may not engage in any practice that 
        has the effect of discriminating against a provider--
                    (A) based on the race, national origin, sex, 
                language, age, or disability of the provider; or
                    (B) based on the socio-economic status, disability, 
                health status, or anticipated need for health services 
                of a patient of the provider.
            (3) Business necessity.--Except in the case of intentional 
        discrimination, it shall not be a violation of this subsection, 
        or of any regulation issued under this subsection, for any 
        person to take any action otherwise prohibited under this 
        subsection, if the action is required by business necessity.
            (4) Regulations.--Not later than 1 year after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall issue regulations to carry out this subsection.
    (d) Requirements for Plans Offering Lower Cost Sharing.--Each 
health plan that offers enrollees the lower cost sharing schedule 
referred to in section 1131--
            (1) shall apply such schedule to all items and services in 
        the comprehensive benefit package;
            (2) shall offer enrollees the opportunity to obtain 
        coverage for out-of-network items and services (as described in 
        subsection (f)(2)); and
            (3) notwithstanding section 1403, in the case of an 
        enrollee who obtains coverage for such items and services, may 
        charge an alternative premium to take into account such 
        coverage.
    (e) Treatment of Cost Sharing.--Each health plan, in providing 
benefits in the comprehensive benefit package--
            (1) shall include in its payments to providers, such 
        additional reimbursement as may be necessary to reflect cost 
        sharing reductions to which individuals are entitled under 
        section 1371, and
            (2) shall maintain such claims or encounter records as may 
        be necessary to audit the amount of such additional 
        reimbursements and the individuals for which such reimbursement 
        is provided.
    (f) In-Network and Out-of-Network Items and Services Defined.--
            (1) In-network items and services.--For purposes of this 
        Act, the term ``in-network'', when used with respect to items 
        or services described in this subtitle, means items or services 
        provided to an individual enrolled under a health plan by a 
        health care provider who is a member of a provider network of 
        the plan (as defined in paragraph (3)).
            (2) Out-of-network items and services.--For purposes of 
        this Act, the term ``out-of network'', when used with respect 
        to items or services described in this subtitle, means items or 
        services provided to an individual enrolled under a health plan 
        by a health care provider who is not a member of a provider 
        network of the plan (as defined in paragraph (3)).
            (3) Provider network defined.--A ``provider network'' 
        means, with respect to a health plan, providers who have 
        entered into an agreement with the plan under which such 
        providers are obligated to provide items and services in the 
        comprehensive benefit package to individuals enrolled in the 
        plan, or have an agreement to provide services on a fee-for-
        service basis.
    (g) Relation to Detention.--A health plan is not required to 
provide any reimbursement to any detention facility for services 
performed in that facility for detainees in the facility.

SEC. 1403. COMMUNITY RATING.

    (a) Regional Alliance Health Plans.--Each regional alliance health 
plan may not vary the premium imposed with respect to residents of an 
alliance area, except as may be required under section 6102(a) with 
respect to different types of individual and family coverage under the 
plan.
    (b) Corporate Alliance Health Plans.--Each corporate alliance 
health plan may not vary the premium imposed with respect to 
individuals enrolled in the plan, except as may be required under 
section 1384 with respect to different types of individual and family 
coverage under the plan.

SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION.

    (a) Regional Alliance Marketing Restrictions.--
            (1) In general.--The contract entered into between a 
        regional alliance and a regional alliance health plan shall 
        prohibit the distribution by the health plan of marketing 
        materials within the regional alliance that contain false or 
        materially misleading information and shall provide for prior 
        approval by the regional alliance of any marketing materials to 
        be distributed by the plan.
            (2) Entire market.--A health plan offered by a regional 
        alliance may not distribute marketing materials to an area 
        smaller than the entire area served by the plan.
            (3) Prohibition of tie-ins.--A regional alliance health 
        plan, and any agency of such a plan, may not seek to influence 
        an individual's choice of plans in conjunction with the sale of 
        any other insurance.
    (b) Information Available.--
            (1) In general.--Each regional alliance health plan must 
        provide to the regional alliance and make available to alliance 
        eligible individuals and health care professionals complete and 
        timely information concerning the following:
                    (A) Costs.
                    (B) The identity, locations, qualifications, and 
                availability of participating providers.
                    (C) Procedures used to control utilization of 
                services and expenditures.
                    (D) Procedures for assuring and improving the 
                quality of care.
                    (E) Rights and responsibilities of enrollees.
                    (F) Information on the number of plan members who 
                disenroll from the plan.
            (2) Prohibition against certification of plans providing 
        inaccurate information.--No regional alliance health plan may 
        be a State-certified health plan under this title if the State 
        determines that the plan submitted materially inaccurate 
        information under paragraph (1).
    (c) Advance Directives.--Each self-insured health plan and each 
State-certified health plan shall meet the requirement of section 
1866(f) of the Social Security Act (relating to maintaining written 
policies and procedures respecting advance directives) in the same 
manner as such requirement relates to organizations with contracts 
under section 1876 of such Act.

SEC. 1405. GRIEVANCE PROCEDURE.

    (a) In General.--Each health plan must establish a grievance 
procedure for enrollees to use in pursuing complaints. Such procedure 
shall be consistent with subtitle C of title V.
    (b) Additional Remedies.--If the grievance procedure fails to 
resolve an enrollee's complaint--
            (1) in the case of an enrollee of a regional alliance 
        health plan, the enrollee has the option of seeking assistance 
        from the office of the ombudsman for the regional alliance 
        established under section 1326(a), and
            (2) the enrollee may pursue additional legal remedies, 
        including those provided under subtitle C of title V.

SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.

    (a) Requirement.--Each health plan must enter into such agreements 
with health care providers or have such other arrangements as may be 
necessary to assure the provision of all services covered by the 
comprehensive benefit package to eligible individuals enrolled with the 
plan.
    (b) Emergency and Urgent Care Services.--
            (1) In general.--Each health plan must cover emergency and 
        urgent care services provided to enrollees, without regard to 
        whether or not the provider furnishing such services has a 
        contractual (or other) arrangement with the plan to provide 
        items or services to enrollees of the plan and in the case of 
        emergency services without regard to prior authorization.
            (2) Payment amounts.--In the case of emergency and urgent 
        care provided to an enrollee outside of a health plan's service 
        area, the payment amounts of the plan shall be based on the fee 
        for service rate schedule established by the regional alliance 
        for the alliance area where the services were provided.
    (c) Application of Fee Schedule.--
            (1) In general.--Subject to paragraph (2), each regional 
        alliance health plan or corporate alliance health plan that 
        provides for payment for services on a fee-for-service basis 
        shall make such payment in the amounts provided under the fee 
        schedule established by the regional alliance under section 
        1322(c) (or, in the case of a plan offered in a State that has 
        established a Statewide fee schedule under section 1322(c)(3), 
        under such Statewide fee schedule).
            (2) Reduction for providers voluntarily reducing charges.--
        If a provider under a health plan voluntarily agrees to reduce 
        the amount charged to an individual enrolled under the plan, 
        the plan shall reduce the amount otherwise determined under the 
        fee schedule applicable under paragraph (1) by the proportion 
        of the reduction in such amount charged.
            (3) Reduction for noncomplying plan.--Each regional 
        alliance health plan that is a noncomplying plan shall provide 
        for reductions in payments under the fee schedule to providers 
        that are not participating providers in accordance with section 
        6012(b).
    (d) Prohibition Against Balance Billing; Requirement of Direct 
Billing.--
            (1) Prohibition of balance billing.--A provider may not 
        charge or collect from an enrollee a fee in excess of the 
        applicable payment amount under the applicable fee schedule 
        under subsection (c), and the health plan and its enrollees are 
        not legally responsible for payment of any amount in excess of 
        such applicable payment amount for items and services covered 
        under the comprehensive benefits package.
            (2) Direct billing.--A provider may not charge or collect 
        from an enrollee amounts that are payable by the health plan 
        (including any cost sharing reduction assistance payable by the 
        plan) and shall submit charges to such plan in accordance with 
        any applicable requirements of part 1 of subtitle B of title V 
        (relating to health information systems).
            (3) Coverage under agreements with plans.--The agreements 
        or other arrangements entered into under subsection (a) between 
        a health plan and the health care providers providing the 
        comprehensive benefit package to individuals enrolled with the 
        plan shall prohibit a provider from engaging in balance billing 
        described in paragraph (1).
    (e) Imposition of Participating Provider Assessment in Case of a 
Noncomplying Plan.--Each regional alliance health plan shall provide 
that if the plan is a noncomplying plan for a year under section 6012, 
payments to participating providers shall be reduced by the applicable 
network reduction percentage under such section.

SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.

    (a) Laws Restricting Plans Other Than Fee-for-Service Plans.--
Except as may otherwise be provided in this section, no State law shall 
apply to any services provided under a health plan that is not a fee-
for-service plan (or a fee-for-service component of a plan) if such law 
has the effect of prohibiting or otherwise restricting plans from--
            (1) except as provided in section 1203, limiting the number 
        and type of health care providers who participate in the plan;
            (2) requiring enrollees to obtain health services (other 
        than emergency services) from participating providers or from 
        providers authorized by the plan;
            (3) requiring enrollees to obtain a referral for treatment 
        by a specialized physician or health institution;
            (4) establishing different payment rates for participating 
        providers and providers outside the plan;
            (5) creating incentives to encourage the use of 
        participating providers; or
            (6) requiring the use of single-source suppliers for 
        pharmacy, medical equipment, and other health products and 
        services.
    (b) Preemption of State Corporate Practice Acts.--Any State law 
related to the corporate practice of medicine and to provider ownership 
of health plans or other providers shall not apply to arrangements 
between health plans that are not fee-for-service plans and their 
participating providers.
    (c) Participating Provider Defined.--In this title, a 
``participating provider'' means, with respect to a health plan, a 
provider of health care services who is a member of a provider network 
of the plan (as described in section 1402(f)(3)).

SEC. 1408. FINANCIAL SOLVENCY.

    Each regional alliance health plan must--
            (1) meet or exceed minimum capital requirements established 
        by States under section 1204(a);
            (2) in the case of a plan operating in a State, must 
        participate in the guaranty fund established by the State under 
        section 1204(c); and
            (3) meet such other requirements relating to fiscal 
        soundness as the State may establish (subject to the 
        establishment of any alternative standards by the Board).

SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING POLICY.

    Each regional alliance health plan shall offer a cost sharing 
policy (as defined in section 1421(b)(2)) to each eligible family 
enrolled under the plan.

SEC. 1410. QUALITY ASSURANCE.

    Each health plan shall comply with such quality assurance 
requirements as are imposed under subtitle A of title V with respect to 
such a plan.

SEC. 1411. PROVIDER VERIFICATION.

    Each health plan shall--
            (1) verify the credentials of practitioners and facilities;
            (2) ensure that all providers participating in the plan 
        meet applicable State licensing and certification standards;
            (3) oversee the quality and performance of participating 
        providers, consistent with section 1410; and
            (4) investigate and resolve consumer complaints against 
        participating providers.

SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MANAGEMENT PROTOCOLS.

    Each health plan shall disclose to enrollees (and prospective 
enrollees) the protocols used by the plan for controlling utilization 
and costs.

SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND REPORTING.

    (a) In General.--Each health plan shall comply with the 
confidentiality, data management, and reporting requirements imposed 
under subtitle B of title V.
    (b) Treatment of Electronic Information.--
            (1) Accuracy and reliability.--Each health plan shall take 
        such measures as may be necessary to ensure that health care 
        information in electronic form that the plan, or a member of a 
        provider network of the plan, collects for or transmits to the 
        Board under subtitle B of title V is accurate and reliable.
            (2) Privacy and security.--Each health plan shall take such 
        measures as may be necessary to ensure that health care 
        information described in paragraph (1) is not distributed to 
        any individual or entity in violation of a standard promulgated 
        by the Board under part 2 of subtitle B of title V.

SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM.

    Each regional alliance health plan of a State that has established 
a reinsurance system under section 1203(g) shall participate in the 
system in the manner specified by the State.

        PART 2--REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE

SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL INSURANCE.

    (a) In General.--An entity may offer a supplemental insurance 
policy but only if--
            (1) in the case of a supplemental health benefit policy (as 
        defined in subsection (b)(1)), the entity and the policy meet 
        the requirements of section 1422; and
            (2) in the case of a cost sharing policy (as defined in 
        subsection (b)(2)), the entity and the policy meet the 
        requirements of section 1423.
    (b) Policies Defined.--
            (1) Supplemental health benefit policy.--
                    (A) In general.--In this part, the term 
                ``supplemental health benefit policy'' means a health 
                insurance policy or health benefit plan offered to an 
                alliance eligible individual which provides--
                            (i) coverage for services and items not 
                        included in the comprehensive benefit package, 
                        or
                            (ii) coverage for items and services 
                        included in such package but not covered 
                        because of a limitation in amount, duration, or 
                        scope provided under this title,
                or both.
                    (B) Exclusions.--Such term does not include the 
                following:
                            (i) A cost sharing policy (as defined in 
                        paragraph (2)).
                            (ii) A long-term care insurance policy (as 
                        defined in section 2304(10)).
                            (iii) Insurance that limits benefits with 
                        respect to specific diseases (or conditions).
                            (iv) Hospital or nursing home indemnity 
                        insurance.
                            (v) A medicare supplemental policy (as 
                        defined in section 1882(g) of the Social 
                        Security Act).
                            (vi) Insurance with respect to accidents.
            (2) Cost sharing policy.--In this part, the term ``cost 
        sharing policy'' means a health insurance policy or health 
        benefit plan offered to an alliance eligible individual which 
        provides coverage for deductibles, coinsurance, and copayments 
        imposed as part of the comprehensive benefit package under 
        subtitle B, whether imposed under a higher cost sharing plan or 
        with respect to out-of-network providers.

SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BENEFIT POLICIES.

    (a) Prohibiting Duplication of Coverage.--
            (1) In general.--No health plan, insurer, or any other 
        person may offer--
                    (A) to any eligible individual a supplemental 
                health benefit policy that duplicates any coverage 
                provided in the comprehensive benefit package; or
                    (B) to any medicare-eligible individual a 
                supplemental health benefit policy that duplicates any 
                coverage provided under the medicare program.
            (2) Exception for medicare-eligible individuals.--For 
        purposes of this subsection, for the period in which an 
        individual is a medicare-eligible individual and also is an 
        alliance eligible individual (and is enrolled under a regional 
        alliance or corporate alliance health plan), paragraph (1)(A) 
        (and not paragraph (1)(B)) shall apply.
    (b) No Limitation on Individuals Offered Policy.--
            (1) In general.--Except as provided in paragraph (2), each 
        entity offering a supplemental health benefit policy must 
        accept for enrollment every individual who seeks such 
        enrollment, subject to capacity and financial limits.
            (2) Exception for certain offerors.--Paragraph (1) shall 
        not apply to any supplemental health benefit policy offered to 
        an individual only on the basis of--
                    (A) the individual's employment (in the case of a 
                policy offered by the individual's employer); or
                    (B) the individual's membership or enrollment in a 
                fraternal, religious, professional, educational, or 
                other similar organization.
    (c) Restrictions on Marketing Abuses.--Not later than January 1, 
1996, the Board shall develop (in consultation with the States) minimum 
standards that prohibit marketing practices by entities offering 
supplemental health benefit policies that involve:
            (1) Providing monetary incentives for or tying or otherwise 
        conditioning the sale of the policy to enrollment in a regional 
        alliance health plan of the entity.
            (2) Using or disclosing to any party information about the 
        health status or claims experience of participants in a 
        regional alliance health plan for the purpose of marketing such 
        a policy.
    (d) Civil Monetary Penalty.--An entity that knowingly and willfully 
violates any provision of this section with respect to the offering of 
a supplemental health benefit policy to any individual shall be subject 
to a civil monetary penalty (not to exceed $10,000) for each such 
violation. The provisions of section 1128A of the Social Security Act 
(other than subsections (a) and (b)) shall apply to civil money 
penalties under this subsection in the same manner as they apply to a 
penalty or proceeding under section 1128A(a) of such Act.

SEC. 1423. STANDARDS FOR COST SHARING POLICIES.

    (a) Rules for Offering of Policies.--Subject to subsection (f), a 
cost sharing policy may be offered to an individual only if--
            (1) the policy is offered by the regional alliance health 
        plan in which the individual is enrolled;
            (2) the regional alliance health plan offers the policy to 
        all individuals enrolled in the plan;
            (3) the plan offers each such individual a choice of a 
        policy that provides standard coverage and a policy that 
        provides maximum coverage (in accordance with standards 
        established by the Board); and
            (4) the policy is offered only during the annual open 
        enrollment period for regional alliance health plans (described 
        in section 1323(d)(1)).
    (b) Prohibition of Coverage of Copayments.--Each cost sharing 
policy may not provide any benefits relating to any copayments 
established under the table of copayments and coinsurance under section 
1135.
    (c) Equivalent Coverage for All Services.--Each cost sharing policy 
must provide coverage for items and services in the comprehensive 
benefit package to the same extent as the policy provides coverage for 
all items and services in the package.
    (d) Requirements for Pricing.--
            (1) In general.--The price of any cost sharing policy 
        shall--
                    (A) be the same for each individual to whom the 
                policy is offered;
                    (B) take into account any expected increase in 
                utilization resulting from the purchase of the policy 
                by individuals enrolled in the regional alliance health 
                plan; and
                    (C) not result in a loss-ratio of less than 90 
                percent.
            (2) Loss-ratio defined.--In paragraph (1)(C), a ``loss-
        ratio'' is the ratio of the premium returned to the consumer in 
        payout relative to the total premium collected.
    (e) Loss of State Certification for Regional Alliance Health Plans 
Failing to Meet Standards.--A State may not certify a regional alliance 
health plan that offers a cost sharing policy unless the plan and the 
policy meet the standards described in this section.
    (f) Special Rules for FEHBP Supplemental Plans.--Subsection (a) 
shall not apply to an FEHBP supplemental plan described in section 
8203(f)(1), but only if the plan meets the following requirements:
            (1) The plan must be offered to all individuals to whom 
        such a plan is required to be offered under section 8203.
            (2) The plan must offer each such individual a choice of a 
        policy that provides standard coverage and a policy that 
        provides maximum coverage (in accordance with standards 
        established by the Board under subsection (a)(3)).
            (3) The plan is offered only during the annual open 
        enrollment period for regional alliance health plans (described 
        in section 1323(d)(1)).
            (4)(A) The price of the plan shall include an amount, 
        established in accordance with rules established by the Board 
        in consultation with the Office of Personnel Management, that 
        takes into account any expected increase in utilization of the 
        items and services in the comprehensive benefit package 
        resulting from the purchase of the plan by individuals enrolled 
        in a regional alliance health plan.
            (B) The plan provides for payment, in a manner specified by 
        the Board in the case of an individual enrolled in the plan and 
        in a regional alliance health plan, to the regional alliance 
        health plan of an amount equivalent to the additional amount 
        described in subparagraph (A).

     PART 3--REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS

SEC. 1431. HEALTH PLAN REQUIREMENT.

    (a) In General.--Subject to section 1432, each health plan shall, 
with respect to each electing essential community provider (as defined 
in subsection (d), other than a provider of school health services) 
located within the plan's service area, either--
            (1) enter into a written provider participation agreement 
        (described in subsection (b)) with the provider, or
            (2) enter into a written agreement under which the plan 
        shall make payment to the provider in accordance with 
        subsection (c).
    (b) Participation Agreement.--A participation agreement between a 
health plan and an electing essential community provider under this 
subsection shall provide that the health plan agrees to treat the 
provider in accordance with terms and conditions at least as favorable 
as those that are applicable to other providers participating in the 
health plan with respect to each of the following:
            (1) The scope of services for which payment is made by the 
        plan to the provider.
            (2) The rate of payment for covered care and services.
            (3) The availability of financial incentives to 
        participating providers.
            (4) Limitations on financial risk provided to other 
        participating providers.
            (5) Assignment of enrollees to participating providers.
            (6) Access by the provider's patients to providers in 
        medical specialties or subspecialties participating in the 
        plan.
    (c) Payments for Providers Without Participation Agreements.--
            (1) In general.--Payment in accordance with this subsection 
        is payment based, as elected by the electing essential 
        community provider, either--
                    (A) on the fee schedule developed by the applicable 
                regional alliance (or the State) under section 1322(c), 
                or
                    (B) on payment methodologies and rates used under 
                the applicable Medicare payment methodology and rates 
                (or the most closely applicable methodology under such 
                program as the Secretary of Health and Human Services 
                specifies in regulations).
            (2) No application of gate-keeper limitations.--Payment in 
        accordance with this subsection may be subject to utilization 
        review, but may not be subject to otherwise applicable gate-
        keeper requirements under the plan.
    (d) Election.--
            (1) In general.--In this part, the term ``electing 
        essential community provider'' means, with respect to a health 
        plan, an essential community provider that elects this subpart 
        to apply to the health plan.
            (2) Form of election.--An election under this subsection 
        shall be made in a form and manner specified by the Secretary, 
        and shall include notice to the health plan involved. Such an 
        election may be made annually with respect to a health plan, 
        except that the plan and provider may agree to make such an 
        election on a more frequent basis.
    (e) Special Rule for Providers of School Health Services.--A health 
plan shall pay, to each provider of school health services located in 
the plan's service area an amount determined by the Secretary for such 
services furnished to enrollees of the plan.

SEC. 1432. SUNSET OF REQUIREMENT.

    (a) In General.--Subject to subsection (d), the requirement of 
section 1431 shall only apply to health plans offered by a health 
alliance during the 5-year period beginning with the first year in 
which any health plan is offered by the alliance.
    (b) Studies.--In order to prepare recommendations under subsection 
(c), the Secretary shall conduct studies regarding essential community 
providers, including studies that assess--
            (1) the definition of essential community provider,
            (2) the sufficiency of the funding levels for providers, 
        for both covered and uncovered benefits under this Act,
            (3) the effects of contracting requirements relating to 
        such providers on such providers, health plans, and enrollees,
            (4) the impact of the payment rules for such providers, and
            (5) the impact of national health reform on such providers.
    (c) Recommendations to Congress.--The Secretary shall submit to 
Congress, by not later than March 1, 2001, specific recommendations 
respecting whether, and to what extent, section 1431 should continue to 
apply to some or all essential community providers. Such 
recommendations may include a description of the particular types of 
such providers and circumstances under which such section should 
continue to apply.
    (d) Congressional Consideration.--
            (1) In general.--Recommendations submitted under subsection 
        (c) shall apply under this part (and may supersede the 
        provisions of subsection (a)) unless a joint resolution 
        (described in paragraph (2)) disapproving such recommendations 
        is enacted, in accordance with the provisions of paragraph (3), 
        before the end of the 60-day period beginning on the date on 
        which such recommendations were submitted. For purposes of 
        applying the preceding sentence and paragraphs (2) and (3), the 
        days on which either House of Congress is not in session 
        because of an adjournment of more than three days to a day 
        certain shall be excluded in the computation of a period.
            (2) Joint resolution of disapproval.--A joint resolution 
        described in this paragraph means only a joint resolution which 
        is introduced within the 10-day period beginning on the date on 
        which the Secretary submits recommendations under subsection 
        (c) and--
                    (A) which does not have a preamble;
                    (B) the matter after the resolving clause of which 
                is as follows: ``That Congress disapproves the 
                recommendations of the Secretary of Health and Human 
                Services concerning the continued application of 
                certain essential community provider requirements under 
                section 1431 of the Health Security Act, as submitted 
                by the Secretary on ______________.'', the blank space 
                being filled in with the appropriate date; and
                    (C) the title of which is as follows: ``Joint 
                resolution disapproving recommendations of the 
                Secretary of Health and Human Services concerning the 
                continued application of certain essential community 
                provider requirements under section 1431 of the Health 
                Security Act, as submitted by the Secretary on 
                ______________.'', the blank space being filled in with 
                the appropriate date.
            (3) Procedures for consideration of resolution of 
        disapproval.--Subject to paragraph (4), the provisions of 
        section 2908 (other than subsection (a)) of the Defense Base 
        Closure and Realignment Act of 1990 shall apply to the 
        consideration of a joint resolution described in paragraph (2) 
        in the same manner as such provisions apply to a joint 
        resolution described in section 2908(a) of such Act.
            (4) Special rules.--For purposes of applying paragraph (3) 
        with respect to such provisions--
                    (A) any reference to the Committee on Armed 
                Services of the House of Representatives shall be 
                deemed a reference to an appropriate Committee of the 
                House of Representatives (specified by the Speaker of 
                the House of Representatives at the time of submission 
                of recommendations under subsection (c)) and any 
                reference to the Committee on Armed Services of the 
                Senate shall be deemed a reference to an appropriate 
                Committee of the Senate (specified by the Majority 
                Leader of the Senate at the time of submission of 
                recommendations under subsection (c)); and
                    (B) any reference to the date on which the 
                President transmits a report shall be deemed a 
                reference to the date on which the Secretary submits 
                recommendations under subsection (c).

 PART 4--REQUIREMENTS RELATING TO WORKERS' COMPENSATION AND AUTOMOBILE 
                       MEDICAL LIABILITY COVERAGE

SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO WORKERS COMPENSATION 
              SERVICES.

    Each health plan shall meet the applicable requirements of part 2 
of subtitle A of title X (relating to provision of workers compensation 
services to enrollees).

SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO AUTOMOBILE MEDICAL 
              LIABILITY SERVICES.

    Each health plan shall meet the applicable requirements of part 2 
of subtitle B of title X (relating to provision of automobile medical 
liability services to enrollees).

                                                    Title I, Subtitle F

                  Subtitle F--Federal Responsibilities

                     PART 1--NATIONAL HEALTH BOARD

           Subpart A--Establishment of National Health Board

SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP.

    (a) In General.--There is hereby created in the Executive Branch a 
National Health Board.
    (b) Composition.--The Board is composed of 7 members appointed by 
the President, by and with the advice and consent of the Senate.
    (c) Chair.--The President shall designate one of the members as 
chair. The chair serves a term concurrent with that of the President. 
The chair may serve a maximum of 3 terms. The chair shall serve as the 
chief executive officer of the Board.
    (d) Terms.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (4), the term of each member of the Board, except the chair, is 
        4 years and begins when the term of the predecessor of that 
        member ends.
            (2) Initial terms.--The initial terms of the members of the 
        Board (other than the chair) first taking office after the date 
        of the enactment of this Act, shall expire as designated by the 
        President, two at the end of one year, two at the end of two 
        years, and two at the end of three years.
            (3) Reappointment.--A member (other than the chair) may be 
        reappointed for one additional term.
            (4) Continuation in office.--Upon the expiration of a term 
        of office, a member shall continue to serve until a successor 
        is appointed and qualified.
    (e) Vacancies.--
            (1) In general.--Whenever a vacancy shall occur, other than 
        by expiration of term, a successor shall be appointed by the 
        President, by and with the consent of the Senate, to fill such 
        vacancy, and is appointed for the remainder of the term of the 
        predecessor.
            (2) No impairment of function.--A vacancy in the membership 
        of the Board does not impair the authority of the remaining 
        members to exercise all of the powers of the Board.
            (3) Acting chair.--The Board may designate a Member to act 
        as chair during any period in which there is no chair 
        designated by the President.
    (f) Meetings; Quorum.--
            (1) Meetings.--At meetings of the Board the chair shall 
        preside, and in the absence of the chair, the Board shall elect 
        a member to act as chair pro tempore.
            (2) Quorum.--Four members of the Board shall constitute a 
        quorum thereof.

SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS.

    (a) Citizenship.--Each member of the Board shall be a citizen of 
the United States.
    (b) Basis of Selection.--Board members will be selected on the 
basis of their experience and expertise in relevant subjects, including 
the practice of medicine, nursing, or other clinical practices, health 
care financing and delivery, state health systems, consumer protection, 
business, law, and delivery of care to vulnerable populations.
    (c) Exclusive Employment.--During the term of appointment, Board 
members shall serve as employees of the Federal Government and shall 
hold no other employment.
    (d) Prohibition of Conflict of Interest.--A member of the Board may 
not have a pecuniary interest in or hold an official relation to any 
health care plan, health care provider, insurance company, 
pharmaceutical company, medical equipment company, or other affected 
industry. Before entering upon the duties as a member of the Board, the 
member shall certify under oath compliance with this requirement.
    (e) Post-Employment Restrictions.--After leaving the Board, former 
members are subject to post-employment restrictions applicable to 
comparable Federal employees.
    (f) Compensation of Board Members.--Each member of the Board (other 
than the chair) shall receive an annual salary at the annual rate 
payable from time to time for level IV of the Executive Schedule. The 
chair of the Board, during the period of service as chair, shall 
receive an annual salary at the annual rate payable from time to time 
for level III of the Executive Schedule.

SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES.

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

SEC. 1504. ANNUAL REPORT.

    (a) In General.--The Board shall prepare and send to the President 
and Congress an annual report addressing the overall implementation of 
the new health care system.
    (b) Matters To Be Included.--The Board shall include in each annual 
report under this section the following:
            (1) Information on Federal and State implementation.
            (2) Data related to quality improvement.
            (3) Recommendations or changes in the administration, 
        regulation and laws related to health care and coverage.
            (4) A full account of all actions taken during the previous 
        year.

SEC. 1505. POWERS.

    (a) Staff; Contract Authority.--The Board shall have authority, 
subject to the provisions of the civil-service laws and chapter 51 and 
subchapter III of chapter 53 of title 5, United States Code, to appoint 
such officers and employees as are necessary to carry out its 
functions. To the extent provided in advance in appropriations Acts, 
the Board may contract with any person (including an agency of the 
Federal Government) for studies and analysis as required to execute its 
functions. Any employee of the Executive Branch may be detailed to the 
Board to assist the Board in carrying out its duties.
    (b) Establishment of Advisory Committees.--The Board may establish 
advisory committees.
    (c) Access to Information.--The Board may secure directly from any 
department or agency of the United States information necessary to 
enable it to carry out its functions, to the extent such information is 
otherwise available to a department or agency of the United States. 
Upon request of the chair, the head of that department or agency shall 
furnish that information to the Board.
    (d) Delegation of Authority.--Except as otherwise provided in this 
Act, the Board may delegate any function to such officers and employees 
as the Board may designate and may authorize such successive 
redelegations of such functions with the Board as the Board deems to be 
necessary or appropriate. No delegation of functions by the Board shall 
relieve the Board of responsibility for the administration of such 
functions.
    (e) Rulemaking.--The National Health Board is authorized to 
establish such rules as may be necessary to carry out this Act.

SEC. 1506. FUNDING.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Board such sums as may be necessary for fiscal 
years 1994, 1995, 1996, 1997, and 1998.
    (b) Submission of Budget.--Under the procedures of chapter 11 of 
title 31, United States Code, the budget for the Board for a fiscal 
year shall be reviewed by the Director of the Office of Management and 
Budget and submitted to the Congress as part of the President's 
submission of the Budget of the United States for the fiscal year.

 Subpart B--Responsibilities Relating to Review and Approval of State 
                                Systems

SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.

    (a) Approval of State Systems by National Board.--
            (1) In general.--The National Health Board shall approve a 
        State health care system for which a document is submitted 
        under section 1200(b) unless the Board finds that the system 
        (as set forth in the document) does not (or will not) provide 
        for the State meeting the responsibilities for participating 
        States under this Act.
            (2) Regulations.--The Board shall issue regulations, not 
        later than July 1, 1995, prescribing the requirements for State 
        health care systems under parts 2 and 3 of subtitle C, except 
        that in the case of a document submitted under section 1200(b) 
        before the date of issuance of such regulations, the Board 
        shall take action on such document notwithstanding the fact 
        that such regulations have not been issued.
            (3) No approval permitted for years prior to 1996.--The 
        Board may not approve a State health care system under this 
        subpart for any year prior to 1996.
    (b) Review of Completeness of Documents.--
            (1) In general.--If a State submits a document under 
        subsection (a)(1), the Board shall notify the State, not later 
        than 7 working days after the date of submission, whether or 
        not the document is complete and provides the Board with 
        sufficient information to approve or disapprove the document.
            (2) Additional information on incomplete document.--If the 
        Board notifies a State that the State's document is not 
        complete, the State shall be provided such additional period 
        (not to exceed 45 days) as the Board may by regulation 
        establish in which to submit such additional information as the 
        Board may require. Not later than 7 working days after the 
        State submits the additional information, the Board shall 
        notify the State respecting the completeness of the document.
    (c) Action on Completed Documents.--
            (1) In general.--The Board shall make a determination (and 
        notify the State) on whether the State's document provides for 
        implementation of a State system that meets the applicable 
        requirements of subtitle C--
                    (A) in the case of a State that did not require the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete, or
                    (B) in the case of a State that required the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete.
            (2) Plans deemed approved.--If the Board does not meet the 
        applicable deadline for making a determination and providing 
        notice under paragraph (1) with respect to a State's document, 
        the Board shall be deemed to have approved the State's document 
        for purposes of this Act.
    (d) Opportunity to Respond to Rejected Document.--
            (1) In general.--If (within the applicable deadline under 
        subsection (c)(1)) the Board notifies a State that its document 
        does not provide for implementation of a State system that 
        meets the applicable requirements of subtitle C, the Board 
        shall provide the State with a period of 30 days in which to 
        submit such additional information and assurances as the Board 
        may require.
            (2) Deadline for response.--Not later than 30 days after 
        receiving such additional information and assurances, the Board 
        shall make a determination (and notify the State) on whether 
        the State's document provides for implementation of a State 
        system that meets the applicable requirements of subtitle C.
            (3) Plan deemed approved.--If the Board does not meet the 
        deadline established under paragraph (2) with respect to a 
        State, the Board shall be deemed to have approved the State's 
        document for purposes of this Act.
    (e) Approval of Previously Terminated States.--If the Board has 
approved a State system under this part for a year but subsequently 
terminated the approval of the system under section 1512(b)(2), the 
Board shall approve the system for a succeeding year if the State--
            (1) demonstrates to the satisfaction of the Board that the 
        failure that formed the basis for the termination no longer 
        exists, and
            (2) provides reasonable assurances that the types of 
        actions (or inactions) which formed the basis for such 
        termination will not recur.
    (f) Revisions to State System.--
            (1) Submission.--A State may revise a system approved for a 
        year under this section, except that such revision shall not 
        take effect unless the State has submitted to the Board a 
        document describing such revision and the Board has approved 
        such revision.
            (2) Actions on amendments.--Not later than 60 days after a 
        document is submitted under paragraph (1), the Board shall make 
        a determination (and notify the State) on whether the 
        implementation of the State system, as proposed to be revised, 
        meets the applicable requirements of subtitle C. If the Board 
        fails to meet the requirement of the preceding sentence, the 
        Board shall be deemed to have approved the implementation of 
        the State system as proposed to be revised.
            (3) Rejection of amendments.--Subsection (d) shall apply to 
        an amendment submitted under this subsection in the same manner 
        as it applies to a completed document submitted under 
        subsection (b).
    (g) Notification of Non-Participating States.--If a State fails to 
submit a document for a State system by the deadline referred to in 
section 1200, or such a document is not approved under subsection (c), 
the Board shall immediately notify the Secretary of Health and Human 
Services of the State's failure for purposes of applying subpart C in 
that State.

SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR 
              COMPLIANCE.

    (a) In General.--In the case of a participating State, if the Board 
determines that the operation of the State system under subtitle C 
fails to meet the applicable requirements of this Act, sanctions shall 
apply against the State in accordance with subsection (b).
    (b) Type of Sanction Applicable.--The sanctions applicable under 
this part are as follows:
            (1) If the Board determines that the State's failure does 
        not substantially jeopardize the ability of eligible 
        individuals in the State to obtain coverage for the 
        comprehensive benefit package--
                    (A) the Board may order a regional alliance in the 
                State to comply with applicable requirements of this 
                Act and take such additional measures to assure 
                compliance with such requirements as the Board may 
                impose, if the Board determines that the State's 
                failure relates to a requirement applicable to a 
                regional alliance in the State, or
                    (B) if the Board does not take the action described 
                in subparagraph (A) (or if the Board takes the action 
                and determines that the action has not remedied the 
                violation that led to the imposition of the sanction), 
                the Board shall notify the Secretary of Health and 
                Human Services, who shall reduce payments with respect 
                to the State in accordance with section 1513.
            (2) If the Board determines that the failure substantially 
        jeopardizes the ability of eligible individuals in the State to 
        obtain coverage for the comprehensive benefit package--
                    (A) the Board shall terminate its approval of the 
                State system; and
                    (B) the Board shall notify the Secretary of Health 
                and Human Services, who shall assume the 
                responsibilities described in section 1522.
    (c) Termination of Sanction.--
            (1) Compliance by State.--A State against which a sanction 
        is imposed may submit information at any time to the Board to 
        demonstrate that the failure that led to the imposition of the 
        sanction has been corrected.
            (2) Termination of sanction.--If the Board determines that 
        the failure that led to the imposition of a sanction has been 
        corrected--
                    (A) in the case of the sanction described in 
                subsection (b)(1)(A), the Board shall notify the 
                regional alliance against which the sanction is 
                imposed; or
                    (B) in the case of any other sanction described in 
                subsection (b), the Board shall notify the Secretary of 
                Health and Human Services.
    (d) Protection of Access to Benefits.--The Board and the Secretary 
of Health and Human Services shall exercise authority to take actions 
under this section with respect to a State only in a manner that 
assures the continuous coverage of eligible individuals under regional 
alliance health plans.

SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF 
              HEALTH AND HUMAN SERVICES.

    (a) In General.--Upon receiving notice from the Board under section 
1512(b)(1)(B), the Secretary of Health and Human Services shall reduce 
the amount of any of the payments described in subsection (b) that 
would otherwise be made to individuals and entities in the State by 
such amount as the Secretary determines to be appropriate.
    (b) Payments Described.--The payments described in this subsection 
are as follows:
            (1) Payments to academic health centers in the State under 
        subtitle B of title III.
            (2) Payments to individuals and entities in the State for 
        health research activities under section 301 and title IV of 
        the Public Health Service Act.
            (3) Payments to hospitals in the State under part 4 of 
        subtitle E of title III (relating to payments to hospitals 
        serving vulnerable populations)

SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS.

    Any State or alliance affected by a determination by the Board 
under this subpart may appeal such determination in accordance with 
section 5231.

SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.

    (a) Planning Grants.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary shall make available 
        to each State a planning grant to assist a State in the 
        development of a health care system to become a participating 
        State under subtitle C.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated $50,000,000 in each of fiscal years 1995 and 
        1996 for grants under this subsection.
    (b) Grants for Start-up Support.--
            (1) In general.--The Secretary shall make available to 
        States, upon their enacting enabling legislation to become 
        participating States, grants to assist in the establishment of 
        regional alliances.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) State matching funds required.--Funds are payable to a 
        State under this subsection only if the State provides 
        assurances, satisfactory to the Secretary, that amounts of 
        State funds (at least equal to the amount made available under 
        this subsection) are expended for the purposes described in 
        paragraph (1).
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated $313,000,000 for fiscal year 1996, 
        $625,000,000 for fiscal year 1997, and $313,000,000 for fiscal 
        year 1998 for grants under this subsection.

        Subpart C--Responsibilities in Absence of State Systems

SEC. 1521. APPLICATION OF SUBPART.

    (a) Initial Application.--This subpart shall apply with respect to 
a State as of January 1, 1998, unless--
            (1) the State submits a document for a State system under 
        section 1511(a)(1) by July 1, 1997, and
            (2) the Board determines under section 1511 that such 
        system meets the requirements of part 1 of subtitle C.
    (b) Termination of Approval of System of Participating State.--In 
the case of a participating State for which the Board terminates 
approval of the State system under section 1512(b)(2), this subpart 
shall apply with respect to the State as of such date as is appropriate 
to assure the continuity of coverage for the comprehensive benefit 
package for eligible individuals in the State.

SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING 
              STATES.

    (a) Notice.--When the Board determines that this subpart will apply 
to a State for a calendar year, the Board shall notify the Secretary of 
Health and Human Services.
    (b) Establishment of Regional Alliance System.--Upon receiving 
notice under subsection (a), the Secretary shall take such steps, 
including the establishment of regional alliances, and compliance with 
other requirements applicable to participating States under subtitle C, 
as are necessary to ensure that the comprehensive benefit package is 
provided to eligible individuals in the State during the year.
    (c) Requirements for Alliances.--Subject to section 1523, any 
regional alliance established by the Secretary pursuant to this section 
must meet all the requirements applicable under subtitle D to a 
regional alliance established and operated by a participating State, 
and the Secretary shall have the authority to fulfill all the functions 
of such an alliance.
    (d) Establishment of Guaranty Fund.--
            (1) Establishment.--The Secretary must ensure that there is 
        a guaranty fund that meets the requirements established by the 
        Board under section 1552, in order to provide financial 
        protection to health care providers and others in the case of a 
        failure of a regional alliance health plan under a regional 
        alliance established and operated by the Secretary under this 
        section.
            (2) Assessments to provide guaranty funds.--In the case of 
        a failure of one or more regional alliance health plans under a 
        regional alliance established and operated by the Secretary 
        under this section, the Secretary may require each regional 
        alliance health plan under the alliance to pay an assessment to 
        the Secretary in an amount not to exceed 2 percent of the 
        premiums of such plans paid by or on behalf of regional 
        alliance eligible individuals during a year for so long as 
        necessary to generate sufficient revenue to cover any 
        outstanding claims against the failed plan.

SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED 
              SYSTEM.

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

SEC. 1524. RETURN TO STATE OPERATION.

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

    Subpart D--Establishment of Class Factors for Charging Premiums

SEC. 1531. PREMIUM CLASS FACTORS.

    (a) In General.--For each class of family enrollment (as specified 
in section 1011(c)), for purposes of title VI, the Board shall 
establish a premium class factor that reflects, subject to subsection 
(b), the relative actuarial value of the comprehensive benefit package 
of the class of family enrollment compared to such value of such 
package for individual enrollment.
    (b) Conditions.--In establishing such factors, the factor for the 
class of individual enrollment shall be 1 and the factor for the 
couple-only class of family enrollment shall be 2.

 Subpart E--Risk Adjustment and Reinsurance Methodology for Payment of 
                                 Plans

SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE 
              METHODOLOGY.

    (a) Development.--
            (1) Initial development.--Not later than April 1, 1995, the 
        Board shall develop a risk adjustment and reinsurance 
        methodology in accordance with this subpart.
            (2) Improvements.--The Board shall make such improvements 
        in such methodology as may be appropriate to achieve the 
        purposes described in subsection (b)(1).
    (b) Methodology.--
            (1) Purposes.--Such methodology shall provide for the 
        adjustment of payments to regional alliance health plans for 
        the purposes of--
                    (A) assuring that payments to such plans reflect 
                the expected relative utilization and expenditures for 
                such services by each plan's enrollees compared to the 
                average utilization and expenditures for regional 
                alliance eligible individuals, and
                    (B) protecting health plans that enroll a 
                disproportionate share of regional alliance eligible 
                individuals with respect to whom expected utilization 
                of health care services (included in the comprehensive 
                benefit package) and expected health care expenditures 
                for such services are greater than the average level of 
                such utilization and expenditures for regional alliance 
                eligible individuals.
            (2) Factors to be considered.--In developing such 
        methodology, the Board shall take into account the following 
        factors:
                    (A) Demographic characteristics.
                    (B) Health status.
                    (C) Geographic area of residence.
                    (D) Socio-economic status.
                    (E) Subject to paragraph (5), (i) the proportion of 
                enrollees who are SSI recipients and (ii) the 
                proportion of enrollees who are AFDC recipients.
                    (F) Any other factors determined by the Board to be 
                material to the purposes described in paragraph (1).
            (3) Zero sum.--The methodology shall assure that the total 
        payments to health plans by the regional alliance after 
        application of the methodology are the same as the amount of 
        payments that would have been made without application of the 
        methodology.
            (4) Prospective adjustment of payments.--The methodology, 
        to the extent possible and except in the case of a mandatory 
        reinsurance system described in subsection (c), shall be 
        applied in a manner that provides for the prospective 
        adjustment of payments to health plans.
            (5) Treatment of ssi/afdc adjustment.--The Board is not 
        required to apply the factor described in clause (i) or (ii) of 
        paragraph (2)(E) if the Board determines that the application 
        of the other risk adjustment factors described in paragraph (2) 
        is sufficient to adjust premiums to take into account the 
        enrollment in plans of AFDC recipients and SSI recipients.
            (6) Special consideration for mental illness.--In 
        developing the methodology under this section, the Board shall 
        give consideration to the unique problems of adjusting payments 
        to health plans with respect to individuals with mental 
        illness.
            (7) Special consideration for veterans, military, and 
        indian health plans.--In developing the methodology under this 
        section, the Board shall give consideration to the special 
        enrollment and funding provisions relating to plans described 
        in section 1004(b).
            (8) Adjustment to account for use of estimates.--Subject to 
        section 1361(b)(3) (relating to establishment of regional 
        alliance reserve funds), if the total payments made by a 
        regional alliance to all regional alliance health plans in a 
        year under section 1351(b) exceeds, or is less than, the total 
        of such payments estimated by the alliance in the application 
        of the methodology under this subsection, because of a 
        difference between--
                    (A) the alliance's estimate of the distribution of 
                enrolled families in different risk categories (assumed 
                in the application of risk factors under this 
                subsection in making payments to regional alliance 
                health plans), and
                    (B) the actual distribution of such enrolled 
                families in such categories,
        the methodology under this subsection shall provide for an 
        adjustment in the application of such methodology in the second 
        succeeding year in a manner that would reduce, or increase, 
        respectively, by the amount of such excess (or deficit) the 
        total of such payments made by the alliance to all such plans.
    (c) Mandatory Reinsurance.--
            (1) In general.--The methodology developed under this 
        section may include a system of mandatory reinsurance, but may 
        not include a system of voluntary reinsurance.
            (2) Requirement in certain cases.--If the Board determines 
        that an adequate system of prospective adjustment of payments 
        to health plans to account for the health status of individuals 
        enrolled by regional alliance health plans cannot be developed 
        (and ready for implementation) by the date specified in 
        subsection (a)(1), the Board shall include a mandatory 
        reinsurance system as a component of the methodology. The Board 
        may thereafter reduce or eliminate such a system at such time 
        as the Board determines that an adequate prospective payment 
        adjustment for health status has been developed and is ready 
        for implementation.
            (3) Reinsurance system.--The Board, in developing the 
        methodology for a mandatory reinsurance system under this 
        subsection, shall--
                    (A) provide for health plans to make payments to 
                state-established reinsurance programs for the purpose 
                of reinsuring part or all of the health care expenses 
                for items and services included in the comprehensive 
                benefit package for specified classes of high-cost 
                enrollees or specified high-cost treatments or 
                diagnoses; and
                    (B) specify the manner of creation, structure, and 
                operation of the system in each State, including--
                            (i) the manner (which may be prospective or 
                        retrospective) in which health plans make 
                        payments to the system, and
                            (ii) the type and level of reinsurance 
                        coverage provided by the system.
    (d) Confidentiality of Information.--The methodology shall be 
developed in a manner consistent with privacy standards promulgated 
under section 5120(a). In developing such standards, the Board shall 
take into account any potential need of alliances for certain 
individually identifiable health information in order to carry out 
risk-adjustment and reinsurance activities under this Act, but only to 
the minimum extent necessary to carry out such activities and with 
protections provided to minimize the identification of the individuals 
to whom the information relates.

SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED GROUPS.

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

SEC. 1543. ADVISORY COMMITTEE.

    (a) In General.--The Board shall establish an advisory committee to 
provide technical advice and recommendations regarding the development 
and modification of the risk adjustment and reinsurance methodology 
developed under this subpart.
    (b) Composition.--Such advisory committee shall consist of 15 
individuals and shall include individuals who are representative of 
health plans, regional alliances, consumers, experts, employers, and 
health providers.

SEC. 1544. RESEARCH AND DEMONSTRATIONS.

    The Secretary shall conduct and support research and demonstration 
projects to develop and improve, on a continuing basis, the risk 
adjustment and reinsurance methodology under this subpart.

SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLIANCES.

    The Board shall provide technical assistance to States and regional 
alliances in implementing the methodology developed under this subpart.

         Subpart F--Responsibilities for Financial Requirements

SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE HEALTH PLAN.

    (a) In General.--The Board shall establish, in consultation with 
the States, minimum capital requirements for regional alliance health 
plans, for purposes of section 1204(a).
    (b) $500,000 Minimum.--Subject to subsection (c), under such 
requirements there shall be not less than $500,000 of capital 
maintained for each plan offered in each alliance area, regardless of 
whether or not the same sponsor offered more than one of such plans.
    (c) Additional Capital Requirements.--The Board may require 
additional capital for factors likely to affect the financial stability 
of health plans, including the following:
            (1) Projected plan enrollment and number of providers 
        participating in the plan.
            (2) Market share and strength of competition.
            (3) Extent and nature of risk-sharing with participating 
        providers and the financial stability of risk-sharing 
        providers.
            (4) Prior performance of the plan, risk history, and 
        liquidity of assets.
    (d) Development of Standards by NAIC.--The Board may request the 
National Association of Insurance Commissioners to develop model 
standards for the additional capital requirements described in 
subsection (c) and to present such standards to the Board not later 
than July 1, 1995. The Board may accept such standards as the standards 
to be applied under subsection (c) or modify the standards in any 
manner it finds appropriate.

SEC. 1552. STANDARD FOR GUARANTY FUNDS.

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

  PART 2--RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES

                  Subpart A--General Responsibilities

SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN 
              SERVICES.

    (a) In General.--Except as otherwise specifically provided under 
this Act (or with respect to administration of provisions in the 
Internal Revenue Code of 1986 or in the Employee Retirement Income 
Security Act of 1974), the Secretary of Health and Human Services shall 
administer and implement all of the provisions of this Act, except 
those duties delegated to the National Health Board, any other 
executive agency, or to any State.
    (b) Financial Management Standards.--The Secretary, in consultation 
with the Secretaries of Labor and the Treasury, shall establish, for 
purposes of section 1361, standards relating to the management of 
finances, maintenance of records, accounting practices, auditing 
procedures, and financial reporting for health alliances. Such 
standards shall take into account current Federal laws and regulations 
relating to fiduciary responsibilities and financial management of 
funds.
    (c) Auditing Regional Alliance Performance.--The Secretary shall 
perform periodic financial and other audits of regional alliances to 
assure that such alliances are carrying out their responsibilities 
under this Act consistent with this Act. Such audits shall include 
audits of alliance performance in the areas of--
            (1) assuring enrollment of all regional alliance eligible 
        individuals in health plans,
            (2) management of premium and cost sharing discounts and 
        reductions provided; and
            (3) financial management of the alliance, including 
        allocation of collection shortfalls.

SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH DRUGS.

    (a) In General.--The Secretary shall appoint an Advisory Council on 
Breakthrough Drugs (in this section referred to as the ``Council'') 
that will examine the reasonableness of launch prices of new drugs that 
represent a breakthrough or significant advance over existing 
therapies.
    (b) Duties.--(1) At the request of the Secretary, or a member of 
the Council, the Council shall make a determination regarding the 
reasonableness of launch prices of a breakthrough drug. Such a 
determination shall be based on--
            (A) prices of other drugs in the same therapeutic class;
            (B) cost information supplied by the manufacturer;
            (C) prices of the drug in countries specified in section 
        802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act;
            (D) projected prescription volume, economies of scale, 
        product stability, special manufacturing requirements and 
        research costs;
            (E) cost effectiveness relative to the cost of alternative 
        course of treatment options, including non-pharmacological 
        medical interventions; and
            (F) improvements in quality of life offered by the new 
        product, including ability to return to work, ability to 
        perform activities of daily living, freedom from attached 
        medical devices, and other appropriate measurements of quality 
        of life improvements.
    (2) The Secretary shall review the determinations of the Council 
and publish the results of such review along with the Council's 
determination (including minority opinions) as a notice in the Federal 
Register.
    (c) Membership.--The Council shall consist of a chair and 12 other 
persons, appointed without regard to the provisions of title 5, United 
States Code, governing appointments in the competitive service. The 
Council shall include a representative from the pharmaceutical 
industry, consumer organizations, physician organizations, the hospital 
industry, and the managed care industry. Other individuals appointed by 
the Secretary shall be recognized experts in the fields of health care 
economics, pharmacology, pharmacy, and prescription drug reimbursement. 
Only one member of the Council may have direct or indirect financial 
ties to the pharmaceutical industry.
    (d) Term of Appointments.--Appointments shall be for a term of 3 
years, except that the Secretary may provide initially for such shorter 
terms as will ensure that the terms of not more than 5 members expire 
in any one year.
    (e) Compensation.--Members of the Council shall be entitled to 
receive reimbursement of expenses and per diem in lieu of subsistence 
in the same manner as other members of advisory councils appointed by 
the Secretary are provided such reimbursements under the Social 
Security Act.
    (f) No Termination.--Notwithstanding the provisions of the Federal 
Advisory Committee Act, the Council shall continue in existence until 
otherwise specified in law.

       Subpart B--Certification of Essential Community Providers

SEC. 1581. CERTIFICATION.

    (a) In General.--For purposes of this Act, the Secretary shall 
certify as an ``essential community provider'' any health care provider 
or organization that--
            (1) is within any of the categories of providers and 
        organizations specified in section 1582(a), or
            (2) meets the standards for certification under section 
        1583(a).
    (b) Timely Establishment of Process.--The Secretary shall take such 
actions as may be necessary to permit health care providers and 
organizations to be certified as essential community providers in a 
State before the beginning of the first year for the State.

SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.

    (a) In General.--The categories of providers and organizations 
specified in this subsection are as follows:
            (1) Migrant health centers.--A recipient or subrecipient of 
        a grant under section 329 of the Public Health Service Act.
            (2) Community health centers.--A recipient or subrecipient 
        of a grant under section 330 of the Public Health Service Act.
            (3) Homeless program providers.--A recipient or 
        subrecipient of a grant under section 340 of the Public Health 
        Service Act.
            (4) Public housing providers.--A recipient or subrecipient 
        of a grant under section 340A of the Public Health Service Act.
            (5) Family planning clinics.--A recipient or subrecipient 
        of a grant under title X of the Public Health Service Act.
            (6) Indian health programs.--A service unit of the Indian 
        Health Service, a tribal organization, or an urban Indian 
        program, as defined in the Indian Health Care Improvement Act.
            (7) AIDS providers under ryan white act.--A public or 
        private nonprofit health care provider that is a recipient or 
        subrecipient of a grant under title XXVI of the Public Health 
        Service Act.
            (8) Maternal and child health providers.--A public or 
        private nonprofit entity that provides prenatal care, pediatric 
        care, or ambulatory services to children, including children 
        with special health care needs, and that receives funding for 
        such care or services under title V of the Social Security Act.
            (9) Federally qualified health center; rural health 
        clinic.--A Federally-qualified health center or a rural health 
        clinic (as such terms are defined in section 1861(aa) of the 
        Social Security Act).
            (10) Provider of school health services.--A provider of 
        school health services that receives funding for such services 
        under subtitle G of title III.
            (11) Community practice network.--A qualified community 
        practice network receiving development funds under subtitle E 
        of title III.
    (b) Subrecipient Defined.--In this subpart, the term 
``subrecipient'' means, with respect to a recipient of a grant under a 
particular authority, an entity that--
            (1) is receiving funding from such a grant under a contract 
        with the principal recipient of such a grant, and
            (2) meets the requirements established to be a recipient of 
        such a grant.
    (c) Health Professional Defined.--In this subpart, the term 
``health professional'' means a physician, nurse, nurse practitioner, 
certified nurse midwife, physician assistant, psychologist, dentist, 
pharmacist, and other health care professional recognized by the 
Secretary.

SEC. 1583. STANDARDS FOR ADDITIONAL PROVIDERS.

    (a) Standards.--The Secretary shall publish standards for the 
certification of additional categories of health care providers and 
organizations as essential community providers, including the 
categories described in subsection (b). Such a health care provider or 
organization shall not be certified unless the Secretary determines, 
under such standards, that health plans operating in the area served by 
the applicant would not otherwise be able to assure adequate access to 
items and services included in the comprehensive benefit package if 
such a provider was not so certified.
    (b) Categories To Be Included.--The categories described in this 
subsection are as follows:
            (1) Health professionals.--Health professionals--
                    (A) located in an area designated as a health 
                professional shortage area (under section 332 of the 
                Public Health Service Act), or
                    (B) providing a substantial amount of health 
                services (as determined in accordance with standards 
                established by the Secretary) to a medically 
                underserved population (as designated under section 330 
                of such Act).
            (2) Institutional providers.--Public and private nonprofit 
        hospitals and other institutional health care providers located 
        in such an area or providing health services to such a 
        population.
            (3) Other providers.--Other public and private nonprofit 
        agencies and organizations that--
                    (A) are located in such an area or providing health 
                services to such a population, and
                    (B) provide health care and services essential to 
                residents of such an area or such populations.

SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMINATION OF 
              CERTIFICATIONS.

    (a) Certification Process.--
            (1) Publication of procedures.--The Secretary shall 
        publish, not later than 6 months after the date of the 
        enactment of this Act, the procedures to be used by health care 
        professionals, providers, agencies, and organizations seeking 
        certification under this subpart, including the form and manner 
        in which an application for such certification is to be made.
            (2) Timely determination.--The Secretary shall make a 
        determination upon such an application not later than 60 days 
        (or 15 days in the case of a certification for an entity 
        described in section 1582) after the date the complete 
        application has been submitted. The determination on an 
        application for certification of an entity described in section 
        1582 shall only involve the verification that the entity is an 
        entity described in such section.
    (b) Review of Certifications.--The Secretary shall periodically 
review whether professionals, providers, agencies, and organizations 
certified under this subpart continue to meet the requirements for such 
certification.
    (c) Termination or Denial of Certification.--
            (1) Preliminary finding.--If the Secretary preliminarily 
        finds that an entity seeking certification under this section 
        does not meet the requirements for such certification or such 
        an entity certified under this subpart fails to continue to 
        meet the requirements for such certification, the Secretary 
        shall notify the entity of such preliminary finding and permit 
        the entity an opportunity, under subtitle C of title V, to 
        rebut such findings.
            (2) Final determination.--If, after such opportunity, the 
        Secretary continues to find that such an entity continues to 
        fail to meet such requirements, the Secretary shall terminate 
        the certification and shall notify the entity, regional 
        alliances, and corporate alliances of such termination and the 
        effective date of the termination.

SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PARTICIPATING STATES.

    (a) In General.--Not less often than annually the Secretary shall 
notify each participating State and each health alliance of essential 
community providers that have been certified under this subpart.
    (b) Contents.--Such notice shall include sufficient information to 
permit each health alliance to notify health plans of the identify of 
each entity certified as an essential community provider, including--
            (1) the location of the provider within each plan's service 
        area,
            (2) the health services furnished by the provider, and
            (3) other information necessary for health plans to carry 
        out part 3 of subtitle E.

        PART 3--SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR.

SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR.

    (a) In General.--The Secretary of Labor is responsible--
            (1) under subtitle G, for the enforcement of requirements 
        applicable to employers under regional alliances (including 
        requirements relating to payment of premiums) and the 
        administration of corporate alliances;
            (2) under subtitle D, with respect to elections by eligible 
        sponsors to become corporate alliances and the termination of 
        such elections;
            (3) under section 1395, for the temporary assumption of the 
        operation of self-insured corporate alliance health plans that 
        are insolvent;
            (4) under section 1396, for the establishment and 
        administration of Corporate Alliance Health Plan Insolvency 
        Fund;
            (5) for carrying out any other responsibilities assigned to 
        the Secretary under this Act; and
            (6) for administering title I of the Employee Retirement 
        Income Security Act of 1974 as it relates to group health plans 
        maintained by corporate alliances.
    (b) Agreements with States.--The Secretary of Labor may enter into 
agreements with States in order to enforce responsibilities of 
employers and corporate alliances, and requirements of corporate 
alliance health plans, under subtitle B of title I of the Employee 
Retirement Income Security Act of 1974.
    (c) Consultation with Board.--In carrying out activities under this 
Act with respect to corporate alliances, corporate alliance health 
plans, and employers, the Secretary of Labor shall consult with the 
National Health Board.
    (d) Employer-Related Requirements.--
            (1) In general.--The Secretary of Labor, in consultation 
        with the Secretary, shall be responsible for assuring that 
        employers--
                    (A) make payments of any employer premiums (and 
                withhold and make payment of the family share of 
                premiums with respect to qualifying employees) as 
                required under this Act, including auditing of regional 
                alliance collection activities with respect to such 
                payments,
                    (B) submit timely reports as required under this 
                Act, and
                    (C) otherwise comply with requirements imposed on 
                employers under this Act.
            (2) Audit and similar authorities.--The Secretary