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ual is enrolled exceeds (II) the reference
premium rate (as defined in section
2009(c)(4)) for the individual; and
(B) the AHP shall credit against the pre-
mium owed the applicable Federal assistance
amount (as defined in section 2009(c)(1)) pro-
vided the plan under section 2002(a)(2)(B).
If the premium reduction under subparagraph (A) is
not a multiple of $1, the Commission may provide
for the rounding of such reduction to a multiple of
$1.
SEC. 1206. FINANCIAL SOLVENCY REQUIREMENTS.
(a) SOLVENCY PROTECTION.—
(1) FOR INSURED PLANS.—In the case of an
AHP that is an insured plan (as defined by the
Health Care Standards Commission) and is issued
in a State, in order for the plan to be registered
under this subtitle the Commission must find that
the State has established satisfactory protection of
enrollees with respect to potential insolvency of the
plan.
(2) FOR
OTHER
PLANS.—In the case of an
AHP that is not an insured plan, the Commission
may require the plan to provide for such bond or
provide other satisfactory assurances that enrollees
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under the plan are protected with respect to poten-
tial insolvency of the plan.
(b) PROTECTION AGAINST PROVIDER CLAIMS.—In
the case of a failure of an AHP to make payments with
respect to the uniform set of effective benefits, under
standards established by the Commission, an individual
who is enrolled under the plan is not liable to any health
care provider or practitioner with respect to the provision
of health services within such uniform set for payments
in excess of the amount for which the enrollee would have
been liable if the plan were to have made payments in a
timely manner.
SEC. 1207. GRIEVANCE MECHANISMS; ENROLLEE PROTEC-
TIONS; 
WRITTEN 
POLICIES 
AND 
PROCE-
DURES RESPECTING ADVANCE DIRECTIVES;
AGENT COMMISSIONS.
(a) EFFECTIVE GRIEVANCE PROCEDURES.—
(1) IN GENERAL.—Each AHP shall provide for
effective procedures for hearing and resolving griev-
ances between the plan and individuals enrolled
under the plan, which procedures meet standards
specified by the Health Care Standards Commission.
(2) ACCESS
OF
OMBUDSMAN
TO
INFORMA-
TION.—Each AHP shall provide the ombudsman,
appointed under section 1107(b) for the HPPC area
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in which the AHP operates, and the ombudsman’s
staff with access to such information as may be nec-
essary for the ombudsman to carry out duties under
such section.
(b) RESTRICTION ON CERTAIN PHYSICIAN INCEN-
TIVE PLANS.—
(1) IN GENERAL.—A health plan may not be
registered as an AHP if it operates a physician in-
centive plan (as defined in paragraph (2)) unless the
requirements specified in clauses (i) through (iii) of
section 1876(i)(8)(A) of the Social Security Act are
met (in the same manner as they apply to eligible
organizations under section 1876 of such Act).
(2) PHYSICIAN INCENTIVE PLAN DEFINED.—In
this subsection, the term ‘‘physician incentive plan’’
means any compensation or other financial arrange-
ment between the AHP and a physician or physician
group that may directly or indirectly have the effect
of reducing or limiting services provided with respect
to individuals enrolled under the plan.
(c) WRITTEN POLICIES AND PROCEDURES RESPECT-
ING ADVANCE DIRECTIVES.—A health plan may not be
registered as an AHP unless the plan meets the require-
ments of section 1866(f) of the Social Security Act (relat-
ing to maintaining written policies and procedures respect-
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ing advance directives), insofar as such requirements
would apply to the plan if the plan were an eligible organi-
zation.
(d) PAYMENT OF AGENT COMMISSIONS.—An AHP—
(1) may pay a commission or other remunera-
tion to an agent or broker in marketing the plan to
individuals or groups, but
(2) may not vary such remuneration based, di-
rectly or indirectly, on the anticipated or actual
claims experience associated with the group or indi-
viduals to which the plan was sold.
SEC. 1208. ADDITIONAL REQUIREMENTS OF OPEN AHPS.
(a) REQUIREMENT OF AGREEMENT WITH HPPC.—
In the case of a health plan which is an open plan (as
defined in section 1701(b)(4)(B)), in order to be reg-
istered as an AHP the plan must have in effect an agree-
ment (described in section 1102) with each HPPC for
each HPPC area in which it is offered.
(b) REQUIREMENT OF OPEN ENROLLMENT.—
(1) IN GENERAL.—In the case of a health plan
which is an open health plan, in order to be reg-
istered as an AHP the plan must, subject to para-
graph (3), not reject the enrollment of any eligible
individual whom a HPPC is authorized to enroll
under an agreement referred to in subsection (a) if
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the individual applies for enrollment during an en-
rollment period.
(2) LIMITATION ON TERMINATION.—Subject to
paragraph (3), coverage of eligible individuals under
an open AHP may not be refused nor terminated ex-
cept for—
(A) nonpayment of premiums,
(B) fraud or misrepresentation, or
(C) termination of the plan at the end of
a year (after notice and in accordance with
standards established by the Health Care
Standards Commission).
(3) TREATMENT OF NETWORK PLANS.—
(A) GEOGRAPHIC LIMITATIONS.—
(i) IN GENERAL.—An AHP which is a
network plan (as defined in subparagraph
(D)) may deny coverage under the plan to
an eligible individual who is located outside
a service area of the plan, but only if such
denial is applied uniformly, without regard
to health status or insurability of individ-
uals.
(ii) SERVICE
AREAS.—The Health
Care Standards Commission shall establish
standards for the designation by network
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plans of service areas in order to prevent
discrimination based on health status of
individuals or their need for health serv-
ices.
(B) SIZE
LIMITS.—Subject to subpara-
graph (C), an AHP which is a network plan
may apply to the Commission to cease enrolling
eligible individuals under the AHP (or in a
service area of the plan) if—
(i) it ceases to enroll any new eligible
individuals, and
(ii) it can demonstrate that its finan-
cial or administrative capacity to serve pre-
viously covered groups or individuals (and
additional individuals who will be expected
to enroll because of affiliation with such
previously covered groups or individuals)
will be impaired if it is required to enroll
other eligible individuals.
(C) FIRST-COME-FIRST-SERVED.—A net-
work plan is only eligible to exercise the limita-
tions provided for in subparagraphs (A) and
(B) if it provides for enrollment of eligible indi-
viduals on a first-come-first-served basis, except
that the plan, under rules of the Commission,
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shall provide preference for eligible individuals
who are not eligible to enroll in another net-
work plan.
(D) NETWORK PLAN.—In this paragraph,
the term ‘‘network plan’’ means an eligible or-
ganization (as defined in section 1876(b) of the
Social Security Act) and includes a similar or-
ganization, specified in regulations of the Com-
mission, that requires a limitation on enroll-
ment of employer groups or individuals due to
the manner in which the organization provides
health care services.
(c) REQUIREMENT OF PARTICIPATION IN MEDICARE
RISK-BASED CONTRACTING.—
(1) IN GENERAL.—In the case of a health plan
which is an open health plan and which is an eligible
organization (as defined in section 1876(b) of the
Social Security Act), in order to be registered as an
AHP the plan must enter into a risk-sharing con-
tract under section 1876 of the Social Security Act
for the offering of benefits to medicare beneficiaries
in accordance with such section.
(2) EXPANSION
OF
MEDICARE
SELECT
PRO-
GRAM.—Subsection (c) of section 4358 of the Omni-
bus Budget Reconciliation Act of 1990 (104 Stat.
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1388–137) is amended by striking ‘‘only apply in 15
States’’ and all that follows through the end and in-
serting ‘‘on and after January 1, 1992.’’.
(3) ELIGIBILITY FOR PAYMENT.—An AHP that
meets the requirement of paragraph (1) is eligible to
receive adjustment payments under section 1210(b).
(d) PARTICIPATION IN FEHBP.—
(1) IN GENERAL.—In the case of a health plan
which is an open health plan, in order to be reg-
istered as an AHP the plan must have entered into
an agreement with the Office of Personnel Manage-
ment to offer a health plan to Federal employees
and annuitants, and family members, under the
Federal Employees Health Benefits Program under
chapter 89 of title 5, United States Code, under the
same terms and conditions (other than the amount
of premiums) offered by the AHP for enrollment of
eligible individuals through HPPCs.
(2) CHANGE
IN
CONTRIBUTION
AND
OTHER
FEHBP RULES.—Notwithstanding any other provi-
sion of law, effective January 1, 1995—
(A) enrollment shall not be permitted
under a health benefits plan under chapter 89
of title 5, United States Code, unless the plan
is an AHP; and
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(B) the amount of the Federal Government
contribution under such chapter—
(i) for any premium class shall be the
same for all AHPs in a HPPC area,
(ii) for any individual in a premium
class shall not exceed the base individual
premium 
(as 
defined 
in 
section
2009(c)(3)), and
(iii) in the aggregate for any fiscal
year shall be equal to the aggregate
amount of Government contributions that
would have been made but for this sub-
section.
SEC. 1209. COORDINATION OF BENEFITS WITH LOW-IN-
COME ASSISTANCE.
(a) IN GENERAL.—Each AHP shall provide for—
(1) acceptance of information, electronically,
from the Health Care Standards Commission on the
eligibility of individuals (and family members) for
low-income assistance under subtitle A of title II,
(2) an adjustment, in accordance with sections
1202(c) and 1205(c), in the cost-sharing or pre-
mium amounts otherwise imposed to reflect the cost-
sharing and premium assistance provided under
such subtitle, and
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(3) such reconciliation payments as may be re-
quired under section 1102(e).
(b) REQUIREMENT OF SPECIAL AGREEMENTS FOR
NON-OPEN PLANS.—In the case of a health plan which
is not an open health plan, in order to be registered as
an AHP the plan must have in effect a special agreement
(described in section 1102(a)(2)) with each HPPC for
each HPPC area in which it is offered.
SEC. 1210. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.
(a) 
MEDICARE
ADJUSTMENT
PAYMENT
RE-
QUIRED.—Each AHP which is not described in section
1208(c)(1) shall provide for payment to the Health Care
Standards Commission of such amounts as may be re-
quired as to put the plan in the same financial position
as the AHP would be in if it was required to meet the
requirement of such section.
(b) REDISTRIBUTION OF PAYMENTS TO PLANS.—
The Commission shall provide for the distribution of
amounts to be paid under subsection (a) among AHPs
meeting the requirement of section 1208(c)(1) in such
manner as reflects the relative financial impact of such
requirement among such plans.
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SEC. 1211. FUNDING FOR APPROVED MEDICAL RESIDENCY
TRAINING PROGRAMS AND PHYSICIAN RE-
TRAINING PROGRAMS.
(a) REQUIREMENT.—Each AHP shall provide for
payment of 1 percent of gross premium receipts (as de-
fined in subsection (c)) to the National Medical Education
Fund established under section 3005.
(b) PAYMENT METHOD.—
(1) OPEN AHPS.—In the case of an open AHP,
the payment under subsection (a) shall be made
through a reduction of 1 percent in the payments
made by each HPPC to the AHP.
(2) CLOSED
AHPS.—In the case of a closed
AHP, the payment under subsection (a) shall be
made on a monthly (or other basis) as specified by
the Commission. Failure of a closed AHP to make
such a payment on a timely basis is grounds for rev-
ocation of the registration of the AHP under this
part.
(c) GROSS PREMIUM RECEIPTS DEFINED.—In this
section, the term ‘‘gross premium receipts’’ means, with
respect to—
(1) an open AHP, the payment amounts other-
wise payable by a HPPC to the AHP, or
(2) a closed AHP, an actuarial equivalent value
(as established in accordance with rules of the Com-
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mission, similar to the rules established for purposes
of section 4980C(d)(1) of the Internal Revenue Code
of 1986).
PART 2—PREEMPTION OF STATE LAWS FOR
ACCOUNTABLE HEALTH PLANS
SEC. 1221. PREEMPTION FROM STATE BENEFIT MANDATES.
Effective as of January 1, 1995, no State shall estab-
lish or enforce any law or regulation that—
(1) requires the offering, as part of an AHP, of
any services, category of care, or services of any
class or type of provider that is different from the
uniform set of effective benefits;
(2) specifies the individuals to be covered under
an AHP or the duration of such coverage; or
(3) requires a right of conversion from a group
health plan that is an AHP to an individual health
plan.
SEC. 1222. PREEMPTION OF STATE LAW RESTRICTIONS ON
NETWORK PLANS.
(a) LIMITATION
ON RESTRICTIONS
ON NETWORK
PLANS.—Effective as of January 1, 1995—
(1) a State may not prohibit or limit a network
plan from including incentives for enrollees to use
the services of participating providers;