Title I, Subtitle B
SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DI-
AGNOSTIC 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 rehabilita-
tion 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 sec-
tion 1861(t) of the Social Security Act (as amended
by section 2001(b))—
(A) except that, for purposes of this sec-
tion, a medically accepted indication with re-
spect to the use of a covered outpatient drug in-
cludes 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 ap-
proved for inclusion) in one or more of the
following compendia: the American Hos-
Title I, Subtitle B
pital Formulary Service-Drug Information,
the American Medical Association Drug
Evaluations, the United States Pharma-
copoeia-Drug Information, and other au-
thoritative compendia as identified by the
Secretary, unless the Secretary has deter-
mined that the use is not medically appro-
priate or the use is identified as not indi-
cated 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 Sec-
retary; 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 accept-
ed indications for drugs.
Title I, Subtitle B
(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 serv-
ices 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 rehabili-
tation services is subject to the following limitations:
(1) RESTORATION OF CAPACITY OR MINIMIZA-
TION 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 cov-
ered only if such person determines that functioning
is improving.
Title I, Subtitle B
SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROS-
THETIC AND ORTHOTIC DEVICES.
(a) COVERAGE.—The items and services described in
this section are—
(1) durable medical equipment, including acces-
sories and supplies necessary for repair, function,
and maintenance of such equipment;
(2) prosthetic devices (other than dental de-
vices) 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 di-
rectly with a prosthetic device to achieve the thera-
peutic 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 re-
placements if required because of a change in the
patient’s physical condition; and
(6) fitting and training for use of the items de-
scribed 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.
Title I, Subtitle B
(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 sim-
ple extractions, for acute infections, bleeding, and
injuries to natural teeth and oral structures for con-
ditions 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 pro-
phylaxis.
(3) Treatment of dental disease, including rou-
tine fillings, prosthetics for genetic defects, peri-
odontal maintenance, and endodontic services.
Title I, Subtitle B
(4) Space maintenance procedures to prevent
orthodontic complications.
(5) Interceptive orthodontic treatment to pre-
vent severe malocclusion.
(b) LIMITATIONS.—Coverage for dental care is sub-
ject 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
Title I, Subtitle B
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 erup-
tion of the permanent posterior tooth con-
cerned.
(4) 
INTERCEPTIVE
ORTHODONTIC
TREAT-
MENT.—Prior to January 1, 2001, the items and
services described in subsection (a)(5) are not cov-
ered. 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 behav-
ioral risk factors and to promote healthy activities. Such
education and training classes may include smoking ces-
sation, nutrition counseling, stress management, support
groups, and physical training classes.
Title I, Subtitle B
(b) DISCRETION OF PLAN.—A health plan may offer
education and training classes at its discretion.
(c) CONSTRUCTION.—This section shall not be con-
strued to include or limit education or training that is pro-
vided 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 in-
vestigational 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 in-
cludes 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
Title I, Subtitle B
(2) the item or service would have been pro-
vided to the individual even if the individual were
not receiving the investigational treatment.
(d) DEFINITIONS.—For purposes of this subtitle:
(1) 
QUALIFYING
INVESTIGATIONAL
TREAT-
MENT.—The term ‘‘qualifying investigational treat-
ment’’ 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 Sec-
retary of Health and Human Services, the Di-
rector of the National Institutes of Health, the
Commissioner of the Food and Drug Adminis-
tration, the Secretary of Veterans Affairs, the
Secretary of Defense, or a qualified nongovern-
mental 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 treat-
Title I, Subtitle B
ment 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 in-
dividuals enrolled under the plan one, but not more than
one, of the following cost sharing schedules, which sched-
ule 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 sec-
tion 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 sub-
Title I, Subtitle B
section (a) shall be applied based upon expenses in-
curred for items and services furnished in the year.
(2) 
INDIVIDUAL
AND
FAMILY
GENERAL
DEDUCTIBLES.—
(A) INDIVIDUAL.—Subject to subpara-
graph (B), with respect to an individual en-
rolled under a health plan (regardless of the
class of enrollment), any individual general de-
ductible in the cost sharing schedule offered by
the plan represents the amount of countable ex-
penses (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 in-
dividual.
(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 deduct-
ible 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.
Title I, Subtitle B
(C) COUNTABLE EXPENSE.—In this para-
graph, the term ‘‘countable expense’’ means,
with respect to an individual for a year, an ex-
pense 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 deduct-
ible 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, respec-
tively) 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 subpara-
graph (B), with respect to an individual en-
Title I, Subtitle B
rolled under a health plan (regardless of the
class of enrollment), the individual out-of-pock-
et 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 be-
cause 
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 pro-
vided 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 of-
fered by the plan represents the amount of ex-
penses 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
Title I, Subtitle B
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 sub-
sections (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 coinsur-
ance; and
(B) subject to section 1152, shall require
payment of the copayment for an item or serv-
ice (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
Title I, Subtitle B
1402(f)) in an amount that is a percentage (deter-
mined under subsection (b)) of the applicable pay-
ment 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
PERCENT-
AGE.—
(1) IN GENERAL.—The National Health Board
shall determine a percentage referred to in sub-
section (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 sub-
ject to coinsurance, except as provided in para-
graph (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 per-
cent of the applicable payment rate.
Title I, Subtitle B
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 de-
ductible of $200 and an annual family general de-
ductible of $400 that apply with respect to expenses
incurred for all items and services in the comprehen-
sive 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 para-
graph (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 (de-
scribed in section 1115(c)) equal to the cost of one
day of such treatment before the plan provides bene-
fits for such treatment to the individual;
(3) shall require an individual to incur expenses
during each episode of intensive nonresidential men-
tal illness and substance abuse treatment (described
in section 1115(d)) equal to the cost of one day of
Title I, Subtitle B
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 di-
agnosis 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
Title I, Subtitle B
(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 pay-
ment 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
TREAT-
MENT.—For purposes of subsection (a)(2), an epi-
sode of inpatient and residential mental illness and
substance abuse treatment shall be considered to
begin on the date an individual is admitted to a fa-
cility for such treatment and to end on the date the
individual is discharged from the facility.
(2) 
INTENSIVE
NONRESIDENTIAL
TREAT-
MENT.—For purposes of subsection (a)(3), an epi-
sode of intensive nonresidential mental illness and
substance abuse treatment—
(A) shall be considered to begin on the
date an individual begins participating in a pro-
gram described in section 1115(d)(1)(A) and to
end on the date the individual ceases such par-
ticipation; or
Title I, Subtitle B
(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 indi-
vidual 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 shar-
ing for in-network items and services than for out-
of-network items and services.
(b) IN-NETWORK ITEMS AND SERVICES.—With re-
spect to an in-network item or service (as defined in sec-
tion 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
Title I, Subtitle B
(3) shall require payment of a copayment in ac-
cordance with the lower cost sharing schedule de-
scribed 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 sched-
ule 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 ac-
cordance 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 coinsur-
ance 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
Title I, Subtitle B
Copayments and Coinsurance for Items and Services—Continued
Benefit
Section
Lower Cost Sharing
Schedule
Higher Cost Sharing Schedule
Hospital emergency room
services ...............................
1111
$25 per visit (un-
less patient has
an emergency
medical condition
as defined in sec-
tion 1867(e)(1)
of the Social Se-
curity Act)
20 percent of applicable
payment rate
Services of health profes-
sionals ................................
1112
$10 per visit
20 percent of applicable
payment rate
Emergency services other
than hospital emergency
room services ......................
1113
$25 per visit (un-
less patient has
an emergency
medical condition
as defined in sec-
tion 1867(e)(1)
of the Social Se-
curity Act)
20 percent of applicable
payment rate
Ambulatory medical and sur-
gical services ......................
1113
$10 per visit
20 percent of applicable
payment rate
Clinical preventive services ....
1114
No copayment
No coinsurance
Inpatient and residential men-
tal illness and substance
abuse treatment .................
1115
No copayment
20 percent of applicable
payment rate
Intensive nonresidential men-
tal illness and substance
abuse treatment (except
treatment provided pursu-
ant to section
1115(d)(2)(C)(ii)) ..............
1115
No copayment
20 percent of applicable
payment rate
Intensive nonresidential men-
tal illness and substance
abuse treatment provided
pursuant to section
1115(d)(2)(C)(ii) ................
1115
$25 per visit
50 percent of applicable
payment rate
Outpatient mental illness and
substance abuse treatment
(except psychotherapy, col-
lateral services, and case
management) ......................
1115
$10 per visit
20 percent of applicable
payment rate
Title I, Subtitle B
Copayments and Coinsurance for Items and Services—Continued
Benefit
Section
Lower Cost Sharing
Schedule
Higher Cost Sharing Schedule
Outpatient psychotherapy and
collateral services ...............
1115
$25 per visit until
January 1, 2001,
and $10 per visit
thereafter
50 percent of applicable
payment rate until Jan-
uary 1, 2001, and 20
percent thereafter
Case management ..................
1115
No copayment
No coinsurance
Family planning and services
for pregnant women (except
clinician visits and associ-
ated services related to pre-
natal care and 1 post-
partum visit) ......................
1116
$10 per visit
20 percent of applicable
payment rate
Clinician visits and associated
services related to prenatal
care and 1 post-partum
visit .....................................
1116
No copayment
No coinsurance
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, radi-
ology, and diagnostic serv-
ices .....................................
1121
No copayment
20 percent of applicable
payment rate
Outpatient prescription drugs
and biologicals ....................
1122
$5 per prescription
20 percent of applicable
payment rate
Outpatient rehabilitation serv-
ices .....................................
1123
$10 per visit
20 percent of applicable
payment rate
Durable medical equipment
and prosthetic and orthotic
devices ................................
1124
No copayment
20 percent of applicable
payment rate
Vision care .............................
1125
$10 per visit (No
additional charge
for 1 set of nec-
essary eyeglasses
for an individual
less than 18
years of age)
20 percent of applicable
payment rate
Title I, Subtitle B
Copayments and Coinsurance for Items and Services—Continued
Benefit
Section
Lower Cost Sharing
Schedule
Higher Cost Sharing Schedule
Dental care (except space
maintenance procedures
and interceptive orthodontic
treatment) ..........................
1126
$10 per visit
20 percent of applicable
payment rate
Space maintenance proce-
dures and interceptive or-
thodontic treatment ...........
1126
$20 per visit
40 percent of applicable
payment rate
Health education classes ........
1127
All cost sharing
rules determined
by plans
All cost sharing rules de-
termined by plans
Investigational treatment for
life-threatening condition ...
1128
All cost sharing
rules determined
by plans
All cost sharing rules de-
termined 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 applica-
ble 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 pre-
vious year after 1994, minus 1.
Title I, Subtitle B
(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 fac-
tor 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 end-
ing 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 ben-
efit package does not include—
Title I, Subtitle B
(1) an item or service that is not medically nec-
essary 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 sec-
tion 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 anom-
aly; 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 individ-
uals at least 18 years of age.
Title I, Subtitle B
(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 applica-
tion 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.
Title I, Subtitle B
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 de-
scribed 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 al-
teration, for each regional alliance for the year, will not
cause any regional alliance to exceed its per capita target
(as determined under section 6003).
Title I, Subtitle B
SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PRE-
VENTIVE 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 perio-
dicity schedule for such items and services;
(2) shall update the periodicity schedules for
the age-appropriate immunizations, tests, and clini-
cian 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 de-
scribed in subsection (a), the National Health Board shall
consult with experts in clinical preventive services.
Title I, Subtitle C
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, re-
strict the practice of any class of health professionals be-
yond what is justified by the skills and training of such
professionals.
SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY
TO RELIGIOUS BELIEF OR MORAL CONVIC-
TION.
A health professional or a health facility may not be
required to provide an item or service in the comprehen-
sive benefit package if the professional or facility objects
to doing so on the basis of a religious belief or moral con-
viction.
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
Title I, Subtitle C
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 docu-
ment (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 partici-
pating State with a State health care system in op-
eration by January 1, 1998, the provisions of sub-
part C of part 1 of subtitle F (relating to respon-
sibilities in absence of State systems) shall take ef-
fect.
(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 re-
quire to determine that the system shall meet
Title I, Subtitle C
the applicable requirements of this Act for the
succeeding year; and
(B) such information as the Board may re-
quire 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 sec-
tion 1202).
(2) HEALTH
PLANS.—Certifying health plans
(in accordance with section 1203).
(3) FINANCIAL SOLVENCY OF PLANS.—Assur-
ing the financial solvency of health plans (in accord-
ance with section 1204).
(4) ADMINISTRATION.—Designating an agency
or official charged with coordinating the State re-
sponsibilities under this Act.
(5) WORKERS
COMPENSATION
AND
AUTO-
MOBILE
INSURANCE.—Conforming State laws to
meet the requirements of subtitles A and B of title
Title I, Subtitle C
X (relating to medical benefits under workers com-
pensation and automobile insurance).
(6) OTHER
RESPONSIBILITIES.—Carrying out
other responsibilities of participating States specified
under this Act.
SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO AL-
LIANCES.
(a) ESTABLISHMENT OF ALLIANCES.—
(1) IN GENERAL.—A participating State shall—
(A) establish and maintain one or more re-
gional 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 partici-
pating State for a year unless the State has estab-
lished such alliances by March 1 of the previous
year.
(b) ALLIANCE AREAS.—
(1) IN GENERAL.—In accordance with this sub-
section, 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.—
Title I, Subtitle C
(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 MET-
ROPOLITAN
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 geo-
graphic area may be assigned to more than one re-
gional 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 alli-
ance area.
(6) NO PORTIONS OF STATE PERMITTED TO BE
OUTSIDE
ALLIANCE
AREA.—Each portion of the
100
Title I, Subtitle C
State shall be assigned to a regional alliance under
this subsection.
(c) STATE
COORDINATION
OF
REGIONAL
ALLI-
ANCES.—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 activi-
ties, and establishment of fee schedules for health pro-
viders.
(d) ASSISTANCE IN COLLECTION OF AMOUNTS OWED
TO
ALLIANCES.—Each State shall assure that the
amounts owed to regional alliances in the State are col-
lected 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 as-
sistance (and premium discounts and cost sharing
reductions for families) are made by regional alli-
ances in the State on the basis of the best informa-
tion 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 Rev-
101
Title I, Subtitle C
enue 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 alli-
ance-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 ADMIN-
ISTRATIVE ERRORS.—Each participating State is finan-
cially responsible, under section 9201(c)(2), for adminis-
trative 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 es-
tablished with respect to—
(A) the quality of the plan,
(B) the financial stability of the plan,
102
Title I, Subtitle C
(C) the plan’s capacity to deliver the com-
prehensive 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 partici-
pating State shall certify each plan as a regional alliance
health plan that it determines meets the criteria for cer-
tification established and published under subsection (a).
(c) MONITORING.—A participating State shall mon-
itor the performance of each State-certified regional alli-
ance 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 (re-
lating to the enforcement of cost containment rules
for plans in the State) or as may be necessary to en-
103
Title I, Subtitle C
sure 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 fam-
ily has adequate access to enroll in a
choice of regional alliance health plans pro-
viding services in the area in which the in-
dividual resides, including (to the max-
imum 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 accord-
ance with such section (including an in-
crease in such discount described in section
6104(b)(2)).
(B) AUTHORITY.—In order to carry out its
responsibility under subparagraph (A), a par-
ticipating State may require, as a condition of
104
Title I, Subtitle C
entering into a contract with a regional alliance
under section 1321, that one or more certified
regional alliance health plans cover all (or se-
lected portions) of the alliance area.
(2) ACCESS TO PLANS USING CENTERS OF EX-
CELLENCE.—Each participating State may require,
as a condition of entering into a contract with a re-
gional alliance under section 1321, that one or more
certified health plans provide access (through reim-
bursement, contracts, or otherwise) of enrolled indi-
viduals to services of centers of excellence (as des-
ignated by the State in accordance with rules pro-
mulgated by the Secretary).
(3) USE
OF
INCENTIVES
TO
ENROLL
AND
SERVE
DISADVANTAGED
GROUPS.—A State may
provide—
(A) for an adjustment to the risk-adjust-
ment methodology under section 1541(b) and
other financial incentives to regional alliance
health plans to ensure that such plans enroll in-
dividuals who are members of disadvantaged
groups, and
(B) for appropriate extra services, such as
outreach to encourage enrollment and transpor-
tation and interpreting services to ensure access
105
Title I, Subtitle C
to care, for certain population groups that face
barriers to access because of geographic loca-
tion, income levels, or racial or cultural dif-
ferences.
(f) COORDINATION
OF WORKERS’ COMPENSATION
SERVICES AND AUTOMOBILE INSURANCE.—Each partici-
pating State shall comply with the responsibilities regard-
ing workers’ compensation and automobile insurance spec-
ified in subtitles A and B of title X.
(g) IMPLEMENTATION
OF MANDATORY REINSUR-
ANCE 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 SUPPLE-
MENTAL INSURANCE.—Notwithstanding any other provi-
sion 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 es-
tablish) 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
106
Title I, Subtitle C
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 de-
fined 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 Na-
tional 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 re-
serves 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 oth-
ers in the case of a failure of a regional alliance
health plan.
107
Title I, Subtitle C
(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 al-
liance health plan within the State to pay an assess-
ment to the State in an amount not to exceed 2 per-
cent 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 cov-
erage for the comprehensive benefit package.
(2) DESIGNATION OF STATE AGENCY.—A par-
ticipating 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
PRO-
VIDERS AND ENROLLEES.—Each participating State
shall assure that in the case of a plan failure—
108
Title I, Subtitle C
(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 other-
wise 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 require-
ments imposed by the State based on rules pro-
mulgated by the Board);
(C) such health care providers have no
legal right to seek payment from eligible indi-
viduals enrolled in the plan for any such cov-
ered 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 sec-
tion, the failure of a health plan means the current
or imminent inability of the plan to pay claims.
109
Title I, Subtitle C
SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL
BENEFITS.
If a participating State provides benefits (either di-
rectly or through regional alliance health plans or other-
wise) 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-spe-
cific 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 re-
quirements:
110
Title I, Subtitle C
(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 op-
erated by the State or a designated agency of the
State.
(3) ENROLLMENT OF ELIGIBLE INDIVIDUALS.—
(A) MANDATORY
ENROLLMENT
OF
ALL
REGIONAL
ALLIANCE
INDIVIDUALS.—The sys-
tem 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 alli-
ance health plan.
(B) OPTIONAL
ENROLLMENT
OF
MEDI-
CARE-ELIGIBLE INDIVIDUALS.—At the option of
the State, the system may provide for the en-
rollment of medicare-individuals residing in the
State (or, in the case of an alliance-specific sin-
gle-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
111
Title I, Subtitle C
(as added by section 4001(a)) for the integra-
tion of medicare beneficiaries into plans of the
State. Nothing in this subparagraph shall be
construed as requiring that a State have a sin-
gle-payer system in order to provide for such in-
tegration.
(C) OPTIONAL
ENROLLMENT
OF
COR-
PORATE ALLIANCE INDIVIDUALS IN STATEWIDE
PLANS.—At the option of the State, a Statewide
single-payer system may provide for the enroll-
ment of individuals residing in the State who
are otherwise eligible to enroll in a corporate al-
liance 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 de-
scription of the option in the submission of its
system document to the Board for the year
under section 1200(b).
(E) EXCLUSION
OF
CERTAIN
INDIVID-
UALS.—A single-payer system may not require
the enrollment of electing veterans, active duty
military personnel, and electing Indians (as de-
fined in 1012(d)).
112
Title I, Subtitle C
(4) DIRECT PAYMENT TO PROVIDERS.—
(A) IN
GENERAL.—With respect to pro-
viders who furnish items and services included
in the comprehensive benefit package to individ-
uals enrolled in the system, the State shall
make payments directly to such providers and
assume (subject to subparagraph (B)) all finan-
cial risk associated with making such payments.
(B) CAPITATED PAYMENTS PERMITTED.—
Nothing in subparagraph (A) shall be construed
to prohibit providers furnishing items and serv-
ices 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 pro-
vide 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 SHAR-
ING.—The system may decrease the cost shar-
ing otherwise provided in the comprehensive
benefit package with respect to any class of in-
113
Title I, Subtitle C
dividuals enrolled in the system or any class of
services included in the package, so long as the
system does not increase the cost sharing other-
wise 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 sat-
isfactory 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 tar-
get that is determined under section 6003
(based on the State being a single regional alli-
ance) for the year;
(B) the per capita expenditures described
in subparagraph (A) are computed and effec-
tively monitored; and
(C) 
automatic, 
mandatory, 
nondis-
cretionary reductions in payments to health
care providers will be imposed to the extent re-
quired to assure that such per capita expendi-
tures do not exceed the applicable target re-
ferred to in subparagraph (A).
114
Title I, Subtitle C
(7) REQUIREMENTS
GENERALLY
APPLICABLE
TO HEALTH PLANS.—The system shall meet the re-
quirements 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 re-
strictions 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 STATE-
WIDE 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 through-
out 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
115
Title I, Subtitle C
(3) the State shall assume the functions de-
scribed 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 re-
quirements of section 1202 (relating to the estab-
lishment of alliances).
(2) HEALTH PLANS.—The requirements of sec-
tion 1203 (relating to health plans), other than the
requirement of subsection (f) of such section (relat-
ing to coordination of workers’ compensation serv-
ices 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 REQUIRE-
MENTS APPLICABLE TO REGIONAL ALLIANCES.—A State
operating a Statewide single-payer system shall be subject
116
Title I, Subtitle C
to the following requirements otherwise applicable to re-
gional alliances in other participating States:
(1) ENROLLMENT; ISSUANCE OF HEALTH SECU-
RITY 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 individ-
uals, 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 require-
ments 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 re-
gional 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.—
117
Title I, Subtitle C
(1) IN GENERAL.—A State operating a State-
wide single-payer system shall provide for the financ-
ing 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 State-
wide single-payer system in effect that has been approved
by the Board in accordance with this part.
SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SIN-
GLE-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 SYS-
TEM OPERATES.—A regional alliance in which an alliance-
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Title I, Subtitle D
specific single payer system is operated shall meet the re-
quirements applicable to regional alliances under subtitle
D, except that the alliance is not required to meet the fol-
lowing requirements of such subtitle:
(1) CONTRACTS WITH HEALTH PLANS.—The re-
quirements 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
OF-
FICE.—The requirements of section 1326(a) (relat-
ing to the establishment of an office of ombudsman).
(4) ADDRESSING NEEDS OF AREAS WITH INAD-
EQUATE 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 es-
tablishment of new plans).
Subtitle D—Health Alliances
SEC. 1300. HEALTH ALLIANCE DEFINED.
In this Act, the term ‘‘health alliance’’ means a re-
gional alliance (as defined in section 1301) and a cor-
porate alliance (as defined in section 1311).
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Title I, Subtitle D
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 require-
ments 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 gov-
erned by a Board of Directors appointed consistent with
the provisions of this subpart. All powers vested in a re-
gional 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 in-
dividuals who purchase such coverage; and
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Title I, Subtitle D
(B) members who represent individuals
who purchase such coverage, including employ-
ees who purchase such coverage.
(2) EQUAL REPRESENTATION OF EMPLOYERS
AND CONSUMERS.—The number of members of the
Board described under subparagraph (A) of para-
graph (1) shall be the same as the number of mem-
bers described in subparagraph (B) of such para-
graph.
(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 mem-
ber 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, de-
vices, 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
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Title I, Subtitle D
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 advi-
sory board consisting of representatives of health care pro-
viders 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 COR-
PORATE ALLIANCES; ADDITIONAL DEFINI-
TIONS.
(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 ter-
minated under section 1313; and
(2) the sponsor has filed with the Secretary of
Labor a document describing how the sponsor shall
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Title I, Subtitle D
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 elec-
tion under subsection (a)(1), and
(ii) is not an excluded employer de-
scribed 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)) main-
tained 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
123
Title I, Subtitle D
more affiliates of the same labor organiza-
tion, or one or more affiliates of labor or-
ganizations representing employees in the
same industry, covering more than 5,000
employees.
(C) RURAL ELECTRIC COOPERATIVE AND
RURAL
TELEPHONE
COOPERATIVE
ASSOCIA-
TION.—A rural electric cooperative or a rural
telephone cooperative association, but only with
respect to a group health plan that is main-
tained by such cooperative or association (or
members of such cooperative or association)
and only if such plan—
(i) offered health benefits as of Sep-
tember 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.
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Title I, Subtitle D
(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 COR-
PORATE ALLIANCE HEALTH PLANS.—For purposes of
part 1 of subtitle A, subject to subsection (d)—
(1) FULL-TIME EMPLOYEES OF LARGE EMPLOY-
ERS.—Each eligible individual who is a full-time em-
ployee (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 alli-
ance.
(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.
125
Title I, Subtitle D
(B) PARTICIPANT AND BENEFICIARY DE-
FINED.—In subparagraph (A), the terms ‘‘par-
ticipant’’ 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 COOPER-
ATIVE
ALLIANCES.—Each full-time employee of a
member of a rural electric cooperative or rural tele-
phone cooperative association which has an election
in effect as a corporate alliance (and each full-time
employee of such a cooperative or association) is eli-
gible to enroll in a corporate alliance health plan of-
fered by such corporate alliance.
(4) INELIGIBLE TO ENROLL IN REGIONAL ALLI-
ANCE 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 ac-
cordance with rules of the Board, the following individuals
shall not be treated as corporate alliance eligible individ-
uals:
(1) AFDC recipients.
(2) SSI recipients.
126
Title I, Subtitle D
(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 agree-
ment (as defined by the Secretary of Labor).
(e) DEFINITIONS RELATING TO CORPORATE ALLI-
ANCES.—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 Retire-
ment Income Security Act of 1974) providing med-
ical care (as defined in section 213(d) of the Inter-
nal Revenue Code of 1986) to participants or bene-
ficiaries (as defined in section 3 of the Employee Re-
tirement Income Security Act of 1974) directly or
through insurance, reimbursement, or otherwise.
(2) LARGE EMPLOYER.—The term ‘‘large em-
ployer’’ means an employer that has more than
5,000 full-time employees in the United States. Such
term includes the United States Postal Service.
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Title I, Subtitle D
(3) MULTIEMPLOYER PLAN.—The term ‘‘multi-
employer 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 ASSOCIA-
TIONS.—The term ‘‘rural telephone cooperative asso-
ciation’’ has the meaning given such term in section
3(40)(A)(v) of the Employee Retirement Income Se-
curity Act of 1974.
SEC. 1312. TIMING OF ELECTIONS.
(a) FOR LARGE EMPLOYERS.—
(1) CURRENT LARGE EMPLOYERS.—
(A) IN GENERAL.—In the case of an em-
ployer 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).
128
Title I, Subtitle D
(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 be-
come 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 Janu-
ary 1 prior to the general effective date, but first be-
comes 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 ap-
plied to the determination of whether an employer is
a large employer before an election is made under
section 1311.
129
Title I, Subtitle D
(b) FOR MULTIEMPLOYER PLANS AND RURAL CO-
OPERATIVES.—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 cov-
erage 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 sub-
section (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 cor-
porate alliance reports under section 1387(c), that there
were fewer than 4,800 full-time employees (or, active par-
ticipants, 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.
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Title I, Subtitle D
(b) TERMINATION FOR FAILURE TO MEET REQUIRE-
MENTS.—
(1) IN GENERAL.—If the Secretary of Labor
finds that a corporate alliance has failed substan-
tially 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
EQUIVA-
LENT.—If the Secretary of Labor finds that the alli-
ance is in violation of the requirements of section
6022 (relating to prohibition against excess increase
in premium expenditures), the Secretary shall termi-
nate 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 termi-
nation shall take effect as of the effective date of en-
rollments in regional alliance health plans made dur-
131
Title I, Subtitle D
ing the next open enrollment period (as provided in
section 1323(d)), and
(2) the enrollment of eligible individuals in cor-
porate alliance health plans of the corporate alliance
shall be terminated as of such date and such individ-
uals 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 sub-
section (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 avail-
ability of the comprehensive benefit package to eligi-
ble individuals residing in the alliance area in a cost-
effective manner, except as provided in this section,
each regional alliance shall negotiate with any will-
ing State-certified health plan to enter into a con-
tract with the alliance for the enrollment under the
plan of eligible individuals in the alliance area. Sub-
ject to paragraph (2), a regional alliance shall not
132
Title I, Subtitle D
enter into any such contract with a health plan that
is not a State-certified health plan.
(2) TREATMENT OF CERTAIN PLANS.—Each re-
gional alliance shall enter into a contract under this
section with any veterans health plan of the Depart-
ment of Veterans Affairs and with a Uniformed
Services Health Plan of the Department of Defense,
that offers the comprehensive benefit package to eli-
gible individuals residing in the alliance area if the
appropriate official requests to enter into such a
contract.
(b) GENERAL CONDITIONS FOR DENIAL OF CON-
TRACT 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 ex-
ceeds 120 percent of the regional alliance per capita
prremium target (as determined under section
6003); or
(2) the plan has failed to comply with require-
ments under prior contracts with the alliance, in-
cluding failing to offer coverage for all the services
in the comprehensive benefit package in the entire
service area of the plan.
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Title I, Subtitle D
SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR EN-
ROLLMENT; ESTABLISHMENT OF FEE-FOR-
SERVICE SCHEDULE.
(a) IN GENERAL.—Each regional alliance must pro-
vide 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 alli-
ance).
(b) OFFERING
OF
PLANS
BY
REGIONAL
ALLI-
ANCES.—
(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 ben-
efit package that are furnished by any law-
ful health care provider of the enrollee’s
choice, subject to reasonable restrictions
(described in subparagraph (B)), and
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Title I, Subtitle D
(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
DE-
SCRIBED.—The reasonable restrictions on cov-
erage 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 serv-
ices.
(iii) Exclusion of providers on the
basis of poor quality of care, based on evi-
dence obtainable by the plan.
Clause (ii) shall not be construed as permitting
a plan to require prior approval for non-pri-
mary health care services through a gatekeeper
or other process.
(c) ESTABLISHMENT OF FEE-FOR-SERVICE SCHED-
ULE.—
(1) IN GENERAL.—Except in the case of re-
gional alliances of a State that has established a
Statewide fee schedule under paragraph (3), each re-
gional alliance shall establish a fee schedule setting
135
Title I, Subtitle D
forth the payment rates applicable to services fur-
nished 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 es-
tablished pursuant to paragraph (1) or paragraph
(3).
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Title I, Subtitle D
(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 es-
tablishment 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 govern-
mental 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 sub-
section, ‘‘negotiations’’ are the process by which pro-
viders 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 con-
137
Title I, Subtitle D
stitutes 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 sub-
section.
(d) PROSPECTIVE BUDGETING OF FEE-FOR-SERV-
ICE.—
(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 pro-
viders annually to develop a budget for the des-
ignated fee-for-service plan;
(B) the negotiated budget shall establish
spending targets for each sector of health ex-
penditures 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 re-
138
Title I, Subtitle D
sult in expenditures under the plan exceeding
the negotiated budget, the plan shall reduce the
amount of payments otherwise made to pro-
viders (through a withhold or delay in payments
or adjustments) in such a manner and by such
amounts as necessary to assure that expendi-
tures will not exceed the budget.
(3) USE OF PROSPECTIVE BUDGETING EXCLU-
SIVE.—If a regional alliance or State establishes the
fee schedule for fee-for-service plans on the basis of
prospective budgeting under this subsection, pay-
ment 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 as-
sure that each regional alliance eligible individual who re-
sides 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 as-
sure 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 reach-
139
Title I, Subtitle D
ing the age of individual eligibility as an eligible enrollee
(and not merely as a family member). Each regional alli-
ance shall establish procedures, consistent with subtitle A,
for the selection of a single health plan in which all mem-
bers of a family are enrolled.
(b) POINT
OF
SERVICE
ENROLLMENT
MECHA-
NISM.—
(1) IN GENERAL.—Each regional alliance shall
establish a point-of-service enrollment mechanism
(meeting the requirements of this subsection) for en-
rolling 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 ben-
efit 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 evi-
dence 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—
140
Title I, Subtitle D
(i) shall provide the regional alliance
with information relating to the identity of
the eligible individual, and
(ii) may request payment from the re-
gional alliance for the furnishing of such
services.
(B) INITIAL
DETERMINATION
OF
ELIGI-
BILITY
AND
ENROLLMENT
STATUS.—The re-
gional alliance shall determine—
(i) if the individual is an alliance eligi-
ble individual for the alliance, and
(ii) if the individual is enrolled under
an applicable health plan (including a cor-
porate alliance health plan).
(C) TREATMENT OF ALLIANCE ELIGIBLE
INDIVIDUALS.—If the regional alliance deter-
mines that the individual is an alliance eligible
individual with respect to the alliance and—
(i) is enrolled under a regional alli-
ance health plan of the alliance, the alli-
ance shall forward the claim to the health
plan involved and shall notify the provider
(and the individual) of the fact of such en-
rollment and the forwarding of such claim
(and the plan shall make payment to the
141
Title I, Subtitle D
provider for the services furnished to the
individual 
as 
described 
in 
paragraph
(3)(C));
(ii) is not enrolled under a regional al-
liance health plan of the alliance but is re-
quired to be so enrolled in a specific health
plan as a family member under section
1011, the alliance shall record the individ-
ual’s enrollment under such specific plan,
shall forward the claim to such plan, and
shall notify the provider (and the indi-
vidual) 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 de-
scribed 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 de-
scribed in paragraph (3) shall apply.
(D) TREATMENT
OF
INDIVIDUALS
EN-
ROLLED UNDER HEALTH PLANS OF OTHER AL-
LIANCES.—If the regional alliance determines
that the individual is not an alliance eligible in-
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Title I, Subtitle D
dividual with respect to the alliance but the in-
dividual is enrolled—
(i) under a regional alliance health
plan of another alliance, the alliance shall
forward the claim to the other regional alli-
ance 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 for-
warding of such claim (and the plan shall
make payment to the provider for the serv-
ices furnished to the individual as de-
scribed in section 1383(b)(2)(B)).
(E) TREATMENT OF OTHER ALLIANCE ELI-
GIBLE INDIVIDUALS NOT ENROLLED IN HEALTH
PLAN.—If the regional alliance determines that
the individual is not an alliance eligible indi-
vidual with respect to the alliance and the indi-
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Title I, Subtitle D
vidual is an alliance eligible individual with re-
spect to another health alliance but is not en-
rolled in a health plan of such alliance, the re-
gional alliance shall forward the claim to the
other alliance involved and shall notify the pro-
vider (and the individual) of the forwarding of
such claim and the requirement for prompt en-
rollment 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 INDIVID-
UALS.—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 in-
dividuals the alliance is unable to identify as eli-
gible individuals.
(3) POINT-OF-SERVICE
ENROLLMENT
PROCE-
DURES 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
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Title I, Subtitle D
provides the individual with materials describ-
ing health plans offered through the alliance.
(B) The individual shall be provided a pe-
riod 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 alli-
ance 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 en-
rolled 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 alli-
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Title I, Subtitle D
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 re-
gional alliance shall provide for the enrollment of all family
members in the same plan, consistent with part 2 of sub-
title A.
(f) OVERSUBSCRIPTION OF PLANS.—
(1) IN GENERAL.—Each regional alliance shall
establish a method for establishing enrollment prior-
ities in the case of a health plan that does not have
sufficient capacity to enroll all eligible individuals
seeking enrollment.
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Title I, Subtitle D
(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 per-
mitted 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 al-
liance eligible individuals to change the plan in
which they are enrolled in the case of the termi-
nation 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 enroll-
ment 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
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Title I, Subtitle D
individuals’ continuation of coverage for the com-
prehensive benefit package.
(h) LIMITATION ON OFFERING OF COVERAGE TO IN-
ELIGIBLE 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 re-
gional alliance health plan or other health plan to offer
coverage to such individuals without any financial pay-
ment or participation by a regional alliance.
(i) ENFORCEMENT
OF
ENROLLMENT
REQUIRE-
MENT.—In the case of a regional alliance eligible indi-
vidual 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 (se-
lected 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 estab-
149
Title I, Subtitle D
lished 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 individ-
uals 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 under-
stood and useful form, that allows such enrollees
(and other alliance eligible individuals) to make valid
comparisons among health plans offered by the alli-
ance.
(2) INFORMATION TO BE INCLUDED.—Such in-
formation 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 pre-
miums and average out-of-pocket expenses.
(B) The characteristics and availability of
health care professionals and institutions par-
ticipating in the plan.
150
Title I, Subtitle D
(C) Any restrictions on access to providers
and services under the plan.
(D) A summary of the annual quality per-
formance report, established pursuant to section
5005(c)(1), which contains measures of quality
presented in a standard format.
(b) MARKETING.—Each regional alliance shall, con-
sistent with section 1404, review and approve or dis-
approve 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 as-
sist 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.
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Title I, Subtitle D
SEC. 1327. DATA COLLECTION; QUALITY.
Each regional alliance shall comply with requirements
of subtitles A and B of title V (relating to quality, infor-
mation systems, and privacy), and shall take appropriate
steps to ensure that health plans offered through the alli-
ance comply with such requirements.
SEC. 1328. ADDITIONAL DUTIES.
(a) ANTI-DISCRIMINATION.—In carrying out its ac-
tivities under this part, a regional alliance may not dis-
criminate against health plans on the basis of race, sex,
national origin, religion, mix of health professionals, loca-
tion 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 speci-
fied by the National Health Board, with other health alli-
ances its activities, including enrollment and disenrollment
activities, in a manner that ensures continuous, non-
duplicative coverage of alliance eligible individuals in
health plans and that minimizes administrative procedures
and paperwork.
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Title I, Subtitle D
SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLI-
ANCES TO ADDRESS NEEDS IN AREAS WITH
INADEQUATE HEALTH SERVICES; PROHIBI-
TION 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 sub-
section (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 ad-
ministering 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 CON-
FLICTS OF INTEREST.
(a) PROMULGATION
OF STANDARDS.—The Board
shall promulgate standards of conduct in accordance with
153
Title I, Subtitle D
subsection (b) for any administrator, officer, trustee, fidu-
ciary, custodian, counsel, agent, or employee of any re-
gional alliance.
(b) REQUIREMENTS FOR STANDARDS.—The stand-
ards 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 individ-
ual’s service or employment with an alliance; and
(2) the circumstances that will constitute im-
permissible 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 stand-
ards promulgated by the Board pursuant to subsections
(a) and (b) shall be subject, in addition to any other pen-
alties that may be prescribed by law, to a civil money pen-
alty 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
154
Title I, Subtitle D
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 FI-
NANCING AND INCOME DETERMINATIONS
Subpart A—Collection of Funds
SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPT-
ANCE OF BIDS.
(a) INFORMATION PROVIDED TO PLANS BEFORE SO-
LICITING 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 (in-
cluding 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 in-
formation shall include the following:
(A) The demographic and other character-
istics of regional alliance eligible individuals for
the regional alliance.
155
Title I, Subtitle D
(B) The uniform per capita conversion fac-
tor 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 rein-
surance 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 CON-
VERSION 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
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Title I, Subtitle D
the accepted bid for each plan for the year into the pre-
mium 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 FAC-
TORS AND REINSURANCE PAYMENT AMOUNTS.—Each re-
gional alliance shall compute and publish the risk-adjust-
ment 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 pay-
ment rate on a per capita basis for the comprehensive ben-
efit package for all alliance eligible individuals in the alli-
ance 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 gen-
eral family share of premiums (as defined in sub-
section (b)(1)(B)):
157
Title I, Subtitle D
(A) PLAN PREMIUMS.—For each plan of-
fered, the premium for the plan for each class
of family enrollment (including the amount of
any family collection shortfall).
(B) ALLIANCE CREDIT.—The alliance cred-
it 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 en-
rollment.
(D) CORPORATE ALLIANCE OPT-IN CRED-
IT.—The amount of any corporate alliance opt-
in credit provided under section 6106 for each
class of family enrollment.
(2) EMPLOYER PREMIUMS.—Each regional alli-
ance shall compute the following components of the
general employer premium payment amount (as de-
fined 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.
158
Title I, Subtitle D
(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 re-
gional 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 re-
gard to section 6101(b)(2)(C)(v).
(2) EMPLOYER PREMIUM.—
(A) IN GENERAL.—Each regional alliance
shall publish, in December before each year (be-
ginning 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.
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Title I, Subtitle D
(B) GENERAL EMPLOYER PREMIUM PAY-
MENT 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 FAMI-
LIES.
(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 fam-
ily. 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 de-
fined in section 1342(b)(1)(B)) for the class of en-
rollment involved;
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Title I, Subtitle D
(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 ac-
count 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 cred-
it 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.
161
Title I, Subtitle D
(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 alli-
ance in the conduct of its business, including the following:
(1) Information required for income-related de-
terminations 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 in-
dividuals on net earnings from self-employment
under section 1602(d).
(5) Applications for premium reductions under
section 6114.
(6) Information concerning medicare-eligible in-
dividuals 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.
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Title I, Subtitle D
(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 alli-
ances (through regional information centers or oth-
erwise) information necessary to determine—
(A) whether an individual is a medicare-eli-
gible individual,
(B) the eligibility of individuals for the
special treatment under section 6115,
(C) if medicare-eligible individuals are de-
scribed in section 1012(a), and
(D) the amounts of payments owed the al-
liance under section 1894 of the Social Security
Act, added by section 4003.
(2) INFORMATION
TO
SECRETARY.—Each re-
gional alliance shall make available to the Secretary
(through the national information system under sec-
163
Title I, Subtitle D
tion 5101 or otherwise) information relating to the
enrollment of individuals who would be medicare-eli-
gible 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 infor-
mation, on a timely basis for each individual enrolled
(and, to the extent required by the Secretary, identi-
fied and required to be enrolled) in a regional alli-
ance health plan regarding—
(A) the applicable premium for such enroll-
ment,
(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 re-
specting 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 con-
164
Title I, Subtitle D
tributions 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 re-
gional health alliance plans, in such manner as iden-
tifies 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 re-
gional alliance determines under section 1343 that a
family has paid any family share required under sec-
tion 6101 and is not required to repay any amount
under section 6111 for a year, the alliance shall pro-
vide notice of such determination to the family. Such
notice shall include a prominent statement that the
family is not required to make any additional pay-
ment and is not required to file any additional infor-
mation 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
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Title I, Subtitle D
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 re-
ductions that have been made in the family’s li-
ability 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 RE-
DUCTIONS
AVAILABLE.—Such 
notice 
shall
include—
(i) information regarding the dis-
counts and reductions available (under sec-
tions 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
DIS-
COUNTS.—
166
Title I, Subtitle D
(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 state-
ment (for use under section 1375) to be com-
pleted 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 infor-
mation 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 eligi-
ble, receive a rebate of the amount of excess
family share paid for the previous year.
(C) ADDITIONAL INFORMATION.—The alli-
ance shall permit a family to provide additional
information relating to the amount of such re-
ductions or the income of the family (insofar as
it may relate to a premium discount or reduc-
tion in liability under section 6104 or 6113).
167
Title I, Subtitle D
(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 speci-
fied 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 be-
comes 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 alli-
ance 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 at-
tributable to periods of coverage obtained through
that alliance);
(2) shall obtain such information, through the
health information system implemented under sec-
tion 5101, as the alliance may require in order to
compute the amount of any liability owed under this
168
Title I, Subtitle D
subpart (taking into account any reduction in such
amount under this section), and
(3) shall provide for the payment to other re-
gional 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 respon-
sible 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 dis-
counts or premium, cost sharing, or other reductions
made, or otherwise). No amounts are payable by the Fed-
eral 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 pro-
cedures, including the imposition of interest charges and
169
Title I, Subtitle D
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 em-
ployer, 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 en-
rolled.
(B) MULTIPLE EMPLOYMENT.—In the case
of a family that includes more than one quali-
fying employee, the family shall choose the em-
ployer 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 alli-
ance involved in a manner consistent with the
payment of employer premiums under sub-
section (c).
170
Title I, Subtitle D
(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 re-
gional alliance shall require payment to be made
prospectively. Such payment may be required to be
made not less frequently than monthly. The Sec-
retary may issue regulations in order to assure the
timely and accurate collection of the family share
due.
(c) TIMING
AND METHOD
OF PAYMENT
OF EM-
PLOYER 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 vir-
tue 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.
171
Title I, Subtitle D
(2) ELECTRONIC TRANSFER.—A regional alli-
ance may require those employers that have the ca-
pacity 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 alli-
ances under this Act by employers. Such assistance
may include the assessment of civil monetary pen-
alties, 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 re-
gional alliances with such technical and other assist-
ance as may promote the efficient collection of other
amounts owed such alliances under this Act. Such
assistance may include the assessment of civil mone-
tary penalties, not to exceed $5,000 or three times
the amount of the liability owed, whichever is great-
172
Title I, Subtitle D
er, in the case of repeated failure to pay (as speci-
fied 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 en-
rolled 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 alli-
ance 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 dur-
ing a year, each regional alliance (other than the final alli-
ance) 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 reduc-
173
Title I, Subtitle D
tions in liability under section 6112) attributable to alli-
ance 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 sub-
part with respect to families in a year in an equitable man-
ner among the regional alliances that provided health plan
coverage to the families in the year.
(d) EXPEDITING PROCESS.—In order to reduce pa-
perwork 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 sys-
tem under section 5101 or otherwise) as the Secretary de-
termines to be cost-effective, subject to such confiden-
tiality restrictions as may otherwise apply.
(e) STUDENTS.—In the case of a qualifying student
who makes an election described in section 1012(e)(1) (re-
lating 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 appro-
priate portion of the premium (determined in accordance
174
Title I, Subtitle D
with procedures specified by the Board) to the other re-
gional alliance in order to compensate that alliance for the
provision of such coverage.
(f) PAYMENTS
OF CERTAIN AMOUNTS
TO COR-
PORATE 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 em-
ployee 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 em-
ployee) 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.—
175
Title I, Subtitle D
(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 re-
spect 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 sec-
tion 6201(a)), reduced by—
(A) such amount multiplied by the sum
of—
(i) the administrative allowance per-
centage 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 REIN-
SURANCE METHODOLOGY.—Each regional alliance shall
use the risk adjustment methodology developed under sec-
tion 1541 in making payments to regional alliance health
176
Title I, Subtitle D
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 IN-
DIAN 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 pro-
visions as require the plan to submit a per cap-
ita 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 ne-
177
Title I, Subtitle D
gotiation 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 pro-
visions as require the plan to submit a per cap-
ita 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 sub-
title 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
178
Title I, Subtitle D
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 alli-
ance 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 per-
mit such alliances to retain a nominal fee to
compensate them for such collection activities.
179
Title I, Subtitle D
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 sec-
tion 8306(b)(4)(A), employees are deemed to be
residing in the area of residence (or area of em-
ployment), as specified under rules of the Sec-
retary, and the class of enrollment shall be such
class (or classes) as specified under rules of the
Secretary.
SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PER-
CENTAGE.
(a) SPECIFICATION BY ALLIANCE.—Before obtaining
bids under section 6004 from health plans for a year, each
regional alliance shall establish the administrative allow-
ance for the operation of the regional alliance in the year.
(b) ADMINISTRATIVE ALLOWANCE PERCENTAGE.—
Subject to subsection (c), the regional alliance shall com-
pute 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
180
Title I, Subtitle D
by the alliance and determined without regard to
section 1345(d)).
(c) LIMITATION TO 21⁄2 PERCENT.—In no case shall
an administrative allowance percentage exceed 2.5 per-
cent.
SEC. 1353. PAYMENTS TO THE FEDERAL GOVERNMENT FOR
ACADEMIC HEALTH CENTERS AND GRAD-
UATE MEDICAL EDUCATION.
Each regional alliance shall make payment to the
Secretary of an amount equal to the reduction in pay-
ments by the alliance to regional alliance health plans at-
tributable 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 com-
ply with standards established under section 1571(b) (re-
lating to the management of finances, maintenance of
records, accounting practices, auditing procedures, and fi-
nancial reporting) and under section 1591(d) (relating to
employer payments).
(b) SPECIFIC PROVISIONS.—In accordance with such
standards—
(1) FINANCIAL STATEMENTS.—
181
Title I, Subtitle D
(A) IN GENERAL.—Each regional alliance
shall publish periodic audited financial state-
ments.
(B) ANNUAL FINANCIAL AUDIT.—
(i) IN GENERAL.—Each regional alli-
ance shall have an annual financial audit
conducted by an independent auditor in ac-
cordance 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
DEFI-
CIENCIES.—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 re-
port.
(C) ELIGIBILITY ERROR RATES.—Each re-
gional alliance shall make eligibility determina-
tions for premium discounts, liability reduc-
tions, and cost sharing reductions under sec-
tions 6104 and 6123, section 6113, and section
1371, respectively, in a manner that maintains
182
Title I, Subtitle D
the error rates below an applicable maximum
permissible error rate specified by the Secretary
(or the Secretary of Labor with respect to sec-
tion 6123). In specifying such a rate, the Sec-
retary shall take into account maximum permis-
sible error rates recognized by the Federal Gov-
ernment 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 ac-
cordance with fiduciary standards and shall hold
such payments in financial institutions and instru-
ments that meet standards recognized or established
by the Secretary, in consultation with the Secre-
taries of Labor and the Treasury and taking into ac-
count current Federal laws and regulations relating
to fiduciary responsibilities and financial manage-
ment 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
183
Title I, Subtitle D
established by the alliance and used to fund any fu-
ture shortfalls resulting from such a discrepancy.
(4) AUDITING OF EMPLOYER PAYMENTS.—
(A) IN GENERAL.—Each regional alliance
is responsible for auditing the records of re-
gional alliance employers to assure that em-
ployer payments (including the payment of
amounts withheld) were made in the appro-
priate amount as provided under subpart A of
part 2 of subtitle B of title VI.
(B) EMPLOYERS WITH EMPLOYEES RESID-
ING 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 con-
ducted by a regional alliance on an employer
under this paragraph, an employer or other re-
gional alliance that is aggrieved by the deter-
mination in the audit is entitled to review of
such audit by the Secretary of Labor in a man-
ner to be provided by such Secretary.
184
Title I, Subtitle D
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 al-
liance health plan and that is either (A) an AFDC
or SSI family or (B) is determined under this sub-
part to have family adjusted income below 150 per-
cent of the applicable poverty level, the family is en-
titled 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 re-
duction is approved under section 1372(c) and be-
fore 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 ac-
cess to such information as may be necessary in
185
Title I, Subtitle D
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 de-
fined 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 shar-
ing plan or receiving a reduction in cost sharing
under paragraph (1), the amount of copayment ap-
plied 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
186
Title I, Subtitle D
copayment amount otherwise applicable under sec-
tions 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 REC-
ONCILIATION.—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 reduc-
tions under this section in the same manner as such provi-
sions apply to premium discounts under section 6104.
SEC. 1372. APPLICATION PROCESS FOR COST SHARING RE-
DUCTIONS.
(a) APPLICATION.—
187
Title I, Subtitle D
(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 es-
tablishing 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 devel-
oped by the Secretary) and shall include at least in-
formation 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 di-
vorce) 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.
188
Title I, Subtitle D
(3) APPROVED FAMILY DEFINED.—In this sec-
tion 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 ap-
prove 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 alli-
ance shall take into account the income for the pre-
vious 3-month period and current wages from em-
ployment (if any), consistent with rules specified by
the Secretary.
(d) FAMILY ADJUSTED INCOME.—
(1) IN GENERAL.—Except as provided in para-
graph (4), in this Act the term ‘‘family adjusted in-
come’’ means, with respect to a family, the sum of
the adjusted incomes (as defined in paragraph (2))
189
Title I, Subtitle D
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 sec-
tion 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 re-
ceived or accrued by the individual which is ex-
empt from tax.
(3) 
PRESENCE
OF
ADDITIONAL
DEPEND-
ENTS.—At the option of an individual, a family may
include (and not be required to separate out) the in-
come of other individuals who are claimed as de-
pendents 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
RE-
QUIREMENT.—The continued eligibility of a family
190
Title I, Subtitle D
for cost sharing reductions under this section is con-
ditioned 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 state-
ments are required to be filed under section
1375.
(2) RULES.—The Secretary shall issue rules re-
lated to the manner in which alliances confirm and
verify eligibility under this section.
(3) NOTICES OF CHANGES IN INCOME AND EM-
PLOYMENT STATUS.—
(A) IN GENERAL.—Each approved family
shall promptly notify the regional alliance of
any material increase (as defined by the Sec-
retary) in the family adjusted income.
(B) RESPONSE.—If a regional alliance re-
ceives notice under subparagraph (A) (or from
an employer under section 1602(b)(3)(A)(i)) or
otherwise receives information indicating a po-
tential significant change in the family’s em-
ployment status or increase in adjusted family
income, the regional alliance shall promptly
191
Title I, Subtitle D
take steps necessary to reconfirm the family’s
eligibility.
(f) TERMINATION OF COST SHARING REDUCTION.—
The regional alliance shall, after notice to the family, ter-
minate 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 sub-
section (c) on a timely basis or the alliance otherwise de-
termines that the family is no longer eligible for such re-
duction. The previous sentence shall not prevent the fam-
ily from subsequently reapplying for cost sharing reduc-
tion 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 shar-
ing under this section.
192
Title I, Subtitle D
SEC. 1373. APPLICATION FOR PREMIUM DISCOUNTS AND
REDUCTION IN LIABILITIES TO ALLIANCES.
(a) IN GENERAL.—Any regional alliance eligible fam-
ily may apply for a determination of the family adjusted
income of the family, for the purpose of establishing eligi-
bility for a premium discount under section 6104 or a re-
duction 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 pre-
mium payments made during a year.
(c) APPROVAL OF APPLICATION.—
(1) IN GENERAL.—A regional alliance shall ap-
prove 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 fam-
ily adjusted income of the family (as deter-
mined 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 sec-
tion 6113, if the application demonstrates that
the wage-adjusted income (as defined in sub-
section 6113(d)) of the family (as determined
193
Title I, Subtitle D
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 alli-
ance shall take into account the income for the pre-
vious 3-month period and current wages from em-
ployment (if any) and the statement of estimated in-
come for the year (filed under section 1374(c)), con-
sistent 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 sec-
tion 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 APPLICA-
TION PROCESS.
(a) DISTRIBUTION
OF APPLICATIONS.—Each re-
gional alliance shall distribute applications under this sub-
part 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
194
Title I, Subtitle D
for this purpose. The application may be submitted with
an application to enroll with a health plan under this sub-
title or separately.
(c) INCOME STATEMENT.—Each application shall in-
clude a declaration of estimated annual income for the
year involved.
(d) FORM AND CONTENTS.—An application for a dis-
count 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 deter-
minations 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 dis-
count 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.—
195
Title I, Subtitle D
(1) IN
GENERAL.—Subject to reconciliation
under section 1375, premium discounts and cost
sharing reductions under this subpart shall be ap-
plied to premium payments required (and for ex-
penses 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 infor-
mation supplied in applications under this part. This
verification shall be separate from the reconciliation pro-
vided under section 1375.
(h) HELP IN COMPLETING APPLICATIONS.—Each re-
gional alliance shall assist individuals in the filing of appli-
cations and income reconciliation statements under this
subpart.
(i) PENALTIES FOR INACCURATE INFORMATION.—
(1) INTEREST FOR UNDERSTATEMENTS.—Each
individual who knowingly understates income re-
ported in an application to a regional alliance under
this subpart or otherwise makes a material misrepre-
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Title I, Subtitle D
sentation 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 ap-
plication 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 state-
ment to verify the family’s adjusted income or wage-ad-
197
Title I, Subtitle D
justed 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 coordi-
nate 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 reconcili-
ation 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 pro-
vided, 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 pro-
vided, the regional alliance shall pay to the family
(directly or through a reduction in future family
198
Title I, Subtitle D
share of premiums or other payments) a total
amount equal to the amount of the deficit.
(c) NO RECONCILIATION FOR AFDC AND SSI FAMI-
LIES; NO RECONCILIATION FOR COST SHARING REDUC-
TIONS.—No reconciliation statement is required under
this section—
(1) with respect to cost sharing reductions pro-
vided under section 1372, or
(2) for a family that only claims a premium dis-
count 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 es-
tablished 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 in-
dividual that provides false information in a statement
under subsection (a) is subject to the same liabilities as
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Title I, Subtitle D
are provided under section 1374(h) for a misrepresenta-
tion of material fact described in such section.
(f) NOTICE OF REQUIREMENT.—Each regional alli-
ance (directly or in coordination with other regional alli-
ances) 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 li-
ability under this subpart in any month during the pre-
ceding 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 infor-
mation relating to the income of families for the pre-
vious 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 fami-
lies with applications filed under this subpart. The
Secretary of the Treasury may, consistent with sec-
tion 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
200
Title I, Subtitle D
information is not directly disclosed to a regional al-
liance.
(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 enroll-
ment 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 require-
ments of this title) as the alliance and plan may provide,
except that in no case does such contract remove the obli-
gation of the sponsor of the corporate alliance to provide
201
Title I, Subtitle D
for health benefits to corporate alliance eligible individuals
consistent with this part.
SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR EN-
ROLLMENT.
(a) IN GENERAL.—Each corporate alliance must pro-
vide to each eligible enrollee with respect to the alliance
a choice of health plans among the plans which have con-
tracts with the alliance under section 1381.
(b) OFFERING OF PLANS BY ALLIANCES.—A cor-
porate alliance shall include among its health plan offer-
ings for any eligible enrollee at least 3 health plans to en-
rollees, 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 INDI-
VIDUALS.—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
202
Title I, Subtitle D
this section sufficient to assure such enrollment.
Such methods and procedures shall assure the en-
rollment 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 ap-
pears to be a corporate alliance eligible individual—
(1) the alliance shall promptly ascertain the in-
dividual’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
203
Title I, Subtitle D
shall make payment to the provider for such
claim (in a manner consistent with require-
ments 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 cor-
porate alliance fails to make premium payments to
a health plan, the plan, after reasonable written no-
tice to the alliance and the Secretary of Labor, may
terminate coverage (and any contract with the alli-
ance under this part). If such coverage is terminated
the corporate alliance is responsible for the prompt
enrollment of alliance eligible individuals whose cov-
erage is terminated in another corporate alliance
health plan.
(e) CORPORATE ALLIANCE TRANSITION.—Each cor-
porate alliance must provide coverage—
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Title I, Subtitle D
(1) as of the first day of any month in which
an individual first becomes a corporate alliance eligi-
ble 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 PRE-
MIUM AREAS.
(a) APPLICATION
OF
COMMUNITY-RATED
PRE-
MIUMS.—The premiums charged by a corporate alliance
for enrollment in a corporate alliance health plan (not tak-
ing into account any employer premium payment required
under section 6131) shall vary only by class of family en-
rollment (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 im-
position 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 (con-
sistent with paragraph (3)) so that within such
205
Title I, Subtitle D
areas there are not substantial differences in average
per capita health care expenditures.
(3) ANTI-REDLINING.—The provisions of para-
graphs (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 ap-
plied under this section based on class of family en-
rollment and shall vary based on such class in ac-
cordance with factors specified by the corporate alli-
ance.
(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.
206
Title I, Subtitle D
(d) SPECIAL TREATMENT OF MULTIEMPLOYER ALLI-
ANCES.—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 em-
ployees under such alliances.
SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.
Each corporate alliance shall make an additional con-
tribution towards the enrollment in health plans of the al-
liance by certain low-wage families in accordance with sec-
tion 6131(b)(2).
SEC. 1386. CONSUMER INFORMATION AND MARKETING;
DATA 
COLLECTION 
AND 
QUALITY; 
ADDI-
TIONAL 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 cor-
porate 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
207
Title I, Subtitle D
form and manner as the Secretary may require, such in-
formation as the Secretary may require in order to mon-
itor the compliance of the alliance with the requirements
of this part.
(c) ANNUAL NOTICE OF EMPLOYEES OR PARTICI-
PANTS.—
(1) CORPORATE ALLIANCE.—Each corporate al-
liance 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 ob-
taining coverage through the alliance as of January
1 of that year.
(2) EMPLOYERS THAT BECOME LARGE EMPLOY-
ERS.—Each employer that is not a corporate alli-
ance 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, in-
formation on the number of such employees.
SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EM-
PLOYEES.
(a) MANAGEMENT OF FUNDS.—The management of
funds by a corporate alliance shall be subject to the appli-
cable fiduciary requirements of part 4 of subtitle B of title
I of the Employee Retirement Income Security Act of
208
Title I, Subtitle D
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; AC-
COUNTING 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 expendi-
tures in a manner that meets the requirements of part
2 of subtitle A of title VI.
SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOY-
ERS 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 cor-
209
Title I, Subtitle D
porate 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 em-
ployer 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 COR-
PORATE 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 em-
ployee of another corporate alliance employer, the cor-
porate 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.
210
Title I, Subtitle D
SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECH-
ANISMS FOR ENFORCEMENT OF CERTAIN RE-
QUIREMENTS.
The provisions of sections 502 (relating to civil en-
forcement) 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 PROTEC-
TIONS TO ENROLLED INDIVIDUALS.
The provisions of sections 510 (relating to inter-
ference with rights protected under Act) and 511 (relating
to coercive interference) of the Employee Retirement In-
come 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 rela-
tion 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 en-
sure that each corporate alliance health plan which is a
self-insured plan maintains plan assets in trust as pro-
211
Title I, Subtitle D
vided 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 secu-
rity to the extent provided in regulations of the Secretary.
(b) DISCLOSURE.—Each self-insured corporate alli-
ance 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 Sec-
retary may prescribe by regulation.
SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT 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
212
Title I, Subtitle D
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 Sec-
retary 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 trustee-
ship is necessary to protect the interests of the enrolled
individuals or health care providers or to avoid any unrea-
sonable deterioration of the financial condition of the plan
or any unreasonable increase in the liability of the Cor-
porate Alliance Health Plan Insolvency Fund. The trustee-
ship of the Secretary shall continue until the conditions
described in the first sentence of this subsection are rem-
edied 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,
213
Title I, Subtitle D
(2) to require the transfer of all (or any part)
of the assets and records of the plan to the Sec-
retary 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 Cor-
porate 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 individ-
uals 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 trust-
eeship,
(7) to commence, prosecute, or defend on behalf
of the plan any suit or proceeding involving the plan,
214
Title I, Subtitle D
(8) to issue, publish, or file such notices, state-
ments, and reports as may be required under regula-
tions 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 al-
liance 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 prac-
ticable 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 con-
tributions to the plan, and
(4) each employee organization which, for pur-
poses of collective bargaining, represents enrolled in-
dividuals.
215
Title I, Subtitle D
(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this Act or part 4 of sub-
title B of title I of the Employee Retirement Income Secu-
rity Act of 1974, or as may be otherwise ordered by the
court, the Secretary of Labor, upon appointment as trust-
ee 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 not-
withstanding the pendency in the same or any other court
of any bankruptcy, mortgage foreclosure, or equity receiv-
ership proceeding, or any proceeding to reorganize, con-
serve, or liquidate such plan or its property, or any pro-
ceeding to enforce a lien against property of the plan.
(f) JURISDICTION OF COURT.—
(1) IN GENERAL.—Upon the filing of an appli-
cation 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 jurisdic-
tion 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
216
Title I, Subtitle D
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 con-
tinue the stay of, any pending mortgage foreclosure,
equity receivership, or other proceeding to reorga-
nize, 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 prop-
erty of the plan or alliance. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary 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 profes-
217
Title I, Subtitle D
sional 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 Sec-
retary of Labor shall guarantee the payment of all benefits
under a corporate alliance health plan which is a self-in-
sured plan while such plan is under the Secretary’s trust-
eeship 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) be-
fore the date of the Secretary’s appointment as trustee
of the plan shall be disregarded for purposes of deter-
mining the guarantee under this section.
(c) CORPORATE ALLIANCE HEALTH PLAN INSOL-
VENCY FUND.—
(1) ESTABLISHMENT.—The Secretary of Labor
shall establish a Corporate Alliance Health Plan In-
solvency Fund (hereinafter in this part referred to
as the ‘‘Fund’’) from which the Secretary shall au-
thorize payment of all guaranteed benefits under
this section.
218
Title I, Subtitle D
(2) RECEIPTS AND DISBURSEMENTS.—
(A) RECEIPTS.—The Fund shall be cred-
ited with—
(i) funds borrowed under paragraph
(3),
(ii) assessments collected under sec-
tion 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 nec-
essary 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 admin-
istrative expenses of the Fund.
(3) BORROWING AUTHORITY.—At the direction
of the Secretary of Labor, the Fund may, to the ex-
tent necessary to carry out the purposes of para-
graph (1), issue to the Secretary of the Treasury
219
Title I, Subtitle D
notes or other obligations, in such forms and de-
nominations, 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 obli-
gations shall bear interest at a rate determined by
the Secretary of the Treasury, taking into consider-
ation the current average market yield on out-
standing marketable obligations of the United States
of comparable maturities during the month pre-
ceding the issuance of such notes or other obliga-
tions 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 pur-
pose 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 se-
curities may be issued under such chapter are ex-
tended 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 Sec-
220
Title I, Subtitle D
retary of the Treasury of such notes or other obliga-
tions 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 Sec-
retary may request the investment of such amounts
as such Secretary determines advisable by the Sec-
retary of the Treasury in obligations issued or guar-
anteed by the United States, but, until all bor-
rowings 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 AS-
SESSMENTS ON SELF-INSURED CORPORATE
ALLIANCE PLANS.
(a) IMPOSITION OF ASSESSMENTS.—Upon a deter-
mination that additional receipts to the Fund are nec-
essary in order to enable the Fund to repay amounts bor-
rowed by the Fund under section 1396(c)(3) while main-
taining 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
221
Title I, Subtitle D
the application of such rates as may be necessary to pro-
vide for such repayments.
(b) UNIFORMITY
OF ASSESSMENTS.—The assess-
ment 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 cat-
egory.
(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 im-
posed by the Secretary of Labor under this section
with respect to that plan when they are due. Assess-
ments under this section are payable at the time,
and on an estimated, advance, or other basis, as de-
termined by the Secretary. Assessments shall con-
tinue to accrue until the plan’s assets are distributed
222
Title I, Subtitle D
pursuant to a termination procedure or the Sec-
retary is appointed to serve as trustee of the plan
under section 1395.
(2) LATE PAYMENT CHARGES AND INTEREST.—
(A) LATE PAYMENT CHARGES.—If any as-
sessment is not paid when it is due, the Sec-
retary of Labor may assess a late payment
charge of not more than 100 percent of the as-
sessment 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 assess-
ment. 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 des-
ignated payor will be unable to pay the assess-
ment 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,
223
Title I, Subtitle D
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 des-
ignated 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 sub-
section 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—
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Title I, Subtitle D
(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 as-
sessments required to be paid by such employer. For
purposes of the preceding sentence, the term ‘‘con-
trolled 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 MUL-
TIEMPLOYER CORPORATE ALLIANCES FOR
ACADEMIC HEALTH CENTERS AND GRAD-
UATE MEDICAL EDUCATION.
(a) IN GENERAL.—A corporate alliance with an eligi-
ble 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
225
Title I, Subtitle E
equivalent calculated under section 6021) that would have
been payable by the alliance under section 1353 if the alli-
ance were a regional alliance.
(b) REFERENCE
TO EXEMPTION
FROM ASSESS-
MENT.—For provision exempting certain corporate alli-
ance 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.
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 ben-
efit 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 re-
spect 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
226
Title I, Subtitle E
that has been certified by a State under section 1203(a)
(or, in the case in which the Board is exercising certifi-
cation authority under section 1522(b), that has been cer-
tified by the Board).
(d) APPLICABLE
REGULATORY
AUTHORITY
DE-
FINED.—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 require-
ments.
227
Title I, Subtitle E
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 enroll-
ment. 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 sta-
tus, anticipated need for health care, age, occupa-
tion, 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 non-
payment of premiums;
228
Title I, Subtitle E
(2) cancel coverage for any alliance eligible indi-
vidual until that individual is enrolled in another ap-
plicable health plan;
(3) exclude coverage of an alliance eligible indi-
vidual because of existing medical conditions;
(4) impose waiting periods before coverage be-
gins; or
(5) impose a rider that serves to exclude cov-
erage of particular eligible individuals.
(c) ANTIDISCRIMINATION.—
(1) IN
GENERAL.—No health plan may dis-
criminate, or engage (directly or through contractual
arrangements) in any activity, including the selection
of a service area, that has the effect of discrimi-
nating, 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 NET-
WORK.—In selecting among providers of health serv-
ices for membership in a provider network, or in es-
tablishing the terms and conditions of such member-
ship, a health plan may not engage in any practice
that has the effect of discriminating against a
provider—
229
Title I, Subtitle E
(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 viola-
tion of this subsection, or of any regulation issued
under this subsection, for any person to take any ac-
tion 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 regula-
tions 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 ob-
tain coverage for out-of-network items and services
(as described in subsection (f)(2)); and
230
Title I, Subtitle E
(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 individ-
uals 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)).
231
Title I, Subtitle E
(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 de-
scribed in this subtitle, means items or services pro-
vided 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 para-
graph (3)).
(3) PROVIDER
NETWORK
DEFINED.—A ‘‘pro-
vider 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 ben-
efit 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 re-
gional alliance health plan may not vary the premium im-
posed with respect to residents of an alliance area, except
as may be required under section 6102(a) with respect to
232
Title I, Subtitle E
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
RESTRIC-
TIONS.—
(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 re-
gional alliance that contain false or materially mis-
leading information and shall provide for prior ap-
proval by the regional alliance of any marketing ma-
terials to be distributed by the plan.
(2) ENTIRE MARKET.—A health plan offered by
a regional alliance may not distribute marketing ma-
terials to an area smaller than the entire area served
by the plan.
(3) PROHIBITION OF TIE-INS.—A regional alli-
ance health plan, and any agency of such a plan,
233
Title I, Subtitle E
may not seek to influence an individual’s choice of
plans in conjunction with the sale of any other in-
surance.
(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 infor-
mation under paragraph (1).
234
Title I, Subtitle E
(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 sub-
title C of title V.
(b) ADDITIONAL REMEDIES.—If the grievance proce-
dure fails to resolve an enrollee’s complaint—
(1) in the case of an enrollee of a regional alli-
ance health plan, the enrollee has the option of seek-
ing 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.
235
Title I, Subtitle E
SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PRO-
VIDERS.
(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 en-
rollees, without regard to whether or not the pro-
vider 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 author-
ization.
(2) PAYMENT AMOUNTS.—In the case of emer-
gency and urgent care provided to an enrollee out-
side 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 alli-
ance for the alliance area where the services were
provided.
(c) APPLICATION OF FEE SCHEDULE.—
236
Title I, Subtitle E
(1) IN GENERAL.—Subject to paragraph (2),
each regional alliance health plan or corporate alli-
ance health plan that provides for payment for serv-
ices on a fee-for-service basis shall make such pay-
ment in the amounts provided under the fee sched-
ule 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 sched-
ule).
(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 noncom-
plying plan shall provide for reductions in payments
under the fee schedule to providers that are not par-
ticipating providers in accordance with section
6012(b).
237
Title I, Subtitle E
(d) PROHIBITION AGAINST BALANCE BILLING; RE-
QUIREMENT 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 le-
gally responsible for payment of any amount in ex-
cess of such applicable payment amount for items
and services covered under the comprehensive bene-
fits 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 shar-
ing 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 en-
tered into under subsection (a) between a health
plan and the health care providers providing the
comprehensive benefit package to individuals en-
rolled with the plan shall prohibit a provider from
238
Title I, Subtitle E
engaging in balance billing described in paragraph
(1).
(e) IMPOSITION OF PARTICIPATING PROVIDER AS-
SESSMENT 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, pay-
ments to participating providers shall be reduced by the
applicable network reduction percentage under such sec-
tion.
SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELAT-
ING TO HEALTH PLANS.
(a) LAWS RESTRICTING PLANS OTHER THAN FEE-
FOR-SERVICE PLANS.—Except as may otherwise be pro-
vided in this section, no State law shall apply to any serv-
ices 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 restrict-
ing 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;
239
Title I, Subtitle E
(3) requiring enrollees to obtain a referral for
treatment by a specialized physician or health insti-
tution;
(4) establishing different payment rates for par-
ticipating 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 require-
ments established by States under section 1204(a);
240
Title I, Subtitle E
(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 as-
surance 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;
241
Title I, Subtitle E
(3) oversee the quality and performance of par-
ticipating providers, consistent with section 1410;
and
(4) investigate and resolve consumer complaints
against participating providers.
SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MAN-
AGEMENT PROTOCOLS.
Each health plan shall disclose to enrollees (and pro-
spective enrollees) the protocols used by the plan for con-
trolling 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 net-
work of the plan, collects for or transmits to the
Board under subtitle B of title V is accurate and re-
liable.
(2) PRIVACY AND SECURITY.—Each health plan
shall take such measures as may be necessary to en-
242
Title I, Subtitle E
sure that health care information described in para-
graph (1) is not distributed to any individual or en-
tity 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 SUPPLE-
MENTAL INSURANCE.
(a) IN GENERAL.—An entity may offer a supple-
mental 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 de-
fined in subsection (b)(2)), the entity and the policy
meet the requirements of section 1423.
(b) POLICIES DEFINED.—
(1) SUPPLEMENTAL
HEALTH
BENEFIT
POL-
ICY.—
243
Title I, Subtitle E
(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 in-
cluded in such package but not covered be-
cause of a limitation in amount, duration,
or scope provided under this title,
or both.
(B) EXCLUSIONS.—Such term does not in-
clude 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 condi-
tions).
(iv) Hospital or nursing home indem-
nity insurance.
244
Title I, Subtitle E
(v) A medicare supplemental policy
(as defined in section 1882(g) of the Social
Security Act).
(vi) Insurance with respect to acci-
dents.
(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 el-
igible 
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 pro-
viders.
SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BEN-
EFIT 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 supple-
mental 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 dupli-
245
Title I, Subtitle E
cates any coverage provided under the medicare
program.
(2) EXCEPTION FOR MEDICARE-ELIGIBLE INDI-
VIDUALS.—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 cor-
porate alliance health plan), paragraph (1)(A) (and
not paragraph (1)(B)) shall apply.
(b) NO LIMITATION ON INDIVIDUALS OFFERED POL-
ICY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), each entity offering a supplemental health
benefit policy must accept for enrollment every indi-
vidual who seeks such enrollment, subject to capac-
ity 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 em-
ployer); or