TITLE VI PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS

table of contents of title                                                Page

Sec. 6000. General definitions                                             982

Subtitle A Premium Caps

Part 1 Regional Alliance Health Expenditures

SUBPART A COMPUTATION OF TARGETS AND ACCEPTED BIDS

Sec. 6001. Computation of regional alliance inflation factors              984

Sec. 6002. Board determination of national per capita baseline premium
target                                                                     990

Sec. 6003. Determination of alliance per capita premium targets            995

Sec. 6004. Alliance initial bidding and negotiation process               1000

Sec. 6005. State financial incentives                                     1004

Sec. 6006. Recommendations to eliminate regional variations in alliance
targets due to variation in practice patterns; congressional consideration1005

Sec. 6007. Reference to limitation on administrative and judicial review of
certain determinations                                                    1012

SUBPART B PLAN AND PROVIDER PAYMENT REDUCTIONS TO MAINTAIN EXPENDITURES WITHIN
TARGETS

Sec. 6011. Plan payment reduction                                         1012

Sec. 6012. Provider payment reduction                                     1017

Part 2 Corporate Alliances Health Expenditures

Sec. 6021. Calculation of premium equivalents                             1020

Sec. 6022. Termination of corporate alliance for excess increase in
expenditures                                                              1021

Part 3 Treatment of Single-payer States

Sec. 6031. Special rules for single-payer States                          1024

Part 4 Transition Provisions

Sec. 6041. Monitoring prices and expenditures                             1024

Subtitle B Premium-Related Financings

Part 1 Family Premium Payments

SUBPART A FAMILY SHARE

Sec. 6101. Family share of premium                                        1025

Sec. 6102. Amount of premium                                              1028

Sec. 6103. Alliance credit                                                1030

Sec. 6104. Premium discount based on income                               1030

Sec. 6105. Excess premium credit                                          1042

Sec. 6106. Corporate alliance opt-in credit                               1044

Sec. 6107. Family collection shortfall add-on                             1045

SUBPART B REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES

Sec. 6111. Repayment of alliance credit by certain families               1047

Sec. 6112. No liability for families employed full-time; reduction in
liability for part-time employment                                        1048

Sec. 6113. Limitation of liability based on income                        1051

Sec. 6114. Special treatment of certain retirees and qualified spouses and
children                                                                  1055

Sec. 6115. Special treatment of certain medicare beneficiaries            1058

Part 2 Employer Premium Payments

SUBPART A REGIONAL ALLIANCE EMPLOYERS

Sec. 6121. Employer premium payment required                              1058

Sec. 6122. Computation of base employment monthly premium                 1063

Sec. 6123. Premium discount for certain employers                         1070

Sec. 6124. Payment adjustment for large employers electing coverage in a
regional alliance                                                         1075

Sec. 6125. Employer collection shortfall add-on                           1081

Sec. 6126. Application to self-employed individuals                       1081

SUBPART B CORPORATE ALLIANCE EMPLOYERS

Sec. 6131. Employer premium payment required                              1084

Subtitle C Payments to Regional Alliance Health Plans

Sec. 6201. Computation of blended plan per capita payment amount          1086

Sec. 6202. Computation of plan bid, AFDC, and SSI proportions             1088


SEC. 6000. GENERAL DEFINITIONS.

  (a) Definitions Relating to Bids. In this title:

  (1) Accepted bid. The term "accepted bid'' means the bid which is agreed to
between a regional alliance health plan and a regional alliance for coverage
of the comprehensive benefit package in the alliance area under subpart A of
part 1.

  (2) Final accepted bid. The term "final accepted bid'' means the accepted
bid, taking into account any voluntary reduction in such bid made under
section 6004(e).

  (3) Weighted average accepted bid. The term "weighted average accepted bid''
means, for a regional alliance for a year, the average of the accepted bids
for all regional alliance health plans offered by such alliance, weighted to
reflect the relative enrollment of regional alliance eligible individuals
among such plans.

  (4) Reduced weighted average accepted bid. The term "reduced weighted
average accepted bid'', for a health plan offered by a regional alliance for a
year, is the lesser of

  (A) the weighted average accepted bid for the regional alliance for the year
(determined using the final accepted bids as the accepted bids), or

  (B) the regional alliance per capita target for the year.

  (b) Weighted Average Premium. In this title, the term "weighted average
premium'' means, for a class of family enrollment and with respect to a
regional alliance for a year, the product of

  (1) reduced weighted average accepted bid (as defined in subsection (a)(4));

  (2)  the uniform per capita conversion factor (established under section
1341(b)) for the alliance; and

  (3) the premium class factor established by the Board for that class under
section 1531.

  (c) Incorporation of Other Definitions. Except as otherwise provided in this
title, the definitions of terms in subtitle J of title I of this Act shall
apply to this title.

Title VI, Subtitle A

Subtitle A Premium Caps

PART 1 REGIONAL ALLIANCE HEALTH EXPENDITURES

Subpart A Computation of Targets and Accepted Bids

SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLATION FACTORS.

  (a) Computation.

  (1) In general. This section provides for the computation of factors that
limit the growth of premiums for the comprehensive benefit package in regional
alliance health plans. The Board shall compute and publish, not later than
March 1 of each year (beginning with 1995) the regional alliance inflation
factor (as defined in paragraph (2)) for each regional alliance for the
following year.

  (2) Regional alliance inflation factor. In this part, the term "regional
alliance inflation factor'' means, for a year for a regional alliance

  (A) the general health care inflation factor for the year (as defined in
paragraph (3));

  (B) adjusted under subsection (c) (to take into account material changes in
the demographic and socio-economic characteristics of the population of
alliance eligible individuals);

  (C) decreased by the percentage adjustment (if any) provided with respect to
the regional alliance under subsection (d) (relating to adjustment for
previous excess expenditures); and

  (D) in the case of the year 2001, increased by a factor that the Board
determines to reflect the ratio of (i) the actuarial value of the increase in
benefits provided in that year under the comprehensive benefit package to (ii)
the actuarial value of the benefits that would have been in such package in
the year without regard to the increase.

For purposes of subparagraph (D)(i), the actuarial value of the increase with
respect to mental illness and substance abuse services (included within the
comprehensive benefit package) shall not exceed an actuarial value based on
the amount of the total expenditures that would have been made in 2001 by
States and subdivisions of States for mental illness and substance abuse
services (included in such package as of 2001) if this Act had not been
enacted.

  (3) General health care inflation factor.

  (A) 1996 through 2000. In this part, the term "general health care inflation
factor'', for a year, means the percentage increase in the CPI (as specified
under subsection (b)) for the year plus the following:

  (i) For 1996, 1.5 percentage points.

  (ii) For 1997, 1.0 percentage points.

  (iii) For 1998, 0.5 percentage points.

  (iv) For 1999 and for 2000, 0 percentage points.

  (B) Years after 2000.

  (i) Recommendation to congress. In 1999, the Board shall submit to Congress
recommendations on what the general health care inflation factor should be for
years beginning with 2001.

  (ii) Failure of congress to act. If the Congress fails to enact a law
specifying the general health care inflation factor for a year after 2000, the
Board, in January of the year before the year involved, shall compute such
factor for the year involved. Such factor shall be the product of the factors
described in subparagraph (C) for that fiscal year, minus 1.

  (C) Factors. The factors described in this subparagraph for a year are the
following:

  (i) CPI. 1 plus the percentage change in the CPI for the year, determined
based upon the percentage change in the average of the CPI for the 12-month
period ending with August 31 of the previous fiscal year over such average for
the preceding 12-month period.

  (ii) Real gdp per capita. 1 plus the average annual percentage change in the
real, per capita gross domestic product of the United States during the 3-year
period ending in the preceding calendar year, determined by the Board based on
data supplied by the Department of Commerce.

  (b) Projection of Increase in CPI.

  (1) In general. For purposes of this section, the Board shall specify, as of
the time of publication, the annual percentage increase in the CPI (as defined
in section 1902(9)) for the following year.

  (2) Data to be used. Such increase shall be the projection of the CPI
contained in the budget of the United States transmitted by the President to
the Congress in the year.

  (c) Special Adjustment for Material Changes in Demographic Characteristics
of Population.

  (1) Adjustment for corporate alliance opt-in.

  (A) In general. The Board shall develop a method for adjusting the regional
alliance inflation factor for each regional alliance in order to reflect
material changes in the demographic characteristics of regional alliance
eligible individuals residing in the alliance area (in comparison with such
characteristics for the previous year) as a result of one or more corporate
alliances terminating an election under section 1313.

  (B) Basis for adjustments. Adjustments under this paragraph (whether an
increase or decrease) shall be based on the characteristics and factors used
for making adjustments in payments under section 6124.

  (2) Adjustment for regional trend compared to national trend.

  (A) In general. The Board shall develop a method for adjusting the regional
alliance inflator factor for each regional alliance in order to reflect
material changes in the demographic characteristics (including at least age,
gender, and socio-economic status) and health status of regional alliance
eligible individuals residing in the alliance area in comparison with the
average change in such characteristics for such individuals residing in the
United States. The adjustment under this paragraph shall be for changes not
taken into account in the adjustment under paragraph (1).

  (B) Neutral adjustment. Such method (and any annual adjustment under this
paragraph) shall be designed to result in the adjustment effected under this
paragraph for a year not changing the weighted average of the regional
alliance inflation factors.

  (3) Application. The Board shall provide, on an annual basis, for an
adjustment of regional alliance inflation factors under this subsection using
such methods.

  (d) Consultation Process. The Board shall have a process for consulting with
representatives of States and regional alliances before establishing the
regional alliance inflation factors for each year under this section.

SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAPITA BASELINE PREMIUM TARGET.

  (a) In General. Not later than January 1, 1995, the Board shall determine a
national per capita baseline premium target. Such target is equal to

  (1) the national average per capita current coverage health expenditures
(determined under subsection (b)),

  (2) updated under subsection (c).

  (b) Determination of National Average Per Capita Current Coverage Health
Expenditures.

  (1) In general. The Board shall determine the national average per capita
current coverage health expenditures equal to

  (A) total covered current health care expenditures (described in paragraph
(2)), divided by

  (B) the estimated population in the United States of regional alliance
eligible individuals (as determined by the Board as of 1993 under paragraph
(4)) for whom such expenditures were determined.

The population under subparagraph (B) shall not include SSI recipients or AFDC
recipients.

  (2) Current health care expenditures. For purposes of paragraph (1)(A), the
Board shall determine current health care expenditures as follows:

  (A) Determination of total expenditures. The Board shall first determine the
amount of total payments made for items and services included in the
comprehensive benefit package (determined without regard to cost sharing) in
the United States in 1993.

  (B) Removal of certain expenditures not to be covered through regional
alliances. The amount so determined shall be decreased by the proportion of
such amount that is attributable to any of the following:

  (i) Medicare beneficiaries (other than such beneficiaries who are regional
alliance eligible individuals).

  (ii) AFDC recipients or SSI recipients.

  (iii) Expenditures which are paid for through workers' compensation or
automobile or other liability insurance.

  (iv) Expenditures by parties (including the Federal Government) that the
Board determines will not be payable by regional alliance health plans for
coverage of the comprehensive benefit package under this Act.

  (C) Addition of projected expenditures for uninsured and underinsured
individuals. The amount so determined and adjusted shall be increased to take
into account increased utilization of, and expenditures for, items and
services covered under the comprehensive benefit package likely to occur, as a
result of coverage under a regional alliance health plan of individuals who,
as of 1993 were uninsured or underinsured with respect to the comprehensive
benefit package. In making such determination, such expenditures shall be
based on the estimated average cost for such services in 1993 (and not on
private payment rates established for such services). In making such
determination, the estimated amount of uncompensated care in 1993 shall be
removed and will not include adjustments to offset payments below costs by
public programs.

  (D) Addition of health plan and alliance costs of administration. The amount
so determined and adjusted shall be increased by an estimated percentage
(determined by the Board, but no more than 15 percent) that reflects the
proportion of premiums that are required for health plan and regional alliance
administration (including regional alliance costs for administration of
income-related premium discounts and cost sharing reductions) and for State
premium taxes (which taxes shall be limited to such amounts in 1993 as are
attributable to the health benefits to be included in the comprehensive
benefit package).

  (E) Decrease for cost sharing. The amount so determined and adjusted shall
be decreased by a percentage that reflects (i) the estimated average
percentage of total amounts payable for items and services covered under the
comprehensive benefit package that will be payments in the form of cost
sharing under a higher cost sharing plan, and (ii) the percentage reduction in
utilization estimated to result from the application of high cost sharing.

  (3) Special rules.

  (A) Benefits used. The determinations under this section shall be based on
the comprehensive benefit package as in effect in 1996.

  (B) Assuming no change in expenditure pattern. The determination under
paragraph (2) shall be made without regard to any change in the pattern of
expenditures that may result from the enrollment of AFDC recipients and SSI
recipients in regional alliance health plans.

  (4) Eligible individuals. In this subsection, the determination of who are
regional alliance eligible individuals under this subsection shall be made as
though this Act was fully in effect in each State as of 1993.

  (c) Updating.

  (1) In general. Subject to paragraph (3), the Board shall update the amount
determined under subsection (b)(1) for each of 1994 and 1995 by the
appropriate update factor described in paragraph (2) for the year.

  (2) Appropriate update factor. In paragraph (1), the appropriate update
factor for a year is 1 plus the annual percentage increase for the year (as
determined by the Secretary, based on actual or projected information) in
private sector health care spending for items and services included in the
comprehensive benefit package (as of 1996).

  (3) Limit. The total, cumulative update under this subsection shall not
exceed 15 percent.

SEC. 6003. DETERMINATION OF ALLIANCE PER CAPITA PREMIUM TARGETS.

  (a) Initial Determination. Not later than January 1, 1995, the Board shall
determine, for each regional alliance for 1996, a regional alliance per capita
premium target. Such target shall equal

  (1) the national per capita baseline premium target (determined by the Board
under section 6002),

  (2) updated by the regional alliance inflation factor (as determined under
section 6001(a)(2)) for 1996, and

  (3) adjusted by the adjustment factor for the regional alliance (determined
under subsection (c)).

  (b) Subsequent Determinations.

  (1) Determination. Not later than March 1 of each year (beginning with 1996)
the Board shall determine, for each regional alliance for the succeeding year
a regional alliance per capita premium target.

  (2) General rule. Subject to subsection (e), such target shall equal

  (A) the regional alliance per capita target determined under this section
(without regard to subsection (e)) for the regional alliance for the previous
year,

  (B) updated by the regional alliance inflation factor (as determined in
section 6001(a)) for the year.

  (3) Adjustment for previous excess rate of increase in expenditures. Such
target for a year is subject to a decrease under section 6001(d).

  (c) Adjustment Factors for Regional Alliances for Initial Determination.

  (1) In general. The Board shall establish an adjustment factor for each
regional alliance in a manner consistent with this subsection.

  (2) Considerations. In establishing the factor for each regional alliance,
the Board shall consider, using information of the type described in paragraph
(3), the difference between the national average of the factors taken into
account in determining the national per capita baseline premium target and
such factors for the regional alliance, including variations in health care
expenditures and in rates of uninsurance and underinsurance in the different
alliance areas and including variations in the proportion of expenditures for
services provided by academic health centers in the different alliance areas.

  (3) Type of information. The type of information described in this paragraph
is

  (A) information on variations in premiums across States and across alliance
areas within a State (based on surveys and other data);

  (B) information on variations in per capita health spending by State, as
measured by the Secretary;

  (C) information on variations across States in per capita spending under the
medicare program and in such spending among alliance areas within a State
under such program; and

  (D) area rating factors commonly used by actuaries.

  (4) Application of factors in neutral manner. The application of the
adjustment factors under this subsection for 1996 shall be done in a manner so
that the weighted average of the regional alliance per capita premium targets
for 1996 is equal to the national per capita baseline premium target
determined under section 6002. Such weighted average shall be based on the
Board's estimate of the expected distribution of alliance eligible individuals
(taken into account under section 6002) among the regional alliances.

  (5) Consultation process. The Board shall have a process for consulting with
representatives of States and regional alliances before establishing the
adjustment for regional alliances under this subsection.

  (d) Treatment of Certain States.

  (1) Non-alliance states. In the case of a State that is not a participating
State or otherwise has not established regional alliances, the entire State
shall be treated under the provisions of this part as composing a single
regional alliance.

  (2) Changes in alliance boundaries. In the case of a State that changes the
boundaries of its regional alliances (including the establishment of such
alliances after 1996), the Board shall provide a method for computing a
regional alliance per capita premium target for each regional alliance
affected by such change in a manner that

  (A) reflects the factors taken into account in establishing the adjustment
factors for regional alliances under subsection (c), and

  (B) results in the weighted average of the newly computed regional targets
for the regional alliances affected by the change equal to the weighted
average of the regional targets for the regional alliances as previously
established.

  (e) Adjustment for Previous Excess Rate of Increase in Expenditures.

  (1) In general. If the actual weighted average accepted bid for a regional
alliance for a year (as determined by the Board based on actual enrollment in
the first month of the year) exceeds the regional alliance per capita premium
target (determined under this section) for the year, then the regional
alliance per capita premium target shall be reduced, by \1/2\ of the excess
percentage (described in paragraph (2)) for the year, for each of the 2
succeeding years.

  (2) Excess percentage. The excess percentage described in this paragraph for
a year is the percentage by which

  (A) the actual weighted average accepted bid (referred to in paragraph (1))
for a regional alliance for the year, exceeds

  (B) the regional alliance per capita premium target (determined under this
section) for the year.

SEC. 6004. ALLIANCE INITIAL BIDDING AND NEGOTIATION PROCESS.

  (a) Bidding Process.

  (1) Obtaining bids.

  (A) In general. Not later than July 1 before the first year, and not later
than August 1 of each succeeding year, the regional alliance shall have
obtained premium bids from each plan seeking to participate as a regional
alliance health plan with respect to the alliance in the following year.

  (B) Disclosure. In obtaining such bids, a regional alliance may determine to
disclose (or not to disclose) the regional alliance per capita premium target
for the regional alliance (determined under section 6003) for the year
involved.

  (C) Condition. Each bid submitted by a plan under this subsection shall be
conditioned upon the plan's agreement to accept any payment reduction that may
be imposed under section 6011.

  (2) Negotiation process. Following the bidding process under paragraph (1),
a State may provide for negotiations with health plans relating to the
premiums to be charged by such plans. Such negotiations may result in the
resubmission of bids, but in no case shall a health plan resubmit a bid that
exceeds its prior bid.

  (3) Legally binding bids. All bids submitted under this subsection must be
legally binding with respect to the plans involved.

  (4) Acceptance. The final bid submitted by a plan under this subsection
shall be considered to be the final accepted bid, except as provided in
subsection (e).

  (5) Assistance. The Board shall provide regional alliances with such
information and technical assistance as may assist such alliances in the
bidding process under this subsection.

  (b) Submission of Information to Board. By not later than September 1 of
each year for which bids are obtained under subsection (a), each regional
alliance shall submit to the Board a report that discloses

  (1) information regarding the final bids obtained under subsection (a) by
the different plans;

  (2)(A) for the first year, any information the Board may request concerning
an estimation of the enrollment likely in each such plan of alliance eligible
individuals who will be offered enrollment in a health plan by alliance in the
first year, or

  (B) for a succeeding year, the actual distribution of enrollment of alliance
eligible individuals in regional alliance health plans in the year in which
the report is transmitted; and

  (3) limitations on capacity of regional alliance health plans.

  (c) Computation of Weighted Average Accepted Bid.

  (1) In general. For each regional alliance the Board shall determine a
weighted average accepted bid for each year for which bids are obtained under
subsection (a). Such determination shall be based on information on accepted
bids for the year, submitted under subsection (b)(1), and shall take into
account, subject to paragraph (2), the information on enrollment distribution
submitted under subsection (b)(2).

  (2) Enrollment distribution rules. In making the determination under
paragraph (1) for a regional alliance, the Board shall establish rules
respecting the treatment of enrollment in plans that are discontinued or are
newly offered.

  (d) Notice to Certain Alliances.

  (1) In general. By not later than October 1 of each year for which bids are
obtained, the Board shall notify a regional alliance

  (A) if the weighted average accepted bid (determined under subsection (c))
for the alliance is greater than the regional alliance per capita premium
target for the alliance (determined under section 6003) for the year, and

  (B) of the reduced weighted average accepted bid for the alliance.

  (2) Notice of premium reductions. If notice is provided to a regional
alliance under paragraph (1), the Board shall notify the regional alliance and
each noncomplying plan of any plan payment reduction computed under section
6011 for such a plan and the opportunity to voluntarily reduce the accepted
bid under subsection (e) in order to avoid such a reduction.

  (e) Voluntary Reduction of Accepted Bid (Final Accepted Bid). After the
Board has determined under subsection (c) the weighted average accepted bid
for a regional alliance and the Board has determined plan payment reductions,
before such date as the Board may specify (in order to provide for an open
enrollment period), a noncomplying plan has the opportunity to voluntarily
reduce its accepted bid by the amount of the plan payment reduction that would
otherwise apply to the plan. Such reduction shall not affect the amount of the
plan payment reduction for any other plan for that year.

SEC. 6005. STATE FINANCIAL INCENTIVES.

  (a) Election. Any participating State may elect to assume responsibility for
containment of health care expenditures in the State consistent with this
part. Such responsibility shall include submitting annual reports to the Board
on any activities undertaken by the State to contain such expenditures. A
participating State may regulate the rates charged by providers furnishing
health care items and services to all private payers. Such regulation of rates
may not cause a corporate alliance health plan to be charged, directly or
indirectly, rates different from those charged other health plans for the same
items and services or otherwise discriminate against corporate alliance health
plans.

  (b) Financial Incentive. In the case of a State that has made an election
under subsection (a), if the Board determines for a particular year (beginning
with the first year) that the statewide weighted average of the reduced
weighted average accepted bids (based on actual average enrollment for the
year), for regional alliances in the State, is less than the statewide
weighted average of the regional alliance per capita premium targets (based
upon such enrollment) for such alliances for the year, then the amount of the
State maintenance-of-effort payment under section 9001(b), for the following
year, shall be reduced by \1/2\ of the product of

  (1)(A) the amount by which the amount of such statewide average target
exceeds the amount of such statewide average accepted bid, divided by (B) the
amount of such target; and

  (2) the total of the amount of the Federal payments made in that particular
year to regional alliances in the State under subtitle B of title IX.

SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL VARIATIONS IN ALLIANCE
TARGETS DUE TO VARIATION IN PRACTICE PATTERNS; CONGRESSIONAL CONSIDERATION.

  (a) Establishment of Advisory Commission on Regional Variations in Health
Expenditures. The chair of the Board shall establish, by not later than 60
days after the date of appointment of the first chair, an advisory commission
on regional variations in health expenditures.

  (b) Composition. The advisory commission shall be composed of consumers,
employers, providers, representatives of health plans, States, regional
alliances, individuals with expertise in the financing of health care,
individuals with expertise in the economics of health care, and
representatives of diverse geographic areas.

  (c) Elimination of Regional Variation in Premiums Due to Practice Pattern.

  (1) Commission study. The advisory commission shall examine methods of
eliminating variation in regional alliance per capita premium targets due to
variation in practice patterns, not due to other factors (such as health care
input prices and demographic factors), by 2002.

  (2) Commission report. The advisory commission shall submit to the Board a
report that specifies one or more methods for eliminating the variation
described in paragraph (1).

  (3) Board recommendations. The Board shall submit to Congress, by not later
July 1, 1995, detailed recommendations respecting the specific method to be
used to eliminate the variation described in paragraph (1) by 2002. Such
recommendations may take into account regional variations in demographic or
health status and in health care input prices, based on the availability of
accurate proxies for measuring price variation. In taking into account health
care input prices, the Board shall explain what percentage of variation found
should be adjusted and what percentage of the premium should be adjusted.

  (d) Congressional Consideration.

  (1) In general. Detailed recommendations submitted under subsection (c)(3)
shall apply under this subtitle unless a joint resolution (described in
paragraph (2)) disapproving such recommendations is enacted, in accordance
with the provisions of paragraph (3), before the end of the 60-day period
beginning on the date on which such recommendations were submitted. For
purposes of applying the preceding sentence and paragraphs (2) and (3), the
days on which either House of Congress is not in session because of an
adjournment of more than three days to a day certain shall be excluded in the
computation of a period.

  (2) Joint resolution of disapproval. A joint resolution described in this
paragraph means only a joint resolution which is introduced within the 10-day
period beginning on the date on which the Board submits recommendations under
subsection (e)(3) and

  (A) which does not have a preamble;

  (B) the matter after the resolving clause of which is as follows: "That
Congress disapproves the recommendations of the National Health Board
concerning elimination of regional variation in regional alliance premiums, as
submitted by the Board on XXXXXXX.'', the blank space being filled in with the
appropriate date; and

  (C) the title of which is as follows: "Joint resolution disapproving
recommendations of the National Health Board concerning elimination of
regional variation in regional alliance premiums, as submitted by the Board on
XXXXXXX.'', the blank space being filled in with the appropriate date.

  (3) Procedures for consideration of resolution of disapproval. Subject to
paragraph (4), the provisions of section 2908 (other than subsection (a)) of
the Defense Base Closure and Realignment Act of 1990 shall apply to the
consideration of a joint resolution described in paragraph (2) in the same
manner as such provisions apply to a joint resolution described in section
2908(a) of such Act.

  (4) Special rules. For purposes of applying paragraph (3) with respect to
such provisions

  (A) any reference to the Committee on Armed Services of the House of
Representatives shall be deemed a reference to an appropriate Committee of the
House of Representatives (specified by the Speaker of the House of
Representatives at the time of submission of recommendations under subsection
(c)(3)) and any reference to the Committee on Armed Services of the Senate
shall be deemed a reference to an appropriate Committee of the Senate
(specified by the Majority Leader of the Senate at the time of submission of
recommendations under subsection (c)(3)); and

  (B) any reference to the date on which the President transmits a report
shall be deemed a reference to the date on which the Board submits a
recommendation under subsection (c)(3).

  (e) Elimination of Regional Variation State Payment Amounts.

  (1) Commission study. The advisory commission shall examine methods of
reducing variation among States in the level of payments required under
subtitle A of title IX by 2002. The commission shall examine methods of
reducing variation due to practice patterns, historical differences in the
rates of reimbursement to providers, and in the amount, duration, and scope of
benefits covered under State medicaid plans.

  (2) Commission report. The advisory commission shall submit to the Board a
report that specifies one or more methods for reducing the variation described
in paragraph (1).

  (3) Board recommendations. The Board shall submit to Congress, by not later
than July 1, 1995, detailed recommendations respecting the specific method to
be used to reduce the variation described in paragraph (1) by 2002 in a budget
neutral manner with respect to total government payments and payments by the
Federal Government. In submitting recommendations under this paragraph, the
Board shall consider the fiscal capacity of the States.

  (4) Congressional consideration.

  (A) In general. Subject to the succeeding provisions of this paragraph, the
provisions of subsection (d) shall apply to recommendations under paragraph
(3) in the same manner as they apply to recommendations under subsection
(c)(3).

  (B) Special rules. In applying subparagraph (A)

  (i) the following shall be substituted for the matter after the resolving
clause described in subsection (d)(2)(B): "That Congress disapproves the
recommendations of the National Health Board concerning reduction of regional
variation in State payments, as submitted by the Board on XXXXXXX.''; and

  (ii) the following shall be substituted for the title described in
subsection (d)(2)(C): "Joint resolution disapproving recommendations of the
National Health Board concerning reducing regional variation in State
payments, as submitted by the Board on XXXXXXX.''.

  (f) Information. The advisory commission shall provide the Board, States,
and regional alliances with information about regional differences in health
care costs and practice patterns.

SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRATIVE AND JUDICIAL REVIEW OF
CERTAIN DETERMINATIONS.

  For limitation on administrative and judicial review of certain
determinations under this part, see section 5232.

Subpart B Plan and Provider Payment Reductions to Maintain Expenditures within
Targets

SEC. 6011. PLAN PAYMENT REDUCTION.

  (a) Plan Payment Reduction. In order to assure that payments to regional
alliance health plans by a regional alliance are consistent with the
applicable regional alliance per capita target for the alliance (computed
under this subtitle), each noncomplying plan (as defined in subsection (b)(2))
for a year is subject to a reduction in plan payment (under section 1351) by
the amount equal to plan payment reduction specified in subsection (c) for the
year.

  (b) Noncomplying Alliance and Noncomplying Plan Defined. In this part:

  (1) Noncomplying alliance. The term "noncomplying alliance'' means, for a
year, a regional alliance for which the weighted average accepted bid
(computed under section 6004(c)) exceeds the regional alliance per capita
premium target for the year.

  (2) Noncomplying plan. The term "noncomplying plan'' means, for a year, a
regional alliance health plan offered through a noncomplying alliance if the
final accepted bid for the year exceeds the maximum complying bid (as defined
in subsection (d)) for the year. No plan shall be a noncomplying plan for a
year before the first year in which the plan is offered by a regional
alliance.

  (c) Amount of Plan Payment Reduction.

  (1) In general. The amount of the plan payment reduction, for a noncomplying
plan offered by an alliance, is the alliance-wide reduction percentage (as
defined in paragraph (2)) of the excess bid amount (as defined in paragraph
(3)) for the plan.

  (2) Alliance-wide reduction percentage.

  (A) In general. In paragraph (1), the term "alliance-wide reduction
percentage'' means, for a noncomplying plan offered by an alliance for a year

  (i) the amount by which (I) the weighted average accepted bid (computed
under section 6004(c)(1)) for the alliance for the year, exceeds (II) the
regional alliance per capita target for the alliance for the year; divided by

  (ii) the sum, for noncomplying plans offered by the alliance, of the plan
proportions of alliance excess bid amounts (described in subparagraph (B)(i))
for the year.

  (B) Plan proportion of alliance excess bid amount described.

  (i) In general. The "plan proportion of alliance excess bid amount''
described in this clause, for a noncomplying plan, is the product of

  (I) the excess bid amount (as defined in paragraph (3)) for the plan, and

  (II) the plan enrollment proportion (as defined in clause (ii)) for the
plan.

  (ii) Plan enrollment proportion. In clause (i)(II), the term "plan
enrollment proportion'' means, with respect to a health plan offered by a
regional alliance, the total enrollment of alliance eligible individuals
enrolled in such plan expressed as a percentage of the total enrollment of
alliance eligible individuals in all regional alliance plans offered by the
alliance. Such proportion shall be computed based on the information used in
computing the weighted average accepted bid for the alliance under section
6004(c)(1).

  (3) Excess bid amount. In this subsection, the "excess bid amount'', with
respect to a noncomplying plan for a year, is the amount by which

  (A) the accepted bid for the year (not taking into account any voluntary
reduction under section 6004(e)), exceeds

  (B) the maximum complying bid (as defined in subsection (d)) for the plan
for the year.

  (d) Maximum Complying Bid.

  (1) First year. In this part for the first year, the "maximum complying
bid'' for each plan offered by a regional alliance, is the regional alliance
per capita premium target for the alliance (determined under section 6003) for
the year.

  (2) Subsequent years. In this part, subject to paragraph (3), for a
subsequent year, the "maximum complying bid'', for a plan offered by an
alliance for a year, is the sum of the following:

  (A) Net previous year accepted bid for plan. The accepted bid for the
previous year  (not taking into account any voluntary reduction under section
6004(e)), minus the amount of any plan payment reduction for the plan for that
year.

  (B) Alliance-wide inflation allowance. The amount by which

  (i) the regional alliance per capita premium target for the year, exceeds

  (ii) such target for the previous year, or, if less, the weighted average
accepted bid (computed under section 6004(c)(1)) for such year.

  (3) Special rules for new plans.

  (A) In general. Subject to subparagraph (B), in the case of a plan that is
first offered by a regional alliance in a year after the first year the
maximum complying bid shall be the regional alliance per capita premium target
for the year.

  (B) Authority. The Board or a State may establish rules to modify the
application of subparagraph (A) for regional alliance health plans in the
State in order

  (i) to prevent abusive premium practices by entities previously offering
plans, or

  (ii) to encourage the availability of all types of plans in the State and to
permit establishment of new plans.

SEC. 6012. PROVIDER PAYMENT REDUCTION.

  (a) Participating Providers.

  (1) In general. Each regional alliance health plan, as part of its contract
under section 1406(e) with any participating provider (as defined in section
1407(c), or group of participating providers) shall

  (A) include a provision that provides that if the plan is a noncomplying
plan for a year, payments to the provider (or group) shall be reduced by the
applicable network reduction percentage (described in paragraph (2)) for the
year, and

  (B) not include any provision which the State determines otherwise varies
the payments to such providers (or group) because of, or in relation to, a
plan payment reduction under section 6011 or otherwise is intended to nullify
the effect of subparagraph (A).

The Board may issue regulations relating to the requirements of this
paragraph.

  (2) Applicable network reduction percentage.

  (A) In general. Subject to subparagraph (B), the "applicable network
reduction percentage'', with respect to participating providers of a
noncomplying plan for a year is

  (i) the plan payment reduction amount for the plan for the year (as
determined under section 6011(c)), divided by

  (ii) the final accepted bid for the plan for the year,

adjusted under subparagraph (B).

  (B) Induced volume offset. The Board shall provide for an appropriate
increase of the percentage reduction computed under subparagraph (A) to take
into account any estimated increase in volume of services provided that may
reasonably be anticipated as a consequence of applying a reduction in payment
under this subsection. The Board may compute and apply such increase
differently for different classes of providers or services or different types
of health plans (as the Board may define).

  (b) Other Providers.

  (1) In general. Each regional alliance health plan that is a noncomplying
plan in a year shall provide for a reduction in the amount of payments to
providers (or groups of providers) that are not participating providers under
the applicable alliance fee schedule under section 1406(c)(3) by the
applicable nonnetwork reduction percentage (described in paragraph (2)) for
the year.

  (2) Applicable nonnetwork reduction percentage.

  (A) In general. Subject to subparagraph (B), the "applicable nonnetwork
reduction percentage'', with respect to nonparticipating providers of a
noncomplying plan for a year is

  (i) the plan payment reduction amount for the plan for the year (as
determined under section 6011(c)), divided by

  (ii) the final accepted bid for the plan for the year,

adjusted under subparagraph (B).

  (B) Induced volume offset. The Board shall provide for an appropriate
increase of the percentage reduction computed under subparagraph (A) to take
into account any estimated increase in volume of services provided that may
reasonably be anticipated as a consequence of applying a reduction in payment
under this subsection. The Board may compute and apply such increase
differently for different classes of providers or services or different types
of health plans (as the Board may define).

  (c) Application to Cost Sharing and to Balance Billing Restrictions. For
purposes of applying section 1406(d) (relating to balance billing limitations)
and part 3 of subtitle B of title I (relating to computation of cost sharing),
the payment basis otherwise used for computing any limitation on billing or
cost sharing shall be such payment basis as adjusted by any reductions
effected under this section.

PART 2 CORPORATE ALLIANCES HEALTH EXPENDITURES

SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.

  (a) In General. By January 1, 1998, the Board shall develop a methodology
for calculating an annual per capita expenditure equivalent for amounts paid
for coverage for the comprehensive benefit package within a corporate
alliance.

  (b) Adjustment Permitted. Such methodology shall permit a corporate alliance
to petition the Secretary of Labor for an adjustment of the inflation
adjustment that would otherwise apply to compensate for material changes in
the demographic characteristics of the eligible individuals receiving coverage
through the alliance.

  (c) Reporting. In 2001 and each subsequent year, each corporate alliance
shall report to the Secretary of Labor, in a form and manner specified by the
Secretary, the average of the annual per capita expenditure equivalent for the
previous 3-year period.

SEC. 6022. TERMINATION OF CORPORATE ALLIANCE FOR EXCESS INCREASE IN
EXPENDITURES.

  (a) Termination.

  (1) In general. If a corporate alliance has two excess years (as defined in
subsection (b)) in a 3-year-period, then, effective beginning with the second
year following the second excess year in such period

  (A) the Secretary of Labor shall terminate the corporate alliance, and

  (B) employers that were corporate alliance employers with respect to such
corporate alliance shall become regional alliance employers (unless, in the
case of a corporate alliance with a plan sponsor described in subparagraph (B)
or (C) of section 1311(b)(1), the employers become corporate alliance
employers of another such corporate alliance).

  (2) Initial 3-year-period. Paragraph (1) shall first apply to the
3-year-period beginning with 1998.

  (3) Special subsequent treatment for large employers. In the case of
corporate alliance employers described in paragraph (1)(B) that are large
employers, the employer premium payments under section 6121 are subject to
adjustment under section 6124.

  (4) No further election. If a corporate alliance of a large employer is
terminated under this subsection, no employer that is a corporate alliance
employer for that alliance is eligible to be a sponsor of a corporate
alliance.

  (b) Excess Year.

  (1) In general. In subsection (a), the term "excess year'' means, for a
corporate alliance, a year (after 2000) for which

  (A) the rate of increase for the corporate alliance (specified in paragraph
(2)) for the year, exceeds

  (B) the national corporate inflation factor (specified in paragraph (3)) for
the year.

  (2) Rate of increase for corporate alliance. The rate of increase for a
corporate alliance for a year, specified in this paragraph, is the percentage
by which

  (A) the average of the annual per capita expenditure equivalent for the
corporate alliance (reported under section 6021(c)) for the 3-year period
ending with such year, exceeds

  (B) the average of the annual per capita expenditure equivalent for the
corporate alliance (reported under such subsection) for the 3-year period
ending with the previous year.

  (3) National corporate inflation factor. The national corporate inflation
factor for a year, specified in this paragraph, is the average of the general
health care inflation factors (as defined in section 6001(a)(3)) for each of
the 3 years ending with such year.

PART 3 TREATMENT OF SINGLE-PAYER STATES

SEC. 6031. SPECIAL RULES FOR SINGLE-PAYER STATES.

  In the case of a Statewide single-payer State, for purposes of section
1222(6), the Board shall compute a Statewide per capita premium target for
each year in the same manner as a regional alliance per capita premium target
is determined under section 6003.

PART 4 TRANSITION PROVISIONS

SEC. 6041. MONITORING PRICES AND EXPENDITURES.

  (a) In General. The Secretary shall establish a program to monitor prices
and expenditures in the health care system in the United States.

  (b) Reports. The Secretary shall periodically report to the President on

  (1) the rate of increase in expenditures in each sector of the health care
system, and

  (2) how such rates compare with rate of overall increase in health care
spending and rate of increase in the consumer price index.

  (c) Access to Information.

  (1) In general. The Secretary may obtain, through surveys or otherwise,
information on prices and expenditures for health care services. The Secretary
may compel health care providers and third party payers to disclose such
information as is necessary to carry out the program under this section.

  (2) Confidentiality. Non-public information obtained under this subsection
with respect to individual patients is confidential.

  (d) Periodic Reports. The Secretary shall periodically issue public reports
on the matters described in subsection (b).

Title VI, Subtitle B

Subtitle B Premium-Related Financings

PART 1 FAMILY PREMIUM PAYMENTS

Subpart A Family Share

SEC. 6101. FAMILY SHARE OF PREMIUM.

  (a) Requirement. Each family enrolled in a regional alliance health plan or
in a corporate alliance health plan in a class of family enrollment is
responsible for payment of the family share of premium payable respecting such
enrollment. Such premium may be paid by an employer or other person on behalf
of such a family.

  (b) Family Share of Premium Defined.

  (1) In general. In this subtitle, the term "family share of premium'' means,
with respect to enrollment of a family

  (A) in a regional alliance health plan, the amount specified in paragraph
(2) for the class, or

  (B) in a corporate alliance health plan, the amount specified in paragraph
(3) for the class.

  (2) Regional alliance.

  (A) In general. The amount specified in this paragraph for a health plan
based on a class of family enrollment is the sum of the base amounts described
in subparagraph (B) reduced (but not below zero) by the sum of the amounts
described in subparagraph (C).

  (B) Base. The base amounts described in this subparagraph (for a plan for a
class of enrollment) are as follows:

  (i) Regional alliance premium. The premium specified in section 6102(a) with
respect to such class of enrollment.

  (ii) Family collection shortfall. 20 percent of the family collection
shortfall add-on (computed under section 6107 for such class).

  (C) Credits and discounts. The amounts described in this subparagraph (for a
plan for a class of enrollment) are as follows:

  (i) Alliance credit. The amount of the alliance credit under section
6103(a).

  (ii) Income related discount. The amount of any income-related discount
provided under section 6104(a)(1).

  (iii) Excess premium credit. The amount of any excess premium credit
provided under section 6105.

  (iv) Corporate alliance opt-in credit. The amount of any corporate alliance
opt-in credit provided under section 6106.

  (v) Additional credit for ssi and afdc recipients. In the case of an SSI or
AFDC family or for whom the amount described in clause (ii) is equal to the
amount described in section 6104(b)(1)(A), the amount described in
subparagraph (B)(ii).

  (D) Limit on miscellaneous credits. In no case shall the family share, due
to credits under subparagraph (C), be less than zero.

  (3) Corporate alliance.

  (A) In general. The amount specified in this paragraph for a health plan
based on a class of family enrollment is the premium described in subparagraph
(B) reduced (but not below zero) by the sum of the amounts described in
subparagraph (C).

  (B) Premium. The premium described in this subparagraph (for a plan for a
class of enrollment) is premium specified under section 1384 with respect to
the plan and class of enrollment involved.

  (C) Credits and discounts. The amounts described in this subparagraph  (for
a plan for a class of enrollment) are as follows:

  (i) Alliance credit. The amount of the alliance credit under section
6103(b).

  (ii) Income related discount. The amount of any income-related discount
provided under section 6104(a)(2).

SEC. 6102. AMOUNT OF PREMIUM.

  (a) Regional Alliance. The amount of the premium charged by a regional
alliance for all families in a class of family enrollment under a regional
alliance health plan offered by the alliance is equal to the product of

  (1) the final accepted bid for the plan (as defined in section 6000(a)(2)),

  (2) the uniform per capita conversion factor (specified under section
1341(b)) for the alliance, and

  (3) the premium class factor established by the Board for that class under
section 1531.

  (b) Reference to Corporate Alliance Premium Provisions. The amount of the
premium charged by a corporate alliance for all families in a class of family
enrollment under a corporate alliance health plan offered by the alliance is
specified under section 1384.

  (c) Special Rules for Divided Families. In the case of an individual who is
a qualifying employee of an employer, if the individual has a spouse or child
who is not treated as part of the individual's family because of section 1012

  (1) the combined premium for both families under this section shall be
computed as though such section had not applied if such combined premium is
less than the total of the premiums otherwise applicable (without regard to
this subsection),

  (2) the regional alliance shall divide such combined premium between the
families proportionally (consistent with rules established by the Board), and

  (3) in such case, credits and other amounts shall be pro-rated in a manner
consistent with rules established by the Board.

SEC. 6103. ALLIANCE CREDIT.

  (a) Regional Alliances. The credit provided under this section for a family
enrolled in a regional alliance health plan through a regional alliance for a
class of family enrollment is equal to 80 percent of the weighted average
premium (as defined in section 6000(b)) for health plans offered by the
alliance for the class.

  (b) Corporate Alliances. The credit provided under this section for a family
enrolled in a corporate alliance health plan for a class of family enrollment
is equal to the minimum employer premium payment required under section 6131
with respect to the family.

SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.

  (a) In General.

  (1) Enrollees in regional alliance health plans. Each family enrolled with a
regional alliance health plan is entitled to a premium discount under this
section, in the amount specified in subsection (b), if the family

  (A) is an AFDC or SSI family,

  (B) is determined, under subpart D of part 3 of subtitle D of title I, to
have family adjusted income below 150 percent of the applicable poverty level,
or

  (C) is a family described in subsection (c)(3) for which the family
obligation amount under subsection (c) for the year would otherwise exceed a
specified percent of family adjusted income described in such subsection.

  (2) Enrollees in corporate alliance health plans.

  (A) In general. Subject to subparagraph (B), each family enrolled with a
corporate alliance health plan in a class of family enrollment by virtue of
the full-time employment of a low-wage employee (as defined in subparagraph
(B)) is entitled to a premium discount under this section in the amount (if
any) by which

  (i) 95 percent of the premium (specified in section 1384) for the least
expensive corporate alliance health plan that is offered to the employee and
that is a lower or combination cost sharing plan (as defined in paragraphs (7)
and (20) of section 1902 for that class and premium area), exceeds

  (ii) the alliance credit under section 6103(b) for that class.

  (B) Low-wage employee defined.

  (i) In general. In this paragraph, the term "low-wage employee'' means, with
respect to an employer, an employee who is employed on a full-time basis and
who is receiving wages (as defined in section 1901(a)(1)(A)) for employment
for the employer, at an annual rate of less than $15,000 (as adjusted under
clause (ii)).

  (ii) Indexing. For a year after 1994, the dollar amount specified in clause
(i) shall be increased or decreased by the same percentage as the percentage
increase or decrease by which the average CPI (described in section 1902(9))
for the 12-month-period ending with August 31 of the preceding year exceeds
such average for the 12-month period ending with August 31, 1993.

  (C) Timing of determination.

  (i) In general. The determination of whether or not an employee is a
low-wage employee shall be made, in accordance with rules of the Secretary of
Labor, at the time of initial enrollment and shall also be made at the time of
each subsequent open enrollment period, on the basis of the wages payable by
the employer at that time.

  (ii) Effective date. Such determination shall apply as of the effective date
of the initial enrollment, or, in the case of an open enrollment period, as of
the effective date of changes in enrollment during such period.

  (3) No liability for indians and certain veterans and military personnel.

  (A) In general. In the case of an individual described in subparagraph (B),
because the applicable health plan does not impose any premium for such an
individual, the individual is not eligible for any premium discount under this
section.

  (B) Individuals described. An individual described in this subparagraph is

  (i) an electing veteran (as defined in section 1012(d)(1)) who is enrolled
under a health plan of the Department of Veterans Affairs and who, under the
laws and rules as in effect as of December 31, 1994, has a service-connected
disability or who is unable to defray the expenses of necessary care as
determined under section 1722(a) of title 38, United States Code,

  (ii) active duty military personnel (as defined in section 1012(d)(2)), and

  (iii) an electing Indian (as defined in section 1012(d)(3)).

  (4) Monthly application to afdc and ssi families. Paragraph (1)(A) (and the
family obligation amount under subsection (c) insofar as it relates to an AFDC
or SSI family) shall be applied to the premium or family obligation amount
only for months in which the family is such an AFDC or SSI family.

  (b) Amount of Premium Discount for Regional Alliance Health Plans.

  (1) In general. Subject to the succeeding paragraphs of this subsection, the
amount of the premium discount under this subsection for a family enrolled in
a regional alliance health plan under a class of family enrollment is equal to

  (A) 20 percent of the weighted average premium for regional alliance health
plans offered by the regional alliance for that class of enrollment, increased
by any amount provided under paragraph (2); reduced (but not below zero) by

  (B) the sum of

  (i) the family obligation amount described in subsection (c), and

  (ii) the amount of any employer payment (not required under part 2) towards
the family share of premiums for covered members of the family.

  (2) Increase to assure enrollment in at-or-below-average-cost plan. If a
regional alliance determines that a family eligible for a discount under this
section is unable to enroll in a at-or-below-average-cost plan (as defined in
paragraph (3)) that serves the area in which the family resides, the amount of
the premium discount under this subsection is increased but only to such
amount as will permit the family to enroll in a regional alliance health plan
without the need to pay a family share of premium under this part in excess of
the sum described in paragraph (1)(B).

  (3) At-or-below-average-cost plan defined. In this section, the term
"at-or-below-average-cost plan'' means a regional alliance health plan the
premium for which does not exceed, for the class of family enrollment
involved, the weighted average premium for the regional alliance.

  (c) Family Obligation Amount.

  (1) Determination. Subject to paragraphs (2) and (3), the family obligation
amount under this subsection is determined as follows:

  (A) No obligation if income below income threshold amount or if afdc or ssi
family. If the family adjusted income (as defined in section 1372(d)) of the
family is less than the income threshold amount (specified in paragraph (4))
or if the family is an AFDC or SSI family, the family obligation amount is
zero.

  (B) Income above income threshold amount. If such income is at least such
income threshold amount and the family is not an AFDC or SSI family, the
family obligation amount is the sum of the following:

  (i) For income (above income threshold amount) up to the poverty level. The
product of the initial marginal rate (specified in paragraph (2)) and the
amount by which

  (I) the family adjusted income (not including any portion that exceeds the
applicable poverty level for the class of family involved), exceeds

  (II) such income threshold amount.

  (ii) Graduated phase out of discount up to 150 percent of poverty level. The
product of the final marginal rate (specified in paragraph (2)) and the amount
by which the family adjusted income exceeds 100 percent (but is less than 150
percent) of the applicable poverty level.

  (2) Marginal rates. In paragraph (1)

  (A) Individual marginal rates. For a year for an individual class of
enrollment

  (i) Initial marginal rate. The initial marginal rate is the ratio of

  (I) 3 percent of the applicable poverty level for the individual class of
enrollment for the year, to

  (II) the amount by which such poverty level exceeds such income threshold
amount.

  (ii) Final marginal rate. The final marginal rate is the ratio of

  (I) the amount by which the general family share (as defined in subparagraph
(C)) for an individual class of enrollment exceeds 3 percent of the applicable
poverty level (for an individual class of enrollment for the year); to

  (II) 50 percent of such poverty level.

  (B) Family marginal rates. For a year for a family class of enrollment (as
defined in section 1011(c)(2)(A))

  (i) Initial marginal rate. The initial marginal rate is the ratio of

  (I) 3 percent of the applicable poverty level for a dual parent class of
enrollment for the year, to

  (II) the amount by which such poverty level exceeds such income threshold
amount.

  (ii) Final marginal rate. The final marginal rate is the ratio of

  (I) the amount by which the general family share (as defined in subparagraph
(C)) for a dual parent class of enrollment exceeds 3 percent of the applicable
poverty level (for such a class for the year); to

  (II) 50 percent of such poverty level.

  (C) General family share. In subparagraphs (A) and (B), the term "general
family share'' means, for a class, the weighted average premium for the class
minus the alliance credit (determined without regard to this section).

  (3) Limitation to 3.9 percent for all families.

  (A) In general.

  (i) Families with income below 150 percent of poverty. In the case of a
family with family adjusted income of less than 150 percent of the applicable
poverty level, in no case shall the family obligation amount under this
subsection for the year exceed 3.9 percent (adjusted under subparagraph (C))
of the amount of such adjusted income.

  (ii) Other families with income below $40,000. In the case of a family with
family adjusted income of at least 150 percent of the applicable poverty level
but less than $40,000 (adjusted under subparagraph (B)) for a year, the family
obligation amount under this subsection for the year is equal to 3.9 percent
(adjusted under subparagraph (C)) of the amount of such adjusted income.

  (B) Indexing of dollar amounts.

  (i) In general. For a year after 1994, the dollar amounts specified in
subparagraph (A)(i) and in section 6113(d)(1)(B) shall be increased or
decreased by the same percentage as the percentage increase or decrease by
which the average CPI (described in section 1902(9)) for the 12-month-period
ending with August 31 of the preceding year exceeds such average for the
12-month period ending with August 31, 1993.

  (ii) Rounding. The dollar amounts adjusted under this subparagraph shall be
rounded each year to the nearest multiple of $100.

  (C) Indexing of percentage.

  (i) In general. The percentage specified in subparagraph (A) shall be
adjusted for any year after 1994 so that the percentage for the year bears the
same ratio to the percentage so specified as the ratio of

  (I) 1 plus the general health care inflation factor (as defined in section
6001(a)(3)) for the year, bears to

  (II) 1 plus the percentage specified in section 1136(b) (relating to
indexing of dollar amounts related to cost sharing) for the year.

  (ii) Rounding. Any adjustment under clause (i) for a year shall be rounded
to the nearest multiple of \1/10\ of 1 percentage point.

  (4) Income threshold amount.

  (A) In general. For purposes of this subtitle, the income threshold amount
specified in this paragraph is $1,000 (adjusted under subparagraph (B)) .

  (B) Indexing. For a year after 1994, the income threshold amount specified
in subparagraph (A) shall be increased or decreased by the same percentage as
the percentage increase or decrease by which the average CPI (described in
section 1902(9)) for the 12-month-period ending with August 31 of the
preceding year exceeds such average for the 12-month period ending with August
31, 1993.

  (C) Rounding. Any increase or decrease under subparagraph (B) for a year
shall be rounded to the nearest multiple of $10.

SEC. 6105. EXCESS PREMIUM CREDIT.

  (a) In General. If plan payment reductions are made for one or more regional
alliance health plans offered by a regional alliance for plan payments in a
year under section 6021, the alliance shall provide for a credit under this
section, in the amount described in subsection (b), in the case of each family
enrolled in a regional alliance health plan offered by the alliance for
premiums in the year.

  (b) Amount of Credit.

  (1) In general. Subject to paragraph (2), the amount of the credit under
this subsection, for a family enrolled in a class of family enrollment for a
regional alliance for a year, is the amount that would be the weighted average
premium for such alliance, class, and year, if the per capita excess premium
amount (determined under subsection (c)) for the alliance for the year were
substituted for the reduced weighted average accepted bid for the regional
alliance for the year.

  (2) Adjustment to account for use of estimates. Subject to section
1361(b)(3), if the total payments made by a regional alliance to all regional
alliance health plans in a year under section 1351(b) exceeds (or is less
than) the total of such payments estimated by the alliance (based on the
reduced weighted average accepted bid under subsection (c)(1)), because of a
difference between

  (A) the alliance's estimate of the distribution of enrolled families between
excess premium plans and other plans, and

  (B) the actual distribution of such enrolled families among such plans,

the amount of the credit under this section in the second succeeding year
shall be reduced (or increased, respectively) by the amount of such excess (or
deficit) in the total of such payments made by the alliance to all such plans.

  (c) Per Capita Excess Premium Amount. The per capita excess premium amount,
for a regional alliance for a year, is the amount by which

  (1) the reduced weighted average accepted bid (as defined in section
6000(a)(1)) for the alliance for the year, exceeds

  (2) the regional alliance per capita premium target for the alliance for the
year.

SEC. 6106. CORPORATE ALLIANCE OPT-IN CREDIT.

  (a) In General. If a regional alliance is owed a payment adjustment under
section 6124 for a year, then the alliance shall provide for a credit under
this section equal to 20 percent of the amount described in subsection (b), in
the case of each family enrolled in a regional alliance plan offered by the
alliance.

  (b) Amount of Credit. The amount described in this subsection, for a family
enrolled in a class of family enrollment for a regional alliance for a year,
is the amount that would be the weighted average premium for such alliance,
class, and year, if the per capita corporate alliance opt-in amount
(determined under subsection (c)) for the alliance for the year were
substituted for the reduced weighted average accepted bid for the regional
alliance for the year.

  (c) Per Capita Corporate Alliance Opt-in Amount. The per capita corporate
alliance opt-in amount, for a regional alliance for a year, is

  (1) the total amount of the payment adjustments owed for the year under
section 6124, divided by

  (2) the estimated average number of regional alliance eligible individuals
in the regional alliance during the year (reduced by the average number of
such individuals whose family share of premiums, determined without regard to
this section and section 6107, is zero).

SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.

  (a) In General. The family collection shortfall add-on, for a regional
alliance for a class of enrollment for a year, is the amount that would be the
weighted average premium for such alliance, class, and year, if the per capita
collection shortfall amount (determined under subsection (b)) for the alliance
for the year were substituted for the reduced weighted average accepted bid
for the regional alliance for the year.

  (b) Computation of Per Capita Adjustment for Collection Shortfalls.

  (1) Per capita collection shortfall amount. The per capita collection
shortfall amount, for a regional alliance for a year, under this subsection is
equal to

  (A) the amount estimated under paragraph (2)(A) for the year, divided by

  (B) the estimated average number of regional alliance eligible individuals
in the regional alliance during the year (reduced by the average number of
such individuals whose family share of premiums, determined without regard to
this section and section 6106, is zero).

  (2) Aggregate collection shortfall.

  (A) In general. Each regional alliance shall estimate, for each year
(beginning with the first year) the total amount of payments which the
alliance can reasonably identify as owed to the alliance under this Act
(taking into account any premium reduction or discount under this subtitle and
including amounts owed under subpart B and not taking into account any
penalties) for the year and not likely to be collected (after making
collection efforts described in section 1345) during a period specified by the
Secretary beginning on the first day of the year.

  (B) Exclusion of government debts. The amount under subparagraph (A) shall
not include any payments owed to a regional alliance by the Federal, State, or
local governments.

  (C) Adjustment for previous shortfall estimation discrepancy. Subject to
section 1361(b)(3), the amount estimated under this paragraph for a year shall
be adjusted to reflect over (or under) estimations in the amounts so computed
under this paragraph for previous years (based on actual collections), taking
into account interest payable based upon borrowings (or savings) attributable
to such over or under estimations.

Subpart B Repayment of Alliance Credit by Certain Families

SEC. 6111. REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES.

  (a) In General. Subject to the succeeding provisions of this subpart, each
family which is provided an alliance credit under section 6103(a) for a class
of enrollment is liable to the regional alliance for repayment of an amount
equal to the base employment monthly premium (applicable to such class) for
the month under section 6122.

  (b) Reduction for Self-Employment Payments. The liability of a family under
this section for a year shall be reduced (but not below zero) by the amount of
any employer payments made in the year under section 6126 based on the net
earnings from self-employment of a family member.

SEC. 6112. NO LIABILITY FOR FAMILIES EMPLOYED FULL-TIME; REDUCTION IN
LIABILITY FOR PART-TIME EMPLOYMENT.

  (a) In General. The amount of any liability under section 6111 shall be
reduced, in accordance with rules established by the National Health Board
consistent with this section, based on employer premiums payable under section
6121 with respect to the employment of a family member who is a qualifying
employee or with respect to a family member. In no case shall the reduction
under this section result in any payment owing to a family.

  (b) Credit for Full-Time and Part-Time Employment.

  (1) In general. Under rules of the Board, in the case of a family enrolled
under a class of family enrollment, if a family member is a qualifying
employee for a month and (except in the case described in section 6114(a)) the
employer is liable for payment under section 6121 based on such employment

  (A) Full-time employment credit. If the employment is on a full-time basis
(as defined in section 1901(b)(2)(A)) the liability under section 6111 shall
be reduced by the credit amount described in subparagraph (C).

  (B) Part-time employment credit. If the employment is on a part-time basis
(as defined in section 1901(b)(2)(A)) the liability under section 6111 shall
be reduced by the employment ratio (as defined in section 1901(b)(2)(B)) of
the credit amount described in subparagraph (C).

  (C) Full-time monthly credit. The amount of the credit under this
subparagraph, with respect to employment by an employer in a month, is  \1/12\
(or, if applicable, the fraction described in paragraph (2)) of the amount
owed under section 6111, based on the class of enrollment, for the year.

  (2) Coverage during only part of a year. In the case of a family that is not
enrolled in a regional alliance health plan for all the months in a year, the
fraction described in this paragraph is 1 divided by the number of months in
the year in which the family was enrolled in such a plan.

  (3) Aggregation of credits. For purposes of paragraph (1)

  (A) Individuals. In the case of an individual who is a qualifying employee
of more than one employer in a month, the credit for the month shall equal the
sum of the credits earned with respect to employment by each employer. Such
sum may exceed the credit amount described in paragraph (1)(C).

  (B) Couples. In the case of a couple each spouse of which is a qualifying
employee in a month, the credit for the month shall equal the sum of the
credits earned with respect to employment by each spouse. Such sum may exceed
the credit amount described in paragraph (1)(C).

  (c) Treatment of Change of Enrollment Status. In the case of a family for
which the class of family enrollment changes during a year, the Board shall
establish rules for appropriate conversion and allocation of the credit
amounts under the previous provisions of this section in a manner that
reflects the relative values of the base employment monthly premiums (as
determined under section 6122) among the different classes of family
enrollment.

SEC. 6113. LIMITATION OF LIABILITY BASED ON INCOME.

  (a) In General. In the case of an eligible family described in subsection
(b), the repayment amount required under this subpart (after taking into
account any work credit earned under section 6112) with respect to a year
shall not exceed the amount of liability described in subsection (c) for the
year.

  (b) Eligible Family Described. An eligible family described in this
subsection is a family which is determined, under subpart B of part 3 of
subtitle D of title I by the regional alliance for the alliance area in which
the family resides, to have wage-adjusted income (as defined in subsection
(d)) below 250 percent of the applicable poverty level.

  (c) Amount of Liability.

  (1) Determination. Subject to subsection (f), in the case of a family
enrolled in a class of enrollment with wage-adjusted income (as defined in
subsection (d)), the amount of liability under this subsection is determined
as follows:

  (A) No obligation if income below income threshold amount or if afdc or ssi
family. If such income is less than the income threshold amount (specified in
section 6104(c)(4)) or if the family is an AFDC or SSI family, the amount of
liability is zero.

  (B) Income above income threshold amount. If such income is at least such
income threshold amount and the family is not an AFDC or SSI family, the
amount of liability is the sum of the following:

  (i) 5.5 percent of income (above income threshold amount) up to the poverty
level. The initial marginal rate (specified in paragraph (2)(A)) of the amount
by which

  (I) the wage-adjusted income (not including any portion that exceeds the
applicable poverty level for the class of family involved), exceeds

  (II) such income threshold amount.

  (ii) Graduated phase out of discount up to 250 percent of poverty level. The
final marginal rate (specified in paragraph (2)(B)) of the amount by which the
wage-adjusted income exceeds 100 percent of the applicable poverty level.

  (2) Marginal rates. In paragraph (1)

  (A) Initial marginal rate. The initial marginal rate, for a year for a class
of enrollment, is the ratio of

  (i) 5.5 percent of the applicable poverty level for the class of enrollment
for the year, to

  (ii) the amount by which such poverty level exceeds such income threshold
amount.

  (B) Final marginal rate. The final marginal rate, for a year for a class of
enrollment, is the ratio of

  (i) the amount by which (I) the amount of the repayment amount described in
section 6111(a) exceeds (II) 5.5 percent of the applicable poverty level (for
the class and year); to

  (ii) 150 percent of such poverty level.

  (3) Monthly application to afdc and ssi families. Paragraph (1) insofar as
it relates to an AFDC or SSI family shall be applied so as to reduce to zero
the liability amount only for months in which the family is such an AFDC or
SSI family.

  (d) Wage-Adjusted Income Defined. In this subtitle, the term "wage-adjusted
income'' means, for a family, family adjusted income of the family (as defined
in section 1372(d)(1)), reduced by the sum of the following:

  (1)(A) Subject to subparagraph (B), the amount of any wages included in such
family's income that is received for employment which is taken into account in
the computation of the amount of employer premiums under section 6121 (without
consideration of section 6126).

  (B) The reduction under subparagraph (A) shall not exceed for a year $5,000
(adjusted under section 6104(c)(3)(B)) multiplied by the number of months
(including portions of months) of employment with respect to which employer
premiums were payable under section 6121 (determined in a manner consistent
with section 1901(b)(3)).

  (2) The amount of net earnings from self employment of the family taken into
account under section 6126.

  (3) The amount of unemployment compensation included in income under section
85 of the Internal Revenue Code of 1986.

  (e) Determinations. A family's wage-adjusted income and the amount of
liability under subsection (c) shall be determined by the applicable regional
alliance upon application by a family under under subpart B of part 3 of
subtitle D of title I.

  (f) No Liability for Indians and Certain Veterans and Military Personnel.
The provisions of paragraph (3) of section 6104(a) shall apply to the
reduction in liability under this section in the same manner as such paragraph
applies to the premium discount under section 6104.

SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES AND QUALIFIED SPOUSES AND
CHILDREN.

  (a) Treatment as Full-Time Employee. Subject to subsection (d), an
individual who is an eligible retiree (as defined in subsection (b)) or a
qualified spouse or child (as defined in subsection (c)) for a month in a year
(beginning with 1998) is considered, for purposes of section 6112, to be a
full-time employee described in such section in such month.

  (b) Eligible Retiree Defined. In this section, the term "eligible retiree''
means, for a month, an individual who establishes to the satisfaction of the
regional alliance (for the alliance area in which the individual resides),
pursuant to rules of the Secretary, that the individual, as of the first day
of the month

  (1) is at least 55, but less than 65, years of age,

  (2) is not employed on a full-time basis (as defined in section
1901(b)(2)(A)),

  (3) would be eligible (under section 226(a) of the Social Security Act) for
hospital insurance benefits under part A of title XVIII of such Act if the
individual were 65 years of age based only on the employment of the
individual, and

  (4) is not a medicare-eligible individual.

  (c) Qualified Spouse or Child Defined. In subsection (a), the term
"qualified spouse or child'' means, in relation to an eligible retiree for a
month, an individual who establishes to the satisfaction of the regional
alliance (for the alliance area in which the individual resides) under rules
of the Secretary that the requirements in one of the following paragraphs is
met with respect to the individual:

  (1) The individual (A) is under 65 years of age and is (and has been for a
period of at least one year) married to an eligible retiree or (B) is a child
of the eligible retiree.

  (2) In the case of a person who was an eligible retiree at the time of the
person's death

  (A) the individual  was (and had for a period of at least one year been)
married to the retiree at the time of the person's death,

  (B) the individual is under 65 years of age,

  (C) the individual is not employed on a full-time basis (as defined in
section 1901(b)(2)(A)),

  (D) the individual is not remarried, and

  (E) the deceased spouse would still be an eligible retiree in the month if
such spouse had not died.

  (3) The individual is a child of an individual described in paragraph (2).

  (d) Application. An individual may not be determined to be an eligible
retiree or qualified spouse or child unless an application has been filed with
the regional alliance. Such application shall contain such information as the
Secretary may require to establish such status and verify information in the
application. Any material misrepresentation in the application is subject to a
penalty in the same manner as a misrepresentation described in section
1374(i)(2).

SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE BENEFICIARIES.

  In the case of an individual who would be a medicare-eligible individual in
a month but for the application of section 1012(a) on the basis of employment
(in the month or a previous month) of the individual or the individual's
spouse or parent, the individual (or spouse or parent, as the case may be) so
employed is considered, for purposes of section 6112, to be a full-time
employee described in such section in such month.

PART 2 EMPLOYER PREMIUM PAYMENTS

Subpart A Regional Alliance Employers

SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.

  (a) Requirement.

  (1) In general. Each regional alliance employer described in paragraph (2)
for a month shall pay to the regional alliance that provides health coverage
to a qualifying employee of the employer an employer premium in a amount at
least equal to the amount specified in subsection (b). Such payments shall be
made in accordance with section 1345(c).

  (2) Employer described. An employer described in this paragraph for a month
is an employer that in the month employs one or more qualifying employees (as
defined in section 1901(b)(1)).

  (3) Treatment of certain employment by corporate alliance employers. A
corporate alliance employer shall be deemed, for purposes of this subpart, to
be a regional alliance employer with respect to qualifying employees who are
not corporate alliance eligible individuals.

  (b) Premium Payment Amount.

  (1) In general. Except as provided in section 6123 (relating to a discount
for certain employers), section 6124 (relating to large employers electing
coverage in a regional alliance), and section 6125 (relating to the employer
collection shortfall add-on), the amount of the employer premium payment, for
a month for qualifying employees of the employer who reside in an alliance
area, is the sum of the payment amounts computed under paragraph (2) for each
class of family enrollment with respect to such employees in such area.

  (2) Payment amount for all employees in a class of family enrollment.
Subject to paragraph (3), the payment amount under this paragraph, for an
employer for a class of family enrollment for a month for qualifying employees
residing in an alliance area, is the product of

  (A) the base employment monthly premium determined under section 6122 for
the class of family enrollment for the previous month for the regional
alliance, and

  (B) the number of full-time equivalent employees (determined under section
1901(b)(2)) enrolled in that class of family enrollment for the previous month
and residing in the alliance area.

  (3) Treatment of certain employees. In applying this subpart in the case of
a qualifying employee (other than a medicare-eligible individual) who is not
enrolled in any alliance health plan

  (A) the employee is deemed enrolled in a regional alliance health plan (for
the alliance area in which the individual resides) in the dual parent class of
enrollment, and

  (B) if the employee's residence is not known, the employee is deemed to
reside in the alliance area in which the employee principally is employed for
the employer.

  (4) Transitional rules for first month in first year for a state. In the
case of an employer for a State in the first month of the State's first year

  (A) the premium amount for such month shall be computed by substituting
"month'' for "previous month'' in paragraph (2);

  (B) payment for such month shall be made on the first of the month based on
an estimate of the payment for such month;

  (C) an adjustment shall be made to the payment in the following month to
reflect the difference between the payment in the first month and the payment
in the following month (calculated without regard to the adjustment under this
subparagraph); and

  (D) the reconciliation of premiums for such first month under section
1602(c) shall be included in the reconciliation of premiums for the following
12 months.

  (5) Special rules for divided families. In the case of an individual who is
a qualifying employee of an employer, if the individual has a spouse or child
who is not treated as part of the individual's family because of section 1012

  (A) the employer premium payment under this section shall be computed as
though such section had not applied, and

  (B) the regional alliance shall make proportional payments (consistent with
rules established by the Secretary) to the health plans (if different) of the
qualifying employee and of the employee's spouse and children.

  (c) Application During Transition Period.

  (1) In general. For purposes of applying this subpart in the case of an
employer described in paragraph (3), there shall only be taken into account
qualifying employees (and wages of such employees) who reside in a
participating State.

  (2) Exception. Paragraph (1) shall not apply in determining the average
number of full-time equivalent employees or whether an employer is a small
employer.

  (3) Employer described. An employer described in this paragraph is an
employer that employs one or more qualifying employees in a participating
State and one or more qualifying employees in a State that is not a
participating State.

SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTHLY PREMIUM.

  (a) In General. Each regional alliance shall provide for the computation for
each year (beginning with the first year) of a base employment monthly premium
for each class of family enrollment as follows:

  (1) Individual enrollment. The base employment monthly premium for the
individual class of enrollment is equal to \1/12\ of 80 percent of the
credit-adjusted weighted average premium (as defined in paragraph (4)) for
such regional alliance for the individual class of enrollment.

  (2) Couple-only enrollment.

  (A) In general. The base employment monthly premium for the couple-only
class of enrollment is equal to \1/12\ of 80 percent of the product described
in subparagraph (B), divided by the sum described in subparagraph (C).

  (B) Total premiums for couple-only enrollments. The product described in
this subparagraph is

  (i) the credit-adjusted weighted average premium for such regional alliance
for the couple-only class of enrollment, multiplied by

  (ii) the sum, for all the months in the year, of the number of covered
families receiving coverage through regional alliance health plans of the
regional alliance within such class of enrollment in each such month.

  (C) Number of workers and extra workers. The sum described in this
subparagraph is

  (i) the sum specified in subparagraph (B)(ii), plus

  (ii) the number of additional workers (determined under subsection (b)(1)),
for families receiving coverage within such class from regional alliance
health plans offered by the regional alliance.

  (3) Single and dual parent enrollments.

  (A) In general. The base employment monthly premium for the single parent
and dual parent classes of enrollment is equal to \1/12\ of 80 percent of the
sum described in subparagraph (B), divided by the sum described in
subparagraph (C).

  (B) Total premiums for single and dual parent enrollments. The sum described
in this subparagraph is the sum of the products described in the following
clauses:

  (i) Total premiums for single parent enrollment. The product of

  (I) the credit-adjusted weighted average premium for such regional alliance
for the single parent class of enrollment, multiplied by

  (II) the sum, for all the months in the year, of the number of covered
families receiving coverage through regional alliance health plans of the
regional alliance within such class of enrollment in each such month.

  (ii) Total premiums for dual parent enrollment. The product of

  (I) the credit-adjusted weighted average premium for such regional alliance
for the dual parent class of enrollment, multiplied by

  (II) the sum, for all the months in the year, of the number of covered
families receiving coverage through regional alliance health plans of the
regional alliance within such class of enrollment in each such month.

  (C) Number of workers and extra workers. The sum described in this
subparagraph is

  (i) the sum specified in subparagraph (B)(i)(II); plus

  (ii) the sum specified in subparagraph (B)(ii)(II); plus

  (iii) the number of additional workers (determined under subsection (b)(1)),
for families receiving coverage within the dual parent class of enrollment
from regional alliance health plans offered by the regional alliance.

  (4) Credit-adjusted weighted average premium defined. In this subsection,
the term "credit-adjusted weighted average premium'' means, for a class of
enrollment and a regional alliance, the weighted average premium for the class
and alliance, reduced by the amount described in section 6106(b) for such
class and alliance.

  (b) Determination of Additional Workers for Couple-Only and Dual Parent
Class.

  (1) In general. Subject to paragraph (4), the regional alliance shall
determine, for each couple class of family enrollment and in a manner
specified by the Board, an estimated total number of additional workers equal
to

  (A) 12 times the alliance-wide monthly average number of premium payments
(as determined under paragraph (2)) for covered families (as defined in
paragraph (3)) within such class of enrollment, minus

  (B) the sum described in subsection (a)(2)(B)(ii) or (a)(3)(B)(ii)(II) for
the couple-only and dual parent classes, respectively.

  (2) Computation of alliance-wide monthly average number.

  (A) In general. In determining the alliance-wide monthly average number of
premium payments under paragraph (1)(A), a covered family shall count for a
month as 1, or, if greater, the number computed under subparagraph (B) (but in
no case greater than 2).

  (B) Counting of families in which both spouses are qualifying employees. The
number computed under this subparagraph over all families within a couple-only
or dual parent class of enrollment in which both spouses are qualifying
employees is determined on an alliance-wide basis based on the following:

  (i) For such a spouse, determine, using the rules under section
1902(b)(1)(A), how many full-time equivalent employees the spouse is counted
as, but not to exceed 1 for either spouse.

  (ii) Add the 2 numbers determined under clause (i) for spouses in such
families.

  (3) Covered family defined. In this subsection, the term "covered family''
means a family other than

  (A) an SSI family or AFDC family,

  (B) a family in which a spouse is a medicare-eligible individual, or

  (C) a family that is enrolled in a health plan other than a regional
alliance health plan.

  (4) Adjustment to account for use of estimates. Subject to section
1361(b)(3), if the total receipts of a regional alliance to all regional
alliance health plans in a year under this subpart exceeds, or is less than,
the total of such receipts estimated by the alliance (based on the base
employment monthly premium under subsection (a)), because of a difference
between

  (A) the alliance's estimate of the estimated total number of additional
workers for the alliance and the estimate of the number of covered families,
and

  (B) the actual total number of additional workers and the actual number of
covered families,

the estimated total number of additional workers to be applied under this
section in the second succeeding year shall be reduced, or increased,
respectively, in a manner that results in total receipts of the alliance under
this subpart in such succeeding year being increased or decreased by the
amount of such excess (or deficit).

  (c) Basis for Determinations.

  (1) Premiums. The determinations of premiums and families under plans under
this section shall be made in a manner determined by the Board and based on
the premiums and families used by the Board in carrying out subtitle A and
shall be based on estimates on an annualized basis.

  (2) Employment. The determinations of employment under this section for the
first year for a State shall be based on estimates of employment established
by the regional alliance in accordance with standards promulgated by the
Secretary of Labor in consultation with the National Health Board.

  (3) Reports. In accordance with rules established by the Secretary of Labor
in consultation with the National Health Board, a regional alliance may
require regional alliance employers to submit such periodic information on
employment as may be necessary to monitor the determinations made under this
section, including months and extent of employment.

  (d) Timing of Determination. Determinations under this section for a year
shall be made by not later than December 1, or such other date as the Board
may specify, before the beginning of the year.

SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.

  (a) Employer Discount.

  (1) In general. Subject to section 6124(c) (relating to phase in for certain
large corporate alliance employers) and section 6125 (relating to the employer
collection shortfall add-on), the amount of the employer premium payment
required under this subpart for a regional alliance employer for any year
shall not exceed the limiting percentage (as defined in subsection (b)) of the
employer's wages for that year.

  (2) Exclusion of governmental employers and certain corporate alliance
employers. Paragraph (1) shall not apply to

  (A) the Federal Government, a State government, or a unit of local
government, or a unit or instrumentality of such government, before 2002; and

  (B) a corporate alliance employer which is treated as a regional alliance
employer under section 6131(a)(2).

  (b) Limiting Percentage Defined. In subsection (a)

  (1) Any employer. For an employer that is not a small employer (as defined
in subsection (c)), the limiting percentage is 7.9 percent.

  (2) Small employers. For an employer that is a small employer and that has
an average number of full-time equivalent employees and average annual wages
per full-time equivalent employee (as determined under subsection (d)), the
limiting percentage is the applicable percentage determined based on following
table:


Limiting Percentage [col head 1] Average number of full-time equivalent
employees [col head 1] Employer's average annual wages per full-time
equivalent employee are: [col head 2] $0$12,000 [col head 2] $12,001$15,000
[col head 2] $15,001$18,000 [col head 2] $18,001$21,000 [col head 2]
$21,001$24,000

Fewer than 25	        03.5%   04.4%   05.3%   06.2%   07.1%

25 but fewer than 50	04.4%   05.3%   06.2%   07.1%   07.9%

50 but not over 75	05.3%   06.2%   07.1%   07.9%   07.9%

  (c) Small Employer Defined.

  (1) In general. In this section

  (A) the term "small employer'' means an employer that does not employ, on
average, more than 75 full-time equivalent employees; and

  (B) the average number of full-time equivalent employees shall be determined
by averaging the number of full-time equivalent employees employed by the
employer in each countable month during the year.

  (2) Countable month. In paragraph (1), the term "countable month'' means,
for an employer, a month in which the employer employs any qualifying
employee.

  (3) Determinations. The number of full-time equivalent employees shall be
determined using the rules under section 1901(b)(2).

  (d) Average Annual Wages Per Full-Time Equivalent Employee Defined.

  (1) In general. In this section, the term "average annual wages per
full-time equivalent employee'' means, for an employer for a year

  (A) the total wages paid in the year to individuals who, at the time of
payment of the wages, are qualifying employees of the employer; divided by

  (B) the number of full-time equivalent employees of the employer in the
year.

  (2) Determination. The Board may establish rules relating to the computation
of the average annual wages for employers.

  (e) Determinations. For purposes of this section, the number of employees
and average wages shall be determined on an annual basis.

  (f) Treatment of Certain Self-employed Individuals. In the case of an
individual who is a partner in a partnership, is a 2-percent shareholder in an
S corporation (within the meaning of section 1372 of the Internal Revenue Code
of 1986), or is any other individual who carries on a trade or business as a
sole proprietorship, for purposes of this section

  (1) the individual is deemed to be an employee of the partnership, S
corporation, or proprietorship, and

  (2) the individual's net earnings from self employment attributable to the
partnership, S corporation, or sole proprietorship are deemed to be wages from
the partnership, S corporation, or proprietorship.

  (g) Application to Employers. An employer that claims that this section
applies

  (1) shall provide notice to the regional alliance involved of the claim at
the time of making payments under this subpart; and

  (2) shall make available such information (and provide access to such
information) as the regional alliance may require (in accordance with
regulations of the Secretary of Labor) to audit the determination of

  (A) whether the employer is a small employer, and, if so, the average number
of full-time equivalent employees and average annual wages of the employer;
and

  (B) the total wages paid by the employer for qualifying employees.

  (h) Treatment of Multi-Alliance Employers. In the case in which this section
is applied to an employer that makes employer premium payments to more than
one regional alliance, the reduction under this section shall be applied in a
pro-rated manner to the premium payments made to all such alliances.

SEC. 6124. PAYMENT ADJUSTMENT FOR LARGE EMPLOYERS ELECTING COVERAGE IN A
REGIONAL ALLIANCE.

  (a) Application of Section.

  (1) In general. Except as otherwise provided in this subsection, this
section shall apply to the employer premium payments for full-time employees
in a State of an employer if

  (A)(i) the employer is an eligible sponsor described in section
1311(b)(1)(A), (ii) the employer elected to be a corporate alliance under
section 1312(a)(1), and (iii) the election is terminated under section 1313;

  (B)(i) the employer is such an eligible sponsor as of the first day of the
first year of the State, and (ii) the employer did not provide the notice
required under section 1312(a)(1) (with respect to an election to become a
corporate alliance); or

  (C)(i) the employer is such an eligible sponsor, (ii) the employer
subsequently became a large employer and elected to be a corporate alliance
under section 1312(a)(2), and (iii) the election was terminated under section
1313.

  (2) Effective date. In the case of an employer described in

  (A) paragraph (1)(A) or (1)(C), this section shall first apply on the
effective date of the termination of the election under section 1313, or

  (B) paragraph (1)(B), this section shall first apply as of January 1, 1996
(or, if later with respect to a State, the first day of the first year for the
State).

  (3) Treatment of employees in small establishments. This section shall not
apply to the payment of premiums for full-time employees of an employer
described in paragraph (1)(A) or (1)(C), if the employees are employed at an
establishment with respect to which the option described in section
1311(c)(1)(B) was exercised.

  (4) Sunset. This section shall cease applying to an employer with respect to
employment in a State after the 7th year in which this section applies to the
employer in the State.

  (5) Large employer defined. In this section, the term "large employer'' has
the meaning given such term in section 1311(e)(3).

  (b) Additional Amount.

  (1) In general. If an employer subject to this section for a year has an
excess risk proportion (specified in paragraph (3)) of greater than zero with
respect to an alliance area, then the employer shall provide, on a monthly
basis, for payment to the regional alliance for such area of an amount equal
to \1/12\ of the excess risk amount described in paragraph (2) for the year.

  (2) Excess risk amount. The excess risk amount described in this paragraph,
for an employer for a year with respect to an alliance area, is equal to the
product of the following:

  (A) The reduced weighted average accepted bid for the regional alliance for
the area for the year.

  (B) The total average number of alliance eligible individuals who

  (i) were full-time employees (or family members of such employees) of the
employer, and

  (ii) residing in the regional alliance area,

in the year before the first year in which this section applies to the
employer.

  (C) The excess risk proportion (specified in paragraph (3)) for the employer
for such area.

  (D) The phase-down percentage (specified in paragraph (4)) for the year.

  (3) Excess risk proportion.

  (A) In general. The "excess risk proportion'', specified in this paragraph,
with respect to an employer and an alliance area, is a percentage that
reflects, for the year before the first year in which this section applies to
the employer, the amount by which

  (i) the average demographic risk for employees (and family members)
described in paragraph (2)(B) residing in the alliance area, exceeds

  (ii) the average demographic risk for all regional alliance eligible
individuals residing in the area.

  (B) Measurement of demographic risk.

  (i) In general. Demographic risk under subparagraph (A) shall be measured,
in a manner specified by the Board, based on the demographic characteristics
described in section 6001(c)(1)(A), that relate to the actuarial value of the
comprehensive benefit package.

  (ii) Provision of information. Each employer to which this section applies
shall submit, to each regional alliance for which an additional payment may be
required under this section, such information (and at such time) as the Board
may require in order to determine the demographic risk referred to in
subparagraph (A)(i).

  (4) Phase-down percentage. The phase down percentage, specified in this
paragraph for an employer for

  (A) each of the first 4 years to which this section applies to the employer,
is 100 percent,

  (B) the fifth such year, is 75 percent,

  (C) the sixth such year, is 50 percent, and

  (D) the seventh such year, is 25 percent.

  (c) Phase in of Employer Premium Discount. For

  (1) each of the first 4 years in which this section applies to such
employer, section 6123 shall not apply to the employer;

  (2) the fifth such year, section 6123 shall apply to the employer but the
reduction in premium payment effected by such section shall be 25 percent of
the reduction that would otherwise apply (but for this subsection);

  (3) the sixth such year, section 6123 shall apply to the employer but the
reduction in premium payment effected by such section shall be 50 percent of
the reduction that would otherwise apply (but for this subsection);

  (4) the seventh such year, section 6123 shall apply to the employer but the
reduction in premium payment effected by such section shall be 75 percent of
the reduction that would otherwise apply (but for this subsection); or

  (5) a subsequent year, section 6123 shall apply to the employer without any
reduction under this subsection.

SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.

  (a) In General. The amount payable by an employer under this subpart shall
be increased by the amount computed under subsection (b).

  (b) Amount. The amount under this subsection for an employer is equal to the
premium payment amount that would be computed under section 6121(b)(2) if the
per capita collection shortfall amount (computed under section 6107(b)(1)) for
the year were substituted for the reduced weighted average accepted bid for
the year. The reduced weighted average accepted bid is used under section
6000(b)(1) in computing the weighted average premium, which in turn is used
under section 6122(a)(1) in computing the base employment monthly premium,
which in turn is used under section 6121(b)(2)(A) in computing the employer
premium amount.

  (c) Discount Not Applicable. Section 6123 shall not apply to the increase in
the amount payable by virtue of this section.

SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.

  (a) In General. A self-employed individual (as defined in section
1901(c)(2)) shall be considered, for purposes of this subpart to be an
employer of himself or herself and to pay wages to himself or herself equal to
the amount of net earnings from self-employment (as defined in section
1901(c)(1)).

  (b) Credit for Employer Premiums.

  (1) In general. In the case of a self-employed individual, the amount of any
employer premium payable by virtue of subsection (a) in a year shall be
reduced (but not below zero) by the sum of the following:

  (A) Subject to paragraph (2), the amount of any employer premiums payable
under this subpart (determined not taking into account any adjustment in the
premium amounts under section 6123 or 6124) with respect to the employment of
that individual in the year.

  (B) The product of (i) the number of months in the year the individual was
employed on a full-time basis by a corporate alliance employer, and (ii) the
employer premium that would have been payable for such months under this
subpart (determined not taking into account any adjustment in the premium
amounts under section 6123 or 6124) for the class of enrollment if such
employer had been a regional alliance employer.

  (2) Special rule for certain closely-held businesses.

  (A) In general. In the case of an individual who

  (i) has wage-adjusted income (as defined in section 6113(d), determined
without regard to paragraphs (1)(B) and (2) thereof) that exceeds 250 percent
(or such higher percentage as the Board may establish) of the applicable
poverty level, and

  (ii) is both a substantial owner and an employee of a closely held business,

the amount of any reduction under paragraph (1)(A) that is attributable to the
individual's employment by that business shall be appropriately reduced in
accordance with rules prescribed by the Board, in order to prevent individuals
from avoiding payment of the full amount owed through fraudulent or secondary
employment arrangements.

  (B) Closely held business. For purposes of subparagraph (A), a business is
"closely held'' if it is an employer that meets the requirements of section
542(a)(2) of the Internal Revenue Code of 1986 or similar requirements as
appropriate in the case of a partnership or other entity.

Subpart B Corporate Alliance Employers

SEC. 6131. EMPLOYER PREMIUM PAYMENT REQUIRED.

  (a) Per Employee Premium Payment. Subject to section 6124, each corporate
alliance employer of a corporate alliance that in a month in a year employs a
qualifying employee who is

  (1) enrolled in a corporate alliance health plan offered by the alliance,
shall provide for a payment toward the premium for the plan in an amount at
least equal to the corporate employer premium specified in subsection (b); or

  (2) is not so enrolled, shall make employer premium payments with respect to
such employment under subpart A in the same manner as if the employer were a
regional alliance employer (except as otherwise provided in such subpart).

  (b) Corporate Employer Premium.

  (1) Amount.

  (A) In general. Except as provided in paragraph (2), the amount of the
corporate employer premium for a month in a year for a class of family
enrollment for a family residing in a premium area (established under section
1384(b)) is 80 percent of the weighted average monthly premium of the
corporate alliance health plans offered by the corporate alliance for that
class of enrollment for families residing in that area.

  (B) Application to self-insured plans. In applying this paragraph in the
case of one or more corporate alliance health plans that are self-insured
plans

  (i) the "premium'' for the plan is the actuarial equivalent of such premium,
based upon the methodology  (or such other consistent methodology) used under
section 6021(a) (relating to application of premium caps to corporate alliance
health plans), and

  (ii) the premium amount, for different classes and, if applicable, for
different premium areas, shall be computed in a manner based on such factors
as may bear a reasonable relationship to costs for the provision of the
comprehensive benefit package to the different classes in such areas.

The Secretary of Labor shall establish rules to carry out this subparagraph.

  (2) Low-wage employees. In the case of a low-wage employee entitled to a
premium discount under section 6104(a)(2), the amount of the employer premium
payment for a month in a year for a class of family enrollment shall be
increased by the amount of such premium discount.

  (c) Determinations.

  (1) Basis. Determinations under this section shall be made based on such
information as the Secretary of Labor shall specify.

  (2) Timing. Determinations of the monthly premiums under this section for
months in a year shall be made not later than December 1 of the previous year.

Title VI, Subtitle C

Subtitle C Payments to Regional Alliance Health Plans

SEC. 6201. COMPUTATION OF BLENDED PLAN PER CAPITA PAYMENT AMOUNT.

  (a) In General. For purposes of section 1351, the blended plan per capita
payment amount for a regional alliance health plan for enrollments in an
alliance for a year is equal to the sum of the 3 components described in
subsection (b), multiplied by any adjustment factor applied for the year under
section 6202(d).

  (b) Sum of Products. The 3 components described in this subsection are:

  (1) Plan bid component for that plan. The product of

  (A) the final accepted bid for plan (as defined in section 6000(a)(2)) for
the year, and

  (B) the plan bid proportion determined under section 6202(a)(1) for the
year.

  (2) AFDC component for alliance. The product of

  (A) the AFDC per capita premium amount for the regional alliance for the
year (determined under section 9012), and

  (B) the AFDC proportion determined under section 6202(a)(2) for the year.

  (3) SSI component for alliance. The product of

  (A) the SSI per capita premium amount for the regional alliance for the year
(determined under section 9013) for the year, and

  (B) the SSI proportion determined under section 6202(a)(3) for the year.

SEC. 6202. COMPUTATION OF PLAN BID, AFDC, AND SSI PROPORTIONS.

  (a) In General. For purposes of this subtitle:

  (1) Plan bid proportion. The "plan bid proportion'' is, for a class of
enrollment, 1 minus the sum of (A) the AFDC proportion, and (B) the SSI
proportion.

  (2) AFDC proportion. The "AFDC proportion'' is, for a class of family
enrollment for a year, the ratio of

  (A) the average of the number of AFDC recipients (as determined under
subsection (c)) enrolled in regional alliance health plans in that class of
enrollment for the year, to

  (B) the average of the total number of individuals enrolled in regional
alliance health plans in that class of enrollment for the year.

  (3) SSI proportion. The "SSI proportion'' is, for a class of family
enrollment for a year, the ratio of

  (A) the average of the number of SSI recipients (as determined under
subsection (c)) enrolled in regional alliance health plans in that class of
enrollment for the year, to

  (B) the average described in paragraph (2)(B).

  (b) Computation.

  (1) Projections. The proportions described in subsection (a) shall be
determined and applied by the State, based upon the best available data, at
least 1 month before the date bids are submitted under section 6004 before the
beginning of the calendar year involved.

  (2) Actual. For purposes of making adjustments under subsection (d), the
regional alliance shall determine, after the end of each year, the actual
proportions described in subsection (a).

  (c) Counting of AFDC and SSI Recipients. For purposes of subsections
(a)(2)(A) and (a)(3)(A), the terms "SSI recipient'' and "AFDC recipient'' do
not include a medicare-eligible individual.

  (d) Adjustments For Discrepancies In Estimations.

  (1) In general. If the actual AFDC proportion or SSI proportion (as
determined under subsection (a)) for a year (in this subsection referred to as
the "reference year''), determined after the end of the year based upon actual
number of AFDC recipients and SSI recipients in the year, is different from
the projected AFDC and SSI proportions (as determined under subsection (b)(1))
used in computing the blended plan payment amount for the year, then, subject
to section 1361(b)(3), the regional alliance shall adjust the blended plan
payment amount in the second succeeding year (in this subsection referred to
as the "applicable year'') in the manner described in paragraph (2). By
regulation the Secretary may apply the adjustment, based on estimated amounts,
in the year before the applicable year, with final adjustment in the
applicable year.

  (2) Adjustment described.

  (A) Positive cash flow. If the cash flow difference (as defined in paragraph
(3)(A)) for the reference year is positive, then in the applicable year the
blended plan payment amount shall be increased by the adjustment percentage
described in paragraph (4).

  (B) Negative cash flow. If the cash flow difference (as defined in paragraph
(3)(A)) for the reference year is negative, then in the applicable year the
blended plan payment amount shall be reduced by the adjustment percentage
described in paragraph (4).

  (3) Cash flow difference defined. In this subsection:

  (A) In general. The term "cash flow difference'' means, for a regional
alliance for a reference year

  (i) the actual cash flow (as defined in subparagraph (B)) for the alliance
for the year, minus

  (ii) the reconciled cash flow (as defined in subparagraph (C)) for the
alliance for the year.

  (B) Actual cash flow. The term "actual cash flow'' means, for a regional
alliance for a reference year, the total amount paid by the regional alliance
to the regional alliance health plans in the year based on the blended plan
payment amount (computed on the basis of projected AFDC and SSI proportions
determined under subsection (b)(1)).

  (C) Reconciled cash flow. The term "reconciled cash flow'' means, for a
regional alliance for a reference year, the total amount that would have been
paid to regional alliance health plans in the year if such payments had been
made based on the blended plan payment amount computed on the basis of the
actual AFDC and SSI proportions for the year (determined under subsection
(b)(2), rather than based on such payment amount computed on the basis of the
projected AFDC and SSI proportions for the year (determined under subsection
(b)(1)).

  (4) Percentage adjustment. The percentage adjustment described in this
paragraph for a regional alliance for an applicable year is the ratio
(expressed as a percentage) of

  (A) the cash flow difference for the reference year, to

  (B) the total payments estimated by the regional alliance to be paid to
regional alliance health plans under this subtitle in the applicable year
(determined without regard to any adjustment under this subsection).


