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