Title I, SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT; ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE. (a) In General. Each health alliance must provide to each eligible enrollee with respect to the alliance a choice of health plans among the plans which have contracts in effect with the alliance under section 1321 (in the case of a regional alliance) or section 1341 (in the case of a corporate alliance). (b) Offering of Plans by Alliances. (1) In general. Each regional alliance shall include among its health plan offerings at least one fee-for-service plan (as defined in paragraph (2)). (2) Fee-for-service plan defined. (A) In general. For purposes of this Act, the term ``fee-for-service plan'' means a health plan that (i) provides coverage for all items and services included in the comprehensive benefit package that are furnished by any lawful health care provider of the enrollee's choice, subject to reasonable restrictions (described in subparagraph (B)), and (ii) makes payment to such a provider without regard to whether or not there is a contractual arrangement between the plan and the provider. (B) Reasonable restrictions described. The reasonable restrictions on coverage permitted under a fee-for-service plan (as specified by the National Health Board) are as follows: (i) Utilization review. (ii) Prior approval for specified services. (iii) Exclusion of providers on the basis of poor quality of care, based on evidence obtainable by the plan. Clause (ii) shall not be construed as permitting a plan to require prior approval for non-primary health care services through a gatekeeper or other process. (c) Establishment of Fee-for-Service Schedule. (1) In general. Except in the case of regional alliances of a State that has established a Statewide fee schedule under paragraph (3), each regional alliance shall establish a fee schedule setting forth the payment rates applicable to services furnished during a year to individuals enrolled in fee-for-service plans (or to services furnished under the fee-for-service component of any regional alliance health plan) for use by regional alliance health plans under section 1406(c) and corporate alliance health plans providing services subject to the schedule in the regional alliance area. (2) Negotiation with providers. The fee schedule under paragraph (1) shall be established after negotiations with providers, and (subject to paragraphs (5) and (6)) providers may collectively negotiate the fee schedule with the regional alliance. (3) Use of statewide schedule. At the option of a State, the State may establish its own statewide fee schedule which shall apply to all fee-for-service plans offered by regional alliances and corporate alliances in the State instead of alliance-specific schedules established under paragraph (1). (4) Annual revision. A regional alliance or State (as the case may be) shall annually update the payment rates provided under the fee schedule established pursuant to paragraph (1) or paragraph (3). (5) Activities treated as State action or efforts intended to influence government action. The establishment of a fee schedule under this subsection by a regional alliance of a State shall be considered to be pursuant to a clearly articulated and affirmatively expressed State policy to displace competition and actively supervised by the State, and conduct by providers respecting the establishment of the fee schedule, including collective negotiations by providers with the regional alliance (or the State) pursuant to paragraph (2), shall be considered as efforts intended to influence governmental action. (6) No boycott permitted. Nothing in this subsection shall be construed to permit providers to threaten or engage in any boycott. (7) Negotiations defined. In this subsection, ``negotiations'' are the process by which providers collectively and jointly meet, confer, consult, discuss, share information, among and between themselves in order to agree on information to be provided, presentations to be made, and other such activities with respect to regional alliances (or States) relating to the establishment of the fee schedule (but not including any activity that constitutes engaging in or threatening to engage in a boycott), as well as any and all collective and joint meetings, discussions, presentations, conferences, and consultations between or among providers and any regional alliance (or State) for the purpose of establishing the fee schedule described in this subsection. (d) Prospective Budgeting of Fee-for-Service. (1) In general. The fee schedule established by a regional alliance or a State under subsection (c) may be based on prospective budgeting described in paragraph (2). (2) Prospective budgeting described. Under prospective budgeting (A) the regional alliance or State (as the case may be) shall negotiate with health providers annually to develop a budget for the designated fee-for-service plan; (B) the negotiated budget shall establish spending targets for each sector of health expenditures made by the plan; and (C) if the regional alliance or State (as the case may be) determines that the utilization of services under the plan is at a level that will result in expenditures under the plan exceeding the negotiated budget, the plan shall reduce the amount of payments otherwise made to providers (through a withhold or delay in payments or adjustments) in such a manner and by such amounts as necessary to assure that expenditures will not exceed the budget. (3) Use of prospective budgeting exclusive. If a regional alliance or State establishes the fee schedule for fee-for-service plans on the basis of prospective budgeting under this subsection, payment for all services provided by fee-for-service plans in the alliance or State shall be determined on such basis.