Title IV, SEC. 4001. OPTIONAL STATE INTEGRATION OF MEDICARE BENEFICIARIES INTO REGIONAL ALLIANCE PLANS. Title XVIII is amended by adding at the end the following: ``integration of medicare into state health security programs ``Sec. 1893. (a) Payment to States. The Secretary shall pay a participating State that has submitted an application, as specified by subsection (b) which the Secretary has approved under subsection (c), the amount specified by subsection (d) for the period specified by subsection (e) for covered medicare beneficiaries. This section shall apply without regard to whether or not a State is a single-payer State. ``(b) Application by State. An application submitted by a participating State shall contain the following assurances: ``(1) Designation of classes covered. ``(A) Designation of classes of medicare beneficiaries covered. In the application the State shall designate which of the following classes of medicare beneficiaries are to be covered: ``(i) Individuals who are 65 years of age or older. ``(ii) Individuals who are eligible for benefits under part A by reason of section 226(b) or section 1818A (relating to disabled individuals). ``(iii) Individuals who are eligible for benefits under part A only by reason of section 226A (relating to individuals with end stage renal disease). A State may not restrict the individuals within such a class who are to be covered under this section. ``(B) Limitation. An individual may not be covered under the application unless the individual is entitled to benefits under part A and is enrolled under part B. ``(2) Enrollment in and selection of health plans. ``(A) Enrollment. Each medicare-eligible individual (within a class of medicare beneficiaries covered under the application) who is a resident of the State will be enrolled in a regional alliance health plan serving the area in which the individual resides (or, in the case of an individual who is a resident of a single-payer State, in the Statewide single-payer system operated under part 2 of subtitle C of title I of the Health Security Act). ``(B) Selection. Each such individual will have the same choice among applicable health plans as other individuals in the State who are eligible individuals under the Health Security Act. ``(C) Offer of fee-for-service plan. Each such individual shall be offered enrollment in at least one health plan that is a fee-for-service plan (or, in the case of an indivdiual who is a resident of a single-payer State, the Statewide single-payer system under part 2 of subtitle B of title I of the Health Security Act) that meets the following requirements: ``(i) The plan's premium rate, and the actuarial value of the plan's deductibles, coinsurance, and copayments, charged to the individual do not exceed the actuarial value of the premium rate, coinsurance, and deductibles that would be applicable on the average to such individuals if this section did not apply to those individuals. ``(ii) The plan's payment rates for hospital services, post-hospital extended care services, home health services, home intravenous drug therapy services, comprehensive outpatient rehabilitation facility services, hospice care, dialysis services for individuals with end stage renal disease, and facility services furnished in connection with ambulatory surgical procedures are accepted as payment in full. ``(iii) The plan's payment rates for physicians' services are no less a percentage of the amounts accepted as payment in full than are the payment rates for physicians' services under part B. ``(3) Coverage of full medicare benefits. For each health plan providing coverage under this section ``(A) the plan shall cover at least the items and services for which payment would otherwise be made under this title, and ``(B) coverage determinations under the plan are made under rules that are no more restrictive than otherwise applicable under this title. ``(4) Premium. During the period for which payments are made to a State under this section, the requirements of the Health Security Act relating to premiums that are otherwise applicable with respect to individuals enrolled in health plans in a State shall not apply with respect to medicare-eligible individuals in the State who are covered under the State's application under this section. Nothing in the previous sentence shall operate to permit a State or health plans in a State to charge different premiums among medicare-eligible individuals within the same premium class under the Health Security Act. ``(5) Quality assurance. For each health plan providing coverage under this section there are quality assurance mechanisms for covered medicare individuals that equal, or exceed, such mechanisms otherwise applicable under this title. ``(6) Review rights. Covered medicare individuals have review, reconsideration, and appeal rights (including appeals to courts of the State) that equal or exceed such rights otherwise applicable under this title. ``(7) Data reporting and access to documents. The State will ``(A) provide such utilization and statistical data as the Secretary determines are needed for purposes of the programs established under this title, and ``(B) the State will ensure access by the Secretary or the Comptroller General to relevant documents. ``(8) Use of payments. Payments made to the State under subsection (a) will be used only to carry out the purposes of this section. ``(c) Approval by Secretary. The Secretary shall approve an application under subsection (b) if the Secretary finds ``(1) that the individuals covered under the State's application shall receive at least the benefits provided under this title (including cost sharing); ``(2) that the amount of expenditures that will be made under this title will not exceed the amount of expenditures that will be made if the State's application is not accepted; and ``(3) that the State is able and willing to carry out the assurances provided in its application. ``(d) Amount and Source of Payment. ``(1) Amount of payment. For purposes of subsection (a), the amount of payments to a State ``(A) for the first year for which payments are made to the State under this section shall be determined by the applicable rate specified in section 1876(a)(1)(C) (but at 100 percent, rather than 95 percent, of the applicable amount) for each medicare-eligible individual who is a resident of the State (but without regard to any reduction based on payments to be made under section 1876(a)(1)(G)), and ``(B) for each succeeding year, shall be determined by the applicable rate determined under subparagraph (A) or this subparagraph for the preceding year for each such individual, adjusted by the regional alliance inflation factor applicable to regional alliances in the State (as determined in accordance with subtitle A of title VI of the Health Security Act) for the year. ``(2) Source of payment. Payment shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund as provided under paragraph (5) of section 1876(a) (other than as provided under subparagraph (B) of that paragraph). ``(e) Period for Which Payment Made. The period for which payment may be made under subsection (a) to a State ``(1) begins with January 1 of the first calendar year for which the Secretary approves under subsection (c) the application of the State; and ``(2) ends ``(A) on December 31 of the year in which the State notifies the Secretary (before April of that year) that the State no longer intends to receive payments under this section, or ``(B) if the Secretary finds that the State is no longer in substantial compliance with the requirements under paragraphs (2) or (3) of subsection (c), at the time specified by the Secretary. ``No termination is effective under paragraph (2) unless notice has been provided to medicare covered individuals, health providers, and health plans affected by the termination. ``(f) Payments Under this Section as Sole Medicare Benefits. Payments to a State under subsection (a) shall be instead of the amounts that would otherwise be payable, pursuant to sections 1814(b) and 1833(a), for services furnished to medicare-eligible residents of the State covered under the application. ``(g) Evaluation. The Secretary shall evaluate on an ongoing basis the compliance of a State with the requirements of this section. ``(h) Definitions. In this section the terms `applicable health plan', `fee-for-service plan', `health care budget', `health plan', `medicare-eligible individual', `participating State', `single-payer State', and `Statewide single-payer system' have the meanings of those terms in the Health Security Act.''.