Title VI, SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLATION FACTORS. (a) Computation. (1) In general. This section provides for the computation of a 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 (2)); (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. (3) General health care inflation factor. (A) 1996 through 1999his 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, 0 percentage points. (B) Years after 1999. (i) Recommendation to congress. In 1998, the Board shall submit to Congress recommendations on what the general health care inflation factor should be for years beginning with 2000. (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 1999, 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. (C) Factor. The factor described in this subparagraph for a year is 1 plus the following: (i) CPI. 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) Population. The average annual percentage change in the population of the United States during the 3-year period ending in the calendar year, determined by the Board based on data supplied by the Bureau of the Census. (iii) Real gdp per capita. 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 inflator 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 method. (d) Adjustment for Previous Excess Rate of Increase in Expenditures. (1) In general. If 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 section 6003(a)) for the year, then the regional alliance inflation factor (A) for the succeeding year shall be reduced by the product of (i) \1/2\ of the excess percentage (described in paragraph (3)) for the previous year, and (ii) the adjustment factor (described in paragraph (2)(A)) for such succeeding year; and (B) in the second succeeding year shall be reduced by the product of (i) \1/2\ of such excess percentage, and (ii) the adjustment factor (described in paragraph (2)(B)) for such second succeeding year. (2) Adjustment factors. (A) Succeeding year. With respect to a succeeding year, the adjustment factor described in this subparagraph is 1 plus the regional alliance inflation factor for such year. (B) Second succeeding year. With respect to a second succeeding year, the adjustment factor described in this subparagraph is the product of (i) 1 plus the regional alliance inflation factor for such year, and (ii) 1 plus the regional alliance inflation factor for the previous year. (C) No adjustment in factor considered. For purposes of subparagraphs (A) and (B), the regional alliance inflation factor for a year shall not take into account any adjustment under this subsection. (3) Excess percentage. The excess percentage described in this paragraph for a year is the percentage by which (A) 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 section 6003(a)) for the year. (e) 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.