providing health care services to quali-
fied recipients.
(3) LIMITED STATE HEALTH CARE WAIVERS.—
Each State which does not receive an approved ap-
plication under paragraph (2) may apply for a lim-
ited State health care waiver. The Secretary shall
award limited State health care waivers to ensure
State demonstrations of health reforms that could
address, but are not limited to addressing, the fol-
lowing issues that are likely to provide guidance for
the development of additional national health re-
forms:
(A) Integration of acute and long-term
care systems, including delivery and financing
systems.
(B) Establishment of methodologies that
limit expenditures or establish global budgets,
including rate setting and provider reimburse-
ments.
(C) Implementation of a quality manage-
ment and improvement system.
(D) Strategies to improve the proper spe-
ciality and geographic distribution of the health
care work force.
(E) Initiatives to improve the population’s
health status.
(F) Development of uniform health data
sets that emphasize the measurement of patient
satisfaction, treatment outcomes, and health
status.
(G) Methods for coordinating or integrat-
ing State-funded programs that provide services
for low-income individuals, including programs
authorized by this Act.
(H) Programs to improve public health.
(I) Reforms intended to reduce health care
fraud and abuse.
(J) Reforms to reduce the incidence of de-
fensive medicine and practitioner liability costs
associated with medical malpractice.
(K) Development of a uniform billing sys-
tem.
(c) ADDITIONAL
RULES
REGARDING
APPLICA-
TIONS.—
(1) TECHNICAL
ASSISTANCE.—The Secretary
shall, if requested, provide technical assistance to
States to assist such States in developing waiver ap-
plications under this section.
(2) INITIAL REVIEW.—The Secretary shall com-
plete an initial review of each State application for
a waiver under paragraph (2) or (3) of subsection
(b) within 40 days of the date of receipt of such ap-
plication, analyze the scope of the proposal, and de-
termine whether additional information is needed
from the State. The Secretary shall issue a prelimi-
nary opinion concerning the likelihood that the ap-
plication will be approved within such 40-day period
and shall advise the State within such period of the
need to submit additional information.
(3) FINAL
DECISION.—The Secretary shall,
within 90 days of the later of—
(A) the date of receipt of a State applica-
tion for a waiver under paragraph (2) or (3) of
subsection (b), or
(B) the date on which the Secretary re-
ceives additional information requested from a
State under paragraph (1),
issue a final decision concerning such application.
(4) WAIVER PERIOD.—A State waiver may be
approved for a period of 5 years and may be ex-
tended for subsequent 5-year periods upon approval
by the Secretary, except that a shorter period may
be requested by a State and granted by the Sec-
retary.
(d) QUALIFICATION
FOR FEDERAL FUNDS.—For
purposes of this section, a State with an approved alter-
native health care system under subsection (b)(2) shall be
considered a participating State and shall maintain such
status if such State meets the requirements established
by the Secretary in the waiver approval and in this section.
(e) EVALUATION, MONITORING, AND COMPLIANCE.—
(1) 
STATE
HEALTH
REFORM
ADVISORY
BOARD.—Within 90 days after the date of the enact-
ment of this Act, the Secretary shall establish a 7-
member State Health Reform Advisory Board (here-
after in this subsection referred to as the ‘‘Board’’)
that will be responsible for monitoring the status
and progress achieved under waivers granted under
this section and promoting information exchange be-
tween States and the Federal Government. The
Board shall be comprised of members representing
relevant participants in State programs, including
representatives of State government, employers, con-
sumers, providers, and insurers. The Board shall
also be responsible for making recommendations to
the Secretary, using equivalency or minimum stand-
ards, for minimizing the negative effect of State
waivers on national employer groups, provider orga-
nizations, and insurers because of differing State re-
quirements under the waivers.
(2) ANNUAL REPORTS BY STATES.—Each State
that has received a waiver approval shall submit to
the Secretary an annual report based on the period
representing the respective State’s fiscal year, detail-
ing compliance with the requirements established by
the Secretary in the waiver approval and in this sec-
tion.
(3) CORRECTIVE ACTION PLANS.—If a State is
not in compliance with the requirements of this sec-
tion, the Secretary shall develop, in conjunction with
all the approved States, a corrective action plan.
(4) TERMINATION.—For good cause, the Sec-
retary may revoke any waiver of Federal law granted
under this section, and if necessary, may terminate
any alternative State health program. Such decisions
shall be subject to a petition for reconsideration and
appeal pursuant to regulations established by the
Secretary.
(5) EVALUATIONS
BY
SECRETARY.—The Sec-
retary shall prepare and submit to the Committee on
Finance and the Committee on Labor and Human
Resources of the Senate and the Committee on En-
ergy and Commerce and the Committee on Ways
and Means of the House of Representatives annual
reports that shall contain—
(A) a description of the effects of the re-
forms undertaken in States receiving waiver ap-
provals under this section;
(B) an evaluation of the effectiveness of
such reforms in—
(i) expanding health care coverage for
State residents;
(ii) providing health care to State
residents with special needs;
(iii) reducing or containing health
care costs in the States; and
(iv) improving the quality of health
care provided in the States; and
(C) recommendations regarding the advis-
ability of increasing Federal financial assistance
for State alternative State health program ini-
tiatives, including the amount and source of
such assistance.
(f) FUNDING.—
(1) IN GENERAL.—The Secretary may provide a
grant to a State that has an application for a waiver
approved under this section to enable such State to
carry out an alternative State health program in the
State.
(2) AMOUNT
OF
GRANT.—The amount of a
grant provided to a State under paragraph (1) shall
be determined pursuant to an allocation formula es-
tablished by the Secretary.
(3) PRIORITY.—In awarding grants under para-
graph (1), the Secretary shall give priority to those
State projects that the Secretary determines have
the greatest opportunity to succeed in providing ex-
panded health insurance coverage and in providing
children and youth with access to health care items
and services.
(4) MAINTENANCE
OF
EFFORT.—A State, in
utilizing the proceeds of a grant received under
paragraph (1), shall maintain the expenditures of
the State for health care coverage purposes at a level
equal to not less than the level of such expenditures
maintained by the State for the fiscal year preceding
the fiscal year for which the grant is received. The
requirement of this paragraph shall not apply in the
case of a State that desires to alter health care cov-
erage funding levels within the scope of the State’s
alternative health program.
(5) REPORT.—At the end of the 5-year period
beginning on the date on which the Secretary
awards the first grant under paragraph (1), the
State Health Reform Advisory Board established
under subsection (e)(1) shall prepare and submit to
the appropriate committees of Congress, a report on
the progress made by States receiving grants under
paragraph (1) in achieving universal health care cov-
erage in such States during the 5-year period of the
grant. Such report shall contain the recommendation
of the Board concerning any future action that Con-
gress should take concerning health care reform, in-
cluding whether or not to extend the program estab-
lished under this subsection.
(g) AVAILABILITY OF FUNDS.—With respect to each
of calendar years 1996 through 2000, $10,000,000,000
shall be available for a calendar year to carry out this sec-
tion from the Health Care Reform Trust Fund established
under section 9551(a)(2)(A) of the Internal Revenue Code
of 1986. Amounts made available in a calendar year under
this paragraph and not expended may be used in subse-
quent calendar years to carry out this section.
(h) AMENDMENT
TO CRIMINAL PENALTIES
FOR
ACTS INVOLVING MEDICARE OR STATE HEALTH CARE
PROGRAMS.—Section 1128B(b) of the Social Security Act
(42 U.S.C. 1320a-7b(b)) is amended by adding at the end
the following new paragraph:
‘‘(4) Paragraphs (1) and (2) shall not apply to—
‘‘(A) any payment to a health insurer or health
maintenance organization for which the premium is
paid in whole or in part by a State health care pro-
gram; and
‘‘(B) any payment made by a health insurer or
a health maintenance organization to a sales rep-
resentative or a licensed insurance agent as com-
pensation for the services of the representative or
agent in marketing and enrolling an individual in a
health plan for which the premium is paid in whole
or in part by a State health care program.’’.
Subtitle B—Existing State Laws
SEC. 2101. CONTINUANCE OF EXISTING FEDERAL LAW
WAIVERS.
Nothing in this Act shall preempt any feature of a
State health care system operating under a waiver granted
before the date of the enactment of this Act under title
XVIII or XIX of the Social Security Act (42 U.S.C. 1395
et seq. or 1396 et seq.) or under an exemption from pre-
emption under section 514(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et seq.).
SEC. 2102. HAWAII PREPAID HEALTH CARE ACT.
(a) ERISA WAIVER.—Section 514(b)(5) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1144(b)(5)) is amended to read as follows:
‘‘(5)(A) Except as provided in subparagraphs
(B) and (C), subsection (a) shall not apply to the
Hawaii Prepaid Health Care Act (Haw. Rev. Stat.
393–1 through 393–51).
‘‘(B) Nothing in subparagraph (A) shall be con-
strued to exempt from subsection (a) any State tax
law relating to employee benefits plans.
‘‘(C) If the Secretary of Labor notifies the Gov-
ernor of the State of Hawaii that as the result of
an amendment to the Hawaii Prepaid Health Care
Act enacted after the date of the enactment of the
Health Innovation Partnership Act of 1994—
‘‘(i) the proportion of the population with
health care coverage under such Act is less than
such proportion on such date, or
‘‘(ii) the level of benefit coverage provided
under such Act is less than the actuarial equiv-
alent of such level of coverage on such date,
subparagraph (A) shall not apply with respect to the
application of such amendment to such Act after the
date of such notification.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and shall apply with respect to notifica-
tions made on or after such date.
SEC. 2103. ALTERNATIVE STATE PROVIDER PAYMENT SYS-
TEMS.
Notwithstanding any other provision of law, if a hos-
pital reimbursement system operated by a State meets the
requirements of section 1814(b) of the Social Security Act
(42 U.S.C. 1395f(b)) and has been approved by the Sec-
retary and in continuous operation since July 1, 1977, the
payment rates and methodologies required under the sys-
tem for services provided in the State shall apply to all
purchasers and payers, including those under employee
welfare benefit plans covered under the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1001 et
seq.), workers’ compensation programs under State law,
the Federal Employees’ Compensation Act under chapter
81 of title 5, United States Code, and Federal employee
health benefit plans under chapter 89 of title 5, United
States Code.
SEC. 2104. ALTERNATIVE STATE HOSPITAL SERVICES PAY-
MENT SYSTEMS.
(a) IN GENERAL.—No State shall be prevented from
enforcing—
(1) a State system described in subsection (b),
or
(2) a State system described in subsection (c),
by any provision of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1001 et seq.) or chapter
81 or 89 of title 5, United States Code.
(b) REIMBURSEMENT CONTROL SYSTEM.—A State
system is described in this subsection if it is a State reim-
bursement control system in operation before the date of
the enactment of this Act which—
(1) applies to substantially all non-Federal
acute care hospitals in the State, and
(2) regulates substantially all rates of payment
(including maximum charges) in the State for inpa-
tient hospital services, except payments made under
title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.).
(c) HEALTH INSURANCE REFORM SYSTEM.—A State
system is described in this subsection if it is a State health
insurance reform system in operation before the date of
the enactment of this Act which requires any insurer (in-
cluding a health maintenance organization) to comply with
requirements governing open enrollment and community
rating, including premium adjustments or other health
care assessments for the purpose of risk adjustment.
(d) EFFECTIVE DATE.—In the case of a State system
described in subsection (b) or (c), the provisions of this
section shall apply before, on, and after the date of the
enactment of this Act.
SEC. 2105. EXEMPTION FROM ERISA PREEMPTION OF CER-
TAIN PROVISIONS OF THE LAW OF THE
STATE OF OREGON RELATING TO HEALTH
PLANS.
(a) IN GENERAL.—Section 514(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1144(b)) is amended by adding at the end the following
new paragraph:
‘‘(9)(A) Subject to subparagraph (B), subsection (a)
shall not apply to the following provisions of the law of
the State of Oregon as applied to a group health plan:
‘‘(i) Chapter 838, Oregon Laws 1989 (relating
to the creation and operation of a high-risk insur-
ance pool).
‘‘(ii) Chapter 591, Oregon Laws 1987, chapter
381, Oregon Laws 1989, and chapter 916, Oregon
Laws 1991 (relating to employer-based health plan
coverage reforms).
‘‘(iii) Chapter 470, Oregon Laws 1991 (relating
to health care cost containment and technology as-
sessment).