SECTION 1. INCLUSION OF CERTAIN COVERED BENEFICIARIES IN FEDERAL 
              EMPLOYEES HEALTH BENEFITS PROGRAM.

    (a) FEHBP Option.--Chapter 55 of title 10, United States Code, is 
amended by inserting after section 1079a the following new section:
``Sec. 1079b. Health care coverage through Federal Employees Health 
              Benefits program
    ``(a) FEHBP Option.--(1) Covered beneficiaries described in 
subsection (b) shall be afforded an opportunity to enroll in any health 
benefits plan under the Federal Employee Health Benefits program 
offering medical and dental care that is comparable to the care 
authorized by section 1077 of this title to be provided under section 
1076 of this title.
    ``(2) The Secretary of Defense and the other administering 
Secretaries shall jointly enter into an agreement with the Director of 
the Office of Personnel Management to carry out paragraph (1).
    ``(b) Eligible Covered Beneficiaries.--(1) A covered beneficiary 
referred to in subsection (a) is a member or former member of the 
uniformed services described in section 1074(b) of this title, and any 
dependent of the member described in section 1076(b) of this title, 
who, as determined pursuant to standards and procedures provided in the 
agreement entered into pursuant to subsection (a)(2)--
            ``(A) is not guaranteed access under CHAMPUS or TRICARE 
        Standard to health and dental care that is comparable to the 
        highest level of health and dental care benefits provided under 
        the service benefit plan offered under the Federal Employee 
        Health Benefits program;
            ``(B) is eligible to enroll in the TRICARE program but is 
        not enrolled because of the location of the beneficiary, a 
        limitation on the total enrollment, or any other reason; or
            ``(C) is entitled to hospital insurance benefits under part 
        A of title XVIII of the Social Security Act (42 U.S.C. 1395c et 
        seq.).
    ``(2) A covered beneficiary shall not be required to satisfy any 
eligibility criteria specified in chapter 89 of title 5 as a condition 
for enrollment in a health benefits plan of the Federal Employee Health 
Benefits program under this section.
    ``(c) Contributions.--(1) Contributions shall be made for an 
enrollment of a covered beneficiary in a plan of the Federal Employee 
Health Benefits program under this section as if the beneficiary were 
an employee of the Federal Government.
    ``(2) The administering Secretary concerned shall be responsible 
for the Government contributions that the Director of the Office of 
Personnel Management determines would be payable by the Secretary under 
section 8906 of title 5 for an enrolled covered beneficiary if the 
beneficiary were an employee of the Secretary.
    ``(3) Each covered beneficiary enrolled in a health benefits plan 
under this section shall be required to contribute the amount that 
would be withheld from the pay of a similarly situated Federal employee 
who is enrolled in the same health benefits plan under chapter 89 of 
title 5.
    ``(d) Management of Participation.--The Director of the Office of 
Personnel Management shall manage the participation of a covered 
beneficiary in a health benefits plan of the Federal Employee Health 
Benefits program pursuant to an enrollment under this section. The 
Director shall maintain separate risk pools for participating covered 
beneficiaries until such time as the Director determines that a 
complete inclusion of participating covered beneficiaries under chapter 
89 of title 5 will not adversely affect Federal employees and 
annuitants enrolled in health benefits plans under such chapter.
    ``(e) Reporting Requirements.--Not later than November 1 of each 
year, the Secretary of Defense and the Director of the Office of 
Personnel Management shall jointly submit to Congress a report 
describing the provision of health and dental care services to covered 
beneficiaries under this section during the preceding fiscal year. The 
report shall address or contain the following:
            ``(1) The number of covered beneficiaries who are 
        participating in health benefits plans of the Federal Employee 
        Health Benefits program pursuant to an enrollment under this 
        section, both in terms of total number and as a percentage of 
        all covered beneficiaries who are receiving health care through 
        the health care system of the uniformed services.
            ``(2) The extent to which covered beneficiaries use the 
        health and dental care services available to the beneficiaries 
        under health benefits plans pursuant to enrollments under this 
        section.
            ``(3) The cost to covered beneficiaries for health and 
        dental care under such health benefits plans.
            ``(4) The cost to the Department of Defense, the Department 
        of Transportation, the Department of Health and Human Services, 
        and any other departments and agencies of the Federal 
        Government of providing care to covered beneficiaries pursuant 
        to enrollments in such health benefits plans under this 
        section.
            ``(5) A comparison of the costs determined under paragraphs 
        (3) and (4) and the costs that would otherwise have been 
        incurred by the United States and enrollees under alternative 
        health care options available to the administering Secretaries.
            ``(6) The effects of the exercise of authority under this 
        section on the cost, access, and utilization rates of other 
        health care options under the health care system of the 
        uniformed services.''.
    (b) Conforming Amendments.--(1) Section 8905 of title 5, United 
States Code, is amended--
            (A) by redesignating subsections (d), (e), and (f) as 
        subsections (e), (f), and (g), respectively; and
            (B) by inserting after subsection (c) the following new 
        subsection (d):
    ``(d) An individual whom the Secretary of Defense determines is an 
eligible covered beneficiary under subsection (b) of section 1079b of 
title 10 may enroll in a health benefits plan under this chapter in 
accordance with the agreement entered into under subsection (a) of such 
section between the Secretary and the Office and with applicable 
regulations under this chapter.''.
    (2) Section 8906 of title 5, United States Code, is amended--
            (A) in subsection (b)--
                    (i) in paragraph (1), by striking ``paragraphs (2) 
                and (3)'' and inserting in lieu thereof ``paragraphs 
                (2), (3), and (4)''; and
                    (ii) by adding at the end the following new 
                paragraph:
    ``(4) In the case of individuals who enroll in a health plan under 
section 8905(d) of this title, the Government contribution shall be 
determined under section 1079b(c) of title 10.''; and
            (B) in subsection (g)--
                    (i) in paragraph (1), by striking ``paragraph (2)'' 
                and inserting in lieu thereof ``paragraphs (2) and 
                (3)''; and
                    (ii) by adding at the end the following new 
                paragraph:
    ``(3) The Government contribution described in subsection (b)(4) 
for beneficiaries who enroll under section 8905(d) of this title shall 
be paid as provided in section 1079b(c) of title 10.''.

SEC. 2. IMPROVED BENEFITS UNDER CHAMPUS AND TRICARE STANDARD.

    Chapter 55 of title 10, United States Code, as amended by section 
1(a), is further amended by inserting after section 1079b the following 
new section:
``Sec. 1079c. CHAMPUS and TRICARE Standard benefits: comparability with 
              service benefit plan of the Federal Employees Health 
              Benefits program
    ``(a) Benefits.--The health and dental care benefits provided under 
CHAMPUS and TRICARE Standard shall be comparable to the highest level 
of benefits provided under the service benefit plan of the Federal 
Employees Health Benefits program.
    ``(b) Provider Reimbursement Rates.--The rates prescribed for the 
reimbursement of health and dental care providers under CHAMPUS and 
TRICARE Standard shall be the same as those provided for the highest 
level of benefits under the service benefit plan of the Federal 
Employees Health Benefits program.''.

SEC. 3. DEFINITIONS.

    Section 1072 of title 10, United States Code, is amended--
            (1) in paragraph (4), by striking out ``The term `Civilian 
        Health and Medical Program of the Uniformed Services' means'' 
        and inserting in lieu thereof ``The terms `Civilian Health and 
        Medical Program of the Uniformed Services' and `CHAMPUS' 
        mean''; and
            (2) by adding at the end the following:
            ``(7) The term `TRICARE program' means the managed health 
        care program that is established by the Secretary of Defense 
        under the authority of this chapter, principally section 1097 
        of this title, and includes the competitive selection of 
        contractors to financially underwrite the delivery of health 
        care services under CHAMPUS.
            ``(8) The term `TRICARE Standard' means a CHAMPUS health 
        care benefits option that, subject to the deductibles and cost-
        sharing requirements under CHAMPUS, pays a share of the cost of 
        covered health care services that are provided by health care 
        providers outside the Federal Government who are not part of 
        the CHAMPUS network of health care providers.
            ``(9) The term `Federal Employee Health Benefits program' 
        means the Federal Employee Health Benefits program under 
        chapter 89 of title 5.''.

SEC. 4. IMPLEMENTATION.

    The Secretary of Defense shall begin to offer the health benefits 
option under section 1079b(a) of title 10, United States Code (as added 
by section 1(a)), and the improved benefits under section 1079c of such 
title (as added by section 3) not later than November 1, 1997.

SEC. 5. CLERICAL AMENDMENT.

    The table of sections at the beginning of chapter 55 of title 10, 
United States Code, is amended by inserting after the item relating to 
section 1079a the following:

``1079b. Health care coverage through Federal Employees Health Benefits 
                            program.
``1079c. CHAMPUS and TRICARE Standard benefits: comparability with 
                            service benefit plan of the Federal 
                            Employees Health Benefits program.''.
Amends the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) to allow certain eligible covered beneficiaries to enroll in any health benefits plan under the Federal Employee Health Benefits Program (FEHB) offering medical and dental care comparable to that offered under CHAMPUS.  Includes as an eligible covered beneficiary any member or former member of the armed forces, and any dependent of such member, who:  (1) is not guaranteed access under CHAMPUS or TRICARE Standard (a Department of Defense managed care program) to health and dental care comparable to the highest level provided under the FEHB; (2) is eligible to enroll in the TRICARE Program but is not so enrolled because of geographical inaccessibility, enrollment limitations, or any other reason; or (3) is entitled to hospital insurance benefits under Part A of title XVIII (Medicare) of the Social Security Act.  States that any such beneficiary shall not be required to satisfy any FEHB eligibility criteria as a condition for enrollment.  Provides for:  (1) enrollment contributions; (2) participation management by the Director of the Office of Personnel Management (OPM); and (3) annual reports from the Secretary of Defense and the OPM Director concerning the provision of such care. 
Requires the health and dental care benefits provided under CHAMPUS and TRICARE Standard, as well as the rates prescribed for the reimbursement of providers under such programs, to be comparable to the highest level of benefits provided under the FEHB. 
Requires the Secretary to begin offering the health benefits option of this Act no later than November 1, 1997.
To amend title 10, United States Code, to permit beneficiaries of the military health care system to enroll in Federal employees health benefits plans; to improve health care benefits under the CHAMPUS and TRICARE Standard, and for other purposes.