SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Medicare Subvention 
Demonstration Project Act''.

SEC. 2. ESTABLISHMENT OF VETERANS MEDICARE SUBVENTION DEMONSTRATION 
              PROJECT.

    (a) Definitions.--For purposes of this section:
            (1) Medicare-eligible veteran.--The term ``medicare-
        eligible veteran'' means a veteran who--
                    (A) is entitled to hospital insurance benefits 
                under part A of title XVIII of the Social Security Act 
                (42 U.S.C. 1395c et seq.); and
                    (B) is enrolled in the supplementary medical 
                insurance program under part B of such title (42 U.S.C. 
                1395j et seq.).
            (2) Veteran.--The term ``veteran'' has the meaning given 
        that term in section 101(2) of title 38, United States Code.
            (3) Veteran integrated service network.--The term ``Veteran 
        Integrated Service Network'' means a field component of the 
        Veterans Health Administration that--
                    (A) is based on a geographic area which encompasses 
                a population of veteran beneficiaries and is defined on 
                the basis of natural patient referral patterns; and
                    (B) provides health care through strategic 
                alliances among Department of Veterans Affairs medical 
                centers, clinics, and other sites.
            (4) Secretaries.--The term ``Secretaries'' means the 
        Secretary of Veterans Affairs and the Secretary of Health and 
        Human Services acting jointly.
    (b) Establishment of Demonstration Project.--
            (1) Establishment.--The Secretary of Veterans Affairs and 
        the Secretary of Health and Human Services shall jointly 
        establish a demonstration project to provide the Department of 
        Veterans Affairs with reimbursement, in accordance with this 
        section, from the medicare program under title XVIII of the 
        Social Security Act (42 U.S.C. 1395 et seq.) for health care 
        services provided to medicare-eligible veterans who participate 
        in the demonstration project and receive the health care 
        services through a managed care plan established by the 
        Secretary of Veterans Affairs under subsection (f).
            (2) Location of demonstration project.--The Secretaries 
        shall conduct the demonstration project in not more than three 
        Veteran Integrated Service Networks.
            (3) Duration.--The Secretaries shall conduct the 
        demonstration project during the three-year period beginning on 
        January 1, 1997.
    (c) Expansion of Demonstration Project.--The Secretaries shall 
include in the demonstration project a provision for expanding the 
demonstration project to incorporate health care services provided to 
medicare-eligible veterans under fee-for-service arrangements if the 
Secretaries determine that such expansion of the demonstration project 
is feasible and advisable.
    (d) Payment to Department of Veterans Affairs.--
            (1) Payment required.--The Secretary of Health and Human 
        Services shall make monthly payments to the Department of 
        Veterans Affairs from the Federal Hospital Insurance Trust Fund 
        and the Federal Supplementary Medical Insurance Trust Fund 
        (allocated by the Secretary of Health and Human Services 
        between each Trust Fund based on the relative weight that 
        benefits from each Trust Fund contribute to the required 
        payment) in an amount equal to one-twelfth of the amount 
        determined under subsection (b) for each medicare-eligible 
        veteran enrolled during the year in a managed care plan 
        established by the Secretary of Veterans Affairs under 
        subsection (f), but only if such veteran's enrollment is in 
        excess of the minimum enrollment number determined under 
        subsection (e)(1) for the geographic region.
            (2) Amount determined.--The amount determined under 
        paragraph (1) is an amount equal to 93 percent of the average 
        adjusted per capita cost determined under section 1876(a)(4) of 
        the Social Security Act (42 U.S.C. 1395mm(a)(4)) for the year.
    (e) Establishment of Minimum and Maximum Enrollment Levels.--
            (1) Minimum.--Based on the best available data, the 
        Secretaries shall establish a minimum enrollment number of 
        medicare-eligible veterans who are required to enroll in a 
        managed care plan established by the Secretary of Veterans 
        Affairs under subsection (f) during a year for each Veteran 
        Integrated Service Network in which the demonstration project 
        is conducted before the Department of Veterans Affairs may 
        receive payment under subsection (d).
            (2) Maximum.--The Secretaries shall establish a maximum 
        number of medicare-eligible veterans for which payment may be 
        made by the Secretary of Health and Human Services under 
        subsection (a).
            (3) Determination of baseline costs.--Before the 
        establishment of the demonstration project, the Secretaries 
        shall establish the minimum and maximum enrollment numbers so 
        that--
                    (A) the expenditures by the Department of Veterans 
                Affairs for such number of medicare-eligible veterans 
                is equivalent to the projected expenditures that would 
                have been made by the Department for such veterans if 
                the demonstration project had not been established; and
                    (B) the cost to the medicare program under the 
                demonstration project does not exceed the cost that the 
                medicare program would otherwise incur with respect to 
                the medicare-eligible veterans participating in the 
                demonstration project in the absence of the project.
    (f) Establishment of Managed Health-Care Plan.--
            (1) Establishment.--As part of the demonstration project, 
        the Secretary of Veterans Affairs shall establish and operate a 
        managed health-care plan through which medicare-eligible 
        veterans who participate in the demonstration project shall 
        receive health care. The plan shall be operated by or through a 
        Department of Veterans Affairs health-care facility or group of 
        facilities and may include the provision of health services 
        through other public or private entities under arrangements 
        made between that Department facility or group of facilities 
        and the other public or private entity concerned. The managed 
        health care plan shall be established and operated in 
        conformance with standards prescribed by the Secretary of 
        Veterans Affairs after consultation with the Secretary of 
        Health and Human Services.
            (2) Enrollment fee waiver.--The Secretary of Veterans 
        Affairs shall waive any enrollment fee applicable to any 
        medicare-eligible veteran enrolled in the managed care plan 
        under paragraph (1) for whom reimbursement is provided under 
        subsection (e).
            (3) Treatment of payments.--Payments received under 
        subsection (e) with respect to care or services provided to a 
        veteran enrolled in the health-care plan under this subsection 
        shall be credited to the applicable Department of Veterans 
        Affairs medical appropriation and shall be used to pay for the 
        costs of furnishing care and services under paragraph (1).
    (g) Reporting Requirements.--Not later than 15 months after the 
establishment of the demonstration project, and then not later than 90 
days after the end of the demonstration project, the Secretaries shall 
submit to Congress a report containing the following:
            (1) The number of medicare-eligible veterans opting to 
        participate in the demonstration project established under this 
        section instead of receiving health benefits through another 
        health insurance plan (including through the medicare program 
        or other health care options of the Veterans Health 
        Administration).
            (2) An analysis of whether, and in what manner, easier 
        access to the Veterans Health Administration affects the number 
        of medicare-eligible veterans receiving health benefits under 
        the medicare program.
            (3) A list of the health insurance plans and programs that 
        were the primary payers for medicare-eligible veterans during 
        the year prior to their participation in the demonstration 
        project and the distribution of their previous enrollment in 
        such plans and programs.
            (4) An identification of cost-shifting (if any) among 
        medical care programs as a result of the demonstration project 
        and a description of the nature of any such cost-shifting.
            (5) An analysis of how the demonstration project affects 
        the overall accessibility of the Veterans Health Administration 
        and the amount of space available for point-of-service care and 
        a description of the unintended effects (if any) upon the 
        normal treatment priority system.
            (6) A description of the difficulties (if any) experienced 
        by the Department of Veterans Affairs in managing the 
        demonstration project.
            (7) A description of the effects of the demonstration 
        project on readiness and training of facilities of the Veterans 
        Health Administration and the probable effects of the project 
        on overall Veterans Health Administration medical readiness and 
        training.
            (8) A description of the effects that the demonstration 
        project, if permanent, would be expected to have on the overall 
        budget of the Veterans Health Administration and the budgets of 
        individual treatment facilities.
            (9) An analysis of whether the demonstration project 
        affects the cost to the Department of Veterans Affairs of 
        prescription drugs or the accessibility, availability, and cost 
        of such drugs to veterans.
    (h) Review by Comptroller General.--Not later than December 31 each 
year in which the demonstration project is conducted, the Comptroller 
General shall determine and submit to the Secretaries and Congress a 
report on the extent, if any, to which the costs of the Secretary of 
Veterans Affairs under the demonstration project and the costs of the 
Secretary of Health and Human Services under the medicare program have 
increased as a result of the project.
    (i) Demonstration Project Adjustments Following Review.--Based on 
the review prepared under subsection (h), the Secretaries shall modify 
the demonstration project at the end of each year to correct for any 
discrepancy between cost targets and actual spending under the 
demonstration project. From funds available to the Secretary of 
Veterans Affairs for the Veterans Health Administration, the Secretary 
of Veterans Affairs shall reimburse the Secretary of Health and Human 
Services for any excess costs incurred by the medicare program in 
violation of subsection (e)(3)(B).
Veterans Medicare Subvention Demonstration Project Act - Directs the Secretaries of Veterans Affairs (VA) and Health and Human Services (HHS) to jointly establish a demonstration project to provide the Department of Veterans Affairs with reimbursement, under provisions of title XVIII (Medicare) of the Social Security Act, for health care services provided to certain Medicare-eligible veterans.  Requires the Secretaries to conduct the project:  (1) in not more than three Veterans Integrated Service Networks; and (2) during the three-year period beginning on January 1, 1997. 
Requires the Secretaries to include a provision for expanding the project to incorporate health care services provided to Medicare-eligible veterans under fee-for-service arrangements if the Secretaries determine that such expansion is feasible and advisable. 
Directs the HHS Secretary to make monthly payments to the Department from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund (HHS trust funds) representing appropriate reimbursement amounts.  Provides for the determination of such amounts. 
Directs the Secretaries to:  (1) establish a minimum and maximum enrollment level for veteran participants in the project; and (2) determine baseline costs of such care and coverage. 
Directs the VA Secretary to:  (1) establish and operate a managed health-care plan through which Medicare-eligible veterans who participate in the project receive health care; and (2) waive any enrollment fee for such participants. 
Directs the Secretaries to report to the Congress concerning specified project participation, findings, and results.  Directs the Comptroller General, for each year of the project, to report to the Secretaries and the Congress on the extent to which the costs of the Secretaries have increased as a result of the project.  Requires the Secretaries to modify the project following such reviews to correct any discrepancies between project cost targets and actual spending.
Veterans Medicare Subvention Demonstration Project Act