SECTION 1. DEMONSTRATION PROJECT FOR MEDICARE REIMBURSEMENT OF 
              DEPARTMENT OF DEFENSE FOR HEALTH CARE PROVIDED TO 
              Medicare-eligible BENEFICIARIES UNDER TRICARE.

    (a) In General.--Notwithstanding any other provision of law and 
subject to subsection (b), the Secretary of Defense and the Secretary 
of Health and Human Services shall enter into an agreement in order to 
carry out a demonstration project under which the Secretary of Health 
and Human Services reimburses the Secretary of Defense, on a capitated 
basis, from the Medicare Program under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) for certain health care services 
provided by the Secretary of Defense to Medicare-eligible military 
beneficiaries through the TRICARE Program.
    (b) Project Requirements.--(1)(A) The Secretary of Defense shall 
budget for and expend on health care services in each region in which 
the demonstration project is carried out an amount equal to the amount 
that the Secretary would otherwise budget for and expend on such 
services in the absence of the project.
    (B) The Secretary may not be reimbursed under the project for 
health care services provided to Medicare-eligible military 
beneficiaries in a region until the amount expended by the Secretary to 
provide health care services in that region exceeds the amount budgeted 
for health care services in that region under subparagraph (A).
    (2) The agreement between the Secretary of Defense and the 
Secretary of Health and Human Services shall provide that the cost to 
the Medicare Program of providing services under the project does not 
exceed the cost that the Medicare Program would otherwise incur in 
providing such services in the absence of the project.
    (3) The authority of the Secretary of Defense to carry out the 
project shall expire 3 years after the date of the commencement of the 
project.
    (c) Reports.--Not later than 14 months after the commencement of 
the demonstration project under subsection (a), and annually thereafter 
until the year following the year in which the project is terminated, 
the Secretary of Defense and the Secretary of Health and Human Services 
shall jointly submit to Congress a report on the demonstration project. 
The report shall include the following:
            (1) The number of Medicare-eligible military beneficiaries 
        provided health care services under the project during the 
        previous year.
            (2) An assessment of the benefits to such beneficiaries of 
        receiving health care services under the project.
            (3) A description of the cost shifting, if any, among 
        medical care programs of the Department of Defense that results 
        from the project.
            (4) A description of the cost shifting, if any, from the 
        Department to the Medicare Program that results from the 
        project.
            (5) An analysis of the effect of the project on the 
        following:
                    (A) Access to the military medical treatment 
                system, including access to military medical treatment 
                facilities.
                    (B) The availability of space and facilities and 
                the capabilities of medical staff to provide fee-for-
                service medical care.
                    (C) Established priorities for treatment of 
                beneficiaries under chapter 55 of title 10, United 
                States Code.
                    (D) The cost to the Department of providing 
                prescription drugs to the beneficiaries described in 
                subparagraph (C).
                    (E) The quality of health care provided by the 
                Department.
                    (F) Health care providers and Medicare-eligible 
                military beneficiaries in the communities in which the 
                project is carried out.
            (6) An assessment of the effects of continuing the project 
        on the overall budget of the Department for health care and on 
        the budget of each military medical treatment facility.
            (7) An assessment of the effects of continuing the project 
        on expenditures from the medicare trust funds under title XVIII 
        of the Social Security Act.
            (8) An analysis of the lessons learned by the Department as 
        a result of the project.
            (9) Any other information that the Secretary of Defense and 
        the Secretary of Health and Human Services jointly consider 
        appropriate.
    (d) Review by Comptroller General.--Not later than December 31 of 
each year in which the demonstration project is carried out under this 
section, the Comptroller General shall determine and submit to Congress 
a report on the extent, if any, to which the costs of the Secretary of 
Defense under the TRICARE Program and the costs of the Secretary of 
Health and Human Services under the Medicare Program have increased as 
a result of the project.
    (e) Definitions.--For purposes of this section:
            (1) The term ``Medicare-eligible military beneficiary'' 
        means a beneficiary under chapter 55 of title 10, United States 
        Code, who is entitled to benefits under part A of title XVIII 
        of the Social Security Act.
            (2) The term ``TRICARE Program'' means the managed health 
        care program that is established by the Secretary of Defense 
        under the authority of chapter 55 of title 10, United States 
        Code, principally section 1097 of that title, and includes the 
        competitive selection of contractors to financially underwrite 
        the delivery of health care services under the Civilian Health 
        and Medical Program of the Uniformed Services.
Requires the Secretary of Defense (Secretary) and the Secretary of Health and Human Services (HHS Secretary) to enter into an agreement to carry out a demonstration project under which the HHS Secretary reimburses the Secretary on a capitated basis, from the Medicare Program under title XVIII of the Social Security Act, for certain health care services provided by the Secretary to Medicare-eligible military beneficiaries through the TRICARE Program (a managed health care program of the Department of Defense).  Outlines project requirements.  Requires annual joint reports from the Secretaries to the Congress on the demonstration project.  Directs the Comptroller General, at the end of each year in which the project is carried out, to determine and submit to the Congress a report on the extent, if any, to which the costs of the Secretary under the TRICARE Program and the HHS Secretary under the Medicare Program have increased as a result of the project.
A bill to require the Secretary of Defense and the Secretary of Health and Human Services to carry out a demonstration project to provide the Department of Defense with reimbursement from the medicare program for health care services provided to medicare-eligible beneficiaries under TRICARE.