SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Uniformed Services 
Medicare Subvention Program Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Establishment of subvention program.
Sec. 4. Determination of reimbursement amounts.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Medicare-eligible covered military beneficiary.--The 
        term ``Medicare-eligible covered military beneficiary'' means a 
        beneficiary under chapter 55 of title 10, United States Code, 
        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) TRICARE program.--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 such 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.
            (3) Subvention program.--The term ``subvention program'' 
        means the program established under section 3 to reimburse the 
        Department of Defense, 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 covered 
        military beneficiaries through the managed care option of the 
        TRICARE program.
            (4) Secretaries.--The term ``Secretaries'' means the 
        Secretary of Defense and the Secretary of Health and Human 
        Services acting jointly.

SEC. 3. ESTABLISHMENT OF SUBVENTION PROGRAM.

    (a) Establishment Required.--The Secretary of Defense and the 
Secretary of Health and Human Services shall jointly establish a 
program to provide the Department of Defense with reimbursement, 
beginning October 1, 1997, in accordance with section 4, 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 covered military beneficiaries who agree to receive the health 
care services through the managed care option of the TRICARE program.
    (b) Voluntary Enrollment.--For purposes of the subvention program, 
enrollment of Medicare-eligible covered military beneficiaries in the 
managed care option of the TRICARE program shall be voluntary, except 
that the total number of Medicare-eligible covered military 
beneficiaries so enrolled shall be subject to the capacity and funding 
limitations specified in section 4.
    (c) Effect of Enrollment.--In the case of a Medicare-eligible 
covered military beneficiary who enrolls in the managed care option of 
the TRICARE program, payments may not be made under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.) other than under the 
subvention program for health care services provided through the 
managed care option, except that the Secretaries may provide exceptions 
for emergencies or other situations as the Secretaries consider 
appropriate.
    (d) TRICARE Program Enrollment Fee Waiver.--The Secretary of 
Defense shall waive the enrollment fee applicable to any Medicare-
eligible covered military beneficiary enrolled in the managed care 
option of the TRICARE program for whom reimbursement may be made under 
section 4.
    (e) Modification of TRICARE Contracts.--In carrying out the 
subvention program, the Secretary of Defense may amend existing TRICARE 
program contracts as may be necessary to incorporate provisions 
specifically applicable to Medicare-eligible covered military 
beneficiaries who enroll in the managed care option of the TRICARE 
program.
    (f) Cost Sharing.--The Secretary of Defense may establish cost 
sharing requirements for Medicare-eligible covered military 
beneficiaries who enroll in the managed care option of the TRICARE 
program and for whom reimbursement may be made under section 4.
    (g) Expansion of Subvention Program.--The Secretaries may expand 
the subvention program to incorporate health care services provided to 
Medicare-eligible covered military beneficiaries under the fee-for-
service options of the TRICARE program if, in the report submitted 
under section 713 of the National Defense Authorization Act for Fiscal 
Year 1997 (Public Law 104-106; 110 Stat. 2591), the Secretaries 
determined that such expansion is feasible and advisable.

SEC. 4. DETERMINATION OF REIMBURSEMENT AMOUNTS.

    (a) Reimbursement of Department of Defense.--
            (1) Basis of payments.--Beginning October 1, 1997, monthly 
        payments to the Department of Defense under the subvention 
        program shall be made from the Medicare program under title 
        XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) on 
        the basis that payments are made under section 1876(a) of the 
        such Act (42 U.S.C. 1395mm(a)).
            (2) Amount of payments.--The Secretary of Health and Human 
        Services shall make payments to the Department of Defense 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 each trust fund contributes 
        to the required payment) at a per capita rate equal to 93 
        percent of the applicable adjusted average per capita cost for 
        each Medicare-eligible covered military beneficiary enrolled in 
        the managed care option of the TRICARE program in excess of the 
        number of such beneficiaries calculated under subsection (b) 
        for the Department of Defense maintenance of health care 
        effort.
    (b) Maintenance of Defense Health Care Effort.--
            (1) Maintenance of effort required.--The Secretary of 
        Defense shall maintain the Department of Defense health care 
        efforts for Medicare-eligible covered military beneficiaries so 
        as to avoid imposing on the Medicare program those costs that 
        the Department of Defense would be expected to incur to provide 
        health care services to Medicare-eligible covered military 
        beneficiaries in the absence of the subvention program.
            (2) Estimate of prior effort.--For the first fiscal year of 
        the subvention program, the Secretaries shall estimate the 
        amount expended by the Department of Defense for fiscal year 
        1997 for providing health care items and services (other than 
        pharmaceuticals provided to outpatients) to Medicare-eligible 
        covered military beneficiaries. For subsequent fiscal years, 
        the amount so estimated shall be adjusted for inflation, for 
        differences between estimated and actual amounts expended, and 
        for changes in the Department of Defense health care budget 
        that exceed $100,000,000.
            (3) Target for defense effort.--On the basis of the 
        estimate made under paragraph (2), the Secretaries shall 
        establish monthly targets of the number of Medicare-eligible 
        covered military beneficiaries for whom reimbursement will not 
        be provided to the Department of Defense under subsection (a).
    (c) Protection of Medicare Program Against Increased Costs.--
            (1) Purpose.--The purpose of this subsection is to protect 
        the Medicare program against costs incurred under subsection 
        (a) in connection with the provision of health care services to 
        Medicare-eligible covered military beneficiaries that would not 
        have been incurred by the medicare program in the absence of 
        the reimbursement requirement.
            (2) Review by comptroller general.--Not later than December 
        31 of each year, 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 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 subvention program.
            (3) Actions to prevent increased costs.--If the Secretaries 
        determine that the trust funds under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) still incur excess costs 
        as a result of the subvention program, the Secretaries shall 
        take such steps as may be necessary to offset those excess 
        costs (and prevent future excess costs), including suspension 
        or termination of the subvention program, adjustment of the 
        payment rate under subsection (a)(2), or an adjustment of the 
        maintenance of effort requirements of the Department of Defense 
        under subsection (b).
Uniformed Services Medicare Subvention Program Act - Directs the Secretaries of Defense and of Health and Human Services (HHS) to jointly establish a subvention program to provide the Department of Defense (DOD) with reimbursement from the Medicare program under title XVIII of the Social Security Act for health services provided to Medicare-eligible covered military beneficiaries who agree to receive such services through the managed care option of the TRICARE program (a DOD-managed health care program).  Makes program enrollment voluntary. Requires the Secretary of Defense to waive the TRICARE enrollment fee for program participants for whom Medicare reimbursement may be made. 
Directs the HHS Secretary to make monthly payments to DOD from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund representing appropriate reimbursement amounts.  Provides for the determination of such amounts. 
Directs the Secretary of Defense to:  (1) maintain DOD health care efforts for Medicare-eligible covered military beneficiaries; (2) estimate, for the first fiscal year of the subvention program, the amount expended by DOD for FY 1997 for providing health care items and services to such beneficiaries; and (3) establish monthly targets of the number of such beneficiaries for whom reimbursement will not be provided to DOD. 
Requires the Comptroller General, for each program year, to report to the Secretaries and the Congress on the extent to which costs under the TRICARE program and the Medicare program have increased as a result of the subvention program.  Requires the Secretaries to take necessary steps to offset any excess costs and prevent future excess costs, including:  (1) suspension or termination of the subvention program; (2) adjustment of the payment rate; or (3) adjustment of DOD maintenance of effort requirements.
Uniformed Services Medicare Subvention Program Act