SECTION 1. SHORT TITLE.

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

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, 
        including a beneficiary under section 1074(a) of such title, 
        who is entitled to benefits under part A of title XVII of the 
        Social Security Act (42 U.S.C. 1395 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) Military treatment facility.--The term ``military treatment 
facility'' means a facility referred to in section 1074(a) of title 10, 
United States Code.

SEC. 3. ESTABLISHMENT.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Defense and the Secretary of 
Health and Human Services shall jointly establish a demonstration 
project to provide the Department of Defense with reimbursement, in 
accordance with section 4, from the medicare program under title XVII 
of the Social Security Act (42 U.S.C. 1395 et seq.) for health services 
provided to certain medicare-eligible covered military beneficiaries.
    (b) Geographic Regions.--The demonstration project established 
under this section shall be conducted in one or more geographic regions 
in which the TRICARE program has been implemented.
    (c) Duration.--The demonstration project established under this 
section shall be conducted for a period not to exceed 2 years.
    (d) Reporting.--
            (1) In general.--
                    (A) First annual report.--Not later than 15 months 
                after the demonstration project under this section has 
                been established, the Secretary of Defense and the 
                Secretary of Health and Human Services shall jointly 
                submit to Congress a report including the information 
                described in paragraph (2).
                    (B) Final report.--Not later than 90 days after the 
                termination of the demonstration project, the Secretary 
                shall jointly submit to Congress a final report 
including the information described in paragraph (2).
            (2) Information described.--The information described in 
        this paragraph includes the following:
                    (A) The number of medicare-eligible covered 
                military beneficiaries 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).
                    (B) Whether, and in what manner, easier access to 
                the military treatment system affects the number of 
                medicare-eligible covered military beneficiaries 
                receiving health benefits under the medicare program.
                    (C) A list of the health insurance plans and 
                programs that were the primary payers for medicare-
                eligible covered military beneficiaries during the year 
                prior to such beneficiary's participation in the 
                demonstration project and the distribution of 
                enrollment of such beneficiaries in such plans and 
                programs.
                    (D) The total number of medicare-eligible covered 
                military beneficiaries who participated in the project 
                during the preceding year and the number of such 
                beneficiaries who were entitled to benefits under part 
                A of title XVIII of the Social Security Act (42 U.S.C. 
                1395 et seq.) and were not enrolled under part B of 
                such title.
                    (E) 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.
                    (F) An analysis of how the demonstration project 
                affects the overall accessibility of the military 
                treatment system 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.
                    (G) A description of the difficulties (if any) 
                experienced by the Department of Defense in managing 
                the demonstration project.
                    (H) A description of the effects of the 
                demonstration project on military treatment facility 
                readiness and training and the probable effects of the 
                project on overall Department of Defense medical 
                readiness and training.
                    (I) A description of the effects that the 
                demonstration project, if permanent, would be expected 
                to have on the overall budget of the military health 
                care system and the budgets of individual military 
                treatment facilities.
                    (J) Whether the demonstration project affects the 
                cost to the Department of Defense of prescription drugs 
                or the accessibility, availability, and cost of such 
                drugs to program beneficiaries.

SEC. 4. REIMBURSEMENT AMOUNTS.

    (a) Payment to Department of Defense.--The Secretary of Health and 
Human Services shall make monthly payments to the Department of Defense 
from the Federal Hospital Insurance Trust Fund and the Federal 
Supplementary Medical Insurance Trust Fund (allocated between each 
Trust Fund in an amount to be determined by the Secretary of Health and 
Human Services based on the relative weight that benefits from each 
Trust Fund contribute to the amounts determined under this subsection) 
in an amount equal to the sum of--
            (1) the payments determined under subsection (b) with 
        respect to medicare-eligible covered military beneficiaries who 
        are enrolled in the TRICARE program; and
            (2) the payments determined under subsection (c) with 
        respect to such beneficiaries who are not enrolled in the 
        TRICARE program.
    (b) TRICARE Payments.--
            (1) In general.--The amount of payment determined under 
        this subsection is an amount equal to \1/12\ of the amount 
        determined under paragraph (2) for each medicare-eligible 
        covered military beneficiary enrolled during the year in the 
        TRICARE program in a geographic region in which the 
        demonstration project is in operation, but only if such 
        beneficiary's enrollment is in excess of the minimum enrollment 
        number determined under subsection (d)(1)(A) for such 
        geographic region.
            (2) Amount determined.--The amount determined under this 
        paragraph is an amount equal to--
                    (A) in the case of an individual entitled to 
                benefits under part A and enrolled under part B of 
                title XVIII of the Social Security Act, 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 such year; or
                    (B) in the case of an individual entitled to 
                benefits under part A and not enrolled under part B of 
                such title, an amount equal to the amount determined 
                under subparagraph (A) attributable to services covered 
                by and expenses otherwise reimbursable under part A of 
                such title only.
    (c) Treatment at a Military Treatment Facility.--The amount of 
payment determined under this subsection is an amount equal to the sum 
of the Secretary's estimates of the amounts determined for each health 
service (using a DRG equivalent and fee schedule equivalent scale 
developed by the Secretary of Health and Human Services) provided 
during the month for which the payment is made under subsection (a) to 
each medicare-eligible covered military beneficiary (other than a 
beneficiary who is enrolled in the TRICARE program) in a military 
treatment facility located in a geographic region in which the 
demonstration project is in operation, but only if such level is in 
excess of \1/12\ of the minimum level of health services described 
under subsection (d)(1)(B) for such geographic region.
    (d) Establishment of Base Level of Coverage.--
            (1) In general.--Prior to the establishment of the 
        demonstration project under this Act and subject to paragraph 
        (2), the Secretary of Defense and the Secretary of Health and 
        Human Services shall jointly estimate, based on the best 
        available data--
                    (A) a minimum enrollment number of medicare-
                eligible covered military beneficiaries who are 
                required to enroll in the TRICARE program during a year 
                in each geographic region in which the demonstration 
                project is in operation before the Department of 
                Defense may receive payment under subsection (a)(1); 
                and
                    (B) a minimum level of health services (using a DRG 
                equivalent and fee schedule equivalent scale developed 
                by the Secretary of Health and Human Services) provided 
                to medicare-eligible covered military beneficiaries 
                (other than beneficiaries enrolled in the TRICARE 
                program) during a year through a military treatment 
                facility in each geographic region in which the 
                demonstration project is in operation before the 
                Department of Defense may receive payment under 
                subsection (a)(2).
            (2) Determination of baseline costs.--The Secretary of 
        Defense and the Secretary of Health and Human Services shall 
establish the minimum enrollment number under paragraph (1)(A) and the 
minimum level of health services under paragraph (1)(B) such that the 
projected expenditures by the Department of Defense for such number of 
medicare-eligible covered military beneficiaries and such level of 
services provided to such beneficiaries by the Department of Defense is 
equivalent to the projected expenditures that would have been made by 
the Department for such beneficiaries if the demonstration project 
under this Act had not been established.
            (3) Upper reimbursement limits.--The Secretary of Defense 
        and the Secretary of Health and Human Services shall jointly 
        establish a maximum number of medicare-eligible covered 
        military beneficiaries and maximum level of health services for 
        which payment may be made by the Secretary of Health and Human 
        services under subsection (a).
    (e) TRICARE Program Enrollment Fee Waiver.--The Secretary of 
Defense shall waive the enrollment fee applicable to any individual 
enrolled in the TRICARE program for whom reimbursement in the amount 
determined under subsection (b)(2)(A) is received under subsection 
(b)(1).

SEC. 5. MEDICARE SUBVENTION FUND.

    (a) Establishment.--There is hereby established in the Treasury of 
the United States a revolving fund known as the Medicare Subvention 
Fund (hereafter in this section referred to as the ``Fund'').
    (b) Use of Funds.--The Fund shall be available to the Secretary of 
Defense, as so provided in appropriations Acts from funds otherwise 
appropriated to the Department of Defense, and without fiscal year 
limitation--
            (1) to make payments to the Secretary of Health and Human 
        Services for deposit into the Federal Hospital Insurance Trust 
        Fund and the Federal Supplementary Medical Insurance Trust Fund 
        in order to reimburse such Funds for additional costs to such 
        Trust Funds resulting from the operation of the demonstration 
        project established under this Act;
            (2) to provide for the participation of medicare-eligible 
        covered military beneficiaries in excess of the maximum 
        enrollment number and maximum level of health services 
        established under section 4(d)(1);
            (3) to provide for payment of administrative expenses 
        associated with the demonstration project established under 
        this Act; and
            (4) if amounts are available in the Fund after expenditures 
        are made under paragraphs (1) through (3), for any other lawful 
        purpose for which the Secretary of Defense may expend funds.
    (c) No Funds Available.--The Secretary of Defense may, if 
inadequate amounts are available in the Fund, limit the enrollment of 
medicare-eligible covered military beneficiaries in the demonstration 
project established under this Act.
    (d) Authorization of Appropriations.--For each of fiscal years 1997 
and 1998, there are authorized to be appropriated from funds otherwise 
appropriated to the Department of Defense, for deposit in the Fund such 
sums as may be necessary to carry out the purposes described in 
paragraphs (1) through (3) of subsection (c). Any amounts appropriated 
in accordance with this subsection shall not be taken into account in 
establishing appropriations levels for the Department of Defense health 
affairs budget.
Output: Uniformed Services Medicare Subvention Demonstration Project Act - Directs the Secretaries of Defense and Health and Human Services (HHS) to jointly establish a demonstration project to provide the Department of Defense (DOD) with reimbursement, under provisions of title XVIII (Medicare) of the Social Security Act, for health services provided to Medicare-eligible covered military beneficiaries who participate in the project and receive such services through the managed care option of the TRICARE program (a DOD managed health care program).  Requires the project to be conducted during the three-year period beginning on January 1, 1997, in two or more regions in which the TRICARE program has been implemented.  Requires inclusion in the project of a provision for expansion to incorporate health care services provided to such beneficiaries under the fee-for-services options of the TRICARE program if the Secretaries determine that such expansion is feasible and advisable. 
Requires the Secretaries to submit to the Congress an interim and final report on project participants and on the project's effects on military medical care access, readiness, and training. 
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 Secretaries to:  (1) establish minimum and maximum project enrollment levels; and (2) determine baseline costs of such care and coverage.  Directs the Secretary of Defense to waive the enrollment fee for individuals enrolled in a TRICARE program participating in the project. 
Requires the Comptroller General, for each project year, to submit to the Secretaries and the Congress a report on the extent to which costs under the TRICARE program and the Medicare program have increased as a result of the project.  Directs the Secretaries to modify the project at the end of each year to correct for any discrepancy between cost targets and actual spending under the project.