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SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ''Uniformed Services
Medicare Subvention Demonstration Project 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 demonstration project.
Sec. 4. Determination of reimbursement amounts.
Sec. 5. Reporting requirements.

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.);
(B) is enrolled in the supplementary medical
insurance program under part B of such title (42 U.S.C.
1395j et seq.); and
(C) resides within a geographic area designated
under section 3(b) as a location for the demonstration
project.
(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) Demonstration project.--The term ''demonstration
project'' means the uniformed services medicare subvention
demonstration project established under section 3.
(4) Secretaries.--The term ''Secretaries'' means the
Secretary of Defense and the Secretary of Health and Human
Services acting jointly, except that in section 6, the term
means the Secretary of Veterans Affairs and the Secretary of
Health and Human Services acting jointly.

SEC. 3. ESTABLISHMENT OF DEMONSTRATION PROJECT.

(a) Establishment Required.--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 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 enroll in the demonstration project and receive the
health care services through the managed care option of the TRICARE
program.
(b) Location of Project.--The Secretaries shall conduct the
demonstration project in not more than five geographic areas of the
United States designated by the Secretaries.
(c) Duration.--The Secretaries shall conduct the demonstration
project during the three-year period beginning on January 1, 1998.
(d) Voluntary Enrollment; Effect of Enrollment.--Enrollment of
medicare-eligible covered military beneficiaries in the demonstration
project shall be voluntary, subject to the capacity and funding
limitations specified in section 4. In the case of a medicare-eligible
covered military beneficiary who enrolls in the demonstration project,
payments may not be made under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) other than for health care services provided
through the demonstration project, except that the Secretaries may
provide exceptions for emergencies or other situations as the
Secretaries consider appropriate.
(e) 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.
(f) Modification of TRICARE Contracts.--In carrying out the
demonstration project, the Secretary of Defense may amend existing
TRICARE program contracts to incorporate provisions applicable to
medicare-eligible covered military beneficiaries enrolled in the
demonstration project.
(g) Cost Sharing.--The Secretary of Defense may establish cost
sharing requirements for medicare-eligible covered military
beneficiaries who enroll in the demonstration project.
(h) 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 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 of the demonstration project is feasible
and advisable.

SEC. 4. DETERMINATION OF REIMBURSEMENT AMOUNTS.

(a) Reimbursement of Department of Defense.--
(1) Basis of payments.--Monthly payments to the Department
of Defense under the demonstration project from the medicare
program under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) shall be made on the basis that payments are made
under section 1876(a) of such Act (42 U.S.C. 1395mm(a)).
(2) Amount of payments.--Subject to subsection (c), 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 demonstration project in
excess of the number of such beneficiaries calculated under
subsection (b)(4) 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 the imposition on the medicare program of the costs
of health care that medicare-eligible covered military
beneficiaries would be expected to receive from the Department
of Defense in the absence of the demonstration project.
(2) Estimate of prior effort.--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. Such amount
shall be adjusted for inflation after the first year of the
demonstration project, 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) Distribution of effort.--The amount determined and
adjusted under paragraph (2) shall be divided into a portion
devoted to providing health care services to medicare-eligible
covered military beneficiaries who do not enroll in the
demonstration project (which of the total amount may not exceed
70 percent in the first year, 60 percent in the second year,
and 50 percent in the third year) and a portion devoted to
medicare-eligible covered military beneficiaries who are
enrolled in the demonstration project.
(4) Target for defense effort.--The Secretaries shall
establish monthly targets for the number of medicare-eligible
covered military beneficiaries enrolled in the demonstration
project necessary to meet the maintenance of effort portion
devoted to such beneficiaries under paragraph (3).
(c) Annual Limit on Use of Medicare Funds.--Annual medicare
payments to the Department of Defense under subsection (a) for the
demonstration project may not exceed $65,000,000.
(d) Protection of Medicare Program Against Increased Costs.--
(1) Purpose.--The purpose of this subsection is to protect
the medicare program against costs incurred in connection with
the provision of health care services to medicare-eligible
covered military beneficiaries enrolled in the demonstration
project that would not have been incurred by the medicare
program in the absence of the reimbursement requirement under
subsection (a).
(2) Additional protections.--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 demonstration project, 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 demonstration project or adjustment of the
payment rate under subsection (a)(2).
(e) Review by Comptroller General.--Not later than December 31 of
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 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.
(f) Demonstration Project Adjustments Following Review.--Based on
the review prepared under subsection (e), the Secretaries shall modify
the demonstration project at the end of each year as provided in
subsection (d)(2) to correct for any discrepancy between cost targets
and actual spending under the demonstration project. The Secretaries
shall provide for an annual reconciliation of payments to ensure that
actual costs incurred by the Secretary of Defense to provide health
care services to medicare-eligible covered military beneficiaries,
exclusive of payments from the Secretary of Health and Human Services
under subsection (a), met the maintenance of effort requirements under
subsection (b).

SEC. 5. 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 covered military
beneficiaries enrolling in the demonstration project instead of
receiving health benefits through another health insurance plan
(including through the medicare program).
(2) An analysis of 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.
(3) 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 their enrollment 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 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.
(6) A description of the difficulties (if any) experienced
by the Department of Defense in managing the demonstration
project.
(7) 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.
(8) 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.
(9) An analysis of 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.
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, 1998, in no more than five geographic regions designated by the Secretaries. Makes project enrollment voluntary. Requires the Secretary of Defense to waive the TRICARE enrollment fee for project participants for whom Medicare reimbursement may be made. 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.
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 the DOD health care efforts for Medicare-eligible covered military beneficiaries; (2) estimate the amount expended by DOD for FY 1997 for providing health care items and services to such beneficiaries; and (3) establish monthly targets for the number of such beneficiaries enrolled in the project necessary to meet DOD maintenance of health care efforts for such individuals. Limits to $65 million the annual payments to DOD for 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.
Directs the Secretaries to submit to the Congress an interim and final report on various project aspects.