text: SECTION 1. DEMONSTRATION PROJECT TO INCLUDE CERTAIN COVERED 
                BENEFICIARIES WITHIN FEDERAL EMPLOYEES HEALTH BENEFITS 
                PROGRAM.
  
      (a) Demonstration Project.--(1) Chapter 55 of title 10, United 
  States Code, is amended by adding at the end the following new section:
  ``Sec. 1107. Health care coverage through Federal Employees Health 
                Benefits program: demonstration project
      ``(a) FEHBP Option Demonstration.--(1) Subject to paragraph (2), 
  the Secretary of Defense, after consulting with the other administering 
  Secretaries, shall enter into an agreement with the Office of Personnel 
  Management to conduct a demonstration project under which covered 
  beneficiaries described in subsection (b) and residing within the area 
  covered by the demonstration project will be eligible to enroll in 
  health benefits plans offered through the Federal Employees Health 
  Benefits program under chapter 89 of title 5.
      ``(2) The authority to enter into the agreement described in 
  paragraph (1) and to conduct the demonstration project provided for by 
  the agreement shall be subject to the availability of appropriations to 
  carry out the demonstration project.
      ``(b) Eligible Covered Beneficiaries.--(1) A covered beneficiary 
  referred to in subsection (a) is a member or former member of the 
  uniformed services described in section 1074(b) of this title, or a 
  dependent of the member described in section 1076(b) of this title, who 
  is or becomes entitled to hospital insurance benefits under part A of 
  title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.).
      ``(2) A covered beneficiary described in paragraph (1) shall not be 
  required to satisfy any eligibility criteria specified in chapter 89 of 
  title 5 as a condition for enrollment in health benefits plans offered 
  through the Federal Employee Health Benefits program under the 
  demonstration project. However, if the covered beneficiary is enrolled 
  in the supplemental medical insurance program under part B of title 
  XVIII of the Social Security Act (42 U.S.C. 1395j et seq.) before the 
  covered beneficiary enrolls in a health benefits plan offered pursuant 
  to subsection (a), the covered beneficiary shall be required to remain 
  enrolled in such supplemental medical insurance program during the term 
  of the demonstration project.
      ``(c) Area of Demonstration Project.--The Secretary of Defense 
  shall carry out the demonstration project in two geographic areas as 
  follows:
              ``(1) One area shall include the catchment area of one or 
          more military medical treatment facilities, within which not 
          more than 25,000 eligible covered beneficiaries reside.
              ``(2) The other area shall not include the catchment area 
          of any military medical treatment facility and not more than 
          25,000 eligible covered beneficiaries may reside in the area.
      ``(d) Time for Demonstration Project.--The Secretary of Defense 
  shall conduct the demonstration project during at least two, but not 
  more than three, contract years under the Federal Employees Health 
  Benefits program.
      ``(e) Management of Participation.--The authority responsible for 
  approving retired or retainer pay or equivalent pay in the case of a 
  member or former member shall manage the participation of the member or 
  former member, or dependents of the member or former member, who enroll 
  in health benefits plans offered through the Federal Employee Health 
  Benefits program pursuant to subsection (a). Such authority shall 
  distribute program information to eligible covered beneficiaries, 
  process enrollment applications, forward all required contributions to 
  the Employees Health Benefits Fund established under section 8909 of 
  title 5 in a timely manner, assist in the reconciliation of enrollment 
  records with health plans, and prepare such reports as the Office of 
  Personnel Management may require in its administration of chapter 89 of 
  title 5.
      ``(f) Separate Risk Pools; Charges.--(1) The Office of Personnel 
  Management shall require health benefits plans under chapter 89 of 
  title 5 that participate in the demonstration project to maintain a 
  separate risk pool for purposes of establishing premium rates for 
  covered beneficiaries who enroll in such a plan in accordance with this 
  section.
      ``(2) The Office shall determine total subscription charges for 
  self only or for family coverage for covered beneficiaries who enroll 
  in a health benefits plan under chapter 89 of title 5 in accordance 
  with this section, which shall include premium charges paid to the plan 
  and amounts described in section 8906(c) of title 5 for administrative 
  expenses and contingency reserves.
      ``(g) Government Contributions.--The Secretary of Defense shall be 
  responsible for the Government contribution for an eligible covered 
  beneficiary who enrolls in a health benefits plan under chapter 89 of 
  title 5 in accordance with this section, except that the amount of the 
  contribution may not exceed the amount of the Government contribution 
  which would be payable if the electing individual were an employee 
  enrolled in the same health benefits plan and level of benefits.
      ``(h) Effect of Cancellation.--The cancellation by a covered 
  beneficiary of coverage under the Federal Employee Health Benefits 
  program shall be irrevocable during the term of the demonstration 
  project.
      ``(i) Reporting Requirements.--Not later than May 31 of each year 
  in which the demonstration project is conducted, the Secretary of 
  Defense and the Director of the Office of Personnel Management shall 
  jointly submit a report to Congress describing the provision of health 
  care services to covered beneficiaries under this section during the 
  preceding calendar year. The report shall address or contain the 
  following:
              ``(1) The number of covered beneficiaries enrolled in 
          health benefits plans offered through the Federal Employee 
          Health Benefits program pursuant to subsection (a), both in 
          terms of total number and as a percentage of all covered 
          beneficiaries receiving health care through the health care 
          system of the uniformed services.
              ``(2) Any changes in enrollment patterns and numbers 
          compared to previous open seasons under the demonstration 
          project.
              ``(3) The out-of-pocket cost to enrollees under such health 
          benefits plans and a comparison of those costs to the costs 
          incurred by other enrollees under the Federal Employee Health 
          Benefits program.
              ``(4) The cost to the Government (including the Department 
          of Defense, the Department of Transportation, and the 
          Department of Health and Human Services) of providing care 
          under such health benefits plans.
              ``(5) A comparison of the costs determined under paragraphs 
          (3) and (4) and the costs that would have otherwise been 
          incurred by the Government and enrollees under alternative 
          health care options available to the administering Secretaries.
              ``(6) The effect of this section on the cost, access, and 
          utilization rates of other health care options under the health 
          care system of the uniformed services.''.
      (2) The table of sections at the beginning of such chapter is 
  amended by adding at the end the following new item:
  
  ``1107. Health care coverage through Federal Employees Health Benefits 
                              program: demonstration project.''.
      (b) Chapter 89 of title 5, United States Code, is amended--
              (1) in section 8905--
                      (A) by redesignating subsections (d) through (f) as 
                  subsections (e) through (g), respectively; and
                      (B) by inserting after subsection (c) the following 
                  new subsection:
      ``(d) An individual whom the Secretary of Defense determines is an 
  eligible covered beneficiary under subsection (b) of section 1107 of 
  title 10 may enroll, as part of the demonstration project under such 
  section, in a health benefits plan under this chapter in accordance 
  with the agreement under subsection (a) of such section between the 
  Secretary and the Office and applicable regulations under this 
  chapter.'';
              (2) in section 8906(b)--
                      (A) in paragraph (1), by striking ``paragraphs (2) 
                  and (3)'' and inserting in lieu thereof ``paragraphs 
                  (2), (3), and (4)''; and
                      (B) by adding at the end the following new 
                  paragraph:
      ``(4) In the case of individuals who enroll, as part of the 
  demonstration project under section 1107 of title 10, in a health 
  benefits plan in accordance with section 8905(d) of this title, the 
  Government contribution shall be determined in accordance with section 
  1107(g) of title 10.''; and
              (3) in section 8906(g)--
                      (A) in paragraph (1), by striking ``paragraph (2)'' 
                  and inserting in lieu thereof ``paragraphs (2) and 
                  (3)''; and
                      (B) by adding at the end the following new 
                  paragraph:
      ``(3) The Government contribution described in subsection (b)(4) 
  for beneficiaries who enroll, as part of the demonstration project 
  under section 1107 of title 10, in accordance with section 8905(d) of 
  this title shall be paid as provided in section 1107(g) of title 10.''.
target: Directs the Secretary of Defense to enter into an agreement with the Office of Personnel Management to conduct a demonstration project under which covered members and beneficiaries under the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) who are or become entitled to hospital insurance benefits under part A of title XVIII (Medicare) of the Social Security Act will be eligible to enroll in health benefits plans offered through the Federal Employees Health Benefits (FEHB) program.  Requires the demonstration project to be conducted in two geographic areas and to last at least two, but not more than three, contract years. 
  Provides for:  (1) management of participation in the project; (2) Government contributions for beneficiary coverage under the FEHB program; and (3) reporting requirements.
feat_title: To amend title 10, United States Code, to establish a demonstration project to evaluate the feasibility of using the Federal Employees Health Benefits program to ensure the availability of adequate health care for Medicare-eligible beneficiaries under the military health care system.