article: 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.''.
summary: 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.