
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-107 Section 735(a)-(d)]
[Document affected by Public Law 107-107 Section 735(a)-(d)]
[Document affected by Public Law 107-107 Section 735(e)]
[CITE: 10USC1073]

 
                         TITLE 10--ARMED FORCES
 
                    Subtitle A--General Military Law
 
                           PART II--PERSONNEL
 
                   CHAPTER 55--MEDICAL AND DENTAL CARE
 
Sec. 1073. Administration of this chapter

    (a) Responsible Officials.--Except as otherwise provided in this 
chapter, the Secretary of Defense shall administer this chapter, for the 
armed forces under his jurisdiction, the Secretary of Transportation 
shall administer this chapter for the Coast Guard when the Coast Guard 
is not operating as a service in the Navy, and the Secretary of Health 
and Human Services shall administer this chapter and for the National 
Oceanic and Atmospheric Administration and the Public Health Service. 
This chapter shall be administered consistent with the Assisted Suicide 
Funding Restriction Act of 1997 (42 U.S.C. 14401 et seq.).
    (b) Stability in Program of Benefits.--The Secretary of Defense 
shall, to the maximum extent practicable, provide a stable program of 
benefits under this chapter throughout each fiscal year. To achieve the 
stability in the case of managed care support contracts entered into 
under this chapter, the contracts shall be administered so as to 
implement all changes in benefits and administration on a quarterly 
basis. However, the Secretary of Defense may implement any such change 
prior to the next fiscal quarter if the Secretary determines that the 
change would significantly improve the provision of care to eligible 
beneficiaries under this chapter.

(Added Pub. L. 85-861, Sec. 1(25)(B), Sept. 2, 1958, 72 Stat. 1446; 
amended Pub. L. 89-614, Sec. 2(1), Sept. 30, 1966, 80 Stat. 862; Pub. L. 
89-718, Sec. 8(a), Nov. 2, 1966, 80 Stat. 1117; Pub. L. 96-513, title V, 
Sec. 511(34)(A), (C), (35), (36), Dec. 12, 1980, 94 Stat. 2922, 2923; 
Pub. L. 98-557, Sec. 19(2), Oct. 30, 1984, 98 Stat. 2869; Pub. L. 105-
12, Sec. 9(h), Apr. 30, 1997, 111 Stat. 27; Pub. L. 106-65, div. A, 
title VII, Sec. 725, title X, Sec. 1066(a)(7), Oct. 5, 1999, 113 Stat. 
698, 770.)

                                          Historical and Revision Notes
-------------------------------------------------------------------------------
---------------------------------
            Revised section                      Source (U.S. Code)            
   Source (Statutes at Large)
-------------------------------------------------------------------------------
---------------------------------
1073..................................  37:402(b).                           Ju
ne 7, 1956, ch. 374, Sec.
                                                                              1
02(b), 70 Stat. 251.
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---------------------------------

    The words ``armed forces under his jurisdiction'' are substituted 
for the words ``Army, Navy, Air Force, and Marine Corps and for the 
Coast Guard when it is operating as a service in the Navy'' to reflect 
section 101(4) of this title.

                       References in Text

    The Assisted Suicide Funding Restriction Act of 1997, referred to in 
subsec. (a), is Pub. L. 105-12, Apr. 30, 1997, 111 Stat. 23, which is 
classified principally to chapter 138 (Sec. 14401 et seq.) of Title 42, 
The Public Health and Welfare. For complete classification of this Act 
to the Code, see Short Title note set out under section 14401 of Title 
42 and Tables.


                            Prior Provisions

    A prior section 1073, act Aug. 10, 1956, ch. 1041, 70A Stat. 82, 
related to right to vote in war-time presidential and congressional 
election, prior to repeal by Pub. L. 85-861, Sec. 36B(5), Sept. 2, 1958, 
72 Stat. 1570, as superseded by the Federal Voting Assistance Act of 
1955 which is classified to subchapter I-D (Sec. 1973cc et seq.) of 
chapter 20 of Title 42, The Public Health and Welfare.


                               Amendments

    1999--Pub. L. 106-65, Sec. 725, designated existing provisions, as 
amended by Pub. L. 106-65, Sec. 1066(a)(7), as subsec. (a), inserted 
heading, and added subsec. (b).
    Pub. L. 106-65, Sec. 1066(a)(7), inserted ``(42 U.S.C. 14401 et 
seq.)'' after ``Act of 1997''.
    1997--Pub. L. 105-12 inserted at end ``This chapter shall be 
administered consistent with the Assisted Suicide Funding Restriction 
Act of 1997.''
    1984--Pub. L. 98-557 inserted provisions which transferred authority 
to administer chapter for the Coast Guard when the Coast Guard is not 
operating as a service in the Navy from the Secretary of Health and 
Human Services to the Secretary of Transportation.
    1980--Pub. L. 96-513 substituted in section catchline ``of this 
chapter'' for ``of sections 1071-1087 of this title'', and substituted 
in text ``this chapter'' for ``sections 1071-1087 of this title'', 
``those sections'', and ``them'', ``Secretary of Health and Human 
Services'' for ``Secretary of Health, Education, and Welfare'', and 
``National Oceanic and Atmospheric Administration'' for ``Environmental 
Science Services Administration''.
    1966--Pub. L. 89-718 substituted ``Environmental Science Services 
Administration'' for ``Coast and Geodetic Survey''.
    Pub. L. 89-614 substituted ``1087'' for ``1085'' in section 
catchline and text.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-12 effective Apr. 30, 1997, and applicable 
to Federal payments made pursuant to obligations incurred after Apr. 30, 
1997, for items and services provided on or after such date, subject to 
also being applicable with respect to contracts entered into, renewed, 
or extended after Apr. 30, 1997, as well as contracts entered into 
before Apr. 30, 1997, to the extent permitted under such contracts, see 
section 11 of Pub. L. 105-12, set out as an Effective Date note under 
section 14401 of Title 42, The Public Health and Welfare.


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-513 effective Dec. 12, 1980, see section 
701(b)(3) of Pub. L. 96-513, set out as a note under section 101 of this 
title.


                    Effective Date of 1966 Amendment

    For effective date of amendment by Pub. L. 89-614, see section 3 of 
Pub. L. 89-614, set out as a note under section 1071 of this title.


                                 Repeals

    The directory language of, but not the amendment made by, Pub. L. 
89-718, Sec. 8(a), Nov. 2, 1966, 80 Stat. 1117, cited as a credit to 
this section, was repealed by Pub. L. 97-295, Sec. 6(b), Oct. 12, 1982, 
96 Stat. 1314.


   Modernization of TRICARE Business Practices and Increase of Use of 
                      Military Treatment Facilities

    Pub. L. 106-398, Sec. 1 [[div. A], title VII, Sec. 723], Oct. 30, 
2000, 114 Stat. 1654, 1654A-186, provided that:
    ``(a) Requirement To Implement Internet-Based System.--Not later 
than October 1, 2001, the Secretary of Defense shall implement a system 
to simplify and make accessible through the use of the Internet, through 
commercially available systems and products, critical administrative 
processes within the military health care system and the TRICARE 
program. The purposes of the system shall be to enhance efficiency, 
improve service, and achieve commercially recognized standards of 
performance.
    ``(b) Elements of System.--The system required by subsection (a)--
        ``(1) shall comply with patient confidentiality and security 
    requirements, and incorporate data requirements, that are currently 
    widely used by insurers under medicare and commercial insurers;
        ``(2) shall be designed to achieve improvements with respect 
    to--
            ``(A) the availability and scheduling of appointments;
            ``(B) the filing, processing, and payment of claims;
            ``(C) marketing and information initiatives;
            ``(D) the continuation of enrollments without expiration;
            ``(E) the portability of enrollments nationwide;
            ``(F) education of beneficiaries regarding the military 
        health care system and the TRICARE program; and
            ``(G) education of health care providers regarding such 
        system and program; and
        ``(3) may be implemented through a contractor under TRICARE 
    Prime.
    ``(c) Areas of Implementation.--The Secretary shall implement the 
system required by subsection (a) in at least one region under the 
TRICARE program.
    ``(d) Plan for Improved Portability of Benefits.--Not later than 
March 15, 2001, the Secretary of Defense shall submit to the Committees 
on Armed Services of the Senate and the House of Representatives a plan 
to provide portability and reciprocity of benefits for all enrollees 
under the TRICARE program throughout all TRICARE regions.
    ``(e) Increase of Use of Military Medical Treatment Facilities.--The 
Secretary shall initiate a program to maximize the use of military 
medical treatment facilities by improving the efficiency of health care 
operations in such facilities.
    ``(f) Definition.--In this section the term `TRICARE program' has 
the meaning given such term in section 1072 of title 10, United States 
Code.''


     Improvement of Access to Health Care Under the TRICARE Program

    Pub. L. 106-398, Sec. 1 [[div. A], title VII, Sec. 721], Oct. 30, 
2000, 114 Stat. 1654, 1654A-184, provided that:
    ``(a) Waiver of Nonavailability Statement or Preauthorization.--In 
the case of a covered beneficiary under chapter 55 of title 10, United 
States Code, who is enrolled in TRICARE Standard, the Secretary of 
Defense may not require with regard to authorized health care services 
(other than mental health services) under any new contract for the 
provision of health care services under such chapter that the 
beneficiary--
        ``(1) obtain a nonavailability statement or preauthorization 
    from a military medical treatment facility in order to receive the 
    services from a civilian provider; or
        ``(2) obtain a nonavailability statement for care in specialized 
    treatment facilities outside the 200-mile radius of a military 
    medical treatment facility.
    ``(b) Notice.--The Secretary may require that the covered 
beneficiary inform the primary care manager of the beneficiary of any 
health care received from a civilian provider or in a specialized 
treatment facility.
    ``(c) Exceptions.--Subsection (a) shall not apply if--
        ``(1) the Secretary demonstrates significant costs would be 
    avoided by performing specific procedures at the affected military 
    medical treatment facilities;
        ``(2) the Secretary determines that a specific procedure must be 
    provided at the affected military medical treatment facility to 
    ensure the proficiency levels of the practitioners at the facility; 
    or
        ``(3) the lack of nonavailability statement data would 
    significantly interfere with TRICARE contract administration.
    ``(d) Effective Date.--This section shall take effect on October 1, 
2001.''
    Pub. L. 106-65, div. A, title VII, Sec. 712(a), (b), Oct. 5, 1999, 
113 Stat. 687, provided that:
    ``(a) Access.--The Secretary of Defense shall, to the maximum extent 
practicable, minimize the authorization and certification requirements 
imposed on covered beneficiaries under the TRICARE program as a 
condition of access to benefits under that program.
    ``(b) Report on Initiatives To Improve Access.--Not later than March 
31, 2000, the Secretary of Defense shall submit to the Committees on 
Armed Services of the Senate and the House of Representatives a report 
on specific actions taken to--
        ``(1) reduce the requirements for preauthorization for care 
    under the TRICARE program;
        ``(2) reduce the requirements for beneficiaries to obtain 
    preventive services, such as obstetric or gynecologic examinations, 
    mammograms for females over 35 years of age, and urological 
    examinations for males over the age of 60 without preauthorization; 
    and
        ``(3) reduce the requirements for statements of nonavailability 
    of services.''


                 TRICARE Managed Care Support Contracts

    Pub. L. 106-398, Sec. 1 [[div. A], title VII, Sec. 724], Oct. 30, 
2000, 114 Stat. 1654, 1654A-187, provided that:
    ``(a) Authority.--Notwithstanding any other provision of law and 
subject to subsection (b), any TRICARE managed care support contract in 
effect, or in the final stages of acquisition, on September 30, 1999, 
may be extended for four years.
    ``(b) Conditions.--Any extension of a contract under subsection 
(a)--
        ``(1) may be made only if the Secretary of Defense determines 
    that it is in the best interest of the United States to do so; and
        ``(2) shall be based on the price in the final best and final 
    offer for the last year of the existing contract as adjusted for 
    inflation and other factors mutually agreed to by the contractor and 
    the Federal Government.''
    Pub. L. 106-259, title VIII, Sec. 8090, Aug. 9, 2000, 114 Stat. 694, 
provided that: ``Notwithstanding any other provision of law, the TRICARE 
managed care support contracts in effect, or in final stages of 
acquisition as of September 30, 2000, may be extended for 2 years: 
Provided, That any such extension may only take place if the Secretary 
of Defense determines that it is in the best interest of the Government: 
Provided further, That any contract extension shall be based on the 
price in the final best and final offer for the last year of the 
existing contract as adjusted for inflation and other factors mutually 
agreed to by the contractor and the Government: Provided further, That 
notwithstanding any other provision of law, all future TRICARE managed 
care support contracts replacing contracts in effect, or in the final 
stages of acquisition as of September 30, 2000, may include a base 
contract period for transition and up to seven 1-year option periods.''
    Similar provisions were contained in the following prior 
appropriation act:
    Pub. L. 106-79, title VIII, Sec. 8095, Oct. 25, 1999, 113 Stat. 
1254.
    Pub. L. 105-262, title VIII, Sec. 8107, Oct. 17, 1998, 112 Stat. 
2321.


                  Redesign of Military Pharmacy System

    Pub. L. 105-261, div. A, title VII, Sec. 703, Oct. 17, 1998, 112 
Stat. 2057, provided that:
    ``(a) Plan Required.--The Secretary of Defense shall submit to 
Congress a plan that would provide for a system-wide redesign of the 
military and contractor retail and mail-order pharmacy system of the 
Department of Defense by incorporating `best business practices' of the 
private sector. The Secretary shall work with contractors of TRICARE 
retail pharmacy and national mail-order pharmacy programs to develop a 
plan for the redesign of the pharmacy system that--
        ``(1) may include a plan for an incentive-based formulary for 
    military medical treatment facilities and contractors of TRICARE 
    retail pharmacies and the national mail-order pharmacy; and
        ``(2) shall include a plan for each of the following:
            ``(A) A uniform formulary for such facilities and 
        contractors.
            ``(B) A centralized database that integrates the patient 
        databases of pharmacies of military medical treatment facilities 
        and contractor retail and mail-order programs to implement 
        automated prospective drug utilization review systems.
            ``(C) A system-wide drug benefit for covered beneficiaries 
        under chapter 55 of title 10, United States Code, who are 
        entitled to hospital insurance benefits under part A of title 
        XVIII of the Social Security Act (42 U.S.C. 1395c et seq.).
    ``(b) Submission of Plan.--The Secretary shall submit the plan 
required under subsection (a) not later than March 1, 1999.
    ``(c) Suspension of Implementation of Program.--The Secretary shall 
suspend any plan to establish a national retail pharmacy program for the 
Department of Defense until--
        ``(1) the plan required under subsection (a) is submitted; and
        ``(2) the Secretary implements cost-saving reforms with respect 
    to the military and contractor retail and mail order pharmacy 
    system.''
    Pub. L. 105-261, div. A, title VII, Sec. 723, Oct. 17, 1998, 112 
Stat. 2068, as amended by Pub. L. 106-65, div. A, title X, Sec. 1067(3), 
Oct. 5, 1999, 113 Stat. 774; Pub. L. 106-398, Sec. 1 [[div. A], title 
VII, Sec. 711(a)], Oct. 30, 2000, 114 Stat. 1654, 1654A-175, provided 
that:
    ``(a) In General.--Not later than April 1, 2001, the Secretary of 
Defense shall implement, with respect to eligible individuals described 
in subsection (e), the redesign of the pharmacy system under TRICARE 
(including the mail-order and retail pharmacy benefit under TRICARE) to 
incorporate `best business practices' of the private sector in providing 
pharmaceuticals, as developed under the plan described in section 703 
[set out as a note above].
    ``(b) Program Requirements.--The same coverage for pharmacy services 
and the same requirements for cost sharing and reimbursement as are 
applicable under section 1086 of title 10, United States Code, shall 
apply with respect to the program required by subsection (a).
    ``(c) Evaluation.--The Secretary shall provide for an evaluation of 
the implementation of the redesign of the pharmacy system under TRICARE 
under this section by an appropriate person or entity that is 
independent of the Department of Defense. The evaluation shall include 
the following:
        ``(1) An analysis of the costs of the implementation of the 
    redesign of the pharmacy system under TRICARE and to the eligible 
    individuals who participate in the system.
        ``(2) An assessment of the extent to which the implementation of 
    such system satisfies the requirements of the eligible individuals 
    for the health care services available under TRICARE.
        ``(3) An assessment of the effect, if any, of the implementation 
    of the system on military medical readiness.
        ``(4) A description of the rate of the participation in the 
    system of the individuals who were eligible to participate.
        ``(5) An evaluation of any other matters that the Secretary 
    considers appropriate.
    ``(d) Reports.--The Secretary shall submit two reports on the 
results of the evaluation under subsection (c), together with the 
evaluation, to the Committee on Armed Services of the Senate and the 
Committee on Armed Services of the House of Representatives. The first 
report shall be submitted not later than December 31, 2001, and the 
second report shall be submitted not later than December 31, 2003.
    ``(e) Eligible Individuals.--(1) An individual is eligible to 
participate under this section if the individual is a member or former 
member of the uniformed services described in section 1074(b) of title 
10, United States Code, a dependent of the member described in section 
1076(a)(2)(B) or 1076(b) of that title, or a dependent of a member of 
the uniformed services who died while on active duty for a period of 
more than 30 days, who--
        ``(A) is 65 years of age or older;
        ``(B) 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
        ``(C) except as provided in paragraph (2), is enrolled in the 
    supplemental medical insurance program under part B of such title 
    XVIII (42 U.S.C. 1395j et seq.).
    ``(2) Paragraph (1)(C) shall not apply in the case of an individual 
who, before April 1, 2001, has attained the age of 65 and did not enroll 
in the program described in such paragraph.''


 System for Tracking Data and Measuring Performance in Meeting TRICARE 
                            Access Standards

    Pub. L. 105-261, div. A, title VII, Sec. 713, Oct. 17, 1998, 112 
Stat. 2060, provided that:
    ``(a) Requirement To Establish System.--(1) The Secretary of Defense 
shall establish a system--
        ``(A) to track data regarding access of covered beneficiaries 
    under chapter 55 of title 10, United States Code, to primary health 
    care under the TRICARE program; and
        ``(B) to measure performance in increasing such access against 
    the primary care access standards established by the Secretary under 
    the TRICARE program.
    ``(2) In implementing the system described in paragraph (1), the 
Secretary shall collect data on the timeliness of appointments and 
precise waiting times for appointments in order to measure performance 
in meeting the primary care access standards established under the 
TRICARE program.
    ``(b) Deadline for Establishment.--The Secretary shall establish the 
system described in subsection (a) not later than April 1, 1999.''


             TRICARE as Supplement to Medicare Demonstration

    Pub. L. 105-261, div. A, title VII, Sec. 722, Oct. 17, 1998, 112 
Stat. 2065, as amended by Pub. L. 106-65, div. A, title X, 
Secs. 1066(b)(6), 1067(3), Oct. 5, 1999, 113 Stat. 773, 774, provided 
that:
    ``(a) In General.--(1) The Secretary of Defense shall, after 
consultation with the other administering Secretaries, carry out a 
demonstration project in order to assess the feasibility and 
advisability of providing medical care coverage under the TRICARE 
program to the individuals described in subsection (c). The 
demonstration project shall be known as the `TRICARE Senior Supplement'.
    ``(2) The Secretary shall commence the demonstration project not 
later than January 1, 2000, and shall terminate the demonstration 
project not later than December 31, 2002.
    ``(3) Under the demonstration project, the Secretary shall permit 
eligible individuals described in subsection (c) to enroll in the 
TRICARE program.
    ``(4) Payment for care and services received by eligible individuals 
who enroll in the TRICARE program under the demonstration project shall 
be made as follows:
        ``(A) First, under title XVIII of the Social Security Act [42 
    U.S.C. 1395 et seq.], but only to the extent that payment for such 
    care and services is provided for under that title.
        ``(B) Second, under the TRICARE program, but only to the extent 
    that payment for such care and services is provided under that 
    program and is not provided for under subparagraph (A).
        ``(C) Third, by the eligible individual concerned, but only to 
    the extent that payment for such care and services is not provided 
    for under subparagraph (A) or (B).
    ``(5)(A) The Secretary shall require each eligible individual who 
enrolls in the TRICARE program under the demonstration project to pay an 
enrollment fee. The Secretary shall provide, to the extent feasible, the 
option of payment of the enrollment fee through electronic transfers of 
funds and through withholding of such payment from the pay of a member 
or former member of the Armed Forces, and shall provide the option that 
payment of the enrollment fee be made in full at the beginning of the 
enrollment period or that payments be made on a monthly or quarterly 
basis.
    ``(B) The amount of the enrollment fee charged an eligible 
individual under subparagraph (A) for self-only or family enrollment in 
any year may not exceed the amount equal to 75 percent of the total 
subscription charges in that year for self-only or family, respectively, 
fee-for-service coverage under the health benefits plan under the 
Federal Employees Health Benefits program under chapter 89 of title 5, 
United States Code, that is most similar in coverage to the TRICARE 
program.
    ``(6) A covered beneficiary who enrolls in TRICARE Senior Supplement 
under this subsection shall not be eligible to receive health care at a 
facility of the uniformed services during the period such enrollment is 
in effect.
    ``(b) Evaluation; Review.--(1) The Secretary shall provide for an 
evaluation of the demonstration project conducted under this subsection 
by an appropriate person or entity that is independent of the Department 
of Defense. The evaluation shall include the following:
        ``(A) An analysis of the costs of the demonstration project to 
    the United States and to the eligible individuals who participate in 
    such demonstration project.
        ``(B) An assessment of the extent to which the demonstration 
    project satisfies the requirements of such eligible individuals for 
    the health care services available under the demonstration project.
        ``(C) An assessment of the effect, if any, of the demonstration 
    project on military medical readiness.
        ``(D) A description of the rate of the enrollment in the 
    demonstration project of the individuals who were eligible to enroll 
    in the demonstration project.
        ``(E) An assessment of whether the demonstration project 
    provides the most suitable model for a program to provide adequate 
    health care services to the population of individuals consisting of 
    the eligible individuals.
        ``(F) An evaluation of any other matters that the Secretary 
    considers appropriate.
    ``(2) The Comptroller General shall review the evaluation conducted 
under paragraph (1). In carrying out the review, the Comptroller General 
shall--
        ``(A) assess the validity of the processes used in the 
    evaluation; and
        ``(B) assess the validity of any findings under the evaluation, 
    including any limitations with respect to the data contained in the 
    evaluation as a result of the size and design of the demonstration 
    project.
    ``(3)(A) The Secretary shall submit a report on the results of the 
evaluation under paragraph (1), together with the evaluation, to the 
Committee on Armed Services of the Senate and the Committee on Armed 
Services of the House of Representatives not later than December 31, 
2002.
    ``(B) The Comptroller General shall submit a report on the results 
of the review under paragraph (2) to the committees referred to in 
subparagraph (A) not later than February 15, 2003.
    ``(c) Eligible Individuals.--An individual is eligible to 
participate under this section if the individual is a member or former 
member of the uniformed services described in section 1074(b) of title 
10, United States Code, a dependent of the member described in section 
1076(a)(2)(B) or 1076(b) of that title, or a dependent of a member of 
the uniformed services who died while on active duty for a period of 
more than 30 days, who--
        ``(1) is 65 years of age or older;
        ``(2) is entitled to hospital insurance benefits under part A of 
    title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.);
        ``(3) is enrolled in the supplemental medical insurance program 
    under part B of such title XVIII (42 U.S.C. 1395j et seq.); and
        ``(4) resides in an area selected by the Secretary under 
    subsection (d).
    ``(d) Areas of Implementation.--(1) The Secretary shall carry out 
the demonstration project under this section in two separate areas 
selected by the Secretary.
    ``(2) The areas selected by the Secretary under paragraph (1) shall 
be as follows:
        ``(A) One area shall be an area outside the catchment area of a 
    military medical treatment facility in which--
            ``(i) no eligible organization has a contract in effect 
        under section 1876 of the Social Security Act (42 U.S.C. 1395mm) 
        and no Medicare+Choice organization has a contract in effect 
        under part C of title XVIII of that Act (42 U.S.C. 1395w-21 [et 
        seq.]); or
            ``(ii) the aggregate number of enrollees with an eligible 
        organization with a contract in effect under section 1876 of 
        that Act or with a Medicare+Choice organization with a contract 
        in effect under part C of title XVIII of that Act is less than 
        2.5 percent of the total number of individuals in the area who 
        are entitled to hospital insurance benefits under part A of 
        title XVIII of that Act.
        ``(B) The other area shall be an area outside the catchment area 
    of a military medical treatment facility in which--
            ``(i) at least one eligible organization has a contract in 
        effect under section 1876 of that Act or one Medicare+Choice 
        organization has a contract in effect under part C of title 
        XVIII of that Act; and
            ``(ii) the aggregate number of enrollees with an eligible 
        organization with a contract in effect under section 1876 of 
        that Act or with a Medicare+Choice organization with a contract 
        in effect under part C of title XVIII of that Act exceeds 10 
        percent of the total number of individuals in the area who are 
        entitled to hospital insurance benefits under part A of title 
        XVIII of that Act.
    ``(e) Definitions.--In this section:
        ``(1) The term `administering Secretaries' has the meaning given 
    that term in section 1072(3) of title 10, United States Code.
        ``(2) The term `TRICARE program' has the meaning given that term 
    in section 1072(7) of title 10, United States Code.''


          Study Concerning Provision of Comparative Information

    Pub. L. 105-85, div. A, title VII, Sec. 703, Nov. 18, 1997, 111 
Stat. 1807, provided that:
    ``(a) Study.--The Secretary of Defense shall conduct a study 
concerning the provision of the information described in subsection (b) 
to beneficiaries under the TRICARE program established under the 
authority of chapter 55 of title 10, United States Code, and prepare and 
submit to Congress a report concerning such study.
    ``(b) Provision of Comparative Information.--Information described 
in this subsection, with respect to a managed care entity that contracts 
with the Secretary of Defense to provide medical assistance under the 
program described in subsection (a), shall include the following:
        ``(1) The benefits covered by the entity involved, including--
            ``(A) covered items and services beyond those provided under 
        a traditional fee-for-service program;
            ``(B) any beneficiary cost sharing; and
            ``(C) any maximum limitations on out-of-pocket expenses.
        ``(2) The net monthly premium, if any, under the entity.
        ``(3) The service area of the entity.
        ``(4) To the extent available, quality and performance 
    indicators for the benefits under the entity (and how they compare 
    to such indicators under the traditional fee-for-service programs in 
    the area involved), including--
            ``(A) disenrollment rates for enrollees electing to receive 
        benefits through the entity for the previous two years 
        (excluding disenrollment due to death or moving outside the 
        service area of the entity);
            ``(B) information on enrollee satisfaction;
            ``(C) information on health process and outcomes;
            ``(D) grievance procedures;
            ``(E) the extent to which an enrollee may select the health 
        care provider of their [sic] choice, including health care 
        providers within the network of the entity and out-of-network 
        health care providers (if the entity covers out-of-network items 
        and services); and
            ``(F) an indication of enrollee exposure to balance billing 
        and the restrictions on coverage of items and services provided 
        to such enrollee by an out-of-network health care provider.
        ``(5) Whether the entity offers optional supplemental benefits 
    and the terms and conditions (including premiums) for such coverage.
        ``(6) An overall summary description as to the method of 
    compensation of participating physicians.''


    Disclosure of Cautionary Information on Prescription Medications

    Pub. L. 105-85, div. A, title VII, Sec. 744, Nov. 18, 1997, 111 
Stat. 1820, provided that:
    ``(a) Regulations Required.--Not later than 180 days after the date 
of the enactment of this Act [Nov. 18, 1997], the Secretary of Defense, 
in consultation with the administering Secretaries referred to in 
section 1073 of title 10, United States Code, shall prescribe 
regulations to require each source described in subsection (d) that 
dispenses a prescription medication to a beneficiary under chapter 55 of 
such title to include with the medication the written cautionary 
information required by subsection (b).
    ``(b) Information To Be Disclosed.--Information required to be 
disclosed about a medication under the regulations shall include 
appropriate cautions about usage of the medication, including possible 
side effects and potentially hazardous interactions with foods.
    ``(c) Form of Information.--The regulations shall require that 
information be furnished in a form that, to the maximum extent 
practicable, is easily read and understood.
    ``(d) Covered Sources.--The regulations shall apply to the 
following:
        ``(1) Pharmacies and any other dispensers of prescription 
    medications in medical facilities of the uniformed services.
        ``(2) Sources of prescription medications under any mail order 
    pharmaceuticals program provided by any of the administering 
    Secretaries under chapter 55 of title 10, United States Code.
        ``(3) Pharmacies paid under the Civilian Health and Medical 
    Program of the Uniformed Services (including the TRICARE program).
        ``(4) Pharmacies, and any other pharmaceutical dispensers, of 
    designated providers referred to in section 721(5) of the National 
    Defense Authorization Act for Fiscal Year 1997 (Public Law 104-201; 
    110 Stat. 2593; 10 U.S.C. 1073 note).''


             Competitive Procurement of Ophthalmic Services

    Pub. L. 105-85, div. A, title VII, Sec. 745, Nov. 18, 1997, 111 
Stat. 1820, provided that:
    ``(a) Competitive Procurement Required.--Beginning not later than 
October 1, 1998, the Secretary of Defense shall competitively procure 
from private-sector sources, or other sources outside of the Department 
of Defense, all ophthalmic services related to the provision of single 
vision and multivision eyeware for members of the Armed Forces, retired 
members, and certain covered beneficiaries under chapter 55 of title 10, 
United States Code, who would otherwise receive such ophthalmic services 
through the Department of Defense.
    ``(b) Exception.--Subsection (a) shall not apply to the extent that 
the Secretary of Defense determines that the use of sources within the 
Department of Defense to provide such ophthalmic services--
        ``(1) is necessary to meet the readiness requirements of the 
    Armed Forces; or
        ``(2) is more cost effective.
    ``(c) Completion of Existing Orders.--Subsection (a) shall not apply 
to orders for ophthalmic services received on or before September 30, 
1998.''


 Inclusion of Certain Designated Providers in Uniformed Services Health 
                          Care Delivery System

    Pub. L. 104-201, div. A, title VII, subtitle C, Sept. 23, 1996, 110 
Stat. 2592, as amended by Pub. L. 104-208, div. A, title I, Sec. 101(b) 
[title VIII, Sec. 8131(a)], Sept. 30, 1996, 110 Stat. 3009-71, 3009-117; 
Pub. L. 105-85, div. A, title VII, Secs. 721-723, Nov. 18, 1997, 111 
Stat. 1809, 1810; Pub. L. 106-65, div. A, title VII, Sec. 707, Oct. 5, 
1999, 113 Stat. 684, provided that:
``SEC. 721. DEFINITIONS.
    ``In this subtitle:
        ``(1) The term `administering Secretaries' means the Secretary 
    of Defense, the Secretary of Transportation, and the Secretary of 
    Health and Human Services.
        ``(2) The term `agreement' means the agreement required under 
    section 722(b) between the Secretary of Defense and a designated 
    provider.
        ``(3) The term `capitation payment' means an actuarially sound 
    payment for a defined set of health care services that is 
    established on a per enrollee per month basis.
        ``(4) The term `covered beneficiary' means a beneficiary under 
    chapter 55 of title 10, United States Code, other than a beneficiary 
    under section 1074(a) of such title.
        ``(5) The term `designated provider' means a public or nonprofit 
    private entity that was a transferee of a Public Health Service 
    hospital or other station under section 987 of the Omnibus Budget 
    Reconciliation Act of 1981 (Public Law 97-35; 42 U.S.C. 248b) and 
    that, before the date of the enactment of this Act [Sept. 23, 1996], 
    was deemed to be a facility of the uniformed services for the 
    purposes of chapter 55 of title 10, United States Code. The term 
    includes any legal successor in interest of the transferee.
        ``(6) The term `enrollee' means a covered beneficiary who 
    enrolls with a designated provider.
        ``(7) The term `health care services' means the health care 
    services provided under the health plan known as the `TRICARE PRIME' 
    option under the TRICARE program.
        ``(8) The term `Secretary' means the Secretary of Defense.
        ``(9) 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.
``SEC. 722. INCLUSION OF DESIGNATED PROVIDERS IN UNIFORMED SERVICES 
        HEALTH CARE DELIVERY SYSTEM.
    ``(a) Inclusion in System.--The health care delivery system of the 
uniformed services shall include the designated providers.
    ``(b) Agreements to Provide Managed Health Care Services.--(1) After 
consultation with the other administering Secretaries, the Secretary of 
Defense shall negotiate and enter into an agreement with each designated 
provider under which the designated provider will provide health care 
services in or through managed care plans to covered beneficiaries who 
enroll with the designated provider.
    ``(2) The agreement shall be entered into on a sole source basis. 
The Federal Acquisition Regulation, except for those requirements 
regarding competition, issued pursuant to section 25(c) of the Office of 
Federal Procurement Policy Act (41 U.S.C. 421(c)) shall apply to the 
agreements as acquisitions of commercial items.
    ``(3) The implementation of an agreement is subject to availability 
of funds for such purpose.
    ``(c) Effective Date of Agreements.--(1) Unless an earlier effective 
date is agreed upon by the Secretary and the designated provider, the 
agreement shall take effect upon the later of the following:
        ``(A) The date on which a managed care support contract under 
    the TRICARE program is implemented in the service area of the 
    designated provider.
        ``(B) October 1, 1997.
    ``(2) The Secretary may modify the effective date established under 
paragraph (1) for an agreement to permit a transition period of not more 
than six months between the date on which the agreement is executed by 
the parties and the date on which the designated provider commences the 
delivery of health care services under the agreement.
    ``(d) Temporary Continuation of Existing Participation Agreements.--
The Secretary shall extend the participation agreement of a designated 
provider in effect immediately before the date of the enactment of this 
Act [Sept. 23, 1996] under section 718(c) of the National Defense 
Authorization Act for Fiscal Year 1991 (Public Law 101-510; [former] 42 
U.S.C. 248c [note]) until the agreement required by this section takes 
effect under subsection (c), including any transitional period provided 
by the Secretary under paragraph (2) of such subsection.
    ``(e) Service Area.--The Secretary may not reduce the size of the 
service area of a designated provider below the size of the service area 
in effect as of September 30, 1996.
    ``(f) Compliance With Administrative Requirements.--(1) Unless 
otherwise agreed upon by the Secretary and a designated provider, the 
designated provider shall comply with necessary and appropriate 
administrative requirements established by the Secretary for other 
providers of health care services and requirements established by the 
Secretary of Health and Human Services for risk-sharing contractors 
under section 1876 of the Social Security Act (42 U.S.C. 1395mm). The 
Secretary and the designated provider shall determine and apply only 
such administrative requirements as are minimally necessary and 
appropriate. A designated provider shall not be required to comply with 
a law or regulation of a State government requiring licensure as a 
health insurer or health maintenance organization.
    ``(2) A designated provider may not contract out more than five 
percent of its primary care enrollment without the approval of the 
Secretary, except in the case of primary care contracts between a 
designated provider and a primary care contractor in force on the date 
of the enactment of this Act [Sept. 23, 1996].
    ``(g) Continued Acquisition of Reduced-Cost Drugs.--A designated 
provider shall be treated as part of the Department of Defense for 
purposes of section 8126 of title 38, United States Code, in connection 
with the provision by the designated provider of health care services to 
covered beneficiaries pursuant to the participation agreement of the 
designated provider under section 718(c) of the National Defense 
Authorization Act for Fiscal Year 1991 (Public Law 101-510; [former] 42 
U.S.C. 248c note) or pursuant to the agreement entered into under 
subsection (b).
``SEC. 723. PROVISION OF UNIFORM BENEFIT BY DESIGNATED PROVIDERS.
    ``(a) Uniform Benefit Required.--A designated provider shall offer 
to enrollees the health benefit option prescribed and implemented by the 
Secretary under section 731 of the National Defense Authorization Act 
for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 1073 note), 
including accompanying cost-sharing requirements.
    ``(b) Time for Implementation of Benefit.--A designated provider 
shall offer the health benefit option described in subsection (a) to 
enrollees upon the later of the following:
        ``(1) The date on which health care services within the health 
    care delivery system of the uniformed services are rendered through 
    the TRICARE program in the region in which the designated provider 
    operates.
        ``(2) October 1, 1997.
    ``(c) Adjustments.--The Secretary may establish a later date under 
subsection (b)(2) or prescribe reduced cost-sharing requirements for 
enrollees.
``SEC. 724. ENROLLMENT OF COVERED BENEFICIARIES.
    ``(a) Fiscal Year 1997 Limitation.--(1) During fiscal year 1997, the 
number of covered beneficiaries who are enrolled in managed care plans 
offered by designated providers may not exceed the number of such 
enrollees as of October 1, 1995.
    ``(2) The Secretary may waive the limitation under paragraph (1) if 
the Secretary determines that additional enrollment authority for a 
designated provider is required to accommodate covered beneficiaries who 
are dependents of members of the uniformed services entitled to health 
care under section 1074(a) of title 10, United States Code.
    ``(b) Permanent Limitation.--For each fiscal year beginning after 
September 30, 1997, the number of enrollees in managed care plans 
offered by designated providers may not exceed 110 percent of the number 
of such enrollees as of the first day of the immediately preceding 
fiscal year. The Secretary may waive this limitation as provided in 
subsection (a)(2).
    ``(c) Retention of Current Enrollees.--An enrollee in the managed 
care plan of a designated provider as of September 30, 1997, or such 
earlier date as the designated provider and the Secretary may agree 
upon, shall continue receiving services from the designated provider 
pursuant to the agreement entered into under section 722 unless the 
enrollee disenrolls from the designated provider. Except as provided in 
subsection (e), the administering Secretaries may not disenroll such an 
enrollee unless the disenrollment is agreed to by the Secretary and the 
designated provider.
    ``(d) Additional Enrollment Authority.--Other covered beneficiaries 
may also receive health care services from a designated provider, except 
that the designated provider may market such services to, and enroll, 
only those covered beneficiaries who--
        ``(1) do not have other primary health insurance coverage (other 
    than Medicare coverage) covering basic primary care and inpatient 
    and outpatient services; or
        ``(2) are enrolled in the direct care system under the TRICARE 
    program, regardless of whether the covered beneficiaries were users 
    of the health care delivery system of the uniformed services in 
    prior years.
    ``(e) Special Rule for Medicare-Eligible Beneficiaries.--If a 
covered beneficiary who desires to enroll in the managed care program of 
a designated provider is also entitled to hospital insurance benefits 
under part A of title XVIII of the Social Security Act (42 U.S.C. 1395c 
et seq.), the covered beneficiary shall elect whether to receive health 
care services as an enrollee or under part A of title XVIII of the 
Social Security Act. The Secretary may disenroll an enrollee who 
subsequently violates the election made under this subsection and 
receives benefits under part A of title XVIII of the Social Security 
Act.
    ``(f) Information Regarding Eligible Covered Beneficiaries.--The 
Secretary shall provide, in a timely manner, a designated provider with 
an accurate list of covered beneficiaries within the marketing area of 
the designated provider to whom the designated provider may offer 
enrollment.
    ``(g) Open Enrollment Demonstration Program.--(1) The Secretary of 
Defense shall conduct a demonstration program under which covered 
beneficiaries shall be permitted to enroll at any time in a managed care 
plan offered by a designated provider consistent with the enrollment 
requirements for the TRICARE Prime option under the TRICARE program, but 
without regard to the limitation in subsection (b). The demonstration 
program under this subsection shall cover designated providers, selected 
by the Secretary of Defense, and the service areas of the designated 
providers.
    ``(2) The demonstration program carried out under this section shall 
commence on October 1, 1999, and end on September 30, 2001.
    ``(3) Not later than March 15, 2001, the Secretary of Defense shall 
submit to the Committees on Armed Services of the Senate and the House 
of Representatives a report on the demonstration program carried out 
under this subsection. The report shall include, at a minimum, an 
evaluation of the benefits of the open enrollment opportunity to covered 
beneficiaries and a recommendation on whether to authorize open 
enrollments in the managed care plans of designated providers 
permanently.
``SEC. 725. APPLICATION OF CHAMPUS PAYMENT RULES.
    ``(a) Application of Payment Rules.--Subject to subsection (b), the 
Secretary shall require a private facility or health care provider that 
is a health care provider under the Civilian Health and Medical Program 
of the Uniformed Services to apply the payment rules described in 
section 1074(c) of title 10, United States Code, in imposing charges for 
health care that the private facility or provider provides to enrollees 
of a designated provider.
    ``(b) Authorized Adjustments.--The payment rules imposed under 
subsection (a) shall be subject to such modifications as the Secretary 
considers appropriate. The Secretary may authorize a lower rate than the 
maximum rate that would otherwise apply under subsection (a) if the 
lower rate is agreed to by the designated provider and the private 
facility or health care provider.
    ``(c) Regulations.--The Secretary shall prescribe regulations to 
implement this section after consultation with the other administering 
Secretaries.
    ``(d) Conforming Amendment.--[Amended section 1074 of this title.]
``SEC. 726. PAYMENTS FOR SERVICES.
    ``(a) Form of Payment.--Unless otherwise agreed to by the Secretary 
and a designated provider, the form of payment for health care services 
provided by a designated provider shall be on a full risk capitation 
payment basis. The capitation payments shall be negotiated and agreed 
upon by the Secretary and the designated provider. In addition to such 
other factors as the parties may agree to apply, the capitation payments 
shall be based on the utilization experience of enrollees and 
competitive market rates for equivalent health care services for a 
comparable population to such enrollees in the area in which the 
designated provider is located.
    ``(b) Limitation on Total Payments.--Total capitation payments for 
health care services to a designated provider shall not exceed an amount 
equal to the cost that would have been incurred by the Government if the 
enrollees had received such health care services through a military 
treatment facility, the TRICARE program, or the Medicare program, as the 
case may be. In establishing the ceiling rate for enrollees with the 
designated providers who are also eligible for the Civilian Health and 
Medical Program of the Uniformed Services, the Secretary of Defense 
shall take into account the health status of the enrollees.
    ``(c) Establishment of Payment Rates on Annual Basis.--The Secretary 
and a designated provider shall establish capitation payments on an 
annual basis, subject to periodic review for actuarial soundness and to 
adjustment for any adverse or favorable selection reasonably anticipated 
to result from the design of the program under this subtitle.
    ``(d) Alternative Basis for Calculating Payments.--After September 
30, 1999, the Secretary and a designated provider may mutually agree 
upon a new basis for calculating capitation payments.
``SEC. 727. REPEAL OF SUPERSEDED AUTHORITIES.
    ``(a) Repeals.--[Repealed sections 248c and 248d of Title 42, The 
Public Health and Welfare, and section 718(c) of Pub. L. 101-510 and 
section 726 of Pub. L. 104-106, set out as notes under section 248c of 
Title 42.]
    ``(b) Effective Date.--The amendments made by paragraphs (1), (2), 
and (3) of subsection (a) shall take effect on October 1, 1997.''
    [Pub. L. 104-208, div. A, title I, Sec. 101(b) [title VIII, 
Sec. 8131(b)], Sept. 30, 1996, 110 Stat. 3009-71, 3009-117, provided 
that: ``The amendments made by subsection (a) [amending section 722 of 
Pub. L. 104-201, set out above] shall take effect as of the date of the 
enactment of the National Defense Authorization Act for Fiscal Year 1997 
[Sept. 23, 1996] as if section 722 of such Act had been enacted as so 
amended.'']


                      Definition of TRICARE Program

    Pub. L. 104-106, div. A, title VII, Sec. 711, Feb. 10, 1996, 110 
Stat. 374, provided that: ``For purposes of this subtitle [subtitle B 
(Secs. 711-718) of title VII of div. A of Pub. L. 104-106, amending 
section 1097 of this title, enacting provisions set out as notes below, 
and amending provisions set out as a note below], 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.''


 Training in Health Care Management and Administration for TRICARE Lead 
                                 Agents

    Pub. L. 104-106, div. A, title VII, Sec. 715, Feb. 10, 1996, 110 
Stat. 375, as amended by Pub. L. 106-398, Sec. 1 [[div. A], title VII, 
Sec. 760(a)], Oct. 30, 2000, 114 Stat. 1654, 1654A-200, provided that:
    ``(a) Provision of Training.--The Secretary of Defense shall 
implement a professional educational program to provide appropriate 
training in health care management and administration--
        ``(1) to each commander, deputy commander, and managed care 
    coordinator of a military medical treatment facility of the 
    Department of Defense, and any other person, who is selected to 
    serve as a lead agent to coordinate the delivery of health care by 
    military and civilian providers under the TRICARE program; and
        ``(2) to appropriate members of the support staff of the 
    treatment facility who will be responsible for daily operation of 
    the TRICARE program.
    ``(b) Limitation on Assignment Until Completion of Training.--No 
person may be assigned as the commander, deputy commander, or managed 
care coordinator of a military medical treatment facility or as a 
TRICARE lead agent or senior member of the staff of a TRICARE lead agent 
office until the Secretary of the military department concerned submits 
a certification to the Secretary of Defense that such person has 
completed the training described in subsection (a).''
    [Pub. L. 106-398, Sec. 1 [[div. A], title VII, Sec. 760(c)], Oct. 
30, 2000, 114 Stat. 1654, 1654A-200, provided that: ``The amendments 
made by subsection (a) to section 715 of such Act [section 715 of Pub. 
L. 104-106, set out above]--
        [``(1) shall apply to a deputy commander, a managed care 
    coordinator of a military medical treatment facility, or a lead 
    agent for coordinating the delivery of health care by military and 
    civilian providers under the TRICARE program, who is assigned to 
    such position on or after the date that is one year after the date 
    of the enactment of this Act [Oct. 30, 2000]; and
        [``(2) may apply, in the discretion of the Secretary of Defense, 
    to a deputy commander, a managed care coordinator of such a 
    facility, or a lead agent for coordinating the delivery of such 
    health care, who is assigned to such position before the date that 
    is one year after the date of the enactment of this Act.'']


   Pilot Program of Individualized Residential Mental Health Services

    Pub. L. 104-106, div. A, title VII, Sec. 716, Feb. 10, 1996, 110 
Stat. 375, provided that:
    ``(a) Program Required.--(1) During fiscal year 1996, the Secretary 
of Defense, in consultation with the other administering Secretaries 
under chapter 55 of title 10, United States Code, shall implement a 
pilot program to provide residential and wraparound services to children 
described in paragraph (2) who are in need of mental health services. 
The Secretary shall implement the pilot program for an initial period of 
at least two years in a military health care region in which the TRICARE 
program has been implemented.
    ``(2) A child shall be eligible for selection to participate in the 
pilot program if the child is a dependent (as described in subparagraph 
(D) or (I) of section 1072(2) of title 10, United States Code) who--
        ``(A) is eligible for health care under section 1079 or 1086 of 
    such title; and
        ``(B) has a serious emotional disturbance that is generally 
    regarded as amenable to treatment.
    ``(b) Wraparound Services Defined.--For purposes of this section, 
the term `wraparound services' means individualized mental health 
services that are provided principally to allow a child to remain in the 
family home or other least-restrictive and least-costly setting, but 
also are provided as an aftercare planning service for children who have 
received acute or residential care. Such term includes nontraditional 
mental health services that will assist the child to be maintained in 
the least-restrictive and least-costly setting.
    ``(c) Pilot Program Agreement.--Under the pilot program the 
Secretary of Defense shall enter into one or more agreements that 
require a mental health services provider under the agreement--
        ``(1) to provide wraparound services to a child described in 
    subsection (a)(2);
        ``(2) to continue to provide such services as needed during the 
    period of the agreement even if the child moves to another location 
    within the same TRICARE program region during that period; and
        ``(3) to share financial risk by accepting as a maximum annual 
    payment for such services a case-rate reimbursement not in excess of 
    the amount of the annual standard CHAMPUS residential treatment 
    benefit payable (as determined in accordance with section 8.1 of 
    chapter 3 of volume II of the CHAMPUS policy manual).
    ``(d) Report.--Not later than March 1, 1998, the Secretary of 
Defense shall submit to the Committee on Armed Services of the Senate 
and the Committee on National Security of the House of Representatives a 
report on the program carried out under this section. The report shall 
contain--
        ``(1) an assessment of the effectiveness of the program; and
        ``(2) the Secretary's views regarding whether the program should 
    be implemented throughout the military health care system.''


         Evaluation and Report on TRICARE Program Effectiveness

    Pub. L. 104-106, div. A, title VII, Sec. 717, Feb. 10, 1996, 110 
Stat. 376, provided that:
    ``(a) Evaluation Required.--The Secretary of Defense shall arrange 
for an on-going evaluation of the effectiveness of the TRICARE program 
in meeting the goals of increasing the access of covered beneficiaries 
under chapter 55 of title 10, United States Code, to health care and 
improving the quality of health care provided to covered beneficiaries, 
without increasing the costs incurred by the Government or covered 
beneficiaries. The evaluation shall specifically address--
        ``(1) the impact of the TRICARE program on military retirees 
    with regard to access, costs, and quality of health care services; 
    and
        ``(2) identify noncatchment areas in which the health 
    maintenance organization option of the TRICARE program is available 
    or is proposed to become available.
    ``(b) Entity To Conduct Evaluation.--The Secretary may use a 
federally funded research and development center to conduct the 
evaluation required by subsection (a).
    ``(c) Annual Report.--Not later than March 1, 1997, and each March 1 
thereafter, the Secretary shall submit to Congress a report describing 
the results of the evaluation under subsection (a) during the preceding 
year.''


  Use of Health Maintenance Organization Model as Option for Military 
                               Health Care

    Pub. L. 103-160, div. A, title VII, Sec. 731, Nov. 30, 1993, 107 
Stat. 1696, as amended by Pub. L. 103-337, div. A, title VII, Sec. 715, 
Oct. 5, 1994, 108 Stat. 2803; Pub. L. 104-106, div. A, title VII, 
Sec. 714, Feb. 10, 1996, 110 Stat. 374, provided that:
    ``(a) Use of Model.--The Secretary of Defense shall prescribe and 
implement a health benefit option (and accompanying cost-sharing 
requirements) for covered beneficiaries eligible for health care under 
chapter 55 of title 10, United States Code, that is modelled on health 
maintenance organization plans offered in the private sector and other 
similar Government health insurance programs. The Secretary shall 
include, to the maximum extent practicable, the health benefit option 
required under this subsection as one of the options available to 
covered beneficiaries in all managed health care initiatives undertaken 
by the Secretary after December 31, 1994.
    ``(b) Elements of Option.--The Secretary shall offer covered 
beneficiaries who enroll in the health benefit option required under 
subsection (a) reduced out-of-pocket costs and a benefit structure that 
is as uniform as possible throughout the United States. The Secretary 
shall allow enrollees to seek health care outside of the option, except 
that the Secretary may prescribe higher out-of-pocket costs than are 
provided under section 1079 or 1086 of title 10, United States Code, for 
enrollees who obtain health care outside of the option.
    ``(c) Government Costs.--The health benefit option required under 
subsection (a) shall be administered so that the costs incurred by the 
Secretary under the TRICARE program are no greater than the costs that 
would otherwise be incurred to provide health care to the members of the 
uniformed services and covered beneficiaries who participate in the 
TRICARE program.
    ``(d) Definitions.--For purposes of this section:
        ``(1) The term `covered beneficiary' means a beneficiary under 
    chapter 55 of title 10, United States Code, other than a beneficiary 
    under section 1074(a) of such title.
        ``(2) 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.
    ``(e) Regulations.--Not later than December 31, 1994, the Secretary 
shall prescribe final regulations to implement the health benefit option 
required by subsection (a).
    ``(f) Modification of Existing Contracts.--In the case of managed 
health care contracts in effect or in final stages of acquisition as of 
December 31, 1994, the Secretary may modify such contracts to 
incorporate the health benefit option required under subsection (a).''


 Managed Health Care Program and Contracts for Military Health Services 
                                 System

    Pub. L. 104-61, title VI, Dec. 1, 1995, 109 Stat. 649, provided in 
part: ``That the date for implementation of the nation-wide managed care 
military health services system shall be extended to September 30, 
1997''.
    Pub. L. 103-139, title VIII, Sec. 8025, Nov. 11, 1993, 107 Stat. 
1443, provided that: ``Notwithstanding any other provision of law, to 
establish region-wide, at-risk, fixed price managed care contracts 
possessing features similar to those of the CHAMPUS Reform Initiative, 
the Secretary of Defense shall submit to the Congress a plan to 
implement a nation-wide managed health care program for the military 
health services system not later than December 31, 1993: Provided, That 
the program shall include, but not be limited to: (1) a uniform, 
stabilized benefit structure characterized by a triple option health 
benefit feature; (2) a regionally-based health care management system; 
(3) cost minimization incentives including `gatekeeping' and annual 
enrollment procedures, capitation budgeting, and at-risk managed care 
support contracts; and (4) full and open competition for all managed 
care support contracts: Provided further, That the implementation of the 
nation-wide managed care military health services system shall be 
completed by September 30, 1996: Provided further, That the Department 
shall competitively award contracts in fiscal year 1994 for at least 
four new region-wide, at-risk, fixed price managed care support 
contracts consistent with the nation-wide plan, that one such contract 
shall include the State of Florida (which may include Department of 
Veterans Affairs' medical facilities with the concurrence of the 
Secretary of Veterans Affairs), one such contract shall include the 
States of Washington and Oregon, and one such contract shall include the 
State of Texas: Provided further, That any law or regulation of a State 
or local government relating to health insurance, prepaid health plans, 
or other health care delivery, administration, and financing methods 
shall be preempted and shall not apply to any region-wide, at-risk, 
fixed price managed care contract entered into pursuant to chapter 55 of 
title 10, United States Code: Provided further, That the Department 
shall competitively award within 13 months after the date of enactment 
of this Act [Nov. 11, 1993] two contracts for stand-alone, at-risk 
managed mental health services in high utilization, high-cost areas, 
consistent with the management and service delivery features in 
operation in Department of Defense managed mental health care contracts: 
Provided further, That the Assistant Secretary of Defense for Health 
Affairs shall, during the current fiscal year, initiate through 
competitive procedures a managed health care program for eligible 
beneficiaries in the area of Homestead Air Force Base with benefits and 
services substantially identical to those established to serve 
beneficiary populations in areas where military medical facilities have 
been terminated, to include retail pharmacy networks available to 
Medicare-eligible beneficiaries, and shall present a plan to implement 
this program to the House and Senate Committees on Appropriations not 
later than January 15, 1994.''


 Condition on Expansion of CHAMPUS Reform Initiative to Other Locations

    Pub. L. 102-484, div. A, title VII, Sec. 712, Oct. 23, 1992, 106 
Stat. 2435, as amended by Pub. L. 103-160, div. A, title VII, Sec. 720, 
Nov. 30, 1993, 107 Stat. 1695; Pub. L. 103-337, div. A, title VII, 
Sec. 714(c), Oct. 5, 1994, 108 Stat. 2803, provided that:
    ``(a) Condition.--(1) Except as provided in subsection (b), the 
Secretary of Defense may not expand the CHAMPUS reform initiative 
underway in the States of California and Hawaii to another location 
until not less than 90 days after the date on which the Secretary 
certifies to Congress that expansion of the initiative to that location 
is the most efficient method of providing health care to covered 
beneficiaries in that location. In determining whether the expansion of 
the CHAMPUS reform initiative to a location is the most efficient method 
of providing health care to covered beneficiaries in that location, the 
Secretary shall consider the cost-effectiveness of the initiative (while 
assuring that the combined cost of care in military treatment facilities 
and under the Civilian Health and Medical Program of the Uniformed 
Services will not be increased as a result of the expansion) and the 
effect of the expansion of the initiative on the access of covered 
beneficiaries to health care and on the quality of health care received 
by covered beneficiaries.
    ``(2) To the extent any revision of the CHAMPUS reform initiative is 
necessary in order to make the certification required by this 
subsection, the Secretary shall assure that enrolled covered 
beneficiaries may obtain health care services with reduced out-of-pocket 
costs, as compared to standard CHAMPUS.
    ``(b) Exception.--The Secretary of Defense may waive the operation 
of the condition on the expansion of the CHAMPUS reform initiative 
specified in subsection (a) in order to expand the initiative to a 
location adversely affected by the closure or realignment of a military 
installation in that location, as determined by the Secretary.
    ``(c) Evaluation of Certification.--The Comptroller General of the 
United States and the Director of the Congressional Budget Office shall 
evaluate each certification made by the Secretary of Defense under 
subsection (a) that expansion of the CHAMPUS reform initiative to 
another location is the most efficient method of providing health care 
to covered beneficiaries in that location. They shall submit their 
findings to Congress if these findings differ substantially from the 
findings upon which the Secretary made the decision to expand the 
CHAMPUS reform initiative.
    ``(d) Definitions.--For purposes of this section:
        ``(1) The terms `CHAMPUS reform initiative' and `initiative' 
    mean the health care delivery project required by section 702 of the 
    National Defense Authorization Act for Fiscal Year 1987 (Public Law 
    99-661; 10 U.S.C. 1073 note).
        ``(2) The term `covered beneficiary' has the meaning given that 
    term in section 1072(5) of title 10, United States Code.
        ``(3) The terms `Civilian Health and Medical Program of the 
    Uniformed Services' and `CHAMPUS' have the meaning given the term 
    `Civilian Health and Medical Program of the Uniformed Services' in 
    section 1072(4) of title 10, United States Code.''


             Alternative Health Care Delivery Methodologies

    Pub. L. 102-484, div. A, title VII, Sec. 713, Oct. 23, 1992, 106 
Stat. 2435, as amended by Pub. L. 103-160, div. A, title VII, Sec. 719, 
Nov. 30, 1993, 107 Stat. 1694, provided that:
    ``(a) Continuation of Health Care Reform Initiatives.--(1) During 
fiscal years 1993 through 1996, the Secretary of Defense shall continue 
to conduct a broad array of reform initiatives for furnishing health 
care to persons who are eligible to receive health care under chapter 55 
of title 10, United States Code.
    ``(2) The health care reform initiatives conducted in accordance 
with paragraph (1) shall include CHAMPUS alternatives, the CHAMPUS 
reform initiative, catchment area management, coordinated care, and such 
other reform initiatives as the Secretary of Defense considers to be 
appropriate.
    ``(3) Not later than September 30, 1994, the Secretary shall submit 
to Congress a report regarding the health care reform initiatives 
conducted during fiscal years 1993 and 1994. The report shall include a 
discussion of the cost effectiveness of the initiatives and the extent 
to which the persons who received health care under such initiatives are 
satisfied with that health care.
    ``(b) Continuation of CHAMPUS Reform Initiative in Hawaii and 
California.--(1) The Secretary of Defense shall ensure that a 
replacement or successor contract for the CHAMPUS reform initiative 
contract applicable to the States of California and Hawaii is awarded in 
sufficient time for the contractor to begin to provide health care in 
those States under the replacement or successor contract as soon as 
practicable after the date of the enactment of the National Defense 
Authorization Act for Fiscal Year 1994 [Nov. 30, 1993].
    ``(2) The Secretary shall use competitive procedures for awarding a 
replacement or successor contract under paragraph (1).
    ``(c) Evaluation of CHAMPUS Reform Initiative.--(1) Not later than 
June 1, 1994, the Secretary of Defense shall enter into a contract with 
a non-Federal entity under which the entity will perform an evaluation 
of the performance of the CHAMPUS reform initiative in the States of 
California and Hawaii. The evaluation shall cover each of the fiscal 
years during which the initiative is carried out in those States under 
the replacement or successor contract referred to in subsection (b) and 
under the predecessor contracts. The evaluation shall include a 
comparison of the cost savings and claims experience resulting in each 
such fiscal year from carrying out the CHAMPUS reform initiative in 
those States.
    ``(2) Not later than one year after the date on which the contract 
for evaluation is entered into under paragraph (1), the non-Federal 
entity making the evaluation shall submit to the Secretary and to 
Congress a report on the results of the evaluation.
    ``(d) Definitions.--For purposes of this section:
        ``(1) The term `CHAMPUS' means the Civilian Health and Medical 
    Program of the Uniformed Services, as defined in paragraph (4) of 
    section 1072 of title 10, United States Code.
        ``(2) The term `covered beneficiary' has the meaning given that 
    term in paragraph (5) of such section.
        ``(3) The term `CHAMPUS reform initiative' means the health care 
    delivery project required by section 702 of the National Defense 
    Authorization Act for Fiscal Year 1987 (Public Law 99-661; 10 U.S.C. 
    1073 note).
        ``(4) The term `catchment area management' means the methodology 
    provided for demonstration in accordance with section 731 of the 
    National Defense Authorization Act for Fiscal Years 1988 and 1989 
    (Public Law 100-180; 10 U.S.C. 1092 note).''


 Military Health Care for Persons Reliant on Health Care Facilities at 
                     Bases Being Closed or Realigned

    Pub. L. 102-484, div. A, title VII, Sec. 722, Oct. 23, 1992, 106 
Stat. 2439, provided that:
    ``(a) Establishment.--The Secretary of Defense shall establish a 
joint services working group on the provision of military health care to 
persons who rely for health care on health care facilities at military 
installations being closed or realigned.
    ``(b) Membership.--The members of the working group shall include 
the Assistant Secretary of Defense for Health Affairs, the Surgeon 
General of the Army, the Surgeon General of the Navy, the Surgeon 
General of the Air Force, or a designee of each such person, and one 
independent member appointed by the Secretary of Defense from among 
private citizens whose interest in matters within the responsibility of 
the working group qualify that person to represent all personnel 
entitled to health care under chapter 55 of title 10, United States 
Code.
    ``(c) Duties.--(1) In the case of each closure or realignment of a 
military installation that will adversely affect the accessibility of 
health care in a facility of the uniformed services for persons entitled 
to such health care under chapter 55 of title 10, United States Code, 
the working group shall solicit the views of such persons regarding 
suitable substitutes for the furnishing of health care to those persons 
under that chapter.
    ``(2) In carrying out paragraph (1), the working group--
        ``(A) shall conduct meetings with persons referred to in that 
    paragraph, or representatives of such persons;
        ``(B) may use reliable sampling techniques;
        ``(C) shall visit the areas where closures or realignments of 
    military installations will adversely affect the accessibility of 
    health care in a facility of the uniformed services for persons 
    referred to in paragraph (1) and shall conduct public meetings; and
        ``(D) shall ensure that members of the uniformed services on 
    active duty, members and former members of the uniformed services 
    entitled to retired or retainer pay, and dependents and survivors of 
    such members and retired personnel are afforded the opportunity to 
    express views.
    ``(d) Recommendations.--With respect to each closure and realignment 
of a military installation referred to in subsection (c), the working 
group shall submit to the Congress and the Secretary of Defense the 
working group's recommendations regarding the alternative means for 
continuing to provide accessible health care under chapter 55 of title 
10, United States Code, to persons referred to in that subsection.
    ``(e) Application of Advisory Committee Act.--The provisions of the 
Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the 
joint services working group established pursuant to this section.''


        Authorization for Extension of CHAMPUS Reform Initiative

    Pub. L. 102-190, div. A, title VII, Sec. 722, Dec. 5, 1991, 105 
Stat. 1406, provided that:
    ``(a) Authority.--Upon the termination (for any reason) of the 
contract of the Department of Defense in effect on the date of the 
enactment of this Act [Dec. 5, 1991] under the CHAMPUS reform initiative 
established under section 702 of the National Defense Authorization Act 
for Fiscal Year 1987 [Pub. L. 99-661] (10 U.S.C. 1073 note), the 
Secretary of Defense may enter into a replacement or successor contract 
with the same or a different contractor and for such amount as may be 
determined in accordance with applicable procurement laws and 
regulations and without regard to any limitation (enacted before, on, or 
after the date of the enactment of this Act) on the availability of 
funds for that purpose.
    ``(b) Treatment of Limitation on Funds for Program.--No provision of 
law stated as a limitation on the availability of funds may be treated 
as constituting the extension of, or as requiring the extension of, any 
contract under the CHAMPUS reform initiative that would otherwise expire 
in accordance with its terms.''


        Extension of CHAMPUS Reform Initiative for Certain States

    Pub. L. 102-172, title VIII, Sec. 8032, Nov. 26, 1991, 105 Stat. 
1178, provided: ``That notwithstanding any other provision of law, the 
CHAMPUS Reform Initiative contract for California and Hawaii shall be 
extended until February 1, 1994, within the limits and rates specified 
in the contract: Provided further, That the Department shall 
competitively award contracts for the geographic expansion of the 
CHAMPUS Reform Initiative in Florida (which may include Department of 
Veterans Affairs medical facilities with the concurrence of the 
Secretary of Veterans Affairs), Washington, Oregon, and the Tidewater 
region of Virginia: Provided further, That competitive expansion of the 
CHAMPUS Reform Initiative may occur in any other regions that the 
Assistant Secretary of Defense for Health Affairs deems appropriate.''


          Conditions on Expansion of CHAMPUS Reform Initiative

    Pub. L. 101-510, div. A, title VII, Sec. 715, Nov. 5, 1990, 104 
Stat. 1584, provided that:
    ``(a) Certification of Cost-Effectiveness.--The Secretary of Defense 
may not proceed with the proposed expansion of the CHAMPUS reform 
initiative underway in the States of California and Hawaii until not 
less than 90 days after the date on which the Secretary certifies to the 
Congress that--
        ``(1) such CHAMPUS reform initiative has been demonstrated to be 
    more cost-effective than the Civilian Health and Medical Program of 
    the Uniformed Services or any other health care demonstration 
    program being conducted by the Secretary;
        ``(2) the contractor selected to underwrite the delivery of 
    health care under the CHAMPUS reform initiative will accomplish the 
    expansion without the disruption of services to beneficiaries under 
    the Civilian Health and Medical Program of the Uniformed Services or 
    delays in the processing of claims; and
        ``(3) such contractor is currently, and projected to remain, 
    financially able to underwrite the CHAMPUS reform initiative.
    ``(b) Report on Certification.--Not later than 30 days after the 
date on which the Secretary of Defense submits the certification 
required by subsection (a), the Comptroller General of the United States 
and the Director of the Congressional Budget Office shall jointly submit 
to Congress a report evaluating such certification.
    ``(c) CHAMPUS Reform Initiative Defined.--For purposes of this 
section, the term `CHAMPUS reform initiative' has the meaning given that 
term in section 702(d)(1) of the Department of Defense Authorization Act 
for Fiscal Year 1987 [Pub. L. 99-661] (10 U.S.C. 1073 note).''


   Requirements Prior to Termination of Medical Services at Military 
                      Medical Treatment Facilities

    Pub. L. 101-510, div. A, title VII, Sec. 716, Nov. 5, 1990, 104 
Stat. 1585, provided that:
    ``(a) Prohibition.--During the period beginning on the date of the 
enactment of this Act [Nov. 5, 1990] and ending on September 30, 1995, 
the Secretary of a military department may not take any action to close 
a military medical facility under the jurisdiction of that Secretary or 
reduce the level of care provided at such a medical facility until 90 
days after the date on which the Secretary submits to Congress a report 
described in subsection (b).
    ``(b) Elements of Report.--A report referred to in subsection (a) 
shall include the following:
        ``(1) The reason for the action.
        ``(2) The projected savings to the Government from the action.
        ``(3) The impact on CHAMPUS and MEDICARE costs in the catchment 
    area of the facility.
        ``(4) The impact on beneficiary cost-sharing.
        ``(5) An examination of alternative ways to provide care to the 
    persons served by the facility that the Secretary determines would 
    not result in adverse consequences to such persons.
        ``(6) An explanation of how care will be provided for and the 
    cost, if any, to those persons to receive such care.
    ``(c) Exception.--Subsection (a) shall not apply with respect to the 
closing of a military medical facility (or the reduction of the level of 
care provided at a military medical facility) as a result of a base 
closure or an operational deployment.''


 Requirement for Availability of Additional Insurance Coverage; Funding 
                         Limitations; Definition

    Pub. L. 100-180, div. A, title VII, Sec. 732(e)-(g), Dec. 4, 1987, 
101 Stat. 1120, 1121, provided that:
    ``(e) Requirement for Availability of Additional Insurance 
Coverage.--(1) The Secretary of Defense shall make every effort to enter 
into an agreement, similar to the one being negotiated with a private 
insurer on the date of the enactment of this Act [Dec. 4, 1987], that 
would provide an insurance plan that meets the requirements described in 
paragraph (3).
    ``(2) If an agreement referred to in paragraph (1) is not entered 
into before a request for proposals with respect to the second phase of 
the CHAMPUS reform initiative is issued, the Secretary shall provide for 
an insurance plan which meets the requirements described in paragraph 
(3) through either of the following means:
        ``(A) By including, in any request for proposals with respect to 
    the second (and any subsequent) phase of the CHAMPUS reform 
    initiative, a requirement for the contractor to offer an option to 
    elect an insurance plan which meets the requirements described in 
    paragraph (3).
        ``(B) By including, in any request for proposals for a contract 
    to process claims for CHAMPUS, a requirement for the contractor 
    (known as a fiscal intermediary) to offer an option to elect an 
    insurance plan which meets the requirements described in paragraph 
    (3).
    ``(3) The insurance plan requirements referred to in paragraphs (1) 
and (2) are the following:
        ``(A) At the election of the individual, the plan shall be 
    available to an individual losing eligibility (by reason of 
    discharge, release from active duty, a change in family status 
    (including divorce or annulment, or, in the case of a child, 
    reaching age 22), or other similar reason) to be a covered 
    beneficiary under chapter 55 of title 10, United States Code.
        ``(B) The plan shall provide for coverage of benefits similar to 
    the coverage of benefits available to the individual under CHAMPUS, 
    regardless of any pre-existing condition.
        ``(C) The plan shall provide that enrollees in the plan shall 
    pay the full periodic charges for the benefit coverage.
    ``(f) Funding Limitations.--(1) None of the funds appropriated or 
otherwise made available to the Department of Defense may be obligated 
or expended for the purpose of entering into a contract for the 
demonstration phase of the CHAMPUS reform initiative required by section 
702(a)(1) of the National Defense Authorization Act for Fiscal Year 1987 
[section 702(a)(1) of Pub. L. 99-661, set out as a note below] until the 
requirements of section 702(a)(4) of such Act (as added by subsection 
(a)) are met.
    ``(2) None of the funds appropriated or otherwise made available to 
the Department of Defense may be obligated or expended for the purpose 
of requesting a proposal for the second (or any subsequent) phase of the 
CHAMPUS reform initiative as described in section 702(c) of the National 
Defense Authorization Act for Fiscal Year 1987 until the requirements of 
paragraph (2) of section 702(c) of such Act (as added by subsection (c)) 
are met.
    ``(g) CHAMPUS Defined.--In this section, the term `CHAMPUS' has the 
meaning given such term by section 1072(4) of title 10, United States 
Code.''


                        CHAMPUS Reform Initiative

    Pub. L. 99-661, div. A, title VII, Sec. 702, Nov. 14, 1986, 100 
Stat. 3899, as amended by Pub. L. 100-180, div. A, title VII, 
Sec. 732(a), (c), Dec. 4, 1987, 101 Stat. 1119, provided that:
    ``(a) Demonstration Project.--(1) The Secretary of Defense shall 
conduct a project designed to demonstrate the feasibility of improving 
the effectiveness of the Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS) through the competitive selection of 
contractors to financially underwrite the delivery of health care 
services under the program.
    ``(2) The demonstration project required by paragraph (1)--
        ``(A) shall begin not later than September 30, 1988, and 
    continue for not less than one year;
        ``(B) shall include not more than one-third of covered 
    beneficiaries; and
        ``(C) shall include a health care enrollment system that meets 
    the requirements specified in section 1099 of title 10, United 
    States Code (as added by section 701(a)(1)).
    ``(3)(A) The Secretary shall submit to the Committees on Armed 
Services of the Senate and House of Representatives a report on the 
development of the demonstration project required by paragraph (1). Such 
report shall include--
        ``(i) a description of the scope and structure of the project;
        ``(ii) an estimate of the costs of the care to be provided under 
    the project; and
        ``(iii) a description of the health care enrollment system 
    included in the project.
    ``(B) The report required by subparagraph (A) shall be submitted--
        ``(i) not later than 60 days before the initiation of the 
    project, if the project is to be restricted to a contiguous area of 
    the United States; or
        ``(ii) not later than 60 days before a solicitation for bids or 
    proposals with respect to such project is issued, if the project 
    will not be restricted to a contiguous area of the United States.
    ``(4) The Secretary of Defense shall develop a methodology to be 
used in evaluating the results of the demonstration project required by 
paragraph (1) and shall submit to the Committees on Armed Services of 
the Senate and the House of Representatives a report on such 
methodology.
    ``(b) Study of Health Care Alternatives.--(1) The demonstration 
project required by subsection (a)(1) shall include a study of--
        ``(A) methods to guarantee the maintenance of competition among 
    providers of health care to persons under the jurisdiction of the 
    Secretary;
        ``(B) the merits of the use of a voucher system or a fee 
    schedule for provision of health care to such persons; and
        ``(C) methods to guarantee that community hospitals are given 
    equal consideration with other health care providers for provision 
    of health care services under contracts with the Department of 
    Defense.
    ``(2) The Secretary shall submit to Congress a report discussing the 
matters evaluated in the study required by paragraph (1) before the end 
of the 90-day period beginning on the date of the enactment of this Act 
[Nov. 14, 1986].
    ``(c) Phased Implementation of CHAMPUS Reform Initiative.--(1) The 
Secretary of Defense may proceed with implementation of the CHAMPUS 
reform initiative, to be carried out in two phases during a period of 
not less than two years, if--
        ``(A) the Secretary determines, based on the results of the 
    demonstration project required by subsection (a)(1), that such 
    initiative should be implemented;
        ``(B) not less than one year elapses after the date on which the 
    demonstration project required by subsection (a)(1) is initiated; 
    and
        ``(C) 90 days elapse after the date on which the Secretary 
    submits to the Committees on Armed Services of the Senate and House 
    of Representatives a report that includes--
            ``(i) a description of the results of the demonstration 
        project, evaluated in accordance with the methodology developed 
        under subsection (a)(4);
            ``(ii) a description of any changes the Secretary intends to 
        make in the initiative during the proposed implementation; and
            ``(iii) a comparison of the costs of providing health care 
        under CHAMPUS with the costs of providing health care under the 
        demonstration project and the estimated costs of providing 
        health care under the CHAMPUS reform initiative if fully 
        implemented.
    ``(2) The Secretary may not issue a request for proposals with 
respect to the second (or any subsequent) phase of the CHAMPUS reform 
initiative until--
        ``(A) all principal features of the demonstration project, 
    including networks of providers of health care, have been in 
    operation for not less than one year; and
        ``(B) the expiration of 60 days after the date on which the 
    report described in paragraph (1)(C) has been received by the 
    committees referred to in such paragraph.
    ``(d) Definitions.--In this section:
        ``(1) The term `CHAMPUS reform initiative' means 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.
        ``(2) The term `Civilian Health and Medical Program of the 
    Uniformed Services' has the meaning given such term in section 
    1072(4) of title 10, United States Code (as added by section 
    701(b)).
        ``(3) The term `covered beneficiary' has the meaning given such 
    term in section 1072(5) of title 10, United States Code (as added by 
    section 701(b)).''

                  Section Referred to in Other Sections

    This section is referred to in section 1072 of this title.
