SECTION 1. DEMONSTRATION PROJECT FOR MEDICARE REIMBURSEMENT OF 
              DEPARTMENT OF VETERANS AFFAIRS FOR HEALTH CARE PROVIDED 
              TO CERTAIN MEDICARE-ELIGIBLE VETERANS.

    (a) In General.--Notwithstanding any other provision of law and 
subject to subsection (b), the Secretary of Veterans Affairs and the 
Secretary of Health and Human Services shall enter into an agreement in 
order to carry out a demonstration project under which the Secretary of 
Health and Human Services reimburses the Secretary of Veterans Affairs, 
on a capitated basis, from the Medicare program under title XVIII of 
the Social Security Act (42 U.S.C. 1395 et seq.) for health care 
services provided by the Secretary of Veterans Affairs to covered 
veterans.
    (b) Project Requirements.--(1)(A) The Secretary of Veterans Affairs 
shall carry out the demonstration project in not less than two or more 
than four Veterans Integrated Service Networks.
    (B) For purposes of the demonstration project, the health care 
facilities of the Department of Veterans Affairs in each Veterans 
Integrated Service Network in which the Secretary carries out the 
demonstration project shall be deemed to meet such standards as are 
applicable to providers of services under the Medicare program under 
title XVIII of the Social Security Act.
    (2)(A) The Secretary of Veterans Affairs shall budget for and 
expend on health care services in each Veterans Integrated Service 
Network in which the demonstration project is carried out an amount 
equal to the amount that the Secretary would otherwise budget for and 
expend on such services in the absence of the project.
    (B) The Secretary may not be reimbursed under the project for 
health care services provided to covered veterans in a Veterans 
Integrated Service Network until the amount expended by the Secretary 
to provide health care services in that network exceeds the amount 
budgeted for health care services with respect to that network under 
subparagraph (A).
    (3) The agreement between the Secretary of Veterans Affairs and the 
Secretary of Health and Human Services shall provide that the cost to 
the Medicare program of providing services under the project does not 
exceed the cost that the Medicare program would otherwise incur in 
providing such services.
    (4) The authority of the Secretary of Veterans Affairs to carry out 
the project shall expire 3 years after the date of the commencement of 
the project.
    (c) Reports.--Not later than 14 months after the commencement of 
the demonstration project under subsection (a), and annually thereafter 
until the year following the year in which the project is terminated, 
the Secretary of Veterans Affairs and the Secretary of Health and Human 
Services shall jointly submit to Congress a report on the demonstration 
project. The report shall include the following:
            (1) The number of covered veterans provided health care 
        services under the project during the previous year.
            (2) An assessment of the benefits to such veterans of 
        receiving health care services under the project.
            (3) A description of the cost shifting, if any, among 
        medical care programs of the Department of Veterans Affairs 
        that results from the project.
            (4) A description of the cost shifting, if any, from the 
        Department to the Medicare program that results from the 
        project.
            (5) An analysis of the effect of the project on the 
        following:
                    (A) Access to the health care facilities of the 
                Department.
                    (B) The availability of space and facilities and 
                the capabilities of medical staff to provide fee-for-
                service medical care.
                    (C) Established priorities for treatment of 
                veterans under chapter 17 of title 38, United States 
                Code.
                    (D) The cost to the Department of providing 
                prescription drugs to veterans.
                    (E) The quality of health care provided by the 
                Department.
                    (F) Health care providers and covered veterans in 
                the communities in which the project is carried out.
            (6) An assessment of the effects of continuing the project 
        on--
                    (A) the overall budget of the Department for health 
                care; and
                    (B) the budget of each Veterans Integrated Service 
                Network covered by the project.
            (7) An assessment of the effects of continuing the project 
        on expenditures from the Medicare trust funds under title XVIII 
        of the Social Security Act.
            (8) An analysis of the lessons learned by the Department as 
        a result of the project.
            (9) Any other information that the Secretary of Veterans 
        Affairs and the Secretary of Health and Human Services jointly 
        consider appropriate.
    (d) Review by Comptroller General.--Not later than December 31 of 
each year in which the demonstration project is carried out under this 
section, the Comptroller General shall determine and submit to Congress 
a report on the extent, if any, to which the costs of the Secretary of 
Veterans Affairs under title 38, United States Code, and the costs of 
the Secretary of Health and Human Services under the Medicare program 
have increased as a result of the project.
    (e) Definition.--In this section, the term ``covered veterans'' 
means any veteran entitled to benefits under part A of title XVIII of 
the Social Security Act who is eligible for health care under chapter 
17 of title 38, United States Code, for a reason other than a service-
connected disability.
Directs the Secretaries of Veterans Affairs and Health and Human Services to conduct and report to the Congress on a demonstration project providing for Medicare (title XVIII of the Social Security Act) reimbursement for health care services provided by the Department of Veterans Affairs to Medicare-eligible veterans.
A bill to require the Secretary of Veterans Affairs and the Secretary of Health and Human Resources to carry out a demonstration project to provide the Department of Veterans Affairs with reimbursement from the medicare program for health care services provided to certain medicare-eligible veterans.