To amend title 38, United States Code, to reform health care policy in the Department of Veterans Affairs.

Allows each veteran who is an eligible individual within the meaning of the Health Security Act (the Act) to enroll with a Department of Veterans Affairs health plan (VA health plan). Allows certain surviving spouses and children of such veterans who are not otherwise eligible for medical care under the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) to enroll with a VA health plan.

Directs the Secretary of Veterans Affairs to authorize a VA health plan to enroll family members of an enrollee, subject to all requirements of the Act concerning premiums, deductibles, copayments, and coinsurance. Continues such eligibility after the death of the veteran enrolled.

Directs the Secretary to ensure that each VA health plan provides to each enrollee the items and services provided in the comprehensive benefit package under the Act. Provides continued coverage of care and services offered under veterans' medical care and benefits provisions that are not offered under the comprehensive plan. Allows a VA health plan to offer supplemental health benefits policies for health care services not provided through the Department and cost sharing policies consistent with the requirements of the Act. Provides coverage limitations with respect to veterans enrolled with health plans outside the Department (such as those in a regional alliance area).

Prohibits the Secretary from imposing a cost-share charge of any kind for veteran enrollees who are service-disabled, discharged for a disability incurred in the line of duty, former prisoners of war, veterans of the Mexican border period or World War I, or unable to defray the expenses of necessary care. Requires the payment of premiums, copayments, deductibles, and coinsurance for all other veterans.

Provides that, for purposes of any Medicare program, a Department facility shall be deemed to be a Medicare provider and a VA health plan shall be deemed to be a Medicare HMO. Provides for the recovery from third party insurers of the cost of certain covered care and services provided through the Department.

Establishes in the Treasury the Department of Veterans Affairs Health Plan Fund, to be used to fund VA health plans under this Act. Provides for the preservation of existing benefits for facilities not operating as VA health plans.

Directs the Secretary to organize health plans and operate Department facilities as or within health plans under the Act and in conformity with requirements prescribed under the Act. Allows VA health plans or the director of a Department health care facility to enter into agreements with health care plans, insurers, and health care providers to furnish or obtain any health-care resource. Allows the Secretary to carry out any necessary Department administrative reorganizations in order to participate in the national health care plan of the Act.

Directs the Secretary of the Treasury to credit to a special fund for each of FY 1995 through 1997 specified amounts for VA health plans authorized under this Act. Directs the Secretary of Veterans Affairs to report to the Congress on the operation of the VA health plans. Authorizes the Secretary to apply for and accept grants to meet the needs of special populations with respect to such plans.

Makes eligible for nursing home care, outpatient care, and care to obviate the need for inpatient care the same veterans enrolled in a VA health plan under this Act from whom no cost-share charge is permitted.