To amend title XIX of the Social Security Act to clarify policy with respect to collecting reimbursement from third-party payers for medical assistance paid under the Medicaid program, and for other purposes.

Summary: Amends title XIX (Medicaid) of the Social Security Act (SSA) to repeal the requirement that state plans for medical assistance pay for covered prenatal or preventive pediatric care services, or other covered services provided to an individual on whose behalf a state agency is enforcing child support, without regard to a third party's liability for payment for such services, and then seek reimbursement from the third party.  Requires a state plan to require any contract with a managed care entity to specify whether the state is: (1) delegating to the entity all or some of its right of recovery for payment of an item or service, and (2) transferring to the entity all or some of the assignment to the state of any right of an individual or other entity to payment from a health insurer for an item or service. Requires any state that makes such a delegation or transfer to have in effect laws requiring such health insurers, as a condition of doing business, to: (1) provide the managed care entity certain information upon request; (2) accept the delegated right of recovery and the transferred assignment of rights; and (3) agree not to deny a claim submitted by a managed care entity, for which the state has delegated or transferred rights, in the same manner that the insurer may not deny a claim submitted by a state.     Requires the state plan of any state that contracts with a health insurer to require that any contract of the health insurer with a pharmacy benefit manager to manage benefits under the insurer's health plan shall require that the pharmacy benefit manager regularly report to the state any relevant data it obtains to assist the state in determining whether the insurer is legally responsible for paying a claim for a health care item or service available under the plan. Requires such a contract also to require the insurer to cooperate with the state Medicaid plan for the proper coordination of benefits offered in order to effectuate the principle of the Medicaid program's being the payer of last resort. Directs the Secretary of Health and Human Services (HHS) to develop and make available to the states a model uniform reporting field that states may use for reporting to the Secretary within CME Form 64 (or any successor form) information identifying third-party health insurers and other relevant information for ascertaining the legal responsibility of such third parties to pay for care and services under Medicaid. Requires the Secretary to apply the federal medical assistance percentage (FMAP) for the state in determining the amount, if any, of any overpayment with respect to Medicaid services for newly eligible individuals. Prescribes an administrative penalty for non-compliance with the additional Medicaid requirements imposed by this Act.

SECTION 1. REMOVAL OF SPECIAL TREATMENT OF CERTAIN TYPES OF CARE AND 
              PAYMENTS UNDER MEDICAID THIRD-PARTY LIABILITY RULES.

    Section 1902(a)(25) of the Social Security Act (42 U.S.C. 
1396a(a)(25)) is amended by striking subparagraphs (E) and (F).

SEC. 2. CLARIFICATION OF ROLE OF MCOS WITH RESPECT TO THIRD-PARTY 
              LIABILITY.

    (a) In General.--Section 1902(a)(25) of the Social Security Act (42 
U.S.C. 1396a(a)(25)), as amended by section 1, is further amended by 
inserting, after subparagraph (D), the following:
                    ``(E) that, if the State contracts with a managed 
                care entity pursuant to section 1932 for the purpose of 
                providing items and services under this title--
                            ``(i) such contract shall specify whether--
                                    ``(I) the State is delegating to 
                                the managed care entity all or some of 
                                its right of recovery for an item or 
                                service for which payment has been made 
                                under the State plan; and
                                    ``(II) the State is transferring to 
                                the managed care entity all or some of 
                                the assignment to the State of any 
                                right of an individual or other entity 
                                to payment from a health insurer 
                                (including self-insured plans, group 
                                health plans (as defined in section 
                                607(1) of the Employee Retirement 
                                Income Security Act of 1974), service 
                                benefit plans, managed care 
                                organizations, pharmacy benefit 
                                managers, or other parties that are, by 
                                statute, contract, or agreement, 
                                legally responsible for payment of a 
                                claim for a health care item or 
                                service) for an item or service for 
                                which payment has been made under the 
                                State plan; and
                            ``(ii) if the State delegates its rights 
                        under clause (i)(I) or transfers assignment of 
                        rights under clause (i)(II), the State shall 
                        have in effect laws requiring such health 
                        insurers, as a condition of doing business in 
                        the State--
                                    ``(I) to provide to such managed 
                                care entity, upon the request of such 
                                entity, the information described in 
                                subparagraph (I)(i);
                                    ``(II) if a right of recovery was 
                                delegated under clause (i)(I), accept 
                                the authority of the managed care 
                                entity to exercise such right;
                                    ``(III) if an assignment of rights 
                                was transferred under clause (i)(II), 
                                accept such transfer of assignment of 
                                rights;
                                    ``(IV) respond to an inquiry made 
                                by such entity in the same manner that 
                                the insurer would respond to an inquiry 
                                by a State under subparagraph (I)(iii); 
                                and
                                    ``(V) agree not to deny a claim 
                                submitted by a managed care entity for 
                                which the State has delegated or 
                                transferred rights under clause (i) in 
                                the same manner that the insurer may 
                                not deny a claim submitted by a State 
                                under subparagraph (I)(iv);''.
    (b) Treatment of Collected Amounts.--Section 1903(d)(2)(B) of the 
Social Security Act (42 U.S.C. 1396b(d)(2)(B)) is amended by adding at 
the end the following: ``For purposes of this subparagraph, 
reimbursements made by a third party to managed care entities pursuant 
to section 1902(a)(25)(E) shall be treated in the same manner as 
reimbursements made to a State under the previous sentence.''.

SEC. 3. REQUIRING COORDINATION OF BENEFICIARY INFORMATION WITH RESPECT 
              TO THIRD-PARTY LIABILITY.

    Section 1902(a)(25) of the Social Security Act (42 U.S.C. 
1396a(a)(25)), as amended by section 2, is further amended by 
inserting, after subparagraph (E), the following:
                    ``(F) that, if the State contracts with a health 
                insurer (as defined for purposes of subparagraph (E)) 
                for the purposes of providing items and services under 
                this title such contract shall require that--
                            ``(i) if such insurer contracts with a 
                        pharmacy benefit manager to manage benefits 
                        under the health plan offered by such insurer, 
                        such contract shall require that the pharmacy 
                        benefit manager regularly report to the State 
                        (or, as applicable, to an authorized contractor 
                        or agent of the State) any data obtained by the 
                        pharmacy benefit manager that is relevant, as 
                        determined by the State, to assisting the State 
                        in determining whether such a health insurer 
                        is, by statute, contract, or agreement, legally 
                        responsible for payment of a claim for a health 
                        care item or service available under the plan; 
                        and
                            ``(ii) such insurer cooperates (including 
                        by granting requests of the State for 
                        information, or for permission to utilize 
                        information, that is relevant to determining 
                        whether such a health insurer is, by statute, 
                        contract, or agreement, legally responsible for 
                        payment of a claim for a health care item or 
                        service available under the plan, regardless of 
                        the State in which the insurer is licensed) 
                        with the State Medicaid plan (including any 
                        State Medicaid agency or authorized agent or 
                        contractor of such program or entity) for the 
                        proper coordination of benefits offered through 
                        the plan of such insurer and medical assistance 
                        under the State plan to effectuate the 
                        principle of the program under this title being 
                        the payer of last resort;''.

SEC. 4. DEVELOPMENT OF MODEL UNIFORM FIELDS FOR STATES TO REPORT THIRD-
              PARTY INFORMATION.

    Not later than January 1, 2015, the Secretary of Health and Human 
Services shall, in consultation with the States, develop and make 
available to the States a model uniform reporting field that States may 
use for purposes of reporting to the Secretary within CMS Form 64 (or 
any successor form) information identifying third-party health insurers 
(including self-insured plans, group health plans (as defined in 
section 607(1) of the Employee Retirement Income Security Act of 1974), 
service benefit plans, managed care organizations, pharmacy benefit 
managers, or other parties that are, by statute, contract, or 
agreement, legally responsible for payment of a claim for a health care 
item or service) and other relevant information for ascertaining the 
legal responsibility of such third parties to pay for care and services 
available under the State plan under title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.).

SEC. 5. STATE INCENTIVE TO PURSUE THIRD-PARTY LIABILITY FOR NEWLY 
              ELIGIBLES.

    Section 1903(d)(2)(B) of the Social Security Act (42 U.S.C. 
1396b(d)(2)(B)), as amended by section 2, is amended by adding at the 
end the following: ``In the case of expenditures for medical assistance 
provided during 2014 and subsequent years for newly eligible 
individuals (as such term is defined in section 1905(y)) described in 
subclause (VIII) of section 1902(a)(10)(A)(i), in determining the 
amount, if any, of overpayment under this subparagraph with respect to 
such services, the Secretary shall apply the Federal medical assistance 
percentage for the State under section 1905(b), notwithstanding the 
application of section 1905(y).''.

SEC. 6. PENALTY FOR NON-COMPLIANCE.

    Subject to section 6(b), for any fiscal year beginning on or after 
the date that is 1 year after the effective date under section 6, in 
the case of a State that fails to comply with the additional 
requirements for the State plan for medical assistance under title XIX 
of the Social Security Act that are imposed by the amendments made by 
this Act, the Secretary of Health and Human Services shall reduce the 
Federal medical assistance percentage (as defined in section 1905(b) of 
the Social Security Act (42 U.S.C. 1396d(b)) for such State by a 
percentage point for such fiscal year during which such requirements 
are not met. To the extent that a State fails to comply with such 
additional requirements for consecutive fiscal years, the reductions 
under the previous sentence shall be cumulative for each such 
subsequent fiscal year.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this Act 
(other than section 4) and the amendments made by this Act shall take 
effect on the date of enactment of this Act and shall apply to medical 
assistance provided on or after such date.
    (b) Exception if State Legislation Required.--In the case of a 
State plan for medical assistance under title XIX of the Social 
Security Act that the Secretary of Health and Human Services determines 
requires State legislation (other than legislation appropriating funds) 
in order for the plan to meet the additional requirement imposed by the 
amendments made under this section, the State plan shall not be 
regarded as failing to comply with the requirements of such title 
solely on the basis of its failure to meet this additional requirement 
before the first day of the first calendar quarter beginning after the 
close of the first regular session of the State legislature that begins 
after the date of the enactment of this Act. For purposes of the 
previous sentence, in the case of a State that has a 2-year legislative 
session, each year of such session shall be deemed to be a separate 
regular session of the State legislature.