SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Third Party Liability 
Act''.

SEC. 2. MEDICAID THIRD PARTY LIABILITY.

    (a) Clarification of Definitions Applicable to Third Party 
Liability.--
            (1) In general.--Section 1902 of the Social Security Act 
        (42 U.S.C. 1396a) is amended by adding at the end the following 
        new subsection:
    ``(nn) For purposes of subsection (a)(25) and section 
1903(d)(2)(B), the term `responsible third party' means a health 
insurer (including a group health plan, as defined in section 607(1) of 
the Employee Retirement Income Security Act of 1974, a self-insured 
plan, a fully-insured plan, a service benefit plan, a managed care 
organization, a pharmacy benefit manager, and any other health plan 
determined appropriate by the Secretary), the TRICARE program under 
chapter 55 of title 10, United States Code, an accountable care 
organization, or any other party that is, by statute, contract, or 
agreement, legally responsible for payment of a claim for a health care 
item or service.''.
            (2) Conforming amendments.--Section 1902(a)(25) of the 
        Social Security Act (42 U.S.C. 1396a(a)(25)) is amended--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``third parties'' and all that 
                follows through ``item or service)'' and inserting 
                ``responsible third parties'';
                    (B) in subparagraph (G), by striking ``health 
                insurer'' and all that follows through ``item or 
                service)'' and inserting ``responsible third party'';
                    (C) in subparagraph (I), in the matter preceding 
                clause (i), by striking ``health insurers'' and all 
                that follows through ``item or service'' and inserting 
                ``responsible third parties''; and
                    (D) by inserting ``responsible'' before ``third'' 
                each place it appears in subparagraphs (A)(i), (A)(ii), 
                (C), (D), and (H).
    (b) 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).
    (c) Clarification of Role of Health Insurers With Respect to Third 
Party Liability.--
            (1) In general.--Section 1902(a)(25) of the Social Security 
        Act (42 U.S.C. 1396a(a)(25)), as amended by subsection (b), is 
        further amended by inserting after subparagraph (D) the 
        following new subparagraphs:
                    ``(E) that, in the case of a State that provides 
                medical assistance under this title through a contract 
                with a health insurer (including a group health plan, 
                as defined in section 607(1) of the Employee Retirement 
                Income Security Act of 1974, a self-insured plan, a 
                fully-insured plan, a service benefit plan, a managed 
                care organization, a pharmacy benefit manager, and any 
                other health plan determined appropriate by the 
                Secretary), such contract shall specify whether the 
                State is--
                            ``(i) delegating to such insurer all or 
                        some of its right of recovery from a 
                        responsible third party for an item or service 
                        for which payment has been made under the State 
                        plan (or under a waiver of the plan); and
                            ``(ii) transferring to such insurer all or 
                        some of the assignment to the State of any 
                        right of an individual or other entity to 
                        payment from a responsible third party for an 
                        item or service for which payment has been made 
                        under the State plan (or under a waiver of the 
                        plan);
                    ``(F) that, in the case of a State that elects an 
                option described in clause (i) or (ii) of subparagraph 
                (E) with respect to a health insurer (including a group 
                health plan, as defined in section 607(1) of the 
                Employee Retirement Income Security Act of 1974, a 
                self-insured plan, a fully-insured plan, a service 
                benefit plan, a managed care organization, a pharmacy 
                benefit manager, and any other health plan determined 
                appropriate by the Secretary), the State shall provide 
                assurances to the Secretary that the State laws 
                referred to in subparagraph (I) confer to the health 
                insurer the authority of the State with respect to the 
                requirements specified in clauses (i) through (iv) of 
                such subparagraph;''.
            (2) 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 responsible third 
        party to health insurers (including group health plans, as 
        defined in section 607(1) of the Employee Retirement Income 
        Security Act of 1974, self-insured plans, fully-insured plans, 
        service benefit plans, managed care organizations, pharmacy 
        benefit managers, and any other health plan determined 
        appropriate by the Secretary) pursuant to section 
        1902(a)(25)(E) shall be treated in the same manner as 
        reimbursements made to a State under the previous sentence.''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on October 1, 2017.
    (d) Increasing State Flexibility With Respect to Third Party 
Liability.--Section 1902(a)(25)(I) of the Social Security Act (42 
U.S.C. 1396a(a)(25)(I)) is amended--
            (1) in clause (i), by striking ``medical assistance under 
        the State plan'' and inserting ``medical assistance under a 
        State plan (or under a waiver of the plan)'';
            (2) by striking clause (ii) and inserting the following new 
        clause:
                            ``(ii) accept--
                                    ``(I) any State's right of recovery 
                                and the assignment to any State of any 
                                right of an individual or other entity 
                                to payment from the party for an item 
                                or service for which payment has been 
                                made under the respective State's plan 
                                (or under a waiver of the plan); and
                                    ``(II) as a valid authorization of 
                                the responsible third party for the 
                                furnishing of an item or service to an 
                                individual eligible to receive medical 
                                assistance under this title, an 
                                authorization made on behalf of such 
                                individual under the State plan (or 
                                under a waiver of such plan) for the 
                                furnishing of such item or service to 
                                such individual;'';
            (3) in clause (iii)--
                    (A) by striking ``respond to'' and inserting ``not 
                later than 60 days after receiving''; and
                    (B) by striking ``; and'' at the end and inserting 
                ``, respond to such inquiry; and''; and
            (4) in clause (iv), by inserting ``a failure to obtain a 
        prior authorization,'' after ``claim form,''.
    (e) 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 subsection (c)(2), is amended by adding 
at the end the following: ``In the case of expenditures for medical 
assistance provided during 2017 and subsequent years for individuals 
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 medical assistance, the Secretary shall apply the 
Federal medical assistance percentage for the State under section 
1905(b), notwithstanding the application of section 1905(y).''.

SEC. 3. COMPLIANCE WITH THIRD PARTY INSURANCE REPORTING.

    (a) In General.--Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended by inserting after subsection (m) the following new 
subsection:
    ``(n)(1) For any year beginning after 2020 (except as provided in 
paragraph (2)), unless a State complies with the requirements of 
section 1902(a)(25) with respect to each calendar quarter in such year, 
the Federal medical assistance percentage shall be reduced by 1 
percentage point for calendar quarters in each subsequent year in which 
the State fails to so comply (and cumulatively for a failure to so 
comply for a period of consecutive years).
    ``(2) Notwithstanding paragraph (1), the reduction in the Federal 
medical assistance percentage shall apply--
            ``(A) in the case of a failure of the State to comply with 
        the requirements of section 1902(a)(25) with respect to payment 
        for items and services furnished to individuals described in 
        subclause (VIII) of section 1902(a)(10)(A)(i), for any year 
        beginning after 2018; and
            ``(B) in the case of a failure of the State to comply with 
        the requirements of section 1902(a)(25) with respect to payment 
        for items and services furnished to individuals described in 
        subdivision (i), (iii), or (iv) of section 1905(a), for any 
        year beginning after 2019.''.
    (b) Verification of Insurance Status Required.--
            (1) In general.--Section 1902(a)(25)(A)(i) of the Social 
        Security Act (42 U.S.C. 1396a(a)(25)(A)(i)) is amended by 
        inserting ``, including the collection of, with respect to an 
        individual seeking to receive medical assistance under this 
        title, information on whether the individual has health 
        insurance coverage provided through a health insurer (as 
        described in section 1902(nn)) and the plan of such insurer in 
        which the individual is enrolled'' after ``sufficient 
        information''.
            (2) FFP unavailable without insurance status 
        verification.--Section 1903(i)(25) of the Social Security Act 
        (42 U.S.C. 1396b(i)(25)) is amended--
                    (A) by striking ``with respect to'' and inserting 
                ``(A) with respect to''; and
                    (B) by inserting before the semicolon at the end 
                the following: ``and (B) with respect to any amounts 
                expended for medical assistance for individuals for 
                whom the State has not obtained and verified, in 
                accordance with section 1902(a)(25)(A)(i), information 
                on whether such an individual has health insurance 
                coverage provided through a health insurer (as 
                described in section 1902(nn)) and the plan of such 
                insurer in which the individual is enrolled''.

SEC. 4. APPLICATION TO CHIP.

    (a) In General.--Section 2107(e)(1) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)) is amended--
            (1) by redesignating subparagraphs (B) through (R) as 
        subparagraphs (C) through (S), respectively; and
            (2) by inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) Section 1902(a)(25) (relating to third party 
                liability).''.
    (b) Mandatory Reporting.--Section 1902(a)(25)(I)(i) of the Social 
Security Act (42 U.S.C. 1396a(a)(25)(I)(i)), as amended by section 
1(d), is further amended--
            (1) by striking ``(and, at State option, child'' and 
        inserting ``and child''; and
            (2) by striking ``title XXI)'' and inserting ``title XXI''.

SEC. 5. TRAINING ON THIRD PARTY LIABILITY.

    Section 1936 of the Social Security Act (42 U.S.C. 1396u-6) is 
amended--
            (1) in subsection (b)(4), by striking ``and quality of 
        care'' and inserting ``, quality of care, and the liability of 
        responsible third parties (as defined in section 1902(nn))''; 
        and
            (2) by adding at the end the following new subsection:
    ``(f) Third Party Liability Training.--With respect to education or 
training activities carried out pursuant to subsection (b)(4) with 
respect to the liability of responsible third parties (as defined in 
section 1902(nn) for payment for items and services furnished under 
State plans (or under waivers of such plans)) under this title, the 
Secretary shall--
            ``(1) publish (and update on an annual basis) on the public 
        Internet website of the Centers for Medicare & Medicaid 
        Services a dedicated Internet page containing best practices to 
        be used in assessing such liability;
            ``(2) monitor efforts to assess such liability and analyze 
        the challenges posed by that assessment;
            ``(3) distribute to State agencies administering the State 
        plan under this title information related to such efforts and 
        challenges; and
            ``(4) provide guidance to such State agencies with respect 
        to State oversight of efforts by medicaid managed care 
        organizations (as defined in section 1903(m)(1)) to assess such 
        liability.''.

SEC. 6. DEVELOPMENT OF MODEL UNIFORM FIELDS FOR STATES TO REPORT THIRD 
              PARTY INFORMATION.

    Not later than January 1, 2018, 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 responsible third parties 
(as defined in subsection (nn) of section 1902 of the Social Security 
Act (42 U.S.C. 1396a)) and other relevant information for ascertaining 
the legal responsibility of such third parties to pay for care and 
services available under the State plan (or under a waiver of the plan) 
under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

SEC. 7. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this Act and 
the amendments made by this Act (other than as specified in the 
preceding provisions of 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.
Medicaid Third Party Liability Act This bill alters provisions related to third-party liability for medical assistance paid under the Medicaid program. Specifically, with respect to such liability, the bill:  expands the&nbsp;definition of "responsible third party"&nbsp;to include, among other health insurers,&nbsp;the TRICARE program;  eliminates special rules with respect to certain services provided to children;  requires the inclusion, in a contract between a state Medicaid program and a health insurer, of&nbsp;certain information regarding whether the state is delegating or transferring to the&nbsp;insurer a right of&nbsp;third-party recovery;&nbsp;  provides for the treatment as overpayment of reimbursements made by a responsible third party to a health insurer;  disallows a responsible third party from denying a state's claim solely on the basis of a failure to obtain a prior authorization;&nbsp;  imposes a timeline for a responsible third party to respond to a state's inquiry regarding a claim for payment;  provides for reductions to a state Medicaid program's federal matching rate&nbsp;if the state&nbsp;fails to comply with third-party insurance requirements; and  modifies other provisions related to third-party liability under the Medicaid program. Third-party liability requirements applicable&nbsp;under Medicaid&nbsp;shall also apply&nbsp;under the Children's Health Insurance Program (CHIP). The Centers for Medicare &amp; Medicaid Services&nbsp;must:  publish on its website, and annually update, best practices for assessing third-party liability;  monitor and analyze efforts to assess that liability;  in consultation with states, develop and make available a model uniform reporting field for identifying information related to responsible third parties; and  provide other specified information and guidance to states.
Medicaid Third Party Liability Act