II 

115TH CONGRESS 

1ST SESSION S. 2027 

To amend title XIX of the Social Security Act to provide clarification with 

respect to the liability of third party payers for medical assistance paid 

under the Medicaid program, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 26, 2017 

Mr. PORTMAN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend title XIX of the Social Security Act to provide 

clarification with respect to the liability of third party 

payers for medical assistance paid under the Medicaid 

program, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicaid Third Party 

5 Liability Act’’. 

6 SEC. 2. MEDICAID THIRD PARTY LIABILITY. 

7 (a) CLARIFICATION OF DEFINITIONS APPLICABLE TO

8 THIRD PARTY LIABILITY.— 


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1 (1) IN GENERAL.—Section 1902 of the Social 

2 Security Act (42 U.S.C. 1396a) is amended by add3 ing at the end the following new subsection: 

4 ‘‘(nn) For purposes of subsection (a)(25) and section 

5 1903(d)(2)(B), the term ‘responsible third party’ means 

6 a health insurer (including a group health plan, as defined 

7 in section 607(1) of the Employee Retirement Income Se8 curity Act of 1974, a self-insured plan, a fully-insured 

9 plan, a service benefit plan, a managed care organization, 

10 a pharmacy benefit manager, and any other health plan 

11 determined appropriate by the Secretary), the TRICARE 

12 program under chapter 55 of title 10, United States Code, 

13 an accountable care organization, or any other party that 

14 is, by statute, contract, or agreement, legally responsible 

15 for payment of a claim for a health care item or service.’’. 

16 (2) CONFORMING AMENDMENTS.—Section 

17 1902(a)(25) of the Social Security Act (42 U.S.C. 

18 1396a(a)(25)) is amended— 

19 (A) in subparagraph (A), in the matter 

20 preceding clause (i), by striking ‘‘third parties’’ 

21 and all that follows through ‘‘item or service)’’ 

22 and inserting ‘‘responsible third parties’’; 

23 (B) in subparagraph (G), by striking 

24 ‘‘health insurer’’ and all that follows through 


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1 ‘‘item or service)’’ and inserting ‘‘responsible 

2 third party’’; 

3 (C) in subparagraph (I), in the matter pre4 ceding clause (i), by striking ‘‘health insurers’’ 

5 and all that follows through ‘‘item or service’’ 

6 and inserting ‘‘responsible third parties’’; and 

7 (D) by inserting ‘‘responsible’’ before 

8 ‘‘third’’ each place it appears in subparagraphs 

9 (A)(i), (A)(ii), (C), (D), and (H). 

10 (b) REMOVAL OF SPECIAL TREATMENT OF CERTAIN

11 TYPES OF CARE AND PAYMENTS UNDER MEDICAID

12 THIRD PARTY LIABILITY RULES.—Section 1902(a)(25) 

13 of the Social Security Act (42 U.S.C. 1396a(a)(25)) is 

14 amended by striking subparagraphs (E) and (F). 

15 (c) CLARIFICATION OF ROLE OF HEALTH INSURERS

16 WITH RESPECT TO THIRD PARTY LIABILITY.— 

17 (1) IN GENERAL.—Section 1902(a)(25) of the 

18 Social Security Act (42 U.S.C. 1396a(a)(25)), as 

19 amended by subsection (b), is further amended by 

20 inserting after subparagraph (D) the following new 

21 subparagraphs: 

22 ‘‘(E) that, in the case of a State that pro23 vides medical assistance under this title through 

24 a contract with a health insurer (including a 

25 group health plan, as defined in section 607(1) 


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1 of the Employee Retirement Income Security 

2 Act of 1974, a self-insured plan, a fully-insured 

3 plan, a service benefit plan, a managed care or4 ganization, a pharmacy benefit manager, and 

5 any other health plan determined appropriate 

6 by the Secretary), such contract shall specify 

7 whether the State is— 

8 ‘‘(i) delegating to such insurer all or 

9 some of its right of recovery from a re10 sponsible third party for an item or service 

11 for which payment has been made under 

12 the State plan (or under a waiver of the 

13 plan); and 

14 ‘‘(ii) transferring to such insurer all 

15 or some of the assignment to the State of 

16 any right of an individual or other entity 

17 to payment from a responsible third party 

18 for an item or service for which payment 

19 has been made under the State plan (or 

20 under a waiver of the plan); 

21 ‘‘(F) that, in the case of a State that elects 

22 an option described in clause (i) or (ii) of sub23 paragraph (E) with respect to a health insurer 

24 (including a group health plan, as defined in 

25 section 607(1) of the Employee Retirement InVerDate Sep 11 2014 01:14 Oct 28, 2017 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2027.IS S2027

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1 come Security Act of 1974, a self-insured plan, 

2 a fully-insured plan, a service benefit plan, a 

3 managed care organization, a pharmacy benefit 

4 manager, and any other health plan determined 

5 appropriate by the Secretary), the State shall 

6 provide assurances to the Secretary that the 

7 State laws referred to in subparagraph (I) con8 fer to the health insurer the authority of the 

9 State with respect to the requirements specified 

10 in clauses (i) through (iv) of such subpara11 graph;’’. 

12 (2) TREATMENT OF COLLECTED AMOUNTS.— 

13 Section 1903(d)(2)(B) of the Social Security Act (42 

14 U.S.C. 1396b(d)(2)(B)) is amended by adding at the 

15 end the following: ‘‘For purposes of this subpara16 graph, reimbursements made by a responsible third 

17 party to health insurers (including group health 

18 plans, as defined in section 607(1) of the Employee 

19 Retirement Income Security Act of 1974, self-in20 sured plans, fully-insured plans, service benefit 

21 plans, managed care organizations, pharmacy benefit 

22 managers, and any other health plan determined ap23 propriate by the Secretary) pursuant to section 

24 1902(a)(25)(E) shall be treated in the same manner 


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1 as reimbursements made to a State under the pre2 vious sentence.’’. 

3 (3) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall take effect as if enacted on 

5 October 1, 2017. 

6 (d) INCREASING STATE FLEXIBILITY WITH RESPECT

7 TO THIRD PARTY LIABILITY.—Section 1902(a)(25)(I) of 

8 the Social Security Act (42 U.S.C. 1396a(a)(25)(I)) is 

9 amended— 

10 (1) in clause (i), by striking ‘‘medical assistance 

11 under the State plan’’ and inserting ‘‘medical assist12 ance under a State plan (or under a waiver of the 

13 plan)’’; 

14 (2) by striking clause (ii) and inserting the fol15 lowing new clause: 

16 ‘‘(ii) accept— 

17 ‘‘(I) any State’s right of recovery 

18 and the assignment to any State of 

19 any right of an individual or other en20 tity to payment from the party for an 

21 item or service for which payment has 

22 been made under the respective 

23 State’s plan (or under a waiver of the 

24 plan); and 


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1 ‘‘(II) as a valid authorization of 

2 the responsible third party for the fur3 nishing of an item or service to an in4 dividual eligible to receive medical as5 sistance under this title, an authoriza6 tion made on behalf of such individual 

7 under the State plan (or under a 

8 waiver of such plan) for the fur9 nishing of such item or service to such 

10 individual;’’; 

11 (3) in clause (iii)— 

12 (A) by striking ‘‘respond to’’ and inserting 

13 ‘‘not later than 60 days after receiving’’; and 

14 (B) by striking ‘‘; and’’ at the end and in15 serting ‘‘, respond to such inquiry; and’’; and 

16 (4) in clause (iv), by inserting ‘‘a failure to ob17 tain a prior authorization,’’ after ‘‘claim form,’’. 

18 (e) STATE INCENTIVE TO PURSUE THIRD PARTY LI19 ABILITY FOR NEWLY ELIGIBLES.—Section 1903(d)(2)(B) 

20 of the Social Security Act (42 U.S.C. 1396b(d)(2)(B)), as 

21 amended by subsection (c)(2), is amended by adding at 

22 the end the following: ‘‘In the case of expenditures for 

23 medical assistance provided during fiscal year 2018 and 

24 subsequent fiscal years for individuals described in sub25 clause (VIII) of section 1902(a)(10)(A)(i), in determining 


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1 the amount, if any, of overpayment under this subpara2 graph with respect to such medical assistance, the Sec3 retary shall apply the Federal medical assistance percent4 age for the State under section 1905(b), notwithstanding 

5 the application of section 1905(y).’’. 

6 SEC. 3. COMPLIANCE WITH THIRD PARTY INSURANCE RE7 PORTING. 

8 (a) IN GENERAL.—Section 1903 of the Social Secu9 rity Act (42 U.S.C. 1396b) is amended by inserting after 

10 subsection (m) the following new subsection: 

11 ‘‘(n)(1) For any fiscal year beginning after fiscal year 

12 2020 (except as provided in paragraph (2)), unless a State 

13 complies with the requirements of section 1902(a)(25) 

14 with respect to each calendar quarter in such fiscal year, 

15 the Federal medical assistance percentage shall be reduced 

16 by 0.25 percentage points for calendar quarters in each 

17 subsequent fiscal year in which the State fails to so comply 

18 (and cumulatively for a failure to so comply for a period 

19 of consecutive fiscal years). 

20 ‘‘(2) Notwithstanding paragraph (1), the reduction in 

21 the Federal medical assistance percentage shall apply— 

22 ‘‘(A) in the case of a failure of the State to 

23 comply with the requirements of section 1902(a)(25) 

24 with respect to payment for items and services fur25 nished to individuals described in subclause (VIII) of 


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1 section 1902(a)(10)(A)(i), for any fiscal year begin2 ning after fiscal year 2018; and 

3 ‘‘(B) in the case of a failure of the State to 

4 comply with the requirements of section 1902(a)(25) 

5 with respect to payment for items and services fur6 nished to individuals described in subdivision (i), 

7 (iii), or (iv) of section 1905(a), for any fiscal year 

8 beginning after fiscal year 2019.’’. 

9 (b) VERIFICATION OF INSURANCE STATUS RE10 QUIRED.—Section 1902(a)(25)(A)(i) of the Social Secu11 rity Act (42 U.S.C. 1396a(a)(25)(A)(i)) is amended by in12 serting ‘‘, including the collection of, with respect to an 

13 individual seeking to receive medical assistance under this 

14 title, information on whether the individual has health in15 surance coverage provided through a health insurer (as de16 scribed in section 1902(nn)) and the plan of such insurer 

17 in which the individual is enrolled’’ after ‘‘sufficient infor18 mation’’. 

19 SEC. 4. APPLICATION TO CHIP. 

20 (a) IN GENERAL.—Section 2107(e)(1) of the Social 

21 Security Act (42 U.S.C. 1397gg(e)(1)) is amended— 

22 (1) by redesignating subparagraphs (B) 

23 through (R) as subparagraphs (C) through (S), re24 spectively; and 


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1 (2) by inserting after subparagraph (A) the fol2 lowing new subparagraph: 

3 ‘‘(B) Section 1902(a)(25) (relating to third 

4 party liability).’’. 

5 (b) MANDATORY REPORTING.—Section 

6 1902(a)(25)(I)(i) of the Social Security Act (42 U.S.C. 

7 1396a(a)(25)(I)(i)), as amended by section 1(d), is further 

8 amended— 

9 (1) by striking ‘‘(and, at State option, child’’ 

10 and inserting ‘‘and child’’; and 

11 (2) by striking ‘‘title XXI)’’ and inserting ‘‘title 

12 XXI’’. 

13 SEC. 5. TRAINING ON THIRD PARTY LIABILITY. 

14 Section 1936 of the Social Security Act (42 U.S.C. 

15 1396u–6) is amended— 

16 (1) in subsection (b)(4), by striking ‘‘and qual17 ity of care’’ and inserting ‘‘, quality of care, and the 

18 liability of responsible third parties (as defined in 

19 section 1902(nn))’’; and 

20 (2) by adding at the end the following new sub21 section: 

22 ‘‘(f) THIRD PARTY LIABILITY TRAINING.—With re23 spect to education or training activities carried out pursu24 ant to subsection (b)(4) with respect to the liability of re25 sponsible third parties (as defined in section 1902(nn) for 


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1 payment for items and services furnished under State 

2 plans (or under waivers of such plans)) under this title, 

3 the Secretary shall— 

4 ‘‘(1) publish (and update on an annual basis) 

5 on the public Internet website of the Centers for 

6 Medicare & Medicaid Services a dedicated Internet 

7 page containing best practices to be used in assess8 ing such liability; 

9 ‘‘(2) monitor efforts to assess such liability and 

10 analyze the challenges posed by that assessment; 

11 ‘‘(3) distribute to State agencies administering 

12 the State plan under this title information related to 

13 such efforts and challenges; and 

14 ‘‘(4) provide guidance to such State agencies 

15 with respect to State oversight of efforts by medicaid 

16 managed care organizations (as defined in section 

17 1903(m)(1)) to assess such liability.’’. 

18 SEC. 6. DEVELOPMENT OF MODEL UNIFORM FIELDS FOR 

19 STATES TO REPORT THIRD PARTY INFORMA20 TION. 

21 Not later than January 1, 2018, the Secretary of 

22 Health and Human Services shall, in consultation with the 

23 States, develop and make available to the States a model 

24 uniform reporting field that States may use for purposes 

25 of reporting to the Secretary through the Transformed 


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1 Medicaid Statistical Information System (T–MSIS) (or a 

2 successor system) information identifying responsible 

3 third parties (as defined in subsection (nn) of section 1902 

4 of the Social Security Act (42 U.S.C. 1396a)) and other 

5 relevant information for ascertaining the legal responsi6 bility of such third parties to pay for care and services 

7 available under the State plan (or under a waiver of the 

8 plan) under title XIX of the Social Security Act (42 

9 U.S.C. 1396 et seq.). 

10 SEC. 7. EFFECTIVE DATE. 

11 (a) IN GENERAL.—Except as provided in subsection 

12 (b) and section 2(c)(3), this Act and the amendments 

13 made by this Act (other than as specified in the preceding 

14 provisions of this Act) shall take effect on the date of en15 actment of this Act and shall apply to medical assistance 

16 provided on or after such date. 

17 (b) EXCEPTION IF STATE LEGISLATION RE18 QUIRED.—In the case of a State plan for medical assist19 ance under title XIX of the Social Security Act that the 

20 Secretary of Health and Human Services determines re21 quires State legislation (other than legislation appro22 priating funds) in order for the plan to meet the additional 

23 requirement imposed by the amendments made under this 

24 section, the State plan shall not be regarded as failing to 

25 comply with the requirements of such title solely on the 


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1 basis of its failure to meet this additional requirement be2 fore the first day of the first calendar quarter beginning 

3 after the close of the first regular session of the State leg4 islature that begins after the date of the enactment of this 

5 Act. For purposes of the previous sentence, in the case 

6 of a State that has a 2-year legislative session, each year 

7 of such session shall be deemed to be a separate regular 

8 session of the State legislature. 

Æ 


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