I 

115TH CONGRESS 

1ST SESSION H. R. 938 

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 HOUSE OF REPRESENTATIVES 

FEBRUARY 7, 2017 

Mr. BURGESS (for himself and Mr. FLORES) introduced the following bill; 

which was referred to the Committee on Energy and Commerce 

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 22:02 Feb 16, 2017 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H938.IH H938

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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 on October 1, 

5 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 2017 and subsequent 

24 years for individuals described in subclause (VIII) of sec25 tion 1902(a)(10)(A)(i), in determining the amount, if any, 


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1 of overpayment under this subparagraph with respect to 

2 such medical assistance, the Secretary shall apply the Fed3 eral medical assistance percentage for the State under sec4 tion 1905(b), notwithstanding the application of section 

5 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 year beginning after 2020 (except 

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

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

14 to each calendar quarter in such year, the Federal medical 

15 assistance percentage shall be reduced by 1 percentage 

16 point for calendar quarters in each subsequent year in 

17 which the State fails to so comply (and cumulatively for 

18 a failure to so comply for a period of consecutive years). 

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

20 the Federal medical assistance percentage shall apply— 

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

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

23 with respect to payment for items and services fur24 nished to individuals described in subclause (VIII) of 


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1 section 1902(a)(10)(A)(i), for any year beginning 

2 after 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 year begin8 ning after 2019.’’. 

9 (b) VERIFICATION OF INSURANCE STATUS RE10 QUIRED.— 

11 (1) IN GENERAL.—Section 1902(a)(25)(A)(i) of 

12 the Social Security Act (42 U.S.C. 

13 1396a(a)(25)(A)(i)) is amended by inserting ‘‘, in14 cluding the collection of, with respect to an indi15 vidual seeking to receive medical assistance under 

16 this title, information on whether the individual has 

17 health insurance coverage provided through a health 

18 insurer (as described in section 1902(nn)) and the 

19 plan of such insurer in which the individual is en20 rolled’’ after ‘‘sufficient information’’. 

21 (2) FFP UNAVAILABLE WITHOUT INSURANCE

22 STATUS VERIFICATION.—Section 1903(i)(25) of the 

23 Social Security Act (42 U.S.C. 1396b(i)(25)) is 

24 amended— 


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1 (A) by striking ‘‘with respect to’’ and in2 serting ‘‘(A) with respect to’’; and 

3 (B) by inserting before the semicolon at 

4 the end the following: ‘‘and (B) with respect to 

5 any amounts expended for medical assistance 

6 for individuals for whom the State has not ob7 tained and verified, in accordance with section 

8 1902(a)(25)(A)(i), information on whether such 

9 an individual has health insurance coverage 

10 provided through a health insurer (as described 

11 in section 1902(nn)) and the plan of such in12 surer in which the individual is enrolled’’. 

13 SEC. 4. APPLICATION TO CHIP. 

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

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

16 (1) by redesignating subparagraphs (B) 

17 through (R) as subparagraphs (C) through (S), re18 spectively; and 

19 (2) by inserting after subparagraph (A) the fol20 lowing new subparagraph: 

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

22 party liability).’’. 

23 (b) MANDATORY REPORTING.—Section 

24 1902(a)(25)(I)(i) of the Social Security Act (42 U.S.C. 


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

2 amended— 

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

4 and inserting ‘‘and child’’; and 

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

6 XXI’’. 

7 SEC. 5. TRAINING ON THIRD PARTY LIABILITY. 

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

9 1396u–6) is amended— 

10 (1) in subsection (b)(4), by striking ‘‘and qual11 ity of care’’ and inserting ‘‘, quality of care, and the 

12 liability of responsible third parties (as defined in 

13 section 1902(nn))’’; and 

14 (2) by adding at the end the following new sub15 section: 

16 ‘‘(f) THIRD PARTY LIABILITY TRAINING.—With re17 spect to education or training activities carried out pursu18 ant to subsection (b)(4) with respect to the liability of re19 sponsible third parties (as defined in section 1902(nn) for 

20 payment for items and services furnished under State 

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

22 the Secretary shall— 

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

24 on the public Internet website of the Centers for 

25 Medicare & Medicaid Services a dedicated Internet 


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1 page containing best practices to be used in assess2 ing such liability; 

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

4 analyze the challenges posed by that assessment; 

5 ‘‘(3) distribute to State agencies administering 

6 the State plan under this title information related to 

7 such efforts and challenges; and 

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

9 with respect to State oversight of efforts by medicaid 

10 managed care organizations (as defined in section 

11 1903(m)(1)) to assess such liability.’’. 

12 SEC. 6. DEVELOPMENT OF MODEL UNIFORM FIELDS FOR 

13 STATES TO REPORT THIRD PARTY INFORMA14 TION. 

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

16 Health and Human Services shall, in consultation with the 

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

18 uniform reporting field that States may use for purposes 

19 of reporting to the Secretary within CMS Form 64 (or 

20 any successor form) information identifying responsible 

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

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

23 relevant information for ascertaining the legal responsi24 bility of such third parties to pay for care and services 

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


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

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

3 SEC. 7. EFFECTIVE DATE. 

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

5 (b), this Act and the amendments made by this Act (other 

6 than as specified in the preceding provisions of this Act) 

7 shall take effect on the date of enactment of this Act and 

8 shall apply to medical assistance provided on or after such 

9 date. 

10 (b) EXCEPTION IF STATE LEGISLATION RE11 QUIRED.—In the case of a State plan for medical assist12 ance under title XIX of the Social Security Act that the 

13 Secretary of Health and Human Services determines re14 quires State legislation (other than legislation appro15 priating funds) in order for the plan to meet the additional 

16 requirement imposed by the amendments made under this 

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

18 comply with the requirements of such title solely on the 

19 basis of its failure to meet this additional requirement be20 fore the first day of the first calendar quarter beginning 

21 after the close of the first regular session of the State leg22 islature that begins after the date of the enactment of this 

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

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


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

2 session of the State legislature. 

Æ 


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