I 
113TH CONGRESS 
1ST SESSION H. R. 3659 
To amend title XIX of the Social Security Act to clarify policy with respect 
to collecting reimbursement from third-party payers for medical assist-
ance paid under the Medicaid program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 5, 2013 
Mr. BURGESS 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 clarify 
policy with respect to collecting reimbursement from 
third-party payers for medical assistance paid under the 
Medicaid program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. REMOVAL OF SPECIAL TREATMENT OF CER-
TAIN 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 subpara-
graphs (E) and (F). 
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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 subpara-
graph (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 wheth-
er— 
‘‘(I) the State is delegating to the 
managed care entity all or some of its 
right of recovery for an item or serv-
ice 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 (in-
cluding 
self-insured 
plans, 
group 
health plans (as defined in section 
607(1) of the Employee Retirement 
Income Security Act of 1974), service 
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benefit plans, managed care organiza-
tions, pharmacy benefit managers, or 
other parties that are, by statute, con-
tract, or agreement, legally respon-
sible 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 en-
tity to exercise such right; 
‘‘(III) if an assignment of rights 
was transferred under clause (i)(II), 
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accept such transfer of assignment of 
rights; 
‘‘(IV) respond to an inquiry 
made by such entity in the same man-
ner that the insurer would respond to 
an inquiry by a State under subpara-
graph (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 fol-
lowing: ‘‘For purposes of this subparagraph, reimburse-
ments made by a third party to managed care entities pur-
suant to section 1902(a)(25)(E) shall be treated in the 
same manner as reimbursements made to a State under 
the previous sentence.’’. 
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SEC. 3. REQUIRING COORDINATION OF BENEFICIARY IN-
FORMATION 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 fol-
lowing: 
‘‘(F) that, if the State contracts with a 
health insurer (as defined for purposes of sub-
paragraph (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 ben-
efits 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 deter-
mined by the State, to assisting the State 
in determining whether such a health in-
surer is, by statute, contract, or agree-
ment, legally responsible for payment of a 
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claim for a health care item or service 
available under the plan; and 
‘‘(ii) such insurer cooperates (includ-
ing by granting requests of the State for 
information, or for permission to utilize in-
formation, that is relevant to determining 
whether such a health insurer is, by stat-
ute, contract, or agreement, legally respon-
sible 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 coordina-
tion 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 INFORMA-
TION. 
Not later than January 1, 2015, the Secretary of 
Health and Human Services shall, in consultation with the 
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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 Re-
tirement 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 infor-
mation 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 LI-
ABILITY 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 deter-
mining the amount, if any, of overpayment under this sub-
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paragraph with respect to such services, the Secretary 
shall apply the Federal medical assistance percentage for 
the State under section 1905(b), notwithstanding the ap-
plication 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 de-
fined 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 
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of this Act and shall apply to medical assistance provided 
on or after such date. 
(b) EXCEPTION
IF
STATE
LEGISLATION
RE-
QUIRED.—In the case of a State plan for medical assist-
ance under title XIX of the Social Security Act that the 
Secretary of Health and Human Services determines re-
quires State legislation (other than legislation appro-
priating 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 be-
fore the first day of the first calendar quarter beginning 
after the close of the first regular session of the State leg-
islature 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. 
Æ 
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