(1) IN GENERAL.—Section 1902 of the Social 
Security Act (42 U.S.C. 1396a) is amended by add-
ing 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 Se-
curity 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 
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‘‘item or service)’’ and inserting ‘‘responsible 
third party’’; 
(C) in subparagraph (I), in the matter pre-
ceding 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 pro-
vides medical assistance under this title through 
a contract with a health insurer (including a 
group health plan, as defined in section 607(1) 
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of the Employee Retirement Income Security 
Act of 1974, a self-insured plan, a fully-insured 
plan, a service benefit plan, a managed care or-
ganization, 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 re-
sponsible 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 sub-
paragraph (E) with respect to a health insurer 
(including a group health plan, as defined in 
section 607(1) of the Employee Retirement In-
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come 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) con-
fer to the health insurer the authority of the 
State with respect to the requirements specified 
in clauses (i) through (iv) of such subpara-
graph;’’. 
(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 subpara-
graph, 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-in-
sured plans, fully-insured plans, service benefit 
plans, managed care organizations, pharmacy benefit 
managers, and any other health plan determined ap-
propriate by the Secretary) pursuant to section 
1902(a)(25)(E) shall be treated in the same manner 
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as reimbursements made to a State under the pre-
vious 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 assist-
ance under a State plan (or under a waiver of the 
plan)’’; 
(2) by striking clause (ii) and inserting the fol-
lowing 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 en-
tity 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 
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