‘‘(A) REPORT.—If a report submitted 
under paragraph (7) indicates a deficiency with 
respect to the financial reporting, performance, 
or compliance (as applicable) with respect to a 
managed care entity with a contract under sec-
tion 1903(m) with a State, not later than 30 
days after the date of submission of such report 
the State shall submit to the Secretary (and 
post on the Web site referred to in paragraph 
(7)(B)(ii)) documentation of any action that the 
State has taken or intends to take in response 
to a reported deficiency. Such documentation 
shall include documentation of any of the fol-
lowing: 
‘‘(i) Adjustments to the terms of new 
or renewed contracts with such managed 
care entity. 
‘‘(ii) A corrective action plan entered 
into by the managed care entity with such 
State. 
‘‘(iii) Any intermediate sanction under 
subsection (e) against the managed care 
entity. 
‘‘(iv) Termination of the contract with 
the managed care entity. 
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‘‘(B) OIG REPORT
TO
CONGRESS.—The 
Secretary, acting through the Inspector General 
in the Department of Health and Human Serv-
ices, shall annually submit to Congress and 
make available to the public a report on the au-
dits conducted under this subsection and the re-
sponses of States to reports of deficiencies in 
such audits. Such report shall contain such rec-
ommendations for changes in law or regulation 
as may be appropriate to ensure the prudent 
expenditure of funds for items and services fur-
nished through managed care entities. 
‘‘(9) ACCESS
TO
INFORMATION
REQUIRED 
UNDER CONTRACT; SANCTIONS FOR MISREPRESEN-
TATION OR FALSIFICATION OF RECORDS.— 
‘‘(A) ACCESS.—If a State enters into or 
renews a contract under section 1903(m) after 
the date of the enactment of the Medicaid In-
tegrity Act of 2013, such contract shall provide 
that the managed care entity, as a condition of 
receiving payment under such contract, shall 
provide the independent auditor with access to 
all information necessary for purposes of the 
audits under paragraph (4). 
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‘‘(B) SANCTIONS
FOR
MISREPRESENTA-
TION OR FALSIFICATION.—The misrepresenta-
tion or falsification of information that is fur-
nished for purposes of such an audit shall be 
subject to a civil monetary penalty under sub-
paragraph (B)(i) of section 1903(m)(5) in the 
same manner as a misrepresentation or fal-
sification described in subparagraph (A)(iv)(I) 
of such section. 
‘‘(10) APPLICATION
TO
WAIVER
STATES.—In 
the case of any State which is providing medical as-
sistance to its residents under a waiver granted 
under section 1115, the Secretary shall require the 
State to meet the requirements of this subsection 
and subsection (j) in the same manner as the State 
would be required to meet such requirement if the 
State had in effect a plan approved under this title. 
‘‘(11) REDUCING
DUPLICATE
AUDITS.—Not-
withstanding any other provision of this title, insofar 
as the Secretary determines that the performance of 
an audit under this subsection duplicates the per-
formance of an audit required under another provi-
sion of this title, the completion of the audit under 
this subsection shall satisfy such requirement. 
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‘‘(12) RESERVATION
OF
STATE
POWERS.— 
Nothing in this subsection shall be construed to limit 
the power of a State, including the power of a State 
to pursue civil and criminal penalties under State 
law against any individual or entity that misuses, or 
engages in fraud or abuse related to, the funds pro-
vided to a State under this title. 
‘‘(13) CONSTRUCTION.—Nothing in this sub-
section shall be construed to prevent the Secretary 
from taking any action, including disallowances of 
payment, with respect to violations of this title re-
lated to a contract with a managed care entity. 
‘‘(14) DEFINITIONS.— 
‘‘(A) AFFILIATE OF THE MANAGED CARE 
ENTITY.—For purposes of this subsection and 
subsection (j), the term ‘affiliate of the man-
aged care entity’ means an entity that, to a sig-
nificant extent, is associated or affiliated with, 
or has control of or is controlled by, the man-
aged care entity or that is related to such man-
aged care entity by common ownership. For 
purposes of this definition— 
‘‘(i) common ownership exists if an in-
dividual or individuals possess significant 
ownership or equity in the managed care 
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entity and the affiliate of the managed 
care entity; and 
‘‘(ii) control exists if an entity has the 
power, directly or indirectly, to signifi-
cantly influence or direct the actions or 
policies of another entity. 
‘‘(B) CONTRACT YEAR.—For purposes of 
this subsection, the term ‘contract year’ means, 
with respect to a managed care entity and a 
State, the 12-month period that begins on the 
effective date of a contract under section 
1903(m) between the managed care entity and 
the State, and each subsequent 12-month pe-
riod while such contract is effective.’’. 
(b) INDEPENDENT ACTUARY.—Section 1932 of the 
Social Security Act (42 U.S.C. 1396u–2), as amended by 
section 2, is further amended by adding at the end the 
following: 
‘‘(j) INDEPENDENT ACTUARY.—As a condition of re-
ceiving a payment under section 1903(a) with respect to 
expenditures under a contract between a State and a man-
aged care entity under section 1903(m), a State may not 
enter into an agreement with an entity (referred to in this 
subsection as an ‘actuary’) to provide actuarial services 
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related to the State’s administration of such contract un-
less the following requirements are met: 
‘‘(1) NO ACTUARIAL SERVICES OR FINANCIAL 
RELATIONSHIP FOR CONTRACT PERIOD.—The actu-
ary has not provided actuarial services to the man-
aged care entity for, or otherwise had any financial 
relationship with the managed care entity during, 
any period of the contract (between such managed 
care entity and the State) with respect to which the 
actuarial services under the agreement (between the 
actuary and the State) are to be provided. 
‘‘(2) NO
FINANCIAL
RELATIONSHIP
DURING 
TERM OF AGREEMENT WITH STATE.—The actuary 
agrees not to have such a financial relationship with 
the managed care entity or affiliate during any part 
of the period of the agreement (between the State 
and the actuary). 
‘‘(3) SPECIAL
RULE
FOR
FIRST
CONTRACT 
YEAR.—For the first contract year in which this 
subsection applies, the actuary has not had such a 
financial relationship with the managed care entity 
or affiliate during the 2-year period ending on the 
date the actuary and State enter into an agreement 
subject to this subsection.’’. 
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(c) TRANSITIONAL
FINANCIAL
INCENTIVES
TO 
STATES.—Section 1903(a)(3) of the Social Security Act 
(42 U.S.C. 1396b(a)(3)) is amended by inserting after 
subparagraph (F) the following: 
‘‘(G) 75 percent of so much of the sums 
expended as are attributable to expenditures for 
the first 3 biannual financial audits conducted 
under section 1932(i)(4)(A)(i) after the date of 
enactment of the Medicaid Integrity Act of 
2013, and for the first 2 biannual performance- 
compliance audits conducted under section 
1932(i)(4)(A)(ii) after such date; plus’’. 
Æ 
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