I 
115TH CONGRESS 
1ST SESSION H. R. 3921 
To extend funding for the Children’s Health Insurance Program, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2017 
Mr. BURGESS introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committee on 
Ways and Means, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To extend funding for the Children’s Health Insurance 
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. SHORT TITLE. 
This Act may be cited as the ‘‘Helping Ensure Access 
for Little Ones, Toddlers, and Hopeful Youth by Keeping 
Insurance Delivery Stable Act of 2017’’ or the 
‘‘HEALTHY KIDS Act’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
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Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—CHIP EXTENSION AND OTHER MEDICAID AND CHIP 
PROVISIONS 
Sec. 101. Five-year funding extension of the Children’s Health Insurance Pro-
gram. 
Sec. 102. Extension of certain programs and demonstration projects. 
Sec. 103. Extension of outreach and enrollment program. 
Sec. 104. Extension and reduction of additional Federal financial participation 
for CHIP. 
Sec. 105. Modifying reduction in Medicaid DSH allotments. 
Sec. 106. Puerto Rico Medicaid payments. 
TITLE II—OFFSETS 
Sec. 201. Medicaid third party liability. 
Sec. 202. Treatment of lottery winnings and other lump-sum income for pur-
poses of income eligibility under Medicaid. 
Sec. 203. Adjustments to Medicare part B and part D premium subsidies for 
higher income individuals. 
TITLE I—CHIP EXTENSION AND 
OTHER MEDICAID AND CHIP 
PROVISIONS 
SEC. 101. FIVE-YEAR FUNDING EXTENSION OF THE CHIL-
DREN’S HEALTH INSURANCE PROGRAM. 
(a) APPROPRIATION; TOTAL ALLOTMENT.—Section 
2104(a) of the Social Security Act (42 U.S.C. 1397dd(a)) 
is amended— 
(1) in paragraph (19), by striking ‘‘and’’; 
(2) in paragraph (20), by striking the period at 
the end and inserting a semicolon; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(21) for fiscal year 2018, $21,500,000,000; 
‘‘(22) for fiscal year 2019, $22,600,000,000; 
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‘‘(23) for fiscal year 2020, $23,700,000,000; 
‘‘(24) for fiscal year 2021, $24,800,000,000; 
and 
‘‘(25) for fiscal year 2022, for purposes of mak-
ing 2 semi-annual allotments— 
‘‘(A) $2,850,000,000 for the period begin-
ning on October 1, 2021, and ending on March 
31, 2022; and 
‘‘(B) $2,850,000,000 for the period begin-
ning on April 1, 2022, and ending on Sep-
tember 30, 2022.’’. 
(b) ALLOTMENTS.— 
(1) IN GENERAL.—Section 2104(m) of the So-
cial Security Act (42 U.S.C. 1397dd(m)) is amend-
ed— 
(A) in paragraph (2)— 
(i) 
in 
the 
heading, 
by 
striking 
‘‘THROUGH
2016’’ 
and 
inserting 
‘‘THROUGH 2022’’; and 
(ii) in subparagraph (B)— 
(I) in the matter preceding clause 
(i), by striking ‘‘(19)’’ and inserting 
‘‘(24)’’; 
(II) in clause (ii), in the matter 
preceding subclause (I), by inserting 
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‘‘(other than fiscal year 2022)’’ after 
‘‘even-numbered fiscal year’’; and 
(III) in clause (ii)(I), by inserting 
‘‘(or, in the case of fiscal year 2018, 
under paragraph (4))’’ after ‘‘clause 
(i)’’; 
(B) in paragraph (5)— 
(i) by striking ‘‘or (4)’’ and inserting 
‘‘(4), or (10)’’; and 
(ii) by striking ‘‘or 2017’’ and insert-
ing ‘‘, 2017, or 2022’’; 
(C) in paragraph (7)— 
(i) in subparagraph (A), by striking 
‘‘2017’’ and inserting ‘‘2022’’; 
(ii) in subparagraph (B), in the mat-
ter preceding clause (i), by inserting ‘‘(or, 
in the case of fiscal year 2018, by not later 
than the date that is 60 days after the 
date of the enactment of the HEALTHY 
KIDS Act of 2017)’’ after ‘‘before the Au-
gust 31 preceding the beginning of the fis-
cal year’’; and 
(iii) in the matter following subpara-
graph (B), by striking ‘‘or fiscal year 
2016’’ and inserting ‘‘fiscal year 2016, fis-
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cal year 2018, fiscal year 2020, or fiscal 
year 2022’’; 
(D) in paragraph (9)— 
(i) in the heading, by striking ‘‘FISCAL 
YEARS 2015 AND 2017’’ and inserting 
‘‘CERTAIN FISCAL YEARS’’; 
(ii) by striking ‘‘or (4)’’ and inserting 
‘‘, (4), or (10)’’; and 
(iii) by striking ‘‘or fiscal year 2017’’ 
and inserting ‘‘, 2017, or 2022’’; and 
(E) by adding at the end the following new 
paragraph: 
‘‘(10) FOR FISCAL YEAR 2022.— 
‘‘(A) FIRST HALF.—Subject to paragraphs 
(5) and (7), from the amount made available 
under subparagraph (A) of paragraph (25) of 
subsection (a) for the semi-annual period de-
scribed in such subparagraph, increased by the 
amount of the appropriation for such period 
under section 101(b)(3) of the HEALTHY 
KIDS Act, the Secretary shall compute a State 
allotment for each State (including the District 
of Columbia and each commonwealth and terri-
tory) for such semi-annual period in an amount 
equal to the first half ratio (described in sub-
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paragraph (D)) of the amount described in sub-
paragraph (C). 
‘‘(B) SECOND
HALF.—Subject to para-
graphs (5) and (7), from the amount made 
available under subparagraph (B) of paragraph 
(25) of subsection (a) for the semi-annual pe-
riod described in such subparagraph, the Sec-
retary shall compute a State allotment for each 
State (including the District of Columbia and 
each commonwealth and territory) for such 
semi-annual period in an amount equal to the 
amount made available under such subpara-
graph, multiplied by the ratio of— 
‘‘(i) the amount of the allotment to 
such State under subparagraph (A); to 
‘‘(ii) the total of the amount of all of 
the allotments made available under such 
subparagraph. 
‘‘(C) FULL
YEAR
AMOUNT
BASED
ON 
GROWTH
FACTOR
UPDATED
AMOUNT.—The 
amount described in this subparagraph for a 
State is equal to the sum of— 
‘‘(i) the amount of the State allotment 
for fiscal year 2021 determined under 
paragraph (2)(B)(i); and 
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place it appears and inserting ‘‘the allotment in-
crease factor under paragraph (6)’’. 
(3) ONE-TIME
APPROPRIATION
FOR
FISCAL 
YEAR 2022.—There is appropriated to the Secretary 
of Health and Human Services, out of any money in 
the 
Treasury 
not 
otherwise 
appropriated, 
$20,200,000,000 to accompany the allotment made 
for the period beginning on October 1, 2021, and 
ending on March 31, 2022, under paragraph 
(25)(A) of section 2104(a) of the Social Security Act 
(42 U.S.C. 1397dd(a)) (as added by subsection 
(a)(3)), to remain available until expended. Such 
amount shall be used to provide allotments to States 
under paragraph (10) of section 2104(m) of such 
Act (as added by subsection (b)(1)(E)) for the first 
6 months of fiscal year 2022 in the same manner as 
allotments are provided under subsection (a)(25)(A) 
of such section 2104 and subject to the same terms 
and conditions as apply to the allotments provided 
from such subsection (a)(25)(A). 
(c) EXTENSION OF THE CHILD ENROLLMENT CON-
TINGENCY FUND.—Section 2104(n) of the Social Security 
Act (42 U.S.C. 1397dd(n)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A)(ii)— 
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(i) by striking ‘‘2010, 2011, 2012, 
2013, 2014, and 2016’’ and inserting 
‘‘2010 through 2014, 2016, and 2018 
through 2021’’; and 
(ii) by striking ‘‘fiscal year 2015 and 
fiscal year 2017’’ and inserting ‘‘fiscal 
years 2015, 2017, and 2022’’; and 
(B) in subparagraph (B)— 
(i) by striking ‘‘2010, 2011, 2012, 
2013, 2014, and 2016’’ and inserting 
‘‘2010 through 2014, 2016, and 2018 
through 2021’’; and 
(ii) by striking ‘‘fiscal year 2015 and 
fiscal year 2017’’ and inserting ‘‘fiscal year 
2015, 2017, and 2022’’; and 
(2) in paragraph (3)(A), in the matter pre-
ceding clause (i), by striking ‘‘or a semi-annual allot-
ment period for fiscal year 2015 or 2017’’ and in-
serting ‘‘or in any of fiscal years 2018 through 2021 
(or a semi-annual allotment period for fiscal year 
2015, 2017, or 2022)’’. 
(d) EXTENSION OF QUALIFYING STATES OPTION.— 
Section 2105(g)(4) of the Social Security Act (42 U.S.C. 
1397ee(g)(4)) is amended— 
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(1) in the heading, by striking ‘‘THROUGH 
2017’’ and inserting ‘‘THROUGH 2022’’; and 
(2) in subparagraph (A), by striking ‘‘2017’’ 
and inserting ‘‘2022’’. 
(e) EXTENSION OF EXPRESS LANE ELIGIBILITY OP-
TION.—Section 1902(e)(13)(I) of the Social Security Act 
(42 U.S.C. 1396a(e)(13)(I)) is amended by striking 
‘‘2017’’ and inserting ‘‘2022’’. 
(f) ASSURANCE OF AFFORDABILITY STANDARD FOR 
CHILDREN AND FAMILIES.— 
(1) IN GENERAL.—Section 2105(d)(3) of the 
Social Security Act (42 U.S.C. 1397ee(d)(3)) is 
amended— 
(A) in the paragraph heading, by striking 
‘‘UNTIL
OCTOBER
1, 2019’’ and inserting 
‘‘THROUGH SEPTEMBER 30, 2022’’; and 
(B) in subparagraph (A), in the matter 
preceding clause (i)— 
(i) by striking ‘‘2019’’ and inserting 
‘‘2022’’; and 
(ii) by striking ‘‘The preceding sen-
tence shall not be construed as preventing 
a State during such period’’ and inserting 
‘‘During the period that begins on October 
1, 2019, and ends on September 30, 2022, 
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the preceding sentence shall only apply 
with respect to children in families whose 
income does not exceed 300 percent of the 
poverty 
line 
(as 
defined 
in 
section 
2110(c)(5)) applicable to a family of the 
size involved. The preceding sentences shall 
not be construed as preventing a State 
during any such periods’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
1902(gg)(2) of the Social Security Act (42 U.S.C. 
1396a(gg)(2)) is amended— 
(A) in the paragraph heading, by striking 
‘‘UNTIL
OCTOBER
1, 2019’’ and inserting 
‘‘THROUGH SEPTEMBER 30, 2022’’; and 
(B) by striking ‘‘September 30, 2019,’’ 
and inserting ‘‘September 30, 2022 (but during 
the period that begins on October 1, 2019, and 
ends on September 30, 2022, only with respect 
to children in families whose income does not 
exceed 300 percent of the poverty line (as de-
fined in section 2110(c)(5)) applicable to a fam-
ily of the size involved)’’. 
(g) CHIP LOOK-ALIKE PLANS.— 
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(1) BLENDING RISK POOLS.—Section 2107 of 
the Social Security Act (42 U.S.C. 1397gg) is 
amended by adding at the end the following: 
‘‘(g) USE OF BLENDED RISK POOLS.— 
‘‘(1) IN GENERAL.—Nothing in this title (or 
any other provision of Federal law) shall be con-
strued as preventing a State from considering chil-
dren enrolled in a qualified CHIP look-alike pro-
gram and children enrolled in a State child health 
plan under this title (or a waiver of such plan) as 
members of a single risk pool. 
‘‘(2) QUALIFIED CHIP LOOK-ALIKE PROGRAM.— 
In this subsection, the term ‘qualified CHIP look- 
alike program’ means a State program— 
‘‘(A) under which children who are under 
the age of 18 and are not eligible to receive 
medical assistance under title XIX or child 
health assistance under this title may purchase 
coverage through the State that provides bene-
fits that are at least identical to the benefits 
provided under the State child health plan 
under this title (or a waiver of such plan); and 
‘‘(B) that is funded exclusively through 
non-Federal funds, including funds received by 
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the State in the form of premiums for the pur-
chase of such coverage.’’. 
(2) COVERAGE RULE.— 
(A) IN GENERAL.—Section 5000A(f)(1) of 
the Internal Revenue Code of 1986 is amended 
in subparagraph (A)(iii), by inserting ‘‘or under 
a qualified CHIP look-alike program (as de-
fined in section 2107(g) of the Social Security 
Act)’’ before the comma at the end. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply with re-
spect to taxable years beginning after December 
31, 2017. 
SEC. 102. EXTENSION OF CERTAIN PROGRAMS AND DEM-
ONSTRATION PROJECTS. 
(a) 
CHILDHOOD
OBESITY
DEMONSTRATION 
PROJECT.—Section 1139A(e)(8) of the Social Security 
Act (42 U.S.C. 1320b–9a(e)(8)) is amended— 
(1) by striking ‘‘and $10,000,000’’ and insert-
ing ‘‘, $10,000,000’’; and 
(2) by inserting after ‘‘2017’’ the following: ‘‘, 
and $25,000,000 for the period of fiscal years 2018 
through 2022’’. 
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SEC. 105. MODIFYING REDUCTION IN MEDICAID DSH AL-
LOTMENTS. 
Section 1923(f)(7)(A)(ii) of the Social Security Act 
(42 U.S.C. 1396r–4(f)(7)(A)(ii)) is amended— 
(1) by striking subclause (I) and redesignating 
subclauses (II) through (VIII) as subclauses (I) 
through (VII), respectively; 
(2) in subclause (VI), as redesignated by para-
graph (1), by striking at the end ‘‘and’’; 
(3) in subclause (VII), as redesignated by para-
graph (1), by striking at the end the period and in-
serting a semicolon; and 
(4) by adding at the end the following new sub-
clauses: 
‘‘(VIII) $8,000,000,000 for fiscal 
year 2026; and 
‘‘(IX) $8,000,000,000 for fiscal 
year 2027.’’. 
SEC. 106. PUERTO RICO MEDICAID PAYMENTS. 
(a) INCREASED CAP.—Section 1108(g) of the Social 
Security Act (42 U.S.C. 1308(g)) is amended— 
(1) in paragraph (2)(A), by inserting ‘‘(or, with 
respect to fiscal years 2018 and 2019, increased by 
such percentage increase plus one percentage point)’’ 
after ‘‘beginning of the fiscal year’’; and 
(2) in paragraph (5)— 
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(A) in subparagraph (A), by striking ‘‘sub-
paragraph (B)’’ and inserting ‘‘subparagraphs 
(B), (C), (D), and (E)’’; and 
(B) by adding at the end the following new 
subparagraphs: 
‘‘(C) The amount of the increase otherwise 
provided under subparagraph (A) for Puerto 
Rico 
shall 
be 
further 
increased 
by 
$880,000,000. 
‘‘(D)(i) For the period beginning October 
1, 2017, and ending December 31, 2019, the 
amount of the increase otherwise provided 
under subparagraph (A) for Puerto Rico shall 
be further increased by $120,000,000 if the Fi-
nancial Oversight and Management Board for 
Puerto Rico established under section 101 of 
the Puerto Rico Oversight, Management, and 
Economic Stability Act (48 U.S.C. 2121) cer-
tifies by a majority vote that Puerto Rico has 
taken reasonable and appropriate steps during 
such period to— 
‘‘(I) reduce fraud, waste, and abuse 
under the program under title XIX; 
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‘‘(II) implement strategies to reduce 
unnecessary, 
inefficient, 
or 
excessive 
spending under title XIX; 
‘‘(III) improve the use and availability 
of Medicaid data for program operation 
and oversight; and 
‘‘(IV) improve the quality of care and 
patient experience for individuals enrolled 
under the program under title XIX. 
‘‘(ii) As a condition of any additional in-
crease pursuant to clause (i), not later than Oc-
tober 1, 2018, Puerto Rico shall submit to the 
Financial Oversight and Management Board for 
Puerto Rico a report regarding steps taken to 
achieve each of the goals described in sub-
clauses (I) through (IV) of clause (i). 
‘‘(E) Payments under section 1903(a)(8) 
for a quarter of a fiscal year shall not be taken 
into account in applying subsection (f) (as in-
creased in accordance with this paragraph and 
paragraphs (1), (2), (3), and (4)) to Puerto 
Rico for such fiscal year.’’. 
(b) FEDERAL MATCH
FOR MEDICAL PERSONNEL 
AND FRAUD REDUCTION.—Section 1903(a) of the Social 
Security Act (42 U.S.C. 1396b(a)) is amended— 
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(1) in paragraph (2)(A), by inserting ‘‘subject 
to paragraph (8),’’ before ‘‘an amount’’; 
(2) in paragraph (6)— 
(A) in subparagraph (B), by inserting 
‘‘subject to paragraph (8),’’ before ‘‘75 per cen-
tum’’; and 
(B) by striking at the end ‘‘plus’’; 
(3) in paragraph (7), by striking at the end the 
period and inserting ‘‘; plus’’; and 
(4) by adding at the end the following new 
paragraph: 
‘‘(8) for quarters during the period beginning 
January 1, 2018, and ending December 31, 2019, 
paragraphs (2)(A) and (6) shall apply with respect 
to Puerto Rico as if— 
‘‘(A) the reference to ‘75 per centum’ in 
paragraph (2)(A) were a reference to ‘90 per 
centum’; and 
‘‘(B) the reference to ‘75 per centum’ in 
paragraph (6)(B) were a reference to ‘90 per 
centum’.’’. 
TITLE II—OFFSETS 
SEC. 201. MEDICAID THIRD PARTY LIABILITY PROVISIONS. 
(a) MEDICAID THIRD PARTY LIABILITY.— 
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(1) DELAY
OF
BIPARTISAN
BUDGET
ACT
OF 
2013 THIRD PARTY LIABILITY PROVISIONS.— 
(A) IN GENERAL.—Section 202(c) of the 
Bipartisan Budget Act of 2013 (Public Law 
113–67; 127 Stat. 1177; 42 U.S.C. 1396a 
note), as amended by section 211 of the Pro-
tecting Access to Medicare Act of 2014 (Public 
Law 113–93; 128 Stat. 1047; 42 U.S.C. 1396a 
note) and section 220 of the Medicare Access 
and CHIP Reauthorization Act of 2015 (Public 
Law 114–10), is amended by striking ‘‘2017’’ 
and inserting ‘‘2019’’. 
(B) EFFECTIVE DATE; TREATMENT.—The 
amendment made by subparagraph (A) shall 
take effect on September 30, 2017, and shall 
apply with respect to claims generated or filed 
after such date. 
(2) CLARIFICATION OF DEFINITIONS APPLICA-
BLE TO THIRD PARTY LIABILITY.— 
(A) IN GENERAL.—Section 1902 of the So-
cial Security Act (42 U.S.C. 1396a) is amended 
by adding at the end the following new sub-
section: 
‘‘(nn) For purposes of subsection (a)(25) and section 
1903(d)(2)(B): 
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‘‘(1) The term ‘responsible third party’ means 
a health insurer, 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. Such term 
does not include a party if payment by such party 
has been made or can reasonably be expected to be 
made under a workmen’s compensation law or plan 
of the United States or a State, or under an auto-
mobile or liability insurance policy or plan (including 
a self-insured plan), or under no fault insurance. 
‘‘(2) The term ‘health insurer’ means a group 
health plan, as defined in section 607(1) of the Em-
ployee Retirement Income Security Act of 1974, a 
self-insured plan, a fully-insured plan, a service ben-
efit plan, a medicaid managed care plan under sec-
tion 1903(m) or 1932, a pharmacy benefit manager, 
and any other health plan determined appropriate by 
the Secretary.’’. 
(B) CONFORMING AMENDMENTS.—Section 
1902(a)(25) of the Social Security Act (42 
U.S.C. 1396a(a)(25)) is amended— 
(i) in subparagraph (A), in the matter 
preceding clause (i), by striking ‘‘third par-
ties’’ and all that follows through ‘‘item or 
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service)’’ and inserting ‘‘responsible third 
parties’’; 
(ii) in subparagraph (G), by striking 
‘‘health insurer’’ and all that follows 
through ‘‘item or service)’’ and inserting 
‘‘responsible third party’’; 
(iii) in subparagraph (I), in the mat-
ter preceding clause (i), by striking ‘‘health 
insurers’’ and all that follows through 
‘‘item or service’’ and inserting ‘‘respon-
sible third parties’’; and 
(iv) by inserting ‘‘responsible’’ before 
‘‘third’’ each place it appears in subpara-
graphs (A)(i), (A)(ii), (C), (D), and (H). 
(3) REMOVAL OF SPECIAL TREATMENT OF CER-
TAIN TYPES OF CARE AND PAYMENTS UNDER MED-
ICAID
THIRD
PARTY
LIABILITY
RULES.—Section 
1902(a)(25) of the Social Security Act (42 U.S.C. 
1396a(a)(25)), as amended by section 202(c) of the 
Bipartisan Budget Act of 2013 (after application of 
paragraph (1)), is amended by striking subpara-
graphs (E) and (F). 
(4) CLARIFICATION OF ROLE OF HEALTH IN-
SURERS WITH RESPECT TO THIRD PARTY LIABIL-
ITY.— 
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(A) IN GENERAL.—Section 1902(a)(25) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396a(a)(25)), as amended by paragraph (3), is 
further amended by inserting after subpara-
graph (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, 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, 
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the State shall provide assurances to the Sec-
retary that the State laws referred to in sub-
paragraph (I) confer to the health insurer the 
authority of the State with respect to the re-
quirements specified in clauses (i) through (iv) 
of such subparagraph;’’. 
(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 following: 
‘‘For purposes of this subparagraph, reimburse-
ments made by a responsible third party to 
health 
insurers 
pursuant 
to 
section 
1902(a)(25)(E) shall be treated in the same 
manner as reimbursements made to a State 
under the previous sentence.’’. 
(5) INCREASING STATE FLEXIBILITY WITH RE-
SPECT
TO
THIRD
PARTY
LIABILITY.—Section 
1902(a)(25)(I) of the Social Security Act (42 U.S.C. 
1396a(a)(25)(I)) is amended— 
(A) in clause (i), by striking ‘‘medical as-
sistance under the State plan’’ and inserting 
‘‘medical assistance under a State plan (or 
under a waiver of the plan)’’; 
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(B) by striking clause (ii) and inserting the 
following 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 
‘‘(II) as a valid authorization of 
the responsible third party for the fur-
nishing of an item or service to an in-
dividual eligible to receive medical as-
sistance under this title, an authoriza-
tion made on behalf of such individual 
under the State plan (or under a 
waiver of such plan) for the fur-
nishing of such item or service to such 
individual;’’; 
(C) in clause (iii)— 
(i) by striking ‘‘respond to’’ and in-
serting ‘‘not later than 60 days after re-
ceiving’’; and 
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(ii) by striking ‘‘; and’’ at the end and 
inserting ‘‘, respond to such inquiry; and’’; 
and 
(D) in clause (iv), by inserting ‘‘a failure 
to obtain a prior authorization,’’ after ‘‘claim 
form,’’. 
(6) STATE
INCENTIVE
TO
PURSUE
THIRD 
PARTY LIABILITY FOR NEWLY ELIGIBLES.—Section 
1903(d)(2)(B) of the Social Security Act (42 U.S.C. 
1396b(d)(2)(B)), as amended by paragraph (4)(B), 
is further amended by adding at the end the fol-
lowing: ‘‘In the case of expenditures for medical as-
sistance provided during 2017 and subsequent years 
for individuals described in subclause (VIII) of sec-
tion 1902(a)(10)(A)(i), in determining the amount, 
if any, of overpayment under this subparagraph with 
respect to such medical assistance, the Secretary 
shall apply the Federal medical assistance percent-
age for the State under section 1905(b), notwith-
standing the application of section 1905(y).’’. 
(b) COMPLIANCE WITH THIRD PARTY INSURANCE 
REPORTING.—Section 1903 of the Social Security Act (42 
U.S.C. 1396b) is amended by inserting after subsection 
(m) the following new subsection: 
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‘‘(n)(1) For any year beginning after 2020 (or a 
sooner year as provided in paragraph (2)), if a State fails 
to comply with the requirements of section 1902(a)(25) 
with respect to each calendar quarter in such year, the 
Secretary may reduce the Federal medical assistance per-
centage by 0.1 percentage point for calendar quarters in 
each subsequent year in which the State fails to so comply 
(and cumulatively for a failure to so comply for a period 
of consecutive years). 
‘‘(2) The Secretary may apply paragraph (1)— 
‘‘(A) for any year beginning after 2018, if a 
State fails to comply with the requirements of sec-
tion 1902(a)(25) with respect to payment for items 
and services furnished to individuals described in 
subclause (VIII) of section 1902(a)(10)(A)(i) or 
non-expansion individuals; and 
‘‘(B) for any year beginning after 2019, if a 
State fails to comply with the requirements of sec-
tion 1902(a)(25) with respect to payment for items 
and services furnished to individuals described in 
subdivision (i), (iii), or (iv) of section 1905(a). 
‘‘(3) For purposes of this subsection, the term ‘non- 
expansion individual’ means, with respect to a State for 
a month, an individual who is— 
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