II 115th CONGRESS 1st Session S. 2027 IN THE SENATE OF THE UNITED STATES October 26, 2017 Mr. Portman introduced the following bill; which was read twice and referred to the Committee on Finance 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. Short title This Act may be cited as the Medicaid Third Party Liability Act . 2. Medicaid third party liability (a) Clarification of definitions applicable to third party liability (1) In general Section 1902 of the Social Security Act ( 42 U.S.C. 1396a ) is amended by adding 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 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 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 item or service) and inserting responsible third party ; (C) in subparagraph (I), in the matter preceding 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 provides medical assistance under this title through a contract with a health insurer (including a group health plan, as defined in section 607(1) of the Employee Retirement Income 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), such contract shall specify whether the State is— (i) delegating to such insurer all or some of its right of recovery 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); 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 subparagraph (E) with respect to a health insurer (including a group health plan, as defined in section 607(1) of the Employee Retirement Income 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) confer to the health insurer the authority of the State with respect to the requirements specified in clauses (i) through (iv) of such subparagraph; . (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 subparagraph, 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-insured plans, fully-insured plans, service benefit plans, managed care organizations, pharmacy benefit managers, and any other health plan determined appropriate by the Secretary) pursuant to section 1902(a)(25)(E) shall be treated in the same manner as reimbursements made to a State under the previous sentence. . (3) Effective date The amendments made by this subsection shall take effect as if enacted 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 assistance under a State plan (or under a waiver of the plan) ; (2) 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 entity 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 furnishing of an item or service to an individual eligible to receive medical assistance under this title, an authorization made on behalf of such individual under the State plan (or under a waiver of such plan) for the furnishing of such item or service to such individual; ; (3) in clause (iii)— (A) by striking respond to and inserting not later than 60 days after receiving ; and (B) by striking ; and at the end and inserting , respond to such inquiry; and ; and (4) in clause (iv), by inserting a failure to obtain a prior authorization, after claim form, . (e) 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 subsection (c)(2), is amended by adding at the end the following: In the case of expenditures for medical assistance provided during fiscal year 2018 and subsequent fiscal years for individuals described in subclause (VIII) of section 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 percentage for the State under section 1905(b), notwithstanding the application of section 1905(y). . 3. Compliance with third party insurance reporting (a) In general Section 1903 of the Social Security Act ( 42 U.S.C. 1396b ) is amended by inserting after subsection (m) the following new subsection: (n) (1) For any fiscal year beginning after fiscal year 2020 (except as provided in paragraph (2)), unless a State complies with the requirements of section 1902(a)(25) with respect to each calendar quarter in such fiscal year, the Federal medical assistance percentage shall be reduced by 0.25 percentage points for calendar quarters in each subsequent fiscal year in which the State fails to so comply (and cumulatively for a failure to so comply for a period of consecutive fiscal years). (2) Notwithstanding paragraph (1), the reduction in the Federal medical assistance percentage shall apply— (A) in the case of a failure of the State to comply with the requirements of section 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), for any fiscal year beginning after fiscal year 2018; and (B) in the case of a failure of the State to comply with the requirements of section 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), for any fiscal year beginning after fiscal year 2019. . (b) Verification of insurance status required Section 1902(a)(25)(A)(i) of the Social Security Act ( 42 U.S.C. 1396a(a)(25)(A)(i) ) is amended by inserting , including the collection of, with respect to an individual seeking to receive medical assistance under this title, information on whether the individual has health insurance coverage provided through a health insurer (as described in section 1902(nn)) and the plan of such insurer in which the individual is enrolled after sufficient information . 4. Application to CHIP (a) In general Section 2107(e)(1) of the Social Security Act ( 42 U.S.C. 1397gg(e)(1) ) is amended— (1) by redesignating subparagraphs (B) through (R) as subparagraphs (C) through (S), respectively; and (2) by inserting after subparagraph (A) the following new subparagraph: (B) Section 1902(a)(25) (relating to third party liability). . (b) Mandatory reporting Section 1902(a)(25)(I)(i) of the Social Security Act ( 42 U.S.C. 1396a(a)(25)(I)(i) ), as amended by section 1(d), is further amended— (1) by striking (and, at State option, child and inserting and child ; and (2) by striking title XXI) and inserting title XXI . 5. Training on third party liability Section 1936 of the Social Security Act ( 42 U.S.C. 1396u–6 ) is amended— (1) in subsection (b)(4), by striking and quality of care and inserting , quality of care, and the liability of responsible third parties (as defined in section 1902(nn)) ; and (2) by adding at the end the following new subsection: (f) Third party liability training With respect to education or training activities carried out pursuant to subsection (b)(4) with respect to the liability of responsible third parties (as defined in section 1902(nn) for payment for items and services furnished under State plans (or under waivers of such plans)) under this title, the Secretary shall— (1) publish (and update on an annual basis) on the public Internet website of the Centers for Medicare & Medicaid Services a dedicated Internet page containing best practices to be used in assessing such liability; (2) monitor efforts to assess such liability and analyze the challenges posed by that assessment; (3) distribute to State agencies administering the State plan under this title information related to such efforts and challenges; and (4) provide guidance to such State agencies with respect to State oversight of efforts by medicaid managed care organizations (as defined in section 1903(m)(1)) to assess such liability. . 6. Development of model uniform fields for States to report third party information Not later than January 1, 2018, the Secretary of Health and Human Services shall, in consultation with the States, develop and make available to the States a model uniform reporting field that States may use for purposes of reporting to the Secretary through the Transformed Medicaid Statistical Information System (T–MSIS) (or a successor system) information identifying responsible third parties (as defined in subsection (nn) of section 1902 of the Social Security Act ( 42 U.S.C. 1396a )) and other relevant information for ascertaining the legal responsibility of such third parties to pay for care and services available under the State plan (or under a waiver of the plan) under title XIX of the Social Security Act ( 42 U.S.C. 1396 et seq.). 7. Effective date (a) In general Except as provided in subsection (b) and section 2(c)(3), this Act and the amendments made by this Act (other than as specified in the preceding provisions of this Act) shall take effect on the date of enactment of this Act and shall apply to medical assistance provided on or after such date. (b) Exception if State legislation required In the case of a State plan for medical assistance under title XIX of the Social Security Act that the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating 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 before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature 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.