Section 1 Short title
This Act may be cited as the “Medicaid Third Party Liability Act”.
Medicaid Third Party Liability Act
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.
Sec. 2 Medicaid third party liability
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) and redesignating the subsequent subparagraphs accordingly.
Clarification of role of health insurers 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 subsection (a), is further amended—
in subparagraph (F) (as so redesignated), by striking at the end “and”;
in subparagraph (G) (as so redesignated), by striking the period at the end and inserting “; and”; and
by adding at the end the following new subparagraph:
“(H) that, in the case of a State after January 1, 2026, 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, or any other health plan determined appropriate by the Secretary)—
“(i) such contract shall specify—
“(I) whether the State is 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) whether the State is 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); and
“(ii) in the case of a State that elects an option described in subclause (I) or (I) of clause (i) 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), 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 (G) confer to the health insurer the authority of the State with respect to the requirements specified in clauses (i) through (iv) of such subparagraph.”
Increasing state flexibility with respect to third party liability— Section 1902(a)(25)(G)(ii) of the Social Security Act (42 U.S.C. 1396a(a)(25)(G)(ii)), as so redesignated by subsection (a), is amended to read as follows:
“(ii) accept—
“(I) the State’s right of recovery and the assignment to the 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) after January 1, 2026, 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;”
Verification of insurance status required—
In general— 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 third party (as described in such paragraph) and the plan of such insurer in which the individual is enrolled,” after “in regulations)”.
FFP unavailable without insurance status verification— Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i)) is amended—
in paragraph (26), by striking “; or” and inserting “;”;
in paragraph (27), by striking “of the State.” and inserting “of the State; or”; and
by inserting after paragraph (27) the following:
“(28) with respect to any amounts after January 1, 2026, expended for medical assistance for individuals for whom the State has not obtained and verified, in accordance with section 1902(a)(25)(A)(i), information on whether such an individual has coverage provided through a third party (as described in such paragraph) and the plan of such coverage in which the individual is enrolled.”
Sec. 3 Effective date
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 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.