H.R. 497 — Medicaid Third Party Liability Act

This section revises Medicaid third-party liability requirements (i.e., rules requiring states to identify liable third parties, such as private insurers, and pursue recovery before using federal Medicaid funds) in several respects. (1) It strikes subparagraphs (E) and (F) of Section 1902(a)(25), removing special exemptions for certain types of care (e.g., cost-sharing amounts and specific payments). (2) It adds subparagraph (H) to Section 1902(a)(25), requiring states after January 1, 2026, to specify in contracts with health insurers (e.g., managed care organizations, pharmacy benefit managers) whether the state is delegating recovery rights or transferring individual assignments to the insurer and to assure the Secretary that state laws confer necessary authority. (3) It revises Section 1902(a)(25)(G)(ii) to require third parties to accept state rights of recovery and assignments and, after January 1, 2026, state plan authorizations as valid for furnishing services. (4) It requires states to collect and verify third-party insurance information for Medicaid applicants under Section 1902(a)(25)(A)(i) and prohibits federal matching payments after January 1, 2026, under Section 1903(i)(28) for individuals where such information is not obtained and verified. (Thus, states risk losing federal funds for non-compliance.)

This section delays the effective date of amendments made by this Act to state Medicaid plans (under title XIX of the Social Security Act) that the Secretary of Health and Human Services determines require state legislation (other than appropriations) to comply, until the first day of the first calendar quarter after the close of the first regular state legislative session beginning after enactment. For states with two-year legislative sessions, each year of such session is considered a separate regular session.