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House Study Bill 177 - IntroducedA Bill ForAn Act 1relating to the Medicaid program including third-party
2recovery and taxation of Medicaid managed care organization
3premiums.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2MEDICAID PROGRAM THIRD-PARTY RECOVERY
3 Section 1. Section 249A.37, Code 2023, is amended by
4striking the section and inserting in lieu thereof the
5following:
6249A.37 Duties of third parties.
71. For the purposes of this section, “Medicaid payor”,
8“recipient”, “third party”, and “third-party benefits” mean the
9same as defined in section 249A.54.
102. The third-party obligations specified under this section
11are a condition of doing business in the state. A third party
12that fails to comply with these obligations shall not be
13eligible to do business in the state.
143. A third party that is a carrier, as defined in section
15514C.13, shall enter into a health insurance data match program
16with the department for the sole purpose of comparing the
17names of the carrier’s insureds with the names of recipients
18as required by section 505.25.
194. A third party shall do all of the following:
20a. Cooperate with the Medicaid payor in identifying
21recipients for whom third-party benefits are available
22including but not limited to providing information to determine
23the period of potential third-party coverage, the nature of
24the coverage, and the name, address, and identifying number
25of the coverage. In cooperating with the Medicaid payor, the
26third party shall provide information upon the request of the
27Medicaid payor in a manner prescribed by the Medicaid payor or
28as agreed upon by the Medicaid payor and the third party.
29b. (1) Accept the Medicaid payor’s rights of recovery
30and assignment to the Medicaid payor as a subrogee, assignee,
31or lienholder under section 249A.54 for payments which the
32Medicaid payor has made under the Medicaid state plan or under
33a waiver of such state plan.
34(2) In the case of a third party other than the original
35Medicare fee-for-service program under parts A and B of Tit.
-1-1XVIII of the federal Social Security Act, a Medicare advantage
2plan offered by a Medicare advantage organization under part C
3of Tit.XVIII of the federal Social Security Act, a reasonable
4cost reimbursement contract under 42 U.S.C. §1395mm, a health
5care prepayment plan under 42 U.S.C. §1395l, or a prescription
6drug plan offered by a prescription drug plan sponsor under
7part D of Tit.XVIII of the federal Social Security Act that
8requires prior authorization for an item or service furnished
9to an individual eligible to receive medical assistance
10under Tit.XIX of the federal Social Security Act, accept
11authorization provided by the Medicaid payor that the health
12care item or service is covered under the Medicaid state plan
13or waiver of such state plan for such individual, as if such
14authorization were the prior authorization made by the third
15party for such item or service.
16c. If, on or before three years from the date a health care
17item or service was provided, the Medicaid payor submits an
18inquiry regarding a claim for payment that was submitted to the
19third party, respond to that inquiry not later than sixty days
20after receiving the inquiry.
21d. Respond to any Medicaid payor’s request for payment of a
22claim described in paragraph “c” not later than ninety business
23days after receipt of written proof of the claim, either by
24paying the claim or issuing a written denial to the Medicaid
25payor.
26e. Not deny any claim submitted by a Medicaid payor solely
27on the basis of the date of submission of the claim, the type
28or format of the claim form, a failure to present proper
29documentation at the point-of-sale that is the basis of the
30claim; or in the case of a third party other than the original
31Medicare fee-for-service program under parts A and B of Tit.
32XVIII of the federal Social Security Act, a Medicare advantage
33plan offered by a Medicare advantage organization under part C
34of Tit.XVIII of the federal Social Security Act, a reasonable
35cost reimbursement contract under 42 U.S.C. §1395mm, a health
-2-1care prepayment plan under 42 U.S.C. §1395l, or a prescription
2drug plan offered by a prescription drug plan sponsor under
3part D of Tit.XVIII of the federal Social Security Act, solely
4on the basis of a failure to obtain prior authorization for the
5health care item or service for which the claim is submitted if
6all of the following conditions are met:
7(a) The claim is submitted to the third party by the
8Medicaid payor no later than three years after the date on
9which the health care item or service was furnished.
10(b) Any action by the Medicaid payor to enforce its rights
11under section 249A.54 with respect to such claim is commenced
12not later than six years after the Medicaid payor submits the
13claim for payment.
145. Notwithstanding any provision of law to the contrary,
15the time limitations, requirements, and allowances specified
16in this section shall apply to third-party obligations under
17this section.
186. The department may adopt rules pursuant to chapter 17A
19as necessary to administer this section. Rules governing
20the exchange of information under this section shall be
21consistent with all laws, regulations, and rules relating to
22the confidentiality or privacy of personal information or
23medical records, including but not limited to the federal
24Health Insurance Portability and Accountability Act of 1996,
25Pub.L. No.104-191, and regulations promulgated in accordance
26with that Act and published in 45 C.F.R.pts.160 – 164.
27 Sec. 2. Section 249A.54, Code 2023, is amended by striking
28the section and inserting in lieu thereof the following:
29249A.54 Responsibility for payment on behalf of
30Medicaid-eligible persons — liability of other parties.
311. It is the intent of the general assembly that a Medicaid
32payor be the payor of last resort for medical services
33furnished to recipients. All other sources of payment for
34medical services are primary relative to medical assistance
35provided by the Medicaid payor. If benefits of a third party
-3-1are discovered or become available after medical assistance has
2been provided by the Medicaid payor, it is the intent of the
3general assembly that the Medicaid payor be repaid in full and
4prior to any other person, program, or entity. The Medicaid
5payor shall be repaid in full from and to the extent of any
6third-party benefits, regardless of whether a recipient is made
7whole or other creditors are paid.
82. For the purposes of this section:
9a. “Collateral” means all of the following:
10(1) Any and all causes of action, suits, claims,
11counterclaims, and demands that accrue to the recipient
12or to the recipient’s agent, related to any covered injury
13or illness, or medical services that necessitated that the
14Medicaid payor provide medical assistance to the recipient.
15(2) All judgments, settlements, and settlement agreements
16rendered or entered into and related to such causes of action,
17suits, claims, counterclaims, demands, or judgments.
18(3) Proceeds.
19b. “Covered injury or illness” means any sickness, injury,
20disease, disability, deformity, abnormality disease, necessary
21medical care, pregnancy, or death for which a third party is,
22may be, could be, should be, or has been liable, and for which
23the Medicaid payor is, or may be, obligated to provide, or has
24provided, medical assistance.
25c. “Medicaid payor” means the department or any person,
26entity, or organization that is legally responsible by
27contract, statute, or agreement to pay claims for medical
28assistance including but not limited to managed care
29organizations and other entities that contract with the state
30to provide medical assistance under chapter 249A.
31d. “Medical service” means medical or medically related
32institutional or noninstitutional care, or a medical or
33medically related institutional or noninstitutional good, item,
34or service covered by Medicaid.
35e. “Payment” as it relates to third-party benefits, means
-4-1performance of a duty, promise, or obligation, or discharge of
2a debt or liability, by the delivery, provision, or transfer of
3third-party benefits for medical services. “To pay” means to
4make payment.
5f. “Proceeds” means whatever is received upon the sale,
6exchange, collection, or other disposition of the collateral
7or proceeds from the collateral and includes insurance payable
8because of loss or damage to the collateral or proceeds. “Cash
9proceeds” include money, checks, and deposit accounts and
10similar proceeds. All other proceeds are “noncash proceeds”.
11g. “Recipient” means a person who has applied for medical
12assistance or who has received medical assistance.
13h. “Recipient’s agent” includes a recipient’s legal
14guardian, legal representative, or any other person acting on
15behalf of the recipient.
16i. “Third party” means an individual, entity, or program,
17excluding Medicaid, that is or may be liable to pay all or a
18part of the expenditures for medical assistance provided by a
19Medicaid payor to the recipient. A third party includes but is
20not limited to all of the following:
21(1) A third-party administrator.
22(2) A pharmacy benefits manager.
23(3) A health insurer.
24(4) A self-insured plan.
25(5) A group health plan, as defined in section 607(1) of the
26federal Employee Retirement Income Security Act of 1974.
27(6) A service benefit plan.
28(7) A managed care organization.
29(8) Liability insurance including self-insurance.
30(9) No-fault insurance.
31(10) Workers’ compensation laws or plans.
32(11) Other parties that by law, contract, or agreement
33are legally responsible for payment of a claim for medical
34services.
35j. “Third-party benefits” mean any benefits that are or may
-5-1be available to a recipient from a third party and that provide
2or pay for medical services. “Third-party benefits” may be
3created by law, contract, court award, judgment, settlement,
4agreement, or any arrangement between a third party and any
5person or entity, recipient, or otherwise. “Third-party
6benefits” include but are not limited to all of the following:
7(1) Benefits from collateral or proceeds.
8(2) Health insurance benefits.
9(3) Health maintenance organization benefits.
10(4) Benefits from preferred provider arrangements and
11prepaid health clinics.
12(5) Benefits from liability insurance, uninsured and
13underinsured motorist insurance, or personal injury protection
14coverage.
15(6) Medical benefits under workers’ compensation.
16(7) Benefits from any obligation under law or equity to
17provide medical support.
183. Third-party benefits for medical services shall be
19primary to medical assistance provided by the Medicaid payor.
204. a. A Medicaid payor has all of the rights, privileges,
21and responsibilities identified under this section. Each
22Medicaid payor is a Medicaid payor to the extent of the
23medical assistance provided by that Medicaid payor. Therefore,
24Medicaid payors may exercise their Medicaid payor’s rights
25under this section concurrently.
26b. Notwithstanding the provisions of this subsection to the
27contrary, if the department determines that a Medicaid payor
28has not taken reasonable steps within a reasonable time to
29recover third-party benefits, the department may exercise all
30of the rights of the Medicaid payor under this section to the
31exclusion of the Medicaid payor. If the department determines
32the department will exercise such rights, the department shall
33give notice to third parties and to the Medicaid payor.
345. A Medicaid payor may assign the Medicaid payor’s rights
35under this section, including but not limited to an assignment
-6-1to another Medicaid payor, a provider, or a contractor.
26. After the Medicaid payor has provided medical assistance
3under the Medicaid program, the Medicaid payor shall seek
4reimbursement for third-party benefits to the extent of the
5Medicaid payor’s legal liability and for the full amount of
6the third-party benefits, but not in excess of the amount of
7medical assistance provided by the Medicaid payor.
87. On or before the thirtieth day following discovery by a
9recipient of potential third-party benefits, a recipient and
10the recipient’s agent shall inform the Medicaid payor of any
11rights the recipient has to third-party benefits and of the
12name and address of any person that is or may be liable to
13provide third-party benefits.
148. When the Medicaid payor provides or becomes liable for
15medical assistance, the Medicaid payor has the following rights
16which shall be construed together to provide the greatest
17recovery of third-party benefits:
18a. The Medicaid payor is automatically subrogated to any
19rights that a recipient or a recipient’s agent or legally
20liable relative has to any third-party benefit for the full
21amount of medical assistance provided by the Medicaid payor.
22Recovery pursuant to these subrogation rights shall not be
23reduced, prorated, or applied to only a portion of a judgment,
24award, or settlement, but shall provide full recovery to the
25Medicaid payor from any and all third-party benefits. Equities
26of a recipient or a recipient’s agent, creditor, or health care
27provider shall not defeat, reduce, or prorate recovery by the
28Medicaid payor as to the Medicaid payor’s subrogation rights
29granted under this paragraph.
30b. By applying for, accepting, or accepting the benefit
31of medical assistance, a recipient or a recipient’s agent or
32legally liable relative automatically assigns to the Medicaid
33payor any right, title, and interest such person has to any
34third-party benefit, excluding any Medicare benefit to the
35extent required to be excluded by federal law.
-7- 1(1) The assignment granted under this paragraph is absolute
2and vests legal and equitable title to any such right in the
3Medicaid payor, but not in excess of the amount of medical
4assistance provided by the Medicaid payor.
5(2) The Medicaid payor is a bona fide assignee for value in
6the assigned right, title, or interest and takes vested legal
7and equitable title free and clear of latent equities in a
8third party. Equities of a recipient or a recipient’s agent,
9creditor, or health care provider shall not defeat or reduce
10recovery by the Medicaid payor as to the assignment granted
11under this paragraph.
12c. The Medicaid payor is entitled to and has an automatic
13lien upon the collateral for the full amount of medical
14assistance provided by the Medicaid payor to or on behalf of
15the recipient for medical services furnished as a result of any
16covered injury or illness for which a third party is or may be
17liable.
18(1) The lien attaches automatically when a recipient first
19receives medical services for which the Medicaid payor may be
20obligated to provide medical assistance.
21(2) The filing of the notice of lien with the clerk of
22the district court in the county in which the recipient’s
23eligibility is established pursuant to this section shall be
24notice of the lien to all persons. Notice is effective as of
25the date of filing of the notice of lien.
26(3) If the Medicaid payor knows that the recipient is
27represented by an attorney, the Medicaid payor shall provide
28the attorney with a copy of the notice of lien. However, this
29provision of a copy of the notice of lien to the recipient’s
30attorney does not abrogate the attachment, perfection, and
31notice satisfaction requirements specified under subparagraphs
32(1) and (2).
33(4) Only one claim of lien need be filed to provide notice
34and shall provide sufficient notice as to any additional
35or after-paid amount of medical assistance provided by the
-8-1Medicaid payor for any specific covered injury or illness.
2The Medicaid payor may, in the Medicaid payor’s discretion,
3file additional, amended, or substitute notices of lien at any
4time after the initial filing until the Medicaid payor has
5been repaid the full amount of medical assistance provided
6by Medicaid or otherwise has released the liable parties and
7recipient.
8(5) A release or satisfaction of any cause of action,
9suit, claim, counterclaim, demand, judgment, settlement, or
10settlement agreement shall not be effective as against a lien
11created under this paragraph, unless the Medicaid payor joins
12in the release or satisfaction or executes a release of the
13lien. An acceptance of a release or satisfaction of any cause
14of action, suit, claim, counterclaim, demand, or judgment and
15any settlement of any of the foregoing in the absence of a
16release or satisfaction of a lien created under this paragraph
17shall prima facie constitute an impairment of the lien, and
18the Medicaid payor is entitled to recover damages on account
19of such impairment. In an action on account of impairment of a
20lien, the Medicaid payor may recover from the person accepting
21the release or satisfaction or the person making the settlement
22the full amount of medical assistance provided by the Medicaid
23payor.
24(6) The lack of a properly filed claim of lien shall not
25affect the Medicaid payor’s assignment or subrogation rights
26provided in this subsection nor affect the existence of the
27lien, but shall only affect the effective date of notice.
28(7) The lien created by this paragraph is a first lien
29and superior to the liens and charges of any provider of a
30recipient’s medical services. If the lien is recorded, the
31lien shall exist for a period of seven years after the date of
32recording. If the lien is not recorded, the lien shall exist
33for a period of seven years after the date of attachment. If
34recorded, the lien may be extended for one additional period
35of seven years by rerecording the claim of lien within the
-9-1ninety-day period preceding the expiration of the lien.
29. Except as otherwise provided in this section, the
3Medicaid payor shall recover the full amount of all medical
4assistance provided by the Medicaid payor on behalf of the
5recipient to the full extent of third-party benefits. The
6Medicaid payor may collect recovered benefits directly from any
7of the following:
8a. A third party.
9b. The recipient.
10c. The provider of a recipient’s medical services if
11third-party benefits have been recovered by the provider.
12Notwithstanding any provision of this section to the contrary,
13a provider shall not be required to refund or pay to the
14Medicaid payor any amount in excess of the actual third-party
15benefits received by the provider from a third party for
16medical services provided to the recipient.
17d. Any person who has received the third-party benefits.
1810. a. A recipient and the recipient’s agent shall
19cooperate in the Medicaid payor’s recovery of the recipient’s
20third-party benefits and in establishing paternity and support
21of a recipient child born out of wedlock. Such cooperation
22shall include but is not limited to all of the following:
23(1) Appearing at an office designated by the Medicaid payor
24to provide relevant information or evidence.
25(2) Appearing as a witness at a court proceeding or other
26legal or administrative proceeding.
27(3) Providing information or attesting to lack of
28information under penalty of perjury.
29(4) Paying to the Medicaid payor any third-party benefit
30received.
31(5) Taking any additional steps to assist in establishing
32paternity or securing third-party benefits, or both.
33b. Notwithstanding paragraph “a”, the Medicaid payor has the
34discretion to waive, in writing, the requirement of cooperation
35for good cause shown and as required by federal law.
-10- 1c. The department may deny or terminate eligibility for
2any recipient who refuses to cooperate as required under this
3subsection unless the department has waived cooperation as
4provided under this subsection.
511. On or before the thirtieth day following the initiation
6of a formal or informal recovery, other than by filing a
7lawsuit, a recipient’s attorney shall provide written notice of
8the activity or action to the Medicaid payor.
912. A recipient is deemed to have authorized the Medicaid
10payor to obtain and release medical information and other
11records with respect to the recipient’s medical services
12for the sole purpose of obtaining reimbursement for medical
13assistance provided by the Medicaid payor.
1413. a. To enforce the Medicaid payor’s rights under
15this section, the Medicaid payor may, as a matter of right,
16institute, intervene in, or join in any legal or administrative
17proceeding in the Medicaid payor’s own name, and in any or a
18combination of any, of the following capacities:
19(1) Individually.
20(2) As a subrogee of the recipient.
21(3) As an assignee of the recipient.
22(4) As a lienholder of the collateral.
23b. An action by the Medicaid payor to recover damages
24in an action in tort under this subsection, which action is
25derivative of the rights of the recipient, shall not constitute
26a waiver of sovereign immunity.
27c. If the recipient or a recipient’s agent brings an action
28against a third party, on or before the thirtieth day following
29the filing of the action, the recipient, the recipient’s agent,
30or the attorney of the recipient or the recipient’s agent,
31as applicable, shall provide written notice to the Medicaid
32payor of the action, including the name of the court in which
33the action is brought, the case number of the action, and a
34copy of the pleadings. The recipient, the recipient’s agent,
35or the attorney of the recipient or the recipient’s agent, as
-11-1applicable, shall provide written notice of intent to dismiss
2the action at least twenty-one days before the voluntary
3dismissal of an action against a third party. Notice to the
4Medicaid payor shall be sent as specified by rule.
514. On or before the thirtieth day before the recipient
6finalizes a judgment, award, settlement, or any other recovery
7where the Medicaid payor has the right to recovery, the
8recipient, the recipient’s agent, or the attorney of the
9recipient or recipient’s agent, as applicable, shall give the
10Medicaid payor notice of the judgment, award, settlement,
11or recovery. The judgment, award, settlement, or recovery
12shall not be finalized unless such notice is provided and
13the Medicaid payor has had a reasonable opportunity to
14recover under the Medicaid payor’s rights to subrogation,
15assignment, and lien. If the Medicaid payor is not given
16appropriate notice, the recipient, the recipient’s agent, and
17the recipient’s or recipient’s agent’s attorney are jointly
18and severally liable to reimburse the Medicaid payor for the
19recovery received to the extent of medical assistance paid by
20the Medicaid payor.
2115. a. Except as otherwise provided in this section, the
22entire amount of any settlement of the recipient’s action or
23claim involving third-party benefits, with or without suit, is
24subject to the Medicaid payor’s claim for reimbursement of the
25amount of medical assistance provided and any lien pursuant to
26the claim.
27b. Insurance and other third-party benefits shall not
28contain any term or provision which purports to limit or
29exclude payment or the provision of benefits for an individual
30if the individual is eligible for, or a recipient of, medical
31assistance, and any such term or provision shall be void as
32against public policy.
3316. In an action in tort against a third party in which the
34recipient is a party and which results in a judgment, award, or
35settlement from a third party, the amount recovered shall be
-12-1distributed as follows:
2a. After reasonable attorney fees and filing fees, there
3is a rebuttable presumption that all Medicaid payors shall
4collectively receive two-thirds of the remaining amount
5recovered or the total amount of medical assistance provided by
6the Medicaid payors, whichever is less. A party may rebut this
7presumption in accordance with subsection 17.
8b. The remaining recovered amount shall be paid to the
9recipient.
10c. For purposes of calculating the Medicaid payor’s
11recovered amount of medical assistance, the fee for services of
12an attorney retained by the recipient or the recipient’s legal
13representative shall not exceed one-third of the judgment,
14award, or settlement amount.
15d. If the recovered amount available for the repayment of
16medical assistance is insufficient to satisfy the competing
17claims of the Medicaid payors, each Medicaid payor shall be
18entitled to the Medicaid payor’s respective pro rata share of
19the recovered amount that is available.
2017. a. A recipient or a recipient’s agent who has notice
21or who has actual knowledge of the Medicaid payor’s rights
22to third-party benefits under this section and who receives
23any third-party benefit or proceeds for a covered injury or
24illness shall on or before the sixtieth day after receipt of
25the proceeds pay the Medicaid payor the full amount of the
26third-party benefits, but not more than the total medical
27assistance provided by the Medicaid payor, or shall place the
28full amount of the third-party benefits in an interest-bearing
29trust account for the benefit of the Medicaid payor pending a
30determination of the Medicaid payor’s rights to the benefits
31under this subsection.
32b. If federal law limits the Medicaid payor to reimbursement
33from the recovered damages for medical expenses, a recipient
34may contest the amount designated as recovered damages for
35medical expenses payable to the Medicaid payor pursuant to the
-13-1formula specified in subsection 16. In order to successfully
2rebut the formula specified in subsection 16, the recipient
3shall prove, by clear and convincing evidence, that the portion
4of the total recovery which should be allocated as medical
5expenses, including future medical expenses, is less than the
6amount calculated by the Medicaid payor pursuant to the formula
7specified in subsection 16. Alternatively, to successfully
8rebut the formula specified in subsection 16, the recipient
9shall prove, by clear and convincing evidence, that Medicaid
10provided a lesser amount of medical assistance than that
11asserted by the Medicaid payor. A settlement agreement that
12designates the amount of recovered damages for medical expenses
13is not clear and convincing evidence and is not sufficient to
14establish the recipient’s burden of proof, unless the Medicaid
15payor is a party to the settlement agreement.
16c. If the recipient or the recipient’s agent filed a legal
17action to recover against the third party, the court in which
18such action was filed shall resolve any dispute concerning
19the amount owed to the Medicaid payor, and shall retain
20jurisdiction of the case to resolve the amount of the lien
21after the dismissal of the action.
22d. If the recipient or the recipient’s agent did not file a
23legal action, to resolve any dispute concerning the amount owed
24to the Medicaid payor, the recipient or the recipient’s agent
25shall file a petition for declaratory judgment as permitted
26under rule of civil procedure 1.1101 on or before the one
27hundred twenty-first day after the date of payment of funds to
28the Medicaid payor or the date of placing the full amount of
29the third-party benefits in a trust account. Venue for all
30declaratory actions under this subsection shall lie in Polk
31county.
32e. Each party shall pay the party’s own attorney fees and
33costs for any legal action conducted under this subsection.
3418. Notwithstanding any other provision of law to the
35contrary, when medical assistance is provided for a minor, any
-14-1statute of limitation or repose applicable to an action or
2claim of a legally responsible relative for the minor’s medical
3expenses is extended in favor of the legally responsible
4relative so that the legally responsible relative shall have
5one year from and after the attainment of the minor’s majority
6within which to file a complaint, make a claim, or commence an
7action.
819. In recovering any payments in accordance with this
9section, the Medicaid payor may make appropriate settlements.
1020. The department may adopt rules to administer this
11section and applicable federal requirements.
12DIVISION II
13Medicaid managed care organization taxation of premiums
14 Sec. 3. NEW SECTION. 249A.13 Medicaid managed care
15organization premiums fund.
161. A Medicaid managed care organization premiums fund
17is created in the state treasury under the authority of the
18department of health and human services. Moneys collected by
19the director of the department of revenue as taxes on premiums
20pursuant to section 432.1A shall be deposited in the fund.
212. Moneys in the fund are appropriated to the department
22of health and human services for the purposes of the medical
23assistance program.
243. Notwithstanding section 8.33, moneys in the fund
25that remain unencumbered or unobligated at the close of a
26fiscal year shall not revert but shall remain available for
27expenditure for the purposes designated. Notwithstanding
28section 12C.7, subsection 2, interest or earnings on moneys in
29the fund shall be credited to the fund.
30 Sec. 4. NEW SECTION. 432.1A Health maintenance organization
31— medical assistance program — premium tax.
321. Pursuant to section 514B.31, subsection 3, a health
33maintenance organization contracting with the department of
34health and human services to administer the medical assistance
35program under chapter 249A, shall pay as taxes to the director
-15-1of the department of revenue for deposit in the Medicaid
2managed care organization premiums fund created in section
3249A.13, an amount equal to two and one-half percent of
4the premiums received and taxable under subsection 514B.31,
5subsection 3.
62. Except as provided in subsection 3, the premium tax shall
7be paid on or before March 1 of the year following the calendar
8year for which the tax is due. The commissioner of insurance
9may suspend or revoke the license of a health maintenance
10organization subject to the premium tax in subsection 1 that
11fails to pay the premium tax on or before the due date.
123. a. Each health maintenance organization transacting
13business in this state that is subject to the tax in subsection
141 shall remit on or before June 1, on a prepayment basis,
15an amount equal to one-half of the health maintenance
16organization’s premium tax liability for the preceding calendar
17year.
18b. In addition to the prepayment amount in paragraph
19“a”, each health maintenance organization subject to the
20tax in subsection 1 shall remit on or before August 15, on
21a prepayment basis, an additional one-half of the health
22maintenance organization’s premium tax liability for the
23preceding calendar year.
24c. The sums prepaid by a health maintenance organization
25under paragraphs “a” and “b” shall be allowed as credits
26against the health maintenance organization’s premium tax
27liability for the calendar year during which the payments are
28made. If a prepayment made under this subsection exceeds
29the health maintenance organization’s annual premium tax
30liability, the excess shall be allowed as a credit against the
31health maintenance organization’s subsequent prepayment or tax
32liabilities under this section. The commissioner of insurance
33shall authorize the department of revenue to make a cash refund
34to a health maintenance organization, in lieu of a credit
35against subsequent prepayment or tax liabilities under this
-16-1section, if the health maintenance organization demonstrates
2the inability to recoup the funds paid via a credit. The
3commissioner of insurance shall adopt rules establishing a
4health maintenance organization’s eligibility for a cash
5refund, and the process for the department of revenue to make a
6cash refund to an eligible health maintenance organization from
7the Medicaid managed care organization premiums fund created in
8section 249A.13. The commissioner of insurance may suspend or
9revoke the license of a health maintenance organization that
10fails to make a prepayment on or before the due date under this
11subsection.
12 Sec. 5. Section 514B.31, Code 2023, is amended by striking
13the section and inserting in lieu thereof the following:
14514B.31 Taxation.
151. For the first five years of the existence of a
16health maintenance organization and the health maintenance
17organization’s successors and assigns, the following shall
18not be considered premiums received and taxable under section
19432.1:
20a. Payments received by the health maintenance organization
21for health care services, insurance, indemnity, or other
22benefits to which an enrollee is entitled through a health
23maintenance organization authorized under this chapter.
24b. Payments made by the health maintenance organization
25to providers for health care services, to insurers, or to
26corporations authorized under chapter 514 for insurance,
27indemnity, or other service benefits authorized under this
28chapter.
292. After the first five years of the existence of a
30health maintenance organization and the health maintenance
31organization’s successors and assigns, the following shall be
32considered premiums received and taxable under section 432.1:
33a. Payments received by the health maintenance organization
34for health care services, insurance, indemnity, or other
35benefits to which an enrollee is entitled through a health
-17-1maintenance organization authorized under this chapter.
2b. Payments made by the health maintenance organization
3to providers for health care services, to insurers, or to
4corporations authorized under chapter 514 for insurance,
5indemnity, or other service benefits authorized under this
6chapter.
73. Notwithstanding subsections 1 and 2, beginning January
81, 2024, and for each subsequent calendar year, the following
9shall be considered premiums received and taxable under section
10432.1A for a health maintenance organization contracting with
11the department of health and human services to administer the
12medical assistance program under chapter 249A:
13a. Payments received by the health maintenance organization
14for health care services, insurance, indemnity, or other
15benefits to which an enrollee is entitled through a health
16maintenance organization authorized under this chapter.
17b. Payments made by the health maintenance organization
18to providers for health care services, to insurers, or to
19corporations authorized under chapter 514 for insurance,
20indemnity, or other service benefits authorized under this
21chapter.
224. Payments made to a health maintenance organization
23by the United States secretary of health and human services
24under a contract issued under section 1833 or 1876 of the
25federal Social Security Act, or under section 4015 of the
26federal Omnibus Budget Reconciliation Act of 1987, shall not
27be considered premiums received and shall not be taxable
28under section 432.1. Payments made to a health maintenance
29organization contracting with the department of health and
30human services to administer the medical assistance program
31under chapter 249A shall not be taxable under section 432.1.
32EXPLANATION
33The inclusion of this explanation does not constitute agreement with
34the explanation’s substance by the members of the general assembly.
35This bill relates to the Medicaid program including recovery
-18-1by the department of health and human services (HHS or the
2department) from third parties and taxation of Medicaid managed
3care organization premiums.
4DIVISION I — MEDICAID PROGRAM THIRD-PARTY RECOVERY. The
5bill strikes and replaces current provisions in Code section
6249A.37 (health care information sharing) and Code section
7249A.54 (assignment — lien).
8Under the bill, new Code section 249A.37 (duties of third
9parties) relates to the duties of third parties, defined
10under the bill as “an individual, entity, or program,
11excluding Medicaid, that is or may be liable to pay all or
12a part of the expenditures for medical assistance provided
13by a Medicaid payor to the recipient”. The listing of
14“third parties” includes but is not limited to a third-party
15administrator, a pharmacy benefits manager, a health insurer, a
16self-insured plan, a group health plan, a service benefit plan,
17a managed care organization, liability insurance including
18self-insurance, no-fault insurance, workers’ compensation laws
19or plans, and other parties that by law, contract, or agreement
20are legally responsible for payment of a claim for a medical
21service. The bill also defines terms including “Medicaid
22payor”, “recipient”, “third party”, and “third-party benefits”.
23The bill provides that the third-party obligations specified
24under the bill are a condition of doing business in the state,
25and a third party that fails to comply with these obligations
26shall not be eligible to do business in the state.
27The bill requires that a third party that is a carrier shall
28enter into a health insurance data match program with HHS
29for the sole purpose of comparing the names of the carrier’s
30insureds with the names of recipients as required by Code
31section 505.25 (information provided to medical assistance
32program, hawk-i program, and child support recovery unit).
33The bill specifies the duties of a third party under the
34Medicaid program including cooperating with the Medicaid payor
35in identifying recipients for whom third-party benefits are
-19-1available; accepting the Medicaid payor’s rights of recovery
2and assignment to the Medicaid payor for payments which the
3Medicaid payor has made; accepting authorization provided by
4the Medicaid payor that the health care item or service is
5covered as if such authorization were the prior authorization
6made by the third party for such health care item or service;
7responding to inquiries from Medicaid payors regarding claims
8for payment; and not denying claims submitted by a Medicaid
9payor solely on the basis of the date of submission of the
10claim, the type or format of the claim form, a failure to
11present proper documentation, or in the case of specified
12third-party payors solely on the basis of a failure to obtain
13prior authorization if certain conditions are met.
14The department may adopt administrative rules to administer
15this Code section of the bill. Rules governing the exchange
16of information under the bill shall be consistent with all
17laws, regulations, and rules relating to the confidentiality or
18privacy of personal information or medical records, including
19but not limited to the federal Health Insurance Portability
20and Accountability Act (HIPAA) and regulations promulgated in
21accordance with HIPAA.
22Under new Code section 249A.54 (responsibility for payment
23on behalf of Medicaid-eligible persons — liability of other
24parties) the bill includes specific provisions relating to the
25responsibility for payment on behalf of Medicaid recipients,
26which include both persons who have applied for and persons
27who have received medical assistance, when other parties are
28liable.
29The bill provides that it is the intent of the general
30assembly that Medicaid payors be the payor of last resort for
31medical services furnished to recipients. All other sources of
32payment for medical services are primary relative to medical
33assistance provided by the Medicaid payor. If benefits of a
34third party are discovered or become available after medical
35assistance has been provided by the Medicaid payor, it is
-20-1the intent of the general assembly that the Medicaid payor
2be repaid in full and prior to any other person, program, or
3entity. The Medicaid payor shall be repaid in full from and to
4the extent of any third-party benefits, regardless of whether a
5recipient is made whole or other creditors paid.
6The bill provides definitions for “collateral”, “covered
7injury or illness”, “Medicaid payor”, “medical service”,
8“payment”, “proceeds”, “recipient” which includes both an
9applicant for and recipient of medical assistance, “recipient’s
10agent”, “third party”, and “third-party benefits”.
11The bill provides that third-party benefits for medical
12services shall be primary relative to medical assistance
13provided by the Medicaid payor. A Medicaid payor has all of
14the rights, privileges, and responsibilities identified under
15the bill, but if HHS determines that a Medicaid payor has not
16taken reasonable steps within a reasonable time to recover
17third-party benefits, HHS may exercise all of the rights of the
18Medicaid payor to the exclusion of the Medicaid payor following
19provision of notice to third parties and the Medicaid payor.
20A Medicaid payor may assign the Medicaid payor’s rights
21under the bill, including to another Medicaid payor, a
22provider, or a contractor. After the Medicaid payor has
23provided medical assistance, the Medicaid payor shall seek
24reimbursement for third-party benefits to the extent of the
25Medicaid payor’s legal liability and for the full amount of
26the third-party benefits, but not in excess of the amount of
27medical assistance provided by the Medicaid payor.
28Within 30 days following discovery by a recipient of
29potential third-party benefits, a recipient and the recipient’s
30agent shall inform the Medicaid payor of any rights the
31recipient has to third-party benefits and provide identifying
32information for any person that is or may be liable to provide
33third-party benefits.
34The bill specifies the rights of a Medicaid payor when
35the Medicaid payor provides or becomes liable for medical
-21-1assistance, including that the Medicaid payor is automatically
2subrogated to any rights that a recipient or a recipient’s
3agent or legally liable relative has to any third-party
4benefit for the full amount of medical assistance provided by
5the Medicaid payor; that the Medicaid payor is automatically
6assigned any right, title, and interest a recipient or
7a recipient’s agent or legally liable relative has to a
8third-party benefit by virtue of applying for, accepting, or
9accepting the benefit of medical assistance, excluding any
10Medicare benefit to the extent required to be excluded by
11federal law; and that the Medicaid payor is entitled to and
12has an automatic lien upon the collateral for the full amount
13of medical assistance provided by the Medicaid payor to or on
14behalf of the recipient for medical services furnished as a
15result of any covered injury or illness for which a third party
16is or may be liable.
17Unless otherwise provided in the bill, the Medicaid payor
18shall recover the full amount of all medical assistance
19provided by the Medicaid payor on behalf of the recipient
20to the full extent of third-party benefits. A recipient
21and the recipient’s agent shall cooperate in the Medicaid
22payor’s recovery of the recipient’s third-party benefits and
23in establishing paternity and support of a recipient child
24born out of wedlock. The Medicaid payor has the discretion
25to waive, in writing, the requirement of cooperation for good
26cause shown and as required by federal law. The department may
27deny or terminate eligibility for any recipient who refuses to
28cooperate, unless HHS has waived cooperation.
29Within 30 days of initiating formal or informal recovery,
30other than by filing a lawsuit, a recipient’s attorney shall
31provide written notice of the activity or action to the
32Medicaid payor.
33A recipient is deemed to have authorized the Medicaid payor
34to obtain and release medical information and other records
35with respect to the recipient’s medical services for the sole
-22-1purpose of obtaining reimbursement for medical assistance
2provided by the Medicaid payor.
3To enforce the Medicaid payor’s rights, the Medicaid
4payor may institute, intervene in, or join in any legal or
5administrative proceeding in the Medicaid payor’s own name, and
6in a number or a combination of capacities listed in the bill.
7An action by the Medicaid payor to recover damages in an action
8in tort, which is derivative of the rights of the recipient,
9shall not constitute a waiver of sovereign immunity.
10If an action is filed by a recipient or a recipient’s agent
11against a third party, the recipient, the recipient’s agent,
12or the attorney of the recipient or the recipient’s agent,
13as applicable, shall provide written notice to the Medicaid
14payor of the action, including the name of the court in which
15the action is brought, the case number of the action, and a
16copy of the pleadings. The recipient, the recipient’s agent,
17or the attorney of the recipient or the recipient’s agent,
18as applicable, shall also provide written notice of intent
19to dismiss the action prior to the voluntary dismissal of an
20action against a third party.
21Before a recipient finalizes a judgment, award, settlement,
22or any other recovery where the Medicaid payor has the right
23to recovery, the recipient, the recipient’s agent, or the
24attorney of the recipient or recipient’s agent, as applicable,
25shall give the Medicaid payor notice of the judgment, award,
26settlement, or recovery. The judgment, award, settlement,
27or recovery shall not be finalized unless the notice is
28provided and the Medicaid payor has a reasonable opportunity
29to recover under its rights to subrogation, assignment, and
30lien. If appropriate notice is not provided, the recipient,
31the recipient’s agent, and the recipient’s or recipient’s
32agent’s attorney are jointly and severally liable to reimburse
33the Medicaid payor for the recovery received to the extent of
34medical assistance paid by the Medicaid payor.
35Unless otherwise provided, the entire amount of any
-23-1settlement of the recipient’s action or claim involving
2third-party benefits is subject to the Medicaid payor’s claim
3for reimbursement of the amount of medical assistance provided
4and any lien pursuant to the claim.
5The bill prohibits insurance and other third-party benefits
6from containing any term or provision which purports to
7limit or exclude payment or the provision of benefits for an
8individual if the individual is eligible for, or a recipient
9of, medical assistance, and any such term or provision shall be
10void as against public policy.
11In an action in tort against a third party in which the
12recipient is a party, of the amount recovered in any resulting
13judgment, award, or settlement from a third party, after
14reasonable attorney fees and filing fees, there is a rebuttable
15presumption that all Medicaid payors shall receive two-thirds
16of the remaining amount recovered or the total amount of
17medical assistance provided by the Medicaid payors, whichever
18is less; and the remaining amount recovered shall be paid to
19the recipient. In calculating the Medicaid payor’s recovered
20amount of medical assistance, the fee for services of an
21attorney retained by the recipient or the recipient’s legal
22representative shall not exceed one-third of the judgment,
23award, or settlement amount. If the recovered amount is
24insufficient to satisfy the competing claims of the Medicaid
25payors, each Medicaid payor shall be entitled to the Medicaid
26payor’s respective pro rata share of the recovered amount that
27is available.
28A recipient or a recipient’s agent who has notice or
29who has actual knowledge of the Medicaid payor’s rights to
30third-party benefits who receives any third-party benefit or
31proceeds for a covered injury or illness, shall after receipt
32of the proceeds pay the Medicaid payor the full amount of the
33third-party benefits, but not more than the total medical
34assistance provided by the Medicaid payor, or shall place the
35full amount of the third-party benefits in an interest-bearing
-24-1trust account for the benefit of the Medicaid payor pending a
2determination of the Medicaid payor’s rights to the benefits.
3If federal law limits the Medicaid payor to reimbursement
4from the recovered damages for medical expenses, a recipient
5may contest the amount designated as recovered damages for
6medical expenses payable to the Medicaid payor as specified
7in the formula under the bill. To successfully rebut the
8formula, the recipient shall prove, by clear and convincing
9evidence, that the portion of the total recovery which should
10be allocated as medical expenses, including future medical
11expenses, is less than the amount calculated by the Medicaid
12payor pursuant to the formula. Alternatively, to successfully
13rebut the formula, the recipient shall prove, by clear and
14convincing evidence, that Medicaid provided a lesser amount of
15medical assistance than that asserted by the Medicaid payor. A
16settlement agreement that designates the amount of recovered
17damages for medical expenses is not clear and convincing
18evidence and is not sufficient to establish the recipient’s
19burden of proof, unless the Medicaid payor is a party to the
20settlement agreement.
21If the recipient or the recipient’s agent filed a legal
22action to recover against the third party, the court in which
23such action was filed shall resolve any dispute concerning
24the amount owed to the Medicaid payor, and shall retain
25jurisdiction of the case to resolve the amount of the lien
26after the dismissal of the action. If the recipient or the
27recipient’s agent did not file a legal action to resolve any
28dispute concerning the amount owed to the Medicaid payor, the
29recipient or the recipient’s agent shall file a petition for
30declaratory judgment. Venue for all such declaratory actions
31shall lie in Polk county. Each party shall pay the party’s own
32attorney fees and costs for any legal action conducted under
33this provision of the bill.
34With regard to medical assistance provided to a minor, and
35notwithstanding any other provision of law to the contrary, any
-25-1statute of limitations or repose applicable to an action or
2claim of a legally responsible relative for the minor’s medical
3expenses is extended in favor of the legally responsible
4relative so that the legally responsible relative shall have
5one year from and after the attainment of the minor’s majority
6within which to file a complaint, make a claim, or commence an
7action.
8In recovering any payments under the bill, the Medicaid
9payor may make appropriate settlements. The department may
10adopt administrative rules to administer this portion of the
11bill and applicable federal requirements.
12DIVISION II — MEDICAID MANAGED CARE ORGANIZATION
13TAXATION OF PREMIUMS. The bill relates to taxation of health
14maintenance organizations.
15Under current Code section 514B.31 (taxation), for the
16first five years of the existence of a health maintenance
17organization (HMO) or its successor, payments received by the
18HMO for health care services, insurance, indemnity, or other
19benefits to which an enrollee is entitled, and payments made by
20the HMO to a provider for health care services, to insurers, or
21to corporations authorized under Code chapter 514 (nonprofit
22health services corporations) for insurance, indemnity, or
23other service benefits, are not considered premiums received
24and not taxable under Code section 432.1 (tax on gross premiums
25— exclusions). After five years, payments received by the
26HMO or its successor for health care services, insurance,
27indemnity, or other benefits to which an enrollee is entitled,
28and payments made by the HMO to a provider for health care
29services, to insurers, or to corporations authorized under
30Code chapter 514 (nonprofit health services corporations)
31for insurance, indemnity, or other service benefits, are
32considered premiums received and taxable under Code section
33432.1. Current Code section 514B.31 also provides that certain
34payments made by the United States secretary of health and
35human services are not considered premiums and therefore not
-26-1taxable under Code section 432.1.
2The provisions of current Code section 514B.31 continue
3under the bill, except that the exclusion from consideration
4as premiums of payments made by the United States secretary
5of health and human services under Code chapter 249A (medical
6assistance) is eliminated and replaced with language that
7instead specifies that payments made to an HMO contracting
8with HHS under Code chapter 249A shall not be taxable under
9Code section 432.1, thereby exempting all payments to
10these particular HMOs from consideration as premiums and
11correspondingly from taxation under Code section 432.1. The
12bill also amends current Code section 514B.31 to provide that
13notwithstanding the provisions applicable to HMOs under Code
14section 514B.31 relating to a premium tax, beginning January
151, 2024, and for each subsequent calendar year, for an HMO
16contracting with HHS to administer the medical assistance
17program under Code chapter 249A, payments received by the
18HMO for health care services, insurance, indemnity, or other
19benefits to which an enrollee is entitled, and payments made by
20the HMO to a provider for health care services, to insurers,
21or to corporations authorized under Code chapter 514 for
22insurance, indemnity, or other service benefits, are considered
23premiums received and taxable under new Code section 432.1A.
24The bill establishes under new Code section 432.1A (health
25maintenance organization — medical assistance program —
26premium tax) the parameters of the new tax on HMOs contracting
27with HHS to administer the medical assistance program under
28Code chapter 249A. Such HMOs shall pay as taxes to the
29director of the department of revenue for deposit in the
30Medicaid managed care organization premiums fund an amount
31equal to 2.5 percent of the premiums received and taxable. The
32premium tax shall be paid on or before March 1 of the year
33following the calendar year for which the tax is due. The
34commissioner of insurance may suspend or revoke the license of
35an HMO subject to the premium tax that fails to pay the premium
-27-1tax on or before the due date.
2An HMO subject to the new tax shall remit on or before June
31, on a prepayment basis, an amount equal to one-half of the
4HMO’s premium tax liability for the preceding calendar year;
5and shall remit on or before August 15, on a prepayment basis,
6an additional one-half of the HMO’s premium tax liability
7for the preceding calendar year. If a prepayment exceeds
8the HMO’s annual premium tax liability, the excess shall be
9allowed as a credit against the HMO’s subsequent prepayment
10or tax liabilities. The HMO may receive a credit or a cash
11refund in lieu of a credit against subsequent prepayment or
12tax liabilities. The commissioner of insurance may suspend or
13revoke the license of an HMO that fails to make a prepayment on
14or before the due date.
15The bill creates in new Code section 249A.13 a Medicaid
16managed care organization premiums fund in the state treasury
17under the authority of HHS. Moneys collected from the new
18tax on premiums shall be deposited in the fund. Moneys in
19the fund are appropriated to HHS for the purposes of the
20medical assistance program. Moneys in the fund that remain
21unencumbered or unobligated at the close of a fiscal year shall
22not revert but shall remain available for expenditure for the
23purposes designated. Interest or earnings on moneys in the
24fund shall be credited to the fund.
-28-pf/rh
2recovery and taxation of Medicaid managed care organization
3premiums.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2MEDICAID PROGRAM THIRD-PARTY RECOVERY
3 Section 1. Section 249A.37, Code 2023, is amended by
4striking the section and inserting in lieu thereof the
5following:
6249A.37 Duties of third parties.
71. For the purposes of this section, “Medicaid payor”,
8“recipient”, “third party”, and “third-party benefits” mean the
9same as defined in section 249A.54.
102. The third-party obligations specified under this section
11are a condition of doing business in the state. A third party
12that fails to comply with these obligations shall not be
13eligible to do business in the state.
143. A third party that is a carrier, as defined in section
15514C.13, shall enter into a health insurance data match program
16with the department for the sole purpose of comparing the
17names of the carrier’s insureds with the names of recipients
18as required by section 505.25.
194. A third party shall do all of the following:
20a. Cooperate with the Medicaid payor in identifying
21recipients for whom third-party benefits are available
22including but not limited to providing information to determine
23the period of potential third-party coverage, the nature of
24the coverage, and the name, address, and identifying number
25of the coverage. In cooperating with the Medicaid payor, the
26third party shall provide information upon the request of the
27Medicaid payor in a manner prescribed by the Medicaid payor or
28as agreed upon by the Medicaid payor and the third party.
29b. (1) Accept the Medicaid payor’s rights of recovery
30and assignment to the Medicaid payor as a subrogee, assignee,
31or lienholder under section 249A.54 for payments which the
32Medicaid payor has made under the Medicaid state plan or under
33a waiver of such state plan.
34(2) In the case of a third party other than the original
35Medicare fee-for-service program under parts A and B of Tit.
-1-1XVIII of the federal Social Security Act, a Medicare advantage
2plan offered by a Medicare advantage organization under part C
3of Tit.XVIII of the federal Social Security Act, a reasonable
4cost reimbursement contract under 42 U.S.C. §1395mm, a health
5care prepayment plan under 42 U.S.C. §1395l, or a prescription
6drug plan offered by a prescription drug plan sponsor under
7part D of Tit.XVIII of the federal Social Security Act that
8requires prior authorization for an item or service furnished
9to an individual eligible to receive medical assistance
10under Tit.XIX of the federal Social Security Act, accept
11authorization provided by the Medicaid payor that the health
12care item or service is covered under the Medicaid state plan
13or waiver of such state plan for such individual, as if such
14authorization were the prior authorization made by the third
15party for such item or service.
16c. If, on or before three years from the date a health care
17item or service was provided, the Medicaid payor submits an
18inquiry regarding a claim for payment that was submitted to the
19third party, respond to that inquiry not later than sixty days
20after receiving the inquiry.
21d. Respond to any Medicaid payor’s request for payment of a
22claim described in paragraph “c” not later than ninety business
23days after receipt of written proof of the claim, either by
24paying the claim or issuing a written denial to the Medicaid
25payor.
26e. Not deny any claim submitted by a Medicaid payor solely
27on the basis of the date of submission of the claim, the type
28or format of the claim form, a failure to present proper
29documentation at the point-of-sale that is the basis of the
30claim; or in the case of a third party other than the original
31Medicare fee-for-service program under parts A and B of Tit.
32XVIII of the federal Social Security Act, a Medicare advantage
33plan offered by a Medicare advantage organization under part C
34of Tit.XVIII of the federal Social Security Act, a reasonable
35cost reimbursement contract under 42 U.S.C. §1395mm, a health
-2-1care prepayment plan under 42 U.S.C. §1395l, or a prescription
2drug plan offered by a prescription drug plan sponsor under
3part D of Tit.XVIII of the federal Social Security Act, solely
4on the basis of a failure to obtain prior authorization for the
5health care item or service for which the claim is submitted if
6all of the following conditions are met:
7(a) The claim is submitted to the third party by the
8Medicaid payor no later than three years after the date on
9which the health care item or service was furnished.
10(b) Any action by the Medicaid payor to enforce its rights
11under section 249A.54 with respect to such claim is commenced
12not later than six years after the Medicaid payor submits the
13claim for payment.
145. Notwithstanding any provision of law to the contrary,
15the time limitations, requirements, and allowances specified
16in this section shall apply to third-party obligations under
17this section.
186. The department may adopt rules pursuant to chapter 17A
19as necessary to administer this section. Rules governing
20the exchange of information under this section shall be
21consistent with all laws, regulations, and rules relating to
22the confidentiality or privacy of personal information or
23medical records, including but not limited to the federal
24Health Insurance Portability and Accountability Act of 1996,
25Pub.L. No.104-191, and regulations promulgated in accordance
26with that Act and published in 45 C.F.R.pts.160 – 164.
27 Sec. 2. Section 249A.54, Code 2023, is amended by striking
28the section and inserting in lieu thereof the following:
29249A.54 Responsibility for payment on behalf of
30Medicaid-eligible persons — liability of other parties.
311. It is the intent of the general assembly that a Medicaid
32payor be the payor of last resort for medical services
33furnished to recipients. All other sources of payment for
34medical services are primary relative to medical assistance
35provided by the Medicaid payor. If benefits of a third party
-3-1are discovered or become available after medical assistance has
2been provided by the Medicaid payor, it is the intent of the
3general assembly that the Medicaid payor be repaid in full and
4prior to any other person, program, or entity. The Medicaid
5payor shall be repaid in full from and to the extent of any
6third-party benefits, regardless of whether a recipient is made
7whole or other creditors are paid.
82. For the purposes of this section:
9a. “Collateral” means all of the following:
10(1) Any and all causes of action, suits, claims,
11counterclaims, and demands that accrue to the recipient
12or to the recipient’s agent, related to any covered injury
13or illness, or medical services that necessitated that the
14Medicaid payor provide medical assistance to the recipient.
15(2) All judgments, settlements, and settlement agreements
16rendered or entered into and related to such causes of action,
17suits, claims, counterclaims, demands, or judgments.
18(3) Proceeds.
19b. “Covered injury or illness” means any sickness, injury,
20disease, disability, deformity, abnormality disease, necessary
21medical care, pregnancy, or death for which a third party is,
22may be, could be, should be, or has been liable, and for which
23the Medicaid payor is, or may be, obligated to provide, or has
24provided, medical assistance.
25c. “Medicaid payor” means the department or any person,
26entity, or organization that is legally responsible by
27contract, statute, or agreement to pay claims for medical
28assistance including but not limited to managed care
29organizations and other entities that contract with the state
30to provide medical assistance under chapter 249A.
31d. “Medical service” means medical or medically related
32institutional or noninstitutional care, or a medical or
33medically related institutional or noninstitutional good, item,
34or service covered by Medicaid.
35e. “Payment” as it relates to third-party benefits, means
-4-1performance of a duty, promise, or obligation, or discharge of
2a debt or liability, by the delivery, provision, or transfer of
3third-party benefits for medical services. “To pay” means to
4make payment.
5f. “Proceeds” means whatever is received upon the sale,
6exchange, collection, or other disposition of the collateral
7or proceeds from the collateral and includes insurance payable
8because of loss or damage to the collateral or proceeds. “Cash
9proceeds” include money, checks, and deposit accounts and
10similar proceeds. All other proceeds are “noncash proceeds”.
11g. “Recipient” means a person who has applied for medical
12assistance or who has received medical assistance.
13h. “Recipient’s agent” includes a recipient’s legal
14guardian, legal representative, or any other person acting on
15behalf of the recipient.
16i. “Third party” means an individual, entity, or program,
17excluding Medicaid, that is or may be liable to pay all or a
18part of the expenditures for medical assistance provided by a
19Medicaid payor to the recipient. A third party includes but is
20not limited to all of the following:
21(1) A third-party administrator.
22(2) A pharmacy benefits manager.
23(3) A health insurer.
24(4) A self-insured plan.
25(5) A group health plan, as defined in section 607(1) of the
26federal Employee Retirement Income Security Act of 1974.
27(6) A service benefit plan.
28(7) A managed care organization.
29(8) Liability insurance including self-insurance.
30(9) No-fault insurance.
31(10) Workers’ compensation laws or plans.
32(11) Other parties that by law, contract, or agreement
33are legally responsible for payment of a claim for medical
34services.
35j. “Third-party benefits” mean any benefits that are or may
-5-1be available to a recipient from a third party and that provide
2or pay for medical services. “Third-party benefits” may be
3created by law, contract, court award, judgment, settlement,
4agreement, or any arrangement between a third party and any
5person or entity, recipient, or otherwise. “Third-party
6benefits” include but are not limited to all of the following:
7(1) Benefits from collateral or proceeds.
8(2) Health insurance benefits.
9(3) Health maintenance organization benefits.
10(4) Benefits from preferred provider arrangements and
11prepaid health clinics.
12(5) Benefits from liability insurance, uninsured and
13underinsured motorist insurance, or personal injury protection
14coverage.
15(6) Medical benefits under workers’ compensation.
16(7) Benefits from any obligation under law or equity to
17provide medical support.
183. Third-party benefits for medical services shall be
19primary to medical assistance provided by the Medicaid payor.
204. a. A Medicaid payor has all of the rights, privileges,
21and responsibilities identified under this section. Each
22Medicaid payor is a Medicaid payor to the extent of the
23medical assistance provided by that Medicaid payor. Therefore,
24Medicaid payors may exercise their Medicaid payor’s rights
25under this section concurrently.
26b. Notwithstanding the provisions of this subsection to the
27contrary, if the department determines that a Medicaid payor
28has not taken reasonable steps within a reasonable time to
29recover third-party benefits, the department may exercise all
30of the rights of the Medicaid payor under this section to the
31exclusion of the Medicaid payor. If the department determines
32the department will exercise such rights, the department shall
33give notice to third parties and to the Medicaid payor.
345. A Medicaid payor may assign the Medicaid payor’s rights
35under this section, including but not limited to an assignment
-6-1to another Medicaid payor, a provider, or a contractor.
26. After the Medicaid payor has provided medical assistance
3under the Medicaid program, the Medicaid payor shall seek
4reimbursement for third-party benefits to the extent of the
5Medicaid payor’s legal liability and for the full amount of
6the third-party benefits, but not in excess of the amount of
7medical assistance provided by the Medicaid payor.
87. On or before the thirtieth day following discovery by a
9recipient of potential third-party benefits, a recipient and
10the recipient’s agent shall inform the Medicaid payor of any
11rights the recipient has to third-party benefits and of the
12name and address of any person that is or may be liable to
13provide third-party benefits.
148. When the Medicaid payor provides or becomes liable for
15medical assistance, the Medicaid payor has the following rights
16which shall be construed together to provide the greatest
17recovery of third-party benefits:
18a. The Medicaid payor is automatically subrogated to any
19rights that a recipient or a recipient’s agent or legally
20liable relative has to any third-party benefit for the full
21amount of medical assistance provided by the Medicaid payor.
22Recovery pursuant to these subrogation rights shall not be
23reduced, prorated, or applied to only a portion of a judgment,
24award, or settlement, but shall provide full recovery to the
25Medicaid payor from any and all third-party benefits. Equities
26of a recipient or a recipient’s agent, creditor, or health care
27provider shall not defeat, reduce, or prorate recovery by the
28Medicaid payor as to the Medicaid payor’s subrogation rights
29granted under this paragraph.
30b. By applying for, accepting, or accepting the benefit
31of medical assistance, a recipient or a recipient’s agent or
32legally liable relative automatically assigns to the Medicaid
33payor any right, title, and interest such person has to any
34third-party benefit, excluding any Medicare benefit to the
35extent required to be excluded by federal law.
-7- 1(1) The assignment granted under this paragraph is absolute
2and vests legal and equitable title to any such right in the
3Medicaid payor, but not in excess of the amount of medical
4assistance provided by the Medicaid payor.
5(2) The Medicaid payor is a bona fide assignee for value in
6the assigned right, title, or interest and takes vested legal
7and equitable title free and clear of latent equities in a
8third party. Equities of a recipient or a recipient’s agent,
9creditor, or health care provider shall not defeat or reduce
10recovery by the Medicaid payor as to the assignment granted
11under this paragraph.
12c. The Medicaid payor is entitled to and has an automatic
13lien upon the collateral for the full amount of medical
14assistance provided by the Medicaid payor to or on behalf of
15the recipient for medical services furnished as a result of any
16covered injury or illness for which a third party is or may be
17liable.
18(1) The lien attaches automatically when a recipient first
19receives medical services for which the Medicaid payor may be
20obligated to provide medical assistance.
21(2) The filing of the notice of lien with the clerk of
22the district court in the county in which the recipient’s
23eligibility is established pursuant to this section shall be
24notice of the lien to all persons. Notice is effective as of
25the date of filing of the notice of lien.
26(3) If the Medicaid payor knows that the recipient is
27represented by an attorney, the Medicaid payor shall provide
28the attorney with a copy of the notice of lien. However, this
29provision of a copy of the notice of lien to the recipient’s
30attorney does not abrogate the attachment, perfection, and
31notice satisfaction requirements specified under subparagraphs
32(1) and (2).
33(4) Only one claim of lien need be filed to provide notice
34and shall provide sufficient notice as to any additional
35or after-paid amount of medical assistance provided by the
-8-1Medicaid payor for any specific covered injury or illness.
2The Medicaid payor may, in the Medicaid payor’s discretion,
3file additional, amended, or substitute notices of lien at any
4time after the initial filing until the Medicaid payor has
5been repaid the full amount of medical assistance provided
6by Medicaid or otherwise has released the liable parties and
7recipient.
8(5) A release or satisfaction of any cause of action,
9suit, claim, counterclaim, demand, judgment, settlement, or
10settlement agreement shall not be effective as against a lien
11created under this paragraph, unless the Medicaid payor joins
12in the release or satisfaction or executes a release of the
13lien. An acceptance of a release or satisfaction of any cause
14of action, suit, claim, counterclaim, demand, or judgment and
15any settlement of any of the foregoing in the absence of a
16release or satisfaction of a lien created under this paragraph
17shall prima facie constitute an impairment of the lien, and
18the Medicaid payor is entitled to recover damages on account
19of such impairment. In an action on account of impairment of a
20lien, the Medicaid payor may recover from the person accepting
21the release or satisfaction or the person making the settlement
22the full amount of medical assistance provided by the Medicaid
23payor.
24(6) The lack of a properly filed claim of lien shall not
25affect the Medicaid payor’s assignment or subrogation rights
26provided in this subsection nor affect the existence of the
27lien, but shall only affect the effective date of notice.
28(7) The lien created by this paragraph is a first lien
29and superior to the liens and charges of any provider of a
30recipient’s medical services. If the lien is recorded, the
31lien shall exist for a period of seven years after the date of
32recording. If the lien is not recorded, the lien shall exist
33for a period of seven years after the date of attachment. If
34recorded, the lien may be extended for one additional period
35of seven years by rerecording the claim of lien within the
-9-1ninety-day period preceding the expiration of the lien.
29. Except as otherwise provided in this section, the
3Medicaid payor shall recover the full amount of all medical
4assistance provided by the Medicaid payor on behalf of the
5recipient to the full extent of third-party benefits. The
6Medicaid payor may collect recovered benefits directly from any
7of the following:
8a. A third party.
9b. The recipient.
10c. The provider of a recipient’s medical services if
11third-party benefits have been recovered by the provider.
12Notwithstanding any provision of this section to the contrary,
13a provider shall not be required to refund or pay to the
14Medicaid payor any amount in excess of the actual third-party
15benefits received by the provider from a third party for
16medical services provided to the recipient.
17d. Any person who has received the third-party benefits.
1810. a. A recipient and the recipient’s agent shall
19cooperate in the Medicaid payor’s recovery of the recipient’s
20third-party benefits and in establishing paternity and support
21of a recipient child born out of wedlock. Such cooperation
22shall include but is not limited to all of the following:
23(1) Appearing at an office designated by the Medicaid payor
24to provide relevant information or evidence.
25(2) Appearing as a witness at a court proceeding or other
26legal or administrative proceeding.
27(3) Providing information or attesting to lack of
28information under penalty of perjury.
29(4) Paying to the Medicaid payor any third-party benefit
30received.
31(5) Taking any additional steps to assist in establishing
32paternity or securing third-party benefits, or both.
33b. Notwithstanding paragraph “a”, the Medicaid payor has the
34discretion to waive, in writing, the requirement of cooperation
35for good cause shown and as required by federal law.
-10- 1c. The department may deny or terminate eligibility for
2any recipient who refuses to cooperate as required under this
3subsection unless the department has waived cooperation as
4provided under this subsection.
511. On or before the thirtieth day following the initiation
6of a formal or informal recovery, other than by filing a
7lawsuit, a recipient’s attorney shall provide written notice of
8the activity or action to the Medicaid payor.
912. A recipient is deemed to have authorized the Medicaid
10payor to obtain and release medical information and other
11records with respect to the recipient’s medical services
12for the sole purpose of obtaining reimbursement for medical
13assistance provided by the Medicaid payor.
1413. a. To enforce the Medicaid payor’s rights under
15this section, the Medicaid payor may, as a matter of right,
16institute, intervene in, or join in any legal or administrative
17proceeding in the Medicaid payor’s own name, and in any or a
18combination of any, of the following capacities:
19(1) Individually.
20(2) As a subrogee of the recipient.
21(3) As an assignee of the recipient.
22(4) As a lienholder of the collateral.
23b. An action by the Medicaid payor to recover damages
24in an action in tort under this subsection, which action is
25derivative of the rights of the recipient, shall not constitute
26a waiver of sovereign immunity.
27c. If the recipient or a recipient’s agent brings an action
28against a third party, on or before the thirtieth day following
29the filing of the action, the recipient, the recipient’s agent,
30or the attorney of the recipient or the recipient’s agent,
31as applicable, shall provide written notice to the Medicaid
32payor of the action, including the name of the court in which
33the action is brought, the case number of the action, and a
34copy of the pleadings. The recipient, the recipient’s agent,
35or the attorney of the recipient or the recipient’s agent, as
-11-1applicable, shall provide written notice of intent to dismiss
2the action at least twenty-one days before the voluntary
3dismissal of an action against a third party. Notice to the
4Medicaid payor shall be sent as specified by rule.
514. On or before the thirtieth day before the recipient
6finalizes a judgment, award, settlement, or any other recovery
7where the Medicaid payor has the right to recovery, the
8recipient, the recipient’s agent, or the attorney of the
9recipient or recipient’s agent, as applicable, shall give the
10Medicaid payor notice of the judgment, award, settlement,
11or recovery. The judgment, award, settlement, or recovery
12shall not be finalized unless such notice is provided and
13the Medicaid payor has had a reasonable opportunity to
14recover under the Medicaid payor’s rights to subrogation,
15assignment, and lien. If the Medicaid payor is not given
16appropriate notice, the recipient, the recipient’s agent, and
17the recipient’s or recipient’s agent’s attorney are jointly
18and severally liable to reimburse the Medicaid payor for the
19recovery received to the extent of medical assistance paid by
20the Medicaid payor.
2115. a. Except as otherwise provided in this section, the
22entire amount of any settlement of the recipient’s action or
23claim involving third-party benefits, with or without suit, is
24subject to the Medicaid payor’s claim for reimbursement of the
25amount of medical assistance provided and any lien pursuant to
26the claim.
27b. Insurance and other third-party benefits shall not
28contain any term or provision which purports to limit or
29exclude payment or the provision of benefits for an individual
30if the individual is eligible for, or a recipient of, medical
31assistance, and any such term or provision shall be void as
32against public policy.
3316. In an action in tort against a third party in which the
34recipient is a party and which results in a judgment, award, or
35settlement from a third party, the amount recovered shall be
-12-1distributed as follows:
2a. After reasonable attorney fees and filing fees, there
3is a rebuttable presumption that all Medicaid payors shall
4collectively receive two-thirds of the remaining amount
5recovered or the total amount of medical assistance provided by
6the Medicaid payors, whichever is less. A party may rebut this
7presumption in accordance with subsection 17.
8b. The remaining recovered amount shall be paid to the
9recipient.
10c. For purposes of calculating the Medicaid payor’s
11recovered amount of medical assistance, the fee for services of
12an attorney retained by the recipient or the recipient’s legal
13representative shall not exceed one-third of the judgment,
14award, or settlement amount.
15d. If the recovered amount available for the repayment of
16medical assistance is insufficient to satisfy the competing
17claims of the Medicaid payors, each Medicaid payor shall be
18entitled to the Medicaid payor’s respective pro rata share of
19the recovered amount that is available.
2017. a. A recipient or a recipient’s agent who has notice
21or who has actual knowledge of the Medicaid payor’s rights
22to third-party benefits under this section and who receives
23any third-party benefit or proceeds for a covered injury or
24illness shall on or before the sixtieth day after receipt of
25the proceeds pay the Medicaid payor the full amount of the
26third-party benefits, but not more than the total medical
27assistance provided by the Medicaid payor, or shall place the
28full amount of the third-party benefits in an interest-bearing
29trust account for the benefit of the Medicaid payor pending a
30determination of the Medicaid payor’s rights to the benefits
31under this subsection.
32b. If federal law limits the Medicaid payor to reimbursement
33from the recovered damages for medical expenses, a recipient
34may contest the amount designated as recovered damages for
35medical expenses payable to the Medicaid payor pursuant to the
-13-1formula specified in subsection 16. In order to successfully
2rebut the formula specified in subsection 16, the recipient
3shall prove, by clear and convincing evidence, that the portion
4of the total recovery which should be allocated as medical
5expenses, including future medical expenses, is less than the
6amount calculated by the Medicaid payor pursuant to the formula
7specified in subsection 16. Alternatively, to successfully
8rebut the formula specified in subsection 16, the recipient
9shall prove, by clear and convincing evidence, that Medicaid
10provided a lesser amount of medical assistance than that
11asserted by the Medicaid payor. A settlement agreement that
12designates the amount of recovered damages for medical expenses
13is not clear and convincing evidence and is not sufficient to
14establish the recipient’s burden of proof, unless the Medicaid
15payor is a party to the settlement agreement.
16c. If the recipient or the recipient’s agent filed a legal
17action to recover against the third party, the court in which
18such action was filed shall resolve any dispute concerning
19the amount owed to the Medicaid payor, and shall retain
20jurisdiction of the case to resolve the amount of the lien
21after the dismissal of the action.
22d. If the recipient or the recipient’s agent did not file a
23legal action, to resolve any dispute concerning the amount owed
24to the Medicaid payor, the recipient or the recipient’s agent
25shall file a petition for declaratory judgment as permitted
26under rule of civil procedure 1.1101 on or before the one
27hundred twenty-first day after the date of payment of funds to
28the Medicaid payor or the date of placing the full amount of
29the third-party benefits in a trust account. Venue for all
30declaratory actions under this subsection shall lie in Polk
31county.
32e. Each party shall pay the party’s own attorney fees and
33costs for any legal action conducted under this subsection.
3418. Notwithstanding any other provision of law to the
35contrary, when medical assistance is provided for a minor, any
-14-1statute of limitation or repose applicable to an action or
2claim of a legally responsible relative for the minor’s medical
3expenses is extended in favor of the legally responsible
4relative so that the legally responsible relative shall have
5one year from and after the attainment of the minor’s majority
6within which to file a complaint, make a claim, or commence an
7action.
819. In recovering any payments in accordance with this
9section, the Medicaid payor may make appropriate settlements.
1020. The department may adopt rules to administer this
11section and applicable federal requirements.
12DIVISION II
13Medicaid managed care organization taxation of premiums
14 Sec. 3. NEW SECTION. 249A.13 Medicaid managed care
15organization premiums fund.
161. A Medicaid managed care organization premiums fund
17is created in the state treasury under the authority of the
18department of health and human services. Moneys collected by
19the director of the department of revenue as taxes on premiums
20pursuant to section 432.1A shall be deposited in the fund.
212. Moneys in the fund are appropriated to the department
22of health and human services for the purposes of the medical
23assistance program.
243. Notwithstanding section 8.33, moneys in the fund
25that remain unencumbered or unobligated at the close of a
26fiscal year shall not revert but shall remain available for
27expenditure for the purposes designated. Notwithstanding
28section 12C.7, subsection 2, interest or earnings on moneys in
29the fund shall be credited to the fund.
30 Sec. 4. NEW SECTION. 432.1A Health maintenance organization
31— medical assistance program — premium tax.
321. Pursuant to section 514B.31, subsection 3, a health
33maintenance organization contracting with the department of
34health and human services to administer the medical assistance
35program under chapter 249A, shall pay as taxes to the director
-15-1of the department of revenue for deposit in the Medicaid
2managed care organization premiums fund created in section
3249A.13, an amount equal to two and one-half percent of
4the premiums received and taxable under subsection 514B.31,
5subsection 3.
62. Except as provided in subsection 3, the premium tax shall
7be paid on or before March 1 of the year following the calendar
8year for which the tax is due. The commissioner of insurance
9may suspend or revoke the license of a health maintenance
10organization subject to the premium tax in subsection 1 that
11fails to pay the premium tax on or before the due date.
123. a. Each health maintenance organization transacting
13business in this state that is subject to the tax in subsection
141 shall remit on or before June 1, on a prepayment basis,
15an amount equal to one-half of the health maintenance
16organization’s premium tax liability for the preceding calendar
17year.
18b. In addition to the prepayment amount in paragraph
19“a”, each health maintenance organization subject to the
20tax in subsection 1 shall remit on or before August 15, on
21a prepayment basis, an additional one-half of the health
22maintenance organization’s premium tax liability for the
23preceding calendar year.
24c. The sums prepaid by a health maintenance organization
25under paragraphs “a” and “b” shall be allowed as credits
26against the health maintenance organization’s premium tax
27liability for the calendar year during which the payments are
28made. If a prepayment made under this subsection exceeds
29the health maintenance organization’s annual premium tax
30liability, the excess shall be allowed as a credit against the
31health maintenance organization’s subsequent prepayment or tax
32liabilities under this section. The commissioner of insurance
33shall authorize the department of revenue to make a cash refund
34to a health maintenance organization, in lieu of a credit
35against subsequent prepayment or tax liabilities under this
-16-1section, if the health maintenance organization demonstrates
2the inability to recoup the funds paid via a credit. The
3commissioner of insurance shall adopt rules establishing a
4health maintenance organization’s eligibility for a cash
5refund, and the process for the department of revenue to make a
6cash refund to an eligible health maintenance organization from
7the Medicaid managed care organization premiums fund created in
8section 249A.13. The commissioner of insurance may suspend or
9revoke the license of a health maintenance organization that
10fails to make a prepayment on or before the due date under this
11subsection.
12 Sec. 5. Section 514B.31, Code 2023, is amended by striking
13the section and inserting in lieu thereof the following:
14514B.31 Taxation.
151. For the first five years of the existence of a
16health maintenance organization and the health maintenance
17organization’s successors and assigns, the following shall
18not be considered premiums received and taxable under section
19432.1:
20a. Payments received by the health maintenance organization
21for health care services, insurance, indemnity, or other
22benefits to which an enrollee is entitled through a health
23maintenance organization authorized under this chapter.
24b. Payments made by the health maintenance organization
25to providers for health care services, to insurers, or to
26corporations authorized under chapter 514 for insurance,
27indemnity, or other service benefits authorized under this
28chapter.
292. After the first five years of the existence of a
30health maintenance organization and the health maintenance
31organization’s successors and assigns, the following shall be
32considered premiums received and taxable under section 432.1:
33a. Payments received by the health maintenance organization
34for health care services, insurance, indemnity, or other
35benefits to which an enrollee is entitled through a health
-17-1maintenance organization authorized under this chapter.
2b. Payments made by the health maintenance organization
3to providers for health care services, to insurers, or to
4corporations authorized under chapter 514 for insurance,
5indemnity, or other service benefits authorized under this
6chapter.
73. Notwithstanding subsections 1 and 2, beginning January
81, 2024, and for each subsequent calendar year, the following
9shall be considered premiums received and taxable under section
10432.1A for a health maintenance organization contracting with
11the department of health and human services to administer the
12medical assistance program under chapter 249A:
13a. Payments received by the health maintenance organization
14for health care services, insurance, indemnity, or other
15benefits to which an enrollee is entitled through a health
16maintenance organization authorized under this chapter.
17b. Payments made by the health maintenance organization
18to providers for health care services, to insurers, or to
19corporations authorized under chapter 514 for insurance,
20indemnity, or other service benefits authorized under this
21chapter.
224. Payments made to a health maintenance organization
23by the United States secretary of health and human services
24under a contract issued under section 1833 or 1876 of the
25federal Social Security Act, or under section 4015 of the
26federal Omnibus Budget Reconciliation Act of 1987, shall not
27be considered premiums received and shall not be taxable
28under section 432.1. Payments made to a health maintenance
29organization contracting with the department of health and
30human services to administer the medical assistance program
31under chapter 249A shall not be taxable under section 432.1.
32EXPLANATION
33The inclusion of this explanation does not constitute agreement with
34the explanation’s substance by the members of the general assembly.
35This bill relates to the Medicaid program including recovery
-18-1by the department of health and human services (HHS or the
2department) from third parties and taxation of Medicaid managed
3care organization premiums.
4DIVISION I — MEDICAID PROGRAM THIRD-PARTY RECOVERY. The
5bill strikes and replaces current provisions in Code section
6249A.37 (health care information sharing) and Code section
7249A.54 (assignment — lien).
8Under the bill, new Code section 249A.37 (duties of third
9parties) relates to the duties of third parties, defined
10under the bill as “an individual, entity, or program,
11excluding Medicaid, that is or may be liable to pay all or
12a part of the expenditures for medical assistance provided
13by a Medicaid payor to the recipient”. The listing of
14“third parties” includes but is not limited to a third-party
15administrator, a pharmacy benefits manager, a health insurer, a
16self-insured plan, a group health plan, a service benefit plan,
17a managed care organization, liability insurance including
18self-insurance, no-fault insurance, workers’ compensation laws
19or plans, and other parties that by law, contract, or agreement
20are legally responsible for payment of a claim for a medical
21service. The bill also defines terms including “Medicaid
22payor”, “recipient”, “third party”, and “third-party benefits”.
23The bill provides that the third-party obligations specified
24under the bill are a condition of doing business in the state,
25and a third party that fails to comply with these obligations
26shall not be eligible to do business in the state.
27The bill requires that a third party that is a carrier shall
28enter into a health insurance data match program with HHS
29for the sole purpose of comparing the names of the carrier’s
30insureds with the names of recipients as required by Code
31section 505.25 (information provided to medical assistance
32program, hawk-i program, and child support recovery unit).
33The bill specifies the duties of a third party under the
34Medicaid program including cooperating with the Medicaid payor
35in identifying recipients for whom third-party benefits are
-19-1available; accepting the Medicaid payor’s rights of recovery
2and assignment to the Medicaid payor for payments which the
3Medicaid payor has made; accepting authorization provided by
4the Medicaid payor that the health care item or service is
5covered as if such authorization were the prior authorization
6made by the third party for such health care item or service;
7responding to inquiries from Medicaid payors regarding claims
8for payment; and not denying claims submitted by a Medicaid
9payor solely on the basis of the date of submission of the
10claim, the type or format of the claim form, a failure to
11present proper documentation, or in the case of specified
12third-party payors solely on the basis of a failure to obtain
13prior authorization if certain conditions are met.
14The department may adopt administrative rules to administer
15this Code section of the bill. Rules governing the exchange
16of information under the bill shall be consistent with all
17laws, regulations, and rules relating to the confidentiality or
18privacy of personal information or medical records, including
19but not limited to the federal Health Insurance Portability
20and Accountability Act (HIPAA) and regulations promulgated in
21accordance with HIPAA.
22Under new Code section 249A.54 (responsibility for payment
23on behalf of Medicaid-eligible persons — liability of other
24parties) the bill includes specific provisions relating to the
25responsibility for payment on behalf of Medicaid recipients,
26which include both persons who have applied for and persons
27who have received medical assistance, when other parties are
28liable.
29The bill provides that it is the intent of the general
30assembly that Medicaid payors be the payor of last resort for
31medical services furnished to recipients. All other sources of
32payment for medical services are primary relative to medical
33assistance provided by the Medicaid payor. If benefits of a
34third party are discovered or become available after medical
35assistance has been provided by the Medicaid payor, it is
-20-1the intent of the general assembly that the Medicaid payor
2be repaid in full and prior to any other person, program, or
3entity. The Medicaid payor shall be repaid in full from and to
4the extent of any third-party benefits, regardless of whether a
5recipient is made whole or other creditors paid.
6The bill provides definitions for “collateral”, “covered
7injury or illness”, “Medicaid payor”, “medical service”,
8“payment”, “proceeds”, “recipient” which includes both an
9applicant for and recipient of medical assistance, “recipient’s
10agent”, “third party”, and “third-party benefits”.
11The bill provides that third-party benefits for medical
12services shall be primary relative to medical assistance
13provided by the Medicaid payor. A Medicaid payor has all of
14the rights, privileges, and responsibilities identified under
15the bill, but if HHS determines that a Medicaid payor has not
16taken reasonable steps within a reasonable time to recover
17third-party benefits, HHS may exercise all of the rights of the
18Medicaid payor to the exclusion of the Medicaid payor following
19provision of notice to third parties and the Medicaid payor.
20A Medicaid payor may assign the Medicaid payor’s rights
21under the bill, including to another Medicaid payor, a
22provider, or a contractor. After the Medicaid payor has
23provided medical assistance, the Medicaid payor shall seek
24reimbursement for third-party benefits to the extent of the
25Medicaid payor’s legal liability and for the full amount of
26the third-party benefits, but not in excess of the amount of
27medical assistance provided by the Medicaid payor.
28Within 30 days following discovery by a recipient of
29potential third-party benefits, a recipient and the recipient’s
30agent shall inform the Medicaid payor of any rights the
31recipient has to third-party benefits and provide identifying
32information for any person that is or may be liable to provide
33third-party benefits.
34The bill specifies the rights of a Medicaid payor when
35the Medicaid payor provides or becomes liable for medical
-21-1assistance, including that the Medicaid payor is automatically
2subrogated to any rights that a recipient or a recipient’s
3agent or legally liable relative has to any third-party
4benefit for the full amount of medical assistance provided by
5the Medicaid payor; that the Medicaid payor is automatically
6assigned any right, title, and interest a recipient or
7a recipient’s agent or legally liable relative has to a
8third-party benefit by virtue of applying for, accepting, or
9accepting the benefit of medical assistance, excluding any
10Medicare benefit to the extent required to be excluded by
11federal law; and that the Medicaid payor is entitled to and
12has an automatic lien upon the collateral for the full amount
13of medical assistance provided by the Medicaid payor to or on
14behalf of the recipient for medical services furnished as a
15result of any covered injury or illness for which a third party
16is or may be liable.
17Unless otherwise provided in the bill, the Medicaid payor
18shall recover the full amount of all medical assistance
19provided by the Medicaid payor on behalf of the recipient
20to the full extent of third-party benefits. A recipient
21and the recipient’s agent shall cooperate in the Medicaid
22payor’s recovery of the recipient’s third-party benefits and
23in establishing paternity and support of a recipient child
24born out of wedlock. The Medicaid payor has the discretion
25to waive, in writing, the requirement of cooperation for good
26cause shown and as required by federal law. The department may
27deny or terminate eligibility for any recipient who refuses to
28cooperate, unless HHS has waived cooperation.
29Within 30 days of initiating formal or informal recovery,
30other than by filing a lawsuit, a recipient’s attorney shall
31provide written notice of the activity or action to the
32Medicaid payor.
33A recipient is deemed to have authorized the Medicaid payor
34to obtain and release medical information and other records
35with respect to the recipient’s medical services for the sole
-22-1purpose of obtaining reimbursement for medical assistance
2provided by the Medicaid payor.
3To enforce the Medicaid payor’s rights, the Medicaid
4payor may institute, intervene in, or join in any legal or
5administrative proceeding in the Medicaid payor’s own name, and
6in a number or a combination of capacities listed in the bill.
7An action by the Medicaid payor to recover damages in an action
8in tort, which is derivative of the rights of the recipient,
9shall not constitute a waiver of sovereign immunity.
10If an action is filed by a recipient or a recipient’s agent
11against a third party, the recipient, the recipient’s agent,
12or the attorney of the recipient or the recipient’s agent,
13as applicable, shall provide written notice to the Medicaid
14payor of the action, including the name of the court in which
15the action is brought, the case number of the action, and a
16copy of the pleadings. The recipient, the recipient’s agent,
17or the attorney of the recipient or the recipient’s agent,
18as applicable, shall also provide written notice of intent
19to dismiss the action prior to the voluntary dismissal of an
20action against a third party.
21Before a recipient finalizes a judgment, award, settlement,
22or any other recovery where the Medicaid payor has the right
23to recovery, the recipient, the recipient’s agent, or the
24attorney of the recipient or recipient’s agent, as applicable,
25shall give the Medicaid payor notice of the judgment, award,
26settlement, or recovery. The judgment, award, settlement,
27or recovery shall not be finalized unless the notice is
28provided and the Medicaid payor has a reasonable opportunity
29to recover under its rights to subrogation, assignment, and
30lien. If appropriate notice is not provided, the recipient,
31the recipient’s agent, and the recipient’s or recipient’s
32agent’s attorney are jointly and severally liable to reimburse
33the Medicaid payor for the recovery received to the extent of
34medical assistance paid by the Medicaid payor.
35Unless otherwise provided, the entire amount of any
-23-1settlement of the recipient’s action or claim involving
2third-party benefits is subject to the Medicaid payor’s claim
3for reimbursement of the amount of medical assistance provided
4and any lien pursuant to the claim.
5The bill prohibits insurance and other third-party benefits
6from containing any term or provision which purports to
7limit or exclude payment or the provision of benefits for an
8individual if the individual is eligible for, or a recipient
9of, medical assistance, and any such term or provision shall be
10void as against public policy.
11In an action in tort against a third party in which the
12recipient is a party, of the amount recovered in any resulting
13judgment, award, or settlement from a third party, after
14reasonable attorney fees and filing fees, there is a rebuttable
15presumption that all Medicaid payors shall receive two-thirds
16of the remaining amount recovered or the total amount of
17medical assistance provided by the Medicaid payors, whichever
18is less; and the remaining amount recovered shall be paid to
19the recipient. In calculating the Medicaid payor’s recovered
20amount of medical assistance, the fee for services of an
21attorney retained by the recipient or the recipient’s legal
22representative shall not exceed one-third of the judgment,
23award, or settlement amount. If the recovered amount is
24insufficient to satisfy the competing claims of the Medicaid
25payors, each Medicaid payor shall be entitled to the Medicaid
26payor’s respective pro rata share of the recovered amount that
27is available.
28A recipient or a recipient’s agent who has notice or
29who has actual knowledge of the Medicaid payor’s rights to
30third-party benefits who receives any third-party benefit or
31proceeds for a covered injury or illness, shall after receipt
32of the proceeds pay the Medicaid payor the full amount of the
33third-party benefits, but not more than the total medical
34assistance provided by the Medicaid payor, or shall place the
35full amount of the third-party benefits in an interest-bearing
-24-1trust account for the benefit of the Medicaid payor pending a
2determination of the Medicaid payor’s rights to the benefits.
3If federal law limits the Medicaid payor to reimbursement
4from the recovered damages for medical expenses, a recipient
5may contest the amount designated as recovered damages for
6medical expenses payable to the Medicaid payor as specified
7in the formula under the bill. To successfully rebut the
8formula, the recipient shall prove, by clear and convincing
9evidence, that the portion of the total recovery which should
10be allocated as medical expenses, including future medical
11expenses, is less than the amount calculated by the Medicaid
12payor pursuant to the formula. Alternatively, to successfully
13rebut the formula, the recipient shall prove, by clear and
14convincing evidence, that Medicaid provided a lesser amount of
15medical assistance than that asserted by the Medicaid payor. A
16settlement agreement that designates the amount of recovered
17damages for medical expenses is not clear and convincing
18evidence and is not sufficient to establish the recipient’s
19burden of proof, unless the Medicaid payor is a party to the
20settlement agreement.
21If the recipient or the recipient’s agent filed a legal
22action to recover against the third party, the court in which
23such action was filed shall resolve any dispute concerning
24the amount owed to the Medicaid payor, and shall retain
25jurisdiction of the case to resolve the amount of the lien
26after the dismissal of the action. If the recipient or the
27recipient’s agent did not file a legal action to resolve any
28dispute concerning the amount owed to the Medicaid payor, the
29recipient or the recipient’s agent shall file a petition for
30declaratory judgment. Venue for all such declaratory actions
31shall lie in Polk county. Each party shall pay the party’s own
32attorney fees and costs for any legal action conducted under
33this provision of the bill.
34With regard to medical assistance provided to a minor, and
35notwithstanding any other provision of law to the contrary, any
-25-1statute of limitations or repose applicable to an action or
2claim of a legally responsible relative for the minor’s medical
3expenses is extended in favor of the legally responsible
4relative so that the legally responsible relative shall have
5one year from and after the attainment of the minor’s majority
6within which to file a complaint, make a claim, or commence an
7action.
8In recovering any payments under the bill, the Medicaid
9payor may make appropriate settlements. The department may
10adopt administrative rules to administer this portion of the
11bill and applicable federal requirements.
12DIVISION II — MEDICAID MANAGED CARE ORGANIZATION
13TAXATION OF PREMIUMS. The bill relates to taxation of health
14maintenance organizations.
15Under current Code section 514B.31 (taxation), for the
16first five years of the existence of a health maintenance
17organization (HMO) or its successor, payments received by the
18HMO for health care services, insurance, indemnity, or other
19benefits to which an enrollee is entitled, and payments made by
20the HMO to a provider for health care services, to insurers, or
21to corporations authorized under Code chapter 514 (nonprofit
22health services corporations) for insurance, indemnity, or
23other service benefits, are not considered premiums received
24and not taxable under Code section 432.1 (tax on gross premiums
25— exclusions). After five years, payments received by the
26HMO or its successor for health care services, insurance,
27indemnity, or other benefits to which an enrollee is entitled,
28and payments made by the HMO to a provider for health care
29services, to insurers, or to corporations authorized under
30Code chapter 514 (nonprofit health services corporations)
31for insurance, indemnity, or other service benefits, are
32considered premiums received and taxable under Code section
33432.1. Current Code section 514B.31 also provides that certain
34payments made by the United States secretary of health and
35human services are not considered premiums and therefore not
-26-1taxable under Code section 432.1.
2The provisions of current Code section 514B.31 continue
3under the bill, except that the exclusion from consideration
4as premiums of payments made by the United States secretary
5of health and human services under Code chapter 249A (medical
6assistance) is eliminated and replaced with language that
7instead specifies that payments made to an HMO contracting
8with HHS under Code chapter 249A shall not be taxable under
9Code section 432.1, thereby exempting all payments to
10these particular HMOs from consideration as premiums and
11correspondingly from taxation under Code section 432.1. The
12bill also amends current Code section 514B.31 to provide that
13notwithstanding the provisions applicable to HMOs under Code
14section 514B.31 relating to a premium tax, beginning January
151, 2024, and for each subsequent calendar year, for an HMO
16contracting with HHS to administer the medical assistance
17program under Code chapter 249A, payments received by the
18HMO for health care services, insurance, indemnity, or other
19benefits to which an enrollee is entitled, and payments made by
20the HMO to a provider for health care services, to insurers,
21or to corporations authorized under Code chapter 514 for
22insurance, indemnity, or other service benefits, are considered
23premiums received and taxable under new Code section 432.1A.
24The bill establishes under new Code section 432.1A (health
25maintenance organization — medical assistance program —
26premium tax) the parameters of the new tax on HMOs contracting
27with HHS to administer the medical assistance program under
28Code chapter 249A. Such HMOs shall pay as taxes to the
29director of the department of revenue for deposit in the
30Medicaid managed care organization premiums fund an amount
31equal to 2.5 percent of the premiums received and taxable. The
32premium tax shall be paid on or before March 1 of the year
33following the calendar year for which the tax is due. The
34commissioner of insurance may suspend or revoke the license of
35an HMO subject to the premium tax that fails to pay the premium
-27-1tax on or before the due date.
2An HMO subject to the new tax shall remit on or before June
31, on a prepayment basis, an amount equal to one-half of the
4HMO’s premium tax liability for the preceding calendar year;
5and shall remit on or before August 15, on a prepayment basis,
6an additional one-half of the HMO’s premium tax liability
7for the preceding calendar year. If a prepayment exceeds
8the HMO’s annual premium tax liability, the excess shall be
9allowed as a credit against the HMO’s subsequent prepayment
10or tax liabilities. The HMO may receive a credit or a cash
11refund in lieu of a credit against subsequent prepayment or
12tax liabilities. The commissioner of insurance may suspend or
13revoke the license of an HMO that fails to make a prepayment on
14or before the due date.
15The bill creates in new Code section 249A.13 a Medicaid
16managed care organization premiums fund in the state treasury
17under the authority of HHS. Moneys collected from the new
18tax on premiums shall be deposited in the fund. Moneys in
19the fund are appropriated to HHS for the purposes of the
20medical assistance program. Moneys in the fund that remain
21unencumbered or unobligated at the close of a fiscal year shall
22not revert but shall remain available for expenditure for the
23purposes designated. Interest or earnings on moneys in the
24fund shall be credited to the fund.
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