House Study Bill 177 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF HEALTH AND HUMAN SERVICES BILL) A BILL FOR An Act relating to the Medicaid program including third-party 1 recovery and taxation of Medicaid managed care organization 2 premiums. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1182XD (13) 90 pf/rh

S.F. _____ H.F. _____ DIVISION I 1 MEDICAID PROGRAM THIRD-PARTY RECOVERY 2 Section 1. Section 249A.37, Code 2023, is amended by 3 striking the section and inserting in lieu thereof the 4 following: 5 249A.37 Duties of third parties. 6 1. For the purposes of this section, “Medicaid payor” , 7 “recipient” , “third party” , and “third-party benefits” mean the 8 same as defined in section 249A.54. 9 2. The third-party obligations specified under this section 10 are a condition of doing business in the state. A third party 11 that fails to comply with these obligations shall not be 12 eligible to do business in the state. 13 3. A third party that is a carrier, as defined in section 14 514C.13, shall enter into a health insurance data match program 15 with the department for the sole purpose of comparing the 16 names of the carrier’s insureds with the names of recipients 17 as required by section 505.25. 18 4. A third party shall do all of the following: 19 a. Cooperate with the Medicaid payor in identifying 20 recipients for whom third-party benefits are available 21 including but not limited to providing information to determine 22 the period of potential third-party coverage, the nature of 23 the coverage, and the name, address, and identifying number 24 of the coverage. In cooperating with the Medicaid payor, the 25 third party shall provide information upon the request of the 26 Medicaid payor in a manner prescribed by the Medicaid payor or 27 as agreed upon by the Medicaid payor and the third party. 28 b. (1) Accept the Medicaid payor’s rights of recovery 29 and assignment to the Medicaid payor as a subrogee, assignee, 30 or lienholder under section 249A.54 for payments which the 31 Medicaid payor has made under the Medicaid state plan or under 32 a waiver of such state plan. 33 (2) In the case of a third party other than the original 34 Medicare fee-for-service program under parts A and B of Tit. 35 -1- LSB 1182XD (13) 90 pf/rh 1/ 28

S.F. _____ H.F. _____ XVIII of the federal Social Security Act, a Medicare advantage 1 plan offered by a Medicare advantage organization under part C 2 of Tit. XVIII of the federal Social Security Act, a reasonable 3 cost reimbursement contract under 42 U.S.C. §1395mm, a health 4 care prepayment plan under 42 U.S.C. §1395l, or a prescription 5 drug plan offered by a prescription drug plan sponsor under 6 part D of Tit. XVIII of the federal Social Security Act that 7 requires prior authorization for an item or service furnished 8 to an individual eligible to receive medical assistance 9 under Tit. XIX of the federal Social Security Act, accept 10 authorization provided by the Medicaid payor that the health 11 care item or service is covered under the Medicaid state plan 12 or waiver of such state plan for such individual, as if such 13 authorization were the prior authorization made by the third 14 party for such item or service. 15 c. If, on or before three years from the date a health care 16 item or service was provided, the Medicaid payor submits an 17 inquiry regarding a claim for payment that was submitted to the 18 third party, respond to that inquiry not later than sixty days 19 after receiving the inquiry. 20 d. Respond to any Medicaid payor’s request for payment of a 21 claim described in paragraph “c” not later than ninety business 22 days after receipt of written proof of the claim, either by 23 paying the claim or issuing a written denial to the Medicaid 24 payor. 25 e. Not deny any claim submitted by a Medicaid payor solely 26 on the basis of the date of submission of the claim, the type 27 or format of the claim form, a failure to present proper 28 documentation at the point-of-sale that is the basis of the 29 claim; or in the case of a third party other than the original 30 Medicare fee-for-service program under parts A and B of Tit. 31 XVIII of the federal Social Security Act, a Medicare advantage 32 plan offered by a Medicare advantage organization under part C 33 of Tit. XVIII of the federal Social Security Act, a reasonable 34 cost reimbursement contract under 42 U.S.C. §1395mm, a health 35 -2- LSB 1182XD (13) 90 pf/rh 2/ 28

S.F. _____ H.F. _____ care prepayment plan under 42 U.S.C. §1395l, or a prescription 1 drug plan offered by a prescription drug plan sponsor under 2 part D of Tit. XVIII of the federal Social Security Act, solely 3 on the basis of a failure to obtain prior authorization for the 4 health care item or service for which the claim is submitted if 5 all of the following conditions are met: 6 (a) The claim is submitted to the third party by the 7 Medicaid payor no later than three years after the date on 8 which the health care item or service was furnished. 9 (b) Any action by the Medicaid payor to enforce its rights 10 under section 249A.54 with respect to such claim is commenced 11 not later than six years after the Medicaid payor submits the 12 claim for payment. 13 5. Notwithstanding any provision of law to the contrary, 14 the time limitations, requirements, and allowances specified 15 in this section shall apply to third-party obligations under 16 this section. 17 6. The department may adopt rules pursuant to chapter 17A 18 as necessary to administer this section. Rules governing 19 the exchange of information under this section shall be 20 consistent with all laws, regulations, and rules relating to 21 the confidentiality or privacy of personal information or 22 medical records, including but not limited to the federal 23 Health Insurance Portability and Accountability Act of 1996, 24 Pub. L. No. 104-191, and regulations promulgated in accordance 25 with that Act and published in 45 C.F.R. pts. 160 – 164. 26 Sec. 2. Section 249A.54, Code 2023, is amended by striking 27 the section and inserting in lieu thereof the following: 28 249A.54 Responsibility for payment on behalf of 29 Medicaid-eligible persons —— liability of other parties. 30 1. It is the intent of the general assembly that a Medicaid 31 payor be the payor of last resort for medical services 32 furnished to recipients. All other sources of payment for 33 medical services are primary relative to medical assistance 34 provided by the Medicaid payor. If benefits of a third party 35 -3- LSB 1182XD (13) 90 pf/rh 3/ 28

S.F. _____ H.F. _____ are discovered or become available after medical assistance has 1 been provided by the Medicaid payor, it is the intent of the 2 general assembly that the Medicaid payor be repaid in full and 3 prior to any other person, program, or entity. The Medicaid 4 payor shall be repaid in full from and to the extent of any 5 third-party benefits, regardless of whether a recipient is made 6 whole or other creditors are paid. 7 2. For the purposes of this section: 8 a. “Collateral” means all of the following: 9 (1) Any and all causes of action, suits, claims, 10 counterclaims, and demands that accrue to the recipient 11 or to the recipient’s agent, related to any covered injury 12 or illness, or medical services that necessitated that the 13 Medicaid payor provide medical assistance to the recipient. 14 (2) All judgments, settlements, and settlement agreements 15 rendered or entered into and related to such causes of action, 16 suits, claims, counterclaims, demands, or judgments. 17 (3) Proceeds. 18 b. “Covered injury or illness” means any sickness, injury, 19 disease, disability, deformity, abnormality disease, necessary 20 medical care, pregnancy, or death for which a third party is, 21 may be, could be, should be, or has been liable, and for which 22 the Medicaid payor is, or may be, obligated to provide, or has 23 provided, medical assistance. 24 c. “Medicaid payor” means the department or any person, 25 entity, or organization that is legally responsible by 26 contract, statute, or agreement to pay claims for medical 27 assistance including but not limited to managed care 28 organizations and other entities that contract with the state 29 to provide medical assistance under chapter 249A. 30 d. “Medical service” means medical or medically related 31 institutional or noninstitutional care, or a medical or 32 medically related institutional or noninstitutional good, item, 33 or service covered by Medicaid. 34 e. “Payment” as it relates to third-party benefits, means 35 -4- LSB 1182XD (13) 90 pf/rh 4/ 28

S.F. _____ H.F. _____ performance of a duty, promise, or obligation, or discharge of 1 a debt or liability, by the delivery, provision, or transfer of 2 third-party benefits for medical services. “To pay” means to 3 make payment. 4 f. “Proceeds” means whatever is received upon the sale, 5 exchange, collection, or other disposition of the collateral 6 or proceeds from the collateral and includes insurance payable 7 because of loss or damage to the collateral or proceeds. “Cash 8 proceeds” include money, checks, and deposit accounts and 9 similar proceeds. All other proceeds are “noncash proceeds” . 10 g. “Recipient” means a person who has applied for medical 11 assistance or who has received medical assistance. 12 h. “Recipient’s agent” includes a recipient’s legal 13 guardian, legal representative, or any other person acting on 14 behalf of the recipient. 15 i. “Third party” means an individual, entity, or program, 16 excluding Medicaid, that is or may be liable to pay all or a 17 part of the expenditures for medical assistance provided by a 18 Medicaid payor to the recipient. A third party includes but is 19 not limited to all of the following: 20 (1) A third-party administrator. 21 (2) A pharmacy benefits manager. 22 (3) A health insurer. 23 (4) A self-insured plan. 24 (5) A group health plan, as defined in section 607(1) of the 25 federal Employee Retirement Income Security Act of 1974. 26 (6) A service benefit plan. 27 (7) A managed care organization. 28 (8) Liability insurance including self-insurance. 29 (9) No-fault insurance. 30 (10) Workers’ compensation laws or plans. 31 (11) Other parties that by law, contract, or agreement 32 are legally responsible for payment of a claim for medical 33 services. 34 j. “Third-party benefits” mean any benefits that are or may 35 -5- LSB 1182XD (13) 90 pf/rh 5/ 28

S.F. _____ H.F. _____ be available to a recipient from a third party and that provide 1 or pay for medical services. “Third-party benefits” may be 2 created by law, contract, court award, judgment, settlement, 3 agreement, or any arrangement between a third party and any 4 person or entity, recipient, or otherwise. “Third-party 5 benefits” include but are not limited to all of the following: 6 (1) Benefits from collateral or proceeds. 7 (2) Health insurance benefits. 8 (3) Health maintenance organization benefits. 9 (4) Benefits from preferred provider arrangements and 10 prepaid health clinics. 11 (5) Benefits from liability insurance, uninsured and 12 underinsured motorist insurance, or personal injury protection 13 coverage. 14 (6) Medical benefits under workers’ compensation. 15 (7) Benefits from any obligation under law or equity to 16 provide medical support. 17 3. Third-party benefits for medical services shall be 18 primary to medical assistance provided by the Medicaid payor. 19 4. a. A Medicaid payor has all of the rights, privileges, 20 and responsibilities identified under this section. Each 21 Medicaid payor is a Medicaid payor to the extent of the 22 medical assistance provided by that Medicaid payor. Therefore, 23 Medicaid payors may exercise their Medicaid payor’s rights 24 under this section concurrently. 25 b. Notwithstanding the provisions of this subsection to the 26 contrary, if the department determines that a Medicaid payor 27 has not taken reasonable steps within a reasonable time to 28 recover third-party benefits, the department may exercise all 29 of the rights of the Medicaid payor under this section to the 30 exclusion of the Medicaid payor. If the department determines 31 the department will exercise such rights, the department shall 32 give notice to third parties and to the Medicaid payor. 33 5. A Medicaid payor may assign the Medicaid payor’s rights 34 under this section, including but not limited to an assignment 35 -6- LSB 1182XD (13) 90 pf/rh 6/ 28

S.F. _____ H.F. _____ to another Medicaid payor, a provider, or a contractor. 1 6. After the Medicaid payor has provided medical assistance 2 under the Medicaid program, the Medicaid payor shall seek 3 reimbursement for third-party benefits to the extent of the 4 Medicaid payor’s legal liability and for the full amount of 5 the third-party benefits, but not in excess of the amount of 6 medical assistance provided by the Medicaid payor. 7 7. On or before the thirtieth day following discovery by a 8 recipient of potential third-party benefits, a recipient and 9 the recipient’s agent shall inform the Medicaid payor of any 10 rights the recipient has to third-party benefits and of the 11 name and address of any person that is or may be liable to 12 provide third-party benefits. 13 8. When the Medicaid payor provides or becomes liable for 14 medical assistance, the Medicaid payor has the following rights 15 which shall be construed together to provide the greatest 16 recovery of third-party benefits: 17 a. The Medicaid payor is automatically subrogated to any 18 rights that a recipient or a recipient’s agent or legally 19 liable relative has to any third-party benefit for the full 20 amount of medical assistance provided by the Medicaid payor. 21 Recovery pursuant to these subrogation rights shall not be 22 reduced, prorated, or applied to only a portion of a judgment, 23 award, or settlement, but shall provide full recovery to the 24 Medicaid payor from any and all third-party benefits. Equities 25 of a recipient or a recipient’s agent, creditor, or health care 26 provider shall not defeat, reduce, or prorate recovery by the 27 Medicaid payor as to the Medicaid payor’s subrogation rights 28 granted under this paragraph. 29 b. By applying for, accepting, or accepting the benefit 30 of medical assistance, a recipient or a recipient’s agent or 31 legally liable relative automatically assigns to the Medicaid 32 payor any right, title, and interest such person has to any 33 third-party benefit, excluding any Medicare benefit to the 34 extent required to be excluded by federal law. 35 -7- LSB 1182XD (13) 90 pf/rh 7/ 28

S.F. _____ H.F. _____ (1) The assignment granted under this paragraph is absolute 1 and vests legal and equitable title to any such right in the 2 Medicaid payor, but not in excess of the amount of medical 3 assistance provided by the Medicaid payor. 4 (2) The Medicaid payor is a bona fide assignee for value in 5 the assigned right, title, or interest and takes vested legal 6 and equitable title free and clear of latent equities in a 7 third party. Equities of a recipient or a recipient’s agent, 8 creditor, or health care provider shall not defeat or reduce 9 recovery by the Medicaid payor as to the assignment granted 10 under this paragraph. 11 c. The Medicaid payor is entitled to and has an automatic 12 lien upon the collateral for the full amount of medical 13 assistance provided by the Medicaid payor to or on behalf of 14 the recipient for medical services furnished as a result of any 15 covered injury or illness for which a third party is or may be 16 liable. 17 (1) The lien attaches automatically when a recipient first 18 receives medical services for which the Medicaid payor may be 19 obligated to provide medical assistance. 20 (2) The filing of the notice of lien with the clerk of 21 the district court in the county in which the recipient’s 22 eligibility is established pursuant to this section shall be 23 notice of the lien to all persons. Notice is effective as of 24 the date of filing of the notice of lien. 25 (3) If the Medicaid payor knows that the recipient is 26 represented by an attorney, the Medicaid payor shall provide 27 the attorney with a copy of the notice of lien. However, this 28 provision of a copy of the notice of lien to the recipient’s 29 attorney does not abrogate the attachment, perfection, and 30 notice satisfaction requirements specified under subparagraphs 31 (1) and (2). 32 (4) Only one claim of lien need be filed to provide notice 33 and shall provide sufficient notice as to any additional 34 or after-paid amount of medical assistance provided by the 35 -8- LSB 1182XD (13) 90 pf/rh 8/ 28

S.F. _____ H.F. _____ Medicaid payor for any specific covered injury or illness. 1 The Medicaid payor may, in the Medicaid payor’s discretion, 2 file additional, amended, or substitute notices of lien at any 3 time after the initial filing until the Medicaid payor has 4 been repaid the full amount of medical assistance provided 5 by Medicaid or otherwise has released the liable parties and 6 recipient. 7 (5) A release or satisfaction of any cause of action, 8 suit, claim, counterclaim, demand, judgment, settlement, or 9 settlement agreement shall not be effective as against a lien 10 created under this paragraph, unless the Medicaid payor joins 11 in the release or satisfaction or executes a release of the 12 lien. An acceptance of a release or satisfaction of any cause 13 of action, suit, claim, counterclaim, demand, or judgment and 14 any settlement of any of the foregoing in the absence of a 15 release or satisfaction of a lien created under this paragraph 16 shall prima facie constitute an impairment of the lien, and 17 the Medicaid payor is entitled to recover damages on account 18 of such impairment. In an action on account of impairment of a 19 lien, the Medicaid payor may recover from the person accepting 20 the release or satisfaction or the person making the settlement 21 the full amount of medical assistance provided by the Medicaid 22 payor. 23 (6) The lack of a properly filed claim of lien shall not 24 affect the Medicaid payor’s assignment or subrogation rights 25 provided in this subsection nor affect the existence of the 26 lien, but shall only affect the effective date of notice. 27 (7) The lien created by this paragraph is a first lien 28 and superior to the liens and charges of any provider of a 29 recipient’s medical services. If the lien is recorded, the 30 lien shall exist for a period of seven years after the date of 31 recording. If the lien is not recorded, the lien shall exist 32 for a period of seven years after the date of attachment. If 33 recorded, the lien may be extended for one additional period 34 of seven years by rerecording the claim of lien within the 35 -9- LSB 1182XD (13) 90 pf/rh 9/ 28

S.F. _____ H.F. _____ ninety-day period preceding the expiration of the lien. 1 9. Except as otherwise provided in this section, the 2 Medicaid payor shall recover the full amount of all medical 3 assistance provided by the Medicaid payor on behalf of the 4 recipient to the full extent of third-party benefits. The 5 Medicaid payor may collect recovered benefits directly from any 6 of the following: 7 a. A third party. 8 b. The recipient. 9 c. The provider of a recipient’s medical services if 10 third-party benefits have been recovered by the provider. 11 Notwithstanding any provision of this section to the contrary, 12 a provider shall not be required to refund or pay to the 13 Medicaid payor any amount in excess of the actual third-party 14 benefits received by the provider from a third party for 15 medical services provided to the recipient. 16 d. Any person who has received the third-party benefits. 17 10. a. A recipient and the recipient’s agent shall 18 cooperate in the Medicaid payor’s recovery of the recipient’s 19 third-party benefits and in establishing paternity and support 20 of a recipient child born out of wedlock. Such cooperation 21 shall include but is not limited to all of the following: 22 (1) Appearing at an office designated by the Medicaid payor 23 to provide relevant information or evidence. 24 (2) Appearing as a witness at a court proceeding or other 25 legal or administrative proceeding. 26 (3) Providing information or attesting to lack of 27 information under penalty of perjury. 28 (4) Paying to the Medicaid payor any third-party benefit 29 received. 30 (5) Taking any additional steps to assist in establishing 31 paternity or securing third-party benefits, or both. 32 b. Notwithstanding paragraph “a” , the Medicaid payor has the 33 discretion to waive, in writing, the requirement of cooperation 34 for good cause shown and as required by federal law. 35 -10- LSB 1182XD (13) 90 pf/rh 10/ 28

S.F. _____ H.F. _____ c. The department may deny or terminate eligibility for 1 any recipient who refuses to cooperate as required under this 2 subsection unless the department has waived cooperation as 3 provided under this subsection. 4 11. On or before the thirtieth day following the initiation 5 of a formal or informal recovery, other than by filing a 6 lawsuit, a recipient’s attorney shall provide written notice of 7 the activity or action to the Medicaid payor. 8 12. A recipient is deemed to have authorized the Medicaid 9 payor to obtain and release medical information and other 10 records with respect to the recipient’s medical services 11 for the sole purpose of obtaining reimbursement for medical 12 assistance provided by the Medicaid payor. 13 13. a. To enforce the Medicaid payor’s rights under 14 this section, the Medicaid payor may, as a matter of right, 15 institute, intervene in, or join in any legal or administrative 16 proceeding in the Medicaid payor’s own name, and in any or a 17 combination of any, of the following capacities: 18 (1) Individually. 19 (2) As a subrogee of the recipient. 20 (3) As an assignee of the recipient. 21 (4) As a lienholder of the collateral. 22 b. An action by the Medicaid payor to recover damages 23 in an action in tort under this subsection, which action is 24 derivative of the rights of the recipient, shall not constitute 25 a waiver of sovereign immunity. 26 c. If the recipient or a recipient’s agent brings an action 27 against a third party, on or before the thirtieth day following 28 the filing of the action, the recipient, the recipient’s agent, 29 or the attorney of the recipient or the recipient’s agent, 30 as applicable, shall provide written notice to the Medicaid 31 payor of the action, including the name of the court in which 32 the action is brought, the case number of the action, and a 33 copy of the pleadings. The recipient, the recipient’s agent, 34 or the attorney of the recipient or the recipient’s agent, as 35 -11- LSB 1182XD (13) 90 pf/rh 11/ 28

S.F. _____ H.F. _____ applicable, shall provide written notice of intent to dismiss 1 the action at least twenty-one days before the voluntary 2 dismissal of an action against a third party. Notice to the 3 Medicaid payor shall be sent as specified by rule. 4 14. On or before the thirtieth day before the recipient 5 finalizes a judgment, award, settlement, or any other recovery 6 where the Medicaid payor has the right to recovery, the 7 recipient, the recipient’s agent, or the attorney of the 8 recipient or recipient’s agent, as applicable, shall give the 9 Medicaid payor notice of the judgment, award, settlement, 10 or recovery. The judgment, award, settlement, or recovery 11 shall not be finalized unless such notice is provided and 12 the Medicaid payor has had a reasonable opportunity to 13 recover under the Medicaid payor’s rights to subrogation, 14 assignment, and lien. If the Medicaid payor is not given 15 appropriate notice, the recipient, the recipient’s agent, and 16 the recipient’s or recipient’s agent’s attorney are jointly 17 and severally liable to reimburse the Medicaid payor for the 18 recovery received to the extent of medical assistance paid by 19 the Medicaid payor. 20 15. a. Except as otherwise provided in this section, the 21 entire amount of any settlement of the recipient’s action or 22 claim involving third-party benefits, with or without suit, is 23 subject to the Medicaid payor’s claim for reimbursement of the 24 amount of medical assistance provided and any lien pursuant to 25 the claim. 26 b. Insurance and other third-party benefits shall not 27 contain any term or provision which purports to limit or 28 exclude payment or the provision of benefits for an individual 29 if the individual is eligible for, or a recipient of, medical 30 assistance, and any such term or provision shall be void as 31 against public policy. 32 16. In an action in tort against a third party in which the 33 recipient is a party and which results in a judgment, award, or 34 settlement from a third party, the amount recovered shall be 35 -12- LSB 1182XD (13) 90 pf/rh 12/ 28

S.F. _____ H.F. _____ distributed as follows: 1 a. After reasonable attorney fees and filing fees, there 2 is a rebuttable presumption that all Medicaid payors shall 3 collectively receive two-thirds of the remaining amount 4 recovered or the total amount of medical assistance provided by 5 the Medicaid payors, whichever is less. A party may rebut this 6 presumption in accordance with subsection 17. 7 b. The remaining recovered amount shall be paid to the 8 recipient. 9 c. For purposes of calculating the Medicaid payor’s 10 recovered amount of medical assistance, the fee for services of 11 an attorney retained by the recipient or the recipient’s legal 12 representative shall not exceed one-third of the judgment, 13 award, or settlement amount. 14 d. If the recovered amount available for the repayment of 15 medical assistance is insufficient to satisfy the competing 16 claims of the Medicaid payors, each Medicaid payor shall be 17 entitled to the Medicaid payor’s respective pro rata share of 18 the recovered amount that is available. 19 17. a. A recipient or a recipient’s agent who has notice 20 or who has actual knowledge of the Medicaid payor’s rights 21 to third-party benefits under this section and who receives 22 any third-party benefit or proceeds for a covered injury or 23 illness shall on or before the sixtieth day after receipt of 24 the proceeds pay the Medicaid payor the full amount of the 25 third-party benefits, but not more than the total medical 26 assistance provided by the Medicaid payor, or shall place the 27 full amount of the third-party benefits in an interest-bearing 28 trust account for the benefit of the Medicaid payor pending a 29 determination of the Medicaid payor’s rights to the benefits 30 under this subsection. 31 b. If federal law limits the Medicaid payor to reimbursement 32 from the recovered damages for medical expenses, a recipient 33 may contest the amount designated as recovered damages for 34 medical expenses payable to the Medicaid payor pursuant to the 35 -13- LSB 1182XD (13) 90 pf/rh 13/ 28

S.F. _____ H.F. _____ formula specified in subsection 16. In order to successfully 1 rebut the formula specified in subsection 16, the recipient 2 shall prove, by clear and convincing evidence, that the portion 3 of the total recovery which should be allocated as medical 4 expenses, including future medical expenses, is less than the 5 amount calculated by the Medicaid payor pursuant to the formula 6 specified in subsection 16. Alternatively, to successfully 7 rebut the formula specified in subsection 16, the recipient 8 shall prove, by clear and convincing evidence, that Medicaid 9 provided a lesser amount of medical assistance than that 10 asserted by the Medicaid payor. A settlement agreement that 11 designates the amount of recovered damages for medical expenses 12 is not clear and convincing evidence and is not sufficient to 13 establish the recipient’s burden of proof, unless the Medicaid 14 payor is a party to the settlement agreement. 15 c. If the recipient or the recipient’s agent filed a legal 16 action to recover against the third party, the court in which 17 such action was filed shall resolve any dispute concerning 18 the amount owed to the Medicaid payor, and shall retain 19 jurisdiction of the case to resolve the amount of the lien 20 after the dismissal of the action. 21 d. If the recipient or the recipient’s agent did not file a 22 legal action, to resolve any dispute concerning the amount owed 23 to the Medicaid payor, the recipient or the recipient’s agent 24 shall file a petition for declaratory judgment as permitted 25 under rule of civil procedure 1.1101 on or before the one 26 hundred twenty-first day after the date of payment of funds to 27 the Medicaid payor or the date of placing the full amount of 28 the third-party benefits in a trust account. Venue for all 29 declaratory actions under this subsection shall lie in Polk 30 county. 31 e. Each party shall pay the party’s own attorney fees and 32 costs for any legal action conducted under this subsection. 33 18. Notwithstanding any other provision of law to the 34 contrary, when medical assistance is provided for a minor, any 35 -14- LSB 1182XD (13) 90 pf/rh 14/ 28

S.F. _____ H.F. _____ statute of limitation or repose applicable to an action or 1 claim of a legally responsible relative for the minor’s medical 2 expenses is extended in favor of the legally responsible 3 relative so that the legally responsible relative shall have 4 one year from and after the attainment of the minor’s majority 5 within which to file a complaint, make a claim, or commence an 6 action. 7 19. In recovering any payments in accordance with this 8 section, the Medicaid payor may make appropriate settlements. 9 20. The department may adopt rules to administer this 10 section and applicable federal requirements. 11 DIVISION II 12 MEDICAID MANAGED CARE ORGANIZATION TAXATION OF PREMIUMS 13 Sec. 3. NEW SECTION . 249A.13 Medicaid managed care 14 organization premiums fund. 15 1. A Medicaid managed care organization premiums fund 16 is created in the state treasury under the authority of the 17 department of health and human services. Moneys collected by 18 the director of the department of revenue as taxes on premiums 19 pursuant to section 432.1A shall be deposited in the fund. 20 2. Moneys in the fund are appropriated to the department 21 of health and human services for the purposes of the medical 22 assistance program. 23 3. Notwithstanding section 8.33, moneys in the fund 24 that remain unencumbered or unobligated at the close of a 25 fiscal year shall not revert but shall remain available for 26 expenditure for the purposes designated. Notwithstanding 27 section 12C.7, subsection 2, interest or earnings on moneys in 28 the fund shall be credited to the fund. 29 Sec. 4. NEW SECTION . 432.1A Health maintenance organization 30 —— medical assistance program —— premium tax. 31 1. Pursuant to section 514B.31, subsection 3, a health 32 maintenance organization contracting with the department of 33 health and human services to administer the medical assistance 34 program under chapter 249A, shall pay as taxes to the director 35 -15- LSB 1182XD (13) 90 pf/rh 15/ 28

S.F. _____ H.F. _____ of the department of revenue for deposit in the Medicaid 1 managed care organization premiums fund created in section 2 249A.13, an amount equal to two and one-half percent of 3 the premiums received and taxable under subsection 514B.31, 4 subsection 3. 5 2. Except as provided in subsection 3, the premium tax shall 6 be paid on or before March 1 of the year following the calendar 7 year for which the tax is due. The commissioner of insurance 8 may suspend or revoke the license of a health maintenance 9 organization subject to the premium tax in subsection 1 that 10 fails to pay the premium tax on or before the due date. 11 3. a. Each health maintenance organization transacting 12 business in this state that is subject to the tax in subsection 13 1 shall remit on or before June 1, on a prepayment basis, 14 an amount equal to one-half of the health maintenance 15 organization’s premium tax liability for the preceding calendar 16 year. 17 b. In addition to the prepayment amount in paragraph 18 “a” , each health maintenance organization subject to the 19 tax in subsection 1 shall remit on or before August 15, on 20 a prepayment basis, an additional one-half of the health 21 maintenance organization’s premium tax liability for the 22 preceding calendar year. 23 c. The sums prepaid by a health maintenance organization 24 under paragraphs “a” and “b” shall be allowed as credits 25 against the health maintenance organization’s premium tax 26 liability for the calendar year during which the payments are 27 made. If a prepayment made under this subsection exceeds 28 the health maintenance organization’s annual premium tax 29 liability, the excess shall be allowed as a credit against the 30 health maintenance organization’s subsequent prepayment or tax 31 liabilities under this section. The commissioner of insurance 32 shall authorize the department of revenue to make a cash refund 33 to a health maintenance organization, in lieu of a credit 34 against subsequent prepayment or tax liabilities under this 35 -16- LSB 1182XD (13) 90 pf/rh 16/ 28

S.F. _____ H.F. _____ section, if the health maintenance organization demonstrates 1 the inability to recoup the funds paid via a credit. The 2 commissioner of insurance shall adopt rules establishing a 3 health maintenance organization’s eligibility for a cash 4 refund, and the process for the department of revenue to make a 5 cash refund to an eligible health maintenance organization from 6 the Medicaid managed care organization premiums fund created in 7 section 249A.13. The commissioner of insurance may suspend or 8 revoke the license of a health maintenance organization that 9 fails to make a prepayment on or before the due date under this 10 subsection. 11 Sec. 5. Section 514B.31, Code 2023, is amended by striking 12 the section and inserting in lieu thereof the following: 13 514B.31 Taxation. 14 1. For the first five years of the existence of a 15 health maintenance organization and the health maintenance 16 organization’s successors and assigns, the following shall 17 not be considered premiums received and taxable under section 18 432.1: 19 a. Payments received by the health maintenance organization 20 for health care services, insurance, indemnity, or other 21 benefits to which an enrollee is entitled through a health 22 maintenance organization authorized under this chapter. 23 b. Payments made by the health maintenance organization 24 to providers for health care services, to insurers, or to 25 corporations authorized under chapter 514 for insurance, 26 indemnity, or other service benefits authorized under this 27 chapter. 28 2. After the first five years of the existence of a 29 health maintenance organization and the health maintenance 30 organization’s successors and assigns, the following shall be 31 considered premiums received and taxable under section 432.1: 32 a. Payments received by the health maintenance organization 33 for health care services, insurance, indemnity, or other 34 benefits to which an enrollee is entitled through a health 35 -17- LSB 1182XD (13) 90 pf/rh 17/ 28

S.F. _____ H.F. _____ maintenance organization authorized under this chapter. 1 b. Payments made by the health maintenance organization 2 to providers for health care services, to insurers, or to 3 corporations authorized under chapter 514 for insurance, 4 indemnity, or other service benefits authorized under this 5 chapter. 6 3. Notwithstanding subsections 1 and 2, beginning January 7 1, 2024, and for each subsequent calendar year, the following 8 shall be considered premiums received and taxable under section 9 432.1A for a health maintenance organization contracting with 10 the department of health and human services to administer the 11 medical assistance program under chapter 249A: 12 a. Payments received by the health maintenance organization 13 for health care services, insurance, indemnity, or other 14 benefits to which an enrollee is entitled through a health 15 maintenance organization authorized under this chapter. 16 b. Payments made by the health maintenance organization 17 to providers for health care services, to insurers, or to 18 corporations authorized under chapter 514 for insurance, 19 indemnity, or other service benefits authorized under this 20 chapter. 21 4. Payments made to a health maintenance organization 22 by the United States secretary of health and human services 23 under a contract issued under section 1833 or 1876 of the 24 federal Social Security Act, or under section 4015 of the 25 federal Omnibus Budget Reconciliation Act of 1987, shall not 26 be considered premiums received and shall not be taxable 27 under section 432.1. Payments made to a health maintenance 28 organization contracting with the department of health and 29 human services to administer the medical assistance program 30 under chapter 249A shall not be taxable under section 432.1. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to the Medicaid program including recovery 35 -18- LSB 1182XD (13) 90 pf/rh 18/ 28

S.F. _____ H.F. _____ by the department of health and human services (HHS or the 1 department) from third parties and taxation of Medicaid managed 2 care organization premiums. 3 DIVISION I —— MEDICAID PROGRAM THIRD-PARTY RECOVERY. The 4 bill strikes and replaces current provisions in Code section 5 249A.37 (health care information sharing) and Code section 6 249A.54 (assignment —— lien). 7 Under the bill, new Code section 249A.37 (duties of third 8 parties) relates to the duties of third parties, defined 9 under the bill as “an individual, entity, or program, 10 excluding Medicaid, that is or may be liable to pay all or 11 a part of the expenditures for medical assistance provided 12 by a Medicaid payor to the recipient”. The listing of 13 “third parties” includes but is not limited to a third-party 14 administrator, a pharmacy benefits manager, a health insurer, a 15 self-insured plan, a group health plan, a service benefit plan, 16 a managed care organization, liability insurance including 17 self-insurance, no-fault insurance, workers’ compensation laws 18 or plans, and other parties that by law, contract, or agreement 19 are legally responsible for payment of a claim for a medical 20 service. The bill also defines terms including “Medicaid 21 payor”, “recipient”, “third party”, and “third-party benefits”. 22 The bill provides that the third-party obligations specified 23 under the bill are a condition of doing business in the state, 24 and a third party that fails to comply with these obligations 25 shall not be eligible to do business in the state. 26 The bill requires that a third party that is a carrier shall 27 enter into a health insurance data match program with HHS 28 for the sole purpose of comparing the names of the carrier’s 29 insureds with the names of recipients as required by Code 30 section 505.25 (information provided to medical assistance 31 program, hawk-i program, and child support recovery unit). 32 The bill specifies the duties of a third party under the 33 Medicaid program including cooperating with the Medicaid payor 34 in identifying recipients for whom third-party benefits are 35 -19- LSB 1182XD (13) 90 pf/rh 19/ 28