This legislation aims to amend Title XIX of the Social Security Act, clarifying and strengthening the rules for third-party liability within the Medicaid program. Its purpose is to ensure that other responsible payers, such as private insurers, contribute to the cost of care for Medicaid beneficiaries when applicable, thereby reducing the financial burden on state and federal Medicaid budgets. The bill removes special treatment for certain types of care and payments under Medicaid's third-party liability rules, promoting a more uniform application. It clarifies the role of health insurers by requiring state contracts with entities like managed care organizations to specify whether the state delegates its right of recovery or transfers the assignment of an individual's payment rights from a responsible third party to the insurer, effective after January 1, 2026. Additionally, the legislation increases state flexibility by requiring third-party payers to accept the state's right of recovery and assignment of rights, and to recognize state-authorized services as valid authorizations for furnishing care after January 1, 2026. Crucially, it mandates that states verify the health insurance status of individuals seeking Medicaid assistance. States failing to obtain and verify this third-party coverage information after January 1, 2026, will not receive Federal Financial Participation for the associated medical assistance, creating a strong incentive for compliance.