; ; (C) in clause (iii)— (i) by striking respond to and inserting not later than 60 days after receiving ; and (ii) by striking ; and at the end and inserting , respond to such inquiry; and ; and (D) in clause (iv), by inserting a failure to obtain a prior authorization, after claim form, . (6) State incentive to pursue third party liability for newly eligibles Section 1903(d)(2)(B) of the Social Security Act ( 42 U.S.C. 1396b(d)(2)(B) ), as amended by paragraph (4)(B), is further amended by adding at the end the following: In the case of expenditures for medical assistance provided during 2017 and subsequent years for individuals described in subclause (VIII) of section 1902(a)(10)(A)(i), in determining the amount, if any, of overpayment under this subparagraph with respect to such medical assistance, the Secretary shall apply the Federal medical assistance percentage for the State under section 1905(b), notwithstanding the application of section 1905(y). . (b) Compliance with third party insurance reporting Section 1903 of the Social Security Act ( 42 U.S.C. 1396b ) is amended by inserting after subsection (m) the following new subsection: (n) (1) For any year beginning after 2020 (or a sooner year as provided in paragraph (2)), if a State fails to comply with the requirements of section 1902(a)(25) with respect to each calendar quarter in such year, the Secretary may reduce the Federal medical assistance percentage by 0.1 percentage point for calendar quarters in each subsequent year in which the State fails to so comply (and cumulatively for a failure to so comply for a period of consecutive years). (2) The Secretary may apply paragraph (1)— (A) for any year beginning after 2018, if a State fails to comply with the requirements of section 1902(a)(25) with respect to payment for items and services furnished to individuals described in subclause (VIII) of section 1902(a)(10)(A)(i) or non-expansion individuals