(a) As used in this section, "affected Medicaid entity" means an individual or entity that:

(1) Provides and is directly reimbursed by Medicaid for services in the Arkansas Medicaid Program;

(2) Is required to submit an annual financial audit to the Department of Human Services; and

(3) Is required to file a state income tax return, state withholding tax return, pass-through entity withholding tax return, or a composite pass-through entity tax return or pay any tax due for the previous calendar year.

(b)

(1) On or before December 1 of each year, the Department of Human Services shall provide the Department of Finance and Administration with a list of the tax identification number of each person and entity enrolled to furnish Medicaid services as an Affected Medicaid Entity.

(2) The Department of Finance and Administration shall:

(A) Verify whether each person and entity enrolled to furnish Medicaid services identified to it under subdivision (b)(1) of this section filed and paid any state income tax liability owed for the tax year for which the return was due; and

(B) Notify the Department of Human Services if any Affected Medicaid Entity failed to file any state income tax return, state withholding tax return, pass-through entity withholding tax return, or a composite pass-through entity tax return or pay any tax due for the previous calendar year.

(3) Upon receiving notice from the Department of Finance and Administration under subdivision (b)(2) of this section, the Department of Human Services shall notify the Affected Medicaid Entity that the Department of Human Services will terminate the Affected Medicaid Entity's enrollment in the Medicaid program unless the Affected Medicaid Entity shows good cause why the Affected Medicaid Entity's Medicaid enrollment should continue.

(c) The Department of Human Services and the Department of Finance and Administration may adopt rules as needed to implement this section.