Legislature(1999 - 2000)
04/17/2000 09:30 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 325(JUD)
"An Act relating to priorities, claims, and liens for
payment for certain medical services provided to
medical assistance recipients; and providing for an
effective date."
JOHN SHERWOOD, Division of Medical Assistance, Department
of Health and Social Services, commented that the proposed
legislation has two main purposes.
· To improve the third party recovery effort for
medical assistance; and
· Changes to the claim filing provisions.
Mr. Sherwood mentioned that HB 325 was a companion bill to
SB 233.
Mr. Sherwood proceeded to explain the second provision of
the bill. He noted that currently, the Department allows
health care providers six months to make payments on claims
for medical assistance from the date of service or twelve
months, as the provider must bill the private insurance
company first. The legislation would extend the filing
deadline to twelve months for all claims, elevating the
Department to the industry standard.
Additionally, the bill would allow the Department to pay
100% of a late claim if the Commissioner finds that the
provider has "good cause" for missing a timely filing
deadline.
LISA KIRSCH, Assistant Attorney General, Department of Law,
explained the third party recovery provision. She noted
that the second part of the bill addresses strengthening
the existing rights in which Medicaid must recover payments
of those that have been made. Currently, there is a
subrogation right, which has been difficult to enforce as
it is not explicitly in statute.
Co-Chair Torgerson inquired if that was Section 8 of the
bill.
Ms. Kirsch stated the provision in Section 8 would allow
the State to waive the right if there were a case where
work would cause a hardship against the Medicaid recipient.
The primary section that changes authority to provide a
lien right would be to Section 9, Pages 3 & 4. The changes
requested would allow the Department flexibility to adjust
the claims.
Ms. Kirsch advised that as it stands, there are references
made to the civil rule, which is intended to clarify
existing law.
Senator Phillips referenced Section 1. He asked to what
extent would the involvement be contained in that process.
He was trying to determine if he had a conflict of
interest.
Ms. Kirsch stated that Section 1 deals with the priority of
the lien. A lien right was created for the Department and
the Division of Medical Assistance had to be placed in the
list of existing liens. She suspected that the concern
would not come up often. She interjected that Medicaid
does pay the hospital.
Senator Phillips asked for consent that he be allowed to
refrain from voting because of a conflict of interest.
Co-Chair Parnell admitted that he could have a conflict of
interest also. He voiced concern that the Department would
be receiving priority over the hospital, nurses and
physicians. He warned that there is much Medicaid money
that needs to be recovered. Co-Chair Parnell asked when
the priority would come into play.
Ms. Kirsch replied that the placement in the list would
depend on the type of placement coming up. She noted that
a number one placement would be to the list of medical
services. In most cases, if the person was Medicaid
eligible, they would be covered and the provider would be
paid.
Co-Chair Parnell questioned why that language was necessary
in the legislation.
Ms. Kirsch replied that the State has to place themselves
somewhere, a vacuum can not be left. She understood the
problem to be that when the State has a subrogation right,
the argument is that you have no right at all once the
plaintiff recovers 100%.
Co-Chair Parnell believed that requesting a right lien
priority was the most extreme way to address the concern.
LEONARD ANDERSON, (Testified via Teleconference),
Representing the State of Alaska, Third Party Recovery
Agent in Medicaid Matters, Anchorage, testified that there
are general problems with the present statute. The first
concern is the notice problem. Currently, when a Medicaid
recipient requests Medicaid, they have already signed up
and contractually agreed to include any Medicaid amount
that they received as part of the claim against a third
party. Part of the problem is getting the notice and then
action when the notice is received.
Typically, it is well into a tort case before the State of
Alaska ever finds out that there is potentially a liable
third party out there. It is not uncommon that the notice
of that fact is received after the settlement has taken
place. He stated that the new bill would address that
issue. The legislation places into statute a requirement
that the Medicaid recipient or his attorney notify the
Department of any claim that is being made against a
potentially liable third party.
Mr. Anderson added, a second portion of the proposed
legislation would address the subrogation issue. The real
issue is that attorneys privately argue that equitable
principles of subrogation apply. That means that if an
injured third party is not made whole, then the State of
Alaska can not get anything until the party is made whole.
The lien will require dialogue between the injured party,
their attorney and the State of Alaska. There is a
"hardship" waiver provision in the bill which will provide
some flexibility to it.
Co-Chair Parnell questioned the position of the insurance
companies. He used the example of a child hit on a bike.
He reiterated why should the State have a higher right than
any other party trying to recover their fees.
Mr. Anderson did not agree that the State was on a "level
playing field". Various courts have found that there are
different policy reasons for where the insurance company
sets. The courts that have addressed the issue have found
that based upon that insurance company's base "risk" into
the rates charged, they are different than the State that
does not use the risk factor. He hesitated to compare the
State and the insurance company.
Tape: SFC - 00 #94, Side B 10:17 am
Co-Chair Torgerson understood that there would only be a
couple cases a year that this clause would apply to.
Mr. Anderson argued that was inaccurate. He noted that
weekly, he is involved in subrogation issues. He
interjected, the Plaintiff's Bar is not happy with Alaska
in the recovery of funds. Based on current statute
weakness, they are waiting for the right case to bring it
to the Supreme Court. If that were to happen, the outcome
would not be good. Mr. Anderson believed that was part of
the reason that State had made it a priority to settle
claims.
Co-Chair Torgerson suggested that the most important part
of the bill was from Sections 3 on. He proposed removing
Sections 1 & 2.
Representative Murkowski stated that there needs to be some
standing in the list, otherwise, the lien right would cause
a great deal of confusion.
Senator Green declared a conflict of interest. She asked
if the legislation would address mainly the person covered
by Medicaid and/or private insurance.
Representative Murkowski stated that was a possibility. It
could also be a circumstance where a Medicaid recipient was
not covered by any other insurance but instead a third
party who was responsible for their injury.
Senator Green asked if the person had no coverage or no
secondary coverage would Medicaid then be designed to
repay.
Representative Murkowski stressed that this was "third
party" recovery.
Senator Green inquired if the State could require a payment
from a Medicaid recipient.
Representative Murkowski mentioned that a couple of years
ago, there had been a legislative change made to allow
people who are disabled to go back to work, and by virtue
of going back to work, they loose their coverage. The
legislation would allow the disabled to enter into a
contract.
Mr. Sherwood stated that the Department is allowed and that
they do charge nominal co-payments. Under federal law
those payments are restricted to 5% of the persons total
income.
Senator Green argued that it is difficult to compare
Medicaid to private insurance.
Representative Murkowski stressed that Medicaid is not an
insurer. That relationship is contractual and it is not
meant to offset insurance.
Co-Chair Parnell clarified that creating a lien would have
other ramifications. Giving the State a lien priority
impacts the collectability of the other claims by other
private parties and also puts the State in priority of
bankruptcy setting over unsecured creditors.
Representative Murkowski stated that the lien created would
be to a third party and responsible for medical expenses.
That would be in the context of a third party recovery in a
tort action if medical expenses were to be considered.
Co-Chair Torgerson advised that the bill would be held in
Committee for further consideration. He recommended that
Sections 1 & 2 be reworked. Co-Chair Torgerson questioned
Section 5 and asked why it had not been reflected in the
fiscal note.
Mr. Sherwood explained that provision related to timely
filings. In that situation, the statute would limit pay of
50% of the claim, which would allow the entire claim to be
paid. He advised that this was an equity issue for timely
filing. Mr. Sherwood noted that the fiscal costs were not
considered "material".
HB 325 was HELD in Committee for further consideration.
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