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SPONSOR: |
Hurt |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Recovery of Medical Assistance Payments |
SB |
299 |
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APPROPRIATION
Appropriation
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Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
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See Narrative |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
Human
Services Department (HSD)
SUMMARY
Synopsis
of Bill
Senate Bill 299 changes the language of the
Public Assistance Act, NMSA § to the extent that for which the department has made
payment.”
Significant
Issues
The intent of SB 299 is to require that Medicaid
be reimbursed 100% anytime a Medicaid recipient makes a recovery from a liable
third party. The statutory section of SB
299 that would be modified is one of two requiring that Medicaid be reimbursed
by liable third parties.
HSD reports that suits that result in Third
Party Liability (TPL) recoveries for Medicaid are not brought by Human Services
Departments (HSD) directly against the liable third party; rather, HSD asserts
its claim after a personal-injury suit is brought (or threatened) by a private
attorney, acting on behalf of the injured Medicaid recipient, against the
liable third party. Currently, amounts
recovered by Medicaid in these cases are negotiated with the recipient’s
attorney and are highly variable depending on the individual circumstances.
As an example, Medicaid might pay medical
expenses of $200,000; the injured recipient might only recover $50,000 (due to
an insurance policy limit) from the person who caused the injury; and the
severity of the person’s injuries (including pain and suffering, lost income,
etc.) might be “worth” $1 million if the case were to go before a jury. In this example, Medicaid would probably only
be able to negotiate a settlement of a few thousand dollars under the present
system. It is apparently the intent of
SB 299 that Medicaid would be entitled to the entire amount Medicaid has paid
in medical expenses.
For calendar year 2002, the Medical Assistance
Division (MAD) recovered $1.9 million on subrogation Tort claims of the $5.4 million that were billed. In many Tort claims, the subrogation Lien
amounts were greater than the Medicaid client settlements. Between 30% and 45% of the settlement claims
goes to attorney’s fees and related costs.
The remainder goes to the lien and the client, usually about ⅓
each. Basically the settlement is
divided three ways so that the client and HSD recover same amount.
In summary, passage of SB 299 might provide HSD
with slight additional leverage in negotiating TPL recoveries, but is probably
insufficient to legislatively overturn the existing case law that governs this
area (Reference is made to “technical issues” below).
FISCAL IMPLICATIONS
According
to HSD, the passage of SB 299 might result in marginal increase in negotiated
TPL Medicaid recoveries.
TECHNICAL ISSUES
While the goal of increasing third party
liability (TPL) recoveries is financially desirable for HSD, the department
notes the following problems with the approach of SB 299:
From HSD’s point of view, a carefully
drafted statute could undo the financial effects of Kahrs lawsuit, as written
SB 299 is insufficient for the HSD.
First, it is not clear that SB 299’s “one hundred percent” language is significantly
different from the deleted “to the extent that” language. That is, “one hundred
percent” of medical expenses are arguably the same as “to the extent” of
medical expenses paid. Thus, a court taking a new look at the TPL issue in
light of SB 299 would probably reach the same conclusion as the Kahrs court.
Pending
the outcome of Minnesota v. Miller, a
carefully drafted lien law would lead to fairer, more uniform TPL recoveries in
greater amounts. A minor gain would
possibly also result if the “is subrogated to…” language in existing §
BD/njw