CLC C.S.S.B. 534 75(R) BILL ANALYSIS HUMAN SERVICES S.B. 534 By: Harris (Maxey) 5-6-97 5-6-97 BACKGROUND Currently, when a state agency pays for certain medical services, the state has a right to recover its costs from any payments a patient may receive in the settlement of a related lawsuit. Texas could avoid some of these medical expenditures by identifying potential third-party liability sources when the suit is initially filed. This bill improves collection efforts by directing the Health and Human Services Commission to enter into subrogation contracts as appropriate. PURPOSE As proposed, C.S.S.B. 534 improves collection efforts by directing the Health and Human Services Commission to enter into subrogation contracts as appropriate. RULEMAKING AUTHORITY This bill does not grant any additional rulemaking authority to a state officer, institution or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 531B, Government Code, by adding Section 531.0391, as follows: Sec. 531.0391. SUBROGATION AND THIRD-PARTY REIMBURSEMENT COLLECTION CONTRACT. (a) Requires the Health and Human SErvices Commission (commission) to enter into contracts to recover money under a subrogation or third-party reimbursement right held by the commission. Sets forth the requirements of the contracts. (b) Requires the commission to develop a process for identifying certain claims. Requires a health and human services agency to cooperate with a contractor on a claim of the agency referred to the contractor for collection. (c) Provides that the commission is not required to enter into a contract under Subsection (a) if the commission cannot identify a contractor who is willing to contract with the commission on reasonable terms. Requires the commission to develop and implement alternative policies to ensure the collection of money under a subrogation or third-party reimbursement right, if the commission cannot identify a contractor who is willing to contract on reasonable terms. (d) Authorizes the commission to allow a state agency other than a health and human services to be a party to contracts required in Subsection (a). Requires the commission to modify the contract as necessary to reflect the services to be provided by the contractor to the additional state agency. Sec. 531.0392. SUBROGATION AND THIRD-PARTY REIMBURSEMENT; HOSPITAL PROVIDERS. Allows a hospital provider to recover from a third party any funds the department has a right of recovery under Subsection (a)(3) regarding the assumption by a third party of another's legal right to collect a debt or damages (subrogation). Allows a hospital provider to file a lien under Chapter 55, Property Code, regarding Hospital Liens, and to recover the full amount of hospital charges for services provided to a recipient. Requires a hospital provider, upon recovery from a third party, to reimburse DHS for any amount previously paid to the hospital provider by DHS. Establishes that the combined amounts received by the hospital provider from DHS and the third party may not exceed the amount charged by the hospital for the first 100 days of the injured recipient's hospitalization. SECTION 2. Requires the commission to enter into an initial contract or implement the alternative policies as required by Section 531.0391, Government Code, by February 1, 1998. SECTION 3. Requires the commission to prepare a report for certain persons. Sets forth the contents of the report. SECTION 4. EMERGENCY CLAUSE. COMPARISON OF ORIGINAL TO SUBSTITUTE Section 531.0392 was added to clarify and reaffirm hospitals' long-standing right to enforce their lien rights when Medicaid has paid. Hospitals would be allowed to collect the full cost for treatment provided to a Medicaid client from any award stemming from a private cause of action. The hospital would then have to reimburse the state for any Medicaid payments made previously.