HOUSE BILL REPORT

SHB 274

BYHouse Committee on Human Services (originally sponsored by Representatives Brekke, Braddock and P. King; by request of  Department of Social and Health Services)

Changing provisions relating to how department of social and health services recovers overpayments of benefits to recipients and vendors.

House Committe on Human Services

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (7)

     Signed by Representatives Brekke, Chair; Scott, Vice Chair; Leonard, H. Sommers, Sutherland, Wang and Winsley.

Minority Report:     Do not pass.  (2)

     Signed by Representatives Padden and Moyer.

House Staff:John B. Welsh, Jr.  (786-7133)

AS PASSED HOUSE MARCH 19, 1987

BACKGROUND:

Current statutes require nursing home vendors to provide security for outstanding debts when their contracts with the Department of Social and Health Services (DSHS) are terminated.  There are no such security requirements for non-nursing home vendors.  Vendors are service providers providing services for DSHS.

There are different standards for various vendors on assessing interest on overpayment debts.  For some vendors interest is suspended on an amount in dispute; for medical vendors only, there is no interest assessed on overpayment due to DSHS error.

Except for nursing homes, currently there is no statutory authority for the recoupment of overpayment debts from subsequent vendor payments, although authority exists for recoupment of interest accrued on such debts.

Patients in state mental hospitals are liable for their costs of care.  Certain medical insurance carriers choose to exclude from coverage care provided in state hospitals even though the type of care would be covered if it were provided by any other medical facility.

The present six-year statute of limitations for the collection of overpayments to public assistance recipients commences upon notice of the overpayment or upon termination of assistance.  Compromise and writing off of uncollectible claims requires the approval and interaction of the Attorney General's Office.

Federal law authorizes the recovery, after a recipient's death, of medical assistance costs for medical assistance recipients.  Under state law, DSHS may only recover from the proceeds of the home upon certification that the patient will never be able to return to the home.

The Department of Social and Health Services is authorized by statute to provide medical assistance to a recipient whose personal injuries have occurred through negligence of a third-party.  However, if the recipient is contributorily negligent, DSHS stands in the same position as the recipient and therefore cannot recover its full costs from the tort feasor.

SUMMARY:

The Department of Social and Health Services (DSHS) is authorized to require non-nursing home vendors to post security, such as withheld future payments, assignment of contractual rights, time deposits, surety and other forms of bonds and other security interest for any outstanding balance on an overpayment.  In the alternative, DSHS is authorized to file a lien for the unsecured overpayment balance.

A standardized assessment of interest on overpayment debts is established for all vendors and is calculated at the current rate of one percent per month on the remaining balance if partial repayment is made.  If the vendor discovers the overpayment, interest begins to accrue 90 days after the vendor notifies DSHS; if DSHS discovers the overpayment, interest begins to accrue 30 days after notice or 90 days after the overpayment, whichever is earliest.  The suspension of interest on amounts in dispute is repealed.  There is no interest assessed for overpayments made by department error.

The Department of Social and Health Services is authorized to make recoupment, or set off, for vendor overpayments, plus applicable interest, against subsequent payments to that vendor.

Group disability insurers, health care service contractors and health maintenance organizations are prohibited from excluding coverage of care provided in state hospitals if the benefits would have otherwise been payable.

The statute of limitations for the collection of overpayments to public assistance recipients and vendors commences six years after the date of notice by DSHS.  The Department of Social and Health Services is authorized to compromise and write-off claims.

Authorization is given to DSHS to recover the cost of care from the real property of a Medical Assistance recipient only after the recipient's death and where there is no surviving spouse or children.  The Department of Social and Health Services is authorized to file liens after death of the recipient and claims in probate proceedings.

In third-party liability actions to recover the cost of care for recipients negligently injured by a tort-feasor, DSHS is subrogated to the recipient's right "against the recovery had" against the third party, and not subject to reduction based on legal equity principles such as contributory negligence.

The vendor lien provisions only shall be incorporated into HB 151 as a new chapter if it becomes law.

EFFECT OF SENATE AMENDMENT(S):  The Department of Social and Health Services may recover from the estate the cost of medical care provided to a recipient of 65 years of age or older upon the recipient's death, except:  a) where there is a surviving spouse, or b) where there is a surviving child under 21 or who is disabled; or c) where there are children over 21, the first $50,000 is exempt plus 65 percent of the remainder.

Fiscal Note:    Attached.

House Committee ‑ Testified For:     Lucille Christenson, Revenue Division, Department of Social and Health Services; Mel Sorensen, Washington Physicians Service; Kaye Kidwell, Office of the Inspector General, Department of Heath and Human services; and John Carroll, United States General Accounting Office.

House Committee - Testified Against: Susie Tracy, Washington State Medical Association; Nick Lippert, Memorial Clinic, Olympia, Washington; and Ken Reuf, Shepard Ambulance, Seattle, Washington.

House Committee - Testimony For:     This omnibus bill covers several Department of Social and Health Services' programs and is intended to assist the department in the collection of revenue through the recovery of overpayment debts and department expenditures.

House Committee - Testimony Against: The Department of Social and Health Services should have no right to assess interest on overpayment debts caused by department error.

VOTE ON FINAL PASSAGE:

     Yeas 52; Nays 43; Absent 1; Excused 2

Voting Nay:     Amondson, Ballard, Basich, Beck, Betrozoff, Cantwell, Chandler, Crane, Day, Doty, Ebersole, Ferguson, Fisch, Fuhrman, Gallagher, Hankins, Hargrove, Heavey, Holm, Jesernig, Kremen, Lewis, May, McLean, Miller, Nealey, O'Brien, Padden, Patrick, Rayburn, Sanders, Sayan, Schmidt, Schoon, Silver, C. Smith, L. Smith, Taylor, Walker, B. Williams, J. Williams, S. Wilson, and Winsley

Absent:    Representative Grant

Excused:   Representatives Moyer and Pruitt