In Kansas, a municipality includes every governmental entity except for the State of Kansas such as cities, counties, school districts, county owned hospitals, townships. There are two types of self-funded municipal health care plans -

1. A single self-funded health care plan, like USD 259 self-funded health care plan;
2. A municipal group-funded health care pool–a group-funded municipal plan requires 5 or more municipalities.

In Kansas, there is a regulation that prohibits health insurance companies from demanding that their insureds repay the medical expenses that the insurance company paid because its insured was injured by someone else negligence–like a car wreck. This demand is called subrogation.

Until 2013, this regulation was limited to health insurance companies. The municipal self-funded and group-funded both argued that they were not “insurance companies” so the anti-subrogation regulation did not apply to them. In 1996, the Kansas Court of Appeals agreed with the municipal self-funded and group-funded--both continued to demand that their insureds repay them for any expenses that they paid for because their insured was injured by the negligence of a third party. The municipal self-funded and group-funded health care plans were the only two Kansas health care plans that were allowed to subrogate.

An example of how the subrogation worked. Insured’s car gets hit by a drunken driver and insured suffers a significant injury. The health plan pays $20,000 of the insured’s medical expenses. The insured settles his case. From his settlement, he has to repay the health care plan the $20,000.

In 2013, the Kansas Legislature expanded the anti-subrogation regulation to include those health care plans that were excluded from the regulation by technicality. Despite this expansion, the municipal self-funded and group-funded continued to subrogate.