MINUTES OF MEETING
ASSEMBLY COMMITTEE ON COMMERCE
Sixty-seventh Session
March 17, 1993
The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 3:40 p.m., Wednesday, March 17, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Gene T. Porter, Chairman
Mr. Morse Arberry, Jr., Vice Chairman
Ms. Kathy M. Augustine
Mr. Rick C. Bennett
Mr. John Bonaventura
Mr. Val Z. Garner
Ms. Chris Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Ms. Erin Kenny
Mr. Richard Perkins
Mr. Scott Scherer
Ms. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Paul Mouritsen, Senior Staff Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Terri Potts, McMullen Strategic Group, Nevada Physicians Caucus; Mary Santina, Retail Association of Nevada; Ray Trease, Consumer Affairs Division (Exhibit B)
ASSEMBLY BILL 238Makes excessive charge for placing vendor or supplier on list of approved vendors or suppliers deceptive trade practice.
Ms. Terri Potts, McMullen Strategic Group, Nevada Physicians Caucus, testified. She advised the physicians supported AB 238. She said as provider panels were closed down, owners of managed care organizations were raising fees for a physician to become a member of such a panel to thousands of dollars. She suggested this practice occurred in many other states. She indicated, should SIIS and Medicaid adopt closed panels, a managed care organization might raise fees for a doctor to become a member of one of its panels to unaffordable limits, i.e. $10,000, $15,000 or $20,000, as a means of closing its panels.
Chairman Porter said he did not know how AB 238 addressed the concern expressed by Ms. Potts. He stated when one dealt with a closed panel situation, one dealt with a contract between a provider and a physician. Ms. Potts responded some managed care organizations charged a provider $200, $250 or $300 to be placed on the organization's list of providers and most any physician could afford such fees. She said the fear was managed care organizations would charge fees so high most providers would be unable to afford them as a means to close provider panels without those panels being "closed" panels.
Chairman Porter asked would it be better to amend the health care statutes to prohibit the practice in question rather than make the practice a deceptive trade practice under NRS 598, policed by consumer affairs. Ms. Potts replied Jim Wadhams, legal counsel for the caucus, suggested AB 238 would receive less opposition if presented in connection with deceptive trade practice than with health care. Chairman Porter advised he understood Ms. Potts position but questioned whether the provisions of AB 238 were being placed under the wrong jurisdiction. Ms. Potts reiterated legal counsel had recommended proceeding in this manner.
Ms. Giunchigliani asked how doctors or participants were solicited for either open or closed panels. Ms. Potts indicated some companies used bulk mailings to physicians, followed up by telephone calls from the company's provider relations department. She cited another method, employed when a patient desired to see a specific doctor not on a company's panel, was to have the patient ask his physician to join the company's panel. She said general marketing practices were employed, and she could target no specific practice.
Ms. Giunchigliani summarized her understanding companies were charging fees to place a provider on a panel, whether the panel was open or closed, and the purpose of AB 238 was to cap the fees charged rather than restrict the charge. Ms. Potts responded Ms. Giunchigliani's understanding was correct. She said a company should be allowed to recover all costs of processing a provider's application and verifying his credentials, but the caucus did not want the fees charged to exceed those costs.
Ms. Giunchigliani posed if the language in AB 238, "10 percent of the actual cost," was intended to include administrative and certification costs, perhaps such intent should be defined in AB 238. She indicated to the Chair the possibility line 8 of AB 238 should be more specific as to the nature of the costs. Ms. Giunchigliani said she understood the costs discussed included not only those to prepare the list but also the administrative costs of processing applications and verifying credentials. Ms. Potts stated most companies had a realistic idea of their costs to process applications and verify credentials. Ms. Giunchigliani asked Ms. Potts, "So, just saying the list is satisfactory?" Ms. Potts indicated if it would please the committee, the language of AB 238 concerning costs could be modified.
Mr. Heller asked how 10 percent was determined to be the percentage by which the fee charged could not exceed the cost. Ms. Potts replied 10 percent was recommended by legal counsel and would provide a margin for error by allowing a company to charge a sum slightly above its estimated cost. Mr. Heller inquired if there was an estimate of the average percentage over cost charged by companies which were not abusive in their charges. Ms. Potts replied she did not have an estimate but would obtain the information for the committee.
Mrs. Williams asked if charging prohibitive fees was a method used to restrict the size of a panel of doctors, thereby limiting a consumer's range of choices. Ms. Potts said it was, and there was huge growth of such practice in the health care field.
Mr. Heller asked if the fee charged by a health care organization to place a provider on a panel was a one-time charge or an annual fee. Ms. Potts responded the answer depended on the organization charging the fee. She said many organizations charged a one-time fee for "processing the credentialling" and thereafter, a discounted annual fee to be maintained on the panel.
Chairman Porter closed the hearing on AB 238.
There being no further business, the Chairman adjourned the meeting.
RESPECTFULLY SUBMITTED,
_______________________
SARA J. KAUFMAN
Committee Secretary
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Assembly Committee on Commerce
March 17, 1993
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