MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
June 30, 1993
The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 10:12 a.m., on Wednesday, June 30, 1993, in Room 352 of the Legislative Building, Carson City, Nevada. No Meeting Agenda is attached. EXHIBIT B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry, Jr., Chairman
Mr. Larry L. Spitler, Vice Chairman
Mrs. Vonne Chowning
Mr. Joseph E. Dini, Jr.
Mrs. Jan Evans
Ms. Christina R. Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Mr. John W. Marvel
Mr. Richard Perkins
Mr. Robert E. Price
Ms. Sandra Tiffany
Mrs. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Gary Ghiggeri, Deputy Fiscal Analyst
AB295Clarifies provisions governing sale of cigarettes by wholesale dealers.
Mr. Harvey Whittemore, McLane Company, explained amendment 1292 to AB295 was technically accurate with two minor changes (see EXHIBIT C). The amendment would solve the problem expressed by the Department of Taxation to have a provision in statute related to the level of discounts. He stated one technical correction in Section 1 of deleting "an" and "for reasonable discounts" and changing "allowance" to "allowances." He explained those changes were from Mr. Hunter and Mr. Watson. The other change was to take out the repealed portion in Section 10 because it was inappropriate.
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MR. MARVEL MOVED AMEND AND DO PASS.
MR. HELLER SECONDED THE MOTION.
THE MOTION CARRIED BY VOICE VOTE. MR. DINI, MS. GIUNCHIGLIANI, MRS. CHOWNING, MR. PRICE AND MRS. EVANS WERE NOT PRESENT AT THE TIME OF THE VOTE.
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SB28 Requires legislative auditor to conduct performance audit of public service commission of Nevada.
Mr. Stevens stated SB28 would direct the Legislative Auditor to conduct a performance audit of the Public Service Commission and would provide $280,000 of PSC funds to pay for the audit.
Mr. Spitler remarked he would abstain from any action taken on SB28 because he was an employee of CENTEL/SPRINT.
Mr. Stevens stated SB28 would not be a general fund expense. It would be funded from the PSC.
Mr. Gary Crews, Legislative Auditor, commented SB28 and AB206 addressed performance audits. He clarified the $280,000 included in SB28 included $200,000 that would be used for consultant and personnel services costs associated with the audit. $80,000 would fund the Legislative Audit cost.
Chairman Arberry closed the hearing on SB28.
SB475Eliminates Nevada racing commission and transfers responsibilities to Nevada gaming commission.
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MR. HUMKE MOVED DO PASS.
MR. DINI SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE.
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AB206Requires legislative auditor to conduct performance audit of state's program of group health insurance that is provided by committee on benefits through plan of self-insurance.
Mr. Stevens explained AB206 would require a performance audit of the Risk Management Division of the Department of Administration. The bill would need to be amended to include a $7,500 appropriation to allow travel expenses for the audit division to conduct the audit.
Ms. Giunchigliani stated it was important to have a plan for the risk management area.
Mrs. Williams commented AB206 had come to the Elections and Procedures Committee and was sent to Ways and Means concurrently for the fiscal approval.
Mr. Stevens indicated AB206 would be a general fund expense of $7,500.
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MRS. WILLIAMS MOVED AMEND AND DO PASS.
MS. GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE.
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SB362Provides in skeleton form for revisions of state personnel system.
Mr. Stevens explained this bill originated in Senate Finance as the Exempt Merit bill. The proposal was not to make the extensive NRS changes related to establishing the Exempt Merit service. He
explained the unclassified and classified class would be retained with approximately 2,600 to 2,700 employees in 500 positions exempt from earning overtime.
Ms. Giunchigliani asked how "pleasure or discretion" in Section 4, page 2 was defined. Mr. Stevens replied he did not know. Ms. Giunchigliani commented the issue of nurses as professionals had not been addressed. Mr. Stevens stated they would not be included in this proposal and would be able to earn overtime.
Ms. Giunchigliani asked what Section 5 related to FLSA meant. Mr. Stevens explained agencies could enter into agreements with representatives of state employees such as in the Benzler Case where SNEA was designated as a representative. He indicated it would also allow employees to enter into agreements directly with the agencies.
Mr. Lorne Malkiewich, Legislative Counsel, stated there would be no substantive difference between "pleasure" or "discretion." He indicated it was different words to describe the same concept of how the employee could be terminated by the employer at will without cause.
Ms. Giunchigliani asked if the long versus short definition of FLSA was included. Mr. Malkiewich explained the voluminous regulations were not included, but the definitions of classification were included. Ms. Giunchigliani pointed out utilizing the short definitions affecting about 500 positions would find the state back in court over the changes, while using the long versions would only affect approximately 150 to 200 positions and reduce court cases. She stated her concern was the attempt to circumvent FLSA to some extent without recognizing the state would be back into litigation if it was not addressed properly now.
Mr. Malkiewich pointed out the language would allow both narrow and broad interpretation based upon how the Department of Personnel looked at it. He noted the problem with including the full federal regulations within this law could lock the state into law which, if federal laws changed, would be in conflict. Some specifications citing the FLSA were included in the legislation. Ms. Giunchigliani asserted just referencing the FLSA would not necessarily cover the intent.
Ms. Giunchigliani asked in Section 5, line 35 if the employee chose to name a different representative other than one recognized by the Benzler decision, would it preclude the representative from working on the employee's behalf. Mr. Malkiewich indicated it would depend on how the representative fit within the standards set by the FLSA related to recognition. As a result of the recent Supreme Court decision, the FLSA-related decision was a mess. He stated it was not clear who was authorized to negotiate and who would have collective bargaining powers. It would be the subject of litigation at some point.
Ms. Giunchigliani inquired if the only issue which employees could enter into agreement was overtime. Mr. Malkiewicz replied Section 7 discussed specifically the overtime agreements. She stressed two classes were being set up based on how the employees were recognized according to the Benzler decision. He reiterated it would allow different bargaining units where some were directly with employees while others were through the designated bargaining unit.
Ms. Giunchigliani asserted this bill did not resolve the issues and the state would be in more litigation.
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MR. MARVEL MOVED DO PASS.
MR. DINI SECONDED THE MOTION.
THE MOTION CARRIED BY VOICE VOTE. MR. PERKINS AND MS. GIUNCHIGLIANI VOTED NO. MR. HELLER WAS NOT PRESENT AT THE TIME OF THE VOTE.
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SB559Directs department of human resources to seek Medicaid demonstration waiver.
Senator Ray Rawson explained there were substantial changes from the first bill draft and the current version had a strong statement of purpose.
Chairman Arberry asserted the old version had been stripped completely and the new version was all new language. Senator Rawson replied that was correct. He stated the preamble remained the same, but all the substantive portion of the bill was replaced. He emphasized the preamble discussed the concerns and reasons related to how to reform health care which would be beneficial for the state.
Senator Rawson testified the bill established the need for the interim standing committee on health care to begin a serious study, evaluation and recommendation for the type of coverage which should occur with the Medicaid system. The bill described the type of study and what evaluations should take place within systems available. He pointed out review should address the issue of funding and how there would be fair compensation to any providers involved along with cost containment.
Senator Rawson emphasized the costs have been out of control. He explained the rise in costs were a result of 70 percent growth in four years partly from mandates, growth and runaway medical costs. He reiterated this was one of the fastest growing budget accounts in the state. This bill would deal directly with the very complicated issue of provider tax. He stated there would need to be some mechanism to try to replace any revenues lost possibly through indemnifying the hospitals. It would not be feasible to compensate the hospitals which would risk the federal aspect of the law.
Senator Rawson explained the plan would be to have a recommendation on July 1, 1995. This would provide one year to study the subject and to see what Washington did with health care reform and what President Clinton could actually implement. The role of Washington would have a significant effect on how Nevada's plan was formulated. He testified there would be quarterly reports to the IFC on the progress of the study toward implementation. He noted SB559 directed the Department of Human Resources to apply for a demonstration waiver if it was recommended by the interim committee and approved by the Governor. He noted there was concern from the hospitals because it would raise the issue of directing patients which could cost hospitals significantly.
Senator Rawson asserted it was his intention to assure no program would be implemented without consensus of those people adversely affected. He commented the purposes of the demonstration project would be to reduce the growth in the overall cost, to improve
access to primary and preventive health care to the Medicaid population, and to institute health education programs to mainstream the population.
Senator Rawson stressed the recommendation would go forward no later than July 1, 1995. This date was selected to offer some security to the people who had significant dollars on the table. He stated if consensus was reached, a national health plan was instituted, a loss of the provider tax or a number of other large impact actions happened over the next 18 months, the state would still be able to move ahead with the program. He stated the committee was willing to put forth a letter of intent indicating there would be no progression of the plan without a consensus of all parties involved.
Ms. Tiffany inquired if nothing would occur on the demonstration waiver until the next Legislative session. Senator Rawson clarified technically there was authority in the bill for "not later than July 1, 1995." She remarked it could occur over the interim. He stated it allowed for the waiver to come forward sooner, but the committee report would be available July 1994 and it would take at least six months to receive a waiver so in all likelihood the fastest case would be at the beginning of the next Legislature.
Ms. Tiffany asked if the size of the Medicaid population was considered in the pilot program. Senator Rawson responded a pilot program currently was in place and had been for ten years. He indicated there was a good idea on how it works, what the advantages were, how much access and the quality of the program. The pilot program did good things for the population and also trained physicians. The actual action would depend on the committee's recommendations, but it would take some time before action occurred.
Senator Rawson indicated the Executive branch had discussed moving forward with the waiver for a managed care program which would raise many of the issues the original bill had raised because the hospitals have put a large amount of money on the table which they could lose.
Ms. Tiffany noted the subcommittee had the impression Mr. Griepentrog was putting forth a RFP for managed care for Medicaid and there was concern over it along with the SIIS RFP for managed care. She asked if these had been considered with the SB559 discussions. Senator Rawson replied it raised all the issue previously discussed in relation to the type of managed care. He emphasized even after six months in session no one had any additional clarification or information regarding the types of managed care. He stated he was not comfortable with it. He pointed out this process should lend itself to public scrutiny, open study and to recommendation which would go forward openly.
Ms. Tiffany asked if a managed care plan for a RFP from Mr. Griepentrog would be superseded by SB559. Senator Rawson explained the committee would not be able to stop Medicaid from doing things on their own, but SB559 was specific about the waiver should it be recommended by the interim committee and approved by the Governor.
Ms. Giunchigliani remarked the original bill basically meant only Health Plan of Nevada would be the company selected, but that language was removed in the second version. She asked after the language was deleted, was the intent to assure this would be an open process. Senator Rawson indicated yes but some smaller outfits without reserve resources which would not work to the
state's advantage. The new language did open up the process considerably. The criteria for selection would be included as part of the recommendations.
Mr. Jim Wadhams, Nevada Hospital Association, testified the key portion of SB559 was Section 1 which established a study to evaluate the process. He remarked the Medicaid budget was a precarious process and this study would be absolutely critical to having a rational program to be put in place during the next legislative session. He reiterated the key portions in Sections 16 and 17 where nothing would be implemented unless all parties were in consensus.
Mr. Harvey Whittemore, State Board of Medical Examiners, requested some modification in respect to assuring certain interests were protected and stated some proposed language related to the membership: "If an interest or ownership or position or salary would materially affect the independence of judgment of a reasonable person and if such service would materially affect his pecuniary interest...". He stated this would make sure if there was a materiality question in respect to the qualifications to serve on the committee, it would be addressed. He requested the committee amend NRS 459B.200 to make it clear.
Mrs. Evans asked if the Administration had any response. Mr. Scott Craigie, Governor's Office, stated the Governor's position was there was merit to an approach which would result in a single payer system where a group in the private sector was the risk taker in terms of helping the state with service to Medicaid clients. He pointed out the Administration believed there were a number of problems in the state and this would be an approach which could assist. He stated problems were: 1) Nevada had one of the fastest growing client bases in the country; 2) because the state was fiscally conservative, caps have been placed on the amount of money to be spent in Medicaid over the biennium; and 3) there was an access problem in many areas of the state, such as in Carson City having difficulty finding primary care or pediatricians to serve the clientele. He indicated by going to an entity with the volume the state produced, the entity would help with the issues of price and access along with giving the opportunity of improving the quality of care.
Mr. Craigie emphasized there were still some controversial portions within SB559. One concern, for the state, was utilizing an entity which would be large enough to do the business without being totally dependent on state business. The approach of an interim study committee made sense to assure all issue were addressed prior to implementation.
Mrs. Evans commented Welfare subcommittee hearings had discussed the hospital tax and a proposed managed care program suggested earlier by the Administration, but the subcommittee had not been clear related to what was envisioned. She asked how SB559 related to the Governor's plan to implement a managed care program for the 1993-95 biennium. Mr. Craigie responded the Administration had made the commitment to the hospitals that any managed care system implemented over the 1993-95 biennium would not direct patients to hospitals in a manner which would significantly alter the current distribution of Medicaid business. He commented there were presently two managed care programs being discussed: the one included within SB559 and the one being in Mr. Griepentrog's agency. He stated the two were different. He emphasized SB559 would not preclude the Administration from moving forward with managed care or planning how the two plans could progress during the interim.
Mrs. Evans asked when the Administration's managed care plans would be shared with the legislative branch or when would it be submitted for review and discussion. Mr. Craigie stated it was in the developmental stages and directed the committee to ask the Medicaid division. Mrs. Evans asked if they were seeking a waiver. Mr. Craigie stated yes, they were seeking a managed care waiver and were discussing options with the San Francisco office, but nothing had been formally submitted.
Mrs. Evans commented the Legislature would be going home not knowing much about the managed care program. Mr. Craigie indicated she was correct, but pointed out there was the standing committing on health care and the IFC which would have quarterly reports on these activities throughout the interim. He emphasized the Administration was willing to come forward with reports to any groups suggested by the Legislature without having the specifications in law.
Mrs. Evans requested a report be presented to the IFC by the Fall of 1993 regarding the managed care program and RFPs pending in relation to the program.
Ms. Giunchigliani asked if SB559 passed, would the Administration have any objections to better checks and balances included within the language in order to allow the Legislature the opportunity to not approve the directions being taken during the study. Mr. Craigie replied he would be amiable to a formula including authority given to the IFC, but remarked he was uncomfortable giving more authority to interim committees because of the chance of litigation over loss of legislative power. He emphasized both branches must be conservative without being abusive.
Ms. Giunchigliani inquired if the intent was, at some point, to have only one group offering services within the state. Mr. Craigie responded it was an area which would need to be aggressively pursued, especially in relation to what was occurring at the national level. At this point, it was not possible to say what would occur either with the study or the plan. It would be dictated by what occurred in Washington. He emphasized, for Nevada, there were significant advantages to having a risk-taking entity as a single payer group providing Medicaid service. Options needed to be investigated more fully first.
Chairman Arberry requested the Administration report to the October IFC meeting on the status of the managed care program. Mr. Craigie committed to providing a report.
Chairman Arberry closed the hearing on SB559.
AB596Makes various changes to encourage education of illiterate offenders in custody of department of prisons.
Mr. Ghiggeri stated this bill provided for the State Prison Commissioners to adopt regulations to provide a literacy program for prisoners within the Department of Prisons system. It also indicated the offenders should be in the programs if they were illiterate unless the Prison Director could determine good cause for the requirement to be waived. He stated Section 7 on page 5 addressed the issue of the Parole Board determining if the prisoner was literate prior to paroling. Chairman Arberry recommended removing the language.
Mrs. Williams commented her notes showed line 11 of page one "shall" was to change to "may" and the language in Sections 6 and 7 would be deleted. She noted the fiscal impact would also be amended out.
Mr. Ghiggeri explained the prison's concern related to the Parole Board mandate and the potential for inmate stacking if the prisoner had to be literate to be paroled.
Ms. Giunchigliani commented it would be an unfunded mandate on the districts because more personnel would need to be hired to place the inmates in the system. She emphasized the concept was good, but funding would need to be provided to assure services without an impact on the local entities. Mr. Ghiggeri remarked the change from shall to may would address the problem and the current adult education program in the system would provide literacy services with no additional costs.
Mrs. Williams remarked there were already teachers, the program was in place and the literacy services would have no negative impact or additional cost.
Mr. Marvel remarked under Section 4, subsection 1b waivers could be granted because of the prison industries program. He explained if someone was excelling in the program, they could remain in it.
Mr. Humke commented he was not fond of the bill at the late date of the session even with the amendments. He pointed out to the committee, turning to the fiscal note, there were no numbers included within it, only narrative. He remarked the bill could have a large fiscal impact as a result of some of the bill's elements. He suggested the change in language proposed by Mrs. Williams was against the committee's earlier view related to giving another branch of government authority over funds. He stated he had asked the warden what the priority was -- literacy or drug/alcohol abuse programs -- and the Warden had responded it was the latter. Mr. Humke stressed at this late date, there were a few too many holes being left unfilled.
Mrs. Williams remarked the Elections and Procedures Committee had passed a study which would be evaluating all the drug abuse in the prisons in order to formulate recommendations on how to deal with the issue. She concurred with Mr. Humke that the Prison Administration did not yet have a clue on how to handle the drug situation within the prisons.
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MR. DINI MOVED AMEND AND DO PASS..
MRS. CHOWNING SECONDED THE MOTION.
THE MOTION DIED FOR LACK OF A MAJORITY. MR. DINI, MR. ARBERRY, MR. MARVEL, MRS. WILLIAMS, MR. PERKINS AND MRS. CHOWNING VOTED YES. MR. HUMKE, MRS. TIFFANY AND MS. GIUNCHIGLIANI VOTED NO. MR. PRICE, MR. SPITLER, MRS. EVANS AND MR. HELLER WERE NOT PRESENT AT THE TIME OF THE VOTE.
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Mr. Jim Weller, Department of Transportation, commented as a result of SB571, the Deputy Directors' salaries were limited by the bill to $48,158 and, therefore, 40 people in the department would be supervised by Deputy Directors who would make less money than those they supervise.
Chairman Arberry stated the unclassified pay bill was currently still in the Senate Finance and, in discussion with the Chairman of Senate Finance, there were no intentions of amending the bill. There would be an interim study formulated to look at the differences.
Chairman Arberry adjourned the hearing at 11:30 a.m.
RESPECTFULLY SUBMITTED:
_________________________
Kerin E. Putnam
Committee Secretary
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Assembly Committee on Ways and Means
June 30, 1993
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