MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      February 9, 1993

 

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on February 9, 1993, in Rooms 207/208 of the Cashman Field Center, Las Vegas, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

Senator Randolph J. Townsend, Chairman

Senator Sue Lowden, Vice Chairman

Senator Ann O'Connell

Senator Mike McGinness

Senator Raymond C. Shaffer

Senator Leonard V. Nevin

Senator Lori L. Brown

 

 

STAFF MEMBERS PRESENT:

 

Linda Krajewski, Committee Secretary

Denise Pinnock, Committee Secretary

Brian Davie, Senior Research Analyst

Frank Krajewski, Senior Research Analyst

 

OTHERS PRESENT:

 

Louis Amundsen, Associate Professor and Chairman, University of       Nevada, Las Vegas (UNLV) Department of Physical Therapy

Joe Baca, Private Citizen

Otis Bryant, Private Citizen

Jack Close, President, Nevada Physical Therapy Association

Frank Doherty, Arbitrator and Mediator

Jerry Fransen, Director of Environmental Safety and Health, EG&G       Special Project

Mark Habersack, Compensation and Benefits Specialist, Harrah's Las       Vegas

Kelly Hawkins, Physical Therapist

Ann Hohman, Business Owner

Tyrone Mc Sorley, Southern District Legislative Chairperson, Nevada       Physical Therapy Association

Dennis Nolan, Chairman of State Industiral Insurance System (SIIS) and       WC Committee and Director of Risk Management, Las Vegas   Chamber of Commerce and Mercy Ambulance

Jane Overy, Private Citizen

Matthew R. Smith, Physical Therapist, ATS Physical Therapy

Stan Smith, Boyd Group and President of the Self-Insured Association

Bill Stapp, Private Citizen

Luther Stark, Private Citizen

Wayne Steed, Registered Physical Therapist

Jack Vergiels, Lobbyist, Nevada Physical Therapy Association

Scott Young, General Counsel, SIIS

 

 

The meeting was called to order by Vice-Chairman Lowden.

 

Jack Close, President, Nevada Physical Therapy Association, read from Exhibit C.

 

Vice Chairman Lowden asked for guidelines to avoid "sweetheart" deals.  Mr. Close responded the committee has identified in the re-draft of the legislation several ways to create a "level playing field."

 

Senator Brown questioned the determination as to quality of care by a review board for physical therapists.  Mr. Close responded there is a review board for licensing and those who are non-licensed are prosecuted.  He stated the services should be provided by the person most qualified to do so.

 

Jack Vergiels, Lobbyist, Nevada Physical Therapy Association, stated Mr. Close's statement was made to protect the smaller physical therapy organizations in that they are given equal access. 

 

Chairman Townsend questioned the incentive for the abusers, other than fines, to not practice anymore.  Mr. Close stated the efforts by the state board has a lot of work to do but they are committed to this issue.  He stated if the licensing board is the committee's choice for handling this problem, then he felt it could be done.

 

Tyrone Mc Sorley, Southern District Legislative Chairperson, Nevada Physical Therapy Association, stated one of his partners is on the board and his (Mr. Mc Sorley's) understanding is there is going to be stronger terminology which will be coming to the legislature along these lines. 

 

Kelly Hawkins, Physical Therapist, read from Exhibit D.  He referred to Exhibit E, page 7, line 5, and read it as he would like it to read: "health care provider who is willing to abide by reasonable terms of a contract for managed care..."

 

Senator Nevin asked for the definition of "reasonable."  Mr. Hawkins stated it was a difficult question but he meant physical therapists do not want stipulations which do not allow them to perform their jobs.

 

Vice Chairman Lowden asked how many members of the Physical Therapy Association are in Preferred Provider Organizations (PPO's) or Health Maintenance Organizations (HMO's).  Mr. Hawkins said he did not know the exact numbers but stated the majority of physical therapy providers are associated with one or more PPO's at a time. 

 

Vice Chairman Lowden confirmed most physical therapists have met the criteria to belong on HMO's and PPO's.  Mr. Hawkins concurred.  He stated that HMO's and PPO's make up approximately thirty five percent of his practice.  He stated there are a few HMO's or PPO's that do not have him on their lists but none of them would have the impact on his practice that SIIS would. 

 

Mr. Louis Amundsen, Associate Professor and Chairman, UNLV Department of Physical Therapy, testified UNLV is supporting the Physical Therapy program.  He stated his mission is to train entry level physical therapists.  He stated part of this is to make certain information available.  He said the concern of the school is everything should be ideal as possible which it is not ideal to cut funds to the point where assessments (the most expensive part of treatment) are limited.

 

Senator Brown asked if an initial evaluation was the assessment and if that was an hourly rate.  Mr. Mc Sorley referred to the last page of Exhibit C.

 

Senator Brown asked if there was a fee for the initial consultation.  Mr. Mc Sorley stated in the last two weeks there had been a transition wherein a patient could be billed.

 

Senator Brown commented on the necessity of having an initial evaluation as to rule out the wrong treatment.  Mr. Mc Sorley concurred. 

 

Senator Nevin asked what percent of his business was from SIIS and did others have higher percents.  Mr. Mc Sorley responded between 30 to 40 percent and higher.

 

Senator McGinness asked if there was concern the rate would get too low.  Mr. Mc Sorley responded that was a concern but there was also a concern regarding the qualifications of the physical therapists.  He stated if the criteria of care was based solely on price, then the committee would be "opening doors they would not want to open."

 

Senator McGinness stated quality was a concern but the price established should be able to be met by the business.  Mr. Mc Sorley concurred. 

 

Senator Brown commented the bottom line was to make sure employees get affordable treatment.  She recognized the problem of the price becoming so low there would not be enough groups to compare outcome of treatment.  Mr. Mc Sorley concurred and stated this is a nationwide problem. 

 

Mr. Close commented he wanted to make sure the injured employee would receive the most qualified and appropriate treatment.  He stated when competition is involved if the price gets too low, volume has to be increased.  He stated the personnel cost is the highest cost for physical therapists, and if the compensation to the physical therapist is reduced they will be forced to spend less time with each patient. 

Senator O'Connell commented she did not think this would be a concern.  She stated with managed care this will not occur because the employer wants the employee well and back to work.  She stated the checks and balances will be there.  She said the problem now is the high dollar is being paid but the care is not there, which is why managed care is necessary.

 

Mr. Vergiels stated because the fee has stayed the same for a long time, there is no motivation on the physical therapists to retain the patients. 

 

Mr. Close re-stated his concern of the fees staying so low that the physical therapists are forced to spend less time with patients.

 

Senator O'Connell requested Mr. Vergiels have the therapists that are in the managed care groups come before the committee to testify that they are being treated in such a way that they are forced to provide a lesser standard of care.  She stated the testimony the committee had heard had been very positive in that the number of appeals were very low.

 

Mr. Close stated his comments did not imply this was occurring in Nevada and he agreed to have association members in managed care systems come before the committee with their concerns.

 

Vice Chairman Lowden requested Mark Habersack, Compensation and Benefits Specialist, Harrah's Las Vegas, (a self-insured company) to address the committee. 

                     

Mr. Habersack stated his company's providers are more than adequate, even better than before the managed care system was set up in regards to quality of care.  He was unaware of the rates they were paying. 

 

Vice Chairman Lowden asked if the goal was to reduce costs through promising volume.  Mr. Habersack concurred.

 

Vice Chairman Lowden asked if he understood the frustration of the physical therapists in regards to quality.  Mr. Habersack stated he sympathized with the physical therapists especially in the small practices who have to compete with the larger practices.  He stated in some of the larger practices, the physical therapists never saw the patient so in his company they focus on quality.  He said if they are paying for a physical therapist, the company wants the employee to see the therapist and not a technician.

 

Senator Shaffer stated the bottom line is money.  Employers want their employees back at work.  He asked if an employee is injured,and refuses to return to work, can he be fired.  Mr. Habersack stated at Harrah's the employee would not be fired but the company would want to know from the doctor why the employee would be released to work.  He stated the employee would have to be stable enough to return to light duty and try to work. 

 

Senator Shaffer stated he receives calls from injured workers who are unable and are being forced to go back to work.  He stated he does not believe the testimony he is hearing regarding the relationship between the employer and employee and coming back to work too soon. 

 

Mr. Habersack said his company developed a different type of relationship with employees.  He said the employees have other avenues.  He stated if an employee shows up for light duty and is clearly not ready, Harrah's will contact the doctor.

 

Senator Shaffer commented he hoped Harrah's attitude was the norm and not the exception. 

 

Mr. Close stated there are times when the physical therapist thinks the employee is ready for light duty and the employer will take the employee back at full duty or not at all.

 

Senator Brown stated she was hopeful a managed care system could be set up for everyone that could be looked at the same way.  She stated in managed care they are not just looking at payment but managed review. 

 

Mr. Habersack said the only way managed care can work is if the employers get involved with it.  He stated it can no longer just be the cost of doing business.

 

Mr. Close stated the recommendation from physical therapists that a worker return to work is an advisory role.  He said physical therapists make recommendations back to the physician and the physician has the final word but that it was a team effort.

 

Vice Chairman Lowden asked if it was possible to get the "right price" from PPO's and HMO's if a company could not promise volume.  Mr. Close answered he was unsure but it was possible yet HMO's and PPO's have dropped some physical therapists due to lack of volume.  Mr. Hawkins stated he understood the committee's concern with quality of care and not volume.  He said last year the SIIS physical therapy expenditures were 4.25 percent of the total SIIS expenditures and 12.8 percent of the total medical costs.

 

Scott Young, General Counsel, SIIS, testified the amount of money for physical therapy is becoming greater.  He stated in 1984 the expenditure amount for physical therapy was approximately 1.9 million dollars and in the last fiscal year it was over 18 million dollars.  In 1984 the number of treatments were slightly over 13,000 and in 1992 it was over 190,000.  He stated this is one of the reasons SIIS wanted managed care in addition to over utilization.  He suggested the committee consider the problem of "self referral" because some of the larger therapy companies have financial ties to doctors and the smaller therapy companies should be protected.

 

Senator O'Connell asked for a copy of this information.  Mr. Young concurred.

 

Vice Chairman Lowden asked if the main concern was the number of physical therapy treatments for patients.  Mr. Young stated this was the reason for the high amount of expenditures. 

 

Vice Chairman Lowden recessed the meeting at 9:35 a.m.  She called the meeting back to order at 9:50 a.m.  She introduced a government class from Chaparral High School.

 

Stan Smith, Boyd Group and President of the Self-Insured Association, testified the Boyd Group entered into a PPO with three physical therapy companies based on the previous years expenditures.  He stated his rate was $35 per day/per visit.  He stated there has been a decline in over-utilization because the exclusive agreement with the physical therapists matched the number of visits prescribed by the doctors.       

 

Vice Chairman Lowden stated the $35 charge was considerably less than the prices the committee had heard and asked if the quality of care was sufficient.  Mr. Stan Smith responded the Boyd Group is very pleased with the care they are receiving.

 

Vice Chairman Lowden asked if the Boyd Group's goal was to lower the price even further if given the ability to do so.  Mr. Stan Smith responded yes but stated his main goal was quality of care. 

 

Vice Chairman Lowden wondered why some physical therapists were able to lower the fees to $35 while maintaining a high quality of care and yet other physical therapists said they can not reduce the price anymore because they have not had an increase in fees for eight to ten years.

 

Mr. Mc Sorley responded to Vice Chairman Lowden's question.  He stated he hoped the physical therapists did not mislead the committee in that they were only there to complain about prices. 

 

Matthew Smith, Physical Therapist, ATS Physical Therapy, testified on physician self referral.  He commented on the escalation of physical therapy.  He then read from Exhibit F.

 

Senator O'Connell requested an approximate figure on the number of doctors in their own practice with a technician practicing physical therapy as opposed to having a physical therapist.  Mr. Matthew Smith was unable to provide the figures.  Mr. Close said the data is not available because a physician can not perform physical therapy without a physical therapist.  He stated the physician can only provide physical therapy procedures and then it must be billed as a medical visit.

 

Senator O'Connell questioned if the physician does this, then is there a higher billing cost and does that reflect in the figures Mr. Young gave earlier.  Mr. Close concurred. 

 

Mr. Close gave the committee information based on Exhibit G. 

 

Mr. Mc Sorley stated he would make available to the committee a copy of an article in the New England Journal of Medicine that referenced a study that showed a lower cost on physical therapy.  He read (from the article) "in the absence of measures of severity of illness among outpatients, it is therefore impossible to determine whether the lower cost per case and the self referral reflects more efficient care of the provision to patients with less severe injuries since self referring practitioners initiate therapy at more than twice the rate of independent practitioners."

 

Senator Brown asked if when looking at self-referrals, do the statistics reflect the money that may be saved from avoiding additional physician treatments.  Mr. Mc Sorley stated there is a study in California (that he will supply to the committee) that does not concur.

 

Wayne Steed, physical therapist, testified on utilization.  He stated physical therapists can not treat patients without a physicians referral.  He stated there are checks and balances, i.e the physician and with SIIS in that every fifteen treatments the physical therapist must get approval for further treatments.  He said there was no case management with SIIS because they would always allow further treatments. 

 

Dennis Nolan, Chairman of SIIS/WC Committee/Director of Risk Management, Las Vegas Chamber of Commerce and Mercy Ambulance, testified as an employer and discussed use of physical therapy.  He stated the rates for Mercy Ambulance with SIIS are pretty high.  He said physical therapy was the only profession that was able to evaluate the physical aspects of a job and provide services that were not available before.  He stated when injured employees went to physician referred physical therapists, i.e. self-referral, he had a more difficult time weaning employees from these groups than he did with independent physical therapists.  He agreed with Mr. Steed in that the physicians were causing the problem with over-utilization. 

Robert Conley, private citizen, and a claimant with SIIS, testified he crushed vertebras in his neck and was sent by SIIS to San Francisco where he learned macrame and decoupage.  He stated he was told never to enter heavy machinery like tractor trucks again, but he was forced to go back to driving a truck.  He again hurt his neck and SIIS wanted him to try nerve blocks as a temporary solution.  He was then referred to a therapist but the doctor told him not to do anything strenuous because he would not feel any pain.  The therapist was informed of this but the therapist had him lifting weights (functional capacity test) which did hurt him.  He informed the therapist this hurt and the therapist told him he (Mr. Conley) was responsible for the pain.  Prior to visiting the physical therapist Mr. Conley said he was told to cooperate with the physical therapist or he could be dropped from SIIS.  He stated it cost him monetarily as well as emotionally.  He said he was sent for more surgery in a facility owned by SIIS where he was treated poorly.  SIIS reports accused him of being uncooperative.

 

Vice Chairman Lowden asked if Mr. Conley indicated to the therapist that the functional capacity test was more than he could tolerate.  Mr. Conley concurred.                                               

Luther Stark, Private Citizen, testified he made arrangements in May of 1990 to go to Long Beach to see a physical therapist, and that SIIS would abide by that physical therapist's recommendations.  The physical therapist recommended that he be put on a lifetime exercise program.  His doctor then prescribed a year of physical therapy which was denied by SIIS.  He stated an exercise program performed by yourself is not covered by SIIS if a problem occurs. 

 

Frank Doherty, Arbitrator and Mediator, read from Exhibit H. 

 

Jerry Fransen, Director of Environmental Safety and Health, EG&G Special Project, testified he experienced physical therapy after a car accident.  He felt it was a scam because all the patients were referred by a few doctors (self referral) and the place was always busy.  He suggested the committee provide for "outside oversight" to determine that the therapy prescribed is provided. 

 

Vice Chairman Lowden stated she hoped managed care would be the overseer.  Mr. Fransen concurred but cautioned against self-referral.

 

Vice Chairman Lowden introduced another Chaparral High School government class and recessed the meeting at 10:35 a.m.  She called the meeting to order at 11:10 a.m.

 

Otis Bryant, private citizen, testified on behalf of his wife, Gladyce, who worked for the Landmark Hotel and Casino for fourteen months.  He stated she was in perfect health until she slipped while working in the kitchen in the Landmark.  Her doctor said she had some type of "degenerative spinal disease" and aggravated it when she fell.  She was classified as 100 percent disabled but the disability was not due to the fall.  He stated no other doctors found any type of disease.  SIIS refuses to reopen the case.  He has not been able to find a doctor to testify because the doctors do not want to deal with NIC and the lawyer will not take the case without a doctor to testify.

Senator Shaffer asked if he received any compensation and was a disease ever found by any doctors.  Mr. Shaffer responded she was given 2 percent "out of the goodness of their (SIIS) hearts."  Mr. Shaffer reiterated no doctor would testify in NIC cases.

 

Jane Overy, Private Citizen, testified on behalf of her employer (whom she did not name) that the company could have learned more from SIIS in their seminars, but did not feel the need until they hired an employee who knew how to use the system.  His first day of work he fell down but there were no witnesses.  Two days later he decided to go to a doctor and was told he had a minor wrist injury.  Several days later he was involved in a confrontation with another employee and quit.  He then threatened his employer and had his claim reopened.  The employer then filed an appeal.  She commented the appeal process is horrible.  She said they have spent two years fighting the system and the employee has received over $32,000 for work and $10,000 for rehabilitation for an injury that never existed.  The employer hired him back so they could receive credit for some of the money spent by SIIS on rehabilitation.  He was hired back on light duty but complained he did not receive enough work.  He then complained to his rehabilitation counselor that the company was giving him too much work and it was not a light duty position.  She suggested better notification from the appeals department of SIIS.  She concluded the "team system" created within SIIS has made the system much better.

 

Joe Baca, private citizen, testified he worked for Reynolds Electric until he received radiation poison.  The work was very strenuous and caused headaches and the beginning symptoms of radiation poisoning.  Reynold's Electric blamed the employees for acting improperly and denied any liability.  SIIS would not cover his injury because they claimed he was engaged in espionage.  He felt he was used as a guinea pig to test radiation.

          

Chairman Townsend asked if he tried to have the case reopened.  Mr. Baca said he has lawyers but has been unsuccessful in reopening the claim.  He stated the doctors he had been previously seeing have all retired.  His new doctor does not want to get involved with the system. 

 

Chairman Townsend requested Mr. Young show Mr. Baca the avenues he can pursue to get the case reopened. 

 

Bill Stapp, Private Citizen, testified he experienced physical therapy after tripping on the way to work.  He began a fitness program which has helped.  He commented that physical therapy has helped him more than physicians.  He stated he is a realtor and required by law to belong to SIIS.  He stated the premium has gone from $35 to $65 per month in one year.  He thinks this is unfair because he will never use it.     

 

Senator O'Connell stated the real estate industry has asked to be withdrawn from SIIS and will be self-insured.  She mentioned three way insurance which is when "industries have a large enough income and if they have someone who is qualified within the industry to become self insured, then the system looks at that and determines if they meet the criteria then they are allowed to do that."  Mr. Stapp replied that small employers do not meet that criteria and are then forced into the SIIS.

 

Senator Brown requested the name of Mr. Stapp's physical therapist since he had such positive comments regarding physical therapy.  He stated Lynn McGuire and Matthew Smith.                             

 

Luther Stark, private citizen, asked about a proposal which states if a person goes back to work and aggravates a injury they had then SIIS will not be responsible.  He stated he has a case currently in District Court.  He stated SIIS has sent him to different doctors and physical therapists.  He wants to work but no one will hire him because SIIS rated him at 36 percent and will not insure him.  He suggested injured workers replace the current administrators at SIIS.

                                          

Ann Hohman, business owner, testified she has dealt with SIIS.  She stated her construction company carefully follows safety procedures.  She stated her employees who have had accidents are repeat claimants with SIIS.  She feels, as an employer, she has been made responsible for the employees "literally from the cradle to the grave."  She stated some employees have had back problems or motorcycle accidents when they were younger, yet if they become injured while at work the employer is responsible.  She said her company is not large enough to hire an attorney to fight the injured workers.  She suggested the employers and SIIS only pay for "accidents."

 

Senator O'Connell commented that language has been suggested to clarify to the doctor to identify the injury as an accident related injury. 

 

Vice Chairman Lowden referred to page 3 of Exhibit E which states "Prohibit payment of compensation if an employee has a preexisting condition or sustains a subsequent injury that is not the primary cause of the resulting disability."

 

There being no further business, Vice Chairman Lowden adjourned the meeting at 11:51 a.m.                                          

                        

           

            RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Melanie Rosenberg,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

DATE:                                

 

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Senate Committee on Commerce and Labor

February 9, 1993

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