MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      February 22, 1993

 

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 5:00 p.m., on Monday, February 22, 1993, in Room 227 of the Legislative Building, Carson City, 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:

 

Brian Davie, Senior Research Analyst

Frank Krajewski, Senior Research Analyst

Linda Krajewski, Committee Secretary

 

OTHERS PRESENT:

 

Stephen A. Shaw, Administrator, Nevada Department of Human         Resources, Rehabilitation Division

Scott Young, General Counsel, Nevada State Industrial Insurance     System

John R. Orr, Deputy Administrator, Nevada Department of Human      Resources, Rehabilitation Division

 

Senator Townsend opened the meeting with the following statement:

 

      I would like to address something that has come to my attention, that seems to be very unfortunate, but needs to be dealt with.  The press has been contacted regarding this BDR (bill draft request) and they in turn contacted me.  The allegation by more than one member, not necessarily of this audience, but of some audience today, was that the bill is not the way it was voted on, but it is the way that the chair wanted to see it. 

 

      That is not, in fact, the case.  This bill was drafted by [the Legislative] Counsel Bureau as the way they saw us voting.  If in fact that is different, that is unfortunate.  This is not a perfect science, and we will, of course, handle it in the following manner:  Each individual item on here will be reviewed to make sure that the committee, in fact, did vote to have it put in the bill and therefore will be part of it; and, of course, eventually this will be made into a bill and will be voted on.  And that will all be done in a public manner, as is all the hearings that have taken place since the second day of the session.  Then, of course, it will be introduced on the floor of the senate and it will be brought back here for hopefully only one more days worth of hearings.

 

      At that point, we will have taken 6 weeks, I repeat 6 weeks, of testimony which will encompass almost 200 hours, which is more than any other piece of legislation that has ever gone before this body.  And then that bill will either pass this committee and be sent to the floor where it will either pass and go to the assembly or it will fail and we will have to start again.

 

      The issue to be brought up here is that if someone thinks that I have tried to draw this bill the way I would like to see it; number one, they should have the common courtesy to address me personally, and or the guts to do it.  And, so if I hear this again from the press, I will be extremely dismayed, I will, of course, have no recourse, which is part of being a public person and will continue to do the right thing.  But if you've got a problem with me, then come and see me ... the press is busy doing things that are substantially more important than to worry about individuals' personal problems.

 

      So with that, I hope I've made myself clear, and if I haven't, please come and see me and I'll make it clearer.

 

Senator Townsend proceeded to introduce Stephen A. Shaw, Administrator, Nevada Department of Human Resources, Rehabilitation Division

 

 

Mr. Shaw stated the rehabilitation portion of the Governor's plan would hand over the rehabilitation duties to the Rehabilitation Division.  He then presented an overview and history of the joint state-federal program.

 

Senator O'Connell mentioned Mr. Shaw had made note of the fact his division had privatized a great deal of their vocational rehabilitation cases, and wondered if the private parties doing the rehabilitation were paid whether they were successful or not.

 

Mr. Shaw replied as a rule they did not purchase private rehabilitation services, as they had qualified rehabilitation professionals on staff.  He noted the Governor's plan would allow them to do that, and they did presently purchase services such as tuition and occupational school plus the use of physical therapists.

 

Senator O'Connell asked if Mr. Shaw had any data on their success rate as to how long the rehabilitated workers stayed in their jobs.

 

Mr. Shaw answered they were judged by the federal government.  He asserted their definition of a successful rehabilitation was, " ... somebody that maintains continuous employment for a period of 60 days.  To get Social Security reimbursement, it's longer ... it's 9 months.  They have to maintain employment for 9 months and they have to make sustained gainful activity ... those are the criteria by which our success is judged."

 

Senator Brown inquired whether they were reimbursed by Social Security even if the rehabilitation was contracted out to private companies.

 

Mr. Shaw acknowledged they were reimbursed for those clients whose services were rendered internally and who were recipients of Social Security who had maintained gainful employment for a period of 9 months and made a minimum of $500 per month for general disability.

 

Senator Brown queried what percentage of clients that had gone through the program attained the 9 month employment period and what percentage of clients came back after the 9 month period.

 

Mr. Shaw replied they did not currently have those figures. 

 

Senator Lowden asked Mr. Shaw to go over the federal program that gave a rebate for successful rehabilitations.

 

 

Mr. Shaw explained if someone was receiving Social Security or Social Security Disability Insurance (SSDI), and at the same time they were receiving workmans' compensation or State Industrial Insurance System (SIIS) benefits, if the division could get them actively employed for a period of 9 months, making at least the wage set by the federal government, the division would be reimbursed 100 percent of the cost for everything that was spent on the client, plus an administrative cost.

 

Senator Townsend inquired if it was known how many people who had undergone rehabilitation over the last 5 years had also been receiving Social Security benefits and would have qualified for that federal rebate program.

 

Scott Young, General Counsel, Nevada State Industrial Insurance System, answered although the figures were not immediately available they could probably be gathered.  He also maintained although the Rehabilitation Division could get a rebate for costs from the federal government, SIIS itself, through statute, could not.

 

Mr. Shaw concurred the Rehabilitation Division was the only agency able to receive rebates under the 1973 rehabilitation act.

 

Senator Townsend queried if the rebate would stay with the division as opposed to being returned to the policy holders.

 

Mr. Shaw replied that was correct.

 

Senator Townsend asked if that were the case, " ... can we guarantee that that cost reduction that is attributable to those that were originally paid for by premium payers can directly be attributed to the costs you would charge the system?"

 

Mr. Shaw declared that, too, was correct.

 

Senator Townsend questioned if it were possible to compare, historically, the two areas of rehabilitation, or was each case so independent that the two really could not be compared in terms of effectiveness.

 

Mr. Shaw stated with the existing data, he would be reluctant to compare them.

 

 

 

 

 

Senator Townsend queried since the Rehabilitation Division was the only agency authorized to obtain federal reimbursements, was it part of the federal requirement that they actually hire people, or could they subcontract to other vendors to provide the services.

 

Mr. Shaw declared he did not know the answer, but he asserted every rehabilitation division in the country hires their own employees, and none of the work is contracted out.

 

Senator Townsend asked if they currently used private vendors in the actual rehabilitation part, as opposed to the medical component or any of the other components.

 

Mr. Shaw commented they used them in terms of purchasing services; such things as tuition for cosmetology schools.  They would normally purchase services that private rehabilitation offered, that his division did not.

 

Senator Townsend inquired what percentage of rehabilitation clients were sent to some kind of school.

 

Mr. Shaw said he did not have that data, but some retraining was considered if possible.

 

Senator Townsend asked, " ... if the Governor would sign a bill that allowed the managed care organizations to provide rehabilitation, would you be available to be the overseer of all of those services that are provided by those private companies?  Do you have the capability of doing that?"

 

Mr. Shaw replied he imagined they could develop that.  He preferred, however, to keep the system as it existed now as it was very successful, and he declared it should be continued to be used in the future.

 

Senator Townsend queried if Mr. Shaw or any of his staff had visited Jean Hanna Clark Rehabilitation Center in Las Vegas.

 

Mr. Shaw answered that John R. Orr, Deputy Administrator, Nevada Department of Human Resources, Rehabilitation Division, had visited as recently as 2 weeks ago.

 

Senator Townsend questioned what role Mr. Shaw envisioned Jean Hanna Clark Rehabilitation Center playing if everything was moved over to the Rehabilitation Division.

 

Mr. Shaw noted he had not considered that because their proposal to the Governor had specifically not included Jean Hanna Clark Rehabilitation Center.

 

Senator Townsend asked the same question of Scott Young.

 

Mr. Young replied what he had seen in the bill led him to believe it did not necessarily impact Jean Hanna Clark Rehabilitation Center because they did not do vocational rehabilitation.

 

Senator O'Connell asked if the National Institute of Occupational Safety and Health (NIOSH) standard was the standard used at Jean Hanna Clark Rehabilitation Center.

 

Mr. Young declared he did not know the answer, but iterated he would not be surprised if they did follow those standards since they performed those types of assessments.

 

Senator O'Connell noted that most of the testimony the committee had heard over the past 2 weeks had indicated that whenever government took over workmens' compensation programs, as far as rehabilitation and vocational rehabilitation were concerned, the results were not positive throughout the country.  She wondered what the Rehabilitation Division would do differently to make it work successfully in Nevada.

 

Mr. Shaw said he had not heard that, but all he could state positively was what his program could do and what it would cost.

 

Senator Shaffer asserted the committee had no figures to compare the job the private section was doing versus the job the Rehabilitation Division was doing.

 

Mr. Shaw pointed out their budget proposal, in the Governor's budget, was for $19 million, which was 12 percent below the 1990 cost.  He added SIIS had figures comparing costs in the rural areas between the Rehabilitation Division and what it had been previously with private rehabilitation.

 

Senator Nevin stressed the rural areas were just a small piece of the puzzle, and it was hard to measure success when compared to Clark and Washoe Counties.

 

Mr. Shaw noted their budget proposal was based on a universe of 3,587 cases, taken from the 1990 SIIS audit.  He added they would require substantially higher staffing increases to do their work in Clark and Washoe Counties, specifically 79 more personnel, 48 of whom would be rehabilitation counselors.

 

Senator Townsend asked how the personnel request was broken down.  Did the additional 79 employees include those requested from SIIS, or were they additional, over and above those requested from SIIS.

 

Mr. Shaw replied if the SIIS employees met the standards, they could be included in the hiring of the 48 rehabilitation counselors.

 

John R. Orr, Deputy Administrator, Nevada Department of Human Resources, Rehabilitation Division, maintained the original proposal envisioned 47 rehabilitation counselors, 23 rehabilitation technicians, four supervisors, and five accounting specialists.

 

Senator Brown inquired if it were possible to, " ... craft something that would allow only those people who come under Social Security benefits to be moved over to your section ... because I'd hate to see federal dollars go down the drain if we don't make this move."

 

Mr. Shaw noted he was not aware of any restrictions in doing that and within the limits of the law, it was possible to craft whatever the committee wanted.

 

Senator Townsend asked if the 48 counselors were from SIIS.

 

Mr. Young stated they had somewhere in the neighborhood of 65, and 48 was the number that would be transferred to the Rehabilitation Division.

 

Senator Townsend asked Mr. Shaw if there were 48 counselors coming from SIIS, where would the other 31 people come from.

 

Mr. Shaw asserted 23 would be rehabilitation technicians, five accounting specialists and four supervisors, for a total of 79 positions.

 

Senator Townsend queried what a "tech" did.

 

Mr. Shaw answered, " ... they can do case development.  They can do a lot of things short of making the eligibility decisions.  They cannot do the direct counseling ... our system operates now with rehabilitation technicians."

 

Senator Townsend asked again if it were possible to find out how many people qualified under Mr. Shaw's guidelines (those people receiving Social Security benefits as well as SIIS benefits.)

 

Mr. Young replied they could at least give some sort of "ballpark" figure.

 

Senator Nevin inquired, " ... could we also get your figures on how much the cost is for you to put these 79 people into place ... and how much it is costing SIIS by comparison."

 

Mr. Young commented he could give SIIS' costs, but would have to get together with Mr. Shaw for the comparison.

 

Mr. Shaw emphasized he had those figures available at that time.

 

Senator Nevin then asked for a comparison of the two.

 

Mr. Shaw declared they had checked with SIIS, and the costs were comparable.

 

Senator Nevin asked how was it qualifications were different for SIIS and the Rehabilitation Division.

 

Senator Shaffer questioned Mr. Young if it were possible to get a figure of how many people had been sent from SIIS to vocational rehabilitation over the past 6 months, not including the Supplemental Security Income (SSI) people.

 

Mr. Young replied they could probably do it, but he was not sure if the figure would exclude those on Social Security.

 

Mr. Shaw  asserted the SIIS rehabilitation system only dealt with injuries caused at the work site, not with secondary disabilities.  He stated the Rehabilitation Division had found 30 to 40 percent of all disabled people had secondary disabilities, and with these people, SIIS or the private rehabilitation center would deal only with the primary disability, and then refer them to the Rehabilitation Division where a concurrent case file would be set up to deal only with the secondary disability.  He added his division could deal with all types of disabilities.

 

Senator Nevin drew attention to the fact that the main thing to control, was the increase in the cost of premiums.  If it were going to cost more money to do the switchover, where, he wondered, would the money come from other than again raising  premiums.

 

Mr. Shaw reminded the committee their proposal was still 12 percent less than 1990.

 

Mr. Young maintained if vocational rehabilitation was transferred to the Rehabilitation Division, and SIIS became responsible for taking care of secondary disabilities, under the SIIS approach, the additional costs would not be passed on to the employers. 

 

 

 

 

Mr. Young continued it was SIIS' contention that, contrary to Mr. Shaw's claim they could do the rehabilitation cheaper and better, under S.B. 7, SIIS was looking at going to 35 cases per counselor while the Rehabilitation Division was looking at 76.5 cases per counselor, which was double what the legislature had determined was the appropriate level.

 

Senator Brown asked, " ... when you talk about secondary disabilities, now the way I've been picturing vocational rehabilitation as opposed to physical rehab [rehabilitation] is you look at this person and figure out what he can do for a living.  Well, that is going to include everything about that person ... isn't it?"

 

Mr. Young answered examples of secondary disabilities might be eyeglasses to do office work, or dental work to make them look more presentable.  He added those were types of things that could be picked up by the Rehabilitation Division, but SIIS, technically, could not pay for those with employers' funds because they were not directly related to the job related disability.

 

Senator Brown inquired if the secondary disability was not dealt with, how would the employee return to work in a different capacity.

 

Mr. Young stated SIIS did, from time to time, provide such things, but it was his opinion most secondary disabilities were much broader than that.  He added the Rehabilitation Division's philosophy was to attempt to place the employee in a job that maximized their potential, while SIIS' philosophy was just to return the employee to gainful employment.  That is why SIIS believed, he continued, the Rehabilitation Division's efforts might turn out to be more costly.

 

Senator Brown commented, " ... the other matter was really more for the committee.  If we were to either send Social Security recipients over to the State Voc' Rehab [Vocational Rehabilitation], or everyone over to the State Voc' Rehab, I think it would probably be in our best interests to keep records and evaluate how you're doing ... like a trial run kind of thing, with a possible sunset if it's not working."

 

Mr. Shaw maintained the employer would not get billed for the cost of the secondary disability, because they would bill the cost to the state-federal program.

 

 

 

 

Senator Townsend inquired how Jean Hanna Clark Rehabilitation Center's expenses, estimated 1993, would be down 14 percent while SIIS' physical therapist projected expenses, projected for 1993, would be up 10 percent.

 

Mr. Young maintained they did not know the answer at the present time, but would get back to the committee at a later date.

 

Senator Townsend again asked for the number of people rehabilitated over the past 5 years who were receiving SSI, versus the total number of people rehabilitated over the past 5 years.

 

Mr. Shaw pointed out his agency would implement whatever policies the legislature chose to adopt.

 

Senator Townsend asked if the Rehabilitation Division would have a tracking mechanism, so the state could measure where they were 2 years from now.

 

Mr. Shaw noted they had to be 100 percent accountable.

 

Senator Townsend noted it was a tough call, and because of some of the changes in the Americans With Disabilities Act (ADA), less people might qualify.                                                                                                     He then questioned, "Is the criteria which was brought up this morning, that Scott's (Young) people have to work under, versus the criteria in order to qualify for your program ... you're saying that everybody would have to be under your criteria ... is that correct?"

 

Mr. Shaw declared that was correct.  He stated the criteria for the state/federal program was, "The individual has a physical or mental impairment which, for such individual, constitutes or results in a substantial impediment to employment ... and, they can benefit in terms of an employment outcome from vocational rehabilitation services."

 

Senator Nevin inquired whether Mr. Shaw planned to put all of their caseloads under the same criteria.

 

Mr. Shaw replied in the affirmative.

 

Senator Townsend wondered if the Rehabilitation Division would be able to meet the caseload requirements, or would the problem be shifted from one group to the other.  He also queried whether the system would counsel the employees well enough so when rehabilitated, they would immediately seek employment rather than continuously changing the type of work they would seek out.

 

Mr. Shaw said it was very rare that they went to a second plan.

He claimed the system that had developed over the years through the federal mandate called for an extensive assessment period to make sure the employee really knew what job he wanted to do.  He declared that their process was so thorough, that SIIS actually purchased it from the Rehabilitation Division for use in the north, through the vocational assessment centers.

 

Senator Townsend maintained many of the things SIIS had had to do had been dictated by the courts, and some of them had been dictated by the legislature.  He asserted the legislature was willing to change some of the things they thought had been wrong, plus, he noted, they had acted on some of the things they thought the courts had done incorrectly.

 

This, he concluded, would make it much easier for the Rehabilitation Division, if, in fact, they got the contract, because they would not have the courts forcing such things as second and third opinions on them, such as SIIS was getting at present.

 

Senator Nevin asked Mr. Shaw if he knew how many people were now working in SIIS who did not qualify under his department's mandates.

 

Mr. Shaw replied he had no idea, but the number was probably small.

 

Senator Nevin asked if Mr. Shaw and Mr. Young could put together a number, because he was concerned about who would lose their job in the transfer of staff from SIIS to the Rehabilitation Division.

 

Mr. Shaw replied he could probably have the number in 2 days.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senator Townsend thanked the witnesses, and there being no further business recessed the meeting at 6:10 p.m.

 

 

 

 

 

 

 

 

                                   RESPECTFULLY SUBMITTED:

 

 

 

                                                           

                                   P. K Fredericks,

                                   Committee Secretary

 

 

 

 

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

DATE:                                

 

??

 

 

 

 

 

 

 

Senate Committee on Commerce and Labor

February 22, 1993

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