MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      March 4, 1993

 

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, March 4, 1993, in Room 119 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:

 

Beverly Willis, Committee Secretary

Brian Davie, Senior Research Analyst

Frank Krajewski, Senior Research Analyst

 

OTHERS PRESENT:

 

Joseph E. Evans, M.D., President, Occu-Family Care

Jann Dorman, Nevada Physical Therapy Association

Pamela C. Hogan, Nevada Physical Therapy Association

John M. Vergiels, Nevada Association of Physical Therapists

Mark Habersack, Harrah's, Las Vegas

Lawrence P. Matheis, Nevada State Medical Association

Terri L. Potts,  Nevada Physicians Caucus

Stephanie S. Tyler, Nevada State Chiropractic Association

Marsha L. Berkbigler, Nevada Association of Rehabilitation       Professionals/Private Sector

L. Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit

Samuel McMullen, Nevada Self-Insurer's Association

Teresa P. Rankin, Commissioner, Department of Insurance

Marc Hechter, Assistant General Manager, Administrative Services,       State Industrial Insurance System

Robert Ostrovsky, Lobbyist

 

Chairman Townsend opened the meeting by presenting two memos from Bryan Davie, Senior Research Analyst.  Mr. Davie explained these memos were primarily for clarification.  The first memo, Hearings and Appeals Statistics  (Exhibit C), clarified statistics on the hearings and appeals process in Nevada's workers' compensation system.  The second, Supreme Court Decision (Exhibit D), was in response to the committee's request for a summary and contained a  copy of the decision of the Nevada Supreme Court on February, 1993, in the case of Seaman v. McKesson, an appeal of a workers' compensation ruling.

 

James E. Evans, M.D., President of Occu-Family Care, began the day's testimony.  Dr. James spoke in favor of managed care.  He gave a comprehensive background on the history of managed care and went on to explain the progress made in the last few years.  He then explained the difference between open, preferred and closed panels.  These deal with a patient's choice of providers, not the composition of the providers in the panel.

 

At Senator O'Connell's inquiry about the difference between utilization review and accountability for the provider, Dr. Evans explained that with utilization review in the hospital setting,  a person must have pre-authorization to see if they should be admitted to the hospital.  After they are in the hospital, the case is reviewed to see if it is necessary to continue treatment at the same level, or can it be handled outside.  Dr. Evans went on to note that the Gatekeeper concept was basically health care providers that would accept the responsibility to limit the participant's health care to only that which is necessary.

 

Senator Brown expressed concerns that in Exhibit E, there was no mention of chiropractic care.  Dr. Evans said that there was no reason that chiropractor's could not be included; that maintaining cost controls was a main concern, in any event.  Dr. Evans indicated that one way to help assure that Gatekeeper's would do a timely, cost effective job, might be to withhold 10 percent of any fees till a satisfactory conclusion of a given case was made.

 

Senator McGinness expressed concern over whether or not rural physicians might fit into this system.  Dr. Evans indicated that everything possible should be done to keep rural physicians from being excluded. He indicated that he certainly would not withhold any fees and would do nothing to discourage rural physicians.

 

Mr. John M. Vergiels, Nevada Association of Physical Therapists, responding to Senator Townsend's request, introduced Jann Dorman and Pamela C. Hogan, from the Nevada Physical Therapy Association. 

Ms. Dorman presented Exhibit F,  Physical Therapy/SIIS/Managed Care.  Ms. Dorman stated the Nevada Physical Therapy Association supported the committee's efforts toward cost containment, improved benefit delivery, and increased efficiency for the workers' compensation system in Nevada.  She did state that her organization was concerned about how exclusive provider contracting would affect physical therapy services to injured workers in Nevada.  Ms. Dorman indicated their organization would recommend a "willing provider" provision for physical therapy be included in the final bill.

 

Ms. Hogan and Senator Townsend discussed the fact that rate reimbursement had decreased substantially  during the past few years and her organization was interested in possible solutions and ramifications.  Mr. Mark Habersack, Harrah's, Las Vegas, testifying from Las Vegas,  questioned the rate structure.  Mr. Vergiels stated that rates were immaterial since the Nevada Physical Therapy Association would not be setting the rates in any event.

 

Next to speak was Lawrence P. Matheis, Nevada State Medical Association.  Mr. Matheis discussed the problem of self-referral, stating that it often caused problems.  He also stated that by the same token, self-referral could often be a way of reducing costs.  For example, ambulatory care centers where the physician might also be an investor.

 

Senator O'Connell inquired regarding national standards and parameters on utilization review.

 

There followed a discussion between Terri Potts, Nevada Physicians Caucus, Mr. Mathies, Stephanie Tyler, Nevada State Chiropractic Association, and Senator O'Connell regarding utilization review.  Ms. Potts said there were three organizations whose information was considered to be very accurate.  Ms. Tyler stated that her organization had been working with the Utilization Accrediting Councils and felt that their information was very accurate, as well.   Mr. Mathies noted that the State of Maine had parameters already in existence.  Senator O'Connell asked that information on these various organizations be given to her.

 

Senator Townsend inquired regarding the role of the physician in vocational rehabilitation, if any.  Marsha Berkbigler, Nevada Association of Rehabilitation Professionals/Private Sector, stated there was no clear, defined answer.

 

Chairman Townsend asked Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, when investigators would be available to be operative.  Mr. Terry said that applicant's were being screened at this time.  Mr. Terry also said that according to Mr. Jayne and Mr. Young of State Industrial Insurance System (SIIS), that SIIS did not plan to have investigators screening fraudulent activities.

 

Terri Potts, Nevada Physicians Caucus, presented a Statement of Nevada Physicians Caucus (Exhibit G).  She stated the main thing that doctors were concerned about was their role as patient advocates and that healing is not turned into a manufacturing process.  She said some of the most important points were, physician training, internal management, approved utilization review, case management procedures, and effective outcome evaluation.  Senator Lowden asked how the training of physicians was accomplished in the process of filling out off duty work slips and other forms that were necessary.  Ms. Potts responded that perhaps a program be developed that would be a 2 to 3 day certification course to take care of this need.  Hopefully, this would be a cooperative effort between SIIS, the physicians, the employers and the utilization review company.  There was general agreement that key components to cost saving and cash flow were utilization review, and return to work.

 

At this time, Samuel McMullen, Nevada Self-Insurer's Association, came forward to present the Statement of Position (Exhibit H).  This statement is on the issue of closed versus open panels.  Mr. McMullen stated that he also represented the Nevada Physicians Caucus.  Mr. McMullen went on to say that the self-insurers were interested in helping the system in total.  He went on to present his statement for the record:

 

      The issues, in my opinion, are sort of three part.  There is an issue that you need to take care of rate.  There needs to be, and even the Physicians Caucus will support this, a severe reduction in rates.  There needs to be some tuning up of rates.  If you have that as the first leg of the stool, if you will, the second leg is one that we've all talked about and that is utilization review.  The rules that either are in place now and not followed, or they need to be in place; they need to be effectively overlaid on the cases that are there right now, and whether or not that can be done within the existing system, or not is a question.  At least it's a question in my mind.  If that's not possible, it may not be, there certainly is another answer and that is taking the utilization review and utilization management expertise that's available in America and in Nevada and applying those immediately to those cases.  Whether that's by privatization or through the system, or however, I think that can be worked out, because I think at that point, you have a minimum disruption, you go from any provider system to a situation where on July 1, or thereabouts, a provider that's currently handling a claimant in the system, has a decision.  That decision is, the rates just changed, the rules just changed, and the major rule that just changed that there is going to be some real, real oversight; real, real utilization review; real, real attention to processing that case, that claim to some sort of conclusion.  Because, I think if you can understand, even if we buy off those cases by making sure that they are closed out with permanent partial disability (PPD), or to whatever the issue may be that's lingering, that, I think, takes away significant part of the reserve, because I think almost, someone else would have to financially validate this, but it's probably a larger reserve for a continuing case than maybe just to awarding and close the case.  But back to the physician or the provider's choice, at that point, it's, look I have this individual as a claimant.  I now know that the rates are different, the rules are different.  If I want to continue to handle that case, I have to do it under these new rates and rules.  So if I choose not to, fine; if I do, I'm going to see that case, manage it.  So hopefully, better and differently than in the past, if that was the problem.  If it wasn't, then it won't be an issue.  But, I think that has, at least, a maximum impact on the short term, while we're looking at what I, pardon me for saying that maybe 5 or 7 months is a long term, but I think the only thing that should delay that is a Request For Proposal (RFP) and bid and a selection process for utilization review, utilization management, and get them on those 65,000 cases and get them to do it, no matter what the long term results may or may not be.  And that is a serious concern that I think every employer, every individual, every policy maker, every elected official has to have.  What can we do, relatively immediately, to take those cases and cut down the reserve, because it's not only a current cash flow issue, but the future cash flow and future reserve issue and we ought to do everything we can, as quickly as possible, to impact all those issues.  I know that's what you 've been trying to do and are still trying to do for all the months.

 

At this point, Senator O'Connell noted that Mr. McMullen had mentioned two points and had three.  Mr McMullen went on to say:

 

      I think the third is sort of inherent in what I said about implementation.  I consider that to be the third leg of the stool.  If there is a question about how you can..... whether the system works or doesn't work in terms of actually forcing utilization review on these cases, then let's implement it with something more effective, or stronger, or whatever the words may be, that actually make sure that that implementation kicks in and happens.  I will say I've had some conversations with people that lead me to believe that, at least as a short term thing, that that's something I hope would be politically acceptable.  I don't have commitments from lots of people, but I think it's something that seems to have some merit and people are willing to, at least consider it.  I guess I should say that the other areas you could privatize, under the current system, are bill paying, bill auditing.  I think there's a dislike in Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO), there's an interesting trade off, I know that my cash flow will come in, the rates may be reduced, because I bargained for lower rates, but I also bargained for the ability for those payments to be made timely and effectively within maybe a 60-day turnaround.  Part of the problem that I think needs to be addressed here too is tidying up the whole system, not only from the administrative aspect of it, but from the point of view of making sure that people are paid quickly so there's not an issue about rates or any of those other things .....  If you're going to make the equivalent of a managed care organization for these first few months, you need to have all the pieces in place, and you have to have the administration of those strong, tight, and very effective.

 

Senator O'Connell asked if Mr. McMullen was thinking that was the case management.

 

Mr. McMullen replied, "Case Management, yes, but it could even go beyond that to better management, effectively, of some of the things that are in place right now.  I guess you'd call it administrative management.  Thank you."

 

Senator Townsend then recognized Stan Smith, Industrial Insurance Administrator, Boyd Group, who was testifying from Las Vegas. 

 

Mr. Smith was most appreciative of the availability of telecasting to Las Vegas.  He stated his associates would favor the closed form of managed care.

 

Marc Hechter, Assistant General Manager, Administrative Services, SIIS, and Teresa Rankin, Commissioner, Department of Insurance spoke regarding their differences in presentation formats.  There is also a difference in the manner that the accountants present the numbers.  Mr. Hechter and Ms. Rankin agreed that financial information needs to be based on similar standards.  Senator Townsend said he wanted to be sure that when the bill goes to the assembly, the financial ramifications are perfectly clear.  Mr. Hechter said that his office and Ms. Rankin's office would continue to cooperate on financial matters.

 

Mr. Robert Ostrovsky, Lobbyist presented a memo, Deductibles, (Exhibit I).  He indicated he was presenting proposed language changes.  It was decided that the best course of action would be for his information to be worked out with the Insurance Commissioner.  Senator Townsend noted that another topic for discussion was pooling for light duty and this was a special project of Senator O'Connell's.  This might be an alternative to the Governor's proposal for a return to work program.

 

Senator O'Connell asked if the committee had a copy of the latest audit.  Senator Townsend stated there would be a copy for the next session.  Senator Townsend asked Mr. Ostrovsky if he would attend the next session.  Mr. Ostrovsky responded in the affirmative.

 

There being no further business, the meeting was adjourned at, 10:20 a.m.

                            .

 

            RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Beverly Willis,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

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Senate Committee on Commerce and Labor

March 4, 1993

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