MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
March 15, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Monday, March 15, 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:
Denise Pinnock, Committee Secretary
Brian Davie, Senior Research Analyst
Jan Needham, Senate Bill Drafting Advisor
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Carol Jackson, Director, Department of Industrial Relations, State of Nevada
Larry Zimmerman, Consensus Group
Dean Hardy, Lobbyist, Nevada Trial Lawyers Association
Scott Young, General Counsel, Nevada State Industrial Insurance System (SIIS)
Stan Smith, Lobbyist, Boyd Group
Marsha Berkbigler, Lobbyist, Nevada State Medical Association
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada
Terry Rankin, Commissioner, Department of Insurance, State of Nevada
Harvey Whittemore, Lobbyist, Nevada Resort Association
Brian Harris, Attorney, Governor's Office, State of Nevada
John Vergiels, ex-Senator, Lobbyist, Nevada Association of Physical Therapists
Sam McMullen, Lobbyist, Nevada Physicians Caucus
Bill Champion, Lobbyist, Nevada Unified Employers
Bob Ostrovsky, Lobbyist, Nevada Resort Association
Chairman Townsend opened the hearing by introducing Bill Draft Request (BDR) 53-1764. (Exhibit C. Original is in the Research Library.)
BDR 53-1764: Makes various changes to provisions governing industrial insurance.
Brian Davie, Senior Research Analyst, submitted Exhibits D, E, and F, summaries and explanations of BDR 53-1764.
There followed general discussion of BDR 53-1764.
Senator Brown asked if section 12 included those employers who fell within the deductible. Jan Needham, Senate Bill Drafting Advisor, explained there was an exemption for the employer to not file with the insurer, but it was not clear whether the employee was also exempt.
Senator Townsend said part of the purpose of the deductible was to reduce the paperwork in the system.
Senator Brown said she would prefer to see the employer required to provide the employee with all the documents necessary in case they needed to file a claim.
Senator Townsend recalled an Occupational Safety and Health Act (OSHA) form had been recommended for the purpose of reporting to the system. He was told by Carol Jackson, Director, Department of Industrial Relations, State of Nevada, that requiring the form could be accomplished through regulations.
Senator Lowden asked whether the form name would be changed to differentiate it from the Department of Labor. Ms. Jackson suggested using the C-3 form, as it was OSHA approved, and already in use by the SIIS.
Dean Hardy, Lobbyist, Nevada Trial Lawyers Association, stated the problems the Consensus Group tried to deal with were the notice problems v. claim for compensation problems. They had tried to make it possible that not every injury needed to be reported to the SIIS.
Scott Young, General Counsel, Nevada State Industrial Insurance System, said most injuries which required medical attention were reported within the first 30 days.
Stan Smith, Lobbyist, Boyd Group, agreed with Mr. Scott about the time-frame for reporting. He stated most self-insured groups had, within their rules and regulations, penalties for not reporting accidents forthwith.
In response to a question from Senator Townsend, Mr. Smith said his group sends compensation checks directly to the insured, and the employee picks them up.
Senator Townsend asked if there were provisions somewhere in the licensing statutes for disciplinary action when a doctor's office staff persuaded a patient to file a claim with the SIIS, which should not have been a SIIS claim. Marsha Berkbigler, Lobbyist, Nevada State Medical Association, said she believed there were.
Senator Brown suggested the new fraud unit be advised of the problem.
Senator Nevin expressed concern that the issue of unbundling had not been addressed. Ms. Berkbigler explained there were existing statutes prohibiting unbundling.
Senator Shaffer said he thought the provider should be held accountable for the conduct of his staff.
Ms. Needham explained section 20 said if a physical injury were caused by stress it would be compensable only if the employee or one of his dependents proved by clear and convincing evidence that the injury was primarily caused by a sudden and traumatic event that arose out of, and in the course of his employment.
Senator Townsend stated there was a court case involving a young man who was robbed, and shot, while working in a convenience store. He asked Scott Young, General Counsel, Nevada State Industrial Insurance System (SIIS), whether treatment of the stress from that incident would be covered. Mr. Young stated it would not be covered. Senator Townsend said he was under the impression it was just that sort of individual they were trying to help. Mr. Young stated his understanding was that the committee was trying to cover the psychological problems that arose out of things like hostage taking situations. The difficulty with the proposed language was that it excluded any type of mental problems.
Senator Nevin agreed they were trying to help the employee who needed some counseling to get back to work.
Larry Zimmerman, Consensus Group, argued against the need for paragraph 3, section 20. Ms. Needham said the intent of the paragraph was not to apply those standards to employees who were claiming compensation under Nevada Revised Statutes (NRS) 617.457.
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada, stated his office read the exemption as a means of not interfering with the rights of firemen and policemen.
Senator Townsend said the committee needed to decide whether it intended to help the type of individual of whom he spoke. Mr. Craigie stated the whole point of the recommendation had been to deal with the medical portion only of claims such as the one Senator Townsend mentioned.
Senator Townsend questioned the lack of paragraph 1(c), section 23, which would have included the actual dollars of the premium. Ms. Needham said she had assumed the rating assigned to the employee would come out to the same amount.
Senator Townsend explained the goal of the section had been to "send a message to people that we are giving them a chance for the first year, to prove they have a good safety record, and if they, in fact, have a lower premium wherever they are, they can import that." Mr. Young stated his understanding was that the section would allow companies new to Nevada to pay the same percentage rate they had been paying, not the same premium. Senator Townsend reiterated his goal, and said at the end of that year the company would be rated like everyone else. Mr. Young said there were big differences in the actual manual rates from state to state.
Senator Nevin asked Mr. Young to provide him with some rough numbers on the number of claims being handled by the SIIS where the worker is from out-of-state. Mr. Young agreed to try.
Terry Rankin, Commissioner, Department of Insurance, State of Nevada, asked for two technical corrections.
There followed general discussion of section 68. Senator Nevin expressed his view that the committee really should be nonpartisan. Senator Townsend agreed.
Ms. Needham stated there was some concern over the broad language in section 72, but language had not been submitted to remedy that. Mr. Young said that his understanding was that the committee had responded to the system's concerns about winding up under the Unfair Claims/Trade Practices Act, and the insolvency division. He said his office was looking for clarification that the section dealt with requirements for financial reporting.
Ms. Rankin said she understood Mr. Young's concern, but did want to retain the flexibility for the use of any insolvency standards.
Senator Townsend said, "Given the tremendous effort that's been put into this to fix the system, you wouldn't subsequently declare it insolvent."
Ms. Rankin stated, "Since it is a constitutional trust fund, there is an inherent problem in liquidating a constitutional trust fund. But, the provisions on supervision, or notice to cure, or problems of that nature, that's very broad authority. Even given the reforms that you've put in place, there might be a need for that."
Senator Townsend opened discussion on section 73. Ms. Needham explained:
Essentially every employer would be required to pay a deductible of $200 toward the total amount of the medical benefits. If they wish to choose a higher deductible, they can contract with the manager of the system to pay an additional deductible on top of the $200, not in lieu of, but in addition to. If the medical benefit is less than $200, they would not be required to file a claim for compensation, but would be required to report those types of injuries on a quarterly basis, or however you choose.
Senator Nevin said he would like to see the deductible raised to $500. Senator O'Connell stated $500 was too much for a small employer. She said the major concern was not with the safety, but the claims that would be charged to an employer that were not related to safety. Senator Townsend explained the committee would debate the level of the deductible the next day.
Mr. Craigie pointed out the language could be interpreted to say an employer would have to pay the deductible amount no matter what the overall medical cost was. He suggested amending paragraph 1, section 73, to say "pay a deductible of total medical costs up to."
Mr. Craigie submitted and explained Exhibit G, language dealing with managed care.
Senator Nevin and Mr. Craigie discussed the payment structure for managed care organizations. Senator Nevin felt there should be uniform rates for the state. Mr. Craigie disagreed. Part of Mr. Craigie's reasoning was the fact the state would be susceptible to withdrawal by certain specialties who disagreed with the rate.
Senator O'Connell said:
Scott [Craigie], you brought up something that's very important, I think. You talked about the self-insured's being able to care for their people, and get them back to work more quickly. They cannot work with a closed panel now. You also mentioned that it is a special issue when you're treating the injured worker. I think those two points are very key to what we're trying to do. We're cutting back on the compensation, so we want to make sure that when that injured worker sees a doctor that they are going to be cared for, there's going to be a response. Now, if the doctor is receiving $30 to care for the injured worker, and his outside clientele are charged $80, and we're working on a volume basis, who do you think that doctor is going to spend more time with, the guy he's receiving $30 for, or the guy that's going to pay him $80? To me we're setting up a situation here where it's just like kind of running people through a manufacturing type line. You know they're not going to get the special care that they need. That is my concern with saying that we're going to have a closed panel.
Mr. Craigie said he respected Senator O'Connell's opinion, but his experience had been different.
Harvey Whittemore, Lobbyist, Nevada Resort Association, testified in favor of the amendments proposed in Exhibit G. He said Senator O'Connell's concerns were addressed therein.
Mr. Craigie stated the proposed language was "a middle ground effort to meet you halfway."
Senator Townsend explained he and Mr. Craigie had talked at length about the possibility of looking at the non-compensatory cuts available to the committee. Mr. Craigie said there was a significant timing difference associated with the numbers the committee had been given. He stated the savings numbers were 1992 and 1993 numbers, whereas the target was for 1994 and 1995. He expressed his interest in meeting with various interest groups and representatives of the SIIS.
Senator Brown submitted Exhibit H, A Brief Explanation of Injured Workers' Benefits.
Senator Townsend called a recess at 10:05 a.m. The meeting reconvened at 4:00 p.m.
Mr. Wittemore pointed out that Exhibit G would need, in section 6, paragraph 4, the words "or self-insured employer" behind "the manager."
Senator Townsend invited comment on section 79. Brian Harris, Attorney, Governor's Office, State of Nevada, stated there were already minimum requirements for an appeals process.
Senator O'Connell wanted to clarify whether section 82, subsection 2(b), would require an open process where there would be some input from employers before a premium could be raised. Ms. Needham said essentially that would happen at a hearing before the Commissioner of Insurance. She said before the premium rates were finalized they would have to be presented to the board in an open hearing.
Senator Nevin wanted to make sure the advisory board in section 81 was also subject to the open meeting laws. Ms. Needham stated they would fall under the open meeting law provisions, because they would have more than one member on their board. This is a requirement even in an advisory capacity.
Senator Brown asked about the lack of a definition of the management information system in section 6. Mr. Wittemore suggested it was a term that was fairly recognizable in terms of the literature involving both computerization, and the development of systems which produced reports.
Senator Brown objected to the use of the term, with or without a definition, because it would allow the manager to discriminate against organizations who did not have a certain kind of system. Mr. Wittemore suggested taking out the words "management information system," and inserting the term "communication system."
Senator O'Connell said, "It was my intent, when we were talking the other day about the language, and I need to probably get an answer from Jan [Needham] on this, that we required the outside utilization review over any of the managed care systems who received the bid."
Ms. Needham stated, "Essentially, the way the bill is drafted, the manager is authorized to enter into a contract for independent utilization reviews. It's not a requirement, but he is authorized to do so. Not only for managed care organizations, but also providers of health care who are not participating in a plan of managed care. He would have the authority to enter into an independent contract, or in a contract to set up independent utilization reviews."
Mr. Wittemore stated Exhibit G was not intended to address anything in section 77.
Mr. Wittemore explained the objectives behind the proposed changes in Exhibit G.
Senator Nevin asked Ms. Needham for her interpretation of Exhibit G. She said:
That would be my interpretation of the change between deleting (a) and (b), and going to the language that says, "prohibit any organization from submitting a bid." Essentially, when you say you cannot prohibit an organization for managed care from submitting a bid, as long as they comply with that definition, whether they are open or closed [panels], they can submit a bid.
Senator Brown asked if there was anything in chapter 333 of NRS prohibiting the manager from saying one of the criteria for bidding was a closed panel. Ms. Needham said the basic statement that the manager would not be able to prohibit any organization for managed care from submitting a bid would do that.
Senator Brown said the language would allow anyone to submit a bid, but asked if the criteria could be limited for who won a bid. Ms. Needham stated, "Are we talking about the choice? Then that's a different ball game. The criteria for accepting the contract is different from being able to submit a bid."
Mr. Wittemore agreed with Ms. Needham. He said the language they were proposing was almost identical to the language already in BDR 53-1764. The difference was that the proposed language was identical to language used by the state of New Mexico which had been "tested in court." Mr. Wittemore stated section 75, subsection 4(b), precluded discrimination based upon category of licensed providers.
Senator McGinness said:
I've had a concern from the beginning that the open marketplace be protected. I've also had a concern that one segment of a provider group not be allowed to hold a managed care group hostage as well. I don't think this language is a great departure from where we were, I just think it expands it, and clarifies in my mind what I was trying to say the other day when the press characterized us as going one way and then the other. I think this leaves the window open enough to allow for a so-called open group, even though that isn't divined in here in any place. I think we've all come to the realization that managed care is where we're going to save some money. It's what's going to save the industrial insurance system. I think the comments Ms. Needham has made clarify in my mind exactly where I was trying to go.
Senator Brown questioned whether the committee had ever addressed the issue of a "licensed provider holding other categories hostage." She suggested language making one of the requirements that the group not restrict an injured worker's ability to seek compensated health care from a physician or chiropractor by mandating that the injured worker obtain a referral.
Senator Townsend said he believed there was already a statute that prohibited the gatekeeper concept. Ms. Needham agreed.
Senator Townsend stated:
I think every one of us here, whether they voted for the reductions on Wednesday or not, have been very concerned about those reductions. For the last 4 days ... was spent in trying to see where we could reduce costs in non-compensatory areas. That, of course, is what I've asked, and the Governor has not only put on the table, but is willing to work with us, and that's what we'll be doing tonight when we get out of here: how do we reduce non-compensatory area costs so that we can attempt to restore some of those reductions. I think that it's been demonstrated, either in our own personal experiences with managed health care, that the tighter the group, the less the cost. The language that is in front of us that is being proposed gives an option to the manager, and in our case, with Governor control, an ability to make a choice based on multiple things: cost, quality of care. I'm a real believer in not just the nature of the entrepreneurial spirit, but certainly in the creative nature of the market place. I think that if there is this language that would allow people to bid, that you can bet there are going to be people that think up real good ways to provide high quality health care at a low price, whether they are currently doing it or not right now. I think it allows us to benefit from that. I want to make sure that in doing that we do have an opportunity to get the lowest conceivable cost, and maintain that quality care. I know when we get numbers later tonight, and bring them back to this committee that all of us will want to attempt to restore some of those cuts that were very painful for everyone.
John Vergiels, ex-Senator, Lobbyist, Nevada Association of Physical Therapists, said:
Any time you go from the language that you have, that you already had, to the language where the previous speaker said the odds were 9 to 1 that a closed panel would be selected, where you're having interpreted for you what you did previously, saying what you really meant was a 9 to 1 chance for a closed panel, to me is quite a jump from where you were originally. I think the fact that words are trying to be said for you on behalf of different members of the panel, when in fact they don't represent what you said or did at all.
Senator Brown submitted Exhibit H, and asked the committee to read it.
Sam McMullen, Lobbyist, Nevada Physicians Caucus, submitted Exhibit I, proposed language to amend section 74, subsection 3.
Ms. Berkbigler testified that her organization did agree that the definition would allow any organization to bid, but there was no clarification that any organization would be accepted for the bid. Her concern was that a provider who was willing to abide by the terms of a contract with the system had no way of becoming part of an existing closed panel.
Bill Champion, Lobbyist, Nevada Unified Employers, read written testimony (Exhibit J).
SENATOR McGINNESS MOVED TO AMEND BDR 53-1764 AS SUGGESTED IN EXHIBIT G.
SENATOR SHAFFER SECONDED THE MOTION.
Senator Nevin expressed his concern that no provider be denied the opportunity to participate. He was reassured by Ms. Needham that would not be the case.
Senator Brown said:
I have two concerns about what we're about to vote on. One is that you're asking me to vote on the amendment to section 6, including subsection 4, and I have not seen ... apparently this is a term of art management information system, and I have not seen what the definition of this is, and I am fearful that if it is a very technical definition it could exclude groups that could serve us very well, because they don't have expensive computer equipment.
Secondly I'm concerned about this because if section 74, subsection 3(a) and (b), is simply a statement of our intent, I don't see how deleting that would, whether it's repetitive or not, if it's just clarifying our intent, I don't see why we need to take those out.
Senator McGinness stated he did not have a problem with the term "management information system." He felt the term did not automatically imply a super computer.
Senator Brown suggested taking out "management information."
SENATOR McGINNESS AGREED TO AMEND HIS MOTION TO INCLUDE THE REMOVAL OF "MANAGEMENT INFORMATION".
THE MOTION CARRIED. (SENATORS O'CONNELL AND BROWN VOTED NO.)
* * * * *
Senator Townsend opened the discussion on section 83. He invited Mr. Young and Bob Ostrovsky, Lobbyist, Nevada Resort Association, to comment.
Mr. Ostrovsky stated that in reviewing section 83 it appeared that the subsequent injury fund was set up inside the system. He said it did not address how the self-insured employers would handle their subsequent injury claims. Ms. Needham explained the existing statutes had been changed to apply only to self-insured employers.
Mr. Young said the first sentence of subsection 1 was not necessary, because it was essentially a credit system. If the employer had a $10,000 charge against their experience rating, and they applied for subsequent injury relief, the system would simply not charge them.
Ms. Needham said the only problem was that at the end of the bill where the assessments paid by the SIIS, which were in the subsequent injury fund, would be paid back to the SIIS. Mr. Young said there was money the SIIS had paid along with the self-insured's into the Department of Industrial Relations fund. He said there should be a provision for returning that money to the SIIS, since they would no longer be participating in a joint fund.
Ms. Needham stated the section to which she and Mr. Young referred was section 291. She said taking out the reference to a new account in section 83 would take care of the problem.
There being no further business, the meeting was adjourned at 5:25 p.m.
RESPECTFULLY SUBMITTED:
Denise Pinnock,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
March 15, 1993
Page 1
Senate Committee on Commerce and Labor
March 15, 1993
Page 1