MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
March 24, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Wednesday, March 24, 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
GUEST LEGISLATORS PRESENT:
Senator Ernest E. Adler
Senator Dina Titus
STAFF MEMBERS PRESENT:
Denise Pinnock, Committee Secretary
Sheri Asay, Committee Secretary
Brian Davie, Senior Research Analyst
Jan Needham, Senate Bill Drafting Advisor
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Don Jayne, General Manager, Nevada State Industrial Insurance System
Brian Harris, Attorney, Governor's Office, State of Nevada
Scott Young, General Counsel, Nevada State Industrial Insurance System
Mark Balen, President, Professional Fire Fighters of Nevada
Terry Rankin, Commissioner of Insurance, Department of Insurance, State of Nevada
Sam McMullen, Lobbyist, Nevada Physicians Caucus
Terri Potts, Lobbyist, Nevada Physicians Caucus
Chairman Townsend opened the meeting, and explained the committee needed to vote on the introduction of Bill Draft Request (BDR) 54-626.
BDR 54-626:Makes various changes to provisions governing licensure and discipline of mortgage companies.
SENATOR NEVIN MOVED FOR COMMITTEE INTRODUCTION OF BDR 54-626.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Senator Townsend opened the discussion on S.B. 316. He explained the committee would hear only new amendment proposals.
Senate Bill (S.B.) 316:Makes various changes to provisions governing industrial insurance.
Senator Ernest E. Adler, Capitol District, Carson City, submitted Amendments 158 and 159 to S.B. 316 (Exhibits C and D). He explained Amendment 158 was designed to ensure that residents of rural counties would not have to travel great distances for medical services.
Senator Lowden stated it was her understanding from the managed care groups who had testified that they understood the need for including the rural areas in the bidding process.
Senator Adler stated those same groups had a history of doing just the opposite with the state employee preferred provider plans. Inadvertently pulling all the industrial workers' business out of the rural hospitals could put many of them out of business, he said.
Senator McGinness agreed that they did not want to make obtaining treatment more difficult than it had to be. He said he wanted to make sure people were not forced to drive long distances if treatment was available locally. Senator Adler assured him that was what the amendment was designed to do.
Senator Townsend stated his concern was that if the committee started making exemptions they would lose the "essence of the ability of this administration to make the right choices for this state."
Senator Adler explained the amendment would not preclude anyone from bidding in the rural counties. It would make inclusion of local physicians and facilities a mandatory part of the package.
Senator Lowden pointed out that people who lived in outlying areas of Clark County routinely drove long distances for medical care. Senator Adler reiterated the problem of hospitals going out of business because of the loss of business.
Senator Adler said:
Amendment 159 to S.B. 316 allows any public agency, or the [State Industrial Insurance] system (SIIS), to bid on vocational rehabilitation services. Whoever has the lowest cost alternative, whether it be the system [SIIS], a public agency, or a private bidder, would then deliver those systems. What it does is bring about a truly competitive system, where, for the system [SIIS] to provide those services, they must make an affirmative showing that their costs are lower than the private bidders, or another public agency, and vice versa. I think that this type of amendment really adds more competitiveness to the bidding on vocational rehabilitation. Rather that just having the private vendors ... in certain counties there are no private vendors available, for instance, and those would be served by a public agency ... The chairman asked me a question yesterday about this bill, and I'd just like to clarify that for the record. The question was does this shift, or in any way ratify, the Governor's plan to make the Bureau of Vocational Rehabilitation (BVR) the primary care provider for this? No, it doesn't. This amendment is based upon the current funding structure within the State of Nevada, and the current organizational chart of the agencies. This does not propose adding any additional personnel to BVR specifically. It just states that they would be an available bidder with their current resources.
Senator Townsend thanked Senator Adler for his testimony, and opened the discussion on Amendment 166 (Exhibit E). He explained the amendment dealt with Nevada Revised Statutes (NRS) 330. Regarding utilization review, Senator Townsend stated:
Before we take the amendment I want to make sure something is very, very clear. Whether, in fact, we adopt this amendment that requires them to do it, or we just leave this alone, and they can determine to do it on their own, the critical thing here is not just a spot check of organizations for managed care, but it's also critical because they will also be going into the rural communities, and doing utilization review of those people that would not be covered under managed care. The position that Senator McGinness has put forward is crucial to understanding what this component does, no matter which way the language goes. It means that those people practicing out in the rurals will have someone providing utilization review, looking over their shoulder. It's not going to be business as usual anywhere in the state.
Senator O'Connell asked Don Jayne, General Manager, Nevada State Industrial Insurance System, if the proposed amendment would change any of his department's procedures in relation to the rural counties. Mr. Jayne said that because of a lack of resources the SIIS has not had an effective utilization review program in the past.
Senator Townsend explained the amendment would mandate independent utilization review, and remove the requirement that the utilization review be put up for contract. He stated his concern was that a second level of utilization review would then be possible, driving up costs. Mr. Jayne said the language was intended to provide a permissive enough situation to allow the manager to perform ongoing utilization review in the rural counties. He assured the chairman that he did not intend to duplicate any services.
Brian Harris, Attorney, Governor's Office, State of Nevada, said his concerns mirrored Senator Townsend's. He stated he preferred the permissive language to the extent that it was understood that it would give the manager the flexibility to do spot checks, not mandate duplicate utilization review.
Senator Nevin expressed the opinion that the existing language was flexible enough. He felt the proposed language would add more costs to the system.
Senator O'Connell said:
I view this in the same light I view the PSC [Public Service Commission]. We are setting up a monopoly situation here. If we do not have the oversight, this is the reason, I think, for government, to watch out for the funds that are being spent by employers, or being given to the system [SIIS]. So, I can't express how strongly I feel about this outside utilization review. I just feel it's every bit as necessary as the PSC. I think we have exactly the same set of circumstances here.
In response to questions from Senator Lowden, Mr. Jayne stated the new SIIS computer system would have enhanced abilities to help with utilization review. He said it would not be their intent to review every case, and therefore duplicate the managed care organization's programs. They would check to ensure they were getting the performance for which they contracted.
Senator O'Connell said any extra money needed would be dollars well spent to protect the employers' funding.
SENATOR O'CONNELL MOVED TO ADOPT AMENDMENT 166 TO S.B. 316.
SENATOR BROWN SECONDED THE MOTION.
Senator Nevin stated he could not support the amendment, because the existing language would more than serve its purpose.
Senator Lowden said the language "as he deems necessary" provided the flexibility Senator Nevin felt was lacking.
THE MOTION CARRIED. (SENATORS TOWNSEND AND NEVIN VOTED NO.)
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Senator Brown introduced and explained Amendment 174 to S.B. 316 (Exhibit F).
Scott Young, General Counsel, Nevada State Industrial Insurance System, stated a rehabilitation counselor, along with a supervisor, would make the decision about whether a claimant could receive more than 6 months of rehabilitation.
Mark Balen, President, Professional Fire Fighters of Nevada, testified regarding his concerns with sections 18 through 21. He stated certain diseases had much longer incubation periods than were provided for in the bill. He said the bill provided for later opening of a claim only if an employee were treated at the time of exposure.
Senator Brown pointed out the committee had stated their intent was to exclude fire fighters and policemen from the bill. Senator Townsend said he thought the committee's intent had been made clear on the issue, but he invited Mr. Balen to draft an amendment and submit it to the assembly.
Senator Dina Titus, Clark County, District 7, submitted Amendments 173 and 172 (Exhibits G and H). She explained Amendment 173 would add a new section to S.B. 316 by amending NRS 616.690 to remove the disclosure provision, and prohibiting self-referral by physicians, or chiropractors to a health facility, or service in which they, or any member of their family, had a financial interest. Included were exemptions to protect the rural areas, and existing health maintenance organizations (HMOs). Senator Titus cited several studies which showed levels of abuse, and added cost to the consumer.
Senator Titus said Amendment 172 dealt with the qualifications for becoming self-insured. The amendment would apply to either a single entity or a group.
Senator Nevin asked how many employers who were currently self-insured would need to put up additional money.
Terry Rankin, Commissioner of Insurance, Department of Insurance, State of Nevada, said approximately one dozen employers were under review for financial problems at that time. She said there were another 14 to 17 who would fall under the $5 million net worth figure. She estimated the number of employers on the self-insured list who would have to drop off that list in the following 5 years would be about 30.
There followed further discussion of Amendment 174.
Senator Townsend introduced Amendment 176 (Exhibit I), and asked Mr. Young to comment. Mr. Young explained the rationale behind the amendment.
At 9:34 a.m. Senator Townsend recessed the meeting. The meeting was reconvened at 9:48 a.m.
SENATOR SHAFFER MOVED TO ADOPT AMENDMENT 159 TO S.B. 316.
SENATOR NEVIN SECONDED THE MOTION.
Senator Lowden commented she thought the addition of Amendment 159 would make the bidding process more competitive, and was glad it had been drafted.
THE MOTION CARRIED UNANIMOUSLY.
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Regarding Amendment 158, Senator Townsend stated:
First of all, before I take a motion on this let me say why I think it is inappropriate. First of all, that would include this community in which we are participating, and I really don't think that Carson City is a rural community. I think the rest of this state is, but I think Carson City is not rural, and I think that we would put a crack in the efforts we are trying to make by getting control of medical costs. More importantly, if you look under Nevada Administrative Code (NAC) 695C.160, which are the regulations relative to HMOs, geographic area of service definition, and may I quote, "An organization shall clearly define the geographic area it intends to serve which, 1) in a county having a population of 30,000 or more must have a radius of not more than 25 miles between the subscriber, or individual enrollee, and a primary physician, and the hospital used by the organization, 2) in any other county must be defined by the organization under a plan for the provision of health care services if the organization receives the written approval of the department for such a geographic area by, a) demonstrating the availability and accessibility of services to its enrollees, including reasonable access to primary physicians, a hospital, and to medically necessary services, and b) submitting a statement concerning the standards within that community regarding the availability and accessibility of other health care services, demonstrating that the organization will meet the community standards for such services."
I would also say that currently in this health care in this state managed care organizations do deal with these problems, and I think it would be micromanaging what the system ought to do with regard to these systems in bringing them in and letting them bid, and provide entrepreneurial ideas on how to deal with these problems. I believe in the last amendment we adopted that Senator O'Connell provided, those rural communities will have utilization review under that mandatory requirement that we put forward. So, I won't support this amendment, but I will take a motion.
Senator Nevin said he had no problem with the amendment, but felt that if it did pass, everyone in the local area should need to sign up for a utilization review program before they could provide services.
Senator O'Connell asked whether the smaller county hospitals would be endangered, as Senator Adler suggested. Senator McGinness said that was also a concern of his.
Mr. Young stated he had seen articles in the newspapers over the years regarding the precarious financial positions of some of the rural hospitals, but declined to hazard a guess on the impact of the amendment.
SENATOR BROWN MOVED TO ADOPT AMENDMENT 158 TO S.B. 316.
SENATOR NEVIN SECONDED THE MOTION.
Senator Lowden commented that the committee had been given assurances from the MCOs saying they would not neglect the rural areas, and said it was unfair to assume the rural hospitals would be excluded. She said she believed the amendment defeated the whole purpose of managed care.
THE MOTION CARRIED. (SENATORS TOWNSEND AND LOWDEN VOTED NO.)
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Sam McMullen, Lobbyist, Nevada Physicians Caucus, and Terry Potts, Lobbyist, Nevada Physicians Caucus, submitted Exhibit J, and testified against Amendment 173. Mr. McMullen stated, "We are entirely willing to work through a set of restrictions that make sure that the abuses that people are concerned about are adequately addressed, but it should not be done in an outright prohibition. You've heard a lot of testimony, and seen a lot of numbers, but I think it's very important to compare apples to apples, not apples to oranges."
Ms. Potts testified regarding the advantages of physician-owned facilities, such as better technology and cost savings in managed care situations.
Senator Lowden stated she had been under the impression the committee would be looking at the problems with self-referral on a statewide basis, not only as it pertained to the SIIS.
Senator Brown said she was going to move to adopt the amendment because besides the testimony regarding the savings and technology, the committee had heard much about the abuse. She charged the lobbyists from the Nevada Physicians Caucus to testify before the assembly about the "good" doctors.
SENATOR BROWN MOVED TO ADOPT AMENDMENT 173 TO S.B. 316.
SENATOR O'CONNELL SECONDED THE MOTION.
Senator Nevin asked if the Governor's Office planned on addressing the issue as separate one. Mr. Harris stated he was not aware of any agreement the Governor's Office may have had. He said the Governor's Office did not oppose Senator Titus' amendment.
Senator Lowden stated if the committee adopted the amendment they were permitting a double standard for the rural counties, and for HMOs.
Senator Townsend said he would support the amendment because 1) the statistics were clear, 2) people were at their most vulnerable when ill or injured; wherever the doctor told them to go, they would go, and 3) the disclosure laws had been drafted in that very committee, and were being ignored.
THE MOTION CARRIED. (SENATOR LOWDEN VOTED NO.)
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SENATOR LOWDEN MOVED TO ADOPT AMENDMENT 172 TO S.B. 316.
SENATOR O'CONNELL SECONDED THE MOTION.
Senator Nevin stated he had not heard anything about raising the limit to become self-funded. He asked Ms. Rankin to respond. She stated her department had no problem with the current limit, and felt it was working well.
THE MOTION CARRIED. (SENATORS TOWNSEND, NEVIN, AND McGINNESS VOTED NO.)
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SENATOR NEVIN MOVED TO ADOPT AMENDMENT 174 TO S.B. 316.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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SENATOR NEVIN MOVED TO ADOPT AMENDMENT 176 TO S.B. 316.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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SENATOR McGINNESS MOVED TO AMEND AND DO PASS S.B. 316.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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As there was no further business, the meeting was adjourned at 10:10 a.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 24, 1993
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