MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 10, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, June 10, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
GUEST LEGISLATORS PRESENT:
Senator Joseph M. Neal, Jr., Clark County Senatorial District
No. 4
STAFF MEMBERS PRESENT:
Daniel G. Miles, Fiscal Analyst
Robert Guernsey, Principal Deputy Fiscal Analyst
Steve J. Abba, Program Analyst
Judy Jacobs, Committee Secretary
OTHERS PRESENT:
Frank Barker, Captain, Las Vegas Metropolitan Police Department
James F. Nadeau, Lieutenant, Washoe County Sheriff's Office
Robert Bayer, Operations Supervisor, Department of Parole and Probation
David F. Sarnowski, Chief Deputy Attorney General, Office of the
Attorney General
Michael Griffin, Deputy Commissioner, Department of Insurance.
Patricia M. Jarman, Executive Director, Commission for Hospital Benefits, Department of Insurance
James L. Wadhams, Nevada Hospital Association
Robert R. Barengo, Sunrise Hospital
Fred L. Hillerby, Blue Cross/Blue Shield of Nevada, Hospital Health Plan of Nevada
Paula Treat, Desert Springs Hospital
Janice C. Pine, St. Mary's Regional Medical Center
James S. Hanna, Chief of Research, Employment Security Department
Laura B. Wallace, Investment Officer, Public Employees' Retirement System
Robert L. Seale, State Treasurer, Office of the State Treasurer
John P. Sande, III, Nevada Bankers Association
Brian K. Krolicki, Chief Deputy Treasurer, Office of the State Treasurer
Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration
Senator Raggio announced there were four bills on the agenda. The first was Senate Bill (S.B.) 6.
SENATE BILL 6: Requires department of parole and probation to pay costs of detaining parolee in county jail for violation of condition of parole.
Frank Barker, Captain, Las Vegas Metropolitan Police Department (METRO), testified the bill had been requested by METRO with the goal of reducing the jail population. He reported the Senate Committee on Judiciary had amended and passed out the bill in its present form.
Captain Barker said S.B. 6 would give the Department of Parole and Probation 8 days to take custody of a parolee who had come into the detention facility. If no other criminal charges or warrants were pending, the sheriff would be allowed to release the parolee from custody. If the person was left in the detention facility, the sheriff would be allowed to bill the Department of Parole and Probation for the actual costs of confinement. He pointed out the sum is $64 per day in Las Vegas which compares to approximately $55 in most other detention facilities.
Captain Barker admitted there would be a financial impact on the state and therefore he proposed an amendment (Exhibit C) to the first reprint of the bill. He pointed out the amendment would replace lines 1 through 19 of the first reprint and would eliminate subsection 3 which allows the sheriff to charge for the detention of the prisoner. Instead the sheriff would be allowed to release the parolee.
Captain Barker pointed out under his amendment the time of detention would be increased to 25 days if the prisoner had been paroled by the State Board of Parole Commissioners and to 40 days if the prisoner had been paroled by another state and was under the supervision of the State of Nevada. He said the dates were suggested to conform with previous legislation that would require the chief parole and probation officer to take action deemed appropriate within 15 days and 30 days depending on which state granted parole. He explained the extra 10 days was added because the hearing must be held at or near the place of the violation within 7 working days of the arrest. He felt 10 days would be sufficient to cover weekends or holidays within the 7-day limit.
Responding to a question by Senator Raggio, Captain Barker said the cost for the initial 25 or 40 days would be absorbed by the local detention center.
James F. Nadeau, Lieutenant (Lt.), Washoe County Sheriff's Office, testified in support of the measure.
Senator Raggio asked if the legislation had been prompted because parolees had been held for inordinate periods of time before the state made a decision. Lt. Nadeau replied it was not necessarily due to an inordinate period of time. He explained the cities and counties were seeking some sort of recourse for handling inmates and to find ways to cut down the population of detention facilities.
Senator Raggio asked what would happen if a dangerous parolee had not been picked up by the state within the 25-day period. Captain Barker responded the person would be released under the proposed amendment. He said there were 61 parole violators in the METRO facility of which seven had been processed and were ready to be transported to other facilities. He said they were waiting for the paperwork for 17 of them who had been there on an average of 30 days each, and 32 of the 61 have other charges pending.
Senator Raggio repeated his question as to why S.B. 6 was deemed necessary. He asked if there was a provision in the bill that would prevent the release of somebody like an axe murder who had
been in local custody for the 40-day period. Captain Barker acknowledged the amendment did not include specific wording, but he suggested such a person would fall into the category of those who have other charges and he or she would be held.
Robert Bayer, Operations Supervisor, Department of Parole and Probation, distributed copies of a presentation (Exhibit D. Original is on file in the Research Library.) prepared before the amendment was proposed by Captain Barker. Mr. Bayer said the time-frames in the proposed amendment are more relaxed than those in current use. He foresaw no fiscal impact to his department if the bill were amended as suggested by Captain Barker.
Mr. Bayer agreed with Senator Raggio that the only problem might occur after the 40 days. Otherwise he said there was no problem with the amendment.
Mr. Bayer pointed out that the proposed amendment in section 3 to Nevada Revised Statutes (NRS) 213.1511 was inconsistent with NRS 213.1513. He suggested that a change of date in either section should reflect the date in the other.
Senator Coffin called attention to the costs of incarceration included under the fiscal note in Mr. Bayer's handout (Exhibit D). He asked for an explanation of the technical violations made by the people enumerated. Mr. Bayer indicated under his normal job he is in charge of the parole revocation process. He said:
Technical violations, sometimes we look at the word and we don't really understand what it means.... An absconder is a technical violation. The absconder does not have any charges against him. What that means is that the person has said, "I'm not going to follow your conditions," and they just take off. They may leave the state...they're in town...they're not reporting. We have absolutely no idea where they are, where they're working and what they're doing.... Generally speaking they abscond for a reason. A lot of time that reason is more criminal activity....
The purpose of parole if someone refuses to be under supervision is the bottom line.... If they commit another crime there's a real liability there that we're not doing our job, and that is a large percentage of those people.
Senator Coffin reiterated he would like to know what violations were charged against the 29 inmates.
Senator Callister reviewed the inconsistent sections pointed out by Mr. Bayer saying NRS 213.1513 required the chief parole or probation officer to take action within 15 days, or 30 days if the prisoner was paroled under the authority of another state. Captain Barker indicated that language would be acceptable, and he proposed to change the amendment accordingly so that it would be consistent with the existing statute.
Senator Raggio asked if that would pose any hardship to the Department of Parole and Probation. Mr. Bayer replied it would not.
Senator Jacobsen asked what would happen if a parole violator was picked up and the county jail was full. Captain Barker expressed the belief that the person would be interred in a prison in another
area. He noted some of the hearings are held in the prisons in other areas of the state.
Mr. Bayer interjected the requirement is that the person not be returned to the prison prior to a preliminary hearing. He said if the person waives the preliminary hearing he could be taken back to the prison. He said the only cases he was aware of in which the hearing was held in the prison occurred when the person was already incarcerated in the prison and had a consecutive sentence. He noted the person could be placed in another county jail.
Captain Barker pointed out there are other mechanisms to be used if the jail is full, such as releasing another inmate.
David F. Sarnowski, Chief Deputy Attorney General, Office of the Attorney General, stated for the record, "If our client, the Department of Parole and Probation, can live with the proposed amendments as have been discussed this morning, then we have nothing to add."
In response to the question posed by Senator Jacobsen, Mr. Sarnowski said there is statutory authority which allows a sheriff to request the Department of Prisons to enter into a safe-keeper agreement to hold prisoners. He acknowledged it happens infrequently.
Senator O'Donnell asked who would determine the release of the prisoner after 15 or 30 days. Mr. Bayer interpreted the wording to mean it would be the sheriff who would give the order for the release after 30 days. Captain Barker responded that before the 15 days expired the Department of Parole and Probation would determine the disposition of the prisoner. After the 15 days the sheriff would make the decision.
Captain Barker said 50 percent of those who violate parole have other charges against them so there is no problem handling their cases.
Senator O'Donnell asked if the sheriff would have the authority to release the prisoner after 15 days without additional adjudication. Captain Barker replied, "If the person has already been adjudicated and has been placed on parole...he would remain convicted."
Senator O'Donnell asked what would happen to the 523 persons arrested for violation of parole. Captain Barker said 50 percent of those who violate parole have other charges against them so there is no problem handling their cases. He said the others would be held because there was a notation they had violated parole or probation.
Senator O'Donnell asked if the prisoners would then go to a preliminary hearing and if the hearing was within 15 days or outside the 15 days. Mr. Sarnowski explained the persons would be seen within the 15-day period. He said the parole-violation charges would have to be dropped if the time exceeded 15 days.
Mr. Sarnowski said there was an arrangement for the Department of Prisons to transport the prisoners from the jail to the prison. He said if necessary the Office of the Attorney General would arrange to transport the violators in a timely manner.
Mr. Sarnowski acknowledged the most serious offenders need to be processed to insure that they will not be released. He suggested
it may take better coordination with sheriffs. He said the bill does not mandate that the sheriff release the person, it simply gives the sheriff the authority to do so. He opined the sheriffs would exercise discretion judiciously.
Captain Barker stated the jail keeps in contact with the penitentiary which sets a schedule to pick up the prisoners at the various facilities. He said after the paperwork is done the person is usually transported out of the jail within 48 hours.
Mr. Bayer pointed out there is no facility for women in southern Nevada so they sometimes stay in the county jail past the 30-day limit.
In the absence of further testimony on S.B. 6 the hearing was closed. Senator Raggio opened the hearing on Senate Bill (S.B.) 359.
SENATE BILL 359: Makes various changes relating to cost of health care.
Michael Griffin, Deputy Commissioner, Department of Insurance, called attention to the front page of the bill. He said the fiscal note indicates there would be an effect on the Executive Budget. He declared he did not believe it actually would affect the Executive Budget.
Mr. Griffin gave an overview of the bill. He described it as an opportunity to expand the authority of the executive director for the Commission for Hospital Benefits and for the insurance in regard to billing practices or errors. He said it would empower the commissioner and executive director to allow patients to receive rewards for spotting errors in their bills. The reward could amount to up to 20 percent of the overcharge but no more than $500.
Mr. Griffin noted that the latter part of section 1 and section 3 which outline the reward provisions have been adopted by the State of Florida.
Patricia M. Jarman, Executive Director, Commission for Hospital Benefits, Department of Insurance, said the commission had been created in 1991 because Nevada had and still has the highest hospital costs in the nation. She said NRS 679.500 has a problem in that, although it establishes a commission and an executive director, it does not provide authority to take action beyond hearing the disputes.
Ms. Jarman asked for the changes because she must go through the Director of Human Resources or the insurance commissioner any time she finds a blatant error and needs to have it corrected. She declared she would not ask for the changes if she did not need them.
Ms. Jarman related examples of blatant errors on billings. She said one patient had been charged for over 26,000 laxative pills. The patient was a cash-paying patient and she could not get the hospital to respond to her. Ms. Jarman said there had been over 26 entries for 900 pills.
Ms. Jarman commented she had established an excellent working relationship with 99 percent of the hospitals since she had been appointed to the job 15 months earlier. She said there were a few
exceptions in which the hospital was uncooperative. She indicated the insurance commissioner did not have the enforcement power, and she did not believe the director of the Department of Human Relations should have the added responsibility.
Ms. Jarman called attention to the provision in section 1 that would allow her to impose a fine of $1,000 on a hospital for each violation. She stated, "I'm not going to blatantly just be handing out errors, but since February 10 of 1992 I've had over 630 complaints for a total of 654 complaints." She said if all those incidents had resulted in the maximum $500 fine to be paid to patients it would amount to $327,000 in fines.
Ms. Jarman said the real purpose of the bill is to get the attention and cooperation of those to whom she is forced to give notification more than once.
Ms. Jarman said section 1, subsection 2 of the bill came about as a result of the Florida measure, which she declared has been very successful. She suggested hospitals would be more accurate if they were made accountable for their errors. She stated, "It's every patient's right...to expect a correct bill..." even if the bill is a few days late. She cited an example of a bill in the amount of $28,000 for a 3-day hospital stay for a kidney stone that had $19,900 in errors. The patient was charged for 128 intravenous (IV) injections which would have been 43 per day. The patient was unable to convince anyone in the billing department to even look at the errors.
Senator Coffin asked how many of the errors she cited had happened to people who were in the hospital under a pre-negotiated agreement. Ms. Jarman said about 15 percent of the cases she had were members of preferred provider organizations (PPO) or placed through insurance agreements. She declared, "The response that I get is it doesn't matter what's on the bill because we write off this as per prearranged agreements with the hospital." She contended no matter what the agreement was the patient should not be billed for services that were not rendered.
Ms. Jarman acknowledged the 26,000-pill incident was obviously an error. She said the hospital claimed the IV mishap was the result of somebody hitting the wrong key in data processing.
Senator Coffin asked why a penalty should be refunded to the patient. Ms. Jarman responded it was included in S.B. 359 to make patients more aware of their bills. She said the general attitude in Nevada had been it did not matter what the bill included because the insurance company would pay. She noted many insurance companies fail to catch errors. She said several insurance companies have informed her they do not check bills under $10,000.
Ms. Jarman speculated by making patients more aware they may find errors. She indicated if the patient finds one error on a bill she generally finds more errors on the same bill.
Senator Coffin asked why the refund or finder's fee should go to the patient and not to the person or employer who paid the premium. Ms. Jarman answered they are not the ones who normally find the errors.
Mr. Griffin responded Florida officials have asserted the fact that there is a bounty system has encouraged patients to examine their bills. He said errors are found by the patients and then relayed to the hospital and insurer.
Ms. Jarman interjected she had never had a hospital inform her of an error in a bill and ask her to contact the patient. She said she tells patients to check their bills even if they do not understand them. Sometimes their doctors can assist them.
Continuing her review of S.B. 359, Ms. Jarman explained most hospitals cooperate when she notifies them bill collection should be stopped until a problem is resolved. She admitted some hospitals harass the patients or their families, which is why she wanted the inclusion of section 1, subsection 3. She said the law allows a hospital 20 working days in which to respond, but she said she often takes 45 or 60 days to process a complaint due to her small staff and the time required for research, legal work or arbitration. Occasionally a hospital requests additional time.
Ms. Jarman said arbitration is a small part of her activities. Of the 654 cases she stated she had only had 20 arbitrations. Most cases were successfully negotiated before they actually went into arbitration. She asked for the authority to do the investigation that is addressed in subsections 2 and 3.
Mr. Jarman noted a new section would be added as set forth in section 3 that applies to insurance companies. Because some insurance companies pay bills without checking them she felt the section was a necessary addition to encourage them to pay more attention and become more accountable. The section would provide that the insured person would share in any savings to the insurance company as a result of finding an error.
Ms. Jarman called attention to section 4, paragraph (c). She indicated the paragraph was necessary because some hospitals demand excessive monthly payments and refuse to negotiate with the patient.
Senator Raggio asked why the section had been changed to include all patients rather than just inpatients. Ms. Jarman replied some uninsured patients are faced with bills beyond their means to pay. She said, "The bottom line is, these people need to have a break." She said over 200,000 of the residents of Nevada do not have insurance. She charged some hospitals use aggressive tactics to collect. She stated she does not begrudge hospitals their fees, but she feels there should be better communication and more reasonable policies regarding collections.
Reading the last part of the bill, section 4, subsection 4, regarding "disposable earnings," Senator Raggio asked if that would apply even if the patient had other income. Ms. Jarman admitted it might need clarification. She said often patients have very little income but they may own property on which the hospitals place liens or try to compel a sale.
Mr. Griffin offered the opinion the gross earnings of an individual would include income in addition to salaries. Senator Raggio said he had the understanding "earnings" meant wages. He cautioned other income may not be included in the definition of "earnings." Mr. Griffin said as a Certified Public Accountant (CPA) he would interpret gross income to include all sources. Senator Raggio pointed out the bill said "gross earnings," not "gross income." Mr. Griffin suggested the wording be changed.
Senator Raggio asked if the income of the patient only should be taken into consideration or that of the family. Ms. Jarman said the income of the entire family should be considered. Senator Raggio pointed out the wording referred to a limitation of 25
percent of "his" monthly disposable earnings. He said that was unclear and there should be some clarification as to what would happen if the patient was unemployed but the spouse was employed.
Senator Glomb asked if there would be any fiscal impact on the state. Senator Raggio said no fiscal note was attached. He asked Ms. Jarman how much she would expect to receive annually in fines. She responded $327,000 could be distributed to patients if all 654 complaints ended up with the maximum. She estimated the state might realize $75,000 to $100,000 per year from fines imposed upon hospitals. Mr. Griffin agreed that was an acceptable estimate.
Senator Raggio wanted to know how much might be received from insurers. Neither Ms. Jarman nor Mr. Griffin were able to give an estimate. Ms. Jarman said:
When I come in contact with cases where the insurance companies will not correct their errors because it's under $10,000...then I can...turn it over to the Department of Insurance and have them pursue it. I've had probably 15 or 20 cases where the insurance [company] has said, well, it's ...under $10,000.
Senator Raggio asked if any money would go directly to the state under that process. Mr. Griffin replied probably not unless the insurer was in violation of Title 57 of NRS which has various provisions for fines.
Senator Glomb asked if S.B. 359 was asking for any additional staff to carry out the authority requested. Ms. Jarman replied it was not. Senator Raggio asked if Ms. Jarman was sure she could implement the provisions of the bill without additional staff. Mr. Griffin said he and Insurance Commissioner Teresa Rankin had studied the issue and determined the existing staff in Las Vegas could handle the processing of claims, investigations and arbitration for the next biennium. He said, "Because of Ms. Jarman's work...hospitals, which may have been somewhat incalcitrant at first, are coming around...."
Mr. Griffin admitted there might be need for more staff by the next legislative session if the caseload increases dramatically. Senator Raggio remarked if there is a fiscal note the committee needs the information right away.
Senator O'Donnell asked if Ms. Jarman worked with a member of the Office of the Attorney General in view of the fact S.B. 359 would allow her to impose a fine of $1,000 for each violation. Ms. Jarman said she confers with an attorney general who works with the Department of Insurance.
Senator O'Donnell asked if Ms. Jarman's role was to act as arbitrator or mediator between the two sides. She clarified, saying most cases have been mediated, and she has only occasionally acted as arbitrator where she made the decision.
Senator O'Donnell asked if passage of S.B. 359 would put Ms. Jarman in an adversarial role rather than that of mediator. Ms. Jarman replied:
For the record, lawyers on the other side for the hospitals have been involved anyway for cases that have gone to arbitration. There have been cases that have
been in the court process, and I've intervened and gotten them to negotiate out of the court process.... I'm not asking for a heavy hand to go around fining...anybody at will.
What I'm asking for is to have a law that the hospitals know that they need to be accountable for what they do. When they send out a bill the patient has a right to have a correct bill, and if there's a blatant error...and the patient has tried to correct that, and...comes to me with the name and time and department of the person they talked to on three different occasions, then I know that that patient has tried to resolve that and the hospital has not been willing to help them. Then that's a case where...it would not be just arbitrarily fining somebody, it would be after conferring with the commissioner of insurance and the AGs [attorneys general] to make sure we have a legal right to do this.
Ms. Jarman confirmed the law demands that every patient must have an itemized bill. She said one hospital wrote to her that it would be cost-prohibitive for them to give each patient an itemized bill. Ms. Jarman said she had to go to the Department of Human Resources to force the hospital to correct their system, which took them 6 months.
James L. Wadhams, Nevada Hospital Association, declared there were two problems with the bill. He acknowledged there were some serious drafting problems. He asserted there were some duplications of the existing law. He noted the limitation on collection in subsection 4 was repetitive of garnishment statutes already in the law. He said there are already provisions regarding collection procedures in state and federal laws.
Mr. Wadhams said the testimony heard today was consistent with testimony before the Senate Committee on Human Resources. He alleged calls regarding disputes going to the office of the Commission for Hospital Benefits are generally errors, not fraud. He asserted there is no conspiracy to extort money from either patients or insurance companies.
Mr. Wadhams related there are approximately 130,000 annual admissions into hospitals, or 150,000 over the period of 15 months in which the office was functioning. He pointed out there had been 650 complaints with 24 disputes out of 150,000 admissions. He conceded those she had cited should not be condoned. He suggested most disputes could be handled through open communication.
Senator Raggio noted Ms. Jarman had pointed out the patients who had been subjected to large billing errors had been unable to get the hospitals to discuss them. He asked Mr. Wadhams for a response.
Mr. Wadhams suggested some employees may not be responsive or had been having a "bad day." He responded the office had been created at the request of the hospitals to be a facilitator to help those who could not get cooperation otherwise. He suggested Ms. Jarman should be able to call any chief financial officer (CFO), controller or chief executive officer (CEO) of the hospital to "break that logjam, bring some attention to this issue and get it resolved."
Mr. Wadhams reminded the committee the commission is directly funded by the hospitals and it is not included in the Executive
Budget. He acknowledged the hospitals want to know who the employees are who are unresponsive so that they may be retrained or reassigned.
Mr. Wadhams objected to the notion of a bounty system, calling it very dangerous. He stated it could result in a proliferation of expensive activity when most errors are largely key-punch errors. He suggested because of section 3 the bill could turn into a negative for the state, considering the insurance woes already facing the state and the fact the state is a major insurer.
Mr. Wadhams expressed difficulty with section 3. He asserted it suggests the notion that an insurance company should participate in the bounty system by paying the insured for finding errors. He called particular attention to page 3, line 21. He said, "I'm not sure paying the contractually required amount is fairly described as saving money."
Mr. Wadhams conceded Ms. Jarman was correct regarding insurance companies not auditing bills, but he did not believe a "vigilante" process was necessary.
Mr. Wadhams admitted there is an archaic and confusing system of "billed charges." He said over 80 percent of the people in the state have no obligation to pay "billed charges." He stated:
That has as much relevance to the cost of health care in this state as the sticker price on an automobile at the car dealership. We have suggested an amendment to another bill which is still in process that would...allow the insurance company...and the hospital to indicate on the bill...the...actual charge for service performed, as opposed to this fictitious number that does nothing but create confusion.
Senator Raggio asked Mr. Wadhams to suggest what would make hospitals responsive when they are contacted by Ms. Jarman short of passage of a bill such as S.B. 359. Mr. Wadhams said he would provide her with the telephone numbers of all the controllers, CEOs and CFOs of the 26 hospitals in the association. He asserted that would be the quickest way to resolve the errors cited.
Senator Raggio declared somebody should instruct those who make the errors that they must respond to those making complaints. Mr. Wadhams said those responsible for training, such as CEOs, need such instances brought to their attention.
Senator Raggio said he did not believe a law could be written instructing a CEO to tell the staff to deal with such problems in an appropriate manner. Mr. Wadhams suggested that was part of the licensing and relicensing process performed by the Department of Human Resources.
Robert R. Barengo, Sunrise Hospital, declared the hospital attempts to be available to Ms. Jarman every day. Senator Raggio acknowledged Ms. Jarman had testified 99 percent of the hospitals were cooperative.
Mr. Barengo called attention to page 3, line 27 where the word "inpatient" was replaced by "patient." He called that a major departure regarding the scope of service. He said the intention of the measure passed last session was to give inpatients only a contractual break if they had no other insurance. He pointed out there is no means test in that portion of the bill, which is why he felt it should be limited to inpatient services only.
Fred L. Hillerby, Blue Cross/Blue Shield of Nevada, Hospital Health Plan of Nevada, added his concern over section 3. He asserted the bounty system will increase administrative costs because people will expect to receive money if they make a report that their bill may have an error. He suggested there will be many frivolous complaints that will have to be investigated.
Mr. Hillerby indicated there may be false expectations that if they see what they believe is an error and they belong to an HMO (Health Maintenance Organization) there will be no money available because the rates of HMOs are negotiated. He suggested that would inflate the price of health insurance in Nevada by increasing the cost of health care. He stated there is already a problem with the uninsured.
Senator Coffin inquired if a bounty system might be appropriate within the employee-employer relationship. He noted the total value of services rendered is the starting point of negotiations between an employer and the insurance company.
Mr. Hillerby agreed that was the type of contractual relationship that could be established. He said the insurance company used to receive bills for lost charges, and some firms hired out on a percentage basis to check hospital bills and medical records. He declared it created an enormous amount of undercharges by the hospital. He suggested opening the issue of auditing every bill with a bounty system for charges that had been omitted may be found as often as those that were incorrect.
Paula Treat, Desert Springs Hospital, echoed the sentiments of the lobbyists who preceded her. She said nobody who worked on establishment of the Commission for Hospital Benefits at the last session thought something like "peace-officer" powers would be included. She stated her hospital also had excellent communication with Ms. Jarman's office and she did not believe the legislation was needed.
Janice C. Pine, St. Mary's Regional Medical Center, elaborated on the point made by Mr. Barengo regarding the change in wording from "inpatient" to "patient." She reported St. Mary's had nearly 13,000 inpatients in 1992. She pointed out every outpatient procedure would be subject to the provisions of S.B. 359, and she guessed there are probably 100,000 procedures that might apply. She said every time a person comes in for a blood test that person becomes an outpatient. She expressed concern over the work the business staff would have to review each outpatient bill and do a means test in order to determine if a discount should be given.
In the absence of further testimony, Senator Raggio closed the hearing on S.B. 359. He called for testimony on Senate Bill (S.B.) 377 which had been introduced by Senator Leonard V. Nevin, Washoe County Senatorial District No. 2.
SENATE BILL 377: Makes various changes relating to unemployment compensation.
James S. Hanna, Chief of Research, Employment Security Department, explained the provisions of the bill. His remarks are attached as Exhibit E.
Senator O'Donnell voiced his understanding unemployment compensation is paid out of a pool of employers in the state, those with union shops and those without union shops. He asked if the bill would require that sums paid into the pool from unemployment
compensation could be paid out to people on strike. Mr. Hanna affirmed his question.
Mr. Hanna said, "By and large...the tax an employer pays is based on his experiences."
Senator Raggio interrupted the testimony to say, "Senator Nevin has sent a message that he is withdrawing this bill." He asked if that would cause discomfort to anyone present. There was no response.
SENATOR RAWSON MOVED TO INDEFINITELY POSTPONE S.B. 377.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio turned to Senate Bill (S.B.) 387.
SENATE BILL 387: Establishes additional requirements for financial institutions in which public money may be deposited.
Laura B. Wallace, Investment Officer, Public Employees' Retirement System (PERS), voiced opposition to S.B. 387. She said the objective of the bank selection criteria was to be able to avail themselves of the best possible service for the members of PERS. She said that could include going outside the State of Nevada. She alleged S.B. 387 would limit that competition.
Senator Raggio asked if there had been a bill processed to allow utilization of a bank outside of the state. Ms. Wallace replied in the affirmative, saying it was Assembly Bill (A.B.) 555.
ASSEMBLY BILL 555: Makes various changes relating to public employees' retirement system.
Senator Raggio asked if S.B. 387 would limit deposits to banks with the rating described in the bill. Ms. Wallace replied that was her understanding.
Senator Glomb asked if PERS presently used any banks without the ratings described on lines 13 and 14. Ms. Wallace replied PERS currently uses First Interstate Bank of Nevada which does fall under the ratings described in the bill. She suggested an occasion may arise in which PERS would wish to deal with a bank that did not fall within the criteria. She said the criteria used by PERS generally relates to financial viability rather than lending practices.
Senator Glomb asked if subsection 3 paragraph (b) was more prohibitive than the language regarding the rating. Ms. Wallace responded, "We view them as equally restrictive." She acknowledged the bill would still be restrictive for PERS even if paragraph (b) was deleted.
Robert L. Seale, State Treasurer, Office of the State Treasurer, declared he also had some problems with S.B. 387. He averred the bill is duplicative of the actions taken by the state treasurer's office. He explained when the office goes out for bid the measure could be very restrictive.
Mr. Seale declared he studies the ratings when a request for proposal (RFP) is made. He said:
Let's assume that the three major banks in this state...could not or did not achieve these ratings. We would then be forced to use a bank outside of the state of Nevada, if this language were in existence. If that were so, the fiscal effect would be devastating. It would cost us a significant amount of money, it would be a significant delay in making those deposits to a bank that's outside of the state.
Mr. Seale said the state treasurer's office should have the ability to make the assessments.
Senator Glomb wondered whether banks would be more inclined to maintain the ratings if state money was required to be deposited in banks with the proposed ratings. Mr. Seale acknowledged her premise but said the state could be in trouble if the bill passed. He asserted banks are already very cognizant of the ratings. He reiterated his belief the proper place for the proposals in the bill belong in the policy of the treasurer's office rather than in the statutes.
Senator O'Donnell asserted every dollar invested in a bank results in $8 in the community. Mr. Seale reiterated his position that the financial effects on the state could be disastrous if he was forced to abide by the provisions of S.B. 387 if none of the major banks had the appropriate rating and he had to go outside the state. He repeated his belief the considerations addressed in the bill were viable but should be policy decisions rather than statutes which would remove his flexibility.
Mr. Seale pointed out the state has money in nearly every bank in the State of Nevada. He said the provisions of S.B. 387 would force him to make withdrawals from some of those banks. He said he would prefer not to be forced to do that even though the amounts may not be substantial. He asserted he attempts to put as much money in Nevada banks as is safe.
Senator Coffin asked from which banks money would have to be withdrawn. Mr. Seale responded it would tend to be from the smaller banks that do not lend money in all of the counties such as the Comstock Bank and Pioneer Citizens Bank.
Senator Coffin asked if Mr. Seale would have a problem with the bill if the provisions requiring lending in 15 counties and meeting outstanding community needs were removed. Mr. Seale reiterated it would not leave him the flexibility he deems necessary to manage his office. He assured Senator Coffin that the treasurer would not invest money with a bank that did not have a satisfactory rating.
Mr. Seale said his RFP includes information on ratings even though his requirements are not in written policy. He reported his office is in the process of developing a liaison position specifically to comply with the Community Reinvestment Act (CRA).
Senator Jacobsen asked if there would be an advantage in having a state bank with no competition. Mr. Seale responded that might be difficult. He noted very few states have had any success with a state bank, and he would probably oppose establishing one. He opined the private sector handles banking far better than the state could.
John P. Sande, III, Nevada Bankers Association, voiced strong opposition to S.B. 387. He agreed lines 17 and 18 would be
detrimental because many banks would not qualify, particularly the smaller banks in Clark and Washoe counties. He pointed out the bill is in error because it suggests that credit unions are subject to CRA requirement, which he claimed they are not.
Mr. Sande opined the bill would only be a detriment to the state. He asserted all banks in the state have either a satisfactory or an outstanding CRA rating at the present time. He alleged banks are already under tremendous pressure to maintain a good CRA rating. He agreed the bill would remove the flexibility necessary for the treasurer to operate efficiently.
Brian K. Krolicki, Chief Deputy Treasurer, Office of the State Treasurer, concurred that the treasurer is very sensitive to the CRA issue. He reiterated the need for flexibility in the office.
Senator Glomb suggested anything of such importance should be in writing and should be included in either regulations or policies. Mr. Krolicki responded that will be part of the RFP going out later in the summer.
Senator Coffin asked how often the CRA performance of a bank was audited by the federal government. Mr. Sande replied, "Annually."
Senator Coffin asked if it would be helpful to insert language regarding a continuing failure to receive one of the two ratings for 2 successive years. Mr. Sande said the banks would prefer that type of language, but he reiterated the banks do not take CRA lightly.
Senator Jacobsen asked how many banks there are in the state. Mr. Sande replied there are 20.
Senator Joseph M. Neal, Jr., Clark County Senatorial District No. 4, testified the purpose of S.B. 387 was to allow the deposit of state funds into financial institutions based upon them having an outstanding or satisfactory rating in meeting community needs. He stated the bill was the result of a study done in Clark County in which it had been determined that banks were not lending to minority areas or poor communities. He alleged funds being deposited in those institutions were being loaned outside of the state.
Senator Neal reported he was attempting to mandate use of a standard set by the Federal Reserve Board. He said, "This was the only leverage that we have in terms of getting financial institutions to make deposits to address the needs of the community in which they are located."
Senator Neal said the report on Clark County was entitled, Cashing Out. He said the data in the report was obtained from the very banks that were examined. He asserted some people who applied for credit were denied even though they met every criteria. He said the same thing applied to some applicants in the smaller counties.
Senator Coffin interjected some of the opponents of the bill had made some concessions that might make the bill more workable, including language regarding a bank with a continuing pattern of failure to meet the ratings.
While Mr. Krolicki agreed with the sentiments expressed by Senator Neal, he repeated the seriousness with which the CRA is treated by the treasurer's office. He reiterated one employee in the office is specifically designated as a CRA liaison. He promised CRA standards would be part of the RFP process.
Senator Neal responded he still felt the law was necessary. Mr. Krolicki stated the treasurer's office is already complying with the provisions of S.B. 387. Senator Neal declared the only leverage the state has with national banks in the state is the money deposited in them.
In the absence of further testimony on S.B. 387, Senator Raggio closed the hearing. He asked the committee to turn to budgets for welfare and Medicaid. He requested the staff to indicate areas where closures proposed by the Senate Committee on Finance differed from those of the Assembly Committee on Ways and Means.
Aid to Dependent Children - Page 872
Steve J. Abba, Program Analyst, recommended the budget be closed in accordance with the Governor's recommendation. He stated the Aid to Dependent Children (ADC) caseload is projected to be lower than had been proposed in the Executive Budget the last two sessions. Because of the potential volatility of ADC caseloads, he was not recommending any change.
Senator Rawson agreed it would be prudent to go along with the recommendation of the Governor.
SENATOR RAWSON MOVED TO CLOSED THE BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER ABSTAINED FROM THE VOTE.)
* * * * *
Medicaid - Page 888
Mr. Abba distributed a summary of the Medicaid budget recommendations (Exhibit F. Original is on file in the Research Library.). He reviewed the summary pages. He said the revised provider tax estimates to come into the Medicaid budget over the biennium would bring in $50,387,000. He explained the Medicaid budget had been predicated upon an estimated benefit of $46.1 million over the biennium, which means there is an anticipated increase of $4.3 million.
Mr. Abba said the closing proposals would take advantage of the net increase and reduce the General Fund by a corresponding amount. He said an $11,758,000 transfer from the hospital and inter-government tax account would give authority for payment to hospitals and noninstitutional providers for June of the present fiscal year because there is a lag of one month.
Mr. Abba explained the second item was a recommendation to reduce General Fund for an overmatch that was budgeted for Child Welfare Title XIX costs. A double match had been discovered in the Youth Community Services and Medicaid budgets whereas only a single state match was required. He said the actual reduction would be $722,000 and part of that would be found in Maintenance item number 200.
In response to a query by Senator Raggio, Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, said he was not aware that the change had been made. Mr. Abba said he had worked with both the Welfare Division and the Division of Child and Family Services on the overmatch issue.
Mr. Abba said some of the $1.5 million savings includes not only savings from the Child Welfare double match but also an adjustment in caseloads for ADC postmedical recipients and disabled recipients. The budget had overestimated postmedical recipients by approximately 2,200 clients over the biennium, but according to the most recent estimates the disabled recipients may have been underbudgeted by 200 recipients per month. He advised a reduction of $206,000 in fiscal year (FY) 1994 and $586,530 in FY 1995 could be made for the overmatch.
Mr. Abba proposed another adjustment in the Maintenance 200 budget of $257,858 in FY 1994 and $371,068 in FY 1995 savings in General Funds due to an anticipated reduction of caseloads. Mr. Abba said those three reductions total the approximately $1.5 million net savings for the General Fund over the biennium.
Calling attention to Maintenance item 530, Mr. Abba explained there had been a recommendation in the Executive Budget to provide for the enhancement of the Welfare Division's Maternal Obstetrical Management System, referred to as the MOMS program. He said the enhancement will provide for additional case-management services with a goal of reducing low-birthweight babies. He said the savings forecast by the division had not been included in the original Medicaid budget but the savings were denoted on his summary. The savings would amount to $679,000 over the biennium
in General Funds.
Mr. Abba said there had been a recommendation in the Executive Budget for a more active prenatal media program in concert with the private sector entitled "Baby Your Baby." He said the entire state match portion of the program is funded by private donations. The initial Medicaid budget included the match for out-of-state General Funds, so a change was recommended for Enhancement 540 to reflect that.
Mr. Abba said Enhancement 770 was another technical adjustment to access a higher federal match for the Drug Utilization program.
Mr. Abba said there was a component in the Medicaid budget to reimburse the director's office for services in the area of Medicaid rate setting. It was found upon review that additional federal match dollars could be obtained that were not reflected in the Executive Budget. The appropriation could be reduced by $24,797 in FY 1994 and by $24,410 in FY 1995.
Mr. Abba summarized the net effect of the above cited closing recommendation on the General Fund was approximately $7.5 million over the biennium. He said none of the proposals would impact the services of Medicaid. He said:
In order for the provider-tax program to work there is a separate account called the Hospital Provider Tax Inter-governmental Transfer account that is...not in your budget books. As a technical matter we would request approval of the committee to establish that account so the department, effective July 1, will be able to continue the provider-tax program without interruption.
Senator Raggio asked how that should be accomplished. Mr. Abba responded the account exists but it had not been included in the Executive Budget. He said it was budget account 101-3157.
Senator Rawson said he would like to propose an organization plan for the delivery of care after closure of the Medicaid budget.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH RECOMMENDATIONS MADE BY STAFF.
SENATOR GLOMB SECONDED THE MOTION FOR THE PURPOSES OF DISCUSSION.
Senator Glomb asked what would happen to the $7.5 million to be achieved in savings. Senator Raggio responded a status sheet is maintained showing each closing and after it is completed a shortfall or excess will be reflected. If there are funds available, it would be up to the committee to determine the priorities to utilize those funds.
Senator Callister alleged the $7.5 million saved out of the Medicaid budget was going into the prison camp budgets. Senator Raggio repeated the status sheet would reflect savings or shortfalls.
Senator Callister commended the staff for identifying places in the Executive Budget where extra General Fund money had been allocated. He said, "I want to make clear for the record. This is General Fund money, is that correct, $7.5 million?" His question was confirmed.
Senator Callister said:
You're correct, it goes onto a tally sheet, some positive, some negative. But I think anyone who has served on a money committee would also acknowledge that when you close one of the four or five major budgets, as we have done with the prison budget, $16 million out of balance, then we've created the hole that we are now shoveling the money that we find into. I understand that that's a policy decision, but I think it's a little bit disingenuous from a public point of view to suggest that somehow we haven't made those decisions...when that was the first decision that we made.
Senator Callister announced he would vote against the measure.
Senator Glomb announced she would have to vote against the motion to close the budget. She said, "I would like to see that $7.5 million go into maybe bringing back those ADC checks up to where we closed in 1991." She said she would like to amend the motion to appropriate some of the money to bring ADC payments back to the 1991 level.
SENATOR GLOMB MOVED TO AMEND THE MOTION TO EARMARK THE $7.5 MILLION SAVINGS FOR AN ENHANCEMENT TO BRING ADC PAYMENTS TO THE 1991 LEVEL.
Senator Raggio suggested the committee should wait until it was learned what money was available. Senator Glomb expressed disagreement. She said within 6 months of the time when ADC grant levels increased to $372 per month for a mother with two children the grant levels were reduced to $348 due to budget shortfalls.
SENATOR CALLISTER SECONDED THE MOTION.
THE MOTION FAILED. (SENATORS RAGGIO, RAWSON, JACOBSEN AND O'DONNELL VOTED NO.)
* * * * *
SENATOR CALLISTER MOVED TO AMEND BY TRANSFERRING THE $7.5 MILLION SAVINGS TO THE DISTRIBUTIVE SCHOOL FUND TO MAKE UP FOR THE $18 MILLION REDUCTION.
SENATOR COFFIN SECONDED THE MOTION.
Senator Callister called for a rollcall vote. Senator O'Donnell announced he would have to abstain because his wife is a teacher.
THE MOTION FAILED. (SENATORS CALLISTER, GLOMB AND COFFIN VOTED AYE. SENATORS RAWSON, RAGGIO AND JACOBSEN VOTED NO.
SENATOR O'DONNELL ABSTAINED.)
* * * * *
Senator Raggio asked for a vote on the main motion to approve the budget with the adjustments recommended by the staff.
THE MOTION CARRIED. (SENATORS COFFIN, GLOMB AND CALLISTER VOTED NO.)
* * * * *
Senator Raggio asked if the action was consistent with that taken by the Assembly Committee on Ways and Means. Mr. Abba replied it was identical action.
Employment and Training - Welfare - Page 905
Mr. Abba recommended closing the budget according to the Governor's recommendation. He said as recommended the budget would not qualify for any enhanced federal funds beyond the budgeted 50-50 split. He explained:
The reason being is that family support act participation requirements for 1994 and 1995, 15 percent and 20 percent, are not anticipated to be met. ...there's some enhance-incentive money that would be available.... In order to meet those enhanced requirements it would be a requirement to add an additional approximately $1 million over the biennium in General Funds to the budget.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION.
SENATOR JACOBSEN SECONDED THE MOTION.
Senator Glomb said, "If we were able to use some of the General Fund dollars...we could leverage that money and get an additional $2.6 million in federal match money to go into this employment and training budget."
THE MOTION CARRIED. (SENATORS GLOMB AND CALLISTER VOTED NO.)
* * * * *
Senator Rawson asked for a bill draft request (BDR) that would permit development of a provider system for Medicaid health-care expenditures. He explained it would be an organization that would utilize the University School of Medicine and a federally qualified Health Maintenance Organization (HMO) to develop a nonprofit organization that could contract with all the providers in the state.
SENATOR COFFIN MOVED FOR A BILL DRAFT REQUEST FOR THE PURPOSE STATED.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio announced there would be a meeting of the committee on Saturday to close all final budgets.
There being no further business before the committee, Senator Raggio adjourned the meeting at 10:45 a.m.
RESPECTFULLY SUBMITTED:
Judy Jacobs,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
June 10, 1993
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