MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 25, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:20 a.m., on Friday, June 25, 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 Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Marion Entrekin, Committee Secretary
OTHERS PRESENT:
Luther Mack, Member, Nevada Athletic Commission
Sandra Johnson, Office Management Assistant IV, Nevada Athletic Commission
Joan Buchanan, Real Estate Education Director, Real Estate Division, Department of Commerce
George Whitney, Real Estate Project Chief, Real Estate Division,
Department of Commerce
David Horton, Legal Counsel, Committee to Restore the Constitution
John P. Sande, III, Representing the Nevada Bankers Association
Edward L. Presley, Representing the Home Rule Coalition
Robert M. Daugherty, M.D., Dean, School of Medicine, University of Nevada, Reno
Cyndy Johnson, Senior Manager, KPMG Peat Marwick, Management Consultants, National Health Policy Practice
Mary Ellen McCarthy, Senior Attorney, Nevada Legal Services
Henry Soloway, M.D., Associated Pathology Laboratories
Jon L. Sasser, Representing Nevada Legal Services
Scott M. Craigie, Chief of Staff, Governor's Office
Frances Daugherty, Staff Attorney, Washoe Legal Services
James L. Wadhams, Representing the Nevada Hospital Association
Janice C. Pine, Representing St. Mary's Regional Medical Center
Ivan R. Ashleman, II, Representing the Lake Mead Hospital Medical Center
William Brezant, Representing Family Health Plan, Incorporated
Dwight Hansen, Medicaid Director, Blue Cross/Blue Shield of Nevada
William Bannen, M.D., Medical Director, Blue Cross/Blue Shield of Nevada, and Medical Director, Health Maintenance Organization of Nevada
Lawrence P. Matheis, Representing the Nevada State Medical Association
David R. Brandsness, Chief Executive Officer, University Medical Center of Southern Nevada
Worker's Compensation Fraud Unit - New Budget
Senator Raggio stated he reviewed the budget closing action made by the Assembly Committee on Ways and Means and believed their decision for closure was appropriate.
SENATOR RAWSON MOVED TO CLOSE THE NEW BUDGET FOR THE WORKERS' COMPENSATION FRAUD UNIT IN THE OFFICE OF THE ATTORNEY GENERAL AS RECOMMENDED BY THE ASSEMBLY COMMITTEE ON WAYS AND MEANS.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearing on Assembly Bill (A.B.) 661.
ASSEMBLY BILL 661: Makes various changes relating to unarmed combat.
Luther Mack, Member, Nevada Athletic Commission, testified in favor of the passage of A.B. 661. He noted Senator Coffin had some concerns regarding section 8 of A.B. 661 regarding the proposed change in the number of rounds for a boxing match from 15 rounds to 12 rounds. He explained that statistically many injuries occur in round 12 which has caused many of the athletic commissioners to believe a match should not progress beyond round 12. Mr. Mack also pointed out the major television networks object to 15 round bouts due to the time element involved.
Mr. Mack stressed the major reason for the proposed change reflected in A.B. 661 is for the safety of the fighters.
Senator Raggio asked what other states are doing in this area.
Mr. Mack said there are no states that permit a match to go beyond 12 rounds.
Senator Coffin said he has talked to many of the major sponsors of boxing matches in the Las Vegas area who do not support a change to a 12-round match. These individuals explained there are international venues for fights that compete with the United States and particularly with Nevada where boxing events are often staged.
Senator Coffin is not in favor of a restriction in Nevada that would have to be legislatively corrected should the rule return to a 15-round match. He further believed this action will put the State of Nevada at a competitive disadvantage at this time.
Mr. Mack pointed out the world boxing organizations have also gone to a 12-round match.
Senator Coffin interjected, "Nobody has any respect for any of these world organizations. They come and go. Many of them are even controlled by promoters. Let us not base our legislation on the whims of some of these people."
Mr. Mack countered the world organizations are recognized by the International Boxing Federation (IBF) and the World Boxing Council (WBC).
Sandra Johnson, Office Management Assistant IV, Nevada Athletic Commission, testified in support of the passage of A.B. 661. She said the Nevada State Medical Advisory Board formed to give opinions to the Nevada Athletic Commission regarding the welfare and safety of fighters for regulation and licensure purposes, do not recommend more than 12 rounds for fights that are held in the State of Nevada. This is due to dehydration and brain injuries that can occur in the later rounds of a match.
Senator Coffin said this could just as easily happen in an earlier round. Usually brain damage is caused by the number of fights and not the duration of a single match.
Senator Callister said A.B. 661 references Nevada Revised Statutes (NRS) 467.055 which deals with the compensation to the members of the commission. He noted there has been an amendment proposed that would modify the executive director's obligation by expanding authority and requiring he devote his entire time and attention to the business of the office and not pursue any other business or occupation. He asked if this is a reasonable requirement under the existing law.
Mr. Mack responded this is not realistic because of the necessity for this individual to handle a variety of athletic events. He believes the executive director's involvement should not be restricted.
Senator Raggio clarified the amendment should stipulate the executive director of the commission may pursue any other business or occupation not in conflict with his duties as executive director and should remain in the unclassified service.
SENATOR CALLISTER MOVED TO AMEND AND DO PASS A.B. 661 INCLUDING SECTION 8 WHICH LIMITS THE ROUNDS TO 12 AND TO AMEND THE BILL FURTHER TO ALLOW THE EXECUTIVE DIRECTOR TO ENGAGE IN OTHER BUSINESS NOT IN CONFLICT WITH HIS DUTIES WHILE REMAINING IN UNCLASSIFIED SERVICE.
SENATOR GLOMB SECONDED THE MOTION.
Senator Coffin noted the motion just stated does not exclude section 8. He said he is in favor of all other aspects of the bill as written with the exception of section 8. He does not want the length of the bouts to be changed from 15 rounds to 12 rounds.
SENATOR COFFIN MOVED TO AMEND AND DO PASS A.B. 661 BUT TO DELETE SECTION 8 WHICH LIMITS THE ROUNDS TO 12.
SENATOR RAWSON SECONDED THE MOTION.
THE SECOND MOTION FAILED. (SENATOR CALLISTER, SENATOR GLOMB, SENATOR JACOBSEN, SENATOR O'DONNELL AND SENATOR RAGGIO VOTED NO.)
Senator Coffin asked for a list to be provided as soon as possible from the Nevada Athletic Commission of the jurisdictions where statutes or regulations have been passed by the states to limit the length of fights.
* * * * *
THE ORIGINAL MOTION CARRIED. (SENATOR COFFIN AND SENATOR RAWSON VOTED NO.)
* * * * *
Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 301.
SENATE BILL 301: Makes appropriation to Clark County for development of system of communication between certain entities that respond to emergencies.
Senator Rawson explained this bill would enable a special Clark County emergency search and rescue team to act as a rapid response team on a cooperative basis for international response. This team is equipped to deal with emergencies that may occur due to earthquakes, fires, mine accidents, and any other emergency event. Their whole purpose is to be able to respond to any place in the world that may require special extraction techniques for which this team is highly equipped and trained to save lives. Senator Rawson said the committee should not be misled to believe this is a team that would operate only in Clark County. They are a Clark County unit and part of a national organization. Their purpose is to be able to respond anywhere in the world, although their primary mission is Nevada.
Senator Rawson said the appropriation requested by S.B. 301 would be to assist this special emergency response team to secure communication equipment.
Senator Glomb asked if there is any other source of funding available for this unit.
Senator Rawson replied this is a very expensive team to operate and Clark County has included them in their budget and purchased specialized equipment for their use.
Senator Jacobsen asked if the Federal Emergency Management Agency (FEMA) has pledged any funds towards this emergency response team.
Senator Rawson was not certain. He said they have received some federal funding, but he would have to check to see if the funds were from FEMA. He pointed out it was specified that federal or international funding cannot be used for communication equipment.
Senator Raggio closed the hearing on S.B. 301 and opened the discussion on Assembly Bill (A.B.) 747.
ASSEMBLY BILL 747: Increases certain fees imposed by and makes appropriation to real estate division of department of commerce.
Joan Buchanan, Real Estate Education Director, Real Estate Division, Department of Commerce, testified A.B. 747 increases certain fees that must be paid to the Real Estate Division. During budget hearings, the money committees were advised that certain fees should be increased to cover the cost of services provided for land company-related activities. The division determined the land company section would have to increase the revenue deposited to the General Fund by approximately $64,000 in order that the fees charged would approximate the cost of operating this section. She added that some of the fees affected have not been increased since 1973 and in some cases since the fee was established.
Ms. Buchanan also stated that data processing enhancements are necessary to put project registrations, development exemption data, and registered owner/developers on-line. This will enable the access of this information by the licensing and compliance staff which are located in Carson City and Las Vegas. Currently, the only source of data is in Carson City which requires extensive use of telephones and is time-consuming.
Included in this legislation is a General Fund appropriation of $22,950 which will provide for the equipment purchase and programming necessary to enhance the division's data processing capabilities.
Senator O'Donnell asked if the division will have sufficient staff to handle some of the projects required to be completed. He specifically referred to a special real estate project known as the Lakes Project scheduled for the southern Nevada area.
George Whitney, Real Estate Project Chief, Real Estate Division, Department of Commerce, responded in the long run there will be sufficient staff available to handle the registration requirements for this project that is being phased in. It will be a continuing process requiring annual updates and reviews by the division.
Senator O'Donnell suggested the division should come before the Interim Finance Committee (IFC) should a staffing problem occur.
Senator Raggio closed the hearing on A.B. 747 and opened discussion on Senate Bill (S.B.) 481.
SENATE BILL 481: Provides in skeleton form for establishment of state bank.
David Horton, Legal Counsel, Committee to Restore the Constitution, testified in support of the passage of S.B. 481. His written testimony (Exhibit C) was read for the record.
John P. Sande, III, Representing the Nevada Bankers Association spoke in opposition of the passage of S.B. 481 and stated this type of legislation is unnecessary.
Mr. Sande remarked:
The Nevada constitution prohibits the state from lending money so there may be a question as to the constitutionality of this bill....This bill does not set forth any guidelines as to what the state bank would do. It states there will be some regulations down the line by the State Board of Finance which will regulate the bank. There have been approximately 20 states that have attempted to have a state bank. There is only one in existence now, the Bank of North Dakota.
If you look at the bill you would have the state treasurer as the president of the bank with no regulation by the state's commission for institutions. You would only have such regulations as the [State] Board of Finance would adopt. There would be politics involved in running the bank which I do not believe is appropriate since the state treasurer is elected from time to time. There would be no federally insured deposits unless there would be compliance with federal insurance requirements in which you would be under the same rules and regulations that commercial banks are under right now, and that would prohibit you from lending at the whim of politics.
Mr. Horton responded:
If you look at what the State Board of Finance is now doing with Nevada funds...you will see they are doing precisely what a State Board of Finance would be doing in approving an application for the state treasurer to permit the infusion of $300 million of new capital into the Nevada economy.
The constitutional argument is, I think, spurious because if you read it the way they want to have you read it...what we are doing right now is violating the constitution. When you take the state's money and put it into a commercial bank, that is a loan of the state's fund to a private corporation. What the State Board of Finance is now doing with the school fund is exactly the kind of thing they would be developing for bringing this idea on-line.
It has been mentioned that the state treasurer is not a banker. He wasn't a banker when he started being the treasurer, but you know from his running of the State Municipal Bond Bank that this has been profitable.
In view of the caution and capability of our treasurer and the familiarity of the [State] Board of Finance which includes a commercial banker, this is an area that can be explored with this skeleton bill.
I would like to commend the Legislative Counsel Bureau for producing a very workable way to introduce this concept. This is a good way to explore the capabilities of this measure and get it on-line to infuse new money into the state.
With regard to the relationship with Mr. Sande's clients....We have experience in Nevada where there is
a symbiosis between a new bank coming into banking turf where that turf is under serviced. It is in the instance of the Caliente's community bank in Lincoln County where they were serviced by a branch bank that was controlled out of their community that was not making real estate loans. They had to go to Utah to get real estate loans on Nevada property which is tough to do. When the Caliente bank got on-line, in 4 months the deposits of the Pioche branch were to the level they were before the entire capital of the bank in Caliente was taken out in order to start the new bank. They now are making more money in that branch bank than they were before. This is what we need to do in the Nevada economy....
Senator O'Donnell asked if the state bank would be inside or outside of the federal reserve loop.
Mr. Horton said that would be optional depending upon the type of work they would enter into. With regard to the reserve requirements that are set for banks, Mr. Horton said, "This would be many times more reserves than in ordinary commercial bank loans. It will be the soundest bank in the country."
Edward L. Presley, representing the Home Rule Coalition, wished to go on record in support of the passage of S.B. 481.
Senator Raggio closed the hearing on S.B. 481 and opened discussion on Senate Bill (S.B.) 559.
SENATE BILL 559: Directs department of human resources to seek Medicaid demonstration waiver.
Senator Raggio stated he serves on the board of Sierra Health Services and will personally abstain from any discussion and vote on the bill. He explained this is due to the perception that this firm may benefit from the passage of S.B. 559. He asked Senator Rawson to serve as chairman of the committee during the hearing on this bill.
Senator Rawson distributed to the committee an audit report for the year ending June 30, 1991, developed by the Department of Human Resources and the Welfare Division regarding the Nevada Medicaid Program. His testimony commenced with an in-depth explanation of the major portions of this audit report, (Exhibit D - Original on file in the Research Library).
Senator Rawson also distributed to the committee Exhibit E, a proposed amendment to S.B. 559.
Robert M. Daugherty, M.D., Dean, School of Medicine, University of Nevada, Reno, testified in favor of the passage of S.B. 559 that will insure the School of Medicine a patient population for their teaching program.
Dr. Daugherty reviewed the 10-year history of providing health care to Medicaid recipients in a managed care system. He stated the School of Medicine currently cares for approximately 25 percent of the state's Medicaid patients that are seen at the school's family medicine centers in Reno and Las Vegas. They are enrolled through the Welfare Division according to eligibility criteria established by the state. Dr. Daugherty pointed out the program is completely voluntary and recipients can disenroll and return to a private fee-for-service physician as they desire. The School of Medicine is responsible for only ambulatory patients and not those that are in a hospital on an inpatient basis.
Using prepared text (Exhibit F), Dr. Daugherty provided the committee with detailed information concerning coordinated care for Medicaid patients in Nevada through the University of Nevada School of Medicine by explaining the growth in the state since l983 and the advantages of the proposed program.
In conclusion, Dr. Daugherty's written testimony (Exhibit G) was read for the record.
Cyndy Johnson, Senior Manager, KPMG Peat Marwick, Management Consultants, National Health Policy Practice, testified most of her practice work is involved with state and local governments on the issue of Medicaid and how to reform programs and transition them from the current fee-for-service model into a managed care program.
She explained the National Health Policy Practice team is extensively involved in the Arizona Health Care Containment System (AHCCS) program in the State of Arizona which is the nation's only fully prepaid Medicaid managed care program. They have served as policy advisors to AHCCS for several years and have been involved with the development of managed care initiatives in the states of New York, Rhode Island, and Oklahoma.
Ms. Johnson commented:
We were contacted by individuals from the Sierra Health Services and the University of Nevada's School of Medicine because they had an interest in this subject and what the possibilities might be for approaching reform....I have learned a lot about your state and the population and how it is similar and dissimilar to other states I have been in to formulate an approach that might be appropriate for this state.
You have a relatively small program....The numbers and the size of population drives how much you would want to spend on these programs versus dollars to go into services. You have high costs compared to other states in Region IX. The Health Care Finance Administration (HCFA) divides the country into regions, and you are a part of Region IX which also includes California, Hawaii, Oregon, and Washington. Based on reports you filed with the federal government, you reported expenditures per recipient of about $3,160. The rest of Region IX was about $1,823. Region IX is driven by California, but it indicates you have expenditures higher than other states in the west. You also have a dilemma in that you do not have a sophisticated Medicaid-management information system to monitor and manage this program which makes it difficult to compile and analyze data to understand what is going on with this population and how dollars are being expended. There is also in this state a limited amount of experience and expertise in the Medicaid agencies because you have historically operated a fee-for-service program, and there was no reason for you to recruit individuals with the expertise in managed care....That has an impact on what you can do and how you can administer these programs. We are talking about a privatization of a lot of the administrative functions of your Medicaid program. It is a coordinated care model and you will have some geographic regions....In each you would select a single contractor to administer the program for you.
Choice and the maintenance of choice is important. It is important to the advocacy groups, physicians, and many people involved in government. Choice is maintained in this model. People will still have the right to select a primary-care provider and delivery system within that network....Choice is interpreted in many other states to mean people should have free choice of health plans and complete and free choice of any provider....There is a variety of debates among reasonable individuals over this subject.
What we have been talking about would be a demonstration program for a 5-year period under section 1115 [of the Social Security Act]. Under section 1115 you could create a program that would cost more than the existing program....Since the 1980s when [the Office of Management and Budget] OMB became involved with this process with HCFA, we have seen no demonstration waivers approved that are not cost-neutral....As the budget is put together, HCFA will want to see a 5-year budget and all assumptions and projections. They are concerned about the financial aspects of all this because of the impact on the federal government who funds half the program.
We have also been talking about the concept of creating a nonprofit foundation or entity to be involved in health education and research. If we cannot improve health status and access with these programs, they are not worth a whole lot. Cost containment is very important, but we have to be mindful of what we are trying to achieve for these individuals. If HCFA were to approve such a demonstration program, they will require an extensive analysis for [cost containment] to be done to learn from what you do here in order to study for implications it has for the nation as we move forward in health care.
In talks before the nation's governors, the President [of the United States] has indicated he intends to give them a fair degree of flexibility on how they will structure health-care reform in their states. The Department of Human Resources as the designated single state agency continues to maintain responsibility for the oversight of this program no matter how it is structured. HCFA issued final draft standards for an initiative called the Quality Assurance Reform Initiative (QARI) that will specify extensive requirements and standards regarding the oversight the states have to provide...and the quality assurance and quality management programs that health maintenance organizations (HMOs) contracting for the Medicaid population must meet....
I wanted to take a minute regarding what other states have done. There is a lot of activity going on. Arizona has the only fully prepaid Medicaid initiative in the country. They have multiple health plans contracting in the state. It is a competitive model and a very elaborate system that was developed. They had many problems in the early years of the program with health plan insolvency, but they have stabilized and have a program that many states are looking to as a model. The administration of it is very complex. The AHCCS agency created to be the Medicaid program now employs 1,000 individuals of which 700 are responsible for overseeing the acute care portion of the program. The state's share of the administrative budget for this program is about $25 million. The Prepaid Medicaid Management System (PMMS) costs $23 million to develop....The concern I have is how much administration can you bite off? What does it buy in a state with a small population? AHCCS administrative costs are on an average of 12 percent with 88 percent going to services. How many times do we want to pay for trying to serve a small population?
Insolvencies of these plans is a critical issue and is something you do not want to have happen because the care will be provided in good faith and it will be an issue. You will want to accomplish mainstreaming. The 75-25 rule is there. You can ask for a waiver from that under 1115. It is a matter of what you want in the way of public policy as a state. Do you want people mainstreamed? Do you want them in plans shoulder to shoulder with people in the private sector?
The capacity to serve the region is important. You need adequate numbers of providers....I think the role of the university is very important....We used to have 75 percent primary care and 25 percent specialists. That is reversed now. We have to go back in the other direction, but if we strip away pregnant women and children from our university medical centers, where are we going to have the base to train our primary-care physicians? That is who is in Medicaid...young women, pregnant women, and children who need primary care and hospitalization services for deliveries. You need contracts with the major providers such as the federally qualified HMOs...and adequate financial resources to assume this level of risk....This is a population difficult to manage at the outset. They have patterns of utilization born out of the fact they have difficulty accessing care now. Many automatically go to the emergency service to get services. These patterns of utilization have to change. What we are relying on in this model is to take the dollars that we are spending and force them down to provide preventive and primary care without having to increase the total budget overall.
In terms of limitations of the number of plans....I have talked about the issue of economies of scale on administration. I think those are critical. Even in California I would tell you in the 13 counties where we are going to expand managed care, we are going to select one public HMO and one private. Even in Los Angeles where we have l.2 million recipients. That is a financial and administrative issue as much as anything.
I think you also will want a single point of accountability....You will have multiple providers...and competition is maintained even under that model....If you have too many plans chasing too few providers, it becomes hard for them to become cost-effective buyers on your behalf.
Budget predictability is important to you....The sort of system where as soon as individuals are identified as being eligible they can immediately be enrolled in these plans and you can begin paying capitation dollars.... Instead of individuals going around accessing all sorts of care because under federal law we are required to go retroactive 90 days...once you know someone is eligible and they have a Medicaid card, it is best to enroll them in the system right away and not have them on their own trying to access care through expensive avenues.
Consolidating data on utilization and expenditures is critical. You need to know more about where your money is going today....The people in your health care financial analysis unit have been very helpful in providing data, but they have limitations in terms of the systems they have and the way in which they can process and analyze this data. They are doing the best they can, but you need to know a lot more.
I want to see the bulk of the dollars spent on the provision of services. It is a big program. You have a rapidly growing program in this state and for everything I can see it will get much bigger over time. We have made some varying assumptions that have the concurrence of people in the state in terms of how big that is likely to get.
Ms. Johnson distributed Exhibit H to the committee which she illustrated with them by using an overhead projector.
Senator Glomb asked if the AHCCS program included the aged and disabled, and Ms. Johnson responded in the affirmative but pointed out the AHCCS program is for acute care.
Senator Glomb asked if AHCCS clients are mainstreamed with Medicaid patients and other patients.
Ms. Johnson answered, "No. When the AHCCS program started in 1982 there was low interest on the part of the commercial sector to be in this. They moved to facilitate the development of new prepaid health plans to serve just the Title XIX population."
Senator Coffin expressed concern regarding the selection of HMOs. He pointed out not all HMOs are federally qualified and asked if this is an issue since quality care is often provided by nonfederally qualified HMOs.
Ms. Johnson replied most of the federal requirements around the transition of Medicaid programs to managed care are driven by federally qualified HMO status. She indicated there are states that have obtained waivers from the provisions in order to be able to award contracts to state-certified HMOs. A waiver would definitely have to be secured if the state wished to select other than a federally qualified HMO. She added, "I would caution you only because of the experience that occurred in Arizona where plans went belly-up. The problem you run into is the state is left holding the bag. Federal match is also an issue."
Senator Callister asked:
Does this somehow have some implication in terms of our provider-tax waiver application? Would it not change patterns of utilization by hospitals? In terms of what patients went where? As I understand it, Medicaid dollars are a significant component of every hospital's operating revenue. If we carefully concocted that provider-tax vehicle and been able to successfully balance one budget on it and now are attempting to balance a second budget on it...it becomes crucial in my mind that we not do anything that may throw a monkey wrench in the works. I wonder if there are some implications we ought to be cautious of because of that issue?
Ms. Johnson replied:
The provider-tax initiatives are a big issue all over the country because states have balanced their budget on them. There is language in the Budget Reconciliation Act in Washington, D.C., that has serious implications for many states regarding whether or not you can even spend all the money you get because you are going to be constrained to cost. Assuming your program is structured in such a way that you can get and spend all of those dollars, including the federally match....The provider taxes are not inconsistent with managed care. It will be important for you in the short term to have in place contracts with the majority, if not all, of the hospitals unless you are expecting some increase in hospital utilization as a result of the provider tax and as long as utilization is not in any way related to the distribution of the tax....If you have all of the hospitals in the network, it should not prove to be a disruption in the flow of the federal funds and the use of the tax dollars in the system....I do not see it as being something that can't work alongside the managed care initiative.
Senator Callister said it would take willing participation of the same individuals that participated in the provider tax or there will be chaos in the system.
Ms. Johnson said the state would not be looking at implementation of the program prior to 1994. The first year in the biennium would be an issue. It would be a transition that should be looked at carefully in terms of how the relationships between the hospitals and contractors are structured in order to avoid jeopardizing funds. She further commented one of the goals of moving to managed care is to reduce inpatient hospital utilization and inpatient hospital days which is a big cost-containment issue.
Prior to listening to additional testimony from other individuals regarding S.B. 559, Senator Raggio requested committee introduction of the following bill draft requests (BDRs).
BILL DRAFT REQUEST R-2158: Directs Legislative Commission to conduct interim study of overtime worked by state employees and methods of complying with Fair Labor Standards Act.
SENATOR RAWSON MOVED TO INTRODUCE BDR R-2158.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST 22-2172: Authorizes public agencies and nonprofit medical facilities to enter into cooperative agreements to provide health insurance.
SENATOR O'DONNELL MOVED TO INTRODUCE BDR 22-2172.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio returned the gavel to Senator Rawson to continue hearing testimony on S.B. 559.
Mary Ellen McCarthy, Senior Attorney, Nevada Legal Services, wished to testify in opposition to the passage of S.B. 559. She submitted written testimony (Exhibit I - Original on file in the Research Library) that was provided for the record and expressed her concern that in the waning days left in the session there is not enough time to provide adequate attention and analysis to the bill. She also said studies have proven that managed care will not work in the rural areas and the bill proposes to include all of the rural areas in the state.
Senator Rawson drew attention to the fact the senate passed a provider-tax measure that has gone to the assembly for consideration. He said the budget is dependent upon that measure being passed in the assembly so that it can be given to the Governor. He acknowledged there is no provider network and a fee-for-service program will have to be considered for the rural areas. He advised Ms. McCarthy he would give special attention to her written testimony (Exhibit I) to consider the points she has raised.
Henry Soloway, M.D., Associated Pathology Laboratories, spoke in opposition to the passage of S.B. 559. He provided the committee with Exhibit J, a newspaper article from the Las Vegas Review Journal regarding health costs. He said there is a demonstration project in the State of Nevada that has effectively reduced out-patient laboratory costs, and he is concerned the bill as currently proposed will disturb this project that has been recommended as a national model as a means to cut health-care costs. He feels this current program should be incorporated in the bill.
Senator Rawson recessed the meeting at 10:50 a.m.
Senator Raggio reconvened the meeting at 2:10 p.m. and called the committee's attention to Senate Bill (S.B.) 84.
SENATE BILL 84: Makes order for payment of money belonging to school district void if not presented for payment within certain time after issuance.
Senator Raggio explained Amendment No. 982 was introduced by the Assembly Committee on Ways and Means to resolve a conflict with Assembly Bill (A.B.) 96.
ASSEMBLY BILL 96:Repeals duplicate and obsolete provisions concerning funds maintained by school districts.
SENATOR RAWSON MOVED TO CONCUR WITH ASSEMBLY AMENDMENT NO. 982 TO S.B . 84.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio turned the gavel over to Senator Rawson to continue hearing additional testimony on S.B. 559.
Jon L. Sasser, Representing Nevada Legal Services, clarified for the record that Nevada Legal Services does not oppose the passage of S.B. 559. He explained Ms. McCarthy received the bill on the afternoon of June 24, 1993, and did not have a chance to confer with him prior to preparing her testimony (Exhibit I).
Mr. Sasser said Nevada Legal Services does have concerns about any managed care system that could offer positive potential for their clients as well as the potential for harm. He stated Ms. McCarthy accurately reflected on page 3 of Exhibit I her concerns regarding the safeguards they would like to see in the final version of the bill.
Scott M. Craigie, Chief of Staff, Governor's Office, testified the concept of having a sole source and single payor system has some economies of scale. He stated:
There are two issues for us. One is the issue of dollar savings, the other is access. We believe in a managed care system where the volume of business that is done in this state can be used in the marketplace to leverage the best price for good quality service. This not only makes sense for us that must deal with the tax and spend part of the budget but also fits with what is happening at the federal level and the work the [President] Clinton administration is doing.
In terms of access, we have had a couple of areas where we have had difficulty getting coverage for service for Medicaid patients. There are areas around the state where we have had difficulty getting enough physicians to do work for [Aid to Dependent Children] ADC recipients and others. We see a system where a managed care entity would take over and help us with this problem because they would have to find a way to get comprehensive care, and by delivering a certain volume at a price the comprehensive coverage would be a little easier.
We are the fastest growing state in the country and attract a large number of people looking for jobs they cannot find. We have a rapidly growing client population. With the caps system we have had in place with this budget, it has been difficult for us to deliver the full service that should be delivered to the recipients. In that regard we feel some managed care system would be a wise idea and is an issue we should look at.
How you set that system up, especially in a single payor system, is what is at issue here. The controversial and difficult part is in subsection 4 to section 1 of the bill. You need to have an entity large enough to take this business and do it correctly. At the same time you do not want to set up an entity that is totally dependent upon this business. You have to establish an entity that is large enough to handle the business and large enough that if we withdraw that business in another contract cycle we don't end up putting a whole corporation out of business. Somehow it has got to be written and defined in a way that it is an entity that can handle this business. We are looking forward to hearing from others that may have other suggestions on this bill or on how we can head in this direction, because we do have the issue of price and access to deal with.
Senator Callister asked if managed care is such a good idea why the state did not enter into such a program on their own.
Mr. Craigie said one of the major reasons is the provider tax has become a problem for the state in putting together an effective managed care system. This is because to collect the provider taxes from those that are providing this service, there has to be some reasonable opportunity for those who pay the tax to receive some benefit from the Medicaid programs that are enhanced as a result of the tax and the federal match. He pointed out a managed care system by definition restricts the providers a person is directed to, and if this restriction were not imposed there would be no volume for price trade off. The state would end up with a system that would provide no incentive to bring the price down.
Mr. Craigie remarked:
When the Executive Budget was being put together last winter we went all the way up until the early weeks of December without a provider-tax component in the proposed budget. We could not balance the Medicaid portion of that budget. Even with that provider-tax benefit in there we have had to increase the General Fund appropriation in this area of the budget by 35 percent. The growth in this area has been astronomical for us. We took the provider-tax route because we felt we had to.
The main area where we have difficulty with provider tax and a managed care system is in the acute care services, because those are the people we collect this tax from. We are putting together a waiver that focuses on much of the remaining issue.
Senator Callister said he would appreciate having an opportunity to interact with somebody from the Department of Human Resources on the language of the proposed amendment (Exhibit E) to S.B. 559 to accommodate some of the concerns that have been raised today.
Senator Rawson remarked:
I have to make sure the record is straight on this...you need to know one of the state's major providers did not come forward with a plan to do this. I went to the medical school and asked them to help me develop a plan that would accomplish certain things. In the process of that there was an approach made to a major provider to get some of their expertise. That is how a consultant was brought into this. In other words, there was an attempt to go out and find those people that were participating in the marketplace to talk in terms of how some of these service areas could be developed....There have been a lot of numbers run on this before I was even satisfied that we could do anything at all. There is a significant area of underfunding....
In spite of everything that is said as we approach this [measure] in the legislature, the executive branch is recommending a managed care approach to Medicaid. It is not like there hasn't been some discussion in this area both in the health committee and individually. A number of legislators have been involved with this issue for a number of years. It is true it is new in this form in this committee today, but the problem is we are stuck in this session with one aspect of our budget that is going out of control. The executive branch took a bold step to say that we need to go into some managed care as they went forward trying to develop this waiver....I think that is where some help should come in to help develop a program that will work....
Many things have happened quietly this session because of the emphasis on national health care reform. Some of the ideas for this came directly out of the two trips that I made to Washington, D.C., on this subject. It is a time of rapid change, and we are going to have to stress people a little bit to get through some of the concepts while we still have a few days left in this session.
Senator O'Donnell recalled the budget hearings dealing with Medicaid and some comments made by the executive branch that the state was not ready for Medicaid reform to be implemented and the plans were scrapped. He opined managed care will be more expensive for the state than the provider tax and asked if an analysis has been done as to which of the two measures will save the state the most money.
Mr. Craigie replied one of the problems with a managed care system is determining exactly what the price savings would be. He added when an intergovernmental transfer that is a part of the provider-tax system is put together with the federal match it is easy to determine what the fiscal impact will be. The reason the state arrived at the formula of part managed care with the provider tax is to have better experience with how the managed care system will function and what it will produce.
As a result of discussion that was held on the floor of the senate today, Senator Rawson reminded the committee the provider-tax measure is a nonissue and should no longer be discussed. He urged the committee to curtail further discussion regarding this proposition to allow for the time necessary to hear other testimony.
Frances Daugherty, Staff Attorney, Washoe Legal Services, said her office is in favor of the expansion of access to health care in whatever manner is the most feasible in the state at the present time. She stated in reviewing the bill she arrived at some serious concerns she feels should be incorporated into the language of the bill. If this cannot be accomplished, she suggested some direction in drafting the contracts with the provider to insure quality assurance language is drafted into the actual contract.
Senator Rawson interrupted and said the reason a federally qualified HMO was suggested within the language of the bill is due to a federal requirement there be quality assurance.
Continuing, Ms. Daugherty said in reviewing some of the documents relevant to managed care and some documents prepared by HCFA and the General Accounting Office (GAO), she noted there are suggestions that the Medicaid regulations as they stand at the present time can be improved upon by the states. She believed Nevada will be capable of assessing the cost of managed care with regard to fee-for-service because the system will be in place. Her concern is the state does not have in place, and the regulations do not provide sufficient suggestions, how to evaluate equally the quality of care. She said both HCFA and the GAO suggest the states go beyond the regulations and require the provider establish health outcome evaluations. She opined the key to all of managed care is to evaluate the cost savings in light of health outcomes. She said to accomplish this it will be necessary to talk to the recipients and the physicians and obligate the provider to provide this information because she has a concern regarding the capability of the state assessing the quality of the provider in light of the testimony given today by Ms. Johnson.
Ms. Daugherty concluded by saying she supports the passage of S.B. 559 and asked that some additional work be invested to assure the overall quality of the measure.
James L. Wadhams, Representing the Nevada Hospital Association, testified in support of the passage of S.B. 559. He said hospitals are very much involved in managed care and recognize the value of it. He suggested that because of the changes that are occurring at the federal level, the particular technique of raising money outlined in the bill to pay for Medicaid may not be available in the future. He further suggested the legislature and the executive branch take a complete and comprehensive look at the way Medicaid will be funded in the future because he does not believe the concept expressed in this bill is adequate.
Mr. Wadhams said the managed care component is necessary to develop and believed the management information system would be a critical component of that and is an area in which the state is sorely lacking.
Senator Callister asked, "You are saying all of the hospitals in the state are supportive of this measure as written?"
Mr. Wadhams clarified the Nevada Hospital Association is supportive of the concept of looking at managed care for Medicaid. He said to upset the balance at this point would be inappropriate and is something that should be looked at during the next session of the legislature when a management information system is in place, and it has been determined what HCFA and the [United States] Congress will do with the current technique of funding. He believes starting this measure at this time could disrupt the anticipation based upon Department of Human Resources estimates of how it will impact the hospitals and the people of Nevada who purchase services.
Mr. Wadhams remarked:
We do need to look at this but we need to look at it carefully over a period of time. I thought the testimony by the consultant this morning was very compelling and also somewhat distressing that we are so totally lacking in the management information system to either develop or manage this kind of a program.
Senator Callister said one of the alternatives to developing your own management information system is using somebody else's system, and is an argument in favor of adopting a managed care format now to take advantage of privatization of that service.
Mr. Wadhams agrees the private sector and public hospitals are capable of doing a great deal of this work, but it should not eliminate the state's need and obligation to audit that performance so that it can be compared to what is happening.
Senator Callister noted the Nevada Hospital Association is supportive of adopting a managed care model but they do not want to do this as of January 1994. He asked again if this position has been taken by the hospitals he represents.
Mr. Wadhams answered he has been authorized to make that statement but suggested representatives of some of the hospitals may wish to speak regarding this.
Janice C. Pine, Representing St. Mary's Regional Medical Center, spoke in opposition to the passage of S.B. 559. Based on testimony heard today, she believes managed care is a part of the future of the health care delivery system for the State of Nevada and the nation. She concurred with Dr. Daugherty's testimony that trying to solve one person's problems may create problems for somebody else.
In looking at S.B. 559, Ms. Pine has been unable to arrive at an understanding regarding how managed care in this kind of format can avoid impacting the hospital tax. As the bill is written today, even with the amendment, she finds it difficult to support anything that may jeopardize the provider tax.
Senator O'Donnell commented he is concerned if something is not done a catastrophe could occur in the state in terms of the Medicaid population for which the state is responsible. He pointed out the state has no idea what the [United States] Congress will come up with in terms of national health reform.
Ivan R. Ashleman, II, Representing the Lake Mead Hospital Medical Center, said this hospital is not a part of the Nevada Hospital Association and are opposed to the passage of S.B. 559.
Mr. Ashleman declared:
I am going to confine my remarks to only the aspects that deal with the provider tax...and despite the chairman's warning that things that have happened today take the provider tax out of the picture, I must respectfully disagree. I do not believe the people of the State of Nevada would thank this committee or the hospitals for agreeing to a scheme where $54 million in provider tax was passed on to them because the provider tax reimbursement mechanism failed them.
Senator Rawson interrupted and said, "Nobody is talking about passing $54 million worth of provider tax on. You know that is not true."
Mr. Ashleman asserted, "...I do not have any way to know that whatsoever. You are devising a scheme....You have accused me of an untruth...."
Senator Rawson responded:
What has been done today will allow a hospital to make a petition if they have suffered a financial reverse because of a government action. There is not a hospital in the state that has all of the Medicaid patients that they are responsible for...so no hospital is going to pass on $54 million. That just isn't going to happen.
Mr. Ashleman clarified this would not happen by itself but could happen collectively. He remarked:
You can have a deal made under this scheme that has come up at the last minute...that you have got perhaps one or two hospitals engaged in....They will not be passing on but all of the others will and we do not know whether that is going to be a major beneficiary of the provider tax or a minor beneficiary of the provider tax.
Senator Rawson concluded Mr. Ashleman made his point and asked him to continue with further testimony.
Mr. Ashleman continued:
Secondly, there is something done with the provider tax in a disproportionate share distribution mechanism that is not as widely understood....The disproportionate share mechanism allows the State of Nevada to not only compensate hospitals for the patients they have that are related to Medicaid...but also under the disproportionate share formula has a mechanism for partially compensating them for the other poor that the hospitals are not reimbursed for. If we destroy that redistribution scheme by using some other mechanism of managed care, we will then eliminate that part of it and we will have whatever costs are passed through as they used to be....Those will have to be passed through to the other consumers. That cost is also involved in here and is one of the reasons why I say the impact upon the consumers of Nevada on a pass through scheme from this will be very great indeed and is a matter of major magnitude. I do not think it is an answer to say it will only be $53 million or it might be $58 million. I think it is something we need to study. Given our financial schemes for studying these matters...I do not think we are figuring out all of these consequences in the time we have got.
I think managed care has a real future and I think managed care will contribute. Managed care today will impact on the provider tax. It will not be as good for the hospitals or as good for redistribution as our charts show because the managed care the administration is proposing will succeed to some degree in getting patients out of the emergency rooms. Managed care as proposed today will succeed in doing some other things in keeping people out of the hospitals....That will save us some money and will keep the patients out of the very high cost centers of the hospitals. I do not think we will see today the reimbursement we are looking at but we cannot have all of it reallocated.
I am sorry to disagree with a senator I admire very much who has been a leader in this field, but I believe those will be the consequences and will be our problems. I do think we are going to have to do something with more managed care in the future...and I do think the provider tax is going to run out and that will be the time we will have to do it.
Senator Rawson told Mr. Ashleman there were some overstatements in his approach which is the reason for his irritation but conceded Mr. Ashleman understands the plan quite thoroughly. He said there may be suspicion or concern there will be a major reallocation but the loss or the win any hospital would go through was based upon statistical information the major portion of which is likely not to change. He suggested there is always uncertainty but the major portions of this measure will not shift. The issue of cost shifting and noncompensated care is a concern the state has to deal with, Senator Rawson admitted.
Mr. Ashleman remarked, "As sincerely as you indicate the damage would be limited, I just as sincerely believe the damage may be on the magnitude that I have suggested....The efficient way to run this is through one or two hospitals which is where the savings will come from."
William Brezant, Representing Family Health Plan, Incorporated, (FHP), testified FHP is a federally qualified HMO, is licensed in the State of Nevada but operates in Arizona, California, New Mexico, Utah, and Nevada and is in the process of going into Texas and Guam.
Mr. Brezant said he initially signed up today to oppose this legislation but now wants to support it in concept. He said he was opposed to the original legislation before he read the amendment (Exhibit E) which he believed addressed some of the concerns.
Mr. Brezant voiced:
I think this is a very serious change in public policy, and the fact there have been no real discussions with FHP who is the largest Medicare risk contractor in the United States and one of the largest HMOs in the state is disturbing. I think this should have had a more public hearing and process coming this late in the session and having the implications it does with respect to hospitals and the provider tax is of some concern. While we embrace the concept of managed care especially in the privatization of Medicaid...I think the consultant pointed out this morning that it is not risk free and that there are certain costs that have to be anticipated in terms of the management of it. I believe she testified in light of the provider tax all hospitals would have to participate so there would be no economic gain achieved through a preferred-provider relationship between an HMO and a single hospital in either the southern or northern part of the state. I think that creates some problems.
With respect to Senator O'Donnell's concern there may be problems if we do not do something now, Mr. Craigie said that a waiver application has been prepared; and it is anticipated that will be sent back to Washington, D.C., so that you could seek the Medicaid waiver.
I think this legislation if we do come back to it and we do not process it which I hope we will not in its present form...that we address some technical issues. There are technical issues with respect to subsection 4 of section 1 of the bill which has no provision for what type of [Request for Proposal] RFP process would be required. We have a 5-year pilot project that involves the entire Medicaid population. We are not going to be able to measure how managed care does compared to one organization providing that care to another. There has got to be multiple organizations so you can determine quality.
Senator Rawson commented Mr. Brezant is misinformed on that issue because section 1115 of the Social Security Act requires a set population as a control group that has to be studied by an outside group.
Mr. Brezant responded:
When we spend almost the entire session talking about the selection process and the need for competition on managed care organizations for the provision of workmen's compensation services, we might contemplate that some of the same concerns might apply here. I believe those kinds of issues ought to be discussed in an open and full hearing with administration officials present....
Dwight Hansen, Medicaid Director, Blue Cross/Blue Shield of Nevada, said his organization was formed over 20 years ago to administer the Medicaid program in Nevada and has maintained the contracts since that time. He commented the amendment (Exhibit E) to S.B. 559 has alleviated some of the concerns he had about not having enough people available to bid on a managed care contract.
Mr. Hansen remarked:
The only way a private partnership can save any money is with competition between plans. Blue Cross/Blue Shield of Nevada employs 70 people directly on the Medicaid program now, and they have a tremendous experience with the program obtained over the last 23 years. But we are also concerned with the future of Medicaid as we watch caseloads almost doubling in the last 4 years....When the Governor was forced to make cuts in all programs we worked with the Welfare Division to cut our contract price and develop electronic billing for providers. Over the last 18 months this has saved the state almost $1 million. We will be offering electronic billing to doctors and hospitals before the end of the year.
The reason I bring up the dedication of our employees and the willingness to invest our own efforts and money in electronic billing is to show that despite this experience, this bill was originally written so restrictive, and is still restrictive, that Blue Cross and others like us may not be able to bid on the contract that will be offered. We do believe revisions are necessary to include more competitors in any bidding....
Regarding the AHCCS program. I attended a seminar and the speaker was the director of this program in Arizona who said it takes a lot of money to start this program and a good management information system in order to carry out a managed care program...and you need a lot of start-up time. I do not think we have enough time... prior to the implementation of this bill.
William Bannen, M.D., Medical Director, Blue Cross/Blue Shield of Nevada, and Medical Director, Health Maintenance Organization of Nevada, testified the shortest cut and maximum savings would come from a single-payor HMO-managed care system. He noted the original bill only allowed for one HMO provider in a geographic area. He pointed out allowing two providers in a geographic area that are HMO competitors for the maximum savings is a consideration that could be taken under advisement. This would allow for individuals to choose an HMO and the primary care physician inside the HMO.
Senator Rawson asked how many HMOs a city with the population of Reno would require.
Dr. Bannen replied at least two would be needed.
Dr. Bannen expressed concern that the state may be excluding HMOs that would like to be included but are not federally qualified. He said the Health Maintenance Organization of Nevada (HMO Nevada) is doing business as a subsidiary of HMO Colorado which is a major component with $16.5 million in assets. HMO Nevada was approved in December 1992 but are not yet federally qualified in this state due to a 2-year processing period. He stressed they do not want to be excluded from consideration because their Nevada subsidiary is not yet financially solvent and federally qualified since their parent company located in Colorado is.
Senator Rawson asked Dr. Bannen if his organizations would support the passage of S.B. 559 if they could bid for contracts under the measure.
Dr. Bannen said they were prepared to support the bill but want to be included in the bidding process. He reiterated Blue Cross/Blue Shield of Nevada are experienced in the Medicaid program and should be eligible to bid on any contract regarding a coordinated care medical system for persons covered by the State of Nevada's Medicaid program.
Mr. Hansen commented Blue Cross/Blue Shield of Nevada would not object to additional competitors being added to the system but said additional study should be done on state managed care programs.
Lawrence P. Matheis, Representing the Nevada State Medical Association, stated they do support some concepts of S.B. 559 of looking at managed care options as a way of delivering more services within Medicaid, and expanding the access to care of Medicaid recipients while making use of the resources in the state. They also agree there needs to be an incorporation of the medical school's activities into any Medicaid system in this state.
To the degree they understood the Welfare Division's abortive attempt at a request for proposals for a managed care system to do Medicaid, Mr. Matheis said it was inappropriate for the Welfare Division to exclude the medical school's activities from participation. He believed this was done inadvertently or without proper advice.
Mr. Matheis further commented:
The problem is with the language of S.B. 559 and whether or not it accomplished the various ends that I think there is general agreement on. I understand this to say that the Department of Human Resources will contract for a 5-year guaranteed Medicaid contract with one or two HMOs to provide all Medicaid services....There will be created a nonprofit organization of some sort with the purpose of researching how that will work. To have any contract, the HMO must have some relationship with the School of Medicine which guarantees the availability of the Medicaid population for training and education activities. That is how I understand S.B. 559. The amendments move in the right direction of addressing areas of concern.
The bill has confusion about what a payor is. It talks about it being a single payor system. Medicaid is a single payor....It is a single contract provider. The way the bill was originally drafted only one entity in the state would be eligible to have the contract. The revision makes two and possibly three eligible....
Given the track record of the Welfare Division, it would be wise to contract out to someone who can structure a managed care arrangement. The management of the [Aid to Families with Dependent Children] AFDC portion of Medicaid can be done with a third party administrator. It does not have to be an HMO....
The other issue is the rural areas. I think if they are not exempted it is simply asking more than managed care organizations in this state have yet been able to do to assure delivery of services in the rural parts of Nevada. I do not see any urgency to include all parts of the state. There is going to have to be a request for a waiver...a lot of waivers. One of those is probably going to be it can't be a single state option that you are going to get a multiple availability, so the rural exemption is probably going to have to be requested anyhow....
Rather than limiting it to only federally qualified HMOs I would suggest you consider managed care organizations or some other language that gives more flexibility. I would suggest language that directs the Department of Human Resources to develop an RFP which would require the medical school's participation and what that entails. Language that would make it clear what the expectations are of all of the players....The problem which I think originated in the medical school suddenly being excluded under an RFP being promulgated by the Department of Human Resources, because they freely interpreted their mandate to be able to do that, isn't addressed here because you still would leave a lot of areas open. You are talking about a 5-year project which I would assume is a 5-year contract....
Senator Rawson said as he understands the process, if this language or some modified language does not pass out of this legislative session the budget will be closed and the state can expect the Department of Human Resources to develop a managed care model during the next 2 years. They will do that without any legislative direction.
Mr. Matheis stressed the legislature should provide direction
on the development of a managed care model. He commented if the legislature is uncomfortable with the direction the Department of Human Resources has tentatively taken on the issue of managed care, they should provide direction. He remarked:
You have been vague in the areas they seem to need the most direction and specific in the areas where I am not sure it gives the flexibility that is desirable. The specificity should be who the managed care outfit will be. It is pinned in to where only a couple of players can really be that outfit.
Senator Rawson said Mr. Matheis did not speak about any radical changes from what the concept of S.B. 559 is. He said if the bill is not defined well enough to state what is needed, it should be better defined. Senator Rawson said the amendment (Exhibit E) does provide for more than one entity in an area, and in whatever service area the entity is located there must be sufficient resources available.
Mr. Matheis concluded the Nevada State Medical Association has to oppose the passage of S.B. 559 as currently written. He said there should not be a limitation to only federally qualified HMOs, and suggested there should be the maximum flexibility for the department to be able to find the best arrangement to deliver services while utilizing the medical school to expand medical services. He noted the Department of Human Resources has made it very clear they are going to managed care in Medicaid, but if they follow the route they are on right now they will exclude some very important resources that are available to them in this state.
David R. Brandsness, Chief Executive Officer, University Medical Center of Southern Nevada, testified:
I think there are a couple of issues that need to be addressed. They may be conceptual....We have to decide whether this is going to be a monopoly...or you people have to decide and ultimately the people...an oligopoly or a free competition or someplace in between. I see great dangers in creating a monopoly and I speak from the hospital's standpoint. Anybody who has dealt with Medicare regulations or Medicaid regulations know there is a large range where this rubberband expands and contracts and what the reimbursement is. It is not a clear-cut decision. I thought the competition, and I am always much more comfortable with competition, was a better choice. I understand there may be an amendment to this bill that allows for a certain degree of competition, but please do not create a monopoly.
I think there has to be some guidelines on the reimbursement and having more experience than probably anybody in this room with Medicaid reimbursement I think there are some problems with relying on their formula.
As to putting this into the medical school....I probably have as much experience as anybody...in dealing with the medical school and their ability to meet the demands of our growing population. I appreciate the qualities of the individuals within the medical school, but they have not always been able to respond. If it had not been for University Medical Center supplementing funds, the Medicaid population in southern Nevada would not have been served.
Senator Rawson closed the hearing on S.B. 559. He stated it is his intention to consider the remarks heard today, both pro and con, to consider potential amendments to come before the committee for discussion.
Senator Rawson adjourned the meeting at 4:55 p.m.
RESPECTFULLY SUBMITTED:
Marion Entrekin,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
June 25, 1993
Page 1
Senate Committee on Finance