MINUTES OF THE

      SENATE COMMITTEE ON HUMAN RESOURCES AND FACILITIES

 

      Sixty-seventh Session

      January 27, 1993

 

 

 

The Senate Committee on Human Resources and Facilities was called to order by Chairman Raymond D. Rawson, at 1:30 p.m., on Wednesday, January 27, 1993, in Room 226 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

Senator Raymond D. Rawson, Chairman

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

Senator Diana M. Glomb

Senator Lori L. Brown

 

COMMITTEE MEMBERS ABSENT:

 

Senator O'Donnell

Senator Townsend

 

GUEST LEGISLATORS PRESENT:

 

None

 

STAFF MEMBERS PRESENT:

 

Pepper Sturm, Research Analyst

Judy Alexander, Committee Secretary

Denise Pinnock, Commerce and Labor

 

OTHERS PRESENT:

 

L. Timothy Terry, Director Medicaid Fraud Control Unit, Senior Deputy    Attorney General

Gary L. Stagliano, Chief of Investigation, State of Nevada

Patricia M. Jarman, Executive Director, Commission for Hospital        Patients, State of Nevada

 

Chairman Rawson, introduced Mr. Timothy Terry, Director Medicaid Fraud Control Unit.  He began by giving a brief history of the Medicaid Fraud Control Unit program.  In 1977 Congress enacted the Medicare and Medicaid Anti-Fraud and Abuse Amendments to the Social Security Act and the cornerstone of this amendment was the creation of a state Medicaid Fraud Control Unit. The unit was to be made up of specialized units or teams of professionals for investigation and prosecution of provider fraud and eliminate patient abuse and neglect in long term  facilities.

 

Congress funded the program at 90 percent for the first 3 years and thereafter at 75 percent.  In 1991, legislation in Nevada was passed to create a unit in our state.  Certification was granted in late September of 1991 by the Department of Health and Human Services and by October 14, 1991, the unit was officially opened.

 

Mr. Terry explained Jurisdiction is broken down into four primary areas on page 2 (Exhibit C).  Under category (1), Provider Fraud, there are approximately 47 different provider types that are authorized under the Medicaid program presently with 4,000 providers.  Category (2) Patient Abuse & Neglect and category (3) Misappropriation Of Patient Trust Funds allows for investigation and prosecution of violations in these areas at facilities receiving funds under the program.  Fraud In The Administration Of The Program, is the last category.

 

Chairman Rawson asked if all the investigation is directed at the providers, including cases of patient abuse or neglect.  Mr. Terry responded that in those cases nursing personnel and administrative level personnel are looked at, not physicians. 

 

Chairman Rawson questioned if the unit has the authority to investigate any patients that abuse the system by improperly stating their income; fraud from the patient's standpoint. Terry explained that since the Medicaid Fraud Control Unit is federally funded they cannot investigate recipient fraud.  He introduced  Mr. Gary Stagliano, Chief of Investigation, Nevada Medicaid Department, whose department does handle recipient fraud and advised Mr. Stagliano would address that topic later.

 

Senator Glomb asked if they investigate patients that are physically abused and/or neglected.  Mr. Terry answered they do, but a comprehensive patient abuse package is needed.  He further added that Assembly Bill 73 was introduced and heard in Judiciary on Monday January 25, 1993, that would consolidate and streamline the process of reporting and investigating.

 

 

ASSEMBLY BILL 73:Provides for reporting and punishment of abuse of patients.

 

He explained there are different standards of reporting and investigation requirements for elders, children and Mental Hygiene and Mental Retardation (MHMR).  

 

Senator Glomb questioned if there is any other recourse than the Nevada State Ombudsman.  Mr. Terry advised that you can report it to local law enforcement, Department of Aging Services, the Bureau of Licensure and Certification; and to the Medicaid Fraud Control Unit, but added they can only prosecute an allegation of patient abuse and neglect for a patient between the ages of 18 and 60.

 

Mr. Terry added that in addition to the ability to criminally prosecute they have a stringent Civil Monetary Penalty Law (CMPL) that allows for a $5,000 penalty per deceptive act, recovery to the state of three times the amount unlawfully obtained, recovery of the cost of investigation and interest allowance.  Referring to page 3 (Exhibit C) cases opened were broken down in the provider area.

 

Chairman Rawson asked to please define what kind of fraud that they encounter.  Mr. Terry  responded that billing for services never rendered, up coding of a claim, and billing for an extended examination are the most common.

 

Referring to (Exhibit C) page 3, Chairman Rawson asked if the first category under Breakdown of Provider Fraud Cases reflected 16 different physicians and to explain fraud in the Pharmacies category.  Mr. Terry affirmed yes there were 16 different physicians.  Fraud in the pharmacies ranged from giving the patient less than what has been prescribed and billing for the full amount; generic substitution for a name brand; buying in quantity at a reduced cost and billing as if bought in small quantity at higher rates.

 

Mr. Terry noted there are three investigators in the unit and each can handle three to five investigations at a time completing one investigation every six months.  He further stated that an investigator has been working for three months on one investigation.

 

Chairman Rawson asked Mr. Terry to please define the cases shown in the category, No Merit and Dismissal.  Mr. Terry explained this category reflected allegations of abuse and neglect such as cold food and misplaced clothing, misplaced property.

 

Mr. Terry called attention to the breakdown of financial recoveries from 3 cases that have been resolved to date page 5, (Exhibit C stating these cases reflect billing of services from a physician, while the physician vacationed in Florida.  The physican regularly billed for one hour appointments that only took ten minutes.    

 

Referring to (Exhibit C), page 5, he explained that the federal government is entitled to the recovery of restitution and 90 percent of the investigative costs since this is a federal participation program.  The federal government has given their unit permission to keep the federal portion of the recovered restitution and to use it as the state matching portion. It was used last year to increase staffing.  Fines and penalties return directly back to the Medicaid program.

 

Chairman Rawson questioned if physicians are excluded or penalized from the program following conviction.  Mr. Terry responded that exclusion from the program depends upon the conviction.

 

Senator Coffin asked, "Is this data shared within our state network so that claims submitted through other state agencies may be audited."  Mr. Terry responded a memo was sent to all state agencies and eight agencies requested the list.

 

Senator Coffin wondered if the physicians could be excluded through administrative means or is statutory authority needed to exclude them from participating.  Mr. Terry advised, when there is a criminal conviction the federal government automatically excludes that individual from Medicaid and Medicare or any federally financed program.  Mr. Terry continued because of a clause in the Medicaid provider contract which allows for the termination of the contract on 30 days notice.  They could delete anyone from the program. 

 

Senator Coffin asked why do they not go to jail.  Mr. Terry stated the tendency over the years is to not impose jail sentences for white collar crime.  He recommended strengthening the program Surveillance and Utilization Review Systems (SURS) which is staffed by two people who do not have a lot of resources. SURS, the primary source of referrals to the Medicaid Fraud Control Unit functions by detecting aberrancies in providers patterns in billing practices.  

 

Senator Neal asked if the Medicaid Fraud Control Unit was currently investigating Humana Hospital for fraud and referred to a report prepared by the inspector general's office that showed billings to the government for liquor, golfing fees and dresses.  Mr. Terry responded that the unit had not received a referral on this case.  The unit must have a referral of an allegation of illegal conduct before opening the investigation.

 

Chairman Rawson asked Mr. Terry to give the committee a report from time to time and Mr. Terry advised that a semi-annual report is provided to the Interim Finance Committee.

 

Mr. Gary L. Stagliano, introduced himself as Chief of Investigation and Recovery Services for the Welfare Division and is responsible for recipient fraud and abuse.  He advised, at the present time there are over 250 investigations a month and total amount recovered last year  was $150 million as a result of overpaid dollars to recipients.

 

Chairman Rawson introduced Patricia Jarman, Executive Director for the Commission of Hospital Patients, Department of Insurance, located in Las Vegas.  Ms. Jarman began her presentation (Exhibit D) following the summary on pages 1,2 and 3 and advised this is a statewide position.  (Exhibit D is on file in the Research Library.)

The commission was created in 1991 because Nevada had the highest health care cost in the nation. The program is funded by an assessment tax levied on the hospital inpatient days. The commission is staffed by her and one Management Assistant and receives referrals from  anyone such as hospital administrators, doctors, ambulance drivers, etc.

 

A.B. 577 was later codified to Nevada Revised Statute (NRS) 679B.500 which gave this very little authority to go after the hospitals when they discover a violation of chapter 439B of (NRS) or chapter 449 (NRS) which are the laws that governs hospital regulations .

 

ASSEMBLY BILL 577

OF THE SIXTY-SIXTH SESSION:   Makes various changes relating

            to provision and cost of health care.

 

When necessary the Director of Human Resources drafts a emergency regulation.  There is a fine up to $5,000 for every violation.

 

Chairman Rawson asked if complaints are mostly from individual patients.  Ms. Jarman responded they were because of the confusion caused by multiple billings.  The patient assumes the hospital bill is all inclusive including doctor, radiology and so forth. 

 

Chairman Rawson asked if they were seeing mistakes, oversights, or premeditated patterns.  Ms. Jarman responded in the 435 cases in 10 months, no one hospital had shown a pattern.

The mistakes appeared to be human input error. 

 

Chairman Rawson asked what the average length of time to resolve a complaint was.  Ms. Jarman advised a minimum of 30 days because the law allows hospitals 21 working days turnaround. 

 

Senator Brown, inquired if there was an investigation fee charged to the hospital when a mistake is found similar to the fraud investigation.  Ms. Jarman answered no, but stated there is a law in Florida, if the hospital is found to be in error on an overcharge of a hospital bill, the patient receives a cash refund up to $500 and the bill must be corrected.  She stated the bureaucratic structure in Nevada hospitals prevents the hospital from doing anything.

 

Senator Neal asked if she had additional staff and the powers to go in and make demands rather than ask for cooperation?  Ms. Jarman responsed she thinks about that every day.  She advised $537,000 is a lot for one person to recover but it is a mere drop in the bucket of what more staff could recover.

 

Senator Neal asked were there any bills being presented to the legislation in their behalf?  Ms. Jarman answered no and the only thing being done is through the Department of Human Resources and need concurrent laws to extend chapter 439 (NRS) and chapter 449 (NRS) under chapter 679B.500 (NRS) which would give her the power that the Human Resources Department does now.

 

Senator Neal stated that her office could become the ideal situation to operate a cost containment commission for hospitals.  Ms. Jarman acknowledged they were in contact with the bills on a day to day basis and see what was being submitted.  She pointed out no one has access to the information of what the markup was, how much they have paid and how much was charged.  Hospitals are required to submit a charge-masterlist of charges to the patients to her department.  As long as charges to the patients are no more than what the State of Nevada allows, that is the only guide she has to go by.

  

Senator Coffin asked if there was any indication the markup on products, provided to the patients at the hospitals, differed between the public and private hospitals.  Ms. Jarman responded no and advised that markup is between 80 percent and 750 percent and on some items as much as 2165 percent. 

 

Senator Coffin questioned if there was a difference between the publicly operated hospital and the stockholder operated hospital. Ms. Jarman answered no.

 

Chairman Rawson adjourned the meeting at 2:40 PM.

 

 

 

                  RESPECTFULLY SUBMITTED:

 

 

 

                                          

                  Judy Alexander

                  Committee Secretary

 

APPROVED BY:

 

 

 

 

                                    

Senator Raymond D. Rawson, Chairman

 

 

DATE:                              

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Senate Committee on Human Resources and Facilities

January 27,1993

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