MINUTES OF THE
SENATE COMMITTEE ON HUMAN RESOURCES AND FACILITIES
Sixty-seventh Session
March 17, 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, March 17, 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 William R. O'Donnell, Vice Chairman
Senator Randolph J. Townsend
Senator Joseph M. Neal, Jr.
Senator Bob Coffin
Senator Diana M. Glomb
Senator Lori L. Brown
STAFF MEMBERS PRESENT:
Pepper Sturm, Research Analyst
Susan Henson, Committee Secretary
Judy Alexander, Committee Secretary
Melanie Rosenberg, Senate Attache
OTHERS PRESENT:
Jerry Griepentrog-Carlin, Director, Nevada Department of Human Resources
Christopher Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources
Jerry Ash, President, Nevada Hospital Association
Chairman Rawson opened the hearing and the first order of business was introduction of bill draft requests (BDRs).
BDR 40-482:Allows any hospital to establish area for detention and examination of persons alleged to be mentally ill.
SENATOR GLOMB MOVED TO INTRODUCE BDR 4O-482.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS COFFIN AND O'DONNELL WERE ABSENT FOR THE VOTE.)
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BDR 40-688:Authorize certification of drug treatment programs that are not funded by the state but seek to comply with federal requirements.
SENATOR TOWNSEND MOVED TO INTRODUCE BDR 40-688.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE.)
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BDR 34-763:Provide for binding arbitration of dispute concerning recommended suspension or revocation of license by state board of education.
SENATOR TOWNSEND MOVED TO INTRODUCE BDR 34-763.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE.)
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BDR 34-552:Change name of University of Nevada System to University and Community College System of Nevada.
SENATOR NEAL MOVED TO INTRODUCE BDR 34-552.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE.)
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Chairman Rawson opened the work session on Senate Bill (S.B.) 59.
SENATE BILL 59: Makes certain changes regarding judicial review of request from minor seeking abortion.
Chairman Rawson presented proposed amendments to S.B. 59 (Exhibit C) which he felt would clarify a host of issues dealing with parents' responsibility for their children. He emphasized, if permission is granted for a 15-year old to have an abortion, the physician should treat her as an adult and inform her of the potential risks, to allow her to make an informed decision. This is not meant to be a scare tactic to prevent the abortion, but to allow the physician to work with one standard.
Chairman Rawson referred to the proposed amendment of Nevada Revised Statutes (NRS) 442.2555, on page 3 (Exhibit C). The change takes away the requirement that a young woman must access the court to file the appeal. It allows the appeal to go on automatically. The clerk of the court transmits the record to the supreme court under seal, thereby maintaining confidentiality.
Chairman Rawson called for discussion regarding the proposed amendments. Senator Brown pointed out the bill has no fiscal note. She stated the proposed amendment calls for an automatic appeal to the supreme court, and the bypass procedure, which requires court filings, although without cost to the young woman, would create a fiscal impact.
Senator Coffin suggested informing young people of the bypass procedure, perhaps through the schools. A discussion ensued between Senator Coffin and Chairman Rawson about distribution of the information to the schools, making it accessible to all students, and adding it to the sex education curriculum. Senator Coffin pointed out currently there is a prohibition against students receiving sex education, which would have to be removed. Chairman Rawson suggested an informed consent document, outlining the bypass procedure, be given to every student at some level in school. This document would require a signature by the parent and be returned to the school. In addition, he suggested adding a requirement that a pamphlet be placed in every school.
Senator Glomb asked for further clarification. Chairman Rawson briefly outlined his understanding of the educational pamphlet.
Senator Coffin commented the pamphlet is not a substitute for sex education, but rather to inform young people about the consequences of pregnancy, and the available remedies for those unable to communicate with their parents. The alternative judicial bypass procedure would be enumerated in the pamphlet.
After listening to the discussion, Senator Neal commented the bill might once again become unconstitutional. It was his understanding a preamble states the purpose of what that legislation is supposed to be about. He emphasized he could accept charging the judicial system with the responsibility of developing a system of procedures to review the requests, and thus allowing speedy access to the process. However, he felt the remaining sections in the preamble would be challenged.
Chairman Rawson agreed the committee would not be serving any purpose if the amendments caused the bill to be unconstitutional. He pointed out the attorney general gave an opinion the bill contained the basic ingredients necessary to be constitutional. He suggested the committee attempt to make this a better bill, without challenging the basic issues. Chairman Rawson pointed out those areas that received criticism and needed to be addressed are the judicial process and confidentiality of the young woman.
Chairman Rawson suggested amending NRS 442.2555. The purpose is not to deny the abortion, but to streamline the procedure so as not to create unnecessary delays.
SENATOR NEAL MOVED TO AMEND NRS 442.2555, PAGE 2, LINES 2, AND 3 (AND PAGE 2, LINES 42 AND 43), OF THE BILL TO SAY THAT IN THE ABSENCE OF AN ORDER, AUTHORIZATION IS DEEMED TO BE DENIED AND AN AUTOMATIC APPEAL IS ENTERED. THE CLERK SHALL TRANSMIT THE RECORD TO THE SUPREME COURT UNDER SEAL.
SENATOR O'DONNELL SECONDED THE MOTION.
Chairman Rawson called for further discussion.
Senator Brown said it was her understanding the purpose of the amendment was to streamline the process. The language, without the amendment, says if there is no order, permission is deemed granted, and the young woman moves on to the choice she has made. The amended language states she must continue to go through the process, which in essence stalls the process.
Chairman Rawson pointed out the current language states the court shall issue an order authorizing or denying the abortion within 1 judicial day, and if the court does not enter an order within the prescribed time, authorization shall be granted. The young woman could receive authorization without a written order to take to the doctor. Chairman Rawson stressed this is not an attempt to make the procedure more difficult, but rather to leave a paper trail so there is no contestable issue. Senator Brown suggested requiring the clerk of the court to notify the young woman that the procedure has been approved, if, after the 2 days, the judge does not notify the clerk to the contrary.
Senator Rawson pointed out if paper is generated, confidentiality is lost, and extra procedures are put in the way. He maintained by having some default mechanisms in place, the process is streamlined. The new language would state, ". . . in the absence of an order, authorization is deemed to be denied and an automatic appeal is entered."
Senator Brown questioned how this would maintain the confidentiality of the young woman as the appellate process will cause the young woman's name to be exposed to more individuals.
Chairman Rawson suggested charging the judiciary system with simplifying this process.
Senator Coffin pointed out the amendment is a direct reversal of what the attorney general drafted. The amendment takes it from "approved" to "denied." He asked how the young woman would know of the denial.
Further discussions continued among the committee members as to the exact meaning and wording of the amendment.
Chairman Rawson processed the bill.
THE MOTION CARRIED. (SENATORS COFFIN, TOWNSEND AND BROWN VOTED NO.)
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Chairman Rawson commenced discussion regarding an amendment whereby the judicial system is asked to assume the responsibility for developing the procedures to review requests.
Senator Coffin suggested adding criminal penalties against disclosure, to help safeguard the young woman's identity.
Chairman Rawson suggested charging the judicial system with developing the procedures which would guaranty confidentiality and ascribe penalties for damage to a person. Senator Coffin stated he wanted it in the statute, and suggested the penalty be a misdemeanor at one stage, and a gross misdemeanor at the second stage, depending on the degree of information revealed. The discussion continued among committee members clarifying the amendment language.
Senator Neal moved to amend the proposed preamble to read:
THE JUDICIAL SYSTEM IS ASKED TO ASSUME THE RESPONSIBILITY OF DEVELOPING A SYSTEM OF PROCEDURES TO REVIEW THESE REQUESTS, WHICH ALLOWS FOR SPEEDY ACCESS TO THE PROCESS WITHIN THE TIME LIMITS SET WITHIN CURRENT LANGUAGE IN STATUTE AND BY NEW LANGUAGE IN THE BILL. THE SYSTEM MUST MAINTAIN AN EFFECTIVE METHOD OF SAFEGUARDING THE WOMAN'S IDENTITY, WHILE ALSO ADDRESSING POTENTIAL BARRIERS THAT MIGHT BE ENCOUNTERED BY PERSONS UNFAMILIAR WITH THE JUDICIAL SYSTEM. A PRECAUTION SHALL BE ADDED TO SAFEGUARD THE WOMAN'S IDENTITY. THERE ARE STATISTICAL RECORDS THAT CAN BE COLLECTED AND ADD VIOLATIONS OR PENALTIES IF THE PRINCIPLES ARE VIOLATED.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Brown stressed the bill needs a fiscal note. Chairman Rawson explained when the bill is rewritten he will ask for an assessment of any fiscal note.
Chairman Rawson called for further amendments before considering the bill in total.
Senator Brown had some reservations about the language, "if the abortion is in her best interest. . ." She feels it makes the bill unworkable. Chairman Rawson asked if the senator was suggesting other language.
Chairman Rawson reviewed a case which was appealed to the Ninth Circuit Court in 1985, Glick, et al. v. McKay, et al. In this case, "The court proposed judgment pending the decision of the U.S. Supreme Court in other related cases. In upholding the lower court, Justices Goodwin, Brunetti, and Stotler, of the Ninth Circuit Court, held that the Nevada statutes fail to satisfy the criteria for a judicial bypass procedure, which was set forth by United States Supreme Court in Ohio v. Akron Center for Reproductive Health, 110 S. Ct. 2972 (1990) (Akron II). The necessary constitutional criteria are: (1) the procedure must allow the minor to show that she possesses the maturity and information to make her abortion decision in consultation with her physician, without regard to her parents' wishes; (2) the procedure must allow the minor to show that even if she cannot make the abortion decision by herself, the desired abortion would be in her best interests, (3) the procedure must insure the minor's anonymity, and (4) the court's must conduct a bypass procedure with expediency to allow the minor an effective opportunity to obtain the abortion."
SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 59.
SENATOR O'DONNELL SECONDED THE MOTION.
Chairman Rawson called for discussion. Senator Coffin stated he had further proposals to make.
Senator Neal withdrew his motion to amend and do pass S.B. 59.
Senator Coffin expressed his concerns about the young women living in rural areas and questioned if something could be done to solve the distance problem, such as allowing for court filings away from the county seat, or allowing the filing to be done by mail, rather than making an appearance. Chairman Rawson thought it best for the young girl to talk to the judge and have the personal contact.
Senator Coffin worried about indigent young women, and wondered if the state would be willing to pay for the abortion.
SENATOR COFFIN MOVED TO AMEND THE STATE BE OBLIGATED TO PAY FOR AN ABORTION SHOULD IT BE SO DEEMED BY THE JUDICIAL SYSTEM OF THE STATE THAT THE ABORTION IS MANDATORY.
Chairman Rawson asked if this amendment would apply to any case, or would it be applicable only to indigent young women.
Senator Coffin withdrew his motion.
THE CORRECTED MOTION SHALL READ: THE STATE SHALL BE OBLIGATED TO PAY FOR THE BIRTH OF THE CHILD SHOULD IT BE SO DEEMED BY THE JUDICIAL SYSTEM OF THE STATE THAT THE ABORTION IS MANDATORY.
Further discussion ensued among the committee members. Senator O'Donnell stressed this bill deals only with parental notification, not consent.
Senator Coffin withdrew his motion.
THE MOTION WAS AMENDED TO READ: IF A PERSON HAS BEEN DENIED THE ABILITY TO HAVE AN ABORTION, WITHOUT PARENTAL NOTIFICATION, BE ALLOWED TO HAVE THE BIRTH OF THE CHILD PAID FOR BY THE STATE.
SENATOR NEAL SECONDED THE MOTION.
Discussion ensued as to whether this amendment is for an indigent young woman, or any young woman. Chairman Rawson pointed out this amendment could obligate the state to several million dollars.
Senator Glomb asked if the parents are notified, how is the doctor to know they are notified. The committee members discussed this in further detail. Notification by the doctor can be done by a telephone call, or a registered letter to the parents.
Senator Coffin explained his proposed amendment, citing an example of a young woman who has gone through the judicial system, reluctant to talk to her parents from the beginning, and is now required by the district court to carry it on to the supreme court. The supreme court acts and decides the parents must be notified. If the young woman has the child, the state should pay for the birth of that child.
THE MOTION CARRIED. (SENATOR RAWSON VOTED NO.)
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Senator Glomb questioned the amendment regarding NRS 442.2555. She suggested this amendment is in conflict with NRS 442.255.
SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 59.
SENATOR O'DONNELL SECONDED THE MOTION.
The Chairman called for further discussion.
Senator Coffin questioned if the committee had adopted a comprehensive educational program.
SENATOR COFFIN MOVED TO AMEND THAT THE BILL CONTAIN LANGUAGE TO PROVIDE FOR INFORMATION TO BE AVAILABLE IN CENTRAL LOCATIONS IN CAMPUSES FROM MIDDLE OR JUNIOR HIGH SCHOOL UP TO HIGH SCHOOL LEVEL, TO BE MADE AVAILABLE TO ALL STUDENTS, MALE AND FEMALE, ABOUT THE JUDICIAL BYPASS PROCESS, INCLUDING A GENERAL STATEMENT ABOUT THE IMPORTANCE OF INFORMING PARENTS OF ALL DECISIONS MADE REGARDING PERSONAL HEALTH AS WELL AS THE IMPORTANCE OF ABSTINENCE.
SENATOR O'DONNELL SECONDED THE MOTION.
Senator Neal withdrew his motion to amend and do pass S.B. 59.
Senator O'Donnell suggested the pamphlet contain two things, (1) the requirement of parental notification in case of pregnancy; and (2) the judicial review and bypass, and the procedure by which an individual may process it through the court system.
Senator Glomb asked if the pamphlet would say the parents have to be notified if the young person is pregnant. Chairman Rawson indicated wording in the pamphlet would follow the law. The law states parents, guardians, or whoever is responsible for the minor, must to be informed before the abortion.
Senator Brown felt it should be a requirement that the pamphlet be given to every child who enters junior high school, to all children being home schooled, and all children in private schools.
Chairman Rawson pointed out the pamphlet would describe the options for young persons, and would follow the law.
Senator Glomb wondered about informing parents of the pregnancy. The Senator stated she did not see where the law says a parent has to be told if a child is pregnant, only if a child is seeking an abortion. Chairman Rawson agreed the law only addresses the abortion.
Senator Brown asked where the pamphlet would be made available for home school children. Chairman Rawson replied it would only be available for public schools.
Chairman Rawson processed the motion.
THE MOTION CARRIED. (SENATOR BROWN VOTED NO.)
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Senator Glomb called for input from the committee members. She feels there is a conflict as the law requires informing the parents about an abortion, but does not speak to notifying parents the parents about a pregnancy. Chairman Rawson reiterated that is another issue and not dealt with in this law and urged the committee to deal with the issue as cleanly as possible. He suggested the committee pursue this new issue through a bill draft request.
SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 59.
SENATOR O'DONNELL SECONDED THE MOTION.
Chairman Rawson called for further discussion.
Senator Brown again expressed concern about the vague language in the bill regarding the young woman's best interest, and the judge who might be anti-choice. The senator stated she sees notification as affecting somebody's right to choose in practice, not in the way it is written.
Chairman Rawson noted for the record additional written testimony (Exhibit D).
THE MOTION CARRIED. (SENATORS TOWNSEND, GLOMB, AND BROWN VOTED NO.)
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Chairman Rawson introduced Jerry Griepentrog-Carlin, Director, Nevada Department of Human Resources (DHR), who spoke on health care costs. Mr. Griepentrog-Carlin presented an overview of some of the key policy issues affecting the health care field, addressed from within his department. Mr. Griepentrog-Carlin elected to walk the committee through a document entitled, Nevada Department of Human Resources, 1993-l995 Policy Issues Presentation (Exhibit E). He provided backup documentation which gave statistical information, Nevada Department of Human Resources, 1993-1995 Policy Issues Presentation Additional Information (Exhibit F. Original is on file in the Research Library.)
Mr. Griepentrog-Carlin stated there were three key issues being addressed. The first is Medicaid, and what managed care might be able to do for Medicaid in terms of controlling costs and providing improved access, and a version of a continuation of the provider tax that is currently in place to help fund the Medicaid program. There have been some dramatic rule changes at the federal level, which the Department of Human Resources (DHR) needs to come in compliance with, in order to continue the program. Additionally, Mr. Griepentrog-Carlin reviewed what the current hospital cost containment efforts have been yielding, and what policy issues exist in that area.
Mr. Griepentrog-Carlin asked the committee to turn to page 1 (Exhibit E). He pointed out how dramatically Medicaid costs are escalating. The first chart, page 1 (Exhibit E), shows the department spent $106 million on Medicaid in 1989. In the Governor's recommended budget, the department is expected to spend $401 million in fiscal year (FY) 1995, which represents a quadrupling of the budget within a fixed period of time. Much of the increase has been due to federal mandates which have expanded Medicaid coverage, particularly to pregnant women and children. That population represents a high cost population because of the associated pregnancies, maternity and neonatal care unit costs.
Mr. Griepentrog-Carlin directed the committee to the second chart, page 2 (Exhibit E). In 1990 there were 39,000 Medicaid recipients. It is projected there will be 100,000 Medicaid recipients by the second year of the upcoming biennium. There are three main categories receiving services, one is the disabled population, one is the aged population, and the third is Aid to Dependent Children (ADC) and services to pregnant women.
Mr. Griepentrog-Carlin stated in terms of cost containment efforts, the initiatives undertaken by the state to date have been how to restrict costs through service limitations. Due to budgetary constraints, the department imposed a means test on pregnant women and children, and curtailed some of the optional services available. Because Nevada already offers a "bare bones" program required by the federal government, the department does not have many areas in which it can reduce costs. There are two main optional service areas left which have not been cut, and the department perceives those as being critical services. The first is long-term care, which is not required, except for a small segment of the population, and the other is medications, or pharmacy services. He stressed if medication is cut, costs could increase due to enhanced hospitalization.
Chairman Rawson asked for ballpark figures on long term care. Mr. Griepentrog-Carlin stated the department is spending about 25 percent of the Medicaid budget on long-term care. He pointed out the counties pay part of that sum. In addition, the department is spending about $15- to $16 million on medication. Chairman Rawson asked, "Where is the growth coming from?" He drew attention to the $55 million ADC figure climbing to $74 million in a 2 year period. Mr. Griepentrog-Carlin replied the ADC figure includes both ADC and the Child Health Insurance Program (CHAP), which is one of the main federal mandates, and one of the reasons why this population is growing. The department was expected to expand the eligibility criteria to 133 percent of poverty. Services used to be provided at a minimum level of 45 percent of poverty. That has been a major driving factor for that particular population. The department is hopeful this will level out. In addition, there is a large immigration population coming into the state. As this is a period of unemployment, people are coming to the state who cannot find work, and thus are on the ADC welfare program. General recessionary times increase caseloads as more people become eligible for assistance.
Mr. Griepentrog-Carlin referred the committee to page 3 (Exhibit E). The first main policy issue is whether the state should move forward with the managed care for the Medicaid population. DHR recommends the state move forward, but recognizes this is not an easy population for which managed care can be provided. There are a number of complexities unique to this particular population in terms of the regulatory kinds of controls under which the department needs to operate. He referenced page 4 (Exhibit E). Roughly 73 percent of the population are women, children, and pregnant women under the ADC category, which accounts for 41 percent of the total costs spent on Medicaid. The disabled population receives a disproportionate amount of medical services. This group represents 13 percent of total Medicaid population, but receives 34 percent of expenditures. The mentally retarded, mentally ill and brain damaged individuals, an extremely difficult population to work with, fall within the disabled population.
Mr. Griepentrog-Carlin moved to page 5 (Exhibit E), and pointed out a problem not found in other populations. The department pays for services provided, before the individual becomes eligible for Medicaid. When the individual becomes eligible for Medicaid, the department pays for bills incurred 3 months prior to eligibility. He cited an example of a poor person, who did not receive prenatal care, going to the University Medical Center for a delivery. When the hospital realizes they will not get paid, they refer them for Medicaid eligibility determination. Forty-three percent of hospital payments are made to people who have received a service prior to coming on to the Medicaid rolls. He stated this population cannot be touched with a managed care program because their existence is not known until bills are received and a eligibility determination is made.
Chairman Rawson asked if there were options available to deal with this problem. Mr. Griepentrog-Carlin suggested an aggressive outreach program. Chairman Rawson asked if the state would violate a federal requirement to say there will be no retroactive payments. Mr. Griepentrog-Carlin stated if an individual is found eligible at the time of review, the department must go back and recover the individual's prior costs for up to 3 months. This is a federal requirement. Chairman Rawson wondered if the state could write a restriction requiring preauthorization, except for emergency surgery. Mr. Griepentrog-Carlin indicated this could not be done.
Senator Brown asked if the state could require all hospitals, not part of the managed care system, to do a quick eligibility survey and refer someone, if not an emergency. Mr. Griepentrog-Carlin pointed out in many cases it is an emergency, and the hospital is not aware the individual is eligible for Medicaid. The hospital does not know what the person's eligibility is because they have not had an opportunity to check bank accounts or take any information from them. He stressed it is a difficult population to address, and they will remain outside the managed care program unless DHR can have some type of outreach program to get them to come in advance. There are people in the state, such as drug addicts, who do not have the benefit of prenatal care, and simply come in to deliver a baby. The likelihood the baby will need extensive medical care is very high.
Senator Neal asked if the department was into a managed care program. Mr. Griepentrog-Carlin advised the department has a limited managed care program, through the University Medical School, which only manages the physician, pharmacy, x-ray, and lab component. They do not manage other aspects of the care. Senator Neal asked if the state was anticipating an expansion of the program. Mr. Griepentrog-Carlin suggested the state needs to change the focus of the managed care program, which would create policy issues as to what needs to be done at the medical school program.
Mr. Griepentrog-Carlin referred the committee to page 3 (Exhibit E). He went on to identify the federal restrictions which must be taken into account when designing a managed care program for the Medicaid population. First, the department must receive a waiver from the federal government allowing the department to restrict the providers people visit. To have a managed care program, the freedom of choice must be eliminated, and a gatekeeper set up so people's care can be managed. Each geographic area of the state must offer two managed care programs for the Medicaid population to pick from, which is a key limitation. This causes an automatic loss of a substantial part of the volume discount normally received if business could be contracted out to just one plan, which is what a private employer would likely do. Also, any existing federally qualified health clinics must be protected. A federally qualified health clinic is one which receives federal grants set up to serve poor people, but which also serves Medicaid and Medicare populations. Patients cannot be diverted from those clinics. Those clinics must be reimbursed on a cost reimbursement system, no matter what type of managed care system has been set up. Mr. Griepentrog-Carlin stressed this is another population which gets carved out that the state cannot put a managed provider at risk for. In addition, unless the state is dealing with a federally qualified Health Maintenance Organization (HMO), they cannot put all of the services at risk. He directed the committee to page 6 (Exhibit E), which shows a listing of services under a clinic option. A clinic does not have to be a federally qualified HMO. The clinics are limited to providing, under the Medicaid rules at the federal level, those services listed. Mr. Griepentrog-Carlin pointed out the second group of services, hospital inpatient, hospital outpatient, long-term care, and home health care. If the clinic is not a federally qualified HMO, it can only serve one of these populations, and the department must pick which one. This is problematic because a lot of the services are intertwined. In order to manage hospital utilization, the state needs to expand home health agencies, but cannot put the provider at risk for both under this particular type of plan. He pointed out the department is picking hospital inpatients because it is the biggest dollar program. The state spends 26 percent of total Medicaid budget on hospital care. Mr. Griepentrog-Carlin pointed out the state spends 25 percent on long-term care. Chairman Rawson asked if a federally qualified HMO could handle all the services. Mr. Griepentrog-Carlin indicated it could, but reminded the committee it would need two in each area of the state.
Senator Brown pointed out the hospital inpatients are the ones with high retroactive services, and asked if this is a smaller amount of what is being spent than some of the other areas. Mr. Griepentrog-Carlin agreed it is a big ticket item compared to home health care. He stated it is difficult to reduce the expenditures in long-term care.
Mr. Griepentrog-Carlin directed the committee to page 3, III, (Exhibit E). He pointed out the additional restraints. Because there are limitation in the amount of money the state puts up for match in the Medicaid program, the department has resorted to some resourceful ways of controlling costs. One of these is to control the supply side. A good example is the intermediate care facilities for the mentally retarded. There are 215 beds in this state. The department does not allow any more beds to be created, and as a result there is a waiting list to get into that program. These are expense services. It costs $60,000 for each bed. If there is a managed care program, the department can manage a person out of one of the $60,000 beds into something less costly, but that bed is then backfilled by those people on the waiting list, and therefore increases the costs. Also, adverse selection is an important variable which must be controlled when there are multiple plans and diverse medical needs. The state must insure equity in the plans.
Mr. Griepentrog-Carlin addressed what types of managed care programs the state is going to have, and how the university program fits into the scheme. It is his opinion the department needs to expand the responsibilities of the current managed care program. Presently it is responsible for physician, x-ray, pharmacy and lab. He referred the committee to chart 6 on page 7 (Exhibit E). DHR has done a detailed analysis of the existing primary care-case-management program provided by the university. The department did not have a data system which would break out the different populations. The department divided up the number of people served by the primary care-case-management program, and the number served by the previous service, and looked at the costs. Those costs were very encouraging. Based on the fiscal year 1992 analysis, the primary care-case-management program operated by the university, received a payment of $135 per month, per recipient in their program. A traditional fee-for-service clients was $183. On the surface, it looked like a savings. In order to make sure the department would save money if the program was expanded, they did a very detailed analysis and recreated a data system to capture what populations were being served disproportionately. DHR found three populations being disproportionately represented in the fee-for-service. The first area was maternity. They were serving about twice as many maternity patients on a percentage basis as the university program, and as a consequences, DHR was at greater risk for the neonatal intensive care. All of the retroactive payments were also being counted against fee-for-service. These are typically high cost people dropping in for last minute types of services, or emergency hospitalization. When those populations are controlled, and an apple-for-apple comparison is done, the costs are virtually identical, $117 per month under the university program and $116 per month under the fee-for-service. DHR should not expand the program as currently constituted if it is after cost savings. There are some benefits to this program. One, the programs provide access to a lot of people who otherwise would have been refused services by the regular medical community. This has indirectly resulted in some cost savings as DHR has been able to keep the physician reimbursement rates low in this state because of the university program is a stop-gap measure for people to go to if the regular medical community will not serve them. DHR is satisfied with the university's quality of service, as evening hours and weekends are included. It has been a good program for Nevada. However, when discussing expansion, the program is not one for saving dollars. DHR is recommending a different model. This model would put the provider, under the managed care program, at risk for a much larger range of services. This raises a secondary policy issue as to what role there is for the medical school, and how would they continue to be a player. Mr. Griepentrog-Carlin stated he had discussed this with the medical school. The medical school believes in order to keep their teaching program alive and to provide an adequate range of services, they would need to serve about 10,000 Medicaid recipients a year, down slightly from the number they currently serve. DHR discussed with the medical school the possibility of affiliating with one of the federally qualified public health clinics.
Mr. Griepentrog-Carlin stated he would like some direction on a policy issue. He pointed out DHR can set the number of Medicaid recipients referred to this particular program. Should they seek 10,000 Medicaid recipients, HDR can see they get that much business. If they want 5,000 or 15,000, HDR can accommodate the teaching aspects by using the Medicaid population for their residents.
Mr. Griepentrog-Carlin discussed the last issue on the managed care program, page 8 (Exhibit E). This chart outlines the time frame. First, DHR will be doing a waiver for the ADC, CHAP and child welfare program, and plans to issue the requests for proposals for that program on April 16th, and expects to have the bids returned from the prospective bidders on June 4th. He recognized the risk, as the legislators could be gone by that time. However, if the legislators are still around, the department could discuss the impact this will have on the budget. ADC, CHAP and child welfare programs represent 73 percent of DHR's population. He stated DHR plans to process a waiver for the aged and disabled, and will bring them on at a slightly later date. He expected to have the managed care program fully operational for the ADC, CHAP, and welfare populations by the end of this calendar year, and shortly thereafter have the aged and disabled populations operational as well.
Chairman Rawson asked if DHR needed any statutory revisions to do the changes. Mr. Griepentrog-Carlin stated DHR did not need statutory authority. He stated DHR wanted to bring this as a policy issue, defining the direction they are going. The plan is to expand managed care and make the provider at greater risk for inpatient hospital care. DHR expects to have a different role for the medical school, one which would focus more on insuring access to patients in case the state could not serve all the people, and insuring the medical schools have a population of people to do their medical educational training.
Senator Rawson noted these decisions could be made by DHR. He pointed out he expected some statutory changes by the legislature, and felt the proposals should be discussed further before decisions are made. Mr. Griepentrog-Carlin declared DHR is looking for guidance in these areas. He emphasized the waiver to the federal government will have to be structured according to the changes imposed by the legislature. Chairman Rawson expressed his concern about getting into contracts influenced by the changes, and thus affecting the budget. He hoped to schedule a session within the next couple of weeks.
Mr. Griepentrog-Carlin began his presentation regarding the provider tax program, and its implications for funding the Medicaid program. He referred the committee to page 9 (Exhibit E), pointing out this is how the program currently works. DHR has a hospital tax account which is set up, and the department gets revenue from several sources. Noninstitutional providers, which are basically outpatient, medical providers, physicians, etc., pay the department this biennium $36 million in taxes. Chairman Rawson asked what form this takes for physicians, is it a tax collection, or a form which needs to be filed? Mr. Griepentrog-Carlin stated this has been made easy for the physicians, in that the department taxes only their Medicaid portion of business and takes it out of their payment. The physician does not have to process any paper, or increase their reimbursement to compensate. The department collects $36 million into the tax account from noninstitutional providers. The department takes one-half of that amount, $18 million, and matches the federal government, and pays back the $36 million. This is all done on paper, there is no transfer of money. The noninstitutional providers get their $36 million back that was taken out of the pot and DHR has gained $18 million, which is kept in the account. The same thing is done with the hospitals. They have paid in this biennium $165 million in taxes. That is put in the hospital tax account, $78 million is taken out and the hospitals are paid a disproportionate share payment, which is a payment based on how many Medicaid people are served. This is then matched by the federal government, and the hospitals get back $157 million. Some hospitals do not qualify for a disproportionate share of payments, because they do not serve enough poor people. The current law states the department must guaranty them they will not lose money. The department pays $35 million this biennium to the hospitals who would otherwise lose money. The hospitals do achieve a net benefit for the biennium, about $27 million in aggregate, with most of this going to hospitals that serve the poor. The largest portion of this goes to the University Medical Center (UMC) in Clark County, because they serve the largest number of indigent people. For the biennium, UMC received $17 million more than they paid into the program, which has helped keep Clark County from having to subsidize the hospital. After the taxes are taken in, and the providers are paid back, $70 million will be left over this biennium. The $70 million is matched with the federal government, and the state is able to expand Medicaid services,
allowing the department to keep up with the explosion in the population growth and the federal mandates.
Chairman Rawson referred to the chart on page 9 (Exhibit E), which shows $46 million going to the counties. He asked which counties. Mr. Griepentrog-Carlin advised that is what all counties have paid to hospitals for indigent care. He pointed out that although the information appears on the chart, the department is not currently using it, as it is a proposal for next time due to the changed federal rules.
Mr. Griepentrog-Carlin pointed out the changed federal rules which are listed on page 10 (Exhibit E). After June 30th of this year, the department will no longer be able to put into the law an explicit warranty that hospitals will be guaranteed to get their money back, so Nevada law will have to change. In addition, the tax must be broad based, in that you cannot tax physicians who serve Medicaid, and only their portion, but must tax all physicians on all their business and tax all hospitals. That throws out the option of using the noninstitutional provider tax, because there is no way to hold them harmless. Also, a cap has been put on by the federal government to make sure the state does not go too far. This was negotiated between the Bush administration, congress, and the National Governor's Association, which established limits. Nevada cannot pay out more than $73.6 million in disproportionate share payments in any year. This limit drives the amount of taxes which can be collected from hospitals, to make sure they are not paying in more than what is available to them in terms of payout. The tax may no longer be imposed on just Medicaid revenues, but must be imposed on a broader base of revenues. Mr. Griepentrog-Carlin pointed out the program could work next biennium because of the intergovernmental transfers, which are tax monies collected by other levels of government (counties in this state) which can be used as match money. DHR is proposing to use that matched money as a replacement for some of the money being lost.
Mr. Griepentrog-Carlin directed the committee to page 11 (Exhibit E). The chart briefly outlines how the program would work under the revised rules. Under hospital districts, there are six rural hospitals eligible for disproportionate shares, who also have a taxing district, and tax their citizens to help support their local hospital. DHR could ask them to transfer a little over $1 million into this account and match their money for them. Because the rural hospitals are operating on a shoestring, the department would not take any other cut, so that hospital would in fact double their money. There are six rural hospitals able to benefit from the program. The regular hospitals' taxes would be reduced to $78, instead of $156 million in taxes. DHR would still take $73.6 million, which is the department's cap, transfer that, have it matched, and pay that back to the hospitals under the disproportionate share vehicle. The department suggests the $46 million the counties have been paying to hospitals for indigent care, be routed through the Medicaid program, because a federal match can be picked up, and the hospitals would still receive the net benefit of that money, because through the disproportionate share program they would get the benefit. The hospitals would end up paying in $78.7 million in taxes, plus the $1 million from the hospital districts. They would lose $46 million in revenue from the counties, but would receive $147 million in Medicaid reimbursement, with a total expenditure of $126 million. In
aggregate, the hospitals would receive back more money than they paid into the program.
Chairman Rawson stated that individually, some hospitals could suffer. Mr. Griepentrog-Carlin advised that is one of the issues which will be discussed shortly. Under this scenario, the department would operate the hospital tax account, and the governmental transfer account, as has been done, but because the department is limited by some of the restrictions, the pot gets smaller. Instead of having $70 million to match, the department only has $46 million to match. If there is no program, the alternative would be to come with $46 million in state General Fund money, or some other form of taxes.
Mr. Griepentrog-Carlin referred the committee to page 12 (Exhibit E). He questioned what happens when DHR can no longer put into the law and use a separate payment to guarantee hospitals they would not lose money under this program. The department has looked at how many admissions the hospitals currently have of either Medicaid or indigents, these are the people they would be paid for through the disproportionate share vehicle, and where they stand in terms of their break-even point. The chart on page 12 (Exhibit E) points to the current number of admissions listed in the first column. Desert Springs is currently admitting 299 people annually. The next column shows they need to admit 30 additional Medicaid people under this program to break-even. Mr. Griepentrog-Carlin stressed these numbers are from last year and can change. Sunrise Hospital had over 2,300 Medicaid and indigent admissions, and thus have 180 admissions more than they need to break-even. The same applies to Lake Mead Hospital. Of the hospitals listed, there are only two hospitals which need to admit a small percentage more people to break-even. Mr. Griepentrog-Carlin asked for suggestions on how to handle this problem. Should the hospitals be told there is $20 million more paid in and they should compete for that business. The department has another option wherein they could influence admissions, if the facility was losing money. He stated it is a policy issue, does the state want to interject itself into gerrymandering these admissions, or should the state let the competitive market force work and let the hospitals compete for the $20 million profit available. Chairman Rawson asked which two hospitals were left short. Mr. Griepentrog-Carlin pointed out Desert Springs would need to admit 30 more people, and Saint Rose would have to admit six more people. These figures are based on current utilization. If utilization went up, they would be making more money. If Desert Springs' utilization and Medicaid patients went down, they would need more money. He stated there are several hospitals not listed on the chart. A new rehabilitation hospital opened in Las Vegas currently has no track record, although the hospital indicated it will be serving a lot of Medicaid patients. In addition, there is a rehab hospital in northern Nevada not yet open, and they anticipate serving a lot of Medicaid patients. The psychiatric hospitals must also be covered. DHR's calculation show those hospitals would not lose money under this proposal. The one exception is a facility in Las Vegas called Care Unit, which serves one-half psychiatric and one-half chemical dependency patients, and is currently not serving Medicaid patients due to some age constraints in the federal regulations. DHR has identified some avenues to send Medicaid business to them as they serve substance and drug abuse patients, and hopefully have them break-even. Mr. Griepentrog-Carlin advised the rural small hospitals are exempted from paying the taxes by a waiver which is written into the law. He advised there is some gerrymandering, but insisted the department is playing by the rules as long as they do not put in the statute an explicit guarantee.
Chairman Rawson asked if the hospitals agree to this program. Mr. Griepentrog-Carlin replied that philosophically, across-the-board, the hospitals are opposed. However, as the individual hospitals make money under this program, there are varying degrees of opposition, and varying degrees of support. Clearly, a hospital like University Medical Center should be in support of the program.
Senator Brown inquired about Saint Rose and Desert Springs, as both hospitals are in her district. The testimony indicated both hospitals have a low Medicaid population. She inquired if it was due to the fact there are not many Medicaid people in the area. Mr. Griepentrog-Carlin stated Saint Rose has a large Medicaid population. Senator Brown asked if these patients are sent elsewhere. Mr. Griepentrog-Carlin replied it depends on where the physicians want to admit the patient. The physician is the one who dictates where people are admitted, and there are very few physicians in the Henderson area who serve Medicaid patients. Mr. Griepentrog-Carlin did state if there was a managed care program, and it is a requirement that clinics be set up in large Medicaid population areas, that problem goes away, because those Medicaid patients would be in the community and would be admitted, as it would be the closest facility. Senator Brown emphasized that would help her district, but asked if it would hurt other hospitals. Mr. Griepentrog-Carlin reminded Senator Brown of the $20 million available money. He stated it would not necessarily hurt hospitals, but would limit their profit. Chairman Rawson pointed out $17 million of that money is going to UMC. Mr. Griepentrog-Carlin clarified $17 million of the $27 million, or under this proposal, if things do not change, $12 million of that $20 million would go to UMC.
Chairman Rawson asked what kind of dollar value do the 30 patients represent for Desert Springs, or the six for Saint Rose.
Mr. Griepentrog-Carlin introduced Christopher Thompson, Chief, Health Care Financial Analysis Unit for DHR. He responded to Chairman Rawson's inquiry. The dollar value for the six patients at Desert Springs Hospital, is just over $100,000 annually, and for Saint Rose's 30 patients, it is approximately $11,000 annually. Mr. Griepentrog-Carlin emphasized this is based on past utilization records, and if they go up or down, it influences the profit or loss. Chairman Rawson asked how much tax would Desert Springs have paid. Mr. Thompson remarked he did not have that information, but estimated it to be in the range of $2 million. Mr. Griepentrog-Carlin pointed out they would get back $1.9 million if they did not increase their utilization rate.
Mr. Griepentrog-Carlin felt this issue would warrant some discussion when putting the budget together, and putting a law change together that would meet and pass the federal regulation requirements. He pointed out the Clinton administration has put out strong signals they are looking to liberalize this particular program, keeping in mind that Arkansas is a major beneficiary of this program. Chairman Rawson reminded the committee of the 1987 proposed indigent tax scheme which would have taxed those hospitals who treated the fewer indigents. He asked if a differential taxing mechanisms could be established to tax the hospitals, and wondered if it is an absolute requirement that it be an across-the-board tax. Mr. Griepentrog-Carlin replied it could be an across-the-board tax, but could have a built in qualifier. Mr. Thompson pointed out the requirements under the tax law is that the tax has to be broad based, either on total revenues, or beds, and can exclude Medicare and/or Medicaid revenues.
Mr. Griepentrog-Carlin directed the committee to the comparison charts on page 12 (Exhibit E). He pointed out the first chart was the only national comparative data available which makes any sense, prepared by the American Hospital Association. Mr. Griepentrog-Carlin pointed out Nevada's ranking in terms of net revenue per adjusted day. This figure reflects how much the hospitals actually receive from people, providers, insurers, etc. In 1987, Nevada was at $129 per day in net revenues and second in the country. In 1988, with the more stringent requirements of Assembly Bill (A.B.) 289, of the Sixty-fourth Session of the Legislature, Nevada's rank did not change, but Nevada was the only state with a reduction, in the nation, in terms of revenues collected. It dropped down by $9 per day. It has been rising since that time, and in 1990 Nevada's rank dropped to the third highest in the country.
A.B. 289 of the
Sixty-fourth Session: Makes various changes relating to restraining costs of medical care.
The most recent information, for 1991, shows Nevada in the third highest category. Mr. Griepentrog-Carlin pointed out this data reflects some encouraging trends. Looking at the percentage change column for those same 4 years, in 1987-1988, the first years after A.B. 289 of the Sixty-fourth Session, Nevada had a 1.1 percent decrease in net revenues, and since that time Nevada has been averaging a 6.5 percent increase each year. He pointed out the percentages for all the other states on an average are much higher. He stressed some states have double digits, pointing out in 1990 some states went as high as 29 percent. Mr. Griepentrog-Carlin remarked if this trend were to continue, Nevada would come down in the rankings because the costs, or payments to hospitals, are rising at a much lower rate.
Mr. Griepentrog-Carlin drew attention to the chart on page 14 (Exhibit E), which compared Nevada and California. He pointed out California was number three and Nevada was number two. In 1987, before Nevada kicked in hospital cost-containment, the hospital payments on a per day basis were $110 per day higher in Nevada than California. As of 1991, California is $92 per day higher than Nevada. He then referred the committee back to the charge on the previous page, which shows Arizona as number four. In 1987, they were $140 per day higher than Nevada, but in 1991, they are only $3 per day higher than Nevada. The same thing is true for Utah. In 1987 Nevada was $200 a day higher than Utah, and in 1991 only $23 per day higher than Utah. Mr. Griepentrog-Carlin suggested Nevada could be dropping down in the rankings if they could keep the trend of small increases over the next few years.
Senator Neal asked if the above ratings would be a result of what the Nevada is doing, or is it because of what they other states are doing? Mr. Griepentrog-Carlin felt it could be attributed to two facts in Nevada. One is what the state is doing in terms of limitations placed on how much hospitals could bring in revenues, what their bill charges could be, a freeze, etc., and also what the private sector is doing. He stated there is an aggressive managed care market, particularly in southern Nevada, which accounts for some of the reductions. He wanted the committee to keep in mind the hospital cost-containment program, particularly in the early years, was geared to give people purchasing health care more leverage with the hospitals. DHR required the hospitals to lower their net revenues, and in order to protect their managed care business, they passed it down to the big managed care providers. Senator Neal asked Mr. Griepentrog-Carlin to explain the phrase managed care providers. Mr. Griepentrog-Carlin stated for instance, the culinary union, and those kinds of organizations. Senator Neal remarked the state has nothing to do with those particular individuals, and maintained the culinary union pulled out of the arrangement they had with one of the major hospitals, did some bargaining until the hospital met their price, at which time the culinary union went back with that hospital. Mr. Griepentrog-Carlin stressed some of the programs are truly managed care programs, while others are negotiated contractual arrangements. He maintained the point he was trying to make was because the state has set a regulatory climate, particularly in southern Nevada, those for-profit hospitals had to reduce the amount of money they were bringing in, in terms of revenues. It put the people in managed care, or contractual negotiations, in a much better driving position because the hospitals they were negotiating with had to lower their income.
Senator Neal asked what was being done in cross-subsidization within the large hospitals. He wondered if DHR gets involved with the cross-subsidization. Mr. Griepentrog-Carlin asked Senator Neal who he was referring to when saying cross-subsidization. Senator Neal asked about the cross-subsidization going on within the hospital itself, does DHR look at actual costs. Mr. Griepentrog-Carlin stated the department does review the contractual arrangements the hospitals have, and what hospitals are offering, and if they are offering an extremely low rate, DHR would have some basis to determine whether they are offering a below cost contract. He pointed out this was the case with one of the hospitals in southern Nevada several years back. The hospital was offering a rate of $150 per day to its own insured, but to everybody else it was $600 per day, or higher. Senator Neal declared that example speaks to another problem, but insisted he was referring to what the hospitals label as their cross-subsidization. Mr. Griepentrog-Carlin declared that what the hospitals label as cross-subsidization is real cross-subsidization. He pointed out hospitals say Medicaid only reimburses them 39 cents on the dollar, and therefore the hospital has to subsidize with payments from other patients. He stated this is not a true characterization, because Medicaid pays them what their cost is, not what their bill charge is. If the hospital is trying to represent they are having to subsidize Medicaid from their other population, they are mischaracterizing their reimbursement rate from Medicaid.
Senator Neal asked if Mr. Griepentrog-Carlin was familiar with the prime time Dingle hearings story from 1992, which talked about cross-subsidization within the hospital. The hospital would buy a crutch for $14, then charge $143 to the patient. Mr. Griepentrog-Carlin remarked he did not characterize that as cross-subsidization, but merely overcharging. Senator Neal asked if DHR gets involved in overcharging. Mr. Griepentrog-Carlin pointed out DHR has set up a review of the charge masters in every hospital, and are limiting increases in these areas.
Chairman Rawson drew attention to the state of Maryland as being $230 below Nevada, but with a higher rate of increase than Nevada under a strict-rate setting formula. He stressed it is impressive Nevada has been able to keep their rates low. Mr. Griepentrog-Carlin explained it would never be fair to assume Nevada should have the same rate as every state, because wage scales are different, construction costs are different and Nevada is in a high wage scale compared to the midwest. Chairman Rawson pointed out Utah was significantly below Nevada when the process commenced, but in 1988-1989 Utah had an increase of 25 percent.
Mr. Griepentrog-Carlin presented his report on what the state has been doing since the passage of A.B. 577 of the Sixty-sixth Session of the Legislature, the cost containment bill.
A.B. 577 of the
Sixty-sixth Session: Makes various changes relating to provisions and costs of health care.
That bill required there be a 1-year freeze on bill charges, and thereafter bill charges could go up no higher than the medical consumer price index for rural areas, each year through 1995. In order to insure the hospitals complied with the bill, a data system was set up with the University of Las Vegas (UNLV) to monitor all of the charge masters, and the bills actually given to patients, to see that they were in fact the same as on the charge master collected from the hospitals at the beginning of the year. Every quarter, bills are randomly collected and run through the system to verify that patients are being charged the amount shown on the charge masters. Any changes to the charge master must be submitted to the department for approval. All of the items are reviewed to make sure they were kept frozen. He noted there were items outside the charge master, and the department had to create a cost for such items. In most cases, the changes have been approved. In a few cases, the documentation did not justify the charge, and the department asked the hospital to pay the patient back. The department did not find any willful violations, merely coding errors. There has been extensive monitoring on the charge masters.
Senator Neal asked if the department found the percentage of errors to be in favor of the patient, or to be in favor of the hospital? Mr. Griepentrog-Carlin responded the patients were overcharged $4,863, a rather insignificant amount when considering the total picture. Senator Neal asked if this was based on a sample done under the contract with the university system.
Chairman Rawson clarified Senator Neal's concerns. There are management companies that set up programs and teach providers to bill to the maximum, which can create errors. Mr. Griepentrog-Carlin explained there is a consumer advocate who looks at bills to make sure hospitals are not listing services which were not provided. He said Patricia M. Jarman has found a number of areas where this has happened, and recovered dollars in favor of patients.
Senator Neal asked Mr. Griepentrog-Carlin to explain a charge master. Mr. Griepentrog-Carlin said each hospital has a listing of every item they provide, such as pills, supplies, etc., with the cost of the item, and how much they charge for the item. The charge master is looking to see that the charges were not increased more than the law allowed. The department is checking each individual charge to see if they increased more than the law allowed, as the law dictated charges were to be frozen.
Mr. Griepentrog-Carlin turned to page 18 (Exhibit E) to review the requirements imposed on the hospitals by A.B. 577 of the Sixty-sixth Session. One requirement created a nursing foundation and a contribution, per hospital, of $250,000 per year. The report sets out how the money was spent. The hospitals created their own private, nonprofit corporation with the chief executive officers from each of those hospitals. Assemblywoman Freeman is the Governor's designee representative. To date, $227,845 has been distributed, which has provided scholarships to nurses in training, and provided for increased capacity of an additional 24 students by increasing the faculty. Information has been received from this foundation they do plan to continue this program and broaden the base of contributors to others in the help care industry.
Mr. Griepentrog-Carlin pointed out a second area under A.B. 577 of the Sixty-sixth Session dealt with wellness, promotion and education. Hospitals were required to provide $100,000 per year. The report indicates they have exceeded this figure. These programs were already in existence, and in some cases the programs were upgraded to meet the criteria established. These programs are operated by the hospitals themselves, rather than coming up with money, which was an option under the law.
Mr. Griepentrog-Carlin directed the committee's attention to the third area, which was a requirement for providing technical assistance to rural hospitals. There is no dollar figure attached, but to show what has been going on, the report indicates an effort by the small rural hospitals to make up an aggregate list of their needs. That has been presented to the larger hospitals and has been used as a guide in terms of things that can be done which would not cost much money, but would be a benefit to the rural hospital.
Mr. Griepentrog-Carlin stated in the areas which the department monitors, they have found the hospitals are in compliance, adding the caveat that Ms. Jarman indicates she has found some problems in the areas she monitors. Chairman Rawson stated the committee had received an initial report from Ms. Jarman, and would have her back once more, before this session is over.
Senator Neal stated he finds it interesting that Nevada would pass a law allowing the hospitals to increase their costs based on the consumer price index. He remarked people are complaining to him about the high cost of their bill, and many of those complaints are in the area of charges. He pointed out that Mr. Griepentrog-Carlin referred to it as overcharging, and the hospitals refer to it as cross-subsidization. The senator felt it is an area which needs attention. He asked Mr. Griepentrog-Carlin if his organization was aware of the problem and had any proposed solutions.
Mr. Griepentrog-Carlin stated he did have some recommendations in that area, because it is an area which needs to be strengthened. He stated he has some regulatory authority, and imposed some regulations on the hospitals to make Ms. Jarman's job more manageable. Mr. Griepentrog-Carlin suggested the person who has the job ought to be the one with the regulatory authority. He stated he felt Ms. Jarman's department could be strengthened to promulgate regulations.
Mr. Griepentrog-Carlin noted this is an area which should be looked at closely and monitoring efforts should be expanded in that area.
Jerry Ash, President, Nevada Hospital Association, which represents 24 acute and specialty hospitals throughout Nevada, spoke on the issue of hospital costs, as referenced in his summary (Exhibit G).
Senator Neal stated his concern with the statement that cost shifting is the result of uncompensated care. He asked what formula the hospitals use to arrive at whether or not they should charge their patient $84 for the recycling of a pillow, in terms of getting at the question of uncompensated care? Mr. Ash replied he was not willing to defend the charge master and the charges reflected there. The charge master was developed in response to rules, regulations and payment policies of Medicare, and the individual insurance companies. Because of the rules, the hospitals cannot bill for nursing services on a Medicare bill. A hospital provides services, more than it provides pillows and aspirins. The hospital is prevented, in the billing process, from billing for services. Therefore, the hospital bills for things, and builds in to those things artificial dollars to cover billing for services. The Nevada Hospital Association would like to sit down and talk about truth in billing and the charge master, and how it is indefensible as it is a public relations problem the hospitals would like to fix. Mr. Ash agreed a person should not be charged $185 for a pillow. However, at the same time, the hospitals must charge for services and are restricted in that area.
Senator Neal asked how long Mr. Ash has been associated with hospitals and his total experience in this area. Mr. Ash replied, "4-1/2 years and 7 years, respectively."
Senator Neal expressed his concern with rising hospital charges, and in particular the ancillary charges. He asked Ms. Ash if the hospitals would have any objection to applying Diagnosis Related Group (DRG) rating across the board, to say the private hospitals. Mr. Ash advised there is a proposal in Washington, D.C., that the DRG rate be extended to all payers. He suggested it would be possible if the rate was for all comers, not just all payers. Mr. Ash stressed there are 300,000 uninsured people in the state of Nevada. The DRG rate of Medicare expressly is set and excludes the payment for anything other than the care received by that patient. Medicare does not pay any money to cover for the $158 million in uncompensated care the hospital provides the uninsured persons who have no way of paying.
Senator Neal asked Mr. Ash if the association would be willing to place a percentage ceiling on how much hospitals can increase the ancillary items within the hospital? Mr. Ash responded hospitals have to cover the cost of doing business, and if there is a system that can accomplish that goal, the hospitals would obviously be quite satisfied. Hospitals must go to the bottom line and determine how much money they need to survive and the charges are determined on that basis. Senator Neal insisted it is not how much is needed to break even, but how much profit the hospital wants to make.
Mr. Ash stated in Nevada, the average profit margin is a little over 5 percent, which, by the standards of the American Hospital Association, is what a hospital needs in order to remain financially viable. He stressed whatever the financing system is, it has to ultimately keep the hospital doors open and provide quality care. Mr. Ash stated the Nevada Hospital Association has gone to Washington, D.C., to say they want to throw out the failed financing system of health care, start over, and make it fair and equitable for all.
Senator Brown asked Mr. Ash if he worked with any of the hospitals affected by A.B. 577 of the Sixty-sixth Session? The Senator wondered how cost shifting occurred in the past 2 years if every item has been monitored. Mr. Ash explained A.B. 577 of the Sixty-sixth Session froze the then current pricing system in place.
All it is doing is preventing the prices from being increased more than a certain price, but it has not looked at the fact that what was frozen into place was an inequitable pricing system.
There being no further business, Chairman Rawson adjourned the meeting at 4:54 p.m.
RESPECTFULLY SUBMITTED:
Susan Henson,
Committee Secretary
APPROVED BY:
Senator Raymond D. Rawson, Chairman
DATE:
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Senate Committee on Human Resources and Facilities
March 17, 1993
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