MINUTES OF THE
SENATE COMMITTEE ON HUMAN RESOURCES AND FACILITIES
Sixty-seventh Session
March 22, 1993
The Senate Committee on Human Resources and Facilities was called to order by Chairman Raymond D. Rawson, at 1:30 p.m., on Monday, March 22, 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:
Judy Alexander, Committee Secretary
Susan Henson, Committee Secretary
Pepper Sturm, Research Analyst
OTHERS PRESENT:
Beth Carl, Student Intern, Social Work
Thomas F. Reilly, Deputy Administrator, Division of Child and Family Services
Shirley Martel, Licensed Practical Nurse (L.P.N.), Foster Parent
Michael Hampton, President, Comstock Foster Parents Association
Lisa Rogers, Foster Parent
Jorgee Hampton, Secretary, Comstock Foster Parents Association
Alicia Smalley, National Association of Social Workers, Nevada Chapter
Dorothy North, Chairman, Commission on Substance Abuse Education, Prevention, Enforcement and Treatment
Elizabeth Breshears, Chief, Bureau of Alcohol and Drug Abuse
Bill Jost, Treasurer, Nevada Association of State Alcohol and Drug Abuse Programs
Larry Osborne, Executive Vice President, Carson City Chamber of Commerce
Gaylon Roe, Silver State Employee Assistance Program, Carson City
Elaine McNeill, Lobbyist, Sierra Nevada Chapter of Associated Builders and Contractors
April Townley, Deputy Administrator, Welfare Division, Nevada Medicaid
Carolyne Edwards, Lobbyist, Clark County School District
Lindsey Jystrup, Lobbyist, Nevada State Education Association
Michael McMahon, Welfare Director, Churchill County Welfare Department, Chairman, Nevada Association of County Welfare Directors
John Beeston, Lobbyist, American Association of Retired Persons
Jeanne Dini, Director, South Lyon Medical Center
James Wadhams, Lobbyist, Nevada Hospital Association
Chairman Rawson opened the continuation of the hearing on SENATE BILL (S.B.) 56.
SENATE BILL 56: Provides cost-of-living increases for reimbursements paid to foster parents.
Senator Diana M. Glomb, Washoe District 1, testified in support of S.B. 56, as referenced in her summary (EXHIBIT C). She introduced her student intern in social work, Beth Carl, who read from a prepared testimony. Ms Carl advised that the testimony heard by the committee for the review of child and family services, indicated a urgent need for a cost-of-living increase in the compensation paid to foster families. The committee recommends that this increase be equivalent to the annual percentage increase in the consumer price index (CPI). Four years have elapsed since the last increase of less than 2 percent, approximately $6 per month. Tying compensation adjustments to the CPI is intended to provide recipients with a fair compensation rate, based upon actual expenses, by eliminating the need to approach the legislature every 2 years, to adjust shortfalls and justify increases. The division estimates that granting an increase, at the current annual CPI rate of 4.05 percent, will require an additional $209,520 per year. Although the committee recognizes the potential difficulties associated with adopting an indexed compensation rate, the members decided the concept was worthy of discussion of debate, by the full legislature.
Senator Glomb, Chairman of the Legislative Committee To Review Child and Family Services (S.B. 611), urged serious consideration of S.B. 56. She stated that foster parents are the backbone of the child welfare system; without them, there would be no homes for the children that have to be taken into custody. She advised, the committee understands the difficult fiscal times, but if an increase for foster parents is not considered in this legislative session, it would be 6 years since foster parents have received a increase.
Chairman Rawson pointed out, the committee could amend to set a future year for the raises to go into effect. He stated, by doing that, the committee would recognize the fact that it is an important concept, but cannot be afforded this year.
Senator Glomb presented a letter (EXHIBIT D) to the committee, from Elaine and William Brooks who are foster parents in Las Vegas.
Thomas F. Reilly, Deputy Administrator, Division of Child and Family Services, testified the division supports S.B. 56 and all efforts to improve assistance in the form of funds. According to the results of a survey of foster care rates by the American Public Welfare Association, the majority of states and territories acknowledge their rates do not reflect the actual cost of child maintenance. The United States Department of Agriculture (USDA) estimates the average cost of raising a child in the west ranges from $542 to $658 per month for a adolescent. He commented that in contrast to those assumed costs, consider the feasibility of providing full-time care, nurturing and supervision, as well as feeding, clothing, transporting and otherwise paying for the basic needs of a non-related child, who most likely has problems, all for the cost of a little over $300 per month. In the fiscal year of 1992, the division paid a basic rate of $281 per month for children between the ages of 0 to 12, and $337 per month for adolescents. There is a small allowance for clothing and school expenses. He cautioned, if the CPI increase becomes a matter of law, rather than budgeting, the law must mandate some adequate funding to insure payments. He stated, as testified earlier, a 4 percent increase in the CPI would cost the division approximately $200,000 per year. The Division of Child and Family Services supports the need for CPI increases, as purposed by S.B. 56. Due to the significant fiscal impact, in the states current fiscal crises, passage of S.B. 56 is recommended, only if there is an appropriation attached to it.
Chairman Rawson asked, is respite care an issue with foster children. Mr. Reilly answered yes, there is approximately $20,000 per year appropriated to the division for respite care, which is given only to the more severe cases. Many foster parents have to make their own arrangements when they go on vacation or when there is an illness.
Chairman Rawson asked, is the CPI the most needed increase or are there other places that the state should put the money in the foster care program. Mr. Reilly answered, in the foster parent adoption program, there are a lot of underfunded areas, including adoption subsidies and a shortage of staff. He stressed, foster parents have not received any type of raise since 1988. The division has difficulty recruiting and retaining foster parents, partially due to out-of-pocket money they have to spend on raising the state's children, who increasingly have more difficult problems. The children they are getting today are medically fragile on one end of the spectrum and emotionally disturbed adolescents at the other. Money was appropriated 4 years ago for foster parents, but because of the fiscal crises at that time, the division could not grant the money to them.
Senator Brown asked, when foster homes are not available, what happens to the children, who are waiting for foster homes. Mr. Reilly answered, the child would be placed in emergency shelter care. Child Haven is an institution, in Las Vegas, that would provide emergency shelter care.
Senator Brown pointed out, she did not see any minus on the fiscal note for what might be saved, by the number of children who would not have to go to through the emergency shelter, due to a lack of foster parents. Mr. Reilly stated, that is a very good point, because institutional care definitely costs more per day than foster care. Chairman Rawson asked Mr. Reilly to help justify the fiscal note.
Shirley Martel, Licensed Practical Nurse (L.P.N.), advised her family has been registered as a foster home for 15 years. Ms. Martel read a letter from Dianne Blazzard, President, Foster Parents of Southern Nevada (EXHIBIT E) requesting passage of S.B. 56. Ms. Martel advised the committee of costs that are not covered by reimbursements such as, repair and replacement of washing machines, due to eight or more loads of wash per day. She deals with 6 to 10 grand mal seizures a day, which destroys screens, walls, carpeting, etc. Ms. Martel addressed the question presented by Senator Brown and advised that when a medically fragile child is left in the hospital for a longer period of time, due to not having a foster home for placement, that the state pays hundreds of dollars more per day, than the per day cost of foster care.
Michael Hampton, President, Comstock Foster Parents Association (CFPA), represented the 40 foster families in the association from Carson City, the Dayton area and Douglas County. He advised, he had been a foster parents for 3 1/2 years and noted the majority of children in foster care are at least emotionally disturbed, if not physically damaged in some way. He referred to a 1990 report, by the USDA, that showed it costs $12.20 per day for a child age 0 to 11 and $15.04 per day for a child age 12 to 18. Currently the rate for foster parents is $8.90 for age 0 to 11 and $10.35 per day for age 12 to 18. Using the 1990 rate, this reflects for age 0 to 11 that foster parents are underpaid in the State of Nevada by 37 percent. The 1990 USDA rate for age 12 to 18 reflects foster parents are underpaid by 45 percent as shown in his chart (EXHIBIT F). He advised all of the foster parents in CFPA support S.B. 56, to maintain adequate care for children in their homes. He stated that each home is licensed for a set number of foster children and a set number of emergency shelter care children. Due to the shortage of foster parents, there are times when they have to take in more emergency shelter care children than those in which they are licensed. He stated institutional emergency shelter care rate is a minimum of $200 per day.
Lisa Rogers, Foster Parent, licensed parent for medically fragile children, advised the committee there is a waiting list of children to get into her home. Those children on the list must wait in the hospital, nursing homes and institutional settings. She read from a summary (EXHIBIT G) which showed a detailed breakdown of expenses incurred by her caring for medically fragile children. She made the observation that most people who are foster parents are middle class families, therefore, they cannot bear the financial burden placed upon them by inadequate reimbursement for foster parenting.
Jorgee Hampton, Secretary, Comstock Foster Parents Association and foster mother, urged the committee to support S.B. 56 to have compensation comparable to what it costs to raise foster children. She advised she has had to become medically knowledgeable in respiratory, heart and dietary areas because of the children assigned to her home. She closed her testimony with a statement, "if more people cared, we'ed have less to care for."
Alicia Smalley, legislative chair for the National Association of Social Workers, Nevada chapter urged, support of S.B. 56 to adequately reimburse the people who provide foster care and that a cost of living increase be an automatic part of the program.
Chairman Rawson closed the hearing on S.B. 56.
SENATOR GLOMB MADE A MOTION TO DO PASS AND RE-REFER TO THE SENATE FINANCE COMMITTEE.
SENATOR O'DONNELL SECONDED THE MOTION.
Chairman Rawson advised the committee that John Sarb, Administrator, Division of Child and Family Services, State of Nevada, had a suggestion to replace the word foster parent, with family foster care parents. He asked Senator Glomb if she felt comfortable with her motion and her vote substituting that change. Senator Glomb answered yes, the term would help to clarify. Chairman Rawson went on to say that he interpreted that as being moved that way, seconded that way and voted that way. Therefore, it passes.
THE MOTION CARRIED AS AMENDED. (SENATOR TOWNSEND WAS NOT PRESENT FOR THE VOTE.)
Chairman Rawson clarified the motion would be an amend, do pass and re-refer.
* * * * *
Chairman Rawson opened the hearing on S.B 71.
SENATE BILL 71: Requires certain entities who receive money from state to establish policy to ensure workplace is free of illegally used drugs and alcohol.
Dorothy North, Chairman, Commission on Substance Abuse Education, Prevention, Enforcement and Treatment, stated this bill came to this
committee by way of introduction through her commission. She began by giving the history on S.B. 71 and said:
It was recommended by the National Drug Strategy several years ago, that states pass this type of legislation. Basically, this legislation is meant to send a message to the private sector that matches what has been going on in the public sector for some time, in terms of a company having a statement in place that says, we do not condone the use of alcohol and drugs in the workplace. One of the objections in the last legislative session, particularly on the other side of the house, with regard to S.B. 71, was some concerns on the part of Labor, that this would mean, across the board drug testing and that we were going to fire everybody, and that this was meant to cost people jobs. I would like to address that objection up front, because this is certainly not the intent of this legislation. This legislation, if done correctly, would include something in the policy of the company that would address the issue of people being afforded assistance, so they can maintain a job rather than be punished and terminated for having an alcohol or drug problem.
Ms. North explained, it was not the intent of S.B. 71, to be a very high dollar figure. Some companies have expressed concern that this would mean they would have to go into a full-blown drug testing program and would have to have the financial resources to set up a full-blown employee assistance program at a great expense to the company. She added, the state has resources at our disposal to provide some assistance with a program.
Chairman Rawson read from lines 14 and 15, "To require each employee to give notice of any violations of laws governing the use of drugs or alcohol." He advised this had been interpreted by one company, which had written to the committee, to mean that people would have to rat on their friends, who have had some off-the-premises recreational use of drugs. Chairman Rawson stated, he did not read it that way and asked Ms. North what her interpretation was. Ms. North, stated this would be addressed individually, company by company, depending on the policy the company developed. A mining operation may have it as a part of the policy, if there are a lot of safety issues at stake.
Chairman Rawson questioned, if an employee was aware of another employee who was operating heavy machinery under the influence of drugs, would the employee be obligated to advise the empolyer. Ms. North answered, she has never known of that to happen, even though there are companies that have this written into their policy. In her opinion, this was more of a liability coverage for the company. She stated she would not object to having a minor amendment to change this language and noted that was discussed before the hearing opened. It is her understanding, that Medicaid has some recommendations for minor language amendments in this bill and she would not have a problem with that.
Senator O'Donnell noted, the language on Lines 11 and 13, seems to be demanding on a five person company which would have to develop a bid, contract and write a policy manual. He asked, could C be incorporated into B, if you are going to specify, that they cannot use drugs in the first place. He questioned, does the state need to get involved in counseling programs, which are expensive on an employer. Ms. North advised, she did not think the intent of the language was that the employer would carry the expense. She noted, that language is there so that the policy does not have to be totally punitive. A good drug-free work-place policy would include this, along with specified disciplinary action. Also, language would say, that if someone chooses to seek help, they can do so without losing their job. She advised, that this is important because most of the people with drug and alcohol problems are in the workplace. She pointed out, this was vague language, but leaves the option open that the employee has some opportunity to seek some help.
Elizabeth Breshears, Chief, Bureau of Alcohol and Drug Abuse (BADA), advised that her division proposed in the fiscal note, to develop a four page model drug policy, to become available to all vendors of the state, which would essentially provide information regarding heightening the awareness of drug abuse. She noted, there is the option of training for supervisors and that the fiscal note recommends that training be done through a number of communities in Nevada. Companies which do not currently have drug-free workplace policies could come to this training, find out what the policies mean and how to go about implementing them.
Senator Coffin declared, how can you suggest the employer be responsible for regulating the behavior of the citizens. He asked, "Aren't we going too far by forcing the employer to actually do this for the state?"
Ms. North answered, there was never any intent that the employer would be obligated to police this policy. She said, what the bill is saying is that the employer makes it known in a written policy that they do not condone the use of alcohol and drugs in the workplace. She added, it does not pertain to off-the-work-site behavior, only to what goes on in the workplace.
Senator Coffin expressed concern that it looked like a substantial amount of liability accrues to the employer, for behavior which could occur in or around the workplace. Ms. North advised, if the employer has no policy, that says he does not condone this type of behavior, and the employee comes back to the work site under the influence of drugs and alcohol, proceeds to resume his job, has an accident in the workplace that costs somebody his life, then the employer would be looking at a liability situation.
Senator Glomb stated she liked this bill in concept, but said she shares some of the concerns of Senator Coffin, that this puts a lot of responsibility on the employer. She asked, is there grant money that might be available to help businesses with a pamphlet or material that can be used in the workplace to educate the employee. Ms. North noted she has information available, as well as the Bureau of Alcohol and Drug Abuse on the drug-free workplace.
Senator Glomb asked for clarification that every employer be required to have this program set up, as well as a referral program, should there be any violation of the policy. Ms. North answered yes, that every employer would have a program, but not necessarily a referral program. She pointed out, that the policy itself could have language that would encourage the employee to seek help and it would not have to be that involved. Senator Glomb noted, the bill states the employer takes disciplinary action and require the employee to enroll and complete a course, which is a follow-up action as well. Ms. North responded, hopefully so that it will not be strictly punitive and the employee will be terminated, if he is caught under the influence.
Senator Neal asked, what caused you to introduce this bill. Ms. North answered, that the commission voted this was very important in terms of priority for the State of Nevada. Nevada has per capita, the second highest alcohol consumption rate in the country and either second or third in per capita, cocaine abuse. She advised the commission has heard significant testimony, in public hearings, that have talked about the abuse of drugs and alcohol in the workplace.
Senator Brown referred to lines 4 and 5 and asked are you anticipating civil liability for breaking the agreement. Will someone oversee the workplaces to make sure the agreement the employer signs is followed. Ms. North stated she did not think there is a lot of policing built into this particular legislation.
Ms. Breshears stated, when the Bureau of Alcohol and Drug Abuse was asked to develop this fiscal note, they took the intent of the law to be similar to that of the federal legislation. Currently, every entity that contracts for federal monies for $25,000 or more, must have in place, drug-free workplace policies. The intent was not to police, but instead to raise awareness. They looked at that from two different scenarios and have included both of them. One is, if 100 percent of the vendors, approximately 114,000, in the state are asked to comply, what that would cost, if at the time of their next contract renewal, the contracting agency provided information to that vendor asking that they develop and implement policies. She noted that University of Nevada, Reno, already had the policy in place for all 7500 of their vendors and have had no problems. The second scenario is, if the bureau excluded employers that had fewer than 10 employees, which in Nevada would mean 75 percent of all vendors would be excluded. This would result in roughly an estimated 72,000 vendors coming into compliance.
She advised the Bureau of Alcohol and Drug Abuse proposed to develop a 10 page pamphlet,, that would be made available to every state agency who could then pass this along to their vendors. Four pages would include S.B. 71 in instructions and a template which they could sign demonstrating that yes, they do have drug-free workplace policies in place. Currently, the bureau contracts with Rotary International in Reno to provide training for small businesses for a drug-free workplace and would purpose to expand that contract statewide. Four pages would actually be a model drug-free workplace policy.
Chairman Rawson stated, that from looking at the statistics in the fiscal note, it is clear that large companies would find it beneficial to have some kind of policy in place. Ms. Breshears stated, that large companies that are self-insurers tend to benefit greatly from having in place, drug-free workplace policies and ensuring that their people get into treatment.
Senator Glomb asked, are you saying the cost of developing this and getting the information to the employers would be picked up through a BADA grant. Ms. Breshears stated, the bureau offered to pick up the cost of the training, developing the materials and sending them to all of the agencies in the state. The agencies themselves would pick up the cost for duplicating the materials and when their vendors contracts came up for renewal, sending the materials along with the renewal contract to the vendors, so that cost would be spread among the state agencies. Senator Glomb asked, is the BADA grant prepared to pick up the start-up cost. Ms. Breshears answered yes, the training, and information, etc.
Ms. North pointed out, this type of legislation has already been passed by a number of other states.
Senator Neal stated, that he had a problem with the language that requires each employee to give notice of any violation of the law governing the use of drugs and alcohol, and added, he did not have a problem with the bill.
Ms. Breshears clarified the language for Senator Neal and advised that federally, that means self report, or that an employee would be obligated to advise the employer, if they had been arrested within the last 30 days.
Bill Jost, Treasurer, Nevada Association of State Alcohol and Drug Abuse Programs advised his association is a statewide, community based, non-profit treatment program and testified in favor of S.B. 71. He declared, there has to be a societal and cultural message that this behavior is not appropriate and not acceptable, if society is going to make a real impact on the alcohol and drug problem in this country. The three areas where most people will be reached is at home, in school and the workplace. He pointed out that the federal equivalent has been in place for a number of years, affecting the county or city governments which receive federal monies. The fiscal impact on employers is relatively minimal at the federal level. It requires the employer to make a list of treatment programs available to employees, who have a substance abuse problem. It does not require that they pay for the program or have an employee assistance program. The referral system is a key part of this bill, so that people know where they can turn for help. The other message is that alcohol and drug abuse is not an acceptable or appropriate behavior in this society. The most successful program in this country is the reduction of smoking which is done by a pervasive, non-acceptance of behavior throughout the culture. This bill is the same type of strategy that has proven so successful in the past.
Senator Coffin asked, how much does treatment cost. Mr. Jost answered, the residential treatment costs $36.12 per day, and the outpatient runs on contact therapeutic hours at $6 per hour. He advised, 5 percent of people with a drug abuse problem are unemployed and 95 percent of the people are functionally employed.
Senator Coffin asked, what would be an appropriate disciplinary action. Mr. Jost responded, to put the employee on notice that this is not acceptable, that they have a substance abuse problem and the employee must do something about it, if they want to retain their employment. He advised an employer has the option to bring someone in to do alcohol and drug education classes or hand out a brochure. The idea was not to be an onerous financial burden on the employer, but more one of making a commitment to taking a stance about the behavior and if a person has a problem, there is help available. At the federal level this drug-free workplace has been in effect for a number of years.
Senator Coffin asked, has there been a decline in the use of drugs in those cities where they have had a drug-free workplace. Mr. Jost responded, he had not seen overall statistics on that, but they are seeing a lot of employer referred substance abusers. He pointed out that rather than firing them, discarding them to the streets, where they will show up in the welfare, judicial and medical system, employers are referring them on to treatment so they can be salvaged, rehabilitated and still be maintained as a useful employee.
Larry Osborne, Executive Vice President, Carson City Chamber of Commerce, testified in support of the intent and purpose of S.B. 71 and noted they do have some concerns about the way it is written. He stated lines 14 and 15 either need to be struck out, or to be more defined as to give violations of laws governing the use of drugs in the workplace specifically. It is too open for interpretation. He referred to Senator Brown's point, that an employer can sign a piece of paper and comply with this.
Gaylon Roe, Silver State Employee Assistance Program, Carson City testified on S.B. 71 as referenced in his summary (EXHIBIT H). He requested the committee to do research on the new drug testing laws that have been passed and furnished the committee with a pamphlet he had drawn up (EXHIBIT I). He suggested the legislature pursue the bill, but with the knowledge, what is going on in the federal statutes that will encumber this bill, if it is passed in its present state. He clarified a question from Senator Coffin and stated he is in favor of the bill.
Elaine McNeill, Lobbyist, Sierra Nevada Chapter of Associated Builders and Contractors testified in opposition to S.B. 71 because they do not think it is necessary. She stated most contractors have a drug-free workplace policy, because they bid on federal jobs of $25,000 or more and are concerned about their SIIS rates or worker compensation rates and concerned about their employees. She advised, she did not think the state needs to get involved in legislating that they have a drug- free workforce. She advised, the bill is too loosely written, and does nothing but create a paperwork nightmare, especially for small businesses. She was especially concerned about lines 14, 15 and line 9 which removes the flexibility the employer has. The assistance he might want to give a long-term employee might be different than the assistance he gives a brand new employee.
April Townley, Deputy Administrator, Welfare Division, Nevada Medicaid, proposed 2 amendments that addresses the paperwork issue, which are referenced in her summary (EXHIBIT J).
Carolyne Edwards, Lobbyist, Clark County School District (CCSD) advised the committee that CCSD is in compliance with federal mandates and has a policy for drug-free workplace. However, they find this legislation ponderous, difficult and if amendments can be worked out, they would be happy to work in subcommittee to see so, but at this point, feel it is redundant legislation.
Lindsey Jystrup, Lobbyist, Nevada State Education Association, testified her association shares the concerns outlined by Ms. Edwards.
Ms. North stated, for the record, there are some problems with the language in this bill and advised the drug commission is willing to work with any of the people, that have discussed this and with the subcommittee, with regard to making changes in the language.
Michael McMahon, Welfare Director, Churchill County Welfare Department, stated he is not opposed to the intention of the bill as articulated by Ms. North. However, he drew issue with the fiscal note which would impact local governments, as well as small, not-for-profit entities. He advised, SB. 71 would make it very difficult for organizations such as the crises line, domestic violence groups, small individuals that receive Title 20 funds, to be able to be in compliance with this bill. He stated that he would look forward to working with Ms. North and the subcommittee.
Chairman Rawson advised the committee he would place S.B. 71 into a subcommittee, unless there was an objection, and assigned Senator Coffin to act as chair with the instruction to try to repair the bill if he can.
Chairman Rawson closed the hearing on S.B. 71.
Chairman Rawson opened the hearing on S.B. 104.
SENATE BILL 104: Revises definition of "county of residence" for purpose of determining eligibility of indigent person for benefits from county.
Michael McMahon, Welfare Director, Churchill County Welfare Department and Chairman, Nevada Association of County Welfare Directors (NACWD) advised the committee S.B. 104 was submitted by NACWD. He explained that the purpose of this bill was to provide a technical correction of the existing statute. The purposed changes would eliminate the unconstitutional language in NEVADA REVISED STATUTES (NRS) 428.020 paragraph 1. Specifically, it would eliminate the 6 week residency requirement that is on statute. He commented, as a review for the committee, NRS 428 requires counties to provide for the care of indigents. It also establishes criterion for determining eligibility of an indigent. NRS 428.015 depicts the income requirements and NRS 428.020 depicts the residency requirements. He advised that during the last legislative session, the association requested and received new language, paragraph 2 of NRS 428.020, to eliminate problems with the fifty-fifty match program in determining residency. At that time, legal briefs were prepared by Washoe Legal Services and the Legislative Counsel Bureau, regarding the unconstitutional nature of the existing language in paragraph 1. He stated the bill is asking that the language that currently exists be deleted and the definition of residency be defined as an individual, who is physically present with an intent to reside.
Chairman Rawson closed the hearing on S.B. 104.
SENATOR GLOMB MOVED TO DO PASS S.B. 104.
SENATOR BROWN SECONDED THE MOTION.
Chairman Rawson asked the committee, if they would like to table this for another day, since Senator Neal requested more information.
SENATOR GLOMB WITHDREW HER MOTION OF DO PASS ON S.B. 104.
Chairman Rawson closed the hearing on S.B. 104.
Chairman Rawson opened the hearing on S.B. 93.
SENATE BILL 93: Creates board to regulate cost of health care.
Senator Joseph M. Neal, Jr., representing Senate District 4, stated that in his opinion S.B. 93 is important, because it addresses the regulation of rates within the hospitals. He advised the committee that in 1970, hospital room rates accounted for 80 percent of hospital costs. Government, private insurers and the media began to focus on the rise of hospital costs, specifically on the room rates. Noticing this, the hospitals began to lower the room rates and switched to charging for ancillary items, such as medication and supplies. These items increased drastically, and many patients have received billing for unexpected expenses. He pointed out that usually, the patient does not recognize the language used and is uncertain that the services were rendered. In recent years, hospitals have exploited this lack of knowledge, on the basis of patients, by increasing the ancillary items to an outrageous percentage. In October of 1991, Congress held a hearing on hospital costs, titled Hospital Care Fraud and Waste, which was under a subcommittee that was chaired by Congressman Dingle. The focus was on Humana, Incorporated, which has 82 hospitals in the system, one of which is located in Las Vegas. They found that 55 percent of these ancillary items were marked up 5 times or more, in terms of their cost and 17 percent were marked up 10 times of what was the original cost. He gave the following examples of ancillary items cost to the hospital and cost to the patient:
Cost to the Hospital Cost to the Patient
Crutch $18.05 $103.35
Crutch armpit $ .90 $ 23.95
Crutch rubber tip$ .75 $ 15.95
Air diffuser $ 8.28 $332.90
Eye patch $ .90 $ 25.70
Ice $ .90 $ 32.00
Hair dressing $ 1.03 $ 25.39
He advised the committee that Humana, Incorporated has 43,000 ancillary items existing within their system. In his opinion, a patient cannot determine what their bill is going to be once they leave that facility and many of these items have been added to the bill without the patient receiving the services.
He explained, in the last session, this issue was addressed by allowing the hospitals to increase their rates according to the consumer price index (CPI). The CPI will not get at the cost of these isolated ancillary items. He noted that he not only spoke of Humana, Incorporated but that the other institutions within this state also engage in this particular practice. He urged the committee to tackle this issue and do something for the people of this state, in terms of health care. He advised, the state needs a hospital rate commission to intervene. If the legislature cannot do that, then in my opinion, the legislature is going to have to increase the service and authority of the Commission for Hospital Patients and give them the necessary authority to go in and examine these bills, even with the point of having the authority to subpoena records and look at documentation as it relates to these hospitals and their particular bills.
Senator Glomb, referred to Patricia Jarman, Executive Director, Commission for Hospital Patients, State of Nevada, and asked if her office were given more power, would that suffice to correct this situation.
Senator Neal responded that she cannot do an effective job because she depends upon someone coming to her. Once someone comes to her, she has no authority to go in and look at records. She must call or write the hospital and asked to see those particular documents, but the hospital does not have to comply. She has been able to get some decreases in the medical bills of patients that have come to her, but she would be able to do a much better job if she had authority.
Senator Brown referenced the top of page 5 of the bill, and asked, if the hospital is cost shifting from patients who cannot pay the bill to the patients who can, this bill does not seem to solve the problem.
Senator Neal stated, when a person looks at the cost of the facility, there should be a breakeven point of what it actually cost to run the facility and the other money the hospital would make in terms of the profit. No one knows what are the breakeven cost of some of these institutions. The closest information to the breakeven cost was a figure he heard in the trial of Humana, Inc. versus. Dr. George Mead Hemmeter, case number A274231, Department Number IV, Clark County District Court in which Dr. Hemmeter stated in testimony, that the breakeven cost for that institution was $698.00 per patient per day.
Senator Brown asked, is there any other legal way of getting that information. Senator Neal advised not to his knowledge.
Senator O'Donnell noted that in the last legislative session, a bill was passed that dealt with CPI which allowed the hospitals to increase the fees by the medical CPI. He noted that a number of years ago, Nevada was rated 47th in health care costs. Considering the state of Nevada is now number three for health care cost in the nation, if the CPI index price is applied to three, that would allow a very high rate of return. He pointed out that over a period of time, with this particular language in the statute, the state of Nevada would go higher and higher, in terms of charge, because the spread is going to get wider and wider as time goes on.
John Beeston, Lobbyist, American Association of Retired Persons and Nevada State Legislative Committee (SLC), testified in support, in principle for S.B. 93 as referenced in his summary (EXHIBIT K). He made a correction of the figure for total health care cost spending in 1992 from $809 billion which has risen to $838 billion. He noted the two largest categories under health care cost are: Hospital Care and Physicians and Lab Services. He referenced page 2, (EXHIBIT K) and advised of five interrelated factors that are the root causes of high health costs.
He stated there are a number of other bill drafts which are related to these overall costs and advised the one of greatest concern to the SLC is BDR 40-1079. That was a proposal in the final recommendations of the Nevada Legislature's Committee on Health Care NRS 439B.200, number 14 of the summary recommendations, which is spelled out on page 4 (EXHIBIT K). He advised, when he testified in the interim committee in June 1992, it seemed that global budgeting was going to be one of the key features of the proposals, to cap the outgrowing hospital costs. President Clinton's administration has indicated this is part of the proposals, which they are now working on and will be announced in the beginning of May. Because of this information, and putting global budgeting into effect, this would have the effect of first setting a national budget target, which in turn would be allocated down to each state to set a state target, for total health care expendature. He explained, this means the state of Nevada would be required to fulfill its target allocated from the federal pool, and would be able to negotiate with all providers in the state to come up with how to do that. The point he stressed is that although the SLC supports the bill Senator Neal, in principle, the AARP would prefer, that if we have a choice, this could be done on a negotiating basis. If global budget is part of the future of health care as it is now being formulated, this would allow that to happen. Instead of telling each hospital that they must charge this, that or the other, it would set a budget for that hospital for the year and let the hospital determine how to spend that. He suggested, that the legislature wait and see what comes out of Washington, D.C. in May.
The AARP, SLC proposal was not a commission as this bill describes, but more of a commission of a planning function that would enable the various parties involved to come to the table to start talking. The issues are so complex that everybody is going to have to give up something in order to arrive at a satisfactory conclusion, which takes time. He suggested to start now on a planning mode, which would bring people to the table, and the process would be 2 years ahead by the time it is known what will be the federal legislation is coming out of Washington later this year.
Chairman Rawson asked Dr. Beeston, if he would work with Pepper Sturm, Research Analyst, to research the issue of global budgeting. Dr. Beeston answered, yes, it is something he has spent some time on for the last few years.
Senator Glomb referred to Patricia Jarman, Executive Director, Commission for Hospital Patients, State of Nevada, and asked if he saw that commission as a viable, possible resource and an area where the state might be able to strengthen her authority and responsibilities to fill the gap, until it is seen what is coming from the federal government. Dr. Beeston stated, the commission's authority is in terms of complaints of inpatient care for people who receive a bill that they do not understand or think they have been overcharged. She could not handle this kind of issue. The commission receives a lot of complaints about doctors and other health providers and has no power in that area.
Senator Brown expressed concern that the cost of a commission being paid by the hospital would be passed on to the consumer, increasing costs even more, and asked if AARP has an opinion on whether that would be the result. Dr. Beeston stated, a commission would cost money, and becomes part of the balance sheet.
Senator Neal asked, if he thought the legislature should have a role in controlling health cost. Dr. Beeston responded, "Not control, but an obligation to provide the health care needs of all the citizens in the state of Nevada, or ensure that they are provided, at reasonable costs for everybody and of high quality." He advised to wait and see what comes out of Washington in May because in his opinion, global budgeting is a very important part of regulating health care cost.
Senator Neal voiced his frustration, that the legislature is not able to get a handle on the health care cost. He asked, "When we put the medical CPI on, weren't we trying to regulate the health care cost?"
Dr. Beeston answered, yes and no. In 1991, when the legislature adopted that proposal in A.B. 577 of the Sixty-sixth Session, the limit was the medical CPI for urban areas.
ASSEMBLY BILL 577
OF THE SIXTY-SIXTH SESSION: Makes various changes relating to provision and costs of health care.
He advised, there are a lot of CPI's. The rate for the medical CPI for big urban areas was 7.6 in 1991, which is higher than smaller rural areas. During the same time period, the general CPI was just over 3 percent. The legislature gave the hospitals 2 1/2 times the ability to raise that charge master. The charge master, in 1991, was inflated from A.B. 289 of the Sixty-fourth Session, that was passed in 1987 by approximately 25 percent.
ASSEMBLY BILL 289
OF THE SIXTY-FOURTH SESSION: Makes various changes relating to restraining costs of medical care.
He pointed out, the CPI started off at a high level and it can be raised 7.6 percent or whatever the medical CPI is and it will continue to go up.
Chairman Rawson stated, it is the balloon concept, which looks at all factors, rather than just picking out a few things and regulating those. He added, the committee is going to be asked to do a introduction in our next meeting to make Nevada a trial state for Clinton's program.
James Wadhams, Lobbyist, Nevada Hospital Association (NHA) advised the committee NHA had asked Jeanne Dini, Director, South Lyon Medical Center to make some comments about the application of this bill, on one of the 13 public hospitals it would affect.
Jeanne Dini, Director, South Lyon Medical Center (SLMC) outlined the history and financial background of SLMC in her summary (EXHIBIT L).
Chairman Rawson advised the committee he would have to leave and would turn the gavel over to Vice Chairman Senator O'Donnell. He stated to Senator Neal, it would be his intention to put this bill into a sub-committee and asked him to chair the subcommittee. He pledged to work with Senator Neal and go over the issues carefully. At the same time, to keep an eye on what is happening in Washington, D.C. and he would expect an initial report on what kind of program the state would have.
Chairman Rawson referred to BDR 40-482, which the committee authorized an introduction on and stated it had been brought to his attention by a county representative, that a word needed to be corrected. The bill draft had detention and examination, the county wanted the word detention removed. He advised he had made the correction and delivered it to the floor.
Mr. Wadhams, briefly summarized that NHA opposed S.B. 93, however, it is not opposition to rate control. He concurred with Ms. Dini, and indicated it is a very broad-based proposal and covers all 32 hospitals in the state, plus a variety of other medical facilities, such as nursing homes, convalescent care, renal dialysis center, etc. NHA suggested that this area be reviewed to consider the breadth. He noted that rate setting is already in place in the large urban hospitals with A.B. 577 of the Sixty Sixth Session. He also noted, Medicare and Medicaid, the State Industrial Insurance System,
Civilian Health and Medical Programs of the Uniformed Services (CHAMPUS) all have limitations on reimbursement rates. The third area of limitation comes from managed care. Over 85 percent of the hospital care delivered is covered by some form of rate protection or rate negation. He concurred with Dr. Beeston that the legislature should monitor the global budgeting in the Clinton administration and wait. The final note he expounded on was on the fiscal note, which has a $3.6 million price tag and stated this would be looked at very carefully.
Mr. Wadhams stated he had been very impressed with the testimony of Patricia Jarman, Executive Director, Commission for Hospital Patients, State of Nevada. He pointed out that she indicated there was a great deal of human error in the billing process and that by requiring the bill be presented to the patient immediately upon checkout, this may eliminate errors. He stated NHA would be happy to work with Senator Neal on the subcommittee.
Dr. Beeston referenced a committee chaired by Senator Rawson that look at the uninsured in Nevada and stated that the end result was that there are 261,000 people in Nevada with no insurance. He explained this is going to have a tremendous impact in the first few years, because of the backlog of people.
Vice Chairman Senator O'Donnell assigned S.B. 93 to Senator Neal for subcommittee.
There being no further business, Vice-Chairman Senator O'Donnell adjourned the meeting at 5 p.m.
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
March 22, 1993
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