MINUTES OF THE SENATE COMMITTEE ON HUMAN RESOURCES AND FACILITIES Sixty-eighth Session April 24, 1995 The Senate Committee on Human Resources and Facilities was called to order by Chairman Raymond D. Rawson, at 1:45 p.m., on Monday, April 24, 1995, in Room 226 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Raymond D. Rawson, Chairman Senator Sue Lowden, Vice Chairman Senator Maurice Washington Senator Kathy M. Augustine Senator Joseph M. Neal, Jr. Senator Bob Coffin COMMITTEE MEMBERS ABSENT: Senator Bernice Mathews (Excused) GUEST LEGISLATORS PRESENT: Senator Dina Titus STAFF MEMBERS PRESENT: Kerry Carroll Davis, Senior Research Analyst Linda Chapman, Committee Secretary Mary Gavin, Committee Secretary OTHERS PRESENT: Chris Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources Jim Wadhams, Lobbyist, Nevada Association of Hospitals and Health Systems Mary Jo Greenlee, Administrator, Economic Opportunity Board (EOB), Clark County Adult Day Care Sharon Ezell, Chief, Bureau of Licensure and Certification, Health Division, Department of Human Resources Charles F. McCuskey, M.D., President, Nevada State Medical Association Jeffrey J. Whitehead, Attorney, Nevada State Medical Association Tyrone McSorley, Legislative Representative, Nevada Physical Therapist Association Chairman Rawson opened the hearing on Assembly Bill (A.B.) 330. ASSEMBLY BILL 330: Extends date for prospective expiration of provisions that limit increase in charges that major hospitals may impose. (BDR S- 1763) Chris Thompson, Chief, Health Care Financial Analysis Unit, Department of Human Resources, presented the committee with a Hospital Cost Containment Analysis (Exhibit C) which he highlighted for the committee in his presentation. After describing the preliminary history of legislation regarding hospital cost containment, he pointed out that at the end of the 2-year period ending 1991, they found that hospitals had generally increased their billed charges right up to the limit. He said they felt that the hospitals were unable to control their costs without some type of regulation. He added, accordingly, Governor Miller entered into negotiations with major hospitals in the state and exacted a voluntary freeze on all billed charges for the 6-month period January 1, 1991, through June 30, 1991. He said the passage of Assembly Bill (A.B.) 577 of the 66th Session provided for a 1-year freeze on billed charges, followed by 3 years where the hospitals could increase their billed charges by no more than the Medical Consumer Price Index (MCPI). He said that bill also provided for a 30 percent discount for individuals without insurance, and established the Commission for Hospital Patients within the Division of Insurance. He said those two provisions did not "sunset" and therefore no further legislation is necessary. He said the overall increase tied to the MCPI is due to "sunset" on June 30, 1995. He concluded A.B. 330 seeks to extend that "sunset" to June 30, 1997. ASSEMBLY BILL 577 OF THE SIXTY-SIXTH SESSION: Makes various changes relating to provision and costs of health care. Chairman Rawson asked Mr. Thompson what the lasting effect is of A.B. 577 of the Sixty-sixth Session. Mr. Thompson replied, at this time, the state has a control on billed charges which allows an annual increase based on the MCPI each year. Chairman Rawson asked Mr. Thompson, if A.B. 330 does not pass, if the hospitals will be allowed to raise their billed charges without limitation. Mr. Thompson answered in the affirmative. He added the Health Care Financial Analysis Unit feels that this type of control, while limited in scope, does put a cap on hospital charges and creates a situation where hospitals can continue to operate and provide the best medical technology to their patients, but cannot unilaterally raise their rates to whatever the market will bear. Chairman Rawson asked Mr. Thompson if the increases have followed the MCPI? Mr. Thompson replied, hospitals have increased their billed charges to the degree provided by law each year. He said hospitals are finding it necessary to negotiate with preferred provider organizations (PPOs), and health maintenance organizations (HMOs) and discount their ordinary billed charges. He said the marketplace has tended to control hospital costs to a reasonable degree. He told the committee this legislation is necessary because there are individuals who are not covered by HMOs or PPOs, and do not have that kind of bargaining power. He said, for those individuals and groups, it is very important that the state maintain some type of cap. Referring to page 2 of Exhibit C, Mr. Thompson explained that the billed charges have continued to rise over the period tracked, but net revenue has been very flat. Chairman Rawson asked Mr. Thompson to refer to the difference in 1988 between billed charges and net revenue as shown on the graph (page 2, Exhibit C), and compare that with 1995. He asked if it increased in such a manner that if the billed charges are adjusted by 30 percent for those people without insurance, the difference is the same as in 1988. Mr. Thompson answered it would be reasonably close. He referred the committee to the chart comparing California and Nevada inpatient revenue per discharge (page 4, Exhibit C). Mr. Thompson explained Nevada and California have comparable circumstances including the average age of the hospitals and like suppliers of medical equipment. He pointed out that in 1988 California was nearly equal to Nevada in terms of inpatient revenue per discharge. He stated, since that point, with the controls imposed by Assembly Bill (A.B.) 289 of the Sixty-fourth Session and A.B. 577 of the Sixty-sixth Session, Nevada has been able to control inpatient hospital costs and is currently approximately 13.5 percent lower than California. He said he thinks this comparison is the clearest indicator that this kind of control, while not overly intrusive, is effective. He reiterated that A.B. 330 just extends the "sunset" for 2 years. ASSEMBLY BILL 289 OF THE SIXTY-FOURTH SESSION: Establishes new programs and modifies existing state laws relative to regulation of hospitals and the costs of medical care in the state. Senator Neal asked, "In 1987-1989 and 1989-1991, A.B. 289 [of the Sixty-fourth Session] applied only to inpatient charges, is that correct?" Mr. Thompson answered in the affirmative. Senator Neal asked Mr. Thompson if A.B. 577 of the Sixty-sixth Session applied only to inpatient charges. Mr. Thompson replied that A.B. 577 of the Sixty-sixth Session applies to both inpatient and outpatient charges. Senator Neal asked Mr. Thompson if A.B. 330 applies to both inpatient and outpatient charges. Mr. Thompson replied in the affirmative. Senator Neal asked Mr. Thompson if A.B. 330 would also allow annual increases equal to the MCPI. Mr. Thompson responded in the affirmative. Senator Neal asked Mr. Thompson what the current MCPI is, and further asked for the MCPI rate for 1993 and 1994. Mr. Thompson replied the increase in 1993 was 6 percent, in 1994 the increase was 4.9 percent, and it appears the increase will be 4.9 percent for 1995. Senator Neal asked Mr. Thompson if the cost increase is based on the charge master. Mr. Thompson replied that on July 1 of each year hospitals are allowed to increase each individual charge on their charge master by the rate determined by the MCPI. Senator Neal asked Mr. Thompson if he has ever made a determination as to what the effect of that would be in terms of the overall percentage. Mr. Thompson asked Senator Neal if he meant in terms of the overall cost that hospitals charge a patient. Senator Neal asked Mr. Thompson if he has ever made an assessment of those charge items as to what the overall effect is of charging 4.9 percent (or whatever the MCPI is) for each one of those charge master items. Mr. Thompson answered, "Yes, the effect is that for any particular bill, assuming that the hospital does raise all of the items [on the charge master], the increase on that bill would be 4.9 percent." Senator Neal asked if that is what the total average would be. Mr. Thompson answered in the affirmative. Senator Neal asked, "Now, if I add 4.9 percent on a $10 bill, that would be less than say the 4.9 percent on say a $400 bill would it not?" Mr. Thompson answered, "Well, on a $10 bill, you would get a 4.9 percent increase which would mean that would be $10.49; on a $400 bill, the increase would be...4.9 percent of $400 which would be $19.96, so the bill would be $419.96. In either case, it would be 4.9 percent more." Senator Neal asked Mr. Thompson, "Is it your testimony then to this committee that, even if those charges...taking those items, item-by-item, multiplying them by 4[.9] percent...or whatever the [M]CPI is, and that comes out to a dollar figure, and that dollar figure is more than say the 4[.9] percent of the overall charges, are you saying that the hospitals then are only allowed to charge that 4[.9] percent?" Mr. Thompson replied, "What I am saying, senator, is that by limiting how much they [the hospitals] can charge for any particular item to the 4.9 percent that the total cannot be more than 4.9 percent over what the total would have otherwise been. Since they are only able to increase..." Senator Neal interrupted saying, "Let me ask you this question... what is your job?" Mr. Thompson replied he is the Chief of the Health Care Financial Analysis Unit for the Department of Human Resources. Senator Neal asked Mr. Thompson what his responsibility is in terms of the charge master. Mr. Thompson stated the Health Care Financial Analysis Unit reviews all hospital charge masters on a quarterly basis, including the review of a sampling of hospital bills to insure accuracy, and a review of any new charges. Senator Neal asked Mr. Thompson if the Health Care Financial Analysis Unit compares the current charge masters to the previous quarter to determine if any changes have been made. Mr. Thompson answered in the affirmative. Referring to page 3 of Exhibit C , Senator Neal asked Mr. Thompson if the 4.9 percent MCPI is added to those costs. Mr. Thompson said the 4.9 percent increase is what reflects the aggregate of those numbers, but those numbers are based on the actual billed charges per admission for each hospital and include the increases that the hospitals have been allowed under the law over the course of time. Senator Neal asked Mr. Thompson, "If I go back and take off 4[.9 percent]...say whatever the year was, and which you added to [M]CPI it would give me the actual cost of charges that the hospital was costing the patient per admission?" Mr. Thompson explained on a billed charge per admission basis it would not necessarily come out to exactly the 4.9 percent or whatever the percentage was... Senator Neal interrupted again asking, "What would it come out to? We are trying to understand how you get at these figures, and how they are being utilized, and whether or not, you know, we [are] engaging in [a] scheme here where the people are continuing to be ripped off by hospitals!" Mr. Thompson said on an overall basis numbers vary as a result of varying hospital practices, but the bottom line indicates the annual percentage increase is very close to the MCPI increase. Senator Neal asked Mr. Thompson, "Is it your testimony to this committee that these figures, the billed charges per admission, represent what the [M]CPI were in terms of the figures here...that if I took any one of these particular years, 6/90, 6/91, go back and check the [M]CPI...for that particular period, and take that amount out, I would get the true figure of what the billed charges were for those hospitals? Is that your representation to this committee?" Mr. Thompson answered, "No, senator, what I am saying is that as far as the billed charges of the individual hospitals are concerned, that they did only increase by their allowable...the allowable percentage which was, for the most part, the [M]CPI. As far as their billed charges are concerned, I do submit that is the case. As far as billed charges per admission is concerned, there are more factors beyond just the individual charges...the variances from those MCPI amounts would be indicative of the changes that they [the hospitals] are making in the severity of the patients, the length of stay and the practice patterns [of the hospital]." Senator Neal asked Mr. Thompson, "Is the billed charges based...is the [M]CPI...that medical component [I have to say that in order to get at what I'm talking about]...is that based upon the billed charges or the net revenue?" Mr. Thompson answered, "The MCPI is based on what individuals pay..." Senator Neal interrupted saying, "I understand you guys always ask the...answer the question that you ask, so let me put it more directly to you: is the [M]CPI medical component...is that computed on the basis of the billed charges or the net revenue?" Mr. Thompson said, "Senator, I am not sure. I believe that it would be on the basis of the net revenues, but those calculations are made by the Commerce Department for the federal government and I know that there are a lot of factors that go into those calculations that are beyond what we have here." Senator Neal said, "What commerce, you are losing me now. I thought, you applied...the 4[.9] percent or whatever the [M]CPI was...to these particular charges, or allowed the hospitals to do that." Mr. Thompson replied the 4.9 percent increase applies to the billed charges, not the net revenues. He explained he thought Senator Neal was asking how the 4.9 percent is determined. Senator Neal asked Mr. Thompson if the calculation was made on the total of billed charges, rather than item-by-item, the totals would be greater. Mr. Thompson replied the calculation would be the same, based on the same charges. Senator Neal requested that Mr. Thompson do those calculations on an actual bill and present it to the committee as an example so they can compare it. He said he does not mean to hold up the bill, but thinks there is a problem in terms of how the 4.9 percent is applied. Senator Neal asked Mr. Thompson if there are other means by which a hospital can increase its costs. Mr. Thompson replied hospitals are allowed to add items to their charge masters such as new drugs or medical supplies, but said once those items are in the system, subsequent increases are limited to the percentage of increase as determined by use of the MCPI. Senator Neal asked Mr. Thompson what effect the financial condition of the hospital has on this process. Mr. Thompson replied the language in the bill relative to the financial condition of the hospital was included because concern was expressed by the hospitals that this program may be too onerous and cause a hospital to experience financial difficulty. Senator Neal asked Mr. Thompson if that provision has ever been utilized. Mr. Thompson replied it has not. Chairman Rawson expressed his amazement that the cost per patient per discharge has actually gone down over the time period tracked. Mr. Thompson said it is clear that this has been a very successful program. He said the reason the state totals have gone up more than the individual hospitals is because this law applies only to the five large hospitals. Chairman Rawson stated in A.B. 289 of the Sixty-fourth Session there was an indigent concern, and asked Mr. Thompson if there are any provisions in A.B. 330 for indigents. Mr. Thompson replied there is nothing in A.B. 330 that speaks to that issue, but said the current provisions are in abeyance because of the hospital tax and disproportionate share program. He explained, effective July 1, 1995, those provisions will again be applied, and each hospital in Clark and Washoe counties with over 100 beds will be required to provide at least six- tenths of 1 percent of their net revenue for indigent care as determined by those counties. Chairman Rawson asked Mr. Thompson if that applies to true indigents, excluding Medicaid patients. Mr. Thompson answered in the affirmative. He pointed out those are the patients for which the counties would otherwise be required to pay. Chairman Rawson asked Mr. Thompson how the issue of intergovernmental transfer of patients is handled. Mr. Thompson answered, "Based on the proposal at this time, since we would not have an overall hospital tax, and would not have a disproportionate share program, that would affect all of the hospitals. The intention would be that [the] provision [six-tenths of 1 percent] would come back into place, and there would be no law required for that to happen." Chairman Rawson asked Mr. Thompson if that is included in the budget calculation. Mr. Thompson replied those numbers do not affect the state's budget, but the counties calculate their budgets based on the return of the six-tenths of 1 percent. Chairman Rawson asked Mr. Thompson what amount of money the six- tenths of 1 percent represents. Mr. Thompson replied the total for Washoe County is just over $1.5 million, and he would guess the total for Clark County to be about $4 million. He said that figure includes the University Medical Center (UMC). Vice Chairman Lowden asked Mr. Thompson if indigent patient charges are based on the normal charge master figures. Mr. Thompson answered in the affirmative. Vice Chairman Lowden commented the hospitals are not necessarily expending as much as the charges indicate. Mr. Thompson replied indigent care, as far as the counties are concerned, works essentially like a PPO in that the amount the counties agree to pay is separate and apart from the billed charges. He said, for example, Clark County pays between $1,000 and $1,200 per day for indigent care, even though the billed charges would typically be between $2,700 and $2,800. Vice Chairman Lowden asserted the difference between the billed charges and the amount the counties pay represents quite a profit margin. Mr. Thompson replied the amount the counties pay is comparable to the actual expense of the hospital. He pointed out in 1994 the total operating expense per day, for all hospitals in the state, was $1,214. Senator Neal asked Mr. Thompson what the source is for the figures on page 3 (Exhibit C) listed as Net Revenue Per Admission. Mr. Thompson told the committee the hospital quarterly reports filed with the Department of Human Resources are the source. Jim Wadhams, Lobbyist, Nevada Association of Hospitals and Health Systems, testified he was appearing in support of A.B. 330, for the reason that 83 percent of hospital charges today are based upon contracted rates, not necessarily managed care contracts (which represent over 18 percent), but contracted rates set by some external authority beyond the pricing structure or discretion of the hospital. He said the charge master (which he likens to the sticker price on an automobile) has little relevance to the actual cost of health care except for the 17 percent of patients who pay "full fare." He suggested hospitals are no longer drivers of health care, but are merely components of the structure where managed care organizations are the primary force. Senator Neal commented it is interesting to hear Mr. Wadhams say that this has little relevance in terms of cost. He asked Mr. Whitehead if this is "just a 'feel good' measure, where we can go home and tell the folks that we have frozen their hospital charges, when in reality we have not done a...thing?" Mr. Wadhams replied that it is relevant to 17 percent of the marketplace, that pays "full fare." He suggested the whole system of third party payment and delivery of care have dramatically changed causing the variance between billed charges and net revenue to be so significant. Senator Neal asked Mr. Wadhams if this particular measure allows hospitals to increase their billed charges and thereby allows them to recuperate money which they have voluntarily decided to discount. Mr. Wadhams said it seems to him that it operates in the reverse. He said to the extent that major purchasers of health care negotiate lower prices than the billed charges puts downward pressure on the increases. He said he believes that it will continue to benefit those in the 17 percent that are exposed to the actual charge master increases. Senator Neal asked Mr. Wadhams if he was saying that discounted rates are not included in the billed charges. Mr. Wadhams replied he is not entirely sure how that is done. Chairman Rawson explained that the negotiated discounts are included in the net revenue figures. Mr. Thompson clarified that the billed charges per admission do not reflect any discounts; and the net revenue per admission reflects all discounts, bad debts, and free care. Mr. Wadhams again likened billed charges to the sticker price on an automobile, and net revenue to the amount a person actually pays for that automobile. Chairman Rawson closed the hearing on A.B. 330 and asked for committee introduction of a bill draft request (BDR). BILL DRAFT REQUEST 40-1376: Require parental notification for minors seeking an abortion. SENATOR NEAL MOVED FOR COMMITTEE INTRODUCTION OF BDR 40- 1376. SENATOR WASHINGTON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Chairman Rawson opened the hearing on Senate Bill (S.B.) 362. SENATE BILL 362: Expands circumstances under which practitioner may refer patient to health care facility in which he has financial interest. (BDR 40-483) Senator Titus told the committee that the main intent of the bill last session was to say that a physician could not refer to a diagnostic lab, or magnetic resonance imaging (MRI) lab, or other facility in which he has a financial interest. She explained the reason was that they were trying to bring down the cost of health care, and if the physician has a financial interest in a lab to which he can self-refer, the likelihood for overusage, and therefore increased cost, is very great. She stated multiple studies have shown that to be the case. She said S.B. 362 modifies the self-referral statute. She asserted when the restriction on self-referral was included in the State Industrial Insurance System (SIIS) bill, a number of practicing physicians who regularly treated injured workers within SIIS also had an ownership share in the diagnostic labs that performed the lab tests. She pointed out that late in 1992, SIIS signed sole source contracts for those tests and all referring physicians were required to send their patients to the designated labs. She said the results were more dramatic than expected. She explained they expected there to be a savings to the system for each and every patient given a computerized tomography scan (CT scan) or MRI, but unexpectedly there was a dramatic reduction in the number of tests ordered. She stated there were 7,000 MRIs ordered the year before the sole source contract went into effect and less than 4,000 the year after. She further stated there were 2,000 CT scans ordered the year before the change, and only 796 the year after. She insisted those statistics elucidate the effect the self-referral restriction has on health care costs. She explained one problem that resulted after the self-referral bill went into effect was brought to her attention by several doctors who are concerned that the way the language is written, if they have a main office, and another office elsewhere where they practice 2 days a week, they cannot send their patients back to the main office to take advantage of the facilities there. She said she assured them that she would clean up that language because that was never the intent of the Legislature. Senator Titus told the committee page 1, lines 20-24, attempts to clean up that language, and on page 2, line 9, eliminating the definition of group practice also attempts to clean up the language. Chairman Rawson asked Senator Titus if the net effect of the bill is just to straighten things out for nephrologists and urologists? Senator Titus maintained the practice of nephrologists and urologists is not an area where there is a problem of over self- referral. She said by taking out the definition of group practice, the four walls provision which currently prevents doctors from having auxiliary offices is removed. Senator Neal said: Now, as I understand this Senator Titus, the operative language is found in subsection 1, and the exclusion is subsection 2, and when we go down and look at this, it does not apply to service or goods required by a patient that are not otherwise available in a 30-mile limit, does not apply to service or goods as provided pursuant to a referral to a practitioner who is practicing health care plan, health maintenance organization, and it does not apply to [a] practitioner who is a member of a group practice and the referral is made to the group practice, and does not apply to the referral made to surgical center of ambulatory patient as defined in [Nevada Revised Statutes {NRS} 449.019] and licensed pursuant to chapter 449 and it does not apply to the referral that is made by a urologist and whatever that other word there is...a practitioner at any health facility that provides services to [a] practitioner's office. It does not apply to the financial interests represented in investment and security under [the] exchange commission in a cooperation that has a shell equity of more than $100 million. That means that, that last one there, that it applies to anything over $100 million, right? Is that what that is saying? So, anybody who has an investment of $100 [million] or less, it would not apply to, is that correct? Senator Titus stated, "This is existing language." Senator Neal said, "I know this is existing language, but you are fixing existing language." Jeffrey J. Whitehead, Attorney, Nevada State Medical Association, came forth to explain that the language Senator Neal referred to in his question to Senator Titus refers to someone who has an interest in a large, publicly traded corporation that has a value of over $100 million dollars. He said the logic behind it is that one referral to a company that has assets that large will have no impact upon the dividend returned to the referring individual. Senator Neal said, "So then, I gather then what is being taken out on page 2, line 9 through 24, that is kind of the heart of the bill, and it seems to me that we [are] right back where we were." Senator Titus emphasized she does not want that to happen. She said, as she understands it, this will keep it intact. She said that if she thought this was going to defeat the bill, she would never have presented it. She said her understanding is that the amendment will just remove the problem of physicians referring within a group practice or from their own office to another office, and will not open it up for everybody else to self- refer. Vice Chairman Lowden asked Mr. Wadhams if he has any statistics showing that this legislation has actually cut down on overutilization during the last couple of years. Senator Titus reiterated the SIIS statistics related to CT scans, and MRIs. Chairman Rawson explained that those statistics are all SIIS related. Vice Chairman Lowden stated that when citing SIIS figures, as proof of effectiveness of the legislation, it is like comparing apples and oranges, since SIIS was operating under an MCO during that time period. Chairman Rawson opened the hearing on Senate Bill (S.B.) 363. SENATE BILL 363: Exempts certain facilities for care of adults from payment of fees related to licensure. (BDR 40-1172) Senator Titus told the committee she sponsored this bill on behalf of Hollyhock Day Care Center for Adults, and other facilities of that type. She said she has first hand knowledge that they do a wonderful job providing respite care to relieve individuals who have the responsibility of full-time care for adults. She maintained they operate on a shoestring, utilizing volunteer services, and receive minimal funding. She suggested this bill would allow them to be exempt from some licensing fees currently imposed. Mary Jo Greenlee, Administrator, Economic Opportunity Board (EOB) of Clark County Adult Day Care, referred the committee to Exhibits D, E and F, which includes a letter from Dr. Burton V. Reifler, Ms. Greenlee's reasons for requesting exemption from the licensing fees, and an EOB budget status report, respectively. Ms. Greenlee pointed out that adult day care centers really need to grow. She stated there are approximately 2 million nursing home beds, but only about 100,000 adult day care slots. She explained one of the reasons is that the climate is not conducive to adult day care, and asserted until Nevada supports adult day care centers, and sees them as a viable alternative to nursing home placement, realizing that they are a cost saving measure, adult day care centers will not flourish in this state. Chairman Rawson asked Ms. Greenlee who provides payment for adult day care. Ms. Greenlee said Medicaid reimburses adult day care at the rate of $31 per day. She emphasized, prior to last week, the adult day care centers were receiving only $25.20 per day. She stressed both amounts are below the $35 actual cost of care. She said her adult day care program has been operating in a deficit situation for the last 4 years. She stated the licensure fee of $5,000 is overwhelming, and the board of health waived those fees this year. Chairman Rawson asked Ms. Greenlee for a listing of the fees she would like to have waived. Ms. Greenlee replied she is asking for a waiver of the licensure fees, which are currently $25 per person and $150 per facility. She said the Hollyhock Center is licensed for 110 individuals and the Lead Center is licensed for 60 individuals which amounts to $4,700 per year. Chairman Rawson asked Ms. Greenlee what those fees are ostensibly used for. Ms. Greenlee deferred to Sharon Ezell, Chief, Bureau of Licensure and Certification, Health Division, Department of Human Resources, who told the committee the fees cover the cost of personnel and operating costs in licensing all types of medical and dependent care facilities. She said the adult day care facility is a dependent care facility, and the fees cover the cost of conducting licensure visits which can consume 60 man hours. Ms. Ezell submitted Exhibit G to the committee outlining her position on S.B. 363. Chairman Rawson asked Ms. Ezell how often the reviews take place. Ms. Ezell replied annually. Chairman Rawson asked if that was in accordance with State Board of Health regulations. Ms. Ezell answered in the affirmative. Chairman Rawson further asked if there are any federal regulations, or funding implications. Ms. Ezell said there is no federal regulation of adult day care centers. She said Medicaid and Title 3b of the Older Americans Act, have oversight requirements. Chairman Rawson asked if Title 3b funds are used for adult day care. Ms. Ezell answered in the affirmative. Chairman Rawson stated there is an issue of certification or loss of federal funds if the state does not properly supervise [those programs]. Ms. Ezell replied, as she understands it, if the Legislature does not require licensure of adult day care facilities, there is no problem with federal funding. Chairman Rawson asked Ms. Ezell if she has any concerns with the waiver of licensure fees. Ms. Ezell replied she has none, whatsoever, and proposed that this is the perfect opportunity for deregulation. She said there are only eight of these facilities at the current time, and 88 percent of the beds are in large nonprofit facilities. Chairman Rawson stated the counties have examined the issue of child care and decided that they needed more control, and require a license in homes where only two children are cared for. He asked Ms. Greenlee if specific requirements are made of child care providers, why those same requirements are not important in adult day care centers. Ms. Greenlee replied they are important in adult day care, but said the same oversights are conducted by other local agencies. Chairman Rawson asked Ms. Greenlee if there are any county regulations imposed on the facilities. Ms. Greenlee answered no, although they do have a contract with the county which monitors them on a quarterly basis. Chairman Rawson asked Ms. Greenlee in what regard the county monitors them. Ms. Greenlee said they inspect the facility for safety and cleanliness, and check their records for accuracy. Chairman Rawson asked Ms. Greenlee if there are regulations or a standard set of criteria by which all facilities are judged. Ms. Greenlee said the county uses Medicaid regulations. Ms. Ezell added these facilities, through the reimbursement process, are regulated both by Medicaid and the Aging Services Division, whose regulations are more extensive than the Bureau of Licensure and Certification's. Chairman Rawson asserted he would like to establish a consistent policy, and added it may be that some of the child day care rules and regulations need to be relaxed. He asked Ms. Greenlee for a list of all licensing and rule making bodies to whom she must report. He further asked Ms. Greenlee if the county imposes any fees. Ms. Greenlee replied they do not. Senator Augustine said, the way she reads the bill, the exemption applies to the fees for licensure, but not the licensure. Ms. Greenlee nodded her assent. Chairman Rawson said the committee needs to make sure they are looking at the whole picture, and asked Ms. Greenlee to delineate all of the fees for which her adult day care facilities are liable. Ms. Greenlee stated they receive funding from: Title 20 through the state; Medicaid; Title 3b; the Veteran's Administration; United Way; and Clark County Social Services. She pointed out that each of those entities monitor them on a quarterly or annual basis. Chairman Rawson asked Ms. Greenlee if there is a county business license fee. Ms. Greenlee responded, because they are private and nonprofit, their business license fees are waived by the county. Chairman Rawson asked how many people they hire to keep up with the paperwork. Ms. Greenlee said approximately two people are required to keep up with the paperwork to comply with all of the regulations. Senator Augustine said, while she understands the needs of the eight adult day care centers mentioned, she thinks this bill may be so broad that it could get them into trouble with those who provide care for Alzheimer patients, or whatever else, during the day. Ms. Greenlee told the committee there is a separate licensing procedure for group care homes. Senator Augustine told Ms. Greenlee the way the bill reads: "a facility for the care of adults," it is not clear that it only applies to those eight facilities in the state. Chairman Rawson said he would accept testimony on S.B. 362. Charles F. McCuskey, M.D., President, Nevada State Medical Association (NMSA), read his prepared written testimony (Exhibit H) expressing the support of the NSMA for S.B. 362. Mr. Whitehead told the committee the request to strike lines 20 through 24 from the bill, intended to allow sole practitioners to do what the state allows the groups to do: own the tools of their trade. He stated it does not affect licensure or any other issue. He insisted that language is important because, otherwise, group practitioners have rights which are denied to sole practitioners. Chairman Rawson asked Mr. Whitehead if he is aware of any business failures due to this legislation. Mr. Whitehead replied he is aware of substantial lawyer and accountant fees being paid by physicians in restructuring their offices which contributes nothing to productivity, or increased quality of health care. Chairman Rawson asked Mr. Whitehead if it was this particular legislation that caused the failure of Women's Hospital. Mr. Whitehead replied he is not sure. Senator Titus said it is her understanding that lines 20-24 just added confusion. She said if there is a way to clarify those lines they may not need to be stricken. Mr. Whitehead told the committee it simply says that a doctor of obstetrics and gynecology (OBGYN) could own an ultrasound machine and would not have to refer his patients to another facility for that procedure. He said the problem they encountered concerned a nephrologist operating under a tightly controlled Medicare program where no one but physicians owned the required equipment. He said because all of the advances in medical technology cannot be anticipated, it is necessary to allow those who can employ the appropriate technology for their own patients to do so. Tyrone McSorley, Legislative Representative, Nevada Physical Therapist Association, read from prepared written testimony (Exhibit I) to express the association's views on S.B. 362. Vice Chairman Lowden asked Mr. McSorley if he could provide the committee with any statistics based on Nevada in the last year that show that there has been a great reduction in medical costs as a result of the doctors not being allowed to self-refer. Mr. McSorley said he cannot. Mr. Whitehead told the committee that the Nevada State Medical Association opposes the revision proposed by the Nevada Physical Therapist Association on the grounds that it addresses a scope of practice issue and is not duly in front of this body. He further stated the proposed amendment poses an unnecessary restriction. Senator Coffin asked Mr. Whitehead if the Nevada State Medical Association has any objection to the repeal of the legislation. Mr. Whitehead replied that he supposes they would be in favor, but does not want to speak to that issue without the benefit of consultation. Mr. Wadhams told the committee he represents Dr. Larry Lerner, and Dr. Paul Stewart who support the amendment contained in this legislation. He explained Dr. Lerner is a nephrologist who sees patients in his office on Rancho Road, but whose hemodialysis clinic is on Charleston Boulevard. He said since the offices are not physically contiguous, if the law is passed, it would preclude him from conducting his practice. Chairman Rawson closed the hearing on S.B. 362, S.B. 363, and A.B. 330. There being no further business before the committee, Chairman Rawson adjourned the meeting at 3:50 p.m. RESPECTFULLY SUBMITTED: Linda Chapman, Committee Secretary APPROVED BY: Senator Raymond D. Rawson, Chairman DATE: Senate Committee on Human Resources and Facilities April 24, 1995 Page