The Committee on Health and Human Services was called to order at 1:35 p.m., on Monday, February 15, 1999. Chairman Vivian Freeman presided in Room 3138 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mrs. Vivian Freeman, Chairman

Mrs. Ellen Koivisto, Vice Chairman

Ms. Sharron Angle

Ms. Merle Berman

Ms. Dawn Gibbons

Ms. Sheila Leslie

Mr. Mark Manendo

Ms. Kathy McClain

Mr. Kelly Thomas

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS ABSENT:

Ms. Barbara Buckley

GUEST LEGISLATORS PRESENT:

Assemblyman David Goldwater, Assembly District 10

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Assembly Bill 69: Revises provisions governing payment of hospitals for treating disproportionate share of Medicaid patients, indigent patients or other low-income patients. (BDR 38-912)

David Goldwater, identified himself and said he represented Assembly District 10. He presented A.B. 69 which revised provisions of the state law regarding disproportionate share (DSH). Federal legislation created in 1991 by Representative Henry Waxman of California, gave hospitals that provided a large proportion of uncompensated, indigent, or Medicaid care additional funds to offset the cost. It was originally funded through a provider tax in the State of Nevada, through the Medicaid program. Other states and programs had different ratios of matching funds, but in Nevada it was a 50 percent match. Previously, Nevada raised the match through a tax on providers. That changed in 1995, when 50 percent of the matching money came from the county of origin. The federal government then matched the other 50 percent. The money was supposed to go to the hospital that provided the disproportionate share coverage. What happened, however, was the county money and the federally matched money went into the state Medicaid program. The total bundled sum of what was intended to be disproportionate share was then returned to the county; an amount that equaled about 60 percent of what they had originally put in. He remarked the county would have done better keeping their match at home and not getting any federal money.

Under A.B. 69, the county would put in their share, the Federal Government would put in their share, and the state would be allowed to take only 10 percent of that money. The state would allocate the remainder of the disproportionate share to the hospitals with the appropriate proportion of disproportionate uncompensated care. That was the intent of the bill; however, Mr. Goldwater stated it was not a perfect piece of legislation. Amendments might be required.

Mr. Goldwater then introduced Bill Hale, of the University Medical Center of Southern Nevada.

Bill Hale identified himself as Chief Executive Officer of the University Medical Center of Southern Nevada. He stated DSH was a hospital payment system established by the Federal Government that reimbursed hospitals that provided a disproportionate amount of uncompensated care. The State of Nevada qualified for the money based on the uncompensated cost in public hospitals only according to DSH limits. Nevada's DSH limit was $73 million for public hospital's cost of care. Mr. Hale referred to Exhibit C, page 1, which showed DSH payments for the year ended 1997. He stated the intent of A.B. 69 was to limit the state's administrative costs to 10 percent of the total amount of eligibility. The calculation protected the state's rural hospitals that were in severe financial crisis. It also protected other non-public Nevada hospitals that provided disproportionate uncompensated care.

Mr. Hale requested an amendment to A.B. 69, outlined in Exhibit C, page 2, which repealed NRS 422.385, to insure the money would go to the hospital. The intent of the Federal Government was to provide services to people without insurance in the sole-community-provider-type hospitals. Therefore, the state, through the legislative process, was requested to reallocate the monies for DSH to those hospitals that actually provided the highest percentage of uncompensated costs. That would provide an additional $10.6 million in funds to the hospitals.

Chairman Freeman thanked Assemblyman Goldwater for the overview provided, and asked Mr. Hale if NRS 422.385 was repealed would Medicaid funds for children's health insurance plan be deleted. Mr. Hale responded affirmatively, intergovernmental transfers were being used to fund the children's program with excess monies. He was not clear how the state planned on budgeting that in the new fiscal year. He had suggested that NRS section be repealed to make it clear the DSH payments go to the hospitals and not back to the state.

Robert Barengo identified himself as representing Sunrise Hospital, and introduced Mitch Mitchell, Chief Executive Officer of Sunrise Hospital. Mr. Barengo stated they were not opposed to A.B. 69, however felt it would be a good bill on which to open discussion of the DSH program.

Mitch Mitchell identified himself as President and Chief Executive Officer of Sunrise Hospital and Medical Center (SHMC), and Sunrise Children's Hospital (SCH). He stated care for Medicaid patients, indigent, and other low-income patients was available and accessible through all community health care providers. Those patients did not differentiate between taxable and non-taxable status when they went in for care and treatment. SHMC and SCH provided nearly 21,000 patient days of care for Medicaid patients for fiscal year ended 1997, or $28 million of charity care for the 12 months ended June 30, 1998; slightly less than half the amount provided by University Medical Center for the same period.

Mr. Mitchell requested the Committee on Health and Human Services to consider not only whether the state had the right allocation for its needs but, that all hospitals in the state who provided care for a Medicaid population were appropriately reimbursed for the costs incurred.

Mr. Barengo asked the committee to look at the true intention of Congress, which had been to reimburse the hospitals serving those populations

Chairman Freeman asked Mr. Barengo to elaborate on what Congress had currently done on the issue. Mr. Barengo responded in the last budget review Nevada had maintained its budget dollars and other states had been moved. That budgeting process would be in place for 2 more years.

Fred Hillerby identified himself as representing Washoe Health System (WHS), a non-profit corporation located in Reno, that owned Washoe Medical Center (WMC). WHS/WMC supported the amended version of A.B. 69. He reiterated the congressional intent for the DSH hospital program was that DSH payments go to the hospitals for that care. The way it had been structured in Nevada, a significant number of those dollars had gone to fund Medicaid generally instead of dedicating general fund monies for that purpose.

Chairman Freeman asked Mr. Goldwater if the hospitals were reimbursed at 70 percent of cost. Mr. Goldwater responded there was not a fixed percentage, rather a "rule of thumb" he determined to be about 60 percent of the total intended for DSH. Mrs. Freeman stated section 1 indicated "must not exceed 10 percent of the total payments." They were still reimbursed for only 90 percent. Mr. Goldwater added there was an administrative cost for the DSH program, and state Medicaid should not be left out. However, it did not cost as much as they had taken. He reiterated he had looked at the intent of Congress and that was what they were trying to get to the hospitals.

Charlotte Crawford identified herself as Director of the Department of Human Resources (DHR), and introduced Janice Wright, Acting Administrator of the Division of Health Care Finance and Policy (HCFP). Ms. Crawford stated they would be happy to work with Mr. Goldwater on A.B. 69. It was a complex area and hard to understand until one looked at the detail in statute, in the Medicaid state plan, and federal law in that area. DSH was frequently confused and used as another term for what had become the "intergovernmental transfer process." She offered to make clear at a later date how they were separate and how they were related; that relationship was integral to decisions made. DHR's analysis was not the same as what had been reflected by previous speakers. Ms. Crawford explained, the department spent approximately $200,000 in administrative costs for DSH, currently allowed under statute, and were the first dollars out. DSH payments had not gone to the state. DSH payments were allowed by Medicaid and were allowable for federal participation to pay hospitals for uncompensated care costs to Medicaid and indigent individuals. DSH payments were made prior to the provider tax and prior to the inter-governmental transfer, at a distinctly lower level than currently. Slightly over $73 million were distributed in DSH payments to Nevada hospitals. Prior to the provider tax, it was below $2 million in DSH payments. The provider tax vehicle was paired with DSH in Nevada, as it had been in other states, to develop a mechanism that allowed states to increase their distribution to hospitals, allowed states to generate funds to support that payment, and support other health care projects. In Nevada, it supported only Medicaid. Congress expressed distress at that in the early 1990s, and in 1992 passed legislation that restricted provider taxes and donations to Medicaid programs to address the problem.

Ms. Crawford added the current level of DSH in Nevada, slightly over $73 million, was the level of our program. It had been frozen by federal legislation until the state reached 12 percent of Medicaid spending, before DSH payments could be increased. Nevada had not reached that mark. In the last congressional session they looked closely at how states used their disproportionate share, particularly at high DSH states that exceeded 12 percent, which Nevada had.

Nevada was the only state that retained its DSH level, so the $73 million had been a cap for Nevada for some time. It would be a guaranteed cap for the next 2 years; Nevada had been allowed to expend that amount with federal participation. It was relevant to know how the determination for rural and small hospitals as well as public and other hospitals had been made.

Continuing Ms. Crawford said the intergovernmental transfer had been an alternative process not directly connected to DSH. It had enabled DHR to maintain the level of DSH payments to hospitals and allowed the state to bring in any net benefit that went toward supporting Medicaid. The net benefit to the state was currently under $16 million a year. That sum was built into the Medicaid budget, not into a reserve. Those funds were needed to support the existing Medicaid program without additional expansions in recipients or benefits for the next biennium. There would be a budgetary impact if DHS was changed in any way relative to the inter-governmental transfers and the relative benefit received by the hospitals in aggregate in the state in its Medicaid program.

In conclusion, Ms. Crawford stated DHR's analysis was different in its impact as the bill was written. The addition of Mr. Hale's amendments would change their analysis. She would be glad to work with Mr. Hale and Mr. Goldwater, but wanted them to be aware it was a critical decision for the state Medicaid program and for the various hospitals.

Janice Wright, HCFP, stated she and Ms. Crawford had an opportunity to address some of those issues with Mr. Goldwater earlier and they would work on clarification.

Mr. Goldwater responded he appreciated the offer to work with Director Crawford. The core issue concerned $73 million in gross DSH payments the state had received. That money had been intended for the disproportionate share of hospitals. The problem had been the net payment to hospitals which had been only $37 million, which had resulted in the bill. Director Crawford had been correct that it would leave a hole in the Medicaid budget; there would be a severe Medicaid shortfall. If it was the policy of the committee that hospitals with a disproportionate share of indigent care receive DSH money, A.B. 69 should be passed. The state could not use DSH money to pay for other Medicaid programs. He said he would work with the state.

Assemblywoman Buckley asked what the affect had been on Clark County and on the rest of the state by taking the DSH money to supplement the Medicaid budget. Mr. Goldwater responded the spreadsheet (Exhibit C) reflected that cost. The cost had been approximately $5.6 million in Clark County alone; that figure represented what Clark County's DSH program was contributing to Medicaid.

Ms. Buckley asked if that had been built into the base budget, and what about the other programs. Ms. Crawford replied prior to the provider tax era, the state had little ability to provide a separate payment in addition to payment for services under Medicaid, to help defray those uncompensated costs. The state had generated a benefit for its programming which had been built into the budget; DHR had not disputed that. How uncompensated care costs for hospitals should be defrayed had been a policy issue, one on which DHR was always glad to work with other interested parties. When uncompensated care costs were examined, the ability to help address those for all hospitals had been dependent on their ability to generate alternative revenue. First it had been the provider tax, then the intergovernmental transfer. The benefit taken by the state and by the hospitals had changed in different versions over the years. If the state had not had some means to generate the revenue to help make those payments for which the Federal Government had participated and added additional amounts to the pool, it would have damaged everyone involved in that endeavor. In that particular scenario, DHR's analysis indicated that Washoe County would reap a substantial benefit because in statute their benefit was capped at a dollar level set by the legislature. It had a relationship to the transfer from Washoe County, so when those various caps were removed it should be understood what happened to each piece of the formula.

Mr. Goldwater stated he did not believe any of the counties disputed the inter-governmental transfer, or that some contribution from that entity would go away, and emphasized it certainly had not been the intent of the bill.

Chairman Freeman asked, in researching the issue with other states which had a broader tax base than Nevada, had he learned how those other states were doing. Mr. Goldwater answered there were 49 other states that had a higher percentage increase of per capita cost for uncompensated health programs, so "We were dead last in what we provided to programs for uncompensated care." Nevada also had one of the highest rates of uninsured.

Assemblywoman Von Tobel asked Mr. Hale if the uncompensated costs were considered receivables. He answered receivables were stated as gross charges. That was the actual cost of providing care to people eligible for Medicaid, the indigent, and charity cases, and the difference between what Medicaid paid and the actual costs. There had been three separate categories of people, so when UMC spoke of receivables they had been stated at gross charges, not at cost of providing care to those three populations.

Ms. Von Tobel said she had heard UMC's receivables had been quite high in the past. Mr. Hale answered UMC's receivables were at 110 days. Receivables would be at 70 days, however, UMC provided care to more Medicaid patients than any hospital in the state, and because of the time required for many people to become eligible for Medicaid (up to two years), it took a long time for the claim to be processed.

Ms. Von Tobel asked if those additional revenues would change UMC's receivables. Mr. Hale said, "No," but it would help offset the cost of providing care.

Chairman Freeman asked what percent of UMC's total budget was attributed to uncompensated costs. Mr. Hale replied approximately 25 to 30 percent.

Bill Welch identified himself as representing the Nevada Rural Hospital Project (NRHP). He stated NRHP had nine hospitals in rural Nevada that showed a deficit situation in the last fiscal year. Additionally, they had nine hospitals that received district tax dollars of approximately $8 million a year to assist in meeting their overhead operating expenses. NRHP supported legislation that would redirect funds to go directly to the hospitals. If A.B. 69 as amended could achieve those goals, NHRP would support that bill. He indicated Ms. Crawford had mentioned some issues that he believed had been addressed. However, he wanted to review those and to the extent they had a negative impact, NRHP would reconsider the legislation and would make appropriate amendments to it.

Assemblywoman Gibbons asked Ms. Crawford if it would be acceptable to amend the time the legislation became effective. Ms. Crawford said she would have to look at that very carefully; her initial impression would be "No." Delaying the onset of that type of change, 2 years would only delay the issue. She stated concern with how the legislation was currently written and how it impacted a number of hospitals. DHR's analysis was different than the analysis done by others, part of the difference was what some of the assumptions were and the actual methodology for payment. She would not make any commitment without having had a clear discussion with all parties as to what they intended as well as what had been written. She believed there might be assumptions, such as the 10 percent cap on administrative costs to Medicaid. She did not believe the intent had been on administrative costs, rather it had been to limit the state benefit.

Assemblywoman Gibbons wondered if the legislation was passed could it be worked out with the Committee on Ways and Means. Something needed to be done with the federal dollars; the intent had been the Federal Government wanted the state to do that with those dollars. Ms. Crawford responded the federal intent had been there and preceded the ability of the state to make its DSH payments anywhere close to what it now was. If the intergovernmental transfer was eliminated, the state would be taken back in time to where DSH payments were at a level below $2 million. The Federal Government gave that as an available avenue to allow states to make a separate payment to defray uncompensated care costs. That was the intent in which they agreed to participate. The Federal Government had not made it a mandate, nor had they set the level and in fact there had been a significant level of flexibility as to how states defined DSH hospitals. Therefore, it would be an incorrect assumption the state had somehow misdirected the intent of Congress, and that by simply changing language to say those funds would proportionately go to hospitals the state had corrected the issue. It had been an extremely complex funding and payment issue. Within the DHR it had involved a complicated and intricate set of exchanges that were separate yet at the same time were related at the funding level. The policy and the financing went hand-in-hand in that arena.

Chairman Freeman stated in her experience in health care in the State of Nevada, the state had never really "stepped up to the plate" in its obligations to Medicaid. It had been very complicated and involved many areas of concern including the governor's budget. Nevertheless, Mr. Goldwater stated it had been a policy issue legislators needed to address. She believed the committee would meet its responsibilities to the state in areas of Medicaid. She added her concern about removing the money for children's health care insurance which had been needed for so long.

Mr. Barengo clarified his earlier testimony. The reason SHMC had neither supported nor opposed A.B. 69, rather had stated it was time to open the discussion on the bill, was that in spite of being the second largest provider in the state, SHMC did not participate in DSH.

Mr. Goldwater stated the budget issue would need to be taken up with the Committee on Ways and Means.

Chairman Freeman concurred and stated A.B. 69 would be rereferred to Committee on Ways and Means.

Chairman Freeman closed the hearing on A.B. 69 and opened the work session on A.B. 7.

Chairman Freeman stated the bill had been heard on February 8, 1999, and no action had been taken.

Myla Florence identified herself as Administrator of the Nevada State Welfare Division (WD). She stated when A.B. 7 had been heard previously, some committee members expressed concern regarding the need for a study. Ms. Florence and Mr. Cashdollar had been encouraged to determine a plan to address the industry's needs and be sensitive to the issues she had presented regarding Temporary Assistance to Needy Families (TANF) recipients, and the fact they were not a ready-made solution to an industry issue. Subsequent to that hearing Ms. Florence and Mr. Cashdollar met. The WD had been unable to commit to a real solution in view of other issues mentioned at the first hearing; namely, the ability and desire of people to enter into the nursing home field. However, they had discussed having a welfare representative on the coalition Mr. Cashdollar had formed. Further, an orientation for TANF recipients regarding opportunities for employment should be considered by the industry. They also had agreed to follow up on a meeting with Kathy Wagner, Executive Director of Horizon Health Care, to discuss her impressions of the success or failure of the demonstration project initiated more than a year ago.

Winthrop Cashdollar identified himself as Executive Director of the Nevada Health Care Association (NHCA). He thanked the committee for its continued consideration of A.B. 7, and the more important issue underlying that bill. He stated he was continually reminded how important and serious the issue was. He had received a phone call from a nursing facility administrator in Las Vegas and had been told there were hundreds of certified nursing assistant (CNA) positions unfilled in that area. Facilities had begun restricting their admissions due to lack of staff. Further, facilities had been forced to rely on commercial staffing pools which provided temporary CNAs, and had raised issues of continuity, quality, and expense.

Mr. Cashdollar said he and Ms. Florence had discussed alternatives to the study envisioned in A.B. 7. Ms. Florence also had told him of the history of similar past efforts. Some things the division had tried had not met with much success. Ms. Florence had offered to contribute a staff member to a coalition the NHCA, the Division of Aging Services and others were forming. They had discussed steps the long-term care industry could take to facilitate recruitment and retension of people from welfare, as well as getting support from the private industry councils that controlled federal welfare-to-work funds.

The NHCA requested the legislature and the Committee on Health and Human Services specifically address the staffing issue. NCHA had not asked for a study initially, and expressed its desire to work with the Welfare Division to get things going in advance of a study, or without a study.

Chairman Freeman remarked she was always glad to hear about problems being worked out by the participants. She asked for confirmation that A.B. 7 would not be needed. Ms. Florence responded it was nice not to have legislation.

Mrs. Freeman stated the bill would be held for the time being and thanked the participants for their efforts. She closed the hearing on A.B. 7 and opened the work session on A.B. 4.

Mrs. Freeman stated because A.B. 4, A.B. 5, and A.B. 6 were related she would allow testimony on all three bills jointly.

Jon Sasser identified himself as representing Washoe Legal Services and three other civil legal services programs. He expressed support of A.B. 4, A.B. 5, and. A.B. 6 and stated each bill had been recommended by the Interim Committee on Health Care (ICHC), on which he had served as a lay member. His testimony, detailed in Exhibit D, covered:

• ICHC's tasks, including the oversight of the implementation of the new children's health insurance program.

• Background of the Medicaid program, and the 1988 requirement by Congress to cover a new category of children and pregnant women. In Nevada, that new category had been called the Children's Health Assurance Program (CHAP), which provided Medicaid to children up to age 6 whose families' incomes had not exceeded 133 percent of the federal poverty level. Coverage for older children through age 16, whose families' incomes had not exceeded 100 percent of the federal poverty level was phased in.

• The Nevada Division of Health Care Financing and Policy (HCFP) election to start a new program for higher income children, called Nevada Check-Up.

• The differences between CHAP and Nevada Check-Up.

HCFP originally projected 60,000 uninsured children in Nevada families with incomes below 200 percent of the federal poverty level. An estimated 12,000 were CHAP eligible, the remaining 48,000 would be covered by Check-Up. However, less than 10,000 children had applied and only 4,318 had enrolled in Check-Up. Because of the low enrollment, the ICHC had been greatly concerned and felt unnecessary red tape and bureaucracy should be eliminated as barriers to enrolling. That concern had led to A.B. 4 (as well as to A.B. 5, and A.B. 6 discussed separately under those bills).

There had been an assets test for CHAP but no assets test had been required for Check-Up. Historically, only 2.32 percent of CHAP applicants had been rejected due to failure to pass the assets test. However a great deal of red tape and staff time were required to administer the test.

In conclusion, Mr. Sasser stated the new federal legislation provided an opportunity to enroll every Nevada child in an appropriate health insurance program. The Interim Committee on Health Care strongly believed the assets test should be eliminated as a bureaucratic barrier to accomplishing that important goal. Under A.B. 4, the assets test would be eliminated and he urged the committee's support.

Janine Hanson identified herself as State President of Nevada Eagle Forum. She

stated she had concerns; however, after listening to the previous testimony, was unsure if her testimony applied. She cited Congressman Thomas Blyly, Chairman of the U. S. House of Representatives committee responsible for the Childrens Health Insurance Program (CHIP) legislation, who stated, "rather than increasing the government's involvement in the health care decisions of individual American families, the state children's health insurance program offered real opportunities for states to promote consumer-based market-oriented health care options for the uninsured." The House Committee on Commerce CHIP Implementation Guide was a useful tool for state policymakers in deciding how best to proceed.

She suggested the State of Nevada look at private insurance options that coordinated with the state, instead of increasing the state's involvement in the Medicaid program. A study published by the Heritage Foundation, "KidCare Implementation, A Helpful Guide For The States," stated CHIP might lead to significant expansions in Medicaid and a reduction in employer-provided private health care coverage without significantly increasing the number of children covered by health insurance. When the government covered children under a health insurance program without regard to need, what happened in the private insurance market was some of those children already covered under their parent's program would be dropped and their parents would go with the state. An option for the insurance companies would be to begin to drop coverage for children and rely on the state coverage. Decreasing options would not be the best way to proceed, as it would increase the burden for the State of Nevada and the responsibility of what they had to cover.

Ms. Hanson said they would like to increase the number of private insurance programs available at a low cost to families. The issue had not been well-discussed in Congress because individual insurance accounts had not been advertised or appreciated. In programs such as those discussed in previous testimony, choice of the kind of coverage individual families would like was denied.

The reason many families had not applied or taken advantage of state insurance programs had been because they considered it to be welfare. Some families did not want that tag. Some middle-class families also turned away from those programs because they had not wanted government intrusion in their lives.

She referred to "The CCHC Brief" (Exhibit E) published by Citizens for Choice in Health Care. It discussed the CHIP program which had been based on the Minnesota program and adopted on a national level. According to the Health Care Task Force, health care reform had been phased in by population beginning with children, and was a precursor to a new system. One of Eagle Forum's concerns was by providing health care for all children, even those whose parents could afford to pay for them, the foundation was laid for socialized medicine. That had happened in Minnesota, and what recipients had not realized because they paid their premiums, was that they were considered to be on welfare.

CHIP clearly expanded welfare into the middle class, which was likely to resist government intervention in order to avoid intrusion. The CCHP Brief (Exhibit E) went on to report:

• For every 100 uninsured children who enrolled in the program, another 70 who now had private insurance were also expected to sign up.

• Families that qualified under the plan's expanded income guidelines might stop buying private insurance because the government would pay for the children's health care.

• Employers would stop offering coverage knowing the government was obligated.

• KidCare/CHIP was catastrophic for children. Coverage in a managed care plan did not guarantee access to care.

• The most important people in a child's world are the least likely to get care. Aging parents, siblings with disabilities, and elderly grandparents may not qualify for care according to their lower functional classification or perceived value to society.

Ms. Hanson said there had been an intense push for government health care because of access to taxpayer dollars. CHIP increased the direct managed care access to the American tax dollar through expanded government programs. Caution should be taken in moving forward to keep many options open and not expand beyond those who really needed it, so as not to initiate a system of socialized medicine. People in nations where care was provided had not been able to gain access to what they needed even though it was guaranteed.

There was a need to be concerned about decreasing private insurance and increasing the number of people on government assistance, because ultimately the dollar was the big issue. The higher the cost of Medicaid coverage meant fewer children would be served with KidCare funds. According to Kaiser Family Foundation, the Medicare benefits package was at least 10 percent more expensive than a private insurance package. The Medicaid program created an entitlement coverage resulting in potentially limitless budgetary exposure to the states. The combination of those factors meant just one thing: The per child cost of Medicaid was higher than if the KidCare funds were used to provide non-Medicaid coverage to eligible children. The KidCare program had given states a capped allotment. Unlike Medicaid, the Federal Government would use the enhanced match rate to match state expenditures only up to a specified level. As a result, the Medicaid program's more expensive benefit package and broader budgetary exposure forced us to make a choice. If the state decided to use KidCare funds to expand Medicare, it would either have to agree to spend whatever it took to meet the obligations it would be assuming under Medicaid, or would have to limit the number of children served in order to stay within Medicare. In Nevada, those were two separate programs, however, care must be exercised in expanding the coverage without taking into consideration the need of the individual because all of our health care and our taxes would suffer.

Chairman Freeman stated they had discussed that at length in the Interim Health Care Committee and were aware of those concerns. One in particular, the implication the state health care program might be perceived as welfare, was being addressed in the way the program was being marketed to the public.

Lynn Chapman, representing Families for Freedom, stated the organization was concerned about the higher tax cost to families due to more government programs.

Assemblywoman Buckley stated A.B. 4 concerned the existing CHAP program and not the new children's health initiative program. The concerns of Ms. Hanson were discussed in the Interim Committee on Health Care because they were national concerns, especially "crowd out," the term designed to cover the question of whether a children's health program would cause employers to drop their insurance programs. No matter which side one took on the issue, no one wanted that to be the result. Therefore, in the plan there were provisions on ensuring "crowd out" would not happen. What A.B. 4 addressed was the dual eligibility process which created the unnecessary and burdensome red tape of the assets test required by both CHAP and CHIP. For instance, certain assets, such as an automobile, allowed under one program disqualified an applicant under the other program. If the program application process were made "seamless" it would reduce staff and administration costs.

Janice Wright, Division of Health Care Financing and Policy (HCFP), stated the most interesting aspect of A.B. 4 was if the assets test were removed, more people would become eligible. As that occurred, it expanded the existing Medicaid program. That expansion would cost dollars. Those dollars were not in the executive budget. There were certain issues to be considered:

1. As the existing Medicaid program was expanded, an amendment to the state plan would be required. If an amendment was made, notice had to be offered, a public hearing held, and time would be needed to submit it to Health Care Financing Administration (HCFA) to determine its appropriateness. Time would be required for all that to occur.
2. There would be an increased number of ongoing cases that would impact the staffing level. The eligibility for Medicaid was retained in the Welfare Division. The eligibility for Nevada Check-Up was with the HCFP. While there would be no impact to the HCFP, there would be an ongoing impact to the WD, because more people would become eligible. It was anticipated there would be five additional staff added in the first year of the biennium to the Welfare Division, and one additional staff in the second year.
3. There would be additional programming required in the Welfare Division for Nevada Operations Multi Automated Data Systems (NOMADS).

The primary goal of the Welfare Division and the Health Care Financing and Policy was to reduce the number of uninsured children within the state. CHAP expansion would do that, but there was a dollar impact to the programs that had to be reflected. Based on the additional cases projected to become eligible as a result of removing the assets test, the Medicaid budget would be increased in the caseload dollar cost of about $5.3 million. That would be offset by a reduction from some of those children that qualified for the Nevada Check-Up program of about $2.3 million. The net impact in the first year of the biennium from both programs would be approximately $3 million, and in the second year approximately $3.4 million.

Ms. Wright reiterated those costs were not built into the Executive Budget. The effective date would cause difficulty because staff had to be hired, programming changes had to be made, and public hearing, public notice, and the amendment to HCFA had to be prepared and approved prior to implementation.

Assemblywoman Buckley asked for clarification that A.B. 4 dealt only with the CHAP program and children and pregnant women insured under that program regardless of assets would be eligible under Nevada Check-Up. Ms. Wright replied all of the children currently eligible for Nevada Check-Up were not tested for the assets portion.

Ms. Buckley asked Ms. Wright why she had stated there would be $3 million in unaccounted costs for taking away work from workers. Ms. Wright countered there would be additional recipients eligible for the Medicaid program. That would cost money. Ms. Buckley responded they would all be eligible under Nevada Check-Up anyway. She hypothesized, there was Program A and Program B; all were eligible under Program A, so the net cost to the state budget was nothing. All that was being accomplished was reducing bureaucracy and state workers.

Ms. Wright opined it had not been the experience of Nevada that all of the people who were eligible for a program applied. Ms. Buckley asked, "then it would cost more because more children and pregnant women would receive health care coverage." Ms. Wright responded it would cost money to provide health care coverage to women and children.

William R. Hale, CEO of University Medical Center of Southern Nevada, testified in support of A.B. 4. He stated the United States had been at the highest level of prosperity in history. Through liberalizing those programs the state had a chance to capture federal dollars to offset those costs. In the case of Medicaid it had been 50 percent, for the children's program 65 percent. Nevada was fiftieth in per capita spending in health care. "It was time we stepped to the plate, we needed continuity of care, we needed children into a primary care physician network so they did not become acutely ill and end up in our hospitals." Presumptive eligibility was the key. Children needed to have care when they were sick, when they were in the hospital emergency room and parents were there and worried about them. Not after the fact by sending a flyer home from school, when they had to decide on buying food or getting health care.

Chairman Freeman understood Mr. Hale's frustration and remarked she, too, had been on the board of a large hospital some years before. Because of the state policy in regard to funding for Medicaid they had been unable to access federal dollars then and were still unable to access those dollars. She then expressed to Charlotte Crawford and Janice Wright, no one intended to take their frustration out on them, rather it was time to "step up to the plate." The state continued to ignore those issues as if they did not exist.

Chairman Freeman temporarily closed the work session on A.B. 4 and opened the work session on A.B. 5.

Jon Sasser, Washoe Legal Services, prefaced his testimony on A.B. 5 and stated he concurred with Assemblyman Goldwater. The Committee on Health and Human Services was a policy committee and there was room in the Committee on Ways and Means to debate the exact amount of any fiscal note attached to the bill. He hoped the Committee on Health and Human Services would give them the opportunity to do that in the Committee on Ways and Means, on A.B. 4, A.B. 5, and A.B. 6, if applicable.

Regarding A.B. 5, Mr. Sasser stated the bill would adopt presumptive eligibility for both Check-Up and CHAP programs. That meant when someone sick went to a health maintenance organization (HMO), doctor's office, clinic, or emergency room and had no insurance coverage, rather than sending the sick individual to the welfare office to fill out forms that would determine eligibility,

their eligibility could be determined right there and care or treatment administered. Thereafter, the bill for that care would be sent to the state and further tests regarding continued eligibility made at that time.

He commented that had been especially important for pregnant women, because the sooner pre-natal care was given the better the chances of eliminating future health problems. Mr. Sasser urged support of A.B. 5 that created presumptive eligibility, a federal option in both CHAP and Check-Up.

Mr. Jon Sasser urged support of the bill, which essentially provided one application and one eligibility worker; all that was necessary for either CHAP or Check-Up, rather than going through two separate processes. Further, that workers be cross trained to look at one application which contained all the information needed to make the eligibility determination. If the assets test were removed it would be a much simpler process.

Assemblywoman Angle asked to have clarified whether non-removal of the assets test meant those two applications (for CHAP and Check-Up) would be required. Mr. Sasser responded that it worked better if the assets test were removed, because persons not meeting eligibility for CHAP would automatically be eligible for Check-Up, so there was no need to ask for that information. The information was needed only when a person's income had been low enough to qualify for the Medicaid side of the program, or CHAP. Part of the single application would be relevant only to about half of the applicants if the assets test were not eliminated.

Ann Cory identified herself as Interim Executive Director of the Great Basin Primary Care Association (GBPCA), the lead agency for the Nevada Covering Kids Coalition. Nevada Covering Kids Coalition was a statewide coalition of 17 organizations interested in promoting the health of Nevada's children. (Exhibit F) They were actively working to bring funding to Nevada from the Robert Wood Johnson Foundation that would enhance outreach to low income children and families for Nevada Check-Up and Medicaid. Her testimony stated, in part:

• A.B. 4, A.B. 5, and A.B. 6 were foundations of the policy issues for their program proposal that removed existing barriers to enrollment in significant programs.

• If the state wanted Nevada Check-Up and Medicaid to work, approval of those bills was necessary.

• Those three bills affected whether or not families would have access to the system.

• Studies showed uninsured children were twice as likely to receive no care for common medical conditions. When left untreated, those illnesses could have severe consequences which often led to more costly medical conditions.

• Healthy children had a better chance of succeeding in school and were more likely to become healthy, productive adults.

• Nevada already covered the cost of health care for uninsured children through the indigent care fund and high cost of health care. By increased access to enrollment, the Federal Government shared the cost of providing health care which reduced the burden on the state.

• Health care coverage for children was not a luxury. Coverage and the access to care it provided were critical to Nevada's families and Nevada's future.

In conclusion, Ms. Cory urged support of A.B. 4, A.B. 5, and A.B. 6.

Lisa Guzman identified herself as the Director of the Nevada Empowered Women's Project, an advocacy group for low income women. She supported A.B. 4, A.B. 5, and A.B. 6, which expanded health coverage for poor families. In 1994, 20 percent of Nevada's children lacked health coverage; a figure 7 percent higher than the nation as a whole. Her testimony (Exhibit G) reiterated the provisions and advantages of each bill.

Assemblywoman Gibbons asked about pregnant teen's ineligibility. Ms. Guzman responded if a pregnant teen lived with her parents, the parent's assets counted toward her eligibility for the program and she might not receive services. Ms. Gibbons then asked, was it not the teen's parent's responsibility to repay to the state those costs for care received by the daughter. Ms. Guzman said it would be nice if parents could do that; however, in her experience, those families were barely scraping by and were not in a position to pay.

Louise Bayard-de-Volo identified herself as representing the Nevada Women's Lobby. They had followed the issues covered by those bills and provided testimony to the committee previously. With regard to A.B. 5, their concern continued to be access to quality care for people with limited resources. Her further testimony, contained in Exhibit H, stated in part, concern about doing another study, and a desire those bills be enacted without another 2 year delay. She proposed an amendment to A.B. 5 that would:

1. Line 1-2: Delete "Conduct a study to determine the feasibility of providing:" Add "Provide:"
2. Line 1-8: Delete "; and" Add "." after inclusive.
3. Delete lines 1-9 through 2-2.

Chairman Freeman stated that proposed amendment would be considered in the workshop to take place on February 24, 1999, at the regular Committee on Health and Human Services meeting.

Bill Welch, on behalf of the Nevada Rural Hospital Project (NRHP) stated he had served on the Interim Committee on Health Care and on the coalition working with the Great Basin Primary Care Association (GBPCA). He expressed support of A.B. 4, A.B. 5, and A.B. 6.

Dana Bennett, representing the Nevada State Medical Association (NSMA), stated support for A.B. 4, A.B. 5, and A.B. 6.

Jan Gilbert, representing The League of Women Voters of Nevada and the Progressive Leadership Alliance of Nevada, stated support of A.B. 4, A.B. 5, and A.B. 6. She also stated in recent years an exhaustive study had been done with leaders in the field and interest groups testifying, where recommendations had been made, but due to lack of funds the recommendations had been discarded. She felt that needed to be addressed, and the Committee on Health and Human Services could do it, without regard to the fiscal impact. She questioned the fiscal note created by the state. With regard to A.B. 5, there should be no cost to study the feasibility. "We know presumptive eligibility would help this state and it should happen now." Ms. Gilbert's written testimony was provided as Exhibit I.

Myla Florence, Administrator, State Welfare Division, stated, in regard to

A.B. 6, one application (Exhibit J) served Medicaid, Food Stamps, Temporary Assistance to Needy Families (TANF), and Children's Hospital Assurance Plan (CHAP), all of the categories one may be deemed eligible. The question was did they need to create another separate application just for pregnant women and children. Application simplification often sounded good and she supported it, but the whole picture needed to be seen at and the objective determined. Had it been to determine benefits for all programs, or just a particular subset. In closing, Ms, Florence stated someday she would like to be characterized as a dedicated public servant rather than a bureaucrat.

Chairman Freeman asked Ms. Florence if she would attend the workshop on February 24. Ms. Florence stated she was not certain of her availability, but would have someone attend.

Janice Wright, HCFP, asked to explain the fiscal impact. The reasons were when they told people what the cost of some of the things HCFP tried to do, those individuals said "No, that's not realistic." With respect to A.B. 5, presumptive eligibility, there had been broad and generic estimates the State of Nevada would spend upwards of $60 million to do it. She reiterated it was not built into The Executive Budget; there were no available resources or staff to perform it, and she had prepared a fiscal note of about $34,000.

Regarding A.B. 6, there was a combined application for everything except Check-Up. Nevada Check-Up had a one-page two-sided application. There were differences in the way they had designed Nevada Check-Up versus the way they had designed the Medicaid program. She requested an opportunity to work with the committee's workshop on that issue.

Assemblywoman Von Tobel stated, in view of the low enrollment, perhaps the committee should look at what had been done with Nevada Check-Up. Had the state not accepted federal funds, we could have gone with a private state-subsidized plan covering many more children, probably not spent as much and not had the problems with Medicaid eligibility. She added that perhaps what was needed was to stop and look at the policy; now that the state had gone forward with the program she wondered if anything could be done to change it. She expressed frustration in watching the results of the Check-Up program over the past year and one-half, and felt a terrible job had been done in enrolling children. So few had been enrolled, and the money spent probably could have provided 10,000 children with insurance in a state-subsidized plan.

Assemblywoman Berman asked how many children had been estimated to be enrolled. Janice Wright answered in HCFP studies there had been approximately 20,000 children. Other studies had differing numbers. But the budget had been built to serve 10,000 children. Of that 10,000, 9,900 applied for the program, and 4,300 had actually enrolled.

Assemblywoman Buckley stated in the Interim Committee on Health Care, they had heard 50 percent of those who were going to apply for Check-Up would be dropped because of the two separate application process, and two steps of qualification. She asked if an analysis had been done to determine if children were not being insured, not because of program design, but because of the way the state had exercised its options in setting up the system of dual programs. Ms. Wright responded the analysis HCFP had done was on the children who had applied and not been determined eligible. They had not performed any studies as to others who had not applied. Some of the barriers they had created were the result of bureaucracy, because it was a governmental program. HCFP had tried to counteract that by marketing it as an insurance program, not as a welfare or public assistance program.

Ms. Buckley asked for further clarification. It had been estimated the state would dis-enroll 50 percent of the people who would apply. Had it turned out to be that way. Ms. Wright reiterated 10,000 children had applied, 4,300 were actually enrolled. The reasons the rest of the children were not eligible were shown in specified reports which she offered to provide.

Chairman Freeman closed the discussion on all three bills and stated they would be taken up again on February 24, 1999.

Mrs. Freeman asked for Committee introduction of three Bill Draft Requests (BDRs).

• BDR 40-265 - Authorizes county hospitals to join purchasing groups and to purchase supplies, materials, and equipment under circumstances without

complying with the local government purchasing act. From Clark County

Administrative Services. (A.B. 251)

ASSEMBLYMAN WILLIAMS MOVED FOR COMMITTEE INTRODUCTION OF BDR 40-265.

ASSEMBLYMAN THOMAS SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

**********

• BDR 38-449 - Amends provisions governing recovery of assets pursuant to Medicaid estate recovery program. Requested by Gary Stagliano, Chief of Investigations and Recovery. (A.B. 249)

ASSEMBLYMAN WILLIAMS MOVED FOR COMMITTEE INTRODUCTION OF BDR 38-449.

VICE-CHAIRMAN KOIVISTO SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY

**********

• BDR 38-634 - Revises provisions governing duties of specialists for rights of elderly persons within Aging Services Division of the Department of

Human Resources. Requested by the Division of Aging. (A.B. 250)

ASSEMBLYMAN MANENDO MOVED FOR COMMITTEE INTRODUCTION

OF BDR 38-634.

MOTION SECONDED BY VICE-CHAIRMAN KOIVISTO.

THE MOTION CARRIED UNANIMOUSLY.

**********

Following testimony, Chairman Freeman introduced two letters received via fax which she asked to have included:

Chairman Freeman stated in regard to the presentation made to the Committee by the Department of Human Resources, on February 3, 1999, in the section entitled "Overview" certain changes had been made.

With no further testimony forthcoming, Chairman Freeman adjourned the meeting at 3:30 p.m.

RESPECTFULLY SUBMITTED:

Darlene Rubin,

Committee Secretary

APPROVED BY:

Assemblywoman Vivian Freeman, Chairman

DATE: