The SubCommittee on Ways and Means was called to order at 8:13 AM, on Friday, March 5, 1999. Chairwoman Jan Evans presided in Room 3137 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.

ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT:

Ms. Jan Evans, Chairwoman

Mr. Joseph Dini, Jr.

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Parks

ASSEMBLY SUBCOMMITTEE MEMBERS ABSENT:

None

SENATE SUBCOMMITTEE MEMBERS PRESENT:

Senator Bob Coffin

Senator Bernice Mathews

Senator William Raggio

SENATE SUBCOMMITTEE MEMBERS ABSENT:

Senator Rawson, Chairman (Excused)

STAFF MEMBERS PRESENT:

Before opening the hearing, Chairwoman Evans welcomed members of the audience who desired to participate in the budget process. Summarizing the rules of order for the hearing, she stated the first priority of the hearing would be to thoroughly review those budget accounts listed on the agenda. As soon as the agency had completed their presentations, the hearing would then be opened to public comment. If the hearing ran over the scheduled time, a separate meeting date would then be designated for public testimony. Public debate was important to the legislators and Chairwoman Evans remarked she wanted speakers to have ample time to express their views.

Chairwoman Evans was then ready to discuss the various budget accounts under the Department of Human Resources.

Janice Wright, Administrator, Department of Human Resources, explained the HCF&P division was a new division created by Senate Bill 427 of the Sixty-ninth Session of the Nevada Legislature. Splitting Medicaid from the Welfare Division S.B. 427, combined Medicaid with the Health Care Financial Analysis Unit, which formerly had been housed within the Director’s Office of the department.

Ms. Wright said the merging of the two programs had created a solid division that concentrated on the most efficient and cost effective ways to provide quality health care services to low income Nevadans. The division had succeeded in improving the Medicaid program and in maximizing federal revenues. For instance, the division was able to concentrate a greater amount of federal dollars in the Nevada Check-up program.

Next, Ms. Wright explained the HCF&P division had a staff of 295 individuals and a biennial budget of $1.3 billion.

In regard to operations, Ms. Wright said the division had worked diligently to achieve a balance between the three groups of people who gave HCF&P its shape. She compared the division to a three-legged stool, where the first leg signified the state administrative staff who worked to administer the programs over which the division had supervisory authority. The second leg symbolized the Medicaid-eligible clients who received the services. Ms. Wright revealed approximately 100,000 individuals were currently eligible for Medicaid in the state of Nevada. The third leg, which provided the stool with balance, denoted the providers that offered the health care services. Ms. Wright felt balance between those three groups ensured program support. With approximately 6,900 providers in the state, achieving a working balance between the three legs of the stool was the division’s most important responsibilities.

Ms. Wright exclaimed Nevada was one of only five states nationwide, who had received an A-rating on the Medicaid program. Ms. Wright explained the Medicaid State Report Card determined Nevada had an economically efficient program. The definition of an efficient Medicaid program was comprised of the following five elements:

• The program must make improvements in health care for the needy;
• The program must minimize the burden on the taxpayer who ultimately paid for the program;
• The program must have low costs on a per recipient basis;
• The program must not cover a large percentage of people above the federal poverty level;
• The program must work to maintain cost and coverage levels.

Ms. Wright related the division tried to achieve a proper balance between those five elements with the three groups of individuals supporting its programs and services.

Although Ms. Wright expressed her pride in the division’s A-rating for excellence and economy, she felt there were other areas in which the division had also exhibited success. First, Ms. Wright called attention to the services, which the division offered to the Medicaid providers. Medicaid would not work if a sufficient number of providers could not be attracted.

Focusing on nursing facilities, Ms. Wright said the division had established a claims reconciliation and special handling project called the Crash Project. The project reviewed unpaid, stale claims to determine those that were payable and it reviewed office management procedures if requested. Ms. Wright disclosed 10 facilities had utilized the project and had benefited financially.

Illustrating HCF&Ps success in nursing facilities, Ms. Wright said training was offered to every certified nursing facility in the state. Also, Medicaid notified the nursing facility in advance of imposing any ban on admissions, to allow the nursing facility to take independent action to correct staffing problems and other deficiencies. Additionally, nursing staff had redesigned the authorization process, which subsequently reduced the type and amount of paperwork required by those facilities to receive an authorization for payment.

HCF&P also ameliorated the provision of dental care. Ms. Wright stated the program requirements for prior authorization had been reduced and payment-processing procedures had been streamlined. Ms. Wright related the division had trained dental coordinators to recruit dentists in their area and it had assisted local dentists with client referrals.

Ms. Wright then noted the division had benefited from a dental care rate increase instituted during the previous legislative session. Significantly impacting the breadth and depth of the division’s services, Ms. Wright revealed the division had an 89 percent increase in dental care services provided to Nevadans. Also resulting from the rate increase, the number of eligible individuals that had been served by the division’s programs increased by 47 percent and the number of providers increased by 8 percent.

With respect to hospital providers, Ms. Wright explained through a public and private partnership with the Nevada Association of Hospitals and Health Systems an electronic payment system had been developed. Additionally, the division had studied and then streamlined the request process for various services requiring prior authorization. Accordingly it eliminated authorization requirements in areas where few denials had occurred. She indicated that action had affected pharmaceutical operations, durable medical equipment, physical therapy, and adult day health care.

Next, Ms. Wright said the division worked with providers to jointly establish written protocols for treatments and services. Through review and modification procedures, she related HCF&P had decreased the prior authorization turnaround time from an 8-week high to a 24-hour low. She felt that was a considerable improvement over the division’s performance in the past.

Ms. Wright also pointed out the division’s improvement of the Electronic Verification of Eligibility (EVE) project. She explained the project allowed providers better access to more timely eligibility information on Medicaid services. Each day the division updated the EVE system.

Next, Ms. Wright turned her attention towards the new services the division had been able to provide to Medicaid recipients. She explained the division had improved access to quality health care services and had given recipients the right to appeal Medicaid decisions. In fact, a grievance and hearing process had been established in February 1998. As a result approximately 1,400 notice of decision forms regarding denied or reduced services had been sent. Also, staff had increased response time to telephone inquiries instead of requiring recipients to attend hearings. She claimed that 50 percent of the recipients, who had been given the opportunity to call the division, receive information and determined not to go forward with a hearing. She also noted only 46 requests for hearings; that number had declined from previous years. Ms. Wright thought those services demonstrated the division’s attempt to reduce the bureaucratic barriers that obstructed individual recipients from receiving Medicaid services.

Continuing her discussion of the division’s accomplishments, Ms. Wright highlighted the Maternal Obstetrical Medical Services (MOMS) program. By preventing the occurrence of low birth weight babies, MOMS saved an estimated $1.7 million in the last fiscal year.

Next, Ms. Wright explained the division had continued its effort to improve the Rehabilitation and Case Management Service (RECAMS) for the physically disabled. RECAMS was entirely devoted to recipient rehabilitation to allow individuals to function at their optimal level in order to prevent institutionalization, to lower the institutional level of care, or to reduce medical services. Approximately 70 individuals were served per year through the RECAMS program; 10 of those individuals had been discharged from a medical facility and had been able to live in the community. Ms. Wright indicated the majority of the remaining 60 individuals would not be institutionally placed as a result of the program.

Ms. Wright relayed the district offices expanded client services through programs such as Healthy Kids, the Pre-Admission Screening and Annual Resident Review (PASARR) program, the Medical Review Team of Nursing Facilities, the Disabled Home and Community Based Waiver, the Personal Care Attendants for the Disabled program, and the Katie Beckett program. She explained that procedures and policies had been reviewed and modified to allow more staff time with clients and to meet the increased caseloads. Consequently, the monthly requests for PASARR reviews in northern Nevada had increased from 197 assessments in 1997 to 360 assessments by the end of 1998.

Chairwoman Evans quickly interrupted Ms. Wright to remind her to use the full name of the program rather than the program’s acronym.

The next program to which Ms. Wright referred was the personal care attendant for the disabled program which responded to NRS 629.091 that allowed disabled persons to select their own home care giver. The program was beneficial because it gave disabled persons control over their own care.

Ms. Wright stated the division had also established a hospice program. She noted 289 Medicaid recipients had elected to receive hospice care since October 1997.

Also, Ms. Wright explained the division had continued the implementation of the Mental Health Rehabilitation Treatment Services for Medicaid eligible children. That program allowed children to remain in the community rather than to be placed in a residential treatment center, which in some instances was out-of-state. As a result, out-of-state placements had been reduced from 148 cases in January 1996 to 37 cases in January 1999. She noted the division had worked with school districts to improve the child’s transition from the residential treatment center back to school.

Turning her attention to the administrative support provided to the division, Ms. Wright addressed the division’s accomplishments in improving the coordination of state and division staff. She articulated the division continued to focus on the goal of assuring that Medicaid should purchase only medically necessary services at the lowest cost possible. For example as a result of the automated dose unit credit system, $250,000 had been recouped as of January 1999. Also moving closer to that goal, the amount and type of physician medical consultation on particular cases and program policies had been increased.

Ms. Wright explained the division had also continued outcome based studies like the Nicotine Cessation Program study and the Home Care for the Fragile Infants study. The division had developed those studies to determine effective services for reimbursement.

In the past year and a half, Ms. Wright relayed HCF&P had competitively bid the Fiscal Agent and the Drug Utilization Review contracts. The division had redesigned procedures for reviewing service requests by persons with mental retardation or mental conditions to meet the requirements for hearing and reviews. Also the division had submitted and obtained approval for the 5-year renewal of the Home and Community Based Waiver program, which served persons with physical disabilities. She elaborated the 5-year waiver renewal for persons with mental retardation and related conditions was submitted and was in the final question and answer period with federal Health Care Financing Administration (HCFA).

After separating from the Welfare Division, Ms. Wright explained the management of rural division offices was centralized under the Reno District Manager. Resources were then shared between offices to ensure that client needs were met and that proper services were provided.

The last major accomplishment of the HCF&P administration involved the Surveillance and Utilization Review (SUR) which collected $193,000 in FY 1998 and referred two cases to the Nevada Medicaid Fraud Unit and one case to the U.S. Attorney General’s Office. SUR also redesigned the personal computer (PC) based Exception Report System to detect potential abuse or fraud.

Before delving into the distinct budget accounts within the division’s budget, Ms. Wright took up the issue of managed care. Responding to a legislative mandate, to enroll Medicaid participants into managed care, the managed care program was evolving from a fledgling voluntary program to a comprehensive mandatory program. During 1997, the sole focus of the unit had been to develop the voluntary stage of the program. That phase entailed contract finalization and negotiations with Health Maintenance Organizations (HMOs). Ms. Wright felt the managed care program’s highlights included the following:

• The program had completed orientation planning, staffing, and staff development;
• An orientation video had been developed;
• An electronic submission capability for the unit had been designed;
• The initial phase of the encountered data system development had been completed;
• HMO financial reporting requirements had been addressed; and
• Quality standard reporting requirements had been created.

Ms. Wright explained the voluntary phase of the managed care unit had been launched in April 1997 with all eligible Temporary Assistance to Needy Families (TANF) and Child Health Assistance Program (CHAP) recipients receiving mandatory orientation sessions. The sessions occurred in both Clark and Washoe counties and were required of all existing participants, as part of their welfare re-determination process, as well as for all new eligible recipients.
Ms. Wright then emphasized the voluntary phase was a massive undertaking on behalf of the Medicaid staff in the district and central offices.

Over the 12-month period, Ms. Wright exclaimed over 50,000 Medicaid recipients had all received a comprehensive 1-hour orientation to managed care and assistance in the election of their HMO coverage. She revealed the initial state contract for the voluntary program had included two HMOs, Health Plan of Nevada (HPN) and Amil International of Nevada in Clark County. Hometown Health Plan (HHP) was the sole HMO provider for Washoe County. Ms. Wright explained that another HMO, Nevada Health Solutions began providing service in Clark County in September 1997 and to Washoe County in August 1998. With each of these HMOs, Ms. Wright said extensive on- and off-site readiness reviews were conducted and a follow-up review was performed as necessary in those areas needing improvement.

Significantly, Ms. Wright noted the Medicaid managed care unit was a new concept to both the Medicaid program as well as to the participating HMOs. Accordingly, the process produced significant learning curves for all of the entities involved. She noted Medicaid managed care was also a highly regulated area, specifically in terms of the federal regulations enforced by the HCFA. Although, HCFA had implemented some restrictive regulations within an already entitlement-oriented health benefit program, it had yet to clearly define much of the regulation process. She thought HCFA also lacked the internal expertise to assist the states in development within the regulatory confines.

Next, Ms. Wright explained the transition between voluntary and mandatory phases would occur through value-based purchasing and the spirit of collaboration. The initiative to out-source the management and delivery of health care benefits and to subsequently mainstream the Medicaid population had been the sole responsibility of the state. The process had been fraught with anxiety, uncertainty, and skepticism and as a result, she contended that Medicaid and sister state agencies were adversely impacted.

Ms. Wright explained the mission of HCF&P was to develop a managed care program that would provide for participant choice, access, cost-containment, budget predictability, and quality of care. Thus, the division’s plan tried to ensure accountability to multiple stakeholders that included HMOs, state agencies, the provider community at-large, Medicaid participants, and the legislative entity. Ms. Wright contended because collaboration with those outside parties was essential, tremendous efforts to inform and educate all of the stakeholders had been expedited.

As the division continued to refine the voluntary program, Ms. Wright stated it also moved closer to completing the contractual HMO requirements that would be used to develop the mandatory program. In fact, she disclosed the implementation of the mandated phase of the program commenced in December 1998. Operating in conjunction with the pre-existing Primary Care Case Management program (PCCM), the managed care program conducted a comprehensive voluntary HMO audit in February 1999. The first year of encounter data reports were currently being finalized.

Next, Ms. Wright summarized the program’s transformation from a voluntary to mandatory nature. First, she noted Nevada had the only approved state plan amendment option for mandatory Medicaid managed care under the Balanced Budget Act of 1997. Second, the division had developed more expeditious and accountable methodology for retro-caps and stop loss payments on-line. Third, the division increased the coordination and communication with HMOs and other state agencies, including major medical providers, welfare, Division Child and Family Services (DCFS), Mental Health and Mental Retardation (MHMR), the Health Division, and local hospitals. Routine monthly meetings are held.

Ms. Wright relayed the division also successfully met both the requirements of the Balanced Budget Act and the Division of Insurance by updating the financial reporting guide which eased administrative overhead and redundancy. Additionally, the division experienced improvements with encounter data submission as well as improvements in industry reporting standards and procedure codes, which allowed for future capitated rate settings.

In regard to participant satisfaction, Ms. Wright revealed a survey had been completed in the latter part of 1998. Ms. Wright said an additional HMO contractor, United Health Care in Clark County, had been recruited to participate in the mandatory program. She said the contract with United Health Care was up for review by the Board of Examiner’s at their next meeting.

Ms. Wright explained that although HHP participated in the voluntary Medicaid managed care program in Washoe County, it chose not to participate in the mandatory program. HHP had contracted with the division to maintain their current participants in a voluntary pre-paid health plan status through the end of 1999. She stated the division had executed the contract and subsequent program components and would continue to manage the voluntary program separate from the mandatory program. Additionally, the division was in the process of transitioning the 22,000 PCCM participants from the voluntary program into the mandatory managed care program, as they became eligible for their next re-enrollment period.

With the loss of the second HMO under risk agreement, Ms. Wright indicated Washoe County would remain a voluntary managed care program for some time. However, she disclosed the division intended to find a second HMO under risk arrangement by the end of 1999 and to transition the Washoe County program into a mandatory status.

Ms. Wright stated the division provided continuous monitoring of HMO financial solvency within the capitated rate negotiated to ensure the viability and integrity of the program. She felt a balance between the quality and the quantity of services provided and between consumer satisfaction and the efficiency of management should be sought.

Additionally, Ms. Wright expounded upon the future of a competitive bidding process for HMO contracting that could potentially ensue from the division’s managed care program. Competitive bidding would improve the division’s efforts at cost containment.

Finally, Ms. Wright called attention to the division’s future activities concerning the mandatory managed care program. She mentioned that in the upcoming biennium, the division would explore the possibility of supporting a voluntary managed care program for the rural areas. Also, dialogue comparing the various population needs of the rural areas, including Washoe County, with HCFA would be initiated. Voluntary program research and HMO stakeholder collaboration with potential implementation of aid categories for the aged, the dual-eligible, and the disabled, would be evaluated. Finally by the end of
FY 1999 the division would complete a Child Health Assurance Program (CHAP) participant survey.

With respect to the severely emotionally disturbed, and children with special healthcare needs, Ms. Wright said a voluntary program in collaboration with the HMOs, DCFS, and MHMR, would be instituted in the forthcoming biennium. Additionally, a medical care advisory committee was established to fulfill a HCFA requirement. Quality standards, which incorporated the results of the Health Employer Data and Information System (HEDIS) report, would also be established and an External Quality Review Organization, (EQRO), which was addressed in a Request-for-Proposal (RFP), would be established within the following two years.

In order to identify all of the benefits covered by Medicaid, Ms. Wright stated the division would continue to communicate with providers and HMOs. Also, future information system enhancements to improve the program’s administration would be studied. That included the evaluation of the NOMADS system transition to ensure its integration with the division’s information system.

Finally, Ms. Wright approached the subject of the division’s budget requests.

She noted the financial analysis and the strategic planning unit was a subsection of Budget Account 3158.

Chairwoman Evans thanked Ms. Wright for her detailed discussion of HCF&Ps background.

Continuing her presentation, Ms. Wright mentioned the division was responsible for the oversight of a number of the Department of Information Technology (DoIT) system changes. In order to comply with federal HCFA requirements, she relayed the HCF&P division had to work closely with DoIT to make additional technical changes with the computer system. In fact, one of the primary issues for HCF&P in the past year, was the Year 2000 compliance issue. The conversion process for the Medicaid claims processing and the associated Year 2000 compliance contingency planning had taken a great deal of time and effort.

Aside from supervising the Year 2000 compliance planning, Ms. Wright said the administrative division was also responsible for supervising the existing contract, which provided a database for Medicaid information, with the University of Nevada, Las Vegas.

Ms. Wright informed subcommittee members the administrative unit of the division was also responsible for managing the Disproportionate Share program (DSH) and for maximizing funding from federal resources that affected Medicaid recipients.

Next, Ms. Wright reported the Kaiser Commission on Medicaid and the Uninsured found that Nevada’s total Medicaid expenditures, as a percent of the total state budget, was 11 per cent for 1995, the fifth lowest expenditure ratio nationwide. However, she noted that between 1990 and 1995, Nevada’s annual growth rate for beneficiaries was 17.4 percent compared to the national average beneficiary growth rate of only 7.9 percent. Those figures illustrated the fact that Nevada’s Medicaid population was growing much more quickly than in other parts of the nation. Ms. Wright noted Nevada’s spending per beneficiary increased by only 3.2 percent compared to the national increase of 5.7 percent.

At the same time, Ms. Wright divulged Nevada’s spending per beneficiary for children under age 21, for adults ages 21 through 64, and for the blind and disabled were higher than national average, only spending for the elderly was significantly lower by $2,900 or by 28 percent. Thus, Ms. Wright explained the division had expended more money on certain groups than it had spent on the elderly and she felt the division had failed to keep pace with the national increases in Medicaid expenses for the elderly.

Because of the lack of active programmers from DoIT, Ms. Wright remarked staff had taken a more active role in finding solutions to computer mainframe problems. In addition to the division’s primary responsibilities to the managed care unit and programs like Nevada Check-Up, the division had assumed ancillary responsibilities stemming from the maintenance of those computer systems.

Next, Ms. Wright remarked the division would soon be responsible for the Health Insurance Portability and Accountability Act (HIPAA) of 1998. HIPAA mandated a national, eight-digit alphanumeric healthcare provider identification number. Currently the division used a seven-digit number that contained embedded intelligence from which a majority of reports and analysis were generated.

Also, Ms. Wright said proposals for common diagnosis and procedure-reporting requirements resulted from a major overhaul of the existing Medicaid claims processing system.

Chairwoman Evans interrupted to ask Ms. Wright to address the specific budget issues and to submit the remainder of her narrative for subcommittee member’s review.

Ms. Wright summarized the remaining issues in her narrative covered the existing UNLV contract, waiver services, federal participation, and the Maximus contract designed to evaluate existing revenues and maximize federal dollars.

Chairwoman Evans asked Ms. Wright to address those issues as she approached the topics within the budget review.

Therefore, Ms. Wright first called attention to the decision module and noted initially, it was not a typical base budget because the division was scheduled to sunset. However, she explained a Bill Draft Request (BDR) had been submitted to the legislature that would eliminate the division’s sunset provision. Therefore, the first decision unit to include the division’s basic expenditures was E-275.

Ms. Wright then addressed the Billed Charge Master program where two full-time equivalent (FTE) positions were assigned. She noted the division supported the sunset of the Billed Charge Master program and would be ready to testify on the issue during the current session. She repeated the division requested the Billed Charge Master program to be eliminated along with the two associated positions.

Chairwoman Evans questioned if the two positions performed duties not associated with the Billed Charge Master program. Ms. Wright replied that they did. Then Chairwoman Evans referred to other cost-containment responsibilities stipulated by NRS 439B and wondered how the division would continue to meet those responsibilities sans the two positions.

Ms. Wright responded the division would experience a hardship minus the assistance provided by those two positions. In fact, the Management Analyst III position also performed various network administration duties for the division. She explained the Billed Charge Master program was a very large PC-based program, which required efficient management of the entire networking system in order to maintain its operation. The other position was a clerical position, which responded to other division needs with respect to cost-containment activities.

Chairwoman Evans asked if the division could manage its workload lacking those two positions. Ms. Wright said the elimination of the positions would pose a challenge, but the division was willing to redirect staff from other areas to perform those additional responsibilities.

Chairwoman Evans next asked by what process the division would track hospital costs in lieu of the Billed Charge Master program. She felt hospital costs might creep upward without the program’s valuable oversight.

Ms. Wright replied the elimination of the Billed Charge Master program would not affect the operation of other programs currently in place to assist hospital patients and to track hospital costs. One of those programs allowed for a
30 percent discount, required for private pay patients who had made reasonable arrangements to pay their hospital bills, and for indigent care. Ms. Wright emphasized the operation of those programs would not be hampered.

Additionally, Ms. Wright explained the Office for Hospital Patients was available to work with individual patients who had billing concerns. The division would even continue to evaluate information reported by the hospital.

Ms. Wright then noted that even though Billed Charge Master oversaw billed charges, the division found only 3.6 percent of total admissions by major hospitals in FY 1998 paid billed charges, which was down from 4.1 percent in FY 1997. Thus, Ms. Wright concluded the Billed Charge Master program did not impact the majority of Medicaid recipients.

Chairwoman Evans reminded Ms. Wright HCF&P had been created by the previous legislative session under the proviso that the division’s activities would be carried out in a more cost-effective manner. She wished Ms. Wright to expound upon the division’s ability to develop a greater degree of financial sophistication. As the legislature would soon consider the proposal to eliminate the division’s sunset requirement, the Chair needed justification to decide to continue the new division as a separate entity.

Ms. Wright replied affirmatively, the creation of the new HCF&P division intensified the department’s focus on the Medicaid program, making it the primary responsibility of HCF&P. She indicated that tremendous changes in the Medicaid program warranted the energy and efforts of an entirely separate staff, which HCF&P was able to provide.

Chairwoman Evans asked if the division had any difficulty in hiring persons with the policy experience needed to fulfill the division’s objectives. Ms. Wright conceded the division had hiring problems since the sunset provision deterred quality prospective staff members. She explained most of the applicants were looking for career length work. She thought the transitory nature of the position was a barrier to the division’s ability to acquire competent staff. Despite that difficulty though, Ms. Wright said the division had been able to attract a few quality persons. She then alluded to the possibility that the division would not sunset, but would continue after its trial phase. Because she felt the division’s continuance was probable, she said the determent factor of the sunset provision was diminished.

Chairwoman Evans quizzed Ms. Wright if the division had identified additional opportunities for maximizing federal funds for Medicaid.

Ms. Wright answered the division had been able to draw additional dollars. For example, the Nevada Check-Up program utilized federal funds to provide services to person who had been ineligible for Medicaid benefits.

However, Chairwoman Evans interrupted to point out that the Nevada Check-Up program was a federally mandated program. It was not the result of a state initiative.

Ms. Wright elaborated the division had been able to use a greater proportion of federal dollars to fund existing services. One area in which the division had been able to maximize federal dollars was in Mental Health and Mental Retardation (MHMR). Ms. Wright then explained the function of the Health Care Financial Analysis and Strategic Planning group was to search for ways to expand the coverage of federal funds in the division’s programs and its sister agencies. As a result, she said the division had requested $100 million less in the department’s budget request than it had requested in the previous biennium. Although she felt part of the division’s success in trimming costs was attributed to that group, however, a dollar amount could not be identified.

Chairwoman Evans thought those issues should be included in the division’s performance indicators to better illustrate the success of the division. She noted the subcommittee was interested in measurements of outcome, but the division’s performance indicators failed to produce those measurements. She requested Ms. Wright to return to subcommittee members with the appropriate measures or figures denoting the division’s cost-efficiency.

As no other questions emerged from the subcommittee, the discussion on the HCF&P Administration was closed and the next budget account was addressed.

Ms. Wright explained the Intergovernmental Transfer (IGT) program was closely tied to the DSH program. The purpose of the DSH program was to attract federal funds by generating monies from alternate non-state sources. Those funds were then matched with federal dollars, which allowed the division to make disproportionate share payments to area hospitals as an offset against their uncompensated care. She articulated that because hospitals had to provide for indigent care, DSH compensated hospitals for those expenses.

Currently, Ms. Wright explained $73.6 million had been set aside for DSH, where half of the funds were federal and half were state funds. The only way for the state to generate money outside of the General Fund for DSH was to create the Intergovernmental Transfer Account.

Ms. Wright explained the account was funded by payments from both counties and area hospitals. She noted a variety of changes to the program had been implemented since its inception.

Ms. Wright reported, hospitals and counties made payments of $52.7 million into the IGT account and $36.8 million of those funds were used as the state match amount for DSH. Afterwards, DSH was able to pay hospitals $73.6 million for uncompensated care. Emphasizing the fact that DSH would not operate without the intergovernmental transfer IGT, she explained DSH was funded by the maximum amount of federal dollars because Nevada was one of the higher DSH states.

Then Ms. Wright explained the state match dollars within IGT were used for purposes ancillary to the state match DSH requirement. First, a portion of the state funds was allocated for DSH. Second, a $200,000 portion of the state match funds within IGT was used to compensate the division for the administrative expenses it incurred while administering the program. The remainder of the state match funds was called a state benefit. Ms. Wright clarified the state benefit currently amounted to $15.7 million each fiscal year.

In regard to the state benefit, Ms. Wright stated the division attracted federal matching funds to the equivalent level of the state benefit. Therefore, the total state benefit would consist of $15.7 million in state-generated funds and $15.7 million in federal matching funds. The sum of those two amounts then paid for the state’s Medicaid program and the Nevada Check-Up Program.

Mr. Dini wondered why four to five of Nevada’s hospitals were about to reach bankruptcy if the state was providing them with DSH funds.

Ms. Wright corrected Mr. Dini by explaining DSH paid hospitals for uncompensated care and there were limitations on how much a hospital could receive. Due to federal restrictions, a hospital could not accept a greater share of funds than it paid out for indigent care. Also, rural hospitals, such as the hospital in Nye County, had management issues that needed to be addressed to achieve financial solvency. She understood that the Nye County Commission had decided to continue its support for the hospital, however she contended the division needed to work with the Nye County hospital in areas other than uncompensated care.

With respect to the reapportionment of DSH funds, Ms. Wright referred to legislation such as Assembly Bill 69, which would change the way that funds were distributed amongst hospitals. Furthermore, she felt area hospitals should be evaluated on an individual basis only because the problems some of the rural facilities faced only dealt with long-term care issues.

Chairwoman Evans expressed her chief concern in the account involved the
$30 million carryforward the division anticipated from FY1999. She wondered if those budget carryforward assumptions were realistic and if not, what the division would do to meet Medicaid expenditures. She also noticed that the reserves in IGT would decline sharply. She thought if a carryforward did not occur, the division would not be able to make up for the loss of those funds. Would the division then have to depend on General Fund monies?

Ms. Wright responded the anticipated carryforward was a convoluted issue as it was affected by Medicaid costs and unfortunately, she could not predict what level Medicaid expenditures would reach in the forthcoming biennium. The best tool the division had to make such a projection was the Medicaid Projection Program (MPP). Ms. Wright then explained that when the Welfare Division developed caseload information, the information was subsequently supplied to the division. The division then placed the information into the MPP model to determine future costs. The subsequent projection gave a dollar amount of Medicaid’s needs.

In FY 1998, Ms. Wright related caseload information had predicted costs to be higher than average. However, in actuality the caseload and costs were not as high as the model had anticipated. Thus, the division did not withdraw the budgeted amount of funds from IGT.

Initially, Ms. Wright felt the assumption that caseload predictions for FY 1999 would again be higher than the actual caseload, thereby alleviating the division’s need for IGT funds for Medicaid, was favorable. Unfortunately, she articulated the actual caseload amount was increasing compared to the projected caseload amount. Actual caseload increases indicated the division would not be able to utilize unexpended IGT funds, which resulted from a low Medicaid expense year.

Chairwoman Evans was concerned the Medicaid caseload was increasing because a large part of the division’s budget had relied upon a diminishing Medicaid caseload. She wondered how the division would manage if those carryforward funds were not available.

Relaying the difficulty of creating a departmental budget in a tight budgetary year, Ms. Wright explained the possibility of utilizing unexpended IGT reserves seemed reasonable at the onset of the budget process. However, that was not the case. She claimed division staff had been working closely with the Budget Office to monitor the status of the Medicaid caseload. As a result, she admitted she was less comfortable with the reliability of IGT reserves.

Ms. Wright argued if IGT were to continue to operate, status quo, the division would have to save $15 million each year of the biennium. She thought the possibility seemed improbable.

Chairwoman Evans interrupted to stress the subcommittee’s distress concerning the uncertainty of a large IGT reserve. She mentioned the current IGT account had almost $70 million in reserve funds. After the division drew upon those funds in its budget requests, the reserve would diminish to $48 million in the first year of the biennium and then to $21 million. The Chair was alarmed by the precipitous decline in the IGT reserve.

Ms. Wright assured subcommittee members the division would provide the most extensive, up-to-date information, regarding Medicaid expenditures as soon as possible. The division planned to utilize March caseload information to re-analyze the MPP and the division’s budget requests by the end of April. By doing so, Ms. Wright argued the maximum number of months in the current year would be evaluated.

Chairwoman Evans was satisfied that the division was working on a contingency plan and was monitoring the situation closely. She asked Mr. Comeaux if he had any additional response concerning the size of the IGT reserve.

Mr. Comeaux commented the situation was complex and needed to be monitored closely to determine if reserve funds would be available from IGT. He also conceded the situation did not look as favorable as it had three months ago when the budget was compiled. Should the carryforward from IGT not become available, the division’s contingency plan was to use additional General Fund monies instead. Mr. Comeaux noted those funds would then have to be cut from another budget request, but hopefully, it would not be necessary.

Senator Coffin quizzed Mr. Comeaux if Christopher Thompson, former Administrator for HCF&P, had forewarned the Budget Office of the difficulty of relying on the IGT carryforward.

Mr. Comeaux stated regardless of Mr. Thompson’s warning the Budget Office had been fully aware the IGT carryforward was uncertain. He explained the $15 million carryforward was used in The Executive Budget to help balance the budget and at the time of the budget’s inception the carryforward had seemed like a plausible option. Regardless, Mr. Comeaux insisted the Budget Office was fully aware the option was risky.

Senator Coffin asked if Mr. Thompson had supported the Budget Office’s plan to utilize the IGT reserve before he had been terminated. Mr. Comeaux submitted that Mr. Thompson had not made that recommendation.

Chairwoman Evans then asked Mr. Comeaux to expound upon the appeal, which had been filed by the University Medical Center (UMC), on rate increases. It seemed the appeal had a collective liability to the state of $23 million.

Mr. Comeaux deferred his response to Charlotte Crawford, Director of the Department of Human Resources. Ms. Crawford stated the department was currently engaged in settlement discussions with UMC and with the Nevada Supreme Court settlement judge. She felt progress had been made in recent weeks and she expected to finalize the settlement in the near future. She confirmed the Chair’s conclusion that state might be liable for an additional
$23 million.

Chairwoman Evans asked if a decision would be reached prior to the end of session. Ms. Crawford responded affirmatively. The settlement was scheduled for completion by March 15, 1999.

Since, subcommittee members had no further questions concerning the IGT budget account the Chair moved the discussion to the issue of the Nevada Medicaid program.

BUDGET ACCOUNT 3243, PAGE HCF&P-1

Ms. Wright first stated the Medicaid account was a difficult account to explain because expenses varied from week to week, thereby making it difficult to predict future costs.

Ms. Wright then elaborated one of the major differences in the base budget for Medicaid was the reduction in expenditures for the drug rebate. Other than that reduction, she felt there were no major changes in the division’s base budget request.

In the M-101 decision unit, Ms. Wright identified a rate increase of 9.97 percent to cover the cost of pharmaceuticals. She noted the M-101 rate increase was the only rate increase built into the Medicaid budget. Also in regard to the rate increase, Ms. Wright clarified that projections had been completed by the division, which illustrated the result of rate increase offered to Medicaid’s 6,900 providers. In past sessions, the legislature had approved rate increases of about 2.5 percent to providers, which would currently cost the division $22 million in the first year of the biennium and $35 million the second year. Nevertheless, due to insufficient resources in the current budget, the rate increase for providers had not been included in The Executive Budget. Thus, Ms. Wright repeated the rate increase for pharmaceuticals was the sole rate increase built into the budget.

Ms. Wright reminded subcommittee members a rate increase had been put into effect in January 1999 that was continued in the module to maintain budgetary support in the upcoming biennium.

Chairwoman Evans wondered how providers such as hospitals and long-term caregivers would be impacted by the lack of rate increases. She opined the division’s difficulty in attracting providers would be exacerbated by the lack of appropriate compensation. She then referred to the HMO, which had declined to participate in the Washoe County mandatory managed care program, and wondered if that HMO chose not to participate because of the lack of rate increases.

Ms. Wright answered the division’s difficulty in attracting providers could be attributed to the static nature of the compensatory rates offered to providers. Obviously, she thought if Medicaid’s reimbursement rate was high enough, a larger number of providers could be attracted. Likewise, when compensation rates were low, providers would be deterred from participating in the program. For example, Ms. Wright cited the 50 percent dental rate increase during the last legislative session, which resulted in a greater variety of services, were offered and more eligible recipients were covered.

Prior to the repeal of the Boren Amendment, Ms. Wright explained the division had been required to provide rate increases to providers sufficient to cover the costs of an efficient and economical facility. That rate was not to exceed the rate Medicare would reimburse the provider. She noted HCFA mandated Nevada Medicaid to provide rate increases sufficient to attract enough providers adequate for the program’s access. If the required rate increases were not addressed in the division’s budget requests, an amendment to the state’s Medicaid plan would have to be made. Thus, the department would have to work carefully to amend the state’s Medicaid plan, in order to eliminate rate increases while maintaining HCFAs approval. She also argued the division would have to prove to HCFA that Nevada’s Medicaid reimbursement rates were sufficient to attract providers.

Chairwoman Evans asked when the division would have to submit its rate plan to HCFA. Ms. Wright responded the process took a few months because work sessions had to allow the industry time to give the division proper input.

Chairwoman Evans then asked what stage the division was in that process. Ms. Wright responded although she felt the process needed to start, it had yet to begin. She then summarized the various steps the division would have to take in order to receive HCFA’s approval for the division’s provider reimbursement rates. The division would have to hold workshops, issue a public notice, schedule public hearings, submit the state plan amendment to HCFA, and receive a response from HCFA. Ms. Wright indicated at the time public notice was posted, the division still had the opportunity to change the reimbursement rates, however the process would still take several months to complete.

Ms. Wright articulated the division could not guarantee HCFA would accept the plan amendments. Should HCFA express concern over the division’s reimbursement rates, further discussion would ensue until HCFA was completely satisfied.

The Chair pondered about the other incentives used to attract providers aside from rate increases. She thought the Medicaid reimbursement process was cumbersome and bureaucratic. In reply, April Townley, Deputy Administrator for HCF&P, answered other incentives included a reduction in Medicaid provider requirements, easier billing mechanisms, and reduced time delays in authorizations alleviated those problems. She argued those incentives might not completely make up for the lack of rate increases but they were offered by the division to attract providers.

The Chair thought it would be valuable to hear testimony from some providers to determine the effectiveness of those incentives. She stated additional time for testimony on the subject should be provided in the future.

Ms. Wright stated the division was aware of some of the industry’s concerns and was conducting meetings with industry members to reduce the burdens and barriers to providers. She stated the division would work with providers in future to improve the Medicaid provider process. Still, she was not sure if those discussions would be enough to offset the lack of a rate increase.

Ms. Wright next addressed the M-200 decision unit. Because the Medicaid caseload would change as a result of including the more recent information from March in the MPP, she said the decision unit might change. She reiterated the caseload projections in The Executive Budget represented information from June. In the categories of the aged, the blind, and the disabled, the division’s projections had been less than the actual expenditure levels.

Chairwoman Evans noted the decision unit called for 54 new Intermediate Care Facility/Mental Retardation (ICF/MR) beds. In previous biennia, the number of ICF/MR beds had been over budgeted. She remarked the issue had been discussed with MHMR in the previous week and she expressed her desire to see other providers for those beds that would not be as expensive.

Ms. Wright articulated the entire 54 ICF/MR beds might not be needed. A discussion between DHR and MHMR had been undertaken in regard to the discrepancy between MHMRs ICF/MR projected-bed needs and the actual numbers. She said the resulting decision still needed to be addressed by the Budget Office. But because the division had just recently become aware of the problem, information had not yet been submitted to Director Crawford.

Ms. Evans clarified that Ms. Wright’s testimony was in reference to the Independent Choices Waiver. She hoped the meeting of the joint-subcommittee would expedite the process. She quizzed Ms. Wright concerning the division’s action during the previous week on the waiver.

Ms. Wright answered the number of beds required was less than what had been budgeted. The difference between the costs of those beds and the division’s resources was contemplated as a means of eliminating the waiting lists.
Ms. Wright explained the division first needed to provide Ms. Crawford with more accurate information regarding the waiting lists before any other action could be taken.

Ms. Crawford added that she had become aware earlier in the week that the subcommittee desired to explore alternative methods of addressing the projected demographic growth, rather than minimizing the waiting list at MHMR. She said 54 ICF/MR small-beds had been projected and funded in the Medicaid budget, but MHMRs initial analysis had not identified the demographics of the caseload that they were using to determine that need. Therefore, Ms. Crawford said the department needed to determine the type of individuals who would use the beds relative to the bed type. She agreed with the Chair that the ICF/MR small beds were expensive. However, she noted the ICF/MR small beds were less expensive than spending money on out-of-state care and acute care.

The Chair directed Ms. Crawford to return to the subcommittee with the results of her findings. Ms. Crawford answered the department would be able to provide an answer on the division’s need for ICF/MR small beds in the next week. Chairwoman Evans wondered how long it would take to then resolve the issue. Ms. Crawford felt once the true need for the ICF/MR small beds had been established, the balance could be used as an alternative method of funding. She did not feel it was fair to assume that extra money existed because MHMRs assessment of ICF/MR small bed need was incorrect.

Chairwoman Evans asked the division to provide a new projection of the division’s number of long-term care beds in the M-200 decision unit. Ms. Wright then admitted the division had over-projected their need for long-term beds in the last biennium. She pledged to provide more accurate information.

The Chair then referred to the M-201 decision unit where the division proposed to discontinue Medicaid funding to assist financially strapped counties. She noticed by January 01, 1999, the Institutional Care Fund had allocated $138,000 to county providers.

Ms. Wright stated the division had completed the paperwork for
Budget Account 3246 but the account was actually controlled by a board of trustees established by Nevada Association of Counties (NACO) representatives. Established in 1997, with $300,000 in IGT funds, the Institutional Care Fund had only made two distributions to Lyon County. She said the fund had generated interest and now amounted to $140,000. When NACO introduced legislation to place an additional $300,000 from IGT, they did not realize the tight financial situation in which the IGT currently found itself.

Ms. Wright elaborated M-201 would continue to fund the state’s share of long-term costs up to the 156 percent of the SSI income level but would discontinue increasing the fund past that level. No other increase had been built into the budget due to the limited amount of resources available.

Next, Ms. Wright addressed decision unit M-202, which accommodated the increases that had been requested for the MHMR Waiver information.

Moving to decision unit M-204, Ms. Wright explained the unit was related to a change in the contract amount for the EQRO contract. Originally, she explained, mandatory managed care did not exist, however by December 1998 managed care in Medicaid was in full swing. Therefore during the 1998 base year, there had been no expenditures for EQRO. The division had anticipated spending $100,000 in FY 1999, which was less than their budgeted authority, but because of the delay in the mandatory managed care program the entire amount wasn’t used.

By 2000 and 2001, Ms. Wright explained HCFA would mandate the EQRO review and the division requested the $250,000 EQRO funding from the last biennium to be carried over to the present biennium. The request was not included in the division’s base budget as a result of their being no EQRO expenditures in 1998. Ms. Wright mentioned the decision unit also assumed a 2 percent increase in savings derived from managed care.

Chairwoman Evans expressed confusion over EQROs funding source. Ms. Wright submitted the division would have to re-analyze their budget requests in order to find alternative funding sources. However, at present the division expected EQRO to be funded with state funds. She indicated that the division would attempt to find another source of funding, as the likelihood of receiving General Funds was slim.

Chairwoman Evans asked Ms. Wright to resolve the issue as soon as possible and to provide a summary of alternative funding sources to staff. Ms. Wright agreed to reply to staff the following week.

Ms. Wright stated the only other issue begging discussion was the method with which the division would attract HMOs to participate in the mandatory Medicaid program. She explained that no rate increases had been built into the contractual agreements funded in The Executive Budget. The contracts however called for actuarially sound rate increases. Should the legislature choose not to fund those rate increases, the contracts would become null and void.

Chairwoman Evans next asked Ms. Wright to discuss the Business Process Re-engineering (BPR) study.

Referring to the BPR for the Medicaid division, Ms. Wright cited several of the study’s conclusions. First, the BPR noted the division’s current information system was outdated and would not meet current and future federal and state reporting requirements. Nevada was the only state in the nation that did not have a certified Medicaid Management Information System (MMIS). However, Ms. Wright related the state had the opportunity to request federal dollars in match funds to pay for up to 90 percent of the planning, development, and implementation expenses of the new information system. She indicated federal funds would also cover 75 percent of the on-going MMIS system operations.

Ms. Evans noted some of the BPR recommendations made during the last biennium had not been accepted. She asked why the division was experiencing problems with the BPR.

Ms. Wright stated the division had contracted with BDM/TRW to deliver a specific list of items the division needed to design their budget. She explained there had been difficulties in obtaining those items in time to use them in budgetary discussions. Currently, BDM/TRW had completed their BPR report and the division had paid the company for their services. Nevertheless, there were two other reports, an evaluation of alternative processes report and an evaluation of outsourcing claims processing that were still needed from BDM/TRW.

Ms. Wright submitted the original budget proposal from the division had included a module which would provide approximately $10 million in each year of the biennium to pay for the recommendations of the BPR. But because there were insufficient revenues in the General Fund to support that request, the division deleted the item from their budget requests. She then introduced Bruce Weydemeyer, an independent health care consultant.

Mr. Weydemeyer informed subcommittee members he was the former Medicaid director for the state of New Mexico. He then presented John Dennig, a consultant with TRW.

In regard to the state’s contract with BDM/TRW, Mr. Weydemeyer pointed out some of the important aspects of that contract. First, he stated the BPR report on the Medicaid information system operation in Nevada had already been completed by TRW. The initial BPR report on the systems background had also been provided and approved. The other two reports were not yet finished as TRW was still negotiating with the state for additional information. Mr. Weydemeyer said the information needed by BDM/TRW concerned other states’ experiences operating automated claims processing systems. He indicated that TRW had recommended out-sourcing the design of the automated claims processing system to a private contractor. Nationwide, only two to three companies were contracted for such work.

Mr. Weydemeyer said TRW had recommended the state should put out an RFP for one of those companies with requirements that met the basic needs of Nevada’s Medicaid system. Afterwards, the state would select a vendor who would operate the system on their data center, which existed outside Nevada. He felt Mr. Thompson had been concerned that TRW had not adequately evaluated options from other states and had not clarified which items the division would add or delete from the BPR recommendations should the legislature decide to reduce Medicaid’s funding. Mr. Weydemeyer also stated DoIT had been concerned that TRW had not explored the option of installing the hardware in the state of Nevada, but operated by an outside vendor.

Chairwoman Evans asked how Nevada was consequently disadvantaged because it was the only state lacking a data management program. Mr. Weydemeyer clarified Nevada had a claims processing system with Blue Cross/ Blue Shield of Nevada. He said the only difference between that system and the system the state needed involved the lack of functionality components, which met federal standards for certification. He explained that in 1991 the federal government had developed standards for a certified Medicaid management information system. If those standards were met, Medicaid would receive a 90 percent federal match for the development and the installation of the system and a 75 percent federal match for operating expenses. Nevada had had a system operating through the local Blue Cross/Blue Shield operation for the past 25 years, however it had not been upgraded to meet federal requirements. As a result, Nevada only received a 50 percent federal match for the $8 million cost of operating the out-dated automated claims processing system. The potential existed for Nevada to draw a 75 percent operating match should it develop a system that met federal certification standards.

The Chair next asked what tasks the MMIS system completed. Mr. Weydemeyer said the MMIS system provided better access to information. He explained the current process of information retrieval was tedious and difficult to do because the information had to be accessed through a database operated by the University of Nevada Las Vegas. The newer MMIS system had a data warehouse where information was downloaded and provided to the division itself, thereby making the budget analysis procedures, performance analyses, and cost trends much easier to complete.

Also, on the provider-side, an MMIS would allow for the electronic submission of claims, electronic deposit of funds, and funds transfers. He also believed the old system contained an onerous code system which required staff to spend an inordinate amount of time converting procedure codes to something the outdated system could process. The new system on the other hand, would be more automated and more efficient.

Chairwoman Evans remarked program management was an important issue and it clearly merited the recommendation for a new system. In terms of financial decisions, she said decisions should be based on more accurate information rather than speculations.

Mr. Weydemeyer claimed that even with the new MMIS system, some amount of speculation would still occur. The information, from which the division could render decisions, was more accurate and precise, however the division would not be able to anticipate every change in formation.

The Chair then asked what the 90 percent federal match entailed. Mr. Weydemeyer explained HCFA would fund 90 percent of the cost of developing a new system, but TRW had not recommended that option. TRW believed the division should transfer a system from another state and modify it to fit Nevada’s needs. HCFA would then compensate Nevada for 90 percent of the total cost of the development and installation of the modified MMIS system. Once the MMIS system was certified the daily operation of the system would be subsidized up to 75 percent of total operating costs by HCFA.

Chairwoman Evans felt if the recommendation had been to out-source the MMIS system, those subsidies wouldn’t be received by the state. However, Mr. Weydemeyer explained out-sourcing the MMIS contract did not affect the decision to allocate a federal match; the state only had to prove the system met HCFA certification requirements.

Next, Chairwoman Evans asked if the costs of the MMIS system could be explained. Mr. Dennig answered TRW had estimated the development of the new system to cost 25.6 million with inflation built-in over the next four years. He said the state would have to supply 10 percent of that cost, or $2.56 million. Mr. Dennig disclosed the operating costs of the new MMIS system would be $11.2 million where the state would be required to meet a 25 percent match at $2.8 million. He noted the total cost of the system included a component called Pharmacy POS System.

Before closing the discussion on the Medicaid account, the Chair asked
Ms. Wright to elaborate on the elimination of four positions all-round by the 1997 Legislature for the Business Process Re-engineering Division’s loss in the number of positions. Ms. Wright explained four positions had been approved for work on the BPR during the interim, but because there was no continuing responsibility for the positions they were eliminated from The Executive Budget. She noted if the division implemented the Point-of–Sale pharmacy recommendation, there would be an additional staffing requirement. She explained the division would work with BDM to determine staffing needs if positions needed to be retained. She would provide the information to staff as soon as possible.

Senator Coffin interjected to note certain members of the audience had traveled long distances in difficult circumstances in order to provide public testimony that day. He felt public testimony should begin immediately especially as Senate members had to leave for the Senate Floor Session shortly.

Chairwoman Evans concurred and allowed members of the audience to present public comment concerning DHRs various budget accounts.

Reading from a prepared statement (Exhibit C), John Chambers, Chairman of the Nevada Forum on Disability stated:

Mr. Chambers then introduced Dr. Ralph Baker, a psychologist for Rural Mental Health and the Chairman of the State Council on Independent Living. Mr. Baker distributed copies of his testimony (Exhibit D) and stated:

Next, Mr. Reggie Bennett of the Assistive Technology Center of Las Vegas presented a letter from Dr. Dale Warby (Exhibit E), a teacher at the University of Nevada, Las Vegas. He read:

Chairwoman Evans then thanked Mr. Bennett for his testimony and clarified S.B. 433 of the Sixty-ninth Legislative Session appropriated money to be matched with federal funds for a waiver program. The waiver required the cooperation of DHR and the Department of Employment Training and Rehabilitation (DETR). The Chair wondered why the waiver proposal was never finalized because nothing had been planned, by either department, for the waiver program. She asked if Ms. Crawford might speak to the issue of the Independent Choices Waiver, detailing the background and present status of S.B. 433.

Ms. Crawford explained S.B. 433 had allocated $500,000 to DETR for the development of a waiver for the physically disabled under the Medicaid program. She said the department of Human Resources through the HCF&P division had developed a waiver and submitted it to DETR. However, she explained the development of a waiver was not a simple process and questions concerning the waiver remained. The waiver’s present status was in the question and answer period with HCFA. She thought that because the state had faced budgetary tightening during the development of department budgets, the waiver had not been built into the budget for the upcoming biennium.

Senator Coffin remarked the delay indicated a difficulty with one of the departments, either DETR or DHR. Ms. Crawford did not feel that was a fair characterization of either administration. She repeated the process of developing a waiver was a lengthy and difficult process. Senator Coffin then asked if the process could be characterized as a lack of will to provide funds. Ms. Crawford responded the failure of the waiver to receive budgetary support in the current biennium was attributed to the inability to sustain funds not the lack of will. She was keenly aware of the acuity of the state’s budgetary problems, especially as positions had been transferred out of the department in order to sustain the state’s budget. She emphasized the department tried to maintain the operations of existing programs with the diminished amount of resources available to it. Although the project had been collaboration between Human Resources and DETR, the waiver was not able to keep pace with the states budgetary difficulties and when the time came to tighten department budgets, a tough decision was made.

The Chair asked if the waiver had been requested by DHR. Ms. Crawford replied affirmatively. Currently, the waiver was stuck in a question and answer phase.

Ms. Wright added after meeting with DETR, she became aware that questions concerning the waiver had been submitted by staff to the Budget Office. She believed DHR had issued responses to those questions and the waiver was currently in the hands of legislative staff. She also indicated the department had experienced difficulty in determining the actual costs of the waiver and the savings.

Chairwoman Evans stated she had received information indicating the two departments, DHR and DETR, were having trouble working together to finalize the waiver. She hoped those troubles would be resolved. Then she asked if the $500,000 allocation had been reverted.

Ms. Wright clarified the $500,000 waiver allocation to DETR would revert if it was not spent in the existing fiscal year.

The Chair then asked how many individuals the waiver would serve.
Ms. Wright responded the waiver would serve 48 people; 29 of whom were Medicaid eligible, including 24 institutionalized people and 5 county-match individuals. Chairwoman Evans wondered how much it would cost per year to cover the eligible individuals in terms of the state’s share of the costs. Ms. Wright replied that the first year costs totaled $980,000, where the state’s share would be $490,000. In the second year of the waiver, the total cost would be $3.8 million of which the General Fund would only support $1.91 million.

The Chair asked if costs were lower in the first year of the biennium because of the delay in the waiver’s start-up. On an annualized basis she understood the program would cost the state $2 million. Ms. Crawford concurred.

Mr. Robert Hogan, Executive Director for the Housing, Long-term living, Rehabilitation, and Assistive Technology Services for Accessible Space, Inc. then provided testimony on the funding of S.B. 433 (Exhibit F). He thought the figures previously discussed assumed individuals would be new to the Medicaid system. However, he anticipated the majority of individuals that the waiver would serve, would be existing Medicaid clients. The purpose of the waiver was to bring individuals out of nursing homes and into the community. He then read,

Chairwoman Evans remarked the people who were already on Medicaid had been factored into the waiver’s cost figures. She then promised that the subcommittee and the two departments would recalculate the cost totals.

Mr. Paul Gowans next testified on behalf of the Disability Forum. He felt it important subcommittee members understood the physical state of those with disabilities. In the past, he said various programs had been supported by the legislature to assist those with disabilities, but currently the disabled population was faced with a dearth of support for personal care services. In fact, there was no increase in the budget to remove those who were on the waiting list for existing waivers.

Mr. Gowans reminded subcommittee members the waiver that had been approved in the last legislative session had not yet been implemented. He understood that the number of individuals with disabilities would continue to grow in the southern part of the state and in the rural communities. He believed that if he did not testify that day, there would be no increases in program support for the next three years. But the Independent Choices Waiver would assist 50 individuals with disabilities. He emphasized the waiver was a top priority amongst programs, which aided the disabled because it provided important things like home modifications. He repeated that he hoped the Chair understood the difficulties faced by those with severe physical disabilities.

The Chair then emphasized subcommittee members understood the issue was of the utmost importance. She felt keeping those persons with physical disabilities outside of institutions was a critical issue. Also important was the quality of life.

Dr. Christine Tower, Professor of Social Work at the University of Nevada, Reno, next testified as a former Medicaid client. She said she had spent ten years of her life battling cancer, and during that time she was on Medicaid and had received in-home services that allowed her to live independently.

Next, Dr. Tower referred to a picture (Exhibit G) of then Governor Richard Bryan signing Nevada’s first in-home services legislation- to keep people out of nursing homes. That had been her first visit to the legislature and she had been involved with Center for Independent Living.

At the time, Dr. Tower explained the center was a small group, struggling to rebuild their lives, going to school, trying to stay well, and trying to stay independent. She noted many of the present legislators on the subcommittee had been present at that time too. She felt that spoke to the confidence citizens had in them. She believed the subcommittee would do the right thing and fund the Independent Choices Waiver, not only because it made good fiscal sense, but because it was the humane thing to do.

Dr. Tower then remembered Robert Laney, Ralph Hicks, Georgia Smithweathers, and Mike Rimburg who had lost their lives since the passage of the in-home services bill. She remarked people with disabilities often died too young.

Next, Dr. Tower listed those with disabilities that had been able to surmount significant obstacles and achieve success in life. She mentioned her husband, Randy Tower, who had been able to receive his degree as a computer consultant. Also she listed, Ralph Baker, who became a clinical psychologist; Paul Gowans, a rehabilitation specialist for the state of Nevada; Dave Nesbitt, a school counselor with Washoe County School District; and Clyde Carvy, a social worker.

Dr. Tower asked the subcommittee to remember those individuals when deciding to fund the Independent Choices Waiver. She stated "We are living proof that independent living is always better than institutionalization." Those receiving in-home living assistance were taxpayers, homeowners, professionals, and volunteers. She hoped the legislature would ensure that the next wave of citizens who encountered disability had the same kinds of opportunities the in-home services bill had given Dr. Tower.

Recalling the similar legislation in past years, the Chair remarked the present attendance of those who lobbied in past legislative sessions for in-home assistance was a tribute to their perseverance and their effort to help legislators understand the difficulties faced by the disabled.

Dr. Tower stressed that perseverance alone would not solve the problem. The Independent Choices Waiver and programs like it were the only way to aid the physically disabled in need of in-home services.

As the Senate commenced Floor Session, The Joint Hearing of the Assembly Ways and Means and Senate Finance Subcommittee on Human Resources/ K12 adjourned and the hearing continued as the Assembly Ways and Means Subcommittee on Human Resources/K-12.

Chairwoman Evans then stated the Assembly members of the subcommittee would remain for an additional 15 minutes to hear public comment. She asked those remaining to speak to be as succinct as possible and to leave time for others also wishing to speak.

Mary Jean Thompson, Community Advocacy Coordinator for the Northern Nevada Center for Independent Living, distributed copies of her testimony (Exhibit I) and summarized the issues she felt needed attention. First, she recalled Ms. Wright’s previous testimony concerning the division’s desire to remain cost-effective and to refrain from unduly burdening the taxpayer. Ms. Thompson emphasized the disabled members of the audience and members of the disabled community in Nevada were taxpayers who contributed to the system and deserved those services.

Second, Ms. Thompson noted the state had been given information concerning the state Medicaid programs quality and economic rating. Despite its A-rating, Ms. Thompson disclosed the HCFA 64 Report described Nevada as rated last in nursing home quality and economic efficiency. Next, she referred to the A-rating the program had received for in-home services. Nevertheless by only spending $9 million in 1996 to 1997 for in-home services the program received a rating by HCFA that placed Nevada at second to last.

Third, Ms. Thompson was dismayed that the MHMR waiver program was scheduled for a $34 million increase in funding, yet funding for the Independent Choices Waiver, costing only a few million dollars, was delayed.

Next, she read from a prepared statement (see Exhibit J),

Finally, Ms. Thompson presented a petition (Exhibit H) compiled from over 1,200 signatures in support of S.B. 433. She then remarked most of the members of the audience arose early in the morning in preparation for the hearing, some even slept in their wheelchairs in order to be given the chance to testify. She mentioned the final waiver (Exhibit I) had been completed and if funding was available approval would not be long away.

Next, Ellie O’Toole, representing Sierra Assisted Living Foundation and Four Seasons Independence Center first expressed her support for S.B. 433. She suggested ways that funds for the Medicaid program could be generated. One possibility was to allow individuals who would otherwise qualify for Medicaid, if not for income or other restrictions, to buy into the Medicaid program like an insurance fund. That money could then be used to attract providers or to fund IGT in order to receive a higher federal match.

The Chair responded the subcommittee was responsive to exploring any avenue which might increase the amount of funds going into Medicaid.

Following Ms. O’Toole, Dee Dee Foremaster, representing the Carson City Center for Independent Living, testified that she had received requests for assistance from disabled Nevadans. Those requests were from individuals desperately in need of help because their entire income had been exhausted. Losing homes, vehicles, and all that they had worked for in their lives, she said those individuals needed the assistance provided by the waiver programs. She requested subcommittee members to consider the disabled who had no resources.

Ms. Foremaster then described a situation where one wife was forced to quit her job and remain at home to care for her disabled husband.
Ms. Foremaster felt the situation cried for the relief that the waiver program could provide.

Next, Mary Catherine Wilson, Program Director for the National Multiple Sclerosis Society for Northern Nevada, testified also as an individual with Multiple Sclerosis (MS). She commented that in the last year, five individuals had been admitted to nursing homes with MS who could have remained at home had the waiver program been funded. Of those five people, one woman had died from a poor quality of life, not because of her disease. She disclosed the remaining four individuals were subsequently confined to nursing homes permanently as their conditions had degenerated to the point of needing feeding tubes. They were currently waiting to die. She emphasized MS was not the cause of their deteriorated conditions, but it was the loss in their quality of life.

Ray Bottrell next addressed the subcommittee as a consumer. He explained that he was an individual who would be released from the nursing home should the waiver program be funded. He mentioned he appreciated the assistance of programs like the Independent Choices Waiver.

The Chair was grateful for the sacrifices Mr. Bottrell had made in order to attend the hearing as a spokesperson for the disabled.

Following Mr. Bottrell, Winthrop Cashdollar, introduced himself as the Executive Director for the Nevada Health Care Association, which was an association of long-term care providers throughout Nevada, including nursing and assisted living facilities. He remarked his pleasure at seeing members of the disabled community testify before the subcommittee, however he intended to speak on behalf of the elderly beneficiaries who could not be present.

First, Mr. Cashdollar explained the Medicaid division faced a daunting responsibility and Mr. Winthrop appreciated its efforts. Nevertheless, he did not think the problems related to nursing home billing and the payment of stale dated claims had been resolved. He also mentioned his dissatisfaction with the delay of the division’s BPR recommendations and hoped the division’s effort to redesign the billing process would be successful.

Second, with respect to stale dated claims (Exhibit K), Mr. Cashdollar felt the division’s Crash program, where stale dated programs were reviewed and in some cases paid, seemed a bit like, "picking someone’s pocket and when you repay part of the money later, calling it progress. " Mr. Cashdollar emphasized the stale dating issue was important because nursing facilities were not being compensated for care rendered.

Finally, Mr. Cashdollar addressed the issue of the underfunding of long-term care. He said that at present, the state did not intend to make its annual adjustment to nursing facility rates. Resulting from a previous lawsuit, a process for updating nursing facility payment rates each July had been created, however the update was not anticipated during the coming summer. Mr. Cashdollar believed the failure to provide for the annual adjustment amounted to a cut in Nevada’s supportive services for the elderly.

Accordingly, Mr. Cashdollar said Nevada’s nursing facilities did not view the annual adjustment as dispensable or optional. For example, in southern Nevada a 17 percent vacancy rate for certified nurse aides existed and many facilities were forced to rely on more costly temporary staff. Nursing facilities had even begun to restrict their own admissions due to the lack of staff. Therefore, he concluded, Nevada’s long-term caregivers could not afford to allow the erosion of the state’s financial support for long-term care.

Next, Jon Sasser, Legal Services Statewide Advocacy Coordinator, distributed written testimony on the Nevada Check-Up budget (Exhibit L) and requested an additional date for public comment to discuss other important issues. He mentioned he respected the decision of the disability committee to prioritize its needs.

Jan Gilbert, Progressive Leadership Alliance of Nevada (PLAN), testified on behalf of PLAN, expressing PLAN’s support for the disabled community as health care had been identified as one of the groups most important concerns. She felt the Independent Choices Waiver should be a top priority for the state as well. She also requested additional time for public comment on a later date.

As, Mr. Dini agreed to continue the hearing for some additional time, the Chair asked those remaining with comments to step forward.

Mike Morceles next testified that he was a narcoleptic and had experienced difficulty in qualifying for Medicaid funds. He felt that the budget for Medicaid was constantly being cut and the income limit for Medicaid recipients was lowered. He noted the new legislative building did not assist the disabled in their struggle to receive help and he asked subcommittee members to understand the problems faced by a disabled person while making budgetary decisions.

George Mayes, Jr., a graduate student at the University of Nevada, Reno and the Chairman of the Sparks Advisory Board, also expressed his support for the Independent Choices Waiver. He felt it was more cost-effective to keep people out of nursing homes. Finally, he stressed a disability could occur at any time, to anyone, to any family member and it could occur anywhere. He then reminded subcommittee members to seriously consider the waiver program.

As time for public comment had expired, Chairwoman Evans stated additional time would be allocated at a future date. She understood some of the difficulties some audience members had overcome to testify.

The meeting was adjourned at 11:40 a.m..

RESPECTFULLY SUBMITTED:

_____________________________

Janine Marie Toth,

Committee Secretary

APPROVED BY:

Assemblyman Jan Evans, Chairwoman

DATE:

Senator Raymond Rawson, Chairman

DATE: