MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-First Session
February 21, 2001
The Committee on Commerce and Labor was called to order at 3:51 p.m., on Wednesday, February 21, 2001. Chairman Joe Dini, Jr. presided in Room 3161 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:
Mr. Joseph Dini, Jr., Chairman
Ms. Barbara Buckley, Vice Chairman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Ms. Dawn Gibbons
Ms. Chris Giunchigliani
Mr. David Goldwater
Mr. Lynn Hettrick
Mr. David Humke
Ms. Sheila Leslie
Mr. Dennis Nolan
Mr. John Oceguera
Mr. David Parks
COMMITTEE MEMBERS EXCUSED:
Mr. Richard D. Perkins
GUEST LEGISLATORS PRESENT:
Mrs. Marcia de Braga
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Darlene Nevin, Committee Secretary
OTHERS PRESENT:
Amy Harvey, Washoe County Clerk, Reno, Nevada
Laurel Moser, Washoe County Clerk, Reno, Nevada
Larry Matheis, Executive Director, Nevada State Medical Association
Danny Coyle, President, State of Nevada Employees Association, AFSCME/Local 4041
Fred Hillerby, Legislative Advocate, Nevada Association of Health Plans
James Jackson, Legislative Advocate, UICI Administrators
Joan Buchanan, Administrator, State of Nevada Real Estate Division
Pat Coward, Legislative Advocate, Nevada Association of Realtors
Frank Johnson, President, Nevada Association of Certified Real Estate Inspectors
Dave Anderson, Owner, AmeriSpec Home Inspection Service.
Chairman Dini called the meeting to order at 3:51 p.m. A quorum was present. Mr. Dini opened the hearing on A.B. 154.
Assembly Bill 154: Revises provisions governing persons who conduct business under assumed or fictitious name. (BDR 52-443)
Amy Harvey, Washoe County Clerk, introduced Laurel Moser, also from her office, who handled fictitious firm names and would address proposed legislation.
Laurel Moser, speaking on behalf of Washoe County, informed the committee the County Fiscal Officers Association (CFOA) proposed the following changes. The changes included three minor revisions to the changes in Nevada Revised Statutes (NRS) Chapter 602 governing fictitious firm names.
The first change was in wording of NRS 602.010. Ms. Moser pointed out in the first paragraph, where it stated “every person doing business in this state” they would like to add “natural or artificial,” an artificial person being a legal entity on file with the Secretary of State. (Exhibit C)
The second change involved NRS 602.015. Ms. Moser said the bill proposed striking that paragraph. Rather than repealing the text, she suggested it would be clear for the public if it read, “any corporation conducting, carrying on or transacting business in this state is considered an artificial person and is subject to the requirements of NRS 602.010.”
Lastly, on NRS 602.020, in Section 3, CFOA had proposed a change to read “an authorized representative of the artificial person.” Ms. Moser offered replacing it by “a person required to sign the annual filing” would make it consistent with the wording in the rest of the statute.
Chairman Dini asked if those proposed changes came from CFOA, which Ms. Moser then affirmed. She went on to specify the “representations” her office was making for proposed language had not yet been discussed with CFOA. Therefore they were not sure CFOA was in support of the changes Washoe County was suggesting.
Chairman Dini asked if there were any CFOA representatives present. There were none. Chairman Dini announced A.B. 154 would be referred to a work session.
Mrs. Gibbons inquired, regarding the proposed changes in NRS 602.015, how corporations would be notified of the changes.
Laurel Moser responded there was nothing at the beginning of the statute that notified a corporation it was considered an “artificial person.” She added the language simply clarified what an “artificial person” was.
Chairman Dini asked if there were any other questions or testimony on A.B. 154. Chairman Dini closed the hearing on A.B. 154 and reiterated it would be taken to a work session.
Chairman Dini opened the hearing on A.B. 123 and invited Assemblywoman de Braga to present her testimony.
Assembly Bill 123: Revises provisions relating to health insurance.
(BDR 57–603)
Mrs. de Braga, Assembly District 35, informed the committee A.B. 123 was essentially a bill she presented last session that was tabled pending a governor’s committee’s study of the issues. She stated the committee had not come forward with any recommendations.
Mrs. de Braga prefaced her presentation stating health care decisions were mostly being made by patients, and patients did not always have access to the best kinds of care. She added A.B. 123 would empower patients in some areas. The bill would require insurers to do three things.
First, the bill would require insurers to estimate the rate at which the health care provider would be reimbursed. If the insurer paid claims on the basis of “usual and customary” charges, or similar terminology, the insurer would be obligated to inform the health care provider as to the estimate of the “usual and customary” charges and the percentage to be paid were there not a contract with the provider. It would also need to be clarified, added Mrs. de Braga, that those figures were based on procedures that did not involve “unexpected complications.” Mrs. de Braga emphasized people needed to know what procedures would cost so they could better make decisions as to whether or not they should go ahead with the medical procedure(s). She stated people could no longer base their decision on “if you need it, you get it;” rather they needed to have some idea of the actual costs.
Secondly, A.B. 123 addressed reimbursing specialists outside a 50-mile radius of the insured’s home with whom there was no contract with the insurer. If the insured had to see a specialist and there was not one contracted with their insurer within a 50-mile radius of their home, how would they be reimbursed? Mrs. de Braga noted the insured would have to know if the insurer would reimburse a specialist outside the 50-mile radius with whom the insurer did not have a contract the same amount they would reimburse a specialist within the 50-mile radius with whom they did have a contract. That could often be the situation in rural areas, added Mrs. de Braga.
Thirdly, A.B. 123 provided any changes in payments under the insurance plan would be “subject to the same deductible, co-payment, co-insurance, waiting period and any other conditions for coverage that were required under the policy.”
Mrs. de Braga added A.B. 123 would remove the annual $2,500 fee for prescription foods for those who needed such foods to treat inherited metabolic disease. She informed the committee they would be hearing testimony opposed to this provision of the bill. She stated about four years ago the legislature enacted a law requiring insurance companies to reimburse families for a percentage of the cost for these special foods. Mrs. de Braga suggested the committee might want to address this issue in legislation other than A.B. 123. She stated there really needed to be a plan by which all children could receive those prescription foods, including those who were not insured. Many families could not afford prescription foods and the result of not receiving them could be brain damage.
Mrs. de Braga continued that A.B. 123 would require self-funded insurance plans to comply with the same provisions of NRS to which other health insurance plans were subject. These requirements were referred to in A.B. 123. She enlightened the committee as to the self-funded insurance plan’s lack of timely response regarding increases in premium without notice and lack of timely response to requests for authorization, if any at all.
A.B. 123 would require self-funded insurance plans to notify insureds at least 60 days in advance of premium increases. Experiences related to Mrs. de Braga, along with her own experiences, were that insureds were not receiving bills from providers for months. The response to Mrs. de Braga’s call to UICI was the computer system was not working and she should be okay as long as she kept paying her premium. Yet they could not tell her the amount of her premium. Mrs. de Braga expressed her concern that the insurance company would not be able to track who had or had not paid. Insureds who had not paid, either because they were waiting for a bill or because they forgot due to not receiving a bill, would eventually receive a large bill for a lump sum.
Mrs. de Braga reiterated A.B. 123 was the same as the bill introduced last session and was deferred, but she did not think anything came from the interim study addressing the particular issues.
Chairman Dini asked if the premium issue Mrs. de Braga addressed was on page 10, lines 1 through 7. Mrs. de Braga affirmed that he was correct and added this text would require insurers to provide notice of a proposed change in premium in advance of actually making such change.
Ms. Giunchigliani, referring to page 10 of A.B. 123 which addressed notification of premium change, related a story of a constituent who, as well as other retirees, had his insurance deducted from the Public Employees Retirement System (PERS) without notification of changes in premium. Upon adding his wife to his plan, this insured could not ascertain from PERS the additional amount in premium to be deducted because PERS itself did not know. Ms. Giunchigliani expressed the need for anyone who was responsible for the payment of deductibles or premiums to be notified of increases in premiums.
Mrs. de Braga voiced her agreement and concern because of problems that could result from automatic deductions, especially for someone on a fixed budget.
Ms. Giunchigliani added that insureds went to doctors not knowing whether or not they were covered because they had not received any indication either way, nor were they informed as to whether or not they were paying the right amount of premium.
Mr. Hettrick also expressed his agreement with much of Mrs. de Braga’s testimony regarding delays in billing and notification of premium changes. He indicated he had not been billed for five months and was told in January, upon trying to get a prescription filled, he was not covered at all, nor was anyone else because the computer was down. He was further told insureds were being re-entered into the system as they called for prescriptions because they could not be re-entered all at once.
Mr. Hettrick acknowledged the content of the bill as being good, but voiced his concern the “as soon as practicable” language in the bill would keep it from really having any affect. Such language had to remain because specifying certain dates required someone to monitor compliance.
Mrs. de Braga agreed with Mr. Hettrick and responded that could be the most opposed part of the bill. Mrs. de Braga voiced her uncertainty as to what wording would be best and perhaps a time should be specified. She also suggested the time element might be considered with the authorizing of procedures and the estimation of the cost. The time element could be a matter of a few weeks or a “very short time.”
Mrs. de Braga thanked Mr. Hettrick for his comments on filling prescriptions and voiced similar experiences. She noted an insured could go for days without a prescription.
Mr. Hettrick informed those present that Laurie England, Director of the Governor’s Office of Consumer Health Assistance, had been very effective in obtaining medical authorizations and stated those who needed assistance be referred to that office.
Larry Matheis, on behalf of the Nevada State Medical Association, expressed support of the bill and noted authorizations were “surprisingly complex” to obtain. He related the experience of a lawyer who, on behalf of his clients, found the payment schedule was often referred to as an “attachment” which in most cases was not with the contract. When he contacted the company to request the attachment, he was usually informed there was no attachment but they were “working on a new one.” Mr. Matheis stated often insureds were unable to get a response as to the expected cost of a procedure. He added the patient had the right to know the cost and the physician needed to consult with the patient regarding the costs, particularly if there might be an alternative to the procedure. Mr. Matheis commented it was a “real issue” and he did not know if this was the best approach. There was value in its being direct, he added.
Mr. Matheis acknowledged the difficulty in rural areas regarding contracted specialists and the inconveniences caused by a lack of contracted specialists in these areas. One needed to be concerned with the “social” issue as well as the medical, such as the difficulty for a family to make a long trip to see a specialist.
Ms. Giunchigliani asked if A.B. 123 dealt with pre-authorizations or if that was automatically included. She voiced concern over the patient being billed for services not included on the pre-authorization, charges of which even the doctor was not aware. She asked if there were other terminologies needed to be included in A.B. 123 to address that issue.
Larry Matheis responded it was a separate and complicated issue. He added he had learned from experience dealing with pre-authorizations that a pre-authorization does not necessarily mean the procedure is a covered benefit, that the issue to approve or deny payment could come later. He did say there has been a lot of cooperation to “streamline” prior authorizations.
Ms. Giunchigliani thanked Mr. Matheis and clarified she did not want to tamper with the bill. She stated, however, there must be a lot people getting “caught” trying to obtain accurate preauthorizations.
Mrs. de Braga added the bill needed to state that preauthorizations should be done in a timely manner. She also drew attention to a disclaimer at the bottom of the authorization sheet stating there was no guarantee of payment for the authorized procedure. That was the problem because one could not make a decision to proceed with a procedure, especially if it were life threatening as well as expensive, and not knowing the amount to be covered.
Danny Coyle, President of the Retiree Chapter of the State of Nevada Employees Association, AFSCME/Local 4041, spoke in support, saying most of the complaints he had received from retirees were addressed in A.B. 123. A lack of information seemed to be part of the problem with retirees. He added Laurie England of the Public Employees Benefits Committee Board was trying to address some of the problems and had produced a newsletter. Jan Marie Reed, Executive Director of the State Employees Benefit Program, was trying to address problems as well. He commented on the difficulty caused by the 50 percent turnover in Ms. Reed’s office. Mr. Coyle thought A.B. 123 would support his efforts to disseminate information to the chapter’s members.
Fred Hillerby, on behalf of Hometown Health Plan and the Nevada Association of Health Plans, prefaced his remarks stating he had met with Mrs. de Braga. He asserted the managed care entities he represented were not really opposed to the bill. Many of the problems were due to a lack of information and he had committed to Mrs. de Braga to assist in forming language that would better address her concerns, especially in Section 3 which dealt with advance notice and obtaining estimates of cost. He added the patient often found the stay in the hospital, procedure and costs were far more than expected at the onset. In reference to Section 4, Mr. Hillerby acknowledged lack of clarity regarding which specialists one could see when the specialist was not in the insured’s rural community. The language of Section 4 stated whether there was a specialist within the 50-mile radius or beyond the 50-mile radius, the insured could go to whichever specialist he/she chose. The difficulty with that was providers were contracted and fees negotiated to keep costs down; therefore the plan needed to let the insured know to which specialists they could go. He added Mrs. de Braga was not receiving that information. Also, using language such as “any willing provider” undercut efforts to contract specialists. It was the responsibility of health plans to produce a list of providers.
In closing, Mr. Hillerby restated he had committed to help Mrs. de Braga with the language of A.B. 123 and was obtaining language from Medicare and federal employees that was clearer regarding responsibilities of insurers. Also, in reference to prescribed foods, Mr. Hillerby stated extending this to “indefinite exposure,” could result in unpredictable costs. He added he had been trying to get numbers from the Division of Health. He recalled there were, two or four years ago, 60 to 100 children in Nevada with metabolic disorders. It was always questioned as to why there was not a public fund so that all such affected children, not only the insured, could receive the benefit of the prescribed foods. Mr. Hillerby concluded that he was not really against the bill, but that he felt changes were needed to protect the contracting with providers and to make sure insureds were receiving accurate information regarding estimates.
Seeking clarification on Section 4, Mr. Hettrick asked Mr. Hillerby if insureds would be expected to see a contracted specialist, if there was not one within a 50-mile radius of the insured’s home.
Mr. Hillerby replied that would be the expectation. If the insured had to see a non-contracted specialist, managed care would like to be part of the decision because they are involved in finding board certified specialists outside Nevada who provide services not available in Nevada. He noted they had relationships developed and received discounts to keep costs down even though they were not contracted.
James Jackson, on behalf of UICI Administrators, informed the committee that he was not prepared to address the concerns presented in the meeting. He understood that the state was responsible for getting the bills out, but there was a three-month contract with UICI to train the state in processing bills. Such clarification should be made before saying whose responsibility it was. Mr. Jackson also informed the committee that there was information sent to the state regarding additional costs due to changes proposed by A.B. 123, and that information was with Jan Marie Reed. Ms. Reed was probably unable to attend the hearing due to a benefits committee meeting and possibly a subsequent meeting. He added that he would pass on to Ms. Reed the concerns raised regarding A.B. 123 and, hopefully, they would be better able to address the issues raised.
Chairman Dini informed Mr. Jackson the committee would hope to have a work session soon and invited Mr. Jackson to attend with some information at that time, probably in a week to ten days.
Mr. Jackson thanked Chairman Dini and stated he would be at the work session with information and someone who could address any concerns.
Chairman Dini asked if there were any more questions. He thanked Mr. Jackson for testifying and asked if there was anyone else to speak for or against the bill. He concluded the hearing on A.B. 123, noting it would be taken to a work session. He voiced his expectations the “industry” would help Mrs. de Braga in making A.B. 123 a “complete bill.”
Chairman Dini opened the hearing on A.B. 153.
Assembly Bill 153: Clarifies that appraiser who completes statement of visual condition required for federally insured home loan is exempt from provisions governing inspectors of structures. (BDR 54-402)
Joan Buchanan, Administrator for the State of Nevada Real Estate Division, introduced Brenda Kindred-Kipling, Appraisal Officer for the Real Estate Division. She informed the committee her office regulated licensing of realtors, appraisers and inspectors and real estate related industries. A.B. 153 was requested by the State of Nevada Department of Business and Industry, Real Estate Division, to exempt real estate appraisers from the Inspector of Structures Law the state passed in, she believed, the 1997 session. It required the Visual Conditions Statement as a part of a federally prescribed appraisal. She noted the Visual Conditions Statement (Exhibit D) was required when an appraisal was done for an FHA loan. Problems arose in 1999 when Housing and Urban Development (HUD), under their new loan program, required appraisers to complete the aforementioned inspection form. The Real Estate Division stated completion of the form required a home inspector’s license and those appraisers lacking such license were considered in violation of the Inspector of Structures Law. That would delay and complicate approval of FHA loans, explained Ms. Buchanan. As there were few appraisers with inspector’s licenses, Governor Guinn issued an executive order that the Real Estate Division not enforce disciplinary actions against appraisers who were completing the forms (Exhibit E). The Real Estate Division continued to hold them to the appraisal license laws.
The Real Estate Division was ordered to meet with the industries, appraisal regulatory groups, and HUD. The division concluded they would continue to hold appraisers to the federal government standards. A.B. 153 would “allow appraisers to be exempt from the law but still be held competent to the standards.”
Because the Governor’s executive order would expire March 14, 2001 and the effective date of A.B. 153 was July 1, 2001, Ms. Buchanan expressed she would appreciate the bill being expedited.
Ms. Buchanan informed the committee another problem was the visual condition form often being mistaken for a home inspection form. She indicated that would be addressed later in the hearing.
Ms. Buchanan explained when a consumer purchased a home through an FHA loan, they must sign the form “For Your Protection: Get a Home Inspection.” Lenders could not process the loan without the signed form. Five days before closing the transaction, the lender would be required to provide the form to the homebuyer. Ms. Buchanan asked if there were questions.
Chairman Dini asked Ms. Buchanan what she would suggest as an effective date for the bill. He suggested “passage and approval” to which Ms. Buchanan agreed.
Ms. Buchanan added the inspection form was a lender’s requirement for FHA loans, but the Real Estate Division would educate realtors to use the form for FHA home financing.
Chairman Dini called on Pat Coward, who spoke on behalf of the Nevada Association of Realtors and voiced their support for A.B. 153. He echoed Ms. Buchanan’s remarks as to the complications brought on by HUD’s mandate for completing a visual conditions form. Many brokers and realtors were aware of the new requirement and on viewing the form, realtors would be alerted to conditions they might need to explore.
Chairman Dini asked if there were any questions from the committee. He thanked Mr. Coward for his testimony.
Frank Johnson, President of the Nevada Association of Certified Real Estate Inspectors, introduced Dave Anderson, chairman of their Legal Ethics Committee.
Mr. Anderson, owner of AmeriSpec Home Inspection Service, member of the American Society of Home Inspectors (ASHI), president of the High Sierra Chapter of ASHI, and legal and ethics chairman of the Nevada Association of Certified Real Estate Inspectors, claimed he was not there in opposition to A.B. 153. He was, however, concerned because buyers were signing the form “For Your Protection: Get a Home Inspection” (Exhibit F) at close of escrow, rather than at completion of the sales contract. He referred to a letter from HUD (Exhibit G) which stated the “For Your Protection: Get a Home Inspection” form had to be signed upon execution of the sales contract. He also informed the committee he received calls from buyers saying their realtor notified them they did not need a home inspection because they had already gotten an appraisal. The misinformation caused Mr. Anderson to be concerned. Those particular buyers, he stated, were those “most in danger of going down” if something was wrong with the property. He clarified the visual conditions form (Exhibit D) was not a property inspection that would help a homebuyer. The purpose of the agencies he represented was to protect homebuyers, and stated they were the only friends of the buyer in a real estate transaction. He voiced his concern as to what could be done to protect the homebuyer and added that Joan Buchanan had expressed willingness to educate realtors, especially in regard to homebuyers signing the form “up front.”
Mr. Humke suggested working with realtors to inform buyers of the difference between appraisers, home inspectors, and “the drive-by federal inspection.” He contended the committee was aware of the risks to the buyer, but added the purpose of the bill was protection of the lender. Mr. Humke asked if Mr. Anderson could suggest a disclosure to add to the bill so the homebuyer would know what they were getting.
Mr. Anderson added they probably could have added some language but they were not aware of the hearing until the night before. He indicated the consumer needed to be made aware and further suggested the state put information out to buyers to protect them.
Mr. Humke replied record was being made at the meeting that would put homebuyers on notice as to their rights and protections. He recommended Mr. Coward and the State Realtors Association work with Mr. Anderson’s association to educate buyers.
Mr. Coward affirmed the Nevada Association of Realtors supported the bill. He expressed their support of condition disclosures, adding in 1995 the Commerce and Labor committee was involved in a disclosure bill. The buyer’s signature was required indicating their awareness the visual conditions form was not an inspection form.
Mr. Anderson said the form was needed by the lender to get the loan insured. It was often presumed already signed. However, it was frequently not being signed until the close of escrow. He affirmed his support of A.B. 153 if the buyer was provided up front, five days in advance of the transaction closing, the “For Your Protection: Get a Home Inspection” form.
Chairman Dini suggested Mr. Anderson, Mr. Coward and Ms. Buchanan, as a subcommittee, discuss their concerns and bring their suggestions back to the committee the next week when the bill would be processed.
Chairman Dini asked if there were any further questions or testimony. Having none, he closed the hearing on A.B. 153.
Chairman Dini presented the following for committee introduction, adding the committee had requested BDR 53-1251.
ASSEMBLYMAN GOLDWATER MOVED TO INTRODUCE
BDR 53-1251.
ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*********
ASSEMBLYMAN HUMKE MOVED TO INTRODUCE BDR 28-508
ASSEMBLYMAN NOLAN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
The hearing went into a brief recess at 4:46 p.m. and was reconvened at
4:48 p.m.
Mr. Anderson testified the subcommittee was in favor of moving forward with A.B. 153 as quickly as possible.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND A.B. 153 AND DO PASS, TO MAKE IT EFFECTIVE UPON PASSAGE AND APPROVAL.
Assemblyman Arberry disclosed he was CEO of a mortgage company. Assemblyman Parks disclosed he was a real estate licensee.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
ASSEMBLYMEN BEERS, GOLDWATER, HETTRICK, PERKINS, AND
ASSEMBLYWOMAN LESLIE WERE NOT PRESENT FOR THE VOTE.
The meeting was adjourned at 4:50 p.m.
RESPECTFULLY SUBMITTED:
Darlene Nevin
Committee Secretary
APPROVED BY:
Assemblyman Joe Dini, Jr., Chairman
DATE: