MINUTES OF THE meeting
of the
ASSEMBLY Committee on Health and Human Services
Seventy-First Session
February 21, 2001
The Committee on Health and Human Serviceswas called to order at 2:30 p.m., on Wednesday, February 21, 2001. Chairman Ellen Koivisto presided in Room 3138 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mrs. Ellen Koivisto, Chairman
Ms. Kathy McClain, Vice Chairman
Ms. Sharron Angle
Ms. Merle Berman
Ms. Dawn Gibbons
Ms. Sheila Leslie
Mr. Mark Manendo
Ms. Bonnie Parnell
Ms. Debbie Smith
Ms. Sandra Tiffany
Mr. Wendell Williams
COMMITTEE MEMBERS ABSENT:
Mrs. Vivian Freeman
GUEST LEGISLATORS PRESENT:
Douglas Bache, Assembly District 11
Barbara Cegavske, Assembly District 5
STAFF MEMBERS PRESENT:
Marla McDade Williams, Committee Policy Analyst
Darlene Rubin, Committee Secretary
OTHERS PRESENT:
Gary Crews, Legislative Auditor, Audit Division, Legislative Counsel Bureau
Robert A. Badal, Director, Managed Care, University Medical Center
Gary Milliken, Lobbyist, GEM Consulting
Warren B. Hardy, II, Lobbyist, Warren Hardy & Associates
From Las Vegas, Nevada:
John Ellerton, M.D., Physician
Raj Chanderraj, M.D.
Ronald J. Slaughter, M.D.
Note: Simultaneous videoconference to Legislative Counsel Bureau, Room 4401
Grant Sawyer State Office Building, 555 East Washington Avenue, Las Vegas, Nevada.
Assembly Bill 52: Limits fees which providers of health services that accept insurance payments may collect from patients and requires legislative audit of University Medical Center of Southern Nevada. (BDR 40-655)
Chairman Koivisto opened the hearing on A.B. 52.
Douglas Bache, Assembly District 11, explained the genesis of the bill was the result of a personal experience that he later found to be quite common. In July 2000, he received a notice from University Medical Center (UMC) of a bill for $68.71 for service on March 10. He was puzzled because he could not recall having been to UMC at that time. Next he saw an article in the Las Vegas Sun about balance-billing that triggered his memory about having taken his daughter to the UMC “Quick Care” Center. At that time he paid the co-pay charge as required. Shortly thereafter he received a notice from his health insurer stating they had paid the amount contracted to pay to UMC, and whatever amount was left over after deduction of his co-payment was to have been written off by UMC. As it turned out, Mr. Bache received the bill for $68.71.
Mr. Bache visited his health insurer’s office with his paperwork and asked if his situation was common with other insureds. The response was that it was a “semi-regular” problem with UMC, perhaps about 25 cases per week. The insurer would then contact UMC and the billing department would correct it. Mr. Bache felt there might be a number of people who, unlike him, would not go to their insurance company but simply pay the bill. The situation represented one portion of what was called “balance billing.”
Mr. Bache said he would be happy to work with others on the bill language as he had not addressed that specifically. In Section 2 of the bill, he had requested an audit of UMC in order to see how frequently the situation occurred. He invited Gary Crews of the Audit Division to recommend how the audit should be handled.
Gary Crews, Legislative Auditor, Audit Division (AD), Legislative Counsel Bureau, had reviewed the bill and its provisions as it applied to the Audit Division. Generally the AD’s audits applied to the executive branch and the judicial branch agencies and the current matter was somewhat outside that scope. However, they had done audits in the city of Reno, the university system, and recently in the Southern Nevada Water Authority. The provisions in the bill extended the same capability and access to information and records as in auditing any other agency of state government. Those provisions were necessary in order for the AD to do the audit. Mr. Crews did however want to narrow the scope so that only four or five contracts between UMC and insurance providers needed to be reviewed. He explained the contracts were very complex.
Mr. Crews noted the bill’s provision of $15,000 was primarily travel and per diem costs that related to the AD’s staff. No salary cost figures had been added and in the event the bill went on to the Committee on Ways and Means they might want to examine that funding provision. In audits conducted in the university system and Southern Nevada Water Authority, they provided that the audited entity transfer to AD the cost of the audit. In the event the audit was undertaken without using general fund monies, there would be an additional cost besides the $15,000. If the scope was narrowed to the larger contracts, the cost would be an additional $35,000 approximately. Another provision was for the completion of the audit by the 2003 Legislative Session. All other provisions that applied to the confidentiality of AD’s work would apply to that work as well.
Chairman Koivisto asked exactly what the AD would be examining. Mr. Crews responded that primarily the AD would be looking at the billing records, determining what services were provided, what was billed for, any continued efforts to collect, and tracking through the accounts receivable system. Also, were individuals rebilled and were the amounts proper or were they outside the contract agreement.
Assemblywoman Leslie asked Mr. Bache to clarify his intent. He said his health and welfare trust had negotiated a deal whereby he would co-pay a set amount to the provider, the health trust would pay a set fee for the service, and thereafter the provider would write off any balance remaining. As Mr. Bache understood it, UMC was the only provider with whom there had been a frequent problem, insofar as billing that unpaid balance back to the patient that, according to the contract, was not supposed to happen. Mrs. Leslie asked what happened when Mr. Bache brought it to their attention. Mr. Bache brought the matter to the attention of his insurance company who contacted UMC and because of his elected position UMC contacted him personally. Mrs. Leslie asked if the problem was confined only to UMC. Mr. Bache said constituents had contacted him to report similar incidences with other groups, but in discussing it with his health trust they said it occasionally happened with others, however it was a ongoing problem with UMC.
Mrs. Leslie asked if what was being proposed was to have the legislative auditor audit an outside agency and that was the reason for the added cost. Mr. Crews stated the cost of $15,000 was something the AD had not budgeted for. They could absorb that amount with the AD’s existing staff resources without any additional cost, but generally that was a policy decision of the Ways and Means Committee.
Mr. Bache said the reason he had asked for a legislative audit of UMC was that UMC was a public hospital that was run by Clark County, therefore, it was a public agency that was appropriate for the AD to audit.
Assemblywoman Gibbons thanked Mr. Bache for bringing the bill forward as she believed it was something the public needed to know. The situation Mr. Bache experienced had also happened to her. She asked if the situation in question would be considered fraud and as such had a criminal penalty. Mr. Bache responded that violations of statute were considered to be misdemeanors unless otherwise noted. However, there were times when legitimate mistakes in billings occurred, but if there was a history of such occurrences and allegations were made, they had to be supported by facts and that was the reason for requesting the audit. He hoped that if the audit found money had been collected by UMC that should not have been, it would be returned to the patient. Mrs. Gibbons still expressed concern that if the Ways and Means Committee did not wish to address part of the audit because of the $15,000 cost, then at least there would be more public awareness and a penalty for UMC’s actions. They clearly should not be getting away with it.
Mr. Bache said that in amending the audit section he could craft language to charge the cost back to the entity so that it did not come from the state.
Assemblywoman Smith referred to Section 1 of the bill and stated she felt it was a common occurrence for patients to be billed for the write-off portion of their bill, however, would legislation help when the provider had a contractual obligation with the insurance company that should be binding. In other words, could it be resolved through the contractual issue rather than by statute. Mr. Bache was unsure but felt it might be possible to resolve it contractually. He said there was a proposed amendment to clarify some of the language, and that the state wanted to make a statement of public policy that the billing practice should not occur. That was the difference in resolving it contractually as opposed to by statute. Ms. Smith still had some reservations about how helpful legislation would be in a situation where a binding contract already existed and was being violated.
Gary Milliken, representing University Medical Center (UMC), introduced Robert A. Badal, Director, Managed Care, University Medical Center (UMC), to respond to Mr. Bache’s bill. Mr. Badal felt two separate issues had been brought up in the last testimony. First, the language of A.B. 52, second, the issue of UMC’s billing practices. He felt further that it would help the committee to be “walked” through the insurance process. He was responsible for putting together all of the contracts between the facility, which included inpatient and outpatient services and all the managed-care organizations in Clark County. In that role he drafted hundreds of different contracts, all of which had different contractual obligations on both parties. In the situation illustrated, it was important to understand the difference between covered and noncovered services. In any contract when a member of an insurance company accessed care from a provider there were contracted items that, when provided, a fee was established and any differential other than co-payments, deductibles, and co-insurance would be waived. Those were the “contractuals,” discussed above, for covered benefits. To illustrate further, Mr. Badal said a particular insurance coverage plan afforded the benefit of lab and X-ray services, but within X-ray services the benefit design did not offer a level 3 chest X-ray, however, it had been determined by the provider that a level 3 chest X-ray was needed, it would be considered a non-covered benefit by the insurance plan.
Mr. Badal continued with regard to specific issues with UMC, upwards of 25 balance billing occurrences had taken place at the Clark County Teacher’s Union, he presented Exhibit C, five letters, among which was one from the Clark County Education Association Welfare Benefit Trust, which stated that “claims have been processed without incident.” Mr. Badal said mistakes did occur and they tried to rectify those mistakes as soon as possible. However, it was important to focus on covered versus noncovered services because it might direct the committee to develop language that would better meet the needs of both patients and providers.
Vice Chairman McClain asked about covered and noncovered procedures. Was it the responsibility of the doctor when advising that a certain procedure was needed to also advise whether or not it was covered by insurance. How was the average consumer to know. Mr. Badal said the physician needed to make that decision regardless of the benefit level; the health care of the patient was paramount. When a patient came in to access care, during admissions process they signed a waiver that any services that were noncovered benefits would be the patient’s responsibility. The physician did not get into discussions with the patient about what was or was not covered. There were 5,000 different insurance plans. An admitting clerk at UMC was confronted with a great deal of information. Many managed care organizations provided the benefit levels for a particular insured but with the volume of information offered it was very difficult to communicate with the patient at time of admission or even discharge, if the service would be provided. Generally, the provider would bill for those fees, the managed care organization or payer would respond back with payment and would identify on the claim form that a service was not covered as part of the benefit design. At that point, the member would be billed.
Assemblywoman Smith said they seemed to be discussing two different situations: a) balances billed to patients that were, according to contract, supposed to be written off by the provider, and b) covered and noncovered services. She believed the issue was a simple situation where the person gets a bill for a balance that should have been written off. She had read through the letters (Exhibit C) and from her perspective felt the insurance company did not necessarily know there was any kind of problem. If the person received a bill and paid it, the insurance company would not know. Thus, there were issues that would not be considered errors in the way claims were processed but simply that the patient was billed.
Mr. Badal reiterated that “contractuals” were written off. In the contract between the insurance payer and the provider, it was the obligation of the provider to write off “contractuals” for those services. Mistakes did occur but he did not feel they occurred in the manner presented in terms of volume. He had personally spoken with 15 other payers who could attest to the claims processed without incident.
Assemblywoman Parnell asked if there was objection to the part of the bill that asked for an audit. Mr. Badal responded there was no problem with an audit that would benefit the community. He agreed with Mr. Bache’s statement that the language regarding the audit needed to be narrowed. Mr. Badal said that, for the purpose of auditing four or five payers to look at particular claims, reimbursement and billing, UMC’s doors were open.
Assemblywoman Gibbons agreed with Assemblywoman Smith in staying with A.B. 52 that addressed covered care. The letter from the Clark County Education Association Welfare Benefit Trust (Exhibit C), specifically the comment that “claims had been processed without incident,” did not take into consideration Mr. Bache’s situation. She asked what should be the penalty when a patient paid for services that should have, by contract, been written off.
Mr. Badal said he could not answer that question.
Chairman Koivisto felt that with so many unanswered questions, the best course was to form a subcommittee, comprised of Assemblywoman Smith, as chair, and Assemblywomen Parnell and Gibbons, to deal with those questions. She then closed the hearing on A.B. 52 and opened the hearing on A.B. 129, noting several people in southern Nevada were waiting to testify on that bill.
Assembly Bill 129: Limits fees which providers of health services may collect from insured patients under certain circumstances. (BDR 40-1052)
Barbara Cegavske, Assembly District 5, provided introductory comments regarding A.B. 129. The bill limited fees a health care provider was able to charge an insured patient for services provided at a hospital under certain circumstances. If the patient’s insurer had a contract with a hospital that specified a payment or reimbursement for their patient’s services, the amount to be paid by a patient after receiving such services should not change, depending upon whether the doctor who treated the patient was on contract with the hospital or was a member of the hospital staff. Any patient who adhered to an insurance company’s choice of preferred providers should expect a certain level of coverage and A.B. 129 was intended to insure that expectation was met. Mrs. Cegavske said Warren Hardy was present to answer any technical questions about the bill.
Warren B. Hardy, II, representing the Nevada Association of School Administrators and the Clark County Association of School Administrators, appreciated Mrs. Cegavske bringing A.B. 129 forward on their behalf. The bill was designed to address a very narrow set of circumstances and with the inclusion of the language in Assemblyman Bache’s bill, A.B. 52, to deal specifically with contracted providers it was very much the same issue. His concern was that when a patient goes to a hospital and/or practitioner listed as a provider no additional fee was charged. He had spoken to representatives of the insurance companies and to doctors who expressed their concerns as well. Mr. Hardy believed the problem might in fact be one of failing to live up to a contractual obligation, and he would like to explore that also.
Assemblywoman Berman read the bill and said it seemed like the hospital was going to negotiate and set a fee for a doctor not employed by the hospital. She felt that infringed on free enterprise. Mr. Hardy said the language appeared much broader in intent and scope than anticipated. He was specifically looking at doctors who were under contract to the insurers and not all doctors. The bill was not meant to apply to specialists, nor even to balance billing in the strictest sense. He would like the opportunity to resolve the language of the bill. Mrs. Berman said the issue had generated voluminous e-mails and faxes.
Vice Chairman McClain asked if there was a desire to withdraw the bill or what action was to be taken. Mr. Hardy believed the issue he was concerned about could be taken care of in Mr. Bache’s bill, with the inclusion of the language that was requested regarding contracts.
Mrs. Berman asked if a motion should be made on A.B. 129. Chairman Koivisto deferred to the individuals in Las Vegas waiting to testify.
John Ellerton, M.D., Las Vegas, Nevada, spokesman for the group that included Ronald J. Slaughter, M.D., and Raj Chanderraj, M.D., strongly opposed A.B. 129. They believed the language was so broad that it changed the fundamental relationship between physicians and hospitals in a way that was unacceptable to physicians and harmful to their patients. Medical staffs of hospitals were independent from the hospital; they had their own bylaws and methods. Credentialing of physicians was done by the medical staff based on applicant’s qualifications and abilities and was designed to provide, along with cooperation with the hospital, high quality patient care and independence of the medical staff. Further, medical staff privileges were not based on any economic relationship with the hospital or with insurance companies. The bill, as written, changed those facts. He believed some confusion had arisen during the testimony. He explained that if UMC contracted with an insurance company to provide care, it had nothing to do with his contract with the insurance company. He negotiated his own contract. He and UMC might both have contracts with the same insurance company but they might be entirely different in content and in levels of reimbursement. It should not be assumed or believed that whatever the hospital was doing the provider was doing, or vice versa.
Dr. Ellerton stated he had reviewed the legislation and discussed it with 50 physicians; some in private practice and several employed by UMC and “Quick Care.” Their reaction was one of universal disbelief, bewilderment, and frustration. Neither he nor his colleagues could find a physician who agreed with the bill. Moreover, he said they respected the contracts they had signed and understood that contractual obligations were legally enforceable, and they could not collect fees to which they were not entitled. He added that the complexity of dealing with the current insurance climate was hard to believe, however, he had staff that could recite the details of each patient’s insurance deductibles, coverage, and co-pays. Even so, mistakes were sometimes made. The issues under discussion were contractual issues with the force of law behind them and should be dealt with in that manner. Dr. Ellerton was emphatic that he did not want to see legislation that said the hospital was negotiating his fees when he was independently contracted with the insurance companies, and if he had a contract with the insurance company he wanted it to be enforced in a contractual manner.
Dr. Ellerton noted, too, the issue of penalties was a very sensitive issue among doctors. The federal government was constantly enforcing its rules and regulations regarding the management of patients by “having the last piece of the bill,” which was how many years would be spent in jail and how large a fine would be imposed. Dr. Ellerton believed it was not necessary in the current circumstances, because the issue was about contracts. He asked how he could collect money from a patient he had contractually agreed not to collect. He could not sue the patient because he would lose, and the patient could counter-sue for damages.
In closing, Dr. Ellerton pointed out that he was vice chief of staff at UMC where there were some 1,450 members and he doubted there was any one who would support the bill. He asked the committee to take his testimony into consideration in regard to A.B. 129 and requested that further consideration be terminated and his remarks noted on the record.
Ronald Slaughter, M.D., a pathologist based at Sunrise Hospital and past president of Nevada State Medical Association, noted that the points that were objectionable to the physicians were not actually the intent of the bill, as had been pointed out in earlier testimony. He urged withdrawal of consideration of A.B. 129.
Raj Chanderraj, M.D., a cardiologist and president-elect for the Clark County Medical Society, expressed his concern regarding penalties. In most of the instances where mistakes were made they were immediately corrected. Most health care providers and physicians did correct mistakes in billing, and if they did not correct them, asking them to correct the mistakes would be more in order rather than penalizing them. “The more laws that are made, the more criminals are made. We don’t want to make criminals out of physicians.” He said they were trying to provide a service and hoped it was appreciated.
Assemblywoman Gibbons asked Dr. Slaughter if he had ever had a contractual obligation with a hospital and it did not fulfill the requirements or pay the fee it had contracted for. Dr. Slaughter could not think of an instance where that had occurred. He did not believe the hospital administrators he had dealt with wanted to negotiate for physicians, and when that had come up in the past the administrators pointedly refused to do that. It was a practice he wanted to continue. Mrs. Gibbons restated the question, asking if Dr. Slaughter had not been paid as contracted. He responded he was in a different position as a hospital-based pathologist and unlikely to encounter that problem. Mrs. Gibbons said she would like to know then, if his colleagues had encountered that problem of not being paid, as it would be helpful for the subcommittee discussion on A.B. 52.
Assemblywoman Cegavske said she had spoken to Mr. Hardy and accordingly asked permission to withdraw A.B. 129 because it was felt that working with Mr. Bache and the subcommittee, the needs of A.B. 129 could be met during that subcommittee hearing. She explained it had been an instance where legislators had similar ideas that were unknown until the legislature met.
Chairman Koivisto reported that the procedure would be to indefinitely postpone the bill.
Assemblywoman Berman applauded Mrs. Cegavske for bringing the bill forward on Mr. Hardy’s behalf. Mrs. Berman had signed onto the bill without realizing the far-reaching consequences the bill would exert on private physicians and their practices.
ASSEMBLYWOMAN BERMAN MOVED TO INDEFINITELY POSTPONE
A.B. 129.
ASSEMBLYMAN MANENDO SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Mrs. Cegavske emphasized to the physicians there had never been an intent to do any harm to what they were currently doing, and she thanked them for their input.
Chairman Koivisto opened the meeting for additional committee business.
Marla McDade Williams, Committee Policy Analyst, reminded the members of a proposal for committee bill draft request to increase the personal needs allowance in Medicaid (BDR S-1451, later introduced asA.B. 371). She had examined the issue and referenced a memorandum dated May 3, 2000, to the Division of Health Care Financing and Policy (HCFP), which indicated there were currently 942 residents of long-term care facilities that were paid for by county match, and 1,319 noncounty match people. If the personal needs allowance was increased by $10 for individuals only in long-term care facilities for the county match people, the cost would be $113,040. For the other 1,319, just increasing it $10 would be $158,280. The analysis she received had increments of $10, $20, and $40. The high end of $40 would cost $452,160 for the 942 county match cases; in which case the counties would have to come up with that money unless the state made some formal determination to pay it for the counties. The state’s actual share without those county match cases would be $633,120.
Assemblyman Manendo asked how many committee bills would be left after that. Chairman Koivisto said there would be two. Mrs. Koivisto said they had all heard that individuals in long-term care facilities had very little money to spend on personal items. Mr. Manendo felt some dialogue was definitely needed on the issue. He reported receiving so many calls in the interim, as had other legislators, from seniors who could not even afford to buy their grandchildren a Christmas card or birthday card. He felt the committee needed to see if some money was available for an increase. Accordingly, the committee voted unanimously to request the drafting of a bill to increase the personal allowance for long-term care residents.
Assemblywoman Leslie asked Mr. Manendo what level increase he had in mind. Mr. Manendo felt the committee should go for the highest level of $40. The committee was in unanimous agreement.
There being no further business before the committee, Chairman Koivisto adjourned the meeting at 3:32 p.m.
RESPECTFULLY SUBMITTED:
Darlene Rubin
Committee Secretary
APPROVED BY:
Assemblywoman Ellen Koivisto, Chairman
DATE: