MINUTES OF THE

SENATE Committee on Commerce and Labor

 

Seventy-First Session

May 1, 2001

 

 

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 8:06 a.m., on Tuesday, May 1, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada.  The meeting was video conferenced to the Grant Sawyer Office Building, Room 4401, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

COMMITTEE MEMBERS PRESENT:

 

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Dean A. Rhoads

Senator Mark Amodei

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman P.M. “Roy” Neighbors, Esmeralda, Lincoln, Mineral, and Nye             Counties Assembly District No. 36

Assemblywoman Barbara E. Buckley, Clark County Assembly District No. 8

 

STAFF MEMBERS PRESENT:

 

Scott Young, Committee Policy Analyst

John Meder, Committee Policy Analyst

Gayle Nadeau, Committee Secretary

 

OTHERS PRESENT:

 

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association

Marie H. Soldo, Lobbyist, Nevada Association of Health Plans

Charles Duarte, Medicaid Administrator, Division of Health Care Financing and      Policy, Department of Human Resources

Jack Kim, Lobbyist, Sierra Health Services Incorporated, Health Plan Nevada,             Nevada Association of Health Plans

Roy Barraclough, Lobbyist, Pahrump Medical Center

Jon L. Sasser, Lobbyist, Washoe Legal Services, Nevada Legal Services,             Washoe County Senior Law Project

Bill M. Welch, Lobbyist, Nevada Hospital Association

Richard Donaldson, Attorney

Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada

Ruth Mills, President, Nevada Health Care Reform Project

Pat Van Betten, Nevada Nurses Association

Matthew Sharp, Lobbyist, Nevada Trial Lawyers’ Association

Robert Barengo, Lobbyist, Nevada State Board of Medical Examiners

Fred L. Hillerby, Lobbyist, Nevada Association of Health Plans

Helen A. Foley, Lobbyist, PacificCare/Secure Horizons

Roger Volker, Lobbyist, Great Basin Primary Care Association

Carl E. Heard, M.D., Chief Medical Officer, Nevada Rural Health Centers,             Incorporated, and Clinical Representative, The Great Basin Primary Care             Association

Janice C. Pine, Lobbyist, Saint Mary’s Health Network

Keith Beagle, President, Nevada Care Incorporated

 

Senator Townsend:

We will open the hearing on Assembly Bill (A.B.) 36.

 

ASSEMBLY BILL 36:  Revises various provisions governing approval and payment of claims. (BDR 57-460)

 

Assemblyman P.M. “Roy” Neighbors, Esmeralda, Lincoln, Mineral, and Nye Counties Assembly District No. 36:

I have prepared a written statement (Exhibit C) regarding A.B. 36, and would like to introduce it at this time.

 

Assemblyman Neighbors:

The example (Exhibit C) passed out to you adds up to 60 days, which is the same 60 days we currently have.  Some of the insurers testified they can pay claims in 22 days.  Well, if you can pay the claim in 22 days, then you should not be threatened, at all, by this bill.  It allows 60 days.  The major changes, if this bill passes, is there will be no more negotiating zero percent interest on payment of claims.  It provides not only the insurer, but also the provider has certain issues he or she has to meet, as far as receipt of information having to do with the time frame.

 

Other than the issue of fines, keep the current law, but make it so any new contracts cannot be negotiated at zero percent interest rates.  The main thing we want is for the payers to pay in a timely manner.  If there is a problem, we will go back and forth, and negotiate it, but I think it is way past the point where we can sit down and make an administrative agreement.  I think it has to be in the statute.

 

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association:

As you know, this issue was addressed in Senate Bill (S.B.) 99 and several of the parts in the revised version of Assemblyman Neighbors’ bill are already addressed in S.B. 99.  The one issue that is different, actually, takes the language you adopted in the workers’ compensation section, which is the timeline on the working days and on requiring a 20-day response by the provider.  We do not have any objection to the bill, but I just wanted to point out that was the one area where it actually expands from what you did.

 

Senate Bill 99: Makes various changes to provisions governing health             insurance.  (BDR 57-132)

 

Senator Townsend:

Mr. Matheis, in discussing with the sponsor of S.B. 99, the committee should make sure that what is in this bill gets carried over into all areas.  I think that would make the complementary nature of the two bills work in tandem to provide reimbursement schedules in an appropriate manner.

 

Mr. Matheis:

Mr. Chairman, that seems reasonable.

 

Marie H. Soldo, Lobbyist, Nevada Association of Health Plans:

I think we have testified a lot before this committee this year with respect to prompt payment of claims.  I know you have all rigorously looked at what the situation has been, and S.B. 99 passed out of this committee.  We agree claims need to be paid on a timely basis.  If you recall, in the course of our testimony and our recommendations for S.B. 99 we did submit a proposal to change the time frames to reduce them by 25 percent.  Frankly, these time frames are just
too rigorous for us, and our systems will not accommodate such a short time-frame turnaround.

 

We would hope you would take it into consideration in your deliberations.  It is not as if we do not agree that we should be paying these claims on time, but I think we have now added, by passage of S.B. 99, very rigorous punitive interest rates, as well as giving the insurance commissioner reinforced authority to fine us.  I believe these financial actions taking place for the health plans will reinforce that the claims coming in will be clean and paid on a timely basis.

 

Charles Duarte, Medicaid Administrator, Division of Health Care Financing and Policy, Department of Human Resources:

I am the administrator for Nevada’s Medicaid fee-for-service program, managed care programs, and the Nevada Checkup program.  We believe A.B. 36 will add some administrative costs to all of our programs.  We are in contact with our HMO (Health Maintenance Organization) contractors to find out what the administrative add-ons would be for modifying their systems to be compliant with this bill.  We are also in contact with the Department of Information Technology to find out what it will take for our fee-for-service systems, claims systems, to be modified to be compliant with this bill.  As soon as we have the information, we will be able to provide it to the committee, and let you know what the potential cost impact might be.

 

Senator Townsend:

Ms. Soldo, I want to make sure I understand your concern.  The bill is repetitive. Is your concern the term “calendar?”  The same term is repeated throughout the bill, and it has been inserted four times on the first page.

 

Ms. Soldo:

We always prefer “working days,” so it would be our preference on any time frame restriction.  Our concern is we are going from 30 days to 20 days.  I think, even without the term “calendar,” the law would be interpreted as “calendar days” as opposed to “working days.”  So, when we get 30 days, we are really getting only 20 working days.  We already have 20 days, in effect, if you think about it as calendar days.

 

Senator Townsend:

My question, though, when I read the bill, the current law on line 4 is 30 days for a clean claim.  And then 30 days again, and then 30 again, and then 20 on line 15.  Then when they go down to new language, “if additional information is requested from a provider of health care, the provider shall furnish the additional information within 20 calendar days.”  Is that the section you are concerned about?

 

Ms. Soldo:

Frankly, we are concerned about the reduction of the days from 30 to 20 in section 1.  If you go down to section 2, subsection 2, that is something, quite honestly, for Larry Matheis to respond to. I would like to see the language in S.B. 99, because what it is saying is when we are requesting additional information from the provider to make the claim clean, he is going to get only 20 days to respond, or he is going to forfeit his interest.  I like that provision, because I think that was the issue we got to in our discussion in this committee.  It never works both ways; it is always going in one direction.

 

Senator Townsend:

Mr. Matheis, do you have a problem with this first section, line 19, within 20 days?  You have to get the information back, or you lose your rights?  This was the issue we dealt with in workers’ compensation, but we did not deal with it in the rest of it.

 

Mr. Matheis:

That is right.  Yes, because it also shortens the payment time from 30 days to 20 days following that.  So, that was the trade-off in workers’ compensation, as well.

 

Senator Townsend:

We are just going to use the first section, here, for the purposes of this discussion.  Section 1, subsection 2, includes two different changes.  One change is a provider has 20 days to give additional information.  Then when you move to the second page, “the administrator shall approve or deny the claim within 20 calendar days,” and it says, “the administrator shall pay the claim within 20 calendar days.”

 

Mr. Matheis:

As long as the last part is there, which contracts it from 30 days to 20 days for the payment, and then the demand for the information is within 20 days it is a reasonable trade-off.

 

Senator Townsend:

Ms. Soldo, we are not making a judgment.  I am just dealing with the bill.

 

Ms. Soldo:

I understand, Senator.

 

Senator Townsend:

In Senator O'Connell’s bill, we dealt with workers’ compensation.  But, what we are trying to figure out here is what works, because the rest of these deal with all the health maintenance organizations, fraternal organizations, small employers, et cetera.  That is what this bill does.  Are the 20 days and 20 days reasonable for you?  Larry Matheis is saying they have to be coupled.

 

Ms. Soldo:

He is trying to get it down.  I think we will be set up to fail if we have to do 20 calendar days.

 

Senator Townsend:

Is that on both?  Because we are not saying they have to give you the information in 20 days; you have to pay the claim in 20 days after you have accepted the claim.

 

Ms. Soldo:

Right now, when a claim comes in, we have to pay it in 30 days.  If the claim is not clean, we have only 20 days to tell the provider.  So, we have to scan the claims really quickly to determine whether they are going to get paid.  And those claims that cannot be paid for need of additional information have to be sent back within 20 days.  When the claim comes back, we have 30 days to review it, and 30 days to pay it.  That is 60 days.  Our proposal was to reduce it to 45 days.

 

Maybe we can do this with “working days,“ because then we are going to be talking about an extended period of time.  I am trying to be fair to both, but I have to talk to my claims people, because to say, “20 working days,” I am not clear if we can accomplish that.

 

Senator Townsend:

Let me ask about subsection 2 in regard to the additional information requested from the provider, it says, “the provider shall furnish the additional information within 20 calendar days after receiving the request.”  Those are your clients, Mr. Matheis.  The providers have 20 days, or they are out of luck.  If they do not give the payers the additional information, the providers are done.

 

Ms. Soldo:

They will get paid, but they will not get interest.

 

Senator Townsend:

Then it reads, “the administrator shall approve or deny the claim within 20 calendar days,” where previously it was 30 days.

 

Mr. Matheis:

And, that is my point. If that is done, then the 20-day response time is reasonable.  If that is not done, then we would not be able to support the 20‑day response time.

 

Senator Townsend:

Then it says, “if the claim is approved, the administrator shall pay the claim within 20 calendar days.

 

Jack Kim, Lobbyist, Sierra Health Services Incorporated, Health Plan Nevada, and Nevada Association of Health Plans:

We also discussed these types of provisions in S.B. 99.  There was an amendment proposed on S.B. 99.  The chairman had asked us to come to an agreement we could all live with at the work session.  At that time, we discussed whether we should put different time frames in for the payment of health care claims. The providers, who were represented at the work session, I think, by Peter Ernaut, and I also believe Larry Matheis was there, indicated we wanted to go with no changes in the time period.

 

We agreed to the penalty interest rate of prime plus 4 percent, I believe, but the committee decided to go 6 percent.  We agreed to go with no panel listing fees.  We think S.B. 99 is a pretty comprehensive bill that addressed all these issues, and we even discussed the same types of issues we are discussing in A.B. 36.  Providers who were represented at the work session did not want the requirement of having to respond within a certain number of days with the information.  What I am looking at in A.B. 36, in the requirements, gets me a little bit concerned, because the way this has now been set up, you have
substantially cut the time to make a decision on claims, and then pay the claims.

 

When we send claims back, we may send them back for a variety of different reasons.  We may get a claim missing some critical information.  When the claim comes back, we may have so much more information we will need the entire 30 days to review it, and then to pay it.  In reviewing A.B. 36, some of those issues are addressed in S.B. 99, including the 95 percent claims-payment requirement the Department of Insurance has for review.

 

Ms. Soldo:

Can we have 10 minutes to come back, and maybe talk with the sponsors of this bill?

 

Senator Townsend:

You can have all the time you would like.

 

Senator Shaffer:

Mr. Matheis, how frequently do doctors get into disputes over whether the claim is clean or not?  Is that something more frequent than normal, or is it just okay?

 

Mr. Matheis:

It is one of the sticking points, and it is an issue being addressed by the task force that Insurance Commissioner Alice A. Molasky-Arman has put together.  I think it will go a long way towards resolving those definitional problems.  What we hope is, as time goes along, all of these time frames become unnecessary because they all can be much more easily met, because we are all working from the same talking points.  Eventually, with a lot of electronic claims billing, it should all be able to be done.  We are at the front end of it; the frustration is very high.  I think it is much higher at the level of the providers because they have already delivered the service, and they are waiting for compensation.

 

Assemblyman Neighbors

First, remember the 60 days: the 20, 20, 20.  It is the same 60 days currently in statute.  The provider sends the payer a bill.  If providers are late getting the bill out, then that is their problem, but from the time the payer receives the bill the payer then has 20 days, 3 weeks, to determine whether there is something wrong with the bill.  If the payer has a problem with the bill, the payer sends it back.  At that point, the clock starts all over again.  After the provider receives the bill, the provider has 20 days to try to resolve the problem, and send it back to the payer.  In each instance, the clock starts again.

 

Roy Barraclough, Lobbyist, Pahrump Medical Center:

That really is the purpose for this initiative.  To try to equalize, if you will, the time frames associated with the submission and payment of a clean claim, and those associated with the submission and payment of a claim determined to be either incomplete or inaccurate.  Currently, statute allows for 30 days for the review of the bill and 30 days for payment.  Sixty days, total, for a clean claim.  If the claim is kicked back, and it has to be done within the first 20 days of the initial 30-day period, then the clock stops.  Once the information is resubmitted to the payer the clock starts over again, and the payer has another 60 days.  This results, in reality, in claims aging to as much as 90 to 110, or 120 days before they are paid.  We are attempting to change that, so those time frames are not quite as generous.

 

I would also indicate, for the benefit of the committee, the initial bill filed had suggested time frames of 15 days; 15 days for the consideration of a resubmitted claim and 15 days to pay.  When we met with representatives of the insurance company, that time frame was changed from 15 days to 20 days.  We also added the provision where the provider now had the responsibility of responding within a 20-day period, thus making it a joint responsibility, if you will, to make sure claims are processed in a timely fashion.

 

The important thing from the provider’s standpoint is this caveat that currently exists through a multiple denial of a claim.  We can be looking at a significant amount of time before the provider is paid.  That is what we are trying to address with the language in this bill.

 

Mr. Barraclough:

I have a written statement (Exhibit D) regarding A.B. 36.

 

Senator Townsend closed the hearing on A.B. 36.

 

Senator Townsend opened the hearing on A.B. 363.

 

ASSEMBLY BILL 363:  Allows patient to obtain his health care records without             charge under certain circumstances.  (BDR 54-1098)

Jon L. Sasser, Lobbyist, Washoe Legal Services, Nevada Legal Services, and Washoe County Senior Law Project, read from prepared testimony (Exhibit E) regarding A.B. 363.

 

Senator Townsend:

Mr. Sasser, do we have people here who are going to testify to the fiscal impacts of this?  On the cover of the bill it lists a fiscal note for local government and for state government, so somebody is going to be hit with a cost.

 

Mr. Sasser:

My assumption is that would be talking about county hospitals having to provide some free medical records when requested.  My understanding is, at least for the response to legal services programs and the advocacy community, most of those county hospitals provide their records free, anyway.

 

Senator Townsend:

Is there anyone here who testified to this?

 

Mr. Sasser:

No one testified in the Assembly in opposition or in terms of the cost.

 

Senator Townsend:

The Division of Mental Health and Developmental Services said it has a neutral position on this.

 

Bill M. Welch, Lobbyist, Nevada Hospital Association:

Most of the public hospitals are already providing these services for free.

 

Senator O'Connell:

If most of the public hospitals are proving the medical records for free, then do you have a problem with the private hospitals providing them for 60 cents a page?  Or are they exceeding 60 cents a page?  Or how much of a problem is it?

 

Mr. Sasser:

The statute currently limits the charge to 60 cents per page, so no one is charging over 60 cents per page.  Many are charging 60 cents per page.  This bill goes not only to hospitals, but also to doctors and other medical providers giving information about a person’s medical condition.  It often is a problem for people at the earlier state of the process.  Usually, when they get an attorney, the attorney will put up the money.  Or, if they go to a legal services program, sometimes we are able as a non-profit to persuade people to give the copies for free.  But, prior to that stage, for the first two stages of the process, it is a problem for people.

 

Senator O'Connell:

So, even though the doctor may not be providing copies of the medical records for free, is there a duplicate set at the hospital where the patient would be going, and then the hospital would be providing them for free?

 

Ms. Sasser:

No, I am not aware of duplicate sets at the hospitals.  Again, Social Security has a very detailed set of criteria about what type of medical condition one must have in order to be disabled, or not.  Sometimes the information needed to prove a disability may be in a hospital record; more often it is in a treating physician’s records.  So, there are not usually duplicate records; there are all sorts of pieces of the puzzle that have to be put together for the Social Security Administration.

 

Mr. Welch:

That was the point I was going to try to clarify.  The hospital records would only be for the care provided to that particular individual while he or she was hospitalized.  The situations Mr. Sasser is referring to generally include on‑going rehabilitation or treatment of that patient, and those records would only be available from the provider who was providing those services, and would not be included in the hospital records.

 

Senator O'Connell:

What you are telling us is the records are not a complete set that follows the patient.

 

Richard Donaldson, Attorney:

I have been practicing Social Security law for almost 30 years, and I want to comment on the necessity of having a complete set of medical records for Social Security cases.  The second part of the bill was not really addressed, and that part has to do with the timeliness.  In Social Security cases, and dealing
with denial, the records often say you have not documented the case properly.  And, many times, it takes up to 3 months to get a copy of the records.

 

The second point I want to mention is when a person is going to the outpatient clinic, for instance, and you go down to the clinic, there will be 300 or 400 souls there.  Most of them are Medicaid-pending patients.  That means they have filed applications, but they have not been awarded benefits.  When a person gets a Medicare card or Medicaid card, he or she can go many other places for service, because the physicians will take Medicare and Medicaid patients.  But, they will not take Medicaid-pending patients.

 

The local governments are picking up the tab for many services that would be paid by the federal government.  If the patients had their records and could get their benefits, they would be able to alleviate the local government system, which is paying for people who are going in and being recycled through the system because they just do not have the appropriate medical documentation.  I think there would be some savings.  There is a fiscal impact; there is no question about it, because the statute about the 60 cents a page has been in place for many years.  So, giving away a copy for free certainly would have a fiscal impact, but, on the other hand, if a person could get a Medicare or a Medicaid card, the person would be able to alleviate the costs now borne by local taxpayers, and it would come from federal revenues through the Medicare system.

 

As far as certain records being free, I guarantee you I pay 60 cents a page in advance for everything from the outpatient clinic for everybody, whether they are poor, rich or even on the streets.

 

Senator O'Connell:

Mr. Donaldson, approximately how large a document are we talking about?

 

Mr. Donaldson:

You have an array of choices.  You can ask for just the tests, or if you ask for progress notes the file gets thicker.  And if you ask for everything, the file is humongous.  I have a set of records at home, now, which is more than 1000 pages.  I had a $1200 bill for a copy of one person’s chart.  Most of my fees are in the neighborhood of $25 to $35, perhaps $60; maybe a quarter of them are up to $100, for the records.  It is important to have copies of the test results, and it is very important to have diagnoses, discharge summaries, and that type of information.  Otherwise, the judge, or the adjudicator, as they call them in Social Security, will not be able to make a decision and, as a result, the claim is denied and the person is going back onto the county system.

 

Mr. Sasser:

Mr. Chairman, there are numerous people, organizations, and hospitals in support of this bill.

 

Senator O'Connell:

Have the counties come in and testified for this bill?

 

Mr. Sasser:

They have not testified one way or the other.

 

Senator O'Connell:

But it could save the counties money?

 

Mr. Sasser:

Absolutely, it could save the counties money.

 

Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada:

We are in support of this bill.  I feel this is kind of a “Catch-22” for these individuals because they are asking for social services and then they are being asked to pay for very expensive medical records.  It puts them in a real bind.  I think most of the hospitals already are providing records, but this just puts it into law and cleans up the statute.

 

Senator Townsend closed the hearing on A.B. 363.

 

Senator Townsend opened the hearing on A.B. 422.

 

ASSEMBLY BILL 422:  Provides for external review of certain determinations          made by managed care organizations and health maintenance             organizations. (BDR 57-1092)

 

Assemblywoman Barbara E. Buckley:

In Las Vegas, if you will permit it, Mr. Chairman, I have Ruth Mills who is the president of the Nevada Health care Reform Project.  As you know, that is the group which wrote and asked me to sponsor the Patient Bill of Rights in 1997 (A.B. 156 of the Sixty-ninth Session), as well as the creation of the office of an ombudsman to help health care patients in 1999 (A.B. 310 of the Seventieth Session).  This group also asked me to sponsor Assembly Bill 422.

 

ASSEMBLY BILL 156 OF THE SIXTY-NINTH SESSION:  Makes various changes             concerning certain entities that provide health care services through             managed care.  (BDR 57-393)

 

ASSEMBLY BILL 310 OF THE Seventieth SESSION:  Establishes office of             ombudsman for health care within bureau of consumer protection in             office of attorney general. (BDR 18-1289)

 

Assemblywoman Barbara E. Buckley:

Mr. Chairman, I feel like I do not have to spend much time discussing Assembly Bill 422 since Senator O'Connell of your committee has a very similar bill and has already presented the need for the bill.

 

I will just highlight a couple of the differences between the bills, and maybe outline some of the policy choices we need to make.  As the committee probably will recall, this bill requires an external review of certain decisions by insurance companies with their focus towards managed care.

 

The first difference is the selection of the external review organization.  Assembly Bill 422 sets up a system whereby the ombudsman’s office, the Governor’s Office for Consumer Health Assistance, selects the external review organization.  Originally, the bill called for, basically, the denial and the file from the insurance company to be sent to the Office for Consumer Health Assistance.  Then they pick an external review organization and then send the file to the external review organization they selected.

 

There was a concern this might set up an unneeded bureaucracy.  Waste time while the file gets from one to the other as opposed to just going from the insurance company to the firm selected, so we modified that in this first reprint.  Now, the only thing the Office for Consumer Health Assistance does is select the external review organization.  This is in section 9, lines 33 and 34, of the bill.  They do not take a copy of the file; they do not waste any time in forwarding the records.

 

Senate Bill 320, by contrast, requires in section 25 that the managed care organizations enter into contracts for the performance with four or more independent review organizations.  Significantly, sitting here and reading it, I am not sure if somewhere else it says they actually have to rotate the use of those, or if they only have to have contracts with four independent review organizations.  But, here is why I like the provisions of Assembly Bill 422.  I think it is important, if you are going to have an independent organization review denials, the patient feel that it is completely independent; that the managed care organization does not have undue bias; that they did not pick the organizations they like the best; and we all know, especially you more than us on workers’ compensation, the problems you get where it is perceived one side is picking a witness, an expert.

 

SENATE BILL 320:  Requires managed care organizations to establish system for independent review of final adverse determinations concerning allocations of health care resources and services. (BDR 57-676)

 

Assemblywoman Barbara E. Buckley:

So, this allows the Office for Consumer Health Assistance, basically, to just list everybody who does this in the state, and go down the list to make sure it is fair.  Additionally, there is clearly a perception of bias when one organization picks and holds the purse strings.  That is, if I am getting better decisions, you might get more work.  I think it is important to have an independent review organization, because the patients will feel like they are truly getting an independent review.

 

In talking with the industry, the concerns they voice is, “Well, what if there is a request for an external review Friday at 4:00 p.m., and then because the Office for Consumer Health Assistance is involved, we will not be able to get the word to them quickly enough, and on the emergencies there is a 72-hour turnaround.”  So, I called the Office for Consumer Health Assistance and they indicated if there is ever a case like that, they will have an emergency pager number available at all times to ensure they are not slowing down the process.  So, with that concern addressed, I think the independence needed is important enough that we consider that approach.

 

Senator O'Connell:

Barbara (Assemblywoman Buckley), you have satisfied in your own mind, time wise, there would not be any delay through this.  How about the background experience, as far as knowing the expertise of the people on the different panels of review?

 

Assemblywoman Buckley:

Yes.  I do feel confident of that.  There was a concern brought up at one point about the expertise of the external reviewers.  What if it is a complex cancer case and your next external reviewer on the list does not do cancer, he has more expertise in orthopods (orthopedics)?  Well, you do not want an orthopod (orthopedist) reviewing a cancer case.  I would expect that, since the insurance commissioner has to certify these folks, they will all have areas of expertise that will be identified on the list, and certainly the next person who meets the criteria will be selected.  I also think it is appropriate to allow a managed health care organization to say, “Here are the issues, Office for Consumer Health Assistance.  This is the kind of expertise we need,” so, collaboratively, the person with the right expertise will be selected.

 

I draw the analogy to the insurance commissioner requiring audits of the insurance companies.  They do not allow the insurance company to pick its own auditor.  I feel even more analogous here, because the patient has to have the confidence that this is truly going to be an independent process.  And with the company that makes the denial picking the reviewer, I think it just leaves the patient with the feeling he or she did not get a fair shake.  We know they are going to get a fair shake, and we want to make sure they know they are going to get a fair shake.

 

Senator Townsend:

We have dealt with section 9 as to how they will be chosen.  Is that the major difference between A.B. 422 and S.B. 320?

 

Assemblywoman Buckley:

It is the major difference.  The other one would be in section 20 in S.B. 320.  It talks about how the reviews of the decisions are made, and that is a bit different.  Starting on page 9 of S.B. 320, the provisions in A.B. 422 talk more about the criteria for which the external reviewers shall base their decision.  Senate Bill 320 talks about different items, including reports and peer-reviewed literature.  There was some question about the likelihood the health care service provided would produce a significant, positive outcome.  What exactly does that mean?  If a procedure is covered, then is it proper for the denial to be based on the outcome not being significant enough?  Then does that open up a whole can of worms about, “What if it would make a cancer patient feel 1 percent better, but is that significant enough even if it is covered?”

 

So, I think that reform projects for some of the nurses and doctors who worked on it liked line 7 through 42 a little bit better.  I think it only fair, Mr. Chairman, that I also note Assembly Bill 422 found many sections Senator O'Connell drafted that they liked much better.  I think those are the two major issues left.  Although, certainly, Ruth Mills might have more issues.

 

Senator O'Connell:

The one thing I think is critical here, wherever we end up putting it as far as the office is concerned:  this is a very important piece of legislation.  Although it is only going to address maybe as few as a dozen to two dozen patients, it is something we do not want to lose sight of.  Whichever bill is going to go through, we just need to make sure the disagreement on where it is going to go does not lose the bill.  That is my major concern.  I know the parties have been really trying to work together in making this decision.  I would encourage that the dialogue continue.  And, if there is any compromise that can be reached, whichever it is, we just do not want to lose sight of whichever bill passes.  That does not make the difference; it is the importance of the issue that requires it to be addressed this session.

 

Assemblywoman Buckley:

I would be happy to have the Senate Bill (S.B. 320) be the bill that is enacted this session, if that is the pleasure of this committee.  The other reason that is pretty much unstated as to why this issue is so important, because it seems kind of small in a way, and why I feel so strongly and why I think the patient groups do, is it is possible Congress might pass a patient bill of rights this year.

 

The compromise version that should be passed this year includes a right to sue.  The reason why many health care organizations thought an external review bill, introduced by Assemblywoman Freeman, 2 or 4 years ago, and it was very much opposed, is one of the reasons why many health care organizations now, themselves, want the bill.  If an independent review organization says, “rules for them and not the patient,” it helps the health care organizations when they are sued.  So, that is why there is a new impetus towards working towards a good arrangement.  And, in the end, it helps the patient, so that is why I link arms with them to support it.  But, that is why it is so important it be independent, because of this right to sue that will come forward.

Ruth Mills, President, Nevada Health Care Reform Project:

I testified 1 month ago on S.B. 320.  As Assemblywoman Buckley has stated, the two bills are so close, and everyone seems to be in support of external review.  The only problem seems to be where it will be housed.  We feel very strongly it needs to be in the Office for Consumer Health Assistance.  This office was set up to handle just such situations, and they have been doing a pretty good job for the last year.  We would urge you to make sure the Office for Consumer Health Assistance handles the external review process.

 

Our organization now has 98 member organizations, so the number of people who are concerned about the uninsured and the underinsured is growing every day.  You have my written testimony (Exhibit F) that was faxed up to you.

 

Senator Townsend:

We want you to know this committee has spent 20 years trying to find a solution to the working uninsured, and we are not going to stop until we come to some conclusion.

 

Pat Van Betten, Nevada Nurses Association:

I am here to say we are also very supportive of this bill as written, and we appreciate all you are doing.

 

Senator Townsend:

Once the Office for Consumer Health Assistance randomly choose these things, then what happens, in practical terms?  Where do they fit in at that point?

 

Assemblywoman Buckley:

They notify the external review organization next on the list with the proper qualifications.  They call them and say, “Congratulations, this is your lucky day.”  Then they call the patient and the health insurance company.  If it is not an emergency, they will probably do it by letter. They might call the managed care organization, so they know who to send the records to right away.  They will probably have a form letter, and in the form letter it will probably tell them a little bit how it will work.  The letter, also, will probably tell the patients that if they want to submit any additional information or arguments, these are your rights, basically.

 

Senator Townsend:

Then once that is done, is the Office for Consumer Health Assistance’s role, other than to answer questions, fairly simplified at that point?  Does it really come back to the external review organization for them to make the determination and file it with insurance carrier, file it with the patient?

 

Assemblywoman Buckley:

We certainly asked in section 17 that we would like a statement of how many reviews were conducted, but basically, besides a reporting function, they are out of it completely.  I think another benefit is by being in touch with the patient, if the patient has any concerns.  They certainly then know about the Office for Consumer Health Assistance, and can consider them a resource.  But, other than that, the office has no other role.

 

Mr. Chairman, I am going to hand to the secretary two proposed amendments to Assembly Bill 422 (Exhibit G).  These are amendments in S.B. 320 that the Assembly committee voted on that in the last minutes of drafting did not get included, but they are concepts you have already discussed.

 

Matthew Sharp, Lobbyist, Nevada Trial Lawyers’ Association:

We are in support of A.B. 422.  I will not go over the additional reasons why we support A.B. 422 other than to echo Assemblywoman Buckley’s comments with regard to the independence of the review process in ensuring the consumer has some assurances the process is independent.

 

Also, I would like to point out one other important distinction between A.B. 422 and S.B. 320, which occurs in section 24 of S.B. 320 and section 29, subsection 2 of A.B. 422.  Both of those provisions deal with definitions of medical necessity and what the independent reviewer will review in regards to the appropriateness of the care.  Assembly Bill 422, I think, has a more practical aspect of how medical necessity is determined.

 

Senator Townsend:

And, where would that be?

 

Mr. Sharp:

On A.B. 422 that is section 8.  “Medically necessary” means health care services, et cetera.  And, if you go to subsections 1, 2, and 3 of section 8, I think those subsections have a pretty conservative balancing act between the interests of the managed care organization and the interest of the patient and treating physician to provide the medically-appropriate care.  In S.B. 320, with regard to what medical necessity means, if you go to section 24, subsection 2, I think in this provision is a balancing act that, in practicality, is difficult for, number one, the consumer to understand, and, number two, the treating physician to deal with.

 

You have to remember, when the consumer is involved in a dispute with the insurance companies over what medically necessary treatment they will receive, initially the primary advocate for that consumer is the treating physician.  The treating physician does not have time or the resources to consult with medical treatises, other matters, et cetera.  They are not getting paid for advocating their position to the managed care organization.  So, it has been my experience the treating physician, when you deal with them, although they are very welcome and very helpful to the consumer, has limited resources.  The more onerous you make that, the more difficult it is for the consumer to seek initial assistance, which is from the treating physician.  And, that is going to, in fact, steer people away from non-adversarial types of resolutions.

 

So, I think, in practice, the definitions as provided in A.B. 422 regarding medical necessity are just more practical; it is going to provide a better, streamlined solution to these problems.

 

Mr. Matheis:

As we did with Senate Bill 320, the importance here is to put this additional piece of the patient protection act, the creation of the Office for Consumer Health Assistance, and now the independent review, into this bill.  Thirty-seven states have operating programs at this point.  They do them in a lot of different ways.  I think the proposal in A.B. 422, which is to have the Governor’s Office for Consumer Health Assistance act as a buffer in the selection of the independent review organization, provides what Assemblywoman Buckley said is that added assurance that it is a fair process.  In fact, I think it would be a fair process even if it were directly contracted.  But, if the perception is it is not, or it is loaded, then it would tend to undo what the effort is here.

 

I think this is a fairly modest role for the state, but a very important one, symbolically, for these relatively few cases that go past the internal complaint appeal process.  On that, I have been informed the Office for Consumer Health Assistance looked at A.B. 422 and S.B. 320, then at their caseload in the year 2000.  They found if these rules were in place, that 74 appeals they were involved with would have been overturned, appeals of denials of services, referrals, or something.  They provided additional advice to 27 people who were in the process of appealing a denial.  So that was 101 cases that would, in one way or another, probably wind up in this process from their experience in 2000.

 

Mostly, we want to really encourage a compromise, if possible, and the independent review process be done.  I think both Senator O'Connell and Assemblywoman Buckley have done, once again, yeowoman’s service on bringing this to the table, and now it is very close to completion.

 

Senator Townsend:

Mr. Matheis, the location of this does not seem to be a problem.  The two sponsors have shown, I think, a great deal of leadership on this issue.  The real question comes down to the areas Mr. Sharp pointed out, which is the definition of medical necessity under section 8 of A.B. 422, versus, I believe, section 24 of S.B. 320.  Could you give us your feelings on that?

 

Mr. Matheis:

I think they are relatively close, and probably could be merged together.  There is a distinction.  In A.B. 422, I think, it is a little more clear from our viewpoint, but I think if you put the two together you have about as comprehensive a definition of medical necessity as what, in practicality, would be used.

 

Senator Townsend:

Is it fair to say the interpretation in section 8 of A.B. 422 is fairly broad relative to the definition section 24 of S.B. 320, which is a little narrower?

 

Mr. Matheis:

Yes, Mr. Chairman, I think that is a fair characterization. And, again, I think splitting the difference is a bad idea.  My personal preference would be more for the bias in A.B. 422, which does lean more towards the benefit of the patient.

 

Senator Townsend:

Well, every time I hear there is going to be rights to sue, my judgment, perhaps, gets a little skewed.  That is why I tend to view things, when I hear there is going to be a lawsuit, to be a little more specific.  Had I not heard that, I might agree with you on section 8.  And, we cannot write a bill based on what Congress may or may not do, we have to do the right thing.  But the goal, I think, by both Assemblywoman Buckley and Senator O'Connell, was not to have litigation, but was to get away from litigation and have people get this thing resolved.  And, if there was an inappropriate determination of denial, they get it resolved, instantly.

 

Mr. Matheis:

I think the issue there is that more of these issues that can be satisfactorily resolved through this administrative process, and this would be the last administrative process in a sense, the less likely it is there would be the need for litigation.  So, you would want as many things that otherwise would have to wind up in litigation to be able to be resolved, where possible, with the medical expertise involved.

 

Senator Townsend:

I think your point is well taken, and we have to be very sensitive to those issues.

 

Mr. Sharp:

With regard to S.B. 320, I think sections 24 and 29 need to be evaluated together, and the reason being is section 24 is medical necessity, and section 29 is what the reviewer is required to consider in the decision.  My primary concern is with regard to section 29, subsection 2.  I think the standards are very vague; and, I think, somewhat onerous, both to the reviewer and to the treating physician who is going to help evaluate the review for the consumer.

 

And, just briefly, on the right to sue, there are a lot of misnomers on what, exactly, that means.  Primarily, the issue with regard to Congress and the right to sue is dealing with ERISA, the Employment Retirement Income Security Act, which originally was intended to apply to large unions, large self-employers, and has been interpreted to be much broader.  That interpretation of what ERISA controls has since been curbed back by the U.S. Supreme Court.  There is, also, at the same time, a majority rule developed where a health plan is making medical necessity decisions versus benefit decisions and the right to sue exists not under federal law, but under state common law.

 

I understand your concern, and it is a concern I have because I will be the one litigating these things in court, and I have been concerned with regard to your concern about standards.  I think we do need to have predictable standards, but the right to sue, for the most part in regard to this bill, already exists.

 

Senator Shaffer:

Mr. Sharp, one question.  After the external review organization rules in favor of the health care provider, how anxious would you be to take a case on after that?

 

Mr. Sharp:

Senator Shaffer, I think, if the review process is independent, we are not going to be interested in taking that case.  But, let us also face reality.  No matter how good those independent reviewers are, sometimes they are going to make mistakes.  And, when you read the review versus what the treating physician says, it just does not make sense.  So, I think you have to look at the individual review, but the primary concern I have had in dealing with these types of cases is how independent the review process is.  Meaning, is there an implied deal between the review organization and the insurer that we are going to get the result the insurer wants?  That is a very real concern, and has been played out in many courtrooms.

 

Robert Barengo, Lobbyist, Nevada State Board of Medical Examiners:

Directing your attention to page 3, section 5, line 36, and then lines 38 and 39.  It talks about a clinical peer, which means a physician who is, one, engaged in the practice of medicine and, two, is certified or eligible for certification by the Board of Medical Examiners.  The Board of Medical Examiners does not certify anyone in any specialty.  The Board of Medical Examiners grants you a license to practice medicine in Nevada, and you then go out and get board certified by the American Board of Medical Specialties.  So, that needs correcting.

 

Senator Townsend:

I believe there is a disclaimer you run either in some of your handouts, or your licensees’ are required to run. I believe it occurs in your profession, too, Mr. Sharp, when you advertise about a particular specialty, you must disclaim that the Nevada State Bar does not certify specialties.  And, I think, the Board of Medical Examiners has the same position.

 

Mr. Barengo:

That is correct for the bar, and the Board of Medical Examiners does not do specialties.  The proper language would be, “The American Board of Medical Specialties.”  You are board certified by a board of the American Board of Medical Specialties.

 

Fred L. Hillerby, Lobbyist, Nevada Association of Health Plans:

Of course, you have heard our testimony.  We support external review; we appreciate the hard work this committee did.  I think you have crafted a very good bill in Senate Bill 320.  I think some of the distinctions that have been made today are somewhat “nit-picky.”  I think the language is very close.  One thing I want to make clear is it is very important that these kinds of reviews be done on as much medical evidence as possible.  Because, I am sure you have heard, and we have all heard from time to time, it is interesting, if not alarming, regarding the different numbers of surgery performed and other medical treatments used around the country.

 

A caesarian section is a good example.  In one place the number of caesarian sections per live birth is very low, and in another it seems to be just a matter of practice, that physicians perform many caesarian sections.  For whatever reasons we are not sure, but those kinds of evidence have been published in a number of areas.  So, we want to be sure when we are looking at this, we are looking at national, what we call, evidence-based medicine, as we should when making these kinds of decisions.

 

As to the independence of the process, let me talk about two or three things in that regard.  One is, this committee passed the patients’ bill of rights in 1997 (A.B. 156 of the Sixty-ninth Session).  Part of that was requiring there be an appeals mechanism in place in health plans.  That has been in place.  I do not think you have heard any evidence saying the appeals mechanism does not work, for the most part.  There have been a few requests for external review.  To my knowledge, at least in our state, there has been no litigation after an internal appeal was done.

 

So, it is working.  I think there is a level of confidence.  I think these companies intend to do the right thing, and if you remember the testimony you heard a month ago as Ruth Mills reminded us, the kinds of external reviews that are being done, many times, are being requested by the health plans to help make the right decision.  And, they are made on behalf of the patient.  There are now 39 states that have external reviews.  And, we look at the evidence.  It, basically, turns out being about 51 percent of the cases are upheld in favor of the plan, 49 percent in favor of the patient.  There is independence in the process.

 

Mr. Hillerby:

If you will recall, in the bill you processed, S.B. 320, we tried to guarantee that.  We added some amendments; section 24.5 in that bill points out that we must have in place, and approved by the commissioner of insurance, standards that we will use to guarantee the independence of this review process.  You will also notice the bill requires the health plans to have at least four independent review organizations under contract, and they have to rotate those.  They cannot just pick one external reviewer they think always rules in their favor.  And, it has not been our experience, but in the case of A.B. 422, the requirement on subsection 8, page 8, section 16, is the Office for Consumer Health Assistance enter into two contracts.  That is two for contracts for the whole state.

 

My concerns are several.  Number one is the misperception our own internal review process does not work most of the time.  And number two, I would guarantee you there is no misperception about the independence of these groups that provide the reviews regarding those plans that have been doing this on a voluntary basis.  Thirdly, I think it is a little bit of wishful thinking to assume an agency getting involved is not going to create any delays.  I am glad to hear somebody is going to have a pager, but when you are talking about an expedited review for someone who needs this because his or her life and health is at stake, to be able do that in 72 hours, I hope you can find the person with the pager.

 

I will tell you in our health plans we have a physician and reviewers available, not carrying a pager; they have to be available.  That is what we do.  And, that expedited review that is so important to these patients, I think it is very risky, at best, to say we are going to be accountable for being sure that occurs in 72 hours by a state agency on a holiday and weekends.  I am not picking on any individual; I am just talking about it in general.  That is a great concern to us, and I think it should be to you and all of us as we try to do what is right for the patients in these cases.  This is another bureaucratic process, and who is going to pay for these?  Well, the Office for Consumer Health Assistance, as I just pointed out to you on page 8, enters into the contracts.  So, there is a process that has to be figured out about how they get paid, and how the health plans get billed for that.  There is going to be more bureaucracy; it is never going to be as simple as pushing a button.

 

I think it is important we try to have a process in place that guarantees their independence by building it in through their certification by the insurance division, not just through these review organizations.  And, as Mr. Sharp said, if, in fact, the review comes back and the independence is not there, then the review is not going to withstand any scrutiny from terms of the courts or anyone else, for that matter.

 

I think you have processed a very good bill in S.B. 320.  I do not see any reason to go to the distinctions between these two bills (S.B. 320 and A.B. 422), primarily the distinction of trying to put a third party in place to deal with this and expect it is not going to create some delays for patients needing access to these in a hurry.

 

Senator Townsend:

Mr. Hillerby, on page 7, section 16, it says, “The director shall.”  And, then it goes on in giving current statute definitions of what they are going to do.  Then it says in subsection 8, “. . . in accordance with regulations adopted by the commissioner . . . .” and it refers back to section 1, and it goes on to give 2 pages of what an external review organization must meet as a standard. 

 

Number one, there are multiple confusing references.  Is the person who heads this office the director of the Office for Consumer Health Assistance?

 

Mr. Hillerby:

Yes, Office for Consumer Health Assistance.

 

Senator Townsend:

I think the two sponsors of the bills have made it quite clear we are going to find a resolution here.  I do not think the mutually exclusive positions have been put forward on the issue of independence.  Can we, effectively, put this provision together regarding the Office for Consumer Health Assistance person contracting, and then you have to figure out how you are going to pay for it, and, then, there is a call, and it may be delayed? And if that is a legitimate concern, can we meet the concern of the organization’s independence by saying the Office for Consumer Health Assistance could go out using certain things that are set forth in this bill about what standards the external review group must meet?  The Office for Consumer Health Assistance can select two or more review organizations, and then you end up contracting with and paying that group.  We are trying to meet a standard that if the Office for Consumer Health Assistance makes the phone call because of medical necessity, there is an
immediate response, while it protects the independence of the recommendation by the majority leader.  Do you see what I am saying?

 

Mr. Hillerby:

I think I am, but I guess I still have to go back to what S.B. 320 did, and that is the commissioner of insurance certifies eligible external review organizations after having received a fee to do so.  It is from that list the companies must select at least four and enter into a contract with them.  Then they have to randomly select among those four as they get cases that go to external review.

 

Senator Townsend:

Well, I think, Assemblywoman Buckley’s concern is a legitimate one.  It is the perception the person we designate to protect the interests of the patient should have a roll here.  And, if the patient feels there is a roll for that person, they should participate in the independence of it.  I think that was her point.

 

Mr. Hillerby:

I guess that is where Assemblywoman Buckley and I and the clients I represent have a difference of opinion.  I do not think a perception of independence or lack thereof will stop somebody from requesting the review.  If that could be proven to me, then I think there is a valid point to be made.  I do not think that is going to happen.  The perception that counts is when they read the review and determine whether it was independent.  I do not think the perception of being chosen by one party or another will stop people from requesting an external review if they think they have had service denied inappropriately.

 

Senator O'Connell:

I think the sticking point, and the thing I am still trying to place in my mind as being effective, is the pager.  The other people are on staff; they are there waiting to pick up a phone call.  The person we are going to assign the pager to, we do not know where that person is from Friday evening until Monday morning, perhaps, when they return to work.  That is not their primary focus.  Where, on the other side, it is their primary focus.  Maybe we have somewhere within our system of government a person who is there on a 24‑hour basis, whether it is Christmas or Thanksgiving or Groundhog Day, waiting for a call, because that is the job they have been hired to do.  Pagers do not always work.  Pagers can be laid down on a table and forgotten.  It is not a “for sure” thing, where the other thing is a “for sure” thing.  I guess that is the thing we are all grappling; is that pager going to be on the person?

Mr. Kim:

I want to follow up on that statement.  Health plans, at this point, that are already doing external reviews, do have people on call 24 hours a day, 7 days a week, 365 days a year, whether it is a holiday or a weekend.  We have people available to make these types of decisions.  And, we have departments doing this already, that have the qualifications and the expertise in order to get these things done, and have the contacts with external review organizations on their list to send them out.  I think Senator O'Connell raised a good issue.  What do you do on a 4-day weekend when you have an expedited review that needs to be done within 72 hours?  We have the staff already in place to do that type of review and send it out to make sure the time lines of this type of statute are met.  We have similar concerns whether any government bureaucracy can do something on an expedited basis like this, or have the procedures in place to do that.

 

When you are talking about an expedited review, you are talking about the life, health, and safety of one of our members.  We want to make sure that member is taken care of when the review is done on an expedited basis.  So, from a consumer’s standpoint, or at least from our members’ standpoint, we think there would be difficulty doing this type of procedure through an Office for Consumer Health Assistance, because, basically, they would contact them and then they have to come back and contact us.  You are throwing another step into the process.  So, from our point of view, that would be problematic.

 

Another comment.  On the independence of these agencies, we have been talking about the perception from the consumers’ standpoint.  You have to remember these organizations pride themselves on their independence.  They do not want to be known as someone who is finding for the insurance company at all times.  That takes away from their perception of being independent.  They go to great lengths to ensure the decisions they are coming out with are independent of any influence from the insurance companies, from the members and patients.  They get all the records; they take a hard look at the records, and make their decisions based on the medical evidence.  We think that is a good process.  So, from the external review organizations, their priorities are to be independent.  To follow up with Mr. Hillerby’s comments, we also think S.B. 320 has a lot of these safeguards in it.

 

Helen A. Foley, Lobbyist, PacificCare/Secure Horizons:

Pacific Care is one of the two HMOs in Nevada that are currently utilizing external review.  When we talk about the qualifications, expertise, and independence of these external review organizations, it is very important to remember, with Senator O'Connell’s bill, it is the insurance commissioner who goes through and certifies each of these organizations.  We would not contract with them; we would not have them on our list if they did not receive approval, and the insurance commissioner will take a close look at their independence from all of the HMOs.  So then we are well equipped and ready to get the next external reviewer on the list when it is time for one.  It is not as if we just contract with these people and there is nothing in between us; there is a state agency, and it is the insurance commissioner who is well equipped to deal with this.

 

Mr. Kim:

You had discussed medical necessity earlier today.  For point of clarification, in A.B. 422, section 8, provisions of the definition of necessity are already included in our definition of medical necessity in section 24 of S.B. 320.

 

Senator Townsend closed the hearing on A.B. 422.

 

Senator Townsend opened the hearing on A.B. 452.

 

ASSEMBLY BILL 452:  Requires certain providers of health insurance to contract with federally qualified health centers as providers of health care under certain circumstances. (BDR 57-1177)

 

Roger Volker, Lobbyist, Great Basin Primary Care Association:

Assemblywoman Giunchigliani has asked Dr. Carl E. Heard and me to lead off the testimony on her bill, A.B. 452.  This bill would, essentially, ensure that federally-qualified health centers would be included on HMO panels so they could receive reimbursement for patients served.

 

As you are aware, the federally-qualified community health centers in Nevada are the core of the safety net of our health care system.  They provide affordable, quality health care services to hundreds of thousands of patient visits in our state for people who would, otherwise, have no access to health care.  They are the working uninsured.  They are people who desperately need this service.  Community health centers are non-profit organizations that are community-owned, and as such always have issues regarding financial viability
in terms of the fact they reinvest every dollar they make back into serving the underinsured and underserved.

 

Across this country there are about 500 community health centers.  On average, the payer mix at the health centers is about 50 percent between the uninsured they serve, with some federal grant dollars, and people who have the ability to pay through third-party payers:  Medicaid, Nevada Checkup, or people who are enrolled with a health maintenance organization.  We have situations today in Nevada where our community health centers are operating at a 75 percent rate of uninsured and insured.  That deeply challenges their ability to be financially viable.  Clark County is in one of these situations.

 

Mr. Volker:

There is group of 100 people in Clark County today, the Clark County Health Access Consortium, who have been spending the last 10 months in a planning process to ponder at how to provide community health services to uninsured and underserved populations.  Their number one goal is to develop a group of financially viable community health centers throughout Clark County.  We see this bill as one step in that process.  We are not looking for the community health centers to open up and compete with private providers of health care services.  That is not their role; they have plenty of patients.  However, there are situations where a patient of the community health center, who is uninsured and is receiving care because that is his or her medical home.  He or she may have a spouse who is covered by an HMO through their work, but the spouse cannot receive care at that community health center, and the health center request be compensated.  Thus the person must go someplace else for care.  We do not think that is reasonable.

 

Mr. Chairman, this bill started out its life by mandating that HMOs would contract with federally-qualified community health centers.  Since then, we have been working with representatives of the health maintenance organizations to soften that language to talk about them making a best effort to include a federally-qualified health center on an HMO panel.  We are comfortable with that because we think everybody’s best interest is served.  We, also, have been working with Mr. Charles Duarte of the Medicaid office to introduce some amended language, which will reduce any burden to the state.  We, also, are comfortable with that.

 

Carl E. Heard, M.D., Chief Medical Officer, Nevada Rural Health Centers, Incorporated, and Clinical Representative, The Great Basin Primary Care Association:

I am here to speak in favor of A.B. 452.  Specifically, my interest as a Chief Medical Officer is to ensure we deliver services to all people, regardless of their ability to pay, and we create an environment that is, essentially, identical to a private practice environment.  I think the best way to do that is to have patients of all payer types mixed within a single population.

 

I have worked in seven different states throughout the country and have worked within indigent care systems.  In fact, that is where I did my internship, at Charity Hospital in New Orleans.  And, the one thing I can tell you is I would like to see us avoid, at all costs, creating a charity organization, for a variety of reasons.  Usually a charity organization is consistently underfunded and treated as a “stepchild” in the health care industry.  Additionally, I think it loses a certain amount of dignity for the patients.  Our interest in Las Vegas, in particular, which is really the place that spurred this conversation and spurred our efforts today for A.B. 452, is because there have been several organizations that have declined to include us on their panel for managed care organizations.  Some of the largest ones are in Las Vegas.  As a consequence, you end up with 75, 80, or 90 percent of your patients being unfunded.  In essence, that is the definition of a charity organization.

 

It threatens the viability of the organization in the long run, and, I think, it threatens the fundamental dignities I like to see our company offering to all of our patients, regardless of their ability to pay.  I think it also forces community health centers to compete, at least as far as their images go, to be indistinguishable from the private sector by saying, “We do need some funded patients to offset the losses of caring for those who have no ability to pay.”  So we must, I think, create an image and quality of practice identical to the private sector.

 

I think this bill has just a few “typo-type” adjustments for which corrections will be necessary.  On lines 13 and 14 on the first page simply strike “for employees.”  It is actually the providers who need to be appropriately credentialed.  The exact same adjustments should be made throughout the rest of the document.

 

Senator O'Connell:

What is the difference between the service you provide and the service the county hospital would provide?

 

Dr. Heard:

County hospitals are primarily required to deliver in-patient services, secondary care services, and do not, generally, deliver outpatient services.  Primary care services are those services you would expect to receive walking into a doctor’s office such as, pediatric, family practice, internal medicine, OBGYN (obstetrics and gynecology), those types of services.

 

Senator O'Connell:

How about the quick-care centers?

 

Dr. Heard:

I am still learning more about the quick-care centers as we go, so I am going to try to tactfully dance around this issue.  Quick-care centers are, by definition, urgent care centers.  An urgent care center is designed to deliver medical services that would be consistent with a higher level of acuity of primary care services.  In other words, normally, in my rural practices, if a patient comes in with a minor laceration, we sew it up for them.  That is a typical urgent-care type of service.  Quick-care centers are designed, as I understand it, to deliver those types of services.  Quick-care centers, by the way, are not included in A.B. 452.

 

And, by the way, as a representative of the primary care association, I can tell you there are two community health centers in the state, and several FQHC (Federally Qualified Health Center) look-alikes.  Those look-alikes are federally designated and receive special consideration in federal rules.  The community health center system throughout the rest of the state, which includes HAWC (Health Access Washoe County) in Reno and our sites in the rural parts of the state, are already contracted with all managed care organizations throughout those services areas.  It is only in Las Vegas that this issue has come up, but it is one that, I think, sets a precedence and a standard for cooperating with community health center systems throughout the state.

 

Senator Townsend:

Maybe you can help me, because I am missing what this bill is suppose to do.  This looks like a resolution to me.  I understand what the first bill did; it mandated you contract with health centers.  Now A.B. 452 says, “Shall use its best efforts to contract with at least one health center in each established geographic area.”  That sounds like a resolution to me.  Can you give me some insight into the bill?  Because you took the mandate out, I am wondering why we need something in statute.

 

Ms. Soldo:

We are prepared to support this bill.  I think, yes, the mandate was much stronger.  On the other hand, I think we were hoping this would encourage the health plans to really make a good-faith effort to contract with the federally-qualified health centers.  They operate in areas where some of us may have patients, and it will improve access.  So, we are more than prepared to support this bill the way it is constructed, and I am only speaking on behalf of Health Plan of Nevada.  We are a Medicaid contractor, as well as commercial health insurance.

 

Mr. Duarte:

Our managed care contracts already incorporate the provisions intended by this bill.  Our contractual language meets the spirit and intent of this piece of legislation.  In fact, I have discussed that with the sponsors of this bill, who have agreed to an exclusion for Title XIX and Title XXI programs, that is the Medicaid and Nevada Checkup programs, respectively.  We recognize the unique nature of federally-qualified health centers and those programs, and we require our contractors to make good-faith efforts to contract with them, as well as pay them a rate equivalent to what they would pay other providers.

 

I have submitted testimony (Exhibit H) with a proposed amendment for your consideration, excluding our specific programs.  I have worked this out with Dr. Carl Heard and Mr. Roger Volker. 

 

Janice C. Pine, Lobbyist, Saint Mary’s Health Network:

I am somewhat reluctant to have to say that I oppose this bill.  Certainly, it is much better in its rewritten, amended fashion, but Saint Mary’s does not contract directly with physicians.  We work through an IPO (Independent Physicians’ Organization).  It happens that HAWC, the federally-qualified health care center in the Truckee Meadows, is a member of one of those organizations.  Thus, we do have a contract with them.  But should they, for whatever reason, not fulfill their obligations to that physician organization, then A.B. 452 says we would have to use our best efforts to contract with them in a manner that we do not use to contract with any other physician.  So, they would have a special standing, and it would mandate something to us we do not presently do.

 

Keith Beagle, President, Nevada Care Incorporated:

I am here again to support this bill.  Just quickly, though, there may have been some resistance initially.  Nevada Care, being the largest Medicaid managed care company, has had a long-standing relationship with HAWC and the Reno-Sparks area, as well as the Bureau of Community Health Services, currently in Las Vegas and its predecessor.  Some of the early, potential resistance, though, was due to the form of reimbursement, which was based on a cost-base reimbursement scenario.  I can say the community health centers have worked diligently to both mainstream their patients and perform more like the private sector.  Therefore, I think the carriers are more agreeable to contracting with them.

 

Senator O'Connell:

What is the cost impact on the state?

 

Mr. Beagle:

The cost impact on the state, at least from the commercial sector, would be none.  There would be a negotiated contractual rate and then that would be the full reimbursement.  There would be no offset by the state.  Regarding Medicaid, I believe there currently is the opportunity for the federally-qualified health clinics, if they so choose, to obtain a match up to their cost-base reimbursement.  To my knowledge, though, that is not being done, and they have agreed to perform and accept that as payment in full under our contractual relationship.

 

Mr. Duarte:

I believe the question was the cost impact on the state in implementing federally-qualified health centers.  In addition to the payment they receive through HMOs, we already pay federally-qualified health centers an amount that would be up to their allowable costs.  In fact, we are just implementing a new provision that is required under the Benefit Improvement and Protection Act of 2000 to pay them a payment rate up to their allowable costs.  So, we do intend, and we always have intended, to pay them allowable costs.  And, we would add to whatever they receive from the HMOs in order to reimburse them up to cost.

 

Senator O'Connell:

OK, because this has a fiscal note on the bill, is this a part of the Governor’s budget?

 

Mr. Duarte:

I am not aware of a fiscal impact of this bill on the state.  If I am mistaken, I apologize, but, as I said, we already reimburse federally-qualified health centers up to reasonable costs.

 

Mr. Volker:

We do not believe there is a fiscal impact on the state in this bill.  Yes, it is true this bill would create a special position for community health centers, and that is exactly what we are asking for.  We believe because they are so essential to the safety-net health care of our state, there are from time to time, needs to make special provisions, and we believe this is one of them.  We strongly appreciate the support from the various organizations that have spoken here.  And, in answer to the chairman’s question, we believe it is important that this is in statute so people have an opportunity to be held accountable to making those best efforts.

 

Dr. Heard:

We cooperate in all the independent physician organizations (IPOs) we can.  It is not necessarily the case that all IPOs will allow the participation of community health centers.  We are not trying to get around that.  We want to do everything we can to create a system that is identical to the private practice environment for all the patients that we serve.

 

Senator Townsend closed the hearing on A.B. 452.

 

Senator Townsend reopened the hearing on A.B. 36.

 

ASSEMBLY BILL 36:  Revises various provisions governing approval and             payment of claims.  (BDR 57-460)

 

Marie H. Soldo, Lobbyist, Nevada Association of Health Plans:

Mr. Larry Matheis and I have met.  Right now, I think the 30 calendar days is, basically what we need to give the doctors 30 calendar days to resubmit their information.

 

Senator Townsend:

So, if we go to page 1, section 1, line 19, you would say that change should be from 20 days to 30 days?  Then on the next page, it says, “The administrator shall approve or deny the claim within 30 calendar days” after receiving the additional information.  If the claim is approved, the administrator shall pay the claim with 30 calendar days?

 

Mr. Soldo:

Yes, and then all the way through.

 

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association:

That, of course, is basically what the current statute is, until you get down to that last part, which again, is pretty much current statute.  We could live with that if all those changes are made that way, but we did not talk to the proponent.  I am not sure that is what the proponent intended, but the primary suggestion is once the request has been made the 20 calendar days would go to 30 calendar days, and then they would have 30 calendar days to respond, which basically does not change the current statute in terms of the payment time.  So, we do not have an objection to that.

 

Senator Townsend:

The committee spent a huge amount of time on section 18 in S.B. 99, which is the workers’ compensation provision, and we put rather substantial penalties in.  Now, the issue is what do we apply?  We did not change the current time frame for non-workers’ compensation issues, which is HMOs, health plans, small employer groups.  We did not change that requirement in 1999 legislative session.  What we did was say, “If you do not meet those standards, you are going to pay a pretty stiff penalty.”  Then we cleaned up the workers’ compensation issue to separate the health side of it from the benefits side.  He is saying, under A.B. 36, we are going to shorten all time frames.

 

You have 20 days to get your additional information in.  You have 20 days instead of 30 days for the administrator to approve or deny the claim.  Then you have 20 days for the administrator to pay it, if it is approved.  So, it has shortened everything down.  I guess the point being made by Ms. Soldo on behalf of the group is some of those things just cannot work, because 20 calendar days equates to approximately 14 working days.

 

Ms. Soldo:

It is a reduction in time, clearly.

 

Senator Townsend:

Thirty calendar days is, generally, 20 working days.  So, if you changed it from 20 calendar days to 20 working days, you really have not changed anything.  That is the status quo.  What he is saying, he being the proponent, you are going to take it to 14 working days.  That is what this says, in essence.

 

Ms. Soldo:

I think we are really getting a much-compressed time frame with this approach.  I think we are prepared to use S.B. 99 as one impetus.  However, if we could go to the 30 calendar days in this bill, it would be much better.

 

Senator Townsend:

Well, do we not have 30 days now in which a provider must respond to a request for additional information?

 

Ms. Soldo:

No, right now we have no time frame for providers to respond.

 

Mr. Matheis:

But, the payment must be 30 days from the receipt of the additional information.

 

Senator Townsend:

The theory is that the incentive is for the providers to get the information here as quickly as they can; otherwise, they are not going to be reimbursed.

 

Ms. Soldo:

In that regard, there is no time frame for providers to submit their initial claim.  One assumes they submit it as quickly as possible.  What we find, when we do our research, is the providers who contract with us for large numbers of cases submit their claims much faster.  The providers who do not see our patients frequently do not have a track record of submitting claims within 30 days of the date of service.  You see patterns on that side.  So, one of the objectives of this was to encourage the physicians to give us the information as quickly as possible.  The discussion taking place at the commissioner’s level, in which
Mr. Matheis has been participating more than I have, indicates there has been evidence that doctors are not returning information on a timely basis.

 

Senator Townsend:

That only disadvantages the doctor.

 

Ms. Soldo:

It does.

 

Mr. Matheis:

I think that is the point.  The calendar time frame reference in A.B. 36 shows when there is a receipt of a claim, or when the additional information has been received.  As I understand the intent of A.B. 36, it takes the specific times, which for the first time included this requirement as to how quickly a provider had to submit additional information, and squeezes it all into a 60-day period.  If that is there, it makes sense.  If you extend both requirements to 30 days, we do not have an objection.  That is right where you are now, for all intent and purposes.  So, I am not sure that it is what the proponent wanted, and I am not sure it is worth the wasting of paper.  We would not have an objection to it, but whether it is necessary is the question.

 

Ms. Soldo:

I think what we are seeing are two different approaches, one from each side of the aisle.  One approach is, “We will get better responses from the health plans if we cut the days.”  The other approach is the approach this committee has made, and that is, “If we penalize the health plans with penalties, that is going to get everybody’s attention.”

 

Senator Townsend:

That was the committee’s determination.  We thought we would rather get your attention than have something in state law that you could duck.

 

Ms. Soldo:

You got our attention.

 

Senator Townsend closed the hearing on A.B. 36.

 

Senator Townsend reopened the hearing on A.B. 363.

 

ASSEMBLY BILL 363:  Allows patient to obtain his health care records without             charge under certain circumstances.  (BDR 54-1098)

 

Senator Townsend:

We asked anyone with a problem on this bill to come up and testify.

 

Senator O'Connell:

I cannot figure out why we do not have a fiscal note on this.

 

Senator Townsend:

Well, it is not like it has not been posted for a week.  I do not understand.  I would presume when it says, “local government, yes, state, yes,” with a big thing saying, “contains unfunded mandates,” somebody would come and testify, and say, “We do not have a problem with it because it is only going to cost us a few dollars,” or, “We have a major problem with it.”

 

Jon L. Sasser, Lobbyist, Washoe Legal Services, Nevada Legal Services, and Washoe County Senior Law Project:

I do not want to put words in his mouth, but I did run right downstairs and talked to Mr. Hadfield (Robert S. Hadfield, Lobbyist, Nevada Association of Counties) and told him of Senator O'Connell’s concern that they had not come out one way or another.  I did not know you were going to put it on work session immediately, but he said he would let Senator O'Connell know he does support the bill.

 

Senator O'Connell:

Mr. Chairman, do you want a motion?

 

Senator Townsend:

No, I am glad to hold it.

 

Senator O'Connell:

I sure do not want to hear from the counties in our S.B. 253 committee that we have an unfunded mandate.

 

Senate Bill 253 of the Sixty-ninth Session:  Creates legislative             committee to study distribution among local governments of revenue             from state and local taxes.  (BDR 17-193)

Senator Townsend:

We can hold it for a day.  I like it; I do not have any problem with it, but I will be a lot more comfortable if we get the counties to come in here and state their position on A.B. 363.  If the parties do not want to participate, then we will have a tough time.

 

Senator O'Connell:

I would like to have them on the record as saying, “We are not going to complain about this unfunded mandate.”

 

There being no further business, the meeting was adjourned at 10:26 a.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Gayle Nadeau,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator Randolph J. Townsend, Chairman

 

 

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