MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
SubCommittee on A.B.269
Seventy-Second Session
April 8, 2003
The Committee on Commerce and Labor Subcommittee on A.B. 269was called to order at 11:08 a.m., on Tuesday, April 8, 2003. Chairman David Goldwater presided in Room 4100 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.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Mr. Bob Beers
Ms. Sheila Leslie
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Assemblyman Garn Mabey, Clark County, District No. 2
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Wil Keane, Committee Counsel
Corey Fox, Committee Secretary
OTHERS PRESENT:
Phil Nowak, Department of Human Resources, State of Nevada
Jack Kim, Sierra Health Services
Bob Ostrovsky, Nevadans for Affordable Health Care
Assembly Bill 269: Requires certain health care plans and insurance policies to provide, under certain circumstances, coverage for medical care if confirmation of coverage and prior authorization is obtained. (BDR 57-813)
Chairman Goldwater started the Subcommittee on A.B. 269 at 11:08 a.m.
Phil Nowak,Department of Human Resources, State of Nevada:
[Phil Nowak distributed his testimony to the Subcommittee (Exhibit C)]. Our issue is that there is a risk, given the monthly eligibility cycle that affects Medicaid recipients. Essentially, an authorization granted in one month could apply to an appointment date. The next month, the recipient is not eligible and it puts us, the state, at liability, as well as the whole payment mechanism.
Assemblyman Garn Mabey, Clark County, District No. 2:
Currently, I’m not on any of the HMO Medicaid plans, so I can’t address how that happens. With straight Medicaid, the patient will have a Medicaid card, so you know when they are eligible. To my knowledge, I’ve never had an issue with a patient with a Medicaid card where I would ever get a statement from the Medicaid department that she was retro-terminated, that she really wasn’t eligible. So, in the case where we might need to do a surgery, then you would verify, during that month, when they are current and if they are still current. So, with Medicaid, I have never had a problem and don’t see a problem with the way it works, because their card is always good when they say it is. That could not be the case with the other insurance plans.
Chairman Goldwater:
What does Medicare do? Obviously, you are age-eligible for Medicare, but you are not always either A, covered for certain benefits, or B, sometimes you are in Medicare managed care.
Jack Kim, Sierra Health Services:
I think Medicare is a little different situation because by the time you get on to Medicare you have reached a certain age in eligibility. You are not switching employers like what typically happens in commercial market. There are incidences where we have to give money back. We do in the Medicare HMO, down south. There are incidences where we do have to give premium back to this government. That can be up to a fairly long time.
Chairman Goldwater:
So the insurer gives it back?
Jack Kim:
Yes. I think the situation that causes a lot of these problems is that, as an employer, they tell us who is eligible and who is not eligible. Often there are delays on their part. When we give either prior authorization or some other type of notification to the provider, it is because in our records, to the best of our knowledge, that person is eligible for that service. What can happen, in between the time of prior authorization, which is automatic necessity, which is a little bit different than what we are talking here, because what we are talking is eligibility, that person may no longer be eligible. That person may still go to a doctor, knowing he is not eligible, ask for the service, and that puts the physician in a bad spot, too. Typically, with our employers, and some of the employers are fairly large employers, the state government, local governments, some unions, who are fully insured through us, small mom and pop shops, we give the money premium back to them. That is part of our contract with them. So, we are sometimes returning a lot of premium to the employer. We have the same problem with the federal government. We recently had a case where we had to give premiums back because we did federal employees benefit plan. A couple of years we gave premiums back to the federal government. So, we’re caught in the middle, along with the physicians in this case. It’s a really complicated situation.
Chairman Goldwater:
Is it any different in other states? I mean, do you find it better or worse any place else?
Jack Kim:
This is fairly standard through the country. Our operation is in different states. We have different operations. We have an HMO in Nevada and a PPO. We have a very small operation in California and Texas. Our other big contract is on the East Coast with the federal government through the military contract. We do the tri-care contract and we have the same issues with them taking premiums back after they’ve paid us. Under the way the current practices are, I know this isn’t any comfort to Dr. Mabey, but they do have a right to balance bill the member or whoever they received treatment from. It may be a little bit more difficult, especially in southern Nevada and anywhere else because it is such a transient society. In other places, people tend to stay there longer and it is just what we have here.
Chairman Goldwater:
Not to mention, we just passed a balanced-billing bill.
Assemblyman Mabey:
Mr. Chairman, I don’t think A.B. 70 would affect this because, basically, what is going to end up happening is the person wasn’t covered and it was amended to cover to apply just to covered members and they weren’t covered in the case of A.B. 70.
Chairman Goldwater:
Bob, what do you think?
Bob Ostrovsky, Nevadans for Affordable Health Care:
Nevadans for Affordable Health Care is a group representing a lot of businesses. As you know, my prior life was 25 years as a human resource executive on the Strip, in charge of up to 40,000 employees insured through companies that I managed from an HR perspective. I plead guilty. The employers are probably the guilty party here. Time works against everybody. We need to separate prior authorization again from eligibility; prior authorization means somebody checked and [confirmed] that is the covered benefit. We pay for that surgery or that procedure. The question is if you are eligible at the time when you actually receive that procedure. If the physician, the hospital, or anybody calls the insurance company and says, “[patient] John Smith is scheduled for some kind of a procedure the following week, can I get authorization for that?” and the insurance company looks and says, “Yes, that person’s on our list.”
Chairman Goldwater:
Is there a certain due diligence standard that an employer needs to meet to determine eligibility? Given technology these days, that lag should be smaller and smaller. Certainly a lag still exists, but there is obviously a lag between somebody who is doing a general ledger with a pencil, and somebody who is doing something that is fairly modernized. Is there any way, or have you seen in your experience, some way to create a floor for technology?
Bob Ostrovsky:
We had these problems existing, so we went online with our self-insurer, our ASO carrier, administrative services contract people, so that we did an add and delete report every day. We had a clerk who did that and said “this person is now on; this person is off.” We did that on a daily basis. We used to do it on a monthly basis, which is what most businesses operate on. [For example], when their premiums are due, usually there’s a 30-day grace period for premiums and [that information] goes in your add and delete report. My little company is insured through the chamber of commerce plan and we’ve got 30 days. The add and delete report goes in with the premium payment. The insurance company could be 30 days out or more before they know that this employee is no longer working, is no longer eligible. If 30 days is due diligence, that is fine. It doesn’t really solve Dr. Mabey’s problem. The only way he can protect himself is that on the day he actually does the service, call the insurance company, and that is no guarantee it may be in that period in which the employer hasn’t notified the insurance company.
I suppose you could set up some standard for notification of the insurance company. I don’t know what it would be. For a large company like Bally’s, it’s hard and easy. It’s hard because I have 40,000 employees, I have to notify the union, and I have to notify if it’s a union plan or depending on the plan. It’s easy from the standpoint that I also had a human resource office, just in the corporate office, that had 30 people. So, you could assign somebody the responsibility to get that information. For the smaller companies that I think Mr. Kim represented at Sierra, it becomes more difficult. At what point do you say the patient has some responsibility? He knows he’s not working there anymore; he must know he’s not insured. The patient goes and gets the service and physicians try to protect themselves. I represent Lake Mead Hospital too. When you check into the hospital, you sign a document that says that you have insurance, but it also says if the insurance doesn’t pay, you are responsible. But that means the doctor becomes a collection agent. That isn’t what doctors want to do, so they turn it over to a collection and they give up 50 percent of their billing, if they collect.
Chairman Goldwater:
Do you notice out of one employer more than another? One insurer more than another?
Assemblyman Mabey:
The answer is no. I think it’s a universal problem.
Jack Kim:
I had a conversation with Woody Thorne last week when he came up and testified. He had mentioned that this is a big issue for the state employees benefit plan. The way their system is set up, they went through the same issues with different departments, not notifying them for sometimes months at a time, and so they run into the same issues. I don’t see this as an insurance issue at all, because even if this bill was passed in its current form, there are a number of entities that it wouldn’t cover. The Medicare, probably not the Medicaid, and after listening to Mr. Nowak, the Federal Employees Benefit Plan, those issues will exist. Even in some of the ERISA [Employment Retirement Income Security Act] plans, the self-funded plans that aren’t fully insured but they are self-insured, you would still have that same problem happening, so then what you have going on are the basic two separate systems being run, instead of one. That’s going to double the cost for everything.
Bob Ostrovsky:
One other point, and I’ll change hats again. I am a trustee on all of the stagehands benefit plans. There is pension disability and now there is… I am not a trustee on a health and welfare fund because they are a member of the culinary plan. I was the Chairman of the trust of the Northern Nevada Musicians Health and Welfare Trust some years ago. The problem those employees face is people who work on the bounce, that is, who work for different employers every day. The union then has to collect hours worked information and we usually get it from a steward’s report, which comes into the union hall, and then we determine the eligibility for that month based on the number of hours that employee worked. Then, we bank some hours so that we can get some credits for employees who don’t work enough to have insurance every month. So, there’s sort of a complicated system of deciding after the fact whether that person was eligible, while the physician is out taking the risk by performing the service. I’m not trying to solve that problem, but I have empathy for a system that leaves the last person, who provides the service, holding the bag basically, if they can’t find the person they provided the service to.
Chairman Goldwater:
In short of that, no one is out a nickel until…
Jack Kim:
There are instances where we become that collection agency too. We are sometimes in the same position as Dr. Mabey. For us, there are times we have to send out notices. We’ve tried to collect from collection agencies for benefits we’ve paid out erroneously because a member had gone in with a card and they were no longer covered, so we are sometimes in the same position as Dr. Mabey trying to collect money from employers.
Chairman Goldwater:
Sure, and it’s tough for patients too. I know that APL did me one time. They said I wasn’t eligible, which was fine, so I wrote them a check and said, “Okay, I wasn’t eligible.” I knew I was, but it was like $60. Then they came back and said I was eligible. What I owed, under the terms of my eligibility, was only $5. So they said, “okay, here’s a bill for $5.” I had already paid the $60. They literally sent me to collection over the $5, which I ended up writing a check for anyways, but it’s tough for everyone.
Jack Kim:
It’s a complicated problem.
Chairman Goldwater:
It’s really complicated.
Jack Kim:
And I just don’t know how to fix it.
Chairman Goldwater:
It’s single-payer health care somewhere along the line, I think.
Jack Kim:
Well, maybe somewhere along the line, but hopefully not…
Chairman Goldwater:
Dr. Mabey, what do you think?
Assemblyman Mabey:
Thank you, Mr. Chairman. It’s very complicated and you said it very well. We are at the end of the chain and we get left holding the bag. I did like Mr. Ostrovsky’s idea of using a credit card up front, but I’m not sure how long those last. We’ve never used a credit card in my business. It seems unfair that sometimes this will happen a year later than the procedure. You’ll get a letter stating that they want a refund. I could understand a month or so, but an entire year after the fact, that’s just an incredible amount of time.
Chairman Goldwater:
How do you think this might tie into the uninsured fund?
Jack Kim:
It gets complicated when getting with uninsured because a lot of these folks are probably uninsured at this point. They have left employment for a variety of reasons, they may have elected to not take COBRA, so they basically are uninsured, but they’re still using their cards in order to try to get more medical care. To us, that means they’re covered because that’s what we have. It’s a difficult problem. I’m not sure how to address that.
Assemblyman Mabey:
Mr. Chairman, one idea I had was to prepay a month in advance or two months in advance. I know that’s expensive up front, but if the insurance discontinued and they were covered for a month more than they were, then they could get a refund.
Chairman Goldwater:
That is not going to happen, I don’t think.
Bob Ostrovsky:
Just a suggestion. If you choose to process this piece of legislation, I’m not sure how or what we would put in it. The only other option available is there’s a standing committee on health that meets in the interim, and this Committee could write them a letter and asked them to study that and bring it back. What’s a standard that ought to apply to all employers in the state and insurance companies, and what steps does a doctor have to take to avail themselves of that? They have to take some reasonable steps to get information from the employee so they can at least try to collect the bill.
In a hospital setting, if someone comes to the door and has insurance, it’s fine. If they don’t have insurance, the first thing we do is determine if they are otherwise Medicaid-eligible. We have eligibility workers right in the hospitals, but if [the patients] don’t say, up front, or if they give you an insurance card that may later turn out to be not active, we don’t even get the chance to try to work with that.
Chairman Goldwater:
What’s the provider tax that the hospitals pay? Isn’t there an uninsured fund at some point?
Bob Ostrovsky:
There is a provider tax. It’s really so that Clark County can make an intergovernmental transfer for the purposes of getting additional Medicaid funds funneled back through UMC [University Medical Center]. It’s a tax, but it’s a matched tax.
Chairman Goldwater:
Some states have an uninsured fund, right? For health care?
Bob Ostrovsky:
Mr. Chairman, there is a statute that permits local governments, in this case, the local government in Clark County, to impose up to a 10-cent property tax. I think, currently, that tax is at 6 cents, the purpose of which is indigent care, and that money was provided to UMC only until, I think, two years ago, and now they started providing some additional funding to Lake Mead Hospital. I called it little dish. It’s sort of local dish money, and I think the county will have to look at whether they need to raise that tax to provide some of the shortfalls that UMC has had because of the increase number of the uninsured, but there is funding in the county for that purpose. It’s been for hospitals.
Jack Kim:
Talking about an uninsured fund, I believe there is a study bill coming out of the Senate, this session, on how to address the uninsured. I know that’s been an issue, at least for our company, over the years. We have been a proponent of trying to address the uninsured issue. It gets somewhat to Dr. Mabey’s issues. It may be the wrong insurer, but someone is insuring them.
Chairman Goldwater:
One of the things I worked on when I worked with the AIDS Drug Assistance Program was not necessarily finding more creative ways to pay for stuff. Rather than just say, “Okay, we need to cover full premium for Jack Kim, no matter where he goes,” when you run into these situations, if a physician can say, “I can get paid if this potential eligible paid their COBRA,” you could find a way to just pay the COBRA, and you can take care of it, and let the physician submit that to some pot of money. We need a pot of money.
Assemblyman Mabey:
Those are ideas. I don’t think we’re going to come to agreement on legislation this session, that’s obvious. But at least we’ve started the talk about it. I plan on visiting with these folks over the next months, and in a couple of years, I’ll be back again.
Chairman Goldwater:
I don’t think anyone doesn’t recognize the plight of the physician in these cases. It’s a tough one to solve.
Assemblyman Mabey:
You know, Mr. Chairman, a lot of times if the patient comes in and doesn’t have any money, I’ll just provide the care. I mean, that’s fine, but when you think they’re covered and then you go through, take care of them, and do the billing, etc., then that is the frustration.
Phil Nowak:
If I may just speak as a citizen for a matter of opinion on this? Just to your initial point about the potential for technology to play a role in narrowing this gap where there have been cases, that’s clearly extended non-notification, and hence the exposure. One provision might be to shift the emphasis on a standard or an allowable window of time within which an employer would be obliged to notify their insurer. If that standard were not met, then that would determine where the liability would lie, from the standpoint of who pays. Therefore, it protects the provider, and I would think, presumably, the insurer would look at that as a priceable risk from the standpoint of looking at the employer’s ability in compliance and so forth. Essentially, they wouldn’t be left holding the bag. It would just put the responsibility at the front of the chain, rather than on the back of the provider.
Chairman Goldwater:
I think that’s the direction, under our current environment. The small business already has a more difficult time and that would only create, in my opinion, probably a higher… As far as insurable risk goes, it would make it even more difficult for them.
Jack Kim:
It would make it more difficult on the small businesses. It’s difficult enough for the small businesses to get health insurance. It’s expensive. We do the chamber plan and we think it’s a great product. It offers something to all of the small employers. About 70 percent of the employers we insure are small businesses, which are the 15-unders. Those are the entities that have the most difficult time purchasing health care insurance and coverage. That’s who something like this would impact the most either on an administrative part, on notice requirements, or on the premium increases that we would have to build in for those. I think we all recognize it’s a difficult problem, and I’m not sure if there is an easy solution that we can figure out in three days.
Chairman Goldwater:
I think you’re right, but I think if we can get anything out of this time we spent here, we can either go down the road of technology, I think we have identified that that may be a standard to create somewhere along the line. Identify a payer standard, some other creative ways in which to pay for the different eligibility levels, whether it’s determining Medicaid eligibility, whether it’s paying in COBRA, whether it’s paying an extra month of benefit or whatever of premium. In some cases, I think some of the physicians would gladly pay an extra month of premium just to get covered, if they had that ability. Lastly, is it punitive? Where are you going to punish someone along the line for doing something wrong? No, we’re not going to solve it in three days, but these things get solved by some impetus, such as forms like this.
Jack Kim:
And I think we all agree. When Dr. Mabey first approached me with his bill, I didn’t really understand the situation that he was in. I had to go back to my folks, and they explained what happens on the employer’s side. That’s when I started to realize it’s a much a bigger problem. That’s when I started talking to Dr. Mabey about this, kind of saying, it’s a bigger problem than it appears. It’s really an eligibility problem and how do we get notice to us quickly enough, because when we get notice about eligibility issues, it takes us as little as five days to fix our system. That’s with over 300,000 members. So, when we get notice within five days, we get that corrected into our system. But that doesn’t get around the issue of the employee who still may have left the job, still have his card, and still may be using it out there. That is the other part of the puzzle. What do you do with the employee who knowingly, or unknowingly, in some cases…
Chairman Goldwater:
Mostly unknowingly. The incentives in health care are misplaced because now you have the guy who’s out of work. He has time to go get the elbow checked and the knee checked and get these things identified and you have a physician who says, “Here is some good insurance.” What was something he could probably take an aspirin for, now needs an MRI. But that’s always been the problem with an employer delivery system in an indemnity environment. The incentives in health care are misplaced and we need to create an entire system that has incentives. That was the whole idea behind managed care until it turned into managed cost and that kind of wrecked it for the guy who is receiving care and for the provider as well. I don’t know what to say, Garn. What do you want me to do with your bill?
Assemblyman Mabey:
Just let it die a slow death.
Chairman Goldwater:
Let’s put it in a study. On behalf of the Committee on Commerce and Labor, Vance and I are going to sit down and outline a nice letter from the Committee to whatever interim study, if there is one. If not, to the Health Committee, outlining this problem and how difficult it is. I think that’s the action that we’ll take. It will outline that this is important, these are some of the options we’ve determined are realistic to pursue, and maybe somewhere along the line, we can develop something.
Bob Ostrovsky:
Mr. Chairman, there is a standing Committee on Health. Senator Joe Neal has a bill coming out of the Senate, calling for a special study on the uninsured and a single payer plan. He has an entire bill, assuming it makes it through the process, and I don’t think anybody testified against the bill.
Chairman Goldwater:
You know, we’ll address our letter…
Bob Ostrovsky:
That bill may be a place where you could amend in something to make sure that that Committee, if it gets approved, actually looks at this issue specifically.
Chairman Goldwater:
Perfect. That’s what we’ll do and we’ll get going in that direction. [Chairman Goldwater adjourned the meeting at 11:36 p.m.]
RESPECTFULLY SUBMITTED:
Corey Fox
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: