MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
February 13, 2003
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, February 13, 2003, in Room 2135 of the Legislative Building, Carson City, 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 Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
GUEST LEGISLATORS PRESENT:
Senator Mark E. Amodei, Capital Senatorial District
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Maryann Elorreaga, Committee Secretary
OTHERS PRESENT:
Bryan Gresh, Lobbyist, Nevada State Psychological Association
Louis F. Mortillaro, Ph.D., President, Nevada State Psychological Association
R. G. Whittemore, Ph.D., Concerned Citizen
Jeanette K. Belz, Lobbyist, Nevada Psychiatric Association
Charles S. Price, M.D., Member, Nevada Psychiatric Association
William Stone, M.D., Member, Nevada Psychiatric Association
Mark Collins, D.O., Member Nevada Psychiatric Association
Philip Rich, M.D., Member Nevada Psychiatric Association
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association
Bobbie Gang, Lobbyist, National Association of Social Workers
Alice Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry
Robert Orgill, Concerned Citizen
Chairman Townsend opened the meeting on Senate Bill (S.B.) 65.
SENATE BILL 65: Allows formation of certain professional corporations. (BDR 7-335)
Bryan Gresh, Lobbyist, Nevada State Psychological Association, said S.B. 65 expands the definition of medical practitioners which can be allowed to form business entities or corporations. Currently that ability is confined to medical doctors and a few other disciplines. The bill would extend that ability to psychiatrists, psychologists, and other mental health professionals.
Louis F. Mortillaro, Ph.D. President, Nevada State Psychological Association presented a statement (Exhibit C), which explained the provisions of S.B. 65 would allow extending a greater range of services to more patients in one centralized location. He said patients often have to wait a long time to get a psychiatric referral and treatment. A multidisciplinary clinic setting would shorten that wait. Also, it made good business sense to incorporate with other health care professionals to share practice costs, ownership of property, and the ability to invest. Multidisciplinary professional corporations would be able to develop an economy of scale and provide more high-quality mental health services. Those advantages cannot be achieved without passage of S.B. 65.
R.G. Whittemore, Ph.D., Concerned Citizen, said S.B. 65 was not just good business, but would also provide greater and better mental health services by allowing a combination of services in one location.
Senator Neal asked why provision of services by psychologists, social workers, registered nurses, and marriage counselors not part of a professional corporation were not effective.
Dr. Mortillaro said they could not be efficient in getting services because it can take weeks to get an appointment for a referred patient. An emergency referral is particularly difficult. A professional corporation would be able to provide services more efficiently by being located in one office complex.
Senator Neal asked if there was some type of association with other physicians in place.
Dr. Mortillaro said there was, on a referral basis only. With training in psychopharmacology, other physicians ask him what medications should be prescribed to psychiatric patients. He said he is uncomfortable with that because it is not within the scope of his practice. If he had a psychiatrist partner as a consultant, medication recommendations could be made through that physician. The formation of a professional corporation that included psychiatrists would be like having a mental health clinic that serves the public but is part of a professional corporation.
Senator Neal pointed out the State employs psychiatrists, social workers, and other such providers and asked if passage of the bill would result in the State becoming a client of a professional corporation.
Dr. Whittemore said the bill would allow an expansion of services not currently provided by any health care professional, but is not designed to put any individual, private corporation in competition with State agencies.
Senator O’Connell asked if there was protection from lawsuits against individual members of the corporation and if such protection was addressed in the bill.
Dr. Mortillaro replied there could be such protection but he did not know if the current bill addressed the issue. He said he thought that subject should be addressed in subcommittee.
Senator Hardy asked how forming corporations would increase access to mental health care and if patients would be restricted to seeking care with corporation members. Dr. Mortillaro said patients have freedom of choice of health care providers. Treating within the corporative practice would be more convenient for patients, but they would not be restricted to that practice. There is no intent to take away a patient’s freedom of choice.
Senator Hardy asked again how forming corporations would increase the number of doctors or increase access to care. Dr. Whittemore said forming corporations expands accessibility to services because patients can be referred to individuals within the corporation. It would not increase the number of skilled mental health professionals, but it would make their services more accessible.
Dr. Mortillaro said psychiatrists, psychologists, and other mental health professionals within the practice would be able to offer a greater range of services, such as weekend appointments, which would maximize the amount of time the psychiatric professional had for providing service.
Dr. Whittemore stated passage of the bill would allow more services to more individuals.
Jeanette K. Belz, Lobbyist, Nevada Psychiatric Association, said there were several testifiers in Las Vegas prepared to speak to the committee.
Charles S. Price, M.D., Member, Nevada Psychiatric Association, spoke in opposition to S.B. 65. He referred to Nevada Revised Statutes (NRS) 89.050 (1), which allows for a professional corporation to be organized only for the purpose of rendering one specific type of professional service. He said physicians, psychologists, social workers, registered nurses, and marriage and family therapists are separately licensed and regulated by different boards. The patient is protected by the corporate separation of the providers giving different services in a like field. There is no question all the providers listed in section 1, subsection4 of S.B. 65 practice in the same field. Allowing them to exist under a corporate umbrella will foster an environment where health care decisions might be overshadowed by a corporate financial relationship.
William Stone, M.D., Member, Nevada Psychiatric Association, stated the bill opened the door to fee splitting among the members of a corporation.
Mark Collins, D.O., Member, Nevada Psychiatric Association, said he was concerned there would be interoffice referral patterns, which would not be in the best interest of a patient. If physicians, psychologists, and other mental health disciplines were allowed to form corporations, it would influence decisions regarding the best treatment of patients.
Philip Rich, M.D., Member, Nevada Psychiatric Association, said in his practice he has a psychologist, a social worker, a marriage and family therapist, and another psychiatrist. All of the members of the practice communicate with each other, but they were not members of a corporation and the concept of not having access to other professionals is not accurate.
Dr. Price said in his practice he works with many psychologists, social workers, marriage and family therapists, and will often see patients on referral from those colleagues. He said cooperation among the different professionals was the key. Corporate financial interest was not necessary. He expressed strong opposition to the bill and encouraged the committee to reject S.B. 65.
Senator Hardy asked to be provided evidence of professional corporations putting financial considerations ahead of their professional responsibilities. The committee would then consider that evidence. He was not comfortable with accusations being made without something to back them up. He went on to say he thought part of the problem with the health care industry in this country is not enough consideration has been given to the business side of the issue.
Senator Neal asked what the worst-case scenario would be if S.B. 65 were to pass.
Dr. Price said he did not have a worst-case scenario to present. He referred to Dr. Rich’s testimony and reiterated creating a corporation would do nothing to increase the proximity of providers. Dr. Price expressed concerns about members of a corporation having a financial interest in the success of the corporation. As a corporation makes money, dividends are paid to members of the corporation. If members provide more patients to each other, they all benefit financially by the greater income to the corporation.
Senator Neal asked Dr. Price if he meant profit would be more important to members of a corporation than treatment of the patient. Dr. Price replied there was no way for members of a corporation, as shareholders, not to profit from the income of other members.
Dr. Collins said, in response to Senator Neal’s question about a worst-case scenario, corporate entities restrict patients’ access to treatment outside those corporations. Recently, a long-term patient of Dr. Collins was hospitalized because of a suicide attempt. The patient’s insurance plan was changed to a managed care plan and Dr. Collins is no longer allowed to provide services to his patient. Dr. Collins said he thought the bill was a direct effort to establish more managed care entities and further limit a patient’s ability to seek treatment outside a corporate managed care umbrella.
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association, testified in opposition to expansion of the Professional Corporations and Associations Act. He said it would create problems for the public and could be perceived as an alternate way to license professionals. Currently it restricts those who can create a professional service corporation to those who share the same professional license. When a professional service corporation is created, it cannot advertise itself as providing services other than those the professional license guarantees. When you mix different professional licenses in the same corporate entity, inappropriate advertising can become a problem for each of the licensees. There are other routes to achieve the business or educational ends that do not create professional licensing problems and do not create problems with the public’s understanding of what the corporation is promising to deliver.
Mr. Matheis cited the example of a pain management clinic whose corporate members have different professional licenses. Each licensee is permitted to provide certain services. The corporation does not provide those services. If the members had the same license category, the professional corporation could say it provides pain management. He said merging different professions could result in possible fee splitting and possible violations of federal Medicaid rules against self-referrals. He said he did not think a corporation could be permitted to say it provides services beyond the license of the least expansive licensee. Only the licensed physician could guarantee the physician services. There is no professional category of mental health service and the bill allows licensed professional services to incorporate.
Bobbie Gang, Lobbyist, National Association of Social Workers, said they support S.B. 65 because it is important that mental health patients have confidence in professionals providing treatment. Having those professionals in one location helps to establish confidence.
Senator Hardy asked Mr. Matheis if a corporation advertises they can provide services A, B, and C, and they have practioners who are licensed to provide services A, B, and C, why would that be misleading the public? Is there concern about someone practicing outside the scope of their license? Mr. Matheis said he thought it could create that kind of confusion. The corporation does not provide service. The licensed professionals within the corporation provide service within the limit of their license. When they have the same license, there is no confusion about what is communicated.
Senator Hardy asked if there were significant sanctions for practicing outside the scope of a license. Mr. Matheis said there were, but the issue would be how to structure the marketing of the corporation in a way that would not lead to confusion.
Senator Hardy said he understood the concerns and the primary consideration was health care, but he did not want business considerations to be disregarded. He said he wants to hear the business reasoning as well as the health care reasoning for the bill from the proponents.
Mr. Matheis said there is nothing to prohibit colocation of professionals, other business arrangements among them, or development of referral agreements. He said he thought this was an attempt to create an integrated professional corporation. There would have to be strong arguments explaining why that would be better than options currently available.
Chairman Townsend closed the hearing on S.B. 65 and referred the bill to the subcommittee on professions, occupations, and businesses with Senator Carlton as Chairman and Senators O’Connell and Shaffer as members.
Chairman Townsend opened the hearing on S.B 64.
SENATE BILL 64: Authorizes formation of associations of self-insured private employers to provide health coverage. (BDR 57-138)
Senator Mark E. Amodei, Capital Senatorial District, said S.B. 64 was the same bill processed out of the Senate Committee on Commerce and Labor Senate as S.B. No. 28 of the 71st session. The intent of the bill was to provide another option for obtaining health insurance coverage at an affordable cost. Senator Amodei said no representative of the insurance industry had come forward with solutions to the problem other than raising premiums and cutting back benefits. Something needs to be done to provide relief to the small employers of Nevada who provide health care to their employees.
Senator Neal asked if there was a provision in the bill for a decrease in premiums.
Senator Amodei said the proposal does not indicate a decrease in premiums but allows small groups of potentially self-insured employers to band together and contract directly with providers. He cited the example of the Builders Association of Western Nevada (BAWN), which contracted directly with a physicians association in Carson City and contracted, through that association, with Carson Tahoe Hospital for their health insurance. He said BAWN believes the direct contracting has eliminated some administrative and middle-person costs which resulted in lower premiums.
Senator Neal asked if direct contracting eliminated insurance companies. Senator Amodei said insurance companies had not been eliminated because there was still a need for an administrator.
Chairman Townsend thanked Senator Amodei for proposing the bill. The issue of providing health coverage for working Nevadans has been a concern of several committee members for a number of years. He said he was hopeful the bill would accomplish providing health coverage.
Senator Neal asked if S.B. 64 had an influence on the provision of workers’ compensation insurance. Senator Amodei said the bill was directed at health insurance. There was no intent to address workers’ compensation insurance.
Alice Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry, said her division is in support of any measure that would achieve Senator Amodei’s objectives as set down in S.B. 64. She pointed out the bill would legalize Multiple Employer Welfare Arrangements (MEWA) in Nevada, which was of concern to her division. She said it was important appropriate safeguards be established to regulate the activities of MEWAs.
Last year Nevada had a serious problem with Employers Mutual, L.L.C, a Nevada corporation acting as a MEWA. They sold policies nationwide and collected $15 million in premiums and $25 million in liabilities on claims over a 9- month period in 2002.
Chairman Townsend asked if the sale of the policies was in violation of licensing requirements and if the individuals involved were still licensed.
Ms. Molasky-Arman verified the activity was in violation of licensing requirements. The individuals involved are still licensed because a settlement agreement allowed for payment of claims, which was the primary concern of the Division of Insurance and the deputy attorney general working on the case.
Chairman Townsend said people licensed by Nevada, who harm other people by their illegal acts, need to go. He acknowledged the licensing issues and regulations of MEWAs should and would be addressed.
Ms. Molasky-Arman added Nevada’s jurisdiction over MEWAs would be shared with the U. S. Department of Labor.
Chairman Townsend asked if a member of the Las Vegas Chamber of Commerce could purchase health insurance through the chamber.
Robert Orgill, Concerned Citizen, said a member of the chamber could purchase a policy for groups of two or more.
Chairman Townsend asked if a bill like S.B. 64 passed, could the chamber take its members and create a self-insured version of their plan. Ms. Molasky-Arman answered yes.
Chairman Townsend asked Ms. Molasky-Arman what other recommendations she had. Ms. Molasky-Arman said she and her staff had identified some areas of concern such as the definition of third-party administrators and cancellations of coverage. She stated her department is available to work with the committee and Senator Amodei to identify solutions.
Chairman Townsend suggested to Ms. Molasky-Arman she make a list of concerns and recommendations and give them to the subcommittee members and Senator Amodei.
Senator Neal said he was concerned for the protection of the public when dealing with insurance matters, especially in consideration of the incident described by Ms. Molasky-Arman. He asked that the Division of Insurance continue to keep the committee informed on how changes in insurance laws will affect the public.
Chairman Townsend said another goal is to find ways to provide health insurance to working individuals that do not have coverage.
Senator Carlton asked if the goals of S.B. 64 could be achieved under chapter 694C of NRS. Ms. Molasky-Arman said there is nothing in chapter 694C of NRS that would preclude associations such as those contemplated in S.B 64 from being licensed; the captive chapter allows for association captives.
Senator Carlton asked if associations had asked for licensing and been denied, or if they did not understand it was a possibility. Ms. Molasky-Arman said people might not be aware of the possibility of forming a captive. Associations seeking a captive license for health coverage have not approached the Division of Insurance.
Ms. Molasky-Arman, referring to the Employers Mutual, L.L.C. situation, said there is now a regulation giving the commissioner of insurance authority to regulate Multiple Employer Welfare Arrangements. It states MEWAs may operate in Nevada if they receive a certificate of authority and submit proof of satisfying all requirements that a licensed insurer must satisfy under chapter 680A of the Nevada Revised Statutes.
Mr. Orgill said he opposed the bill based on funding arrangements and the same concerns expressed by the commissioner on the MEWA issue.
Chairman Townsend closed the hearing on S.B. 64 and referred the bill to the subcommittee on insurance with Senator O’Connell as Chairman and Senators Hardy and Schneider as members.
Chairman Townsend introduced three bill draft requests (BDRs) BDR 40-296, BDR 58-344, and BDR 58-488.
BILL DRAFT REQUEST 40-296: Makes various changes to provisions governing hazardous materials. (Later introduced as Senate Bill 127.)
BILL DRAFT REQUEST 58-344: Exempts retail customers who purchase energy from certain municipal utilities from payment of universal energy charge. (Later introduced as Senate Bill 126.)
BILL DRAFT REQUEST 58-488: Revises provisions relating to certain final orders and permits for public utilities. (Later introduced as Senate Bill 125.)
SENATOR NEAL MOVED TO INTRODUCE BDR 40-296, BDR 58-344, AND BDR 58-488.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL WAS ABSENT FOR THE VOTE.)
*****
There being no further business, Chairman Townsend adjourned the meeting at 9:30 a.m.
RESPECTFULLY SUBMITTED:
Maryann Elorreaga,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: