MINUTES OF THE
JOINT Subcommittee on
Human Resources/K-12
of the
Senate Committee on Finance
and the
Assembly Committee on Ways and Means
Seventy-second Session
March 21, 2003
The Joint Subcommittee on Human Resources/K-12 of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Raymond D. Rawson at 8:09 a.m. on Friday, March 21, 2003, in Room 3137 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.
Senate COMMITTEE MEMBERS PRESENT:
Senator Raymond D. Rawson, Chairman
Senator William J. Raggio
Senator Barbara K. Cegavske
Senator Bernice Mathews
Assembly COMMITTEE MEMBERS PRESENT:
Ms. Sheila Leslie, Chairman
Mrs. Dawn Gibbons
Ms. Christina R. Giunchigliani
Mr. David E. Goldwater
Mr. Lynn C. Hettrick
STAFF MEMBERS PRESENT:
Bob Guernsey, Principal Deputy Fiscal Analyst
Steven J. Abba, Principal Deputy Fiscal Analyst
Joyce Garrett, Program Analyst
Judy Coolbaugh, Committee Secretary
OTHERS PRESENT:
Steven G. McGuire, State Public Defender, Office of the State Public Defender, Department of Human Resources
Michael Torvinen, Administrative Services Officer IV, Office of the Director, Department of Human Resources
Charles Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources
Mary Wherry, Deputy Administrator, Division of Health Care Financing and Policy, Department of Human Resources
Debbra J. King, Administrative Officer IV, Division of Health Care Financing and Policy, Department of Human Resources
Lawrence Fry, Lobbyist, Coalition of Assisted Residential Environments
Francis Ashley, Community Liaison Director, Evergreen Nursing Home
Dell Williams, Administrator, Silver Rose Manor
Stephen Koetsier, Administrator, Carson Valley Residential Care Center
Jon L. Sasser, Lobbyist, Nevada Legal Services and Washoe Legal Services
Roger Volker, Executive Director, Great Basin Primary Care Association
Alicia Smalley, Lobbyist, National Association of Social Workers
Stephen C. McFarlane, Ph.D., Dean, University of Nevada, School of Medicine
Patricia K. Elzy, Lobbyist, Planned Parenthood
HR, Public Defender – Budget Page DEFENDER-1 (Volume 2)
Budget Account 101-1499
Steven G. McGuire, State Public Defender, Office of the State Public Defender, Department of Human Resources, explained the office represents adult and juvenile indigent, criminal defendants when a court appoints the public defender as counsel. The public defender also handles appeals for state prison inmates whose habeas corpus post-conviction petitions have been denied, and cases of involuntary civil commitment for mental health reasons in the rural counties with under 100,000 residents. The public defender operates out of three offices located in Carson City, Winnemucca, and Ely.
Mr. McGuire stated the public defender’s office is a relatively small agency with nine full-time employees serving seven counties. The Carson City office represents Carson City and Storey Counties. The Winnemucca regional office serves Humboldt and Pershing counties. The Ely regional office represents White Pine, Eureka, and Lincoln Counties. In the mid 1990s, caseload growth had steadily increased requiring another position in the Carson City office. Following a national trend, caseload growth has leveled off. The agency is not asking for, nor is it in need of, any new positions. The main changes in the budget are in enhancement units E-710 and E-720.
E-710 Replacement Equipment – Page DEFENDER-3
Mr. McGuire explained this decision unit recommends a combination of General Fund support and county fees in the fiscal year (FY) 2003-2005 biennium to upgrade to a larger motor pool vehicle for the Ely office. The vehicle requested is a four wheel drive vehicle (4X4) sport utility vehicle (SUV) because winter driving conditions can be very difficult and hazardous, especially over three passes in the area higher than 7000 feet. The deputies of the public defender’s office have expressed concern about their ability to get to court, and to visit clients on a pre-trial basis. Upgrading to one “4X4” vehicle will help resolve safety concerns about driving in remote areas in adverse conditions. The ability to easily get around will also provide better client service.
Senator Rawson asked whether any court dates had been missed because of poor weather conditions. Mr. McGuire answered no court dates have been missed. Up to this point, the problem has mainly been deputies’ anxiety about becoming stranded in remote areas.
Senator Rawson indicated statistics show more rollovers occur in SUVs, and if the funding were approved, he insisted the vehicle users would always have to wear their seat belts.
E-720 – New Equipment - Page DEFENDER-3
Mr. McGuire said this decision unit requests a digital camera for the investigations unit, and four laptop computers with associated software for office attorneys. Three of the laptop computers will be used in the courtrooms in Carson City, Winnemucca, and Ely. The investigations unit will use the fourth one. The funding is a combination of General Fund support and county fees in the FY 2003‑2005 biennium. Using the laptop computers in court will enhance efficiency and improve the quality of service.
Mr. McGuire continued saying another expense is rent for the Winnemucca office. For the last 20 years, the public defender has occupied free office space in the basement of the courthouse. Humboldt County is in the process of solving potential health problems caused by mold in the public defender’s office. He explained other office space in Winnemucca was sought, and rent costs were calculated. The office space in the basement of the courthouse is highly desirable, convenient, and cost-effective. Humboldt County is helping in cleaning up the mold problem, but given its budget constraints, some rental income would be helpful in offsetting the repair costs.
Senator Rawson indicated the rent-funding request was not in the Executive Budget.
Michael Torvinen, Administrative Services Officer IV, Office of the Director, Department of Human Resources, said the rent adjustments for Carson City and Ely are in the Executive Budget, and the office will work with staff to address the Winnemucca rent issue.
HR, HCF&P, Nevada Medicaid, Title XIX – Budget Page HCF&P-11 (Volume 2)
Budget Account 101-3243
Charles Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources, said the agency has provided additional information requested at the February 27, 2003 budget hearing. A handout entitled Division of Health Care Financing and Policy Budget Presentation to Assembly Committee on Ways and Means and the Senate Committee on Finance Joint Subcommittee on K-12/Human Resources March 21, 2003 (Exhibit C. Original is on file in the Research Library.) was distributed.
Mr. Duarte stated additional justification for positions has been included under tab 12 of the handout. The status of the transition of the health care management service from Health Insight to First Health Services Corporation (FHSC) is covered. As with any transition of contractors in a program this size, unexpected issues developed which were challenging to the agency, the contractors, and the providers. As the issues were raised, they were addressed.
Mr. Duarte noted the University Medical Center (UMC), Washoe, Sunrise, and Valley Health Care Systems had raised concerns about retrospective reviews not being completed by the prior vendor, and a significant fiscal impact was created by this omission. FHSC has placed nurse reviewers on-site in UMC and Sunrise Hospitals in Las Vegas, and Washoe County Hospital in Reno to clean up the backlog. The process will continue to be monitored to determine whether additional reviewers are needed on‑site.
Mr. Duarte added response to customer service calls was problematical at the start up of the transition, and FHSC has increased staff to accommodate the demand. Phone volume is averaging 600 calls per day. The FHSC’s average speed of answer for customer service representatives is under 15 seconds, and for nurses it is between 24 seconds and 1.5 minutes.
Mr. Duarte indicated the FHSC and the Division of Health Care Financing and Policy (DHCFP) collaborated to conduct training sessions in Las Vegas and Reno for all provider types, and provided comprehensive training packets, including processes, guidelines, forms, and other helpful information.
Mr. Duarte stated information on the University of Nevada, Las Vegas (UNLV) School of Dentistry is detailed. Covered dental services for Medicaid recipients, and Nevada Check Up enrollees in Clark County, are contracted through managed health care plans. Both of the managed health care plans are in turn contracted out to the UNLV School of Dentistry to provide dental services through its clinics. A number of fee-for-service dentists are utilized in the Las Vegas area. With the exception of orthodontia, compensation for the UNLV School of Dentistry is fully capitated. Orthodontia treatment plans are paid on a global basis using the fee-for-service reimbursement schedule. Covered dental services, in areas of Nevada, other than Clark County, are reimbursed under fee‑for-service contracts. The numbers of clients on the waiver waiting list are also included.
Mr. Duarte noted a supplemental update is shown under tab 12 of the handout for E-501 and E-915, which were not included in the Executive Budget.
E-600 Budget Reductions – Page HCF&P-23
Mr. Duarte explained this decision unit cuts costs and reimbursement rates to comply with the Governor’s direction for a 3 percent across-the-board cut in General Fund appropriations. The reduction in FY 2003-2004 is $11,158,663, and in FY 2004-2005 the amount is $11,891,291.
Assemblywoman Leslie asked whether obstetrical services were still going to be reduced. She commented it appears the Governor is not going to cut them.
Mr. Duarte answered the obstetrical services will not be cut. He noted the Governor is committed to hold harmless obstetrical service reimbursements as a class of services in budget reductions. The agency believes the shortfall can be made up with some of the pharmaceutical initiatives that will be implemented.
Assemblywoman Leslie asked how long the Governor plans on keeping obstetrical services under a hold harmless agreement. Mr. Duarte said the time period would cover the biennium.
E-601 Cost Containment Initiatives – Page HCF&P-23
Mr. Duarte explained this decision unit recommends a series of six procedural and policy changes, which will reduce the costs of Medicaid medical payments. The changes being considered will impact the following areas: Personal Care Aide Service Limitations, Medicaid Life Skills Training, Physician Reimbursement Rates, Medicaid Preferred Drug list, Maximum Allowable Costs Pricing for Drugs, and Graduate Medical Education Payments. The reduction in FY 2003‑2004 will be $7,769,995, and in FY 2004-2005, the amount will be $8,619,719.
Mr. Duarte stated the proposed changes in physician reimbursement rates will correct years of inconsistent reimbursements between procedures and specialties. Historically physicians, clinics, and other health-care professionals have billed Medicaid for reimbursement based on Current Procedural Terminology (CPT) codes. For decades, Nevada Medicaid has reimbursed physician services using CPT codes based on the 1974 California Relative Value Study (CRVS) system.
Mr. Duarte explained from the CRVS base, Medicaid has changed values for codes over the years, sometimes across all services by a certain percentage. Many changes were made sporadically on an ad hoc basis, code by code, often in response to specific provider complaints about reimbursements on individual procedures. He asserted net result is a very inconsistent reimbursement system with dramatic variations in reimbursements, even for similar services. In some instances, reimbursements far exceed commercial carrier costs, while in other areas they are well below market values.
Mr. Duarte added that since the California study, many states have changed to a newer system for valuing CPT codes, the Resource Based Relative Value Scale (RBRVS). RBRVS was developed by the Center for Medicaid and Medicare Service (CMS), and calculates unit values for all CPT codes. RBRVS differs from CRVS in that primary care type services, such as evaluation and management, are weighed more heavily than specialty services, such as surgery. This change results in more dollars flowing to preventative primary care, and therefore reduces the need for more intensive and costly care later on. Additionally, RBRVS continues to be maintained by CMS, since it is the basis for physician reimbursements in the Medicare program.
Mr. Duarte said this change in valuing CPT codes using the new RBRVS system is a significant improvement over the previous methodology. He drew attention to first spreadsheet under tab 4 of the handout, which shows the current rate compared to the proposed rate for physician reimbursements. He noted evaluation and management service are the types of services provided by a primary care physician. These types of services are valued at a higher level when compared to current compensation. Surgical and some procedural services will be reimbursed at a lower rate.
Senator Rawson inquired whether the DHCFP will conduct a hearing process so physicians’ concerns can be addressed.
Mr. Duarte answered a hearing process will be established after approval of the RBRVS system for valuing the CPT codes. It is the intent of the agency to provide 30-days notice of a public hearing, and to provide lead time for the Nevada State Medical Association (NSMA) to review the documents. Further, the agency will meet with the NSMA prior to the public hearing. Testimony from private citizens and physicians who have concerns will also be heard.
Senator Rawson commented after budget closings, hearings are just a matter of form. He added it appears most of the reimbursements for surgical services are half of the previous amount.
Senator Rawson asked what amount of total saving could be generated using the new RBRVS system.
Mr. Duarte answered it may be appropriate to reduce the reimbursement for some of those surgical procedures because technological advancements and specialized training have reduced the cost over time. He pointed out the DHCFP has not adjusted its rates to match the market place, so the reductions seem to be dramatic.
Assemblywoman Gibbons said commercial insurance rates usually reimburse at the lowest amount, but the Medicare reimbursement rate appears to be much lower than the commercial rates. For example, she suggested an explanation of what is involved in wound exploration under surgical services might provide insight into how the rate decreases were determined.
Senator Rawson commented the discussion was about adjusting the Medicare rate, but the rate being proposed seemed to be less than the Medicare facility based rate. He stated the committee does not want to become expert in setting rates, and recognizes it is a complicated process further impacted by budget constraints.
Mr. Duarte responded he could not provide an explanation for the wound exploration, or how the payment code for the procedure was determined. With respect to the overall concern about adjusting to Medicare rates, the agency is not adjusting to 100 percent of Medicare rates. The adjustment is being made to reflect 80 to 90 percent of Medicare rates for most services. He said that granted the rate is lower than Medicare, and certainly lower than the commercial insurance rates, but Medicaid rates nationwide are the lowest. Medicaid and Medicare are not considered to be the primary care providers. The programs have always been referred to as a safety net. Commercial insurance should be the primary vehicle for income to providers.
Mr. Duarte continued, saying a consulting study completed in 2001 for the Medical Policy Institute in California indicated Nevada was ranked number one or number two in the nation in terms of Medicaid reimbursement. He suggested reducing rates will probably move Nevada down on the ranking scale to a place in the top one‑third of Medicaid-reimbursing states. Nevada does rank at the top of some lists, including reimbursements to physicians for surgical and technical services. There will be an impact on the program, but barriers to access cannot be determined at this time. He reported the agency believes it is prudent to adjust these rates. The DHCFP will have hearings, and will listen to the concerns of physicians, as well as monitor access after implementation.
Senator Mathews asked how the maximum number of minutes per activity were determined if the agency only compared its Activities for Daily Living (ADL) to the standards used in Montana for personal care aide services.
Mary Wherry, Deputy Administrator, Division of Health Care Financing and Policy, Department of Human Resources, answered when the agency selected the standardized uniform assessment tool for the development of the program’s functional assessment program, the Montana assessment tool was chosen. Montana had limited its hours for all ADLs and Instrumental Activities for Daily Living (IDAL) to 40 hours per week. The DHCFP recalculated the hours and raised the ADLs and IDALs to a maximum of 54 hours weekly, which is still in excess of the original Montana assessment tool.
Senator Mathews commented Nevada seems to have recommended a total of 45 hours per week, not 54. Ms. Wherry answered the 45 hours per week would only be in the ADL area, not in the combination of ADL and IDAL.
Senator Mathews referred to the statistics shown in tab 5 of the handout, and Ms. Wherry indicated the Nevada current time for ADLs is 54.5 hours a week, and the recommended amount is 45.5. IDALs are currently at 8 hours per week with a recommended reduction to 5 hours weekly. Any recipients who are “at risk” would not have their hours reduced if they required more care.
Senator Mathews inquired whether people who received these services have been included in the discussions for rate reductions.
Ms. Wherry replied the agency will have a public hearing, and the recipients will be given an opportunity to comment. Recipients were included in the original discussions for determining the number of hours, and in discussions on modifications the agency would make on the Montana assessment tool. The growth in the agency’s personal care program has been dramatic, which is encouraging, because there is a corresponding decline in the nursing home utilization.
Senator Mathews said the agency is reducing the hours, and there is a waiting list for these services.
Ms. Wherry stated the agency does not have a waiting list for ADL or IDAL services. There is no cap on this program. The waiver group does have a waiting list, because acceptance is based on the number of funded slots that are available. The Nevada Medicaid Personal Care Aide program (PCA) is an optional service under the State’s plan. The waiver group is an exception to the State plan. These additional services are made available to recipients in addition to services they are receiving on the PCA plan.
Senator Mathews inquired whether the intent of the agency was to remove people from the waiting list by reducing the hours of care provided. Ms. Wherry explained the agency could reduce the number of people requiring a waiver by utilizing the PCA plan.
Assemblywoman Leslie inquired whether the total amount of savings available from rate adjustments to the physicians reimbursement program had been calculated.
Debbra J. King, Administrative Officer IV, Division of Health Care Financing and Policy, Department of Human Resources, stated the total of projected savings in FY 2004 is $7.8 million, and in FY 2005, $8.6 million.
Assemblywoman Leslie commented the savings are significant, but her concern is with program access and physician availability.
Senator Rawson indicated the implementation date of the program is May 2003, so the plan will be in place before this session ends.
Ms. King said the public hearing notice would be posted prior to April 1, 2003, and the hearing would be held before May 1, 2003.
Assemblywoman Giunchigliani asked on what the date the life skills assessments will be finished for the individuals in the Rehabilitation and Case Management Services (RECAMS) program to determine whether the individual qualifies for the physically disabled waiver.
Ms. Wherry answered every recipient in the RECAMS program is also receiving PCA services. There is a 6-month reassessment process, and each recipient will be evaluated to reduce the life skills training, which has a current rate of $21 per hour for 3 hours of daily service. This rate was set in a pilot program 10 years ago, and has never been modified. The recipients probably would receive additional PCA services, which is rated at $17 per hour in place of the more expensive life skills training services. The reassessment will assure the agency that the services being paid for are the ones the recipients actually need. There will be a 1-year transition period.
Assemblywoman Giunchigliani asked for confirmation that no one would automatically be “dumped off” the program, and asked whether some of the recipients might be qualified for the physically disabled waive at some point.
Ms. Wherry answered some of them have already qualified for the physically disabled waiver, and throughout the 6-month functionality reassessment for PCA services, the hours for PCA services may be increased, as the RECAMS program hours are decreased or eliminated.
Assemblywoman Giunchigliani asked what the difference is between the terms “habilitative and rehabilitative.”
Ms. Wherry responded if it is a Medicaid plan service, federal regulations mandate the agency can only pay for rehabilitative services, which means the persons have to be brought to their optimal level of functioning. Once people reach that level, they are reclassified to a habilitative state, which typically fall under the physically disabled waiver services. She explained the State’s program has taken a step beyond what the federal rules will reimburse by paying for habilitative services. The recipients are at their optimal level of functioning, and the agency’s programs are sustaining them with a support service, which is not taking them to higher levels of progress.
Senator Rawson said the reason for the committee’s questions is concern that some recipients might “fall through the cracks.”
Ms. Wherry said not all recipients will qualify for the physically disabled waiver, but the PCA program, which is a State plan, will compensate for the 3 hours daily of life skills training.
Assemblywoman Leslie said the Preferred Drug List (PDL) was not adequately covered during the last hearing, and requested a review.
Mr. Duarte stated the PDL is addressed in tab 6 of the handout. He asserted it is not the intent of the agency to deny any person pharmaceuticals. The implementation of the program will proceed in a manner that is safe for recipients. The aged, blind, and disabled population receives 85 percent of all pharmaceuticals. It is estimated implementation of the PDL will save the State $5.5 million in each year of the FY 2003-2005 biennium.
Mr. Duarte continued saying the DHCFP will hire a contractor to be a PDL manager, and will release a request for proposal (RFP) by the end of the month to solicit bids for these services. The RFP will also include some generic drug‑price setting for implementation next year. The model for the State’s plan approximates the plan in operation in Michigan. The PDL manager will review the Medicaid pharmacy claims data to determine the most frequently used therapeutic classes of drugs within the paid claims file.
Mr. Duarte explained the PDL manager would forward recommendations to a review board for classes of drugs to be considered, based upon clinical safety and efficacy guidelines. The list of therapeutic drugs has not been determined at this time. A board of clinical reviewers will review the targeted therapeutic class of drugs to ensure clinical equivalence between drugs. The DHCFP will use the existing Drug Utilization Review (DUR) board as the clinical review body. In cases where drugs within a class are determined to be clinically equivalent for safety, effectiveness, and therapeutic value, the PDL manager will make recommendations as to which drug should be the established reference drug.
Mr. Duarte stated manufacturers whose prescription drugs are determined not to be reference drugs have an option to rebate the cost of their drug down to the price of the reference drug. If a manufacturer chooses not to participate, the prescription drug will not be excluded from coverage, but will be placed on a prior authorization list.
Assemblywoman Leslie asked who is going to be on the DUR board.
Mr. Duarte said recent discussions were held with staff about whether or not the DUR board should be enhanced from its traditional role of monitoring utilization of drugs and educating providers to a more clinical role. It was determined the more prudent step would be to establish a separate pharmaceutical and therapeutics committee to deal specifically with the selection of preferred drugs.
Assemblywoman Leslie asked whether the members of the new committee have been named. Mr. Duarte indicated the plan is still in the proposal stages, and it would be premature for the agency to identify the members of the committee.
Assemblywoman Leslie asked whether the committee selection would be in the RFP or be made by the DHCFP.
Mr. Duarte said the agency would like some guidance on the makeup of the Pharmaceutical and Therapeutic (PT) committee.
Senator Rawson commented the emphasis is not on accounting, but on clinical issues. Mr. Duarte said the agency has no intention of placing an actuary or accountant on the PT committee. The committee will not be making pricing decisions. Its function is to consider the efficacy, safety, and therapeutic equivalents within a class of drugs.
Assemblywoman Leslie inquired whether the supplemental rebates from the manufacturers, whose drugs are not the established reference drugs, are included in the total amount of savings. Since a PDL manager has not been chosen, she remarked, the total savings amount is representative of a “soft” number.
Mr. Duarte answered the total savings amount is a “soft” number, and a relatively conservative one, based on estimates from the Michigan model. The number does include the supplemental rebates. The procurement of a separate drug vendor will require some additional administrative costs, but the agency intends to fund that amount from the savings.
Assemblywoman Leslie inquired about the costs of implementation of the program. Mr. Duarte said some of the costs for implementation have been removed from the savings amount. Any additional costs will also be removed from the savings figure, but the anticipated extra amount is not significant.
Assemblywoman Leslie asked where the cost of the PDL manager is shown in the budget. Mr. Duarte said the amount to pay for the PDL manager would also be taken from the savings figure.
Senator Cegavske expressed concerns about using First Health Services Corporation (FHSC) provider and some reservations about using the Michigan model. She suggested the agency needed to look at all programs to determine what is best for the State. Other states have indicated there have been problems with FHSC. The actual language in the RFP should be made available to the committee.
Mr. Duarte addressed these concerns by stating fiscal agents like FHSC are responsible for implementation of State policy. It is not FHFC’s policy that resulted in the Michigan model. It was the Michigan Medicaid program that implemented the policy to determine a PDL with this methodology. FHSC is merely the vendor. Our transitioning fiscal agent, FHSC, will be responsible, and will continue to be responsible, for processing pharmaceutical claims, overall payment, adjudication, and management of the State’s pharmacy program. The agency is procuring administrative support services to assist the PT committee in making appropriate decisions on which drugs will be on the PDL, and who will be affected by the PDL. The information is placed in a computer system administered by FHSC. Claims are paid based on policies the agency establishes after hearing the clinical committee’s recommendations.
Assemblywoman Giunchigliani asked for clarification on the meaning of PPI and COX II. Mr. Duarte replied PPIs are Proton Pump Inhibitors. This is a new class of drugs to address gastric-acid reflex disease. COX II, cyclooxygenase‑2 inhibitors are a new class of anti-arthritis drugs. Both drugs are extremely expensive. Many individuals satisfactorily respond to comparable, but less costly, alternatives available in the generic drug field.
Assemblywoman Giunchigliani asked whether the agency’s purpose in requiring a prior authorization for these new classes of drugs is to encourage health care providers to use suitable generic equivalents.
Mr. Duarte replied that is correct, and the prior authorization program, which the agency refers to as “step-therapy,” for PPIs and COX II inhibitors has already been implemented resulting in a $500,000 per month savings.
Mr. Duarte continued, saying certain classes of medications would not be placed on the PDL. Current exclusions include atypical and typical anti‑psychotics, anti-human immunodeficiency virus drugs, which include proteinase inhibitors, anti-retroviral, anti-seizure, anti-transplant rejection, anti‑diabetic medications, and any other drugs the PT committee removes because of patient safety issues. The PT committee will also make decisions about which types of diagnoses should be excluded for safety reasons. The independent clinical review committee will also be exclude medications for individuals who are on sensitive drug regimens.
Senator Rawson commented this policy is a move to an evidence-based formulary as opposed to a price-based one, and the DHCFP is to be applauded for developing the plan.
Assemblywoman Leslie asked for clarification on the mental health drugs that are being removed from the PDL.
Mr. Duarte reiterated the agency is removing the atypical and typical anti‑psychotic medications. He asserted the anti-depression drugs are appropriate for drug management, and the PT committee will provide assistance in this area.
Senator Rawson stated when the program was originally presented; exclusions were not made for certain drugs. He asked whether the agency will still maintain confidence in the quoted savings total by removing certain drugs.
Mr. Duarte replied the savings total would stand. Although the drug classifications mentioned for exclusions are expensive, the utilization is quite low.
E-605 Budget Reductions – Page HCF&P-24
Mr. Duarte stated in this decision unit the agency is proposing the elimination of two Medicaid services specialist positions and their associated costs. This reduction amounts to $99,487 in FY 2003-2004, and $104,310 in FY 2004‑2005.
E-710 Replacement Equipment – Page HCF&P-24
Mr. Duarte indicated this request is needed to replace equipment necessary for continued operations. It includes a high volume facsimile machine, leasing of a copier, and replacement of “power user” computers on an annual basis in accordance with the Department of Information Technology standards. It is estimated that 10 percent of the staff in each unit have “power use” computers. A 1998 Ford Escort at the Las Vegas office is scheduled for replacement in FY 2005 because the vehicle will have reached the 80,000-mile mark. The total requested in FY 2003-2004 is $21,870, and in FY 2004-2005 the amount is $25,623.
Senator Mathews inquired whether the State had guidelines for the number of miles on a car or is replacement based on the condition of the vehicle. Ms. King answered the State guideline is 80,000 accumulated miles for replacement of vehicles.
E-720 New Equipment – Page HCF&P-25
Mr. Duarte indicated this decision unit is for additional equipment to carry out training responsibilities. The amount requested is $1,016 in FY 2003-2004.
Ms. King referred the committee to tab 10 of the handout for an explanation of the estimated Medicaid shortfall of $19.4 million in General Funds. However, she pointed out, the amount will be offset by a decrease in the disproportionate share payments (DSH) in the amount of $2.8 million. A further decrease of $3 million, which is the State’s benefit from the upper payment limit (UPL) program, will also offset the shortfall. Some additional funding in the amount of $7 million is available from the intergovernmental transfer (IGT) program, which will also decrease the shortfall. She explained the $19.4 million shortfall is the amount before 3 percent budget reduction. If the 3 itemized decreases, which total $12.8 million are subtracted, and if the 3 percent budget reduction totaling $7.4 million is added back into budget account 3243, the total shortfall would be $14 million.
Ms. King said the agency will begin running the Medicaid projection program as soon as some revised figures are put together by the DHCFP, the welfare agency, and the Legislative Counsel Bureau staff on caseload estimates. Those figures will change the amount of the shortfall.
Ms. King noted the projected shortfall in budget account 101-3178 is $1.7 million. If the amount of the 3 percent budget reduction is added back into the account, the shortfall will be $510,155.
Senator Rawson asked what kind of an “if” was being referred to. Ms. King responded the current plan is to add back in the 3 percent budget reductions.
Ms. King added information received from the rural counties indicates many of them will not be able to meet the county match obligation. This shortfall will be in the amount of $713,621.
Senator Rawson asked about the graduate medical education (GME) program. Medicaid is required to pay the differential costs for teaching hospitals relating to GME. The DHCFP is under a Medicaid rate settlement agreement to reimburse the UMC for costs incurred relating to GME. The agreement stipulated Medicaid shall revise the State plan no later than July 1, 2004, to incorporate the payment of the GME program. The DHCFP is working with a consultant to develop a State plan amendment to meet the terms of the UMC agreement. According to the DHCFP, the consultant indicates GME payments to UMC could be reduced from approximately $2.3 million annually to approximately $820,000, which represents a $1.5 million saving.
Mr. Duarte answered a part of the settlement, resulting from a law suit brought in 1997 by UMC relating to GME and trauma care, required the agency to make supplemental payments. In addition, the settlement required the DHCFP to develop a new State methodology for administering the GME program. Another part of the settlement directed the DHCFP to negotiate the acceptance of the methodology plan with the UMC’s attorneys. The agency remains confident in the $820,000 figure, and believes GME is currently being overpaid. Some reasonable adjustments downward need to be realized.
Senator Rawson said the funding was originally provided to aid in the development of GME programs, and currently those programs are failing in the State. Several of the residency programs have been recommended for discontinuance. It is less expensive for the State to pay for GME programs with matching federal funds than it is to remove the funding from the General Fund.
Senator Rawson requested a meeting with Mr. Duarte and the chairmen of the subcommittee for a thorough briefing on the proposed methodology. Mr. Duarte replied a meeting would be arranged, and noted the hospital does not guarantee the funding will go into the residency programs.
Senator Rawson agreed it is understood the hospital can apply the funds to indirect costs generated by having the GME programs.
HR, HCF&P, Nevada Check-Up Program – Budget Page HCF&P-31 (Volume 2)
Budget Account 101-3178
Mr. Duarte noted the Balanced Budget Act of 1997 created the State Children’s Health Insurance Program under Title XXI of the Social Security Act to enable states to initiate and expand health-care coverage targeted for low‑income uninsured children. The Nevada Check Up (NCU) program was approved as a stand‑alone program that covers children ages birth through 18 years of age from families with income up to 200 percent of the federal poverty level. Currently, he stated the NCU program services approximately 25,000 children. There is an administrative cap applied to the NCU of 10 percent, and the agency is well under the cap. Recipients are required to pay premiums ranging from $10 to $50 based on family size.
Senator Rawson stated it appears the caseload growth seems to have reached a plateau. If that is the case, downward adjustments in the budget should be considered. If the caseload has not flattened out, the funding will have to be set aside for the NCU program.
Ms. King responded the caseload projections for the NCU program will be revised this week, because 3 more months of caseload data have been generated since the initial projections were made. There is an offsetting issue since the Covering Kids and Families Coalition grant is becoming active. One primary mission is to increase the health insurance availability to low-income women and children.
Senator Rawson stated $36.59 is the amount of premium per enrollee annually, and suggested the agency could raise the premium amount.
Mr. Duarte replied the DHCFP is evaluating the possibility of a premium increase. The agency is also developing a system to more promptly bill and record paid premiums. He explained the agency has not been able to monitor payment, and termination of eligibility for non-payment has been difficult to determine. The use of a lock-box is one of the improvements the agency has made in the last year. The lock-box eliminates the need for manual processing of small checks. An accounting system is also being developed, which will help manage the premium payments and notifications of ineligibility.
Senator Rawson indicated a low-income qualification must be met to be included in the NCU program. He acknowledged the committee is sensitive to concerns expressed that additional financial hardship might be placed on this group. There is also a sense that people should have some responsibility for meeting their own health care needs. He pointed out an increase in premium to $5 per month, from the current $3, would generate $750,000.
Assemblywoman Leslie asked the reasons the agency is currently having problems collecting the premiums.
Mr. Duarte said two factors, the mechanics of collecting and the amounts of the premium, are contributing to collection problems. The agency is dealing with a very high volume, low dollar transaction amount. The DHCFP sent out premium notices on March 1, 2003, stating if payment is not received by the end of the month, eligibility will be terminated.
Assemblywoman Leslie inquired whether the premium payment is made on a monthly or quarterly basis. Mr. Duarte answered payment is collected on a quarterly basis.
Senator Rawson asked if NCU clients could pay an annual premium instead of paying on a quarterly basis. Mr. Duarte replied no annual payment option is provided.
Assemblywoman Leslie commented that situation should be investigated to see whether annual premium payments are a suitable option to generate more funding.
Senator Rawson noted there is a concern that if an annual premium is collected, the family may become ineligible for other reasons. The agency would be unaware their participation in the program should have been terminated. Mr. Duarte answered the clients are qualified for a full year of coverage when they enter the NCU program.
Senator Rawson said the annual premium payment option should to be created.
Mr. Duarte replied the agency would investigate the possibilities of annual premium payments.
Senator Rawson stated the agency is provided some protection when it receives “bad” checks, because the clients run the risk of having their driver’s licenses or vehicle plate renewals suspended.
HCF&P Intergovernmental Transfer Program - Budget Page HCF&P-38 (Volume 2) Budget Account 101-3157
Senator Rawson stated a consultant is working with the Interim Finance Committee (IFC) to correct a funding error relating to health care. The hospitals are already being budgetarily squeezed, but it appears about $2 million will have to come out of the hospitals’ budgets for the State.
Ms. King distributed a handout entitled “BA 3157 – Intergovernmental Transfer E-501 Gov Rec – Budget Adjustments” (Exhibit D). She explained the IGT account collects monies from hospitals and counties pursuant to Nevada Revised Statutes 422.380 through 422.390 to fund hospitals that treat a disproportionate share of Medicaid patients, indigent patients, or other low‑income patients. Through the operation of the DSH/IGT for hospitals, approximately $16 million is generated to offset the cost of Medicaid. The significant reserves, which had existed in this account in prior years, have been spent down. The account can no longer provide transfers to the Medicaid account in excess of annual receipts.
Ms. King continued, saying Exhibit D is a budget modification adjustment to include the impact from the UPL program that was passed by the IFC at the February 18, 2003, meeting. Tab 12 of Exhibit C contains additional justification for this supplemental General Fund request.
E-501 Gov Rec – Budget Adjustment
Drawing attention to Exhibit D, Ms. King said that, in order to preserve access to inpatient hospital services for needy individuals, the State has entered into contracts with the counties to provide the counties supplemental hospital payments, as allowed by the federal UPL program. The supplemental payments are determined on an annual basis, and paid to qualifying hospitals on a quarterly basis. These payments do not exceed, in the aggregate, 100 percent of Medicaid reimbursement. The DHCFP has contracted with the UMC to provide 60 percent of the gross UPL payment, and rural counties will provide the non-federal share of their respective UPL payments. A matching decision unit is included in BA 3243 – Medicaid.
Ms. King added that for the FY 2003-2005 biennium, the Executive Budget estimates the IGT program will generate a benefit for the State in the amount of $17.8 million for FY 2004, and $18.7 million for FY 2005. The public hospitals and participating counties will receive $20 million in additional funds for each year of the FY 2003-2005 biennium in the form of DSH payments from the Medicaid program.
Senator Cegavske asked for the number of nursing care facilities in the State. Ms. King answered the total number of nursing homes is 42.
Senator Cegavske asked whether the agency, as the program regulators, conducts on‑site inspections. Mr. Duarte replied the agency does not do on-site inspections. The Bureau of Licensure and Certification (BLC) are the regulators.
Senator Cegavske inquired whether the agency is notified of any problems in the facilities. Ms. King responded the DHCFP is notified of any irregularities in the facilities’ operations. BLC inspections are paid from the Medicaid portion of the DHCFP funding. Both federal funds and General Fund appropriations for BLC inspections are in the DHCFP budget. BLC bills the DHCFP for payment.
Senator Cegavske inquired about the number of yearly inspections the BLC conducts at the regulated facilities. Mr. Duarte said the DHCFP does not have the information, but the agency will obtain it for the committee.
Assemblywoman Leslie asked whether the DHCFP budget would be impacted for every rate increase provided to hospitals in the future, and whether the agency has investigated alternative funding sources.
Mr. Duarte agreed, stating the agency is tied to the higher rate base, because once a rate has been given, it is very difficult to take it back. In public hospitals, he said, there is a greater dependence by physicians on Medicaid payments. The stated rate serves as the cost base in all future transactions.
Senator Rawson requested the agency’s prediction on the direction this budget will be taking.
Mr. Duarte said the agency does not know the direction public hospital expenditures will take. The assumption is the costs will increase if the economic downturn continues, as a larger portion of indigent and low-income patients will be served. Counties with public hospitals fund the General Fund portion, and there is a “hold harmless” clause. It is the responsibility of those facilities to ensure their ability to sustain themselves should this basic funding loophole disappear at the federal level.
Assemblywoman Leslie asked whether the agency has given consideration to separate reimbursement schedules for UPL hospitals and non-UPL hospitals.
Ms. King answered in October 2003 the agency will be implementing the Medicaid management information system (MMIS). The system will allow the agency to practice a far larger flexibility in payment methodology for the providers. One of the changes being made by using MMIS is billing on a per diem rate. The MMIS is not set up to use the DHCFP’s current tier payment method. MMIS has the ability to set rates that are provider-specific or patient‑specific.
Senator Rawson noted the efficiency of public hospitals should be investigated. He suggested there may be suitable private alternatives available at a better rate. Since the State has already invested large amounts of funds into a public hospital system, the private option has not been considered.
Mr. Duarte commented the traditional role of the Medicaid program has not been to evaluate hospital efficiency. An evaluation is not a popular issue, but it is one the agency intends to address. Mr. Duarte asserted that, if the agency were allowed to competitively procure all services, better pricing would be available. Private entities can often provide more cost-effective systems of care. Seeking services through private enterprises is a policy decision that needs to be made at the Legislative level.
Senator Rawson noted there have to be some limits on how much public money can be put into public facilities.
Senator Rawson asked the status of the agency’s proposal for a provider tax program. Mr. Duarte replied evaluations are still going on. He noted it is not the DHCFP proposal, but the agency does have to evaluate the impact of the proposal on agency‑funded programs.
Senator Rawson questioned whether the agency believes the provider tax would generate additional funds. Mr. Duarte said it depends on the starting point of rate-setting. The agency still has not received federal approval on the hospital provider tax, which “sunsetted” in 1994. Federal approval would be required for the proposed provider tax, and such approval may have a lengthy waiting period.
Lawrence Fry, Lobbyist, Coalition of Assisted Residential Environments (CARE), distributed a testimonial letter (Exhibit E). He stated the CARE group is in support of the Medicaid group care waiver program. It is a plan that permits stable ambulatory patients currently living in a medical setting to be transferred to a less restrictive, more independent, assisted living environment. Assisted living facilities are losing money at the present reimbursement rate, which is the reason a rate enhancement is supported by CARE. The State saves money, and the resident is in a more appropriate living environment. The group care waiver program is a positive and winning plan for all parties.
Francis Ashley, Community Liaison Director, Evergreen Nursing Home, handed out a letter (Exhibit F) in support of the expansion of group care waiver services.
About 20 years ago, she related, skilled nursing home facilities increased their functions to meet the demand for an expansion of residential homes that offered acute care. An acute hospital bed currently costs $1500 per day. The average cost for a Medicaid patient in a skilled nursing facility is $300 per day, but the Medicaid reimbursement is only $120 daily. Many elderly people who could benefit from living in an assisted living facility are not being served, because Medicaid reimbursement is inadequate to meet costs.
Dell Williams, Administrator, Silver Rose Manor, distributed a letter (Exhibit G) in support of the Medicaid group care waiver proposal. He explained Silver Rose Manor has not accepted any qualified Medicaid recipient in the last 2 years because reimbursement does not cover the care costs.
Stephen Koetsier, Administrator, Cason Valley Residential Care Center, handed out a testimonial letter (Exhibit H) in support of the Medicaid group care waiver plan. He said the Carson Valley Residential Care Center’s reward for participating in the Medicaid program is its ability to provide a desirable service to the needy elderly. The facility no longer accepts Medicaid clients, because it loses money at the current reimbursement rate.
Jon L. Sasser, Lobbyist, Washoe Legal Services, presented written testimony on the Nevada Check Up program (Exhibit I). He reported that under the Robert Wood Johnson Foundation grant, the Advocacy Committee of the Nevada Covering Kids and Families Coalition received $750,000 to ensure that every Nevada child has the opportunity to be covered by health insurance.
Senator Rawson inquired whether the suggested increase in premiums and caseload projections could be addressed from the Coalition’s perspective.
Mr. Sasser stated a new survey of Nevada’s uninsured population completed by the Great Basin Primary Care Association shows, in the group between 100 percent and 200 percent of the federal poverty level, 38,551 children remain uninsured. The survey shows some positive progress, and the Nevada Check Up program deserves much of the credit for that accomplishment.
Mr. Sasser said the uninsured rate in this group has fallen from 17.8 percent to 15.8 percent. There were some administrative issues in getting people signed up, but they have been resolved. There was a large backlog of cases that has been significantly reduced.
Assemblywoman Leslie asked for an answer to the question of increasing premiums.
Mr. Sasser replied many of the recipients could afford a slight increase in premiums. The major concerns would be adding another layer of red tape, and problems with collection of a small amount of money. He expressed concern that, if the parents “trip over” the red tape, it is the children who will remain uninsured.
Assemblywoman Leslie commented that if the agency is having trouble collecting the premiums now, more problems could be anticipated if the premiums are increased. She inquired about the possibility of offering an option of paying premiums on an annual basis.
Mr. Sasser answered the option of annual premium payments is a good alternative choice. It saves the State paperwork, and some recipients are able to pay the entire premium at one time. Making one payment relieves concern about paying future ones.
Roger Volker, Executive Director, Great Basin Primary Care Association (GBPCA), handed out a brochure (Exhibit J). He said the GBPCA supports the Nevada Check Up program and urges continued funding. The brochure is a short biographical sketch of an 8 year-old boy, who is one of the 25,000 uninsured Nevada children, receiving medical care through the Nevada Check Up plan.
Alicia Smalley, Lobbyist, National Association of Social Workers (NASW), distributed a testimonial letter (Exhibit K). She reported the letter states that, according to national data, income is one of the strongest predictors of a mental health disorder. People in the lowest socio-economic group are 2.5 times more likely to have a mental health disorder than people in the highest group. Research suggests the cost of treatment, and lack of insurance coverage are the biggest barriers to treatment. She stated NASW urges continued funding support of the Nevada Check Up program and supports provisions for people living in poverty, to have better Medicaid access.
Mr. Duarte commented rural Nevada has a serious access problem for recipients in need of the Nevada Check Up and Medicaid programs.
Stephen C. McFarlane, Ph.D., Dean, University of Nevada, School of Medicine, stated the UMC works closely with Mr. Duarte. When considering issues of health care, the UMC is affected directly or indirectly in almost all cases of indigent medical services, since it is the main provider. The UMC receives about 20 percent of its budget from the State. The remaining funds come from grants, research stipends, and fees for services. The UMC is restructuring its fees for service schedule, since from 36 to 50 percent of the expenses have to be funded through this source. There is a significant problem with the residency programs, but the programs have obtained full accreditation status for 8 years.
Senator Rawson asked about the lack of resources for the UMC. Mr. McFarlane replied salary is not a resource issue, but resources, necessary for growth and advancement so the UMC can become a fully academic institution, are not there.
Patricia K. Elzy, Lobbyist, Planned Parenthood, testified the organization fully supports the Governor’s budget for Medicaid and Nevada Check Up programs. Many recipients of these programs obtain services from Planned Parenthood clinics.
Chairman Rawson adjourned the meeting at 10:03 a.m.
RESPECTFULLY SUBMITTED:
Judy Coolbaugh,
Committee Secretary
APPROVED BY:
Senator Raymond D. Rawson, Chairman
DATE:
Assemblywoman Sheila Leslie, Chairman
DATE: