MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
February 10, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Wednesday, February 10, 1993, in Room 207 of Cashman Field Center, Las Vegas, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Sue Lowden, Vice Chairman
Senator Ann O'Connell
Senator Mike McGinness
Senator Raymond C. Shaffer
Senator Leonard V. Nevin
Senator Lori L. Brown
STAFF MEMBERS PRESENT:
Brian Davie, Research Analyst
Linda Krajewski, Primary Secretary
Denise Pinnock, Committee Secretary
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association
Dr. Jess L. Askeroth, Vice President, Nevada State Chiropractic Association
Carol Jackson, Director, Department of Industrial Relations (DIR)
Florence Semon, R.N., Medical Unit, Department of Industrial Relations
John McGlamery, Legal Counsel, Department of Industrial Relations
Don Jayne, General Manager, State Industrial Insurance System (SIIS)
George McNally, Lobbyist, Nevada Trial Lawyers Association (NTLA)
Arthur Busby Jr., Benefits Director, Horseshoe Casino
Stan Smith, Industrial Insurance Administrator, Boyd Group/NSIA
Jim Jeppson, Administrator, Division of Industrial Insurance Regulation
Jerry Leshnick, Private Citizen
John Kendrick, Private Citizen
Gerald Samplawski, Private Citizen
Jerry Fransen, Private Citizen
Brian Rogers, Private Citizen
Senator Lowden opened the meeting by announcing a discussion of chiropractic care.
Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association, stated the chiropractic profession supports the need for reform within workers' compensation. She commended the committee for their quick action thus far.
Dr. Jess L. Askeroth, Vice President, Nevada State Chiropractic Association, testified before the committee. He reiterated the chiropractic profession's support for workers' compensation reform, and also praised the committee for their work. Dr. Askeroth proclaimed the NSCA's support of Managed Care Organizations (MCOs).
Dr. Askeroth explained chiropractic treatment and how it complements the State Industrial Insurance System (SIIS) in getting the injured worker back to work. He cited studies done regarding chiropractic care. According to Dr. Askeroth, the studies concluded that chiropractic care gets workers back to work sooner, and that it is a therapeutic treatment approach. He referred to Exhibit C, page 2, which makes a comparison between chiropractic care and traditional medical treatment. Dr. Askeroth stated that chiropractic treatment is also cost effective. He pointed out that back injuries make up 51.3 percent of the total dollars given to physicians for treatment. Dr. Askeroth favored reprimanding physicians who abuse the system. He reiterated his profession's support of cost containment, as well as support of utilization and peer review committees.
Senator Lowden asked Dr. Askeroth what percentage of chiropractors belong to Preferred Provider Organizations (PPOs) or Health Maintenance Organizations (HMOs). Dr. Askeroth responded, "...except for a few, we are all involved in some type of PPO group."
Senator Lowden pointed out that chiropractors could request tests which require pre-authorization. She asked Dr. Askeroth if he had a problem with the requirement. He said he did not.
Senator Townsend referred to testimony of February 9 regarding fee schedules of $71 set by the Department of Industrial Relations (DIR). Dr. Askeroth explained that the system has gone to a timed element basis, with each treatment assigned a unit cost.
Senator Townsend cited a hypothetical case requiring treatment and asked what the average charge would be. Dr. Askeroth responded the charge would vary somewhat from office to office, and gave an estimated range of $30 to $50. Senator Townsend asked how the DIR arrived at the fee of $71, expressing confusion over the different rates charged for the same treament.
Ms. Tyler explained that her profession has looked into this issue, and they wondered whether fees should be charged in a flat-rate manner. She said there is "a difference, obviously, between maintenance care and emergency trauma care, but I'm sure that you're fully aware that a lot of those billings you've seen are not necessarily an emergency situation." She expressed a desire to work with the committee to solve these problems.
Senator Townsend asked if utilization review has national or state standards with which to measure a chiropractic physician's behavior. Ms. Tyler responded affirmatively.
A discussion of the medical fee schedule followed. Carol Jackson, Director, Department of Industrial Relations, (DIR), referred to Exhibit D, and explained how the 1993 medical fee schedule was calculated. She said there were no codes established for chiropractors or physical therapists. The actuarial firm recommended DIR use the conversion factor of $5.73 and establish unit values, she said, explaining how the DIR arrived at the $71.62 per hour maximum rate.
Florence Semon, R.N., Medical Unit, Department of Industrial Relations, gave further explanation of the maximum rate and how unit values are established.
John McGlamery, Legal Counsel, Department of Industrial Relations, said the law states a physician must get his normal rate or the medical fee schedule, whichever is less. The fee schedule is only the maximum, or the cap, he explained.
In answer to a question from Senator Townsend, Ms. Jackson said that under managed care the rates should be lower than the maximum rate. She thought the fee schedule now in place should remain, until DIR is directed to do another one. Ms. Jackson added that DIR is considering adopting the schedule used by the Medicare/Medicaid systems.
Don Jayne, General Manager, State Industrial Insurance System (SIIS), testified about the medical fee schedule, which SIIS regards as a ceiling under which the competition would compete. Mr. Jayne thought competition could exist well, under the current fee schedule, depending on the type of networks SIIS would be allowed to contract with. He concluded that reduction in fees would be a welcome bonus, but the reduction of lost time claims would be even better.
Senator Townsend asked Mr. Jayne if rural areas would be able to get high quality care.
Ms. Jackson responded that DIR is currently checking for quality in the rural areas, and has discussed the possibility of certifying or decertifying MCOs. In response to Senator Townsend's question, Ms. Jackson said she and Terry Rankin, Commissioner of Insurance, State of Nevada Department of Insurance, have discussed the Governor's Reorganization Plan in regard to the possibility of combining DIR and the Department of Insurance. They discussed elements each would want in an MCO, i.e., peer review.
Mr. Jayne elaborated on the issue of quality rural care.
In response to Senator O'Connell's question of cost sharing, George McNally, Lobbyist, Nevada Trial Lawyers Association (NTLA), expressed concern about the equity of deductibles to be paid by employers and employees. "With regards to the issue of liability, ... on an employee participating in a deductible plan for workers' comp (compensation), I could give you probably 3 days' worth of comparing first-party benefits to third-party benefits under just a typical insurance contract," he said. Mr. McNally explained that injured workers are now regarded as third-party beneficiaries, between SIIS and the employer. He stated, "The employee pays no deductible, no premium assessment...but they are a beneficiary of that contract of insurance. If an employee then comes in and is required to make some type of a deductible contribution, there may very well be some shots at piercing the exclusive remedy protection that's out there."
Senator O'Connell asked if any other states have a strictly state-protected exclusive remedy. Mr. McNally said he knows of no state that has employee deductible programs currently in effect.
Mr. Jayne said SIIS has been concerned over this issue, and subsequent research convinced them not to advance an employee deductible. SIIS is continuing the research, he said, intending to formulate an official opinion on the issue. He added that they are specifically looking at what other states are doing.
Mr. McNally commented that, "Any time you get into the realm of participation by various parties and into an insurance contract,
that leads to the potential... third party cause of action." He elaborated on this situation.
Arthur Busby Jr., Benefits Director, Horseshoe Casino, Las Vegas, testified regarding workers' compensation in New York, a no-fault state. He cited two states which allow employee deductibles, if the employee wants to go outside the managed care system.
Senator Townsend expressed the concern, "If you go outside the selected panel, and there is a deductible, would that pierce the single remedy theory?" He mentioned Washington State's handling of this issue.
Stan Smith, Industrial Insurance Administrator, Boyd Group, addressed the committee regarding Permanent Partial Disabilities (PPDs). He expressed concern about the rotating list of physicians. Mr. Smith recommended that Nevada Revised Statutes (NRS) 616.539 be repealed. He also proposed changes in NRS 616.605 (Exhibit E), and referred to the expenditures graph in Exhibit E.
There was general discussion on whether a doctor could be purged from the rotating list. Mr. Smith was worried about the system "having to go to the rotating list on March 1st." He said it is time consuming to go through the Division of Industrial Insurance Regulation (DIIR).
Jim Jeppson, Administrator, Division of Industrial Insurance Regulation (DIIR), stated that the list of rating physicians is maintained by DIIR, and explained how a physician can be purged from the list. He added that no physician has been removed in the past couple of years. Mr. Jeppson said DIIR is not currently testing physicians to add to the rotating list, because of some disagreement with the American Medical Association (AMA) guidelines. He expressed his opinion that the current list is inadequate to meet the needs of the State of Nevada.
Senator Lowden expressed a concern of the committee that with the willing provider language, they will get doctors in managed care who are not qualified to be on the rotating list.
Mr. Jeppson responded that DIIR has "waiting in the wings" the American Academy of Disability Evaluating Physicians. He explained that this group is prepared to help the State of Nevada set up training, testing and certification programs for any physician who wants to qualify as a rating physician. Mr. Jeppson added that they are willing to do this only if DIIR agrees to adopt the most current edition of the AMA guidelines.
Mr. McGlamery explained to the committee that DIR does have a process for removing a physician, but no one has come to them with a complaint about the quality of care.
Senator Townsend requested that Mr. Jayne get specific information for the committee regarding this issue.
There was further discussion of rating methods. Mr. McGlamery compared the method the State of Nevada uses to rate physicians, with that of other states. Senator Townsend reiterated his request for information regarding other states, "...We even contemplated saying that Nevada will rate people based on what the average is of all the surrounding states... We apparently can't do that, because we rate differently."
Mr. Jeppson explained how DIIR would do a rating in a managed care environment, in response to an earlier question by Senator Townsend.
There was further discussion regarding the rating issue. Mr. McNally discussed the problem of "getting to that percentage (of a PPD), and in each state it's very different." He gave examples of the disparity between states' rating methods. Mr. McGlamery expressed his opinion, "... the one fallacy with the loss of earning capacity is that is an area ripe for litigation. It's a real problem in other states, too." There was further discussion on this issue.
Senator Brown favored the rotating list concept. She said she thought the function of such a list was to eliminate bias of an employer or an employee. Mr. Jeppson affirmed that original purpose, "although right now it only applies to the insurers."
Senator Lowden reminded the committee that a consensus group would be formed, consisting of DIR, self-insurers, NTLA and SIIS, to decide how ratings will be handled, regarding managed care.
Senator Lowden recessed the meeting for a break at 10:05 a.m. The meeting reconvened at 10:40 a.m.
Jerry Leshnick, Private Citizen, testified with a narrative of
his association with workers' compensation, as a former SIIS accountant, and as a current claimant. He stated that managed care should be managed by SIIS, and not by outside providers. Mr. Leshnick objected to a closed panel system.
Senator Lowden explained the problems SIIS is having with claims management. She also commented on the willing provider language in Bill Draft Request (BDR) 53-1764.
Senator Brown also commented on the inability of SIIS to manage claims, with the current caseload and staff size. She added that monetary provisions have been proposed to enable SIIS to hire more people.
Mr. Leshnick explained the problems he had encountered as a SIIS employee. He did not think that adding staff would help. Mr. Leshnick praised Mr. Jayne's efforts with SIIS, and said Mr. Jayne needed to be able to operate SIIS as a "truly risk-pooling entity" to be most effective. He recommended a "fast-track program" to handle the 20 percent of the claims which he said carry 80 percent of the expenses.
Mr. Leshnick cited other areas of concern, i.e., enforcing regulations against the uninsured, and against SIIS for areas of non-compliance, getting attorneys involved, procedures for reporting fraud, mandatory generic drug use, physician fee schedules, the net pay issue, the 3-year reopening restriction, etc. Mr. Leshnick referred to the Proposals Approved for the Committee's BDR 53-1764 (Exhibit F). He also commented on the hearings and appeals process.
Mr. Leshnick said he favored a two-way system over a three-way system, and objected to smaller groups banding together to form larger groups for the purpose of self-insuring. He concluded his remarks with opinions on other areas of Exhibit F, and suggestions for improving SIIS.
John Kendrick, Private Citizen, addressed the committee. He offered his thoughts on the proposals regarding SIIS. Mr. Kendrick stated that the system needs to prevent job-related injuries, and to provide more incentives for employers and employees not to use the system. He offered examples of weaknesses of the system.
Senator O'Connell explained managed care and case management, the "two sides of a coin," to Mr. Kendrick. She thought that case management was not working within the system, because of the overwhelming number of cases currently being handled by SIIS.
Mr. Kendrick inquired about areas of prevention. Senator O'Connell replied that the committee has focused on safety issues since 1991.
Gerald Samplawski, Private Citizen, testified before the committee. As a current SIIS claimant, Mr. Samplawski discussed the problems he has encountered within the system, i.e., a shortage of staff, involvement with litigation, inefficiency and waste. He expressed concern about the reopening restriction, and was reassured by Senators Lowden and O'Connell that extenuating circumstances would be considered. Senator O'Connell asked that the proposal be reworded to specify the intent of the committee in this regard.
Mr. Samplawksi concluded his remarks with a suggestion that cases be reviewed on a regular basis. Senator Lowden assured Mr. Samplawski that the committee is addressing the problem of caseload size.
Jerry Fransen, Private Citizen, testified regarding waste and abuse by doctors and gave a specific example.
Brian Rogers, Private Citizen, addressed the committee regarding his concern with the length of time it takes to see a doctor and get a claim approved. He related his own experience with this.
Senator Lowden explained utilization review, in answer to Mr. Roger's concerns. Senator Brown stated that the length of time it takes to process a claim should be considered in utilization review legislation. Mr. Smith stated that his managed care organization requires that a doctor see a claimant within 5 days.
There being no further business, Senator Lowden adjourned the meeting at 11:35 a.m.
RESPECTFULLY SUBMITTED:
Sheri Asay,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
February 10, 1993
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