MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 18, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Wednesday, January 18, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Randolph J. Townsend, Chairman Senator Ann O'Connell, Vice Chairman Senator Sue Lowden Senator Kathy M. Augustine Senator Raymond C. Shaffer Senator Jack Regan Senator Joseph M. Neal, Jr. GUEST LEGISLATORS PRESENT: Dennis Nolan, Assemblyman STAFF MEMBERS PRESENT: Scott Young, Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Kathy Costello, President, Sierra Healthcare Options, Inc. Patty Allen, Senior Vice President, Prime Health Malcolm Weiss, M.D., President, Medical Benefit Consultants Larry Tarno, D.O., Medical Director, Silmo, Managed Care Organization Cecilia Colling, Assistant General Manager, State Industrial Insurance System Gail Sherman, State Industrial Insurance System, Chief of Benefit Services, Northern Region Senator Randolph Townsend opened the meeting with an introduction of Senator Jack Regan who replaced Senator Bernice Mathews on the committee. Testimony was given on managed care organizations. The presenters included Kathy Costello, President, Sierra Healthcare Options, Inc., Patty Allen, Senior Vice President, Prime Health, and Dr. Malcolm Weiss, President, Medical Benefit Consultants. Exhibit C was offered with testimony by the three presenters. The first to speak was Patty Allen of Prime Health. Mrs. Allen began by thanking the committee for asking them to speak. She thanked the legislators and the State Industrial Insurance for their continued diligence for trying to improve Nevada's workers compensation system. She complimented the 13 managed care organizations for being able to cooperate on the production of Exhibit C. She stated the purpose of the testimony was to give insight on the trends and operational issues that occurred when managed care was integrated with the State Industrial Insurance System (SIIS). She indicated the main goals of the organizations along with SIIS is to reduce claim expenses and stabilize the premiums while providing the highest possible care to the worker. It is very important to the managed care organizations to work in partnership with SIIS to continue to improve and fine tune the system and to educate the providers, the employers and their employees to maximize the benefits of managed care. Kathy Costello, President, Sierra Healthcare Options, Inc., presented the trends in managed care and described how they have been implemented by the managed care organizations. The trends include discounts at or below the state regulated fee schedule contracted by each Managed Care Provider (MCO) and medical bill repricing. The medical bill is sent to the MCO, the MCO compares its contracted rate with the state fee schedule, uses whichever is less, and then sends it on to SIIS. At the time the bill is received it is determined if the treatment priced has been authorized and if it is appropriate to the injury. Dr. Malcolm Weiss, President, Medical Benefit Consultants, stated quality management has been offered at all levels. "...any health care service that is provided to an injured worker is subject for our review." The goal is to protect an injured workers rights and to provide quality health care. Dr. Weiss explained under-utilization of health care is more dangerous to an injured employee than over- utilization. Their MCO makes certain treatment is appropriate. They also look at coexisting illnesses to be certain a patient receives the type of care required and to modify treatment according to the individual needs of the patient. This extra care reduces time off of work and hospital stays. He stated they review all hospital stays for medical necessity. They use manuals to formulate length of stay guidelines. They begin discharge planning on the day of admission, an important part of their treatment. They determine the appropriate post hospital care needs and strive to return the employee back to work in a reasonable and safe length of time. Advances in medical science occur at a rapid rate and constant review of treatments is necessary. Office staff is contacted regularly to make certain they fill out all needed paperwork in an appropriate and timely manner. Staff is available to the patients to answer questions about their treatment. Peer review is a strong incentive for quality and cost effective health care. Senator O'Connell asked Dr. Weiss what strides had been taken to assure light duty work for the injured worker. He stated they ask the employer to consider light duty work for the worker because it is a great morale booster and aids in the worker's recovery. He stated they communicate with their physicians and obtain job descriptions and supply those to the physicians. They ask the physician to work with the MCO to develop a light duty program for the worker. Senator O'Connell asked how widely used was this technique. Ms. Costello responded, "all the (13) MCOs agree the job of the MCO is to return the injured worker on an expedited basis to work in a safe manner." They utilize case managers who work with the employee and the employer. They are to coordinate between the principles involved. The employer is given information needed so they may make whatever accommodations are necessary to bring the injured worker back to work in a light duty position. Senator O'Connell asked if Ms. Costello felt that part of the program had been successful. She confirmed its success. Senator O'Connell invited employers to express their feelings on this approach and if it has been working for them. Ms. Costello emphasized the employers are not required to participate. Not all employers can accommodate the reduced work schedule or limitation of duties. If they can, the MCO asks them to accommodate the worker in these areas. Mrs. Allen commented education is very important. Until a worker is injured the employer may not have thought of ways of offering light duty work. Senator Neal asked for clarification of the term, "safe return to work." Dr. Weiss clarified if a patient has an infected wound it may not be safe for him to return to work in a job which required a great deal of physical exertion. Each injury dictates its own safety considerations. Senator Neal asked if the employers are informed of the conditions. Dr. Weiss responded they were. The case manager calls the employer and discusses with the employer the worker's capabilities and whether or not the employer can accommodate those capabilities to get the employee back into the work force. Senator Lowden asked if the employers have direct access to the doctors to ask questions about the employee. Dr. Weiss stated the employer could obtain information from the MCO. Ms. Costello stated she could not speak for other MCOs, but for Sierra Healthcare Options, Inc., part of the contract with the provider requires the treating provider be available to the employer to discuss the injured worker's treatment. Mrs. Allen commented, though she could not speak for all of them, most MCOs have a medical director assigned specifically for workers' compensation to help coordinate when there is a team of physicians to present the employer with a consolidated report on the employee's condition. Senator Lowden stated she had heard complaints from employers that they do not receive answers back fast enough from physicians. Employers have complained they have not been able to talk to physicians for months at a time. Mrs. Allen stated part of the problem is in educating the employer to contact the MCO who has the direct contractual and communication link with those physicians. The nurse case manager can get back to the employer quickly. It is difficult for the physician to respond because he may not know of all the treatment being given to the worker. The case manager will have the complete record of all treatments. Senator Townsend asked the committee to withhold questions until the end of the presentation. Ms. Costello stated a requirement for returning to work is "on going treatment and progress reports." The MCO has the information to supply to the employer. Dispute resolutions are required by contract. MCO staff stays in contact with the injured worker. This policy has reduced the number of disputed claims. Ms. Allen stated MCOs were given the responsibility for the enrollment process. This allows the MCOs to gain knowledge of the employer groups with whom they work and also to provide effective enrollment for SIIS so they may structure the system around the administrative costs and services through the MCO. MCOs are responsible for marketing to the employers. The employers are allowed to choose the MCO based on specific needs. Updating is done monthly to provide new employees with information on new providers and changes to administrative policies and procedures. She stated though initially cumbersome it has been effective in giving accurate information on employee status. SIIS has allowed flexibility in dealing with the small groups and temporary employees. Mrs. Allen addressed the strengths and weaknesses of the current program. SIIS and the MCOs had a monumental task in setting up communication links between the various organizations. Computer interfaces and operational descriptions progressed after the startup of the programs. They have effectively serviced the SIIS clients. Dr. Weiss stated during the first year of operations there was some duplication of effort between SIIS and the MCOs. His concern was the duplication in medical decision making. He explained how the system works. When the health care provider wants prior approval for a certain procedure, the provider gives the medical director clinical data to support that request. The medical director and a medical necessity review team composed of registered nurses and physicians reviews the requests and makes decisions based on medical considerations. Many times a decision is made by an MCO and is reversed by SIIS. SIIS has a lot of legal considerations which forces them to make their decisions, but the MCOs wish to be part of the process. They want to communicate better with SIIS so they may be able to explain to their providers why a decision was made by SIIS. Ms. Costello stated the MCOs and SIIS need to evaluate where the duplication of services occurs. There was a delay in the medical bill repricing because many of the MCOs felt the procedures required were vague and inconsistent. There was a startup delay which caused a lag in provider bill repricing. This lag problem has been corrected. Senator Townsend asked what was the standard. Ms. Costello responded the standard is at 30 days. Mrs. Allen stated during the enrollment processes each MCO requested from the employer that each employee sign a form to enroll them into the system. The enrollment form gave the employer the opportunity to educate the employee on managed care. The form also created an excess of paper work for the employee and the MCO. She felt they were working with SIIS on the improvement of this situation. She was confident things would improve. Ms. Costello stated the MCOs continued to improve their relationship with SIIS. Communication seemed to need the most improvement. Greater access to SIIS claim information was needed through their computer system. Communication between the disability and case management teams of both SIIS and the MCOs are very important. Developing policies together would greatly improve the system. Senator Shaffer asked for recommendations from the MCOs on what they could do and what the legislature could do to improve the system. He felt many of the recommendations could be addressed by the MCOs and wondered what the legislators could do. Ms. Costello stated, when working on their report, the 13 MCOs felt they needed to fine tune their processes and many of these issues could be handled contractually through SIIS. They had not come up with a list of issues which needed to be handled through the legislature. Senator Townsend complimented the presenters on the format of their testimony. He asked if the concerns expressed had been brought to the attention of Mr. Dirks at SIIS. She stated they had and that Doug Dirks, General Manager, SIIS had reviewed the document before its presentation today. Ms. Costello stated they had ongoing communications with SIIS and even though the issues presented today were not legislative, they wanted the legislators to be aware of them for future reference. Senator Townsend asked if there are impediments currently in the law or in regulation to keep the efficacy of this relationship from continuing to improve for the benefit of a party that has been injured and also to the premium payer. Some of the impediments may be over some things which the committee has no control. Senator Neal asked what the goals of the MCO were after a year in the system. He asked what the MCO sees in terms of this program as a common denominator. Is the goal of the MCO to treat as a priority, the premium payer, the injured worker, or the employer? Dr. Weiss responded their goal is to protect the rights of the injured worker and to give quality health care in an appropriate way and a timely manner meeting the best medical standards in the United States. He stated it is also the responsibility of the MCO is to do so in a cost effective way. These are the two major responsibilities of the MCO. Senator Neal stated he felt the report treated the injured worker as an afterthought. He stressed the report covers the problems with communication with SIIS and the employers. It covers the problem of returning the injured worker to work stressing which body parts are available to use, but does not seem to address the needs of the individual. Dr. Weiss apologized for the confusion, but stressed the injured worker is the major concern. The MCOs, when they compiled the report, did not feel it was necessary to elaborate on the specific needs of the worker. They are the primary concern. Senator Neal asked if the MCOs deal with the complaints of the injured worker. Dr. Weiss responded they do and they each have grievance processes which have been reviewed by SIIS. There are channels through which an injured worker may present his complaints and they are dealt with immediately. Senator Neal asked why the MCOs feel they need greater access to SIIS. Mrs. Allen stated information on the client's medical history is necessary when case managing an injury to prevent repetition of treatment. Senator Neal asked if an employee is hurt on a job how does the MCO get the information on the employee. Mrs. Allen stated there are required forms to be filled out by the provider. The provider notifies the MCO when a worker is admitted to the hospital. This is called a C-4 form. A case worker is immediately assigned to the case. Senator Neal asked about the provision for pre-authorization of a worker. Mrs. Allen responded this would only be for a non-emergency or non-urgent admission such as in the case of elective surgery. An emergency admission is reviewed retrospectively to make certain he continues to receive care. Senator Neal asked if a doctor is involved. Mrs. Allen stated a doctor was consulted. Standards are set up by the organization and can only be deviated from through medical consultation by a physician. Dr. Weiss stated the first physician involved is either the patient's own physician or the emergency physician. The MCO does not interfere with the decision made by the physician. Future hospitalization would be reviewed for the best utilization of resources. Senator Neal asked how the MCOs communicate with the various providers used. Ms. Costello stated each of the MCOs were required to provide the employers with an enrollment form and a provider list. Every employer was required to sign the form stating they understood the process. Customer service telephone lines were established. Posters were sent out to educate the employer and the employee. Seminars were conducted and a huge education program was developed for employers and employees. Mrs. Allen stated education is an ongoing process. Trends are evaluated and reviewed. Senator Neal asked how treatment was expedited, and how communication with the injured worker was improved. Mrs. Allen stated the MCO assigns a nurse case manager. The manager is responsible for making certain the physician, the provider and the employer are all aware of the treatment plan. This is done in a timely fashion. The manager and the physician expedite the treatment and stay in communication with the worker. Senator Neal asked if the testifiers felt the nurse manager was considered a friend or a foe by the injured worker. Dr. Weiss stated the manager was a friend. More care is being taken to assist the injured worker to find needed assistance. The manager tells the worker where to find the needed equipment for their rehabilitation. A claim representative visits the worker if there are any problems. Timely treatment is the major concern. Senator Neal asked how the contract proposals were presented. Ms. Costello stated the MCOs were required to submit three different options. One per employee. One per composite injury per claim. One broken down as medical versus lost time. These were part of requirements for the bid. The agencies were then allowed to pick from the proposals. Senator Lowden congratulated the MCOs on the changes they have made in the past 2 years to come into compliance with the new regulations. One complaint she has heard has been from physical therapists. Therapists have stated they are not receiving authorizations for continued treatments quickly enough by the MCOs. Mrs. Allen stated due to the wide scope of changes made during the past 2 years, there have been some administrative problems. Sometimes it is simply the provider who does not know how to use the system. Quality improvement evaluations are a part of the program to measure the performance of the staff and provider. Senator Lowden asked how doctors are selected and deleted from the lists of an MCO. Ms. Costello stated all MCOs have a credentialling process which they require each provider to go through. Quality care and competitive pricing are factors in selecting providers. Senator Lowden asked how a provider is removed from a list. Ms. Costello responded there is a process for removing someone. Overutilization of the system or lack of credentials would keep someone off the list. Dr. Weiss stated there are penalties if a provider is "de-listed." In Medical Benefit Consultants there is a specialty review committee for each specialty. There are rules for managed care. If a provider is not willing to follows those rules the review board would work to resolve the problem. The review board consists of five peers in the provider's field. Senator Augustine stated she understood the provider was not always notified of de-listing. Ms. Costello responded that the process for de-listing is very long. Mrs. Allen clarified if a physician is under review, he is aware of it. Administrative dropouts are another matter. Sometimes a doctor may leave a practice and start up a new one. He has a new address which does not get transferred. This could cause a physician to be dropped from the list and then he must reapply. Senator Neal asked why there are not more black doctors in the managed care organizations. He said the black doctors have not been invited to join. Mrs. Allen stated there are many black doctors participating. Ms. Costello concurred. They offered to send Senator Neal the list. Senator Lowden asked how disputes are resolved. Ms. Costello stated they are required to respond within a 14 day time frame. They hold a mini hearing. The case management system has lowered the incidence of disputes about medical issues. Senator Lowden stated Mr. Dirks said the appeals have increased on the SIIS side. Cecilia Colling spoke for SIIS and clarified the disputes were not medical treatment disputes but were compensation issues. Medical treatment disputes have decreased in the past 2 years. Senator Lowden asked how someone becomes a nurse case manager. Dr. Weiss said the nurses are licensed by the state of Nevada and have had many years of clinical nursing experience. They have received extra training, are board certified, and have expressed a desire to be a case manager. The nurse managers are close to the patient and communicate openly with the patient. They help keep the disputes down by being available to the patient. The nurses follow the nationally accepted guidelines for the United States. Mrs. Allen stated they encourage their nurse managers to receive extra certifications. Ms. Costello stated some of the certifications are optional because it is possible to have the experience in a specific field without the certification. Mrs Allen stressed the nurse manager shares with the physician what the guidelines are and if the physician specifies different courses of treatment then the manager reviews the treatment with the physician and the primary care doctor. They work as a team and agree to a treatment. Case management is different from prior authorization. In case management the history of the patient is discussed in detail, their home situation is evaluated, their treatment plan is analyzed, and the financial situation is clarified. Then as a team they decide what needs to be done for the patient. Senator O'Connell commented on her concerns about reopening of cases. Dr. Weiss stated the attending physician has the primary responsibility of discharging a patient from care. There are rules concerning aggravation of pre- existing conditions. SIIS decides whether a case should be reopened. Senator O'Connell asked if frequency is tracked through audits of the system. Mrs. Allen said they would like to be able to integrate SIIS's records with their records. Ms. Costello stated a difficulty for the MCO is that a worker may go through treatment, be released to go to work, then may take off again. SIIS may not consider the claim closed, but the MCO has no way of knowing the person is off again. Senator O'Connell stated a complaint she has heard is that doctors are not giving SIIS enough information on their records. Dr. Weiss said that since 1994 the record keeping requirement has strengthened. SIIS receives a copy of the record with the bill. If they find records are not complete, they will notify the doctor to make more detailed records. Senator O'Connell stressed she has had complaints from employers who feel the records are not complete enough for the appeals system. Senator O'Connell asked if there are second opinions on major surgery. Dr. Weiss stated the first line of defense is in communication between the patient and the doctor. He does not feel a surgeon would deny anyone a second opinion. Mrs. Allen stressed the patient may not be aware they may have a second opinion. The case manager should let them know their rights as a patient. The MCO does not require a second opinion. If all the criteria for surgery has not been met by the physician, then the MCO would request a second opinion. A question was asked from the audience concerning ratios of caseworkers to injured workers. Mrs. Allen stated there are no set standards. Generally the ratio is about 30 cases per nurse. Senator Townsend asked Scott Young, Research Analyst, if there had been provisions made in the last session to establish a specific ratio of caseworkers to injured workers. Mr. Young indicated S.B. 7 (of the Sixty-sixth Session) dealt with this issue. SENATE BILL 7 OF THE SIXTY- SIXTH SESSION: Makes various changes relating to industrial insurance and other rights of employees. Dr. Larry Tarno, Medical Director, SELMO, stated that as a practicing physician he felt the MCO program is working. Dr. Tarno confirmed he, too, would like to see more communication with SIIS. It takes too long for a claim to be accepted by SIIS keeping the injured worker out of work before the worker can be treated. This costs the state money to keep a worker out of work while claims are being processed. The longer a worker is out of work, the harder it is to get that worker back to work. Senator Neal asked who keeps the medical files. Dr. Tarno stated the physician has all the files and copies go to the case manager. It is important SIIS share information on preexisting conditions. Senator Lowden questioned if an injury is not an emergency or if there is question as to whether the injury occurred at work how this is handled. She also asked Dr. Tarno to expand on the term "light duty" as it pertains to the construction business. In a large business it is much easier to create a light duty job than it is in a small business. Dr. Tarno stated the employer has the option of filing an appeal against an injured worker's claim. Light duty work is not always available. In the construction industry, where there are many injuries, all work is heavy duty. He stressed each case is handled individually. Mrs. Allen clarified SIIS is the keeper of the medical records. She stated no one is denied treatment at the time of need. There is a disclaimer, however, that notifies the patient if workers' compensation does not cover the injury, the patient will be held accountable for the bill. If a person is unable to pay for the bill, the MCO will work with them to pay for the bill. Senator Lowden confirmed it is SIIS who ultimately makes the decision if the patient is qualified to receive workers' compensation. Senator Neal asked if the MCO would treat an injured worker even though they may suspect the injury is the result of a preexisting condition. Senator Townsend stated "yes." The system would make the determination whether the condition affects the injury. Mrs. Allen said if the claim is denied then other resources are used to resolve the issue. Gail Sherman, SIIS, Chief of Benefit Services, Northern Region, responded to Dr. Tarno's concerns about the length of time it takes to answer a claim. The MCOs are becoming involved very early on in the claims process. They may be aware of an injury before SIIS is aware of it. They authorize treatment out of medical necessity, which is separate from the compensability issue. The MCO may be aware of a claim several days before SIIS receives the paper work. SIIS has 30 days to accept a claim, by statute. SIIS is also required to act upon all appeals by an employer because they must serve both the worker and the employer. Senator Lowden asked if SIIS can authorize the stopping of treatment based on an employer protesting the injury was not work related. Ms. Sherman said, "no," she was referring to claim acceptance issues. The MCO sees a claim as soon as it happens. SIIS does not consider it a claim until they hear both sides of the situation and then make a determination as to whether there is a claim or not. Senator Lowden asked if people are aware they may have to pay for treatment themselves if the claim is denied, and asked if the system is losing people because they are afraid they will have to pay their own bills. Ms. Sherman stated she felt there were more claims, not less, and people are being treated. Senator Lowden asked if people received discounted bills when the claims were denied. Mrs. Allen stated they were not unless the issue was addressed by the caseworker on a case-by-case basis. There being no further business the meeting was adjourned by Senator Townsend. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 18, 1995 Page