MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 25, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Wednesday, January 25, 1995, in Room 119 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 John B. (Jack) Regan Senator Joseph M. Neal, Jr. STAFF MEMBERS PRESENT: Beverly Willis, Committee Secretary DeLynn Gillentine, Committee Secretary Scott Young, Senior Research Analyst OTHERS PRESENT: Marsha Berkbigler, Lobbyist, Nevada State Medical Association Charles F. McCuskey, Jr., M.D., President, Nevada State Medical Association (NSMA) Frank Nemec, M.D., Nevada State Medical Association (NSMA) Donald D. Van Dyken, M.D., President, Nevada Academy of Family Physicians Larry Matheis, Executive Director, Nevada State Medical Association Robert Schreck, M.D., President Southern Nevada Family Physicians Douglas Dirks, General Manager, State Industrial Insurance System (SIIS) Gayle Sherman, Chief, Benefit Services, State Industrial Insurance System (SIIS) Jan Myers, Director, Northern District Manager, Industrial Insurance Regulation James Tate, M.D., Chief of Surgery, University Medical Center, Las Vegas Chairman Townsend opened the meeting, noting the meeting would be teleconferenced with Las Vegas. Marsha Berkbigler, Lobbyist, Nevada State Medical Association, opened by introducing several people who planned to testify. First to testify was Charles F. McCuskey, Jr., M.D., President, Nevada State Medical Association (NSMA). Dr. McCuskey stated his organization had been asked to provide a summary of physician's experiences with workers' compensation. NSMA was asked to provide specific recommendations to address any problems identified. Dr. McCuskey presented Exhibit C. Senator Townsend then called for those who might be representing a Managed Care Organization (MCO) if they would care to respond to Dr. McCuskey's testimony. Senator Townsend went on to say he would expect a response to the document within 24 hours. Senator Neal noted he was concerned about the lack of response to a survey noted in Exhibit C. Dr. McCuskey stated there were probably several reasons. One would be, there are so many forms to be filled out, some doctors simply may have ignored the survey. Another could be, certain specialized doctors would have no experience or reason to fill out the survey. Senator Neal went on to state he had concerns regarding two groups of people (the physicians and the injured worker) who could be hurt and felt Dr. McCuskey's report upheld his concern. Senator Neal went on to express other concerns he had regarding MCOs. Senator Neal and Dr. McCuskey had a detailed discussion regarding other problems with which both were concerned. One important concern Senator Neal had was the process of deslection of doctors from panels. At this time Frank Nemec, M.D., Nevada State Medical Association (NSMA) speaking from Las Vegas, commented on Senator Neal's question regarding deselection. Dr. Nemec related an incident of which he had personal knowledge. Dr Nemec stated in this particular incident according to the MCO, the decision for deselection was arbitrary. Dr. Nemec went on to state the only reason he could give as far as why the MCOs charged doctors to be on the panel was "that they could." Dr. Nemec noted he felt that more and more patient care is being replaced by paper care which entails a tremendous expense to the doctor's office and the MCO. Senator Lowden asked if the MCOs who were charging or might be involved in deselection process could possibly be new to the system. Dr. Nemec stated the example he had of the arbitrary deselection process was from a new MCO. Senator Lowden then asked what sort of fees were charged by the MCOs. Ms. Birkbigler responded by stating some charged nothing, although some fees were around $600. Senator Lowden requested a list of MCOs who were charging and what the fees were. Donald D. Van Dyken, M.D., President, Nevada Academy of Family Physicians, noted to Senator Lowden, MCOs require from 5 to 20 percent of the Division of Industrial Relations (DIR) rate of physicians and he felt this would have to be considered part of the fee schedule. Dr. Van Dyken presented Exhibit D. There was further discussion between Senator Lowden, Dr. Van Dyken and Dr. Nemec regarding the cause for delayed payments. In answer to the question from Senator Neal regarding the beneficial use of MCOs, Dr. McCuskey replied he found a very limited beneficial use of MCOs. Dr. McCuskey went on to elaborate and gave several examples. Dr. Van Dyken replied he felt the concept of an MCO should be two pronged. The primary thrust would seem to be cost containment. Dr. Van Dyken went on to state a secondary benefit should be to better patient care. At this time Dr. Nemec gave further views regarding the MCOs. Next to testify was Larry Matheis, Executive Director, Nevada State Medical Association. Mr. Matheis noted because of intervention by the state, patients are obligated to use the plan to which they are assigned. He went on to say, the law has already directed the only way service can be delivered to someone who is injured or gets ill on the job, is through an assigned organization. Mr. Matheis continued with his thoughts regarding remedies when the state intervenes and there are few controls. Senator Lowden remarked her responsibility was to make the State Industrial Insurance System (SIIS) act like a business. Mr. Matheis replied stating "we don't disagree at all. The difference is if it were a business, it would have competition." After further remarks, Mr. Matheis reiterated his comments regarding intervention and the fact this intervention can cause an imbalance which should be addressed. A detailed discussion between Senator Augustine and Mr. Matheis regarding corrections and protections needed to correct the imbalance. Senator Shaffer related several incidents of overutilization in the workers' compensation system. Dr. McCuskey responded if a patient says he or she hurts, the doctor probably feels obligated to respond accordingly. Senator Regan wondered if defensive medicine might play a role in overutilization. Dr. McCuskey replied in the affirmative. Senator Townsend questioned Dr. Van Dyken regarding his remarks that "if the system and MCOs worked as well as self-insured do, he would beat a path to their door." Senator Townsend asked if Dr. Van Dyken felt the system was the problem and not the MCOs. Dr. Van Dyken responded it was the input of his constituents that working with self-insured plans seems to be easier and smoother and turnaround time for reimbursement seems to be shorter than is experienced with the state plan. Senator Townsend stated he felt many of the problems may be caused by a lack of communication. Senator Townsend continued his comments referring to Exhibit D. Senator O'Connell asked Dr. Van Dyken to give the committee information regarding duplication of paperwork as opposed to practices in the past. Senator O'Connell also asked for information on timelines and things he might be doing now. Dr. McCuskey stated it varied. Senator Regan asked for a clear definition of problems existing, stating he felt this was extremely important. Dr. Van Dyken stated "family doctors provide care for the entire family and would like to continue to do so." Dr. Van Dyken set forth some major points brought to him by constituents, in the order of their importance. Primary was the paperwork hassle. Secondarily, reimbursement problems. Thirdly, lack of timeliness in reimbursement. Fourth, "the $1,000 fine." Fifth, the evaluation and management functions of physicians. Dr. Van Dyken stated members of his organization felt there was disincentive for good case management at the level of the physician with an overabundance of rewards for procedural as opposed to clinical evaluation skills. He went to state it was difficult to get approval for diagnostic tests and referrals to specialists, when needed. Dr. Van Dyken noted the members of his organization see an increase in the costs of providing care, while getting a discounted rate of reimbursement. Often the patient, or the supervisor are not sure by whom they are covered. Dr. Van Dyken then gave an example of what happens when one of his constituents sees an injured worker. Dr. Van Dyken also noted there was a real problem with slow payment. At this time, Dr. Van Dyken gave several quotes from constituents regarding the approval process of speciality referral or additional diagnostic tests. Other problems were discussed at great length. The requirement that providers must subscribe to a publication that gives coding numbers for individual medications, poses another problem (Exhibit E). These codes must be used in order to be reimbursed. Senator O'Connell and Senator Regan asked for further clarification from Dr. Van Dyken regarding these various problems. Senator Neal, Dr, Van Dyken and Mr. Matheis reviewed the evaluation process, in particular regarding the Permanent Partial Disability (PPD) i.e. the general practitioner versus the specialist. Mr. Matheis noted the state has not adopted the current evaluation guide. Senator Lowden wanted clarification regarding the $1,000 fine. Dr. Van Dyken replied that by not returning paperwork within 3 days, there is a threat of up to a $1,000 fine. Senator Lowden went on ask if any of the doctors present, either in Carson City or Las Vegas were qualified evaluation doctors. Dr. McCuskey stated it was his understanding any doctor could do disability ratings. Senator Lowden posed a question regarding the final judgement in an appeal between a specialist and a general practitioner. Dr. Robert Schreck, President, Southern Nevada Family Physicians, testified from Las Vegas. Dr. Schreck noted many of his thoughts had already been covered, however, he did want to comment on the disruption of the doctor/patient relationship caused through the MCO system of the new workers' compensation system. He also commented on discrimination against physicians with whom he was personally familiar. Senator Neal questioned Dr. Schreck on "how important is the continuity of care." Dr. Schreck replied "very important," noting without continuity it is much easier for mistakes to be made, costs can escalate and quality of care to patients is not as good. Senator Neal questioned the physicians present regarding their experience with pre-existing injuries. Dr. McCuskey answered stated this was common and a very complex problem. Douglas Dirks, General Manager, State Industrial Insurance System (SIIS), gave an overview of items heard previously during this meeting. Mr. Dirks went on to explain the relationship of SIIS with an MCO. He stated there is another contract between the MCO and the providers. Mr. Dirks, responding to a statement by Senator Townsend regarding bureaucracy and paperwork, stated steps were being taken to alleviate some of the paperwork by embarking on an imaging process. Senator Townsend reminded Mr. Dirks the imaging process had been put into motion by the committee. Mr. Dirks then introduced Gayle Sherman, Chief, Benefit Services, State Industrial Insurance System (SIIS). Ms. Sherman clarified documents that are new as a result of the MCO program. Senator Townsend made the comment everyone needed to be thinking about cutting down on paperwork. Following Ms. Sherman, Jan Myers, Director, Northern District Manager, Industrial Insurance Regulation was next to testify. Ms. Myers gave further information regarding new documents. James Tate, M.D., Chief of Surgery, University Medical Center, Las Vegas, testified from Las Vegas. As a trauma surgeon, Dr. Tate related a frustrating situation regarding one of his patients who has not been able to have hospital and surgical bills paid by an MCO because of lack of prior authorization. Dr. Tate stated all of the trauma surgeons, in Las Vegas, have had an identical problem with MCOs, since the program began. Dr. Tate went on to say "we are in a very precarious situation; we don't have any choice, we have to treat the patient, clearly we want to treat the patient, but we are not being paid after we render the case." Senator Lowden stated she had asked MCOs in a previous hearing and the committee was assured that emergency situations get taken care of and no pre-authorization was necessary. Senator Lowden noted clarification was necessary. Senator Neal asked Dr. Tate for elaboration regarding the acceptance of black doctors to MCOs. Dr. Tate replied there had been multiple problems, in particular with primary care physicians, being accepted into the MCOs. Dr. Tate went on to state, MCOs will accept one or two family practitioners who may be much less expensive, but when it came to specialists, the usual answer would be they have all the people needed in that particular specialty. Dr. Tate stated there was definite lack of acceptance on the part of many MCOs regarding African American physicians. Senator Townsend stated there would be other meetings for these issues. There being no further business, the meeting was adjourned at 10:50 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 25, 1995 Page