MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 26, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, January 26, 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: Assemblyman Dave Humke STAFF MEMBERS PRESENT: Scott Young, Senior Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Edward F. Barnard, P.T., President, Nevada Physical Therapy Association David Rovetti, D.C., President, Nevada State Chiropractic Association Gary Whitehead, M.D., Vice President, The Cooperative Association of Chiropractic Physicians Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association Kim Hubbard, Receptionist, Mt. Rose Chiropractic Association Lawrence R. Davis, M.D., President, Nevada Chiropractic Association Valerie Hawkins, Office Manager, Davis Chiropractic Martin P. Rutherford, Vice President, Nevada Chiropractic Association Paula Berkley, Lobbyist, Nevada State Board of Chiropractic Examiners Wayne Colwell, President, Minerals Processing and Environmental Laboratories, Inc. (MPEL) John Sabatini, Great Basin Labs Edward F. Barnard, P.T., President, Nevada Physical Therapy Association, presented Exhibit D, a commentary on Managed Care Organizations (MCOs). He stated a difficulty the physical therapists are having is with the authorization process. A memo from an MCO he received stated "...they would authorize only five treatments at a time no matter what..." One point he wanted to present was the decrease in workers' compensation cases this year. He knows of a physical therapist in Washoe County who is on six of the seven panels, but has had a 90 percent decrease in her workers' compensation cases. It appears to the members of the association, that the MCOs who have clinics within their systems are sending the patients to their own clinics first and then referring the overcapacity to outside clinics. This allows an MCO to be paid both for managing a case and for providing the treatment. He stressed the need for a prohibition of directed referrals. He emphasized a common practice, especially in the building trades, is to automatically deny a claim. This causes problems for the injured worker while they wait for authorization and an investigation into the accident. The MCOs need to communicate better with the State Industrial Insurance System (SIIS) about claims acceptance rules, procedures, and guidelines. Senator Townsend directed Scott Young, Senior Research Analyst, to obtain statistics on the "length of stay" during the past year which is crucial to the solvency of the system. Senator Neal read from Exhibit D. Dr. Barnard explained the practice of setting arbitrary time limits for physical therapy treatment does not address the nature of the injury. Each case is individual and has to be treated as such. Guidelines and standards need to be developed. Physical therapists need to be a part of the development of the guidelines. A physical therapy consultant in the peer review process would be helpful. Streamlining an investigation will benefit the claimant and the employer by resolving the issues before more damage is done. It is not unusual for cases to remain in limbo for months where the injured worker cannot obtain treatment because of the paperwork slowdown. In response to Senator Neal's question regarding referrals, Mr. Barnard described the 90 percent decrease in another physical therapist's practice due to direct referrals by MCOs to their own physical therapists instead of allowing free choice by the injured worker. He stated in Washoe County four of the seven organizations who provide managed care are also care providers. Mr. Barnard stressed the need for streamlining the billing procedures and for computerizing the procedures. Private companies seem to be much more efficient than the state system. He stated there seems to be a confusion over the roles of SIIS and the MCOs. Form management is a problem. Each MCO has developed forms for their use. They are all different and it is very time-consuming and frustrating to work within this system. One system for all would be much more efficient. MCOs negotiate discounts on the rates, then they require that discount be taken from the fee schedule. SENATE BILL 316 OF THE SIXTY-SEVENTH SESSION: Makes various changes to provisions governing industrial insurance. Gary Whitehead, M.D., Vice President, The Cooperative Association of Chiropractic Physicians addressed the committee: I'd like to take a moment to thank the committee for the dedication it has shown in the past several sessions in attempting to solve the problems associated with this multi-faceted and highly complex problem. In 1993 when S.B. 316 [of the Sixty-seventh Session] the chiropractic profession, like pretty everyone else in the state, recognized that the State Industrial Insurance System was on the verge of bankruptcy. Consequently, as a profession, we welcomed the opportunity to work in good faith with the members of this committee and the assembly labor and management committee in an effort to become part of the solution and not just part of the problem. We understood that the concept of managed care was upon us in 1993 and we felt then, and continue to now, that chiropractic care goes hand-in-hand with the goals which you have been diligently working towards achieving. Chiefly, that injured workers in our state are entitled to appropriate and effective health care and that health care must be delivered in a cost effective manner. It also must strive to maintain the workers productivity in an effort to further reduce the individual cost of claims. Historically speaking, in the mid 1980s and early 1990s the chiropractic delivery system, that the previous State Industrial Insurance System [SIIS], had clearly broke down. Overutilization became more prevalent as utilization management became more difficult. Utilization review nurses employed by SIIS poorly understood what reasonable and customary chiropractic care was and were at a loss to adequately judge whether that care was appropriate or not. The chiropractic advisers that SIIS hired were, frankly, overwhelmed by the sheer number of cases of claims that they needed to review. Chiropractors who suggested or sought second opinions from other medical practitioners and other specialists, or even the State Industrial Insurance System itself, rarely, if ever, saw those patients return to them even when conservative care was deemed necessary and appropriate. That practice in itself, further fostered the overutilization that occurred. Myself and a handful of other chiropractors recognized that tendency back in 1987 and therefore we created and developed the Cooperative Association of Chiropractic Physicians (CACP). CACP is Nevada's largest, nonprofit chiropractic Preferred Provider Organization (PPO). It was designed to provide employer groups, union groups, and third party administrators with a means of obtaining quality chiropractic care at contracted rates and to provide service that was rarely done back in 1987 and that was to provide peer to peer utilization review which in our case has been extremely successful in reducing the overutilization of services. In the past 7 years CACP has administered contracts to provide chiropractic care to over 110,000 Nevadans on both the private health care insurance and workmen's compensation side. However, essential to CACP's utilization management, is the ability to make adequate and timely referrals to other health care providers without concern for losing control or at least an ability to remain part of the health care team. That team effort in treating individual claimants is actually the strength of the managed care system. Managed care takes a team approach to treating that individual. You have case managers working with doctors, working with utilization review people to make certain that individual worker is getting the appropriate and proper care. There is a problem in the current MCO system, however, and that is chiropractors are not part of the team. We are not allowed in the game at the present time. The current managed care organization gatekeeping system has essentially benched my profession. That has occurred despite the fact that in the last 15 years there have been no less than six government-funded studies that have concluded that chiropractic care is safe, effective and extremely cost-efficient with respect to treating back and muscular skeletal injuries, often saving as much as 30 to 50 percent on both the treatment and disability costs. I have the references of those six studies. My profession has been benched from treating in the workmen's compensation market despite the fact, in 1988 a Florida study partially sponsored by the Florida Department of Labor and Employment Security, states, and I quote, `A claimant with a back related injury when initially treated by a chiropractor versus medical physicians is less likely to become temporarily disabled and if disabled is likely to remain disabled for a shorter period of time.' Chiropractic has been excluded in the current MCO market despite the fact a prestigious study done by the Ontario Ministry of Health in Ontario, California, has stated and I quote, `There is an overwhelming body of evidence indicating chiropractic management of low back pain is more cost-effective than medical management.' I need not remind this committee that back related injuries comprise about 50 percent of the workmen's compensation injury problem. And I'm certain those numbers were instrumental in this committee's opinion during the last legislative session that chiropractors should remain portal of entry physicians with respect to these types of injuries. Stephanie [Tyler] has prepared for the committee several areas of S.B. 316 [of the Sixty-seventh Session] that have broken down in this regard. Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association, began her presentation with a discussion of S.B. 316 of the Sixty-seventh Session, section 140, paragraph 3. She presented Exhibit F (BPA Managed Care Organization). Page three of the exhibit gives a list of facilities from which the injured worker is to choose. Senator Townsend asked if BPA lists clinics and practitioners. She stated they have both. Senator Townsend asked Scott Young, Senior Research Analyst, if the system has the authority to review the documents, referring to Exhibit F, before they are sent out to assure they are in compliance with the law. Mr. Young replied the system reviews all the advertising and the enrollment forms used by the MCOs. Ms. Tyler discussed Exhibit E (a letter from SIIS, notice, and a letter from the Nevada Legislature, dated September 27, 1994). Senator Augustine asked how many referrals were received from a physician to Dr. Whitehead's practice. Dr. Whitehead responded: In the chiropractic market, senator, we are primary portal of entry on every other level, currently. Therefore, although a small percentage of my practice is based on physician referrals, and I do get numerous referrals from medical practitioners and other specialists, the overwhelming majority of the patients that I see are either directly referred to me by other patients, or off of other provider lists, for other PPOs and [Health Maintenence Organizations] HMOs that I currently provide services for, so access to me via a provider list is extremely important in today's health care market. Senator Augustine stated he was suggesting he would be the primary care provider. An injured worker would go to his office rather than to an osteopath's office. Dr. Whitehead responded: That has always been the case to my knowledge in the State of Nevada, at least since I have practiced here since 1981. Injured workers have had the right to seek my services directly. Ms. Tyler continued with her presentation of the exhibits and referred back to Exhibit E, paragraph 3. She explained "gatekeeping" as the "practice of guiding, directing, or steering care either through a group or a single health care provider before they can reach, for example, a chiropractor." She presented Exhibit G (Workers' Choice, Provider Network by Coordinated Care Options of Nevada) and Exhibit H (Workers' Choice, Provider Network by Coordinated Care Options of Nevada). She emphasized, though they have the same title, they do not contain the same information. Exhibit G is sent to the health care provider which is on the MCO. Exhibit H is sent to the employer. Exhibit G is 16 pages long and she indicated page three lists chiropractors. Exhibit H does not contain page 3 and is only 6 pages long. These lists were sent to the same doctor, Exhibit G when he signed on as a health care provider, and Exhibit H when he decided to enroll his staff as an employer. She emphasized these are SIIS MCOs, not self-insurers. Senator Townsend asked if Ms. Tyler had inquired of Coordinated Care Options of Nevada why there are two lists. David Rovetti, D.C., President, Nevada State Chiropractic Association, stated he is one of the members on the list, and because he anticipated a great inflow of patients from the group, and because he received no patients during the first months, he called an MCO, Coordinated Care Options of Nevada. They stated they felt there was an unwritten understanding that for the first 6 months, patients could go to any doctor they chose. He stated: So they thought they could get a little more control over the patients having them go to the medical doctors first before they went to the chiropractors. But they tried to settle my need by saying that there is pretty much a good understanding between SIIS and that for the first 6 months since everything [is] in flux, that patients will be able to go anywhere they want to... Senator Townsend asked if the person representing the MCO, Dr. Rovetti spoke with, stated it was SIIS's determination that everyone could still go wherever they wanted and therefore they were directed to the medical portion of the list. Dr. Rovetti stated, "...it was the MCOs decision to focus everyone on the medical gatekeepers to gain control, whereas SIIS would have been less control." Senator Townsend stated, "Would [SIIS or MCOs] have allowed people to pick from the panel as was the wish of the legislature." Dr. Rovetti stressed the conversation he had with the person from the MCO did not make a lot of sense so he had a hard time explaining it to the committee. Senator Townsend directed Mr. Young to contact Coordinated Care Options of Nevada to ask the reason for two lists. Ms. Tyler discussed peer review and utilization review. She referred to S.B. 316 of the Sixty-seventh Session, section 77, subsection 3, paragraph (c), subparagraph (3) specifically states independent evaluations will be done peer to peer. She stressed it is difficult to have a medical doctor, a nurse, or a clerk to make decisions as to what is appropriate chiropractic care. Ms. Tyler stated there was a 41 percent drop in chiropractic care during fiscal year 1993-1994 for the first 6 months of the MCOs going into effect. She read from a letter by Douglas Dirks, Assistant General Manager, Administrative Services Division, SIIS. ...in addition the research found that each MCO provides a summary sheet to providers through their employers. This summary appears at the beginning of the completed provider list and usually provides names and locations of emergency centers only. But does not include all specialties. Injured workers use the summary list to choose medical care and chiropractic rather than going through the entire directory. It is possible that other specialties could be overlooked because of these limited lists. Ms. Tyler stressed it appeared SIIS has made an attempt to control the problem, but she said, "...the reality of practice still exists." Dr. Whitehead concurred by stating: To piggy back what Stephanie [Ms. Tyler] just stated, last week Doug Dirks, the new general manager of SIIS, did tell you there was a greater than 40 percent decrease in the number of workers being treated by chiropractic physicians during the fiscal year that ran from 1993 through 1994. If that decrease is reflective of improved case management, then the system is truly efficient. But if that drop in chiropractic claims is a result of injured workers being unable to choose the non-invasive, cost-effective chiropractic care that myself and my colleagues provide, then what we seem to have is an injustice to both the people of Nevada or the injured workers of Nevada, and my profession as well. In my opinion, managed care can work. I have seen it work through CACP even though this is just a microcosm of what the broader and bigger problem is. It can cut costs and provide quality and effective care. To date the State Industrial Insurance System has proven that it can cut medical costs. I believe according to what I received in mail the other day, the medical portions of the claims are down from $152 million to $99 million. But in my opinion, they have done that at the cost of the quality and the availability of care to those who are entitled to it, who deserve it, and who need it. In 1993, the legislature passed a very broad bill dealing with many different issues and problems relating to workmen's compensation that namely being S.B. 316 [of the Sixty-seventh Session]. As you know, regulations are generally promulgated to be the day-to-day guide to make law, and especially a broad law, workable in daily life. Very little of that has been done to this point and a good deal of the legislative intent of S.B. 316 [ of the Sixty- seventh Session] has been lost in the absence of that regulation. The chiropractic profession would like to see more direct and specific language making it clear that managed care organizations cannot gatekeep, that is not permissible. That the injured employee should have the right to be handed a list of providers, simple, plain, clear without an attempt to steer them towards particular clinics or providers. Portal of entry, medical doctors and chiropractic physicians should be listed without the additional verbiage seen in some of their lists at present. And in my opinion, or in our opinion, specific fines, appropriate fines and penalties for violations should be included in that. Additionally, we would like to see more clear language addressing mandatory peer review and utilization review. And again, with appropriate fines and penalties for violations in that area as well. I cannot emphasis enough the importance of peer-to-peer utilization review and how effective that can be to reducing overall health care costs. In addition you must understand, that by establishing a peer-to- peer utilization review process you take some of the fear away from the managed care organization to utilize our services. Because now they do not have to watchdog every step of the way. They have people who can do that task for them. The Cooperative Association of Chiropractic Physicians, if by nothing else than an example of 7 years of providing quality chiropractic care and effective peer-to-peer utilization review, has proven that this goal is attainable. That is if you, as senators, amend in regulation and codify in statute these types of measures. I thank you for your time. Senator Shaffer asked for a definition of peer review in S.B. 316 of the Sixty- seventh Session. Ms. Tyler stated there was not a definition. Dr. Whitehead stated: Senator, I believe that one that is evident to me, that some specialties like physical therapy and like chiropractic, clearly do need to have the review done by people within that profession. It is just the most appropriate way to document that. It is not an impossible task. I am a utilization review physician for Prime Health which is managed care organization in the south, but who also do a great deal of private health care insurance and it is a task that is not difficult for the providers to provide and when done on a peer-to-peer level. Truly as a provider of services, the burden of proving that this care is necessary falls on your shoulders, because you know someone in your profession is looking at that case, and they know how to treat it. They know how effective the treatment is and they are best able to determine whether this is overutilization or additional measures should be brought in at this point in time for the benefit of that individual patient. Senator Neal asked if they had read Exhibit C (Nevada State Board of Chiropractic Examiners' letter). He read from the letter. Ms. Tyler stated she had read the letter. Dr. Lawrence R. Davis, M.D., President, Nevada Chiropractic Association, read from Exhibit C (Nevada State Board of Chiropractic Examiners' letter). Dr. Davis referred to question 5 and explained the answer given. He emphasized his concern was with the medical legal issues of malpractice. He quoted from the California Court of Appeals ruling on April 6 which said: The physician who complies without protest with the limitations imposed by a third party payer when his medical judgement dictates otherwise, cannot avoid his ultimate responsibility for his patients' care. He cannot point to the health payer as the liability scapegoat when the consequences of his own determinative medical decisions go sour... He stated his personal office policy is to provide care needed regardless of ability to pay. Senator Neal questioned the before mentioned quote and asked what was meant by "without protest." Dr. Davis stated if he accepted a patient for care he was obligated to care for that patient. Senator Lowden asked if this happens frequently. Dr. Davis stated it was standard for a patient to need care, but not have authorization for that care. The MCO needs to authorize for more than one visit. If a person is in a lot of pain they may need a visit the next day. The approval process can take 5 days or more. Senator Lowden asked if the delay is caused because the MCO or SIIS does not know if the claim is really going to be a workers' compensation claim. Dr. Davis stated he felt the problem might be that they are unwilling to accept further visits on that claim. They have to decide whether additional care is warranted. Senator Lowden asked if the patient will say they will pay no matter whether the claim is accepted or not because of the level of pain they are experiencing. Dr. Davis stated this happens. Senator Lowden asked if he gives the discounted rates if the claim is denied. Dr. Davis stated there were no discounts given. Senator Lowden asked if he pays to be on an MCO list. Dr. Davis stated he was not certain if he paid to be on the list, but now that he is on the list, he receives bills from the MCOs for a 2 percent administrative fee. Dr. Davis stated he and other doctors he has spoken with have accepted responsibility for managing care of those patients who cannot pay. He has had patients refuse care because they do not want to take charity. He stressed doctors are still managing the care of their patients even though the MCOs exist to do that. He questioned who was ultimately responsible for the management of the patient's care. Is it with the treating doctor, with the MCO, with the employer, or is it with the patient. He stressed a concern was with cost effectiveness in the managed care system with high quality of care. He discussed the Manga Report by the University of Ontario. The Manga Report stated: There is an overwhelming body of evidence indicating that chiropractic management of low back pain is more cost effective than the medical management and that Canada and other countries would have potential savings of many hundreds of millions of dollars annually, by having chiropractors handling these types of cases...since low back pain is of such significant concern to workers' compensation chiropractors should be engaged at a senior level by workers' compensation board to assess policy procedures and treatment of workers with back injury and a very good case can be made for making chiropractors the gatekeepers for management of low back pain in the workers' compensation system in Ontario. Dr. Davis pointed out that chiropractic treatment had been singled out as a specific problem contributing to the financial problems in the 1993 State Of The State Address. The chiropractic profession in the state suffered an unsubstantiated attack shown by the research studies. He read a report which stated average cost of chiropractic cases was at $829 compared to medical care costs at $2142 for the same diagnosis. Twenty-four percent of the cases were back injuries, but that accounted for over 50 percent of the money put out by the system. In 1990, chiropractics relative share of total medical costs was 7.4 percent. There is a savings of $1313 per average case, a total of 61 percent savings which does not include the fact that chiropractic treatment gets people back to work earlier. The national average is 21 days off work with a medical doctor supervising the care, and 3.5 days off work under chiropractic care. There are no drug costs under chiropractic care. Dr. Davis stated: The numbers say if you take 51.3 percent of your gross costs and decrease by at least 61 percent by each additional percent of chiropractic utilization there is a savings to SIIS of $610,000 for every $390,000 served by chiropractic. With chiropractic utilization and 7.4 percent and medical at 81.5 percent the other 11.1 percent being physical therapy, there is a lot of percentage point spread that could increase the cost effectiveness and provide optimal care in this system. My concern is that if the concerns that are being addressed in SIIS by promoting managed care are purely economic without sacrificing quality care then I feel chiropractic is part of the solution. Valerie Hawkins, Office Manager, Davis Chiropractic, stated each day after the first treatment, calls are made to the MCO to obtain approval for additional visits if they are needed. She stated that sometimes it takes as long as 10 days to receive an answer from the MCOs. Once Ms. Hawkins was told by an MCO employee that she had "10 feet of files piled in front of her, and I would just have to wait." This leads to frustration by the patient. They need treatment, but do not wish to obtain it without authorization. One of the MCOs told Ms. Hawkins it was not necessary for the patient to wait for treatment, because they may receive treatment for the first 15 visits. She quoted code NAC 616.5628A. She stated the MCOs have developed their own protocols and guidelines, but they have never seen any of these guidelines. There is no set guideline from the MCOs and no consistency in their requirements. She illustrated with a case from January, 1994. The MCO authorized 12 visits. In June, 1994, SIIS denied the claim. She sent a letter to the Division of Industrial Relations (DIR) with all the documentation. She asked who was responsible for payment. Their response was that the denial was beyond the time frame allowed in NRS 616.5014. They told her SIIS may be responsible for payment, but they are not certain. A year has passed and Davis Chiropractic has still not be paid for this claim. She related another case, again in January, 1994, where an MCO approved 12 visits, then denied the visits after the treatment was given, stating they felt the visits were not medically necessary. A week later, Davis Chiropractic received another letter, accepting the visits. Ms. Hawkins then called the MCO and was told they did not know why the second letter was sent. Ms. Hawkins sent another letter to the DIR and has not received an answer. No payment has been sent and SIIS stated the file is in the basement. She stressed many patients are afraid to make a claim if they are injured on the job. They are afraid they will lose their job because their boss does not want to deal with the MCOs, or they are uncomfortable with the way they are treated by the MCOs. The patients feel they do not get the care they need and that SIIS is not there to help them. There is too much confusion with the MCOs. MCOs have administrators, then osteopaths to decide if care is necessary. She questioned if those people were qualified to determine the need for chiropractic care. There are no chiropractors on staff to review cases. These problems occur in 80 percent of all their workers' compensation claims. Senator Lowden stated she asked the MCOs about their authorization time during an earlier hearing. They told her they responded immediately. Senator Lowden asked Ms. Hawkins how their response compares to her experience with the MCOs. Ms. Hawkins stated at times they will give their authorization within 2 to 3 days, verbally. But then it takes from 7 to 10 days to get it in writing. She stressed even if it is an emergency, they never give authorization the day it is asked for. Senator Lowden asked if Ms. Hawkins ever asked for the protocols from the MCOs in writing. Ms. Hawkins stated she had not. Senator Lowden asked if the MCOs they deal with, concerning SIIS, are more unreliable than the MCOs they deal with who work with the self-insurers. Ms. Hawkins stated they deal with three MCOs who deal with SIIS. Senator Lowden expressed her irritation that a clerk would question a doctor, chiropractor or neurosurgeon's decisions regarding a patient. The committee had been assured by the MCOs the case managers were very qualified to do their job. Ms. Hawkins stressed the managers are not qualified to determine if a patient needs chiropractic care. Dr. Davis stated peer review is needed. He stressed he is frustrated when he has to keep a patient waiting. He does not think he, as a doctor, should have to field complaints regarding the system. He wants to treat the patient and make them well. Senator Shaffer asked if Dr. Davis calls the MCOs directly and asks their medical background. He suggested it might help him get the answers he needs. Martin P. Rutherford, Vice President, Nevada Chiropractic Association, commented he has done so. Twice last week he had to call the MCO. In one instance the caseworker told him, "...it would take 6 days and that is just the way the protocols are." He explained the patients situation, asked to speak to a supervisor and was told "no." The caseworker indicated she was the one he had to speak to. He asked her if she was a nurse and was told no, she was an administrator and she followed the protocols. She gave authorization for one treatment. After that, he could treat the patient only after further authorization. After 18 visits the case would be referred to a nurse, then to a doctor who would finally make a final decision. Dr. Rutherford treated the patient throughout the weekend and was able to return her to light duty work on Monday. Another patient required immediate care due to the nature of the injury. Care was denied, but Dr. Rutherford treated her because she needed the care. The patient returned to work, but Dr. Rutherford was denied payment. He indicated his workers' compensation patients have dropped from 119 to 17 during the past year. He is not getting the referrals from the MCOs. He stressed his commitment to treat his patients from the chiropractic oath point of view. He stressed, no matter who makes the decision about a worker's treatment, it is the doctor who is responsible for that care, and if someone is going to be sued, it will be the doctor. He commented there was a lag period for each workers' compensation case he treated. He stressed patients do not always hurt themselves between 9 o'clock and 5 o'clock. He had a patient who came into his office at 5:15 on a Friday afternoon. Verbal authorization was given for one treatment, but the patient needed treatment through the weekend. It was given. Then the MCO refused to authorize any treatments even though they had first given verbal authorization. The patient returned to light duty on Monday. He was treated for 18 more visits. Then the MCO stated there was a pre-existing history. After further research, it was found he had no pre-existing history. Then Dr. Rutherford was told it was not an on-the-job injury. There were witnesses to the accident including the patient's supervisor. Payment was finally made to Dr. Rutherford in mid-January a year after the injury occurred. Another patient was treated and returned to work. The patient never missed work, but the MCO stated the person had been off work for 2 weeks. The MCO then authorized the treatment, but SIIS denied it. He related similar cases and stressed his dissatisfaction with the MCO system. Their methods for dealing with the patients lead to further damage to the patient. He illustrated a case where the patient was not given authorization for further treatment, was sent to work, was in more pain, then sent home, then the MCO released the patient to work, she could not work, and finally the MCO sent someone to her home to see her. During this time Dr. Rutherford was unable to treat her every day. The patient felt victimized by the system. The MCO told the patient the reason Dr. Rutherford had not seen her was because he did not handle the calls or the paperwork correctly. The patient had been present during the calls and when the paperwork was written. He stated too many people are involved in the process. The patient should come first. If they are, then the rest of it all falls into line, the pricing, the treatment, and the decision regarding the patients. He stated SIIS is winning because they are making the money. Managed care is winning because they are being paid very well for managing care which they do not know very much about. The doctor-patient relationship is not doing well. The doctors are supposed to do what the MCO tells them. If they do not, the MCO makes the doctor look bad to the patient. He stated this happens regularly. He stressed the same diagnosis does not mean the same treatment. There are variables to consider. Diet, age, and mental attitude all affect a patient's care. Each case is different, but the administrator at an MCO will give the same care requirements. He commented he does not want to apologize for doing his job. He has trained for his job, studied, and took the risks necessary to set up a small business. He will not apologize for his job. He stressed he does a good job and patients should be able to choose the doctor they want. He wanted the committee to remember the patients. They are what it is all about. Kim Hubbard, Receptionist, Mt. Rose Chiropractic Association, recounted the problems that occur when a patient must be referred to another doctor because Mt. Rose Chiropractic is not on a provider list for the MCO handling their case. Sometimes a patient will not change doctors, but will stay with their own doctor and pay for their care themselves. She shared her feelings that the patient is often frustrated by the system which does not consider their feelings. Dr. Davis commented that SIIS is managed care. He did not feel SIIS was doing a poor job in terms of patient care. Senator Shaffer commented they thought SIIS was doing a good job, too, until they came up with a deficit. They were good for the patient, but too expensive for the state. Dr. Rutherford commented somewhere in the middle might work. If SIIS is good for the patient, and MCOs are good for the state, maybe somewhere in the middle lies the answer. Senator Lowden stated the committee has been told by the MCOs that their goal was to provide the highest quality of care for the patient. The MCOs stated they had protocols to insure adequate and timely diagnostic tests. She said she would ask for copies of the protocols. Senator Lowden commented she has heard positive comments by patients about MCOs. It seems they are being seen in a timely fashion in comparison to previous experiences with SIIS. Dr. Rutherford stated his referrals to specialists have been timely. Senator Lowden asked if the chiropractors were on the ratings list. Dr. Davis stated they were not. SIIS determined it was more cost effective to stay with the American Medical Association second edition ratings list. Chiropractors are qualified on the fourth edition ratings list. Senator Neal asked the chiropractors if they provide their discount rates with an MCO. Dr. Davis stated any discount for a patient is a result of a contractual agreement between his office and the MCO. Senator Neal asked what problems are occurring with repricing. Stated he has not had problems with repricing, only with the time delays. He stressed he is concerned about the delays of treatment for a patient. Paula Berkley, Lobbyist, Nevada State Board of Chiropractic Examiners, presented Exhibit C (letter, Nevada State Board of Chiropractic Examiners). Senator Neal referred to Exhibit C and asked what problems occur with the MCOs when they limit the number of treatments. (question 5, Exhibit C) Dr. Rovetti responded the chiropractors wished the MCOs did not have the authority to limit the number of visits. The MCOs micro manage the care of a patient. They have taken management away from the doctor. Senator Neal referred to question 10 of Exhibit C. Dr. Rovetti responded that the chiropractors are being left off the care lists. Senator Neal referred to question 2 of Exhibit C. Dr. Rovetti explained a repricing sheet. If the bill is repriced incorrectly by the MCO when they send it to SIIS, SIIS will return that bill to the MCO. The doctor sends a bill into the MCO with everything documented complete with pricing. The doctors do not know who to follow through with on their bills. The MCOs say SIIS has the bill. SIIS says the bill has been sent back to the MCO for repricing. The doctors are frustrated by not knowing where the bill is. Senator Townsend stated: The way it is supposed to work...you should electronically transfer a bill to an MCO which, in turn, reprices it, electronically transfers it to the system, which, in turn reads it, in turn, authorizes it, electronically transfers the funds into [your] account. That is how it is supposed to work. That can be done in a matter of minutes. Senator Townsend asked for specific recommendations from the doctors to improve the system. He closed the hearing on chiropractors and physical therapists and opened the hearing on the State Health Laboratory and its budget. Exhibit I ( The Nevada Chiropractic Association, Responsibility of Managed Care Organizations) was not discussed. Wayne Colwell, President, Minerals Processing and Environmental Laboratories, Inc. (MPEL) discussed concerns the private lab owners have with the State Health Laboratory and their policy of competing with private labs. He explained how the state lab uses state funds to augment its budget to undercut private labs pricing (page 1, Exhibit J). Senator Townsend stated the State Health Lab is the regulator of private labs. Mr. Colwell commented that is why there were very few at the hearing to testify. Senator Townsend asked what need there was for the state lab other than to regulate the private laboratories. Mr. Colwell stated the state regulates other labs to do those samples which they are not able to do themselves. The workload is too high for the state to be able to do them all. He stated there are two divisions in the state lab, the microbiological division and an inorganic-organic chemistry division. Most of the laboratories in the state are not involved in the microbiological analysis. There are over 20 commercial laboratories providing water analysis. These laboratories are under the state certification program. Senator Townsend asked why the state does not use more private labs to do the work. Mr. Colwell stated it was in the best interest of the state to let the labs do the analysis. Senator O'Connell asked how long the State Health Lab has been in existence. John Sabatini, Great Basin Labs presented Exhibit J (a collection of materials relating to the State Health Laboratory) and explained the state lab was chartered in 1909. He stated the general purposes are outlined in Exhibit J under section 439.510. He explained the original purpose of the state lab was to handle samples from doctors and the state. The state lab has evolved into something it was not meant to be. It is now a commercial lab competing with the private labs. Senator O'Connell asked if this problem has been brought to the Legislature's attention. Mr. Colwell stated they had brought the problem to the State Health Board. They were not allowed to discuss the issue at the meeting because it was not part of the public notice. Senator O'Connell asked if they had brought the issue up before Senate Committee on Finance when they are reviewing the budget for the State Health Lab. Mr. Colwell responded they had not. Senator Townsend asked for a review of this by the money committees. He directed Scott Young, Senior Research Analyst, to write a letter addressing this issue. Senator Townsend stated he understood the private lab owners fears of retribution by the State Health Lab for their testimony. Senator Shaffer asked if the private lab owners would object if the state lab was not supplemented and had to survive on the fees they charge just as the private labs do. Mr. Colwell stated: ...it is a risk to be here and to even discuss anything openly with anybody because we are regulated by somebody that we do compete with and there are some other issues that are probably not appropriate at this time...but if I could run my business at a deficit as they do, I would certainly love to and if I could come to the state and say, listen, can you give me $700,000 to augment my shortfall so that I can continue to do business in this state and employ people, I would love to do that. If they were to up their rates to a competitive rate that dealt at a same level as we did that would be fine, too. Senator O'Connell stressed her concern and encouraged the lab owners to appear before the committee. She stated the committee will want to hear if the lab owners have any problems due to their appearance before the committee. Mr. Colwell stated the lab owners are concerned and will not express their concerns in public. Senator Townsend told Mr. Colwell and Mr. Sabatini to contact Mr. Young to set up another day for another hearing. They will draft a policy statement to resolve this issue. Mr. Sabatini stated he has spoken to many lab owners and there would be three times as many people at this hearing except they are terrified of losing their license. He stressed the state lab would be helped by taking away the commercial lab so that it can concentrate on the state business. Senator Townsend closed the meeting at 11:00 a.m. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 26, 1995 Page