MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session February 15, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Wednesday, February 15, 1995, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, 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 Scott Young, Senior Research Analyst Vance A. Hughey, Senior Research Analyst OTHERS PRESENT: Robert Kessler, Physician Carl Recine, M.D., Desert Radiologists John Clark, Safety Engineer, American Society of Safety Engineers, Southern Nevada Chapter Helen Aberle, Assistant Administrator, Division of Industrial Relations, Department of Business and Industry Ron Hubel, Industrial Relations Director, Industrial Medical Group Janet Brown, Industrial Medical Group, Office Manager Raymond C. Kelly, Ph.D., Director of Toxicology, Associated Pathologist Laboratories, Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS) Gayle Sherman, Benefit Services Chief, State Industrial Insurance System (SIIS) Vera Smith, Assistant General Manager, Southern Region, State Industrial Insurance System (SIIS) Malcolm H. Weiss, M.D., President, Medical Benefit Consultants Kathleen Marlow, President/Chief Operating Officer, Sierra Health Care Options Barbara G. Merritt, Director, Sierra Health Care Options Lynn Grandlund, Lobbyist, President - GWC, Vice President - EON, Grandlund, Watson, Clark and Associates Arthur L. Busby, Jr., Lobbyist, Benefits Administrator, Horseshoe Operations, Inc. Mat Dorangricchia, Consultant, SILMO Management Corporation David Oakden, Director, SILMO Management Corporation Lauraleigh I. Hunt, Personnel Analyst, City of Henderson Evan Weinper, Concerned Citizen The meeting was video conferenced to the Department of Transportation, 1263 South Stewart Street, Carson City, Nevada, Room 314. Senator Townsend called the meeting to order. The first items of business were general comments from physicians on workers' compensation, managed care organizations and Senate Bill (S.B.) 316 of the Sixty-seventh Session. SENATE BILL 316 OF THE SIXTY- SEVENTH SESSION: Makes various changes to provisions governing industrial insurance. (BDR 53-1764) First to testify was Robert Kessler, M.D. Dr. Kessler stated before S.B. 316, 35 percent of his business was State Industrial Insurance System (SIIS). Currently, 18 percent of his practice is SIIS. Dr. Kessler said he would much rather deal with the Managed Care Organizations (MCOs) than SIIS, since SIIS is very bad at managing state government. Dr. Kessler said: Problems still exist despite the reforms and in terms of the payments of claims. Regulation 616-578 says that the insurer shall pay bills within 60 days. That still does not happen. When we ask why, we are told things by the MCOs such as; `well, we sent that to SIIS' and SIIS still says things like `well, we never got it' at which time we have to redo all of our paperwork and send it in again. We feel that there is very little motivation for SIIS to do this any more efficiently than there was prior to S.B. 316 . . . We think that SIIS should be responsible to pay interest on those bills which they cannot manage to get paid. We think we deserve a detailed explanation of why this has occurred . . . There should be somebody that we can call who will do the paperwork for us, . . . so my staff does not have to take time to find out why we have not been paid . . . In terms of prior authorizations, [Nevada Revised Statutes] NRS 616.562 No. 8 states `that a treatment program that consists of more than 15 visits, not including the initial evaluation and is billed under the codes 97010 to 97799 must be prior authorized.' Currently, all of the MCOs still require prior approval on the first office visit, and indeed for every service that is done. We have communicated with [Division of Industrial Insurance Regulation] DIIR in regard to this and in all fairness I have to say that our communications were with the former head of DIIR. We were basically told, `the MCOs can do anything they want.' We don't think that the law says that, in fact, the law does not say that and we were told that by the former head of DIIR also. Dr. Kessler explained the overhead in a physician's office is very high. It takes him more time to do the paperwork than it does to see the patient. Dr. Kessler discussed the procedures the MCOs require him to follow in order to submit the required paperwork. He continued: Besides my paperwork, when we do our time and motion studies it takes an average of 61 minutes for my front office staff to do . . . paperwork involved in the initial visit for an SIIS injury. That includes calling and confirming that the patient indeed does have a particular insurance . . . It takes an average of 10 minutes to then photocopy the notes and fax them to the MCO. It takes another 10 minutes to call, 4 to 24 hours later . . . to verify the fax has been received because we don't hear anything back . . . Paperwork has increased 4 times in our office. That is a 400 percent increase since this bill has gone into effect, because the MCOs don't follow the law. The legislature in this bill allowed the MCOs to pick their own standard of care . . . Dr. Kessler stated each MCO has hired a medical director who defines their standard of care. He said: As an osteopathic physician, I do quite a bit of manipulative medicine. I have been asked for double- blind studies to prove the ethicality of what I do, even though all national standards of care allow what I do. I have been told that for any visit I need to provide that. For any procedure that I do . . . I think that the legislature needs to pick a standard of care . . . You need to be the ones who decide what is and what is not appropriate. In fact, we spent hundreds and hundreds of hours with the DIIR writing a standard of care prior to S.B. 316 [of the Sixty-seventh Session]. . . Some of the MCOs, one in particular has a medical director in Kentucky. It is very hard to deal with a medical director in Kentucky. SIIS is still by far the most difficult organization to deal with and all of the old problems still exist. Dr. Kessler gave examples of the difficulty with SIIS. He said it is hard to get a patient in for Magnetic Resonance Imaging (MRI) and Computerized Axial Tomography (CT) scans. Senator Neal was concerned about the MCOs asking Dr. Kessler for a double-blind study. Senator Neal asked about the uses of double blind studies. Dr. Kessler explained that double-blind studies are a research tool. They are a type of study done when neither the patient nor the physician knows which type of therapy the patient received. Double-blind studies are effective in drug therapy, but not for a study on surgery. Dr. Kessler added, "There are many types of therapies that do not lend themselves to double-blind studies . . . " Senator Neal asked who at the MCO had made the request of him to provide a double-blind study, and if that person was a M.D. Dr. Kessler responded the doctor who requested the study was a M.D. Senator Neal questioned, " . . . Who is the committee supposed to believe in this particular situation, when you have a doctor to doctor disagreement?" Dr. Kessler answered, " . . . I am asking the committee to look at the structural problem that exists. If I was the medical director and he was the physician applying that I would also be prejudiced to my point of view . . . and that is why the law states that national standards of care would be used. There are national standards of care . . . that are accepted everywhere." Senator Neal inquired, "Is S.B. 316 [of the Sixty-seventh Session] lacking in addressing the standards of care?" Dr. Kessler responded: S.B. 316 [of the Sixty-seventh Session] states that the organization will pick a national standard of care or a standard of care accepted in neighboring states. What that means is that the MCO can pick anything they want . . . That responsibility given to an MCO or to an individual employer allows them to have any standard of care they want. I think this committee needs to decide what the standard of care is in partnership with the DIIR . . . The next person to testify was Carl Recine, M.D., Desert Radiologists. Dr. Recine thinks there should not be a single source for [Magnetic Resonance, Computerized Axial Tomography] MRCT examinations. Dr. Recine surmised that cost would decrease and they would diminish patient waiting time with more than one source for MRCT exams. Also, with more than one source comparing cost and quality of care is possible. Dr. Recine urged the committee to consider the "any willing provider issue" because it will "benefit the patients, the physicians and I think it will actually bring your costs down." Senator Lowden introduced students from the Meadows School. Two classes were in attendance. One the advanced placement and the other the honors class. The student body government representatives were also present. John Clark, Safety Engineer, American Society of Safety Engineers, Southern Nevada Chapter, was next to testify. Mr. Clark expressed concern about Assembly Bill (A.B.) 62. ASSEMBLY BILL 62: Revises requirements for establishing quorum of occupational safety and health review board. (BDR 53-910) Mr. Clark stated they established the occupational safety health board in 1973 with representatives; two from labor; two from management and one from business. They would like to see if that could be extended to; two from safety, one from the north and one from the south. Mr. Clark testified in regard to S.B. 316 of the Sixty-seventh Session: "There has not been any 15 percent increases or any fine assessed to anybody without a written safety program. We feel that this is not fair with the companies that are in the state of Nevada that diligently went in to practice their safety programs. . " Senator Lowden noted: When we implemented the safety program as part of [S.B.] 316 [of the Sixty-seventh Session] we were doing it so that we would prevent accidents . . . rather than look at accidents afterwards. We were told a couple of weeks ago that this was working very well and that a lot of accidents were being prevented because there were written safety programs . . . This is the first time I am hearing that there are a lot of companies out there that haven't complied with the law and that there have been no fines . . . Senator Townsend asked Helen Aberle, Assistant Administrator, Division of Industrial Relations, Department of Business and Industry, to respond to some of the committee's questions. Ms. Aberle testified that she was very surprised at Mr. Clark's comments and very concerned. It is her understanding that they are writing citations for violations of the written safety program. Senator Townsend remarked, "Senator Neal on the first day of this committee hearing asked for the numbers of whom they are citing and who is meeting the requirements. I hope you will have that by the time we get back to Carson City." Ms. Aberle said she would and stated: I would also like to take this opportunity to . . . address a response from Dr. Kessler. The disturbing remark, I believe he said, is that organizations for managed care can . . . do anything they want to. I believe that our statutory authority is very clear under NRS 616-182. The administrator of the division is responsible for the investigation of complaints. I would like everyone in this room to know that if there is a complaint, concerning our workmen's compensation system that they please contact the division of industrial relations. We have a complaint process in place. We want to know . . . the complaints . . . I would also say that under [NRS] 616-687 the administrator of the division has the statutory authority to fine not only insurers, providers, but organizations for managed care. So if this is a perception, we want to clear it up. This is one of our great responsibilities. Ron Hubel, Industrial Relations Director, Industrial Medical Group, and Janet Brown, Industrial Medical Group, were next to testify. Mr. Hubel stated the Industrial Medical Group is a major provider for SIIS and self-insureds in southern Nevada. The Industrial Medical Group is the only provider in the state of Nevada that has a sole practice of industrial medicine. Mr. Hubel stated that by limiting your practice to industrial medicine, many of your other costs go down such as malpractice insurance and operational costs such as billings. In the last 2 years, the Industrial Medical Group has gone from a profitable business to a business that is making a loss. The thing which caused that to occur is the increased paperwork. There is a ninefold increase in denials. The major reasons for increased denials are more investigations, watchful eyes and drug testing. Mr. Hubel discussed drug testing procedures, results and SIIS. Mr. Hubel stated that while a case is being investigated, the physicians treat the patients. Consequently, there is the possibility of ringing up very high bills and finding out later that the patient has been denied insurance coverage. Mr. Hubel said: We should be notified that something is put under investigation so we can put a minimal care and not do anything wrong to that patient. But we can't go forward as if they have emergency problems and then find out 60 - 45 days later that . . . specialists and everybody else are turned down and their bills are not paid. Especially, with all the increases in costs . . . and the reduction of pay rates. We shouldn't have to wait longer to get answers and bill . . . We would also like to be notified within 24 hours of the employers . . . on those results . . . We don't get a copy of those results and as a treating physician. I believe we would be entitled [and] that would be a part of a person's medical well- being to know that they were on a drug at the time of an accident . . . Mr. Hubel discussed his experiences and fee disputes with DIIR and SIIS. To clarify his interest and participation in this area, Mr. Hubel explained that they are providers for six MCO panels. Mr. Hubel reiterated his concerns on drug testing procedures. Senator O'Connell asked Mr. Hubel to expand on his testimony in regard to taxes on his supplies. Mr. Hubel explained his current problems with supplies. Senator Lowden asked Mr. Hubel if 15 percent of his business is with SIIS. Mr. Hubel explained that they process 15 percent of the total SIIS claims. Senator Lowden inquired how many MCOs they belong to. Mr. Hubel reiterated that they belong to six out of the eight MCOs. Senator Lowden questioned Mr. Hubel about any other complaints he might have in regard to the time line on approvals/denials. Mr. Hubel reiterated his prior testimony. Senator Lowden and Mr. Hubel discussed denials and payment of claims. Senator Lowden introduced Meadows Middle School. Raymond C. Kelly, Ph.D., Director of Toxicology, Associated Pathologist Laboratories, was next to testify. Dr. Kelly explained the state of drug testing and accuracy of the tests. Dr. Kelly discussed interpretations of drug testing and his laboratory's role in SIIS. Senator Lowden asked Dr. Kelly how long it takes his laboratory to process a drug test. Dr. Kelly responded if the test were to come out negative, the process would only take a couple of hours. If the test were to come out positive, it takes typically 24 to 48 hours. Senator Lowden asked Dr. Kelly about the procedures they follow after completing the test, if it is a SIIS claim. Senator Lowden wondered why it would take 30 days to get a response on a drug test if the test is actually completed in 48 hours. Dr. Kelly discussed how the results are transferred to the client, but the laboratory does not interpret the results. Senator Shaffer and Dr. Kelly discussed involvement and questions SIIS asks of Dr. Kelly for a SIIS claim. Senator Augustine asked Dr. Kelly why there is a difference in the time it takes to process a drug test depending on whether or not it came out positive if he does not determine what is actually in the blood. Dr. Kelly explained that they do determine what is in the blood and report it, if the test is positive. If the test is negative, they do not have to test any further. Dr. Kelly explained the testing process in more detail. Senator Lowden and Dr. Kelly discussed how the lab decides if a person had used the drug 3 hours ago or 3 days ago. Senator Neal asked how the lab administers the drug test. Dr. Kelly discussed the procedure the laboratory takes to administer the drug test and concluded his testimony. Vice Chairman O'Connell called a 10-minute break. Senator Townsend called the meeting to order. Senator Townsend announced that the State Industrial Insurance System and managed care representatives would testify next. Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS), introduced and discussed Exhibit C (on file at the Research Library). Senator Augustine introduced students from the GATE program at Cyril Wengert school. Senator Townsend explained the teleconference to the students. Ms. Colling continued with her presentation. Ms. Colling said that managed care has altered the fundamental approach to workers' compensation. It is a step to reduce costs while maintaining the quality of care for injured workers. Ms. Colling stated they are working closely with "businesses to see how effective the MCOs are doing in instituting the new laws, the contract and most importantly how they are doing with their utilization review protocols, etc." Senator Townsend asked Ms. Colling to explain the reason Washoe County total is higher than Clark County in the MCO Management Report for Timeliness of Medical Referrals (Exhibit C). Ms. Colling replied, "I think that is probably because we have fewer specialists in Washoe . . . I also would suspect that managed care has been operational longer in Clark County and therefore it is easier to make the referrals because they have been doing it longer." Senator Townsend questioned, in regard to previous legislation, if Ms. Colling could, "Somewhere in here demonstrate that we are either leveling off or going back in the other direction?" Ms. Colling answered: If you look at the report (Exhibit C) that is the loose report, if you go to the third chart which talks about the body parts . . . You will see on the third line for each situation what the average lost time days are. So you will see that we are reducing in some areas and staying the same in others. Senator Townsend suggested Ms. Colling come up with an opinion of whether they are going the right direction or not, in terms of the reducing the lost time days average. Senator Townsend continued, "Is managed care having an influence on getting better medical care quicker to injured workers and getting them either into light duty or back to work quicker?" Ms. Colling replied, "Because it takes sometimes 2 to 3 years for a claim to mature it is really too early to tell about the lost time. We can show you the reduction in medical costs . . . but we cannot show you . . . whether it is working in the [workers' compensation] area until next year or the year after." Senator Townsend asked about the claims that have come in and have closed. Ms. Colling said, "Those are primarily medical only claims and you don't know how a condition will mature and reopen." Senator Townsend called attention to "those that are closed and haven't been reopened that were lost time claims, you do have that don't you?" Ms. Colling explained, "We have that number but I think it would be misleading. I will just tell you that it is a misleading number and if you look in the report that was done by the bureau, . . . other states are finding . . . it is too early for them and some of them have programs that are 5-years old." Senator Townsend maintained, "I just would like to have a number . . . The analysis of workers' compensation in the state of Nevada, . . . done by the legislature, showed that we had a severe problem in terms of lost time . . . We are trying to figure out if we are slowly getting a handle on that or not." Ms. Colling stated, "I have shown you the reduced actual dollar amounts in [workers' compensation] payments system wide . . . " Senator Lowden queried, "Prior to the MIRA (Micro Insurance Reserve Analysis), were employers not aware of what . . . reserves were set?" Ms. Colling responded, "Often they were not unless they were on a [retroactive] program. Instead of reserves being set every 3 or 4 years, they are now set monthly." Senator Lowden noted, "In the MIRA system I understand that from here on in . . . the injured workers are being computed through MIRA . . . What about the thousands of others prior to MIRA? Is there someone working on re-reserving?" Ms. Colling explained, "The system automatically reserved all claims in the system . . . It uses 10-years experience, it uses the national trends, medical costs and workers' [compensation] costs and then it does a monthly evaluation of our costs and there are things that trigger a reserve. Long periods of [compensation], failures to have appropriate treatment, all of those factors . . . " Senator Lowden and Ms. Colling discussed the reserves and experience with the reserve. Senator Lowden inquired, "On another matter, are you aware of the letter that the Governor received from an insurance company saying they were willing to take over SIIS?" Ms. Colling replied, "I am aware that there is a letter." Senator Lowden said, "I requested from Mr. Dirks . . . prior to us leaving Carson City, that we get a copy of that letter. He was supposed to be responding for the Governor to this insurance company and I am wondering if you know what that response is. Since he is not here . . . I was going to ask him personally on the record . . . if we can have access to his response and the Governor's letter." Ms. Colling stated, "I wouldn't want to speak for him but I can tell you . . . if you want to have a copy of a letter from a Governor the appropriate person to ask is the Governor . . . and the response also." Ms. Colling and Senator Townsend discussed report one in Exhibit D. Senator Townsend asked why, with the advent of managed care, are there more people working at SIIS now then there were before the MCOs and how many people are on a claims team? Ms. Colling replied that six people are working on a claims team. Ms. Colling presented and discussed the executive summary of the survey (Exhibit E) (The exhibit is on file at the Research Library.) Senator Townsend asked if there has been a discussion about allowing employers to choose various deductibles depending on their ability to pay. Ms. Colling replied they are attempting to develop programs that would offer that to employers. Senator Townsend suggested, "As you know, in most insureds [there are] areas you can choose a deductible depending on your ability to pay . . . and it does dramatically affect your premium. Perhaps one of the things that could be helpful to employers in the system . . . would be a flexibility in that deductible." Ms. Colling concurred, "We agree that we should attempt to provide that as our financial system becomes more stable we will be able to offer more opportunities to do that. We are restricted in some ways by our financial condition at this point." Senator Townsend questioned: One of the recommendations that the system made last time, and one of the reasons the deductible was put into place, was to cut down on the amount of paperwork that came in . . . The theory was that if it was a claim that was dealt with between the injured worker and the employer and did not go into the system per se that it helped everybody . . . I would think that many employers [and] injured workers get frustrated would probably . . . like . . . to take a little higher deductible . . . and get back to work. How soon can we expect that kind of creativity? Ms. Colling discussed the current retroactive program. Senator Lowden asked, "The complaint we heard from Mr. Hubel . . . about the drug testing . . . Is there anything to alleviate that problem?" Gayle Sherman, Benefit Services Chief, State Industrial Insurance System (SIIS), responded: . . . As I understood Mr. Hubel's testimony, it appeared to me that some of the problems developing with drug testing is a result of increased drug testing on the part of employers. The statute that I think is involved here is the one that allows SIIS to deny a claim if there is intoxication either from alcohol or controlled substances. I think Dr. Kelly's testimony underlined the fact that although they know what levels of intoxication are for alcohol, we are not really aware what they are for drug testing. [It] . . . makes the claim acceptance process more complex and leads us back to Mr. Hubel's complaint about prolonged periods of investigation. If we have an indication of a positive in a drug test for a controlled substance, . . . we have to establish that person was actually intoxicated by their consumption of the controlled substance. I think that is where the problem is. Senator Lowden questioned, "I think we have a clear understanding of that. I think that is one of our goals'. To work on those kinds of definitions to help you . . . In the meantime, what happens to the physicians and the groups out there that are left holding the bag as far as expenses? Is there any way to alleviate this problem?" Vera Smith, Assistant General Manager, Southern Region, State Industrial Insurance System (SIIS), replied: . . . The problem is with an injured worker who is injured on the job . . . SIIS's liability is to make sure that we do dispense those benefits. If someone is deemed impaired, do we have witnesses? That is the number one problem we have . . . did anyone witness the accident? Can anybody validate the impairment? Drug testing is fine, but drug testing does not validate that impairment. The problem Mr. Hubel is talking about is under the statues of the law, SIIS must make a determination whether we can accept . . . a claim. In order to determine that our investigators will go out to the scene, they will collect witness statements . . . They collect reports of injury. They collect physician statements . . . We cannot pay benefits until that time because a claim is not accepted by statue so Mr. Hubel and our providers are left with the task of looking at a bill that cannot be paid because of the law. Until we can establish . . . that there is a percentage of alcohol in the blood stream. You have a more difficult task when it is a controlled substance because there is no law stating what causes impairment. Mr. Hubel is correct, we cannot pay that billing or emergency room visit until we establish compensability. Senator Lowden asked, "What can SIIS do to close the gap in terms of the investigation? . . . So these physicians, . . . treating the claimants, . . . not being told until 30 or 60 days later that they are not going to be paid . . . Is there anything we can do to help them?" Ms. Smith responded, "In alcohol situations you will not see that lag time because you have the lab reports . . . Once we know there was an impairment by alcohol that is denied. The physicians are notified by letter as well as the employer. What the problem SIIS had in the past is making sure we had the notification of the employers." Senator Shaffer queried, "I am just curious, the number of employers that are . . . claiming drugs was involved or the injury was related to consuming drugs of some kind, has that increased over the last 3, 4 or 5 years?" Ms. Smith responded, "I would say so." Senator O'Connell asked, " . . . Mr. Hubel . . . told us that there had been a policy decision. That there were fees . . . attached to the supplies . . . I wonder if you could address that issue and tell us how that came into being and why there wasn't a public hearing on it. Why the gentleman has yet to have his case heard." Ms. Smith gave an example of a person coming in for a suture repair, according to the code they would pay for the procedure. The code also allows for supplies involved in that procedure. According to Ms. Smith, Mr. Hubel wanted them to include every instrument involved in the suture, the scalpel, the dressing, the wash. A hearing has been established for Mr. Hubel to state his complaint. Senator O'Connell asked if this was a change in policy as Mr. Hubel testified. Ms. Sherman said the code book Mr. Hubel was talking about are global billings listed in the code book and this is just a clarification of the global code. Senator O'Connell stated, "I think it would be important . . . to find out when there was a change . . . There does seem to be some kind of a change rather than just reinterpreting what was going on. If we could have that specifically addressed in the letter to the committee, we would appreciate it." Senator Townsend called a recess until 2:00 p.m. At 2:00 p.m. Senator O'Connell called the meeting to order. Senator Neal questioned the number that represented the amount of people considered in the survey the SIIS representatives presented. Ms. Colling stated the number of respondents was 318. Senator Neal inquired about page 29 of Exhibit E in regard to the chart and the word neutral. Ms. Colling explained that neutral meant the individual completed the survey and chose not to take a stand on it. Neutral and nonresponse are not the same. Senator Neal and Ms. Colling discussed the results of the survey. The senator asked how page 47 related to the survey. Ms. Colling responded this summary represents the goals of the survey. Senator Neal and Ms. Colling continued to discuss Exhibit E. Ms. Colling explained that the no response on the survey meant that the respondent did not go to a specialist. Ms. Colling continued to explain the survey and the way that it was conducted. Senator Neal, Ms. Colling and Ms. Sherman discussed Exhibit C and clarified terms in certain reports. Senator Townsend and Ms. Colling discussed Exhibit D. Next, Malcolm H. Weiss, M.D., President, Medical Benefit Consultants, and Kathleen Marlow, President/Chief Operating Officer, Sierra Health Care Options, testified. Ms. Marlow commented on Exhibit D. Ms. Marlow said in report number one, the figures only represent lost time claims. Ms. Marlow continued: We have been before this committee . . . and testified. I briefly wanted to make three points and then what we wanted to do was open it up for questions. The three points we wanted to discuss were: 1. The issue of streamlining paperwork - . . . we agree that we very much need to look at the process and what we can do . . . in partnership with SIIS to streamline the paperwork function. 2. The bill payment process - in our original testimony we mentioned that there were startup delays in bill repricing. That is where the . . . provider is supposed to direct the medical bill to the MCO. The MCO reprices it according to our contracts and sends it on to SIIS . . . 3. The dispute resolution process - One of the reports I believe SIIS provided to you was a report showing the disputes the MCOs have had. We are required to . . . provide those reports to SIIS on our disputes. As far as the start up process, I know that many of the MCOs provided to their provider networks the employers and the injured workers what the process was to file a dispute . . . Senator O'Connell asked in regard to page 2 of Exhibit E, "Going down to `Physicians surveyed agree on eight high-priority issues' I wonder if you . . . would take each of those issues and address them for us?" Ms. Marlow responded, " . . . Our average time for all medical bills being priced and sent back to SIIS is 5 days." Senator O'Connell asked Dr. Weiss if that is what is being done with his organization. Dr. Weiss answered affirmatively. Ms. Colling referred the committee to page 22 of Exhibit E. Ms. Colling said, " . . . look at the bottom of that page. It is a little more clear than the summary. It basically does relate to the issue of people who are denying treatments are not medically knowledgeable, in the opinion of the people surveyed." Dr. Weiss said: My understanding of the process, or the way it works with our MCO, is that these requests are reviewed by registered nurses who are specialists in managed health care. They use nationally accepted guidelines . . . and these guidelines are adhered to by the case managing nurse in terms of whether or not there is medical necessity to approve a test or procedure that the physician requests. We are not talking about emergency situations. In emergency situations, the attending physician does what he or she thinks is appropriate immediately and review of it is retrospective . . . Senator O'Connell stated that they have heard testimony from doctors who say they have had problems getting approvals after hours or on weekends. Dr. Weiss said they don't require authorizations for every kind of treatment, but make authorization decisions based on medical necessity. Ms. Marlow said that not all MCOs work the same way on procedures for authorizations. Ms. Marlow explained her MCOs requirements for authorization of treatment. Dr. Weiss and Ms. Marlow discussed current procedures and continued to explain the eight high priority items in Exhibit E. Senator O'Connell asked if someone would respond to the comment made earlier about patients not being able to have a MRI or CT scan in less than 1 week. Dr. Weiss said that is not true for the Reno Area. Barbara G. Merritt, Director, Sierra Health Care Options, testified next. Ms. Merritt stated: In the south the MRI and CT scans, frequently the sole source provider does want information whether or not the claim has been accepted. In an emergency where a procedure must be preformed, where there is evidence that there has to be surgical intervention or there is a problem, those cases are done regardless of claim issue . . . That is the way it is handled by Steinberg, the sole source, because . . . law we must go through Steinberg for MRI's and CT scans. They are the sole source provider in the south . . . Senator O'Connell asked if Ms. Merritt thought the sole source was working well. Ms. Merritt responded the sole source is working. Senator Lowden questioned, "Are you saying that because of past experience they have been stiffed so many times . . . that they just won't take the claimant anymore until they are sure that it is a real claim?" Ms. Merritt answered, "I would say there might be some discretion on their part. I am a registered nurse by background and I know that there would be situations where it is not necessary to do an MRI or a CT scan as your first line of diagnostics. I think I would defer that question to Dr. Weiss." Senator Lowden continued: Let's take it one step further to the doctors . . . who are treating patients, and the chiropractors, physical therapists who aren't sure either if this is a valid claim or not . . . They have to eat the claim . . . if in fact this person doesn't have medical benefits or cannot pay in some other way. Is there anything we can do to expedite the workings of these claims? Ms. Marlow responded, "A couple of things . . . were done upon the implementation of the MCOs. The first thing we did was we received on-line access to SIIS so . . . the time we are doing preauthorization, we can tell them what the claim status is . . . I don't know the answer of your question short of medical benefits or pursuing it through the injured worker." Dr. Weiss remarked, "The question . . . relates also to the large number of people that are uninsured. If everybody had some type of insurance . . . then the question would be: Should this be paid by the industrial insurance system? Should this be paid by private health insurance? Unfortunately, we have a large number of uninsured." Ms. Smith answered a question Senator Lowden had previously asked. Ms. Smith stated: I am answering a question regarding the emergency MRIs. SIIS has done a lot of different things to try to assist the providers in making sure we could approve payment for the MRIs or CT scans on claims that probably would be compensable even though we may not have had the report of injuries. We have established an emergency line in our administrative office. We also put fax machines in every team. If a provider wanted to get an MRI or CT scan approved they could fax the information to us. Senator Lowden inquired, "If you are not sure if it is a real claim yet, and we have already heard that it could be 30 or . . . 60 days . . . then I can understand why in a nonemergency situation like a CT scan or an MRI where someone would be hesitant to allow that person to go forward with that kind of treatment. In the meantime, this person could be off of work . . . waiting for these treatments . . . while the claim is being investigated. What I am wondering is, why does it take so long to investigate a claim?" Ms. Smith said, "In answer to your question regarding the MRI's and CT scans, what we do, we call the employer. We have even asked some of the providers to call the employer to get additional information. If we can get adequate information via the phone, we will approve payment for the MRI. We don't wait for additional information for investigative purposes, but if a claim is fraudulent we have no choice . . . there is going to be a delay." Dr. Weiss stated, "The last item on that particular paragraph (Exhibit E) concerns a suspicion that some of the MCOs engage in gatekeeping behavior. I don't really know how to answer that. Our MCO does not engage in gatekeeping. We don't require a gatekeeper. I don't know of an MCO that does require a gatekeeper . . . I think . . . the answer would depend on individual cases." Senator Neal asked, "At what point are you committed to involve yourself in a particular claim?" Dr. Weiss responded, "We become involved immediately. As soon as we hear that someone has been injured, we are now involved in the management of that claim . . . We do not direct people to a doctor and we certainly never give anyone the idea that they have to go where we tell them to go." Senator Neal continued, "Are you required to have the authority to give advice . . . to . . . a provider in terms of the care of an injured worker?" Dr. Weiss responded, "Certain procedures have to be prior approved, nonemergency situations. If a provider requests an MRI for someone who has had a back sprain, we need to know that certain criteria for an MRI have been met. Sometimes we need to know that some conservative management has been attempted before the request for an MRI was attempted . . . " Senator Neal asked, "One of the questions that has been mentioned is that with some of the MCOs, there is an allegation made that when the provider called, he or she is not able to talk to any real people . . . " Dr. Weiss answered, "We try to call providers back as quickly as we can. The people that return the calls are registered nurses . . . " Senator Neal continued, "How extensive is the voice mail used in cases dealing with the injured worker?" Dr. Weiss replied they do not have voice mail. Ms. Marlow said they do not have voice mail either. Senator Neal queried, "One of the questions raised by the providers . . . the MCOs have added paperwork. The allegation is that this has been done to discourage them . . . from providing adequate care . . . Do you have the authority to add any type of paperwork, generate any type of form by which an injured worker claim has to be reported?" Dr. Weiss responded, "The only additional paperwork we see in our office . . . is the physician's progress report. This is an additional report that has been required by SIIS to give them certain information as to how the diagnosis is made and how it is related back to an industrial injury. We think that it can be streamlined . . . this is something we have to work out with SIIS . . ." Senator Neal asked if there is a form called a DIIR fee schedule. Ms. Marlow confirmed that there is a form called a DIIR fee schedule. Ms. Marlow explained, "Our contracts without providers generally state . . . the DIIR fee schedule is what SIIS will pay the provider, and in the past what SIIS would pay a provider before the MCOs came into being. Now the DIIR fee schedule, for instance our contracts read, `the lessor of DIIR fee schedule, bill charges, or your contracted rate whichever is less.' " Senator O'Connell asked the MCO representatives if they could comment on prior testimony in regard to the threat of fines for not submitting reports in a tight time frame. Dr. Weiss commented that the law says there could be a $1000 fine for filing the C-4 form too late, but the MCO doesn't fine anybody. Senator O'Connell questioned, "In the answer for fee payment, we understand that some of them require 2 percent of paid charges as an administrative fee. Another MCO charges $150 for an annual, administrative and credentialing fee. Another charges a nominal provider credentialing fee. Is that done in either of your MCOs?" Dr. Weiss said they do not charge. Ms. Marlow stated, ". . . We charge a nominal credentialing fee because the credentialing process is a long and labor intensive process . . . " Senator Neal asked, "Have you as MCOs or SIIS provided any report or documentation indicating any savings that you might have had in terms of your MCO activity . . . indicating what the savings might have been within the last year . . ?" Ms. Marlow replied, "We have not been required by SIIS to provide a savings report . . . Any kind of report we would give you wouldn't be valid because the data is too new." Next to testify was Lynn Grandlund, Lobbyist, President - GWC, Vice President - EON, Grandlund Watson Clark and Associates. Ms. Grandlund said: I would like to address the committee on a couple of issues. One is the issue of the timeliness of the submission of the C-4. That was passed in S.B. 316 [of the Sixty-seventh Session] not as part of the managed care organization package, but due to the fact that the state industrial insurance system was spending excessive amounts of money in doing administratively written C-3's in order to get claims processed. From an employer's standpoint, that is oftentimes when an employer will see a red flag that it might possibly be a claim that really is not workers' [compensation]. The law states that the providers have 3 workdays after the initial visit to send that C-4 to the employer. The employer then has 6 workdays after receipt of that C-3 to get it to the system. I have . . . advised my clients, they are not to make out C-3's until they receive those C-4's. We have waited, in some instances, a month . . . As far as the gatekeeping situation that was discussed, I have personal knowledge of several instances where the managed care organizations have in fact done gatekeeping and have not allowed the injured worker their proper selection process of choosing their first two treating physicians within the first 90 days . . . Arthur L. Busby, Jr., Lobbyist, Benefits Administrator, Horseshoe Operations, Inc., was next to testify. Mr. Busby said: . . . You ask about streamlining the system, I proposed something to DIIR back in October, a system that the Horseshoe Hotel is trying to put in to go to a paperless casino . . . Our system was, an employee would go to the security officer to report his accident. All information would be typed into a computer. The next morning, I . . . would review the claim, . . . accept the claim and then my third party administrator would call in via modem and download that information into their computer system, virtually creating a paperless society. All of this information would be archived . . . DIIR told me no. The statute requires it be on paper . . . We need to do something with the statute . . . that will allow . . . [us] to get away from paper . . . Senator O'Connell asked Mr. Busby if he could cite the NRS on this and he said he could not. Mr. Busby said there is a statute that allows gatekeeping in certain circumstances. Mr. Busby stated that within 96 hours he can accept or deny a claim based on drug testing. Mr. Busby presented and discussed Exhibit F. Mr. Busby and Helen Aberle discussed and clarified information on drug testing as testified earlier. Mat Dorangricchia, Consultant, SILMO Management Corporation, and David Oakden, Director, SILMO Management Corporation, were next to testify. Mr. Dorangricchia stated, "We are representing [the] SILMO managed care organization, southern Nevada. Mr. Dorangricchia wanted the committee to know they were willing to testify and answer any questions. Mr. Oakden also stated his availability for the committee's questions. Next to testify was Lauraleigh I. Hunt, Personnel Analyst, City of Henderson. Ms. Hunt said: . . . As far as S.B. 316 [of the Sixty-seventh Session] is concerned, the City of Henderson feels that it was a very successful bill and we want to thank you for it. It does need a little bit of fine tuning which is why we do support the proposals that Nevada self insurers have made previous to todays testimony. With S.B. 316 [of the Sixty-seventh Session]. . . the City of Henderson went self-insured. Through this self-insured status, we are able to do a little better claims management. In 1994, we only had 20 injuries that involved days away or days restricted from work and that is out of 1000 employees. Five of those . . . injuries were days away from work . . . There were 52 recordable injuries that did not involve any days away from work or restricted time . . . As far as illnesses, we only had two that were involved in days away or restricted duties . . . The City of Henderson . . . covers a water treatment plant, a raised water reclamation facility, a correctional facility, a police department and a fire department as well as the general administration of the city municipality. One of the other things that we pride ourselves on is the rehabilitation effort we have taken. We have put a lot of time and effort into training our employees. We do extensive safety training . . . Mr. Busby discussed procedures that Horseshoe follows. Evan Weinper, Concerned Citizen, testified and presented Exhibit G. Senator Lowden informed Mr. Weinper of some of his rights and gave him some direction in which to find assistance. Helen Aberly said she would speak to Mr. Weinper about his claim against the department filed with DIR. Exhibit H (on file at the Reference Library) was introduced for the record and at 4:00 p.m. Senator O'Connell adjourned the meeting. RESPECTFULLY SUBMITTED: DeLynn Gillentine, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor February 15, 1995 Page