MINUTES OF THE meeting
of the
ASSEMBLY Committee on Health and Human Services
Seventy-Second Session
March 19, 2003
The Committee on Health and Human Serviceswas called to order at 1:40 p.m., on Wednesday, March 19, 2003. Chairwoman Ellen Koivisto presided in Room 3138 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mrs. Ellen Koivisto, Chairwoman
Ms. Kathy McClain, Vice Chairwoman
Mrs. Sharron Angle
Mr. Joe Hardy
Mr. William Horne
Ms. Sheila Leslie
Mr. Garn Mabey
Ms. Peggy Pierce
Ms. Valerie Weber
Mr. Wendell P. Williams
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Marla McDade Williams, Committee Policy Analyst
Terry Horgan, Committee Secretary
OTHERS PRESENT:
Mary Liveratti, Deputy Director, Nevada Department of Human Resources
Jane Smedes, Management Analyst, Nevada Department of Human Resources
Bob Johnson, State President, Retired Public Employees of Nevada
Richard “Skip” Daly, Business Manager, Laborers’ International Union of North America
Sandy Kerr, Benefit Plan Administrators
Debbie Smith, Fringe Benefits Representative, Operating Engineers Local Union No. 3
Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO
Mark Sullivan, Associated General Contractors, Nevada Chapter
Jack Kim, Sierra Health Services
Janice Pine, Dir., Governmental Relations, Saint Mary’s Health Network
M. Donald Kowitz, Vice President, Chief Operating Officer, Saint Mary’s Health Plans; Vice President, Saint Mary‘s Health Network
Fred Hillerby, Washoe Medical Center
Jim Miller, Chief Executive Officer, Washoe Medical Center
Chris Bosse, Washoe Medical Center
Marcia Holmberg, University Medical Center
Stephanie Beck, RN, Emergency Services Coordinator, Washoe County District Health Department
Robin Keith, President, Nevada Rural Hospital Partners
Chairwoman Koivisto, explaining that A.B. 283 was not nearly as contentious an issue as the other bill on the agenda, said that the Committee would hear it first.
Assembly Bill 283: Provides subsidies from Fund for a Healthy Nevada for coverage of limited-scope dental and vision benefits to certain senior citizens. (BDR 40-152)
Assemblywoman Kathy McClain, Clark County District No. 15 and the sponsor of A.B. 283, mentioned that she was the Clark County senior citizens’ advocate. She noted that the advocate program had begun in October 2001 and provided outreach to senior citizens groups by going to senior living complexes and attending monthly senior fairs. At each event, she said, senior citizens were asked to rank which of about ten different items they thought most important and that they could use help with. The comments were compiled and the number one and number two needs of the senior citizens who had responded were for dental and vision care. Ms. McClain added that she had not included hearing needs in A.B. 283, because she had wanted this pilot project to start small at first until it could be seen how it would work.
Assemblywoman McClain explained that A.B. 283 would utilize a portion of the tobacco Master Settlement Agreement money currently being used for the Senior Rx plan. It was hoped additional money could be added by applying for a Medicaid waiver, and out of those combined funds some vision and dental coverage could be added for senior citizens qualifying for the Senior Rx. Ms. McClain stated that she just wanted to try the program to see how it would work. She pointed out that people who could see would be mobile longer and probably would have fewer accidents around their homes. Bad teeth, she added, could also affect a person’s health in the long run.
Ms. McClain acknowledged that A.B. 283 would also be heard in the Assembly Ways and Means Committee because it had a fiscal note, but she indicated that the key to the plan was the ability to leverage money currently available to the Senior Rx program so that some sort of assistance could be provided for Nevada’s senior citizens.
Mary Liveratti, Deputy Director, Nevada Department of Human Resources, read a portion of her testimony from prepared text (Exhibit C). She explained that the services provided in A.B. 283 would be paid for out of the 30 percent of tobacco settlement revenues that were set aside for the Senior Rx program from the Fund For a Healthy Nevada. She added that to be eligible for Senior Rx, a person had to be 62 years of age or older, have been a Nevada resident for one year, have a household income of not over $21,500, and not be eligible for Medicaid prescription benefits. Currently, she noted, the Senior Rx program had 7,500 senior citizens enrolled, with 1,475 persons on a waiting list. Ms. Liveratti indicated that The Executive Budget included a decision unit to expand the program to serve 12,000 senior citizens by the end of the next biennium, and that the Governor had proposed using $5 million in state General Funds to finance that expansion.
Ms. Liveratti emphasized that while the need for vision and dental services for low and moderate-income senior citizens was evident, there was concern that without additional revenue, the cost to provide those services would decrease the number of senior citizens who were being helped with prescription costs. She stated that the Legislative Counsel Bureau had predicted receipt of 6.4 percent less in tobacco settlement funds than had been originally estimated. In order to determine the cost of adding vision and dental services, she had contacted the Department of Insurance, which had provided her with an average group rate for vision and dental coverage. Based on that information, it was estimated that the cost would be approximately $4.8 million for fiscal year 2004 and $5.7 million for fiscal year 2005. Ms. Liveratti cautioned the Committee that the benefits in the rate packages quoted by the Department of Insurance had not been designed specifically for senior citizens, so the costs might be higher to cover the senior citizen population.
Ms. Liveratti pointed out that the Department could further refine the fiscal impact of A.B. 283 by defining which vision and dental benefits would be included in the program, what the deductibles and co-payments would be, and the extent of the coverage. She added that in an effort to expand funding for prescription coverage for senior citizens, the Department had been researching the possibility of accessing federal dollars through a Medicaid Pharmacy Plus waiver. The Department had also contacted their representative to the Centers for Medicare and Medicaid Services to discuss the possibility of adding vision or dental services to that kind of waiver. Ms. Liveratti noted that the response had been positive but the Department had been warned that the waivers must maintain budget neutrality. Ms. Liveratti added that, though the Department would like to see low and moderate-income senior citizens obtain some help with their vision and dental needs, the Department did not want to see new services added at the expense of the prescription drug program.
Assemblyman Mabey asked if Medicare paid for vision or dental care.
Assemblywoman McClain replied that Medicare paid nothing.
Mr. Mabey inquired what was meant by “limited scope.”
Ms. McClain replied possibly a tooth that needed to be pulled or broken dentures repaired. She explained that the intention was to cover small repairs and to offer preventive care, and possibly new eyeglasses every couple of years.
Assemblyman Horne, referring to senior citizens on the waiting list for the Senior Rx program, asked if a program could be designed so that a person on the waiting list who only needed a denture repaired, or a tooth extracted, or eyeglasses, could get off the waiting list for those limited purposes.
Ms. McClain replied that the Senior Rx program was insurance-based, so it was to the benefit of all plan participants to incorporate the good risks with the bad risks. She explained that Mr. Horne’s idea would defeat the purpose of spreading the risks across a large pool of people, but mentioned that if the state ran the Senior Rx program, there might be some cost savings.
Mr. Horne said that he had misunderstood. He had thought Ms. McClain was hoping to include the people on the waiting list.
Assemblywoman McClain agreed that she was hoping to include those people on the waiting list into the program. Household income of $21,500 was not much money, she commented, and added that there were probably as many as 28,000 people who were really low-income in her mind.
Assemblywoman Angle said that the fiscal note on A.B. 283 indicated the plan would cost $41.67 per month, per member. She asked whether that figure would be in addition to what Senior Rx charged each member or if it would be the total amount for Senior Rx, plus the new benefit.
Mary Liveratti replied that $41.67 would be the cost for the vision and dental benefit and would be in addition to the premium cost for the Senior Rx prescription coverage.
Assemblywoman Angle inquired what the premium cost for the Senior Rx program was.
Jane Smedes, Management Analyst, Nevada Department of Human Resources, replied that the cost was approximately $65 per month.
Mrs. Angle opined that the monthly premium costs for all the benefits would be a little over $100 per month.
Ms. Smedes agreed that she was correct.
Mrs. Angle pointed out that vision coverage would have no deductible, but that there were deductibles for the dental coverage.
Ms. Liveratti replied that for the sample coverage as contained in the fiscal note, 100 percent of an eye exam would be paid after the $10 co-pay, lenses and frames would be paid at 100 percent, and that there was an estimated cost of $140 per year, per member. Preventive care for dental work, she added, would have a $50 annual deductible, and then the plan would pay 80 percent while the member would pay 20 percent of the cost. Major dental work would have a $1,000 maximum annual benefit with a $150 deductible, with the member and the plan each paying 50 percent. Ms. Liveratti pointed out that the estimated annual premium would be $360 per year, per member.
Mrs. Angle asked if preventive care meant teeth cleaning and examinations.
Ms. Liveratti agreed that it would and added that preventive care was mainly cleanings.
Assemblywoman McClain reminded the Committee that they were just hearing an example of the kind of coverage she was hoping for, but that specific coverages were “not locked in stone” and could be higher or lower depending upon deductibles and coverage changes. She also mentioned that the Senior Rx program was in the middle of negotiations with its insurance provider and that lower premiums for plan members might result.
Ms. Smedes told the Committee that the contract for Senior Rx had been finalized.
Mrs. Angle asked how many people were currently enrolled in the Senior Rx program.
Ms. Liveratti replied that there were 7,500 people enrolled in the program. When costs over the next biennium were being estimated, she added, the Department had included a maximum enrollment of approximately 12,000 by the end of 2005 based on the $5 million that the Governor had proposed to add to their funding.
Assemblywoman Leslie, noting that the Committee would be voting on the policy of A.B. 283 and not the cost, indicated she believed the bill was good policy. She expressed the hope that when the bill arrived at the Ways and Means Committee there would be a better fiscal note, because she believed the Ways and Means Committee would not be able to make a good decision based on the figures in the current fiscal note.
Chairwoman Koivisto inquired whether there was any additional testimony on A.B. 283.
Assemblywoman McClain thanked the Committee for allowing her to present her proposal.
Chairwoman Koivisto noted that someone else had signed in to speak in favor of A.B. 283.
Bob Johnson, State President, Retired Public Employees of Nevada, explained he represented 8,000 members of the Retired Public Employees of Nevada, although he noted that there were approximately 26,000 retirees in the state. He said that he traveled the state constantly to meet with retirees, whose major concerns were medication, dental care, and vision. He pointed out that in conversations with the retirees, they said they could do without dental care, but if they did not have vision, they would be unable to take their medication. He emphasized that poor vision was a major concern and problem for single retirees, and added that glasses cost around $300 to $400. For that reason, Mr. Johnson said that he strongly supported A.B. 283.
Chairwoman Koivisto, noting that Assemblyman Mabey was testifying in another committee, postponed the vote on A.B. 283 and opened the hearing on A.B. 228, which she reminded Committee members had been a Committee introduction.
Assembly Bill 228: Requires certain major hospitals to reduce or discount total billed charge for hospital services for treatment of trauma to certain inpatients. (BDR 40-1048)
Richard “Skip” Daly, Laborers’ Union Local 169 of Northern Nevada, read his testimony from a prepared statement (Exhibit D). He explained that A.B. 228 would provide a 30 percent discount on total bill charges for inpatient treatment for trauma at a designated trauma center in a county whose population was more than 100,000 but less than 400,000. It would also provide for a 30 percent discount when the patient had insurance but there was no agreement with the hospital to reduce or discount the total billed charges, and the patient made reasonable arrangements to pay their hospital bill.
Mr. Daly explained that insurance and medical providers sought to make mutually beneficial arrangements where the medical provider would agree to discount the bill charges in exchange for the insurance provider encouraging its participants to use that medical provider. Mr. Daly stated that the discounts would be offset by increased volume and guaranteed payment, and for that reason billed charges were often discounted by up to 50 percent, or more.
Mr. Daly indicated that A.B. 228 would remedy the problem created when a patient was treated in a trauma center, because it sought parity for people who had insurance, with people who had no insurance but who would be offered a 30 percent discount. He added that the monopoly effect created by the designated trauma center law required government regulation to remedy the situation.
Assemblywoman Leslie asked whether Mr. Daly had any actual cases where a union member had been taken to Washoe County’s trauma center, and if so, what costs were involved.
Mr. Daly responded that he had actual cases and explained that when one of the participants in the union’s insurance program had been taken to Washoe Medical Center for trauma treatment, the ability to use the plan’s preferred provider was lost. The bill for treatment was sent to the plan’s insurance and the plan paid what the plan provided for under the fee schedule as though the person had gone to the preferred provider. Mr. Daly referred to a specific instance when a plan member’s child was taken to Washoe Medical Center and treated for several days. The insurance plan paid approximately $30,000 and then the family appealed to the union’s trust fund to pay the balance, which was around $80,000. Mr. Daly noted that the impact to the family to try to pay the $80,000 was substantial. He pointed out that the plan’s third-party administrator had indicated the patient did not qualify for the 30 percent deduction for the uninsured that existed under Nevada Revised Statutes (NRS) 439B.260, Section 1(c).
Assemblywoman Leslie asked if it would have been better, financially, if the person had been uninsured.
Mr. Daly replied that the family would have owed less.
Ms. Leslie inquired if there was such a thing as a contract with a trauma center for those services.
Mr. Daly answered that the plan had a preferred provider contract with the area’s other major hospital, which would not be opposed to allowing the plan to carve out a separate contract just for trauma, but that the trauma hospital had refused.
Assemblywoman Weber asked if a patient taken to a trauma center outside the state of Nevada would have the ability to negotiate a discount.
Mr. Daly explained that when those circumstances happened to one of their plan participants, the plan attempted to negotiate with the hospital and that in some instances, the out-of-area hospitals had negotiated. He added that the plan paid the fee schedule as though the care had been provided locally.
Ms. Weber inquired whether Mr. Daly had any data to support his contention that there were other trauma hospitals outside the state of Nevada that would offer discounts.
Sandy Kerr, Benefit Plan Administrators, said that she would have to research the issue.
Assemblyman Hardy inquired if Mr. Daly was referring to paragraph (c) on page 2, line 15 of A.B. 228.
Mr. Daly asked if Mr. Hardy was referring to existing law.
Mr. Hardy indicated that he was, and asked if the language in paragraph (c) was what had caused Mr. Daly to say that, because a patient had insurance, he was not as well off, referring to the hospital bill, as one who did not have insurance and could receive the 30 percent discount.
Mr. Daly agreed that the paragraph (c) under the previous law, which was lined out in A.B. 228, referred to making reasonable arrangements within 30 days after discharge to pay the hospital bill. Mr. Daly reiterated that he had been told if a patient had insurance, the hospital had said that patient was not eligible to receive the discount.
Assemblywoman Angle, noting that A.B. 228 would only apply to Washoe County, asked if 30 percent discounts were being honored across the state or if Washoe County was the only problem.
Mr. Daly replied that the state had two designated trauma centers, one in the south and one in the north, but that because the southern trauma center, University Medical Center (UMC), had arrangements with all the major providers in southern Nevada, this issue did not arise there.
Mrs. Angle, noting that testimony indicated no problem in southern Nevada, asked whether the arrangements in the south were voluntary.
Mr. Daly testified that, to his knowledge, there was not this difficulty in southern Nevada.
Ms. Angle reiterated her remark that UMC voluntarily made arrangements with the major providers in southern Nevada.
Mr. Daly said that it was his understanding that UMC had agreements to provide discounts with the major insurance providers in the south.
Assemblywoman Leslie, explaining that she had just looked up NRS 439B.260, asked why that statute did not apply.
Mr. Daly claimed that his third-party administrator, and everyone in the industry who he had spoken to, said that because the plan had a contract for payment by a third party, those provisions did not apply.
Ms. Leslie commented that there was no contractual provision for the trauma center.
Mr. Daly agreed that there was no contractual provision between the provider and the trauma center. The language in the current statute, he noted, asked whether there was a contractual provision between the patient and the provider to provide insurance, and since there was such a provision, the patient was excluded from the benefit of the existing laws.
Ms. Leslie stated that a legal opinion should be requested, because she believed Mr. Daly had “already won” with the existing law, but added that she might be misreading it.
Ms. Kerr read a statement in support of A.B. 228 (Exhibit E). She explained that when one of the insurance plan’s participants was hospitalized for trauma services at Washoe Medical Center, they, as third-party plan administrators, immediately notified the treating physician and Washoe Medical Center that the participant should be moved to the preferred provider as soon as medically appropriate, so that the participant would not be left with a large liability.
Ms. Kerr indicated that Washoe Medical Center’s refusal to contract for trauma services had resulted in harm to their plan participants because of the large patient liability remaining after the insurance payment, which was frequently turned over to a collection agency.
Ms. Kerr noted that Washoe Medical Center had an Uncompensated Care Committee, but added that not everyone could access the program; it was therefore not applied fairly.
Debbie Smith, Operating Engineers Local 3, explaining that she was a benefits plan representative, read her testimony to the Committee (Exhibit F). Ms. Smith testified that A.B. 228 would help plan participants by ensuring that trauma patients with insurance would get the same consideration as those trauma patients without insurance.
Assemblyman Hardy asked why there was no contract with Washoe Medical Center.
Ms. Kerr replied that the Operating Engineers had a contractual arrangement with the area’s other major hospital that would allow them to contract for the trauma services that were not available at any other facility than Washoe Medical Center. However, she stated, the plan had been unable to contract with Washoe Medical Center for only trauma services.
Ms. Smith explained that Washoe Medical Center probably did not want to contract only for trauma services, but for all of a plan’s business. That was the way contracts worked, she noted.
Mr. Hardy inquired whether public funds helped support Washoe Medical Center. Ms. Smith answered that Washoe Medical Center did receive public funds.
Mr. Hardy asked how much support Washoe Medical Center received. Ms. Smith replied that she could not answer that question, but would get the answer later if the hospital representatives could not provide it.
Assemblyman Hardy wanted to know whether the funds originated with the state or the county. Ms. Smith indicated that she believed Washoe Medical Center received funds from both funding sources.
Assemblywoman Weber, asking for clarification about negotiations solely for trauma services, inquired whether Washoe Medical Center would not negotiate for any discount, or whether it would negotiate some other discounted percentage.
Ms. Kerr explained that, with negotiations she had been involved in, the hospital had refused to negotiate any discount or contract for trauma services.
Ms. Weber inquired whether there were any other groups that the hospital negotiated with solely for trauma services. Ms. Kerr replied that she did not have that information.
Assemblyman Horne asked whether a representative from Washoe Medical Center was present at the hearing.
Chairwoman Koivisto indicated that there was a representative present, but that she wanted to hear from other proponents of A.B. 228.
Danny Thompson, Nevada State AFL-CIO, testified that he represented all of the union trust funds in northern Nevada, and that a cornerstone of the unions was the ability to offer good insurance to their members. He reiterated that there was no problem in southern Nevada. Mr. Thompson emphasized that the patient had no choice when the situation was such that treatment at trauma center was required, and that he was in support of A.B. 228.
Assemblywoman McClain asked how many other providers could not get trauma contracts with Washoe Medical Center. Mr. Thompson said that he did not know but that he would find out.
Mark Sullivan, Nevada Chapter, Association of General Contractors (AGC), explained that the AGC negotiated contracts for several different crafts, such as operating engineers, laborers, carpenters, plumbers, and sheet metal workers as well as electrical workers, floor coverers, et cetera in northern Nevada. He indicated that the AGC was in support of A.B. 228. Trauma cases had to be taken to Washoe Medical Center, he noted, and as a result, the patients oftentimes were stuck with insurmountable bills.
Jack Kim, Sierra Health Services, expressed support for A.B. 228. He noted that, because the bill would only “affect Washoe,” it would not involve Sierra Health Services, but the company felt it was good public policy.
Janice Pine, St. Mary’s Health Network, introduced Don Kowitz, a Vice President of St. Mary’s Health Network.
Donald Kowitz, Vice President, St. Mary’s Health Network, and Chief Operating Officer, St. Mary’s Health Plans, reading from prepared text (Exhibit G), spoke in support of A.B. 228. He stated that he was speaking on behalf of the approximately 85,000 northern Nevadans St. Mary’s either insured or whose health plans they administered. Mr. Kowitz, noting that by law trauma services must be provided by a single designated trauma facility, explained that only a payer contracting with Washoe Medical Center for the full range of hospital services could receive a discount on trauma services. He added that if a payer chose to contract with another hospital facility for non-trauma services, the designated trauma center would not grant that payer a discount for trauma services.
Mr. Kowitz emphasized that when the law dictated what facility must be used for trauma services, users of that service should not be financially penalized because they were transported to the designated trauma center. He noted that during 2001 and 2002, charges in excess of $3 million were paid for trauma services on behalf of the 30,000 members insured by St. Mary’s Health Plans, with virtually no discount being available to the payers of those services in spite of the fact that other payers were granted discounts during the same period by the designated trauma center.
Mr. Kowitz stated that it was his position that granting discounts for trauma services only to those payers who contracted for the full range of services at the designated trauma center was an unfair use of the unique monopoly status that had been granted by the state to that designated trauma center. He noted that A.B. 228 took advantage of existing state statute regarding discounts for hospital services provided to individuals with no insurance coverage.
Assemblywoman McClain commented that the original language in the law required a 30 percent discount for people with no insurance or for people who were on public assistance. She asked whether that would apply to people who had insurance but had no contract and noted that previous testimony indicated that most providers managed to negotiate reductions of up to 40 to 50 percent.
Mr. Kowitz agreed, saying that in his experience the discount on a general contract with a medical center for a full range of services would be approximately 40 to 50 percent.
Assemblywoman McClain opined that passage of A.B. 228 would provide some help, but not as much as the patient would have received had there been a contract.
Mr. Kowitz agreed that the situation could be perceived that way. He acknowledged that trauma services were expensive, so it might be prohibitive to ask for that larger discount. Mr. Kowitz reiterated that this was an opportunity to apply an existing law.
Ms. McClain noted that the original law applied statewide.
Fred Hillerby, representing Washoe Medical Center, responding to an earlier question concerning public support, indicated that Washoe Medical Center did not receive public support, neither county nor state tax subsidies. He added that the medical center did receive Medicaid and Medicare payments.
Mr. Hillerby explained that Washoe Medical Center had been a county hospital, but that it had converted to a private not-for-profit institution some time previously.
Chairwoman Koivisto inquired whether Washoe Med received any Disproportionate Share (DSH) money.
Mr. Hillerby responded that Washoe Med did receive a minimal amount of DSH money for treating a disproportionate share of indigent patients. He added that Washoe County also paid the hospital $1.5 million, and in return for that money, Washoe County did not have to pay for county indigent care. Washoe Medical Center, he noted, ultimately received $4.8 million, out of which was deducted care for all county indigents. The net result in past years had been about $1 million, he elaborated, but lately, the net was much less. Those were just the Medicaid dollars from care of the county indigents, not a subsidy, he pointed out.
Mr. Hillerby showed Committee members a brief video produced by Washoe Medical Center that showed scenes from the trauma center. Jim Miller, Chief Executive Officer, spoke on the video about the trauma services offered by the medical center and said that it was self-funding and that the services were available 24 hours a day, 7 days a week on a moment’s notice. Myron Gomez, attending surgeon and Director of Trauma Services at Washoe Medical Center, also spoke on the video and explained that the trauma center had been northern Nevada’s designated trauma center since 1989, treating approximately 2,500 trauma patients in the resuscitation area of the trauma center each year.
Dr. Gomez noted that trauma care required a tremendous stand-by capacity and that the response team consisted of an in-house trauma surgeon, emergency room physician, two nurses, respiratory therapy, laboratory, and radiology. In addition, trauma center care also required the immediate availability of a number of specialists, including neurosurgeons, orthopedists, anesthesiologists, and plastic and reconstructive surgeons.
Mr. Miller, again speaking on the videotape, explained that it was very expensive to employ physicians and support staff 24 hours a day as well as keeping technologies and programs open 24 hours a day so they would be available on a moment’s notice. He suggested that if employers and other insurers in Nevada did not pay for trauma services, or were provided a legislated or mandated discount for those services, someone would need to pay for them. He mentioned that the states of Washington, California, and Texas had imposed a number of taxes on things such as moving traffic violations, cigarettes, and alcohol to support trauma centers.
Chris Bosse, Washoe Medical Center, explained that the purpose of showing the videotape had been so Committee members could see the trauma center. She pointed out that the Washoe Medical Center trauma center had been continuously verified by the American College of Surgeons and had treated approximately 2,500 patients in 2002 coming from ten Nevada counties. The trauma center, she added, served as a resource center for outlying counties by providing leadership and education to their physicians and hospital staffs, and also by providing comprehensive patient care services.
Speaking of costs, Ms. Bosse indicated all physicians were required to be present to meet any arriving patient. Backup physicians were required to be available within 30 minutes, so coverage by physicians cost over $3 million annually. Internal costs, Ms. Bosse stated, included operating room trauma teams on standby 24 hours a day, as well as internal reorganization so that lab services, adequate blood supply, and radiology services would be available. Ms. Bosse noted that nurses trained in trauma were also required for adequate staffing. Pediatric intensive care must be offered, Ms. Bosse added, as well as rehabilitation services for trauma patients, plus separate emergency room trauma facilities standing by, dedicated imaging equipment, resuscitation equipment, and dedicated trauma intensive care beds. One operating room, she noted, was set aside at all times for trauma care.
Ms. Bosse emphasized that other expenses included preventive programs such as car seat giveaways, seat belt training, bike helmet giveaways, physician and clinician education, and a trauma registry that looked at trauma trends.
Assemblyman Horne stated that what the Committee had been shown by Washoe Medical Center was nothing more than UMC was doing in the southern part of the state. He still wanted to know why UMC had found a way to negotiate, but Washoe Med had not.
Jim Miller, Chief Executive Officer, Washoe Medical Center, explained that contracting in Nevada was done through exclusive, or limited, networks, which meant that if an insurer, or payer, contracted with a network, they would get the providers within that network only. He maintained that it was true in Clark County as well as Washoe County, and that it was true at UMC. Mr. Miller noted that there were payers that did not contract with all the hospitals. He also stated that the hospitals contracting in the limited networks did not provide single-service contracts.
Assemblyman Horne, stating Washoe Medical Center’s trauma unit was “the only game in town,” asked what percentage of patients would be affected by A.B. 228.
Mr. Miller replied that approximately 40 percent would qualify and the remainder would fall under some sort of governmental or worker’s comp. He explained that 40 percent roughly represented the commercial population, people covered by insurance plans.
Mr. Horne asked whether passage of A.B. 228 would put Washoe Medical Center at a competitive disadvantage with the other two hospitals in the area.
Mr. Miller answered, “Absolutely.”
Ms. Bosse, referring to local market forces, indicated that Washoe Medical Center’s competitors had an advantage because they had a lower cost opportunity in negotiating rates with health plans and that certain health plans would like legislation passed so that they could avoid paying their share of trauma services for their members. She pointed out that someone had to pay for the availability of trauma care so it would be there when it was needed.
Ms. Bosse explained that trauma activation charges were less than $3,100 per admittance and that Washoe Med charged the same for non-trauma or trauma services. On average, trauma costs were higher, she noted, because of the intensity of services. Ms. Bosse emphasized that, generally speaking, trauma claims were large and that accidents were expensive. She noted that there were very few cases, on an annual basis, and that health plans were looking for a way to reduce costs on the few claims they had per year.
Ms. Bosse quoted actuaries Milliman and Roberts, whose findings indicated that, of the premium dollar, professional services accounted for the largest part at 39.3 percent. Hospital services, not including trauma, were 24.1 percent, and the trauma part of the premium dollar was .9 percent.
Assemblywoman McClain inquired whether the .9 percent was the cost to the health plan or the cost of the service.
Ms. Bosse replied that it was the cost to the insurance companies.
Ms. McClain commented that it was not the cost that the trauma center charged.
Mr. Hillerby explained that they were trying to relate to the total premium cost for health insurance and that .9 percent of the premium cost was spent on trauma care and he promised to expand on the point later in his testimony.
Ms. Bosse noted that the potential impact of A.B. 228 would be a 30 percent discount, so in the end, the impact to the health plan industry would be less than .3 percent of the premium dollar. She highlighted that the impact on Washoe Medical Center would be 30 percent of charges to 40 percent of their trauma cases.
Assemblywoman Leslie asked if the hospital representatives were saying that they knew for certain that 40 percent of the people who sought services in the trauma center were under insurance plans to which Washoe Med would not offer a contract for trauma services.
Ms. Bosse replied that 40 percent of the population fell under commercial insurance companies and that Washoe Med would need to provide the proposed 30 percent discount to all those populations. She added that the 40 percent included people not contracted with Washoe Med, as well as people who were contracted with Washoe Med.
Ms. Leslie, noting that Mr. Daly and his union were not able to purchase trauma services under their current insurance plan because that provider could not offer those services, said that the union would like to contract with Washoe Medical Center for trauma services. She indicated that the issue was that the only place people could get trauma services was at Washoe Medical Center, but they would not contract for those services. Ms. Leslie asked why they would not do so.
Mr. Miller answered that he had explained the contracting standard in Nevada relative to exclusive networks, which was essentially that exclusive networks offered the services that they provided at a discount and they did not contract for individual services separately. He expressed Washoe Medical Center’s willingness to enter into a contract with the unions or other payers, but the argument, he noted, would be at what rate. Mr. Miller added that he believed Washoe Medical Center was collecting rates for trauma care from the people they contracted with as well as collecting those rates from the people who they did not contract with, and that there was a fair playing field.
Assemblyman Horne explained that the problem today was a contract for patients who did not have a choice, who were sent to Washoe Medical Center because of a trauma, an emergency. Mr. Horne stated that Mr. Miller was trying to lump all the hospital’s services into a contract, which the people did not need. The patients were put into a position where they had no other place to go, he pointed out, and all they were asking was to be able to enter into an agreement for those services for which they had no choice in the provider.
Mr. Miller reiterated that Washoe Medical Center was willing to enter into a contract, but that the reason there was no contract was that the rate Washoe Medical Center was asking had not been agreed with. This was a rate issue, he emphasized. Mr. Miller reiterated that Washoe Medical Center had additional costs because it was a trauma center. Other providers did not have trauma costs, and as a result could offer their services at a discounted rate, he added.
Assemblywoman Leslie asked if Washoe Med would be willing to contract for the 30 percent discount that she still thought was in existing law.
Mr. Miller replied, “Not at this time. No.”
Ms. Leslie responded, “At a future time? Why not?”
Mr. Miller indicated that the balance of the hospital’s presentation would address that issue.
Assemblywoman McClain inquired if part of the problem was insufficient caseload for the extremely high costs of doing business by the trauma unit.
Mr. Miller replied that there were 2,500 trauma cases treated by Washoe Medical Center and that the cost of each case was approximately $60,000.
Assemblywoman McClain, stating that Washoe Medical Center had a monopoly, reiterated that maybe the trauma unit was not making any money. She opined that the unit costs must be “outrageous.”
Assemblyman Hardy stated that the Committee understood that trauma costs were expensive, but that the Committee was concerned with policy.
Mr. Miller emphasized that other area hospitals that did not have trauma costs had a price contracting advantage, and that some health plans had chosen that contracting advantage over Washoe Medical Center and now were asking for special legislation to help them avoid paying their share of trauma costs as well. He added that those health plans were also asking to “double dip” on discounts, by first taking the discounted advantage of one network, and then attempting to use legislation to get discounts from the other network, too. Mr. Miller maintained that legislation should not be passed to help health plans make their business decisions.
Mr. Miller stated that A.B. 228 was purported to be about plan members when, in reality, it was about health plans. He noted that, to save a small percentage of premiums, a few health plans were choosing not to pay the price for trauma and instead telling the families they insured that they would not cover the price of serious accident care. The burden of accident care, he continued, then fell to the insured families. Mr. Miller stressed that the health plans were making the decision to place the burden on their insured members when the health plans could have paid for that care. He pointed out that the very nature of insurance was for the many to pay for the few. Mr. Miller noted that the health plans wanted to carve out the accident coverage for the few, because it had been identified that accidents were expensive. He said that the real public policy was the health plans working to avoid a small percentage of their total plan costs by placing the burden of the accident costs on the families they insured in order to attempt to get trauma centers to sell the trauma services for amounts that did not pay for the care.
Mr. Miller asked if, through legislation, health plans were excused from their full obligation to their members to pay for trauma care, how would trauma care be funded. He pointed out that trauma care prevented deaths and loss of limbs and that Washoe Medical Center had been able to make the state’s northern trauma program operate without government subsidy. Comparing Washoe Medical Center’s trauma unit with UMC’s, Mr. Miller noted that Washoe’s had been able to remain open, even when physician costs increased, unlike UMC’s, which had had to close. Mr. Miller warned that Washoe Medical Center did not have unlimited resources to continue to fund such challenges and shortfalls and that passage of A.B. 228 would only serve to exacerbate the already serious situation for trauma hospitals within Nevada that were struggling to meet rapidly growing cost needs.
Mr. Miller explained that if Washoe Medical Center were forced to discount trauma services, all current contractors would demand the same discount break on trauma costs in their contracts, and all not contracted with Washoe Medical Center would demand the discount as well. Basically, the result would be discounted trauma care to all insurers, he emphasized, and any discount would be an overwhelming burden to the program and would take away the very funds that made the program free of government subsidy.
Assemblywoman Leslie indicated that Mr. Miller had made some good points. She inquired how much of a patient’s trauma bill went uncollected after the patient’s insurer had paid, referring to the clientele with no contract, such as the people who had been testifying that day.
Mr. Miller said for those insurers who had chosen not to cover the full cost of trauma, he did not have information as to how much Washoe Medical Center had written off for patients left owing a balance.
Ms. Leslie stated that the real losers in the debate were those people, and she noted that bad credit could affect many facets of a person’s life, such as auto and home insurance rates.
Chairwoman Koivisto requested Marcia Holmberg provide insight on the per-unit cost for trauma care at UMC. She also asked how many trauma patients UMC saw in a year.
Mr. Hillerby, indicating that he was not a health insurance or medical administrator, agreed with Ms. Leslie that the people were caught in the middle. He stated that those working people, who thought they had insurance to take care of them when they were injured, were finding that they did not have insurance. Mr. Hillerby emphasized that the health plans were electing to not pay the full cost for trauma because they did not want to contract with Washoe Medical Center. Mr. Hillerby indicated that was their right but added that the cost to provide such coverage was such a small part of the premium dollar and he wondered why the members were not covered and why the hospital had been placed in the middle. He noted that someone had to pay for the cost of having trauma care available when it was needed. Mr. Hillerby pointed out that no one had mentioned not having trauma centers, because they worked. He stated that the issue, as he saw it, was that health plans could save money by contracting with another provider, but he inquired why they could not afford to pay for trauma care, when just a few of their clientele needed it. He asked why the hospital should offer a discount to those people, when they believed they were covered.
Marcia Holmberg, University Medical Center, Las Vegas, apologized to the Committee for not having a per-unit cost, but stated that she could get that information to the Committee at a later date. She indicated that UMC’s level 1 trauma center saw approximately 11,000 patients per year.
Assemblywoman McClain expressed her concern that Washoe Medical Center’s trauma unit did not have enough patients to make the unit “cost-effective.” She asked if UMC had arrangements with all providers in southern Nevada.
Ms. Holmberg stated that UMC had larger trauma costs because they had more physicians available on a moment’s notice. Referring to the contracts, she indicated that UMC had contracts with the different managed care organizations and that each contract was a little bit different and had discounts built in because UMC contracted for the full range of services.
Chairwoman Koivisto inquired if UMC had to have an exclusive agreement, or whether a managed care group or a self-funded group could have contracts with other hospitals as well as with UMC.
Ms. Holmberg replied that she was unclear of the question.
Chairwoman Koivisto asked if a managed care group negotiated a contract with UMC, could it also have a contract with another hospital.
Ms. Holmberg indicated that it was her understanding that there was no monopoly.
Assemblyman Mabey asked whether any Las Vegas health plans did not have a contract with UMC.
Ms. Holmberg said there were none and expressed concern that, “if a limit was set” in future negotiations with managed care contracts, UMC would be at a disadvantage “for them to engage in full fair-market negotiations.”
Mr. Mabey inquired what happened if someone were visiting from another state and needed trauma care.
Ms. Holmberg stated that it was her belief such a patient would be charged the full charges.
Mr. Miller noted that Washoe Medical Center had contracts with employers who also had contracts with St. Mary’s, similar, he said, to what occurred in Clark County.
Assemblywoman McClain inquired whether UMC ever negotiated to provide a single service for trauma.
Ms. Holmberg replied that she did not think so.
Ms. McClain, referring to a single service contract for trauma care, asked what sort of discount Washoe Medical Center would provide.
Mr. Miller, stating that he believed Ms. McClain was asking whether Washoe Medical Center would provide a single service discount for trauma, reiterated that the medical center did not provide a single service discount for any of its services, some of which, he noted, were exclusive in their market place.
Mr. Hillerby thanked the Committee for allowing Washoe Medical Center to make its presentation.
Assemblywoman Pierce asked who decided which hospital would become an area’s trauma unit.
Mr. Hillerby replied that the state Health Department had made that designation based on hospitals that could qualify based on the American College of Surgeons’ standards, and that there were criteria such as population base. He noted that the idea had been to not have too many trauma centers because they were so expensive and because concentrating the trauma cases would result in a greater proficiency. He added that it had been a public policy decision made in the 1980s.
Assemblywoman Pierce opined that if another hospital in the area wanted to be a trauma unit it would not be able to.
Mr. Hillerby replied that it could not be a level 2 unit, which was Washoe Medical Center’s designation. He thought that Churchill County Hospital was a level 3 hospital.
Ms. Pierce reiterated that by law, another hospital would not be allowed to get that designation.
Mr. Hillerby affirmed that, by law, no other hospital could be a level 2 hospital in this service area.
Chairwoman Koivisto noted that two additional people had signed up to testify on A.B. 228 and that, while they were coming forward, she would request Committee introduction of a bill draft request (BDR) from the Department of Human Resources, Healthcare Financing and Policy Division.
ASSEMBLYWOMAN LESLIE MOVED FOR COMMITTEE INTRODUCTION OF BDR 38-482.
ASSEMBLYWOMAN McCLAIN SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY.
Stephanie Beck, RN, Emergency Medical Services Coordinator, Washoe County District Health Department, noted this issue was an access-to-care issue that the Health Department was very concerned about, and she presented a letter to Committee members (Exhibit H). Ms. Beck pointed out that many trauma centers across the country had been unable to maintain their designations because of extensive and often unreimbursed costs and that in several states, trauma hospitals were seeking public tax support to be able to maintain those services.
Ms. Beck noted that the Washoe County District Health Department had reservations about the short and long-term repercussions of A.B. 228 on the statewide trauma system and the designated trauma center in Washoe County. She was concerned that the additional financial pressures that might result from passage of A.B. 228 could result in all of northern Nevada and northern California being without a trauma center in the future. Ms. Beck urged the Committee to carefully consider the issues.
Robin Keith, President, Nevada Rural Hospital Partners; and President, Nevada Rural Hospital Partners Foundation, noted that the Fallon hospital was designated a level 4 trauma center; however, she added that the Fallon hospital was giving serious consideration to letting that designation lapse because of the costs associated with maintenance of that designation.
Ms. Keith pointed out that trauma services were similar to obstetrical services in that they were not often needed, but when they were needed there was no substitute. She emphasized that trauma services were very expensive to provide and that Nevada’s small, rural, frontier hospitals and residents relied on access to those services in both southern and northern Nevada. Ms. Keith mentioned that the state’s interstate and intrastate highways were frequently the scenes of tremendous trauma and that in those circumstances, local hospitals stabilized the victims, who were then transported to a facility with the level of care needed by the victim.
Ms. Keith noted that in addition to direct, immediate care, the trauma centers provided outreach services to rural Nevada that were extremely important. She mentioned that one of Washoe Medical Center’s trauma physicians was very interested in the treatment and early intervention of strokes. The physician, she added, taught a program that involved the giving of very powerful drugs within a very narrow time frame to patients who met very specific clinical criteria. When those protocols were followed, Ms. Keith emphasized, the clinical difference in terms of patient outcome was astounding. She noted that patients who qualified clinically for the treatment and received it had far better results than patients who did not. The physician had gone out into rural Nevada and taught the protocol to local medical staffs statewide. A recent discussion of the effectiveness of this protocol on five people indicated all that all had returned to their normal lives, including one 38-year-old father. Ms. Keith also noted that five insurance plans now did not have to stand the costs of long-term rehabilitation that were normally involved with a stroke. In conclusion, Ms. Keith stated that the rural hospitals in Nevada encouraged the Committee to carefully consider anything that might erode the viability of trauma services in northern Nevada.
Chairwoman Koivisto closed the hearing on A.B. 228, mentioning that there was information the Committee needed before taking action on the bill.
Chairwoman Koivisto requested a motion on A.B. 283.
ASSEMBLYMAN WILLIAMS MOVED TO DO PASS A.B. 283.
ASSEMBLYMAN HORNE SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY.
With no further business to come before the Committee, the hearing was adjourned at 3:45 p.m.
Terry Horgan
Committee Secretary
APPROVED BY:
Assemblywoman Ellen Koivisto, Chairwoman
DATE: