MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
March 13, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Thursday, March 13, 2003, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4401, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
GUEST LEGISLATORS PRESENT:
Senator Bernice Mathews, Washoe County Senatorial District No. 1
Senator Dean A. Rhoads, Northern Nevada Senatorial District
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Laura Adler, Committee Secretary
Johanna Downey, Committee Secretary
OTHERS PRESENT:
Buffy Gail Martin, Lobbyist, Government Relations Director-Nevada, American Cancer Society-Reno
Gil Robison, President, Gil Robison Construction and Development Incorporated
Jessica Clayton
Randy Richardson
Jack Kim, Lobbyist, Director of Legislative Programs, Sierra Health Services, Incorporated
Lawrence P. Matheis, Lobbyist, Executive Director, Nevada State Medical Association
John H. McAfee, M.D., Diplomate, American Board of Gastroenterology
Melody L. Luetkehans, Lobbyist, Nevada Association of Realtors
Judy Cook, Lobbyist, President, Cook and Company, Limited
Gail J. Anderson, Administrator, Real Estate Division, Department of Business and Industry
Tami DeVries, Acting Deputy Administrator, Real Estate Division, Department of Business and Industry
Joe E. Lawrence, Lobbyist, President, Managed Care Consultants
Scott J. Watts, Lobbyist, President, Nevada Alliance for Retired Americans
Thelma Clark, Lobbyist, AARP
Charles (Chas) L. Horsey III, Administrator, Housing Division, Department of Business and Industry
Nancy Ford, Administrator, Welfare Division, Department of Human Resources
Craig Davis, Superintendent, Grants Project Analyst, Housing Division, Department of Business and Industry
Ernest E. Adler, Lobbyist, Nevada Housing Coalition
Arthur C. Thurner, Chief of Federal Programs, Housing Division, Department of Business and Industry
Jessie R. Battey, Redress Incorporated
Barbara Stone, Senior Advocate
Dawn Costa, LSW, Social Worker II, Washoe County Senior Services
Chairman Townsend:
I will introduce Senate Bill (S.B.) 183.
SENATE BILL 183: Requires certain policies of health insurance and health care plans to include coverage for screening examinations and tests for colorectal cancer. (BDR 57-726)
Senator Bernice Mathews, Washoe County Senatorial District No. 1:
We will delete S.B. 183 as a whole and replace it with this new amendment (Exhibit C). I think all of us have had someone who has been touched by colon cancer one way or the other. Minorities are at risk more than any other group in the population. Section 1 is amended by adding a new section that reads, “A policy of health insurance that provides a coverage for the treatment of colorectal cancer shall provide colorectal cancer screening in accord with the American Cancer Society colorectal cancer screening guide.” Section 2 is the policy on group health insurance and shall provide coverage for the treatment for colorectal cancer, shall provide colorectal cancer screening according to the American Cancer Society colorectal cancer screening guide. The major amendment is in section 5: “The governing bodies of any county, school district, municipal, corporation, political subdivision, public corporation, or other public agencies that provide health insurance through a plan of self insurers shall provide coverage for colorectal cancer screening in accord with the American Cancer Society colorectal cancer screening guide.”
Buffy Martin, Lobbyist, Government Relations Director-Nevada, for the American Cancer Society-Reno:
We have prepared packets for your review. I am here to speak in support of S.B. 183. I will read from my written testimony (Exhibit D).
Senator Neal:
This proposed amendment, which deletes the bill as a whole, drastically changes the original bill. Is there an insurance plan providing coverage for the treatment of colorectal cancer using a guideline other than the one provided by the American Cancer Society?
Ms. Martin:
The National Institute of Health works with the American Cancer Society guidelines. This amendment to S.B. 183 does not outline the exact test, which does give us certain flexibility. If a colonoscopy becomes obsolete within 5 years, it would not be codified in law. By working with the American Cancer Society guidelines we are able to provide insured Nevadans with the best possible test at that moment.
Senator Neal:
The essence of this legislation would take effect only if a company associated with the American Cancer Society had a policy of insurance that covers colorectal cancer screening.
Ms. Martin:
The group study commissioned by the American Cancer Society showed 100 percent of plans do cover basic colorectal cancer screening tests. They may not cover the colonoscopy.
Gil Robison, President, Gil Robison Construction and Development Incorporated:
I am here to speak from prepared testimony (Exhibit E) in support of S.B. 183.
Jessica Clayton:
I am here to testify in support of S.B. 183. The fact that my mother’s death could have been prevented by a colonoscopy angers me. I do not want another person to go through what my mother and our family experienced. If I am at high risk, I would like to be covered for a colonoscopy. I have a 4-year-old son. I would like to be here for him. On behalf of Nevada’s families, I ask you to please vote to support this lifesaving bill.
Randy Richardson:
I live in Sparks. I am an American Cancer Society volunteer ambassador for the State of Nevada. I am a cancer survivor. When finally diagnosed, my entire colon had to be removed. After radical surgery I was told that I had gallbladder cancer that had spread to my liver, colon, and lymph nodes. I was diagnosed as terminal and given 6 months to live. I am a single father with an 8-year-old son and 2-year-old daughter. I decided that no matter what, I would try to live as long as I could, hope for a cancer cure, and fight to stay alive. I had the best family and professional support. It is why I am here to speak in support of S.B. 183.
Senator Mathews:
After talking to the third-party payers, all insurance companies, except maybe one, cover this procedure. Self-funded plans are a concern.
Senator Neal:
I am concerned the amendment language presupposes there is a plan in place to use the American Cancer Society’s guidelines to colorectal cancer screening.
Jack Kim, Lobbyist, Director of Legislative Programs, Sierra Health Services, Incorporated:
Sierra Health Services went to various sponsors who said these tests are covered. National clinical guidelines do change versus what is in the statutes. The U.S. Preventative Services Task Force, a division of the Agency for Health Care Research and Quality of Health and Human Services, has similar guidelines. I am not here to oppose this bill.
Senator Carlton:
Do these guidelines preempt someone at high risk? I would not want someone to hide behind these guidelines and not offer the test or treatment if necessary.
Mr. Kim:
The guidelines have high-risk protocols. There are situations available that address high-risk incidences.
Lawrence P. Matheis, Lobbyist, Executive Director, Nevada State Medical Association:
I do support this bill. The disconnect lies between the growing knowledge and the ability to prevent the onset of major diseases, to have early screenings and effective interventions, versus a coverage system which can incorporate these integral and integrated parts of health care. A great number of people are without coverage at all. Mechanisms need to be developed that cover a broad spectrum of health care.
Senator Mathews:
Public health has advocated a need for preventative health care.
Senator O’Connell:
The State of Nevada is losing good physicians. This State has a serious crisis of a shortage of physicians.
Mr. Matheis:
Health care providers and physicians feel challenged to do the things they have been trained to do. Priorities do need to be set through community choices.
Senator O’Connell:
Physicians I have personally worked with care about what they are trained to do. They do not care about politics or insurance. They simply want to do their jobs.
Mr. Matheis:
Physicians’ commitment to their profession is all consuming. How do we make sure physicians are available to provide necessary care, knowing they will not be financially undercut? How can insurers create a predictable and stable system where people who contract health problems and face life-changing situations can be treated appropriately in a timely and feasible manner?
Chairman Townsend:
Senator Mathews, sections 1 through 4 of your proposed amendment deal with plans that currently cover colorectal cancer treatment and give guidelines through the American Cancer Society. Section 5 deals with a mandate to the plans of self-insurance requiring insurers to cover that. If this bill is amended, there will be a fiscal note attached.
Senator Mathews:
Yes, we are aware of that. The fiscal note should not be very big. The additional cost is minimal.
Chairman Townsend:
I suggest you get that information and depending on the amount, with your discussions with Senator Raggio and Assemblyman Arberry, we would process this bill. Depending on whether it is re-referred to your committee, we would send this directly to the floor.
Senator Mathews:
I will get that note to your office.
John H. McAfee, M.D., Diplomate, American Board of Gastroenterology:
The technology currently exists to eliminate colon cancer. It is possible in a 30‑ to 60-minute colonoscopy once every 10 years for an average person to identify and remove polyps, which are the precursors to cancer. If this screening were more readily available to people, cancer could virtually be eliminated.
Chairman Townsend:
Amend the bill as a whole and place in its sections 1 through 5. We will hold this bill until we receive a fiscal note from Senator Mathews.
SENATOR NEAL MOVED TO AMEND S.B. 183 AS A WHOLE WITH THE AMENDMENT PROPOSED BY SENATOR MATHEWS.
SENATOR CARLTON SECONDED THE MOTION.
Mr. Kim:
My concern with this bill is it is limited by the American Cancer Society’s guidelines when there are other guidelines available. The U.S. Preventative Services Task Force guideline is identical.
Chairman Townsend:
Discuss this with Senator Mathews. It will take a while to get the amendment and the fiscal note. Depending on that, we can make appropriate adjustments.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend:
We will close the hearing on S.B. 183 and open S.B. 139.
SENATE BILL 139: Makes various changes to provisions governing certain real estate practices. (BDR 54-663)
Chairman Townsend:
There is an amendment proposed by Cook and Company Limited that has to do with property management. I want to disclose my wife is a broker and a property manager. This proposed amendment treats all property managers equally. I will process this bill accordingly.
Melody L. Luetkehans, Lobbyist, Nevada Association of Realtors:
I will address sections 1, 3, and 4. The original language of this bill was established when the practice in the State was to have a co‑agency and everybody worked for the seller. Since 1995, when we had a major rewrite of the Real Estate Division’s chapter of the Nevada Revised Statutes, (NRS) 645, it is now common practice for individuals to represent buyers exclusively. This bill changes the language of the current statutes that provide for a listing agreement to make any brokerage agreement so that the rules applicable to a listing agent are also applicable to a buyer’s agent. It also changes the word “licensee” to “broker.” The word “licensee” includes many other types of agencies including the broker salesman as well as the salesman. This would clarify that the contract form for employment among a seller, a buyer, and a real estate agent remains with the broker.
Senator Neal:
Please give me an example that precipitated this amendment.
Ms. Luetkehans:
As general counsel for the Nevada Association of Realtors, there is a legal hotline for Realtors across the State of Nevada. The question of, “I am representing a buyer and I have a listing agent or a seller’s agent that is contacting my buyer. Is that not against the law?” Under the existing statute it would not be because the exclusive agency stated that it was only for listing agents. We have changed that to say that anyone with a brokerage agreement, whether they are representing the buyer solely, or representing a seller, has the ability to have an exclusive agency relationship.
Senator Neal:
Would a solution be to change the word “licensee” to “broker”?
Ms. Luetkehans:
No. Existing statutory language says that only a broker is allowed to receive compensation, but the language that was in sections 1 and 3 has the word “licensee.” That word could refer to either a salesman or a broker salesman, but not a broker.
Judy Cook, Lobbyist, President, Cook and Company, Limited:
This amendment would allow a separate definition of property management agreement from the catchall definition of brokerage agreement. The purpose of this is simply to acknowledge the difference in the agent-client relationship between most brokerage services as in sales or buyer’s brokerage, or leasing compared to property management. A friendly amendment has been submitted for consideration (Exhibit F). Scott Brenneke, broker owner of Advanced Asset Management, Incorporated, an established company in northern Nevada, has submitted written testimony (Exhibit G). He was unable to be here today. Mr. Brenneke outlined a very good example of a property owner who might be in the middle of evicting an existing tenant for nonpayment or some other default of payment of a rental agreement and the management contract suddenly terminates, or the agent can no longer represent the property owner, and the case falls apart and the tenant remains in possession.
Senator O’Connell:
I need to declare for the record that my husband is a broker, not a property manager. I would like that to be noted.
Gail Anderson, Administrator, Real Estate Division, Department of Business and Industry:
The Real Estate Division has reviewed this bill draft and Ms. Cook’s amendment. We support these changes that have been proposed to NRS 645.
Tami DeVries, Acting Deputy Administrator, Real Estate Division, Department of Business and Industry:
I am here in a show of support for the passage of this bill and the proposed amendments brought by Ms. Cook (Exhibit H).
SENATOR SCHNEIDER MOVED TO AMEND AND DO PASS S.B. 139 ELIMINATING SECTION 2 OF THE BILL AND USING MS. COOK’S PROPOSED AMENDMENT.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend:
I close the hearing on S.B. 139 and open the hearing on Senate Bill (S.B.) 163.
SENATE BILL 163: Revises provisions governing certain contracts with providers of health care. (BDR 57-683)
Mr. Matheis:
Senate Bill (S.B.) 163 looks at how managed care had transformed the health care delivery system. Senate Bill No. 145 of the 70th Session had two aspects. One was to establish a timely payment criterion for medical claims. The other was to restrict the practice of charging physicians and other providers to be on panels available to the recipients of care under various managed care health insurance options. After the 1999 Legislative Session, some problems emerged involving S.B. No. 145 of the 70th Session on prompt payment and panel fees. There was systematic noncompliance regarding prompt payment. In 2001, S.B. No. 99 of the 71st Session added significant new punishment for failure to comply with the timely payment law. I am pleased to report the timely payment seems to be working well. There is one aspect that still causes problems. There is no schedule of actual payment to physicians for particular procedures. You can ask for them, but you cannot get them. That makes it difficult for the timely payment law to be fully implemented because if you do not know what you are going to be paid, you do not know if your claim is being dealt with appropriately.
The second part of S.B. No. 145 of the 70th Session deals with the issue of charging panel fees. Sometimes these fees are called credentialing fees, administrative fees, or education fees. A physician had to pay these fees in order to be listed on a panel to be available for insureds or plan users. In S.B. No. 145 of the 70th Session we tried a reasonable approach of charging an actual administrative cost when putting a physician or provider on a list. There were problems with this. Some plans charged double or triple saying administrative costs went up more. Others tried to change the terms of what they were doing. Senate Bill No. 99 of the 71st Session banned the practice of charging panel fees. In S.B. No. 145 of the 70thSession there was a claim by one managed care organization structured in a way that it is not licensed nor regulated. The Legislative Counsel Bureau inserted the language of the panel fee ban into NRS 695G, which was created as the Patient Protection Act in 1997. That was meant to cover all forms of managed care organizations.
No workers’ comp, managed care organization ever charged a panel fee. Last January, one organization decided to charge a panel fee, the rationale being it was not banned. The ban was not in place because until then, no one was charging a panel fee in workers’ comp, managed care organizations. There is a provision in the amendment prohibiting workers’ comp, managed care organizations from charging panel fees. Mr. Kim raised the point that very few physicians and providers need all the schedule payment codes. Each specialty practice uses a small portion of frequently used codes.
Senator Shaffer:
If a physician is offering or providing a service, are you saying that he cannot charge a fee for this service?
Mr. Matheis:
How can a physician or any provider be expected to provide a service not knowing in advance what they will be paid for that service? Most contracts change items on the schedule for items of particular procedures. Physicians are informed changes have occurred but are not told what those changes entail. There has to be sufficient information for a physician to want to do business with a company at a particular price.
Senator O’Connell:
Please clarify the practice of third-party providers who credential physicians at a cost, then pass the cost on to the physicians for a charge.
Mr. Matheis:
There is a cost for doing an initial credentialing and for maintaining it. That was why we had S.B. No. 145 of the 70th Session. It was abused and the Division of Insurance reported on the actual costs of credentialing which were significantly less than any annual fee that was being charged. The charge for checking on recredentialing is very small. National groups that validate physician recredentialing are used. The costs associated with putting providers into the panel are recovered by taking a piece off the top of what the physician is being paid for the services. This compensates them for any administrative costs. The panel-fee issue has become an added profit item for plans. The recovery of any initial cost of assuring a physician is licensed and credentialed is taken up in the discounting arrangements negotiated with the physicians who are on those panels.
Senator Carlton:
There are costs of doing business. Many third parties contract with another company to do their credentialing. When the physician does not pay to have his records substantiated, then an insurance company or health and welfare fund ends up paying for that. The insured has to go back to the person who funds that particular fund, and tell them there is a need for more money. If it is just the cost of doing business, and the physician wants to be on the panel, then it is his choice to provide a service to those particular people in that health fund or health insurance plan. It costs the physician to verify he has a clean record and that he would be good for that panel. I will respectfully disagree with you, Mr. Matheis, on that issue.
On the second issue, you want the health maintenance organization to provide a list of the different items and prices physicians are going to be paid, that is, to establish a pricing system. There are a lot of codes out there. It is difficult to decipher what the different codes mean. Is it your intent for every code to be made available to all physicians, or do you mean that codes would be broken down into specialized areas of the physicians’ fields?
Mr. Matheis:
On the last point, yes, that is the intent. The physician or provider needs to know what the schedule of payment is for services. This would entail a limited number of codes.
Senator Carlton:
When a third-party provider or health maintenance organization (HMO) provides those codes and prices to the physician, is there any contractual agreement those cannot be changed, or does the physician have to go back and establish another contract before those amounts can be changed?
Mr. Matheis:
It depends upon the contract. Some are pegged to a percentage of the Medicare fee, which is annually and automatically revised at the national level. Many have a notice requirement. The plan notifies the physician that the schedule is changing. The physician needs to know what he will be compensated for a procedure in order to make the evaluation of whether or not that is a contract he wants to fulfill or if it is a procedure he wants to do.
Senator Carlton:
Do the physicians ask?
Mr. Matheis:
Physicians do ask but get no response. Third-party entities view themselves as the gatekeepers to the professional providing the services.
Mr. Kim:
When we saw the original provision of that bill, our concerns were similar to those brought up by Mr. Matheis. Codes can number between 8,000 and 16,000. In our process, when we contract with the providers, many do not ask what the fee schedule is. A contract does outline the fee schedule, whether it is to Medicare, or Medicaid, or to a particular fee schedule to a particular company. Physicians ask for the codes. We ask what codes are applicable to the physician’s office and we provide copies of them. Many times physicians realize later they just needed an update on the codes they already possessed. We fax any updates to the requesting physicians. I have not seen this process as a problem. I do not want all the codes made available all the time, just the ones that apply.
Senator O’Connell:
This affects the quality of life for a physician and determines whether or not he will keep his practice in Nevada.
Joe E. Lawrence, Lobbyist, President, Managed Care Consultants:
Three years ago my company asked its providers to help with the fee schedule costs. Three years ago my clients said we had to start using external review organizations with much stricter criteria, which added more costs to my company. We sent out letters over the last 3 years asking physicians for a credentialing fee. I have never removed a physician from the panel. I have never suppressed a name in our directory. If a physician disagrees with the philosophy of my company and chooses to not pay the fee, he stays on the panel regardless.
Mr. Matheis:
Each structure is different. We have banned this practice for all licensed insurers and HMOs. The issue lies with unregulated entities that provide networks to exclusive or multigroups.
Chairman Townsend:
Mr. Lawrence, where does your organization fit in?
Mr. Lawrence:
My company is a managed care organization. The utilization management is licensed by the Division of Insurance. As a third-party administrator the commission regulates my company. It qualifies in three different areas under the statutes. If a physician or a provider says they will not do business with me to justify the fee, I tell them not to pay it. Four years ago we had to ask 18 physicians to leave our panel because physicians provided false information. My clients insist that if we do not follow national guidelines for external validation, they will not let their members go to that physician. Either I do this or I lose the contract with my clients.
Mr. Matheis:
This is true. The Division of Insurance did a survey and found the average initial cost for credentialing was under $100. The recredentialing cost is under $50. Physicians view this as paying dues in order to see patients.
Chairman Townsend:
Mr. Kim, you have offered to clarify some of this language.
Mr. Kim:
Our language only addresses the codes. Senate Bill No. 145 of the 70th Session prohibited the health plans of other NRS Title 57 insurers from doing that. There is a cost every time you access the national practitioner’s databank.
Mr. Lawrence:
The Division of Insurance did have a complaint. They require me to provide information to validate or substantiate my fees. I demonstrated it was costing us much more than what we were asking the physicians to pay.
Chairman Townsend:
The question is not that you can justify it. If Mr. Kim and alike licensed organizations are prohibitive, Mr. Matheis’ contention is it should be eliminated for everyone.
Senator Neal:
It seems to me the cost of illness is what should be addressed, rather than what a physician is paying to be on a panel in order to get patients.
Mr. Lawrence:
The fees that I ask for are to help validate physician quality.
Senator Neal:
There is a national register of physicians. It is just a matter of accessing that information.
Mr. Lawrence:
It costs money for our organization to access that.
Senator O’Connell:
Certification for specialty boards, which are done nationally, can change. The reason initial certification is more costly than an annual update is because the background check into the physician’s basic education is extensive. As the licensing boards become more integrated, all of the information regarding any past licensing actions are now or should now be available through the State licensing boards. My concern is the inappropriateness of a physician or provider to pay to be on a panel.
Senator Neal:
I think the whole role and purpose of the third-party administrator should be reviewed.
Senator Hardy:
We need to look at this from a business perspective. It is worth the cost because of the business generated and because the customer is assured of a certain level of quality and standards.
Mr. Matheis:
Physician practices were paying tens of thousands of dollars a year in panel fees and getting nothing in return other than being listed on panels and having the same patients. Physicians and providers did not get any particular benefit nor feel they had a choice.
One of Mr. Lawrence’s groups is registered as a utilization review entity. That is not covered because they do not provide panels. There is a third-party administrator. The Division of Insurance’s legal counsel has opined in the case of Managed Care Consultants, Mediversal, which is Universal’s network, and Nevada Preferred Providers. These three groups do not fall under the S.B. No. 99 of the 71st Session restriction on panel fees.
Chairman Townsend:
This has nothing to do with the company Mr. Lawrence owns. It is a ruling of the Division of Insurance that states it does not license that part of that entity. Mr. Lawrence, your company is being requested or demanded by your clients to ensure quality, and there is an administrative cost. There are many things that can be done to assure quality and access.
Senator Shaffer:
I believe health planners are more concerned with how many patients can be turned out in a day versus the actual competency of a physician. Mr. Lawrence, can you guarantee the quality of physicians will be much better than if you were not doing your job at all?
Mr. Lawrence:
I certainly could not guarantee that, but it certainly helps to identify someone who has had a pattern of unacceptable practice. That should result in fewer malpractice suits.
Senator Shaffer:
I think if we can eliminate one malpractice suit, it is well worth the small cost we have to pay.
Senator Neal:
Who hires you and how do you get paid?
Mr. Lawrence:
Employers and/or insurance companies hire us. Ninety-eight percent of my clients are self-funded administrators. They pay us per employee, per month.
Senator Neal:
If an employer has 100 employees, then a certain amount of dollars per employee per month is paid whether or not that employee goes to see a physician?
Mr. Lawrence:
That is right.
Senator Neal:
Where does your company get the authority to allow charged physicians to be on the panel?
Mr. Lawrence:
The authority comes from the Division of Insurance. I have never taken a physician off the panel because they had refused to pay a panel fee.
Mr. Matheis:
The division had the legal opinion they did not have the authority to impose the law on entities like Mr. Lawrence’s company. In several other cases in other networks physicians had been removed because they did not pay the panel fees. We are trying to upgrade the laws and rebalance the system because there has been a quantum change in the way we have structured the delivery of health care.
Senator Neal:
The third-party administrator’s position was to look at claims coming from the physicians involving treatment decisions and seeing whether those claims were excessive. Now it seems as though there is control of the physician.
Mr. Matheis:
The structures of managed care, the different permutations of how one aggregates certain services, and how they are performed, change constantly. The challenge is to create a statutory or regulatory structure that can allow those changes to occur, but also to make sure that they do not create problems and do not go to excess.
Mr. Kim:
Mr. Lawrence had mentioned that 98 percent of his clients are self-funded. That raises the question that if they are self-insured, it may preempt any regulation or State law. Legal counsel may need to take a look at that.
Courtney Wise, Committee Policy Analyst:
I will obtain the opinion, but it is my understanding that you are correct. That may be the reason for the ruling.
Chairman Townsend:
The ruling should state the reason these plans are exempt from these laws is because they are federally authorized.
Mr. Lawrence:
My company qualifies as a managed care organization. I have received mandates and instructions from the Division of Insurance, which has acted and will continue to act as though it regulates me.
Senator Carlton:
We have talked a lot about these fees but I have not heard any dollar amounts. Are we talking about an exorbitant amount or a minimal amount?
Mr. Lawrence:
I can only speak for my company. If a physician refuses to pay, the cost is from nothing, then the amounts range from $150 to $300, depending on the number of positions involved. It is an annual fee.
Mr. Matheis:
The average fee is $150 to $300 per year. Mr. Lawrence’s position is that he wants to charge panel fees. My position is that I do not want him to charge panel fees.
Mr. Lawrence:
I want to make sure that I am not breaking the law.
Chairman Townsend:
The Division of Insurance will give us legal clarity.
Senator carlton:
After each visit with my physician, I get a statement that states very clearly across the bottom, “This is not a bill.” It shows how much I paid and how much the plan paid the physician. This is sent to all members. There is usually a form attached to clarify the codes.
Chairman Townsend:
I now close the hearing on S.B. 163 and open the hearing on S.B. 171.
SENATE BILL 171: Requires managed care organizations to establish system for independent review of final adverse determinations concerning allocations of health care resources and services. (BDR 57-243)
Scott J. Watts, Lobbyist, President, Nevada Alliance for Retired Americans:
I am speaking today in support of Senate Bill 171. I will now read from a prepared statement (Exhibit I).
Mr. Kim:
This is a consensus bill that has been amended. I have submitted a copy of the proposed amendments to S.B. 171 (Exhibit J). We are waiting for Assembly Bill (A.B.) 79 to come over from the Assembly.
ASSEMBLY BILL 79: Provides for the external review of final adverse determinations made by managed care organizations, health maintenance organizations and certain insurers. (BDR 57-955)
Senator O’Connell:
It would be my pleasure to allow Senator Neal’s bill to be the one that we adopt.
Chairman Townsend:
Ms. Wise, please ask the Legal Division how we can incorporate Senator Neal’s bill in processing A.B. 79.
I now close the hearing on S.B. 171 and open the hearing on S.B. 4.
SENATE BILL 4: Eliminates universal energy charge funding low-income energy assistance and conservation programs. (BDR 58-40)
Senator Dean A. Rhoads, Northern Nevada Senatorial District:
Senate Bill 4 has to do with putting in a universal energy charge, and this bill would repeal it. I am not opposed to helping low-income people, but I believe this program should be reviewed and repealed. Currently there are several local and federal programs available that assist low‑income people. The universal energy charge (UEC) provides assistance to households that do not exceed 150 percent of the federally established level of poverty. I question a government mandate that taxes the very people that end up with the assistance. I question a low-income person who would have an electrical or energy bill of $3000. I question the administration costs which showed a shortfall of $198,000 for the year 2002. Housing bond revenues are being used to cover the deficit. In conclusion, I hope this allows this committee to revisit this program and repeal it. The Senate Committee on Finance will also be reviewing the budget and making recommendations. I have an accompanying handout to clarify the collection and disposition of the UEC levied pursuant to NRS 702.150 through 702.170 (Exhibit K).
Chairman Townsend:
I find it incredible taxes apply to those who receive assistance. It was my understanding organizations had a net effect in place to cover the cost of administration.
Senator Rhoads:
The money is mixed with other funds to get leverage for federal grants. Regarding administration costs, bond revenue money is being used to pay off administration overrun.
Chairman Townsend:
Cutting the cost due to proper weatherization is important.
Senator Neal:
Can you tell me what is FAC? Can you tell me if the charges are for energy or for weatherization?
Senator Rhoads:
The definition for FAC is “fixed annual credit.” The charges are for energy.
Senator Neal:
Some of these charges are not outrageous in terms of assistance. Some of the areas where there were spikes in power increases due to deregulation accounted for this. Senator Rhoads, is your complaint based on the amount that was paid out or is it based on the fact that the power companies had to put up this amount?
Senator Rhoads:
It does not come out of the power company. The consumers are the ones who pay it, and the State administers it.
Senator Hardy:
We will now take the opposition on S.B. 4.
Thelma Clark, Lobbyist, American Association of Retired Citizens:
Senate Bill 4 may save customers money. I am willing to pay the nominal energy charge. The people who have complained feel the qualifier should be higher. The Welfare Division and the Housing Division need to give the committee information on how many people have been helped with this program. I think the accounting should be separate from any other funds available for needy families. Low-Income Housing Energy Assistance (LIHEA), and UEC should be separated and accounted for separately, since one is a grant and the other comes from customers. We need to keep the UEC in place because too many people need help. The Housing Division’s qualifier is too low to help people’s houses be more user-friendly. Older homes in Las Vegas need to be insulated. If the Welfare Division is not going to use all of its money, and does not have the labor to disburse the money, then more money should go to the housing authority and the qualifier should be hired for the housing authority.
Charles (Chas) L. Horsey III, Administrator, Housing Division, Department of Business and Industry:
The enabling statute, A.B. No. 661 of the 71st session, designates that 25 percent of all monies raised should go to the Housing Division’s weatherization program. A portion of the funds should go to reduce the total energy consumption in the State. Households must have incomes that are at or below 150 percent of the poverty rate to qualify for the program. For a family of four, this equates to an income of $27,600 a year. The portion of the UEC revenue used for these purposes approximated $2,300,000 per year. Approximately $2000 per unit has been going into the homes that have been weatherized. This fiscal year we anticipate weatherizing over 1400 residences. This production level is nearly a four-fold increase from the number of households weatherized in fiscal year 2002. It took a tremendous amount of time, effort, and money to develop the delivery system for the weatherization program. Prior to that bill, the only source for the weatherization program was federal and it was decreasing every year. The delivery system had increased from a yearly budget of $500,000 to $2,300,000 to $2,500,00 per year. The Housing Division had to increase their capacities. Technical expertise is required for weatherization. Subgrantees have had to train workers so that proper procedures were followed. This information is available in the accompanying handout (Exhibit L).
We added a third delivery system specifically for the rural areas. The U.S. Department of Energy reports low-income households must spend an average of 14 percent of their annual income on household energy. This number is outdated. Today, heating, gas, and electric charges have increased above 14 percent. High utility costs have a disproportionate affect on low-income families, especially the elderly. The elderly have the least capacity to find alternative sources to pay these costs. In Nevada, we estimate the average savings to a weatherized home is $311 per year, or approximately $26 per month. This does not sound like a large sum of money, but for those on fixed incomes, it is a drastic difference.
We have taken on three new programs over the last few years. We do not place the expense burden of personnel on a new program until we have a track record. Craig Davis, who has had administrative support from our existing staff, oversees the weatherization program. We have a federal program supervisor whose duties include the supervision of the weatherization program. We also have an employee of the U.S. Department of Housing and Urban Development, funded through a little-used program that lend-lease employees for a period of a year. We have one new person on our staff.
Senator O’Connell:
You are spending $500,000 and our expenses went to $2,500,000?
Mr. Horsey:
No, Senator. We assumed the weatherization program from the Welfare Division, which was in the process of having federal allocations decreased. With the advent of the UEC charge, total funds have gone back up to $2,300,000 to $2,500,000, including the federal funds.
Senator O’Connell:
You said you had to spend time training people. Who were the people you trained?
Mr. Horsey:
We had to train the one staff person we brought on board. The weatherization program paid for the training of that person.
Senator O’Connell:
Tell me the cost of administration.
Chairman Townsend:
Cynthia Mitchell provided a book, with attachment 4, where it lists energy‑assisted program administrative cost projections at $444,245.
Nancy Ford, Administrator, Welfare Division, Department of Human Resources:
Attachment 4 (Exhibit M) is the administrative cost projections for the energy assistance program, not the weatherization program. These are the costs for the Welfare Division to administer this program. The Legislature wanted us to open an office in Las Vegas, which we did. That is part of the administrative cost. It is the energy assistance office in the Las Vegas area. This program was previously administered out of the Carson City office through the UEC program. The total administrative costs are anticipated to be $744,000. We have 10 percent of administrative dollars from the LIHEA program itemized at the bottom of attachment 4. We are allowed 3 percent out of the UEC funds toward cost administration, that is $209,000. Fiscal year 2002 we had A.B. No. 209 of the 71st Session monies that provided us with $4 million toward energy assistance for this biennium. Because of the budget shortfall, a substantial portion of that money was reverted back to the General Fund. The Housing Division had some funds available and provided us with a grant to backfill that loss of A.B. No. 209 monies. Because of money we got from the Housing Division, we were able to make up for a deficit in the administrative costs. We do not overspend our administrative budget. We are not asking for any additional administrative dollars for the next biennium because Mr. Horsey, in the Housing Division, has graciously extended the grant to go through 2005, so we have those monies available to us until the next biennium. It is our hope the administrative costs will come down because part of the cost has been installing the new computer system, problems with the computer system, and streamlining the eligibility and benefit calculation processes. We believe those difficulties will be resolved and our administrative costs will come down. By next Legislative Session we will not have this projected deficit and we will not have this projected need for additional dollars.
Senator O’Connell:
We instituted a whole new program for welfare in the administration of this; it was not able to be done in any existing program?
Ms. Ford:
This was a total change in the way energy assistance benefits were provided. Under the LIHEA program it was done by a point system, where the income and fuel usage were assessed. The UEC is based on the concept of reducing a low‑income household’s percentage of income that goes toward energy compared to what a median household pays toward energy. The median household in Nevada pays 4.27 percent of their income toward energy. If your income is below 150 percent, we calculate 4.27 percent of that income, and that determines what gets paid toward energy. We get the figures of energy usage from the utilities and calculate the difference. If 4.27 percent is $300, and the energy bill is $1200 a year, the household will receive a benefit of $900. It is an annual benefit, not a monthly benefit. When the benefit is $600 or more per year to one household, we make a referral to the Housing Division for weatherization because it is obvious to us there is a problem that would cause the need for weatherization.
Chairman Townsend:
Why are there two separate programs?
Ms. Ford:
Fiscal year 2002 we administered the old low-income home energy assistance program. By doing that, we were able to serve 74 percent more households. Nevada Revised Statutes (NRS) 702 indicated UEC monies had to be distributed based upon reducing the energy burden of a household to the median energy burden. In order to save administration costs, we synchronized the low-income, energy-assistance program eligibility and benefit criteria with the UEC criteria because we realized we had very limited dollars. With 3 percent administrative dollars for UEC we would not have been able to build a computer system and administer a totally different program. We synchronized the two programs so we would have the administrative dollars.
Chairman Townsend:
Should we have two different criteria?
Ms. Ford:
Right now, we do not have two different criteria, they are the same. The intention of the UEC was to augment the low-income, home-energy assistance program. Only people who pay the UEC charge can access that piece of the energy assistance program. Eligibility and benefits are calculated the same. With the LIHEA program, we have caps on the benefit, so the UEC can make up the difference in an area UEC can apply. The maximum we can pay out of the LIHEA program is $700. If the benefit were $900, we would take $700 of LIHEA and $200 of UEC for that family benefit. Payment of the money goes directly to the utility, which then credits the family’s energy bill.
Senator O’Connell:
Does your computer system interface with other computers in your programs?
Ms. Ford:
Yes. We built the Open Access Same-time Information System (OASIS) last year, which was used for employment training services through our Temporary Assistance to Needy Families (TANF) program. That system gets information from the Nevada Operations Multi-Automated Data Systems (NOMADS), which is a server-based environment. The energy assistance computer program of LIHEA came off the OASIS system. It is an independent system that draws information. Ultimately the Welfare Division wants to identify a client through one input into the computer system program.
Senator O’Connell:
Does a client who comes in and needs help have to go to various areas?
Ms. Ford:
The welfare office has applications for TANF, food stamps, and Medicaid. The LIHEA program is located in a separate office. Most LIHEA applications are mailed in because it is a Statewide program. Our welfare offices are aware of the LIHEA program. They provide applications and information to our clients that can be mailed in by them. Applications can also be printed off our Web site.
Senator O’Connell:
Do clients have access to computers?
Ms. Ford:
Clients can go to various places within the community that have access to computers, such as a library. One goal of the Welfare Division is to acquire computers in our lobbies so clients can input information directly into the computer system.
Senator O’Connell:
Where is the location of the new office? What do you pay on the lease?
Ms. Ford:
It is at the southern Professional Development Center, 701 North Rancho, Las Vegas. The Welfare Division rents the building for a cost of $22,442 annually. The information is in attachment 4.
We have two main LIHEA offices, one in Las Vegas and one in Carson City. We also have intake sites throughout the State through arrangements with senior citizen centers and community service centers where people can get applications, have help in filling them in, and sending out the applications.
Senator Neal:
Does your office receive some type of documentation from the power company regarding energy usage at a requesting client’s residence?
Ms. Ford:
Yes, not just the energy usage for the residents, but also for the physical building itself. There is a computer interface. That is why we need the computer systems because it is very complex to calculate.
Craig Davis, Superintendent, Grants Project Analyst, Housing Division, Department of Business and Industry:
When we receive referrals from the LIHEA program, an energy auditor goes to the site and conducts a variety of tests. Some tests measure carbon monoxide levels in the house. Some tests check for building shell leakages as well as duct leakages. We can also check the level of attic insulation and the efficiency of the furnaces. Based on the findings, the energy auditor makes recommendations. An automated, computer-generated energy audit is created in our computer system. Based on the building type, whether it is a multifamily unit, a single‑family unit, or a mobile home, the audit will determine what cost-effective measures will be installed in a house. From that, materials are ordered and work is assigned.
Senator O’Connell:
Are these rental homes or owner-occupied homes? Are we doing something the landlord should be doing?
Mr. Davis:
Federally-funded programs provide assistance to rentals as well as owner‑occupied homes. I cannot speak on behalf of landlords. The tenant has to qualify for assistance from LIHEA. Low-income people, in general, reside in rental units. We cannot categorically exclude them. In emergency situations, we will pay for a capital-intensive repair such as replacing a heating or air-conditioning system or addressing a carbon monoxide problem. This is because of a potential liability issue. With respect to multifamily-unit homes, we do ask for landlord contributions. We do needed repairs, not replacements.
Senator Neal:
Do you test the load of electricity that comes into a home?
Mr. Davis:
No, we do not do load tests. If there is an extremely high utility bill, we will have the client notify the power company.
Chairman Townsend:
The Welfare Division wrote checks over $2500 to 13 clients for the power company. Was there a common problem among these 13 clients?
Ms. Ford:
Yes, 13 people received the benefit.
Ernest E. Adler, Lobbyist, Nevada Housing Coalition:
Simply, these 13 people have large families; it is the number of bodies occupying a particular household at one time.
Chairman Townsend:
Are there guidelines on weatherization for mobile homes, manufactured homes, or manufactured housing that could be helpful so units that create the same problem are not being continuously sold?
Mr. Adler:
Most counties have outlawed old mobile homes with regard to moving and resetting them up again. Newer mobile homes have improved insulation and energy standards. Eventually, with energy upgrades on the older units, which is what the weatherization program does, energy demands on mobile homes will be reduced.
Chairman Townsend:
Of those clients referred to the Housing Division, please break down and explain how many of those homes are manufactured or mobile homes, versus stick built? This dialogue needs to continue. We will set another hearing for this issue. I am not convinced yet that we cannot make this situation better.
Senator Hardy:
Along those lines of efficiency, with regard to the weatherization program, do we have a mechanism in place, or will we have a mechanism in place that will determine whether the amount of money we are expending to do the weatherization will ever be recovered in actual savings?
Mr. Davis:
We have developed a fairly comprehensive program to determine actual savings. Based on the subgrantee’s expenditures and the measures installed, there is a five-to-one payback. After 5 years the weatherization measures will be left in place. They could be dual-pane windows or attic insulation. In Las Vegas we do a lot of polyurethane and ceramic roof coatings on all mobile homes.
Senator Hardy:
Do you have statistics, or are you tracking the number of cases that are turned over to you for considering weatherization that, in the end, you discover do not qualify for weatherization?
Mr. Davis:
Are you asking if we track the referrals from the LIHEA program? No, we are not tracking that.
Senator Neal:
Once you go in and weatherize a house, do you notify the Welfare Division this has been done?
Mr. Davis:
Currently, we do not, no. We could easily do that.
Senator Neal:
What happens if you got a high energy-usage bill after you had turned over the property for weatherization?
Ms. Ford:
If we turned an energy bill over to weatherization, it is because we already paid a one-lump annual sum benefit to that household. The household cannot reapply that same year.
Senator Neal:
How soon do you respond once you receive a notice from the Welfare Division that a household needs to be weatherized?
Mr. Davis:
That depends upon the nature of the request. Emergencies are given first priority. High-energy users are next, based on the information given to us by the subgrantees. We know if it is an emergency because the subgrantee specifically lets us know. Unless we were notified directly by a utility company there is an emergency situation, our program has, whether it is relayed by a client or not, the equipment and the crew to do various appropriate tests. Requests come from clients who are income eligible. We do not provide services to the general public.
Arthur C. Thurner, Chief of Federal Programs, Housing Division, Department of Business and Industry:
Locally-based subgrantees handle the program. Our division administers it. We give them advice and there is a matrix in place. Key people served are the elderly, families with children under 6, the disabled, and high-energy users. This is information we get from the Welfare Division from a monthly computer download. When we get the download, within 3 days we mail a postcard notice to the high-energy user address. That addressee’s response goes directly to one of the local subgrantees.
Jessie R. Battey, Redress Incorporated:
I represent an advocacy for civil rights. If there is an overlapping of funding, an effort should be made to bring money together in a comprehensive plan. Do not kill the LIHEA program. Administrative costs have always been expensive. Start‑ups are especially expensive. It does not sound like there are excessive surpluses. I am here because I believe this program should be kept in place
Barbara Stone, Senior Advocate:
I would hate to see you not continue with the LIHEA program for the simple reason that there are a lot of senior citizens I know that get this, and they need it desperately. These people do not know about the programs Senator Rhoads was talking about. They do not understand the programs, and they do not apply for them because they do not know how. Senior citizens need to have somebody looking out for them.
This LIHEA program costs 27 cents per energy bill. This is a nominal fee. The money is a big help to seniors. The LIHEA program needs to be continued to especially help the senior citizens.
Dawn Costa, LSW, Social Worker II, Washoe County Senior Services:
I speak on behalf of Bobbie Campbell, a senior citizen. Washoe County Senior Services looked at her power bill. She pays 27 cents a month towards the UEC. Our office is an intake site for the LIHEA program. We help seniors fill out these applications. We know the guidelines of the program and who would qualify. Many seniors are dependent on these monies, especially during the winter when power bills can get expensive.
Chairman Townsend:
I close the hearing on S.B. 4. There being no further business this meeting is adjourned at 11:03 a.m.
RESPECTFULLY SUBMITTED:
Johanna Downey,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: