State’s health bills put on back burner

Friday, Aug. 15, 1997 | 9:37 a.m.

CARSON CITY -- The state of Nevada is creating a right for itself that taxpayers would love to share -- the right to blow off its health bills for two months with no penalty attached.

The bills, amounting to more than $15 million, are owed to doctors, hospitals, dentists and other medical providers who treat state workers, dependents and retirees covered by state insurance.

The state Committee on Benefits has suspended payments while it switches to a new private company to handle the paperwork.

Carson-Tahoe Hospital alone says it's due $800,000, or 7 percent of its outstanding bills. The state insurance policy covers 26,500 employees and retirees and another 15,000 to 20,000 dependents.

So far, no hospital or doctor has refused service to a state worker or dependent because of nonpayment, said David Thomas, director of the state Risk Management Division. He conceded, however, that the state's decision could cause "major cash-flow problems" for physicians who do a lot of state business.

A company called Coresource processed the state claims but the company was purchased last year by L&H Administrators of Bowling Brook, Ill. L&H fell behind in processing and paying the claims and, in accordance with its contract, was therefore penalized by the state. Penalties were imposed in eight of the 12 months it handled the insurance claims.

In June, the company gave up, closing its offices and leaving 40,000 claims unpaid.

The Committee on Benefits hired UICI Administrators to process the claims at $13 apiece, compared with the $8.50 that L&H was paid. In an Aug. 11 letter to all health providers, the committee said the switch to the new administrator will take two months while computer records are converted.

"During July and August, while UICI is handling these administration issues, no medical or dental claims will be paid," the committee said.

Michael Pitlock, director of the state Department of Taxation, said if a private company, without notification, suspended payment of its taxes, it would face a penalty of up to 10 percent of the amount of the payment plus 1 1/2 percent interest.

He said a company could request a waiver to delay payment of taxes but a 1 percent-per-month interest rate would be tacked onto the payment. And there's no guarantee the payment would be made.

Meanwhile, the state insurance commissioner completed two days of hearings Wednesday on a complaint to revoke L&H's license. One part of the complaint says L&H received money to make the payments to the hospitals and doctors, which were never made.

The company's license had been suspended in May from seeking more business in Nevada and it was ordered only to continue serving its current clients -- the biggest one being state government.

Thomas said L&H was never big enough to handle the state's business but that UICI has the experience, including processing claims for the state of Arkansas and the University of Southern California.

So far, Thomas said the hospitals and doctors have been cooperative over the suspension of payments. "We don't want doctors to demand payment upfront or delay elective surgery until they get their money," he said. So far there have not been any of those cases reported.

When UICI is up and operating in September, it will face an estimated 70,000 back claims. But Thomas says it has the computer technology to catch up with those in about a month.

There are additional problems. The new firm must check numerous cases where overpayments or underpayments were made to the doctors, hospitals and others. Thomas said that will take a major effort.