State considers running own employee health insurance plan

Monday, Dec. 22, 1997 | 9:40 a.m.

The Committee on Benefits, which oversees the insurance fund, believes the plan could prevent another fund administration fiasco and save money at the same time.

"The consultant estimates it would cost $1.6 million to $2.5 million a year," Perry Comeaux, director of the state Department of Administration and a committee member, told the Nevada Appeal.

He said that is below the estimated $3 million the state now pays a third-party administrator to process health benefit claims and make sure doctors, hospitals and other medical providers get paid.

The panel dumped L&H Administrators as the third-party administrator earlier this year after the company fell thousands of claims behind in making payments.

UICI Administrators was subsequently hired to fix the mess and isn't expected to eliminate the backlog until the spring. It inherited 75,000 unprocessed claims from L&H.

A former L&H claims manager, Mary Ferris, since has been indicted on charges of taking $608,000 from the state insurance fund.

"Administratively, it would be a pain in the butt" to manage the fund, Comeaux said. "But the kind of thing that happened at L&H would be very unlikely to happen to us again if we had our own division."

He said he and committee Chairwoman Barbara Nelson plan to take a thorough look at three states that handle their own benefit plans.

If a consultant's initial report on the cost savings proves accurate, he said, the committee could recommend the division's creation to the 1999 Legislature.

In the interim, the committee is taking other steps to avoid a repeat of the L&H fiasco.

The panel plans to ask the governor and Legislative Interim Finance Committee for money to hire its own auditor to review the performance of the third-party administrator.

"We're paying attention to things today that we did not realize we needed to pay attention to last year," Comeaux said. "I'll tell you once the fiasco with L&H is cleared up, we're not going to be interested in doing this again anytime soon."