Another funding transfer OK’d to help state’s group health insurance

Brendan Riley

Wednesday, May 6, 1998 | 1:29 a.m.

CARSON CITY - Another transfer of funds to help a group health insurance system covering about 25,000 state and university employees and dependents was approved Wednesday by Nevada lawmakers.

The Legislature's Interim Finance Committee approved a request by the state Committee on Benefits to transfer $19.8 million from reserve funds to help meet claims expenses.

That follows another transfer, for $3.2 million, that was approved in March by the IFC to help cover the cost of resolving a big backlog in processing claims for health insurance benefits.

Sen. Bill Raggio, R-Reno, IFC chairman, said there are a lot of concerns about the system, but at this point there's "no alternative course of action" because of the need to pay the claims.

That followed Assemblyman David Goldwater's comment that the funding transfer raises "a big red flag." Goldwater, D-Las Vegas, added that he's concerned there will either be an eventual premium increase or a benefit reduction because of the financial hassles facing the system.

Raggio said all IFC members share that concern, but added it's apparent that the system has made "significant progress" in recent months.

The Committee on Benefits manages an insurance system which collects about $93 million a year in premiums. But there has been a 12.5 percent increase in claims, and the system was budgeted only for a 7 percent increase in fiscal 1997.

Lawmakers also were told the status of the system is confusing because thousands of claims from last year are only now being paid.

The insurance system's problems began when the benefits committee hired L & H Associates to process the claims of employees for medical services. It fell behind and was then fired, leaving more than 85,000 unpaid claims. UICI of Texas was hired on an emergency basis to clear up the backlog. Doctors, hospitals and other medical providers weren't paid for up to a year.

UICI administrator Jan Marie Reed has said a major problem facing the system is the loss of its discount rates, negotiated with hospitals or doctors if the bills were paid within 30 days. Since the bills were not processed within that time period, the state ended up paying full price for many services.