Panel moves to save state employees insurance

Wednesday, Feb. 17, 1999 | 11:17 a.m.

CARSON CITY -- An Assembly committee voted unanimously Tuesday to allow Gov. Kenny Guinn to take over the financially ailing state employees group health insurance plan, which has 47,000 members.

The Assembly Ways and Means Committee agreed that the Committee on Benefits, which oversees the insurance system, be stripped of its authority and Guinn put in charge.

The committee also agreed to pump an emergency $10 million into the system to keep it afloat until the end of May. Without the infusion of cash, the system would not be able to pay its bills within several weeks.

State Budget Director Perry Comeaux called the move to relieve the benefits committee of its authority a "very good idea."

The system had a reserve of more than $12 million but now is $15 million in the red. There are a number of bills in the Legislature to change the makeup of the committee, which now consists of two representatives of the State of Nevada Employees Association, two appointees of the governor and Comeaux.

Bob Gagnier, executive secretary of the employees association, had no comment after the committee's move. But Martin Bibb, executive director of the Retired Public Employees of Nevada, applauded the decision.

There are 5,600 retirees in the insurance plan. "We've got to stop the bleeding. It's time to get a grip on this," Bibb said.

The motion to remove the authority of the committee on benefits came from Assembly Speaker Joe Dini, D-Yerington, who said he was concerned about a scheduled Feb. 24 meeting. On the agenda were proposals for the benefits committee to shift more of the program to outside private companies.

There's great concern, Dini said, that the committee has not shown "good fiscal management."

Assemblyman David Goldwater and Assemblywoman Chris Giunchigliani, both Las Vegas Democrats, convinced the committee to write a letter asking for a review of the contract between the benefits committee and its actuarial consultant the William M. Mercer Co., which earns several hundred thousand dollars a year from the state.

Giunchigliani said there's concern about illegal actions, and she wanted to know if there may be a way to recover any money or cancel the contract of the firm.

Glenn Meister, who handles the account for the Mercer firm, could not be reached for comment.

Jeanne Adams, chairwoman of the benefits committee, could also not be reached for comment.

The problem with the insurance system started in 1997 when the firm hired by the benefits committee L & H Associates, fell behind in paying the claims of hospitals, doctors and other medical providers who treat state workers and their dependents.

L & H Associates was fired but left a backlog of more than 80,000 claims. The committee then hired UICI of Texas to do the claims processing. Payments to these providers lagged for up to a year, but UICI reported recently it is paying the claims on time.

An audit of the system released two months ago showed there was a high number of errors in the payments -- both over and under payments -- to health care providers.

And claims from state workers and their dependents came in at a higher rate than anticipated, putting the system in jeopardy.

The committee on benefits now contracts with the state Risk Management Division to perform much of its clerical work. But the committee was considering a shift to the Mercer company and UICI for the work. That concerned Dini and prompted to move to remove the benefits committee from overseeing the insurance plan.