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SPONSOR: |
Coll |
DATE TYPED: |
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HB |
498 |
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SHORT TITLE: |
Health Security Act |
SB |
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ANALYST: |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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Significant See Narrative |
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(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
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Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
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(30,000.0) |
Recurring
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General
Fund |
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(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates SB 505
Relates
to Appropriation in the General Appropriation Act
Responses
Received From
Department
of Health (DOH)
Health
Policy Commission (HPC)
Human
Services Department (HSD)
Children
Youth and Families Department (CYFD)
Attorney
General (AG)
New
Mexico Public Schools Insurance Authority (NMPSIA)
Public
Regulation Commission (PRC)
General Services
Department (GSD)
Synopsis
of Bill
House
Bill 498 proposes the development of a statewide health care plan at a level of
benefits mirroring the current state employees plan. Financing options are to be developed by the
LFC, working with the Superintendent of Insurance. The LFC report on financing options is to be
provided to the legislature by
The
first meeting of the nominating committee will be held on or before
Significant
Issues
The
information below summarizes the specific sections of the bill. Each section is followed by Comments
and/or Technical Issues related to the section.
Section 2: explains that
the purpose of the Act is to ensure coverage for all New Mexicans with a combination
of public and private financing and to contain health care costs.
Section 3: delineates
several definitions for use in the Act.
Comments
and Technical Issues
Definitions are needed for “coalition” as used on p. 3 line 8, and
“Consortia” as used in a similar context at p. 29, line 15. Are these words
with truly different meanings or connotations?
Section
3, Part L (p 4) does not include all potential health
care delivery organizations that could be covered under HB498. For example,
home care agencies are not facilities, but are an integral part of the delivery
system of health care. Also the definition may want to enumerate specifically
what is meant by outpatient facility, which might include a diagnostic and
treatment center, ambulatory surgery center, alcohol and detoxification centers
and other categories of licensure as defined by the DOH regulations.
Section
3, Part M (p 4) defines health plan, but does not include
the word “insurance” anywhere in the definition. HPC assumes that the State of New Mexico is
at risk for the provision and coverage of benefits, has exclusions, has defined
who is and is not covered, how payments are made, ERISA coordination, waivers,
how fraud is defined, etc. Therefore,
the plan would likely be viewed as insurance.
Section
3, Part O (p 4) may want to define “operating budget” to
be provided on an accrual basis of accounting, and would include a line item
for facility depreciation.
Section
3,Part S (p 5) defines transportation services as
“equipped with health care supplies and equipment.” There are providers of medical transportation
under the current Salud program that do not have medical supplies and equipment
in the vehicle, but these providers do transport individuals for medical
services.
Sections 4-10: The Health Care Commission:
·
HB498 forms the Health Care Commission to
create the health care insurance coverage program. A health care nominating committee is created
to make recommendations by
·
Until the Commission is appointed, staff
from the Department of Health shall assist the nominating committee.
·
The 15 members of the commission are to
include at least 10 members representing non-specific consumer interests, and 5
representing health care providers or facilities to represent different areas
of the state.
·
No Commission member can be appointed if
he or she has a controlling interest in a healthcare provider or health insurer
or vote on issues where he has a financial interest, with the exception of
members representing health care facilities or providers.
Comments
and Technical Issues
Section7,
Part A (p 11) is silent whether a director or board member of an entity
providing health care or health insurance could be a commission member. HB498
language notes “officer of or has a
controlling interest.”
Section 11: Commission staff and responsibilities
include:
·
The Commission is to adopt a five-year
plan to implement the Health Care Act, develop an educational program about the
plan, and adopt as provisions of the plan methods to provide quality health
care to all New Mexicans. This should include emphasis on preventive and primary
care, provision of rural health care, in-home and community based alternatives
to institutional care and case management services.
·
Other directives for the Commission
include the development of compensation methods, health plan budgets, capital
budget for health facilities, a data collection system, establishment of an
efficient health care delivery system and methods to evaluate the quality of
health care delivered by the system.
·
The Commission is to study and evaluate
the cost of health care provider professional liability and liability insurance
and is to establish and improve changes in coverage benefits and benefit
standards.
Comments
and Technical Issues
The
Health Policy Commission (HPC) responsibilities under the HPC statute and
Health Information System Act are, in part, either supplanted or duplicative to
the responsibilities of the Health Care Commission. The bill does not acknowledge where or how
the new Commission will receive its data; for example existing rules give the
HPC the authority to collect capital assets data from hospitals and health
facilities. Should this legislation
pass, existing statutes may need to be amended or repealed.
Section 12 – 13:
Commission’s Authority and Advisory Boards
·
Provisions are made to furnish the Commission
with the necessary authority to carry out all duties related to the Health Care
Act, including, approval of budgets and approving and making changes in the
State health plan.
·
The Commission is to establish a Health
Care Provider Advisory Board and a Health Care Facility Advisory Board to
provide expertise and knowledge to the Commission.
Section 14- 15: Health Care
Delivery Regions and Regional Councils
·
The Commission is to establish health
care delivery regions, which may be assigned different fee scheduling or
expenditure allocation designed to tailor and improve health care delivery for
each region.
·
The Commission is also to establish
regional councils to report to and inform the commission.
Section 16: Rulemaking
·
The Commission is to adopt rules
necessary to carry out its duties and the provisions of the Health Care
Act. Provisions are made for a public
hearing for any adoption, amendment or repeal of rules.
Section 17-19: The Health Plan
·
The health plan is to specify covered
services and benefits. Categories of
benefits the plan must include and benefits the plan may not
include are listed.
·
There are provisions for caps on
administrative costs, the gradual phase in of beneficiaries, and the review of
the five-year plan and other short and long term plans by the commission and
regional councils.
Comments and Technical
Issue
There exists confusion and a possible
contradiction between the time provisions for getting long term care coverage
functioning and operational, as found in Section 17 at p. 26 lines
11-14, and as found in Section 18 (p.26) line 20.
Sections
18 and 19 of the bill furnish descriptions of the
specific long-term care and mental health services to be included in the health
plan, provisions for service coordination and case management and the formation
of a Long-term Care Committee and a Mental Health Services Committee to develop
a plan to integrate these services into the State health plan. Mental health care is to be included in the
inception of the plan and long- term care and dental care at the earliest time
possible based on planning and budget constraints.
Section 20: Medicaid
·
There should be agreements between the
Commission and HSD, and other departments to provide for certain Medicaid services
to be covered and administered by the Commission.
Comments and Technical
Issues
Section 20 (p. 28)
of the bill provides that the Commission “may enter into appropriate agreements
with the Human Services Department … [to] provide for certain services provided
pursuant to the Medicaid program to be administered by the commission to implement
the health plan. “ This could result in the Commission becoming the major
Medicaid administrator, necessitating a change in the Medical Assistance
Division’s designation as the single state agency.
Medicaid claims are paid through a federally certified
Medicaid Management Information System (MMIS).
Enhanced federal funding at 75% is available for the MMIS. This needs to be considered when determining
how the claims will be paid.
Section
21-24: Eligibility for
Benefits
·
Individuals physically present in
·
Those not to be brought into the plan are
federal retirees, active duty military and those covered by federal health
plans. There are provisions for retirees
to switch from their employee sponsored health plan to the State health plan.
·
Indian Health Service recipients are not
brought into the plan except through agreement with individual tribes,
consortia of tribes, or a federal IHS agency subject to approval by the tribes
in that agency.
·
Provision is made by rule for
non-residents employed in the state to participate in the plan.
·
Provisions are made for the purchase of
coverage and assessment of fees by educational institutions for non-resident
students.
·
Provision is made for eligibility cards
for beneficiaries and liabilities for misuse of the cards.
Comments
and Technical Issues
Definitions are needed for “coalition” as used on p. 3 line 8, and
“Consortia” as used in a similar context at p. 29, line 15. Are these words
with truly different meanings or connotations?
Section 21C (p29) addresses incompletely the coverage of IHS beneficiaries since a significant portion of such persons are already Medicaid enrollees.
Section
25: Primary Care Provider
·
The beneficiary has the right to choose a
primary care provider. Stipulations are
made for the assigning of a provider if one is not chosen by the health plan
member, for responsibilities of the provider to the beneficiary, rules of
referral, change of provider and selection of a specialist as a primary care
provider.
Sections
26 - 29:Discrimination, Claims Review, Monitoring
Providers and Facility Practices and Dispute Resolutions
·
There are provisions against
discrimination by providers and facilities.
The Commission is to adopt a comprehensive claims review program and
rules to implement a continuous quality improvement program, and is to
establish procedures for dispute resolution.
Comments and Technical
Issues
Section 28
(p 35) of the bill would establish health care monitoring programs to oversee
providers. This could duplicate DOH’s
statutory responsibility to monitor health facilities and community providers.
Page 36, Paragraph #, line 22. “Administrative penalties shall be deposited
in the current school fund”. The meaning
of “current school fund” is unclear.
Section
30:Health Plan Budget
·
The Health Care Commission has the
responsibility to develop an annual health plan budget for the approval of the
State Legislature.
Sections
31-32: Payments to Health
Care Providers and Facilities:
·
The Commission is to prepare budgets and
negotiate payments with health care providers and facilities. There are
provisions for caps on the budgets, different and supplemental payment rates,
co-payment schedules, and dispute resolutions when there is lack of agreement between
the Commission and a provider or facility.
Sections
33 - 37: Health Resource Certificate, Audits, Standard
Claims Forms, Computerized System, Reports
·
A health resource certificate is required
for capital expenditures, and other acquirements of capital projects, with some
specified exceptions. The Commission is to report to the Legislature on capital
needs of health facilities and geographic barriers by
·
The Commission is to provide for an
annual independent actuarial review of the health plan and of any funds of the
Commission or of the plan.
·
The Commission is to adopt standard
claims forms for all providers and facilities.
·
All health care providers and facilities
are to participate in the health plan's computer network, which will provide
for payment transfer, billing data and the transfer of other data and
information.
·
The Commission is to require reports by
all health care providers and facilities of information enabling the commission
to evaluate the health plan.
Comments and Technical
Issues
DOH states that the “health resource certificate” procedure likewise is a potentially costly process that could generate significant additional administrative and litigation costs.
The provisions for “Standard claims
forms” in Section 35 (p 44) or computer systems in Section 36 (p
45) does not specify that the Commission must comply with the federal
HIPAA rule on Transactions and Code sets.
Sections
38-39: Consumer and Provider
Assistance Program, Miscellaneous Reimbursements:
·
The Commission is to establish a consumer
and provider assistance program to take complaints and provide assistance.
·
Provisions are made for payments for out
of state services and determinations of liability for payment by third parties.
Sections
40 – 43: Insurance
·
After the implementation of the plan no
private insurance is to be provided to a beneficiary for any service covered by
the plan, except for retiree insurance plans not entering into agreements
with the health plan. Nothing in the act
is to affect coverage pursuant to the federal Employee Retirement Income
Security Act of 1974 (ERISA).
·
The Commission, in conjunction with HSD,
is to apply for any waivers necessary to enable the State to utilize federal
payments for the health plan, negotiate with employers offering health coverage
regarding the deposit of their contributions into the health plan, and is to
seek an amendment to ERISA to exempt New Mexicans from any part of the act
pertaining to health care. The
Commission is also to seek payment to the health plan from Medicaid, Medicare
or any other federal or other insurance plan for any reimbursable payment
provided under the plan.
·
No person included by this bill in the
health plan is to insure himself or his employees after
·
The Superintendent of the Division of
Insurance (DOI) should work with the LFC to identify premium costs and shall
lower insurance premiums as soon as the health plan is implemented.
Comments and Technical
Issues
DOH points out that the authority granted to the
superintendent of insurance in Section 43 B (p51) to unilaterally “lower
insurance premiums associated with medical benefits on all types of insurance
policies.” – without going through the usual procedures
for establishing rules governing the regulation of insurance – is possibly
unconstitutional.
Section
44: Financing the Health
Plan
·
The Legislative Finance Committee (LFC)
is to determine financing options for the plan.
·
Benefits considered when determining
these financing options will be no less than the benefit package offered State
employees.
·
Options may include minimum and
maximum levels of premium payments, sliding scale premium payments, Medicare
payments and employer contributions and shall include a system for
reasonable co-payments, except for preventive care.
·
A report will be submitted by the LFC to
the Legislature of recommendations and options no later than
Comments and Technical
Issues
DOH
notes that a mechanism needs to be created to integrate federal and state
categorical health program funding with the benefits of the Plan.
DOH
notes that HB 498 does not fully describe how revenues sufficient for
supporting proposed benefits will derived. The department states that the bill
does not fully address how the State Health Plan will be integrated with other
State and Federal program payments to health care providers and health
facilities.
Section
45: Temporary Provisions
·
On the date the health plan is
implemented, those individuals receiving health care benefits under a private
contract or collective bargaining agreement prior to
·
Any individual covered by a health care
services plan with premiums paid for in any part by public money,
"including money from the State, a political subdivision, State
educational institution, public school or other entity that receives public
money to pay health insurance premiums" will be covered by the health plan
upon its implementation.
Section
46:
Effective Dates
·
Sections 43-44 are effective
·
Sections 1-42 and 45 are effective
The bill does not contain an appropriation.
Financing options are to be developed by the LFC, working with the Superintendent of Insurance. The legislation proposes that the LFC determine in FY 04 financing options to include:
· The cost of the plan
· Individual premiums and employer contribution
· Public Funds
· Payment Process
Expertise in the field is required to conduct the study. Therefore, the LFC would need to bid a contract for this study at an estimated cost of $250.0 to $300.0. Previous studies have had a price tag of $200.0. Another option would be to have staff members from other state agencies assist the LFC in conducting the study.
In
the next fiscal year, the Health Care Commission would develop and submit to
the legislature a health plan budget that would be the total amount to be spent
by the plan for covered health care services.
The budget would be established within projected annual revenues.
A
study done for the HPC by the Lewin Group in 1996, involving only public health
sector spending, showed the State would receive greater value for what it spent
on health care by consolidating the purchase of health services programs to
maximize purchasing power through the creation of a larger risk pool, and
elimination of duplicative administrative costs associated with separate
purchasing. If the plan had been adopted as suggested by the Lewin Group for
State employees, retired employees, Medicaid and the Health Insurance Alliance,
it was estimated that
the
State would have reduce health care spending by $108 million over five years,
with an estimated direct saving to the State of $50 million for that period.
A
study done by the Lewin Group in 1994 showed even greater savings when
considering both the public sector health spending and private sector
participation. In that study, the State
of
The
effect of this legislation on some state agencies is described below. However, there are no actual dollar savings
to the general fund since the revenue will be placed into a “pool” to be use in
the Health Plan budget.
ADMINISTRATIVE IMPLICATIONS
HB
498 would have some immediate administrative impact upon the Department of
Health. The Department of Health is directed to staff the initial Health Care
Commission Membership Nominating Committee.
After implementation,
the PRC’s Insurance Division will no longer need to regulate comprehensive
major medical insurance or managed care plans.
Fewer personnel will be needed in this division.
The AG believes that because of the fundamental
and comprehensive change proposed by the bill, legal challenges from those with
a vested interest in the existing health care financing and delivery systems
should be expected. The staggered
effective dates of the bill creates the opportunity to discuss points of
conflict with the stakeholders of the existing system, but it is not possible
to predict the precise legal challenges that might be brought as the result of
unsuccessful discussion with stakeholders nor the ultimate judicial
outcomes. Much of the policy success of
the proposal will be determined by the willingness of the federal government to
grant waivers permitting federal health care financing dollars to be used in
the
OTHER SUBSTANTIVE ISSUES
At least 60% of all health care spending in
HPC
notes that:
·
The last seven years have seen
significant progress in reducing the number of uninsured citizens in
·
According to the US Census Current
Population Survey of March 2000, as reported in HPC Quick Facts, 2001,
affordability is the primary reason cited for lack of insurance coverage. New
Mexicans without health insurance coverage do not generally receive the
benefits of medical care for treatable or chronic illnesses.
·
According to the HPC 2000 Employer
Survey, 58% of NM establishments offer health insurance, and that number drops
to 52% outside of the Albuquerque MSA area. The current study found that NM
workers contribute a higher percentage of their income to health insurance
premiums than the national average.
·
Health insurance premiums nationally rose
an average of 11% last year, and are expected to rise another 13% this year,
after several years of very modest growth.
BD/njw