Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Heaton

DATE TYPED 2/10/05

HB 374

SHORT TITLE Health Policy Commission Membership

SB

ANALYST Collard

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 358

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 374 introduced for the Legislative Health and Human Services Committees proposes

to increase the membership of HPC from eight members to nine members, and require that a ma-

jority of the members have no financial interest in the health care industry while serving or for

three years preceding their appointment. Three members would be appointed to one-year terms,

three members would be appointed to two-year terms, and three members would be appointed to

three-year terms.

Significant Issues

DFA notes the bill allows for the majority of the commission members to have no pecuniary or

fiduciary interest in the health services industry while serving or for three year preceding ap-

pointment to the commission. This is a significant change because if members of the commis-

sion have a pecuniary or fiduciary interest in the health services industry, a member who may

House Bill 374 -- Page 2

have a pecuniary or fiduciary interest in the health services industry may act in such a way as to

benefit ones-self as opposed to the interest of New Mexicans.

HPC notes a minority member of the commission may be a professional who understands the

practical realities of policy alternatives, the implications of data trends, and the effects that new

policy will have on both the public and private sectors.

HPC quotes the enabling legislation for the commission (NMSA 9-7-11.1), “the purpose of the

New Mexico health policy commission is to provide a forum for the discussion of complex and

controversial health policy and planning issues and for the creative exploration of ideas, issues

and problems surrounding health policy and planning, including the interrelations with educa-

tion, the environment and economic well-being.”

Again quoting the law, “the Legislature also finds that health care requires a growing portion of

the state's public and private resources and impacts a broad segment of the state's economy; a

need, therefore, exists to establish an entity for research, guidance and recommendations on

health policy and planning issues.”

The purpose of increasing the number of commissioners is to build the capacity of the commis-

sion to consider complex and varied health policy matters. This requires a strong working knowl-

edge of issues.

FISCAL IMPLICATIONS

DFA states the bill creates an additional commission member who is entitled to receive per diem

and mileage expenses as provided in the Per Diem and Mileage Act, but does not appropriate

additional funding. HPC notes the average cost per commissioner for per diem and mileage is

$1.2 thousand.

ADMINISTRATIVE IMPLICATIONS

HPC cites minimal administrative impact by the addition of another commissioner; however,

there is a very significant positive implication to the commission and staff with the addition of

commissioners with pecuniary or fiduciary interest with a reduction in commissioner orientation

time as well as commissioners, management and staff obtaining that commissioners expertise

and knowledgebase for information related to policy issues.

DUPLICATION

House Bill 374 duplicates Senate Bill 358.

OTHER SUBSTANTIVE ISSUES

DOH notes HPC is an independent state agency whose mission is to improve access and quality

health care for all New Mexicans by providing timely, relevant health care information and

analysis on health policy research and planning issues. HPC was established by statute in 1991

to provide a forum for the discussion of complex and controversial health policy issues. HPC is

to develop a plan for and monitor the implementation of the state’s health policy. As expressed

in statue, "it is the policy of the state of New Mexico to promote optimal health; prevent disease,

House Bill 374 -- Page 3

disability and premature death; to improve the quality of life; and to assure that basic health ser-

vices are available, accessible, acceptable and culturally appropriate, regardless of financial

status" (9-7-11.1.D, NMSA 1978). DOH notes the department has worked effectively with HPC

in efforts to build a healthy New Mexico.

HPC notes the commission responds to a complex range of health policy and data issues. Exam-

ples of recent areas of commission work include cultural competency and disparities; workforce

distribution, recruitment and retention; teen suicide and child health; incidence and distribution

of traumatic brain injury, diabetes and stroke; and small employer provision of health insurance.

Additionally, healthcare encompasses complex issues that touch every sector of life in New

Mexico. Often, actions taken in healthcare to improve one aspect of healthcare such as improv-

ing access to care will impact other aspects such as the cost of care. Considerable orientation is

required to become an effective commissioner versed in the implications of policy actions if the

new commissioner has no or very little background or knowledge of healthcare. Hospital boards

of directors often will take one year or longer to become oriented, knowledgeable and effective

in their roles. Health policy commissioners may have a similar circumstance.

Healthcare is a growing and very significant part of New Mexico’s economy that impacts all

New Mexicans. The House Bill 955 study shows that it was almost an $8 billion industry in

2002. As such, interest in healthcare is large and generates conflicting and controversial solu-

tions to issues. Often individuals such as physicians or clinic managers with direct experience

and involvement in healthcare can be a valuable resource and knowledge base utilized by other

commissioners and staff about policy matters.

HPC believes the commission would benefit from having physician or other healthcare members

who help the commission understand clinically related issues and the perspectives of practicing

caregivers and their patients. From their practices, physicians and others bring a "real world"

context to the commission’s work and would help the commission make better-informed deci-

sions.

A physician or other healthcare provider commissioner would have the same fiduciary responsi-

bility to the commission as every other commissioner. Voting physician commissioners must

make decisions based on the best interests of the citizens of New Mexico, not the interests of

physicians.

A 2000 survey study of hospital boards of directors done by the Governance Institute indicates

that the median hospital board had 12 members, including two medical staff members. Among

the survey respondents 56 percent of hospital boards had 1-3 physician members and 26 percent

had 4 or more physician members.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The Health Policy Commission will not have direct provider input into its policy-making delib-

erations and recommendations. The quality of the service and product from the commission will

not be as beneficial to the citizens of New Mexico.

KBC/sb:lg