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

SPONSOR Payne

DATE TYPED 2-15-05

HB 762

SHORT TITLE Hospital Quality Info Disclosure Requirements

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)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

SUMMARY

Synopsis of Bill

House Bill 762 requires hospitals to disclose and report quality information and “charge descrip-

tion master” information. “Charge description master” is defined as “a uniform schedule of

charges represented by the hospital as its gross billed charge for a given service or item, regard-

less of payer type.” Additionally, the bill requires hospitals to post clear and conspicuous notices

in the emergency departments, in the admissions offices and in the billing offices that inform pa-

tients that the hospitals’ charge description masters are available. Information about charges

must include information regarding hospital quality, including hospital outcome studies and sur-

vey information from the Joint Commission on Accreditation of Healthcare Organizations

(JCAHO). The bill requires hospitals to file the following annually to DOH: 1) copies of their

charge description masters; 2) calculations of the percentage increase in gross revenue due to

price increase for charges for patient services during the twelve-month period and supporting

documentation; 3) lists of the charges for the 25 services or procedures most commonly charged

to patients and make them available to patients upon request. Finally, the bill allows individuals

to file claims with DOH alleging violations of the act. DOH would be required to investigate

and inform the complainant as to its determination whether a violation has occurred and of the

action it will take, if any.

Significant Issues

DOH indicates the bill increases dissemination of hospital information related to costs, revenues

House Bill 762 -- Page 2

and quality. JCAHO survey reports are confidential and there may be issues related to making

that information public. JCAHO publishes limited information as to whether a hospital is ac-

credited or provisionally accredited.

DOH also states the bill requires DOH to investigate complaints related to violations of the act.

The Health Facility Licensing and Certification Bureau (HFLC) of DOH is the state survey

agency that licenses, certifies and investigates complaints for hospitals pursuant to its contract

with the federal Centers for Medicare and Medicaid Services (CMS).

Most hospitals in New Mexico are JCAHO-accredited and therefore have what is referred to as

“Deemed Status.” Deemed status relative to health care organizations originated with the crea-

tion of the Medicare program in 1965. Under the authority of Section 1865 of the Social Secu-

rity Act, hospitals accredited by the JCAHO or the American Osteopathic Association are auto-

matically “deemed” to meet all the health and safety requirements. JCAHO certifies hospitals as

having met the conditions of participation required for reimbursement under the federal Medi-

care program. New Mexico recognizes JCAHO accreditation as a condition of licensure and re-

ceiving Medicaid reimbursement.

DOH HFLC may not conduct a complaint survey for an accredited hospital or deemed provider

unless the CMS Regional Office authorizes it. It is the regional office’s responsibility to deter-

mine whether the complaint alleges one or more condition-levels of non-compliance. DOH may

conduct a complaint investigation if it determines that the accredited hospital or deemed provider

is non-compliant with state licensure laws. DOH is required to advise the CMS Regional Office

prior to instituting any state action against an accredited hospital or deemed provider.

FISCAL IMPLICATIONS

Although this bill contains no appropriation, DOH indicates it could increase complaint reporting

and investigation activity for HFLC.

ADMINISTRATIVE IMPLICATIONS

DOH indicates HFLC’s survey and administrative resources are already over extended to meet

present obligations. The increased activity could increase the workload, making the need for

more health and safety engineers eminent. The cost for one health and safety engineer ranges

from $40 thousand to almost $74 thousand per year.

TECHNICAL ISSUES

DOH suggests on page 1, line 25, adding “Limited service hospitals” to the definition of hospi-

tals.

ALTERNATIVES

DOH suggests conducting a feasibility study to determine the most effective means to enable this

reporting and its associated enforcement, investigating the legal aspects related to dissemination

of JCAHO survey reports, and considering allowing DOH the authority to promulgate rules and

establish penalties.

KBC/yr