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 Campos

DATE TYPED 3-9-05

HB 801/aHBIC/aHTRC

SHORT TITLE Health Facility Licensing Requirements

SB

ANALYST Collard

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

See Narrative

General Fund

Over $79.0

Over $79.0 Recurring DOH Receivership

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates SB 445

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Aging and Long-Term Services Department (ALTSD)

Human Services Department (HSD)

Public Education Department (PED)

SUMMARY

Synopsis of HTRC Amendment

The House Taxation and Revenue Committee amendment to House Bill 801 adds the language

“or similar” to Section 2C of the bill, which describes the provisions for sanctions and civil

monetary penalties in relation to federal penalties. The section now reads:

“The provisions of this section for intermediate sanctions and civil monetary penalties shall ap-

ply to certified nursing facilities except when a federal agency has imposed the same remedies,

sanctions or penalties for the same or similar violations.”

DOH indicates the addition of the words “or similar” allows for a broader interpretation as to

what actions could be imposed by the state. For instance, if the state cited under its federal regu-

House Bill 801/aHBIC/aHTRC -- Page 2

lations a particular deficiency and there was a similar but not exactly the same state regulation,

Health Facility Licensing & Certification (HFL&C) could not impose an additional sanction for

that deficiency under its state sanctioning scheme.

Synopsis of HBIC Amendment

The House Business and Industry Committee amendment to House Bill 801 removes the provi-

sion allowing DOH to collect a fee of up to $12 per inpatient bed or $300 for any other health

facility. It appears to completely remove the dollar cap on fees charged by DOH. However, the

amendment reduces the total civil monetary penalty fees charged per day from $10 thousand to

$5 thousand. The amendment still allows DOH to retain the fees, using them for funding the

cost of facility monitors, temporary management and health facility receiverships.

Synopsis of Original Bill

House Bill 801 amends the Public Health Act to permit the Health Facility Licensing and Certi-

fication (HFL&C) Bureau of DOH to impose state sanctions on certified nursing homes. Cur-

rently nursing homes are the only federally certified facility type exempted from state sanctions.

The bill also increases per day civil monetary penalty fees from $5 thousand to the current fed-

eral maximum of $10 thousand. The bill sets a new maximum for licensure fees from $3 per bed

to $12 per bed to determine the annual licensure fee for an inpatient health facility and increases

the set fee for other facilities from $100 to $300 per facility per year. The bill allows licensure

fees to be used for HFL&C operations. The bill allows civil monetary penalties (CMP) to be

used for receiverships, temporary management and monitoring of health care facilities when

there are no other sources to pay for such actions. Current statute requires that any excess reve-

nue from these fees revert; however, DOH historically has not reverted these funds. The finan-

cial audit for FY04 indicates there is $6.5 thousand in CMP at DOH for use in the Division of

Health Improvement.

Significant Issues

DOH indicates the bill strengthens enforcement actions improving protections for residents and

resources from licensure fees will improve HFL&C operations. The bill affords DOH a wider

range of sanctions and the ability to act on state licensure requirements independently from Fed-

eral Center for Medicare and Medicaid Services (CMS). The current language limits the

HFL&C Bureau from imposing expedient actions outside of CMS processes and approval. The

HFL&C Bureau, through its contract with CMS, has authority to impose intermediate sanctions

against nursing homes for violations of federal certification standards. The amended language

would allow the use of state sanctions for state regulations that have not been cited under the

federal scheme. DOH cannot currently impose an intermediate remedy due to the exception

found at § 24-1-5.2(C), NMSA 1978. With the exception of nursing homes that participate in

the Medicaid/Medicare programs, all other federally certified health care providers in New Mex-

ico are subject to intermediate sanctions for violations of state law and regulations.

ALTSD indicates the bill will improve protection for residents of health facilities by increasing

the funding for DOH’s licensing and certification operations and its receivership and facility

monitoring operations.

House Bill 801/aHBIC/aHTRC -- Page 3

FISCAL IMPLICATIONS

DOH indicates it supports this bill. It addresses the governor’s zero tolerance policy for elder

abuse. The department indicates no appropriation is required.

DOH indicates this bill may increase revenues from licensure fees HFL&C operations. Current

revenues are $79 thousand per year. Potential revenue increases from current or increased CMP

would be deposited into an account for facility receiverships, temporary management or moni-

tors for failing health care facilities, and would be used when other sources of funds are not

available. Currently only a nominal amount of funds are collected from CMP and are not re-

verted to the general fund.

Licensure fees have not been increased since 1983. DOH indicates the increased maximums

seem appropriate when compared with other states’ fees. Any fee increases contemplated by

DOH would be done in collaboration with health facilities and conducted through an open, fair

hearing process under its rule making authority. DOH does not intend to increase fees to the

maximum proposed in the bill. Fees currently collected go to the general fund. This bill allows

the HFL&C Bureau to use these fees to support its operations to include adding additional staff.

Additional staff resources are needed because state-licensed-only facilities such as residential

care homes are not receiving their statutorily required annual surveys. Approximately 70 percent

of the 200 state-licensed residential care homes do not receive annual onsite reviews because of

lack of HFL&C resources.

HSD notes, if this bill is enacted, the CMP that are currently wired transferred by CMS to the

State Treasurer for HSD would go to the State Treasurer for DOH to be used for the receivership

fund.

The general fund impact of this bill is unknown at this time as it depends on how much fees

would be increased and how they would be used. The fiscal impact should be minimal in any

case and is limited to potential reversions. Although the department should revert CMP to the

State Treasurer to be deposited in the general fund, per current statute, the CMP have historically

been treated as “restricted funds” by the financial auditors for DOH and have not reverted.

There should be a decrease to the general fund, but the general fund has not seen these revenues,

so the impact is unknown.

ADMINISTRATIVE IMPLICATIONS

DOH indicates increased revenues would help the department add resources, including FTE, to

its HFL&C operations necessary to meet statutory annual survey requirements. Potential reve-

nues from state CMP would go into an account for the payment of receiverships, temporary man-

agement and monitors when other sources of funds are not available.

HSD notes the transfer of CMP from HSD to DOH to support the cost of facility monitors,

temporary management and health facility receiverships would require an amendment to the

existing joint powers agreement (JPA) between the two departments and, possibly, CMS

approval of the State Plan Amendment incorporating the terms of the amended JPA.

Specifically, the JPA would require revision and amendment to reflect current state and federal

practices and provide for the transfer of civil monetary penalties from HSD to DOH for the

purposes described.

House Bill 801/aHBIC/aHTRC -- Page 4

DUPLICATION

With the exception of a slight stylistic difference on page 4, lines 6-10, House Bill 801 seems to

be identical to Senate Bill 445.

OTHER SUBSTANTIVE ISSUES

The Public Health Act, with regard to HFL&C operations has not been updated since 1983. This

bill would improve protections for health facility residents, will update outdated licensure fee

maximums allowing collected licensure revenues to be used for HFL&C operations. The bill

would give DOH authority to impose state sanctions on certified nursing facilities, and would

allow DOH to use state CMP to pay for receiverships, temporary management and monitors

when no other funds are available. These updates to the act are reasonable and necessary to im-

prove the quality of care to residents of health facilities.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

PED notes, if the bill is not passed, nursing homes will continue to be the only federally certified

health facility exempt from state intermediate sanctions and statutory requirements for annual

state-licensed facility surveys will continue to go unmet.

KBC/lg:njw