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 Jennings

DATE TYPED 02/11/05 HB

SHORT TITLE Medicaid Reimbursement Payment Increase

SB 339

ANALYST Weber

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$8,902.6 (FY07) Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$22,824.3 Recurring

Medicaid federal

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department

SUMMARY

Synopsis of Bill

Senate Bill 339 adds subsections B and C to Section 27-2-12.3 requiring the Human Ser-

vices Department to increase the Medicaid fees for physicians, dentists, optometrists, po-

diatrists, and psychologists for services rendered to fee-for-service Medicaid clients each

July 1, starting in 2006. All reimbursements must include the gross receipts tax. This

bill is effective July 1, 2005. However, SB 339 does not require that fees be increased

Senate Bill 339 -- Page 2

until July 1, 2006. Consequently, there will no be a fiscal impact until FY07.

Significant Issues

The Human Services Department reports.

SB 339 requires the Human Services Department to increase the Medicaid fees to certain

providers under fee-for-service and the reimbursements are inclusive of the gross receipt

tax. The average medical price had increased 3.93% a year from July 1994 to July 2004

according to the medical care component of the consumer price index for all urban con-

sumers (Medical care of CPI-U). The requirements of SB 339 were not clear on the exact

increase amount so the average growth of the CPI-U from July 1994 to July 2004 is used

to estimate the impact. Though SB 339 is not clear on the methodology required to in-

crease provider rates, any legislation that requires yearly increase in payments to provid-

ers severely limits the ability of the Medical Assistance Division to meet budget con-

straints.

The increase in the fees for physicians, dentists, optometrists, podiatrists, and psycholo-

gists in all Medicaid delivery systems by this rate would result in additional yearly costs

of $31,762,900 to the Medicaid program beginning in FY07. The state share of that in-

crease is $8,902,600. The state share is based on the FY06 FMAP rate. SB 339 also re-

quires that reimbursement of Medicaid fees to physician, dentist, optometrist, podiatrist,

and psychologist providers under fee-for-service and managed care service programs in-

clude the gross receipt tax. HSD currently reimburses the fee-for-service providers listed

in SB 339 for gross receipts tax

.

FISCAL IMPLICATIONS

Beginning in FY07 significant annual general fund increases are required.

MW/sb:rs