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

SPONSOR Sandoval

ORIGINAL DATE

LAST UPDATED

1/26/06

1/30/06 HB 354

SHORT TITLE Modernize Primary Care Clinic Patient Records

SB

ANALYST Lewis

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

720.0 Non-Recurring

General Fund

1680.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 90

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

New Mexico Primary Care Association (NMPCA)

SUMMARY

FOR THE LEGISLATIVE HEALTH AND HUMAN SERVICES COMMITTEE

Synopsis of Bill

House Bill 354 appropriates $2,400,000 from the general fund to the Department of Health for

expenditure in fiscal year 2007 to update patient billing systems, implement electronic health re-

cords and conduct training in primary care clinics eligible to receive funds under the rural pri-

mary health care act.

FISCAL IMPLICATIONS

The appropriation of $2,400,000 contained in this bill includes $720,000 for computer hardware

(non-recurring) and $1,680,000 for software (recurring) expense to the general fund. Any unex-

pended or unencumbered balance remaining at the end of fiscal year 2007 shall revert to the gen-

eral fund.

House Bill 354 – Page

2

SIGNIFICANT ISSUES

This appropriation is not included in the Department of Health (DOH) executive budget recom-

mendation. According to the DOH, the funds are sought by the New Mexico Primary Care Asso-

ciation (NMPCA) to implement electronic health records in primary care clinics across the state.

The New Mexico Primary Care Association (NMPCA) indicates that the $2,400,000 requested

would breakout to approximately 30% ($720,000) for computer hardware and 70% ($1,680,000)

for software. According to the NMPCA, New Mexico’s Primary care clinics have been strug-

gling to update obsolete patient billing systems and incorporate electronic health records (EHRs)

into their systems.

NMPCA notes that, at $40,000-$50,000 per clinician, the purchase of new and sophisticated pa-

tient tracking and Electronic Medical Record systems is beyond the capability of most non-profit

primary care organizations. However, by combining purchasing power and sharing training and

implementation costs, health centers can implement electronic health records at a 40-50% cost

savings as compared to individual purchases. With this appropriation, NMPCA expects that 80

clinical providers and their support staff can be transitioned to Electronic Health Records at a

cost of $25,000 per clinician ($2 million); and five organizations can replace obsolete patient

billing and information systems for $80,000 each ($400,000).

NMPCA argues that these systems can reduce medical errors, and improve efficiency and quality

of care, and the health status of the 275,000 (mostly low-income and uninsured) New Mexicans

served by primary care clinics. The financial stability of the clinics will be improved as well,

through better billing and collection and more efficient accumulation and tracking of key data.

According to the DOH, the Rural Primary Health Care Act (RPHCA) Program, which is admin-

istered by DOH, supports 82 clinics statewide through contracts with community-based nonprofit

organizations and governmental entities. In fiscal year 2005, RPHCA-funded clinics reported

over 750,000 primary care patient visits. In many rural communities the RPHCA-funded clinics

are the only source of accessible primary care available. The majority of patients at RPHCA-

funded community-based primary care centers are either indigent or Medicaid/Medicare partici-

pants. Indigent patients receive services according to sliding fee schedules, based upon their abil-

ity to pay.

The Health Policy Commission (HPC) reports that, according to the American Medical Associa-

tion, “many experts are advocating electronic records as a way to cut medical errors, provide

doctors with up-to-date patient histories, and put best practices and clinical guidelines at their

fingertips. Entering data into electronic records could facilitate quality measurement and im-

provement, cut paperwork, and streamlines health transactions. Proponents envision a system

under which a patient's medical records could easily be shared electronically among doctors and

other health care professionals caring for the patient.” (www.amednews.com/2004/gvsa0209)

At the HPC’s January, 2006 meeting the commissioners recommended that lawmakers support

funding for electronic medical records for primary care clinics. The commissioners stated that

telehealth cannot be productive or effective without including electronic medical records.

House Bill 354 – Page

3

ADMINISTRATIVE IMPLICATIONS

According to the DOH, the additional appropriation would require a separate stand-alone RFP

process and add additional procurement, contracting and monitoring activities to existing work-

loads of the RPHCA Program. At current staffing levels, one additional FTE of $60,000 (salary

and benefits), plus start-up costs for new staff (space, computer, licenses, etc.) of approximately

$11,500 would be needed.

OTHER SUBSTANTIVE ISSUES

HPC suggests that there

is potential duplication with the initiatives of HB 354 at the federal

level. In November, 2005, HHS Secretary Mike Leavitt announced the awarding of contracts “to-

taling $18.6 million to four groups of health care and health information technology organiza-

tions to develop prototypes for a Nationwide Health Information Network (NHIN) architecture.

The contracts awarded to these four consortia will move the nation toward the President’s goal of

personal electronic health records by creating a uniform architecture for health care information

that can follow consumers throughout their lives.”

(http://www.hhs.gov/news/press/2005pres/20051110.html)

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

HPC notes that without updated billing systems or access to electronic medical records, health

care providers will continue using outdated and inefficient billing and medical records systems.

ML/mt