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

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

SPONSOR King

ORIGINAL DATE

LAST UPDATED

01/19/08

02/13/08 HB

167/aHAFC/aSFC

/aSFL#1

SHORT TITLE Birthing Workforce Retention Fund

SB

ANALYST Hanika Ortiz/Geisler

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

None

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

$0.1

Recurring Birthing Workforce Retention

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 134

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

New Mexico Medical Board (MB)

SUMMARY

Synopsis of SFL#1 Amendment

This Amendment requests an annual reporting to the LFC on the status of the ‘Birthing

Workforce Retention Fund’. The intent of the Bill has not changed.

House Bill 167/aHAFC/aSFC/aSFl#1 – Page

2

Synopsis of SFC Amendments

The Senate Finance Committee amendment to House Bill 167 as amended by the House

Appropriations Committee:

1) Adds a requirement that awards shall be disbursed based on the percentage of Medicaid

patients or indigent patients seen in the practice; and

2) Clarify that the money in the fund is appropriated to the Department of Health for the purpose

of making awards pursuant to the provisions of Section 1 of the bill.

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee Amendment requires applicants to also

demonstrate need by showing that their malpractice insurance premiums have increased every

year for two years; requires any award to be subject to availability of funds; provides that awards

be no more than $5 thousand; clarifies that physicians need not have a low number of patients

before they can apply for an award; and, removes the appropriation to the birthing workforce

retention fund from the bill.

SIGNIFICANT ISSUES

There is no longer an appropriation from the General Fund to carry out the purposes of the fund.

Synopsis of Original Bill

House Bill 167 appropriates $250 thousand from the General Fund to the newly proposed

Birthing Workforce Retention Fund for FY09 and subsequent fiscal years. Any unexpended or

unencumbered balance remaining at the end of any fiscal year shall not revert to the General

Fund.

The bill states the purpose of the fund is to provide malpractice insurance premium assistance for

certified nurse-midwives (CNM’s) or physicians whose insurance premium costs jeopardize their

ability to continue their obstetrics practices in New Mexico. The fund shall be administratively

attached to the DOH.

FISCAL IMPLICATIONS

The appropriation of $250 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY09 shall not revert to

the General Fund. The use of legislative appropriations to fund malpractice premiums may raise

potential constitutional law questions under the Anti-Donation Clause of Article IX, Section 14.

The HPC reports that given the significant rural population in New Mexico and the high rates of

both rural and urban poverty, reinsurance efforts designed to increase, improve and ensure access

to pre- and post- pregnancy-related healthcare for those populations is a goal that may fit within

the Anti-Donation Clause’s exception of the State providing for the care and maintenance of the

sick and indigent.

The applicant must have a malpractice liability insurance policy currently in force. Any award

from the fund shall not be less than $10 thousand; and, priority for awards will be given to

House Bill 167/aHAFC/aSFC/aSFl#1 – Page

3

certified nurse-midwives, family practice physicians and obstetricians having a low number of

patients. There appears to be no maximum cap for any amount awarded an applicant.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

SIGNIFICANT ISSUES

The rules will require that the applicant demonstrate need by showing that Medicaid patients or

indigent patients constitute at least one-half of the obstetric practice of the applicant; and, that

malpractice insurance premium costs have threatened the health of the practice.

PERFORMANCE IMPLICATIONS

The NM Medical Board notes a shortage of physicians in rural areas providing specialized

practice such as obstetrics. One fact reportedly, they believe, is the pressure of malpractice

coverage.

The bill establishes the "birthing workforce retention fund" for physicians and certified nurse

midwives but does not include licensed midwives. A licensed midwife is not a nurse but has met

licensure requirements to perform a specified array of services. Licensed Midwives, not Certified

Nurse Midwives, provide most out-of-hospital births and also are the practitioners for whom

obtaining professional malpractice insurance is the greatest problem.

ADMINISTRATIVE IMPLICATIONS

The Department of Health will need to develop rules, process applications and award funds and

the Department believes they will need at least six to eight months to able to do so within

existing resources.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Duplicates HB 134

Relates to SM 1, a memorial requesting the HPC to continue the task force on obstetric health

care practitioner liability insurance.

TECHNICAL

Clarification may be needed to define the terms “indigent" and “financial stability" as used

within the bill.

OTHER SUBSTANTIVE ISSUES

Proponents of the bill believe the cost of insurance is prohibitive for obstetrical providers.

According to previous agency analyses from 2006, between Aug 2001 and July 2005 obstetrician

premiums rose from $40,801 to $89,710.This was even with the cap in New Mexico on damages

other than medical bills and punitive damages, as well as the mandatory review of claims before

a medical/legal panel provisions.

House Bill 167/aHAFC/aSFC/aSFl#1 – Page

4

DOH notes that family Practice physicians face significant increases in liability insurance rates if

they provide childbirth services. Most family practice physicians devote little or none of their

practice to childbirth, and are less able to cover such increases with payments for childbirth

services. Many have chosen not to provide these services in order to avoid high liability

insurance premiums.

DOH reports there are currently 137 CNMs licensed and actively practicing in New Mexico.

Since 2005, 82% of CNMs have estimated that half or more of their patients were on public

assistance. DOH further reports that CNMs are affected more than physician providers by

medical malpractice claims because they are not included in the Med-Mal Act and because their

incomes are smaller. A 2007 study by the HPC’s Task Force on Alternative Compensation

found that liability insurance premiums for various CNMs in urban and rural private practices

increased 432% in five years, from an average of about $6,000 per year in 2001 to $31,900 in

2007. The reason for the rapid rise in liability premiums for CNMs is related to the rise in the

awards for each claim, not to an increase in claims made against CNMs.

ALTERNATIVES

In 2006 HSD implemented a Birthing Options Program that allows Licensed Midwives and

Certified Nurse Midwives who certify they cannot obtain malpractice insurance at reasonable

costs for out-of-hospital births to participate in the Medicaid Program. The mother acknowledges

that she is aware the practitioner does not carry malpractice insurance. The governing statute of

the Medical Board has no requirement that these providers carry medical malpractice insurance.

HPC further provides that their “Task Force on Alternative Compensation" worked during 2007

to develop long-term solutions to the rising costs of professional liability insurance for childbirth

health care providers and is in the process of developing proposals to further address this issue.

AHO:GG/mt:nt:bb